20051021 Hwang DBS Daily Focus

Highlights
>
> Motor sector - New National Auto Policy revealed - Maintain Neutral
>
> The 10-page National Auto Policy Framework (NAPF) revealed yesterday
> suggests that Malaysia is liberalising the auto sector by eliminating
> rebates on excise duties given to the national producers, and providing
> financial assistance and grants to all qualified domestic producers. The
> award of Approved Permits was also restructured. Separately, it was also
> reported that the government has reduced import and excise duties. We
> believe this is the right step taken to strengthen the auto sector's
> international competitiveness and to attract foreign investments into the
> sector. While further financial details are needed, it appears that the
> national producers are net losers and the winners are non-national
> producers. Bumiputera-controlled PLCs will gain from the ability to apply
> directly for Approved Permits (AP). Maintain Neutral call on the sector,
> Buys on UMW and MBM Resources, and Sell on Proton.
>
> Amway (M) - FY05 results below expectations - Fully Valued (Downgrade
> from Hold)
>
> Amway's FY05 NI came in 4.4% below our lower-than-consensus forecast, as
> 4QFY05 earnings disappointed with pretax profit coming in flat y-o-y. Full
> year revenue growth was in line with our expectations at 11.1%, bringing
> revenue to RM507.0m, but NI fell 3.2% to RM51.9m as EBIT margins
> disappointed, falling 1.3ppt to 13.3% due to continuing sales support and
> brand building during the year in conjunction with Amway's 30th
> Anniversary Celebrations. We are downgrading our FY06-07 forecast by c.10%
> factoring rising costs and a more cautious outlook. We are downgrading the
> stock to Fully Valued, with a target price of RM6.65, but note Amway's
> high dividend yield of 7.5%.
>
> Unisem (M) - Better than expected 3Q05 - Maintain Hold
>
> We expect increased SLP production (which carries a higher profit margin)
> to sustain margins in 4QFY12/05.  No change in our Hold recommendation.
> However, we are looking to upgrade our FY12/05 earnings forecast by 10-15%
> pending today's analyst briefing. While short term demand for
> semiconductors is strong, potential slower economic growth in FY12/06 and
> FY12/07 due to high oil prices could present some downside risks on ASPs,
> chip demand as well as Euro/US$ exchange rate. Target price remains
> unchanged at RM2.10 (based on 1.5x P/Book).
>  <<20051020.pdf>>