Newz Bits 130212

Highlights of the day

§         Gamuda (Company Update): PDP done deal, what next? (SELL; TP: RM3.51) [download report]

Gamuda-MMC JV has formalised its PDP agreement for the Klang Valley MRT - Sungai Buloh – Kajang line project with the Government of Malaysia via MRT Co, entitling it to a 6% fee of the aggregate value of all 90 works contracts to be awarded, provided that the PDP delivers the project as a fully functional railway system within the stipulated target cost and completion deadline. However, our analysis shows that factoring in all the positive newsflow on Gamuda-MMC being the frontrunner for the c.RM8bn tunneling portion and Gamuda possibly clinching a JV role in the c.RM7-8bn Southern double tracking project raises our sum-of-parts RNAV of RM2.94 previously  to only RM3.51, which poses 8.8% downside from the current price. Maintain SELL.

§         Axiata (Company Update): Data to drive earnings (Downgrade from BUY to HOLD TP: RM5.20) [download report]

We came away from a visit to Axiata feeling optimistic about the group’s long term prospects in view of the robust data growth, particularly in its subsidiaries Celcom and XL Axiata (XL). We view the revocation of Idea’s 13 licences to marginally impact Axiata at this juncture. However, we are reducing our EPS forecasts by 14% and our target price from RM5.76 to RM5.20, due to lower EBITDA margin assumptions in both Celcom and XL and applying a higher WACC on XL. Downgrade from BUY to HOLD.

Other reports

§         Plantation (Sector Update): Stocks levels continue to disappoint (Maintain NEUTRAL) [download report]

§         Newz Bits [download report]

Other Malaysian news

§         IOI: Mulls re-listing of property arm

§         SP Setia: SC decision of joint offerors’ revised offer still pending

§         MAS: Appoints AirAsia’s Rozman Omas as CFO

§         Alam Maritim: Hopeful to return to black

§         London Biscuits: To raise RM29.3m from new share placement

§         Banking: Bank Islam eyes stake in Indonesian bank

§         Construction: Prasarana to pick Dang Wangi project partner

§         Construction: MRT Corp says still over 80 job packages up for tender

§         Property: Slower high-end property sector

§         Technology: Sluggish demand for PCB seen in Q1

Global news

§         US: Budget gap narrowed to US$27.4bn in January 2012

§         US: Consumer sentiment falls more than forecast

§         Europe: Greek parliament passes austerity bill as rioters burn buildings

§         China: Exports, imports slump more than forecast, new loans slows

§         China: January lending grew less than estimated amid holiday

§         India: Factory output misses estimate amid economic slowdown

Visit ECM Libra at https://www.ecmlibra.com/ecmlsmy

Our on-line trading portal at www.ecmmoney.com

Newz Bits 110112

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 (Sector Update): 2011 sees record production and exports (Maintain NEUTRAL) [download report]

§         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 frequency

§         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 rating downgrade

§         China: Import growth slide

Visit ECM Libra at https://www.ecmlibra.com/ecmlsmy

Our on-line trading portal at www.ecmmoney.com