20050915 by Hwang DBS Research

> Highlights
>
>
>
> Budget 2006 - Diluting the "oil" impact
>
>
>
> We expect the upcoming 2006 Budget announcement (on Sept 30) to be
> slightly contractionary and market-neutral. Fiscal consolidation will
> remain the main thrust. Just like last year, we expect this Budget to be a
> "people's" budget, focusing on mitigating the impact of runaway fuel
> costs, energy conservation, and encouraging the use of oil substitutes.
> The Budget is expected to reduce the financial burden of lower income
> groups (perhaps through lower direct and indirect taxes), but also, allow
> a moderate fuel subsidy cut possibly towards year-end and raise excise
> duties on tobacco products. Positively, more financial resources would be
> channelled to the construction sector, and the development of biotech and
> biofuel. Maintaining our 930-940 YE KLCI target and our largely defensive
> Buys comprising B-Toto, Tenaga, Public Bank, IJM and Digi.
>
>
>
> Comments
>
>
>
> RIB - To launch travel phone soon - Maintain Buy
>
>
>
> The Business Times reported that RIB is expected to launch its travel
> phone product this year. However, no figures were available at the moment.
>
>
>
>
> We view this positively as it would generate more business for the group.
> To give investors an idea of how it works, a traveler would pick up the
> travel phone from RIB's counter at an airport after putting down a deposit
> and divert all calls from this handphone to RIB. RIB would then connect
> the call to the destination country of the traveler and patch the call to
> the travel phone. Travelers would be charged a daily rental as well as
> airtime, and could save on roaming charges by up to 80% using RIB's travel
> phones.
>
>
>
> We maintain our forecasts and Buy call on REDtone with a price target of
> RM3.00, which is based on 18x FY2/06 earnings.
>
>
>
> Banking - Khazanah may issue US$500m to US$1bn worth of Islamic bonds -
> Maintain Overweight
>
>
>
> The Business Times reported sources saying that Khazanah is planning to
> issue the world's first Islamic convertible bonds in the range of
> US$500m-US$1bn. It is not clear from the article whether the bonds would
> be convertible into a single stock or a basket of stocks. Sources familiar
> with the planned issue said that stocks being considered include Plus
> (PLUS MK), MAS (MAS MK), Maxis (MAXIS MK), Tenaga (TNB MK) and Telekom (T
> MK).
>
> We view this positively as it would release more liquidity into the
> market. Back in 2003, Khazanah had issued packages of call warrants (that
> are convertible into Malaysian equities) with the aim of raising funds for
> investments. The latest news article said that Khazanah plans to use the
> funds for overseas investments