DIGI (FV RM4.00'NEUTRAL) Company Update: Main Bites From CFOLuncheon We maintain our NEUTRAL rating on Digi following the luncheon with itsCFO. While Digi's execution track record speaks for itself, especially with thecommendable quarterly showing vis-''-vis its peers, the telco is showing signsof lethargy and could see greater earnings fallout from a re-energized Maxis.It also faces retained earnings constraints at the subsidiary level, whichprevents the payout of special dividends and is not able to capitalize on  the share premium account at the holdcolevel.  The meeting did not prompt us tochange our forecasts  and we havenot  incorporated any special payout forFY13. Our FV stays at RM4.00 (7.5x FY13 EV/EBITDA). TM and Axiata are thebetter picks for capital management upside surprises.   

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Blue chip bias. While decliners led advancers by 443 to 296and 367 counters closed unchanged, the FBM KLCI rose 3.67 pts to close at1,579.38 ' a reflection of investors' preference towards more defensive bluechip stocks. The key market news today include: EPMB takes over MajuExpressway, Zelan bags 25-year Gombak terminal concession,  Selangor Dredging bought three parcels of landfor RM34.5m in Selangor, RAM reaffirms YTL notes ratings and Astral Asia buysoffice space for RM21m. Meanwhile, Deleum proposes 1-for-2 bonus issue, HockLok Siew chairman and MD resigns, and Top Glove's 2Q net  profits more than double y-o-y. Another round of strong reports on  US jobless claims and manufacturing drove the S&P 500 up by 8.32 ptsovernight to 1,402.60, which is expected to boost market sentiment on the localbourse today.

EP Manufacturing (EPMB) is buying the 26km Maju Expressway(MEX) from Maju Holdings SB. The auto parts maker will pay RM1.7bn for thehighway concessionaire, according to sources. The RM1.7bn price tag includes debts.The MEX links the acquisition agreement today. The sale will enable Maju groupexecutive chairman Tan Sri Abu Sahid Mohamed to unlock his investment in thetoll concession. A source familiar with the deal said EPMB will finance theacquisition by issuing RM1.2bn in sukuk while the remaining amount will beraised through bank borrowings. (Financial Daily)

Zelan Bhd's 95%-owned Terminal Bersepadu Gombak SB (Tegas)yesterday entered into a public-private partnership agreement with the  government to construct the Gombak IntegratedTransport Terminal (GITT),  a deal thatcomes with a 25-year concession. Construction of the seven storey terminal, tobe integrated with the existing Gombak LRT station, will cost some RM307.37mand is expected to take 27 months. (Financial Daily)

Sunway REIT proposed issuance of up to RM1.6bn in commercialpapers has been approved by the Securities Commission Malaysia (SC). Accordingto statement yesterday, it said the commercial paper (CP) programmer has aseven-year tenure and funds raised would be used to repay existing borrowingsgranted by Public Bank. Funds raised would also go towards working capitalrequirement and defray expenses in relation to the exercise. (Financial Daily)

Silver Bird  Bhd,whose accounts are being probed for alleged irregularities, yesterday receiveda notice to terminate a distribution agreement from Maxis Mobile Services SB.The termination was for an agreement to distribute Maxis products sealed withSilver Bird's subsidiary Stanson Marketing SB. Silver Bird also distributes telecommunicationsprepaid cards besides its bakery products. (Financial Daily)

Selangor Dredging Bhd's wholly-owned SDB Properties SB hassigned an agreement wuth Superior Dignity SB to buy 3 parcels of leaseholdlands for RM34.5m. The land in Tempat Kampung Klang Gates Baru, Mukim Ulu Kelang,Gombak is part of the group's ongoing efforts to add suitable landbank, itsaid. The acquisition is expected to be completed by 2Q of FY ending 31 March2013.(StarBiz)

Deleum Bhd, a diverse range of specialized products andservices provider in the oil & gas industry, has proposed a 1-for-2 bonusissue of 50 million new shares of RM1 each. It said the proposed bonus issuewould be capitalized from its retained earnings. Deleum Group MD, Nan Yusrisaid the bonus issue would be a good reward for shareholders in addition toDeleum's second interim dividend payment of 9 sen per share, which was recentlydeclared in respect of its financial year ended 31 Dec. (Financial Daily)

Ooi Chieng Sim 42, has resigned as Hock Lock Siew Corp Bhd(HLS) chairman and MD on the advice of his family and personal doctor, casting yet another question mark on thefate of the company. 'His reason for the resignation is due to pressure andstress arising from the court case with Malayan Banking Bhd in relation to the corporateguarantee amounting to RM31.26m,' said a company statement to Bursa Malaysia.(Financial Daily)

Singapore's retail sales unexpectedly rose for an eleventhmonth in January as consumers spent more on food and increased purchases atsupermarkets. The retail sales index climbed 1.7% from a year earlier aftergaining a revised 4.3% in December, the statistics department said in astatement yesterday. Jobs growth and an expanding tourism industry have boostedsales at hotels, restaurants and department stores, even as Singapore's economyshrank last quarter for the second time in three quarters on easingmanufacturing. The Ministry of Manpower said yesterday the unemployment rateaveraged a 14-year low of 2% in 2011 and companies added more jobs thaninitially estimated last quarter. (Bloomberg)

Foreign direct investment in China fell for a fourthstraight month in February as companies reined in spending amid a slowdown inthe world's second-biggest economy and the prolonged European debt crisis.Investment declined 0.9% to USD7.73bn last month from a year earlier, theMinistry of Commerce said in a statement yesterday, following a 0.3% drop inJanuary. Overseas spending in the first two months decreased 0.6% to USD17.7bn.(Bloomberg)

India's central bank left interest rates unchanged for athird consecutive meeting after inflation accelerated and as it awaits steps tocurb the fiscal deficit in the budget today. The Reserve Bank of India kept therepurchase rate at 8.5  percent, it saidin a statement yesterday. The central bank has signaled rate cuts to counterthe weakest expansion in almost three years depend on a sustained easing ininflation and moves to curb the largest budget gap among BRIC economies.(Bloomberg)

Wholesale prices in the US climbed in February by the mostin five months, reflecting a jump in fuel costs that Federal Reserve officialsproject will be temporary. The producer price index  rose 0.4% following a 0.1%t increase theprior month, Labor Department figures showed yesterday. The core measureexcluding volatile food and energy rose 0.2%, less than in the prior month.Rising energy costs may make it more expensive to manufacture goods,restraining profits as companies find it difficult to pass the increases tocustomers. (Bloomberg)

Consumer confidence rose last week to the highest level infour years as job gains put more Americans in the mood to spend. The BloombergConsumer Comfort Index climbed to minus 33.7 in the period to 11 March, the strongestsince March 2008, from minus 36.7 the previous week. A buying-climate gaugereached the highest level since Nov 2007, and a measure of the state of the economy had its best showing sinceSept 2008. The bounce in sentiment coincides with gains in employment and apickup in incomes that are giving households the means to withstand rising fuelbills. A rally in stock prices  alsobodes well for consumer spending, which accounts for about 70% of the economy.(Bloomberg)

Claims for jobless benefits dropped last week to match afour-year low, and US consumer confidence rose to the highest since 2008,signaling an improving labor market may boost household spending. Applicationsfor unemployment insurance payments fell by 14,000 to 351,000 in the periodended 10 March, Labor Department figures showed yesterday. (Bloomberg)

Source: OSK188