Newz Bits 220212

Highlights of the day

§         ECS ICT (Stock idea): High dividend yield stock (BUY, TP: RM1.70) [download report]

ECS ICT is a distributor of ICT products in Malaysia, and is thus a proxy to ICT spending in Malaysia.  It announced its FY11 results last night, which places the stock on an FY11 PER of only 5.6x with a net cash per share of 56 sen!  Its proposed dividend also translates into an attractive net dividend yield of 5.7%.  We have not met with management and our Buy recommendation is purely based on publicly available information.

§         Malaysia Marine & Heavy Engineering (3QFY11 Results): A disappointing year (Maintain SELL, TP: RM4.21) [download report]

9MFY11 net profit of RM206m (-36% y-o-y, -42% q-o-q) was disappointing making up only 51% of house and 42% of consensus full year estimates. The variance from our results were due to (i) delays in projects delivery (ie. Gumusut-Kakap load-out), (ii) lower than expected recognition from new projects, and (iii) higher-than-expected effective tax rates. At current price, MMHE is trading at a hefty PE of 22x, a 51% premium over average comparable peers in the region. Considering MMHE’s smaller net income and smaller market capitalization against closest peers Sembcorp Marine and Keppel Corp, as well as slower growth in the next 2 years, we feel that its PER valuation is unjustifiably rich. Reduce target price from RM4.96 to RM4.21. Maintain our SELL.

Other reports

§         Newz Bits [download report]

Other Malaysian news

§         Maxis: Poised for special dividend payout

§         YTL Corp: To delist YTL Cement

§         MAHB: Sees challenging 2012

§         Alliance Financial Group: Announces record dividend as profits rise

§         Eversendai: Wins new RM185m contracts in Mideast, Malaysia

§         Glomac: Wins bid for Klang Valley parcels

§         Iris: Partners to build waste plant in China

§         Scomi Engineering: Notches milestone in India monorail project   

§         Construction: Alstom-Mudajaya wins Tanjung Bin job

§         Technology: SilTerra-Mimos partnership heralds new start

§         Telco: M&A talks between mobile service operators

§         Economy: FDI up 12% y-o-y in 2011

Global news

§         US: Margins widen at companies as wages lag behind

§         US: Obama administration said to release corporate tax plan

§         Europe: Greece reaches agreement on biggest sovereign restructuring

§         Europe: Euro-area central banks said to swap Greek portfolio bonds

§         Europe: EU to move to suspend funds to Hungary

§         Europe: Consumer confidence gains

§         Britain: Biggest budget surplus in four years

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