20051006 Hwang DBS Dail Focus

Highlights
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> REDtone International - 21% earnings downgrade, hit by celcos - Hold
> (Downgrade from Buy)
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> We have downgraded RIB's FY2/06 net income by 21% as recent price cuts on
> long distance call rates by celcos put a halt to RIB's q-o-q earnings
> growth. 2QFY06 NI from its Malaysian operations is expected to be flat
> q-o-q at c.RM7m. We foresee 2HFY06 to be flat q-o-q as well. We have also
> lowered our FY07 and FY08 forecasts by 4% and 3% respectively, offset by
> strong performance at its Pakistani subsidiary, which is on track to
> contribute RM5m NI in FY06. Our price target has been downgraded to RM2.45
> (based on 13.8x FY07 earnings) if investors choose to receive Mobile Money
> (MM) shares, or RM2.56 inclusive of 11 sen/RIB share capital distribution
> in lieu of MM shares. Hence we downgraded RIB to Hold.
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> Comments
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> KFC - Temporary setback for Kulim - Maintain Fully Valued
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> According to The Sun, the Kuala Lumpur High Court has ruled that QSR
> Brands Bhd chairman Tan Sri Nik Ibrahim Nik Ahmad Kamil's decision to
> adjourn its controversial EGM last month is valid and binding. It also
> declared that the purported EGM held on Sept 20 immediately after Nik
> Ibrahim's decision to adjourn the EGM, and chaired by its director Datuk
> Johari Abdul Ghani, was null and void.
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> This is a temporary setback to Kulim Berhad, which is in the midst of
> securing approval from its shareholders to acquire a controlling stake in
> QSR. Once completed, Kulim will secure majority control over QSR, and
> hence, control over KFC. Meanwhile, however, there could still be further
> corporate maneuvering by the rival party linked to Soh Chee Wen. Maintain
> Fully Valued call and RM3.10 target price (25% discount to RNAV) until the
> contest for control is over.