MRCB - Malaysian Resources raised to 'buy'

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: UOB

Malaysian Resources Corp was raised to “buy” from “hold” at UOB-Kay Hian Holdings Ltd to reflect the higher value of its Kuala Lumpur Sentral development and the possibility of the company securing a parcel of government land.

The share price estimate was increased to RM2.86 from RM2.30, Vincent Khoo, an analyst at UOB-Kay Hian, wrote in a report today in Kuala Lumpur. -- Bloomberg

JOBST - CIMB Research keeps Jobstreet TP at RM3.77

Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research said Jobstreet's job posting volumes have been rising, thanks to its marketing campaign.

It said on Thursday, April 7 that Jobstreet was also riding on the tailwinds of a recovery in regional economies, the tight labour market and the resumption of hiring activities.

'On the negative side, there is a rise in competition in Jobstreet's core markets. Also, there is no immediate plan to merge SEEK's Asian investments despite its strategic merits,' it said.

CIMB Research said it was retaining its EPS estimates. Its target price of RM3.77 remains unchanged as it now pegs Jobstreet at parity with its peers instead of a 20% discount as the average CY12 P/E of its global peers has corrected to 22.6 times, largely because of Monster.

It added that it valued Monster at parity as Jobstreet has been executing well and volumes have been rising.

'Jobstreet remains a BUY, with the potential catalysts being market share gains and lower-than-expected competition,' it said.

IOICORP - CIMB Research maintains Underperform on IOI Corp

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research said the Roundtable on Sustainable Palm Oil's (RSPO) suspension is a negative surprise and is maintaining an Underperform on the stock.

It said on Thursday, April 7 that the RPSO has suspended its certification process for all of IOI group's activities with immediate effect, following land dispute complaints and charges of deforestation.

'This is a negative surprise and may tarnish the group's image as a sustainable palm oil producer as well as its sales of sustainable palm oil to Europe. For now, we do not expect the suspension to affect the group's operations as it will merely delay the certification of new estates,' it said.

CIMB Research said given the group's willingness to work with RSPO, it believes this issue will be resolved amicably in due course.

'We retain our earnings forecasts and target price of RM5.95 (16x CY12 P/E). Also intact is our UNDERPERFORM rating in view of its below-peers FFB output growth and our view that the CPO price is close to peaking. For exposure to the sector, we prefer Sime,' it said.

CENSOF - Century Software is small in size, but big in potential

Stock Name: CENSOF
Company Name: CENTURY SOFTWARE HOLDINGS BHD
Research House: OSK

Century Software Holdings Bhd
(April 6, RM1.41)
Initiate coverage with buy call at RM1.38 with fair value RM1.53: Century Software Holdings (CSHB) is a provider of financial management software and solutions with a near-monopoly on providing these solutions to federal statutory bodies (FSB). CSHB looks set to benefit from the government's push for a standard accounting system for government agencies (Saga) which will utilise compliant financial management software solutions (FMSS). Some 42% or 49 FSBs have yet to instal the Saga system, which potentially represents a market valued of RM50 million per year for CSHB to tap into. The government has so far recognised only two FMSS, namely CSHB's Saga Century and Konsortium Jaya's Saga 3 solutions.

CSHB could also look to penetrate the local councils, state statutory bodies, and government-linked companies. Although the government has yet to mandate Saga-compliance here, we opine that uniformity across accounting systems makes more sense over the long run. CSHB is still largely non-existent in these agencies and we believe this represents a potential market worth RM60 million per year.

Demand for payment aggregation software is likely to swell with increasing Internet banking. According to Bank Negara Malaysia, the volume of Internet transactions in Malaysia grew 40% to 60% per year over the last three years. The subscriber base has also jumped approximately 30% per year over the last five years, with 9.4 million registered for Internet banking facilities as at 2010. As payment aggregation software is able to simplify and increase the speed of making payments and receiving collection, CSHB should benefit from the gradual migration to e-payments.

T-Melmax Sdn Bhd (TMX) recently launched its e-Bayaran portal, a one-stop business-to-government website for businesses to make payments to government bodies. Malaysia had over 550,000 small- and medium-sized enterprises as at 2009, with over four million companies registered with the Companies Commission of Malaysia. Assuming a conservative 20% take-up rate, this could translate into annual revenues of RM15 million from monthly payments to the Employees Provident Fund, the Social Security Organisation and the Inland Revenue Department. Imputing a margin of 30%, this could boost CSHB's profit-after-tax by RM4.5 million a year. ' OSK Research, April 6


This article appeared in The Edge Financial Daily, April 7, 2011.

COASTAL - Coastal Contracts riding high on merger speculation

Stock Name: COASTAL
Company Name: COASTAL CONTRACTS BHD
Research House: AMMB

Coastal Contracts Bhd
(April 6, RM3.50)
Downgrade to hold at RM3.41 with fair value RM3.35: We downgrade our call on Coastal Contracts Bhd from 'buy' to 'hold' as the surge in share price has reached our unchanged fair value of RM3.35, pegged to an FY11F price-earnings ratio (PER) of six times, based on the group's seven-year average forward PER.

Coastal's share price surged 33 sen or 11% yesterday, following a news report that the group is planning to sell a major stake to a strategic partner as part of its plan to diversify into the fabrication business.

These market rumours are not a surprise, given that our report on Feb 10 this year had already highlighted the potential M&A exercise.

In a reply to Bursa Malaysia, Coastal highlighted that the proposed collaboration with Ramunia Fabricators Sdn Bhd is still under discussion and does not involve the selling of a major stake in Coastal.

The company also emphasised that if the proposed collaboration with Ramunia Fabricators fails to materialise, Coastal would be open to other options with alternative strategic partners to diversify into the offshore structure fabrication business.

Coastal also noted that the board has not formed a firm intention to sell a major stake to any identified party. Our channel checks reveal that the collaboration and M&A negotiations are with various parties and are still at a preliminary stage.

On fundamentals, the group's current order book of RM760 million will last until mid-2012 and it would face an earnings contraction in the absence of fresh vessel sales in FY12F.

Given the huge incoming global delivery of anchor handling tug supply vessels, Coastal's prospects would not appear exciting if a merger fails to materialise.

We have projected flat earnings growth over FY11F/13F, which incorporate fresh orders of RM700 million to RM800 million in FY12F/13F. In our oil and gas sector report on April 5, we highlight that charter rates for anchor handling tug supply vessels are only expected to improve towards end-2012 and platform supply vessels by end-2013.

Hence, we are of the view that the stock is currently fairly valued given that its current PER of six times is at its seven-year average. ' AmResearch, April 5


This article appeared in The Edge Financial Daily, April 7, 2011.

COASTAL - Coastal downgraded to 'hold'

Stock Name: COASTAL
Company Name: COASTAL CONTRACTS BHD
Research House: AMMB

Coastal Contracts Bhd was cut to “hold” from “buy” at AmResearch Sdn Bhd as the recent surge in the Malaysian shipbuilder’s share price has reached the brokerage’s fair value of RM3.35 for the stock.

The stock slid 2 per cent to RM3.46 at 10:32 a.m. in Kuala Lumpur trading, set for its biggest decline since March 15, snapping an eight-day rally. -- Bloomberg

CENSOF - Century Software a 'buy': OSK

Stock Name: CENSOF
Company Name: CENTURY SOFTWARE HOLDINGS BHD
Research House: OSK

Century Software Holdings Bhd, a Malaysian software company, rose to a one-week high after OSK Research Sdn Bhd rated the stock new “buy” to reflect its earnings growth potential.

The stock advanced 1.5 per cent to RM1.40 at 9:44 a.m. in Kuala Lumpur trading, set for its highest close since March 30.

The “fair value” for the stock is RM1.53, Kong Heng Siong, a Kuala Lumpur-based analyst at OSK, wrote in a report today. -- Bloomberg

MEDIA - RHB Research sees more upside for media sector

Stock Name: MEDIA
Company Name: MEDIA PRIMA BHD
Research House: RHB

KUALA LUMPUR: RHB Research said while year-to-date (Jan-Feb) gross adex for TV and print media was up 8.6% on-year, for full-year 2011, it projects adex could grow by 10.5% on-year.

'This is based on our projected 2011 GDP growth of 5% and the average GDP multiplier of 2.1 times. Notwithstanding the lack of ad-friendly events this year, adex growth should remain healthy, supported by resilient consumer spending,' it said on Wednesday, April 6.

Telecom companies have been the biggest spenders in terms of adex last year and RHB Research believes this would likely continue in FY11 as telco operators compete to defend and/or grow market share and revenues.

Over at the cost side, newsprint prices have been hovering around US$720-780/tonne up from US$650/tonne seven months ago, although the weakening of the US dollar (-1.2% YTD) has helped cushion the higher US dollar-denominated cost.

RHB Research said Media Prima (Outperform, FV=RM3.20) remains its top pick given its position as the largest integrated media player in Malaysia.

'We view the sector as defensive and coupled with decent valuations and attractive dividend yields, these could help shield investors from the volatile market. Thus, we maintain our Overweight stance on the sector,' it said.

GENM - Genting Malaysia rated 'buy' at Macquarie

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: MACQUARIE GROUP

Genting Bhd was cut to “neutral” from “outperform” at Macquarie Group Ltd because of minimal upside to its share price and prefers the Malaysian casino group’s Genting Malaysia Bhd unit.

The share price estimate was cut to RM11.60 from RM13, according to the report.

Genting Malaysia was rated new “outperform” with a target price of RM4.25. -- Bloomberg

GENTING - Genting cut to 'neutral' at Macquarie

Stock Name: GENTING
Company Name: GENTING BHD
Research House: MACQUARIE GROUP

Genting Bhd was cut to “neutral” from “outperform” at Macquarie Group Ltd because of minimal upside to its share price and prefers the Malaysian casino group’s Genting Malaysia Bhd unit.

The share price estimate was cut to RM11.60 from RM13, according to the report.

Genting Malaysia was rated new “outperform” with a target price of RM4.25. -- Bloomberg