Kencana shares up on firm 1Q earnings, MIDF Research ups TP to RM3

Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD

Research House: MIDF

Price Call: BUY

Target Price: 3.00

KUALA LUMPUR (Dec 15): KENCANA PETROLEUM BHD [] shares edged up on Thursday after its first quarter earnings rose 59.5% to RM83.54 million from RM52.35 million a year ago, underpinned by the full contribution from Allied Marine & Equipment Sdn Bhd.

At 9.25am, Kencana was up two sen to RM2.81 with 164,000 shares traded.

Its revenue increased by 69% to RM569.92 million from RM336.96 million while earnings per share were 4.2 sen compared with 3.16 sen.

MIDF Research in a note Thursday said that Kencana's 1QFY12 earnings were above expectations, the research house made no changes to its profit estimates, awaiting the completion of its merger deal with SapuraCrest.

'Nonetheless, we revised our target price to RM3 (which is at par with the offer price for the merger deal) from RM2.70 previously to reflect better-than-expected earnings.

'Our TP implied 21.1 times PER12, which is 1 times multiple above its historical average since 2007,' it said.

Kulim to privatise QSR and KFC?

Stock Name: KULIM
Company Name: KULIM (M) BHD

Research House: AMMB

Price Call: BUY

Target Price: 4.25

M'sian brewed Asahi Super Dry coming to town soon BUY

Stock Name: CARLSBG
Company Name: CARLSBERG BREWERY MALAYSIA BHD

Research House: AMMB

Price Call: BUY

Target Price: 8.30

RWNY's second phase to open on 16 Dec

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: AMMB

Price Call: BUY

Target Price: 4.30

Putting The Worst Behind

Stock Name: MISC
Company Name: MISC BHD

Research House: OSK

Price Call: BUY

Target Price: 7.23

ECM Libra Research downgrades Gamuda to Sell

Stock Name: GAMUDA
Company Name: GAMUDA BHD

Research House: ECMLIBRA

Price Call: SELL

Target Price: 2.94

KUALA LUMPUR (Dec 14): ECM Libra Investment Research has downgraded GAMUDA BHD [] to Sell from Hold previously, and said the company's share price was above the research house's SOP valuation of RM2.94, which itself was subject to significant downside risk.

The research house said Gamuda's 1QFY12 results scheduled to be announced on Dec 16 were expected to be in line with expectations.

However, it cautioned investors that the risk of the group's exposure to the Vietnam property venture and SPLASH is substantial, at 43% of group RNAV per share.

'The Vietnamese property market continues to show signs of weakness as buyers face more difficulties in getting financing amid local credit tightening,

'Due to the water asset consolidation impasse in Selangor, Gamuda's 40%-owned associate Syarikat Pengeluar Air Selangor Holdings Bhd (SPLASH) has about RM1 billion of receivables from cash-strapped Syarikat Bekalan Air Selangor Bhd (Syabas) owing to the deferred 37% tariff rate hike in 2009,' it said in a note Wednesday.

''

Earnings lift for Aeon Credit Service

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 7.00

AEON Credit Service (M) Bhd
(Dec 14, RM 6.23)

Maintain buy with revised target price of RM7 from RM5.70: Our net profit forecasts have been raised after factoring in lower operating expenses (mainly from provision of doubtful debts), which more than offset the smaller increase in revenue contributions from the personal financing segment (on lower blended finance charges) and credit card business (due to lower outstanding credit balance).

We are keeping our FY12F to FY14F loan financing assumptions at RM1.5 billion (+27.8% year-on-year [y-o-y]), RM1.7 billion (+12.4% y-o-y) and RM2 billion (+16.4% y-o-y) as demand for microfinancing products is expected to remain steady despite the uncertain economic outlook.

During the 2008/09 global financial crisis, the group posted loan growth of 8.4% (and non performing loans of 1.8%) in FY10 ended February.

Results for 3QFY12, to be released this Tuesday, should come in stronger vis-''-vis 3QFY11 net profit of RM16 million and 2QFY12's RM23.5 million. The most recent quarter could have benefited from spillover festive spending for Hari Raya Aidilfitri (which fell at end-August).

Our revised net profit projections imply annual growth rates of 40.5% (to RM89 million) in FY12 and 22% (to RM108.6 million) in FY13.

This is based on a higher CY12 target price earnings ratio of eight times (seven times previously) after considering the expanding size of ACSM (from RM300 million to RM751 million in market cap as net profit posted a five-year compound annual growth rate of 35.2%) since its listing in 2007.

Our new target price offers a potential upside of 17%, including FY13F net dividend yield of 5%. Maintain 'buy'. ' Hwang DBS Vickers Research, Dec 14

Is trying time over?

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD

Research House: MIDF

Price Call: SELL

Target Price: 3.29

HLIB Research 14 Dec 2011 (Plantations; SP Setia; Mah Sing; Traders Brief) (Part 2/2)

Stock Name: SPSETIA
Company Name: SP SETIA BHD

Research House: HLG

Price Call: HOLD

Target Price: 3.90

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD

Research House: HLG

Price Call: BUY

Target Price: 2.37

Plantations (Neutral)

Palm oil inventory declines in Nov 11

'''' Palm oil inventory in Nov 11 declined by 1.5% mom to 2.07m tonnes, mainly on the back of a 14.8% mom decline in production that more than offset lower domestic consumption and exports.

'''' Production declined by 14.8% mom to 1.63m tonnes from a two-year high of 1.91m tonnes in Oct 11, mainly due to: (1) The end of peak production cycle; and (2) Adverse weather that affected harvesting of palm oil. Exports, on the other hand, declined by 9.9% mom to 1.66m tonnes, led by a 17.9%, 20.8%, and 14.1% mom decline from China, India, and Netherlands respectively.

'''' On a yoy basis, palm oil inventory rose by 26.5% mainly on: (1) Higher beginning inventory; and (2) A 15.5% increase in production (2010's production was hit by La Nina), which more than offset a 10.7% increase in exports.

'''' We are keeping our average CPO price assumption of RM3,000/tonne for 2012-13 as:

1. We expect palm oil prices to come off in 2H12 as La Nina is expected to subside (by end-2Q12), which would bring palm oil production higher; and
2. The European debt crisis, which is expected to remain long drawn over the medium term, which may affect demand for vegetable oils including palm oil.

'''' Given the rich valuation of the plantation stocks vis-''-vis the regional peers, we are maintaining our Neutral stance on the plantation.

''

SP Setia (HOLD)

Beranang land update

'''' SP Setia have hit a snag in their Beranang land acquisition, with the Vendor refusing to extend the deadline of the conditions precedent ("CP") for the deal. The original deadline was 1H FY12.

'''' SP Setia is currently seeking legal advice and will seek the appropriate relief from the court, if necessary.

'''' A worst-case scenario would see them missing on the opportunity to develop an RM3.5bn GDV mixed residential township and break into the affordable housing in a big way.'' Nonetheless, they still have their ongoing acquisition for 673 acres of land in nearby Semenyih.

'''' Even if that were to occur, it would not be sufficient to affect our earnings forecasts for SP Setia.

'''' Maintain HOLD and target price of RM3.90, which is the offer price.

''

Mah Sing (BUY)

Pekeliling Update

'''' Mah Sing has hit a snag in its 60/40 Joint Venture Agreement ("JVA") with Asie and Usaha Nusantara ("the Vendors") over the 4.08-acre land acquisition at Pekeliling.''

'''' Recall that under the JVA, Mah Sing was to developed an RM900m mixed development on the land.

'''' The Vendors are arguing that the JVA has lapsed, while Mah Sing is claiming that it has not.''

'''' Impact and timeline of this potential dispute are uncertain given lack of details.'' But even in the event of a worst-case scenario of the Pekeliling JV being called off, we believe that impact will be minimal given their strong project pipeline and land banking activities.

'''' No change to our earnings forecasts and positive outlook for Mah Sing. Maintain BUY and RNAV-based price target of RM2.37 (30% discount to RNAV).

''

KLCI: Critical support near 1450 pts''

'''' Volatility is here to stay for a while as near term market trend will continue to be dictated by headlines in Europe.

'''' Immediate crucial support is the 50-d SMA or uptrend line at 1450. A breakdown below 1450 would mean that the rally from 1311 low (Sep 26) is likely exhausted and will head toward lower Bollinger band (1426). Resistance levels are 10-d SMA (1476), 38.2% FR (1487) and 200-d SMA (1502).

''

RSAWIT: Anticipating a technical rebound''

'''' Currently, RSAWIT is trading at 0.75x P/BV against peers' average of 1.48x. The recent correction from RM1.04 to RM0.83 has nearly reached the 38.2% FR level and we think a temporary base has been formed. Based on hourly chart, technical indicators are rebounding from oversold positions and traders with higher risk appetite may start to accumulate before stronger rebound towards RM1.00-1.04. Immediate supports are RM0.855 (30-d SMA), RM0.83 and RM0.81 (lower Bollinger band). Cut loss below RM0.80

IAG May be Keen to Acquire a Stake in Kurnia's KIMB

Stock Name: KURASIA
Company Name: KURNIA ASIA BHD

Research House: TA

Price Call: BUY

Target Price: 0.65