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Thursday, April 21, 2011

Market Preview From HWangDBS (22 APR 2011)

We may see the benchmark FBM KLCI attempting to cut above the resistance barrier of 1,530 again today. This comes as our Malaysian bourse – the only market across the region to finish in the red yesterday – could recover after the 4.7-point dip. Nevertheless, trading interest is expected to be quite slow today as most regional peers (like Singapore, Indonesia, Philippines,
Hong Kong and India) are on holidays today. Wall Street – which saw its key equity indices rising between 0.4% and 0.6% last night – would also be closed tonight.

Amid a relatively quiet market backdrop, counters that could attract attention today include:
  1. RHB Capital, after a media report said two foreign parties are in the midst of making a joint bid to acquire a stake in the bank;
  2. Jerneh Asia, which has signed an MOU to explore a proposed acquisition of a Sabah-based property developer; and
  3. CBIP, as the company has just announced a proposal to undertake a 1-for-1 bonus issue.

Wednesday, April 20, 2011

Market Preview From HWangDBS (21 APR 2011)

There is a chance for the benchmark FBM KLCI to break away from the resistance-turned-support line of 1,530 today, as the bellwether makes its way towards the next resistance target of 1,550 on the back of follow-through buying momentum.

Giving a boost to investors’ sentiment is the overnight jump on Wall Street. Key U.S. stock indices were up between 1.4% and 2.1% at the closing bell lifted by better-than-expected corporate financial results. Back home, we will also be hoping for positive vibes to emerge from the ongoing earnings reporting season as the likes of Tenaga and BAT are scheduled to announce their latest quarterly results this evening. Separately, there may be a pick-up in trading interest in TRC Synergy, which has just secured new construction contracts worth RM44m.

Report from HwangDBS

Tuesday, April 19, 2011

Petronas Gas - Buy with higher TP of RM13.50

Transformation takes shape
• Maiden contributions from regasification and power plants in FY12-13
• PGU gas supply will increase by up to 20% after completion of Melaka regasification plant
• Signing of RSA and PPA will be key catalysts; upgrade to Buy with higher TP of RM13.50

Transforming into multi-utility player.
Petgas will turn into a multi-utility player with the completion of its Melaka regasification plant in Jul 2012 and Kimanis power plant in 2013. We expect the regasification services agreement (RSA) between Petgas and Petronas to be finalized soon. There will be no fuel cost risk under
the RSA as gas supply will be procured by Petronas. Assuming RM1.5bn investment and 9% IRR, the plant will add 18% to net profit from FY13 onwards. We estimate IRR at 9% for the Kimanis power plant, and Petgas’s 60% stake will entitle it to c.RM130m annual contribution from FY14 onwards.

Sustainable 4% net yield despite higher capex.
Petgas registered strong net cash of RM2.1bn (RM1.06/share) for 9M11. We expect capex to rise to RM1.5bn p.a. over FY12-13 with the new investments, but FCF will remain strong at >RM600m due to improved profitability under the 4th GPTA. Petgas does not have a dividend policy. We assumed 66-68% net payout for FY11-12F with sustainable 50 sen DPS.

Additional gas supply to PGU.
We expect higher revenue for Petgas’ PGU gas volume upon completion of the Melaka regasification plant, as the 4th GPTA allows the use of third party gas. We raised FY13-14F net profit by 3%-18% after imputing additional 200mmscfd of gas volume that will be transported by PGU, and maiden contribution from the regasification plant. Consequently, our DCF-derived target price is raised to RM13.50/share.

Report from HWangDBS

Market Preview From HWangDBS (20 APR 2011)

After testing and bouncing up from the 39-day moving average line yesterday, we expect the key FBM KLCI to show an upward bias today. Technically speaking, the benchmark index could climb towards the first resistance line of 1,530. There was an overnight rebound on Wall Street too. Major U.S. equity indices rose between 0.4% and 0.6% at the closing bell as sentiment improved on the back of better housing starts data and corporate earnings momentum. Among the stocks that may attract added interest today include:
  1. DRB-Hicom, after a news report said it has won a bid to take over the controlling stake in Pos Malaysia (at around RM3.60 per share) with an agreement likely to be signed early next week;
  2. Berjaya Corp, which has confirmed that Kim Eng has approached its management to explore the possibility of acquiring a 100% stake (instead of 70%) in Berjaya Corp’s stockbroking arm; and
  3. Emas Kiara, following its announcement to pay a special tax exempt dividend per share of 12 sen (translating to a generous yield of 16.3% based on its last done price of RM0.735).

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