Highlights of the day
§ Industrial Production Index: November 2011: IPI slips unexpectedly [download report]
November industrial production index (IPI) was up only 1.8% y-o-y compared the consensus of 3.5% y-o-y. On the bright side, the October figure was revised up to 2.9% y-o-y from 2.8% y-o-y. The slower November growth was due to weaker manufacturing growth. It is very likely that economic troubles abroad are affecting local production. We expect for the IPI to grow at a slower pace of 1.7% y-o-y for December 2011 due to unfavorable external factors.
§ Top Glove (Company Update): Rich valuation, tough times ahead (Downgrade HOLD to SELL, TP: RM4.00) [download report]
We came back from Top Glove Corporation’s (Top Glove) analyst briefing feeling less sanguine about its growth prospects in 2012. In our view, Top Glove’s earnings growth would average 13% in FY12-14 albeit a rich PE valuation. It is trading at 23x FY12 EPS (28% above its historical average of 18x) while its peers are trading at single digit or low teens. We are forecasting a slower growth due to lower-than-expected sales volume and a product mix skewed towards natural rubber (80% latex) which has lower margins compared to nitrile. We may see upwards pressure on latex prices between Feb and May due to seasonally low production period. Downgrade HOLD to SELL.
Other reports
§ Plantation
§ Newz Bits [download report]
Other Malaysian news
§ SapuraCrest: JV gets RM315m subsea job offshore Vietnam
§ Maybank: Debit card spending up 20%
§ CIMB: To expand into Philippines
§ MAS: MAS may cut Sydney
§ DRB-Hicom: Sees RM2bn Pos profit
§ QL Resources: Expanding operations in Indonesia
§ Southern Steel: Signaland shareholder exits company
§ Dijaya: Brisk sales of Tropex Residence apartments
§ Delloyd Ventures: Expands bus chassis business
§ Can-One: Unaware of plan to privatise or merge with Kian Joo
§ Xidelang: Navis has no plan to buy Xidelang Stake
§ Yinson: Fixes rights issue first call price at 40% discount
§ Insurance: No material action to sell MCIS
§ Property: Belleview to unveil projects worth RM500m this year
§ Property: Naza TTDI and Seacera in JV?
Global news
§ US: Wholesale inventories rise 0.1%; sales gain 0.6%
§ US: Hiring rises underlining job market gains
§ US: Confidence at small companies increases for fourth month
§ Europe: Fitch sees a ‘significant chance’ of Italy
§ China
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