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8 June 2010 (Gamuda, Banks; Technical: Faber) Top Story : Gamuda – Field report: Tan Thang looking to sell like “hot pho” Underperform Visit Note - We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. This dense population base translates to ready buyers for the Tan Thang project. - Previously farm land, the land is flat and just a little lower than the road level that means it does not need extensive ground treatment other than some filling to raise the elevation. Most importantly, the land is 100% cleared of squatters. - Our conversation with consultants from the HCMC office of an international property consulting firm gave us the comfort that Gamuda’s RM10bn Yenso Park in Hanoi should do well too. - Fair value raised from RM2.05 to RM2.74, having imputed in for the first time a value of RM1,231m to Gamuda’s two property projects in Vietnam. Underperform remains as upside in share price has already been exhausted. Sector Call Banks : BNM “rejects” Affin’s application to commence negotiations with EON Cap Overweight Sector News Update Affin : Fair value of RM3.58 Trading Buy EON Cap : Fair value of RM8.07, downgrade call after outperformance Market Perform (down from OP) - Affin announced yesterday that BNM was unable to consider Affin’s application to commence negotiation with EON Cap and its major shareholders. No further details were mentioned. - Possibly, a spanner to the proposal was whether Affin’s financials would have been able to digest the acquisition, in our view. - Despite this “setback”, fundamentally, our view on Affin is unchanged. Valuations appear cheap despite the recent 1Q results that beat our and consensus expectations. Furthermore, asset quality appears intact notwithstanding the implementation of FRS139. Pending Affin’s analyst briefing later today, our fair value of RM3.58 (13x FY10 EPS) and Trading Buy recommendation remain unchanged. - With the latest development, focus would now turn back to EON Cap’s EGM, which is reportedly set to take place sometime next month. That aside, EON Cap’s 1QFY10 results have helped to reinforce our view that its fundamentals are improving. - Our fair value of RM8.07 (15x FY10 EPS) is unchanged. However, EON Cap’s share price performance has done rather well of late which means that the stock now offers a potential return that is roughly in line with our expected market return. Thus, we downgraded our call to Market Perform from outperform. Technical Highlights Daily Trading Strategy : Index’s direction is expected to stay negative… - Despite bouncing from an early sell off, the FBM KLCI registered a candlestick pattern that still points to a volatile trading day ahead. - In fact, the market is still overwhelmed by the poor trading sentiment from the recent fallout. - Given further weakness on the short-term momentum indicators, the index’s trading direction is expected to stay negative. - The poor level of participation yesterday was also in line with our expectation that investors at current stage, would prefer to stay sideline ahead of Thursday’s FIFA 2010 World Cup kick-off. - Immediate level is at the 10-day SMA of 1.276. Losing it will refresh selling activities, hence retest the 1,250 support level and the recent low of 1,243.86. - We maintain a medium-term retracement target at between the 23.6% Fibonacci Retracement (FR) level at 1,229 and the 38.2% FR level at 1,154. Daily Technical Watch: Faber Group – Continuous buying momentum if it sustains at above RM2.60… - 10-day SMA: RM2.371 - 40-day SMA: RM2.305
IS = RM2.60 IR = RM2.80
S1 = RM2.29 R1 = RM3.04
S2 = RM1.98 R2 = RM3.40
Co/Sector Power News Minister of Energy, Green Technology and Water revealed yesterday that the rough estimate of a proposed nuclear plant is between US$2.5-4bn (1,000MW plant). However, while the starting cost was high, operating cost was lower. (Financial Daily) Impact Recom
The cost estimate is broadly consistent with what OW TNB had mentioned previously, i.e. US$34m/MW. We believe nuclear is only one of the options to address long-term concerns on power generation capacity and the country’s overreliance on gas and coal for fuel, and especially given the cancellation of the Bakun undersea cables project. The other options are: 1) renewable energy (which underscores the importance of the proposed Renewable Energy Act which appears to have been delayed to 2011 for tabling to parliament); and 2) electricity demand management. While this may be perceived as negative for Berjaya Corp which is proposing to buy 70% of Ascot Sports, we believe the Government has not shut the door yet on the re-issue of the sports betting licence. In any case, this news is neutral for B-Toto as we estimate the sports betting licence would have minimal impact to net profits of +1.4% for FY04/11 and +1.9% for FY04/12. OW B-Toto: OP, FV = RM4.95
PM stated that the Government has yet to issue a sports betting licence to Ascot Sports as discussions on the licensing terms and conditions are being finalised with the company. The Government is also getting feedback and views from various quarters on the proposal. (Star)
Exxon Mobil is reportedly expecting to spend around US$1bn for the enhanced oil recovery project in Tapis field beginning 2013. Recall that Petronas signed a Production Sharing Contract (PSC) in June 2009 between its wholly-owned Petronas Carigali and ExxonMobil Exploration and Production Inc. (Exxon) to further develop seven oil fields offshore Peninsular Malaysia. The Tapis oil field, discovered in 1969, is located in the South China Sea- 209 km off the east coast of peninsular Malaysia in water depths of 64 metres. (Starbiz)
Long-term positive. Although crude oil price of OW US$70-80 appears to be a comfortable level for investment in shallow-water exploration project, we highlight that Petronas and PSCs are still cautious on pushing ahead with unproven greenfield development projects in a major way given still-high exploration and development costs. While Petronas’ 1HFY10 E&P spending increased by 9.8% yoy to RM13.7bn, this was mainly driven by reservoir management as well as enhanced oil recovery (EOR) activities for the current brownfield blocks i.e. to boost current output level.
CIMB’s plan to list on the Stock Exchange of Neutral. Management had previously highlighted OP, FV = Thailand will be delayed for a few months from in its 1QFY10 analyst briefing the possibility of a RM8.12 Jun due to the current environment there as well delay given the current situation there. as the requirement for more time to study legal issues. (StarBiz) Digi, which embarked on a cost-saving initiative to withstand challenges in the competitive industry, is on track to achieve RM100m savings this year. (Starbiz) Neutral, as we expect its ongoing cost-saving OP, FV = measures would help cushion the impact of RM25.70 higher handset subsidies and price pressures, keeping FY10 EBITDA margin flat. However, these measures could be positive for margins if the cost savings turn out to be higher-thanexpected.
The Health Director General said that the Neutral. Only consultants’ fees are regulated by OP, FV = Government will review the fees charged by the Government, while other hospital charges are RM3.50 private hospitals and clinics. (Financial Daily) not. In addition, KPJ only shares 5-10% of consultants’ fees. Nevertheless, we believe the
Government is trying to shift the attention away from PEMANDU’s proposal to raise the nominal out-patient fees charged by public hospitals from RM1 to RM3, and for in-patient fees to double to between RM6 and RM160.
Company New entitlements Muda Holdings Dufu Technology Oriental Holdings Going “ex” on 9 Jun Pelangi Publishing Group Tong Herr Resources Jerneh Asia Muar Ban Lee Group MPI CCM Duopharma Biotech Eng Teknologi Holdings Hunza Properties Hong Leong Industries Willowglen MSC Tomypak Holdings Mudajaya Entitlement details First and final dividend of 2.5 sen tax exempt First and final tax exempt dividend of 1 sen Final dividend of 5 sen less 25% tax Ex-date 28-Jun-10 28-Jun-10 12-Jul-10 Payment date 15-Jul-10 29-Jul-10 30-Jul-10
Bonus issue on the basis of 1-for-4 Tax exempt final dividend of 5 Sen Final dividend of 5 sen less 25% tax Final dividend of 1.5 sen single tier tax exempt Second interim dividend of 15 sen tax exempt Final gross div of 7 sen less 25% tax + final tax exempt div of 5 sen Final tax exempt dividend of 6 sen Special interim single tier dividend of 2.5 sen Second interim dividend of 10 sen tax exempt Final div of 2 sen tax-exempt + Special div of 1 sen tax-exempt Tax exempt interim dividend of 3.5 sen Final single tier dividend of 2 sen
9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10 9-Jun-10
22-Jun-10 22-Jun-10 23-Jun-10 25-Jun-10 25-Jun-10 28-Jun-10 28-Jun-10 28-Jun-10 30-Jun-10 2-Jul-10 6-Jul-10
...For more details, see individual reports attached IMPORTANT DISCLOSURES
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