Maybank IB Research 17 Aug 2011

Maybank IB Research
• Dialog (DLG MK), RM2.67. New leg, new growth, new perspective. Bags Balai marginal field project. While Balai is expected to be more challenging than the Berantai project, the risk is mitigated as capex is fully recoverable under the RSC. We opine that the consortium will likely bag the next RSC (i.e. Belantara) to make it a more economical investment. Maintain BUY and TP RM3.35.
• Kuala Lumpur Kepong (KLK MK), RM21.10. Downgrade to HOLD (fr BUY). 3Q results ABOVE on lower effective tax rate. 3QFY11 RM420m recurring net profit (+72% YoY,+85% QoQ) brings 9MFY11 recurring net profit to RM1,047m (+49% YoY), which met 78% and 74% of our and consensus full-year forecasts. After chalking up 29% in capital gain since we upgraded our call on 24 Jun 2010, we are changing our valuation methodology to PER (fr SOP), resulting in a lower TP RM21.60 (fr RM23.25).
• WCT (WCT MK), RM2.9. 2Q results BELOW due to an unexpected RM13m forex loss from the stronger Ringgit. RM75m 1H11 net profit (+9% YoY) made up 41% of our full-year forecast. LOWER our 2011-12 forecasts by 8-9%. Lower TP RM3.50 (RM3.75). Maintain BUY.
• JTI (RJR MK), RM6.9. 2Q results BELOW on higher than expected marketing costs and lower sales volume. 1H11 net profit of RM65m (-8.9% YoY) accounts for 45% and 47% of our and consensus full-year forecasts. Still attractive valuations at 11.1x 2012 PER. Our DCF-basedTP RM8.1 implies 13x 2012 PER. Maintain BUY.

News
• MMC Corp (MMC MK), RM2.61, plans to list Gas Malaysia on the Main Board of Bursa Malaysia in 4Q. The company has appointed Maybank Investment to advise on the initial public offer exercise.
• MPHB (MPU MK), RM2.84, confirms talks to dispose of Menara Multi-Purpose.
• MAHB (MAHB MK), RM6.42, to revise charges for airlines, passengers on September 15.
• Bina Puri (BIN MK), RM1.12, wins RM470.3m contract for the proposed development of a tourist recreational and commercial development at KK Times Square (Phase II) in Kota Kinabalu, Sabah.
• CPO prices declined on worries that demand from the Euro zone may come down after the lower-than-expected GDP numbers. CPO futures closed at RM3,002 (-RM34 or 1.1%)