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EquityFocus
SapuraCrest Petroleum (RM0.615): Fully Valued
– Stumbled at the final hurdle
§ FY09 net profit of RM116m (+48% YoY) was marginally below our RM124m forecast due to weaker 4QFY09 performance (-29% QoQ).
§ Cutting FY10-11 earnings forecasts by 7-8% with further downside should O&G activities remain lethargic over the next 24 months.
§ Maintain Fully Valued and RM0.74 TP (1x book), with no near term exciting catalyst.
Berjaya Sports Toto(RM4.60):
– Deportation déjà vu
§ We expect 3QFY09 results to be weak on poor revenue growth after two successive Mega 6/52 Jackpot strikes and high prize payout ratio.
§ Trimming earnings estimates by up to 8% to reflect tougher operating conditions (deportation of foreign workers and economic slowdown).
§ Assuming 75% net payout ratio for the whole year, investors can expect gross DPS of 21sen or 5% dividend yield from 2HFY09 alone.
Plantation: Underweight
– POC2009 – Sings a cautious tune
§ Six speakers forecast CPO price to range RM1,400-2,368/t in 2009-10. Mostly are in unison of an impending weaker CPO price outlook in 2H09 as production is set to pick up strongly.
§ Except for one speaker who focused on the supply equation, all others expressed uncertainties on the demand outlook in the wake of unprecedented global financial crisis and recession.
§ POC2009’s price outlook is in tune with our view of a weaker 2H09 price outlook amid a deep and protracted global recession that will impact overall demand. Maintain Underweight.
Economic Trends
Industrial Production, January 2009
– …
§ Industrial Production Index (IPI, 2005=100) contracted by 20.2% YoY in Jan ’09, pulled down by the worsening drop in manufacturing (-26.7% YoY) and further decline in mining (-6.1% YoY) which pull down electricity generation (-12.4% YoY).
§ The decline in manufacturing output was broad-based as both export-based and domestic-based manufacturing industries shrank, pointing to weakness in both external demand and internal demand.
§ We are barely halfway through this downturn in industrial output as the last two recessions (1998 and 2001) saw 12-13 months of consecutive monthly (% YoY) decline in industrial output – specifically manufacturing – versus current five straight months of drop.
Other Local News
§ Economy: New Committee To Monitor Stimulus Package Implementation
§ MMC- Gamuda: 6000 jobs planned from double-tracking project
§ Telekom Malaysia: To unveil access terms for high-speed broadband
§ TMI: USD1.4b rights offer price on Mar 27
§ Plantation: Bursa Malaysia plans Islamic trading in CPO
Outside Malaysia
§ U.S: Retail sales decrease less than forecast in sign of stabilization
§ U.S: Household net worth plunged by a record USD 5.1tr last quarter
§ U.S: Warren Buffett’s Berkshire has AAA credit rating cut by Fitch
§ Germany: Economy is industrial `war zone' as global slump throttles exports
§ Switzerland: Cuts key rate to 0.25%, will buy currencies to stem Franc gain
§ Japan: Economy shrank at 12.1% QoQ pace last quarter on export slide
§ China: Industrial-output growth slows as exports slide
§ India: Posts 1st back-to-back output fall in 16 years
§ S. Korea: Unexpectedly keeps rate at record-low 2%
§ Crude Oil: Trades near USD 47/bbl after surging as OPEC weighs production cut
Technicals
The market tumbled on persistent profit taking activities on weak sentiment due to the slowing economy
SapuraCrest Petroleum (RM0.615): Fully Valued
– Stumbled at the final hurdle
§ FY09 net profit of RM116m (+48% YoY) was marginally below our RM124m forecast due to weaker 4QFY09 performance (-29% QoQ).
§ Cutting FY10-11 earnings forecasts by 7-8% with further downside should O&G activities remain lethargic over the next 24 months.
§ Maintain Fully Valued and RM0.74 TP (1x book), with no near term exciting catalyst.
Berjaya Sports Toto(RM4.60):
– Deportation déjà vu
§ We expect 3QFY09 results to be weak on poor revenue growth after two successive Mega 6/52 Jackpot strikes and high prize payout ratio.
§ Trimming earnings estimates by up to 8% to reflect tougher operating conditions (deportation of foreign workers and economic slowdown).
§ Assuming 75% net payout ratio for the whole year, investors can expect gross DPS of 21sen or 5% dividend yield from 2HFY09 alone.
Plantation: Underweight
– POC2009 – Sings a cautious tune
§ Six speakers forecast CPO price to range RM1,400-2,368/t in 2009-10. Mostly are in unison of an impending weaker CPO price outlook in 2H09 as production is set to pick up strongly.
§ Except for one speaker who focused on the supply equation, all others expressed uncertainties on the demand outlook in the wake of unprecedented global financial crisis and recession.
§ POC2009’s price outlook is in tune with our view of a weaker 2H09 price outlook amid a deep and protracted global recession that will impact overall demand. Maintain Underweight.
Economic Trends
Industrial Production, January 2009
– …
§ Industrial Production Index (IPI, 2005=100) contracted by 20.2% YoY in Jan ’09, pulled down by the worsening drop in manufacturing (-26.7% YoY) and further decline in mining (-6.1% YoY) which pull down electricity generation (-12.4% YoY).
§ The decline in manufacturing output was broad-based as both export-based and domestic-based manufacturing industries shrank, pointing to weakness in both external demand and internal demand.
§ We are barely halfway through this downturn in industrial output as the last two recessions (1998 and 2001) saw 12-13 months of consecutive monthly (% YoY) decline in industrial output – specifically manufacturing – versus current five straight months of drop.
Other Local News
§ Economy: New Committee To Monitor Stimulus Package Implementation
§ MMC- Gamuda: 6000 jobs planned from double-tracking project
§ Telekom Malaysia: To unveil access terms for high-speed broadband
§ TMI: USD1.4b rights offer price on Mar 27
§ Plantation: Bursa Malaysia plans Islamic trading in CPO
Outside Malaysia
§ U.S: Retail sales decrease less than forecast in sign of stabilization
§ U.S: Household net worth plunged by a record USD 5.1tr last quarter
§ U.S: Warren Buffett’s Berkshire has AAA credit rating cut by Fitch
§ Germany: Economy is industrial `war zone' as global slump throttles exports
§ Switzerland: Cuts key rate to 0.25%, will buy currencies to stem Franc gain
§ Japan: Economy shrank at 12.1% QoQ pace last quarter on export slide
§ China: Industrial-output growth slows as exports slide
§ India: Posts 1st back-to-back output fall in 16 years
§ S. Korea: Unexpectedly keeps rate at record-low 2%
§ Crude Oil: Trades near USD 47/bbl after surging as OPEC weighs production cut
Technicals
The market tumbled on persistent profit taking activities on weak sentiment due to the slowing economy
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