Business

Analyst call April 23

April 23, 2012
Latest Update: April 23, 2012 07:38 pm

KUALA LUMPUR, April 23 — This is a selection of morning calls by local research houses for the day.

HwangDBS Vickers

Market Preview

In the absence of visible leads from Wall Street, which saw its key equity indices closing mixed last Friday, we reckon Asian equities are likely to range-bound when trading resumes this week.

Back home, the benchmark FBM KLCI — after a sudden drop just before the market closed on Friday to finish at its intra-week low of 1,591.85 — could stage a mild technical rebound today. Nevertheless, the bellwether may struggle to overcome the psychological mark of 1,600 anytime soon.

Against the fairly quiet market backdrop, stocks that are expected to garner added interest today include: (a) property developers like WCT amid a news report saying that the tender for the re-development of the huge Rubber Research Institute Malaysia land in Sungai Buloh (to be spearheaded by EPF) would be called by 3Q or 4Q this year; and (b) BAT, which is scheduled to release its latest quarterly financial results later in the evening.

From the Chartroom

Bit by bit, the FBM KLCI was inching down last week to close at a low of 1,591.85 on Friday, a weekly drop of 11.3-point or 0.7 per cent. From a technical perspective, the benchmark index appears to be running out of steam after slipping further away from a positive sloping trend line.

As the bellwether drifts towards the apex of a minor symmetrical triangle pattern, a breakout on the downside may be forthcoming. If so, then the FBM KLCI could drop inside the 1,555-1,580 support zone going forward.

Axis REIT

Axis REIT will be converting Wisma Bintang (now leased to Cycle & Carriage) to its “Axis Business Campus”, which will add 50k sf of NLA and substantial rental increases (exp. 12-13 per cent yield — RM6-7m in NOI or 166-190 per cent increase) when completed. This is slated for Jun12 when C&C’s lease expires and is expected to complete in FY13.

Valuations will also see a jump to RM90m from its current RM47m, which will contribute to its RM2.08 NAV/share. Another development is enhancement to Axis Eureka, adding 10k sf to its 127k sf NLA as well as higher rents (est 4.30psf now vs potential RM4.50psf).

Other projects include refurbishment of Infinite Centre to elevate its low-average rentals of RM2.09psf.

Capex requirements for the enhancements will be RM32m (incl. Axis Eureka though designs are not finalised), while potential acquisitions totalling RM338m loom over the horizon, which we believe will exceed its internal 7 per cent yield hurdle rate.

Assuming all assets are acquired through debt, gearing will increase to c.40 per cent, which will still be below 50 per cent. However, CEO/executive director Stewart Lebroy said there might be a potential placement in 4Q12 to bring down the gearing level post asset acquisitions.

We continue to like Axis REIT for its active approach on yield-accretive asset acquisitions (>7 per cent), stable long-term tenancies, strong dividend yields (6.4 per cent on 17.6sen/share DPS for FY12F) and earnings upside from asset enhancements of its older buildings. Our forecasts have incorporated a conservative view on Wisma Bintang’s higher expected contributions.

RHB Research

Economic Highlights

The headline inflation rate eased further to 2.1 per cent yoy in March, after decelerating sharply to +2.2 per cent in February and compared with +2.7 per cent in January. This was reflected in the core inflation rate, which inched lower during the month, indicating that price pressures were benign despite a resilient domestic demand.

Food & non-alcoholic beverage prices, on the other hand, held stable in March, after a slowdown in February as the Chinese New Year festivities boosted prices in the preceding month.

Going forward, we believe inflation will likely moderate, as a slowing economic growth will likely translate into a slower increase in demand and reduce price pressure. In view of the slower-than-expected increase in inflation in recent months, we have revised downward our inflation forecast for 2012 to 2.5 per cent, from +2.8 per cent projected previously and +3.2 per cent in 2011.
Still, upward pressure on inflation could emerge and we expect price pressures to start to pick up again in the 2H of 2012.

Bank Negara Malaysia left the Overnight Policy Rate (OPR) unchanged at 3.0 per cent on 9 March, as the urgency to ease monetary policy has been reduced significantly. Still, it highlighted in its annual report that should the global economy enter a new phase of even weaker growth during the course of 2012, it has the “flexibility to respond to adjust the degree of monetary accommodation” to cushion the impact.

Nevertheless, any consideration for further monetary easing will be weighed carefully by policymakers against the potential upside risks to inflation as well as the build-up of financial imbalances. This suggests that the Central Bank is more likely to keep its OPR unchanged at 3.0 per cent for the rest of the year.

Weekly Trading Strategy

Last week, the FBM KLCI index bucked its four-week uptrend as it shed 11.27 pts (-0.70 per cent) to close below the 10-day SMA at 1,591.85, from its previous week’s close of 1,603.12.

The index started the week on a negative note as it fell below the psychological resistance of 1,600 to close at 1,597.51 (from its open of 1,602.42). The index subsequently traded sideways on Tuesday before ending the day marginally lower at 1,596.19.

While the index staged a recovery to a day-high of 1,602.34 on Wednesday, it failed to sustain above the psychological resistance of 1,600 and pulled back to close marginally unchanged at 1,598.86.

Although the index retested the psychological resistance of 1,600 the following day, it failed to stage a convincing breakout above the level and thus slide lower to close at 1,596.62.
Losing upward momentum, the index resumed its downtrend to end the week at a day-low of 1,591.85 (from its open of 1,596.84) on Friday.

The index recorded its week-high of 1,602.42 on Monday and week-low of 1,591.85 on Friday.

While the RSI remained slightly above the 50 pt level at 51.872 pts last week, the decline in both RSI and Stochastic indices suggests weakening buying momentum.

In addition, the short-term outlook has now turned negative (from neutral earlier) given the crossing of the MACD line below the signal line. Any further increase in divergence between the MACD and signal lines would turn the short-term outlook increasingly negative.

Nevertheless, the positive medium-term outlook remains intact for now given the substantial divergence between the 10 (1,597.274) and 40-day (1,584.582) SMAs. This is substantiated by both the MACD and signal lines remaining deep in the positive region.

Overall, the index’s positive medium-term outlook remains intact (as indicated by the MACD and SMAs) despite the change in the stock’s short-term outlook to negative (from neutral earlier).

However, we think that the index may continue to trend lower in the near term and retest the immediate support region of 1,578-1,584 on expectations of weakening buying momentum ahead (as indicated by the RSI and Stochastic indices).

While we note that the index is now below the floor of the “rising wedge” formation, the positive medium-term outlook (as indicated by the MACD and SMAs) indicates that the index stands a fair chance of moving above the psychological resistance of 1,600 in the short term and thus restore its uptrend.

We thus maintain our view that the index would advance towards the 50 per cent short-term FP level of 1,621 (which coincide with the ceiling of the rising wedge formation) and the 61.8 per cent short-term FP levels of 1,649 over the medium term.

As such, we advise intraday and short-term investors to stay aside for now in anticipation of a further decline in the index. Longer-term investors may, however, choose to buy/accumulate within the region of 1,578-1,584 on expectations that the index would retest the 1,600 psychological resistance over the short term and upon breakout, advance towards the next projected levels of 1,621 and 1,649 over the medium term.

On the downside, we continue to expect good short and medium-term supports at 1,549 and the region of 1,500-1,505 respectively. Breaching of these levels could, however, turn both outlooks negative and lead to the index falling towards the next support region of 1,396-1,417, which should hold well over the longer term.

While we expect any upside over the medium term to be capped at 1,649, we are maintaining our view that the index would advance towards our projected targets of 1,663 and 1,704 over the longer term.

TRC Synergy

TRC reiterated that it is going all-out for work packages for the Sg Buloh-Kajang (SBK) Line of Klang Valley MRT project but will stick with its stance of not unduly compromising on margins.

In the immediate term, TRC does not expect significant expansion in construction margins as construction earnings will predominantly be underpinned by two key contracts, i.e. LRT line extension and Brunei airport that command relatively lower margins.

On a brighter note, the recent soft launch of TRC’s gated and guarded property project called Ukay Tropika in the Ulu Klang area with a GDV of RM90m was a runaway success.
FY12-14 net profit forecasts cut by 8-14 per cent, having reflected lower blended construction EBIT margins of 6.6-7.4 per cent (8.6-8.8 per cent previously), partially cushioned by contribution from Ukay Tropika.

Fair value is reduced by 12 per cent from RM0.96 to RM0.85.  Maintain Outperform.

AirAsia

Airasia’s share price rose from a low of RM1.07 at end-May 2011 to a high of RM4.20 on 4 Aug before it turned bearish over the next two months, falling sharply to a low of RM2.68 by end-Sep 2011.

Oversold, the stock staged a strong recovery to remove the 10-day SMA over the week and resumed its uptrend to a high of RM4.00 by end-Oct 2011. Nevertheless, the stock failed to break out above the psychological barrier of RM4.00 and corrected towards the 23.6 per cent FR level of RM3.45 by end-Nov 2011.

Over the next three months, the stock’s price traded sideways (alternating between upswings and corrections) within the RM3.51-3.80 region. The stock’s price subsequently resumed its downtrend to a low of RM3.34 by end-Mar before recovering above the 10-day SMA by mid-Apr.

Last Friday, the stock’s price continued to inch upwards to close slightly below the 40-day SMA at RM3.50 (from its previous week’s close of RM3.47), registering a total trading volume of 6.9m shares.

Noticeably, the medium-term outlook is slightly negative given that both MACD and signal lines are in the negative region. This is substantiated by the divergence of the 10-day SMA (RM3.449) below the 40-day SMA (RM3.529).

Nevertheless, the increasing divergence of the MACD line above the signal line indicates that the short-term outlook is now turning increasingly positive.

In addition, the increase in both the RSI (52.198 pts) and Stochastic indices indicates strengthening buying momentum. Note that the recent crossing of the RSI above the crucial 50-pt level also means that the recovery in buying momentum may continue to gain traction moving forward.

Technically, the stock’s price had since recovered above the 10-day SMA since hitting a six-month low of RM3.34 in end-Mar. While we note that the medium-term outlook is still negative (as indicated by the MACD and SMAs) and the stock’s price remained short of removing the 40-day SMA of RM3.53 last Friday, the increasing divergence between the MACD and signal lines indicates that the stock’s price would continue to trend higher in the near term.

Coupled with readings of strengthening buying momentum (as indicated by the RSI and Stochastic indices), we expect the stock’s price to break out above the 40-day SMA of RM3.53 and turn its medium-term outlook positive.

Upon removal of the 40-day SMA of RM3.53, we expect the stock’s price to climb towards its next resistance of RM3.80 in the short term. Any further breakout above the RM3.80 barrier would then propel the stock’s price towards the next resistance levels of RM4.00 and RM4.20 over the medium term.

As such, we advise investors to buy/accumulate within the region of RM3.45-3.53 on expectations that the stock’s price would trend higher upon removal of the 40-day SMA in the near term.

On the downside, we note that breaching of 27 Mar’s low of RM3.34 would turn both short and medium-term outlooks negative and lead to an extended downtrend towards the psychological support of RM3.00. While this could offer longer-term investors an opportunity to accumulate at a bargain, short and medium-term investors should cut loss at below RM3.34 given the substantial downside to the psychological support of RM3.00.

Overall, we see a compelling risk-to-reward ratio for investors with a theoretical entry price of RM3.50 given the limited downside risk of 16 sen from the cut loss level of RM3.34 compared to an upside of 30 sen and 50 sen to the resistance levels of RM3.80 and RM4.00 respectively.

MRCB

The tender for the re-development of the Rubber Research Institute (RRI) land in Sungai Buloh is expected to be called by 3Q or 4Q2012. (Starbiz)

Assuming this is to happen, it will be positive to MRCB. Recall, MRCB hopes to play a dual role in the project with an estimated GDV of RM10bn, namely: 1) The project manager for the entire development; and 2) For a start, the developer for at least one land parcel measuring 100-200 acres.

Also recall, during MRCB’s last analysts’ briefing in Feb 2012, management was less “chatty” about the project, having only described it as “still work-in-progress”, we believe, due to the potential delays in the tender of the project.

Faber

Faber announced the appointment of Juliza binti Jalil as group chief financial officer. (Bursa)

Positive. We understand that the appointment would be based on a 3-year contract. Prior to that, she was the senior GM of finance of Faber Group and has worked with the company’s finance department since Jan 1995. The CFO position has been vacant since 2008.

JCY International

JCY may trade higher if it breaks above the resistance level. The stock has moved favourably after it was highlighted about a month ago. As expected, it met with resistance at RM1.40, the level that it failed to break convincingly in early February.

Sellers initially had the upper hand early last week, where a “Bearish Engulfing” candle was formed last Tuesday. But buying interest returned and pushed it right to the RM1.40 level on Friday. A close above this level today will likely nullify the negative bias of the “Bearish Engulfing” candle and see the stock trading higher.

Positions can be initiated if this happens with a stop loss on close below last week’s low of RM1.30. The target is the early-January high of RM1.50 and a strong move could see the test of RM1.60, the high of June 2010.

However, a failure to break above RM1.40 could see the return of selling, with a close below RM1.30 as the confirmation. Strong support is at RM1.07, where a violation may signal the end of the rally.
Look for further support at RM0.94 and RM0.80, the Fibonacci retracements of the Oct 2011-Jan 2011 rally.

Astral Supreme

Astral may trade higher if it breaks the long-term resistance level. The stock is on an uptrend since Aug 2011, as evidenced from the series of higher lows. Nonetheless, it spent the past month and a half consolidating the gains.

The consolidation is now over on the back of the continuation of the upward movement, after 4 days of higher closes. It even closed right at the 3-year resistance level of RM0.27, highlighting the strength of the upward bias.

A breakout could be in the offing as the price strength was accompanied by steady volumes, suggesting firm buying interest. Thus, the upward continuation is expected on a close above RM0.28 and purchases can be made if this happens with a close below last Friday’s low of RM0.265 as a stop loss.

A conservative trade may choose the 3-day low of RM0.245 as a stop instead. The price target is the early 2009-high of RM0.365 and a strong move may even see the test of RM0.43 — the support level of 2007/2008 and also the measured move based on the 3-year consolidation.

The trade may not work out should the price close below RM0.245 and if this happens, it would take a while before a test of RM0.28 could take place again.

OSK Research

Malaysia Economics

There were no surprises in the Mar inflation data. Headline inflation continued to ease as expected, moderating from 2.2 per cent in Feb to 2.1 per cent yoy in Mar (OSK and consensus: 2.1 per cent).  
In Mar, food prices (the largest component in the CPI basket at 30 per cent) rose by 2.9 per cent yoy, unchanged from Feb, while housing and transport cost (38 per cent combined weightage) moderated a tad by 1.8 per cent and 1.3 per cent respectively from 1.9 per cent and 1.4 per cent in Feb.

The rest of the components in the CPI basket also rose at a slower pace in Mar as compared to Feb, with furnishing and healthcare costs being the exception.

We think that inflation should moderate for the full year on the back of base effects, coming in at 2.7 per cent versus 3.2 per cent in 2011.  However, there are upside risks to our forecast, particularly from the impact from civil servant pay hikes, fuel subsidy cuts (probably coming after the general elections) and implementation of minimum wage.  These could add 100-150 bps to our baseline forecast.

As for policy, we expect the easing inflationary trend to provide some room for the central bank to keep policy rates on hold for at least the first half of the year. We think that rate cuts are not likely unless the external environment worsens.

However, given the build-up in inflationary pressure on the back of strong public spending and private consumption, as well as the possible further upside to inflation (as discussed above), the bias is tilted towards the normalisation of rates.

We think that a hike of at least 25 bps in the OPR sometime in the latter half of 2012 is possible.

Technical Analyser

FKLI

The index continued to weaken following the failed test at the 1,600-pt psychological level last Wednesday. It was the second day that saw a lower close following the formation of last Wednesday’s “Long Black” candle. It even closed below the 5-day low of 1,588.50 pts and a similar breakdown was seen in the daily RSI too.

The simultaneous violations likely confirm the negative bias arising from the “Shooting Star” of 3 April and the “Long Black” candles of 4 and 13 April. Last Friday’s close also led to the formation of a “Gravestone Doji” in the weekly chart, which carries a negative bias.

Thus, further selling is expected as long as the index stays below 1,588.50 pts. Further confirmation is still needed by way of a close below the April low of 1,582 pts. This should see the start of a correction in earnest.

Support lies at the Fibonacci retracement levels of the March-April rally of 1,578 and 1,572 pts. A close below 1,578 pts will also see the violation of the 50-day MAV line, thereby increasing the negative bias.

However, a close back above 1,582 pts may see the return of buying, owing to the longer-term uptrend. Again, the 50-day MAV line is yet to be broken, and both the 50-day and 200-day MAV lines are rising.

But buying needs to be confirmed by a close above psychological 1,600 level. If this level is violated, the next resistance lies at the all-time intraday high of 1,606 pts and thereafter, the round figure of 1,610 pts.

FCPO

The commodity may trade higher following the firm close last Friday. As expected, it managed to build on the buying strength seen from the “Hammer” of last Thursday. Sentiment looks positive as the commodity closed right at the psychological RM3,500, above the “Hammer” high of RM3,487 on a “Long White” candle. It also appears that the price bounced off the most oversold RSI in more than 2 months.

Nonetheless, buying support still needs to be confirmed by a close above the 16 April-gap high of RM3,505. This should lead to a higher price and resistance is expected at the low of 3 to 5 April at RM3,532, the low of 6-10 April at RM3,562 and thereafter, the round figure of RM3,600.

A close above RM3,562 will significantly increase the possibility of an upward continuation as the rebound will have regained more than 62 per cent of the recent decline.

However, the failure to close above RM3,500 today should see the short-term downtrend reassert itself, with a close below the prior 3-day low of RM3,458 as the confirmation. Further support is expected at RM3,400 — a 38 per cent retracement of the Feb-April rally. Note too that minor support lies at RM3,470, the intraday support and resistance level of the past 4 days.

WTI Crude Futures

The commodity’s price appears to be well supported and this may enable it to move higher. Although our earlier positive anticipation hit a snag, where the firm close of last Tuesday was followed by a “Bearish Engulfing” candle, the presence of buying support propelled the commodity to a higher finish this week.

A positive “Hammer” was formed last Thursday and the higher close on Friday shows the lack of follow-through selling after the formation of the “Bearish Engulfing” candle.

The “Hammer” low was right about USD102, where the commodity found support multiple times in the past 2 weeks.

Together with the continuation of the “Flag” pattern, the daily RSI at its 5-month support level and the “Bullish Engulfing” candle of 11 April, a continuation of the 6-month rally is expected as long as the price stays above USD102. Nonetheless, an upward bias is only confirmed if the commodity breaks the “Flag” formation to the upside.

This will happen if it closes above USD105, which should see the price move above the rising 50-day MAV line too. A close back above the broken support of USD121 by Brent should add to the upward bias.

Note that the correction eased the overbought daily RSI, thus leaving plenty of room for prices to move higher. A measured move based on the February rally could see the price head towards USD118, provided that the recent high of USD110 and the 2011-high of USD115 are violated.

A close above USD115 will negate the bearish bias of the 2011 decline and confirm the continuation of the long-term uptrend that started from the October low, in view of the most oversold weekly RSI in two years. This should be confirmed by Brent closing above its 2011-high of USD127.

A failure to break above USD105, which is followed by the violation of USD102 support, will keep the current correction intact and support is expected above USD100 — which is the 62 per cent retracement of the February rally.

Media — Overweight

1QCY12 advertising expenditure (adex) came in at RM1.77bn, declining slightly by 3.8 per cent y-o-y. We deem this within expectations, as advertisers typically plan their budgets in 1Q and an early CNY this year compelled them to bring forward most of their spending to 4QCY11 (adex q-o-q: -18.9 per cent).

Despite the slight y-o-y adex deterioration in 1Q, we are maintaining our OVERWEIGHT call for the sector in anticipation of a strong rebound in 2HCY12 during which some major events, such as 2012 Olympics, Euro 2012 and the highly anticipated General Election, could take place.

Hence, we maintain our Adex growth forecast for this year at 2x our FY12 house GDP growth projection of 5.2 per cent. We are maintaining the status quo of Media Chinese (BUY, FV RM1.47) as the sector’s top pick.

We remain bullish on the overall media sector as we believe 2012 will turn out to be a decent year for media players, owing to the upcoming major sports events, as well as the highly anticipated General Election that is expected to be held in 2HCY12.

We see the sector benefiting from: (i) political ad campaigns in the run-up to the General Election, and (ii) strong A&P spending from food and beverage, brewery, and telco companies during the 2012 Olympics and Euro 2012.

Media Chinese remains our top sector pick. Our top pick is Media Chinese (BUY, FV RM1.47), which is currently trading at an attractive valuation of 10x FY12 PER and comes with a lucrative 6 per cent dividend yield.

We see strong potential in Media Chinese, considering the country’s growing Chinese-literate population and the increasing importance of the language in the global arena. The company’s advertising space is still largely untapped, considering that its existing publications are skewed towards editorial content as opposed to advertising at a ratio of 60:40.

We also like Media Prima (BUY, FV RM3.01) for its: (i) status as the nation’s sole integrated media player with exposure across all media platforms, (ii) strong print media business, with a dominant position in the BM daily space — thanks to Harian Metro and Berita Harian, which are the leaders in the BM sub-segment with adex shares of 47.9 per cent and 24.1 per cent respectively (within the BM paper space), and (iii) its leading FTA TV position in the country with a lion’s share of the FTA TV adex at 87.2 per cent.

Should the negotiations on the content sharing rates between the Pay and FTA TV operators bear fruit, we believe Media Prima is likely to record strong adex growth this year.

Nonetheless, we are maintaining our 5 per cent adex growth forecast at this juncture for its FTA TV segment, pending the release of more concrete details on the content sharing charges between TV operators.

Within the small- to mid-cap space, we like Catcha Media (BUY, FV RM1.03) for its potential to reap benefits from the niche Internet media segment, which continue to record a healthy y-o-y adex growth of 9.8 per cent in 1QCY12.

As Internet advertising will grow in tandem with the expansion of broadband services, we expect Catcha Media to benefit from the aggressive rollout of broadband services by telco companies and the Government initiatives to boost household Internet penetration rates.

We reckon that Catcha Media will leverage on the rising take-up rate of Internet broadband services moving forward.

We are less keen on Star (NEUTRAL, FV RM3.33), which is facing a decline in readership, dwindling adex share and a saturation in advertising space. Besides, the stock’s valuation looks rather rich now, considering that it is trading at 13x FY12 PER compared to its closest peer Media Chinese, which is currently trading at 10x FY12 PER.

Last Friday, TimedotCom (TDC) announced that the High Court of Malaya had granted approval confirming its proposals to conduct (i) a capital restructuring and (ii) a capital repayment of RM0.02/share.

We view the approval by the High Court positively building up to the much-anticipated acquisition of the Global Transit Entities and AIMS Group, which is slated to be completed by 2HFY12.
With their inclusion into TDC’s current business structure, we see the new enlarged entity being able to leverage on each other’s strengths to provide a more holistic one-stop solution to their wholesale customers since it would have access to an extensive regional footprint with connectivity from Asia all the way to the US.

We think that with the multiple proposals in the pipeline, there may be a rerating of the stock especially when the operations of the acquirees are consolidated together with TDC’s later in the year.
We are reiterating our BUY recommendation on the company at a fair value of RM0.87 based on a sum-of-parts valuation.

AirAsia

AirAsia announced that it has entered into a distribution agreement with Tune Ins Holdings SB (TIH) in relation to the provision of insurance products over the next 10 years.

Tune Money together with Tune Ins has also granted to AirAsia a call option agreement for an irrevocable right to purchase 20 per cent equity interest in TIH during the tenure of the agreement or prior to the listing of TIH at the option price of one times the Net Asset Value of TIH subject to a maximum of RM16m.

Upon exercise of the share purchase and should TIH fail to be listed during the term of the agreement, AirAsia has the right to exercise a Put Option which requires Tune Money to repurchase the option shares.

To recap, this new distribution agreement supersedes its earlier agreement with the provision of services extended from 1 to 10 years, with a projected value of RM43m from RM1m in the earlier.

As the operational agreement remains unchanged, growth outlook for the insurance segment will continue to grow. AirAsia’s revenue from Tune Money travel insurance products is in the form of commission from the insurance premium (at a 25 per cent average margin on the premium collected), is also expected to see growth.

AirAsia is targeting to collect RM50m worth of commissions over the next few years. With RM100m insurance premiums targeted to be collected in 2011 alone (up 42 per cent y-o-y), AirAsia raked in RM20m in commissions last year.

Furthermore, like its tie-ups with banks, the marketing costs are fully borne by Tune Money. Demand for insurance has picked up notably among passengers who need to make connecting flights.

The call option exercise allows AirAsia to capture the growing awareness of the travel insurance market which we think AirAsia is likely to exercise as its network connectivity expands. With a potential listing eventually, this would further polish the valuation of the insurance stake.

We make no changes to our earnings hence our FV of RM4.57 pegged at 12x FY12 EPS is maintained. We remain positive on AirAsia as it is poised to see more yield upside from the withdrawal of Firefly’s East Malaysia routes. Furthermore, earnings from its ongoing JVs are expected to contribute more this year.

* These recommendations are solely the opinion of the respective research firms and not endorsed by The Malaysian Insider. The Malaysian Insider shall not be liable for any loss arising from any investment based on any recommendation, forecast or other information contained here.

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