2009年 20只备受瞩目的股项 : IJM Land Bhd 怡保置地

Shareholders, management known for nurturing assets

No matter how cheap they get, how well they are organised or how good their landbank is, property stocks are far from the path of recovery.

IJM Land Bhd, which was formerly known as RB Land Bhd, is no different. Despite having completed a rationalisation exercise in 2008 and emerging as one of the largest property developers in the country in terms of asset size, the stock has not captured the imagination of investors.

The value of properties under IJM Properties Sdn Bhd, which had some prime land particularly in Kuala Lumpur and Penang, alone was RM1.6 billion in August 2008. At current prices, IJM Land's market capitalisation is more than RM750 million, which is less than half the value of IJM Properties' landbank. Valuation-wise, IJM Land is trading at half its net asset value of RM1.33.

The company has shareholders and management who are known for nurturing assets, giving minorities little reason to complain. IJM Corp Bhd, the construction giant, holds close to 70% of IJM Land. Another shareholder is Peco Homebuilders (M) Sdn Bhd, a subsidiary of the Government of Singapore Investment Corp (GSIC) which has, under the rationalisation exercise, accepted IJM Land shares at RM2 each.

Even IJM Corp's entry cost into IJM Land is high. IJM Corp subscribed for the rights issue, which comes with warrants, at RM1.35 each. It sold some 60 million IJM Land warrants to its senior management at about 26 sen each. The exercise price for the conversion of the warrants is RM1.35.

At the time of writing, IJM Land was trading at 68 sen and the warrants at 19.5 sen — at a steep discount to the entry price of IJM Corp and GSIC into the company.
Considering that the major shareholders and senior management recently put their money in the stock at much higher prices than the market price, there is reason to believe there isn't much downside for the stock at prevailing prices.

In terms of landbank, IJM Land has some prime parcels that are being developed in Kuala Lumpur and Penang. It has a chunk of land in Seremban which came from a merger with RB Land and would probably see a slower take-up rate.

2009年 20只备受瞩目的股项 : IOI Corp Bhd IOI集团

Blue chip worth accumulating during CPO downcycle

Certainly, the big fall in crude palm oil (CPO) prices does not augur well for IOI Corp Bhd's earnings in FY2009 ending June 30 and maybe even FY2010.

This, however, does not mean the plantation giant is not worth looking at. More­over, this is not the first downcycle IOI Corp has experienced — during a previous down­cycle, the group had remained profitable even when CPO was trading below RM800 per tonne. CPO is now hovering between RM1,500 and RM1,600 a tonne.

No doubt, soft CPO prices have put the small oil palm planters in dire straits. But as one of the more efficient players in the industry — with low production costs — IOI Corp is capable of surviving the current downcycle.

Also, the group's extensive downstream activities will act as a hedge against poor earnings upstream. The weak CPO prices mean lower raw material costs for IOI Corp's speciality fat and oil production operations. Downstream activities are expected to be the key earnings driver for IOI Corp in the CPO downcycle.

The company's strong fundamentals have been overshadowed by current bearish sentiments. The group's foreign exchange (forex) losses are also a concern. IOI Corp announced a realised forex loss of RM100.6 million and unrealised forex loss of RM212.2 million in 2008. Some analysts anticipate more such losses due to the US dollar holding firm against the ringgit and euro.

These worries have depressed IOI Corp's share price, which fell more than 50% in 2008. The counter closed at RM3.58 on Dec 30, 2008.

The current share price may appear expensive amidst expectations of shrinking plantation earnings and the soft property market.

The group is unlikely to surpass its record high earnings per share of 38.65 sen posted in FY2008, but it will be the blue chip to accumulate should its share price weaken further. Being a leading player, IOI Corp's share price will be the first to surge when the next CPO upcycle comes, with investors willing to pay a premium for the stock.

2009年 20只备受瞩目的股项 : Nestlé 雀巢

Tight cost control stands company in good stead

Consumer products stalwart Nestlé (M) Bhd remains a company to watch this year due to the stable earnings growth it offers investors. With its established portfolio of brands, including long-time favourites Milo and Maggi, and its ability to pass on costs to consumers, the company's earnings are expected to remain resilient.

Going forward, Nestlé's export segment is another potential area of excitement for the company. In November 2008, the company opened a new RM75 million non-dairy creamer plant to cater for exports to countries like Indonesia, the Philippines, Turkey and Russia. Nestlé Malaysia is the biggest exporter among Nestlé operations in the region. As at end-September 2008, exports accounted for 22.9% of overall revenue for the group.

However, what makes Nestlé stand apart from its peers is its ability to keep a tight rein on costs, according to analysts. Good cost control becomes even more important in a market where consumer sentiment has hit rock bottom and raw material cost has soared.

In fact, it was Nestlé's ability to hedge raw material prices that helped the company achieve sterling results in 1H2008, according to reports. As at end-September 2008, the company was in a net cash position — net cash generation from operating activities increased year on year to RM370.8 million from RM247.7 million.
Bloomberg data shows target prices for Nestlé range from RM28 to RM29.50. The stock has been trading at around RM27 over the last three months.

For FY2007, Nestlé paid out its highest net dividend ever — 113.81 sen a share or 13.8% more than in FY2006. Historically, its average dividend yields have been about 5%.

For FY2008, Nestlé has already paid out a gross special dividend and interim dividend of 61.19 and 50 sen a share respectively. Analysts are expecting the company's dividend yields to average 6.5% for FY2009.

2009年 20只备受瞩目的股项 :Top Glove Corp Bhd 顶级手套

Margins to improve on lower raw material costs

Top Glove Corp Bhd's profit margin was affected by rising raw material prices and the weakening US dollar in the early part of 2008. Despite the challenges, the company managed to improve its full-year earnings before interest, tax, depreciation and amortisation (ebitda) margins from 13.5% to 13.8%.

Now with the prices of latex declining and the US dollar appreciating, the company will be experiencing a reversal of fortunes. Thus, its margins are expected to improve slightly, at least, in the next quarter.

The company will also benefit from the lag effect of passing on the benefits of
lower raw material prices to customers.

That said, even if the prices of raw materials rise, Top Glove, like other glove manufacturers, has the advantage of being able to pass on the extra cost to customers.

What makes Top Glove different from other manufacturers is that it enjoys economies of scale mainly due to its size. It is the world's largest rubber glove maker and controls about 25% of the global market. Moreover, its plan to grow organically via the setting up of more factories enables Top Glove to register consistent growth.

The glove manufacturer's share price has fallen some 46% year to date. It closed at RM3.58 on Dec 30, 2008. Top Glove also provides consistent returns to its shareholders. Its gross dividend per share rose to 11 sen in FY2008 from 10 sen the previous year.

In terms of valuation, Top Glove is more expensive than other glove manufacturers. According to Bloomberg on Dec 31, Top Glove is trading at a price-earnings multiple of 9.51 times while peers Supermax Corp Bhd and Kossan Rubber Industries Bhd are trading at is 3.38 and 6.58 times respectively.

But despite the higher valuation, analysts are optimistic about the stock. JP Morgan, which maintains an "overweight" on the stock, with a target price of RM5, expects demand for the company's gloves to remain relatively resilient despite the global economic slowdown. Top Glove supplies 80% of its gloves to the medical industry.

The research house believes that there are good growth opportunities and potential new markets, given that healthcare spending as a percentage of gross domestic product is still very low in China and India.

2009年 20只备受瞩目的股项 :Resorts World Bhd 名胜世界

Cash pile, fundamentals make resort operator a good bet

The large cash pile that Resorts World Bhd is sitting on is difficult to ignore. With RM4.6 billion in cash and cash equivalents, or 78 sen a share, the company is sitting pretty, especially at a time when cash is king.

Resorts' market capitalisation had been reduced to RM13 billion at year-end — a poor reflection of the group's strong fundamentals and huge cash pile. Debts are negligible, and it generates cash flow before working capital changes to the tune of more than RM1.2 billion annually.

As a result, many believe that the stock has been oversold. The consensus is Resorts, at its current low prices, may be worth a closer look. The stock, which was trading at RM4.02 in January 2008, came down some 44% to close at RM2.24 on Dec 30. The gaming operator's share price, like all other stocks, were affected by the global financial crisis. In November, it also hogged the limelight for the wrong reasons when it entered into a related-party transaction with its major shareholders.

Fifty-five per cent of analysts polled by Bloomberg have a "buy" call on the stock, while 31% have a "hold" and 14% a "sell". The consensus target price for the stock is RM3.

Resorts' net profit for 3QFY2008 ending Sept 30 fell 49% to RM340 million, from RM668 million a year earlier. However, it should be noted that its 3Q results in 2007 was boosted by one-off gains. Revenue for 3QFY2008 rose 9.8% to RM1.22 billion from RM1.11 billion, and for the nine months to September 2008, Resorts World registered a pre-tax profit of RM1.37 billion on a turnover of RM3.6 billion.

Resorts, like all the other gaming operators, was dealt a poor hand last year but the counter's current level coupled with the company's huge cash pile, steady operating cash flow and resilient business could prove a good bet for 2009.

2009年 20只备受瞩目的股项 :QL Resources Bhd 全利资源

Resilience reflects strength of business model

QL Resources Bhd is one of the more resilient counters despite the recent stock market meltdown. Year to date, the stock had shed only 9.1% as of its Dec 26 closing of RM2.28 despite a 39.6% decline in the Kuala Lumpur Composite Index (KLCI).

The stock hit a high of RM2.99 in June before the global financial crisis erupted. The resilience of QL's share price reflects the strength of its business model in the face of a downturn.

While overall consumer demand may be affected as the economy slows, the diversity in QL's operations in the food and agricultural sectors is likely to spare the group any major revenue contraction. Meanwhile, the full-fledged downstream and upstream operations within its business divisions put the group in a stronger position than its peers.

The group has divided its operations into three areas — marine products (fishmeal, surimi products and deep-sea fishing); crude palm oil (CPO) milling and plantation; and integrated livestock (poultry farming and feed meal distribution).

The marine product and integrated livestock divisions account for about 90% of the group's earnings, while CPO milling and plantations contribute the remaining 10%. Hence, the impact of low CPO prices on QL is minimal.
The group has enjoyed double-digit growth since it was listed in 2000, fuelled by organic expansion as well as acquisitions.

It posted a net profit of RM46.73 million for the six months ended Sept 30, 2008, on a turnover of RM756.11 million. Both net profit and turnover increased 29.5% and 21.6% respectively, compared to the previous corresponding period. For FY2008 ended March 31, group net profit grew 27.7% year on year to RM80.8 million, while turnover rose 16.4% to RM1.3 billion.

Besides strong earnings, the group's balance sheet remains healthy with net gearing maintained at 0.33 times. This, however, excludes letters of credit or trade financing for the feedmeal trading operations.

At its current share price, QL's market capitalisation stands at RM752.4 million. The group is now trading at an undemanding 7.76 times forward estimated earnings (8.22 times historical earnings), based on consensus earnings polled by Bloomberg.
In a recent report entitled The eating is not stopping, Aseambankers says QL remains its top pick in the small and medium capitalisation consumer sector, with a target price of RM3.90.

2009年 20只备受瞩目的股项 :Astro All Asia Network plc Astro公司

Dividend yield of 4% for those who wait

Start-up losses and provisions for ventures abroad have dragged Astro All Asia Network plc into the red for four straight quarters, clouding the fact that its Malaysian operations are still robust and generating healthy cash flow. It didn't help that its numbers for 3Q2008 ended Oct 31 came in way below street expectations, largely due to an unexpected RM264 million provision for Indonesia.

Astro may have to set aside another RM75 million in provisioning for its Indonesia operations in 4Q, but this is a non-cash item which does not affect cash flow.
While there is a chance that Astro may join hands with another Indonesian partner after having severed ties with Lippo Group, re-entry terms, if any, are likely to be better for Astro. Moreover, conditions are fluid in Indonesia, with 2009 being an election year.

In the absence of large provisions for Indonesia in 2009, Astro is likely to return to the black as a group, given that its portion of losses in India in 2009 is not expected to exceed profits in Malaysia. That could somewhat boost sentiment, although a stronger US dollar means content cost is going up.

Still, at its RM2.28 close on Dec 30, 2008, Astro was trading at only 56% of its initial public offering price of RM4.06. It was also trading at a 24% discount to an already conservative discounted cash flow valuation of RM3. It would only take RM3.4 billion for tycoon T Ananda Krishnan (who owns 42% of Astro) to privatise the company at RM3 apiece. But for this to happen, the maths would have to be worth his while.

For now, investors can expect to receive a steady stream of dividends as Astro goes through "growing pains" abroad. Its board had promised to distribute at least half the profits generated in Malaysia as dividends to shareholders. Dividend payout for FY2009 ending Jan 31 is expected to amount to RM193.2 million or 10 sen a share (with 2.5 sen per share tax exempt declared every quarter). For FY2008 ended Jan 31, Astro paid 10 sen a share. At current levels, dividend yield is in excess of 4% for investors who are willing to stick around for value to emerge.

2009年 20只备受瞩目的股项 :SapuraCrest Petroleum Bhd 沙布拉浪峰

Just the stock for those looking for capital appreciation

For the next two years or so, SapuraCrest Petroleum Bhd's earnings seem secure, largely buoyed by its hefty order book of some RM4.8 billion.

Some 81% of this order book, or RM3.9 billion, is in the drilling and installing pipelines and facilities (IPF) business, which enjoys high margins.

The impact of the IPF and drilling businesses can already be seen in SapureCrest's earnings. For the nine months ended September 2008, the company posted a net profit of RM89.4 million on the back of RM2.6 billion in revenue, which marks a gain of 99% and 52.9% respectively from the previous corresponding period.

SapuraCrest's IPF and drilling businesses picked up after it took delivery of the Sapura 3000 which it jointly owns with Acergy MS Ltd. The Sapura 3000 is a self-propelled heavy lift derrick pipe-laying vessel and was delivered in early February 2008. It was built at a cost of RM850 million, but has since considerably brightened SapuraCrest's prospects.

The company has also been touted to secure a RM3.5 billion (US$1 billion) contract for the provision of IPF works at the Gemusut oil well located off the shores of Sabah. The contract should commence once SapuraCrest's negotiations with the production sharing contract parties — Shell, Petronas Carigali and ConocoPhilips — are firmed up. This contract could expand the company's order book to above the RM8 billion mark.

Another vessel smaller than the Sapura 3000 is being built in collaboration with Indian company Larsen & Toubro Ltd, but this vessel will be dedicated to pipe-laying activities in shallow waters.

Interestingly, SapuraCrest has caught the attention of billionaire tycoon John Fredriksen who, via his vehicle Seadrill Ltd, has amassed about 24% in the company. In a buying spree that started in May 2007, Seadrill has mopped up some 288.4 million shares on the open market.

Lately, the controlling shareholders of SapuraCrest — Tan Sri Shamsuddin Abdul Kadir and his family — have been accumulating the company's stock possibly because of the weakness in its share price. Year to date, the company's shares have fallen 52%, and underperformed the benchmark Kuala Lumpur Composite Index by about 14%.

But for all the orders it has secured, SapuraCrest has a poor dividend payout record, which is why long-term investors are shying away from it. However, with Fredriksen upping his stake, the stock is likely to offer something for those looking for capital appreciation.

2009年 20只备受瞩目的股项 :Tanjong plc 丹绒

Well positioned to acquire more power plants

In good times and bad, Tanjong plc, the flagship company of T Ananda Krishnan is well known for its dividend play. This view has not changed despite the challenging economic environment.

In the last financial year, Tanjong paid out 90 sen gross dividend a share. For the current financial year, despite the tough operating environment, it declared 52.5 sen gross for the first three quarters.

Analysts are expecting gross dividends of about RM1.02 in FY2009 ending Jan 31 and RM1.12 in FY2010. That would translate to a gross dividend yield of 7.4% based on Tanjong's current price of RM13.50 — not bad for an independent power producer (IPP), considering that the sector as a whole did not fare well in 2008, following the introduction of a windfall tax in July.

Tanjong had to set aside RM55 million as payment for the windfall tax in FY2009 ending Jan 31. The government however withdrew the windfall tax. Although there is lingering concern that the government could force IPPs into agreeing to changes in the power purchase agreements (PPAs) in the coming years, Tanjong would probably be the least affected of the IPPs.

Given the uncertain regulatory environment and increasing scrutiny of the IPPs' licences, it is not surprising that Tanjong has continued to extend its reach outside Malaysia. It has power plants in Egypt and has acquired Globelaq Ltd, which has power plants in four countries, including Egypt. The Globelaq acquisition, which was completed in November 2007, has contributed to Tanjong's earnings growth of 22% in the current year of operations.

With an operating profit of RM750.3 million for the nine months to Oct 31, 2008, Tanjong has a strong enough cash flow to fund further acquisitions. It has cash and cash equivalents of RM1.2 billion for the first nine months; its short-term borrowings are RM750.3 million.

With asset prices in the power generation sector falling, Tanjong is well positioned to take advantage of the situation by acquiring more power plants. And considering its track record, rest assured that all acquisitions will be earnings accretive, which only means higher payouts. This is more than enough reason for investors to put their money in the stock.

2009年 20只备受瞩目的股项 :YTL Corp Bhd 杨忠礼机构

A safe haven for investors even in troubled times

YTL Corp Bhd's share price has performed relatively well despite the current economic turmoil, and since hitting a 52-week low of RM5.20 in mid-September 2008, the company's stock has bucked the general trend to gain about 30%.

The appeal in YTL Corp's stock lies in it having little downside, with the company's aggressive share buyback scheme propping up prices.

In 2008, YTL Corp acquired about 9.1 million of its own shares, which nudged its treasury shares up to 137.3 million. Although YTL Corp had a dividend yield of only 2.7% in FY2008, the prospects of the company handing out higher dividends are good in the longer run, considering its recent acquisitions.

Recently, its 53.3%-owned subsidiary YTL Power International proposed to purchase PowerSeraya Ltd, a Singapore-based power generator owned by the Singapore government's investment arm Temasek Holdings, for RM8.6 billion. The deal should be concluded by February 2009.

PowerSeraya could add on as much as RM76 million to YTL Power's bottom line from FY2010 ending June 30. This figure could also increase as PowerSeraya is building two 379mw combined cycle gas turbines that should be operational by 2010. This will increase its capacity by 24.4%. At present, more than 70% of YTL Corp's profits are from YTL Power. So, YTL Power's improved performance will be reflected in YTL Corp.

In addition to the growing operations of YTL Power, YTL Corp is sitting on fixed deposits of some RM12.5 billion and trade and other receivables of some RM2.2 billion. This is enough for it to continue to stay on its asset acquisition trail. The cash works out to some RM7.80 per share but this does not take into account the company's debts.

Another strength of the company is its management, headed by Tan Sri Francis Yeoh and the patriarch of the family Tan Sri Yeoh Tiong Lay. The duo have built the company over the years from a concern largely dependent on power generation into an asset-rich entity. Investors looking for a safe haven even in the worst of times can look to YTL Corp.

2009年 20只备受瞩目的股项 :Quill Capita Trust

Decent returns amid volatile market conditions

From a high of RM1.43 in March 2008, the unit price of Quill Capita Trust (Q-Capita) had tumbled to 90 sen as at Dec 26, not far off the price at which it had gone public in January 2007 — 84 sen.

Although the unit price has declined significantly, yield has increased on the back of rising dividend payments over the last two years.

Only 400 units of Q-Capita were transacted on Dec 26, and given such thin volume, it was traded at a wide bid-and-ask spread of between 81 and 90 sen. At this price range, the real estate investment trust (REIT) was trading at a forward gross dividend yield of between 9.3% and 8.4%. This translates to an attractive net dividend yield of 8.4% to 7.5%, after deducting a 10% withholding tax for individual investors.

The numbers were derived from management's dividend forecast of 7.53 sen per unit for FY2009 ending Dec 31. This is a 7.4% increase from FY2008's dividend of 7.01 sen per unit. The forecast was supposedly presented by management to Q-Capita investors in October 2008 when the US subprime mortgage woes worsened.

Notwithstanding the gloomy economic outlook, Q-Capita may deliver higher dividends in 2009, given its niche in purpose-built offices, which are tenanted by major multinational corporations.

Q-Capita owned 10 properties as of end-2008, of which four were acquired in 2008 alone with new lease contracts. The four properties, acquired for RM226.5 million, are purpose-built buildings tenanted by BMW, DHL, HSBC and Tesco. In the pipeline for 2009 is the acquisition of HSBC Malaysia's new headquarters in Kuala Lumpur.

Since its listing in early 2007, Q-Capita has grown its total and net assets to RM677 million and RM468.9 million respectively from RM524.2 million and RM413.6 million.

Its growth was underpinned by a strong shareholder in CapitaCommercial Trust — a unit of Singapore's government-linked CapitaLand Ltd, which owns a 30% stake in Q-Capita.

In a nutshell, Q-Capita should appeal to investors who are seeking decent dividend returns amid the current volatile market conditions, while anticipating certain capital gains from the REIT when the situation improves.

2009年 20只备受瞩目的股项 :PPB Group Bhd PPB集团

Better results from addition of Wilmar to stable

While diversified PPB Group Bhd has not been spared by the downtrend in crude palm oil (CPO) prices, it is still worth keeping an eye on as the company is expected to reap the benefits of having Asia's leading agribusiness group, Wilmar International Ltd, in its stable.

PPB — controlled by tycoon Robert Kuok — had already seen a boost in earnings following the incorporation of Wilmar's earnings, and does not discount the possibility of raising its stake in the Singapore-listed associate company.

Wilmar, which had fallen some 48.2% year to date to S$2.79 on Dec 31, 2008, gives PPB a good opportunity to increase its stake. PPB, which is favoured by investors for its sound management and consistent dividend payout, saw its share price decline 11.7% year to date to RM9.30 on Dec 31. It paid out a dividend of 30 sen a share in FY2007 versus 20 sen the previous year. For the nine months to Sept 30, 2008, the company has proposed a dividend of 67 sen a share.

PPB's 18.3% interest in Wilmar, which has a market capitalisation of about RM43 billion, is valued at about RM7.9 billion. After stripping the RM7.9 billion out of PPB's market capitalisation of RM11 billion, the rest of PPB's business, which includes its flour and sugar-processing operations, is only valued at RM3.1 billion.

Analysts are generally positive on Wilmar's earnings, which are expected to account for some 78% of PPB's net profit. In 3QFY2008, Wilmar's earnings were up 147% to US$483 million, mainly due to the higher sales volume and improved margins of its merchandising and processing business. It also generated some US$1.6 billion in operating cash flow.

Meanwhile, PPB posted a net profit of RM923.2 million for the nine months ended Sept 30, 2008, compared with RM6.9 billion a year earlier, while revenue rose to RM2.6 billion from RM2.2 billion. Note that earnings in 2007 were boosted by one-off gains from the disposal of assets to Wilmar under a corporate exercise.

PPB's cash flow rose to RM175.1 million as at Sept 30, 2008, from RM75.7 million a year ago.

Going forward, PPB expects its overall results in 2009 to better last year's performance due to higher contributions from Wilmar, despite the current global economic crisis that has created volatility and uncertainty in the business environment.

2009年 20只备受瞩目的股项 :Muhibbah Engineering (M) Bhd 睦兴旺工程

Earnings growing despite economic slowdown

As the outlook for the global economy turns grimmer, Muhibbah Engineering (M) Bhd stands out as one of the few engineering and construction companies that continue to see earnings growth.

The company managed to post net profit growth of 38.6% and 19.7% in 1QFY2008 and 2QFY2008 respectively. Although 3QFY2008's net profit fell 14.5% due to higher building material costs, its nine-month net profit was 12.9% higher at RM57.35 million. At end-September 2008, Muhibbah had cash of RM373.4 million, compared with RM144.6 million a year earlier. Total borrowings stood at RM204.7 million. This means the company is effectively in a net cash position.

In addition, its strong order book of RM4.74 billion as at Nov 21, 2008, is seen as an impetus to help sustain earnings growth in the next few years.

Of the total, RM3.08 billion comes from Muhibbah's infrastructure construction division, RM908 million from the shipyard division and RM751 million from the crane division. These orders will support the group's revenue growth until 2013.

As the market tumbled, Muhibbah's share price dropped by a substantial 76.4% to 99 sen on Dec 26, 2008, from its year high of RM4.20 on Jan 11, 2008. At 99 sen, and based on Bloomberg's consensus estimated earnings per share of 21.4 sen for FY2008 and 26.6 sen for FY2009, the stock is trading at attractive forward price-earnings of 4.63 and 3.72 times respectively. It should also be noted that the stock is trading below its net asset per share of RM1.13.

Considering its impressive order book and clean balance sheet, the company appears attractive at current price levels and is worth watching in 2009.

InsiderAsia says Muhibbah should be able to "continue enjoying good profits" in the next few years due to its huge order book, which is one of the largest among listed local construction companies.

"The company's various operating units are also faring well despite the slowdown. Except for the crane unit, all other divisions posted good double-digit growth figures for the first nine months of the year," InsiderAsia says in a research note.
While Muhibbah has seen its margins erode, InsiderAsia says it is not a significant drop as the company has put in place some mitigating measures, including hedging and stocking policies for raw materials.

In addition, Muhibbah's Cambodian airport concessions in Phnom Penh and Siem Reap, held under 30%-owned Societe Concessionaire des Aeroports, continue to provide steady income although growth recently declined from double digits to single.

2009年 20只备受瞩目的股项 :TM International Bhd 马电讯国际

A 50% discount to its regional peer

Those who picked up TM International Bhd (TMI) shares when they dipped to RM3.12 on Dec 5, 2008, would have made a 48 sen, or 15%, profit on paper in just three weeks, going by the stock's RM3.60 close on Dec 26.

Given the uncertainties in the market, it is hard to say if there is more upside for the stock. Nonetheless, at least one issue that has given investors cause for concern has been cleared — TMI has lost out to UAE-based Etisalat in its bid for Iran's third nationwide mobile network licence. Investors were worried that additional spending in Iran would add to TMI's near-term debt burden. (An official announcement was pending at press time but Etisalat's CFO, Salem Ali Al Sharhan, in a statement to the Abu Dhabi Securities Exchange on Dec 23, confirmed that its consortium with Tamin Telecom was "the highest bidder".)

As one of investors' main fears is TMI's highly leveraged position, clarity is needed on how the company plans to achieve what it calls "an optimal capital structure" through "equity and equity-like instruments". TMI says it will finalise this structure by 1Q2009.

Sentiment should improve if the structure does not greatly dilute investor holdings. Khazanah Nasional Bhd, which owns 45% of TMI, has said it will back the latter's funding needs. Khazanah is expected to underwrite a hybrid debt/equity issuance.
Concerns over currency fluctuations and TMI's exposure in emerging markets like Indonesia, Bangladesh, Sri Lanka and Cambodia will be reduced if the company's key units continue to deliver decent numbers.

Expectations are highest for Celcom, which generates over RM1.3 billion in free cash flow a year and contributed 45% of group revenue and 50% of group ebitda (earnings before interest, tax, depreciation and amortisation) for the year to September 2008. Indonesia contributed about 37% to 38%.

At RM3.60, TMI is trading at only 4.7 times EV/ebitda (enterprise value over ebitda) for 2009 — less than half the 9.67 times EV/ebitda that its peer, Singapore Telecommunications Ltd (SingTel), is trading at. While SingTel's assets in India and Indonesia are more sought-after and the company is offering 4.9% yields to shareholders, does TMI deserve to trade at a 50% discount to its peer? Ultimately, the decision to buy TMI depends on whether one thinks the risks associated with the stock have been fully priced in.

2009年 20只备受瞩目的股项 :KPJ Healthcare Bhd 柔佛医药保健

Less affected by turmoil because of nature of business

KPJ Healthcare Bhd is one of the stocks that should be able to sidle through the current global economic slowdown, given that healthcare services are deemed a necessity. Analysts, in general, are of the view that it should be less affected by the poor economic outlook.

KPJ reported net profit growth of 90.1%, 40.8% and 14.3% respectively for the first three quarters of FY2008, mainly due to higher patient admissions and contributions from newly acquired hospitals. On a cumulative basis, its net profit for the first nine months was 42.4% higher at RM63.19 million.

Some of the group's previously loss-making hospitals — Perdana Specialist Hospital in Kelantan, Kuching Specialist Hospital and Taiping Medical Centre — turned around or broke even in 2008.

KPJ is in expansion mode, targeting to acquire more specialist hospitals in 2009. It is able to continue expanding because of its asset-light position. Its hospitals have been or are being disposed of to Al-'Aqar KPJ REIT — a real estate investment trust in which it indirectly owns a 52% stake.

Selling hospital properties to the REIT and then leasing them back has enabled the company to realise its investment in the properties, raise cash to pare down debts and generate recurring income from consistent cash distribution from the REIT. With savings in interest and depreciation expenses, KPJ has been able to better utilise its capital for operational expansion.

Based on its closing price of RM2.55 on Dec 24, 2008, the stock was trading at a FY2008 and FY2009 price earnings ratio (PER) of 6.68 and 5.77 times respectively, according to Bloomberg's consensus data. KPJ's PER valuations are undemanding compared to its regional peers' FY2009 PER of 10 to 20 times, says OSK Research.

In terms of share price, KPJ was more resilient than the Kuala Lumpur Composite Index (KLCI) in 2008 as the stock fell only 26.3% for the year up to Dec 26 compared to KLCI's fall of 40%.

Despite its thin liquidity, KPJ is an excellent choice for long-term investment and portfolio balancing, with steady dividend payout, according to OSK Research. For FY2008, the company paid an interim gross dividend of seven sen a share on Sept 26.

2009年 20只备受瞩目的股项 :Malaysian Bulk Carriers Bhd (Maybulk) 大马散装货柜

Appeal lies in strong balance sheet

Malaysian Bulk Carriers Bhd (Maybulk) may not be on the shopping list of many analysts because the plunging prices on the Baltic Dry Index (BDI), which measures dry bulk shipping rates, will take a heavy toll on shipping companies.

Their concerns are not misplaced as dry bulk shipping rates have dived to a 22-year low, which in some ways is uncharted territory for many of the younger analysts. As the BDI dropped from its historical high of 11,793 in May 2008 to its current level of 770, the view taken by many was that the days of supernormal profits were gone.

Despite such pessimism, Maybulk has its appeal. It has a lot of cash and little borrowings on its balance sheet, which will help the company keep its head above the water in the current economic climate. Net cash per share is now at RM1.06, given the company's large cash pile of RM1.42 billion.
Of this, some RM802 million will be forked out for a 22% stake in PACC Offshore Services Holdings Pte Ltd (POSH), which it is buying from parent Pacific Carrier Ltd (PCL).

Considering the acquisition and lower earnings, OSK Research believes Maybulk could still afford to maintain a dividend yield of 9% (based on its share price of RM2.31) — a return that is substantially higher than a fixed deposit.

Furthermore, the 22% stake in POSH, a provider of offshore support vessel services for the oil and gas industry, could be a re-rating catalyst for Maybulk's share price in the future.

Some critics argue that the deal is pricey, but management defends the acquisition as being watertight, given that Maybulk has the option to sell back its POSH shares to PCL if the investment turns sour.

Instead of expanding capacity when the BDI was soaring, Maybulk, in the past two years, has been divesting itself of vessels at exceptionally high prices, which caused its cash reserves to swell. The investment in POSH enables it to indirectly expand its asset base as the latter is buying a fleet of vessels.

Management's foresight in building up a war chest augurs well for the company in the current downturn. Sceptics, however, are viewing the purchase of the stake in POSH suspiciously, which has caused its share price to fall. But at current prices and with good management, there is little downside for the stock.

2009年 20只备受瞩目的股项 :KLCC Property Holdings Bhd KLCC产业

Solid enough to weather the financial storm

The words "solid" and "dependable" are often used to describe the mundane KLCC Property Holdings Bhd. How­ever, given the current market turmoil, these two qualities have turned the property owner into a credible defensive stock.

Backed by a strong portfolio of buildings in prime locations with long lease agreements and reputable tenants, it is easy to see why analysts favour KLCC.
"KLCC's earnings from its property investment segment are locked in with lease agreements and predictable upward rent revisions for buildings such as the Petronas Twin Towers," says Citigroup.

While most are expecting growth to moderate in the near term as the global credit crunch tempers consumer spending, KLCC — with its significant exposure to the retail office segment — is expected to weather the storm better than most.
There could also be a few earnings surprises for the stock, going forward, which dropped 28% from the beginning of 2008. The stock was trading at RM2.74 on Dec 30, 2008.

KLCC has consistently declared gross dividends of 8 to 10 sen a share, giving it a yield of 2.9% to 3.6% — far greater returns than keeping your money in a fixed deposit account.

According to analysts, future earnings growth will come from the development of its last two lots of land, potentially higher rates from the renewal of lease agreements and capital value growth.

The development of the two lots, scheduled to start in 1H2009, is expected to add two million sq ft to KLCC's existing net lettable area of five million sq ft by 2014. The presence of Petronas as a major shareholder certainly adds to the stock's glitter, say analysts.

"Its (Petronas') strong patronage has allowed KLCC to benefit from cheaper sources of financing. In addition, Petronas, which owns KL Convention Centre, could take the lead role by injecting assets into KLCC in the future," says RHB Research, which values the company's stock at RM3.09.

Fundamentally, the company is strong with a low net gearing of 0.4 times and stable net operating cash flow of above RM400 million. With a total asset value of RM9.5 billion and the pedigree of its major shareholder, KLCC looks more than equipped to ride out the crisis.

2009年 20只备受瞩目的股项 :Hong Leong Bank Bhd 丰隆银行

Overseas ventures beginning to pay off

Although local banks have been relatively sheltered from the financial turmoil in the US, their operating environment is expected to be tough, going into 2009.
Hong Leong Bank Bhd (HLB), however, has the added boost of revenue from its China operations and improved asset quality. With the contribution of its associate in China, HLB managed to register a strong set of numbers for the quarter ended Sept 30, 2008.

Registering a year-on-year net profit growth of 29% to RM242 million in 1QFY2008 ended Sept 30, HLB saw improved performance with an additional RM28 million from its 20%-owned Bank of Chengdu Co Ltd. The better results were also due to high non-interest income due to foreign exchange gains. Its asset quality has also improved, with loan-loss coverage improving to 109% and net non-performing loans ratio coming down to 1.8%.

Nevertheless, HLB's stock price does not reflect the bank's steady performance. From its 52-week high of RM6.45 in January 2007, the stock had dipped to its 52-week low of RM4.94 on Dec 17, 2008. Some 57% of analysts polled by Bloomberg have a "buy" call on the stock, which is trading at a price-to-book ratio of 1.4 times, and a consensus target price of RM5.80.

With the purchase of the Chinese bank now completed, HLB's entry into China is believed to be the catalyst for the banking group moving forward. Its FY2009 ending June 30 will see full contribution from its Chinese associate.

HLB is also entering the Vietnam market. The bank recently received approval from the Vietnamese government to open a 100% foreign-owned bank in the country. HLB will establish Hong Leong Vietnam with a capital base of one trillion dong, or nearly US$60 million (RM208 million).

HLB is steadily venturing abroad to diversify its risks and tap growing opportunities overseas for the longer term, and is already starting to see the fruits of its labours.

Thus, at its current low level, the stock makes an attractive pick for the long-term investor.

2009年 20只备受瞩目的股项: BINTULU PORT 民都鲁港

Staying afloat in turbulent times

With average dividend yields of more than 10% over the past few years, and a business model that is only likely to be marginally impacted by the economic downturn, Bintulu Port Holdings Bhd easily qualifies as an investor favourite in turbulent times.

With its mainstay in the handling of liquefied natural gas (LNG), Bintulu Port's earnings are likely to remain resilient and largely unaffected by the weak global economic climate.

In 2007, LNG cargoes amounted to about 78% of operating revenue and accounted for about 59% of cargo throughput.

Thus, while the economic downturn might impact Bintulu Port's container and bulk operations, the LNG operations are unlikely to feel the crunch.

With Petroliam Nasional Bhd (Petronas) controlling some 32.8% of Bintulu Port's equity and an additional 2.6% parked under its shipping unit MISC Bhd, there is unlikely to be any drastic change in the current scenario.

Malaysia LNG Sdn Bhd (MLNG), the LNG manufacturer located at Bintulu Port, has long-term contracts to supply gas to Japan, South Korea and Taiwan, among others, which will ensure that Bintulu Port gets a steady stream of ship calls.

It is also likely that MLNG, a unit of Petronas, will step up its LNG production capacity, which in turn will translate to more revenue for Bintulu Port.
For the nine months ended Sept 30, 2008, Bintulu Port posted a net profit of RM117 million on the back of RM333.3 million in revenue. In contrast to a year ago, net profit improved by 3.3% while revenue inched up 7.4%.

It is also noteworthy that with Bintulu Port's cash hoard of RM494.3 million and trade receivables of about RM30.3 million as at end-September 2008, a capital repayment or special dividend payment cannot be ruled out.

With these possibilities, it is not surprising that Bintulu Port's stock has performed quite well amidst the financial turmoil. Year to date, the company's shares have fallen only 7% and outperformed the benchmark Kuala Lumpur Composite Index by about 35%.

2009年 20只备受瞩目的股项 ：IJM CORPORATION 怡保工程

Trading at a steep discount to net asset value

Malaysia's biggest construction outfit, IJM Corp Bhd, lost 66.4% in market capitalisation year to date and is now trading at less than half its net asset value (NAV) of RM5.60 per share.

The discount is more significant if the market value of its two listed subsidiaries is taken into account. IJM's 76.54% stake in IJM Land Bhd and 54.31% stake in IJM Plantations Bhd are together worth RM1.27 billion, making up half of IJM's market capitalisation.

Hence at current market capitalisation of RM2.54 billion (based on IJM's share price of RM2.71), the value of its construction operations and other businesses is only RM1.27 billion.

While IJM's shares look cheap from the asset value point of view, some analysts are concerned about its future earnings performance.

For instance, sales of properties at IJM Land are expected to be slow in 2009, while IJM Plantations has already been hit by low crude palm oil (CPO) prices. The margin of the group's core construction activities, even with RM4.6 billion worth of outstanding jobs, is another concern, especially with regard to IJM's projects in India that make up about 40% of its order book.

Nevertheless, as raw material prices have recently declined and with the government pump-priming the domestic economy with infrastructure projects in 2009, the floor could have been set for IJM. A rebound in CPO prices could also benefit IJM Plantations and hence its parent IJM.

Based on these premises, five out of seven analysts polled by Bloomberg who updated their calls on IJM in December 2008 actually recommended a "buy", "trading buy" or "outperform" on the stock, with target prices of RM3 to RM6.10. In a nutshell, IJM has a strong management track record and a solid balance sheet to ride out the current cyclical downturn. The stock's current price weakness makes it an attractive pick if one is taking a two to three-year investment horizon.