RHBInvest Research Highlights 01st August 2011

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RHBInvest Research Highlights 01st August 2011

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Publish date: Mon, 01 Aug 2011, 01:21 PM

01^st August 2011

Top Story: Banks ' Jun '11 system data ' Loan growth eased slightly but still robust Overweight

Sector Update

'' Jun '11 system-wide loan growth eased to 13.5% yoy (May '11: +13.8% yoy) with the slight slowdown mainly due to large repayments as loans were refinanced with funds from the debt capital market.

'' Consequently, loans to businesses expanded by a slower pace of 14.3% yoy (May '11: +14.7% yoy). The expansion in household loans outstanding also eased to 12.8% as compared to +13% in May '11.

Corporate Highlights

Allianz: Still interested in M&As Outperform (up from MP)

Company Update

'' The failure to strike a deal with MNRB for a stake in Takaful Ikhlas was disappointing in our view, although we understand that Allianz would continue to pursue a Takaful business.

'' Allianz is also not ruling out other M&A to strengthen its conventional insurance business. In this regard, we believe that a potential target could be in the general insurance sector due to the high capital requirements from the RBC framework and also the high level of competition in the sector, as there are currently 29 general insurance players (inclusive of six composite insurers).

Axiata: XL fell a bit short Outperform

Company Update

'' 67%-subsidiary, XL Axiata (XL), posted 2QFY11 core net profit of Rp842bn (+>14.8% yoy), representing only 43% of both our and consensus full-year estimates.

'' 2Q revenue increased 0.5% qoq, mainly due to strong data & VAS revenue (+13.6% qoq), mostly offset by weaker voice (-0.7% qoq) and SMS (-2.2%). EBITDA margin was marginally lower by 0.7ppt qoq to 52.3%. Nonetheless, together with lower net interest cost (-12.9% qoq), 2Q core net profit increased 14.3% qoq.

Unisem: Initiating internal restructuring Market Perform

Briefing Note

'' Unisem is initiating an internal restructuring in order to transform into a "World Class Supplier" to be on par with major players within the industry. These include putting in place advance IT systems i.e. ERP to integrate all its plants for better efficiency. Going forward, management expects improvement in cycle time, productivity, and better cost savings through better waste management.

MAS: Passenger capacity to grow by 5-8% in FY12/11 Market Perform

Briefing Note

'' MAS guided a passenger capacity growth rate of 5-8% for full-year FY12/11.

'' MAS reiterated that there is no need for a cash call in FY12/11 as funding for the scheduled aircraft delivery in 2011 has already been put in place.

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