Friday, 16 March 2012

OSK188 - 16 March 2012: Daily Research Report


On The Platter
DIGI (FV RM4.00–NEUTRAL) Company Update: Main Bites From CFO Luncheon We maintain our NEUTRAL rating on Digi following the luncheon with its CFO. While Digi’s execution track record speaks for itself, especially with the commendable quarterly showing vis-à-vis its peers, the telco is showing signs of lethargy and could see greater earnings fallout from a re-energized Maxis. It also faces retained earnings constraints at the subsidiary level, which prevents the payout of special dividends and is not able to capitalize on  the share premium account at the holdco level.  The meeting did not prompt us to change our forecasts  and we have not  incorporated any special payout for FY13. Our FV stays at RM4.00 (7.5x FY13 EV/EBITDA). TM and Axiata are the better picks for capital management upside surprises.   

TOPGLOV (FV RM6.00–BUY) 1HFY12 Results Review: Higher Sales Offset Lower Selling Prices

SIA (FV SGD12.47–BUY) Company Update: February Op Stats: Encouraging Start


Market Review
Blue chip bias. While decliners led advancers by 443 to 296 and 367 counters closed unchanged, the FBM KLCI rose 3.67 pts to close at 1,579.38 – a reflection of investors' preference towards more defensive blue chip stocks. The key market news today include: EPMB takes over Maju Expressway, Zelan bags 25-year Gombak terminal concession,  Selangor Dredging bought three parcels of land for RM34.5m in Selangor, RAM reaffirms YTL notes ratings and Astral Asia buys office space for RM21m. Meanwhile, Deleum proposes 1-for-2 bonus issue, Hock Lok Siew chairman and MD resigns, and Top Glove’s 2Q net  profits  more than double y-o-y. Another round of strong reports on  US  jobless claims and manufacturing drove the S&P 500 up by 8.32 pts overnight to 1,402.60, which is expected to boost market sentiment on the local bourse today.


MEDIA HIGHLIGHTS
EPMB takes over Maju Expressway
EP Manufacturing (EPMB) is buying the 26km Maju Expressway (MEX) from Maju Holdings SB. The auto parts maker will pay RM1.7bn for the highway concessionaire, according to sources. The RM1.7bn price tag includes debts. The MEX links the acquisition agreement today. The sale will enable Maju group executive chairman Tan Sri Abu Sahid Mohamed to unlock his investment in the toll concession. A source familiar with the deal said EPMB will finance the acquisition by issuing RM1.2bn in sukuk while the remaining amount will be raised through bank borrowings. (Financial Daily)
Zelan bags 25-year Gombak terminal concession
Zelan Bhd’s 95%-owned Terminal Bersepadu Gombak SB (Tegas) yesterday entered into a public-private partnership agreement with the  government to construct the Gombak Integrated Transport Terminal (GITT),  a deal that comes with a 25-year concession. Construction of the seven storey terminal, to be integrated with the existing Gombak LRT station, will cost some RM307.37m and is expected to take 27 months. (Financial Daily)

SC okays SunREIT RM1.6bn debt papers
Sunway REIT proposed issuance of up to RM1.6bn in commercial papers has been approved by the Securities Commission Malaysia (SC). According to statement yesterday, it said the commercial paper (CP) programmer has a seven-year tenure and funds raised would be used to repay existing borrowings granted by Public Bank. Funds raised would also go towards working capital requirement and defray expenses in relation to the exercise. (Financial Daily)

Maxis terminates deal with Silver Bird
Silver Bird  Bhd, whose accounts are being probed for alleged irregularities, yesterday received a notice to terminate a distribution agreement from Maxis Mobile Services SB. The termination was for an agreement to distribute Maxis products sealed with Silver Bird’s subsidiary Stanson Marketing SB. Silver Bird also distributes telecommunications prepaid cards besides its bakery products. (Financial Daily)

SDB Prop buys Gombak land for RM35m
Selangor Dredging Bhd’s wholly-owned SDB Properties SB has signed an agreement wuth Superior Dignity SB to buy 3 parcels of leasehold lands for RM34.5m. The land in Tempat Kampung Klang Gates Baru, Mukim Ulu Kelang, Gombak is part of the group’s ongoing efforts to add suitable landbank, it said. The acquisition is expected to be completed by 2Q of FY ending 31 March 2013.(StarBiz)

Deleum proposes 1-for-2 bonus issue
Deleum Bhd, a diverse range of specialized products and services provider in the oil & gas industry, has proposed a 1-for-2 bonus issue of 50 million new shares of RM1 each. It said the proposed bonus issue would be capitalized from its retained earnings. Deleum Group MD, Nan Yusri said the bonus issue would be a good reward for shareholders in addition to Deleum’s second interim dividend payment of 9 sen per share, which was recently declared in respect of its financial year ended 31 Dec. (Financial Daily)

Hock Lok Siew chairman and MD resigns
Ooi Chieng Sim 42, has resigned as Hock Lock Siew Corp Bhd (HLS) chairman and MD on the advice of  his family and personal doctor, casting yet another question mark on the fate of the company. “His reason for the resignation is due to pressure and stress arising from the court case with Malayan Banking Bhd in relation to the corporate guarantee amounting to RM31.26m,” said a company statement to Bursa Malaysia. (Financial Daily)


ECONOMIC HIGHLIGHTS
Singapore: Retail sales unexpectedly rise on food purchase
Singapore’s retail sales unexpectedly rose for an eleventh month in January as consumers spent more on food and increased purchases at supermarkets. The retail sales index climbed 1.7% from a year earlier after gaining a revised 4.3% in December, the statistics department said in a statement yesterday. Jobs growth and an expanding tourism industry have boosted sales at hotels, restaurants and department stores, even as Singapore’s economy shrank last quarter for the second time in three quarters on easing manufacturing. The Ministry of Manpower said yesterday the unemployment rate averaged a 14-year low of 2% in 2011 and companies added more jobs than initially estimated last quarter. (Bloomberg)

China: Foreign direct investment falls for fourth month
Foreign direct investment in China fell for a fourth straight month in February as companies reined in spending amid a slowdown in the world’s second-biggest economy and the prolonged European debt crisis. Investment declined 0.9% to USD7.73bn last month from a year earlier, the Ministry of Commerce said in a statement yesterday, following a 0.3% drop in January. Overseas spending in the first two months decreased 0.6% to USD17.7bn. (Bloomberg)

India: Holds rate for third meeting as inflation accelerates
India’s central bank left interest rates unchanged for a third consecutive meeting after inflation accelerated and as it awaits steps to curb the fiscal deficit in the budget today. The Reserve Bank of India kept the repurchase rate at 8.5  percent, it said in a statement yesterday. The central bank has signaled rate cuts to counter the weakest expansion in almost three years depend on a sustained easing in inflation and moves to curb the largest budget gap among BRIC economies. (Bloomberg)

US: Wholesale prices increase by most in five months
Wholesale prices in the US climbed in February by the most in five months, reflecting a jump in fuel costs that Federal Reserve officials project will be temporary. The producer price index  rose 0.4% following a 0.1%t increase the prior month, Labor Department figures showed yesterday. The core measure excluding volatile food and energy rose 0.2%, less than in the prior month. Rising energy costs may make it more expensive to manufacture goods, restraining profits as companies find it difficult to pass the increases to customers. (Bloomberg)

US: Consumer confidence rose last week to four-year high
Consumer confidence rose last week to the highest level in four years as job gains put more Americans in the mood to spend. The Bloomberg Consumer Comfort Index climbed to minus 33.7 in the period to 11 March, the strongest since March 2008, from minus 36.7 the previous week. A buying-climate gauge reached the highest level since Nov 2007,  and a measure of the state of the economy had its best showing since Sept 2008. The bounce in sentiment coincides with gains in employment and a pickup in incomes that are giving households the means to withstand rising fuel bills. A rally in stock prices  also bodes well for consumer spending, which accounts for about 70% of the economy. (Bloomberg)

US: Labor market gains boost consumer optimism
Claims for jobless benefits dropped last week to match a four-year low, and US consumer confidence rose to the highest since 2008, signaling an improving labor market may boost household spending. Applications for unemployment insurance payments fell by 14,000 to 351,000 in the period ended 10 March, Labor Department figures showed yesterday. (Bloomberg)

Source: OSK188

No comments:

Post a Comment