February 8, 2012
FY11F earnings expected to be in line
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: AMMB | Price Call: BUY | Target Price: 8.00 |
Beyond near-term headwinds
Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Company Name: AXIATA GROUP BERHAD
| Research House: AMMB | Price Call: BUY | Target Price: 6.08 |
Not Surprised by MARC's Rating Watch
Stock Name: KINSTEL
Company Name: KINSTEEL BHD
Company Name: KINSTEEL BHD
| Research House: OSK | Price Call: TRADING BUY | Target Price: 0.66 |
Calm on MARC Downgrade
Stock Name: PERWAJA
Company Name: PERWAJA HOLDINGS BERHAD
Company Name: PERWAJA HOLDINGS BERHAD
| Research House: OSK | Price Call: BUY | Target Price: 1.65 |
Fraser & Neave Holdings: Maintain Sell - Coping with life after Coca-Cola
Stock Name: F&N
Company Name: FRASER & NEAVE HOLDINGS BHD
Below expectations. 1QFY12 recurring net profit plunged 62% YoY, battered by the massive flood in Thailand last October, coupled with the cessation of the Coco-Cola franchise. 1QFY12 recurring net profit of RM41.6m was below our expectations and made up just 13% of our and consensus full-year estimates. We have reduced our net profit forecasts for FY12 and FY13 by 25% and 5%. Sell maintained with a lower TP of RM15.40 on the back of the earnings downgrade (16.5x CY13 target PER vs 16x previously, on higher peer valuations).
Maybank Research 8 Feb 2012
Click here for full report
Company Name: FRASER & NEAVE HOLDINGS BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 15.40 |
Below expectations. 1QFY12 recurring net profit plunged 62% YoY, battered by the massive flood in Thailand last October, coupled with the cessation of the Coco-Cola franchise. 1QFY12 recurring net profit of RM41.6m was below our expectations and made up just 13% of our and consensus full-year estimates. We have reduced our net profit forecasts for FY12 and FY13 by 25% and 5%. Sell maintained with a lower TP of RM15.40 on the back of the earnings downgrade (16.5x CY13 target PER vs 16x previously, on higher peer valuations).
Maybank Research 8 Feb 2012
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Wah Seong Corporation: Maintain Hold Eyes Congo palm oil venture
Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Maintain Buy with a RM3.10 target price. We reckon WSC's venture into palm oil operations in Congo is part of the Group's agenda to anchor its non-O&G operations once the O&G business spins off from the Group. While this could provide long-term growth prospects, country and operation risks are the concerns, for little is known of Congo's suitability for oil palm cultivation, its economic strength and legislation stability. That aside, we remain positive on its pipe-coating business. Our TP is based on 14x 2012 EPS.
Maybank Research 8 Feb 2012
Click here for full report
Company Name: WAH SEONG CORPORATION BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.10 |
Maintain Buy with a RM3.10 target price. We reckon WSC's venture into palm oil operations in Congo is part of the Group's agenda to anchor its non-O&G operations once the O&G business spins off from the Group. While this could provide long-term growth prospects, country and operation risks are the concerns, for little is known of Congo's suitability for oil palm cultivation, its economic strength and legislation stability. That aside, we remain positive on its pipe-coating business. Our TP is based on 14x 2012 EPS.
Maybank Research 8 Feb 2012
Click here for full report
Hock Seng Lee: Maintain Buy Take another look
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Maintain Buy. HSL's share price underperformed in 2011, falling 23% (+13% 2012-YTD). At current levels, the stock trades at 8.4x one-year forward PER, a level not seen since 2H 2009. Near-term earnings will be supported by a decent RM1b outstanding order book. We recommend that investors reposition for a pick-up in infrastructure construction activities in Sarawak. Maintain Buy with an unchanged RM2.10 target price, pegged to 12x 2012 earnings.
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Company Name: HOCK SENG LEE BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 2.10 |
Maintain Buy. HSL's share price underperformed in 2011, falling 23% (+13% 2012-YTD). At current levels, the stock trades at 8.4x one-year forward PER, a level not seen since 2H 2009. Near-term earnings will be supported by a decent RM1b outstanding order book. We recommend that investors reposition for a pick-up in infrastructure construction activities in Sarawak. Maintain Buy with an unchanged RM2.10 target price, pegged to 12x 2012 earnings.
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Genting Malaysia: Maintain Hold Hasta la vista Miami (See you later Miami)
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Better luck next year. As the 'destination resort' bill for 2012 was all but terminated last Friday, Genting Malaysia (GENM) is unlikely to receive a casino license in Miami this year. The bill may be reintroduced in 2013 but with the overall unemployment rate in the United States falling to a three-year low, its appeal will likely diminish. Our RNAV-based TP incorporates 24 sen/sh cost of the Miami property, without the earnings potential. Maintain Hold and RM3.88 TP for now.
Maybank Research 8 Feb 2012
Click here for full report
Company Name: GENTING MALAYSIA BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.88 |
Better luck next year. As the 'destination resort' bill for 2012 was all but terminated last Friday, Genting Malaysia (GENM) is unlikely to receive a casino license in Miami this year. The bill may be reintroduced in 2013 but with the overall unemployment rate in the United States falling to a three-year low, its appeal will likely diminish. Our RNAV-based TP incorporates 24 sen/sh cost of the Miami property, without the earnings potential. Maintain Hold and RM3.88 TP for now.
Maybank Research 8 Feb 2012
Click here for full report
Wah Seong Corp: Venturing into upstream plantation in Congo
Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Wah Seong Corp; Buy; RM2.10
Price target: RM2.50; WSC MK
Venturing into upstream plantation in Congo
Wah Seong announced that it will be acquiring a 51% stake in Atama Resources Inc (ARI) in 2 stages for a total amount of US$25m (~RM75m) from 2 private companies (Silvermark Resources Inc and Giant Dragon Group Limited) registered in the British Virgin Islands.
ARI has been granted an initial 30-year oil palm plantation concession (extendable for as many terms as required by ARI) by the Government of the Republic of Congo to undertake upstream oil palm planting on 470,000 ha of federal land in Congo. Feasibility study has been completed and 180,000 ha has been identified to be developed for oil palm plantation which is estimated to take up 15 years in 10 phases with commencement in 2Q13.
Although a potential M&A to beef up Wah Seong's non-O&G earnings contribution (O&G contributed 92% earnings for 9M11) has been largely anticipated, we are slightly taken aback by this plantation acquisition given the considerable risks including geo-political risk and execution risk. We understand that the FFB yield in Congo is lower than that of Indonesia and Malaysia while CPO production cost could be 10% higher than the average of RM1,000-RM1,300/ MT in Malaysia and Indonesia.
While the estimated price of the massive land appears to be undemanding at US$104/ha relative to Indonesian green-field plantation land of US$300-400/ha, high initial capex requirement may be a concern for investors. Given this latest development, our Buy recommendation and RM2.50 TP is under review, pending an analyst briefing from Wah Seong to clarify its plantation project in Congo. Nevertheless, we remain positive on its O&G business, premised on the increasing capex spending in Malaysia and Australia.
Source: HwangDBS Equity Research: 8 Feb 2011
Company Name: WAH SEONG CORPORATION BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 2.50 |
Wah Seong Corp; Buy; RM2.10
Price target: RM2.50; WSC MK
Venturing into upstream plantation in Congo
Wah Seong announced that it will be acquiring a 51% stake in Atama Resources Inc (ARI) in 2 stages for a total amount of US$25m (~RM75m) from 2 private companies (Silvermark Resources Inc and Giant Dragon Group Limited) registered in the British Virgin Islands.
ARI has been granted an initial 30-year oil palm plantation concession (extendable for as many terms as required by ARI) by the Government of the Republic of Congo to undertake upstream oil palm planting on 470,000 ha of federal land in Congo. Feasibility study has been completed and 180,000 ha has been identified to be developed for oil palm plantation which is estimated to take up 15 years in 10 phases with commencement in 2Q13.
Although a potential M&A to beef up Wah Seong's non-O&G earnings contribution (O&G contributed 92% earnings for 9M11) has been largely anticipated, we are slightly taken aback by this plantation acquisition given the considerable risks including geo-political risk and execution risk. We understand that the FFB yield in Congo is lower than that of Indonesia and Malaysia while CPO production cost could be 10% higher than the average of RM1,000-RM1,300/ MT in Malaysia and Indonesia.
While the estimated price of the massive land appears to be undemanding at US$104/ha relative to Indonesian green-field plantation land of US$300-400/ha, high initial capex requirement may be a concern for investors. Given this latest development, our Buy recommendation and RM2.50 TP is under review, pending an analyst briefing from Wah Seong to clarify its plantation project in Congo. Nevertheless, we remain positive on its O&G business, premised on the increasing capex spending in Malaysia and Australia.
Source: HwangDBS Equity Research: 8 Feb 2011
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