Century Logistics dips on RHB Research downgrade, cut in fair value

KUALA LUMPUR (May 11): CENTURY LOGISTICS HOLDINGS BHD [] shares fell on Friday after RHB Research downgraded the stock to Underperform and slashed its fair value to RM1.63 (from RM2.09) and said the company’s 1QFY12 net profit came in below expectations.

At 12.25am, Century fell eight sen to RM1.72 to 186,500 shares done.

“We believe this was mainly due to: (1) start-up losses from the operation of its double hull product tanker; (2) Lower-than-expected contribution from the ship-to-ship (STS) segment; and (3) The ongoing strike by container haulage drivers had indirectly hampered its total logistics segment,” the research house said in a note Friday.

RHB Research said that Century believes its weak 1Q12 earnings was the trough and management was optimistic of better earnings ahead as: (1) Oil transport business to turn profit (from losses currently) in the coming quarters as it increases its frequency; and (2) To reinstate 3-4 additional floating storage units (FSUs) in PTP.

“We have reduced our FY12-14 net profit forecast by 10.5-26.1% respectively after imputing lower contribution from the STS segment.

“Fair value is reduced to RM1.63 based on 8x FY12 FD EPS. Downgrade to Underperform,” it said.



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RHB Research downgrades Century Logistics, slashes fair value to RM1.63

KUALA LUMPUR (May 11): RHB Research has downgraded CENTURY LOGISTICS HOLDINGS BHD [] to Underperform and slashed its fair value to RM1.63 (from RM2.09) and said the company’s 1QFY12 net profit came in below expectations.

“We believe this was mainly due to: (1) start-up losses from the operation of its double hull product tanker; (2) Lower-than-expected contribution from the ship-to-ship (STS) segment; and (3) The ongoing strike by container haulage drivers had indirectly hampered its total logistics segment,” the research house said in a note Friday.

RHB Research said that Century believes its weak 1Q12 earnings was the trough and management was optimistic of better earnings ahead as: (1) Oil transport business to turn profit (from losses currently) in the coming quarters as it increases its frequency; and (2) To reinstate 3-4 additional floating storage units (FSUs) in PTP.

“We have reduced our FY12-14 net profit forecast by 10.5-26.1% respectively after imputing lower contribution from the STS segment.

“Fair value is reduced to RM1.63 based on 8x FY12 FD EPS. Downgrade to Underperform,” it said.



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MBMR advances after RHB Research raises target price

KUALA LUMPUR(May 7): MBM RESOURCES BHD [] shares advanced on Monday after RHB Research has maintained its Outperform rating on the stock and raised its fair value to RM6.40 (from RM5.05) after MBMR fixed the issue price of its 3 for 10 rights issue at RM1.42 and the exercise of the accompanying free warrants at RM3.20.

At 9.36am, MBMR rose four sen to RM5.28 with 28,500 shares traded.

RHB Research in a note Monday said the total proceeds of RM340.3m will fund a RM250m capex programme (excluding Hirotako) over the next five years.

“We believe management is currently working hard on potential vehicle assembly opportunities with positive news flow likely in the coming months. There could be potential opportunities with various China commercial vehicle manufacturers.

“Within the MBM Group, potential assembly opportunities exist for Hino trucks. MBM owns a 42% stake in Hino Malaysia.

RHB Research said that among the Japanese marques there could be potential opportunities with Mazda and Mitsubishi who do not yet have major local assembly operations.

It sai Hirotako would drive MBM’s earnings in 2012, adding that demand for airbags would be rising going forward, driven by the Government’s push for all new cars sold locally to be fitted with dual airbags, in addition to rising consumer awareness of vehicle safety issues.

“We lift our 2012-14 earnings estimates by 7.1%, 3.6% and 3.6% respectively after revisiting our Hirotako assumptions and factoring in OMI’s new alloy wheel business.

“We reiterate our Outperform call and lift our fair value estimate to RM6.40 (from RM5.05) after ascribing a 10x PER (close to sector average) to 2012 earnings (from 8.5x),” it said.



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RHB Research maintains Outperform on MBM Resources, ups fair value to RRM6.40

KUALA LUMPUR(May 7): RHB Research has maintained its Outperform rating on MBM RESOURCES BHD [] and raised its fair value to RM6.40 (from RM5.05) after MBMR fixed the issue price of its 3 for 10 rights issue at RM1.42 and the exercise of the accompanying free warrants at RM3.20.

RHB Reseacrch in a note Monday said the total proceeds of RM340.3m will fund a RM250m capex programme (excluding Hirotako) over the next five years.

“We believe management is currently working hard on potential vehicle assembly opportunities with positive news flow likely in the coming months. There could be potential opportunities with various China commercial vehicle manufacturers.

“Within the MBM Group, potential assembly opportunities exist for Hino trucks. MBM owns a 42% stake in Hino Malaysia.

RHB Research said that among the Japanese marques there could be potential opportunities with Mazda and Mitsubishi who do not yet have major local assembly operations.

It sai Hirotako would drive MBM’s earnings in 2012, adding that demand for airbags would be rising going forward, driven by the Government’s push for all new cars sold locally to be fitted with dual airbags, in addition to rising consumer awareness of vehicle safety issues.

“We lift our 2012-14 earnings estimates by 7.1%, 3.6% and 3.6% respectively after revisiting our Hirotako assumptions and factoring in OMI’s new alloy wheel business.

“We reiterate our Outperform call and lift our fair value estimate to RM6.40 (from RM5.05) after ascribing a 10x PER (close to sector average) to 2012 earnings (from 8.5x),” it said.



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Fajarbaru gains on RM299.84m sub-contract

KUALA LUMPUR (May 4): Fajarbaru Builder Group Bhd shares advanced on Friday after it secured a sub-contract worth RM299.84 million to build a power substation from MALAYSIAN RESOURCES CORP []oration Bhd .

At 9.25m, Fajarbaru gained half a sen to 95.5 sen with 31,0000 shares done.

The company said on Thursday that its unit Fajarbaru Builder Sdn Bhd had received a letter of acceptance to build the Kg Kuala Sungai Baru substation and other associated works for the Ampang (AMG) Line Extension project.

RHB Research has upgraded Fajar baru to Outperform from Market Perform with a revised fair value of RM1.10 from RM1.04 previously.

“Assuming EBIT margin of 6-8%, the contract will fetch RM18-24m EBIT over the CONSTRUCTION [] period.

“FY06/13-14 net profit forecasts are raised by 11-15%, having reflected RM668 million new jobs in FY06/12 vis-à-vis RM368m previously,” the research house said on Friday.



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RHB Research maintains Market Perform on S P Setia, ups fir value to RM4

KUALA LUMPUR (April 24): RHB Research has raised its fair value for S P Setia Bhd to RM 4 and said the company’s recent venture into China made good sense.

In a note Tuesday, the research house said (i) The G-to-G tie-up underpinned SP Setia’s venture in the Qinzhou Industrial Park (QIP) development should enhance the credibility and chances of success of the project; (ii) Tier-4 city as an entry point can avoid the high regulatory requirements in housing sales; (iii) Timely entry to the Chinese market in the temporary sector downcycle; and (iv) The QIP project can potentially be worth more than RM20 billion.

If the 1st phase is proven successful, long-term value to SP Setia will be tremendous, it said.

“The risk profile of the company is expected to change given the size of the QIP project (13,591 acres). We are biased on the positive side due to the above factors. Initial funding and future working capital will be funded via debt and equity, which will be within SP Setia’s capacity given its current net gearing of 8%.

“Fair value is raised to RM4.00 as we impute only the DCF value from the Binhai project. Given minimal potential upside, we maintain our Market Perform call on the stock,” it said.



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KLCI retreats in early trade, blue chips weigh

KUALA LUMPUR (April 23): The FBM KLCI retreated in early trade on Monday, weighed by losses including at Genting, Maybank and BAT.

At 9.05am, the FBM KLCI shed 1.46 points to 1,590.39.

Gainers led losers by 111 to 54, whil 103 counters traded unchanged. Volume was 109.93 million shares valued at RM38.11 million.

Asian shares and the euro steadied on Monday after the IMF secured new funding to prevent the contagion of the euro zone's debt crisis, with investors turning to Chinese data to gauge the market's resilience to risk, according to Reuters.

The contagion risk of Europe's debt problems was reduced slightly when the International Monetary Fund secured $430 billion to boost its firepower in case Europe's debt woes worsen and spill over to peripheral economies, it said.

Other factors that would play a crucial part in influencing investor sentiment this week are the policy-setting meeting of the U.S. central bank's Federal Open Market Committee, as well as earnings releases from several bellwethers. The most important will likely be Apple Inc , which reports after the market close on Tuesday.

A slowly improving U.S. jobs market and reasonably solid growth at the start of the year brightened the economic outlook and cut chances the Fed will conduct another round of bond purchases, according to a Reuter’s poll last week.

With the Fed monitoring a healing but still fragile economy, the statement expected on Wednesday will be closely watched by investors, said Reuters.

On Bursa Malaysia in early trade on Monday, among the major deciners were BAT, Genting Asas, Affin, Mah Sing, P.I.E and Telekom.

RHB Research Institute Sdn Bhd in a note Monday said that in the absence of domestic catalysts and a possible massive Bersih 3.0 rally on 28 Apr, the FBM KLCI was likely to face further consolidation amid the moderating technical readings and dwindling volume.

“Immediate resistance levels are historical high at 1,609, followed by weekly upper Bollinger band of 1622. Immediate supports are 1,579 (50-d SMA) to1,588 (30-d SMA) levels. A break below 1,579 is likely to trigger more selldown towards YTD low at 1,549,” it said.



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TRC Synergy fair value cut by RHB Research to 85 sen

KUALA LUMPUR (April 23): RHB Research Institute Sdn Bhd has cut its fair value for TRC Synerygy Bhd to 85 sen from 96 sen.

In note Monday, the research house maintained its outperform rating on the stock and said TRC had reiterated that it was going all-out for work packages for the Sg Buloh-Kajang (SBK) Line of Klang Valley MRT project but will stick with its stance of not unduly compromising on margins.

The research house said that in the immediate term, TRC does not expect significant expansion in CONSTRUCTION [] margins as construction earnings will predominantly be underpinned by two key contracts, i.e. LRT line extension and Brunei airport that command relatively lower margins.

“In a brighter note, the recent soft launch of TRC’s gated and guarded property project called Ukay Tropika in the Ulu Klang area with a GDV of RM90m was a runaway success, it said.

“FY12-14 net profit forecasts cut by 8-14%, having reflected lower blended construction EBIT margins of 6.6-7.4% (8.6-8.8% previously), partially cushioned by contribution from Ukay Tropika.

“Fair value is reduced by 12% from RM0.96 to RM0.85. Maintain Outperform,” it said.



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SEMI: N. American semicon equipment makers post March book-to-bill ratio of 1.13

KUALA LUMPUR (April 20): North America-based manufacturers of semiconductor posted $1.48 billion in orders in March 2012 (3-month average basis) and a book-to-bill ratio of 1.13, according to the US-based Semiconductor Equipment Manufacturers Industry association (SEMI).

A book-to-bill of 1.13 means that $113 worth of orders were received for every $100 of product billed for the month.

In its March Book-to-Bill Report released on April 19, SEMI said the 3-month average of worldwide bookings in March 2012 was $1.48 billion.

“The bookings figure is 10.7% higher than the final February 2012 level of $1.34 billion, and is 6.4% below the $1.58 billion in orders posted in March 2011,” it said.

The report also stated that the 3-month average of worldwide billings in March 2012 was $1.31 billion.

However, the billings figure was 0.9% less than the final February 2012 level of $1.32 billion, and was 20.9% less than the March 2011 billings level of $1.66 billion, it said.

SEMI president and chief executive officer Denny McGuirk said that the equipment orders continued to increase and have improved to the highest reported value since July 2011.

"The semiconductor equipment market outlook has strengthened since the beginning of the year as reflected in the increasing bookings rate,” he said.

Meanwhile, RHB Research Institute Sdn Bhd said on Friday that this was the second consecutive month of book-to-bill above parity as equipment orders in Mar grew by 10.7% month-on-month (Feb: 12.6% m-o-m) to US$1.48 billion.

“Moreover, on year-on-year basis, Mar orders decline of 6.4% y-o-y narrowed from a decline of 16.2% in Feb.

“The positive capex momentum data supports our view that the industry is on track for stronger recovery expected to commence in the 2H2012,” it said.

RHB Research has a Neutral recommendation on the semiconductor sector.



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RHB Research positive on KPJ Healthcare’s Sarawak hospital plan with Naim

KUAL LUMPUR (April 20): RHB Research has an Outperform rating on KPJ HEALTHCARE BHD [] with a fair value RM5.69 and said it was positive on KPJ entering into a JV agreement with Naim Land, a 100%-subsidiary of Naim Holdings to construct and operate a hospital in Miri, Sarawak.

KPJ would own 70% of the while Naim Land would hold 30% upon completion of the deal.

The research house said on Friday that this was in line with KPJ’s plan to open at least 2 new hospitals per annum (p.a.).

“KPJ’s hospitals are currently operating at high occupancy rate of 70-75% and thus there is a need to add capacity. KPJ will fund its equity portion of RM13.7m via internally-generated funds.

“No change to forecasts which had earlier assumed sufficient capex of RM200 million p.a,” it said.



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RHB Research maintains Outperform on Eversendai, fair value RM2.15

KUALA LUMPUR (April 19): RHB Research Institute Sdn Bhd has maintained its Outperform rating Eversendai Corp Bhd with a fair value of RM2.15 after the company was awarded a contract by Hyundai Engineering & CONSTRUCTION [] Co Ltd structural steel works worth RM134m for the National Museum of Qatar (Phase 2) project.

The research house in a note Thursday said the latest contract boosted Eversendai’s yer-to-date new jobs secured to RM844 million and its outstanding construction orderbook by 9% from RM1.53 billion to RM1.67 billion.

“Assuming an EBIT margin of 12-15%, the contract will fetch RM16.1-20.1 million EBIT over the contract period ending 2013.

“Forecasts are maintained as we have already assumed Eversendai to secure RM1.5 billion worth of new jobs in FY12/12. Maintain Outperform. Fair value is RM2.15,” it said.



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MBSB up 4% in anticipation of higher dividends

KUALA LUMPUR (April 17) : MALAYSIA BUILDING SOCIETY BHD [] (MBSB) shares rose as much as 4% on Tuesday morning, possibly, in anticipation of higher dividends by virtue of the financial services provider’s land disposal proceeds.

The stock added nine sen to RM2.25 before being transacted lower at RM2.23 at 12.03pm. Some 3.5 million shares changed hands.

In a note, RHB Research Institute Sdn Bhd said MBSB could register a one-off gain of some RM100 million from the sale of its tracts in Sungai Buloh and Johor.

The one-off gain may result in an additional net dividend yield of 1% assuming a 30% payout ratio, according to RHB.



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RHB Research maintains Outperform on Carlsberg, ups fair value to RM11.60

KUALA LUMPUR (April 17): RHB Research Institute Sdn Bhd has maintained its Outperform rating on CARLSBERG BREWERY MALAYSIA BHD [] at RM10.82 with a higher far value of RM11.60, and said that the first batch of Asahi draft, which Carlsberg started brewing in Dec 2011, sold out much faster than the company’s initial expectations.

"Asahi’s strong take-up in the market is positive for Carlsberg, although we note that it is still too early to gauge its long-term success."

“Similar to Asahi, Carlsberg will start producing Kronenburg’s draft first followed by bottles later. However, unlike Asahi, we understand the locally-produced Kronenburg will still be priced at a fairly high price point, we believe due to Kronenburg’s premium branding,” the research house said in a note Tuesday.

Carlsberg intends to raise its selling prices by ~3-4% on average, which will take effect in early May 2012. We are positive on this move as we believe it would help cover Carlsberg’s higher raw material costs to a certain extent.

“We have raised our fair value estimate to RM11.60, based on WACC of 8.4% (8.7% previously). Although this implies 20x FY12 PER, we note that Carlsberg has previously traded as high as 24x forward PER. Maintain Outperform,” it said.



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Stocks to Watch Axis REIT, Chin Well, Bumi Armada, CIMB, Hartalega

KUALA LUMPUR (April 16): Malaysia's stock market benchmark could take the cue from external factors on Tuesday as global economic headwinds take centre stage in a still-fragile macro landscape.

Analysts said dynamics across the US, China and European countries will be closely watched as investors assess the impact from these major importing nations on world financial markets.

In Malaysia, it will be interesting to see whether domestic funds could offer adequate support to the FBM KLCI against a still-volatile global backdrop which have thrown most Asian indices into the red.

The FBM KLCI of 30 stocks fell 5.61 points to close at 1,597.51 on Monday.

Stocks to watch on Tuesday include Axis Real Estate Investment Trust (Axis REIT), Bumi Armada Bhd, CHIN WELL HOLDINGS BHD [], CIMB Group Holdings Bhd, and HARTALEGA HOLDINGS BHD [].

Axis REIT's first quarter net profit rose 27% from a year earlier, as a higher top line and a revaluation surplus mitigated the impact of higher expenses. In a statement to the exchange on Monday, Axis REIT said its net profit came to RM20.96 million in the quarter ended March 31, 2012 versus RM16.49 million previously while revenue was up 18% to RM32.29 million from RM27.25 million.

Bumi Armada will offer oil and gas support services to Russia-based OAO Lukoil in a deal worth an estimated U$200 million (RM614 million). In a statement to Bursa Malaysia on Monday, Bumi Armada said the job includes engineering, procurement, installation and pre-commissioning of subsea in-field and inter-field pipelines for the Filanovsky field in the Caspian Sea.

Chin Well, a screw and bolt manufacturer, plans to pay a tax-exempt interim dividend of 2% for the financial year ending June 30, 2012.

Reuters reported that CIMB will enter into an agreement to acquire a controlling 60% stake in the Philippines-based conglomerate San Miguel Corp's unlisted banking arm "soon", quoting a senior board member. The deal will allow San Miguel — the Philippines's most diverse conglomerate — to keep a minority stake in the unlisted bank while focusing on its new ventures such as power, mining, telecoms, infrastructure, and more recently, airlines.

RHB Research Institute Sdn Bhd has slashed its net profit forecast for Hartalega, a nitrile glove manufacturer, by between 6.1% and 18.5% for financial years 2012 till 2014. The research house said it has taken into account the glove manufacturer's lower capacity utilisation, and average selling prices apart for costlier raw material and higher net interest expenses.



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RHB Research ups target price for Tan Chong to RM4.60

KUALA LUMPUR (April 16): RHB Research Institute Sdn Bhd has maintained its Market Perform call on TAN CHONG MOTOR HOLDINGS BHD [] (TCM) and lift our fair value to RM4.60 (from RM4.20), and said Tan Chong will likely report relatively weak 1Q earnings after MAA data for the first two months of 2012 showed combined Nissan and Renault sales down 16.7% year-on-year, attributed to a combination of component supply constraints and the newly-introduced responsible lending guidelines.

The research house said in a note Monday that Nissan Vietnam (NVL) was likely to remain loss making in 2012 although Indo-China continues to hold long-term promise given their large populations and growing middle class.

“TCM’s Danang assembly plant is now expected to commence production in Jan 2013 that will help to lower selling prices. Nissan’s B-segment competitor the Almera is scheduled for a Sep launch with initial CKD production already begun,” it said.

Further out, there are plans to reintroduce the Datsun brand into the local market with an A-segment model scheduled for 2014 that could be priced in the sub-RM60k bracket, it said.

“We reiterate our Market Perform call on Tan Chong and lift our fair value to RM4.60 (from RM4.20), derived from applying a 13x (from 10x) target PER to revised 2012 earnings,” it said.



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Eversendai up on new Saudi project

KUALA LUMPUR (April 16): Eversendai Corp Bhd shares edged up on Monday afer the company secured a 193 million riyal (RM158 million) structural steel job for the railway station at King Abdul-Aziz International Airport in Saudi Arabia.

The company said last Friday that it ha been appointed as subcontractor for the project by Saudi Binladin Group Architecture & Building CONSTRUCTION [] Division.

At 9.10am, Eversendai was up five sen to RM1.70 with 32,800 shares done.

RHB Research Institute Sdn Bhd in a note April 16 said the latest contract had boosted Eversendai’s year-to-date new jobs secured to RM710 million and its outstanding construction orderbook by 12% from RM1.37 billion to RM1.53 billion.

“Assuming an EBIT margin of 12-15%, the contracts will fetch RM19.0-23.7m EBIT over the contract period ending 2013.

“Forecasts are maintained as we have already assumed in our forecasts Eversendai to secure RM1.5 billion worth of new jobs in FY12/12. Maintain Outperform. Fair value is RM2.15,” it said.



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RHB Research upgrades utilities sector to Overweight

KUAL A LUMPUR (April 12): RHB Research Institute Sdn Bhd has upgraded the Utilities sector to Overweight from Neutral and said it was turning more positive on Tenaga Naional Bhd given better visibility of its earnings outlook with the improved gas supply.

In a note April 12, the research house said that while imported LNG pricing remained an issue, it believed that the implementation of a dual pricing system wass more likely and therefore have an earnings neutral impact to Tenaga.

“As for YTL Power, the stock lacks catalysts while dividends are no longer attractive. However, sentiment may improve if the 1Bestarinet project helps to monetise its WiMAX network.

“Given our recent upgrade on TNB, we upgrade the sector to Overweight, from neutral,” said RHB Research.



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RHB Research upgrades Tenaga to Outperform, ups fair value to RM7.60

KUALA LUMPUR (April 10): RHB Research Institute Sdn Bhd has upgraded TENAGA NASIONAL BHD [] to Outperform and raised its fair value for to RM7.60 (from RM6.50 previously) and said it was turning more positive on Tenaga given better visibility of its earnings outlook with the improved gas supply.

In a results preview on Tuesday, RHB Researh said given that the gas supply situation had improved significantly to 1,100-1,150 mmscfd in 2Q (1Q: 1,050 mmscfd), it expectes earnings to jump quareter-on-quarter.

“We estimate 2Q core net profit of RM500 million-RM600 million (1QFY12: RM196 million, 2QFY11: RM442 million),” it said.

RHB Research said it gathered that Tenaga would write back the RM2.05 billionn compensation in 2Q.

It said this opened the possibility for Tenaga to resume paying dividends. For 1HFY12, we estimate electricity unit sales growth of 4.6%. This is within management’s guidance and our forecast of 4-5% and 4% respectively.

“We are turning more positive on Tenaga given better visibility of its earnings outlook with the improved gas supply. Fair value raised from RM6.50 to RM7.60 based on unchanged target FY13 PER of 15x and EPS of 50.8 sen after rolling over the valuation base year to 2013,” it said.



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RHB Research upgrades Aeon to market perform, raises FV to RM10.40

KUALA LUMPUR (April 10): RHB Research Institute Sdn Bhd has upgraded Aeon Co (M) Bhd to Market Perform and raised its fair value to RM10.40(from RM8.90 previously) and said Aeon expects to open another outlet in Dec 2012 in Sri Manjung.

In a note Tuesday, RHB Research said the mall would be leased from the developer and have total net lettable area of 400k sq ft.

“Further ahead, we understand that Aeon has plans to open one mall in 2013, although no details on location were given. In 2014, Aeon expects to open three new malls, i.e. Kulai, Sg. Petani and Bukit Mertajam.

“For its retail operations, which include department store and supermarket sales, AEON expects its Same Store Sales (SSS) growth to be approximately 4% for FY12, higher than our estimates of 2-3% for FY12-14,” it said.

The research house said that moving forward, Aeon’s management expects profit before tax for its property management service to be sustained at FY11 levels of RM120 milion-RM130 million, which RHB Research said was slightly higher than its current estimates of RM110 million-RM120 million for FY12-14.

“We raise our fair value to RM10.40 (from RM8.90) based on a new target PER of 16x FY12 EPS (from 14x FY12 EPS previously). We upgrade our call on the stock to Market Perform,” it said.



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EITA debuts on Bursa with 22% premium

KUALA LUMPUR (April 9) : EITA Resources Bhd rose as much as 22% on Monday early trade during the elevator system provider’s debut on Bursa Malaysia.

The stock added 17 sen to an intraday high of 93 sen before trading lower at 88.5 sen with some 19 milllon shares done as at 9.17am. EITA was among the top gainers and most-actively traded entites across the exchange.

In a note, RHB Research Institute Sdn Bhd said it expects EITA to register an earnings compound annual growth rate of 14.4% between FY12 and FY14, helped by its new product development and higher demand for elevator systems.

“EITA’s dividend policy is to pay out at least 30% of its annual earnings. Therefore, we have forecast FY12 to FY14 annual net dividend per share of 3.6 sen and 4.4 sen. This translates to net yield of 4.3% to 5.3% based on our estimated fair value,” said RHB which has a target price of 83 sen for EITA shares.



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