RHB Research Summary - 4 Nov 2014

Malaysia Airports Holdings (MAHB MK, BUY, TP: MYR8.04)

The Worst May Be Over

Results Review

MAHB’s 3QFY14 core losses reduced QoQ to MYR2.7m from MYR25m. We deem this in line with our expectation as 4Q could be soft in view of the anticipated flight cancellations in the peak season post MH17 and MH370. The worst may be nearing its tail-end as FY15 earnings growth for domestic operations could be robust on KLIA 2’s full-year contribution. Maintain BUY, at a lower MYR8.04 TP (11% upside).

 

 

Alam Maritim (AMRB MK, NEUTRAL, TP: MYR1.12)

Secures MYR31.7m Demobilisation Contract

Corporate News Flash

Alam Maritim has received a USD9.56m (MYR31.7m) letter of award (LOA) to demobilise a floating storage facility. Maintain NEUTRAL, with our TP trimmed to MYR1.12 (from MYR1.35), implying a 4.7% upside. Although this LOA and a possible short-term contract for 1MAS-300 are positive surprises to us, we believe they are insufficient to lift the sentiment on the stock amid the current cautious outlook.

 

 

Malaysia Building Society (MBS MK, NR)

Higher Impairment Allowances In 3Q14

Results Review

Malaysia Building Society’s (MBSB) 3Q14 net profit of MYR192.4m fell 17.4% QoQ (+63.4% YoY) due to higher impairment allowances on loans, rising operating expenses as well as lower non-interest income. 3Q14 loan growth remained muted while NIM was stable QoQ at 3.86% (2Q14: 3.83%). Management updated that efforts to close the gap towards a full-fledged banking institution have been completed in 3Q14.

MIB Research Summary - 10 Oct 2014

MY Banking Sector: Maintain Neutral CIMB-RHB-MBSB’s mega-merger

Outright winner is MBSB with potential cash option at MYR2.82/share (+19% upside). Positive for RHB - upgrade to BUY with a higher TP of MYR10.45. Positive for OSK with a FV MYR2.64. HOLD on CIMB with an unchanged TP of MYR7.60. Sime Darby: Maintain Buy Short term pain, long term gain  Shariah-compliant Expect neutral-to-slight negative earnings impact in the short term if Sime successfully privatises NBPO. But we are long term positive as PNG opens up a new market and provides future expansion opportunities for the group. Maintain BUY with an unchanged TP of MYR10.20 based on 18x 2015 PER. Technicals: Sell the Budget Day rebound (if any) The FBMKLCI advanced 5.41 points to 1,829.73 yesterday, while the FBMEMAS and FBM100 also closed higher by 42.72 points and 35.20 points, respectively. We recommend a “Sell on Rallies” stance for the index. Trading idea is a Take Profit call on NAIM with downside target areas at MYR3.08 & MYR2.28.

HLIB Research Summary - 10 Oct 2014

Banking (NEUTRAL  çè)

Mega Merger – Still Prefer RHB Cap

• CIMB, MBSB and RHB Cap announced merger structure and valuations, completion expected in mid-2015.
• CIMB and MBSB delist post capital distribution.
• CIMB valued at RM7.267 (1.7x P/B 1HFY13) and RHB Cap at RM10.028 (1.44x), both in line but MBSB at RM2.82 (1.9x) surprised on upside.
• Long-term positive but short-term pain (ROE dilution and integration cost).  Execution and overlaps key risks.
• MBSB winner, privatize at RM2.82 vs. RM2.37, +19%.
• Neutral to CIMB, valued at near current price.
• RHB Cap positvie, new valuation yardstick vs. current undervaluation.  At RM10.028, FY15 P/E and P/B at 11x and 1.1x although ROE will drop to high single-digit.
• Maintain BUY on RHB Cap with unchanged RM10.00 TP and HOLD on CIMB with unchanged RM7.22 TP.
• OSK still good proxy but price appreciation reduced SOP (after 10% discount) of RM2.63 with market price to 15%.

Sime Darby (HOLD çè)

A surprise offer for NBPOL

• Sime surprised the market by announcing its intention to make a general offer for all the shares in NBPOL at £7.15/share cash.
• The price tag values NBPOL at 2014-2015 P/E of 16.4-20.5x (based on consensus), current P/B of 2.04x, EV/ha of RM80,356 (planted oil palm estates). We believe the high price tag is justified given: (1) the scarcity of sizeable brownfield plantation land bank; (2) the rare opportunity to acquire quality brownfield asset (which has strong reputation and track record, and full RSPO certification); (3) it is a good platform for Sime to expand into plantation business in PNG.
• Sime would not have issue funding the acquisition, and the acquisition will only raise Sime’s net gearing from 0.22x to 0.44x, based on our estimates. Earnings wise, we estimate that the acquisition will add ~2.5% to Sime’s FY06/15 earnings.
• Maintain earnings, SOP-derived TP of RM9.75, and Hold recommendation.

Traders Brief

Jittery mood returns amid overnight Wall St slump and the tabling of Budget 2015 today

• Ahead of the Budget 2015 release today and the return of jittery mood in Wall St and overseas markets due to concern of global economic growth, KLCI is expected to experience some wild swings ahead, tracking external markets.
• Immediate rebound targets are 1833 (50% FR), 1838 (10-d SMA) and 1852 (200-d SMA). Only a strong breakout above 200-d SMA will lift the market from current downward consolidation. Conversely, a breakdown below 1818 will likely to spur further downside towards 1800 psychological support.

Trading Idea - Brent Crude Oil

Brent Crude Oil – Technical rebound on the card!

• Positive Divergence between price and Slow Stochastics suggests potential technical rebound. Moreover, “Spinning Top” candlestick at bottom on weekly chart indicates sign of reversal of recent correction. Thus, Crude Oil is expected to rebound in near term and subsequently resume its uptrend if the downtrend (USD97) is taken out. Critical resistances are located at USD97, USD102 and USD105 while supports at USD88.42, USD82.68 and USD76.75.

Research Summary: 15 August 2014

Research Summary: 15 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	MRCB	Shedding more light on Project MX-1	Buy	RM2.05
RHB	Results review	Paramount	Earnings pick up in 2Q	Buy	RM1.88
RHB	Results review	Media Prima	Weaker than expected	Neutral	RM2.10
RHB	Results review	Hektar REIT	Short term pain, long term gain	Neutral	RM1.43
RHB	Results review	MBSB	Muted loan growth but asset quality remains stable	Buy	RM2.80
RHB	Results review	Notion VTEC	Disappointing quarter	Sell	RM0.49
CIMB	Results note	Media Prima	Times of uncertainty	Hold	RM2.52
Maybank	Results review	Media Prima	Washout quarter	Hold	RM2.16
Maybank	Company update	Inari	Sowing seeds for future growth	Buy	RM4.20
Maybank	Technical	VS		Short-term buy
Kenanga	Results note	Media Prima	Below expectations	Market perform	RM2.53
Kenanga	Quick Bites	MRCB	Details on Project MX-1	Outperform	RM2.48
Kenanga	Results note	Notion VTec	Slower-than-expected recovery	Underperform	RM0.58
Kenanga	Results note	MBSB	Above expectations but…	Outperform	RM2.65
Kenanga	Results note	Genting	Weak 2Q14 at GENS, bit 1H14 in line	Outperform	RM12.50
HL	Results note	Media Prima	2QFY14 results, disappointing	Hold	RM2.10
HL	Newsbreak	Inari	Procured land for expansion	Buy	RM3.41
HL	Company insight	Caring	Post FY05/14 results meeting	Hold	RM1.94