20050929 Hwang DBS Daily Focus
Highlights
>
> Tanjong plc - Weaker 2H expected - Maintain Hold
>
> Tanjong's 2QFY06 NI (+20.7% y-o-y to RM117.7m) was better than expected,
> boosted by an estimated RM15m exceptional item (mainly from the property
> division which gained c.RM10m from back-dated rental billings). However,
> we estimate that core NI rose by just 2.7% as a strong performance at the
> NFO division was mostly offset by a shortfall at Tropical Island (TI).
> Looking forward, there could be some downside to our FY06 forecast
> (unchanged) in anticipation of much weaker 2H results, factoring in a
> scheduled rise in maintenance costs at Powertek and continuing losses at
> TI. Maintain our Hold call, but we may revise up our RNAV-based target
> price of RM13.60 as the company is expected to clinch a major IPP deal by
> 1Q06.
>
> Gamuda - Laos project to be delayed slightly - Maintain Trading Buy
>
> Gamuda's 4Q05 net profit declined 6% y-o-y to RM62.3m largely because of
> weaker construction earnings. The drop was cushioned by a lower tax rate
> of 21% for 4Q05 (28% for FY05) and lower minority interest. YTD net profit
> of RM265.8m (-10% y-o-y) is 3% below our estimates and 7% below consensus.
> The Group declared final gross dividends of 9 sen, bringing YTD gross
> dividend to 16 sen (FY04: 21 sen including special of 5 sen). There may be
> weakness due to the delay in the Laos power project. In the longer term,
> this may be compensated by new Middle East projects. We maintain our
> trading Buy call with a RM4.80 price target.
>
>
>
> Comments
>
> Southern Bank-F - Acquisition of Asia General - Maintain Hold
>
> The Asian Wall Street Journal (AWSJ) said that the Selangor royal family,
> who owns 10% direct stake in Southern Bank (SBB) is against the banking
> group acquiring a 40% stake in Asia General at S$919m. Citing sources,
> AWSJ said royalty is interesting in disposing SBB, and the acquisition of
> Asia General would make such disposal difficult. CIMB was also cited as a
> strategic acquirer of Southern Bank.
>
> (Recall that CIMB (CBB MK, not rated), which is part of corporate banking
> group, Commerce Asset (CAHB MK, Hold) while SBB is a small retail bank.)
>
> Additionally, the AWSJ reported that SBB made a S$50m deposit for the
> purchase of Asia General, which is at risk of being forfeited if the
> acquisition fails. However, there are circumstances permitting a refund of
> this deposit, which include failing to secure approvals from regulator of
> Malaysia and Singapore. Hence, in the worst case, the S$50m (RM111.5m) is
> forfeited. This would hurt SBB's after-tax EPS by 5.4 sen, i.e. 22.4% or
> 18.9% of either FY05 or FY06 earnings respectively, depending when the
> charge may be taken. The acquisition of Asia General is due for completion
> end-05 or early-06. If forfeited, it is likely to be treated as a one-off
> item.
>
> We have not incorporated the financials of Asia General in our model, and
> thus would maintain our forecasts, Hold rating and price target of RM3.70,
> pending further clarification from management.
>
>
> Tanjong plc - Weaker 2H expected - Maintain Hold
>
> Tanjong's 2QFY06 NI (+20.7% y-o-y to RM117.7m) was better than expected,
> boosted by an estimated RM15m exceptional item (mainly from the property
> division which gained c.RM10m from back-dated rental billings). However,
> we estimate that core NI rose by just 2.7% as a strong performance at the
> NFO division was mostly offset by a shortfall at Tropical Island (TI).
> Looking forward, there could be some downside to our FY06 forecast
> (unchanged) in anticipation of much weaker 2H results, factoring in a
> scheduled rise in maintenance costs at Powertek and continuing losses at
> TI. Maintain our Hold call, but we may revise up our RNAV-based target
> price of RM13.60 as the company is expected to clinch a major IPP deal by
> 1Q06.
>
> Gamuda - Laos project to be delayed slightly - Maintain Trading Buy
>
> Gamuda's 4Q05 net profit declined 6% y-o-y to RM62.3m largely because of
> weaker construction earnings. The drop was cushioned by a lower tax rate
> of 21% for 4Q05 (28% for FY05) and lower minority interest. YTD net profit
> of RM265.8m (-10% y-o-y) is 3% below our estimates and 7% below consensus.
> The Group declared final gross dividends of 9 sen, bringing YTD gross
> dividend to 16 sen (FY04: 21 sen including special of 5 sen). There may be
> weakness due to the delay in the Laos power project. In the longer term,
> this may be compensated by new Middle East projects. We maintain our
> trading Buy call with a RM4.80 price target.
>
>
>
> Comments
>
> Southern Bank-F - Acquisition of Asia General - Maintain Hold
>
> The Asian Wall Street Journal (AWSJ) said that the Selangor royal family,
> who owns 10% direct stake in Southern Bank (SBB) is against the banking
> group acquiring a 40% stake in Asia General at S$919m. Citing sources,
> AWSJ said royalty is interesting in disposing SBB, and the acquisition of
> Asia General would make such disposal difficult. CIMB was also cited as a
> strategic acquirer of Southern Bank.
>
> (Recall that CIMB (CBB MK, not rated), which is part of corporate banking
> group, Commerce Asset (CAHB MK, Hold) while SBB is a small retail bank.)
>
> Additionally, the AWSJ reported that SBB made a S$50m deposit for the
> purchase of Asia General, which is at risk of being forfeited if the
> acquisition fails. However, there are circumstances permitting a refund of
> this deposit, which include failing to secure approvals from regulator of
> Malaysia and Singapore. Hence, in the worst case, the S$50m (RM111.5m) is
> forfeited. This would hurt SBB's after-tax EPS by 5.4 sen, i.e. 22.4% or
> 18.9% of either FY05 or FY06 earnings respectively, depending when the
> charge may be taken. The acquisition of Asia General is due for completion
> end-05 or early-06. If forfeited, it is likely to be treated as a one-off
> item.
>
> We have not incorporated the financials of Asia General in our model, and
> thus would maintain our forecasts, Hold rating and price target of RM3.70,
> pending further clarification from management.
>
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