Market Focus
Addressing public finances

Upcoming measures to reduce debt and fiscal deficit and improve current account position. Reprioritisation of Government projects could result in potential delays for oil & gas projects. Possible near-term headwinds for the property sector. Tenaga will benefit if a cost pass-through mechanism is introduced.
 
Hong Leong Bank; Buy; RM13.70
Price Target: RM18.00; HLBK MK
Stronger non-interest income

4Q/FY13 earnings in line; stronger non-interest income. Declared final DPS of 30sen (less 25% tax), taking FY13 DPS to 45sen (34% payout); above expectation. Maintain BUY and RM18 TP.

Hong Leong Financial Group; Buy; RM14.12
Price Target RM18.80; HLFG MK
Riding on HLB

4Q/FY13 net profit beat our expectations, lifted by investment gains and dividend income. Riding on HLB’s growth (92% of profits from HLB). Maintain BUY and RM18.80 TP based on SOP-metric.
 
DRB-HICOM; Buy; RM2.60
Price Target RM3.50 (Prev RM3.60); DRB MK
A subdued quarter

1QFY14 earnings missed our estimate due to higher tax rate and weaker property earnings. Launch of new Proton models should help to lift TIV. Cut FY14-16F earnings by 9-18% after adjusting for weaker property contribution and higher tax rate. BUY, nudged down TP to RM3.50.
 
Sunway Bhd; Buy; RM2.75
Price Target RM3.50; SWB MK
Attractive entry point

2Q13 earnings beat expectations. Record orderbook and strong unbilled sales. Next catalyst is launch of Medini, Iskandar. Upgrade to BUY, nudged up TP to RM3.50.
 
Felda Global Ventures; Hold; RM4.32
Price Target RM4.30 (Prev RM4.40); FGV MK
Lacks rerating catalysts

2Q13 profit missed our and market expectations. Cut FY13-15F core profit by 26%/10%/6% after adjusting for higher costs. Muted growth from unfavourable tree age profile and depressed CPO prices. Maintain HOLD with RM4.30 TP.

Genting Berhad; Hold; RM9.18
Price Target RM9.40 (Prev RM10.90); GENT MK
Christmas Came Early

Results in line, catalysts more long-term in nature. Special net DPS of 37.5sen declared - better to take cash than reinvest in warrants. Maintain HOLD, revised SOP-based TP to RM9.40.

Genting Malaysia; Hold; RM4.04
Price Target RM4.05; GENM MK
Potential Headwind Ahead

Core earnings in line. Catalysts more longer term, rising risk of gaming tax hike. Maintain HOLD, and SOPbased TP of RM4.05.
 
UEM Sunrise; Hold; RM2.44
Price Target RM2.50 (Prev RM3.35); UEMS MK
Slower progress

2Q13 results missed expectations. Potential headwinds from tightening measures for property in Budget 2014. Maintain HOLD with revised RM2.50 TP.

Telekom Malaysia; Fully Valued; RM5.26
Price Target RM4.80; T MK
Strong quarter but competition looms

1H13 core net profit was in line; effective tax rate to rise following expiry of tax incentive in Sep13. Declared 9.8sen DPS, or 82% payout of 1H13 profits. Competition and cost pressures may pressure nearterm earnings. Maintain FULLY VALUED with RM4.80 TP.

Source: HwangDBS Research - 30 Aug 2013