Malaysia Business News From Newspapers, Blogs, Broker House.

Sunday, October 3, 2010

Market Talk 04.10.2010

Genting Malaysia May Rise, Test MYR4.06 - RHB
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0346 GMT [Dow Jones] STOCK CALL: Charts suggest Genting Malaysia (4715.KU) may resume uptrend after recent pullback, says RHB Research. "We view the recent consolidation as a base-building phase for it to propel to greater heights in the near term," house says, citing Friday's positive harami candle formation, improved buying momentum as indications of possible turnaround. Adds, breach of MYR3.60 resistance would pave way for stock to test MYR4.06, then MYR4.60. Stock last +2.6% at MYR3.50.

Affin Keeps MAS at Reduce; Target At MYR2.10
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0410 GMT [Dow Jones] STOCK CALL: Affin Investment keeps Malaysian Airline System (3786.KU) at Reduce with target unchanged at MYR2.10; says de-rating catalysts include higher-than-expected loss from company's fuel-hedging activity, continuous weakness in passenger load factor. House says MAS' preliminary operating statistics for August signal demand slowdown in last couple of months; adds number of passengers carried fell for first time since August last year, down 5.1% on-year to 1.05 million (down 10.1% on-month). House adds MAS will continue to register mark-to-market losses over next couple of quarters as it has hedged 60% of fuel requirement in FY10, 40% in FY11 at $100 per barrel; this compares with house's estimates on crude oil prices of $80/bbl by emd-2010, $85/bbl by end-2011, $90 by 2012. Says prefers airport operator Malaysia Airports Holdings (5014.KU) for exposure to passenger movements, domestic tourism theme. MAS last +0.8% at MYR2.41, Malaysia Airports unchanged at MYR5.79


AmResearch Keeps Kencana At Buy, MYR2.00 Target
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0407 GMT [Dow Jones] STOCK CALL: AmResearch keeps Kencana Petroleum (5122.KU) at Buy rating with unchanged MYR2.00 price target based on 20X 2010 PE; believes company poised to ride upcycle with new domestic oil & gas contract rollouts; adds "stock currently trades at an attractive 2011 forecast PER of 14X, way below its 2007 peak of 25X." Analyst Alex Goh also notes, Malaysian government's plans for local fabricators to be able to compete regionally could mean news flow on mergers and acquisitions could resurface for Kencana, further catalyse re-rating on stock. Kencana last +4.8% at MYR1.74.



YTL Corp +1.2% On High Speed Rail Project Hopes
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0328 GMT [Dow Jones] YTL Corp. (4677.KU) +1.2% at MYR7.55, may rise to test psychological MYR8.00 resistance in next few weeks, on hopes power and property group may get approval for MYR12 billion high speed rail project, says local brokerage dealer. "Should YTL manage to secure the high speed rail project, earnings growth would accelerate, which would help re-rate the stock," says Terence Wong, an analyst with CIMB Research; adds as high speed rail project would lead to significant spillover benefits for Greater Kuala Lumpur by bringing in Singaporeans who would spend money in the city and possibly buy property, YTL Group stands to benefit handsomely too as it has shopping malls along Jalan Bukit Bintang held under Starhill Global REIT, hotels throughout country via Starhill REIT and upscale properties for sale through YTL Land. Wong doesn't have a call on stock.

UOB KayHian Eyes 1,635 As End-2011 KLCI Target
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0320 GMT [Dow Jones] UOB KayHian pegs end-2011 target for KCLI at 1,635 based on 14.5X forward P/E; says applying conservative P/E multiple (below post-Asian financial crisis average of 15X) due to risks to corporate earnings from likely fall-off in external demand, execution risks to economic transformation programme. "The rolling-out of more mega construction projects amid lower development expenditure suggests a strong reliance and 'buy-in' from private funding." Adds banks still remain "most effective" proxies to rising investment cycle in Malaysia. Also says potential winners from Budget 2011 are Gamuda (5398.KU), WCT (9679.KU), IJM Corp. (3336.KU) from construction sector, Malaysian Resources (1651.KU) from property sector; British American Tobacco (Malaysia) (4162.KU) key loser. PM Najib to make budget announcement on October 15. KLCI last +0.5% at 1,474.01

Maybank Cuts BAT Malaysia To Sell From Hold
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0259 GMT [Dow Jones] STOCK CALL: Maybank IB Research downgrades BAT Malaysia (4162.KU) to Sell from Hold after cutting its FY10, FY11, FY12 earnings forecasts by 3.2%-8.4% to MYR731.7 million, MYR756.2 million, MYR777.9 million, respectively; cuts earnings forecast to reflect lower sales volume after 70 sen/pack hike in retail cigarette prices. "We think that this is negative to consumers' psychology leading to smokers shifting to the Value-for-Money segment, at least for the short-term," Maybank says. Notes, such a shift would be negative for BAT as its sales mainly derived from premium brand, Dunhill. But house keeps MYR43.00 price target. Stock last down 0.6% at MYR48.10.

TA Research Ups Genting Target To MYR13.04; Buy
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0237 GMT [Dow Jones] STOCK CALL: TA Research ups Genting (3182.KU) target to MYR13.04 from MYR10.85 as earnings potential of Resort World Sentosa or RWS "slightly underestimated"; thus ups earning projection for Genting by 10% for both 2010, 2011 to factor in RWS plans to ramp up its gaming table capacity and managements revising its visitor arrival target from 13 million to 15 million for 2010. Keeps Buy call as "we like Genting as it is a cheaper proxy to Genting Singapore." Stock last +0.8% at MYR10.04.

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