AIRASIA - HDBSVR maintains AirAsia fully valued at RM2.94

Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research is maintaining AirAsia Fully Valued at the current price of RM2.94 which is pegged at 11 times FY11 earnings per share.

'We remain concerned about the airline given the current high oil prices could dampen travel demand and earnings. The recently declared 2.8sen net DPS for FY10 is unlikely to recur,' it said on Thursday, May 5.

HDBSVR said Thai AirAsia has better growth prospects than PT Indonesia AirAsia (IAA), due to a less competitive and regulated domestic market

However, high jet fuel prices will remain a challenge for both, the research house said, adding its 12-month target price is RM2.

GUANCHG - Guan Chong hits 4-day low at RM2.85

Stock Name: GUANCHG
Company Name: GUAN CHONG BHD
Research House: HWANGDBS

KUALA LUMPUR: GUAN CHONG BHD [] shares fell to a four-day low of RM2.85 in late afternoon on Wednesday, May 4 as investors took profit after the recent strong run-up its share price in recent weeks.

At 4.04pm, it was down 15 sen to RM2.85 with 366,800 shares done. The warrants fell eight sen to RM1.31.

Hwang DBS Vickers Research had recently initiated coverage with Buy call and RM3.60 target price.

'Our fair value is pegged to 10x target PE, using fully diluted FY12F EPS. This is a steep discount to DBS Vickers' 15 times FY11/12 PE accorded to Singapore-listed Petra Food, its nearest peer,' it said.

HDBSVR said Guan Chong was an under-researched counter.

'We like it because its market cap (RM941 millio) is poised to expand along with strong profit growth. Potential risks to earnings are a global economic collapse (leading to customers deferring deliveries as demand falls) and disruptions to cocoa bean supply,' it said.

To recap, Guan Chong manufactures and sells cocoa ingredients: cocoa butter (54% of FY10 revenue), cocoa powder/cake (43%) and cocoa liquor (3%). Exports were 92% of sales last year as it counts global chocolate manufacturers like MARS, Hershey's and Lotte as customers.

Since 1990, its capacity has increased from 6,000 tonnes per annum to'' 140,000 tonnes now to rank among the top 10 cocoa processors in the world.

'It is set to grow bigger when another 60,000 tonnes per annum at its new plant in Indonesia ' which has the advantage of buying zero-tariff local beans ' is fully completed by 2Q12,' it said.

QL - OSK maintains 'buy' call on QL Resources

Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: OSK

OSK Research has reduced its 2011/12 forecast earnings for QL Resources by one per cent to 5.3 per cent, saying that heavy rainfall in Indonesia and the stake dilution of 40.5 per cent to 35 per cent in Boilermech had delayed the company from achieving its target fresh fruit bunch production volume in Vietnam.

The research house however raised its Future Value (FV) from RM3.51 to RM4, pegging at a higher price earnings (PE) of 19 times earnings per share in 2012, taking into account the potential catalyst from its venture into renewable energy and higher share liquidity post share placement exercise.

QL Resources is a regional integrated livestock farming player
and has diversified into the fisheries sector through the development of a marine-based manufacturing chain.

Meanwhile, OSK also said there have been reaffirmation that radiation from Japan's nuclear plant disaster would not reach Malaysia due to the distance.

This means, QL Resources fish caught in South East Asian waters is safe for consumption. OSK Research has maintained a "Buy" recommendation on QL Resources. -- Bernama

DIGI - DiGi hits new high on BNP Paribas estimate

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: BNP Paribas

DiGi.Com Bhd, a Malaysian mobile-phone and Internet services provider, climbed to a record in Kuala Lumpur trading after BNP Paribas raised its share estimate to RM30.70 following last week’s quarterly earnings report.

The stock gained 1 per cent to RM29.90 at 9:24 a.m. local time. -- Bloomberg

AIRASIA - AirAsia gains mart share in neighbours

Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: ECMLIBRA

AirAsia Bhd's units in Indonesia and Thailand are gaining substantial market share and a strong foothold in the respective countries, says ECM Libra Capital Sdn Bhd.

Despite higher jet fuel costs, demand is looking up for Indonesia AirAsia (IAA) and Thailand AirAsia (TAA), it said in a research note today.

In the first quarter 2011, IAA's passenger traffic rose 33.1 per cent year-on-year to 1.5 billion, with the load factor up 2.5 percentage points year-on-year to 80 per cent.

Likewise, TAA's traffic grew 23.5 per cent year-on-year to 1.9 billion as the first quarter is usually the peak season for tourism. The load factor was up by 4.6 percentage points year-on-year to 84 per cent.

ECM Libra maintained a "buy" call on AirAsia.

According to AirAsia, both IAA and TAA will focus on improving their market share for international routes and identify, create and interconnect new uncharted routes through existing hubs.

ECM Libra said AirAsia's affiliates are currently preparing for their upcoming initial public offerings and listings, which are expected to take place in the fourth quarter of this year.

TAA is looking to raise US$150 million from the exercise while IAA plans to raise between US$150-US$200 million in proceeds. This is to finance future growth plans, including capacity expansion and acquisition of aircraft.

"As part of the listing exercise, accumulated debts may be cleared, which means AirAsia may start recognising earnings from IAA and TAA through its 49 per cent stake in the units.

"Based on the 49 per cent stake, AirAsia would be able to gain an additional RM224 million in earnings," ECM Libra said.-- Bernama

TRC - RHB Research maintains Outperform on TRC, fair value RM1.94

Stock Name: TRC
Company Name: TRC SYNERGY BHD
Research House: RHB

KUALA LUMPUR: RHB Research Institute is maintaining its Outperform on TRC Synergy with a Fair value of RM1.94.

It said on Wednesday, May 4 that TRC has secured a RM45m contract for the CONSTRUCTION [] of submarine safety conditioning facilities, submarine hangar and workshop facilities for the Royal Malaysian Navy.

This is the second key contract TRC has secured so far this year, boosting its YTD new contracts secured to RM88.8m and its outstanding construction orderbook by 4% to RM1.3bn.

'Assuming an EBIT margin of 6-8%, the contract will fetch RM2.7-3.6m EBIT.''Forecasts are maintained as we have assumed TRC to secure RM300m worth of new jobs per annum in FY11-13,' RHB Research.

DIGISTA - CIMB Research has Buy on Digistar at 35 sen

Stock Name: DIGISTA
Company Name: DIGISTAR CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research has a technical Buy call on Digistar Corp at 35 sen, at which it is trading at a price-to-earnings of 1.9 times.

It said on Wednesday, May 4 the recent pullback dragged Digistar to the 38.2% FR level. Since then, the bulls have come to the rescue.

'We think that a base is formed at the 38.2% FR level and there is potential of stronger rebounds ahead,' it said.

CIMB Research said the technical landscape is improving. MACD histogram bars are falling at a slower pace, suggesting that momentum is slowly picking up. RSI too has move above the 50pts mark.

'Any pullback is an opportunity to accumulate. The next upleg should lift prices towards RM0.375 and possibly even RM0.425 next. On the downside, a fall below RM0.31 would trigger our stop,' it said.

Digistar integrates IT infrastructure, teleconferencing, LANs, interactive media management systems, radio and television news automation, telecommunication systems and other related electronic systems.

AIRASIA - AirAsia soars to RM3, MAS struggles

Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: OSK

KUALA LUMPUR: Shares of low-cost carrier AirAsia rose to RM3 in afternoon trade on Tuesday, May 3 but Malaysian Airline System (MAS) struggled below RM2, weighed by high fuel costs.

At 2.32pm, AirAsia was up 13 sen to RM3 with 7.37 million shares done, the highest since January.

MAS, meanwhile, shed one sen to RM1.81 with 203,900 shares done.

OSK Research after the drop in AirAsia's share price since the start of 2011, the announcement of its symbolic maiden dividend and the imposition of a fuel surcharge starting May and its encouraging 1Q traffic numbers should bring AirAsia back into the limelight of investors.

It said the surcharge should lift FY11 earnings by 4.15% while the traffic number, where group revenue per kilometre was up 26% on-year.

'The stock's valuations remains attractive, currently trading at a 34% discount against its peers, while the upcoming IPO of its two associates is expected to further crystallise valuations. Following the 4.15% upward revision in FY11 earnings from the fuel surcharge, we continue to retain our BUY recommendation at a higher fair value of RM3.57 premised at 12x FY11 EPS,' it said.

As for MAS, analysts were impressed by the national carrier's younger fleet plant which was anticipated to be MAS' key earnings kicker for a turnaround on better fuel burn, lower maintenance costs, and more reliability and flying hours.

However, they were concerned about the impact of the high oil prices.

A local research house said its higher revised oil price assumption prompted it to downgrade its earnings by 18% for FY11-FY12, which accordingly entailed a downgrade to SELL at a lower fair value of RM1.60, premised on 8.5 times enterprise value/earnings before interest, tax, depreciation and amortisation.

AIRASIA - AirAsia soars to RM3, MAS struggles

Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: OSK

KUALA LUMPUR: Shares of low-cost carrier AirAsia rose to RM3 in afternoon trade on Tuesday, May 3 but Malaysian Airline System (MAS) struggled below RM2, weighed by high fuel costs.

At 2.32pm, AirAsia was up 13 sen to RM3 with 7.37 million shares done, the highest since January.

MAS, meanwhile, shed one sen to RM1.81 with 203,900 shares done.

OSK Research after the drop in AirAsia's share price since the start of 2011, the announcement of its symbolic maiden dividend and the imposition of a fuel surcharge starting May and its encouraging 1Q traffic numbers should bring AirAsia back into the limelight of investors.

It said the surcharge should lift FY11 earnings by 4.15% while the traffic number, where group revenue per kilometre was up 26% on-year.

'The stock's valuations remains attractive, currently trading at a 34% discount against its peers, while the upcoming IPO of its two associates is expected to further crystallise valuations. Following the 4.15% upward revision in FY11 earnings from the fuel surcharge, we continue to retain our BUY recommendation at a higher fair value of RM3.57 premised at 12x FY11 EPS,' it said.

As for MAS, analysts were impressed by the national carrier's younger fleet plant which was anticipated to be MAS' key earnings kicker for a turnaround on better fuel burn, lower maintenance costs, and more reliability and flying hours.

However, they were concerned about the impact of the high oil prices.

A local research house said its higher revised oil price assumption prompted it to downgrade its earnings by 18% for FY11-FY12, which accordingly entailed a downgrade to SELL at a lower fair value of RM1.60, premised on 8.5 times enterprise value/earnings before interest, tax, depreciation and amortisation.

AXIATA - ECMLibra maintains 'neutral' call on telco sector

Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: ECMLIBRA

ECMLibra Investment Research has maintained a neutral call on the telecommunication sector. It gave a buy recommendation on Axiata with target price of RM6.08.

"Axiata is our strong pick in the sector given strong growth prospects and potential upside surprises in dividend payments.

"Although earnings growth is lower for other telcos, valuations are likely to be supported by the high dividend yields," the research house said in its Sector Monthly Review (Telecommunication) today.

ECMLibra gave hold recommendations on Maxis, DiGi and TM with target prices of RM5.70. RM30.14 and RM3.86 respectively. -- Bernama