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)