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

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).

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.

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.

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.

12 days countdown to GE......

UEMLand : Land Sale To Kuok Brothers

The latest land sale in Puteri Harbour, Johor is expected to net a gain of MYR81m (1.87sen per share) to UEML's FY14 earnings. More importantly, the land sale to Kuok Brothers' will further enhance the profile and re-rate land/property prices in Nusajaya. Other stock to watch like Benalec and Tebrau who will likely benefits from the entrance of Kuok Brothers into Johor. Amanah REITS: Buys Factories In Penang We are positive on ARREIT's latest acquisition in Seberang Perai, Penang. New acquisitions with rental source are vital to sustain its dividend payments, especially after the disposal of Wisma UEP. This new asset is expected to enhance our FY14 DPU forecast by 0.4sen (8.5% gross yield). The FY14-15 earnings forecasts and DCF-based TP of MYR0.95 pending completion of the acquisition. Perdana Petroleum: A Younger, Better Fleet Perdana announced the purchase of two new, high-specification work barges from Nam Cheong. We see this as part of Perdana's ongoing fleet renewal and in support of Dayang’s bid for the Pan Malaysian Hook-up, Construction and Commissioning (HUCC) contract. No changes to the forecasts and TP. Perdana is valued at 10x FY14 PER, on par with its local peers. Further catalysts are: i) crystallisation of vessel charters to Dayang, and ii) further vessel acquisitions with firm contracts in the plan. OTHERS KLCCP: MYR5b mixed commercial project takes shape. Cititower Sdn Bhd, a JV between KLCC (Holdings) Sdn Bhd and Qatari Diar Asia Pacific Ltd, will build a mixed commercial development in the eastern corner of the KLCC development with an expected GDV of over MYR5b. The development is expected to be completed by the end of 2017. (Source: The Edge Daily) BHIC: Wins contracts worth MYR515m for works related to 2nd generation patrol vessels. Boustead Heavy Industries Corp Bhd (BHIC) via its sub-subsidiary company Contraves Advanced Devices Sdn Bhd (CAD) has been awarded two contracts by the Government totalling MYR514.9m for works related to second generation patrol vessels. The contract spans an implementation period of up to 10 years from the commencement date. (Source: The Star) Wah Seong: Inks deal with Japan's Shinko. Wah Seong Corporation Bhd has inked a joint-venture (JV) agreement with Shinko Ind Ltd from Japan to combine expertise and capabilities in the manufacture of turbines and other related ancillary equipment. (Source: The Star) TAS: Plans to diversify into vessel chartering. TAS Offshore Bhd plans to diversify into vessel chartering for the domestic oil and gas industry. It foresees increasing demand for such vessels in view of the surge in activities in the domestic industry. (Source: The Star) Autos: Proton's new models may be launched in next 12 months, including Perdana replacement. Proton Holdings Bhd is expected to reveal a string of announcements in the next twelve months, including the collaboration with Japanese auto giant Honda and the launch of new models. (Source: The Star) Market: PNB eyes MYR500b managed assets by 2020. Permodalan Nasional Bhd (PNB), one of the country's largest fund managers, aims to increase its assets under management by more than twofold to MYR500b by 2020. PNB currently has MYR239b worth of assets under management. (Source: Business Times) MISC: 12 months before new offer. It would take 12 months before Petroliam Nasional Bhd (Petronas) can launch a new takeover offer for MISC Bhd and not six months as previously reported. This is according to Section 34 of the Malaysian Code on Take-Overs and Mergers (2010). (Source: The Star) Coastal Contracts: To sell nine vessels with a total value of MYR434m. Coastal Contracts Bhd has secured contracts for the sale of nine offshore vessels with a total value of MYR434m. (Source: The Star) Tradewinds: Gets nod for privatization. Tradewinds Corporation Bhd shareholders have approved the proposal for its major shareholder and parties acting in concert to privatise the company. The privatisation will be via selective capital reduction and repayment exercise. Entitled shareholders will receive a total capital repayment of MYR347m, or MYR1.10 a share. (Source: The Star) Infrastructure: Shah Alam LRT link in pipeline. The government may build a third light rail transit (LRT) line from Kelana Jaya to Port Klang, believed to cost MYR5b to MYR6b. Dubbed the Shah Alam LRT line, Syarikat Prasarana Negara Bhd (Prasarana) is expected to call for tenders for the project next year, after a proper due diligence to be undertaken by the Land Public Transport Commission (SPAD) is completed. (Source: Business Times) Aviation: Air France returns to KLIA and wants to explore cooperation with MAS. After a 20-year absence, Air France has returned to KL International Airport (KLIA) and now that it is here, it wants to explore areas of cooperation with Malaysia Airlines (MAS). (Source: The Star) FBMKLCI Is Treading Water At Lofty Levels The FBMKLCI inched up 0.40 points to close at 1,706.68 yesterday. Its resistance levels of 1,706 and 1,716 will cap market gains, whilst obvious support areas are located at 1,688 and 1,702. Trading idea is a Take Profit call on TEBRAU with downside target areas at MYR1.00 & MYR1.20.