AUTOMOTIVE (NEUTRAL) Sector News Flash: Tighter Lending NotTo Blame TIV plunged in Jan 2012 on slower business activities in a monthshortened by fewer working days due to the Lunar New Year holidays. While thetighter lending rules have dampened vehicle sales, we expect the impact to bequite manageable as banks and dealers adapt to the situation. Given that wehave no SELLs in our auto coverage, we upgrade our sector call from UNDERWEIGHTto NEUTRAL, with UMW as our top pick. We are still cautious on the macropicture though, as the demand upside would be marginal since the replacementcycle for new vehicles  - a potentialsales driver  - has peaked and upcomingmodels may not be exciting enough to spur TIV amid deteriorating consumersentiment.

Range bound trading. The FBM KLCI closed marginally lower at 1,579.00  pts last Friday, for a week-on-week loss of 4.78 pts, or 0.30%. Despite someforeign interest in the market, profit taking had offset  the earlier gains.  The key marketnews over the weekend  are  MAS and Qantas call off talks on new premiumairline, Datuk Ajit Ranjit Singh made new SC chairman, Cosway and Eng Kah setup a 70:30 JV to build a plant in China to manufacture personal care plushousehold products, Ho Wah denies Yunnan buying its mining operation, AirAsia Xmay face penalty if it ends flights to Christchurch, Perwaja extends deadlinefor RCULs application to 16 March and PFCE has asked for trading suspensionpending  an  acquisition announcement.  Last week, US stocks rose, capping the fourth straight weekly rally for the S&P500 Index, after a government report showed stronger-than-forecast payroll growth bolstered optimism in the world'slargest economy.  The default in Greecewas shrugged off as a non-incident. Therefore, we expect  the  local market to  trend higher given the  positive domestic  and external sentiments

Datuk Seri Shahrizat Abdul Jalil has announced that she willstep down as minister when her senatorship ends on 8 Apr. UMNO leaders,including its president Datuk Seri Najib Tun Razak, welcomed her decision,saying it was an appropriate thing to do. Wanita UMNO leaders lamented thatShahrizat's resignation was a big loss but were grateful that she was stilltheir chief. (The Star)

A total of 59 projects are expected to bring in RM139.3bn ininvestments by 2020 and create 68,000 job opportunities in Johor, said PrimeMinister Datuk Seri Najib Tun Razak. He noted that the projects, under  the Economic Transformation Programme (ETP),would not only change Iskandar Malaysia's landscape but also Pangerang in theSouth East and Mersing in the North East. The 27 entry point projects (EPP)would cover the education, tourism and the oil and gas sectors while the 32Quality Living Projects under the Johor Baru transformation plan would coversafety and security, improvements in living standards in the city and also its roadand transport systems. (The Star)Qantas plan in jeopardy as MAS talks fail ontrade terms Qantas Airways Ltd's plans to set up a full-service carrier in Asiato reverse losses on international routes have been set back after talks withMalaysian Airline System Bhd collapsed. The companies couldn't agree on commercialterms, the Sydney-based airline said in a statement last Friday. The companysaid it will examine other opportunities for a venture in Asia involvingminimal capital.  (Malaysian Reserve)Please see accompanying report

Eversendai Corp Bhd has another RM800m worth of jobs that ithas bid for in Malaysia, which includes some work for the new MRT line. Freshfrom its Tanjung Bin project win, group managing director Datuk AK Nathan saidof the RM12bn it has bid for, about 10% is for businesses in Malaysia while therest are mainly in the Middle East. He added that financing for its projectswould mainly be via banks. (BT)

Eng Kah Corp Bhd, one of the largest contract manufacturersfor personal care and household products in the country, is banking on a jointventure partner Cosway Corp Ltd's aggressive expansion in China to furtherboost its bottom line. The two companies, Cosway and Eng Kah, via a 70:30 jointventure  company, have set up a plant inChina to manufacture personal care and household products for Cosway's storesthere. (Financial Daily)

Volkswagen AG and DRB-Hicom are targeting at localizing 40%of the automotive components in the next 12 to 18 months, said Dr ChristofSpathelf, senior vice-president, group manufacturing overseas of Volkswagen AG.The Passat 1.8 TSI is the first of a few Volkwagen vehicles to be assembled at the DRB-Hicom Automotive Complexin Pekan and the group is currently investigating the potential export ofPassat to other countries of Asean. (Financial Daily)

Source: OSK188