KUALA LUMPUR, May 9 — This is a selection of morning calls by local research houses for the day.
From HWANGDBS – Vickers:
CIMB Group Holdings; Hold; RM7.63
Price Target: RM7.60; CIMB MK
Adding Philippines to its platter
Acquisition priced at RM881m or 1.14x Dec11 P/BV (post-adjustment at 1.3x P/BV). Expect completion by 3Q12; pending regulatory approvals in the Philippines and Malaysia. Minimal impact on CIMB Group’s financials and key ratios; EPS and ROE accretive from 2013. Maintain Hold rating and RM7.60 TP.
Genting Plantations; Buy; RM9.44
Price Target: RM11.40 (Prev: RM11.00); GENP MK
Buy for 19 per cent upside on higher TP of RM11.40. A 12 per cent q-o-q dip in 1Q12 earnings is an opportunity to accumulate, as 2H12 FFB yield is to fully recover. FY12F-14F profit raised by 13-23 per cent on higher CPO price forecasts.
TSH Resources; Buy; RM2.45
Price Target: RM2.75 (Prev: RM2.55); TSH MK
Resuming aggressive expansion
Weaker 1Q12 results should be an opportunity to collect. Sabah FFB yield recovery and rising Indonesian output should boost 2H12 earnings. FY12F-14F earnings raised by 5-13 per cent after imputing higher CPO price forecasts. Maintain Buy with higher TP of RM2.75.
Perisai Petroleum; Buy; RM0.89
Price Target: RM1.20; PPT MK
New jack-up rig to fuel growth
Ordered US$208m jack-up drilling rig for future growth. Confident of securing contract in Malaysia; strong earnings boost upon delivery in 2H14. Maintain Buy rating and RM1.20 TP.
Hartalega Holdings; Hold; RM7.84
Price Target: RM7.70; HART MK
Consistent earnings delivery
4Q12/FY12 results were in line; full year net profit came in at RM202m. Declared 6 sen (single tier) interim DPS. Maintain Hold rating and RM7.70 TP.
From OSK Research:
TECHNICAL ANALYSER: COMEX Gold Futures- 2-Month Support Violated
The commodity tumbled yesterday and the failure to reverse the decline today should lead to further declines. The move yesterday, which broke the 2-month support level of US$1,629, should confirm the continuation of the correction that started since the formation of a “Long Black Day” candle on 29 Feb. This is illustrated by the clear downtrend line that connects the highs of 12 March, 27 March, 12 April and 1 May. This line is also still below the important 100-day MAV line.
From RHB Research:
Oil & Gas – Storing for the future
Malaysia’s plans for a storage hub for crude oil and petroleum products are relatively recent. However, on completion in 2017, the two ongoing projects in Johor, Dialog/Royal Vopak’s Pengerang Independent Terminals (PIT) and MISC/Vitol’s ATB Terminal as well as other existing tank terminals will result in a combined storage capacity of 8.1m m3, which would be a close second to Singapore’s estimated 9.5m m3.
While Singapore has decided not to further expand storage capacity due to land constraints, Malaysia’s growth potential is significant and closely tied to Petronas’ plans for the RM60bn Refinery and Petrochemical Integrated Development (RAPID) project, which is expected to kick off in 2014, and commissioned in 2016.
Dialog (OP, FV = RM3.08) is the primary play for the storage business, and in our view, the stock deserves to trade at a premium above our sector benchmark of 15x CY12 EPS due to its good long-term earnings visibility – over the next five years, the company will enjoy E&C earnings from the PIT construction, while recurrent earnings from PIT will start in late FY06/14. Longer-term, we believe RAPID will also benefit Dialog, Petronas Chemicals and Sapura-Kencana Petroleum, but any construction/fabrication work for the project will not impact earnings until 2015 at the earliest.
CIMB – Acquiring a 60 per cent stake in Bank Of Commerce for RM881m
CIMB announced yesterday the acquisition of a total 60 per cent stake in Philippines’ Bank of Commerce (BoC) from San Miguel Properties and various other shareholders. The total cash consideration amounts to Php12.2bn (RM881m).
The acquisition P/BV works out to 1.14x, based on BoC’s 31 Dec 2011 book value (acquisition PER of 35x, based on 2011 net profit). Post alignment with CIMB’s accounting and provisioning policies, management estimates P/BV could rise to about 1.3x. While the cleaning-up exercise of BoC’s books may render traditional valuation metrics less useful, we think valuations appear fair especially after taking into account BoC’s underleveraged and well-capitalised balance sheet.
In conjunction with the deal, CIMB has also entered into a collaboration agreement with San Miguel Corporation (SMC). Management sees this as one of the key highlights of the deal as it allows access to the SMC ecosystem ranging from SMC companies, vendors and suppliers (wholesale banking) and employees and retail customers of the SMC Group (retail banking).
We estimate the acquisition would be earnings neutral to the group and thus, keep our numbers unchanged. No change to our fair value of RM8.05 (14x CY12 EPS) and Market Perform call.
* 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.