Sie sind auf Seite 1von 5
Market Dateline PP 7767/09/2010(025354) RHB Research Institute RHB Equity 360 ° 1 September 2010 (Benchmarking,

Market Dateline PP 7767/09/2010(025354) RHB Research Institute

RHB Equity 360 °

1 September 2010 (Benchmarking, Property, Semicon, O&G, Sunway City, Glomac, Maxis, Kurnia Asia, KPJ, KNM; Technical: UMW)

Top Story : Benchmarking – Positive funds flow Market Update

- Despite our more cautious views, trading values for the Bursa Malaysia stocks rose by 61% for the YTD. More specifically, funds flows to the FBM100 stocks have remained positive over the last 1M and 3M, indicating the still-bullish flow of liquidity into the equity market.

- The implied positive funds flow benefitted mostly banks, power, plantation and telecom, but this is not surprising given the four sectors account for a combined 67.4% weighting on the FBM100.

- In the last 1M and 3M, the funds flow appears to have turned negative for some sectors including infrastructure (as interest in PLUS appears to have peaked), transport and semiconductor/IT (on fears of a sharper-than-expected global economic slowdown), and gaming (due to concerns of a tougher regulatory environment). In contrast, the 1M changes in trading values suggest more interest in the banks (on better- than-expected quarterly earnings) and the plantation sector, which saw a significant jump in trading value compared to three months ago following a +5.7% rise in CPO prices over the same period.

- This suggests that investors are already looking forward to 2011 PER of 14.7x and normalised earnings growth of 14.5%. We note that our corporate earnings forecasts have largely taken into account the anticipated slowdown in Malaysia’s estimated GDP growth to 5% in 2011, from 7.3% in 2010. As it stands, the gain in FBM100 index weighting for the banks also reflects the robust underlying economic conditions. We thus maintain our recommendation to focus on the better-rated stocks.

Sector Call

Property : IFRIC 15 deferred to 2012

Sector Update

- From our recent checks with a few developers, the effective implementation date for the new accounting standard – IFRIC 15 on real estate development has been deferred to Jan 2012, from July 2010 previously.

- According to MASB’s website, the deferment was to allow stakeholders to continue deliberating its implementation as it noted that the sell-and-build business model used by developers in Asia, where both the seller and buyer share certain elements of risk over the real estate-in-progress, differs from real estate business models employed elsewhere.

- The deferment gives relief to investors as well as developers who are concerned with lumpy earnings recognition, which may potentially affect investor sentiment on property stocks.

- In our view, changes in accounting standards will not have an impact on company fundamentals, and the sector will continue to be driven by macroeconomic growth as well as Government’s policy to cool the “overheating” property sector.

- Currently, our valuations methodology for all the property stocks (except for REITs) under our coverage is based on RNAV, which is valid under both the current accounting stardard and IFRIC 15.

- We are cautiously optimistic at this juncture, as Bank Negara Malaysia may impose a cap on loan-to-value ratio for home mortgage. Pending further details, we maintain our Overweight rating on the sector.

Overweight

Semiconductor : Jul chip sales up mom

Neutral

Unisem : Maintain forecasts, fair value of RM2.31

Market Perform

MPI : Maintain forecasts and fair value of RM6.35

Market Perform

JCY : Maintain forecasts, fair value of RM1.32

Market Perform

Notion Vtec : Maintain forecasts, fair value of RM1.54

Underperform

- The yoy sales growth of 37.0% marked its ninth monthly growth on a yoy basis, although the growth rate continues to fall (vs. 42.6% in Jun and a high of 58.4% in Mar). Nonetheless, on mom basis, chip sales grew by 1.2%, stronger than Jun’s gain of 0.5%, but lower than the high of 5.2% in May.

- Intel recently warned of lower-than-expected earnings in the 3QCY10, reflecting concerns on the strength of PC demand from mature markets as sales were weaker than expected. Going forward, the chip industry will likely hinge on handheld devices, witnessed by sustained robust demand in smartphones and tablets.

- In addition, we note that lead times for 6, 8 and 10-inch wafer processes at foundries have fallen to two

weeks vs. 10 weeks previously during the beginning of the year. To recap, fabless IC suppliers previously had to order a minimum of four months in advance from foundries to compete for capacity.

Oil & Gas : SOGT finally awarded?

Sector Update

- Business Times reported that Korean company Samsung Engineering has been awarded a US$770m (RM2.4bn) contract from Petronas Carigali (PCSB) to build an oil and gas terminal in Sabah which we believe is the long-awaited SOGT project. Samsung Engineering will lead the engineering, procurement, construction and commissioning (EPCC) works while its local partner is Naim Cendera S/B Engineering (NCSB), a Sarawak-based construction subsidiary of Naim Holdings.

- While Samsung Engineering has significant experience in energy projects, its local partner Naim Cendera is relatively new to the oil and gas sector, with their latest awards being from Assar Senari for the construction of an oil and gas jetty in Tanjung Manis in Jul.

- We expect contract awards to gain momentum going into the tail-end of FY10, with the next awards likely to be for brownfield maintenance. While this bodes well for the sector, we expect the new wins to only impact companies’ earnings in FY11. Maintain Neutral for now. Our top pick is Dialog (OP, FV = RM1.30).

Neutral

Corporate Highlights

Sunway City : Aggressive launches of new properties

Visit Note

- Following Suncity’s targeted new launches of RM1.76bn for 2010, management plans to put RM2.6bn GDV worth new projects into the market next year. These include: (i) South Quay condo and commercial component; (ii) Melawati garden villas; (iii) Sunway Velocity service apartment; and (iv) Overseas projects – Jiangyin and Tianjin SSTEC project.

- Suncity plans to rebuild its recurring income sources after the injection of 8 assets into Sunway REIT. Hence moving forward, Suncity will construct six new commercial properties, including (i) Sunway SOHO and office suites; (ii) The Pinnacle; (iii) Sunway Velocity Shopping Mall; (iv) Sunway Monash University Residence; (v) Sunway Medical Cancer Centre; and (vi) Lost World Hotel in Tambun.

- Following the listing of REIT, Suncity has ample room to gear up to fund the construction of the six new property assets and new landbank acquisitions. Indeed, Suncity is likely to seal two deals in 2H2010.

- We adjust our RNAV estimates to include Sunway Giza and Sunway Hotel Hanoi (acquisition completed in June 2010) as investment properties, and contribution from a new Penang land and Tianjin Eco City to projects DCF. Our revised fair value is hence RM5.45, based on an unchanged 15% discount to RNAV.

Outperform

Glomac : Buys land in Cyberjaya

News Update

- Glomac announced an agreement with Cyberview and Setia Haruman to buy 7 acres of land in Cyberjaya for RM27.4m.

- On the surface, the total consideration translates into a land cost of RM90 psf, as compared to RM26 psf for Mah Sing and RM36 psf for Paramount. However, considering that Glomac’s land is a commercial land with higher plot ratio and density compared to residential land, the acquisition price of RM27.4m is therefore reasonable.

- Upon completion of the acquisition, the same concept as Glomac Cyberjaya will be adopted, as the extension to the existing development of Glomac Cyberjaya. Currently, the existing development mainly

comprises commercial shop offices and a 15-storey office block. Thus far, 75% of the project has been sold, and the remaining 25% (RM100m) will be launched in FY11 (office block), targeted for en-bloc sale.

- As the GDV of the new piece of land was not given in the announcement, we maintain our FY11-13 forecast, pending update from the management.

- No change in our RNAV estimate, and likewise our fair value of RM1.56, based on a 30% discount to RNAV of RM2.23/share. Maintain Outperform.

Outperform

Maxis : 2QFY10 net profit declined 3.6% qoq on higher operating expenses

2QFY10 Results/Briefing Note

- 1HFY10 net profit of RM1,084m (-5% yoy) came in below expectations, at only 43.6% of our and 44.0% of the consensus full-year estimates. Key variances against our forecasts were: 1) lower-than-expected

Outperform

revenue; and 2) higher-than-expected administrative and network operation expenses.

- Management expects the new interconnect termination rates (which took place effective 15 Jul ’10) could hamper Maxis’ EBITDA by RM20-40m in FY10 (depending on traffic patterns), while the downward revision in Singapore roaming charges could hamper Maxis’ revenue by RM30m per annum. As for spectrum re- farming, Maxis expects the auction to be limited to existing players and to reach first landing by 1Q 2011.

- Management toned down their revenue guidance for FY10 from high single-digit to 5-6%, mainly due to the recent regulatory changes, which includes: 1) the downward revision in interconnection termination rates that came earlier-than-expected; and 2) the proposed drop in Malaysia-Singapore roaming charges, which would have a negative impact on its FY10 revenue growth.

- We are revising our FY10-12 net profit forecasts downwards by 5.6-6.3%, largely to account for: 1) lower ARPU assumptions; and 2) higher administrative expenses.

- DCF-derived fair value has been lowered by 7.3% from RM6.20 to RM5.75 (WACC=8.4%, TG=1.5%).

Kurnia Asia : Below expectations

2QFY10 Results/Briefing Note

- 1HFY12/10 net profit of RM27.1m (-RM60.1% yoy) was below expectations, accounting for 27% and 23% of our and consensus full-year forecasts respectively. We believe the lower-than-expected earnings were mainly due to: 1) slower-than-expected premium growth; 2) higher increase in unearned premium reserves; 3) higher management expense ratio; and 4) higher effective tax rate

- All in, our FY10-12 EPS forecasts are reduced by 24-42% p.a. After the earnings revision, we have cut our fair value to RM0.44 (from RM0.63), based on unchanged target PER of 9x FY11 EPS. We thus downgrade our call on the stock to Market Perform (from outperform).

Market Perform (down from OP)

Company

Quarter

Result

Results Comment And Changes To Forecasts

Recom

KPJ

2Q10

In line

No change to forecasts. Maintain fair value of RM4.51 based on unchanged target FY11 PER of 17x. We cut our FY10 core EPS forecast by 55% as we factor in the weaker- than-expected 1H earnings. However, we raise our FY11-12 core EPS marginally by 3.2% and 0.1% respectively.

OP, FV =

 

RM4.51

KNM

2Q10

Below

UP, FV =

 

RM0.37

Technical Highlights

Daily Trading Strategy : Volatility likely to increase in the near term…

- As buying momentum on the key heavyweights continued, the FBM KLCI shot up further to a more than 30-month high on Monday.

- Although the benchmark closed off its day high of 1,428.44 (+17.39 pts) at 1,422.49, and the stochastic oscillators have rebounded into the “overbought” region, there is still upside for the FBM KLCI towards the 1,450 resistance target due to the sustained buying support on the core bluechips, in our view.

- However, based on our observation, investors should expect higher volatility in the near term, as buying appears overstretched in the heavyweight bluechips.

- Moreover, with the dwindling daily turnover of late plus the constant negative market breadth, the market may roll into a profit-taking leg should investors decide to lock in profits on the core bluechips.

- Nevertheless, with the index sustaining at above the 10-day SMA near the 1,400 psychological level, as well as the 1,390 key technical level, upside is still possible in the immediate term.

Daily Technical Watch: UMW – Breaking the RM6.64 level will mark a fresh chart breakout on the stock …

- 10-day SMA:

RM6.466

- 40-day SMA:

RM6.343

- Support:

IS = RM6.26

S1 = RM5.95

S2 = RM5.54

- Resistance:

IR = RM6.64

R1 = RM7.01

R2 = RM7.2940

Bulletin Board

Co/Sector

News

Impact

Recom

Banking

StarBiz reported that some banks have started to

The full impact of the three OPR hikes that have

OW

 

lower mortgage rates again, with some as low as BLR-2.3%. (StarBiz)

taken place thus far is expected to be felt in 2H2010 and should help cushion competitive pressures on asset yields. Cutting lending rates could also help cushion the impact of the OPR hikes on loan growth.

Power RE resources that have been approved under the proposed Feed-in Tariff (FiT) include biomass, biogas, mini-hydro and solar photovoltaic. FiT forms part of the RE Act that is expected to be tabled before the Parliament next month and if passed, the mechanism is expected to be effective from 2Q2011. (StarBiz)

Approval of the Act would be a major step towards helping the Government achieve a higher generation mix from RE (targeted mix of 5.5% by 2015, from <1% currently). However, we believe much would still depend on the Government’s will power especially given that it is electricity consumers that would have to bear the higher cost of RE (via a 2% adjustment in electricity tariffs).

OW

Water According to Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim, there is no need to proceed with the Langat 2 project in haste and water sector restructuring remains as the state government’s priority. (Starbiz)

Neutral, we are keeping our view that water sector restructuring in Selangor would still take time before it materialises.

Neutral

 

Genting

According to an article in the New York Daily

Neutral, as we believe that this is part of the due

MP,

FV

=

Malaysia

News, the Aqueduct racino is still not a sure bet, as State Controller Thomas DiNapoli has concerns about the latest deal, and he must sign off on it before it becomes official. Sources in the report said the controller's office is worried that the company picked to run Aqueduct, Genting New York, was the sole qualified bidder; and about Genting's 3% stake in MGM Grand, which works with Pansy Ho - whose father is a Chinese casino magnate with reported mob ties. Note that the two outstanding approvals required are from State Controller DiNapoli and state Attorney General Andrew Cuomo. (New York Daily News)

diligence that would normally have to take place for any such approvals to go through, and that these concerns are not substantial enough to abort the deal. Ultimately, we believe that with the amount of money GM is going to invest in this racino, and the potential tax dollars the state would receive would go a long way in persuading the State Controller and Attorney general to vote positively on the deal.

RM3.25

Sime Darby Sime Darby is taking a re-look at some of its

This is not new news, as it has been highlighted

MP,

FV

=

property joint ventures and, where possible, is seeking to unwind ventures that do not create maximum value for itself. It is also in no hurry to list its Indonesian plantation arm, as was earlier speculated, preferring to enhance efficiencies before such an exercise. According to reliable sources, some of Sime Darby’s property joint ventures that may be studied closely by Bakke and his team are believed to include the RM1bil development in Shah Alam with Sunrise Bhd and other ventures formed with the Brunsfield Group. (The Star)

in our reports previously. We believe that while Sime would be unlikely to get out of these JVs that have already been formed with Sunrise and Brunsfield, we believe that from now on Sime is likely to focus on developing its vast landbank on its own, even if it takes them many more years, given that it has the knowledge, experience and expertise to do so.

RM8.35

Important Dates

Company

Entitlement details

Ex-date

Payment date

New entitlements OSK Ventures International

Rights issue of free warrants

13-Sep-10

-

Maxis

Interim single-tier tax exempt dividend of 8 sen

14-Sep-10

30-Sep-10

BIMB

Interim dividend of 1.5% less 25% tax

14-Sep-10

1-Oct-10

Scomi Engineering

Loan Stock Interest : Interest Payment of 4% for ICULS

17-Sep-10

30-Sep-10

Apex Healthcare Tiong Nam Logistics Eksons Corporation Eng Kah Corporation EP Manufacturing Parkson Holdings Parkson Holdings Lion Forest Industries Lion Diversified Holdings Lion Industries Corporation

Tax-exempt interim dividend of 4 sen Proposed first and final dividend of 7 sen less 25% tax Final dividend of 3 sen single tier Second tax exempt interim dividend of 3.75 sen First interim dividend of 1 sen less 25% tax First and final dividend of 6 sen tax exempt Distribution of treasury shares on the basis of 1-for-100 First and final dividend of 2 sen tax exempt First and final dividend of 1 sen tax exempt First and final dividend of 1.0% less 25% tax

27-Sep-10

15-Oct-10

29-Sep-10

26-Oct-10

20-Oct-10

18-Nov-10

27-Oct-10

12-Nov-10

4-Nov-10

23-Nov-10

24-Nov-10

15-Dec-10

24-Nov-10

15-Dec-10

24-Nov-10

15-Dec-10

25-Nov-10

15-Dec-10

2-Dec-10

22-Dec-10

Going “ex” on 2 Sep Yee Lee Corporation Yee Lee Corporation Hartalega Holdings Oriental Food Industries APM Automotive Holdings Gadang Holdings Plus Expressways

Share split on the basis of 1-into-2 Bonus issue on the basis of 2-for-5 Bonus issue on the basis of 1-for-2 Tax exempt dividend of RM0.02 Interim dividend of 8% less 25% tax Renounceable two-call rights issue on 2-for-3 basis + free warrants Single tier dividend of 7.5 sen

2-Sep-10

-

2-Sep-10

-

2-Sep-10

-

2-Sep-10

17-Sep-10

2-Sep-10

20-Sep-10

2-Sep-10

23-Sep-10

2-Sep-10

24-Sep-10

For

more details, see individual reports attached

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors, officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the actions of third parties in this respect.