Bursa Malaysia Stock Watch

RHBInvest Research Highlights 28th September 2011

kltrader
Publish date: Wed, 28 Sep 2011, 10:21 AM
kltrader
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28th September 2011
 
Top Story: Shifting Trends ' Looking to the past for guidance
Market Update
''       We believe past downturns may give an indication of what to look out for in the market in the near term. We thus looked at previous RHBRI Market Outlook & Strategy reports published during the global financial crisis, and pinpointed the changes to earnings forecasts and one-year forward PER.
 
Transport: Higher earnings risk on increased risk of a global recession                                Neutral
Sector Update
''       We are cutting FY12/11-13 earnings forecasts of MISC, ILB and Century by 4-42% to reflect the impact of the increased risk of the global economy sliding into a double-dip recession.
''       We are also downgrading our benchmark 1-year forward PER for the logistics sector from 10x to 6x largely to reflect further earnings risk and reduced appetite for small-cap companies, resulting in fair values of logistics companies being cut by 28-51%.
 
Insurance: Slowdown in gross premiums growth, rise in claims ratio expected in 2012       Neutral
Sector Update
''       Due to the global economic slowdown, we believe FY12-13 gross premium growth for the general insurance (GI) industry would likely be weaker than our earlier projections of 7-8%. We see downside risk to GDP growth ahead, and this would likely translate to weaker gross premium growth for the GI industry. We are thus revising our gross premium growth assumption for FY12-13 to 5-6% p.a..m
 
Corporate Highlights
 
Puncak Niaga: Lack of visibility - Ceasing coverage                         Market Perform (Cease Coverage)
Company Update
''       The takeover story of Puncak's water assets has dragged on far too long, mainly due to political and valuation issues.
''       Puncak's cash flow quality may be weaker than expected, so long as the SSG does not grant the 37% tariff hike and if the related compensation for the tariff delay is not forthcoming.
''       Puncak's receivables now stand at a staggering RM1.4bn as at Jun 2011 (as it continues to accrue for the "delayed compensation").
PUNCAK (6807)
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