Pos Malaysia (BUY '')
More tie-ups by 2012
'''' Pos Malaysia has 106 post offices furnished with RHB shared banking services to-date. It is also in the process of implementing share banking services with Maybank. Management also indicated that Bank Negara Malaysia will likely open up the possibility of Pos Malaysia working with more than 2 financial institutions soon.
'''' Pos Malaysia is still in discussion with DRB-Hicom on more potential tie-ups in 3 main areas, including: (1) Insurance services with UniAsia; (2) banking services with Bank Muamalat; and (3) DRB-Hicom's further expansion in its logistics business (in particularly, KLAS) by leveraging on Pos Malaysia's large vehicle fleet. More details will be shared in 6 months time.
'''' The launch of direct mail has been delayed to Apr 12.
'''' With the change in financial year end (from 31 Dec to 31 Mar), management indicated that decision on dividends will be delayed.
'''' 2011-13 net profit forecasts cut by 10.3-19.1% to reflect higher staff costs and higher raw material costs.
'''' TP cut by 15.8% to RM3.20 based on unchanged 13x revised 2012 core EPS of 24.6x.
''
Sime Darby (HOLD '')
1QFY12 net profit rises 72% yoy
'''' 1Q06/12 core net profit accounted for 30.5% and 29.1% of our and consensus full-year estimates. We consider the results within expectations as we expect Sime Darby's earnings to weaken in the subsequent quarters.
'''' Sime Darby introduced its FY12 headline KPIs, with a target net profit of RM3.3bn and return on average shareholders' funds of 11.5%.
'''' Management has yet to see a slowdown in its property take-up.'' This is on the back of strong take-up for its recently launched property projects.
'''' Sime Darby's heavy equipment division currently has an outstanding orderbook of RM3bn. Although a slowdown in China/Hong Kong construction sector has impaired the division's 1Q earnings (on qoq basis), management remains positive on this division, underpinned by robust mining activities in both China and Australia.
'''' Management indicated that it would not write down investment in E&O despite the pending conversion of 60m E&O ICSLS.
'''' SOP-derived TP maintained at RM9.08. ''
''
TdC (BUY '')
Better than Expected Quarter
'''' Although TdC's revenue disappoints street's estimate, 9M11 core net profit of RM72.5m (after adjustment of RM19.7m) came above expectations, accounting for 82% of our full-year forecast and 79% of consensus.
'''' 3Q11: TdC registered a revenue of RM77m (-8% qoq, -12% yoy), EBITDA of RM45.5m (+62% qoq, +112% yoy), PAT of RM40.7m (+42% qoq, +94% yoy).
'''' 9M11: TdC recorded a revenue of RM230.7m (-2% yoy), EBITDA of RM96.2m (+56% yoy), PAT of RM92.2m (+47% yoy).
'''' Estimates were fine-tuned according to deviations stated above. As a result, FY11-FY13 EPS were adjusted by +32%, +11.9% and +5.5% respectively.
'''' Maintain our Buy call with revised SOP target price of RM0.85 imputed with our DiGi target price (instead of market price, which would add 4 sen).
''
MRCB (BUY '')
3Q weighed down by construction woes
'''' MRCB's 9MFY11 core earnings surged by 79% to RM46.1m (3.71 sen/share). However, core earnings only made up of 53% and 49% of ours and street's forecasts respectively. As a result, management has highlighted that they will most likely miss their earnings target of RM90m for FY11 due to delays in the construction division.
'''' During the quarter, the construction division posted an operating loss of RM4.1m and we believe that this is due to many of its construction projects which are at the tail end coupled with the delay effects from the construction mishap for Nu Sentral project. On the other hand, the property division continued to post steady earnings, buoyed by the developments within KL Sentral, namely Lot G office towers.
'''' We slashed our earnings forecast by 3-8% for FY11-FY13 and maintain a BUY call on MRCB with a reduced TP of RM2.12 based on SOP valuation.
''
IJM Corp (HOLD '')
Half time earnings took a breather
'''' IJM posted 1HFY12 PATAMI of RM190m. However, after adjusting for EI of 'RM32m, core earnings grew by 31% to RM222m (16.28 sen/share), making up 46% and 47% ours and street's estimates respectively. We consider results to be in line as we are expecting stronger results in the 2H.
'''' Both NPE Extension (~RM1bn) and the WCE Highway (~RM4-5bn) are still pending for approval. The former has been delayed due to realignment issue whereby the highway will run behind Masjid Negara instead of the front, whereas management is still hopeful that WCE may seek closure by year-end. Overall, we believe that actual construction works may only take-off in CY2H12.
'''' Overall, IJM has an outstanding construction order book of RM3.8bn translating to ~2.4x FY11 construction revenue while property unbilled sales remained at ~RM1bn, translating to 0.8x FY10's property revenue.
'''' Although we like IJM for being professionally run, we believe that the company's fundamentals have already been reflected in its share price. Thus, we maintain our HOLD call with a lower TP of RM5.76.
''
YNH (BUY '')
Hurt By Back taxes
'''' 3Q net profit declined 1% yoy, but rose 12% qoq as Fraser Residence started to contribute to earnings.'' Overall, 9M net profit declined 14% yoy to RM68.2m, or 59% of HLIB and consensus estimates
'''' 1.5 sen interim, single-tier dividend.
'''' Our forecasts for earnings contributions for Fraser Residence and Kiara 163 turned out to be overly aggressive for FY11.'' We have accordingly reduced our forecasted earnings contribution for these two projects by 52% for FY11
'''' We have reduced FY11 net profit forecast by 19% as we adjust our progress billing timing for Fraser Residence and Kiara 163.'' With this delay in recognition, we have raised our FY12-13 forecasts by 33-49%.
'''' Nonetheless, we maintain our positive view on YNH, and raise our TP from RM2.65 to RM2.73 (maintain 40% discount to RNAV, post forecast adjustments), implying 56% upside. BUY
''
KLCI: Optimism returns but still a trading oriented market
'''' Despite the overnight jump on Wall St, we remain cautious on our market and still advocate investors to capitalize any rebounds to trim their positions or maintain a short-term trading oriented approach, given the external headwinds.
'''' Unless the KLCI is able to reclaim the 50% FR barrier (i.e. 1453), downside risks will remain with immediate supports at 1420 (38.2% FR) and 1400 pts. Further resistance levels are 1465 (mid Bollinger band) and 1478 (100-d SMA).
DIGI: Temporary base near RM3.50 levels
'''' The correction from its RM3.88 high nearly reached the 38.2% FR level (RM3.50) and we think a temporary base has been formed. If prices can continue to consolidate from here, there is a good chance that the DIGI may reclaim the RM3.65 (23.6% FR) and RM3.75 (upper Bollinger band) and possibly even RM3.88. Traders with higher risk appetite may BUY on weakness before stronger rebound set in. Cut loss below RM3.40.
