20051010 Hwang DBS Daily Focus

Highlights
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> Litrak - Resilient traffic volume growth - Maintain Buy
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> Litrak's traffic volume growth has remained relatively healthy, growing 6%
> in 1QFY06, despite several petrol price increases this year. We expect
> traffic volume to remain resilient in the near term because of the
> Damansara Puchong Highway's strategic alignment. The stock remains among
> our favourite defensive picks. Reiterate Buy with RM3.10 price target,
> based on 43% discount to DCF value of RM5.40.
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> Comments
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> Maybank - 18% ROE and 60% Payout - Maintain Buy
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> Maybank said that it is aiming for 18% ROE, which is in line with our
> expectations. We have forecast 17.4% and 17.9% ROE for FY6/06 and FY6/07
> respectively, up from 16.6% in FY6/05.
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> The group is also maintaining for 60% dividend payout ratio, which is
> within our expectations. We are projecting 68% payout for FY6/06, which is
> slightly above the 65% Maybank declared for last FY. So, this does not
> change our estimates.
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> As mentioned before, Maybank does not intend to acquire Bank Islam (BIMB)
> but would consider it on a commercial basis. This reaffirms our view that
> Maybank's management remains prudent and stakeholders' interest has not
> been compromised.
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> We maintain our forecasts and Buy call on Maybank with a price target of
> RM12.60. Investors are still entitled to Maybank's 60 sen dividends for
> FY6/05 (going ex on November 7th) and can potentially receive special
> dividends of up to 80 sen in addition to regular annual dividends of 70
> sen.
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> Proton - Proton may acquire a stake in EON - Maintain Sell 
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> According to the BizWeek, Proton may consider acquiring DRB-Hicom's 73m
> shares or 29.3% stake in vehicle distributor Edaran Otomobil Nasional
> (EON). This is believed to be spearheaded by the government's investment
> arm, Khazanah Nasional (Khazanah). According to the source, Proton may
> even acquire EON shares own by other government bodies such as EPF and
> Khazanah (both hold 12.2% and 6.2% stake in EON, respectively).
> Ultimately, Proton may end up holding a 48% stake in EON. Proton is
> expected to utilize its war chest (net cash of RM1.4bn) to fund the
> acquisition.
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> We do not view this positively although the acquisition should be earnings
> accretive to Proton. Assuming Proton owns a 48% stake in EON, the
> estimated earnings enhancement is only about 6%. Also, should we assume
> the cash acquisition is priced at 0.8-1x book (which implies forward PER
> of 11-14x), Proton would see its cash reserves dropping by at least 30% to
> < RM1bn. The impact may be greater as the acquisition could trigger a
> general offer which may cost Proton around RM800m-1bn. After its capital
> repayment, EON is left with only RM26m net cash (as at 30 June, 2005).