EP  Manufacturing  (EPMB)'s  effort  to  seek  more  businesses  from  Perodua  has proven  to  be  the  correct  strategy,  as  it  offset  the  decline  in  revenue  from  Proton. Furthermore, EPMB's proposed  acquisition  of  the  MEX  highway  concession  from Maju Holdings has yet to be approved by the government. We are ceasing coverage on EPMB due to our internal resource allocation and the stock's thin trading volume coupled with  the  lack  of  interest  from  investors.    We  now  have  a  non-rated  call  on the stock. Our previous call was a trading buy with an FV of RM0.94.

Perodua  saves  the  day  as  Proton  sales  dwindle.  EPMB's strategy  to  seek  more businesses from Perodua has proven to be the correct strategy. The higher revenue from Perodua  offset  the  declining  revenue  from Proton due to the latter's low vehicle sales, which we foresee could likely persist into 2013  given the lack of key model launches that would spur buyer demand amidst intensifying competition.

Uncertainty  on  MEX  acquisition.  EPMB's proposed  acquisition  of  the  MEX  highway concession  from  Maju  Holdings  has  yet  to  be  approved  by  the  government.  Given  the political controversial nature of the transaction, it is likely that the Government would  only announce  its  approval  after  the  upcoming  General  Election,  followed  by  a  potential  toll hike. We understand that EPMB firmly intends to proceed with the acquisition.
 
Discontinue  coverage. We are ceasing coverage on EPMB due to our internal resource allocation and the stock's thin trading volume coupled with the lack investor interest given the  uncertainty  whether  its  MEX  (Maju  Expressway)  acquisition  will  be  approved  by  the Government. We now have a non-rated call on the stock. Our previous call was a  trading buy with an FV of RM0.94.

Source: OSK