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)