Sold SP Setia-WB

Managed to sold off my SP Setia-WB @ RM0.90. Not sure how long the negotiation between SPSB board and PNB going to last, thus its better for me to take profit first. Definitely my best short term ever. :p

Affin Holdings Bhd

Affin Holdings looks very attractive to me at current valuation.

Price = RM2.46

PE = 7.6

NTA = RM3.48

Not so crazy about their ROE and customer loan breakdown. Though we are expecting a slower growth of loan in next few quarter due to gloomy outlook in global and domestic market but i think their share has been over punished to a unreasonable valuation. Trading buy?

My third Luck.... now SP Setia

I'm a bit excited when i notice the share of SP Setia being suspended this morning, as i had similar experience/situation with Mamee early this year and C.I. Holding, mid of this year. So, first Mamee, then Permanis, now SP Setia.

Consider myself very lucky with latest PNB move to acquire SP Setia at RM3.90 and RM0.91 for its warrant. Honestly, i think the offer is undervalue for a good and a darling for local and international funds. Hope they will revised the offer at much higher side, at least RM4.00/share.

Nonetheless, im still happy as @RM0.91, im making ~139% gain in short time.(if share were traded near the offer) :p

Blain Says Enlarged EFSF Still Vulnerable to Speculators

S P Setia posts strong numbers yet again

Will collect more if its down again. I think SP Setia is the only giant property developer currently sitting on net cash, good landbank (local and o/sea) and mix combination of mid and high end residential and commercial development.

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S P Setia Bhd

(Sept 23, RM3.08)

Maintain buy at RM3.19 with fair value of RM5.41: We reaffirm our “buy” rating on S P Setia with our fair value unchanged at RM5.41, at par to its fully-diluted NAV estimate.

S P Setia reported 3QFY11 earnings of RM91 million, taking its 9MFY11 net profit to RM246 million, or a robust growth of 39% year-on-year. This is well within our estimate, covering 78% of our full-year earnings projection of RM311 million although it came way above consensus estimates by 12%.

At a glance, earnings were flat quarter-on-quarter. However, stripping off the RM32 million gain from the sale of Tenby International School in Setia Alam, core earnings jumped by half. Earnings were driven by progress billings at Setia Alam, Setia Eco Park, Bukit Indah and Setia Walk.

S P Setia’s sales remain strong, recording RM2.3 billion in new sales as at end-August, already surpassing its best ever full fiscal year sale. We expect the group to record sales above its bullish target of RM3 billion and FY11F earnings may exceed our current earnings forecast of RM311 million.

While latest monthly sales have dropped i.e. August figures dropped by some 12% month-on-month to RM186 million due to slower launches, sales are expected to rebound sharply in the next two months. S P Setia is expected to recognise the sale of the boutique offices in KL Eco City as the privatisation agreement with DBKL would be finalised soon. Sales from its maiden launch in Australia would also likely be accounted next month.

While there are a lot of uncertainties given the confidence crisis in the global economy, sector fundamentals remain solid. And S P Setia’s earnings are very much secured by record unbilled sales of RM3.9 billion (about two times its FY10 revenue). Should the economy turn, we believe sales would remain resilient and it has products to cater to the mass market; for example, Setia Alam and the recent land acquisition in Semenyih would provide more opportunities to launch mid-segment houses.

Following the weak sentiment, the stock has dropped by some 31% since its high of RM4.62. S P Setia is currently trading at a steep discount of 41% and an undemanding forward FY12F-FY13F PE of 11 to 14 times. We believe it is a good opportunity to accumulate the stock, notwithstanding the current weak market sentiment. — AmResearch, Sept 23

Market in Free fall mood

F=mg, seems like the value of g is getting larger and larger since last few weeks. Anyway, added mahsing @ RM1.55. Regret added too early @ RM2.00, but then again company still a solid rock.

Added SPSetia-WB @RM0.38. :p

update= ok, now below 1.50 alr. wont touch anymore until market stabilizing.

MBSB transformation yields stronger results

Malaysian Building Society Bhd
(Sept 19, RM1.38)
Initiating coverage at RM1.43 with buy call and target price of RM1.84: MBSB’s change in business direction has resulted in a turnaround in performance. Compound annual growth
rate (CAGR) for net net profit from FY08 to FY10 was 61.4%. The strong growth in personal loan financing extended to government servants as opposed to its past focus on property development financing made the difference.

MBSB’s loan portfolio comprises a mix of personal, mortgage and corporate loans representing 40%, 34% and 25% as at 2QFY11. Loans grew strongly at a CAGR of 16.3% over
FY08 to FY10. Key driver was personal loan financing for government servants. Growth of mortgage loans is expected to be flat for FY11 as the group is in the process of
restructuring its mortgage loan portfolio.

Loan to deposit (LD) ratio as at 2QFY11 stood at 109%. It improved compared with 254.35% in 1999. Since the Ministry of Finance’s approval in 2004, fixed deposits of government and statutory bodies are allowed be placed with MBSB. Year-to-date, customer deposits have grown 150%. MBSB has been securitising receivables (selling mortgage loans to Cagamas Bhd) to raise funds. It is in the progress of issuing sukuk securities to support the growth of its loan book.

Both impaired loan ratios (gross and net) gradually declined. For 2QFY11, gross impaired and net impaired loan ratio stood at 12.2% and 26.3% against FY08 of 48.3% and 23.2%.

With stronger risk management in place and a focus on growing personal loan financing which has a low impairment risk, we expect asset quality to improve further and are projecting a gross impaired loan ratio of 25% for FY11.

Cost-to-income came off a high of 46.3% in 2008 to 18.3% in 2QFY11, lower than the average CTI of 47% in 2QCY11 for banking stocks under our coverage. The improvement was mainly due to stronger growth in Islamic banking income over the past two years.

We believe CTI will not rise substantially as overheads, in particular personnel cost, will be kept low. Expansion of its retail and corporate loans will be done through strategic tie-ups with agents instead of recruitment of additional personnel with its limited branches. We project a CTI of 20% and 22% for FY11 and FY12.

We initiate coverage with a “buy” at a target price of RM1.84. Valuation is undemanding with price-earnings ratio of 8 times (one standard deviation below five-year historical
average PER) on a forecast earnings per share of 23 sen for FY12. Our fair value for the stock at RM1.84 equates to 1.8 times our forecast book value for FY12. — MIDF Research,
Sept 19

SocGen's Oudea Says `Big Merger' Wouldn't Solve Crisis

Sime to benefit from Caterpillar-Bucyrus deal - Agree

AGREE!

The gain will come from better sales of equipment and parts, lower production cost and improved service

Kuala Lumpur: Sime Darby Bhd, the exclusive distributor for Caterpillar Inc is expected to benefit from Caterpillar's US$8.8 billion (RM27.28 billion) purchase of Bucyrus International Inc.

The gain will come from better sales of equipment and parts, lower production cost and improved service.

Sime Darby executive vice president industrial division Scott William Cameron said there will be a good spillover effect on Sime Darby, especially for its Hasting Deerings operations in Australia.

"With the acquisition of Bucyrus, it will give a positive impact towards Sime Darby especially in Australia and China.

The benefits include higher sales of new equipment and aftermarket parts and support, lower product cost and greater reliability, driven by the use of Caterpillar engines and components in Bucyrus products," Cameron said in an e-mail interview.

He said Sime will benefit from an improved service and lower owning and operating costs, propelled by Caterpillar's global manufacturing, supply chain and purchasing capabilities.

US-based Caterpillar, which is one of the world's leading makers of heavy equipment, completed its Bucyrus purchase last July. Bucyrus produces huge machines and equipment for the mining sector.

New York Stock Exchange-listed Caterpillar said with the deal, it has created a mining equipment group with unmatched product range.

Caterpillar is one of the world's leading manufacturers of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

Sime Darby, which is one of Malaysia's largest conglomerates, has six business divisions, namely plantations, property, energy and utilities, industrial, healthcare and automotive.

Sime Darby Industrial Division is the world's fifth largest Caterpillar dealer. It has been distributing Caterpillar products for the past 80 years.

Sime's industrial division registered its highest ever operating profit of RM1.1 billion for the financial year ended June 2011.

The 41 per cent increase over the previous financial year was due to strong sales in Australia/Pacific Islands, China and Malaysia, as well as better price realisations across all regions.

Plantations: Stock level eases in August

Plantation sector
Maintain neutral: Lower crude palm oil (CPO) inventory in August this year, the large price discount between CPO and soyoil/rapeseed oil of US$280 (RM854) to US$300 per tonne, and relatively softer soyabean prospects in the US and parts of South America will help support CPO price above RM3,000 per tonne in the short term. We expect short-term CPO price volatility to continue and maintain “neutral” on the sector. Our top “buys” are Sarawak Oil Palms Bhd (SOP) and TSH Resources Bhd which provide good long-term value and growth propositions with strong 16% and 20% three-year forward production compound annual growth rate respectively. SOP also trades at a single-digit price-earnings ratio of eight times 2012 PER.

Malaysia’s CPO production fell to 1.667 million tonnes (-4.8% month-on-month [m-o-m]) in August as work hours were shorter during the fasting month and workers went on holiday ahead of Hari Raya Aidilfitri. Lower m-o-m production was partially mitigated by weaker m-o-m exports of 1.689 million tonnes (-2.7% m-o-m, +39.4% year-on-year) and weaker m-o-m domestic consumption of 0.164 million tonnes (-10.1% m-o-m, -8.7% y-o-y). This resulted in lower August month-end stock of 1.885 million tonnes (-5.6% m-o-m, +10.2% y-o-y); in line with our expectations. Weaker m-o-m exports were mainly due to lower demand from China (0.39 million tonnes; -15% m-o-m, +204% y-o-y), and other non-core export markets (collectively 0.62 million tonnes; -13% m-o-m, +4% y-o-y). Exports to the European Union, the US, India and Pakistan registered higher m-o-m and y-o-y figures.

Early data point to the likelihood of an increase in inventory for September, with weaker m-o-m export estimates for Sept 1 to 10 of 389,069 tonnes (-36% m-o-m) and 337,038 tonnes (-36% m-o-m) by independent cargo surveyors Societe Generale de Surveillance and Intertek. Exports were likely impacted by the week-long Hari Raya and Independence Day celebrations in Malaysia. While we anticipate exports to pick up for Sept 11 to 20, the overall export figure for the month of September is likely to be weaker m-o-m. Demand may however receive a boost from CPO’s widening price discount to soyoil and rapeseed oil.

We maintain our RM3,200 per tonne average CPO price forecast for 2011 (year-to-date: RM3,390 per tonne) and RM3,000 per tonne for 2012 as we had expected prices to be lower in 2H11 on strong production recovery. The recent steep share price correction (-10% since August this year) presents investors with a good entry level into large-cap IOI Corp Bhd (“buy”). We also advocate “buy” on mid-caps, TSH and SOP, for their long-term value and growth propositions. — Maybank IB Research