Buy Axis REIT shares: OSK

Stock Name: AXREIT
Company Name: AXIS REITS

Research House: OSK

Price Call: BUY

Target Price: 2.75

Axis Real Estate Investment Trust (REIT) is expected to issue sukuk bonds worth RM300 million in the near-term to refinance its short-term debt, extend its debt expiry profile and lock in lower interest rate.

As at Sept 30, Axis REIT short-term debt stood at RM340 million, with RM198 million due this year.

However, it is likely REIT may draw down a portion first, given the revolving credit due to the maturity in 2011, and planned unit placement, HwangDBS Vickers Research said in a statement today.

"At 38.2 per cent gearing (Sept 30) based on total asset value, the company could still take on around RM151.1 million in debt before hitting the 50 per cent threshold.

"This is unlikely as impending capital management exercises should supplement its existing funding for asset acquisition purposes and bring it to a more comfortable low around 30 per cent level," it said.

The research firm maintained its "buy" call on the REIT and reduced the target price by 15 sen to RM2.75 from RM2.90.
-- Bernama

Maxis up, RHB Research keeps fair value at RM5.65

Stock Name: MAXIS
Company Name: MAXIS BERHAD

Research House: RHB

Price Call: BUY

Target Price: 5.65

KUALA LUMPUR: Maxis Bhd shares rose in afternoon trade on Monday, Oct 24, but the gains were outpaced by other key KLCI stocks, though analysts were positive on the telco's tie up with U Mobile to provide its 3G radio access network (RAN)

At 3.01pm, Maxis rose nine sen to RM5.34. There were 831,500 shares done at prices ranging from RM5.30 and RM5.37.

RHB Research Institute said it was positive on the tie-up which would stretch an initial period of 10 years and cater for long-term evolution (LTE) when the spectrum becomes available.

Maxis and U Mobile entered into an agreement to share Maxis' 3G radio access network (RAN), for an initial period of 10 years and will cater for long-term evolution (LTE) when the spectrum becomes available.

'Details were vague, but we are positive on the move as a means to help maintain Maxis' industry leading EBITDA margin of 50% in the medium term through capex and opex savings,' it said.

RHB Research said the active sharing arrangement could help Maxis mitigate margin erosion arising from subscriber acquisition costs related to its new Home Services. Besides that, Maxis will also likely generate some roaming revenue on a net basis given its wider 3G network coverage.

'We however believe that both companies may not gain as much as the RM2.2bn capex and opex combined savings that Celcom and DiGi are targeting through passive sharing over 10 years, given that Maxis and U Mobile do not have significant overlap in 3G coverage, except in mainly urban areas such as the Klang Valley and Johor Baru.

'Also, U Mobile does not have a nationwide 2G network, relying instead on an existing domestic 2G network roaming arrangement with Celcom, which will expire by Sep 2013.

'DCF fair value maintained at RM5.65. As a defensive play with purely domestic mobile operations, we maintain our Outperform call on Maxis amid global external uncertainties,' it said.

RHBInvest Research Highlights 24th October 2011

Stock Name: PETGAS
Company Name: PETRONAS GAS BHD

Research House: RHB

Price Call: BUY

Target Price: 14.50

24th October 2011

 

Top Story: HSL ' What flows above and beneath                     Outperform

Visit Note

''       The RM452m Phase 1 of the Kuching City Centralised Sewerage System project has hit the half-way mark and HSL is in a good position to negotiate for Phase 2 of the project worth about RM800m.

 

Sector Call

 

Oil & Gas: Petronas opens up to unlicensed players?                Neutral

Sector Update

Petronas Gas:  Fair value at RM14.50                                         Outperform

Dialog: Fair value at RM3.51                                                         Outperform

Kencana: Fair value at RM2.21                                                     Market Perform

SapuraCrest:  Fair value at RM3.36                                             Market Perform

Petronas Chemicals: Fair value at RM5.62                               Market Perform

Dayang: Fair value at RM1.55                                                       Market Perform

Wah Seong: Fair value at RM1.87                                                Market Perform

Petra Perdana:  Fair value at RM0.60                                          Market Perform

KNM: Fair value at RM0.70                                                            Underperform

MMHE: Fair value at RM3.93                                                         Underperform

RH Petrogas: Fair value at S$0.75                                              Outperform

 

Corporate Highlights

 

Axiata: Idea weighed down by finance costs                                Market Perform

Company Update

''       Axiata's associate, Idea Cellular reported 1HFY03/12 core net profit of INR3,173m (-16.7% yoy), which came in below expectations, accounting for only 38% of consensus full-year estimates. The market had expected 9.5% net profit growth to INR4,171m. The key variance was higher interest expenses.

 

Maxis: Hops onto sharing bandwagon                                          Outperform

News Update

''       Maxis and U Mobile entered into an agreement to share Maxis' 3G radio access network (RAN), for an initial period of 10 years and will cater for long-term evolution (LTE) when the spectrum becomes available.

 

Proton: Big in China                                                                        Market Perform 

News Update 

''       Proton has entered into an MOU with Hawtai Motor Group ("Hawtai") to evaluate the possible establishment of a joint venture in China , to invest in product development via joint designing and development cost sharing.

 

MBM Resources: MOU to sell 20% of Daihatsu Malaysia         Underperform 

News Update 

''       MBM entered into an MOU with Mitsui for the sale of an additional 20% in Daihatsu ( Malaysia ) for RM75m cash. DMSB is the distributor of Daihatsu commercial vehicles and is also a dealer of Hino commercial vehicles and Perodua vehicles. DMSB is currently a 71.5% subsidiary of MBM with Mitsui holding 10% and will remain a subsidiary (51.5%) following the stake disposal.

 

Daibochi: Within expectations                                                       Market Perform

3QFY11 Results

''       Daibochi reported 9MFY11 net profit of RM14.2m, in line with our expectations but below consensus, accounting for 73% and 66% of our and consensus full-year estimates respectively.

HLIB Research 24 October 2011 (Axiata; Maxis; Economics; Traders Brief)

Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD

Research House: HLG

Price Call: BUY

Target Price: 5.41

Stock Name: MAXIS
Company Name: MAXIS BERHAD

Research House: HLG

Price Call: HOLD

Target Price: 5.39

Axiata (BUY)

Celcom Breaking Up with U Mobile

'''' U Mobile has entered into Malaysia's first active 3G radio access network sharing agreement with Maxis.

'''' In a separate announcement, Celcom and TM jointly update that they have yet to conclude and finalize on the strategy in providing the fixed mobile convergence (FMC) solution.

'''' Comments: We think that this announcement marks the end of Celcom's 4-year relationship with U Mobile.

'''' As a result, Celcom will lose a long term revenue stream from U Mobile but we opined the impact to Axiata is negligible.

'''' In response to competition, we also foresee a high probability that Celcom would expand the current scope of collaboration with DiGi to include active 3G and LTE network sharing the near future.

'''' We update our estimates by tuning down Celcom's revenue very marginally starting from 3Q12 assuming U Mobile fully cutover to Maxis by then. Hence, our FY12 and FY13 EPS are revised by -1% respectively. Also, we updated Idea's market price used in SOP whereby it has decreased about 7% since our last report.

'''' SOP-based target price is lowered from RM5.48 to RM5.41 mainly due to lower market price for Idea.

''

Maxis (HOLD)

Maxis & U Mobile: "Yes, I do!"

'''' Maxis and U Mobile entered into a landmark multi-billion ringgit agreement to share Maxis' 3G radio access network (RAN) making the partnership the first active 3G RAN agreement to be deployed in Malaysia.

'''' The agreement also encompasses LTE sharing when the spectrum becomes available and rolled out.

'''' The agreement will be for a period of 10 years with an option to extend for up to another 2 years.

'''' Comments: Maxis has successfully wooed U Mobile by offering 3G domestic roaming (DR) on top of 2G DR which U Mobile is currently enjoying through tie-up with Celcom Axiata since June 2007.

'''' Win-win strategy: Maxis to enjoy long term revenue stream and increase asset utilization and productivity; U Mobile to avoid CAPEX at locations with low business viability (Sabah and Sarawak) while able to offer nationwide coverage.

'''' We update our estimates to reflect contribution from this collaboration assuming U Mobile fully cutover to Maxis from Celcom by 3Q12. As a result, our FY12 and FY13 EPS estimates are revised by +1.2% and +2.6% respectively.

'''' Our DDM-derived TP of RM5.39 remains unchanged.

''

September Inflation Report

'''' CPI growth inched up marginally to 3.4% yoy in Sep 2011 (Aug: +3.3% yoy), higher than the consensus estimate of 3.3% on account of faster annual increase in food prices (+5.0% yoy; Aug: +4.6% yoy).''

'''' The uptick in inflation rate was due entirely to base effect. Mom basis, the CPI growth had remained stable at 0.2% for the third consecutive month. However, the ongoing flood in Thailand and the upward revision in Thai rice may cause food prices to remain high in 4Q.

'''' As in the past, we expect the next round of subsidy rationalisation to be implemented in December. All-in-all, we retain our forecast that the CPI growth will average 3.2% in 2011.

'''' We expect inflation to ease marginally to 3% in 2012 driven by government's subsidy removal exercises and the new salary scheme for civil servants and pensioners.

'''' We expect BNM to hold the OPR at 3.00% until end-2012 as it focuses on growth agenda given the recent external developments while inflation is on moderation trend.

''

More profit taking near 1470 levels

'''' Asian markets and Bursa Malaysia are likely to open higher today, driven by Dow's strong gains last Friday amid optimism of a euro debt-crisis solution and a possible QE3 by the Fed.

'''' We continue to advocate risk-averse investors to sell into rally or trim positions when KLCI reaches our envisaged stiff resistance targets near 1470 (15-w SMA) and 1495 (20-w SMA). Immediate base building supports for pullbacks are 1411 (30-d SMA), 1405 (mid Bollinger band) and the 1400 psychological levels.

QL: Medium term upside targets at RM3.15-3.30

'''' As weekly technical readings are on the mend, QL's medium term resistance targets are at RM3.15 (38.2% FR) and RM3.30 (23.6% FR). Support levels are RM2.75 (mid Bollinger band-daily) and RM2.63 (lower Bollinger band-weekly). Accumulate now but stop loss below RM2.63.

Proposed Renounceable Two-Call Rights Issue

Stock Name: MELEWAR
Company Name: MELEWAR INDUSTRIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 0.59

3QFY11 Results: On Track to Meet Full Year's Target

Stock Name: AMEDIA
Company Name: ASIA MEDIA GROUP BERHAD

Research House: TA

Price Call: BUY

Target Price: 0.32

OSK Research maintains trading buy on Pantech

Stock Name: PANTECH
Company Name: PANTECH GROUP HOLDINGS BHD

Research House: OSK

Price Call: TRADING BUY

Target Price: 0.57

KUALA LUMPUR: OSK Research is maintaining a trading buy on Pantech Grpup Holdings at 57 sen. Its last closing price was 47 sen.

It said on Monday, Oct 24 Pantech's 1HFY12 numbers came in below its estimation and only made up 35% of its full year earnings projection.

'But we still remain positive on its development as we can see improvement from its manufacturing division indicating the stainless steel pipe mill is progressing on the right track,' it said.

OSK Research said the negative market sentiment and weakening economy backdrop prompted it to slash down its valuation parameter to 5.0 times FY12 EPS from 7.0 previously.

'Nevertheless, we still maintain our Trading BUY recommendation as we believe that Pantech's performance will improve in 2HFY12,' it said.

OSK keeps 'buy' call on Pos

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: OSK

Price Call: BUY

Target Price: 4.12

OSK Research is maintaining its "buy" recommendation on Pos Malaysia Bhd, given the group's positive synergies with DRB-Hicom Bhd and its collaboration with Bank Muamalat Malaysia Bhd.

OSK Research said in a research note today: "We maintain our earnings forecast at this juncture because we believe the group will be unveiling more collaboration efforts with DRB-HICOM going forward."

The research firm said the tie-up with Bank Muamalat and Uni-Asia Life Insurance would boost Pos Malaysia's retail service and it would leverage on DRB's Kuala Lumpur Airport Services (KLAS) to enhance its PosLaju courier services.

OSK Research also highlighted the potential for DRB to unlock the value of the five land plots owned by Pos Malaysia through redevelopment.

The research firm said it is maintaining the "buy" call on Pos Malaysia with a fair value (FV) of RM4.12. -- Bernama

OSK maintains 'buy' call on Ajiya

Stock Name: AJIYA
Company Name: AJIYA BHD

Research House: OSK

Price Call: BUY

Target Price: 1.94

OSK Research Sdn Bhd has lowered Ajiya Bhd's net profit forecast by 12.1 per cent and 11 per cent for the financial years 2011 (FY11) and 2012, respectively.

"Ajiya reported nine-month FY11 results that were below our forecast," OSK said in a research note today.

It said Ajiya's revenue and net profit dwindled quarter-on-quarter by 14.5 per cent and 62.1 per cent, respectively, due to slower sales and rising raw material costs.

The research firm said the company continued to face challenges of rising input costs.

Despite lowering the net profit forecast, OSK maintained the positive view on Ajiya for FY12. It also maintained its "buy" recommendation with a lowered fair value (FV) to RM1.94 from RM2.17.

OSK said: "We still think Ajiya is a "buy", given the still significant price upside to our FV, and we still think it should benefit from the projects under the Economic Transformation Programme, which the company has been gearing up for since earlier this year." -- Bernama

Genting Malaysia price estimate raised

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: UOB

Price Call: BUY

Target Price: 3.95

Genting Malaysia Bhd rose in Kuala Lumpur trading after its share-price estimate was increased at UOB Kay-Hian Holdings Ltd, which cited its overseas earnings growth prospects.

The stock climbed 1.1 percent to RM3.71 at 9:31 a.m. local time, set for its highest close since Oct. 13.

The share estimate was raised to RM3.95 from RM3.79, UOB-Kay Hian wrote in a report today. -- Bloomberg