Malaysia Business News

KUALA LUMPUR: OSK Investment Research is revising upwards its earnings for Proton Holding Bhd substantially to RM179mil and RM184mil for the financial years ending March 30, 2009 (FY09) and FY10 respectively.

“The potential re-rating catalysts are its long term plan for a strategic partnership to tap the export market as well as set up manufacturing plants,” it said in a research note issued on Thursday.

“We are upgrading Proton to a BUY on its short term turnaround. Blending a valuation mix of both 8.0 times forward price-to-earnings (PE) and 0.5 times price/net tangible asset (P/NTA), we arrive at a revised target price of RM3.64 (from RM3.34),” it said.

OSK Research said it was applying a 0.5 time P/NTA until a solid strategic partnership for Proton materialised.

On Wednesday, Proton announced net profit of RM52.02mil for the 1Q from a net loss of RM46.75mil a year ago. Revenue rose to RM1.71bil from RM1.14bil. Earnings per share were 9.5 sen from a loss per share of 8.5 sen.

The improvement in profitability was mainly due to Proton’s domestic sales volume growth of 55% on-year, underpinned by new models, the Persona and Saga.

OSK Research said Proton’s annualised revenue came in 7% below its expectation but was 1% above street estimates on lower-than-expected volume.

“But to our surprise, 1QFY09 accounted 87% of our full year forecast and 62% above consensus,” it said.

Hence, it was trimming its cost component assumptions as Proton was reducing its distribution and administrative costs to enhance operating efficiency and reduce the size of its distributorship network.

OSK Research said the overall expansion in Proton’s margins might possibly be due to Proton cutting on its distribution expenses by slashing the number of distribution outlets from 303 to 250 by end-FY09, as well as overhead costs by reducing its dependence on vendors (from 200 to150 by end-FY09).

However, the research house said it remained concern over rising raw material prices. The higher prices would ultimately raise its core earnings assumption to RM179mil (from RM59mil) for FY09 and RM184mil (from RM66.7mil) for FY10.

OSK Research added it was reaffirming its key assumptions on the increase in raw material prices (specifically carbon steel) by 18% and 8% for FY09 and FY10 respectively.

UEM World violated a critical support of RM2.49 yesterday. If it was a clean violation, this breakdown means that the stock is expected to face strong selling pressure going forward. Yesterday’s breakdown caused significant technical damage to the daily chart and triggered a Sell signal. It is likely that the stock will retrace to the next support level of RM2.49 and strong support can only be seen at the RM2.10 level. From the current level, look for an immediate resistance at the 50-day MAV line which is now situated at the RM2.88 level, followed by the tougher RM3.00 level.

ECM Libra call- buy Sime darby (4197). Target sell price RM8.20. Today closed at RM6.35 Volume 66734. Target 20% profit.

Click to enlarge

ECM Libra call : BUY

Target Price : RM1.06

We did not expect the KLCI to fall close to 10 pts last Friday despite the poor performance of the US market last Thursday. However, what is important is that the KLCI was able to sustain a posture at above the key 1120 pt-level.

Last week, we saw the key index carve out two bullish candlestick patterns, which were the “Bullish Harami Cross” and the “Long Leg Doji”. Nonetheless, the market did not have the chance to stage a strong technical rebound to confirm the two bullish candlestick patterns. Anyhow, as long as the 1120 pt-level is not taken out, the odds are still high that the KLCI could march higher from the current level. Meanwhile, our bullish stance is maintained.

From the current level, look for an immediate resistance at the1148 pt-level followed by the 1165 pt-level. To the downside, the 1120 pt-level is now the immediate support followed by the 1100 pt-level.


GuocoLand made another step forward to test the 100-day MAV line, which is now situated at the RM1.52 level. It looks like the stock has formed a rather strong support at above the RM1.20 level. A successful crack above the 100-day MAV line would provide a buying opportunity for investors. We are eyeing the RM1.87 level as the upside target. Our cut-loss point is pegged at below the 100-day MAV line. From the current level, look for immediate support at the RM1.35 level.

KUALA LUMPUR, AUG 11 (Bernama) -- At 9.30 a.m. today, there were
152 gainers, 48 losers and 86 counters traded unchanged on the Bursa
Malaysia.
The KLCI was at 1,123.37 up 3.06 points, the FBM2BRD was at
5,314.60 down 0.46 of a point, and the FBMEmas was at 7,495.78 up 29.16
points.
Turnover was at 54.243 million shares valued at RM70.133 million.
-- BERNAMA
HBS HBS



11/08/2008 09:38 AM

PETALING JAYA: Axis Inc Bhd has formalised the appointment of Messrs Horwath, its current external auditor, to carry out a special audit on its transactions with contract manufacturers from April 1 last year to March 31.

Axis said in a statement to Bursa Malaysia yesterday the audit would also include the balances outstanding with the contract manufacturers as at March 31.

“The audit procedures include the determination of the nature of the transactions and validation of the transactions and balances to the appropriate audit evidence,” it said.

On Aug 1, Axis told Bursa Malaysia that Horwath was unable to obtain sufficient appropriate audit evidence and explanations over several transactions, including about RM105mil due from contract manufacturers that had to be verified.

Axis yesterday said upon completion of the special audit, Horwath would present the findings and recommendations for the appropriate adjustments, if any, to the company’s financial statements.

“The preliminary draft report will be made available for discussion within eight working weeks from the date of commencement of work and the special audit is expected to start on Aug 11,” it said.