MAHB (BUY)
Look for Longer Term Prospect
'''' MAHB revealed KLIA2 final detailed layout costing RM3.6-3.9bn, more than the initial provisions of RM2bn. There are several major upgrades, capacity of 45m passenger p.a. By bringing forward capex will save MAHB RM766m.
'''' MAHB expects to recoup ~RM175m savings from building materials sales tax for KLIA2 development, which will effectively reduce its overall development cost of RM3.9bn.
'''' MAHB also expects to develop more JVs or commercial lots. MAHB had projected additional revenue of RM2.5-3.0bn and the project IRR improved to ~11% from previous 8% over the concessionaire term.
'''' The final commencement date of KLIA2 is targeted by April 2013 and MAHB expects the KLIA2 to be profitable within first year of operation, where passenger numbers is projected to hit 20m.
'''' Target price reduced to RM6.80 (RM7.00) as dilution impact more than offset the cost savings and additional revenue.
''
TdC (BUY)
3Q11 Analyst Briefing
'''' We felt positive after TdC shared key takeaways and post-acquisition outlook during the briefing.
'''' TdC put strong emphasis in profitability over revenue growth and committed to deliver shareholders' return more than the dilution resulted from the acquisition. As a result, TdC has walked away from DiGi-Celcom's node fiberisation bid which demanded extremely low price. Currently, DiGi and Celcom are laying their own fibre.
'''' Wholesale data segment is expected to undergo strong growth momentum which more than sufficient to neutralize the decline in voice revenue. TdC is expecting the growth will outpace and offset price erosion of 15%-30% annually.
'''' Current EBITDA margin of 32% is expected to be sustainable thanks to economy of scale.
'''' All corporate exercise proposals (including financing) are on track and expected to complete by February 2012. TdC is looking at about 20% growth post-merger.
'''' Comments: DiGi-Celcom self-fiberisation requires long lead time and not cost effective, especially to support LTE deployments. Thus, we see opportunity for TdC to benefit in near future.
'''' Reiterate our Buy call with unchanged SOP target price of RM0.85 imputed with our DiGi target price (instead of market price, which would add 4 sen).
''
RHB Capital (HOLD)
Likely Miss ROE KPI But Already Factored In
'''' 3QFY11 results in line with HLIB and consensus.
'''' Despite strong loans growth (ahead of industry), 3Q weaker qoq due to derivative MTM loss, impairment loss and erosion in NIM but partly offset by low provisions.
'''' Management indicated that FY11 results are likely to miss its ROE KPI.'' However, this is in line with our expectations.''
'''' Derivative MTM loss (would reverse upon maturity) to remain unchanged unless changes to interest rate and yield curve.
'''' 4Q results likely to mirror 3Q - absence of derivatives MTM and impairment losses as well as NIM near bottom to offset expected higher credit charge on strong loans growth.
'''' Asset quality improved and capital ratios robust.
'''' Internal stress test indicated that it can meet Basel III requirements at the group level, subject to BNM guideline.
'''' It is hopeful of completing the Mestika and OSK M&As within six-month times.'' It is targeting for a win-win deal with OSK by end 2011 with completion another 3-4 months later.
'''' Maintain HOLD and target price of RM7.00.
''
Lion Industries (SEL)
1QFY06/12: Below expectations
'''' 1QFY06/12 net profit of RM27.6m (qoq: -38.6%) came in below expectations, at 20.4% and 18.8% of our and consensus full-year forecasts respectively.
'''' Key deviations were: (1) Lower-than-expected sales volume at the steel manufacturing division; and (2) Higher-than-expected effective tax rate of 58.0% vs. 25.0% we assumed, mainly due to certain expenses not deductible for tax purposes.
'''' FY06/12-14 net profit forecasts cut by 18.6-34.7% to RM88.4m, RM110.7m and RM129.0m respectively, largely to account for lower sales volume, lower average selling price assumption, as well as higher effective tax rate assumption in FY06/12.''
'''' SOP-derived TP lowered by 26.8% from RM1.38 to RM1.01 (unchanged 20% discount) to reflect: (1) The downward adjustment in our net profit forecasts; and (2) The latest share prices of its listed subsidiaries and associate.
''
TRC Synergy (BUY)
3Q still being weighed down by LRT delays
'''' 9MFY11 PATAMI dipped by -14% to RM11m (2.36 sen/share), making up only 55% and 47% of HLIB and consensus expectations respectively.
'''' Earnings missed expectations due to slower than an expected progress for the LRT project while existing construction orders are either at the tail end or still at the initial stages to have meaningful contribution. We believe that it is a timing issue in profit recognition as earnings will pick up once the new orders fully takeoff.
'''' Overall, total outstanding order book remains sizable at ~RM1.43bn, translating to ~3.8x FY10's revenue and ~5.1x order book-to-market cap ratio.
'''' We maintain a BUY call on TRC but with a reduced TP of RM0.69 due to lower earnings forecast to reflect delays in construction activities.
''
ViTrox Corp (HOLD)
Evident Slowdown in 3Q11
'''' 3Q11: ViTrox registered a revenue of RM18.1m (-28.0% yoy, -33.3% qoq), EBITDA of RM4.1m (-57.5% yoy, -50.3 qoq), PAT of RM6.36m (-30.7% yoy, -26.8% qoq).
'''' Lower revenue mainly due to reduction in sales from MVS and ECS in line with the global slowdown in semiconductor industry. However, there is increase in sales from ABI due to high demand for advanced X-ray inspection system from new customers in the US market.
'''' 9M11: ViTrox reported a revenue of RM66.9m (+4.2% yoy), EBITDA of RM19.2m (-22.1% yoy), PAT of RM21.5m (-8.4% yoy). Marginally higher sales driven by stronger demand from ABI thanks to continuous acceptance of AOI and AXI from customer worldwide. Lower EBITDA due to higher sales from lower margin products (ABI) and lower sales from higher margin products (MVS and ECS).
'''' ViTrox is expecting to secure first service contract soon from a Chinese customer which will positively contribute to the top line as recurring revenue.
'''' Comments: Continuous investment in R&D during current difficult outlook is crucial for ViTrox to sustain competitive edge, understanding that talent is scarce.
'''' Successful product diversification and not solely dependent on MVS only.
'''' Our target price is cut to RM0.95 (from RM1.17 previously) based on DCF with a WACC of 13.8% and TG of 0%. This gives ViTrox an implied PER of 7.6x for FY11.
''
KSL (BUY)
KSL City in full swing; time to look ahead
'''' 3Q net profit rose 3.3% qoq and 92.8% yoy to RM30.0m.''
'''' 9M net profit was RM72.0m, in-line with HLIB and street estimates.
'''' Phase 1 of their flagship RM2.5bn project Klang has launched in Q4; this project is expected to be KSL's main earnings driver from 2012 onwards.
'''' We maintain our positive outlook on KSL; no change to our earnings forecast and price target of RM2.16 (based on 30% discount to RNAV), implying 56% upside.'' Maintain BUY.
''
KLCI: Choppy trend ahead
'''' We doubt this downtrend could reverse any time soon as KLCI struggles to crack above the immediate resistance zones at mid Bollinger band (now at 1464) and 100-d SMA (1476) levels. If the last week's low 1424 (Nov 23) is taken out, we expect the next down leg towards the 1400 psychological level and probably retesting the 76.4% FR support at 1378 pts.
OSK: Momentum building up
'''' Technically, short term outlook has turned better after holding well above the mid Bollinger band (now at RM1.74), 10-d SMA (RM1.76) and 50% FR (RM1.72) supports, underpinned by improving technical readings of its daily and monthly charts. Upside targets are situated at RM1.96 (monthly upper Bollinger band) and around RM2.10 (downtrend line since 1999). Immediate supports are RM1.72, RM1.68 (38.2% FR) and RM1.65 (50-d SMA). Cut loss below RM1.65.
