Results Review
Bursa Malaysia RM8.49: Sell
– Sequentially weaker
Maintain Sell. RM81m 9M09 net profit (-11% YoY) was above our expectations, at 79% of our 2009 forecast. This was due to higher-than-expected trading activities and a one-off RM5m CDS fee recognition relating to prior periods, both in 3Q09. The results were however below market expectations, at 64% of consensus full-year forecasts. We raise our net profit forecasts by 6% for 2009, 11% p.a over 2010-11. Current valuations nonetheless remain high, at a huge premium to peers.
Company Update
Media Prima RM1.77: Buy (Under review)
– A marginal deal for NSTP shareholders
Media Prima looks to swallow NSTP, creating a media behemoth. Media Prima’s offer to privatise 43%-associate New Straits Times Press (NSTP) is unattractive when compared to the latest share price. However, it allows NSTP holders to participate in a media conglomerate covering five media platforms with greater growth prospects. Media Prima may be happy with control of NSTP despite it not being wholly owned.
Comment on News
Water: Neutral
– Selangor water: Issue moves up to Federal level?
A step towards conclusion? We think that the final offer to take over water infrastructure in Selangor, after a due diligence by PAAB, will not be lower than the offer made by the Selangor Government in July 2009. We see the due diligence as a positive indication of a conclusion to the whole take-over exercise. We retain our Buy call on Gamuda (GAM MK); Not Rated on Puncak Niaga Holdings (PNH MK) and Kumpulan Perangsang Selangor (KUPS MK).
Technicals
The FBM KLCI should remain firm today. The strong support areas for the FBM KLCI are located in the 1,233 to 1,256-zone. The key resistance areas of 1,260 and 1,288 may cap any selling activities. Market may remain buoyant despite the DJIA’s 67.03-points decline last Friday. Our chart buy calls today are 3A and NOTION.
Other Local News
Construction: Another theme park for Nusajaya
ETI Tech: To expand Kulim factory
Mulpha: Plans Klang Valley projects
RHB Bank: Said to buy Medan bank for RM1b
Technology: PMC-Sierra to set up HQ in Penang
Outside Malaysia
U.S: 2009 budget deficit widens to record USD 1.42tr on crisis spending
U.S: Industrial production increased 0.7% MoM in September
U.S: Consumer confidence falls in October
E.U: Exports decline 5.8% MoM in August
Japan: Government keeps its economic assessment for third month
Japan: To freeze JPY 2.9tr (USD 32b) of extra budget
Singapore: September exports decline matches smallest drop in 11 months
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