Ann Joo Resources - Extended Loss..

Ann Joo’s losses deepen in 2QFY12, resulting in a cumulative net loss of RM6m for 1HFY12, which was way below our and street estimates. We suspect the poor numbers are due to weaker steel prices and start up plus additional overhead costs from its new Blast Furnace (BF). Meanwhile, we are keeping our bearish view since: i) the gestation period on its BF, and ii) the grim outlook for the steel industry with the slowing Chinese economy adding pressure to the already pathetic steel prices. As we cut our projection to a loss of RM14.5m in FY12 and lower profit of RM70m in FY13, we lower our FV to RM1.42, based on 0.7x FY12 BV, or -1.5 SD of the stock’s historical trading range. Reiterate SELL.

Short term revival. Ann Joo extended its negative position into 2QFY12 with a loss of RM4.9m, widening its 1HFY12 cumulative losses to RM6m, which was way below our and consensus estimates. The figure included some items like unrealised forex gains, reversal of inventories written down to net realisable value and positive tax that have mixture of impacts to its bottomline. While we normally deem those items as continuous (not exceptional), we decided to make a quick back-of-the-envelope calculation which showed post adjustment 1H earnings returning to positive at RM4.1m, which is nonetheless still unexciting. We suspect the weak earnings can be attributed to poor selling prices and start up plus additional overhead costs incurred at its BF. 

All eyes on BF. The management guided that its BF operation has improved gradually, but there is still room for further enhancement. Meanwhile, we continue to think it is fair to assume that the company may need to undergo a gestation period in handling this first-of-its-kind furnace in the country. Meanwhile, the immediate cost reduction should come from the arrival of lower-priced iron ore and coke. In the absence of a proven track record, we prefer to see the actual cost savings materialize before fully incorporating any positive numbers into our earnings model.

Maintain SELL. We remain cautious on the overall steel industry outlook, given renewed concerns over the deepening economic conditions in some of the European Union countries. As it is, international steel prices have come under tremendous downward pressure which impacted 2Q export and likely to extend into 2H. Also, the implementation of “mega” projects under the Economic Transformation Programme (ETP), which would in turn spur physical steel demand, may take time – at least until the conclusion of the next General Election. Therefore, we are now expecting Ann Joo to record a loss of RM14.5m in FY12 and 28% lower profit in FY13 at RM70m. The disappointing results also prompted us to keep our SELL recommendation on Ann Joo with our Fair Value lowered to RM1.42 based on 0.7x FY12 BV or -1.5 standard deviation (SD) of the stock’s historical trading range.

Source: OSK

Puncak Niaga Holdings - Oil & Gas Unit Keeps The Cash Flowing

Puncak Niaga Holdings (Puncak)’s 1HFY12 net profit of RM146.8m was well in line with our estimates but 11% ahead of market expectations. Although the improvement was partly due to the recognition of higher water tariff compensation without involving physical cash until the court hands down judgment, its Oil & Gas (O&G) and construction units made great strides in 2Q. We believe the results are enough to cheer investors, especially since the equity market is currently short on investment ideas. That said, we are keeping our profit estimates and maintain our Trading BUY on Puncak, with our FV lifted to RM2.08. 

Result in line. Puncak’s net profit of RM146.8m for 1HFY12 was well within our but was 11% ahead of street estimates. This was due to the timely recognition of higher water tariff compensation arising from the scheduled 25% water tariff hike, which should have been gazetted on 1 Jan 2012. Meanwhile, the group’s Oil & Gas division reported a profit before interest and tax (PBIT) of RM34.6m, or a 380% improvement q-o-q, as the pace of jobs returned to normal when the monsoon season ended. Also, its construction division posted a higher PBIT of RM22.8m in 1H, boosted by a local rural water supply project.

O&G fared well. As the dispute between its water unit and the Selangor State Government rages on, the focus has turned to Puncak’s O&G business. Meanwhile, we understand that the newly acquired Global Offshore (M) SB (GOM) has secured a lucrative O&G pipe maintenance project worth more than RM500m YTD, which is impressive, considering it is newly acquired. We expect the income from GOM to be sustainable moving into 3Q before monsoon season arrives at the year-end. Meanwhile, the margins from the group’s O&G projects are estimated to be in the mid-teens. That said, as the earnings are largely in line with our estimates, we are making no change to our projection for now.

Reiterate Trading BUY. Although the major improvements to the company’s bottomline were mainly attributed to the compensation for non-implementation of higher water tariffs and did not involve any physical cash inflow until the court hands down its decision, the improvement in P&L is indeed a sentiment booster. Furthermore, the group’s move into the lucrative O&G field as well as both the continuous flow of O&G as well as rural water supply contracts are sufficient reasons for investors to cheer. Therefore, we are keeping our Trading BUY recommendation, with the stock’s fair value revised higher to RM2.08. This implies a mere 3x forward FY12 EPS (changing from a book based valuation).

Source: OSK

Malaysian Pacific Industries - Dimmer Outlook

Key takeaways from MPI’s analyst briefing yesterday: (i) sequential q-o-q top-line decline expected, (ii) it intends to spend RM200m in capex, and (iii) the second phase of its Suzhou plant has been qualified to commence operations. Even though MPI’s results came within expectation, we are cutting our FY13 net profit estimate by 14% to incorporate higher opex assumptions. We are also introducing our FY14 numbers. In view of the weaker outlook of the global semiconductor sector, we are downgrading the stock to NEUTRAL from TRADING BUY, with a lower FV of RM2.72 based on 0.8x CY13 P/NTA (reverting back to a 40% discount to the historical five-year sector average of 1.4x).

Weaker outlook, in line with global numbers. During yesterday’s analyst briefing, management guided that MPI’s sequential q-o-q top-line is likely to decline, or remain flat at best. Over the past month, management saw and acknowledged that its sales numbers were sluggish given the reduced inventory re-stocking initiatives among customers. The earlier expected recovery in 2H seems highly unlikely now. Management did not shed light on its bottom-line outlook going forward.

Strong take-up for new packages going into smartphones and tablets. According to MPI, sales of new packages going into smartphones and tablets (S&T) have continued to gain traction in 4QFY12. This high growth segment now accounts for almost 45% of its product mix compared to a year ago at only approximately 15%. During the briefing, we glimpsed into a stripped down Samsung Galaxy SIII as well as the new Apple iPad – the devices had numerous MPI products embedded in them, ranging from accelerometer to communication chips. Besides Samsung and Apple, the company also has exposure to other major S&T players. Management foresees strong persistent demand for S&T and thus, its FY13 capex will be directed mostly to this area. MPI targets capex of RM200m for next year.

Phase 2 of Carsem Suzhou qualified. MPI’s wholly-owned subsidiary, China-based Carsem Suzhou (CS), has been qualified to commence operations of its phase 2 cleanrooms. CS’ Micro Leadframe Package (MLP) capacity has increased by four-fold from 5m units/day to 20m units/day. We also gather that the first volume of products will be shipped in 1QFY13. Recall that the company has in 3QFY12 secured a new customer, a leading smartphone producer, which is expected to add some USD25m/year to its revenue. Currently, CS contributes 15%-20% to MPI’s total top-line but that may possibly increase to 30%-40%, after incorporating the new customer.

Big enough portfolio of clienteles to mitigate single customer concentration risk. Management is comfortable with MPI’s client mix – its top 10 customers contribute 74% of sales while the top 30 account for 96%. Also, we gathered that its biggest customer, an integrated device manufacturer (IDM), contributes approximately 14% to its top-line.

Downgrade to NEUTRAL with revised FV of RM2.72. In view of the strong demand for new S&T-related products and contributions from CS’ new customer, we are nudging up our FY13 revenue forecast slightly by 3%. However, we are cutting our FY13 net profit estimate by 14% to incorporate higher opex assumptions. We also take the opportunity to introduce our FY14 financial forecasts. We are downgrading the stock to NEUTRAL, with a revised FV of RM2.72 based on 0.8x CY13 P/NTA (reverting back to a 40% discount to the historical five-year sector average of 1.4x). The downgrade is to reflect the weaker outlook of the global semiconductor sector.

Source: OSK

Perwaja Holdings - Mixed on Prospects

Perwaja posted 1HFY12 net profit of RM18.5m with its 2Q earnings shrinking by a disappointing 86% q-o-q. The sharp decline was due to an abnormally strong 1Q, which benefited from cheap raw material as a result of aggressive inventory impairment in 4Q last year. We remain cautious for the near term, as steel prices are dropping faster than its material costs. Nonetheless, potential mining contributions in the future and improved developments on its ore processing plant offer investors new hope. Having revised our earnings and valuation methodology, we are projecting lower earnings and adjusted the FV to RM1.12. Maintain TRADING BUY.   

Below expectations. Perwaja’s 1HFY12 net profit of RM18.5m came in short of our and consensus estimates, representing only 37.9% and 42% of the full year’s projections respectively. 2Q’s bottom-line shrank by 86% q-o-q despite iron ore pellets still priced at a smaller premium of USD35 per tonne (compared the high of USD70 per tonne in 2010 and 2011) to iron ore fine prices. We suspect the 1Q numbers were abnormally strong due to it benefiting from cheaper-than-market material costs. This was due to its aggressive inventory impairment in 4QFY11. Newly-delivered raw material costs in 2Q have risen compared to the previous quarter. The EBITDA margin narrowed to only 6.6% in 2Q vs 13.3% in 1Q, despite a 53.2% q-o-q rise in sales amid better demand for Direct Reduced Iron (DRI).

A prompt uplift from new income, perhaps. Meanwhile, we are cautious of Perwaja’s near-term outlook on the back of falling steel and material prices, which may push the company into the red. Nonetheless, we are hopeful that its iron ore mining income may materialise no later than 4Q, as projected by the management in their results announcement. This is on top of our confirmation of the opening of its initial mine operation just last month. While iron ore spot prices have dropped below USD100 a tonne since last week, this is just a knee-jerk disposal by a handful of panicked sellers after China reported a depressed set of economic data. The ore price is likely to rebound as Chinese mills may prefer to import at this price level, which comes way cheaper than the cash production costs of their own mines in Mainland China. Meanwhile, the new income stream from mining may take a few months to reach its optimum level, while the low-cost open pit mining method may still help to partly offset the lower earnings from its existing iron and steel making business. It is prudent to expect only 100k tonnes of iron ore to be sold in FY12, followed by a gradual improvement in volume (refer to Figure 1).

Greater assurance. Mining operations aside, Perwaja has also kicked off the construction of its iron ore concentration and pelletisation plant, which will likely be ready by the end of 3Q2013. While we are disappointed with the delay of its commissioning, the first shipment of its concentration machines have already arrived at the Kemaman plant and the other parcel is en route to Malaysia. We also understand that its financier for the new plant just issued the company a Letter of Credit (LC), which means that construction works can begin immediately after the commissioning of its concentration plant by end-2012. That said, the in-house iron ore mining activities will be timely in supplying ore for processing in its new plant. To be prudent, we also projected some anticipated technical hiccups during the start-up stages of the new plant.

A conservative margin assumption. With more defined development now, we have incorporated the value enhancement from Perwaja’s concentration plant where iron ore fine can be sold at better margins of USD25 a tonne in FY13 compared to FY12; further margin increases of USD3 a tonne p.a. can be expected until it reaches USD35 a tonne. The margin for pellet processing is also conservative, at USD10 a tonne and may slowly increase to USD25 a tonne in FY16 given that shipment cost savings may already be inching to USD20 a tonne. Based on the revised assumption, we arrived at a new DCF for the combined iron ore mine and ore-processing plant of RM1.75 a share.

Maintain TRADING BUY. Although we are cautious on the steel industry’s outlook against a backdrop of weaker economic conditions, we recognize that there will be a timely boost to Perwaja’s earnings coming from cheaper in-house iron ore that will be further enhanced by its in-house processing. We have made some major revisions in our earnings model following the recent developments, with the key assumption stated in Figure 1. Post-adjustment, our FY12 earnings are slashed by 78.5% to RM10.5m and FY13 profit is slightly lower at RM128.5m from RM135.5m previously, as we factor in lower selling prices for billets together with the higher cost of pellets for the existing iron- and steel-making businesses. We also lower our book base valuation based on 0.5x FY12 BV or -1 standard deviation of its historical trading range but are adding a 30% of the DCF value of its iron ore and new ore processing plant in the light of the company’s further developments. As the result, our FV is tweaked slightly to RM1.12 from RM1.13, as we keep our TRADING BUY rating on the stock.

Source: OSK

News Highlights - AirAsia, Lingkarang Trans Kota Holdings, Construction Sector

AirAsia Bhd (RM3.50/share)

Indonesia approves AirAsia’s purchase of Batavia Air

The Indonesian government has approved in principle the purchase of Batavia Air by Malaysian low cost airline company, AirAsia Bhd and its Indonesian partner, PT Fersindo Nusaperkasa.

Indonesia’s Air Transportation Director General, Harry Bakti said following the approval, AirAsia will be able to realise its purchase of 76.95% share of Batavia Air initially and follow up with the purchase of another 23.05% equity in the second phase. Meanwhile, Dharmadi, the President Director of Fersindo, the majority shareholder of PT Indonesia AirAsia, said with the approval from the Transportation Ministry, the company will be taking the steps to finalise the acquisition. With the purchase, AirAsia will hold 49% equity in Batavia Air, while Fersindo will be the majority shareholder with 51% share. – Bernama

Lingkaran Trans Kota Holdings Bhd (RM4.15/share)

Gets RM80m from govt for toll hike delay

Highway concessionaire Lingkaran Trans Kota Holdings Bhd (Litrak) will receive over RM80mil in compensation from the government for postponing toll hikes. Chief financial officer Richard Lim Kim Ong said the company had received half of the cash payout in the middle of this year and the balance will come in the following year after an audit of the traffic has been conducted.

According to Litrak’s concession agreement, the toll rates for Lebuhraya Damansara Puchong (LDP) were scheduled for a rise on January 1 2011, but the government had decided to defer until further notice.  Lim said the cash payout from the federal government will help ease the company’s top line as traffic along the LDP has been almost saturated.

Meanwhile, Litrak chief executive officer Sazali Saidi said he is unaware of any Gamuda Bhd’s plans, the company’s major shareholder, to divest stake in the highway operator. Sazali also refuted claims that the management of Litrak and PLUS Expressways Bhd are now in talks on a potential buyout offer for Sprint.   – Business Times

Construction Sector

Ahmad Zaki wins RM174m MRT project

Ahmad Zaki Resources Bhd, a construction company, has won a RM174.6mil project from Mass Rapid Transit Corp Bhd for the construction and completion of elevated stations and other associated works at Taman Suntex, Taman Cuepacs and Bandar Tun Hussein Onn. 

The date for the practical completion for the works shall be on June 30, 2016, while the date for line completion for the entire works will be on July 31, 2017.  – Business Times 

Source: AmeSecurities

PPB Group - Hurt by Wilmar again Hold

- Maintain HOLD on PPB Group Bhd, with a lower fair value of RM15.90/share versus RM17.25/share previously. Our fair value of RM15.90/share is based on a PE of 18x on FY13F EPS. 

- PPB’s 18%-owned associate, Wilmar International, is currently trading at FY13F PE of 11.4x (based on consensus estimates) compared with PPB’s 15.8x. 

- Not surprisingly, PPB’s 1HFY12 results fell short of our expectations and consensus estimates due to Wilmar’s weak results.  

- PPB’s share of profits in associate declined 52% from RM446.3mil in 1HFY11 to RM214.4mil in 1HFY12. Recall that Wilmar’s core net profit shrank 51.5% from US$779.8mil in 1HFY11 to US$378mil in 1HFY12 due to losses in the oilseeds and grains and sugar milling divisions. 

- A positive note is the depreciation of the RM against the US$. US$ appreciated 1.8% from an average of US$1.00/RM3.0324 in 1HFY11 to US$1.00/RM3.0878 in 1HFY12. Wilmar’s earnings are reported in US$. Hence, PPB benefits from a weaker RM when Wilmar’s earnings are translated into RM.

- PPB’s flour division recorded an 8.2% increase in EBIT from RM61mil in 1HFY11 to RM66mil in 1HFY12. We believe that this was due to the fall in wheat costs. We reckon that improved performance from the flour division helped in compensating for losses in the bread subdivision.

- EBIT margin of the flour division inched down marginally from 8% in 1HFY11 to 7% in 1HFY12. 

- According to Bloomberg, the price of low protein soft red wheat fell 23.6% from an average of US$8.77/bushel  in 1HFY11 to US$6.70 1/8/bushel in 1HFY12. 

- To improve market share, Massimo bread is still being sold at the promotional price of RM2.50/400 gm loaf after its launch in July last year.  

- Massimo had also launched a new bread product, i.e. whole wheat loaf in June 2012. The selling price of whole wheat bread is RM3.50 for a 420 gram loaf. 

- EBIT of the cinema division declined 8.5% YoY to RM19.6mil in 1HFY12 on the back of higher distribution costs.   

Source: AmeSecurities

Multi-Purpose - Weak ticket sales Hold

- We are downgrading our recommendation on MultiPurpose Holdings Bhd (MPHB) from BUY to HOLD, with a higher fair value of RM4.00/share. We have raised the terminal growth rate in our DCF calculation for MPHB’s NFO operations from 2.6% to 4%. 

- The proposed demerger exercise of MPHB’s non-gaming (property and insurance assets) is scheduled to be completed by 1HFY13.

- Stripping out the non-gaming assets, which would be listed eventually, we estimate the implied value of MPHB’s NFO operations at an FY13F PE of 14x. 

- This is on par with Berjaya Sports Toto, which is currently trading at FYE4/13F PE of 14x (before listing of the business trust in Singapore).

- MPHB’s 1HFY12 core net profit (excluding gains on fair value adjustment and sale of shares in associate) was within our expectations, but below consensus estimates.

- Pre-tax profit of MPHB’s NFO, stockbroking and insurance divisions fell 28% YoY to RM194.4mil in 1HFY12 due  to increases in NFO prize payouts and net insurance claims.

- Pre-tax profit of the NFO division declined 25.9% YoY to RM167.6mil in 1HFY12. Prize payout rose from an estimated 65.1% in 1HFY11 to 68.1% in 1HFY12. Ticket sales were tepid in 1HFY12 due to weak consumer spending and competition from Berjaya Sports Toto’s jackpot games. 

- Gross NFO sales shrank 2.9% from RM20.1mil/draw in 1HFY11 to RM19.5mil/draw in 1HFY12. Number of draws amounted to 89 in 1HFY12, which was the same as 1HFY11.

- For FY13F, we have forecast a low ticket sales growth per draw of 2% in FY13F (FY12F: 2%) to account for competition from Pan Malaysian Pools’ 6D Jackpot, which was launched in July 2012. 

- On a QoQ basis, pre-tax profit of the NFO division was weak in 2QFY12 due to higher prize payouts and a fall in ticket sales/draw. However, pre-tax profit of the insurance division improved from RM2.3mil in 1QFY12 to RM20.6mil in 2QFY12 on the back of a decline in insurance claims.

- Ticket sales per draw shrank 7.6% from RM20.3mil in 1QFY12 to RM18.7mil in 2QFY12 while prize payout climbed from 65.6% to 69.4%.    

Source: AmeSecurities

Padini Holdings - Yet another applauding year with favourable prospects Hold

- We are downgrading Padini Holdings to a HOLD, with a higher fair value of RM2.57/share vs. RM2.15/share previously, based on a 10% discount to our DCF value. Our fair value implies an upside of only 11%. The stock has rallied by a whopping 88% YTD. We have rolled our valuation forward to FY13F and revised our earnings assumption upwards.

- Padini registered 4Q net profit of RM15mil, bringing the full-year FY12 earnings to RM95mil, exceeding our forecast but below consensus, accounting for only 85%. The strong earnings growth YoY was achieved on the back of an aggressive expansion in FY12. A dividend of 2.0sen/share was declared for FY13F.

- Earnings surged by 26% YoY on the back of a 30% growth in revenue largely driven by an additional 20% of total area under retail domestically. To-date, Padini has 95 stores with a total gross floor area of circa 719,408sf. 

- 4Q is traditionally the weakest quarter. Earnings declined by 38% QoQ (86% domestic operation, 14% exports) with a marginal drop of 4% in revenue due to:- (1) Higher selling and marketing expenses arising from five new store openings in May; and (2) The way members redeem rebates via the loyalty programme.  Compared to the preceding quarter, gross profit margin declined by 5.1% to 46% due to year-end adjustments made for inventories lost and increased promotions.

- Given the strong FY12 results, we have revised our  turnover per store assumption by 8%-10% and raised FY13F-FY14F earnings by 12%-22%. Therefore, we project FY13F earnings to grow by 17% to RM111mil on the back of the five new stores in May 2012, followed by earnings expansion of 15% in FY14F. Prospects for FY13F remain favourable as the five new stores would realise its full earnings potential, apart from another new store in August. In addition, we introduce our FY15F earnings at RM145mil. We maintain our assumption of five new stores per year. 

- We continue to assume at least 30% payout ratio in  line with Padini’s historical practice with a projected DPS of 6.0sen, representing yield of 2.6%.

- Separately, we have not included any earnings arising from the collaboration with FJ Benjamin (FJB). We foresee minimal impact in the near- to mediumterm until the distribution grows large in Indonesia. As a recap, Vincci merchandise are sold to FJB at a cost plus 15% and royalties of 2% based on the sales of merchandise by FJB in Indonesia. However, Padini will allocate 50% of the royalty received as contributions to FJB for branding and promotional activities for the VNC label. 

- Trading now at a 14x PE for FY13F, we believe it is fairly valued, considering no visibility of new store openings in the pipeline at this juncture and growth to decelerate due to a larger base, while also trading above its historical average PE of 10x and below market of 15x. 

- Nevertheless, we still like Padini and  believe that prospects remain bright underpinned by:- (1) Sustainable earnings growth (3-year CAGR: 15%); (2) Strong franchise value with acclaimed brand names; and (3) Robust growth and penetration of Brands Outlet into the middle- to lower-end markets. Note that Brands Outlet’s EBIT grew by 164% YoY, making up 17% of EBIT in FY11 and hence, sales momentum is likely to strengthen further moving forward.  

Source: AmeSecurities

Puncak Niaga - Oil & gas booster Hold

- We maintain our HOLD recommendation on Puncak Niaga Holdings, with an unchanged fair value of RM1.54/share.  This pegs the stock to a 7% discount on its estimated sumof-parts (SOP) value.

- Puncak’s 2QFY12 net profit came in at RM78mil – bringing 1HFY12 earnings to RM147mil. As expected, Puncak did not declare any interim dividend for the quarter under review.

- The results constituted 56% of both consensus as well as our estimates. We envisage 4Q contributions from the oil & gas division to taper off towards the year-end.

- 2QFY12 earnings rose 15% QoQ largely on a pick-up in activities for both the construction and oil & gas operations.

- Similarly, 1HFY12 swung to the black from a RM4mil loss a year earlier on improvements in all of its operating units. Group operating margin remained fairly stable at ~26%. 

- Turnover for SYABAS grew 32% YoY to RM1.3bil – reflecting the recognition of a scheduled tariff hike effective 1 January 2012 as per its concession agreement.

- At half-time, the oil & gas division reported an EBIT of RM41mil (~7% of group EBIT) compared with an operating loss of RM6mil a year earlier. This was further lifted by the full-year consolidation of a 100% stake in Global Offshore (Malaysia).   

- We have assumed Puncak to sustain an oil & gas order book of RM700mil p.a. over FY12F-14. This is anchored by more Offshore Installation Contracts (OIC) from Petronas.

- In addition, Puncak continues to eye marginal oilfield opportunities in Malaysia although the timing is uncertain. Our preliminary estimates indicate that any such win may lift its break-up value by RM0.33/share (6.4%) based on an effective stake of 30%.

- But, we believe it is still dead money risk for Puncak despite the stock trading at a steep 75% discount to its SOP value.

- As such, our HOLD rating on Puncak remains until there is more clarity on the water impasse in Selangor post the 13^th General Election.  

Source: AmeSecurities

Sime Darby - Softening industrial business expected but plantation to remain resilient Buy

- We reaffirm our BUY rating on Sime Darby, but with our fair value cut to RM12.06/share based on a 10% discount to our revised sum-of-parts value of RM13.40/share. The lower sum-of-parts value is to account for slower recovery in downstream business and slower growth assumption for its industrial division amid softening market conditions and also higher debt assumptions. 

- Sime Darby reported a net profit of RM1.1bil for 4QFY12, bringing its FY12 earnings to RM4.15bil (+13% YoY) – just slightly above our, and consensus, estimates of RM4.0bilRM4.1bil. This is also some 27% higher than its conservative target of RM3.3bil.

- Sime declared a final dividend of 25sen/share, thus bringing its full year-DPS to 35 sen. 

- While earnings were mainly driven by the plantation business – CPO price realised at RM2,925/MT – the division recorded a decline in EBIT (-2% YoY) due to:- (1) lower FFB production amid bad weather conditions & tree stress; (2) continued losses at midstream & downstream because of weaker utilisation rates and lower Europe demand, among others.

- Moving into FY13F, the group is looking at a decent performance for the division with an expected recovery in FFB production, especially in Indonesia (+8% YoY). But having said that, downstream would continue to face challenges amid the Indonesian tax structure although as a whole, there has been a recovery in performance.

- The management indicated a challenging year ahead for the industrial division with signs of slowing orders already seen – due to the softening mining industry in Australia. It is also seeing deferments in orders for FY2014-FY2016. Sime, nonetheless, is looking at matching FY12’s performance for FY13, underpinned by a RM4bil order book.

- Sime Darby is looking at generating more than RM1.2bil (FY12 sales) for new sales in FY13F. We believe this is achievable, given its focus on affordable housing with 60% of its planned launches would be from this segment.

- The biggest concern for the motors divisions remains with China due to sustained competitive environment although we believe other markets should somewhat compensate for the expected weak performance.

- We are revising down our estimates by 3%-4% for FY13FFY14F to RM4.5bil-RM4.8bil due to lower margins at downstream business and slower growth assumption for the industrial business (4% vs 7%). We introduce FY15F earnings at RM4.9bil.   

Source: AmeSecurities

Telekom Malaysia - Unifi subscriber target raised Buy

- We re-affirm our BUY call on Telekom Malaysia, with a higher DCF-derived fair value of RM6.70/share (vs. RM5.90/share previously) as we roll over our valuation base to FY13F. 

- TM reported a core net profit of RM223mil for its 2Q12, which brought 1H12 core earnings to RM406mil. The 1H12 earnings were broadly within expectations, accounting for 55% of our FY12F net profit and 53% of consensus. Meanwhile, normalised EBITDA of RM1.6bil accounted for 49% of our FY12F projection and consensus. 

- Earnings grew 22% QoQ, led by growth in Internet services. Unifi subscriptions grew 22% QoQ, but there was a slight (-1% QoQ) contraction of Streamyx subscriber base. Unifi subscriber net additions in 2Q12 slowed slightly to 22,760/month versus 26,415/month in 1Q12. Latest Unifi subs stood at 420K (33% take-up rate), which means that TM has exceeded its original target of 400K subs. Management has now set a new target of 500K subs by end-FY12F, which is in-line with our projection. 

- ARPU growth potential is not limited to just migration to Unifi, but also via enhanced packages for Streamyx subscriptions. Notably, Streamyx ARPU rose 3% YoY to RM79 in 1H12 (from RM77 in 1H11). Nonetheless, 30% of existing Unifi subs (ARPU: RM181) migrated from Streamyx. This was a notable increase versus a 20% proportion a year ago.

- Margins remained steady at close to 33% (EBITDA margin) despite Maxis’ aggressive pricing strategies during the early phase of its home fibre broadband launch in 2Q12. However, we believe competition will likely heat up going forward, given new fibre broadband offerings by TM’s wholesalers e.g. Maxis and Green Packet. In the July till end-August period, Unifi subs net addition declined further to circa 18K/month, though this has to be taken into context with the festivities and shorter working month in August. 

- Management indicates of possibly better receivable collections in 2H12, which may improve operating cashflows. However, no exact measure or target was forthcoming. Additionally, there is no indication yet of 2013 HSBB capex (as TM enters a demand-driven rollout phase). We model in declining capex for FY13F to RM2.1bil (from RM2.6bil in FY12F), which translates into 14sen/share savings. 

- On an EV/EBITDA basis, TM is cheap (FY13F: 7.7x) relative to mobile telco peers, i.e. Maxis: 11x and DiGi: 12x. We believe capex intensity may also peak in FY12F as major towns have been covered in the initial HSBB rollout phase which ends in FY12F – which suggests potential surprise dividends going forward.  

Source: AmeSecurities

Benelac Holdings - Step by step Buy

- Maintain BUY on Benalec Holdings, with our sum-of-parts (SOP) derived fair value lowered slightly to RM2.48/share (previously: RM2.51/share) – as we roll forward our valuation base to FY13F. 

- Benalec reported 4QFY12 net profit of RM11mil, bringing FY12F core net profit to RM83mil. Its results were largely within expectations. 

- Stripping off a RM6mil gain from the bargain purchase of subsidiaries acquired in the previous financial year, FY12 core net profit shed 8% YoY on:- (i) timing issues  for ongoing construction jobs/recognition of land sales at its Malacca concessions; and (ii) one-off ESOS expenses totalling RM2mil during the financial year; and (iii) preliminary expenses for its future ventures in Johor.   

- But, we forecast a turnaround in FY13F core earnings (+13% YoY; FY12: -8% YoY). This would be mainly underpinned by a step-up in recognition from three key projects: (i) DMDI land in Kota Laksamana, Malacca  (ii) Pulai Indah Industrial Park, Selangor; and (iii) RM67milfreight contract to carry coal for TNB.

- The latest contract (3 years + option for another 2 years) that commenced last May adds another dimension to Benalec’s expanding capabilities via recurring charter income from TNB. 

- Benalec’s has built up a healthy order book buffer of RM561mil (~2x construction revenue) that would provide earnings visibility until 2016.

- But, the real beef with Benalec largely hinges on its pursuit to seal a formal mandate to develop a maritime industrial park in South Johor – strategically located in close proximity to Singapore. We expect maiden contributions from Johor to start channelling-in from 4QFY13 onwards.   

- Benalec’s cash balance remains healthy with FY13F net gearing at only 0.1x, suggesting ample room to gear up for future value-accretive deals – notably in Johor. To kick start its Johor ventures, we understand that the group is planning to raise ~RM100mil in borrowings.   

- Forward valuations remain attractive at FY13F-15F FD EPS of 7x-10x against robust EPS CAGR of 16%. Our forecast only assumes land reclamation works for Phase 1& 2 of its Tg.Piai landbank in Johor (2,000 acres) – implying more upside to its future valuation upon contract delivery.    

Source: AmeSecurities

Genting Malaysia - Good set of results Buy

- Reiterate BUY on Genting Bhd with a lower RNAV-based fair value of RM10.85/share (vs. RM11.85/share previously) mainly to account for our new fair value of S$1.54/share for Genting Singapore PLC (GenS). GenS is estimated to account for 47% of Genting Bhd’s RNAV. 

- We have also excluded earnings from the Malaysian power division but included cash from the disposal of the Genting Sanyen Power Plant in our RNAV calculation.  

- Genting Bhd’s 1HFY12 earnings were within our expectations but below consensus estimates. Although GenS’ results were weak, this was compensated by Genting Malaysia Bhd’s (GenM) good results.   

- EBIT of the power division fell 20% YoY to RM266.9mil in 1HFY12 due to lower power generation at the Meizhouwan power plant. However on a QoQ basis, power EBIT expanded 13% to RM141.6mil in 2QFY12 as Genting Bhd recognised higher earnings from the Jangi wind farm in India. Jangi wind farm commenced operations in December 2011. 

- We understand that Genting Bhd would use part of the RM2.3bil proceeds from the disposal of Genting Sanyen Power Plant to invest in its existing business. 

- Recall that the group plans to build a RM3.2bil coal-fired power plant in West Java. The power plant, which would command a capacity of 660MW, is expected to start operations in FY17F. 

- Genting Bhd also plans to continue with its exploration activities at the Kasuri oil and gas block in Indonesia.

- We gather that the disposal of the Genting Sanyen Power Plant is not a signal that Genting Bhd plans to exit the power business completely.

- The group has indicated that it would continue to focus on overseas power assets. Currently, Genting Bhd has power assets in China and India. Having said that, we gather that if the group were to receive an attractive selling price for its power assets, then it would not be adverse towards accepting the offer.  

- In respect of overseas casino investments, we understand that Genting Group prefers to own a controlling stake. However, if the jurisdiction requires Genting Group to have a local partner, then the group would enter into joint ventures.

Source: AmeSecurities

Kuala Lumpur Kepong - Results were not too bad Buy

 - Kuala Lumpur Kepong Bhd (KLK) remains a BUY, with an unchanged fair value of RM25.90/share. KLK is a big-cap proxy for a recovery in CPO prices. 

- KLK’s 9MFY12 results were just slightly below our expectations. We have tweaked the group’s FY12F results downwards by 3.6% for housekeeping reasons. KLK’s net profit rose 8.5% QoQ to RM233.1mil in 3QFY12 underpinned by a decline in the effective tax rate. 

- A positive surprise was the continued improvement in the profitability of the manufacturing division. In spite of challenging operating conditions in the April to June quarter, EBIT of the manufacturing division climbed 68.8% QoQ to RM83mil in 3QFY12. 

- EBIT margin of the manufacturing division expanded from 3.9% in 2QFY12 to 6.3% in 3QFY12. 

- KLK’s plantation revenue shrank 6.2% YoY to RM3.9bil in 9MFY12 suppressed by flattish CPO prices and declining palm oil production. 

- KLK realised an average CPO price of RM2,848/tonne in 9MFY12 against RM2,952/tonne in 9MFY11. According to MPOB (Malaysian Palm Oil Board), spot CPO price averaged RM3,129/tonne in 9MFY12. 

- Unlike other plantation companies, KLK’s FFB production did not fall as much. Due to KLK’s year-end, which is 30 September, the group recorded healthy production in 4Q2011 to cushion the 8% YoY fall in FFB output in 1H2012. 

- Also, the 1.9% YoY decline in KLK’s FFB production in 9MFY12 was not as sharp as its peers due to the robust double-digit growth in its FFB output in Indonesia. Indonesia is estimated to account for about a third of group FFB production.  

- Average age of KLK’s oil palm trees in Indonesia is about 7.7 years old compared with 14.4 years old in Sabah. As a group, the average age of KLK’s oil palm trees is roughly 10.2 years old.     

- Plantation (including refining) EBIT margin slid from 27.7% in 9MFY11 to 23.5% in 9MFY12 on the back of higher fertiliser and labour costs. 

- We believe that weak refining margins could have also contributed to the erosion in the EBIT margin of the plantation division. We estimate that refining accounts for 10%-13% of the division’s earnings

Source: AmeSecurites

Kulim (Malaysia) - NBPOL affected by wet weather Buy

- Although our fair value of RM5.00/share is below Kulim’s current share price of RM5.19, we are keeping our BUY recommendation on the group for its special dividend of 82-93 sen/share. We believe that this would be paid in either September or October 2012.

- Based on the current share price of RM5.19, Kulim’s exprice after the special dividend would be about RM4.26 to RM4.37. This would value Kulim at FY13F PEs of 13.6x to 13.9x (excluding fast food earnings), which are undemanding. 

- Kulim’s 1HFY12 results were in line with expectations but below consensus estimates. Kulim’s core net profit  fell 51.9% YoY to RM129.5mil in 1HFY12 due to low palm oil production and higher costs. 

- NBPOL’s (New Britain Palm Oil Ltd) FFB processed fell 5.6% YoY to 1.2mil tonnes in 1HFY12 due to torrential rains, which affected harvesting in 1QFY12. Although FFB production had improved in 2QFY12, this was not enough to compensate for the deficit in 1QFY12. 

- Due to the dilution in Kulim’s shareholding in NBPOL from 50.68% to 48.97%, Kulim commenced equity-accounting for NBPOL’s net profits from 2QFY12 onwards. NBPOL accounted for 28% of Kulim’s pre-tax profit in 2QFY12.

- The silver lining is that NBPOL has locked-in to sell about 105,000 tonnes of its CPO production at US$1,092/tonne (RM3,440/tonne). This is about 15% of NBPOL’s estimated FY12F production.   

- Kulim’s FFB production in Malaysia fell 8.3% YoY to 259,782 tonnes in 1HFY12 due to the lag impact of the drought in early-2010. 

- However, we expect FFB production to recover in 2HFY12. Kulim’s internal FFB output in July 2012 expanded 25% from June’s 54,129 tonnes.

- Due to a 15% to 20% YoY climb in production costs in 1HFY12, Kulim’s plantation EBIT margin (Malaysia only) shrank from 26.9% in 1HFY11 to 18% in 1HFY12. 

- We anticipate margin enhancements in 2HFY12, underpinned by expansions in palm oil production, which should lower production costs. Kulim’s production cost in Malaysia was about RM1,500/tonne in 1HFY12.   

Source: AmeSecurities

Media Chinese Intn’l - A good kick-start to the year Buy

- We re-affirm our BUY recommendation on Media Chinese (MCIL), with an unchanged fair value of RM1.70/share, based on a 10% discount to our DCF value – following the release of the 1QFY13 results. Its share price has rallied by 31% since July, purely reflecting the proposed special dividend of RM0.41/share.

- MCIL reported a core net profit of RM49mil for 1QFY13, which is within our expectations, accounting for 27% of our  FY13F earnings. The proposed special dividend is expected to be completed by 4Q this year.

- Earnings expanded by 19% YoY and 3% QoQ on the back of a revenue growth of 10% YoY and 23% QoQ. This was led mainly by:- (1) Strong performance of the tour business; and (2) Advertising revenue from the publishing and print business. 

- The boost from the tour business came from the weakening Euro which led to higher demand for long-haul tours to Europe coupled with summer-time in June being the peak season for  travelling. YoY, advertising grew by 4.4% in PBT, driven mainly by operations in Hong Kong stemming from the luxury brands and recruitment advertisements. 

- In the immediate term, we expect adex in the 2Q and 3Q to ramp up, driven by nationwide sales and the mooncake festival in Malaysia. No change to our earnings forecasts. We project a net profit of RM184mil for FY13F, growing by 9% to RM201mil in FY14F and another 4% to RM209mil in the following year. 

- We are in favour of its proposed spin-off of the travel business by having a separate listing in Hong Kong, resulting in a 75% equity stake for MCIL being the controlling shareholder. We reckon this is beneficial to MCIL, allowing a particular focus on its core business in print, given the travel business’ contribution of only 3% to the bottom line; hence, an insignificant impact on share price, in our view. 

- Despite the recent run-up in the share price, this does not imply a re-rating on the stock. Ex-capital repayment, the stock trades at 14x PE for FY13F with a dividend yield of 31% – which is broadly in line with its peers’ valuations. Both Media Prima and Star are trading at 13x PE. Stripping off the special dividend, the yield stands at 4.4% with DPS projected at 6.8 sen, assuming a 62% payout. This is consistent with the payout policy of between 30%-60%. We note that MCIL’s dividends have been on an upward trend over the past three years.

- MCIL’s strong equity name, its dominance in the Chinese-language newspaper segment with a market share of 89% in Malaysia and a more effective capital management underpin our BUY conviction.

- Key risks to our forecasts are:- 1) Lower-than-expected adex; (2) Higher-than-expected newsprint cost given its tendency to rise particularly during election seasons; and (3) Depreciation of RM against US$.

Source: AmeSecurities 

Press Metal - Margins holding up despite weak pricing environment Buy

- Maintain BUY on Press Metal with a lowered fair value of RM2.33/share (previously: RM2.42/share) – pegged to an unchanged target PE of 13x. This is to account for a 2%-5% cut in FY12F-14F core net profits on higher interest cost assumptions (+33% YoY) following the release of its 2QFY12 results.

- Press Metal reported 2QFY12 net profit of RM19mil (1HFY12: RM42mil). As expected, the group did not declare any interim dividend for the quarter under review.

- While we had earlier flagged about a softer 1HFY12 (~42% of our previous forecast), the sequential decline in 2Q profit was more than expected.

- 2QFY12 profits dipped 15% QoQ on lower aluminium selling prices. Benchmark aluminium prices fell 9% QoQ to US$1,978/tonne in 2Q12 as buying sentiment turned cautious due to a weaker global economy.  

- On a positive note, 1HFY12 revenue managed to hold around the levels achieved last year, at ~RM1bil. We believe this was due to a higher sales volume via the fullimpact of Mukah Smelter despite weaker aluminium pricing trends. To be sure, EBIT margin was little changed YoY at 9.7% (2QFY12: 8.4%). 

- We expect Press Metal’s prospects to improve in 2H.Phase 2 of its aluminium expansion programme at the Samalaju Industrial Park, Bintulu is set to kick-off by endSeptember.

- Phase 2A alone would add 120,000 tonnes in new capacity – followed by another 120,000 tonnes under Phase 2B by mid-2013.

- This is timely, given nascent signs of a return of buying interest in Asia by Chinese traders with spot aluminium prices hovering near-trough levels currently (~$1,823/tonne).  

- We continue to like Press Metal for its transformational growth prospects as one of only two aluminium smelters operating within a growing ASEAN market. Phase 2 would help triple its smelting capacity to 360,000 tonnes when it is fully commissioned next year.

- Prospects of M&A activities further back our strong conviction on Press Metal. We reckon that the group is still open to foreign investors when its new plant kicks off – including Japan’s Sumitomo which already has a 20% stake in Phase 1.    

- Valuations remain alluring at FD12F-14F PEs of 5x-9x against robust EPS CAGR of 22%.   

Source: AmeSecurities

Ann Joo Resources - Biding its time Buy

- Maintain BUY on Ann Joo Resources with a lower fair value of RM2.25/share (previously: RM2.43/share) on an unchanged target PE of 11x – following a downward revision in our earnings forecast.

- Ex unrealised forex losses, we have trimmed FY12F-14F net profits by 10%-14% on a more conservative selling price assumption amid a challenging global macro backdrop. It also takes into account the threat of dumping by Chinese millers on Ann Joo’s wire rod sales (~30% of the group’s finished products), as China’s economy slows.

- Not unlike its peers, Ann Joo reported a RM5mil net loss in 2QFY12. This brought cumulative 1H losses to RM6mil against a net profit of RM75mil a year earlier. 

- Apart from start-up losses for its new blast furnace, we stress that the losses were largely attributable to an unrealised forex loss of RM28mil incurred in 2QFY12. Stripping these out, Ann Joo would have made a net profit of RM34mil at half-time.  

- On the flipside, Ann Joo’s topline growth remains intact (+9% YoY), thanks to improving local demand and higher export tonnage. The group is refocusing its efforts on the domestic markets, where pricing trends are more robust than the international markets. Local rebar prices  are currently hovering around the RM2,300/tonne level.

- Apart from PETRONAS, Ann Joo is positioning its trading units abroad to tap into the booming oil & gas capex cycle. The division remained in the black at half-time although EBIT margin shrank from 4.9% to 9.3% (2QFY12: 2.3%). 

- The utilisation rate for its blast furnace has risen to ~80%. Management hopes to achieve a scrap/hot metal mix of 50:50 by 4QFY12 from 60:40 at the moment. This is to take advantage of softening iron ore prices, which have recently dipped below the US$100/tonne mark.

- Even on revised earnings, Ann Joo is still trading below its 5-year historical PE average of 14x (FY12F-13F FD PE: 5x- 11x) on 0.7x P/B value. We foresee Ann Joo’s core net profit to rebound by 3.1x to RM121mil in FY13F, as the fullimpact of its blast furnace would be tangibly felt by then.

- From a strategic standpoint, we advocate Ann Joo as a proxy to rising building material consumption as the pace of several infrastructure projects (e.g. Sg.Buloh-Kajang MRT, Klang Valley LRT Extension, KLIA2) start to pick up.

- We have already seen a re-rating sweeping through the cement sector, whereby industry leader Lafarge Malayan Cement had reportedly raised prices by 6% from August 1.   

Source: AmeSecurities

Genting Bhd - GenM makes up for GenS’ weak earnings Buy

- Reiterate BUY on Genting Bhd with a lower RNAV-based fair value of RM10.85/share (vs. RM11.85/share previously) mainly to account for our new fair value of S$1.54/share for Genting Singapore PLC (GenS). GenS is estimated to account for 47% of Genting Bhd’s RNAV.

- We have also excluded earnings from the Malaysian power division but included cash from the disposal of the Genting Sanyen Power Plant in our RNAV calculation.  

- Genting Bhd’s 1HFY12 earnings were within our expectations but below consensus estimates. Although GenS’ results were weak, this was compensated by Genting Malaysia Bhd’s (GenM) good results.   

- EBIT of the power division fell 20% YoY to RM266.9mil in 1HFY12 due to lower power generation at the Meizhouwan power plant. However on a QoQ basis, power EBIT expanded 13% to RM141.6mil in 2QFY12 as Genting Bhd recognised higher earnings from the Jangi wind farm in India. Jangi wind farm commenced operations in December 2011. 

- We understand that Genting Bhd would use part of the RM2.3bil proceeds from the disposal of Genting Sanyen Power Plant to invest in its existing business. 

- Recall that the group plans to build a RM3.2bil coal-fired power plant in West Java. The power plant, which would command a capacity of 660MW, is expected to start operations in FY17F. 

- Genting Bhd also plans to continue with its exploration activities at the Kasuri oil and gas block in Indonesia.

- We gather that the disposal of the Genting Sanyen Power Plant is not a signal that Genting Bhd plans to exit the power business completely.

- The group has indicated that it would continue to focus on overseas power assets. Currently, Genting Bhd has power assets in China and India. Having said that, we gather that if the group were to receive an attractive selling price for its power assets, then it would not be adverse towards accepting the offer.  

- In respect of overseas casino investments, we understand that Genting Group prefers to own a controlling stake. However, if the jurisdiction requires Genting Group to have a local partner, then the group would enter into joint ventures.

Source: AmeSecurities 

Kimlun Corporation - Strong sets of numbers BUY

- We reaffirm our BUY rating on Kimlun Corporation (Kimlun) with our fair value kept at RM2.20/share.

- Kimlun recorded a net profit of RM14.7mil for 2QFY12, bringing its 1HFY12 earnings to RM25.4mil (+19% YoY) which came within our expectations. No dividend was declared for the quarter. Earnings also grew by a healthy 39% QoQ on the back of a strong growth (+25%) in revenue.

- This was mainly due to stronger turnover from the manufacturing and trading division, underpinned by stronger orders for the Tunnel Lining Segment and jacking pipes to Singapore. EBIT margins were also better this quarter (9% versus 8.5%) as a result of economies of scale.

- Going forward, earnings would be supported by strong unbilled sales of RM1.8bil (2.7x FY11 revenue). 

- Kimlun has already bagged new contracts worth close to RM800mil, which is a record win for the company. While this is already above our order book renewal assumption of RM700mil, we are keeping our estimates unchanged.

- The bulk of the contracts would likely be booked in FY13F and this should see strong growth in earnings – at an estimated 20% YoY growth.

- While the newsflow on KV MRT packages has peaked, Kimlun can still look forward to more jobs in Singapore. The group is one of the frontrunners to supply TLSS to Singapore’s underground cable tunnel project, which we gather worth is S$100mil. We gather that the contracts will be awarded by end of the year, albeit in small packages. Past records indicate Kimlun had won 70% of available tunnel lining packages in Singapore.

- We continue to like Kimlun because of its attractive valuations – currently trading at FY13F PE of 6x, well supported by 3-year earnings CAGR of 20%. 

Source: AmeSecurities 

TSR Capital - Buy on weakness

INVESTMENT MERIT

• Back into the black. In FY11, TSR Capital (“TSR”) dipped into the red due mainly to losses in its highway project in the East Coast (Package 4 & 7). However, management is confident that FY12 will  definitely be a comeback year for the group as all the losses in FY11 has been fully recognised coupled with its recent contract award of RM330m from MRT Co, which will be a boost to the group’s earnings over the next 4 years.

• Order book of RM480m for next 4 years.  Riding on its recent contract award from MRT Co. worth RM330m, its outstanding order book has ballooned from RM150m toRM480m, which represents 4.05x of its FY11 revenue. This would likely provide earnings visibility to the group for the next 3-4 years. 

• Launching Port Dickson project.  TSR’s 70-acre flagship development namely PD Waterfront with an overall GDV of RM1b is expected to be completed in 5 to 8 years. The group will be launching the 2^nd  phase of the project by year-end comprising of 3-4 stars hotel and serviced apartment with a combined GDV of RM130m. This is expected to provide TSR with a steady recurring income at c. RM4-5m per annum.

• Buy on weakness. However, based on the current price of RM0.80, the stock is trading at c. 7x PER FY13E, which is below our average targeted PER for small to mid-cap construction stocks of 8x. Thus, we have projected a fair value of RM0.87 for TSR (based on 8x PER FY13E). We advise investors to buy the shares on weakness on any falls in the stock price.

SWOT ANALYSIS

• Strength:  Strong track records in civil construction works and the ability to secure government projects, i.e. prisons, highways, MRT. 

• Weaknesses:  Heavily dependant on government related projects. The MRT project is its biggest contributor (68% of the current order book).

• Opportunities:  Further participation in Public-Private Partnership/Private Finance Initiative projects due to its proven track record in executing government related projects in the past.

• Threats: Escalating building material cost and labor shortage, which could compress its margins.

TECHNICALS

• Resistance: RM1.00 (R1), RM1.17 (R2)

• Support: RM0.79 (S1), RM0.70 (S2)

• Outlook: S-T (Neutral), M-T (Negative), L-T (Negative)

• Comments:  TSR’s share price has been on a long term downtrend spanning 2 years. However, support appears to be developing at RM0.78-RM0.80 and the share price is  also trading close to its historical lows. Investors with a long-term view may be well served to buy in at these levels.

BUSINESS OVERVIEW

TSR Capital is principally involved in construction and civil engineering works, manufacture and marketing of precast concrete products, investment holding, project management, property investment and development. TSR Capital’s core businesses are construction, civil engineering and geotechnical works. The company is also involved in the manufacture, trading and marketing of pre-cast concrete products. 

BUSINESS SEGMENTS

• Construction.  Core business focusing on contruction projects mainly from the government i.e. highways, prisons, hospital, MRT, etc.

• Property.  Its property division is primarily involved in property development activities with its latest developments being TSR corporate office and the PD Waterfront project.

• Manufacturing.  It manufactures pre-cast products, which supports the groups core business i.e. construction and property development.

Source: Kenanga