Monday 12 March 2012

OSK188 - 12 March 2012: Daily Research Report (English Version)


On The Platter
AUTOMOTIVE (NEUTRAL) Sector News Flash: Tighter Lending Not To Blame TIV plunged in Jan 2012 on slower business activities in a month shortened by fewer working days due to the Lunar New Year holidays. While the tighter lending rules have dampened vehicle sales, we expect the impact to be quite manageable as banks and dealers adapt to the situation. Given that we have no SELLs in our auto coverage, we upgrade our sector call from UNDERWEIGHT to NEUTRAL, with UMW as our top pick. We are still cautious on the macro picture though, as the demand upside would be marginal since the replacement cycle for new vehicles  - a potential sales driver  - has peaked and upcoming models may not be exciting enough to spur TIV amid deteriorating consumer sentiment.

TRANSPORT (OVERWEIGHT) Sector News Flash: Qantas Deal Fails to Take Off

Market Review
Range bound trading. The  FBM KLCI closed marginally lower at 1,579.00  pts  last Friday, for a week-on-week loss of 4.78 pts, or 0.30%. Despite some foreign interest in the market, profit taking had offset  the  earlier gains.  The key market news over the weekend  are  MAS and Qantas call off talks on new premium airline, Datuk Ajit Ranjit Singh made new SC chairman, Cosway and Eng Kah set up a 70:30 JV to build a plant in China to manufacture personal care plus household products, Ho Wah denies Yunnan buying its mining operation, AirAsia X may face penalty if it ends flights to Christchurch, Perwaja extends deadline for RCULs application to 16 March and PFCE has asked for trading suspension pending  an  acquisition announcement.  Last week, US  stocks rose, capping the fourth straight weekly rally for the S&P 500 Index, after a government report showed  stronger-than-forecast payroll growth bolstered optimism in the world’s largest economy.  The default in Greece was shrugged off as a non-incident.  Therefore, we expect  the  local market  to  trend higher given the  positive  domestic  and external sentiments

MEDIA HIGHLIGHTS
Datuk Seri Shahrizat leaving as Women, Family and Community Development Minister
Datuk Seri Shahrizat Abdul Jalil has announced that she will step down as minister when her senatorship ends on 8 Apr. UMNO leaders, including its president Datuk Seri Najib Tun Razak, welcomed her decision, saying it was an appropriate thing to do. Wanita UMNO leaders lamented that Shahrizat’s resignation was a big loss but were grateful that she was still their chief. (The Star)

RM139bn boost for Johor
A total of 59 projects are expected to bring in RM139.3bn in investments by 2020 and create 68,000 job opportunities in Johor, said Prime Minister Datuk Seri Najib Tun Razak. He noted that the projects, under  the Economic Transformation Programme (ETP), would not only change Iskandar Malaysia’s landscape but also Pangerang in the South East and Mersing in the North East. The 27 entry point projects (EPP) would cover the education, tourism and the oil and gas sectors while the 32 Quality Living Projects under the Johor Baru transformation plan would cover safety and security, improvements in living standards in the city and also its road and transport systems. (The Star)Qantas plan in jeopardy as MAS talks fail on trade terms Qantas Airways Ltd’s plans to set up a full-service carrier in Asia to reverse losses on international routes have been set back after talks with Malaysian Airline System Bhd collapsed. The companies couldn’t agree on commercial terms, the Sydney-based airline said in a statement last Friday. The company said it will examine other opportunities for a venture in Asia involving minimal capital.  (Malaysian Reserve) Please see accompanying report

Eversendai has bid for RM800m worth of jobs locally
Eversendai Corp Bhd has another RM800m worth of jobs that it has bid for in Malaysia, which includes some work for the new MRT line. Fresh from its Tanjung Bin project win, group managing director Datuk AK Nathan said of the RM12bn it has bid for, about 10% is for businesses in Malaysia while the rest are mainly in the Middle East. He added that financing for its projects would mainly be via banks. (BT)

Eng Kah moves into China with Cosway
Eng Kah Corp Bhd, one of the largest contract manufacturers for personal care and household products in the country, is banking on a joint venture partner Cosway Corp Ltd’s aggressive expansion in China to further boost its bottom line. The two companies, Cosway and Eng Kah, via a 70:30 joint venture  company, have set up a plant in China to manufacture personal care and household products for Cosway’s stores there. (Financial Daily)

DRB-Hicom, VW target 40% local content in 12-18 months
Volkswagen AG and DRB-Hicom are targeting at localizing 40% of the automotive components in the next 12 to 18 months, said Dr Christof Spathelf, senior vice-president, group manufacturing overseas of Volkswagen AG. The Passat 1.8 TSI is the first of a few  Volkwagen vehicles to be assembled at the DRB-Hicom Automotive Complex in Pekan and the group is currently investigating the potential export of Passat to other countries of Asean. (Financial Daily)

Source: OSK188

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