Regional Plantation
Rising global stockpile

Malaysia’s end Jan14 palm oil stockpile fell by 3% m-o-m to 1.935m MT – slightly above expectations. Weaker exports (-4% m-o-m) offset 10% m-o-m lower output. Both are expected to fall further in Feb14. CPO price forecasts unchanged. We have  imputed c.880k MT y-o-y jump in combined biodiesel demand in Indonesia and Malaysia in FY14. We recommend TSH, BAL and WIL as our top BUY picks for volume leverage and improved margins.
 
Petronas Gas; Buy; RM23.10
Price target: RM28.60; PTG:MK
Stronger earnings, bigger dividend

FY13 earnings within our expectation but above market estimates. Expect minimal risk from GPTA renewal in Mar14. Key  catalysts: Award of Pengerang regas plant in 2Q14 and Petronas’s larger gas capex. Net cash with strong parentage; maintain BUY with RM28.60 TP.

Digi.Com; Buy; RM5.00
Price target: RM5.35; DIGI:MK
Not letting up its pace

Greater network coverage and quality boosts data traffic, translating to strong revenue gains. Ready to grow beyond strongholds.
Maintain BUY and RM5.35 TP.

Petronas Chemicals; Hold; RM6.75
Price target: RM6.15; PCHEM:MK
Hit by prolonged maintenance

4Q13 results missed expectations due to heavy maintenance activities and interruption in utilities supply. Relatively less turnaround maintenance activities in FY14 to boost performance. Declared 12 sen interim DPS. Maintain HOLD with RM6.15 TP.

Southern Steel Bhd; Hold; RM1.40
Price target: RM1.60 (Prev RM1.80); SSB:SP
Minor turnaround

Turned around in 2QFY14 but net profit of RM2.3m was unimpressive; 1HFY14 figures are below our expectation. Gross profit margin improved q-o-q on higher selling prices but we expect steel prices to be volatile. Trimmed FY14/15/16F net profits by 23%/6%/26%. Maintain HOLD with a lower RM1.60 TP.

Source: HwangDBS Research - 11 Feb 2014