20051017 Hwang DBS Daily Focus

Highlights
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> PLUS Expressways - Upside remains limited - Maintain Hold
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> PLUS Expressways (PLUS)'s share price has lost 4% since announcing traffic
> volume dropped 4% y-o-y (+2% m-o-m) in August. Although YTD traffic volume
> growth of 1% (versus same period last year) is below our projection of 3%,
> we do not expect significant impact to our earnings forecast at this
> point. Nevertheless, upside to our RM3.50 price target (based on 10%
> discount to DCF value of RM3.90) remains relatively limited. We maintain
> our Hold recommendation for the expected step-up in dividend from 7.5 sen
> net in FY04 to 11.5 sen net (3.7% dividend yield) in FY06.
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> Comments
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> TNB - Open tender for Sabah power plant - Maintain Buy
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> The Edge weekly reported that Tenaga Nasional has received the
> government's nod to call for tenders for a 300MW of coal-fired independent
> power plant (IPP) in Sabah, hence paving the way for the first power plant
> project to be implemented on a competitive basis. (In the past, the
> Economic Planning Unit gives out the IPP projects to individuals or
> private companies, which later go on to negotiate a power purchase
> agreement (PPA) with Tenaga.) Tenaga is said to be finalising on the terms
> and conditions of the open tender and targets to float it before year end.
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> Implication on the industry: We are neutral towards the tender bidding
> process in the immediate term (as current reserve margin approximates 40%)
> but positive over the longer term impact. We believe the open tender
> process will benefit the nation and Tenaga by providing cheaper sources of
> energy cost.
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> Implication on Tenaga: The new Sabah power plant will help reduce the cost
> of energy production of Sabah Electricty Sdn Bhd (SESB), an 80% owned
> subsidiary of Tenaga. Currently, SESB has an available generation capacity
> of 690MW and is currently heavily reliant on diesel power plants (an
> expensive energy source). But this new power plant will only come on board
> earliest 3 years from now and we only expect marginal impact on the bottom
> line of Tenaga. Hence, we maintain our Buy recommendation with RM12.00
> price target, based on its RNAV.
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> Transmile - Competitor FedEx serving India-China link - Maintain Hold
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> Competitor of Transmile's customer, FedEx, has launched the first daily
> overnight express delivery link between India and China. DHL is a key
> customer of Transmile. We do not expect competition from FedEx to affect
> Transmile's growth strategy in India, which provides modest but
> fast-growing earnings contributions to Transmile. The Indian market is
> certainly large enough to accommodate both FedEx and Transmile, which
> serves the Hong Kong-India route.
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> Maintain our Hold call and RM11.00 target price. There could be room for
> upgrading our call; presently, we are still gauging the short term lease
> demand for its MD-11 during the critical 4Q season.