HDBSVR sees Bursa Malaysia playing catch-up

KUALA LUMPUR (Nov 29): Hwang DBS Vickers Research (HDBSVR) said while Bursa Malaysia could play catch-up with key regional markets on Tuesday and following the strong overnight close on Wall Street.

It said on Tuesday that while Bursa Malaysia was closed on Monday for a public holiday, regional bourses mostly ended in positive territory with India’s benchmark index up 3.0%, China shares listed in Hong Kong added 2.3% and South Korea’s Kospi 2.2%.

Over on Wall Street, key US equity indices jumped between 2.6% and 3.5% last night following buoyant retail sales and hopes that the European leaders would act harder to resolve the region’s sovereign debt crisis.

“Consequently, the benchmark FBM KLCI could play catch-up today. After a plunge of 22.8-point or 1.6% last week, the bellwether is expected to stage a technical rebound towards the first resistance level of 1,445 ahead,” it said.

The positive market backdrop will probably lift large caps like Sime Darby and IJM Corporation, which have announced their latest quarterly results on Friday evening that came in within expectations.

“On the other hand, MRCB and Kinsteel may see selling pressures after reporting below par quarterly earnings,” it said.



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HDBSVR maintains high conviction Buy on IJM Corp, TP RM8.70

KUALA LUMPUR (Nov 29): Hwang DBS Vickers Research (HDBSVR) said IJM Corp’s first half financial results for the period ended Sept 30, 2011 (1HFY12) were in line and it is expecting a stronger 2H.

The research house said IJM Corp remains its high conviction BUY with a target price of RM8.70.

HDBSVR said IJM reported strong operations, but it was hit by forex loss. The 2QFY12 headline net profit was RM75 million (-35% YoY and QoQ), taking 1HFY12 profit to RM190 million.

“This is within our and consensus’ forecasts, excluding the RM32 million forex loss on a USD loan for its Infrastructure unit,” it said.

The research house said the key earnings drivers in 2QFY12 were PLANTATION []s and property which contributed a combined 71% of group pretax profit, while manufacturing profit grew 22% QoQ to RM39 million backed by 6-7 months of orders.

IJM’s 1HFY12 property sales were RM630 million, but should meet FY11 peak sales of RM1.47 billion given stronger recognition of unbilled sales of RM1 billion in the 2H.

HDBSVR said CONSTRUCTION [] remained a small earnings contributor at 6%, as key local jobs from its RM3.8 billion orderbook have not started to filter through.

“We expect earnings to accelerate in 2HFY12 as works progress,” it said.



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IJM earnings down 35%

IJM Corp, a Malaysian builder, said second-quarter net income dropped 35 per cent to RM74.8 million from RM115.1 million a year earlier.

Profit fell due to foreign exchange losses on dollar-denominated debt in its infrastructure division after booking a currency gain in the same period a year earlier, IJM said in a statement. -- Bloomberg



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RAM reaffirms RHB Capital’s issue ratings

RAM Ratings has reaffirmed the A1/P1 ratings of RHB Capital Berhad’s RM1.1 billion Commercial Papers/Medium-Term Notes CP/MTN) Programme (2009/2016) and RM150 million CP/MTN Programme 2008/2015).

At the same time, the A1 rating of the Company’s RM350 million Fixed-Rate Bonds (2006/2012) has also been reaffirmed. All the long-term ratings have a stable outlook.

RHB Capital is an investment-holding company that mainly relies on dividend income from its core subsidiary, RHB Bank Berhad; its other key subsidiaries include RHB Investment Bank Berhad, RHB Islamic Bank Berhad, a wholly owned subsidiary of RHB Bank and RHB Insurance Berhad - collectively known as “RHB Capital Group”. RHB Bank, RHB Islamic and RHB Investment carry AA2/Stable/P1 ratings from RAM Ratings.

The ratings reflect the improved profit performance of RHB Capital as a group, as well as the synergistic benefits that have been realised since its transformation into a universal-banking group. The ratings also take into account RHB Capital’s relatively higher gearing and double-leverage ratios as a financial services holding company.

RHB Capital seeks to expand its presence in Asean. The Group is now in negotiations with OSK Investment Bank Berhad and the latter’s holding company, OSK Holdings Berhad as well as OSK Holdings’ major shareholders for the potential merger of their businesses.

OSK Investment's presence in Asean will facilitate RHB Capital’s regional aspirations, which have been rather stagnant since its proposed acquisition of Indonesia’s PT Bank Mestika Dharma had been put on hold pending a regulatory review on the single-shareholding limit of Indonesian banks.

We opine that the merger, if successful, will see RHB Investment’s institutionally focused business being complemented by OSK Investment’s predominantly retail-oriented stockbroking operations and forming the largest domestic stockbroking firm by both trading volume and value. -- Reuters



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CIMB Research has technical sell on Gamuda at RM2.99

KUALA LUMPUR (Nov 29): CIMB Equities Research has a technical sell on GAMUDA BHD [] at RM2.99 at which it is trading at a FY13 price-to-earnings of 10.7 times and price-to-book value of 1.7 times.

The research house said on Tuesday Gamuda violated the flag support few days ago. Prices also slipped below its 30-day and 50-day SMAs along the way.

“Looking at the chart, we think the current consolidation could last a while longer. Traders should use any rebound to unload on strength as near term gains are likely capped at RM3.07-3.21. The odds will continue to favour the bears as long as the candles stay below these levels. Next supports are RM2.80 and RM2.63,” it said.

CIMB Research said the indicators show negative trends. MACD signal line has slipped into the negative territory while RSI is below the 50pts mark.



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CIMB Research has technical buy on Integrated Rubber at 18 sen

KUALA LUMPUR (Nov 29): CIMB Equities Research has a technical buy on INTEGRATED RUBBER CORPORATION [] at 18 sen at which it is trading at a price-to-book value of 0.5 times.

The research house said on Tuesday the recent correction dragged prices towards its 50-day SMA but it thinks the stock is ripe for a stronger rebound soon.

CIMB Research said currently, the bulls are trying to push above its 200-day SMA. Expect momentum to pick up strongly once the candles swing above the 19 sen level.

“MACD histogram bars are falling at a slower pace, suggesting that selling pressure has tapered off. RSI too has hooked upward.

“Risk takers may start to nibble now while others should wait for a push above the 19 sen level before going long. Be quick to cut loss if the 16.5 sen level is breached,” it said.



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CIMB Research has technical buy on Latexx at RM1.97

KUALA LUMPUR (Nov 29): CIMB Equities Research has a technical buy on Latexx Partners at RM1.97 at which it is trading at a FY13 price-to-earnings of 6.0 times and price-to-book value of 1.1 times.

The research house said on Tuesday the rebound from its September’s low does not look complete as prices are still holding steadily above its 30-day and 50-day SMAs.

“Looking at the chart, we think the candles are likely to edge towards the 200-day SMA soon. Once the RM2.16 level is taken out, the following resistances levels are RM2.31 and RM2.42,” it said.

CIMB Research said the indicators remain compelling. MACD signal line is hovering in the positive territory while RSI is also above the 50pts mark.

“Aggressive traders may start to nibble now. However, it is important to place a stop at below the RM1.87-RM1.80 levels, depending on one’s risk appetite,” it said.



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UEM Land sets RM3b sales target

KUALA LUMPUR: UEM Land Holdings Bhd, the country's biggest property player by market capitalisation, aims to sell RM3 billion worth of properties next year, an increase of 40 per cent from this year.

Managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said the company was optimistic on hitting the sales target.

"We are confident as we have the right products to offer in the market. We are close to achieving this year's sales target of RM2.2 billion," said Wan Abdullah.


The merger with Sunrise Bhd has also raised UEM Land's profile, given the former's expertise in high-rise integrated developments and branding.

For the year ended Dec 31, 2010, UEM Land posted a net profit of RM194.5 million on a revenue of RM469.7 million.

Maybank Investment Bank expects the company to record a strong 37 per cent growth in net profit in 2011, mainly due to the consolidation of Sunrise's earnings.

Wan Abdullah said UEM Land had launched projects worth close to RM11 billion in the past four years and RM10 billion of that would be realised over the next few years.

"We have projects worth RM34 billion to be launched over the next several years," he said after unveiling the RM1.3 billion Angkasa Raya, Sunrise's new landmark project in the Kuala Lumpur city centre, last Tuesday.

UEM Land is the property arm of UEM Group, which owns 69.1 per cent of the company. UEM Group, in turn, is wholly owned by Khazanah Nasional Bhd.

The company became the biggest property player on Bursa Malaysia after buying Sunrise earlier this year. It now has a market capitalisation of about RM11 billion.

UEM Land is currently developing Nusajaya, one of the five flagship zones of Iskandar Malaysia in Johor.

Nusajaya spans 9,662ha, with UEM Land owning 4,161ha that are under various stages of development.

UEM Land also has projects in Bangi, Cyberjaya, Kajang and Mont'Kiara.



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