Market Update 25-3-2011 (Source: HLB)

Gamuda

2H Results

§ 2Q11 revenue came in at RM607.2m with PATMI of RM94m translating to EPS of 4.59 sen/share and diluted EPS of 4.39 sen/share.

§ Construction margins continued to expand in 2Q and this allowed the division’s earnings to grow on a QoQ and YoY basis despite the drop in revenue.

§ The EDTP progress remained flat (from 54% to 58% completed) but Yenso Park activities picked-up in pace (from 57% to 72% completed)

§ Active outstanding order book as of 2Q11 is at RM3.2bn, translating to 1.8x FY10’s construction revenue.

§ Property division continued to do very well, buoyed by sales in Bandar Botanic, Horizon Hills and Jade Hills. However new sales did cool off after a record breaking of RM350m inthe previous quarter to RM250m. Unbilled sales increased to RM840m, translating to 1.6x FY10’s property revenue.

§ Celadon City, Ho Chi Minh, is set for full launch in April and management has projected sales of US$100m for FY11. Currently, 159 units of apartment have been booked with each unit selling between US$70k-130k.

§ Overall, the management is confident of surpassing earnings high of RM325m achieved in 2008.

§ Maintain HOLD call as fundamentals have already been reflected in share price. Maintain TP of RM3.63 based on SOP valuation.



Time DotCom

No Longer Requires Exemption from MGO

§ Pursuant to a consultation with the SC, Megawistra will no longer require a waiver from the SC to undertake a Mandatory General Offer of TDC as it was concluded that Khazanah and Global Transit International (GTI) are considered to be persons acting in concert (PAC).

§ Accordingly, before and after TDC’s proposed acquisitions (of GTI, GTL and AIMS), Megawistra and its PACs would collectively hold more than 50% of the voting shares in TDC and post the acquisitions, neither Megawistra nor its PACs would individually hold more than 33% of the voting shares in TDC.

§ This is a positive development for TDC as it moves a step closer towards finalizing the proposed acquisitions.

§ Maintain Buy with Target Price of RM0.95 based on SOP.



A decisive breakout above DTL will spur more uspide

§ The KLCI is likely to trend higher today amid overnight gains on Wall St and strengthening technical readings. As reiterated, a close above DTL is crucial for further progress towards the 1527 (upper Bollinger band) pts. However, declining volume is a concern that could cap further upside beyond 1526 pts.



Stock to watch – Tongher (RM2.52) - Likely beneficiary of Japan’s reconstruction

§ Apart from the timber plays, fasteners players such as Tongher could also benefit as its products are catered to various industries and has some exposure to Japan.

§ Tongher’s high-end customized and specialized stainless steel fasteners have diversified applications in construction, infrastructure, machinery and equipment, marine engineering and ship building, public transportation and automobiles. Its products are mainly exported to countries in Europe (60%), Japan (20%), U.S. & others (20%).

§ The successful breakout above the mid Bollinger band and improving technical landscape are likely to spur prices higher to RM2.70-2.80 zones. Immediate support levels are RM2.40-45. Stop loss below RM2.36.




Source: Vernon Lim Lee Cherh (HLB)