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THE EDGE

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S&P STOCK UPDATE--BIMB,FABER,MTD,STB

S&P EQUITY RESEARCH
Stock Updates
After a better-than-expected 4Q09 for BIMB (BIMB MK, MYR1.23, Hold), we revise our estimates to reflect the change in financial year end to December, making the December 2010 FY an 18-month period. We lift our earnings estimates for FY10 and 2011 to MYR236.9 mln and MYR186.0 mln from MYR127.2 mln and MYR151.5 mln for FY10 and FY11 (Jun) respectively. We tweak our 12-month target price to MYR1.40 (vs. MYR1.30). / Alexander Chia

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We maintain our Buy recommendation on Faber (FAB MK, MYR1.90), but lift our 12-month target price to MYR2.10 (from MYR1.60) after raising our earnings estimates. We like Faber for the improving outlook of its Facilities Management Services (FMS) operations that have been strengthened by the infrastructure maintenance and FMS contracts in Abu Dhabi./ Kum Seng, Wan

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We keep our Hold call on MTD Capital (MTD MK, MYR3.40), and raise our 12-month target price to MYR3.60 (from MYR2.80) after lifting our earnings estimates. We keep our call after 9MFY10 (Mar) results, as we believe its 21% share price increase over the past two months has adequately reflected its improving earnings outlook in FY11, which includes maiden earnings
contribution from the South Luzon Expressway. / Kum Seng, Wan

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Though Seacera’s (STB MK, MYR0.40) 2009 earnings were ahead of expectations, and its earnings outlook is improving due to higher demand for homogeneous tiles and packaging materials, we maintain our Hold recommendation. This is due to its small capacity and market share, which limit its earnings growth prospects. Its capacity expansion. We keep our 12-
month target price at MYR0.41. / Kum Seng, Wan

AXIATA,SPSETIA,MRCB & other business news

Axiata Group Bhd (AXIATA MK, Buy, TP: RM4.15) is considering a dividend payout from 2011 onwards as its balance
sheet has improved on the back of improving business conditions. This would be its first payout to shareholders since its
listing in 2008 after the demerger from Telekom Malaysia. Also, the group’s Indonesian unit, XL Axiata has a free float of
0.2% as Emirates Telecommunications Corp controls another 13.3% stake in the Indonesian firm. “We have said back at the
end of 2008 that we are open at possibility in increasing the float up (to) 15% to 20%. It is something that we are always
looking at,” said the CEO, Datuk Seri Jamaluddin Ibrahim. (StarBiz)
* * * * *
SP Setia Bhd (SPSB MK, Buy, TP: RM4.05 ) has increased its sales target for the financial year ending October 31,
2010 (FY10) to RM2bn from RM1.65bn, on the back of a jump in sales of RM608m in the first quarter. The group
recorded its record high sales of RM1.65bn in FY09. According to its president and CEO, almost all of the RM2bn target will
come from the local market and 10% will come from its projects in Vietnam. Its total 10 ongoing projects in Malaysia have a
GDV of RM26bn that would last for 10 to 20 years on 3,900 acres of land. (StarBiz)
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The Employees Provident Fund (EPF) is making a conditional takeover offer for the shares it does not already own in
Malaysian Resources Corporation Bhd (MRCB) at RM1.50 cash apiece, after it triggered the general offer (GO) following its
subscription of 171.47m rights shares last year. MRCB said following its subscription of the rights shares, EPF’s shareholding
in MRCB rose to 33.8% or 461.52m of RM1 each. EPF intended to maintain MRCB’s listing status and would explore various
options to rectify the company’s public shareholding spread. (Financial Daily)
* * * * *
Pharmaniaga Manufacturing Bhd (PMB) has had its manufacturing licence revoked following a routine audit by the
pharmaceutical services division of the health ministry. In a statement to Bursa Malaysia, Pharmaniaga however did not
reveal the reason. It said the cessation of production would not have a significant financial impact on the group as the other
business lines were not affected. “The company is taking all necessary steps to ensure that the issues raised are addressed
expeditiously for the re-issuance of the licence to enable the plant to resume production as soon as possible,” it said, without
saying what the “issues” are. (Financial Daily)
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Malaysian Bulk Carriers Bhd (Maybulk) is eyeing potential vessels to grow its fleet as the global financial crisis has
resulted in lower vessel prices. The company will be looking for available second hand vessels instead of ordering new
vessels. On newly built vessels, the company is waiting for the market to correct itself. Maybulk’s fleet currently consist of 13
of its own vessels and two vessels on long term charter. In view of the fleet expansion, Maybulk may declare lower dividends
for shareholders as the company conserves its cash reserves to finance the expansion plan. (Malaysian Reserve)
* * * * *
Faber Group Bhd is targeting revenue to grow between 12% and 15% this year. The company’s focus will still be on
overseas operations as it was the major contributor to the integrated facilities management (IFM) segment last year. “We will
be moving according to our roadmap which is to enhance operations in United Arab Emirates and India. We are also looking
at diversifying and expanding our business into the IFM segment which is the major contributor to company revenue,” said
managing director Adnan Mohammad. (Malaysian Reserve)
* * * * *
Malaysia will miss its output target of 18.1m tonnes because of a shortage of foreign labour even as yields recover, a top
industry official said. Industry regulator Malaysian Palm Oil Board (MPOB) chairman Datuk Sabri Ahmad said Indonesian
plantation workers make better pay at home as more oil palm estates start up there while employers in Malaysia have trouble
hiring because of a stricter work-permit process. Sabri said the industry was in talks with the government to get more “flexible
work permits” for foreign labourers who make up about two-thirds of the half a million estate workers in Malaysia. Many of the
returned Indonesian labourers subsequently get jobs in plantations in Indonesia’s Kalimantan province. (Financial Daily)

CIMB, PBB, SIME DARBY & OTHERS

CIMB Investment Bank Bhd, a wholly owned unit of CIMB Group Holdings (CIMB MK, Buy, TP: RM15.25) gets nod from
the Vietnam Securities Commission for its subscription of equity interest in Vinashin Shipbuilding Finance Company
Securities LLC, (VFC Securities). The approval was obtained on Feb 23, CIMB said in a statement to Bursa Malaysia. VFC
Securities will change its name to CIMB Vinashin Securities LLC with immediate effect. VFC is wholly owned by Vietnam
Shipbuilding Industry Group (Vinashin), the largest shipbuilder and an industrial conglomerate in Vietnam. (Financial Daily)
* * * * *
Public Bank Bhd (PBB) (PBK MK, Buy, TP: RM14.50) has no plans to raise fresh capital this year despite some quarters
expressing concern that its capital ratios may decline upon the implementation of enhancements to the Basel III framework,
said its chief operating officer, Leong Kwok Nyem. The Basel Committee announced that it had approved the consultation of a
package of proposals to strengthen global bank capital and liquidity regulations, dubbed as Basel III. Leong said that the bank
was comfortable with its capital levels. Its risk weighted capital ratio rose to 14.2% as at Dec 31, 2009. (Financial Daily)
* * * * *
Sime Darby Property Bhd, a subsidiary of Sime Darby Bhd, (SIME MK, Hold, TP: RM8.30) is awaiting approval from the
state and federal governments for its proposed 10,861 acre Selangor Vision City (SVC) development. The SVC is
located along the Guthrie Corridor Expressway from Lagong to Bukit Jelutong, and 3,450 acres of the total 10,861 acres have
been developed. The entire SVC project will have an estimated GDV of RM10bn, and will focus on the Bukit Jelutong City
Centre and an environmentally-friendly township named Elmina East, which has an estimated GDV of RM6bn. (Financial Daily)
* * * * *
Bank Negara Malaysia (BNM) will raise interest rates in a measured, gradual way in order to keep supporting the
economy, governor Tan Sri Zeti Akhtar Aziz said. Zeti said that inflation pressures remained modest and the central bank
would not rush to withdraw policy support. “Interest rates will continue to be supportive of growth. Current rates were brought
down to these levels because of the extraordinary circumstances to avert a fundamental recession,” Zeti said. She also added
that a change to banks’ reserve requirements was not likely to be part of the normalisation process unless there is fundamental
situation of excess liquidity in the system. (Financial Daily)
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The government will emphasize on promoting more domestic private investments through public-private partnership
(PPPs) under the 10th Malaysia Plan instead of depending on foreign direct investments to ensure future growth.
Minister in the Prime Minister’s department Tan Sri Nor Mohamed Yakcop said domestic private companies have upgraded
themselves to be at par with international standards and that it’s time to provide opportunities for local investors to support
sustainable economic growth. He added that the government will continue to place emphasis on infrastructure development to
propel the country’s economic transformation via private sector participation in PPP policies. (Malaysian Reserve)
* * * * *
Malaysia’s government said exports may grow this year at twice the pace it predicted earlier, citing rising global
demand for palm oil and electronics. Overseas shipment may increase 6% or 7% this year, more than a previous forecast of
3.5%, International Trade and Industry Minister Mustapa Mohamad said. “The recovering global economy would contribute to
increased demand for Malaysian exports such as electrical and electronic products, furniture, rubber products as well as
commodities,” he said. (Malaysian Reserve)
* * * * *

HAPPY CHINESE NEW YEAR

TELEKOM, MAS, SIME

Telekom Malaysia Bhd (TM) (T MK, Buy, TP: RM3.54) the country's dominant fixed-line operator, has finally revealed the pricing for its High Speed Broadband (HSBB) access to industry players, more than one year after the project was first announced. This means that service providers, including mobile operators, broadband service providers and pay-TV operators will now know how much it will cost them to ride on TM's fibre optics network to offer services like video-on-demand, Internet protocol television (IPTV), voice call and Internet surfing. It is believed that most of the industry players came away feeling that the pricing offered by TM was "good" and "reasonable", but remained concerned on how the prices will affect them in the long run. TM executive vice-president Rafaai Samsi gave an assurance that the company would not abuse its "power". The pricing comes in two forms: a one-time charge and a monthly recurring charge. It charges service providers one-time fees of between RM52 and RM55 for activation of each Internet port. On a monthly basis, it charges the service providers between RM100-200 per megabit per second (Mbps), in terms of bandwidth subscription. (BT)
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Malaysian Airline System (MAS MK, Sell, TP: RM2.21) is seeking financing for 3 Boeing 737-800 aircraft according to its chief executive officer Tengku Datuk Azmil Zahruddin. MAS will receive three B737-800s this year with the first to arrive in October. Last week, MAS received the blessings of its shareholders to raise RM2.67bn from a rights issue mainly for a fleet expansion exercise. The company also got the approval of shareholders to spend about RM3.19bn on the acquisition of two B747s and two B777s from Penerbangan Malaysia Bhd and six new A380s. (Malaysian Reserve)
* * * * *
Sime Darby Bhd (SIME MK, Hold, TP: RM8.10) is in negotiations to acquire Sapura Resources Bhd’s BMW dealership held under wholly owned Sapura Auto Sdn Bhd, industry sources say. The price tag for the dealership is being bandied at some RM40m, adding that details of the acquisition are still being finalised. It is learnt that Munich based Bayerische Motoren Werke AG, the parent company of BMW, has to give the nod for the acquisition to go through. According to Sapura Resources’ annual report, this dealership and its assets have a net book value of RM24.8m. The RM40m price tag is likely to include inventories such as cars, parts and machinery. The sale of the BMW dealership will have huge impact on Sapura Resources, as the business is the core activity of the company. Sime Darby has established BMWdealerships in various parts of the region held under Auto Bavaria Sdn Bhd and has a 49% stake in BMW Malaysia Sdn Bhd, which is the wholesaler of BMW cars, spare parts, and accessories. (The Edge)
* * * * *
AirAsia X will temporarily suspend its flights to Abu Dhabi beginning Feb 21 in a bid to realign its fleet to cover priority areas. “We are temporarily suspending the flights to prepare for other flights especially to India but we will revert back to Abu Dhabi at a later date,” AirAsia X CEO Azran Osman-Rani said. He added that it wasn’t because of competition with Etihad
Airways the flights have been suspended. “We cannot be flying five times weekly to Abu Dhabi, we need more frequencies, better airplanes and capacity before we get back there,” Azran said. AirAsia X began flying to Abu Dhabi in November with load factors of over 65% using its A340 aircraft. The low-cost carrier’s A330 seats are not as comfortable and to add more flights or
use the A330 does not bode well for AirAsia X on that route, where passengers demand quality and comfort. It has embarked on a seat refurbishment exercise and would be grounding planes to fit the new seats. AirAsia X will get back to Abu Dhabi when the new seats have been fitted into its aircraft, according to a source. (Starbiz)
* * * * *
Wilmar International Ltd has shelved plans to spin off the group’s operations in China on the Hong Kong Stock Exchange after its original application lapsed. “The company has no current intention to submit a fresh listing application to the HKEX for the listing of Wilmar China,” Wilmar said in an announcement to the Singapore Stock Exchange. It noted that in
accordance with HKEX’s guidance letter, the exchange considers any new application submitted within three months of a lapsed application as a renewal/continuance of the original application. Wilmar did not elaborate. The PPB Group has an 18.35% stake in the Singapore listed company. (Starbiz)
* * * * *
DRB-Hicom Bhd plans to set up an automotive university college to produce skilled human capital for the industry. It told Bursa Malaysia yesterday it had formed a unit, HICOM University College Sdn Bhd (HUCSB), with an authorised capital of RM10m, or 10m ordinary shares of RM1 each, and paid-up capital of RM2 of two RM1 shares each. DRB-HICOM said the
university college would carry out the business of higher educational and vocational training institution, focusing on programmes to enhance the competency and skill of human capital for the automotive and automotive-related industries. DRBHICOM said the university college would complement its automotive business. DRB-HICOM said it foresaw itself contributing
towards making Malaysia as one of the leading education hubs for the region. (Starbiz)

Stocks Falter Despite Giddy GDP --another down day for BURSA tomorrow?

Stocks Falter Despite Giddy GDP
By Melinda Peer 01/29/10 - 05:27 PM EST

NEW YORK (TheStreet) -- Stocks slumped on January's last trading day despite Friday's robust fourth-quarter GDP growth and a slew of strong earnings reports. The major averages put in their worst month since February 2009.
More on AMZN
DOWNStocks erased earlier gains made on a strong GDP report as U.S. indices finished the week -- and the month -- in the red.
The Dow Jones Industrial Average shed nearly 106 points this week, or 1% and finished the month 1% lower. The S&P 500 lost 18 points, or 1.6%, on the week and slumped 3.7% this month while the Nasdaq surrendered 58 points, or 2.6%, weekly and lost 5.5% in January.
On Friday, the Dow Jones Industrial Average lost 53 points, or 0.5%, to close at 10,067. The S&P 500 shed 11 points, or 1%, at 1074 and the Nasdaq finished down by 32 points, or 1.5%, at 2147.
"Despite earnings, markets have been taking their cues from overseas all week -- whether it's been concerns about China or Greece -- there's been a lot of questions about where growth is going to come from," said Mike Sokoll, director of Nasdaq OMX's market intelligence desk. "So even though we had a strong GDP number today, market gains didn't hold. I think perhaps people are wondering whether this is just stimulus juice and whether growth can hold up."

>>Microsoft Sees Lower IT Spending
The tech sector led the declines, with key tech stocks among the Dow's worst performers. Microsoft, Boeing(BA Quote) and Intel(INTC Quote) were the day's biggest duds, with Hewlett-Packard(HP Quote) and IBM(IBM Quote) not far behind.
"Tech has been one of the market's leading sectors, so they're a likely place to take profits," Sokoll added.
Shares of Microsoft(MSFT Quote), Sirius XM Radio(SIRI Quote), Qualcomm(QCOM Quote) and Intel were seeing heavy volume on the Nasdaq, with only Sirius trading in green territory.
An 8% decline in Microsoft's business sales appeared to spark fears that weak enterprise spending could flatten future technology growth.