MSM registered 1QFY12 earnings of RM66.6m (-24.8% y-o-y), in line with both our and consensus estimates. The newly signed LTC contract price led to significant raw sugar cost increases, thus dampening earnings on a y-o-y basis. Historical 1Q earnings have, however, represented more than 30% of full-year earnings given the higher utilization of LTC sugar during the quarter. Quarterly earnings should be more evenly distributed in 2012 given the proximity between the new LTC and market prices. Maintain NEUTRAL with FV of RM4.96.

Jitters in Europe.The FBM KLCI retreated 6.17pts yesterday to 1548.87 following the weak US jobs data released and the fallout from the public discontent that resulted in the change in  government for France. Among the notable headlines are: AA Anthony is said to be in a management buy-out deal with its parent ' MPHB, Bumi Armada inked a USD65m contract to provide a workboat to a Mexican oil and services provider and Keretapi Tanah Melayu (KTM)'s takeover by MMC is on track with the due diligence exercise to be completed in July. With protracted concerns over external developments and the unsettling changes within the political  arenas in France and Greece as votes were cast  against pro-austerity candidates, we would expect Asian markets to languish further in the interim.

Bumi Armada subsidiary, Bumi Armada Navigation SB, has been awarded a  contract valued at USD65m or RM198.9m. The contract is for the provision of an accommodation workboat from Mexican oil and gas services company Tecnologias Relacionadas con Energia y Servicios Especializados, S.A. de C.V. The contract is for a period of five years with an extension option of an additional five years. The vessel, which will be provisioned by Bumi Armada, will provide accommodation and offshore support services in Mexican territorial waters.  (StarBiz) Please see accompanying report

Perusahaan Otomobil Kedua SB (Perodua) will be investing between RM1.2bn and RM1.5bn over the next three years as it gears up for the imminent liberalisation of the local automotive industry. Perodua managing director Datuk Aminar Rashid Salleh said the investment would be to upgrade its production line and equipment, improvement to its sales and service outlets nationwide as well as for research  and development for new models.'The reality is that liberalisation will happen sooner or later. It's just a matter of time and we need to transform,' he told StarBiz yesterday, adding that Perodua had also submitted its five-year roadmap (outlining its growth strategy for that duration) to the Government. (StarBiz)

MMC Corp is optimistic regarding the proposed listing of its subsidiary, Gas Malaysia, this year due to encouraging demand for Malaysian stocks and ample liquidity in the local market. "Based on the feedback from Miti (Ministry of International Trade and Industry), Gas Malaysia stocks are oversubscribed," said MMC group managing director Datuk Haji Hasni Harun recently. He said Malaysian stocks were currently on foreign investors' radar, although they were not that aggressive in buying the shares as they needed certainty on the impending 13th general election before making investment decisions. (BT)

MMC Corp expects to complete due diligence on Keretapi Tanah Melayu Bhd (KTMB) by between July and August this year, its group managing director Datuk Haji Hasni Harun said. The due diligence is for MMC to participate in the proposed privatisation of the national rail company. 'We have appointed consultants. We are at 30% of the (due diligence) exercise now. There are still 70% to complete before we can forward our privatisation proposal to the government,' Hasni told Business Times. KTMB is currently incurring losses averaging RM200m a year and Hasni said MMC's proposal will be aimed primarily at turning around the rail company. The company, together with Gamuda Bhd, was eyeing to privatise KTMB and take over its assets in 2003. (BT)

AA Anthony SB's management Datuk Lim Tiong Chin is negotiating a management buyout (MBO) for the Penang-based stockbroker with its parent Multi-Purpose Holdings (MPHB), financial executives involved in the corporate plan said. The proposed MBO, which is expected to be finalized by mid-June, is part of MPHB's rationalization to focus its business on gaming. Also, Lim who bought the stockbroking company in 1990, has been keen to bring the company back into his family holdings, the financial executives said. Pricing remains sketchy, but several analysts who track MPHB estimated AA Anthony to be worth around RM170m in terms of shareholders' funds. (Financial Daily)

Indonesia posted its slowest growth in six quarters in 1Q12, as exports fell due to weaker global demand. The central bank might have to hold its policy rate steady for the whole year to spur the domestic economy. Government data yesterday showed 1Q growth was 6.3% from a year ago, as expected, and still among the highest in the region, but exporters expect a shrinkage this year due to the weak recovery in the US and the ongoing debt problems in the Eurozone. (Bloomberg)

India will curtail its imports of Iranian oil by 20%, officials said, as US Secretary of State Hillary Clinton held talks in New Delhi to enlist India's help with sanctions aimed at pressuring Iran over its nuclear program. Asia's thirdbiggest oil importer will cut purchases of crude from Iran to 14m tonnes from 17.5 m tonnes in the 12 months ending 31 March, according to two Indian diplomats and two refinery officials who asked not to be identified because they weren't authorized to speak publicly. The officials said Iranian crude would account for 7% of India's imports in fiscal year 2013, down from 10% currently. (Bloomberg)

South Korean producer-price inflation cooled to the slowest pace in 26 months on a decline in meat and fish costs, according to a report released two days before a monetary-policy meeting. Prices climbed 2.4% in April from a year earlier, the smallest gain since February 2010, after a 2.8% increase in March, the Bank of Korea said in a statement in Seoul yesterday. Prices fell 0.1% from March. Consumer prices rose 2.5% in April from a year earlier, the slowest pace in 21 months, a government report showed on 1 May. (Bloomberg)

Europe and the International Monetary Fund pledged to resume checks on Greece's eligibility for more aid disbursements when a new Greek government emerges  after voters split over the rescue conditions. The European Commission in Brussels said it 'hopes and expects' Greece will fulfill the budget-austerity requirements for a loan payment due in June following the 6 May election. The Washington-based IMF said 'we look forward to being in contact with the new Greek government once it has been formed.' (Bloomberg)

German factory orders rose more than economists forecast in March as demand from outside the euro area helped Europe's largest economy weather the debt crisis. Factory orders, adjusted for seasonal swings and inflation, jumped 2.2% from February, when they gained a revised 0.6%, the Economy Ministry in Berlin said today. Economists surveyed by Bloomberg News predicted a 0.5% increase, according to the median of 37 estimates. From a year ago, orders dropped 1.3% when adjusted for work days. (Bloomberg)

German Chancellor Angela Merkel rejected government stimulus as the way to spur economic growth in Europe, setting up a clash with French President-elect Francois Hollande before he's even taken office. In her first response to Hollande's victory in yesterday's French election, Merkel rejected a return to the 'huge' stimulus programs following the financial crisis in favor of business-friendly economic changes. She and Hollande will talk 'very openly' about the form of growth to pursue, a discussion now taking place across Europe and 'to which the new French president will bring his own accents.' (Bloomberg)

The European Central Bank's financing to Portuguese lenders fell in April from the previous month, the Bank of Portugal said. ECB financing decreased to EUR55.4bn (USD72.2bn) from a record EUR56.3bn in March, the Lisbon- based Bank of Portugal said today on the BPStat portion of its website. Financing reached a record in March after the Frankfurt- based ECB awarded EUR529.5bn to 800 financial institutions at the end of February. The central bank's second round of three-year loans was designed to avert credit paralysis and ease concern that Europe's banks would run out of cash or curb lending as the debt crisis drove up borrowing costs.

Source: OSK188