STOCK FOCUS OF THE DAY
IOI Corporation : Selling at spot prices BUY
Maintain BUY on IOI Corp (IOI) with lower fair value of RM5.20/share. We have revised our FY09F-FY10F earnings forecasts for IOI downwards by 1% to 2% to account for lower manufacturing profits, after our recent discussion with management. IOI’s oleochemical division is currently facing declining sales margins and volume as the economic slowdown takes its toll on demand for beauty, personal care and cosmetic products. Despite the plunge in crude palm oil (CPO) prices recently, IOI is still positive on prices. We understand that demand for palm oil is stable. Due to IOI’s favourable view on CPO prices, the group is currently selling at spot prices. There are currently mixed views about weather conditions. Operating costs are expected to be either flat or slightly higher than last year. It could range between RM1,100/tonne to RM1,200/tonne in FY09F (FY08: RM1,098/tonne). Although cost of fertiliser has declined compared to last year, other components such as labour and transportation costs have increased.
Others :
Banking Sector : Relaxation in NPL classification will not distort industry data OVERWEIGHT
QUICK TAKES
Indofood Agri : Mulling issuance of Rp1 trillion bonds BUY
AirAsia : Extending out gearing upcyle in growth phase BUY
Rubber Glove Sector : Longer delivery time from shortage of labour OVERWEIGHT
NEWS HIGHLIGHTS
Proton Holdings : Proton plans to tap high-growth regional markets
Financial Services : Kenanga to sell stake in Dubai advisory
Oil & Gas Sector : LNG exports slump, gas demand down / Merapoh’s US$10bil refinery may get 50% funding from foreign banks
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