Evergreen Fibreboard - A Triple Digit Leap

OSK - On an annualised basis, Evergreen Fibreboard’s (EFB) earnings beat our and consensus estimates. However, in being conservative, we are retaining our earnings estimates and maintain the stock’s target price at RM2.63, with its BUY recommendation intact. We also note that EFB has declared a second interim tax exempt dividend of 2 sen per share, which brings its total payout YTD to 4 sen per share, accounting for 55.5% of our full-year estimate of 7.2 sen per share.

Maintain BUY. We are keeping our BUY recommendation for EFB as its fundamentals remain intact. Our target price is maintained at RM2.63, derived from pegging its FY11 EPS at 26.3 sen and ascribing to the stock a higher tier building material PE of 10x.

Study on MRT to be completed early October

TECHNICAL study on the proposed mass rapid transit (MRT) project, conducted by the Land Public Transport Commission (LPTC) and a consultant appointed by the Ministry of Finance, will be completed by early October.

LPTC said a report on the technical study will be presented to the Steering Committee on the Klang Valley Integrated Transportation System headed by the Secretary-General of the Treasury.

A paper on the proposal is expected to be drawn up and tabled in Cabinet soon after that, LPTC said in a statement yesterday.

The proposed MRT system, consisting three lines running a total of 150km and covering an area within a 20km radius of central Kuala Lumpur, was initiated by a joint venture between MMC Corp Bhd and Gamuda Bhd earlier this year.

The proposed project is valued at RM36 billion, excluding the cost of land acquisition and rolling stock.

The three-month technical study on the proposal, carried out by LPTC and consultant Minconsult Sdn Bhd, began on July 1 this year.

"The technical study covers an appraisal by the two parties on the viability of the proposal. Among the areas covered were the corridor and alignment, engineering, environmental and social impacts and others," LPTC chief executive officer Mohd Nur Ismal Mohamed Kamal said in the statement.

He stressed that LPTC's key objective is to ensure the MRT project will meet the needs of the people in order to encourage increased usage of public transport.

When the technical study is completed, a further assessment called the Value Management Study (VMS) will be conducted by LPTC and the Economic Planning Unit.

The second study is required as a project of such magnitude will need early identification of opportunities to ensure its sustainability, LPTC said.

A VMS is a common approach practised globally, especially on projects that require optimisation of the funding mechanism and prudent spending.

In other words, the VMS will ensure that the MRT project is economically sustainable and optimises government spending whilst promoting public interest as its priority.

Read more: Study on MRT to be completed early October

Infrastructure players ride high on ETP hopes

Written by Surin Murugiah Wednesday, 22 September 2010 13:21


KUALA LUMPUR: Infrastructure players including Gamuda, MMC Corp, YTL Corp advanced on Wednesday, Sept 22 on expectations they would take the lead in infrastructure projects to be implemented under the Economic Transformation Programme (ETP).

The FBM KLCI rose 1.25 points to 1,477.24 at midday, lifted by gains including Gamuda, YTL Corp, Genting and MMC Corp. Gainers led losers by 347 to 299, while 270 counters traded unchanged. Volume was 789.55 million shares valued at RM1.01 billion.

Gamuda shares, call warrants and warrants totalled 81.71 million units, accounting for 10.35% of total trading volume.

.......................

OSK Research said key players involved in infrastructure development are expected to benefit from the implementation of the ETP, including the RM36 billion KL mass rapid transit (MRT) which features in the Greater Kuala Lumpur plan. They include Gamuda and MMC Corp (TRADING BUY, FV: RM2.59) for the MRT and MRCB, which may be involved in land development around KL.

Gamuda added 19 sen to RM3.94, Gamuda-WD gained 13 sen to RM1.38 and Gamuda-CM 6.5 sen to 24 sen on hopes of taking the lead in the MRT project in Kuala Lumpur. MMC Corp was up 13 sen to RM2.91 and MRCB up four sen to RM2.04.

Among the major gainers YTL Corp rose 22 sen to RM7.81 on hopes of the high speed rail link from Kuala Lumpur to Singapore.

Tradewinds added 23 sen to RM4.17, Lion Forest Industries and Wah Seong rose 19 sen each to RM1.86 and RM2.27,Genting rose eight sen to RM10.44, , Bursa up 30 sen to RM8.

Plenitude up 15 sen to RM4.89, SHL Consolidated up 13 sen to RM1.24 and E&O added nine sen to RM1.23.

Among the losers, Far East Holdings fell 38 sen to RM6.50, Tasek down 26 sen to RM6.62, Masterskill fell 20 sen to RM3.20, Top Glove lost 16 sen to RM5.39, DFZ Capital down 15 sen to RM3.60, Mudajaya fell 13 sen to RM4.25 while Boustead lost 12 sen to RM4.45.

The actives included Genting Malaysia call warrants, Gamuda call warrants, KNM, Zelan, E&O and Karambunai. Karambunai surged 36% to 7.5 sen in the morning session on a news portal report about an integrated resort in Sabah.

Economic Transformation Programme: Roadmap to high-income nation

Written by Chan Kok Leong Wednesday, 22 September 2010 15:40

KUALA LUMPUR: The government has announced the Economic Transformation Programme (ETP) to realise Malaysia’s ambition to turn the country into a high-income economy by 2020.

Minister in the Prime Minister’s Department, Senator Datuk Seri Idris Jala told a hall packed with some 3,000-odd corporate figures and business leaders yesterday that the ETP will help Malaysia triple its Gross National Income (GNI) from RM660 billion (2009) to RM1.7 trillion in 2020.

This translates to an increase of GNI per capita income from RM20,770 (US$6,700) to at least RM46,500 (US$15,000), meeting the World Bank’s high-income benchmark. To help achieve this, the government aims to sustain 6% GNI growth between 2011 and 2020.

On top of that grand aspiration, the government is confident that the private sector will be the primary driver for the push towards a high-income nation.

A total funding of over RM1.4 trillion is required for the duration of this economic push, with 92% of the funding expected to come from domestic investments and public funding expected to take up the remainder.

In his presentation, non government-linked companies (GLCs) are expected to fund 60% or RM824 billion with GLCs funding 32% or RM446 billion. Public spending is estimated to be around RM105 billion.

According to Idris, the targeted 60% private sector funding will be a significant increase from 37% in 2008, and is consistent with the 12.8% per annum private investment growth noted in the 10th Malaysia Plan.

During his hour-long presentation, it was noted that the total private investment from 2005 to 2010 was RM410 billion or an average of RM68 billion per annum.

“Malaysia needs to increase this average annual private investment level in the next 10 years by about 60% more than historical average to around RM120 billion per annum for 2011-2020,” said Idris.

Private investment-led growth will cut government funding, which is constrained by the need to improve the nation’s fiscal position, said Idris.

“As such, government funding will be targeted at initiatives that will maximise GNI impact for every ringgit of public money spent, with heavier emphasis on development expenditure over operational expenditure,” said the former Malaysian Airlines Bhd CEO.

“Malaysia has no time to lose. We need a complete, radical economic transformation. The days of depending on traditional growth engines are over. If we continue on the current model, we risk getting stuck in middle-income trap and lose out on talents necessary to support a high-income economy,” he added.

This article appeared in The Edge Financial Daily, September 22, 2010.

DRB Hicom upbeat on financial results

Automotive based group DRB Hicom Bhd is confident of surpassing last year's operating profit of RM457 million in the current financial year ending March 2011.

It said the projection was based on the positive performance in the first quarter ended June 30, 2010 and the much-improved results of its subsidiaries and its continuing group-wide efforts to improve.

Group managing director Datuk Seri Mohd Khamil Jamil said the pre-tax profit for the first quarter ended June 30, 2010, was a 157 per cent jump at RM223.475 million compared with RM86.988 million in the same quarter of 2009.

DRB Hicom also recorded its highest ever operating profit of RM457 million for the financial year ended March 31, 2010 while profit before tax was at RM657 million.


"We are trying to rationalise between automotive and other businesses because automotive is a very volatile business and the margins are very low," he told reporters after its 20th Annual General Meeting in Shah Alam today.

Despite the difficult operating environment, the group managed to grow its businesses especially in the services sector with a 3.5 per cent increase in revenue to RM6.31 billion from RM6.1 billion in the previous financial year.

Meanwhile, Mohd Khamil said the company was also looking at new joint ventures with another automotive company in Asia and hoped to finalise it soon.

"We are now negotiating with the company and we have done a lot of feasibility studies and costing," he said, adding that some details were being looked into now.

On the possibility of Proton acquisition, he said for now the company was focusing on Volkswagen and UK-based POTENZA Sports Cars Ltd to develop its automotive sector.

"Proton is being very well managed by its current management under Datuk Syed Zainal," he said.

"Whether we acquire Proton or not we will always work together as we are one of the main vendors and suppliers to Proton parts and components, and a retailer," he added.

On Bank Muamalat disposal, the company has written in to Bank Negara to ask for an extension on the period for the divestment of its 30 per cent interest in Bank Muamalat.

Would be potential acquirers of the equity have been slowed down by the economic slowdown, he said, adding that the bank was looking at a strategic partner who can also bring their management, products and technical expertise.--Bernama

Read more: DRB Hicom upbeat on financial results

DRB-Hicom Official: Expect To Sign Assembly Pact With Volkswagen By Year End

KUALA LUMPUR (Dow Jones)--DRB-Hicom Bhd (1619.KU) expects to sign a definitive agreement with German auto maker Volkswagen AG (VOW.XE) for the assembly of Volkswagen vehicles in Malaysia by the end of the year, DRB-Hicom Managing Director Mohd. Khamil Jamil said Wednesday.

"We hope to conclude the agreement by year end and the first rollout may be towards the end of 2011," Khamil said at a news conference after the company's general meeting.

DRB-Hicom aims to have an annual production capacity of 30,000 Volksawgen units by 2015, he added. DRB-Hicom is one of Malaysia's largest car distributors and importers.

Khamil also said the automotive division of the diversified group will likely be a driver for both revenue and earnings in fiscal year 2011 beyond. "We are looking at another Asian automaker and are quite close to an agreement," he said, but didn't provide further details.

-By K.P. Lee; Dow Jones Newswires; 603-2026-1233; ankur.relia@dowjones.com

ADVENTA (TP RM3.73– BUY) - OSK

9MFY10 Results Preview: Hurt By External Factors

Adventa is expected to announce its 9MFY10 results later this month, which we think may come in below consensus and our expectations given that latex prices stayed at a high of about RM7.00/kg, and the USD continued to weaken against the MYR. However, we believe 4QFY10 would be a better quarter since the company will have additional capacity from its new nitrile glove lines. We are tweaking our FY10-11 earnings downward by 8%-13%. Maintain Buy, but at a lower target price of RM3.73.

Bina Puri to take 80% stake in RM500m Medini project

Written by Joseph Chin Tuesday, 07 September 2010 18:43

KUALA LUMPUR: BINA PURI HOLDINGS BHD [] is teaming up with Medini Land Sdn Bhd to develop 1.048 million sq ft gross floor area in Medini North, the first phase of Medini Iskandar Malaysia.

“The development will have a gross development value of approximately RM500 million upon completion of the two-phase development in Johor,” it said.

Bina Puri will have an 80% stake in the development of the project which is expected to be completed in 2012.

Extracted from...

MMCCORP - Winds of Change

Initiate coverage with buy call at RM2.53 and target price RM3.20

MMC, an integrated utilities and infrastructure player, is strongly leveraged on Malaysia's improving economy (1H2010 GDP 9.5% year-on-year). For example, container volume at PTP and Johor Port are up 13% and 5% y-o-y for year-to-date June, passenger traffic at Senai airport is resilient at 1.4 million, Malakoff IPP's average despatch factor is 50% (against 49% in 4Q2009) and Gas Malaysia's volume is up 14% for 1H2010.

The company is a strong proxy to Iskandar Malaysia, which makes up an estimated 68% of MMC's sum-of-parts (SOP) value. It owns two ports ' PTP and Johor Port, the only airport, located in Senai, 16 water treatment plants, and a landbank of 4,296 acres. Completion of key infrastructure projects by 2012, such as Legoland, the Newcastle University Medicine Malaysia Campus in EduCity and Marlborough College will yield steep appreciation potential in land values. We estimate every RM5 psf rise in land value will raise our SOP valuation by 8%. Recent transactions by EQ solar and MOX valued raw land at RM25 psf with infrastructure. Improving relations between Singapore and Malaysia could also offer substantial development opportunities, such as a rapid transit system between Tanjung Puteri in JB and Singapore, bullet train and/or a third link to Singapore. This will see land values reflate.

Alternative proxy to MRT. Key to its construction arm will be the MMC-Gamuda JV bid for RM36 billion MRT project in Kuala Lumpur.

If it comes to fruition its order book will triple and add another 17 sen per share to its SOP. Other potential projects include other road-based projects and replicating the SMART tunnel in other states. We assume every RM1 billion increase in new order wins will raise our SOP valuation by 4%. It is the only construction-related stock included in the KLCI FBM 30 and should command some IPP premium with the delisting of Tanjong. ' HwangDBS Vickers Research, Sept 2

This article appeared in The Edge Financial Daily, September 3 2010.

Taiwan PC Makers Post Profit Rises

By LORRAINE LUK And TING-I TSAI

TAIPEI—Taiwan's major personal-computer makers—Acer Inc., Compal Electronics Inc. and Quanta Computer Inc.—reported rises in second-quarter net profit, helped by a recovery in demand for electronic products.

But Quanta offered a cautious outlook for the second half, in an indication that growth may be slowing due to economic uncertainties in the U.S. and Europe.

Analysts say that PC manufacturers' profit margins continue to be pressured by their growing exposure to low-cost products such as netbooks—laptops that can conduct basic Internet and computing functions—and rising price competition from rivals. Quanta President C.C. Leung said increasing competition will continue to pressure the company's gross margin for the remainder of this year and next year.

Market research firm Gartner on Tuesday reduced its forecast for PC shipment growth in the second half by about two percentage points to 15.3% due to the uncertain economic outlook in the U.S. and Western Europe. But for the full year, Gartner expects world-wide PC shipments to rise 19% to 367.8 million units from 308.3 million units in 2009.

"The slow pace of economic recovery and austerity measures in Europe have made PC suppliers very cautious in 2010. However, consumer demand is likely to remain strong even if the economic recovery stalls because consumers now view the PC as a relative 'necessity' rather than a 'luxury' and will continue to spend on PCs, even at the expense of other consumer electronic devices," said Ranjit Atwal, research director at Gartner.

Acer, the world's second largest personal-computer maker by shipments after Hewlett-Packard Co., said its audited net profit for the three months ended June 30 rose 55% to 3.6 billion New Taiwan dollars (US$112.4 million) from NT$2.3 billion a year earlier. Revenue rose 26% to NT$150.3 billion from NT$119.1 billion.

Quanta, the world's largest contract maker of notebook PCs by revenue, said its net profit for the three months ended June 30 rose 4% to NT$5.1 billion (US$159.4 million), or NT$1.35 a share, from NT$4.9 billion, or NT$1.34 a share, a year earlier. But the result fell short of analysts' expectations of NT$5.3 billion. Consolidated revenue in the second quarter rose 63% to NT$295 billion from NT$181.1 billion.

Quanta said it expects shipments in the third quarter to be flat or drop slightly from the 13.7 million units it shipped in the previous three months because of softening demand from developed markets such as Europe and the U.S. But the company maintained its target of growing its full-year shipment by 40% to 50 million laptops this year.

"We will improve our cost structure and ramp up our revenue from non-notebook products such as mobile computing devices to mitigate the gross margin pressure," said Chief Financial Executive Elton Yang at a press briefing.

Quanta said its second-quarter gross margin fell sharply to 3.4% from 6.2% a year earlier due to rising component costs and higher marketing expenses for new products.

Compal Electronics, the world's second-largest contract maker of notebook computers by revenue after Quanta Computer, said its second-quarter net profit nearly doubled from a year earlier due to strong demand for notebook computers. Compal reported a net profit of NT$6.44 billion (US$200.9 million) for the three months ended June 30, up from NT$3.24 billion a year earlier and beating analysts' expectations. Revenue rose 78% to NT$217.06 billion from NT$121.90 billion a year earlier.

Write to Lorraine Luk at lorraine.luk@dowjones.com

Read more...

HDBSVR: RM36b mass rapid transit to transform local construction landscape

Written by HwangDBS Vickers Research Friday, 03 September 2010 14:17

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) expects the RM36-billion mass rapid transit (MRT) to drive the CONSTRUCTION [] sector, once it is approved and takes off.

The research house said the probability of it being approved is high as the recent subsidy cuts suggest political will.

A key turning point could be the outcome of two consultant studies in mid-September. This project could see Gamuda’s orderbook double and MMC’s triple, but all contractors will benefit given its sheer size.

“In terms of sum-of-parts accretion, we expect additional 26 sen per share for Gamuda and 17 sen for MMC. The MRT project also ties in with another anchor market theme – government land sales. We expect MRCB’s participation in the 3,400-acre RRIM land to give it pricing power beyond our assumption of RM300 psf,” it said.

Hwang DBS Vickers Research said the 10th Malaysia Plan (10MP) tabled in June 2010 has at least set the foundation for the rollout of key projects.

“There is emphasis on upgrading the country’s transportation system with projects including seven new highways, LRT extensions, MRT and southern double tracking worth a total of RM71 billion.

“A total of 52 public-private projects (PPP) worth RM62.7bn were also identified. There is also a RM20 billion fund established to facilitate private sector investments in projects with high strategic value and multiplier effects,” it said.

HDBSVR said the sector will ultimately be driven by newsflow, but it expects more emphasis on margin recovery to monitor execution risks.

The research house expects stronger margin recovery in 2HCY10, and normalising to 9-10% in FY11; IJM is a candidate with zero legacy jobs in its orderbook currently.

From January 2007 to September 2008 – about when 9MP projects were rolled out - the KL Construction Index traded up to 24 times price-to-earnings and 2.2 times price/net tangible asset (+2SD above mean) vs mean valuations now.

“And in anticipation of more aggressive rollout of high multiplier projects, the KL Construction Index has room to trade higher and possibly test 2007/2008 highs,” it said.

HDBSVR said its high conviction picks for the sector are Gamuda and MRCB – the two largest beneficiaries of the MRT project. Its recent initiation on MMC is also an alternative MRT proxy.

“We are also positive on Gamuda’s Vietnam project that is slated for maiden launch in October. Our other BUYs are IJM as the safest proxy to the sector given its diversified earnings base and strategy to bid for a large pool of contracts, while WCT remains the proxy most leveraged to the sector. Our small cap value pick is Sunway which is trading at only 10 times CY11 EPS and will post record FY10 earnings,” it said.

Source...

Kencana Petroleum: Maintain Buy, target price RM2.06

OSK Research's target price for Kencana Petroleum Bhd (5122) remains unchanged at RM2.06 based on a calendarised price earnings ratio of 16 times financial year 2011 earnings per share.

Maintaining its "Buy" call on the stock, the research house said the company remains its top pick for the oil and gas sector.

"We like its strong delivery track record, which we think puts it in a position to benefit from new fabrication jobs from Petronas and its production-sharing companies (PSC) contractors," OSK said.

It said, currently, they believe both Kencana's order book and tender book stand at RM1.6 billion and RM2 billion respectively.

On Wednesday, Kencana announced that its fully-owned subsidiary Kencana HL Sdn Bhd received two hook-up and commissioning work orders from PSCs.
The contracts, valued at RM32 million in total, are expected to be completed by the middle of 2011.

"We see jobs trickling in. Although the amount is immaterial, making up only about 1 per cent to 2 per cent of its total revenue, Kencana is gradually receiving more new jobs, either from Petronas, its PSC contractors or other oil majors from around the globe.

In the local oil and gas market, OSK said it believes Petronas and its PSC contractors will continue awarding more jobs, especially in the brownfield services segment, to give an immediate boost to the country's oil and gas production.

"We guess the targeted field would be Tapis oilfield as we gather from our sources that this oilfield still contributes about one-third of Malaysia's total oil and gas production," OSK said.

Read more...

SapuraCrest: Buy, target price RM3.12

AMRESEARCH Sdn Bhd reiterated its "Buy" call on SapuraCrest Petroleum Bhd (8575)with an unchanged fair value of RM3.12 per share based on a 2010 forecast price earnings of 22 times.

The research house said the company remains the top pick in the oil and gas sector given its dominant position in Malaysia's pipe-laying/off shore installation services and tender rig market.

"SapuraCrest also has a huge order book of RM10 billion, the largest among locally listed stocks," it said.

However, including the full five-year Pan Malaysian pipe-laying contract, its gross order book is even larger at RM13 billion, with a sizeable oil and gas asset ownership.
At present, it has a substantial seadrill equity participation of 24 per cent and strong earnings forecasts from financial year 2009 to 2013 with a compound annual growth rate of 24 per cent.

"Hence, we maintain financial year 2011 forecast to financial year 2013 forecast earnings for now, which project annual earnings growth of up to 19 per cent, underpinned by the group's RM10 billion order book," it added.

AmResearch said the stock currently trades at an attractive 2010 forecast price earnings of 13 times, compared to over 25 times registered by SapuraCrest and Wah Seong back in 2007.

Read more...

Real Men Go to a Hotel With Virtual Girlfriends

KKB subsidiary gets RM114m pipe supply contract

Written by Joseph Chin Monday, 30 August 2010 19:24

KUALA LUMPUR: KKB ENGINEERING BHD []’s subsidiary Harum Bidang Sdn Bhd has secured a RM114 million contract from CMS Infra Trading Sdn Bhd to supply steel pipes.

KKB said on Monday, Aug 30 that Harum Bidang was issued a letter of award by CMS Infra for the supply and delivery of various concrete line mild steel pipes and mechanical couplings.

“The time for completion of the award is 24 months with effect from Sept 1, 2010 to Aug 31, 2012. This contract is worth an estimated sum of RM114 million,” it said.

KKB said CAHYA MATA SARAWAK BHD [] (CMSB) is a major shareholder of KKB. CMS Infra is a subsidiary of CMSB and accordingly, CMSB is deemed interested in the award.

“The award is expected to contribute positively to the earnings and net assets of KKB Group for the financial years ending Dec 31, 2011 to 2012,” it said.

BRDB’s 2Q net profit doubles to RM84.1m

Written by Surin Murugiah Friday, 27 August 2010 18:57

KUALA LUMPUR: BANDAR RAYA DEVELOPMENTS BHD []'s (BRDB) net profit for the second quarter (2Q) ended June 30, 2010 doubled to RM84.15 million from RM40.61 million a year earlier despite posting a lower revenue of RM151.36 million.

Earnings per share was 17.7 sen, while net assets per share was RM3.59.

For the six months ended June 30, net profit surged to RM106.31 million from RM57.59 million a year ago.

In a filing to Bursa Malaysia on Friday, Aug 27, BRDB said its 2Q revenue declined 35% due to lower revenue from both its property and manufacturing divisions.

Revenue during this quarter under review was mainly derived from progress recognition of CONSTRUCTION [] of CapSquare Office Tower 2 and Troika with fewer property sales in Kuala Lumpur and reduced construction contract revenue from Lahore, Pakistan, it said.

BRDB said the lower revenue in the property division was partially mitigated by higher property investment income from Bangsar Shopping Centre (BSC).

Revenue from the manufacturing division under Mieco Chipboard Berhad (MIECO) in this second quarter fell 3% to RM44.6 million from RM46 million a year ago due to lower sales volume of particleboard, although sales of value-added products have improved, it said.

“Despite the lower revenue, the group’s pre-tax profit rose to RM94.1 million for the quarter under review, up 86% when compared to RM50.5 million a year ago due mainly to a RM82.7 million gain arising from adjustment to fair value of the BSC based on an independent professional valuation.

“MIECO reported higher pretax profit of RM1 million as compared to RM200,000 a year ago despite lower revenue, as its margins improved and its operational costs decreased,” it said.

On its prospects going forward, BRDB said despite the economic expansion during the first half of this year, the outlook remains challenging with anticipation of a slower global recovery in the second half.

Nevertheless, the company said it was optimistic that the property division will achieve satisfactory results in the current financial year, given the earlier mentioned fair value gain on its investment property.

BRDB said that in August it had offered for sale its latest project in Kuala Lumpur -- 6 CapSquare, which offers freehold luxury condominiums, for which the initial response has been encouraging.

“The manufacturing division has achieved higher margins through value-added products whilst managing costs and productivity.

“In view of strengthening of demand for particleboard, MIECO is preparing to recommence operations at its Kuala Lipis plant as soon as possible,” it said.

Read more...

Markets Hub

A 'Very Good Time' for Bargain Hunting: Stock Picker

Multi Sports' Pre-Tax Profit Up At RM21.330 Million In Second Quarter

KUALA LUMPUR, August 25 (Bernama) -- Shoe sole manufacturer Multi Sports Holdings Ltd announced impressive results with pre-tax profit for its second quarter ended June 30, 2010, up at RM21.330 million from RM14.325 million in the same quarter last year.

Revenue rose to RM74.177 million from RM48.656 million previously, it said in a filing to Bursa Malaysia Wednesday.

For the half-year period, Multi Sports' pre-tax profit rose to RM39.194 million from RM25.907 million in the corresponding period last year while revenue increased 57.6 per cent to RM137.922 million from RM87.544 million.

On prospects, Multi Sport is optimistic that financial year ending Dec 31, 2010, will be a promising year for the group as the growth rate for China's sports footwear market should continue to improve in tandem with the country's economic growth, which continues to be robust.

"As China's per capita disposable income continues to grow, we are optimistic that average consumption of sports shoes per person per annum will continue to grow with the increasing purchasing power of the average person in China," the group said.

"This will bode well for the group, especially in view of the size of the domestic consumer market in China," it said.

In view of promising market conditions this year, Multi Sports fast-tracked its expansion plans, and expect to complete construction of all factories and dormitories on its new production centre on Xibin Land in Fujian Province by end-2010.

"Our operations are expected to grow significantly with the completion of our new production centre," the group said.

"The commencement of operations after completion of the buildings on Xibin Land is anticipated to contribute positively to growth in forthcoming years," it said.

The group's performance is expected to further improve in financial year 2010 as it continues to increase its production capacity to fulfil customer demand, and increase its new range of design offerings in line with market trends.

While optimistic about demand conditions for its sports-shoe soles and sports shoes in China for 2010, Multi Sports said it would continue to exercise discipline in managing its operating cost base.

-- BERNAMA

SUNCITY - Sunway City to be lighter and nimbler

Maintain buy at RM3.73 with target price of'' RM4.70: Results in line with expectations. 2Q2010 net profit ex-exceptionals came in at RM39 million (+50% year-on-year, -6% quarter-on-quarter). The leisure and hospitality segments reported stronger earnings before interest and tax (EBIT) y-o-y (school holidays & Middle East tourists, 4QFY2009 affected by Influenza A H1N1 outbreak), while property development saw a q-o-q decline due to completion of Sunway Giza commercial project. Interim dividend per share of 31 sen (4QFY2009: eight sen) with net yield of 6.2% (FBM KLCI: 2.8%), to reward shareholders post-REIT listing.

Robust physical sales of RM285 million (+239% y-o-y, +105% q-o-q), driven by Sunway Damansara Rymba Hills bungalows, Sunway SPK 3 Harmoni townhouses, Sunway Guanghao condos, and Sydney industrial lot sale. 1H2010 sales of RM424 million are on track to meet the RM1 billion 2010 target. Riding on robust demand, the launch target has been raised to RM1.76 billion with RM800 million slated for 2H2010, including Sunway Velocity (maiden launch of shopoffices & serviced apartments), South Quay condos, and Sunway Damansara (SOHO, shopoffices). Unbilled sales stood at RM743 million (twice FY2009 annualised property development revenue).

Stronger balance sheet post-REIT. The listing of Sunway REIT has helped to unlock value and provide a ready avenue for SunCity to monetise more of its investment properties in the future. REIT net proceeds of about RM500 million (after minority interest and RM780 million debt repayment) should come in handy for working capital and landbank replenishment. We raised FY2010-12F earnings by 8% to 25% to factor in acceleration in project launches and REIT impact (annual REIT dividend and management fees along with interest savings should help offset lower property investment contribution). SunCity will also recognise a RM530 million one-off gain on disposal in 3Q2010. ' HwangDBS Vickers Research, Aug 23

This article appeared in The Edge Financial Daily, August 24 2010.

China’s Stock Market Passes US as Leading Indicator

Published: Wednesday, 4 Aug 2010 | 12:43 PM ET
By: John Melloy, Executive Producer, Fast Money

China may be the second biggest economy in the world behind the US, but it is No. 1 in terms of influence over global stock markets, analysts said.

“The Chinese equity market has shown signs of ‘leading’ global equity markets at turning points over the past three years,” wrote Geoffrey Dennis, Citigroup’s emerging markets strategist. “As a result, the 13 percent rally in the Shanghai Composite since early-July has been a major support for improved overall global sentiment over the past month.”

It’s only natural China’s stock market would take a leading role following structural changes such as a jump in listings and the allowance of short sales. After all, the economic influence speaks for itself. Among other things, China is the biggest consumer of energy products, accounts for 70 percent of iron ore demand, and in 2009, became the No. 1 auto market, according to analysts’ reports.

Read more...

MRT for KL vital to boost efficiency, attractiveness to investors, says expert

Written by Melody Song, Friday, 20 August 2010 16:24

PETALING JAYA: Malaysia should consider putting in place a mass-rapid transit (MRT) system soon in view of the increasing population, rising CONSTRUCTION [] costs and to enhance its competitiveness in attracting foreign investors, said an official of Hong Kong's MTR Corp Ltd.

Its projects director Chew Tai Chong said an integrated transportation system as a backbone is needed to boost time and cost efficiency.

“Among one of the things foreign investors consider is a country’s core infrastructure. If their staff are taking too long to commute, it is counter-productive to their business,” he said recently. “This is part of the reason why Singapore continues to improve its MRT system.”

He also said that proposals served by key players locally could serve as a catalyst to move the project.

“A masterplan would be a step forward for Kuala Lumpur, but those involved need to remember that these plans should be reviewed and improved on a regular basis,” said Chew.

“At present, with three separate railway lines and only 18% public transport utilisation in KL, there are losses arising in terms of time and efficiency (for workers in the city centre) because of traffic congestion.”

He added there was little integration and interconnectivity between the lines and bus systems and that tolerable “walking time” for commuters to move between lines should be addressed.

On soil conditions in the city which could make drilling at certain depths challenging, Chew said there were always risks but new TECHNOLOGY [] would enable project engineers had methods to mitigate the risks.

“There is a window of opportunity in Malaysia at present (for a MRT system), given a reduction in government subsidies (for petrol), talks of environmental sustainability, and the increasing number of cars on the road,” he said. “If the project is delayed for too long, it could eventually be beyond the means of construction players to build.”

The proposal for a MRT was mooted in June this year by a joint-venture comprising of MMC Corp Bhd and GAMUDA BHD [].

The project is estimated to cost up to RM36 billion and stands to receive up to RM3.6 billion from an infrastructure allocation under the 10th Malaysia Plan (10MP).

Read source...

Dell, HP profits rise, wave off slowdown fears

SAN FRANCISCO: Dell Inc and Hewlett-Packard Co dismissed worries about weakening tech demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.

Both faced questions on Thursday, Aug 19 about the strength of the recovery in spending on TECHNOLOGY [], after Cisco Systems Inc CEO John Chambers' warned about "unusual uncertainty" in the global economy.

Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.

But executives from the two largest U.S. personal computer makers waved off such fears.

"We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions," said Cathie Lesjak, HP's interim chief executive, on a conference call with the media.

Dell beat Wall Street's profit and revenue estimates, and said it expected a continued pick-up in demand for PCs from corporate customers for the next several quarters. But the company's gross profit margin lagged Wall Street expectations and its shares fell in after-hours trading.

HP -- posting its first quarterly report since the ouster of CEO Mark Hurd -- said earnings rose 6 percent as expected, helped by strength in servers and personal computers.

Storage and server revenue rose 19 percent, while PC revenue rose 17 percent. Lesjak did not point to any particular weakness in the market, other than in consumer notebooks.

"People were spooked after Cisco cited uncertainty and now people are more concerned about how the rest of the year will play out," said Morningstar analyst Michael Holt.

REFRESH CONTINUES

On the corporate side, Dell Chief Financial Officer Brian Gladden said the refresh cycle was proceeding as forecast, adding that he expects component costs to start to come down in the fiscal third and fourth quarters.

Dell said it expected demand for PCs among corporate customers to continue for the "next several" quarters. It said it expects "seasonal improvements" in the third quarter, thanks to sales to the federal government and business customers, with a resulting "pick-up in the low single digits."

"This is a pretty stretched-out cycle and we think it'll continue for several quarters," he said in an interview with Reuters. For the fiscal second quarter, "commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent."

Apart from questions about the strength of the global tech recovery, HP executives are also likely to field queries on its CEO search, officially launched Wednesday and encompassing both internal and external candidates.

HP, the world's largest technology company by revenue, forced out Hurd on Aug. 6 for expense account irregularities related to a female contractor. Hurd, CEO since 2005, had been credited with reviving the company's fortunes.

HP shares have fallen about 12 percent since Hurd left. The stock closed at $40.76 on the New York Stock Exchange, and dropped to $40.50 after hours.

Shares of Round Rock, Texas-based Dell, which are down roughly 31 percent since April, fell 2.6 percent to $11.73 in extended trading. - Reuters

Gamuda BUY RM 3.35 Price Target : 12-month: RM 4.35 - DBS

• RM36bn MRT project, a key milestone catalyst easily doubling orderbook with another 10 years earnings visbility

• Excellent proxy to Vietnam's positive long term structural shift in property market with RM16bn GDV (12% of SOP)

• Resolution on Selangor State Water restructuring soon could see Gamuda reaping >RM600m in cash or RM0.28/share

Read more...

VW set to jump-start DRB-HICOM business

Although it was a memorandum of understanding (MOU), the initial deal with Volkswagen AG (VW) signals a revival of DRB-HICOM Bhd's (1619) auto business.

However, the division may not repeat its glory days when it made most of the group's profit because of changes in the industry and stiffer competition now.

In 2005, its auto division accounted for some 54 per cent of total revenue of RM4.6 billion while its operating profit made up about 70 per cent of the total.

Fast forward to 2010, although the business made up more than half of revenue, its share of operating profit has plunged to less than half of the total.

Now, the bulk of its profits come from subsidiary Bank Muamalat and its long-term contract to operate and maintain the Tanjong Bin power plant in Johor.

But DRB-HICOM has been steadily working on its auto division.

In April this year, it signed an MOUwith Potenza Sports Car Ltd to manufacture and distribute the latter's products, including hybrids and electric vehicles, locally.

Potenza makes the Westfield and GTM marques and both parties may want to manufacture Potenza sports cars for the Asia-Pacific market.

Later that same month, it made its first overseas shipment of Suzuki Swift 1.5L to Brunei. Senior company executives said that DRB-HICOM and its 40 per cent-owned Suzuki Malaysia Automobile Sdn Bhd (SMA) plan to make Malaysia the regional hub for Suzuki Motor Corp to export its cars to Southeast Asia.

This was followed by the Malaysian launch of the fully-imported Suzuki Alto 1.0L last week.

But its major coup appears to be the MOU with VW, which may lead to the assembly of VW cars at its plant in Pekan, Pahang.

For starters, this could be the Golf, Beetle and Passat models, as they are VW's best-selling cars in Malaysia, according to OSK Research.

It also thinks that VW plans to use Malaysia as an export hub for its sedan cars.

"As the deal now has been secured by DRB-HICOM, we opine that Volkswagen's intention to make Malaysia its sedan exporting hub has been firmed up, especially with the inking of the deal with DRB-HICOM as the last resort.

"We understand that the Pekan plant has an estimated production capacity of up to 60,000 units per annum, and it currently assembles the Suzuki and Mercedes marques," said analyst Ahmad Maghfur Usman in his report.

And winners from this collaboration would be auto-part players.

"The winners from the localisation of the Volkswagen production line in Pekan is especially the auto-part players that have established strategic tie-ups /joint ventures with foreign players such as Bosch and Autoliv (a worldwide leading airbag supplier)," Ahmad Maghfur said.

DRB-HICOM operates eight assembly plants which includes Mercedes, Honda, Isuzu Motors and Suzuki Motor vehicles and Yamaha Motor motorcycles.

Shares of DRB-HICOM have gained some 13 per cent so far this year, outperforming the broader market's 7.7 per cent gain in the same period.

Its stock closed 7.5 per cent higher to RM1.14 yesterday, its biggest jump in more than four months.

3 VW models to roll out of DRB-Hicom plant

Three new Volkswagen models are expected to roll out of the DRB-Hicom plant in Pekan, thus strengthening the district's position as a regional automotive hub.

Prime minister Datuk Seri Najib Tun Razak said assembling of CKD (complete knock down) vehicle components of the renowned German brand would see the vehicles roll out of the plant by the end of the first quarter next year.

He said the joint venture was agreed upon after his meeting with Volkswagen top officials during his overseas holiday recently.

"I've always been monitoring the developments involving DRB-Hicom and during my recent vacation, I took the opportunity to meet the Volkswagen officials and ask them whether they were till keen to establish cooperation with DRB-Hicom.

"Actually, they were waiting for the indication from me whether they could sign the agreement with DRB-Hicom or not," he said in his speech at a Ramadan gathering with DRB-Hicom management and staff in Pekan today.

Also present was DRB-Hicom Berhad managing director Datuk Seri Mohd Khamil Jamil.

Yesterday, DRB-Hicom and Volkswagen signed a memorandum of understanding to cooperate in the assembly and production of Volkswagen vehicles in Malaysia.

Najib said Volkswagen also requested for incentives from the Malaysian government to make the DRB-Hicom production plant here its export base for the Asean region.

"This needs to be studied and approved by the government," he said.

Najib said the joint venture would also contribute to the success of the East Coast Economic Region's development plan based partly on continuous development of the local automotive industry.

In this respect, he said, the DRB-Hicom management and staff needed to carry out transformation to put the company's image at the highest level, thus building foreign manufacturers' confidence including those which had already established cooperation with DRB-Hicom like Suzuki and Mercedes-Benz, in the local automotive industry.

"Total commitment from all quarters is a vital ingredient for continuous success."

The prime minister then together with over 100 residents performed Tarawih prayers at the Batu 8 mosque in Pekan. -- Bernama

Reading the VIX: What the "Fear Index" is Saying Now

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Unisem Double Top Double Bottom - What's Next?

SC still reviewing affairs of Mudajaya

Source: The Edge | Publish date: Fri, 6 Aug 16:51

KUALA LUMPUR: The Securities Commission said it would conclude its review on MUDAJAYA GROUP BHD [] as soon as possible, after the company announced it had engaged with SC to clarify matters.

In an email reply to The Edge Financial Daily on Friday, Aug 6 it said it was still reviewing the affairs of Mudajaya, whose share price had tumbled 20.5% on Thursday and saw RM156 million erased from its market capitalisation.

The selldown on Thursday was sparked by concerns about SC's informal probe into the company, that is believed to be related to its independent power producer (IPP) project in India.

The selldown on Thursday was sparked by concerns about SC's informal probe into the company, that is believed to be related to its independent power producer (IPP) project in India.

"As part of our review, we have engaged all the relevant parties, including the management of Mudajaya. We aim to conclude our review as soon as possible," said the SC spokesperson.

Before market opened on Friday, Mudajaya announced that it met up with the SC and provided the clarifications needed.

Market fears appeared to have been allayed by Mudajaya's announcement that its board of directors affirmed that the company had conducted its business in a professional manner.

The counter managed to recoup part of the recent losses on Friday, ending the day eight sen higher to RM4 with 17.64 million shares done.

"The board wishes to advise shareholders of the company to exercise caution not to trade in the company's shares based on rumours.

"Currently, the company has no borrowings and has a net cash position of approximately RM223 million. The company's focus remains on delivering and completing all our projects on hand. The board will update the shareholders of the company if and when is necessary," it said.

On Thursday, Mudajaya bought back one million of its shares for RM4.39 million, at prices ranging between RM3.90 and RM4.55. After the purchase, Mudajaya had 2.62 milllion treasury shares. No reasons were provided about the buyback.

Since the informal probe was announced by SC in June 22, the stock has plunged 34.4% from a recent high of RM6.10 to Friday's closing price at RM4.

Prior to the probe, Mudajaya's price rallied following news of a potential change in its substantial shareholding, with speculations that Tanjong plc and MMC CORPORATION BHD []'s unit Malakoff Corp Bhd eyeing a significant stake.

However, both Tanjong plc and MMC Corp had denied the market talk.

Based on its 2009 annual report, Mudajaya's major shareholders include Dataran Sentral (M) Sdn Bhd with a 24.43% stake and Mulpha Infrastructure Holdings Sdn Bhd with 21.45%.

Dataran Sentral's shareholders include managing director Ng Ying Loong and executive director Wee Teck Nam.

AmResearch has Buy on Ivory Properties

KUALA LUMPUR: AmResearch reaffirmed its'' BUY rating on Ivory PROPERTIES [] Bhd (Ivory) with unchanged fair value of RM1.75/share based on 35% discount to its NAV/share of RM2.70/share.

The research house said on Friday, Aug 6 that Ivory is buying prime seafront land (1.1 acres) at the Batu Ferringhi seafront area on Penang island for RM25 million - conditional on Ivory securing planning approval from the local council.

Project comprises 96 units of luxury condominiums with built up areas from 2,400sf to 8,000sf, housed in a 41-storey tower.

'With gross development value of RM159mil, market response is expected to be strong due to the project's scarcity premium and unique appeal,' it said.

AmResearch said potential enhancement to its earnings estimates and NAV is significant. Ivory will be stepping up presales from RM500mil in FY10F to RM750mil in FY11F.

'Current unbilled sales are RM385mil - and rising. Despite its share price outperformance, the stock is still at the early stages of a sustained re-rating cycle. At RM1.28/share currently, Ivory is trading at a steep 53% discount to our NAV of RM2.70/share.

'Forward PE multiples ' 3x-4x, are attractive with EPS CAGR of 63%. Taken together, Ivory remains an excellent transformational growth story,' it said.

Faber posts RM32.47m net profit in 2QFY10

KUALA LUMPUR: FABER GROUP BHD [] net profit for the second quarter ended June 30, 2010 jumped to RM32.47 million from RM13.85 million a year ago, on the back of a 58.5% increase in revenue to RM270.22 million.

Earnings per share was 8.94 sen while net assets per share was RM1.16.

In said on Thursday, Aug 5, its integrated facilities management (IFM) business recorded a positive variance of RM106.8 million mainly due to business expansion in the UAE as well as higher variation orders, higher bed occupancy rates and additional new facilities at the government hospitals within the group's concession area.

In addition, the commencement of new housekeeping projects in India also contributed towards the positive variance, it said.

Faber said its property division recorded lower revenue by RM4.5 million mainly due to the completion of Phase 3 Laman Rimbunan, Kepong as most of the revenue for the project was already recognised in the preceding 2 years based on the percentage of work progress.

On its prospects for the current financial year, Faber said it was committed to improve contribution from all business divisions and focus its efforts on IFM business expansion, local and overseas.

It said the property division would improve its contribution to the group's revenue from the proposed new project launches in the second half of the year. 'We expect to meet our KPI targets for the year,' it said.

The company has targeted a revenue growth of between 12% to 15% for this year, and 15% to 18% return on equity (ROE).

Extracted from...

Scomi to benefit from Brazil monorail job re-tender

Maintain buy at 43 sen with a fair value of 80 sen: The Edge Financial Daily reported yesterday that the 23.9km Tiradentes monorail project in Sao Paolo, Brazil has been re-tendered.

It was indicated that the Brazilian authorities had requested for a re-issue of the tender, with modifications such as less tight delivery dateline and better payment structure.

We think this is positive news, which gives Scomi Bhd (and its partner Almeida SA) another shot at the contract where we understand Bombardier was the favourite.

This project is worth US$35 million-US$40 million (RM110.6 million to RM126.4 million) per km or RM3 billion in total.

Notwithstanding that, as highlighted in our previous reports, the scale of planned monorail projects in Brazil is massive ' a total of 77km of monorail line is planned.

Even if Scomi were to miss out on the first line (Tiradentes), the group could still be involved in the remaining lines.

We understand two other tenders are coming up (i) Manaus ' 20km (Aug 9); and (ii) Sao Judas ' 21.5km (September)

Obviously, looking at the size of the Tiradentes contract (RM3 billion) ' assuming 45% stake in the JV with a net margin of 6%, Scomi's EPS for FY11F-FY12F would be boosted by 30%-35% (9.9 sen to 11.5 sen).

On the flipside, there would be some concerns on the operating environment in Brazil given the unfamiliar territory.

We maintain our buy rating on Scomi Group with an unchanged fair value of 80 sen per share based on a 5% discount to our sum-of-parts valuation of 84 sen per share.

We think Scomi Group is undervalued by the market due to'' (i) true enough earnings deliverance track record has been weak and (ii) concerns over political connections or lack of it currently; whereby it should benefit from the strong news flows for SEB and impending new rail jobs. ' AmResearch, Aug 2

This article appeared in The Edge Financial Daily, August 3, 2010.

Unisem 2Q net profit surges 102% to RM48m

KUALA LUMPUR: UNISEM (M) BHD [] net profit for the second quarter ended June 30, 2010 surged 102.2% to RM48.05 million from RM23.98 million a year ago on the back of a 40.8% increase in revenue to RM359.5 million.

In a filing to Bursa Malaysia on Friday, July 30, Unisem attributed the significant increase in revenue and net profit to improved sales volume due to strong demand for its products and services.

Earnings per share was 9.27 sen, while net assets per share rose to RM1.94 from 1.83.

Note1: On behalf of the Board of Directors of Unisem, Maybank Investment Bank Berhad wishes to announce that a total of 155,575,704 new Unisem Shares have been issued pursuant to the Bonus Issue. The Bonus Shares will be listed and quoted on the Main Market of Bursa Malaysia Securities Berhad with effect from 9.00 a.m. on Monday, 2 August 2010. This announcement is dated 30 July 2010.

Note2: Renounceable rights issue of up to 168,540,346 new warrants (“Warrants”) at an issue price of RM0.10 per Warrant on the basis of one (1) new Warrant for every four (4) existing ordinary shares of RM0.50 each in Unisem (M) Berhad (“Unisem Shares”) held after the bonus issue involving 155,575,704 new Unisem Shares to be credited as fully paid-up (“Bonus Shares”) on the basis of three (3) Bonus Shares for every ten (10) existing Unisem Shares held as at 5.00 p.m. on 30 July 2010 (“Rights Issue of Warrants”).

Kindly be advised of the following :
1) The Rights commence of trading : [ 2 August 2010 ]
2) The Date of Despatch of the Prospectus and Provisional Allotment Letter of Offer : [ 3 August 2010 ]
3) The last day and time for Acceptance, Renunciation and Payment : [ 16 August 2010 @ 5:00pm ]
4) The Rights cease quotation : [ 9 August 2010 ]
The Stock Short Name, Number and ISIN Code [ UNISEM-WR, 5005WR and MYL5005WR009 ] respectively

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