SP Setia: Jamaludin may succeed Liew as SP Setia chief. I&P Group Sdn Bhd's Datuk Jamaludin Osman is among candidates tipped to head SP Setia Bhd with the imminent departure of its president and chief executive officer Tan Sri Liew Kee Sin next year. Business Times understands that Permodalan Nasional Bhd (PNB) is considering appointing either Jamaludin or a senior executive from within the PNB group of companies as the new SP Setia chief. I&P was formed from the merger of three property companies in the PNB stable, namely Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd. The company's assets are worth about MYR10b. (Source: Business Times)
Sona Petroleum: Will not take stake in Singapore RH Petrogas. Contrary to earlier speculation, special-purpose acquisition company (SPAC) Sona Petroleum Bhd will not be taking up any stake in Singapore-listed RH Petrogas Ltd. RH Petrogas is an oil and gas (O&G) company controlled by Sarawak tycoon Tan Sri Tiong Hiew King. Tiong, whose flagship company is the unlisted Rimbunan Hijau Group, was not too keen on diluting his interest in RH Petrogas. Sona is now in the midst of evaluating other assets. It has moved on from RH Petrogas. (Source: The Star)
Media: Malaysia's media adex up 20% to MYR9.6b. Malaysia's overall media advertising expenditure (adex) grew 20% to MYR9.6b in the first nine months of this year, up from MYR8.0b in same period last year. Advertisers spent MYR5.6b on television advertising in the first nine months of the year, compared with MYR4.2b in the same corresponding period last year. During the period, newspaper adex revenue rose slightly to MYR3.3b from MYR3.2b recorded in the January to September period last year. In terms of market share, newspapers held 34.6% of the adex in the media industry, second after television. (Source: Business Times)
BFood: Expands in ASEAN. Few may be aware that the same store sales growth of Starbuck outlets in Malaysia is the top globally. This speaks well for the earnings prospect of Berjaya Food Bhd (BFood), which owns 50% of Berjaya Starbuck Coffee Sdn Bhd that owns the gourmet coffee chain in Malaysia ( Source: The Edge Financial Daily)
Bintulu Port: Dishes out major package of the MYR2bil Samalaju Port project. Bintulu Port Holdings Bhd (BPHB) has dished out a major package of the MYR2bil Samalaju Port project for bidding of contractors. The wharf package, the biggest of the several packages, will involve the construction of five wharves to cater for handymax and handysize bulk carriers. "Tender for the wharf package closes next month," Samalaju Industrial Port Sdn Bhd (SIPSB) head of operations Mat Salleh Mohd Etli. (Source: The Star Malaysia)
IPO: Karex to expand capacity with IPO proceeds. Karex Bhd, which is raising MYR75m from its initial public offering (IPO), slated on Nov 6, will use the proceeds to double the size of its manufacturing capacity to 6 billion condom pieces by end of 2015 from 3 billion condom pieces currently, said its CEO Goh Miah Kiat. "The listing will enable us to leverage on the growing opportunities of the global condom industry," he told reporters at the prospectus launch on Friday. (Source: The Sun Daily).
U.S: Senate leaders struggle to end shutdown as default looms. Senate Majority Leader Harry Reid, who started talks with Minority Leader Mitch McConnell, said the two had "a productive conversation" this afternoon. "The discussions were substantive, and we'll continue those discussions," Reid said before the Senate wrapped up almost four hours of debate without a deal being unveiled. "I'm optimistic about the prospects for a positive conclusion." (Source: Bloomberg)
China: Unexpected export drop underscores global demand threat. China's exports unexpectedly fell in September, signaling the constraints of global demand on the nation's recovery and highlighting distortions caused by fake invoices that have yet to be eliminated from trade data. Overseas shipments dropped 0.3% YoY, the General Administration of Customs said in Beijing on Oct. 12, while imports rose a more-than-forecast 7.4% YoY. (Source: Bloomberg)
India: Surprise factory slowdown pressures Singh to spur growth. India's industrial-output growth slowed more than economists estimated in August as consumer spending moderated, adding pressure on Prime Minister Manmohan Singh's government to intensify efforts to revive the economy. Output at factories, utilities and mines advanced 0.6% YoY after a revised 2.75% YoY climb in the previous month. (Source: Bloomberg)
U.S: Senate leaders restart fiscal talks after house scraps vote. Majority Leader Harry Reid, a Democrat, and Minority Leader Mitch McConnell, a Republican, had suspended their talks earlier while the House was considering its own bill. "Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach," Adam Jentleson, Reid's spokesman, said in a statement. (Source: Bloomberg)
U.S: AAA rating put on negative watch by Fitch on delayed budget. The U.S.'s AAA credit grade was placed on rating watch negative by Fitch Ratings, which cited the government's failure to raise its borrowing limit as the Treasury's deadline nears. "The political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default," Fitch, which is a jointly owned subsidiary of Paris-based Fimalac SA and New York-based Hearst Corp., said in a statement. Fitch reiterated that it expects the debt ceiling to be raised. (Source: Bloomberg)
U.S: Fed regional directors saw 'moderate' growth amid fiscal risks. "Directors viewed recent readings on manufacturing activity and the housing and auto sectors as generally positive," according to minutes released. "Directors continued to see downside risks to the outlook stemming from ongoing domestic fiscal constraints and uncertainties, recent increases in long- term interest rates, and geopolitical concerns." (Source: Bloomberg)
U.K: Inflation was unexpectedly unchanged in September as air fares offset a decline in gasoline prices. Consumer prices increased 2.7% YoY. A separate report showed house-price growth accelerated in August, with increases in London driving a national index of values to a record. (Source: Bloomberg)
Russia: Central bank left its main lending rate unchanged for a 13th month and removed a signal that it will keep monetary policy on pause as inflation dropped into its target range for the first time since August 2012. Bank Rossii left the one-week auction rate, its benchmark introduced last month, at 5.5%. (Source: Bloomberg)
China: Foreign-exchange reserves rose last quarter by the most in more than two years, a sign the government's efforts to protect growth attracted money even as developing nations from India to Indonesia saw capital exit. Reserves were a record USD 3.66t at the end of September, the People's Bank of China said, up from USD 3.5t in June. (Source: Bloomberg)
Wednesday, October 16, 2013
Wednesday, June 5, 2013
KLSE looks resillient
The FBMKLCI gained 10.41 points to close at 1,776.74 yesterday. Its
resistance levels of 1,780 and 1,826 may cap market gains, whilst obvious
support levels are at 1,748 and1,776.
2013 YE KLCI target raised to 1,840 from 1,815, pegged to 15.5x 12M forward earnings (15x previously), on a further re-rating of Malaysian equities, due to their rising appeal. The re-rating is supported by solid domestic fundamentals – stable macroeconomic conditions, a strong banking system, healthy corporate balance sheets, and continuous corporate earnings growth. Despite gaining 4.2% in just one month after the 13GE and 4.6% YTD, the KLCI has still underperformed its regional peers.
MAHB
Estimate KLIA2 will be ready for operations in end-1Q14, nine months from its latest 28 Jun 2013 target. Project cost could rise to MYR4.3b, up from the original MYR3.9b estimate. Despite this, upgrading the earnings and target price on the premise of higher traffic growth of 6% p.a. in 2014-2020 (from 5% p.a.) and assume MAHB will receive an investment tax allowance (ITA). Once there is a firm date for KLIA2's completion, people will refocus on MAHB's solid fundamentals and the fact that its share price has lagged the World Airports Index (WAI) and regional peers. MAHB is a BUY, with a DCF-based TP of MYR7.20/share (from MYR6.60/share).
SapuraKencana
While the USD35m offshore installation contract from PTSC is relatively small, it reflects: (i) SAKP's continuous aspiration in growing its regional/global footprint and (ii) improving orderbook replenishment, locally and abroad. SAKP's potential inclusion in the FBMKLCI 30 Index and the possibility of it securing the Petrobras multi-billion contract are two near-term catalysts that will further fuel interest on the stock. Our TP is pegged to 20x FY1/15 PER.
Others
Alam Maritim: Clinches MYR71.5m. Alam Maritim Resources Bhd has won an MYR71.5m contract from an oil and gas company to supply an anchor handling tug supply vessel. The five-year contract is expected to commence in the second half of this year. (Source: Bursa Malaysia)
IPO: Cardiff, 7-Eleven listing one of options. Billionaire Tan Sri Vincent Tan Chee Yioun has not ruled out the possibility of listing Cardiff City Football Club and 7-Eleven to raise funds. Confirming this, he said, the decision will only be made in the next few months. "We will consider. We are looking at several options to raise money to pay the banks. I have invested so much, so now I need to raise some money. Listing is one of the options. Nothing firm or definite yet," he told reporters. Pressed further, he said, the possible listing will probably happen this year. (Source: Business Times)
UEM, Bina Puri: Seeking RM300m from MAHB. The UEM-Bina Puri joint venture (JV) is seeking as much as MYR300m from Malaysia Airports Holdings Bhd (MAHB) for additional works being done at the Kuala Lumpur International Airport 2 (klia2) project, a person with first-hand knowledge of the matter says. It is learnt that MAHB has requested the joint venture to expand the floor area at the airport’s main terminal and satellite buildings to cater to requirements from various government agencies. A source said extra floor space is also required at the three-storey main terminal building to cater to Malindo Air, Malaysia’s newest domestic low-cost carrier, which plans to move to klia2 when it opens next year. (Source: Business Times)
MMC Corporation: Che Khalib tipped to head MMC. Former Tenaga Nasional Bhd (TNB) chief Datuk Seri Che Khalib Mohamad Noh (pic) is tipped to head MMC Corp Bhd, taking over from group managing director Datuk Hasni Harun whose contract expires end-June. An announcement on this could be made as early as next month. Sources said the appointment was likely, owing to the expertise of Che Khalib in the area of utilities, specifically power and energy. Che Khalib, 48, is currently DRB-Hicom Bhd chief operating officer (COO) of finance, strategy and planning. (Source: The Star)
F&N Holdings: F&N distributor for Oishi green tea. Fraser & Neave Holdings Bhd's unit, F&N Beverages Marketing Sdn Bhd, has been appointed the exclusive distributor of Oishi ready-to-drink green tea products. (Source: Bursa Malaysia)
2013 YE KLCI target raised to 1,840 from 1,815, pegged to 15.5x 12M forward earnings (15x previously), on a further re-rating of Malaysian equities, due to their rising appeal. The re-rating is supported by solid domestic fundamentals – stable macroeconomic conditions, a strong banking system, healthy corporate balance sheets, and continuous corporate earnings growth. Despite gaining 4.2% in just one month after the 13GE and 4.6% YTD, the KLCI has still underperformed its regional peers.
MAHB
Estimate KLIA2 will be ready for operations in end-1Q14, nine months from its latest 28 Jun 2013 target. Project cost could rise to MYR4.3b, up from the original MYR3.9b estimate. Despite this, upgrading the earnings and target price on the premise of higher traffic growth of 6% p.a. in 2014-2020 (from 5% p.a.) and assume MAHB will receive an investment tax allowance (ITA). Once there is a firm date for KLIA2's completion, people will refocus on MAHB's solid fundamentals and the fact that its share price has lagged the World Airports Index (WAI) and regional peers. MAHB is a BUY, with a DCF-based TP of MYR7.20/share (from MYR6.60/share).
SapuraKencana
While the USD35m offshore installation contract from PTSC is relatively small, it reflects: (i) SAKP's continuous aspiration in growing its regional/global footprint and (ii) improving orderbook replenishment, locally and abroad. SAKP's potential inclusion in the FBMKLCI 30 Index and the possibility of it securing the Petrobras multi-billion contract are two near-term catalysts that will further fuel interest on the stock. Our TP is pegged to 20x FY1/15 PER.
Others
Alam Maritim: Clinches MYR71.5m. Alam Maritim Resources Bhd has won an MYR71.5m contract from an oil and gas company to supply an anchor handling tug supply vessel. The five-year contract is expected to commence in the second half of this year. (Source: Bursa Malaysia)
IPO: Cardiff, 7-Eleven listing one of options. Billionaire Tan Sri Vincent Tan Chee Yioun has not ruled out the possibility of listing Cardiff City Football Club and 7-Eleven to raise funds. Confirming this, he said, the decision will only be made in the next few months. "We will consider. We are looking at several options to raise money to pay the banks. I have invested so much, so now I need to raise some money. Listing is one of the options. Nothing firm or definite yet," he told reporters. Pressed further, he said, the possible listing will probably happen this year. (Source: Business Times)
UEM, Bina Puri: Seeking RM300m from MAHB. The UEM-Bina Puri joint venture (JV) is seeking as much as MYR300m from Malaysia Airports Holdings Bhd (MAHB) for additional works being done at the Kuala Lumpur International Airport 2 (klia2) project, a person with first-hand knowledge of the matter says. It is learnt that MAHB has requested the joint venture to expand the floor area at the airport’s main terminal and satellite buildings to cater to requirements from various government agencies. A source said extra floor space is also required at the three-storey main terminal building to cater to Malindo Air, Malaysia’s newest domestic low-cost carrier, which plans to move to klia2 when it opens next year. (Source: Business Times)
MMC Corporation: Che Khalib tipped to head MMC. Former Tenaga Nasional Bhd (TNB) chief Datuk Seri Che Khalib Mohamad Noh (pic) is tipped to head MMC Corp Bhd, taking over from group managing director Datuk Hasni Harun whose contract expires end-June. An announcement on this could be made as early as next month. Sources said the appointment was likely, owing to the expertise of Che Khalib in the area of utilities, specifically power and energy. Che Khalib, 48, is currently DRB-Hicom Bhd chief operating officer (COO) of finance, strategy and planning. (Source: The Star)
F&N Holdings: F&N distributor for Oishi green tea. Fraser & Neave Holdings Bhd's unit, F&N Beverages Marketing Sdn Bhd, has been appointed the exclusive distributor of Oishi ready-to-drink green tea products. (Source: Bursa Malaysia)
Tuesday, May 28, 2013
Inching Down From The False Pennant Breakout
The FBMKLCI declined by 5.93 points to close at 1,767.13 yesterday. Its
resistance levels of 1,767 and 1,793 may cap market gains; whilst obvious
support levels are at 1,718 and 1,764.
Kossan Rubber
Strong 1Q13 net profit of MYR33m (+12% QoQ, +51% YoY) made up 27% of our and street's full-year estimates, supporting our BUY call on Kossan. Expecting stronger sequential quarters on better sales volume and margins, we raised our FY13F and FY14F EPS by 7% and 6% respectively.
Consequently, our TP is lifted to MYR4.70 (+7%), based on an unchanged target FY14F PER of 10x. Kossan remains a BUY with attractive net dividend yield of 4.1%-5.2%.
Alam Maritime
Alam's 1Q13 core net profit of MYR22.2m (+201.5% YoY, +32.8% QoQ) was in line with our and consensus full-year forecast. The stronger earnings were due to lumpy contract recognition.
Remain optimistic about Alam's performance and expect newsflow to increase in 2H13 on further OSV and IRM contract wins. Retaining forecasts, BUY call but raise our TP to MYR1.55 (+19%) on a higher target FY14F PER of 12x (10x previously), implying an FY14F PBV of 1.7x, still below its 8-year mean PBV of 1.8x
MPHB
MPHB's 1Q13 results were above expectations on a lower-than-expected prize payout ratio. Nonetheless, its share price fell 10% yesterday ostensibly because it went ex-rights for the MPHB Capital (MPHBC) share subscription. Investors who buy MPHB today will receive Magnum shares and be entitled to a 48.5sen/ sh capital repayment, together worth MYR3.93/sh or 12% upside.
We adjust our TP from MYR4.44 to MYR3.93 to exclude the MPHBC rights offer. Investors should subscribe for MPHBC shares.
Petronas Chemical Group
1Q13's core PATAMI of MYR1,105m (+8.4% YoY, +5.6% QoQ) makes up 27% of our full year forecast and 29% of consensus. This better-than-expected results was derived from stable utilization rates and higher ASPs. Revising 2013 forecast upwards by 3.8% to take into account the 1Q13 numbers, and subsequently raise our target price by +4% to MYR6.75/share on unchanged 12.8x 2013 PER – in line with global peers. Maintain HOLD on limited upside to our new target price.
SapuraKencana
SAKP's new MYR0.5b HUC and TMCC contract from EMEPMI will partly anchor its earnings over the next 5-6 years. Orderbook replenishment is rising; the momentum set to continue with a Petrobras multi-billion dollar contract in the pipeline. This job will be a re-rating catalyst, ensuring earnings stability over the next 5-8 years. Its potential inclusion into the FBMKLCI 30 Index will further fuel interest in this stock, whose share price has risen 29% post-13GE. TP is pegged to 20x FY15F PER (18x previously) on improving prospects.
Kimlun
We like Kimlun for its: (i) construction business in the strong property market of Iskandar Malaysia; and (ii) precast concrete manufacturing for MRT systems in the KV and Singapore, where there are few investible building material stocks. Forecast FY14/15 earnings step-ups of 18%/9%, backed by contributions from its maiden property development project and a margin recovery at its precast business. Initiating on Kimlun with a BUY and TP of MYR2.50 (10x FY14 PER).
Others
Dayang: Wins another O&G job. Dayang Enterprise Holdings Bhd's unit Dayang Enterprise Sdn Bhd has been awarded a five-year contract from Petronas Carigali Sdn Bhd for the provision of hook-up, commissioning and topside major maintenance services until May 20, 2018. The contract sum was not revealed. The same unit had bagged a MYR2b contract from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd, just last week. (Source: Bursa Malaysia)
YTL Comm: To break even next year. YTL Communications Sdn Bhd, the telecommunications arm of YTL Corp Bhd, expects to break even next year by increasing its Yes subscriber base, says its executive director Datuk Yeoh Seok Hong. The company currently has some 500,000 active users since its launch in November 2010. (Source: Business Times)
Nestle: Aims MYR300m sales from East Malaysia this year. Nestle (Malaysia) Bhd is expecting an increase in projected sales to MYR300m this year from Sabah and Sarawak, from MYR262.8m in 2012, with products mainly sourced from its Sejingkat factory. Managing director Alois Hofbauer said the group is looking at expansion plans for the 38,000 sq m factory, which currently produces the Maggi instant noodles and Nestle ice cream brands, with new production lines. (Source: The Sun)
Gromutual: Plans MYR700m projects in Johor Baru. Gromutual Bhd is targeting to launch projects with MYR700m in gross development value (GDV) here over the next few years. Gromutual deputy managing director Chew Kwee Hiok said going forward, Gromutual will continue to identify strategic locations in Johor for its landbanking activities. To date, it has undertaken property developments in Malacca and Johor with a GDV of MYR800m. (Source: Business Times)
Kossan Rubber
Strong 1Q13 net profit of MYR33m (+12% QoQ, +51% YoY) made up 27% of our and street's full-year estimates, supporting our BUY call on Kossan. Expecting stronger sequential quarters on better sales volume and margins, we raised our FY13F and FY14F EPS by 7% and 6% respectively.
Consequently, our TP is lifted to MYR4.70 (+7%), based on an unchanged target FY14F PER of 10x. Kossan remains a BUY with attractive net dividend yield of 4.1%-5.2%.
Alam Maritime
Alam's 1Q13 core net profit of MYR22.2m (+201.5% YoY, +32.8% QoQ) was in line with our and consensus full-year forecast. The stronger earnings were due to lumpy contract recognition.
Remain optimistic about Alam's performance and expect newsflow to increase in 2H13 on further OSV and IRM contract wins. Retaining forecasts, BUY call but raise our TP to MYR1.55 (+19%) on a higher target FY14F PER of 12x (10x previously), implying an FY14F PBV of 1.7x, still below its 8-year mean PBV of 1.8x
MPHB
MPHB's 1Q13 results were above expectations on a lower-than-expected prize payout ratio. Nonetheless, its share price fell 10% yesterday ostensibly because it went ex-rights for the MPHB Capital (MPHBC) share subscription. Investors who buy MPHB today will receive Magnum shares and be entitled to a 48.5sen/ sh capital repayment, together worth MYR3.93/sh or 12% upside.
We adjust our TP from MYR4.44 to MYR3.93 to exclude the MPHBC rights offer. Investors should subscribe for MPHBC shares.
Petronas Chemical Group
1Q13's core PATAMI of MYR1,105m (+8.4% YoY, +5.6% QoQ) makes up 27% of our full year forecast and 29% of consensus. This better-than-expected results was derived from stable utilization rates and higher ASPs. Revising 2013 forecast upwards by 3.8% to take into account the 1Q13 numbers, and subsequently raise our target price by +4% to MYR6.75/share on unchanged 12.8x 2013 PER – in line with global peers. Maintain HOLD on limited upside to our new target price.
SapuraKencana
SAKP's new MYR0.5b HUC and TMCC contract from EMEPMI will partly anchor its earnings over the next 5-6 years. Orderbook replenishment is rising; the momentum set to continue with a Petrobras multi-billion dollar contract in the pipeline. This job will be a re-rating catalyst, ensuring earnings stability over the next 5-8 years. Its potential inclusion into the FBMKLCI 30 Index will further fuel interest in this stock, whose share price has risen 29% post-13GE. TP is pegged to 20x FY15F PER (18x previously) on improving prospects.
Kimlun
We like Kimlun for its: (i) construction business in the strong property market of Iskandar Malaysia; and (ii) precast concrete manufacturing for MRT systems in the KV and Singapore, where there are few investible building material stocks. Forecast FY14/15 earnings step-ups of 18%/9%, backed by contributions from its maiden property development project and a margin recovery at its precast business. Initiating on Kimlun with a BUY and TP of MYR2.50 (10x FY14 PER).
Others
Dayang: Wins another O&G job. Dayang Enterprise Holdings Bhd's unit Dayang Enterprise Sdn Bhd has been awarded a five-year contract from Petronas Carigali Sdn Bhd for the provision of hook-up, commissioning and topside major maintenance services until May 20, 2018. The contract sum was not revealed. The same unit had bagged a MYR2b contract from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd, just last week. (Source: Bursa Malaysia)
YTL Comm: To break even next year. YTL Communications Sdn Bhd, the telecommunications arm of YTL Corp Bhd, expects to break even next year by increasing its Yes subscriber base, says its executive director Datuk Yeoh Seok Hong. The company currently has some 500,000 active users since its launch in November 2010. (Source: Business Times)
Nestle: Aims MYR300m sales from East Malaysia this year. Nestle (Malaysia) Bhd is expecting an increase in projected sales to MYR300m this year from Sabah and Sarawak, from MYR262.8m in 2012, with products mainly sourced from its Sejingkat factory. Managing director Alois Hofbauer said the group is looking at expansion plans for the 38,000 sq m factory, which currently produces the Maggi instant noodles and Nestle ice cream brands, with new production lines. (Source: The Sun)
Gromutual: Plans MYR700m projects in Johor Baru. Gromutual Bhd is targeting to launch projects with MYR700m in gross development value (GDV) here over the next few years. Gromutual deputy managing director Chew Kwee Hiok said going forward, Gromutual will continue to identify strategic locations in Johor for its landbanking activities. To date, it has undertaken property developments in Malacca and Johor with a GDV of MYR800m. (Source: Business Times)
Monday, May 20, 2013
Another good day for KLSE...
Alam Maritime
Alam's target price was raised to MYR1.30 (+16%) following a 9-11% upgrade in our FY14-15 earnings forecasts on higher IRM/T&I contract win assumptions. Now expect Alam to win up to MYR600m of Inspection Repair Maintenance (IRM) and Transportation & Installation (T&I) jobs in 2013 vs. MYR300m previously as O&G capex spend is expected to accelerate going into 2H. Alam has won MYR206.9m YTD. Expecting Alam's job win announcements to lift its share price further (+76.5 YTD). Our TP remains pegged to 10x FY14 EPS.
Dialog Group
Cut FY6/13 forecasts by 13% following softer than-expected 3QFY6/13 results. Nevertheless, remain positive on Dialog's growth prospects; its tank terminal operations in Johor will sustain earnings growth over the long term. Dialog offers investors a steady business model, focused management, attractive earnings growth with an increasing proportion of recurring income, and a progressive dividend. SOP-based TP is unchanged at MYR3.05.
Tan Chong Motors
TCM's 1Q13 net profit of MYR84m (+74% QoQ, +169% YoY) beat our and consensus expectations at 27% respectively. The better-than-expected results were due to (i) margin recovery from economies of scale from higher production volume and (ii) component cost savings from the softer Yen. Taking these into account, we raise our FY13/14/15 forecast by 5%/6%/4%. Backed by a strong investment case with a potential 3-year forward net profit CAGR of 66%, higher valuations are warranted and we have correspondingly raised our TP to MYR8.05 (+15%) on a higher FY14 PER target of 13x (12x previously) – 15% premium to its long-term mean of 11.3x.
Gas Malaysia
1Q13 core earnings made up 22% of our and consensus full year forecast. We are keeping our forecasts unchanged, and expect a stronger 2H12 performance driven by higher sales of natural gas as LNG regas supplies kick in. While Gas Malaysia is notable for its strong cash-generative capacity and dividend disbursements, most of the positives have been priced in. We maintain our HOLD call and MYR2.90 DCF-based TP.
Others
CIMB: San Miguel says sale of BoC at final stage. The Philippines' San Miguel Corp expects to know the outcome of its proposed sale of a stake in Manila-based Bank of Commerce (BoC) to CIMB Group Holdings Bhd in a week or so. (Source: The Star)
BIMB: To start board talks on Dubai Financial stake buy. BIMB Holdings Bhd will initiate detailed discussions within its board on the plan to acquire Dubai Financial Group LLC's equity interest in Bank Islam Malaysia Bhd by month-end. Group MD and CEO Johan Abdullah said at this juncture, valuation and pricing parameters for the acquisition had been determined. (Source: Business Times)
WCT: Confident of winning MYR1.5b projects this year. Deputy managing director Goh Chin Liong said the company has already secured MYR500m worth of projects and is tendering for contracts worth MYR5b here and overseas. "Out of the MYR5b, MYR3b is from domestic and MYR2b from overseas, especially in the Middle East," he told reporters after the company's AGM yesterday. He said the firm aims to grow its business in Malaysia and abroad and will continue to bid for some of the major infrastructure and building projects under the Economic Transformation Programme and other private sector projects. (Source: Business Times)
Astro: Signs MYR497.5m deal with Measat. Astro Malaysia Holdings Bhd has entered into an agreement with Measat Global Bhd (MGB) for the utilisation of transponder capacity on the Measat-3c satellite for a fee of MYR497.5m. The related party transaction signed via its unit Measat Broadcast Network Systems Sdn Bhd, and MGB's unit Measat Satellite Systems Sdn Bhd, would enable Astro to utilise transponder capacity of 6 Ku-band transponders on the satellite in tranches over a period of 15 years starting from the commencement date. It said the satellite is expected to be launched by the third quarter of 2015. (Source: The Star)
Alam's target price was raised to MYR1.30 (+16%) following a 9-11% upgrade in our FY14-15 earnings forecasts on higher IRM/T&I contract win assumptions. Now expect Alam to win up to MYR600m of Inspection Repair Maintenance (IRM) and Transportation & Installation (T&I) jobs in 2013 vs. MYR300m previously as O&G capex spend is expected to accelerate going into 2H. Alam has won MYR206.9m YTD. Expecting Alam's job win announcements to lift its share price further (+76.5 YTD). Our TP remains pegged to 10x FY14 EPS.
Dialog Group
Cut FY6/13 forecasts by 13% following softer than-expected 3QFY6/13 results. Nevertheless, remain positive on Dialog's growth prospects; its tank terminal operations in Johor will sustain earnings growth over the long term. Dialog offers investors a steady business model, focused management, attractive earnings growth with an increasing proportion of recurring income, and a progressive dividend. SOP-based TP is unchanged at MYR3.05.
Tan Chong Motors
TCM's 1Q13 net profit of MYR84m (+74% QoQ, +169% YoY) beat our and consensus expectations at 27% respectively. The better-than-expected results were due to (i) margin recovery from economies of scale from higher production volume and (ii) component cost savings from the softer Yen. Taking these into account, we raise our FY13/14/15 forecast by 5%/6%/4%. Backed by a strong investment case with a potential 3-year forward net profit CAGR of 66%, higher valuations are warranted and we have correspondingly raised our TP to MYR8.05 (+15%) on a higher FY14 PER target of 13x (12x previously) – 15% premium to its long-term mean of 11.3x.
Gas Malaysia
1Q13 core earnings made up 22% of our and consensus full year forecast. We are keeping our forecasts unchanged, and expect a stronger 2H12 performance driven by higher sales of natural gas as LNG regas supplies kick in. While Gas Malaysia is notable for its strong cash-generative capacity and dividend disbursements, most of the positives have been priced in. We maintain our HOLD call and MYR2.90 DCF-based TP.
Others
CIMB: San Miguel says sale of BoC at final stage. The Philippines' San Miguel Corp expects to know the outcome of its proposed sale of a stake in Manila-based Bank of Commerce (BoC) to CIMB Group Holdings Bhd in a week or so. (Source: The Star)
BIMB: To start board talks on Dubai Financial stake buy. BIMB Holdings Bhd will initiate detailed discussions within its board on the plan to acquire Dubai Financial Group LLC's equity interest in Bank Islam Malaysia Bhd by month-end. Group MD and CEO Johan Abdullah said at this juncture, valuation and pricing parameters for the acquisition had been determined. (Source: Business Times)
WCT: Confident of winning MYR1.5b projects this year. Deputy managing director Goh Chin Liong said the company has already secured MYR500m worth of projects and is tendering for contracts worth MYR5b here and overseas. "Out of the MYR5b, MYR3b is from domestic and MYR2b from overseas, especially in the Middle East," he told reporters after the company's AGM yesterday. He said the firm aims to grow its business in Malaysia and abroad and will continue to bid for some of the major infrastructure and building projects under the Economic Transformation Programme and other private sector projects. (Source: Business Times)
Astro: Signs MYR497.5m deal with Measat. Astro Malaysia Holdings Bhd has entered into an agreement with Measat Global Bhd (MGB) for the utilisation of transponder capacity on the Measat-3c satellite for a fee of MYR497.5m. The related party transaction signed via its unit Measat Broadcast Network Systems Sdn Bhd, and MGB's unit Measat Satellite Systems Sdn Bhd, would enable Astro to utilise transponder capacity of 6 Ku-band transponders on the satellite in tranches over a period of 15 years starting from the commencement date. It said the satellite is expected to be launched by the third quarter of 2015. (Source: The Star)
Friday, May 17, 2013
KLSE Stabilising....
AMMB Holdings
AMMB's FY13 net profit of MYR1.63b (+10% YoY) was within expectations and consensus. The forecasts are maintained but with the stock offering stable ROEs of about 14.5%, we do believe higher valuations are warranted. The TP is thus raised to MYR8.30 from MYR7.60 on a higher CY13 P/BV target of 1.9x vs 1.8x previously. AMMB continues to offer exposure to a) a decently valued (CY14 PER of 11.1x vs the sector’s 11.9x) financial stock with sustainable, rather than declining, ROEs of about 14.5%, b) a beneficiary of the ETP, c) a group whose fee income base is growing a double the rate of its peers'.
Notion Vtec
NVB's 6MFY9/13 core net profit of MYR5m (-73% YoY) was below expectations, making up just 12% and 15% of our and the market’s full-year estimates respectively. While we expect a strong revenue rebound in 2HFY9/13 (+30-40% HoH), full-year earnings may still come in below forecast. The earnings forecasts, HOLD rating and TP of MYR0.76 (5.5x 2013 PER) are under review, pending an analyst briefing today.
UMW
Pending an analyst briefing today, we remain neutral on UMW's proposal to list its core O&G assets via UMW Oil & Gas Corporation (UMW-OG). While the exercise is positive in unlocking values for the group, much will depend on the pricing of the IPO, which has not been determined just yet. Unchanged TP of MYR13.26 pegged at 14x FY14 PER.
Hartalega
Hartalega's non-deal roadshow (NDR) in Singapore last Friday was well-received. The two areas that garnered the most attention were with regard to: i) management’s ability to successfully execute its ambitious expansion plans; and ii) competition within the nitrile space. Investors were generally positive on its next phase of growth, which will see Hartalega dominating the nitrile space. However, trading at forward PER of 16x, we think the current share price is already fair. TP of MYR5.40 (15x 2014 FD PER).
OTHERS
Petronas Gas: To allocates MYR8.1b capex. Petronas Gas Bhd has allocated MYR8.1b in capital expenditure (capex) for the next five years beginning from this fiscal year, which will be mainly spent on the construction of its two liquefied natural gas (LNG) regasification terminals in Pengerang and Lahad Datu and its plant rejuvenation projects. For FY13 alone, Petronas Gas has put aside MYR1b in capex. (Source: The Sun)
CIMB: To decide soon on BoC stake buy. CIMB Holdings Bhd expects a decision soon on its planned purchase of the Philippines' Bank of Commerce (BoC). Chief executive Datuk Seri Nazir Razak said the decision on whether to proceed (with the acquisition) could happen in a few days, or weeks, but surely within a month. (Source: Business Times)
Astro: To join MSCI Malaysia Index. Astro Malaysia Holdings Bhd will be included as a component of the 42-stock MSCI Malaysia Index with effect from May 31. MSCI Inc said Astro would replace Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) in the index. (Source: The Star)
AMMB: To complete due diligence for HwangDBS. MD Ashok Ramamurthy said AMMB Holdings Bhd (AmBank Group) expects to complete its due diligence on the proposed acquisition of HwangDBS Investment Bank Bhd in two weeks. (Source: The Sun)
Sime Darby: Sells office tower for MYR125m.Sime Darby Bhd's indirect subsidiary Sime Darby Ara Damansara Development Sdn Bhd is selling a 12-storey office tower in Oasis Square Ara Damansara, Petaling Jaya to Brunsfield Oasis Tower Sdn Bhd for MYR124.5m. The proceeds from the sale will be used for working capital. (Source: Bursa Malaysia)
Deleum: Tendering MYR2b contracts. Deleum Bhd, which aims for regional expansion, is tendering for contracts worth MYR2b this year. The contracts were related to power and machinery, oilfield services and maintenance, repair and overhaul works, its group MD Nan Yusry Nan Rahimy said. It currently has contracts worth MYR1.4b that would last through 2018. (Source: The Star)
AMMB's FY13 net profit of MYR1.63b (+10% YoY) was within expectations and consensus. The forecasts are maintained but with the stock offering stable ROEs of about 14.5%, we do believe higher valuations are warranted. The TP is thus raised to MYR8.30 from MYR7.60 on a higher CY13 P/BV target of 1.9x vs 1.8x previously. AMMB continues to offer exposure to a) a decently valued (CY14 PER of 11.1x vs the sector’s 11.9x) financial stock with sustainable, rather than declining, ROEs of about 14.5%, b) a beneficiary of the ETP, c) a group whose fee income base is growing a double the rate of its peers'.
Notion Vtec
NVB's 6MFY9/13 core net profit of MYR5m (-73% YoY) was below expectations, making up just 12% and 15% of our and the market’s full-year estimates respectively. While we expect a strong revenue rebound in 2HFY9/13 (+30-40% HoH), full-year earnings may still come in below forecast. The earnings forecasts, HOLD rating and TP of MYR0.76 (5.5x 2013 PER) are under review, pending an analyst briefing today.
UMW
Pending an analyst briefing today, we remain neutral on UMW's proposal to list its core O&G assets via UMW Oil & Gas Corporation (UMW-OG). While the exercise is positive in unlocking values for the group, much will depend on the pricing of the IPO, which has not been determined just yet. Unchanged TP of MYR13.26 pegged at 14x FY14 PER.
Hartalega
Hartalega's non-deal roadshow (NDR) in Singapore last Friday was well-received. The two areas that garnered the most attention were with regard to: i) management’s ability to successfully execute its ambitious expansion plans; and ii) competition within the nitrile space. Investors were generally positive on its next phase of growth, which will see Hartalega dominating the nitrile space. However, trading at forward PER of 16x, we think the current share price is already fair. TP of MYR5.40 (15x 2014 FD PER).
OTHERS
Petronas Gas: To allocates MYR8.1b capex. Petronas Gas Bhd has allocated MYR8.1b in capital expenditure (capex) for the next five years beginning from this fiscal year, which will be mainly spent on the construction of its two liquefied natural gas (LNG) regasification terminals in Pengerang and Lahad Datu and its plant rejuvenation projects. For FY13 alone, Petronas Gas has put aside MYR1b in capex. (Source: The Sun)
CIMB: To decide soon on BoC stake buy. CIMB Holdings Bhd expects a decision soon on its planned purchase of the Philippines' Bank of Commerce (BoC). Chief executive Datuk Seri Nazir Razak said the decision on whether to proceed (with the acquisition) could happen in a few days, or weeks, but surely within a month. (Source: Business Times)
Astro: To join MSCI Malaysia Index. Astro Malaysia Holdings Bhd will be included as a component of the 42-stock MSCI Malaysia Index with effect from May 31. MSCI Inc said Astro would replace Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) in the index. (Source: The Star)
AMMB: To complete due diligence for HwangDBS. MD Ashok Ramamurthy said AMMB Holdings Bhd (AmBank Group) expects to complete its due diligence on the proposed acquisition of HwangDBS Investment Bank Bhd in two weeks. (Source: The Sun)
Sime Darby: Sells office tower for MYR125m.Sime Darby Bhd's indirect subsidiary Sime Darby Ara Damansara Development Sdn Bhd is selling a 12-storey office tower in Oasis Square Ara Damansara, Petaling Jaya to Brunsfield Oasis Tower Sdn Bhd for MYR124.5m. The proceeds from the sale will be used for working capital. (Source: Bursa Malaysia)
Deleum: Tendering MYR2b contracts. Deleum Bhd, which aims for regional expansion, is tendering for contracts worth MYR2b this year. The contracts were related to power and machinery, oilfield services and maintenance, repair and overhaul works, its group MD Nan Yusry Nan Rahimy said. It currently has contracts worth MYR1.4b that would last through 2018. (Source: The Star)
Monday, May 13, 2013
Market continue to charge higher...Construction & Property Play...
Property Sector
Property stocks are expected to trend higher on:
1) being a laggard in the region supported by ample liquidity in the financial system and
2) stronger newsflow on government land developments and KVMRT 2nd and 3rd lines and the KL-Singapore High Speed Rail (HSR).
The sector could further re-rate with the listing of IOI giant developers – IOI Properties (IOIP) and Iskandar Waterfront Holdings (IWH). Maintain Overweight. Our top picks are SP Setia, Sunway and Glomac.
Plantations
Malaysia's April 2013 stockpile beats market estimates again for the 2nd consecutive month, dipping below 2m MT for the first time in 9-months. April 2013 stockpile at 1.93m MT (-11% MoM, +4% YoY) and lower stock-to-usage ratio (SUR) of 9.5% (-1.3ppts MoM) strengthen the case for sustained CPO price recovery. The only setback to the positive news is a sharp decline in May exports estimates for the first ten days.
Roadrunner Top pick for plantation stocks is TSH with the possible re-rating for this stock in the horizon. Maintain outperform and investor should accumulate TSH aggresively with this low price.
Petronas Gas
1Q13 results were in line, accounting for 24% of our and consensus full year forecasts. The earnings forecasts are unchanged, which have imputed contributions from the Melaka regasification plant that is expected to commence operations in 2H13. PGas and Gas Malaysia are both defensive stocks but the latter is more preferred for its less demanding valuations and better dividends yields (4%).
Tan Chong Motors
Raising TP for TCM to MYR7.00 (+9%), pegged to an unchanged 12x FY14 PER, following a 9%/13% upgrade in our 2014-15 earnings forecasts, on higher vehicle sales estimates and lower component costs. Expect TCM's sales to be stronger at 65k units (+8%) in 2014 and 70k units (+13%) in 2015, fueled by the mass market model launches ahead. Valuations remain undemanding with the stock trading at just 10.2x 2014 earnings.
OTHERS
IPO: Malakoff postponing listing. MMC Corp Bhd has announced that its unit Malakoff Corp Bhd is postponing its listing which was planned by the second quarter this year. In a filing with Bursa Malaysia, it said the Tanjung Bin power plant would be undergoing major maintenance works which were expected to be substantially completed by the second half of 2013. (Source: Bursa Malaysia)
SapuraKencana: Gets RM60mil Petronas Carigali contract. TL GeoSciences Sdn Bhd, a unit of SapuraKencana Petroleum Bhd, has clinched an MYR60m contract from Petronas Carigali Sdn Bhd for the provision of marine geohazards investigation services. The contract comprises the provision of marine geohazards investigation services covering Petronas Carigali's offshore oil and gas fields in Peninsular Malaysia. (Source: Bursa Malaysia)
REIT: To take on construction risk.Managers of industrial real estate investment trusts (REITs) will likely be the leading beneficiaries if Securities Commission Malaysia (SC) allows Malaysian REITs to take on the construction of selected green field projects up to 10% of their asset base, on top of their staple of mature real estate. (The Edge Weekly)
Benalec: Set to seal two major deals.Benalec Holdings Bhd is close to inking two major deals for its land reclamation project off Tanjung Piai in Johor, which will translate into investments exceeding MYR35b. Brian Mak, Benalec's business development manager, said the company is in talks with potential investors from Europe and the Middle East, as well as the independent storage operators in the Jurong petrochemical hub in Singapore. (Source: Business Times)
Property stocks are expected to trend higher on:
1) being a laggard in the region supported by ample liquidity in the financial system and
2) stronger newsflow on government land developments and KVMRT 2nd and 3rd lines and the KL-Singapore High Speed Rail (HSR).
The sector could further re-rate with the listing of IOI giant developers – IOI Properties (IOIP) and Iskandar Waterfront Holdings (IWH). Maintain Overweight. Our top picks are SP Setia, Sunway and Glomac.
Plantations
Malaysia's April 2013 stockpile beats market estimates again for the 2nd consecutive month, dipping below 2m MT for the first time in 9-months. April 2013 stockpile at 1.93m MT (-11% MoM, +4% YoY) and lower stock-to-usage ratio (SUR) of 9.5% (-1.3ppts MoM) strengthen the case for sustained CPO price recovery. The only setback to the positive news is a sharp decline in May exports estimates for the first ten days.
Roadrunner Top pick for plantation stocks is TSH with the possible re-rating for this stock in the horizon. Maintain outperform and investor should accumulate TSH aggresively with this low price.
Petronas Gas
1Q13 results were in line, accounting for 24% of our and consensus full year forecasts. The earnings forecasts are unchanged, which have imputed contributions from the Melaka regasification plant that is expected to commence operations in 2H13. PGas and Gas Malaysia are both defensive stocks but the latter is more preferred for its less demanding valuations and better dividends yields (4%).
Tan Chong Motors
Raising TP for TCM to MYR7.00 (+9%), pegged to an unchanged 12x FY14 PER, following a 9%/13% upgrade in our 2014-15 earnings forecasts, on higher vehicle sales estimates and lower component costs. Expect TCM's sales to be stronger at 65k units (+8%) in 2014 and 70k units (+13%) in 2015, fueled by the mass market model launches ahead. Valuations remain undemanding with the stock trading at just 10.2x 2014 earnings.
OTHERS
IPO: Malakoff postponing listing. MMC Corp Bhd has announced that its unit Malakoff Corp Bhd is postponing its listing which was planned by the second quarter this year. In a filing with Bursa Malaysia, it said the Tanjung Bin power plant would be undergoing major maintenance works which were expected to be substantially completed by the second half of 2013. (Source: Bursa Malaysia)
SapuraKencana: Gets RM60mil Petronas Carigali contract. TL GeoSciences Sdn Bhd, a unit of SapuraKencana Petroleum Bhd, has clinched an MYR60m contract from Petronas Carigali Sdn Bhd for the provision of marine geohazards investigation services. The contract comprises the provision of marine geohazards investigation services covering Petronas Carigali's offshore oil and gas fields in Peninsular Malaysia. (Source: Bursa Malaysia)
REIT: To take on construction risk.Managers of industrial real estate investment trusts (REITs) will likely be the leading beneficiaries if Securities Commission Malaysia (SC) allows Malaysian REITs to take on the construction of selected green field projects up to 10% of their asset base, on top of their staple of mature real estate. (The Edge Weekly)
Benalec: Set to seal two major deals.Benalec Holdings Bhd is close to inking two major deals for its land reclamation project off Tanjung Piai in Johor, which will translate into investments exceeding MYR35b. Brian Mak, Benalec's business development manager, said the company is in talks with potential investors from Europe and the Middle East, as well as the independent storage operators in the Jurong petrochemical hub in Singapore. (Source: Business Times)
Friday, May 10, 2013
Market firm and KLCI ease slightly...
The FBMKLCI declined 7.93 points to close at 1,766.07 yesterday. Its resistance
level of 1,766 and 1,826 will cap market gains, whilst obvious support areas are
located at 1,718 and 1,764.
MAXIS
Maxis reported 1Q13 net profit of MYR475m (-17% YoY, +26% QoQ), 23% of our full-year forecast and 22% of consensus. An 8.0sen DPS was declared as expected. Within the sector, Maxis continues to offer attractive dividend yields, but remain wary of the long-term sustainability of its dividend commitment. Maintain HOLD with a higher target price of MYR7.20 (from MYR6.25).
Hong Leong Bank
HL Bank's 9MFY6/13 recurring net profit of MYR1,440m (-0.9% YoY) was in line with the consensus of full-year forecasts. There was little to excite in 3QFY6/13 results, with net profit down 11% QoQ and 23% YoY due to tepid topline growth and higher credit costs. Forecasts are maintained, MYR15.80 TP (2013 P/BV of 2.1x).
OTHERS
AMMB: Manulife, Metlife among suitors for AMMB insurance unit. Manulife Financial Corp and Metlife Inc are among companies that have made bids for a controlling stake in the life insurance unit of AMMB Holdings Bhd, the third insurance deal in the country over the past year. Zurich Insurance Group, Hong Kong tycoon Richard Li's Pacific Century Group, ACE Ltd and two Japanese insurers have also submitted first-round bids to buy up to 70% in unlisted AmLife Insurance Bhd worth USD350m (MYR1.04b). (Source: The Star)
CIMB: Resumes Thailand Stock Exchange dual-listing plan. CIMB Group Holdings Bhd has officially resumed its plans for a dual listing on the Stock Exchange of Thailand (SET), after postponing it numerous times due to an unresolved double taxation issue. In a filing with Bursa Malaysia, CIMB Group said it had decided to resume its planned dual listing, following recent regulatory developments in Thailand. (Source: The Star)
DiGi: To invest in network modernization. DiGi.Com Bhd, which is looking to invest MYR750m as capital expenditure this year, has reiterated that it was still looking into the possibility of setting up a business trust. DiGi is currently exploring the trust as a potential vehicle for its capital management initiatives. On capex, 80% of this year's allocation would be mainly for its network modernisation for the long-term evolution (LTE) or 4G and 3G networks. (Source: The Star)
Iskandar Investment: IRDA confident of getting MYR21b new investments by year-end. Iskandar Regional Development Authority (IRDA) is confident of attracting MYR21b in new investments by the end of the year. Chief executive officer Datuk Ismail Ibrahim said this was based on the continuous strong interest shown towards the country's first economic growth corridor. Iskandar had received MYR5b in new investments as of the 1Q13, bringing the total cumulative committed to MYR111.3b from 2006. (Source: The Star)
Construction: Private sector continues to drive construction activity. The private sector continued to dominate construction activity in the country with an increase of share to 69.8% in 1Q13. This compares to the 68.4% share in the 4Q12. The total value of construction work done in the first quarter 2013 recorded a decrease of 5.4% QoQ to MYR21b. However, the percentage change YoY showed a significant growth of 18.4%. In 1Q13, the highest percentage share was contributed by the civil engineering sub-sector with 38.0%, followed by non-residential buildings (32.0%), residential buildings (25.8%) and special trade (4.2%).(Source: Business Times)
MAXIS
Maxis reported 1Q13 net profit of MYR475m (-17% YoY, +26% QoQ), 23% of our full-year forecast and 22% of consensus. An 8.0sen DPS was declared as expected. Within the sector, Maxis continues to offer attractive dividend yields, but remain wary of the long-term sustainability of its dividend commitment. Maintain HOLD with a higher target price of MYR7.20 (from MYR6.25).
Hong Leong Bank
HL Bank's 9MFY6/13 recurring net profit of MYR1,440m (-0.9% YoY) was in line with the consensus of full-year forecasts. There was little to excite in 3QFY6/13 results, with net profit down 11% QoQ and 23% YoY due to tepid topline growth and higher credit costs. Forecasts are maintained, MYR15.80 TP (2013 P/BV of 2.1x).
OTHERS
AMMB: Manulife, Metlife among suitors for AMMB insurance unit. Manulife Financial Corp and Metlife Inc are among companies that have made bids for a controlling stake in the life insurance unit of AMMB Holdings Bhd, the third insurance deal in the country over the past year. Zurich Insurance Group, Hong Kong tycoon Richard Li's Pacific Century Group, ACE Ltd and two Japanese insurers have also submitted first-round bids to buy up to 70% in unlisted AmLife Insurance Bhd worth USD350m (MYR1.04b). (Source: The Star)
CIMB: Resumes Thailand Stock Exchange dual-listing plan. CIMB Group Holdings Bhd has officially resumed its plans for a dual listing on the Stock Exchange of Thailand (SET), after postponing it numerous times due to an unresolved double taxation issue. In a filing with Bursa Malaysia, CIMB Group said it had decided to resume its planned dual listing, following recent regulatory developments in Thailand. (Source: The Star)
DiGi: To invest in network modernization. DiGi.Com Bhd, which is looking to invest MYR750m as capital expenditure this year, has reiterated that it was still looking into the possibility of setting up a business trust. DiGi is currently exploring the trust as a potential vehicle for its capital management initiatives. On capex, 80% of this year's allocation would be mainly for its network modernisation for the long-term evolution (LTE) or 4G and 3G networks. (Source: The Star)
Iskandar Investment: IRDA confident of getting MYR21b new investments by year-end. Iskandar Regional Development Authority (IRDA) is confident of attracting MYR21b in new investments by the end of the year. Chief executive officer Datuk Ismail Ibrahim said this was based on the continuous strong interest shown towards the country's first economic growth corridor. Iskandar had received MYR5b in new investments as of the 1Q13, bringing the total cumulative committed to MYR111.3b from 2006. (Source: The Star)
Construction: Private sector continues to drive construction activity. The private sector continued to dominate construction activity in the country with an increase of share to 69.8% in 1Q13. This compares to the 68.4% share in the 4Q12. The total value of construction work done in the first quarter 2013 recorded a decrease of 5.4% QoQ to MYR21b. However, the percentage change YoY showed a significant growth of 18.4%. In 1Q13, the highest percentage share was contributed by the civil engineering sub-sector with 38.0%, followed by non-residential buildings (32.0%), residential buildings (25.8%) and special trade (4.2%).(Source: Business Times)
Wednesday, May 8, 2013
The election fever continues after the GE13....What next for Malaysian KLSE.....
Malaysia Airport Holdings
MAHB has announced that some of its contractors are facing difficulty in meeting the 28 June 2013 opening deadline. No details on a revised completion time and cost overruns were provided. This announcement is not a surprise, and that the market has priced in this risk already. Maintain earnings forecasts and MYR6.60 DCF-based target price. The stock is however downgraded to a HOLD (from BUY) for its narrowed 3% upside to target price.
Hartalega
FY3/13 net profit of MYR235m (+17% YoY) was in line, at 103% and street's full-year estimates. The share price has run up 12% in one-month due to the H7N9 newsflow, although note that the contagion rate has declined of late. Net profit forecasts (FY3/14: +7%, FY3/15: +7%) on better sales volume assumptions, but the impact to EPS is muted as we factor in the potential dilution from its outstanding warrants. Consequently, TP is unchanged at MYR5.40 (15x CY14 PER) and stock is downgraded to HOLD (from BUY), in view of the reduced upside.
OTHERS
Telekom Malaysia: Has enough cash to redeem MYR2b Sukuk. Telekom Malaysia Bhd has enough cash to redeem the MYR2b Sukuk due to mature on Dec 31, 2013. As at end-2012, TM had MYR3.7b in cash and bank balances. At the AGM on Tuesday, TM obtained shareholders' approvals for all the resolutions including the final dividend of 12.2 sen per share which will be paid on May 27. The total dividend payout including interim dividend, of 22 sen per share or MYR787m exceeded its dividend obligation of MYR700m. (Source: The Star)
Alam Maritim: Extension of contract for the provision of one accommodation vessel. Alam Maritim (M) Sdn Bhd, has recently been awarded an extension of contract by Petronas Carigali Sdn Bhd for the provision of one unit workboat. The Contract for the value of approximately MYR38m (inclusive of catering, lodging and de-mobilisation costs) will be effective from 9 October 2013 to 8 October 2014 is for a firm period of one year. (Source: Bursa Malaysia)
Banking: OCBC Bank records MYR811m net gain. OCBC Bank (Malaysia) Bhd has recorded a MYR811m net gain for the fiscal year ended December 31 2012, a four per cent jump from the previous year. Total income rose 8% to more than MYR2b while its pre-tax profit was up 5% YoY, to more than MYR1b. OCBC attributed the robust performance to strong growth in operating profit and reduction in impairment losses and provisions. Total gross loans, advances and financing grew 12% to MYR48b as at year-end, mainly due to additional consumer and business loans of MYR3.5b and MYR1.6b, respectively. Total assets grew 13% to MYR73b. (Source: Business Times)
No Gap Filling Yet
The FBMKLCI advanced 24.71 points to close at 1,776.73 yesterday. Its resistance level of 1,780 and 1,826 will cap market gains, whilst obvious support areas are located at 1,718 and 1,776. The Trading Idea is a SHORT-TERM BUY call on TUNEINS with upside target prices of MYR1.92 & MYR2.26, followed by a stop-loss of MYR1.49.
MAHB has announced that some of its contractors are facing difficulty in meeting the 28 June 2013 opening deadline. No details on a revised completion time and cost overruns were provided. This announcement is not a surprise, and that the market has priced in this risk already. Maintain earnings forecasts and MYR6.60 DCF-based target price. The stock is however downgraded to a HOLD (from BUY) for its narrowed 3% upside to target price.
Hartalega
FY3/13 net profit of MYR235m (+17% YoY) was in line, at 103% and street's full-year estimates. The share price has run up 12% in one-month due to the H7N9 newsflow, although note that the contagion rate has declined of late. Net profit forecasts (FY3/14: +7%, FY3/15: +7%) on better sales volume assumptions, but the impact to EPS is muted as we factor in the potential dilution from its outstanding warrants. Consequently, TP is unchanged at MYR5.40 (15x CY14 PER) and stock is downgraded to HOLD (from BUY), in view of the reduced upside.
OTHERS
Telekom Malaysia: Has enough cash to redeem MYR2b Sukuk. Telekom Malaysia Bhd has enough cash to redeem the MYR2b Sukuk due to mature on Dec 31, 2013. As at end-2012, TM had MYR3.7b in cash and bank balances. At the AGM on Tuesday, TM obtained shareholders' approvals for all the resolutions including the final dividend of 12.2 sen per share which will be paid on May 27. The total dividend payout including interim dividend, of 22 sen per share or MYR787m exceeded its dividend obligation of MYR700m. (Source: The Star)
Alam Maritim: Extension of contract for the provision of one accommodation vessel. Alam Maritim (M) Sdn Bhd, has recently been awarded an extension of contract by Petronas Carigali Sdn Bhd for the provision of one unit workboat. The Contract for the value of approximately MYR38m (inclusive of catering, lodging and de-mobilisation costs) will be effective from 9 October 2013 to 8 October 2014 is for a firm period of one year. (Source: Bursa Malaysia)
Banking: OCBC Bank records MYR811m net gain. OCBC Bank (Malaysia) Bhd has recorded a MYR811m net gain for the fiscal year ended December 31 2012, a four per cent jump from the previous year. Total income rose 8% to more than MYR2b while its pre-tax profit was up 5% YoY, to more than MYR1b. OCBC attributed the robust performance to strong growth in operating profit and reduction in impairment losses and provisions. Total gross loans, advances and financing grew 12% to MYR48b as at year-end, mainly due to additional consumer and business loans of MYR3.5b and MYR1.6b, respectively. Total assets grew 13% to MYR73b. (Source: Business Times)
No Gap Filling Yet
The FBMKLCI advanced 24.71 points to close at 1,776.73 yesterday. Its resistance level of 1,780 and 1,826 will cap market gains, whilst obvious support areas are located at 1,718 and 1,776. The Trading Idea is a SHORT-TERM BUY call on TUNEINS with upside target prices of MYR1.92 & MYR2.26, followed by a stop-loss of MYR1.49.
Monday, May 6, 2013
Most memorable GE13 in the history of Malaysia! Now is time to charge ahead .....
The just concluded 13th General Election (GE13) yesterday, 5 May 2013, ended
with the ruling coalition Barisan Nasional (BN) retaining power with a slightly
lesser majority than in the 12th General Election (GE12).
BN won 133 (60%) of the 222 Parliament seats contested, down from the 140
(63%) won in GE12.
OTHERS
Allianz: General insurance unit expects to beat industry growth rate. Allianz General Insurance Co (M) Bhd, a unit of Allianz Malaysia Bhd (AMB), expects to exceed the industry's projected growth rate this year by registering a double digit-growth for its gross written premiums. On the whole, it aims to at least match last year's performance in the current financial year. (Source: Star)
MNRB: Expects earnings boost from new products. MNRB Holdings Bhd said it expects its takaful insurance business as operated by Takaful Ikhlas Sdn Bhd to churn out higher earnings this year due to its new products and better distribution channels. Currently, more than 90 per cent of MNRB's net profit comes from Malaysian Reinsurance Bhd, a general reinsurance company. The rest is derived from Takaful Ikhlas, MNRB Retakaful Bhd, Malaysian Re (Dubai) Ltd (MRDL) and MMIP Services Sdn Bhd. (Source: Business Times)
Market: Foreigners net buyers of local stocks for 21 days. Foreign investors were net buyers of equities traded on Bursa Malaysia for 21 consecutive days, with the buying frenzy threatening to overshadow the current record of 20 weeks of consecutive buying by them. Interest by overseas investors has helped to boost the market by more than six per cent this year. YTD, foreign funds have a net investment totaling MYR13.2b in the local stock market, which is a huge sum considering that for 2012, the net investment from the funds was MYR13.7b. (Source: Business Times)
OTHERS
Allianz: General insurance unit expects to beat industry growth rate. Allianz General Insurance Co (M) Bhd, a unit of Allianz Malaysia Bhd (AMB), expects to exceed the industry's projected growth rate this year by registering a double digit-growth for its gross written premiums. On the whole, it aims to at least match last year's performance in the current financial year. (Source: Star)
MNRB: Expects earnings boost from new products. MNRB Holdings Bhd said it expects its takaful insurance business as operated by Takaful Ikhlas Sdn Bhd to churn out higher earnings this year due to its new products and better distribution channels. Currently, more than 90 per cent of MNRB's net profit comes from Malaysian Reinsurance Bhd, a general reinsurance company. The rest is derived from Takaful Ikhlas, MNRB Retakaful Bhd, Malaysian Re (Dubai) Ltd (MRDL) and MMIP Services Sdn Bhd. (Source: Business Times)
Market: Foreigners net buyers of local stocks for 21 days. Foreign investors were net buyers of equities traded on Bursa Malaysia for 21 consecutive days, with the buying frenzy threatening to overshadow the current record of 20 weeks of consecutive buying by them. Interest by overseas investors has helped to boost the market by more than six per cent this year. YTD, foreign funds have a net investment totaling MYR13.2b in the local stock market, which is a huge sum considering that for 2012, the net investment from the funds was MYR13.7b. (Source: Business Times)
Friday, May 3, 2013
Last call before the GE13 Poll......Let's get this over once and for all.....
| Subdued Loan Growth in March |
|
Loan growth slipped from 11.4% YoY in February 2013 to 10.6% YoY in March
2013, with the slippage in corporate lending being the primary cause of this.
Much remains a waiting game for now, the sentiment has been somewhat dampened by the General Election and that there should still be a pick-up in momentum thereafter. 2013 loan growth forecast of 10.7% is maintained, along with our BUYS on AMMB, BIMB, RHB Capital and HLFG, in that OTHERS Maybank: Named world's 13th strongest bank. Maybank, Southeast Asia’s fourth largest lender, is the world's 13th strongest bank, according to Bloomberg Markets' June issue. Maybank is the new entrant in the magazine's list of the world's 20 strongest banks. Maybank now has 2,200 branch offices in 20 countries, after emerging stronger from the 1997/1998 Asian financial crisis. Its rapid expansion overseas began with the purchase of a controlling stake in PT Bank Internasional Indonesia in 2008. (Source: Business Times) Nestle Malaysia: Plans MYR200m capex mostly on liquid drinks, confectionery expansion. Nestle (M) Bhd has earmarked more than MYR200m as capital expenditure (capex) to boost its operation in the current financial year. Last year the company spent about MYR160m as capex for the expansion of its culinary products and confectionery division. (Source: The Star) Daya Materials: Bags MYR199m job. Daya Materials Bhd has been awarded a EUR49.4m (MYR198.5m) contract by Boustead Naval Shipyard Sdn Bhd, in relation to the memorandum of understanding (MoU) between its unit Daya Oci Sdn Bhd and Cofely Axima. The contract is for the provision of full package relating to the heating, ventilation and air-conditioning (HVAC) work. (Source: The Star) Oil & Gas: Cendor to be Malaysia's major oilfield. Petronas has converted the Cendor oilfield offshore Peninsular Malaysia from a marginal field into one of the country's biggest oilfields, with estimated recoverable reserves of over 200m stock tank barrels (MMstb), more than 16 times what was first discovered. It announced yesterday the successful drilling of Cendor Graben-2 appraisal well within Block PM304 offshore Peninsular Malaysia. The well was drilled to a depth of over 1,000 m and confirmed the presence of oil and some gas-bearing reservoirs. (Source: The Star) Oil & Gas: Petronas receives LNG shipment from Nigeria. Petronas, Malaysia's state-owned oil and gas producer, received a cargo of liquefied natural gas at its Sungai Udang receiving terminal in Malacca, according to ship-tracking data. The Seri Bijaksana, with a capacity of 152,888 cu m, arrived on Wednesday in Malacca, according to ship transmissions captured by IHS Fairplay. Petronas is scheduled to start operations at its 3.8 million tonne-a-year Malacca terminal by mid-2013. (Source: Business Times) Infrastructure: M'sia, S'pore in final stages of Johor Baru-S'pore rail link plans. Malaysia and Singapore are in the final stages of their plans for the proposed rapid transport system (RTS) linking Johor Baru and the republic. The proposed alternative will be finally presented to the two governments, including the design, taking into account also the costing. Before the year-end, both governments will decide on the type of RTS to be implemented with the scheduled completion by 2018. (Source: The Star) |
Thursday, May 2, 2013
2 more days to the Malaysian DECIDES DAY! KLSE still standing firm on 1700 level..
CIMB Group
The key takeaway from a pre-results briefing with Shahnaz Jammal (Deputy Group CFO) and Renzo Viegas (Group Deputy CEO of CIMB Bank) is that CIMB 2.0 is progressing well but cost containment is still the main challenge for FY13 amid the prospect of ongoing negative JAWS.
Positively, the group appears on track to meeting its ROE target of 16% for FY13. The earnings forecasts and TP of MYR7.50 (1.8x FY13 P/BV, ROE: 15.9%) are maintained. 1Q13 results will be out on 21 May.
SOP
1Q13 results disappointed primarily due to low CPO ASP achieved and ~4% of new plantation area coming into maturity which eroded margins. SOP's earnings contribution for FY13 will be back loaded into 2H on CPO ASP recovery, seasonally stronger production and higher refining margin.
Still, cutting FY13-15 earnings forecasts by 30%/23%/23% on lowered CPO ASP assumptions. Due to lack of short term catalyst, SOP is downgraded to HOLD for now given limited upside to our new TP of MYR6.18 on 13x FY14 PER (previously 13x mid-FY14 PER).
SUNWAY
SunREIT's 9MFY6/13 core net profit of MYR163m is in line. The proposed 3rd interim DPU of 2.1sen (YTD: DPU of 6.3sen, +12% YoY) is also within expectations. Maintain earnings forecasts, MYR1.60 DCF-based TP and HOLD rating. SunREIT offers gross yield of 5.2% (FY14) vs. 4.9% for large-cap REITs.
OTHERS
Construction: 4 groups eye high-speed rail link project. Four consortiums will be bidding for the high-speed rail (HSR) link between Kuala Lumpur and Singapore. MMC Corp Bhd is forming a consortium with Gamuda Bhd and roping in Chinese and European system integrators to bid for the HSR project. The details of the HSR link is being ironed out and tenders will be called by year-end. (Source: Business Times)
O&G: MNGV in project funding talks. Malaysian NGV Sdn Bhd (MGNV), which will be setting up a MYR7b regasification plant in Tanjung Langsat, Johor, is in talks with Asian Development & Investment Bank Ltd to finance the mammoth project. (Source: The Edge Financial Daily)
REIT: SC should consider letting REITs buy greenfield assets. Local real estate investment trust (REIT) managers are asking the Securities Commission (SC) to consider allowing them to buy greenfield assets, according to Malaysian REIT Managers Association chairman Datuk Stewart LaBrooy. (Source: The Star)
Market: Ekuinas eyes MYR600m investment in high-potential local firms. Ekuiti Nasional Bhd (Ekuinas) is looking to deploy MYR600m in high-potential Malaysian companies this year, having already committed a total of MYR49m thus far to two private firms. Ekuinas has six target investment sectors oil and gas (O&G), education, services, fast moving consumer goods, healthcare, and retail and leisure. (Source: The Star)
Closes At A New High, But Poor Breadth PersistsThe FBMKLCI rose by 9.68 points to close at 1,717.65 on Tuesday. Its resistance level of 1,718 will cap market gains, whilst obvious support areas are located at 1,695 and 1,717. Trading idea is to maintain strong buy on Eversendai and Benalec. This two stocks are extremely oversold and undervalue comparing to the peers in the same segment. KLSERoadrunner predicts the stocks will run up within this week before the GE13.
The key takeaway from a pre-results briefing with Shahnaz Jammal (Deputy Group CFO) and Renzo Viegas (Group Deputy CEO of CIMB Bank) is that CIMB 2.0 is progressing well but cost containment is still the main challenge for FY13 amid the prospect of ongoing negative JAWS.
Positively, the group appears on track to meeting its ROE target of 16% for FY13. The earnings forecasts and TP of MYR7.50 (1.8x FY13 P/BV, ROE: 15.9%) are maintained. 1Q13 results will be out on 21 May.
SOP
1Q13 results disappointed primarily due to low CPO ASP achieved and ~4% of new plantation area coming into maturity which eroded margins. SOP's earnings contribution for FY13 will be back loaded into 2H on CPO ASP recovery, seasonally stronger production and higher refining margin.
Still, cutting FY13-15 earnings forecasts by 30%/23%/23% on lowered CPO ASP assumptions. Due to lack of short term catalyst, SOP is downgraded to HOLD for now given limited upside to our new TP of MYR6.18 on 13x FY14 PER (previously 13x mid-FY14 PER).
SUNWAY
SunREIT's 9MFY6/13 core net profit of MYR163m is in line. The proposed 3rd interim DPU of 2.1sen (YTD: DPU of 6.3sen, +12% YoY) is also within expectations. Maintain earnings forecasts, MYR1.60 DCF-based TP and HOLD rating. SunREIT offers gross yield of 5.2% (FY14) vs. 4.9% for large-cap REITs.
OTHERS
Construction: 4 groups eye high-speed rail link project. Four consortiums will be bidding for the high-speed rail (HSR) link between Kuala Lumpur and Singapore. MMC Corp Bhd is forming a consortium with Gamuda Bhd and roping in Chinese and European system integrators to bid for the HSR project. The details of the HSR link is being ironed out and tenders will be called by year-end. (Source: Business Times)
O&G: MNGV in project funding talks. Malaysian NGV Sdn Bhd (MGNV), which will be setting up a MYR7b regasification plant in Tanjung Langsat, Johor, is in talks with Asian Development & Investment Bank Ltd to finance the mammoth project. (Source: The Edge Financial Daily)
REIT: SC should consider letting REITs buy greenfield assets. Local real estate investment trust (REIT) managers are asking the Securities Commission (SC) to consider allowing them to buy greenfield assets, according to Malaysian REIT Managers Association chairman Datuk Stewart LaBrooy. (Source: The Star)
Market: Ekuinas eyes MYR600m investment in high-potential local firms. Ekuiti Nasional Bhd (Ekuinas) is looking to deploy MYR600m in high-potential Malaysian companies this year, having already committed a total of MYR49m thus far to two private firms. Ekuinas has six target investment sectors oil and gas (O&G), education, services, fast moving consumer goods, healthcare, and retail and leisure. (Source: The Star)
Closes At A New High, But Poor Breadth PersistsThe FBMKLCI rose by 9.68 points to close at 1,717.65 on Tuesday. Its resistance level of 1,718 will cap market gains, whilst obvious support areas are located at 1,695 and 1,717. Trading idea is to maintain strong buy on Eversendai and Benalec. This two stocks are extremely oversold and undervalue comparing to the peers in the same segment. KLSERoadrunner predicts the stocks will run up within this week before the GE13.
Tuesday, April 30, 2013
KLCI to continue to make new high.....
Sunway
Sunway's latest MYR222m job win has lifted its outstanding construction order book to MYR4.4b (+5%), improving the visibility of its construction earnings over the next 2-3 years.
Maintain earnings forecasts as this already imputed job wins of MYR1.8b for FY13. Our MYR2.65 RNAV-based TP and HOLD rating are under review pending the completion of Sunway's fundraising exercise (1-for-3 renounceable rights issue).
Malaysia Marine & Heavy Engineering
Contract flows are less forthcoming due to delays in new orders, which are only expected to crystalise by end-4Q13 at the earliest (previous expectation: 3Q13). With majority of ongoing projects to be completed in 2013, we lower our FY14-15 earnings estimates by 15%/4% to account for slower than expected order replenishment.
Accordingly, the TP is revised to MYR3.70 (-12%), on unchanged 18x FY14 PER basis. Share price is expected to trade sideways in the absence of catalyst in the short-midterm. Maintain Hold.
CIMB Group
CIMB Niaga's 1Q13 results were below expectations at just 21% of our full-year estimates, but with management holding out for an improved operating outlook in the following quarters, trim the earnings forecasts only marginally (-2% p.a. for FY13-15) on lower NIM assumptions, with little impact to CIMB Group (forecasts maintained).
It is expected CIMB Niaga to contribute to 33% of group earnings this year. Our CIMB Group TP of MYR7.50 (FY13 P/BV of 1.8x, ROE: 15.9%) is maintained.
OTHERS
Sime Darby: PNB finds buyer for non-core assets. Permodalan Nasional Bhd (PNB) has found a suitor to buy the non-core assets of Sime Darby Bhd. Other non-core assets that PNB is looking to divest include U-Insurance Sdn Bhd, the insurance arm of UMW Holdings Bhd. (Source: Business Times)
Syarikat Takaful: Expects higher revenue. Syarikat Takaful Malaysia Bhd aims for its revenue for the financial year 2013 to grow in line with the industry expansion of between 20% and 25%. (Source: The Star)
Oil & Gas: Progress Energy, Petronas secure first LNG buyer. Progress Energy Canada Ltd, Pacific NorthWest LNG Ltd and Petroliam Nasional Bhd (Petronas) have closed the previously announced transaction that saw Japex Montney Ltd, the Canadian subsidiary of Japan Petroleum Exploration Co Ltd (Japex), acquire a 10% interest in Progress Energy Canada’s natural gas assets in north-east British Columbia and in the proposed Pacific NorthWest LNG export facility on Canada’s west coast. As part of the transaction, Japex has agreed to buy a 10% share of the liquefied natural gas (LNG) facility’s production for a minimum of 20 years for domestic use in Japan. (Source: The Star)
Economics: Malaysia on track for 5%-6% GDP growth. Malaysia is on track to achieve gross domestic product (GDP) growth of 5% to 6% this year, driven by strong domestic demand and investment inflows despite the current slowdown in China, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said. The central bank has already included the risk from global slowdown in the projection and that the current situation in China would not affect the GDP target for the whole year. (Source: The Star)
M&A: Fitters, Deluge Fire sign MoU on merger. Fitters Diversified Bhd has entered into a memorandum of understanding (MoU) with Deluge Fire Protection (SEA) Pte Ltd (Deluge) to facilitate the merger of their fire protection businesses and listing of the merged entity on the Main Market of Bursa Malaysia. (Source: Business Times)
Boring And Range Bound At Lofty Levels
The FBMKLCI declined by 3.32 points to close at 1,707.97 yesterday. Its resistance levels of 1,707 and 1,718 will cap market gains, whilst obvious support areas are located at 1,688 and 1,703.
Trading idea is maintain strong buy for Eversendai. Recent sold down of the share is overdone and rebound is in the horizon. TP MYR1.70
Sunway's latest MYR222m job win has lifted its outstanding construction order book to MYR4.4b (+5%), improving the visibility of its construction earnings over the next 2-3 years.
Maintain earnings forecasts as this already imputed job wins of MYR1.8b for FY13. Our MYR2.65 RNAV-based TP and HOLD rating are under review pending the completion of Sunway's fundraising exercise (1-for-3 renounceable rights issue).
Malaysia Marine & Heavy Engineering
Contract flows are less forthcoming due to delays in new orders, which are only expected to crystalise by end-4Q13 at the earliest (previous expectation: 3Q13). With majority of ongoing projects to be completed in 2013, we lower our FY14-15 earnings estimates by 15%/4% to account for slower than expected order replenishment.
Accordingly, the TP is revised to MYR3.70 (-12%), on unchanged 18x FY14 PER basis. Share price is expected to trade sideways in the absence of catalyst in the short-midterm. Maintain Hold.
CIMB Group
CIMB Niaga's 1Q13 results were below expectations at just 21% of our full-year estimates, but with management holding out for an improved operating outlook in the following quarters, trim the earnings forecasts only marginally (-2% p.a. for FY13-15) on lower NIM assumptions, with little impact to CIMB Group (forecasts maintained).
It is expected CIMB Niaga to contribute to 33% of group earnings this year. Our CIMB Group TP of MYR7.50 (FY13 P/BV of 1.8x, ROE: 15.9%) is maintained.
OTHERS
Sime Darby: PNB finds buyer for non-core assets. Permodalan Nasional Bhd (PNB) has found a suitor to buy the non-core assets of Sime Darby Bhd. Other non-core assets that PNB is looking to divest include U-Insurance Sdn Bhd, the insurance arm of UMW Holdings Bhd. (Source: Business Times)
Syarikat Takaful: Expects higher revenue. Syarikat Takaful Malaysia Bhd aims for its revenue for the financial year 2013 to grow in line with the industry expansion of between 20% and 25%. (Source: The Star)
Oil & Gas: Progress Energy, Petronas secure first LNG buyer. Progress Energy Canada Ltd, Pacific NorthWest LNG Ltd and Petroliam Nasional Bhd (Petronas) have closed the previously announced transaction that saw Japex Montney Ltd, the Canadian subsidiary of Japan Petroleum Exploration Co Ltd (Japex), acquire a 10% interest in Progress Energy Canada’s natural gas assets in north-east British Columbia and in the proposed Pacific NorthWest LNG export facility on Canada’s west coast. As part of the transaction, Japex has agreed to buy a 10% share of the liquefied natural gas (LNG) facility’s production for a minimum of 20 years for domestic use in Japan. (Source: The Star)
Economics: Malaysia on track for 5%-6% GDP growth. Malaysia is on track to achieve gross domestic product (GDP) growth of 5% to 6% this year, driven by strong domestic demand and investment inflows despite the current slowdown in China, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said. The central bank has already included the risk from global slowdown in the projection and that the current situation in China would not affect the GDP target for the whole year. (Source: The Star)
M&A: Fitters, Deluge Fire sign MoU on merger. Fitters Diversified Bhd has entered into a memorandum of understanding (MoU) with Deluge Fire Protection (SEA) Pte Ltd (Deluge) to facilitate the merger of their fire protection businesses and listing of the merged entity on the Main Market of Bursa Malaysia. (Source: Business Times)
Boring And Range Bound At Lofty Levels
The FBMKLCI declined by 3.32 points to close at 1,707.97 yesterday. Its resistance levels of 1,707 and 1,718 will cap market gains, whilst obvious support areas are located at 1,688 and 1,703.
Trading idea is maintain strong buy for Eversendai. Recent sold down of the share is overdone and rebound is in the horizon. TP MYR1.70
Monday, April 29, 2013
KLCI all time high! Positive sentiments to continue to propel KLCI to new high.
Malaysia Airports Holdings
1Q13 core operating income of MYR119.5m (+23.6% YoY) was ahead of the consensus. Outperformance stems from higher traffic growth of 8.7% versus 7%-8% growth assumption.
Things are expected to perform better as many airlines have commenced new services in 2Q13, and KLIA is the second fastest growing airport in Asia for 1Q13 with a growth of 11.1% YoY.
No change to target price and BUY recommendation. KLIA2 is likely to be delayed, causing a temporary overhang on the stock. Management reassures that they will guise the market soonest possible.
Eversendai
Eversendai acquisition of Singapore Technics O&G Limited is seen as a positive move from the analysts, paving the way for more O&G contract. This is in line with the management’s plan to expand into interrelated sectors. There is also a “synergy” between both of them as Technics specializes in the design and fabrication of complex and highly customised process modules and equipment. This also includes gas compression packages, which are integrated to form the operating system for production operations and storage applications in oil and gas exploration and production activities (onshore and offshore).
More job in flows to Eversendai in coming weeks, the bid of of a multi-billion structure steel work in Saudi is progressing well ahead of management expectations.The group has put in bids for RM12bn worth of projects in the Middle East, India and Malaysia. The focus will still be on the Gulf region though opportunities on the local scene have emerged in the form of power plant and oil & gas projects. There is also scope for project awards in India where new airports are being planned. Eversendai should not have a problem clinching RM1bn-1.5bn worth of new jobs p.a. and hitting its RM2bn revenue target by 2017. The current order book is RM1.4bn.
Reiterate outperformance for an undervalued stock with huge potential of growth in the O&G industry going forward. Eversendai is seen as the cheapest stock in the construction universe.
OTHERS
FGV: Mulls Papua New Guinea foray. FELDA Global Ventures Holdings Bhd (FGV) may venture into Papua New Guinea to increase its plantation land. It is conducting feasibility studies and technical due diligence and if it decides to enter PNG, FGV can easily start with an initial 10,000ha. (Source: Business Times)
MAS: Oneworld factor lifts MAS passenger load 3.5% in Q1. Malaysia Airlines' (MAS) entry into the Oneworld alliance, among other factors, has lifted loads, although not drastically. The airline saw a 3.5% rise in passenger loads for the first three months of 2013 to 76.6% from the 73% recorded a year ago. (Source: The Star)
WCT: To build two more shopping complexes. WCT Bhd is going big on malls with the addition of another two malls in Overseas Union Garden (OUG), Kuala Lumpur, and Kemayan City, Johor to its portfolio in a bid for growth. (Source: The Star)
Building Material: Local steel mills poised for turnaround in 4Q13. Industry players
note that the government's recent move to curb the import of cheap steel and increase the rollout of projects under the Economic Transformation Programme (ETP) will spur domestic steel demand. The industry is already beginning to see some positive signs in 1Q13. Once the issue of cheap steel imports is addressed, industry turnaround is more certain and likely to be in 4Q13 or 1Q14. (Source: The Edge Weekly)
Some Firm Price Action Ahead Of GE13
The FBM KLCI rose 5.01 points on a WoW basis to close at 1,711.29 last Friday. The index closed up on low market interest and volume ahead of GE13 on 5 May. The obvious support areas for the FBM KLCI are in the 1,664 to 1,711 zone. The key resistance levels of 1,713 and 1,718 will see some heavy liquidation activities.
1Q13 core operating income of MYR119.5m (+23.6% YoY) was ahead of the consensus. Outperformance stems from higher traffic growth of 8.7% versus 7%-8% growth assumption.
Things are expected to perform better as many airlines have commenced new services in 2Q13, and KLIA is the second fastest growing airport in Asia for 1Q13 with a growth of 11.1% YoY.
No change to target price and BUY recommendation. KLIA2 is likely to be delayed, causing a temporary overhang on the stock. Management reassures that they will guise the market soonest possible.
Eversendai
Eversendai acquisition of Singapore Technics O&G Limited is seen as a positive move from the analysts, paving the way for more O&G contract. This is in line with the management’s plan to expand into interrelated sectors. There is also a “synergy” between both of them as Technics specializes in the design and fabrication of complex and highly customised process modules and equipment. This also includes gas compression packages, which are integrated to form the operating system for production operations and storage applications in oil and gas exploration and production activities (onshore and offshore).
Eversendai will leverage on Technics’ existing O&G business and fullyutilize its expertise in structural steel works to bid for any O&G fabrication projects in the foreseeable future. The management did also indicate in a previous briefing that it may organically increase the stake in Technics.
More job in flows to Eversendai in coming weeks, the bid of of a multi-billion structure steel work in Saudi is progressing well ahead of management expectations.The group has put in bids for RM12bn worth of projects in the Middle East, India and Malaysia. The focus will still be on the Gulf region though opportunities on the local scene have emerged in the form of power plant and oil & gas projects. There is also scope for project awards in India where new airports are being planned. Eversendai should not have a problem clinching RM1bn-1.5bn worth of new jobs p.a. and hitting its RM2bn revenue target by 2017. The current order book is RM1.4bn.
Reiterate outperformance for an undervalued stock with huge potential of growth in the O&G industry going forward. Eversendai is seen as the cheapest stock in the construction universe.
OTHERS
FGV: Mulls Papua New Guinea foray. FELDA Global Ventures Holdings Bhd (FGV) may venture into Papua New Guinea to increase its plantation land. It is conducting feasibility studies and technical due diligence and if it decides to enter PNG, FGV can easily start with an initial 10,000ha. (Source: Business Times)
MAS: Oneworld factor lifts MAS passenger load 3.5% in Q1. Malaysia Airlines' (MAS) entry into the Oneworld alliance, among other factors, has lifted loads, although not drastically. The airline saw a 3.5% rise in passenger loads for the first three months of 2013 to 76.6% from the 73% recorded a year ago. (Source: The Star)
WCT: To build two more shopping complexes. WCT Bhd is going big on malls with the addition of another two malls in Overseas Union Garden (OUG), Kuala Lumpur, and Kemayan City, Johor to its portfolio in a bid for growth. (Source: The Star)
Building Material: Local steel mills poised for turnaround in 4Q13. Industry players
note that the government's recent move to curb the import of cheap steel and increase the rollout of projects under the Economic Transformation Programme (ETP) will spur domestic steel demand. The industry is already beginning to see some positive signs in 1Q13. Once the issue of cheap steel imports is addressed, industry turnaround is more certain and likely to be in 4Q13 or 1Q14. (Source: The Edge Weekly)
Some Firm Price Action Ahead Of GE13
The FBM KLCI rose 5.01 points on a WoW basis to close at 1,711.29 last Friday. The index closed up on low market interest and volume ahead of GE13 on 5 May. The obvious support areas for the FBM KLCI are in the 1,664 to 1,711 zone. The key resistance levels of 1,713 and 1,718 will see some heavy liquidation activities.
Friday, April 26, 2013
Another quiet day....... Look like a construction play day
IJM Land
The crystalisation of major construction job wins by the end of this year, record-high property sales, strategic property landbanks with high capital appreciation potential and an expansion at its Kuantan Port are not fully reflected in IJM Corp's share price, in our view. We fine-tune our earnings forecasts post housekeeping, and raise our RNAV-based target price by 9% to MYR6.10. IJM Corp is now a BUY. Current valuations, at 13.2x CY14 earnings, are below its long-term mean of 14x. Our new TP implies a CY14 PER of 14.7x.
OTHERS
PChem: Investing MYR1.5b in Kuantan plant with BASF. Petronas Chemicals Group Bhd (PChem) and German chemicals giant BASF are investing USD500m (MYR1.5b) in an integrated aroma ingredients production facility in Gebeng, Kuantan, expanding on an existing joint venture (JV) there. (Source: The Star)
JTI: High dividends if there is excess cash. JT International's CFO Thean Nam Hooi said the company will continue paying high dividends if it has no major capital expenditure requirement. However, Thean also said that a high dividend payout for this year may not be possible as JTI expects the operating environment to remain "extremely challenging". This is due to the impact of illegal cigarette sales and from certain local brands being sold below the minimum price. (Source: Business Times)
Astro: PT Direct Vision claims USD20b from Astro. PT Direct Vision (PTDV) of Indonesia has served a statement of claim for USD20b (MYR60.8b) against Measat Broadcast Network Systems Sdn Bhd (MBNS) and its parent, Astro Malaysia Holdings Bhd, for "immaterial loss" resulting from the 2008 dispute over the proposed DTH pay TV business in Indonesia. (The Edge Daily)
Bright Packaging: Cancels dividend. Bright Packaging Industry Bhd's new board of directors have revoked the company's earlier announcement on the 100% dividend policy payout for the next five years. The current board said this is because the focus of the company, for the time being, is growth. (Source: The Star)
Property: Broadway Malyan wins design job for Bandar Malaysia. 1Malaysia Development Bhd (1MDB) has appointed an international team in partnership with local planners to create the master plan for Bandar Malaysia at the Sungai Besi airport in Kuala Lumpur. Led by internationally-acclaimed master planner Broadway Malyan (BM), the team will be supported by world-class design and engineering teams from Arup and Sinclair Knight Merz, in collaboration with local planner Arah Rancang Malaysia (AR). (Source: The Star)
FBMKLCI Will Be Boring And Range Bound
The FBMKLCI declined by a marginal 1.01 points to close at 1,706.34 yesterday. Its resistance levels of 1,706 and 1,716 will cap market gains, whilst obvious support areas are located at 1,688 and 1,704.
Trading idea is a Short-Term Buy on INARI with upside target areas at MYR0.63 & MYR0.72. Stop loss is at MYR0.48.
There is a wide speculations in the market that Eversendai’s executive chairman and group managing director AK Nathan may privatise Eversendai in short-mid term. Eversendai is not available to comment on this news speculation. Eversendai ends trading at 1.09 at Friday closing and believe to be trending higher next week on possible announcement of big contract win in the Kingdom of Saudi Arabia in the coming weeks. Eversendai is among the cheapest stock in the construction universe, with 9 times forward PER;8% 2012 to 2015 net profit CAGR;and 3.2% dividend yield.
The crystalisation of major construction job wins by the end of this year, record-high property sales, strategic property landbanks with high capital appreciation potential and an expansion at its Kuantan Port are not fully reflected in IJM Corp's share price, in our view. We fine-tune our earnings forecasts post housekeeping, and raise our RNAV-based target price by 9% to MYR6.10. IJM Corp is now a BUY. Current valuations, at 13.2x CY14 earnings, are below its long-term mean of 14x. Our new TP implies a CY14 PER of 14.7x.
OTHERS
PChem: Investing MYR1.5b in Kuantan plant with BASF. Petronas Chemicals Group Bhd (PChem) and German chemicals giant BASF are investing USD500m (MYR1.5b) in an integrated aroma ingredients production facility in Gebeng, Kuantan, expanding on an existing joint venture (JV) there. (Source: The Star)
JTI: High dividends if there is excess cash. JT International's CFO Thean Nam Hooi said the company will continue paying high dividends if it has no major capital expenditure requirement. However, Thean also said that a high dividend payout for this year may not be possible as JTI expects the operating environment to remain "extremely challenging". This is due to the impact of illegal cigarette sales and from certain local brands being sold below the minimum price. (Source: Business Times)
Astro: PT Direct Vision claims USD20b from Astro. PT Direct Vision (PTDV) of Indonesia has served a statement of claim for USD20b (MYR60.8b) against Measat Broadcast Network Systems Sdn Bhd (MBNS) and its parent, Astro Malaysia Holdings Bhd, for "immaterial loss" resulting from the 2008 dispute over the proposed DTH pay TV business in Indonesia. (The Edge Daily)
Bright Packaging: Cancels dividend. Bright Packaging Industry Bhd's new board of directors have revoked the company's earlier announcement on the 100% dividend policy payout for the next five years. The current board said this is because the focus of the company, for the time being, is growth. (Source: The Star)
Property: Broadway Malyan wins design job for Bandar Malaysia. 1Malaysia Development Bhd (1MDB) has appointed an international team in partnership with local planners to create the master plan for Bandar Malaysia at the Sungai Besi airport in Kuala Lumpur. Led by internationally-acclaimed master planner Broadway Malyan (BM), the team will be supported by world-class design and engineering teams from Arup and Sinclair Knight Merz, in collaboration with local planner Arah Rancang Malaysia (AR). (Source: The Star)
FBMKLCI Will Be Boring And Range Bound
The FBMKLCI declined by a marginal 1.01 points to close at 1,706.34 yesterday. Its resistance levels of 1,706 and 1,716 will cap market gains, whilst obvious support areas are located at 1,688 and 1,704.
Trading idea is a Short-Term Buy on INARI with upside target areas at MYR0.63 & MYR0.72. Stop loss is at MYR0.48.
There is a wide speculations in the market that Eversendai’s executive chairman and group managing director AK Nathan may privatise Eversendai in short-mid term. Eversendai is not available to comment on this news speculation. Eversendai ends trading at 1.09 at Friday closing and believe to be trending higher next week on possible announcement of big contract win in the Kingdom of Saudi Arabia in the coming weeks. Eversendai is among the cheapest stock in the construction universe, with 9 times forward PER;8% 2012 to 2015 net profit CAGR;and 3.2% dividend yield.
Thursday, April 25, 2013
Another Jittery Trading day......
Public Bank
1Q13 earnings were within expectations. But, with NIMs compressing much more than expected, trimmed FY13-15 earnings by 2-5%. Public Bank's share price is close to its all-time high is testimony to its strong fundamentals, with investors gaining exposure to a group that continues to steadily garner market share in the consumer segment.
Current valuations, however, appear toppish with the stock trading close to 1 SD above its mean PER and P/BV, with just an 8% upside to our TP of MYR17.60 (P/BV target of 3.2x, +1 SD from mean). Dividend yields are fair at 3.2% for FY13.
DIGI.COM
Digi's 1Q13 net profit of MYR329m (+2% YoY, +34% QoQ) was 19% the consensus on full-year forecast. This is in line with the expectation of accelerated depreciation (MYR91m in 1Q against c.MYR150m for the full year) to taper off in the subsequent quarters (1Q13 EBITDA was 24% of full-year forecast). A 3.8sen DPS was declared, 90% payout. Overall, the sector continues to be devoid of strong re-rating catalysts.
Kossan Rubber
Having underperformed its peers in 2012, Kossan's share price has risen 13% YTD, outperforming peers by 5-ppt YTD. It is believe its share price performance will continue to be supported by falling rubber prices, along with a more assertive growth strategy and dividend payout.
FY13/14/15 EPS forecasts are raised by 6%/ 10%/9% on assumptions of stronger sales and better margins.
Pavilion REIT
PavREIT's 1Q13 net profit of MYR54.3m (+14% YoY, +8% QoQ) was within our and consensus expectations.
Maintain FY13-15 earnings forecasts and DCF-based TP of MYR1.63. The REIT has risen 14% in price since Jan 2013, outperforming the KLCI’s 2% rise. It currently trades at an FY14 gross yield of 4.8% vs the large-cap REIT average of 5.0%. Total return is less than 10%.
OTHERS
UMW: Primed for stronger showing. UMW Holdings Bhd is anticipating a stronger showing this year as its drilling operations and oilfield services and manufacturing and engineering (M&E) activities move upscale. The group has set aside a total of MYR1.3b for capital expenditure this year to boost its vast operations. (Source: Business Times)
Selangor Properties: To develop 105ha in Selangor. Selangor Properties Bhd plans to develop about 105.2ha in Selangor over the next few years. Firstly, it hopes to develop its landbank of about 32.4ha in the areas of Bukit Permata and Selayang Mulia, Selangor. (Source: The Star)
Plantation: Indonesia to limit size of new oil palm estates. Indonesia is working on a regulation to restrict to 100,000ha plantation area for new private palm oil firms, as the world's top producer of the edible oil seeks to open up the industry to smaller players. The regulation would not be retroactive. Companies that have acquired more than 100,000ha can still manage them. (Source: The Star)
Property: 5% to 10% property price correction seen. Luxury condominiums and even landed property may face a 5%-10% price correction this year in response to a slower occupancy rate last year. This does not, however, mean that property prices would start to tumble as overall mass market housing would be able to sustain slower growth. (Source: The Star)
Healthcare: Nusa Gapurna plans medical centre in MYR11b PJ Sentral project. Nusa Gapurna Development Sdn Bhd is in talks with a few parties, including the Pantai Group and KPJ Healthcare Bhd, to set up a medical facility in Phase Two of its flagship MYR11b PJ Sentral project. Separately, Nusa Gapurna is looking at real estate investment trust (REIT) option for the last of its six office towers, which form part of PJ Sentral's first phase. (Source: The Star)
Iskandar: Attracted RM5b in Q1, committed investments at MYR111b. Iskandar Malaysia attracted RMYR5.06b new investments for the January-to-March period, with committed investments totalling MYR111.37b from 2006 up to March 31. Of the total cumulative committed investments, MYR44.82b, or 40.2%, represents investments that have been realised. (Source: The Star)
FBMKLCI Is Still Resilient
The FBMKLCI climbed 6.96 points to close at 1,707.35 yesterday. Its resistance levels of 1,707 and 1,716 will cap market gains, whilst obvious support areas are located at 1,689 and 1,705. Trading Idea is a Take Profit call on MISC with downside target areas at MYR4.28 & MYR4.08.
1Q13 earnings were within expectations. But, with NIMs compressing much more than expected, trimmed FY13-15 earnings by 2-5%. Public Bank's share price is close to its all-time high is testimony to its strong fundamentals, with investors gaining exposure to a group that continues to steadily garner market share in the consumer segment.
Current valuations, however, appear toppish with the stock trading close to 1 SD above its mean PER and P/BV, with just an 8% upside to our TP of MYR17.60 (P/BV target of 3.2x, +1 SD from mean). Dividend yields are fair at 3.2% for FY13.
DIGI.COM
Digi's 1Q13 net profit of MYR329m (+2% YoY, +34% QoQ) was 19% the consensus on full-year forecast. This is in line with the expectation of accelerated depreciation (MYR91m in 1Q against c.MYR150m for the full year) to taper off in the subsequent quarters (1Q13 EBITDA was 24% of full-year forecast). A 3.8sen DPS was declared, 90% payout. Overall, the sector continues to be devoid of strong re-rating catalysts.
Kossan Rubber
Having underperformed its peers in 2012, Kossan's share price has risen 13% YTD, outperforming peers by 5-ppt YTD. It is believe its share price performance will continue to be supported by falling rubber prices, along with a more assertive growth strategy and dividend payout.
FY13/14/15 EPS forecasts are raised by 6%/ 10%/9% on assumptions of stronger sales and better margins.
Pavilion REIT
PavREIT's 1Q13 net profit of MYR54.3m (+14% YoY, +8% QoQ) was within our and consensus expectations.
Maintain FY13-15 earnings forecasts and DCF-based TP of MYR1.63. The REIT has risen 14% in price since Jan 2013, outperforming the KLCI’s 2% rise. It currently trades at an FY14 gross yield of 4.8% vs the large-cap REIT average of 5.0%. Total return is less than 10%.
OTHERS
UMW: Primed for stronger showing. UMW Holdings Bhd is anticipating a stronger showing this year as its drilling operations and oilfield services and manufacturing and engineering (M&E) activities move upscale. The group has set aside a total of MYR1.3b for capital expenditure this year to boost its vast operations. (Source: Business Times)
Selangor Properties: To develop 105ha in Selangor. Selangor Properties Bhd plans to develop about 105.2ha in Selangor over the next few years. Firstly, it hopes to develop its landbank of about 32.4ha in the areas of Bukit Permata and Selayang Mulia, Selangor. (Source: The Star)
Plantation: Indonesia to limit size of new oil palm estates. Indonesia is working on a regulation to restrict to 100,000ha plantation area for new private palm oil firms, as the world's top producer of the edible oil seeks to open up the industry to smaller players. The regulation would not be retroactive. Companies that have acquired more than 100,000ha can still manage them. (Source: The Star)
Property: 5% to 10% property price correction seen. Luxury condominiums and even landed property may face a 5%-10% price correction this year in response to a slower occupancy rate last year. This does not, however, mean that property prices would start to tumble as overall mass market housing would be able to sustain slower growth. (Source: The Star)
Healthcare: Nusa Gapurna plans medical centre in MYR11b PJ Sentral project. Nusa Gapurna Development Sdn Bhd is in talks with a few parties, including the Pantai Group and KPJ Healthcare Bhd, to set up a medical facility in Phase Two of its flagship MYR11b PJ Sentral project. Separately, Nusa Gapurna is looking at real estate investment trust (REIT) option for the last of its six office towers, which form part of PJ Sentral's first phase. (Source: The Star)
Iskandar: Attracted RM5b in Q1, committed investments at MYR111b. Iskandar Malaysia attracted RMYR5.06b new investments for the January-to-March period, with committed investments totalling MYR111.37b from 2006 up to March 31. Of the total cumulative committed investments, MYR44.82b, or 40.2%, represents investments that have been realised. (Source: The Star)
FBMKLCI Is Still Resilient
The FBMKLCI climbed 6.96 points to close at 1,707.35 yesterday. Its resistance levels of 1,707 and 1,716 will cap market gains, whilst obvious support areas are located at 1,689 and 1,705. Trading Idea is a Take Profit call on MISC with downside target areas at MYR4.28 & MYR4.08.
Wednesday, April 24, 2013
12 days countdown to GE......
Subscribe to:
Posts (Atom)