Time to Go Global

'''' We concluded our recent meeting with the management with positive impressions on (i) the merger and (ii) BAU.

'''' Although delayed (due to regulatory process), the acquisitions of GTL, GTC and AIMS Group are expected to complete latest by January 2012 upon High Court approval.

'''' TdC also shared that all 3 companies are doing well; GTL has successfully sold 19 IRUs (indefeasible right of use) with 5 more on standby and has turned into profitable state; AIMS has 90% utilization as at end of 2010 and is currently expanding another 2 floors.

'''' We are of the opinion that TdC share price is currently undervalued. Based on our estimation, TdC's cash and DiGi holdings would already account for RM0.40 per share (based on DiGi's closing price of RM29.98 on 3 October 2011), leaving RM0.05 per share for the remaining assets.

'''' Maintain our Buy call with a lowered SOP target price of RM0.81 from RM0.97 due to lower DiGi share price and higher CAPEX assumption.

''

SP Setia (HOLD)

Acquires land in Semenyih

'''' SP Setia to acquire 673.27 acres of freehold land in Semenyih for RM381m, or RM13.00 psf.''

'''' The land is located 8km from SP Setia's Beranang land and 15 minutes from the proposed Bandar Kajang MRT Station.

'''' The mixed township with RM4.0bn of GDVis slated for launch in end 2012, implying modest earnings impact in FY13 but precise quantum is uncertain at this juncture.

'''' SP Setia now has''~1700 acres of land near the future Kajang MRT station with potential GDV of RM7.5bn.

'''' Although RM13.00 psf is nearly double what they paid for Beranang (RM7.50 psf).'' We believe this is still acceptable as land cost constitutes less than 10% of potential GDV and it is nearer to the Kajang MRT.''

'''' No change to our earnings forecast but lowered price target to RM3.90 (offer price) and rating on the stock to Hold.

''

FBM KLCI: Fear of Contagion Overwhelmed Positive Economic Data

'''' Despite positive economic data from the US and a rise in China non-manufacturing PMI, the overnight plunge in Dow (during the second half session) indicate that investors are overwhelmed by fear of the contagion effect from the Euro debt crisis.'' Given that the latter is expected to drag on and would take time to resolve, sentiment is likely to remain weak.

'''' Immediate resistance levels are the 1376 (5-d SMA), 1400, 1414 (mid Bollinger band) and 1434 (30-d SMA). Supports are situated at 1336 (lower Bollinger band), 1310 (26 Sep pivot low) and the psychological 1300 level.

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Dow: Testing Year Low?

'''' Technically, while it is still moving sideways within a box (or sideways channel), investors fear of contagion effect is likely to see the Dow testing its year low of 10597.''

'''' Immediate resistance levels are the psychological 11k and 11,130 (mid Bollinger band) while support levels are at'' year low of 10597, 10429 (38.2% FR ' from low in Mar 09 to high in May 11) and 10390 (74.6% FR ' from low in Jul 10 to high in May 11).