Kuala Lumpur Kepong (SELL)
FY11: Slightly below our expectation
'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.
'''' Deviations were lower-than-expected EBIT margin at both the manufacturing and retailing divisions that more than offset lower-than-expected effective tax rate.''
'''' Declared a final NDPS of 70sen.
'''' FY09/12-13 net profit forecasts cut by 0.3% to RM1,429.3m and RM1,443.1m largely to reflect lower EBIT margin at the manufacturing division.''''
'''' TP was also lowered by 0.3% from RM18.85 to RM18.79 based on revised 14x CY2012 EPS of 134.2 sen. Downgraded from Hold to Sell as share price has run ahead of fundamentals.'' ''
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Genting Plantations (HOLD)
9M11: Beats our expectation
'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.
'''' Genp has yet to lock in any forward sales, as it feels that supply constraint will sustain the current high CPO prices 595.7over the near term.
'''' FFB output growth guidance for 2011 is raised to 12%. For 2012, management guided for an output growth of 8%, underpinned by higher output from its Indonesian oil palm.
'''' Management is guiding for a 12% increase in 2012's production cost to RM1,150/tonne, on higher fertilizer and labour costs.
'''' Genp planted 1,015ha in 3Q11 (or 2,800ha in 9M11), and management is targeting to plant another 1,500-1,700ha in 4Q. Beyond 2011, planting target would normalize back to 10,000-15,000ha per annum.
'''' Premium Outlets is scheduled to open to the public on 2 Dec 2011.
'''' Management is targeting to launch 530 units of properties in 2012 with a total GDV of RM230m.
'''' For the full-year, management is guiding for a capex of slightly below RM300m.
'''' 2011-13 net profit forecasts raised by 7-13%to reflect: (1) Higher FFB output assumption; and (2) Earnings contribution from Premium Outlets from 2012 onwards.
'''' TP raised by 13.1% to RM7.61 (based on 13x 2012 revised EPS of 58.5 sen), to reflect higher net profit forecast.'' ''
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Pos Malaysia (BUY)
9M11: Below our expectation
'''' 9M11 core net profit of RM97.9m (+49.4) came in below our expectation, accounted for only 68.3% of our full-year forecast. Against consensus, the results came in within expectations, at 73.2% of the consensus estimates.''
'''' ''Key deviations were: (1) Lower-than-expected other operating income; and (2) Higher-than-expected effective tax rate.''
'''' ''Earnings forecasts and TP (RM3.80 based on unchanged 13x 2012 EPS of 29.3 sen) are maintained for now, pending further update with management in the coming results briefing. ''
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UMLand (BUY)
Making good progress
'''' 9M net profit rose 51% yoy to RM52m, in-line with our full-year estimate, due to improved performance from both the niche and township divisions.'' A 2.5 sen gross dividend was declared.''
'''' We are pleased to see them making good progress with the projects.'' Puteri Harbour's GDV has been bumped up from RM188m to RM209m, whilst their efforts to remodel Bandar Seri Alam is progressing well.''
'''' Launches have been slow this year ' only 30% of their initial RM522m target, but management have been diligently executing their game plan and we expect them to launch more aggressively next year.''
'''' FY12-13 earnings raised by 1-2% to reflect Puteri Harbour's increased GDV.'' Our TP remains at RM1.61 (65% discount to RNAV). BUY
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Notion VTec (HOLD)
FY11 Results, Thai Flood Assessment
'''' FY11 reported net profit of RM40.1m came in below our expectation, accounting for 90% of our full-year forecast and 87% of consensus.
'''' 4QFY11: Revenue RM62m (+16.9% yoy, +1.8% qoq), EBITDA RM21.8m (+41.7% yoy, -13.0% qoq) and PATAMI RM12.5m (+54.8% yoy, +23.4% qoq).
'''' FY11: Revenue RM236.8m (+4.4% yoy), EBITDA RM92.3m (+16.7% yoy) with EBITDA margin of 39% and PATAMI RM46.8m (+24.8% yoy).
'''' HDD revenue declined 9% yoy and is offset by camera revenue which increased 19% yoy, while industrial/automotive revenue remained stagnant.
'''' Along with 4QFY11 results, the company also shared the expected financial impact of Thailand flood:
'''' To reflect lower earnings forecast, our target price is revised downward by 42.2% to RM1.49 from RM2.58 previously based on NPV of FCF based on WACC of 12.7% and terminal growth of 10%.
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October Inflation Report
'''' The CPI growth remained stable at 3.4% yoy in October 2011, slightly higher than the consensus estimate of 3.3%, as surge in food prices (+5.7% yoy; Sep: +5.0% yoy) offset moderation in non-food prices (+2.4% yoy; Sep: +2.7% yoy).''
'''' The moderation in prices of non-food category was caused by the lapse of cigarette excise duty hike (22 sen per stick from 19 sen per stick) effected a year ago.
'''' The uptick in services inflation (+3.1% yoy; Sep: +3.0% yoy) suggests that there is still risk of subsequent rounds of inflationary pressure.
'''' We maintain our inflation forecast of 3.2% for 2011 and 3.0% for 2012. However, there is now more upside risk to our projection given the uncertainty on food supply chain and its impact on prices.
'''' The stronger-than-expected 3Q GDP growth further reinforced our view that BNM will hold the OPR steady until end-2012.
'''' Real return to savings has been running negative since April 2011, representing another constraint for BNM to switch unreservedly to growth promotion mode.
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KLCI: The odds favour the bears
'''' Given the failure to defend the 30-d SMA (1357) and lower Bollinger band (1435) as well as bearish technical readings, KLCI is slated to head south towards the next support at 1420 (38,2% FR) and the 1400 psychological barrier. Immediate resistance levels are 1357, 1468 (mid Bollinger band) and 1480 (100-d SMA).
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DJIA: Downside bias despite oversold slow Stochastics
'''' Following the breakdown of major supports near mid Bollinger band (11896), 100-d SMA (11636) and 11344 (50% FR), the next supports are 11222 (61.8% FR), 11k psychological level and 10847 (76.4% FR). Overall, downside risk to violate the 11k support has increased despite an oversold slow Stochastics reading. Immediate resistance levels are 11636-11896 levels.
