20050930 Hwang DBS Daily Focus

 Highlights

> Banking sector - Strong loan growth indicator - Maintain Overweight
>
> Coming in at RM18.25bn, Aug 05 loan approvals were the largest in the last
> two years. We read this as an indication that the loan growth momentum is
> unlikely to ease in the short term. The approval figures also indicate
> that hire purchase is expected to take the lead from mortgages as the key
> loan growth driver. This is in line with a slowing property market and an
> already large mortgage base. With only four month till year-end and y-o-y
> loans chugging along at >8% y-o-y for the last eight months, we foresee
> 2005 loan growth to reach 7-7.5%. We maintain our overweight call on the
> banking sector with PBB-F (PBKF MK) as our top pick with a price target of
> RM7.80, which has factored in potential for special dividends. We also
> like Maybank (MAY MK) as a dividend play RHB Capital (RHBC MK) is
> attractive for its turnaround story and M&A potential.
>
> 
>
> Megan Media - 1QFY06 results - Maintain Buy
>
> 
>
> Annualised, Megan Media's 1QFY06 results looks to be below our
> expectations. However, we expect stronger quarters ahead. In FY05, 1Q net
> profit was 21.6% of full year net profit. The gearing situation remains a
> concern and the management has indicated that they are looking into ways
> to reduce the loans but no details were given. Maintain our Trading Buy
> recommendation due to low PE of only 3.0x FY06 EPS. We also maintain our
> price target of RM1.60.
>
> 
>
> Comments
>
> 
>
> Astro - Dividend ex-date - Maintain Buy
>
> 
>
> The company announced an interim dividend of 1.5 sen per share earlier. Ex
> Date is 14 October 2005. This is in line with our expectation of a 3.5 sen
> dividend/share for FY06. While this compares favourably to the 2.5 sen
> total dividend declared for FY05, FY06 dividend yield remains low for
> Astro at 0.6%. Maintain Buy with RM7.25 price target, based on DCF
> valuation.
>
> 
>
> Ann Joo - Ann Joo to achieve higher synergies with Malayawata - Maintain
> Fully Valued on Ann Joo
>
> 
>
> Flat steel products producer, Ann Joo has announced a conditional
> voluntary offer to acquire the remaining 67.9% of shares not already owned
> in Penang-based Malayawata Steel. Recall that Ann Joo had purchased its
> initial 30.03% stake in Malayawata for a total consideration of about
> RM201 m in year 2001 (RM3.33/share). We think that the implementation of
> the corporate proposal should be positive in the long term as Malayawata
> is a major long products producer in Malaysia which should be
> complimentary to Ann Joo. Note also that one of the main reasons the
> international steel industry enjoyed bumper profits last year was due to
> the mergers of many smallish steel players which resulted in scale
> economies and higher efficiencies. A larger sized steel player is usually
> able to wield more muscle in raw materials procurement, a vital ingredient
> for successful cost containment especially in highly cyclical sectors such
> as steel.
>
> 
>
> Although we do not foresee any significant catalysts in the immediate term
> for the local steel industry, we note that international prices of steel
> have been firming up with large international players like Europe's
> Arcelor, Germany's Thyssen Krupp and India's Tata Steel increasing prices
> of steel products for November delivery, ranging from increase of 8%-15%.
> However, we remain underweight on the Malaysian steel sector with
> potential for review pending the implementation of the 9MP, due to the
> lack of other significant demand catalysts.
>
> 
>
> We are currently maintaining our Fully Valued call on Ann Joo and price
> target of RM1.50 based on 12x CY06 earnings due in large to industry-wide
> negative sentiments and pending further details on the corporate proposal.