HAIO - Price Target News

Stock Name: HAIO
Company Name: HAI-O ENTERPRISE BHD
Research House: RHB

KUALA LUMPUR: RHB Research has reduced its fair value (FV) of Hai-O to RM5.20 from RM5.30 after its earnings adjustment.

It said on Monday, March 22 the revised fair value was based on an unchanged 11.5 times CY10 EPS, a 20% discount to its consumer division PE of 14.5 times.

"Together with attractive net dividend yield of 4%-6% per annum, we maintain our Outperform recommendation for the stock," it said.

RHB Research said Hai-O's 9MFY04/10 core net profit of RM56.0 million (+52.7% YoY) was in line with its and consensus expectations, accounting for 71% of full year net profit forecasts respectively.

"We believe this to be in line as 4Q is generally the strongest quarter for the group, accounting for 30-36% of historical full year forecasts," it said.

ALAM - Price Target News

Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: KENANGA

Alam Maritim Bhd
(March 19, RM1.80)
Maintain buy with an unchanged target price of RM2.25: Alam Maritim announced last Thursday that it was awarded a contract worth about RM19 million by an established offshore installation & construction contractor (OIC) for the provision of a ""launch barge''.

The primary period of the contract is 45 days (inclusive of mobilisation and demobilisation period) while options for weekly extension will by mutual agreement; exercised seven days prior to option period. The barge is tentatively set to be delivered for on-hire on March 27.

The ""launch barge'' is a normal barge, similar to a flat floating bed that is utilised to carry offshore structures to the site where they are to be installed (launched). The barges typically need to be towed by AHTS vessels as they have no engines installed.

Implied charter rates are high, at around RM400,000 (about US$120,000) per day based on the contract worth (RM19 million) and period (45 days).

The rates fall within the guided US$125,000 per day rates Alam previously paid to rent a pipe-lay barge from external parties for their last OIC projects. Hence, we gauge the market for barges remains intact, buoyed by the scarce supply of such assets in the region.

Barge rented from JV partner Swiber, hence net margins are a minimal 15%. This translates to a net profit of around RM2.9 million for the overall project.

Nevertheless, the high per day charter rates highlight how lucrative the OIC market is and once they receive their pipe-lay barge (50:50 JV with Swiber); guided by mid-2010; Alam's earnings are set for new heights. At present, our estimates have not incorporated the potential earnings of the pipe-lay barge.

We maintain a buy recommendation and target price of RM2.25. Earnings estimates unchanged at this juncture given the minimal net earnings of the contract.

However, we do see value in Alam's bid to diversify itself from being the "run-of-the-mill" offshore marine vessel provider. Valuations remain attractive at 7.9 times FY2010 earnings versus peer's average of 10.9 times. - Kenanga Research, March 19


This article appeared in The Edge Financial Daily, March 22, 2010.

IJM - Price Target News

Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: AFFIN

IJM Corp announced that Road Builder (M) Bhd, a wholly-owned subsidiary, has accepted the Letter of Award(LOA) for Projek Sambungan Lebuhraya Sungai Besi for a fixed price lump sum of RM600 million.

With the RM600m contract, outstanding order book is now in the region of RM4.2 billion. The issue of the LOA is well within expectations and was in fact, long overdue.

Affin recommends a BUY for IJM at RM5.51.

IJM - Price Target News

Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its Neutral call on IJM Corp at RM4.70 after it had accepted the Letter of Award for the CONSTRUCTION [] of the Besraya Elevated Expressway for a fixed price lump sum of RM600 million. Construction period is 36 months.

The research house said on Monday, March 22 this award does not come in as a surprise given that IJM had already received a letter from the Ministry of Works in February stating of the intention to extend the Sg Besi Highway. The contract value of RM600 million was however slightly lower than the previous guidance of RM649 million (-7.6%).

Besraya Elevated Expressway is an extension of the Sungai Besi Highway by 12.3km. The extended portion will be an elevated highway commencing at the previously abolished Salak Jaya toll and will connect to Jalan Istana and the Middle Ring Road 2 (MRR2).

"We have previously factored in the Besraya Elevated Expressway into our FY11-12 earnings projections. We now adjust down our FY11-12 earnings by an insignificant 0.2% to account for the slightly lower than expected project value.

"Our sum of parts (SOP) based TP of RM4.70 is unchanged, implying CY10 PER of 16.8x. In our view, valuations do not appear compelling as large cap contractors are trading at 14.5x CY10 earnings. Maintain NEUTRAL," it said.

SPSETIA - Price Target News

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: OSK

KUALA LUMPUR: OSK Research maintains its Take Profit call on SP Setia with a current year (CY10) target price of RM3.59 based on 1.69 times CY10 price/ net tangible assets. It said on Friday, March 19 that SP Setia's 1QFY10 annualised results came in 29% below its expectation and 23% below that of consensus. "This was primarily due to the seasonal slower progress billings in the quarter as well as much lower profit from investment activities," it said. OSK Research said the 1QFY10 year-on-year turnover and net profit improved significantly by 22.5% respectively on the back of much improved new property sales. Quarter-on-quarter turnover and net profit, however, fell by 8% and 33% respectively. These were mainly due to certain elements of seasonal factor. However, progress billings from its recent impressive improvement in new property sales will likely to pick up more steam in the later quarters, it maintained its earnings forecast for now, OSK Research said.

WASEONG - Price Target News

Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform on Wah Seong Corp Bhd at RM2.52 with a target price of RM2.96. The research house said Wah Seong is making progress with its takeover talks with both Orleans and Socotherm. "We now understand that the Socotherm deal may be completed earlier. Wah Seong has sufficient funds to finance the acquisitions and has ruled out a fundraising exercise. As at December 2009, the group had cash reserves of RM471 million," it said. CIMB Research said the acquisition plans, assuming they pan out, would give Wah Seong access to a string of new markets, namely Nigeria, Angola, Brazil, the Middle East and the Gulf of Mexico, thereby narrowing the gap between itself and Bredero, whose annual sales are in excess of US$1 billion. "Apart from the M&A efforts, we expect newsflow to also remain active on the order book front as Wah Seong awaits the awards of pipe coating contracts from clients in Australia and Papua New Guinea. "We maintain our forecasts and target price of RM2.96, pegged to an unchanged target market P/E of 15x. Wah Seong remains an OUTPERFORM, premised on the potential re-rating triggers of an expanding order book, and M&As," it said.

IJMLAND - Price Target News

Stock Name: IJMLAND
Company Name: IJM LAND BERHAD
Research House: KENANGA

IJM Land Bhd (March 18, RM2.30)
Initiating coverage with buy and RM2.79 target price: We like IJM Land given its promising growth prospects (two-year CAGR of 75%; three-year CAGR 32%). It is an alternative proxy to Malaysia's property sector with a geographically diversified strategic landbank with large GDV (gross development value) pipeline.

There is also positive news flow on the stock from headline projects like The Light, Changchun @ China as well as the potential of the company benefiting from foreign investors' re-entry given its low foreign shareholding levels currently.

Its fair value of RM2.79 is based on diluted (ex-warrants only) sum-of-parts (SOP) revised net asset value (RNAV) excluding Canal City. Our RNAV conservatively assumes overall 14% net margins, 12% WACC (weighted average cost of capital) rates and longer project durations of more than five years.

IJM Land is currently trading at FY11 PER of 16 times and 1.5 times PBV (price-to-book value). Our fair value provides 22% upside to current share price (RM2.28 on March 17).

IJM Land owns one of the largest landbank (more than 7,600 acres) with estimated RM25 billion GDV in Malaysia. Sizeable lands are in key property growth regions like the Klang Valley, Penang island, Johor Bahru (JB), Seremban, Sarawak and Sabah.

IJM Land is one of the few developers with expertise in almost all property segments; ideal for capitalising on all property cycles. A promising future lies ahead for IJM Land given two large pipeline projects - The Light and Sebana Cove.

The Light - Phase I (residential component) of RM1.2 billion GDV is enjoying brisk sales. The Light Linear (Linear) and The Light Point has achieved 85% and 70% take-up rate.

The residential portion should yield around 35% gross margins. We do expect future margin and GDV enhancement given ability to price up. The Light's residential component makes up 5% of our revised asset value.

There's also the China development worth RM500 million in GDV. IJM Land and Talam Corp Bhd (50:50 JV) are to develop a high-end condominium cum retail podium development along Xian Road, Changchun, Jilin Province.

Changchun is one of China's largest automotive cities. Site is located along the city's prime main road and has obtained development approvals.

The balance sheet is strong. Current net gearing stood of 0.25 times is healthy versus sector range of 0.2 times to 0.4 times. Ample room to gear up for reclamation of The Light-Phase II, given large cash pile of RM414 million as at Dec 31, 2009 is more than sufficient to cover estimated reclamation cost of RM224 million.

We estimate between RM1 billion to RM1.3 billion sales for FY10-11E, implying a FY10-11E net profit of RM104 million (+103% y-o-y) to RM161 million (+55% y-o-y).

Unbilled sales remain strong at RM800 million (excluding around RM200 million bookings sales) as at Dec 31, 2009 with sales touching the RM1 billion mark. Key earnings drivers are its townships such as Seremban 2, The Light and en bloc sale of AEON Mall @ Melaka. - Kenanga Research, March 18 This article appeared in The Edge Financial Daily, March 19, 2010.

MPI - Price Target News

Stock Name: MPI
Company Name: MALAYSIAN PACIFIC INDUSTRIES
Research House: RHB

Semiconductor sector
Maintain overweight; top pick Unisem with RM3.07 fair value: We believe the semiconductor sector is poised for a stronger recovery in 2010 given stronger outlook for key product segments (ie mobile PCs, smart phones and LCD tablets) as well as new electronic gadgets/applications, as these will drive chips demand going forward.

We expect stronger silicon wafer demand ahead. Already, Gartner expects 2010 silicon wafer demand to increase 29.5% year-on-year (versus -18% y-o-y in 2009) largely due to production ramp-up by major foundries to replenish the low inventory level plus anticipation of higher chips demand ahead.

Given the sharp pull-back in capital expenditure (capex) in 2009 (-45% y-o-y) as well as stronger chips demand ahead, we expect capex spending to increase significantly over the next two years.

Hence, against the backdrop of improved earnings visibility and stronger chip sales in 2010, we are reiterating our overweight stance on the sector. Our top pick for the sector is Unisem (M) Bhd.

Unisem is riding on Chengdu's growth. Its management expects FY10 revenue contribution from Unisem Chengdu to increase to 35% before rising to over 50% in FY11 (from 20% in FY09).

The company expects Chengdu's FY10 earnings to double on the back of higher capacity and margin expansion. Hence, against the backdrop of improved earnings visibility and stronger-than-expected chip sales in 1Q10 and extending into 2Q10, we are reiterating our outperform call on the stock with an unchanged fair value of RM3.07.

We believe Malaysian Pacific Industries Bhd's (MPI) medium-term earnings visibility remains bright given still-resilient chips demand from China. We maintain our outperform call with fair value of RM8.15, which is based on unchanged 15 times calendar year 2010 PER (price-to-earnings ratio).

In 2010, we believe chip players would likely focus on specific segments in which they have technological advantage to improve its profit margins. We are positive on the latest development as this would benefit chip assemblers as margins for Unisem and MPI, which would likely remain resilient, supported by its customers' higher-margin products. - RHB Research Institute, March 18 This article appeared in The Edge Financial Daily, March 19, 2010.

UNISEM - Price Target News

Stock Name: UNISEM
Company Name: UNISEM (M) BHD
Research House: RHB

Semiconductor sector
Maintain overweight; top pick Unisem with RM3.07 fair value: We believe the semiconductor sector is poised for a stronger recovery in 2010 given stronger outlook for key product segments (ie mobile PCs, smart phones and LCD tablets) as well as new electronic gadgets/applications, as these will drive chips demand going forward.

We expect stronger silicon wafer demand ahead. Already, Gartner expects 2010 silicon wafer demand to increase 29.5% year-on-year (versus -18% y-o-y in 2009) largely due to production ramp-up by major foundries to replenish the low inventory level plus anticipation of higher chips demand ahead.

Given the sharp pull-back in capital expenditure (capex) in 2009 (-45% y-o-y) as well as stronger chips demand ahead, we expect capex spending to increase significantly over the next two years.

Hence, against the backdrop of improved earnings visibility and stronger chip sales in 2010, we are reiterating our overweight stance on the sector. Our top pick for the sector is Unisem (M) Bhd.

Unisem is riding on Chengdu's growth. Its management expects FY10 revenue contribution from Unisem Chengdu to increase to 35% before rising to over 50% in FY11 (from 20% in FY09).

The company expects Chengdu's FY10 earnings to double on the back of higher capacity and margin expansion. Hence, against the backdrop of improved earnings visibility and stronger-than-expected chip sales in 1Q10 and extending into 2Q10, we are reiterating our outperform call on the stock with an unchanged fair value of RM3.07.

We believe Malaysian Pacific Industries Bhd's (MPI) medium-term earnings visibility remains bright given still-resilient chips demand from China. We maintain our outperform call with fair value of RM8.15, which is based on unchanged 15 times calendar year 2010 PER (price-to-earnings ratio).

In 2010, we believe chip players would likely focus on specific segments in which they have technological advantage to improve its profit margins. We are positive on the latest development as this would benefit chip assemblers as margins for Unisem and MPI, which would likely remain resilient, supported by its customers' higher-margin products. - RHB Research Institute, March 18 This article appeared in The Edge Financial Daily, March 19, 2010.

CIHLDG - Price Target News

Stock Name: CIHLDG
Company Name: C.I. HOLDINGS BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research maintains a Buy on CI Holdings with the potential re-rating catalysts being additional production capacity, and an increasingly marketable product line. "We note that CIH may be an effective indirect exposure to PepsiCo given that PepsiCo brands make up 85% of CIH's product portfolio and 80% of the company's revenue," it said in a research note on Friday, March 19. CIMB Equities Research maintains its earnings forecasts and target price of RM2.63, pegged to an unchanged 20% discount to its 15 times target market P/E given the stock's relatively low liquidity. CIH remains a BUY. CIH's Bangi plant is expected to hit maximum production in at least five years but Tropicana's wild success has shortened it to two years. To address the capacity constraint and allow for future growth, the company is now installing a RM45 million new production line. The new line will have the capacity to manufacture about RM300 million worth of products. "We maintain our earnings forecasts and target price of RM2.63, pegged to an unchanged 20% discount to our 15x target market P/E given the stock's relatively low liquidity," it said.