21 November 2008 Newz Bits

December 1, 2008 at 2:18 am Leave a comment

TALKING POINT

Initiating coverage on SP Setia
We initiate coverage on SP Setia with a HOLD call and target price of RM2.62 (25% discount to RNAV of RM3.50). SP Setia is currently trading at P/E of 12.2x based on FY2009 earnings which is almost at parity to its 15-year historical P/E of 12.8x as well as our expected market P/E of 12.5x for FY2009. Although there is
limited upside for now, SP Setia remains the best proxy to Malaysia property sector and we suggest accumulation on price weaknesses.

HIGHLIGHTS

On Malaysia
• Datuk Seri Idris Jala will stay as the boss of Malaysia Airlines for another 3 years
• New car sales in October falls 13% y-o-y

On The Global Front
• U.S. leading economic indicators fall in October
• U.K. retail sales fall less than economists forecast in October

REPORTS
• SP Setia – Initiating Coverage – For the long term, but not now (Hold; RM2.56; TP:RM2.62)
• Puncak Niaga Holdings – 3QFY08 Results (Buy; RM2.30; TP:RM3.30)
• YTL Corporation – 1QFY09 Results (Buy; RM6.35; TP:RM8.00)
• YTL Power International – 1QFY09 Results (Buy; RM1.72; TP:RM2.93)
• YTL Cement – 1QFY09 Results (Buy; RM2.16; TP:RM4.50)

Datuk Seri Idris Jala will stay as the boss of Malaysia Airlines (MAS MK, Buy, TP: RM5.40) for another three years, helping the airline to steer through an industry battered by volatile fuel prices, a slowing global economy and stiff rivalry. His contract as managing director has been extended for three years from December 1 2008 to November 30 2011, MAS said in a statement. (BT)
* * * * *
Foreign funds holding KNM Group Bhd shares have continued their selling spree. Boston-based FMR LLC and
Bermuda-incorporated FIL Ltd remained net sellers in the past three weeks, disposing of more than 100 million shares and reducing their stakes in KNM to 6% from 9.1% previously. (Starbiz)
* * * * *
MISC Bhd’s net profit eased to RM483.86m for the second quarter ended September 30 this year from RM654.98m in the same period in 2007. This was mainly due to losses in liner, higher operational costs and a lower share of profit from jointly controlled entities, MISC told Bursa Malaysia yesterday. Group revenue, however, was 40.3% higher to RM4.45bn from RM3.17bn previously. In light of the current business environment, MISC expects lower profit for the full year. An interim dividend of 15 sen per share was declared. (BT)
* * * * *
New car sales in October fell 13% over the same month last year and this is likely to continue for the rest of the year as consumers cut back on spending. Sales were 26% lower compared with September. The Malaysian Automotive Association (MAA) said the sluggish performance was due to low consumer confidence caused by the current global financial crisis. Total sales volume for passenger and commercial vehicles in October shrunk to 37,512 units compared with 42,915 units in the same month last year, MAA said in its monthly sales and production release for October. (BT)
* * * * *
Motorists may get another cut in pump prices as crude oil continue to slide while the cash rebate for vehicle owners following June’s steep petrol hike will continue to March 2009. “I will suggest a further reduction before the National economic Action Council meets on Dec 1 to decide whether to carry on with the managed float or have floor pricing for fuel prices, Domestic Trade and Consumer Affairs Minister Datuk Sharir Abdul Samad said. He said the pump petrol price for RON97 at RM2 per litre was higher than the current market price of about RM1.55 per litre (with crude oil at US$52.85 or RM190.26 per barrel). (Financial Daily)
* * * * *
Wall Street slumped Thursday, the Dow Jones Industrial Average tumbled 445 points, or 5.6%. The Standard & Poor’s 500 index lost 6.7% and closed at its lowest point sine April 14, 1997. Stocks slipped through the early afternoon following miserable readings on the labor market and manufacturing sector. The major gauges briefly bounced after hitting fresh 5-1/2 year lows. But the recovery attempt dissolved as Congress haggled over the fate of the automakers and Citigroup led the bank stocks sharply lower. (CNN Money)
* * * * *
The U.S. Department of Labor reported Thursday that initial filings for state jobless benefits increased by 27,000 to 542,000 for the week ended Nov. 15. This marks the third time since 1992 that initial claims have exceeded 500,000. The Senate on Thursday voted to approve a measure, passed by the House earlier this year, that extends benefits to the unemployed. The bill allows for a seven-week extension in every state and would provide an additional 13 weeks in states with an unemployment rate of 6% or greater. The number of people continuing to collect benefits for one week or more neared a 26-year high. The number surged by 109,000 to 4m people for the week ended Nov. 8, the most recent data available. (CNN Money)
* * * * *
The index of leading U.S. economic indicators fell in October for the third time in four months as stocks and consumer confidence plunged, signaling a deepening recession. The Conference Board’s gauge dropped 0.8%, more than forecast, after rising 0.1% in September. Consumers and companies are cutting back as financial markets remain fragile, job losses mount and housing and manufacturing sink deeper into a slump. (Bloomberg)
* * * * *
U.K. retail sales fell less than economists forecast in October as shoppers bought more food items, offsetting lower spending on electrical goods and clothing. Sales fell 0.1% in October after dropping 0.5% in September, the Office for National Statistics said. The decline was less than the 0.9% median forecast in a Bloomberg News survey of 27 economists. Household goods stores led the monthly drop and fell 5.4% from a year earlier, the most since 1992, as shoppers bought fewer electrical items. Food sales rose 1%, helping to offset the overall decline. (CNN Money)
* * * * *
The French government and a state-owned lender will raise 6bn euros ($7.6 bn) to create a sovereign fund aimed at protecting and developing the country’s “strategic companies”. The creation of the fund is aimed at implementing French President Sarkozy’s plan, announced last month, of protecting strategic French companies from “foreign predators” and helping them survive the global financial crisis. The turmoil has wiped out about 45% of the value of the benchmark CAC 40 index, choked bank lending and left businesses struggling to find financing. (Bloomberg)
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November 20, 2008 Daily Highlights SP Setia : INITIATING COVERAGE – For the long term but not now

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