Thursday, September 9, 2010

Malaysian Airline System-kenanga

Malaysian Airline System
HOLD @ RM2.28-17/08/10
Target Price: RM2.04
52-week range: RM1.80-RM2.60
Higher cost results in RM532m net loss in 2Q

l 1H10 net loss of RM221.3m is way below expectations. However, the core net loss of RM10.8m seems to be better than our net loss expectations for the whole year of RM360m after stripping out the YTD derivative loss and forex l oss of RM161mm and RM50m, respectively. This was also helped by RM330m Airbus compensation which has been recognised in the previous quarter. In 2Q10, MAS made additional provisions for land contract, agent incentives and maintenance of leased aircraft at RM20m, RM30m and RM109m, respectively. Nonetheless, we do not impute these as exceptional as they could be recurring items, going forward.

l QoQ, revenue was higher by 8.6%. Despite of higher revenue, the EBITDA was a loss of RM164m due to higher fuel cost by 3% and non-fuel cost by 7%. The loss was also coupled by lower yield by 3ppts with slight decrease in load factor of 1.4% to 74.0% despite of 4% increase in passenger carried.

l YoY, operating loss was halved on slightly higher yield by 2%. The narrowed operating loss was mainly due to higher RASK (revenue per ASK) improved by 15% and marginal improvement in yield by 2%. MAS accounted for derivative loss at RM217m in the quarter, comprises of fuel hedging contract loss (RM216m), forex contracts gain (RM6.9m) and interest rate contracts loss (RM5.6m). Excluding these, 2Q10 core net loss was at RM265.2m . On a positive note, 2Q10 cargo division yield improved by 21% to 84sen/ LTK with higher loads by 11 ppts to 76.1%.

l 2H10 still challenging. We expect the 2H10 is mainly a yield play for MAS and breakeven at best. However, we opined that it is still challenging ahead given that heat of price war is still ongoing on the back of bleak global economic recovery outlook.

l No change to our forecast. Maintain our HOLD recommendation and forecast but upgrading our TP from RM1.69 to RM2.04 as we change our valuation point from price-to-sales to 1x NTA FY10.


l Cargo growth pace might not be sustainable in 2H10. Despite of strong performance in cargo division, we opined that the growth momentum will be less exciting in the 2H10 due to bleak outlook in the global economic recovery. Thus far, the YTD loads and yield for cargo is inline with our expectations hence we are keeping our forecast for FY10 unchanged.

l Airbus compensation narrows core net loss to RM10.8m . Stripping out one off items, the YTD net recurring loss would have been RM340m (after excluding RM330m Airbus compensation in 1Q10) or 94% of our full year net loss forecast. We strongly believe that the 2H10 headline for MAS is definitely yield play, where MAS is looking to impose a reasonable fuel surcharge in tandem with fuel price movements . We think this strategy is positive for MAS but remains challenging due to competitive ticket price offer from it peers. At best we expect MAS to breakeven for 2H10 hence meeting our core net loss forecast for full year FY10.

l The rationale of RM240m one-off items in 2Q10. Among the numerous one-off items we are only imputed RM50m forex contract loss while keeping the remaining in its core operation cost. The rationale behind this lies on our concern that it could be recurring in the future premised on the provision on leased aircraft maintenance which constitute a big chunk of the provision at RM110m. We see that the nature of the cost could be a recurring item if the cost allocation is under provi ded or it is already been accounted in the operation cost. In addition we believed that are also other operating cost that could be recurring as there are another 13 leased aircrafts yet to re -deliver into the fleet.

l 2H10 could be breakeven at best supported with yield improvements. In the 2H10, we expect favourable demand especially in festive seasons and increasing forward bookings will encourage MAS to aim for better yield in order to cushion the fuel cost impact. This suggests that at best, MAS will be able to breakeven in the 2H10 to meet our net loss at RM360m (excluding Airbus compensations).

l Profitable routes and manage capacity for yield play. In comparison to its peers like Cathay Pacific and Singapore Airlines, MAS is lagging behind in terms of yield growth (YoY). Both of its peers recorded middle double digit growth vis-à-vis 2% growth for MAS. We strongly believe that full service carriers that are still maintaining its profitable routes and managing its fleet efficiently (ASK) will have the flexibility in pushing up the yield.

DXN--Mushrooming Money with Multi-Level Marketing -bfm89.9

Tuesday, September 7, 2010

US mid-term elections ‘moderately positive’ for stock markets -dbsv

Run-up to US mid-term elections ‘moderately positive’ for stock markets
We had correctly warned in April that stock markets tend to correct 1-2 months ahead of the start of the FIFA World Cup tournament. We apply the same test for the upcoming US mid-term election on 2 November and deduce that the run-up to the US mid-term election is moderately positive for stocks. Table 1 shows the % change in the Dow between the midterm election date and 2 months prior for the past 10 elections.

We found that the average gain was 2.1%. The Dow returned positive in 6 out of the 10 occasions. The Dow returned positive in excess of 3% for 4 occasions and fell more than 3% only in 2 occasions.

The odds look moderately positive for markets given the average 2.1% gains and the positive return 6 out of 10 times. If history is of any guide, this should dispel worries about US indices caught in a downtrend over the next 2 months amid worries of a ‘double dip’. The implication is a relatively stable or moderately positive external environment for Asian equities.

Technical view for the STI -dbsv

We maintain our technical view for the STI to range from 2800-3100. We see a higher likelihood for the index to test the upper band of 3100 first, which also coincides with 14.8x (average) blended FY10/11 PE in coming weeks before correcting. The near-term resistance is at 3025-3043 and nearterm support at 2965.

This is why we think the STI can head higher first:
1. Important support held intact. The index withstood volatility in US markets during the August period to stand firm above the 65-day exponential moving average (EMA) and January’s high level around 2930.

2. Even though the more sensitive daily stochastics has risen to an overbought level of 85 (readings above 80 considered overbought), the 14-day RSI, currently at 65, still has more room to trend higher before hitting above the overbought level of 70. In addition, we note that the MACD has crossed above its 9-day EMA last week, which is a positive sign.

While the immediate resistance at 3025-3043 (early August high) can trigger a minor pullback, we see near-term support at 2965, which coincides with the current level of the 15-day EMA.

Small cap ideas -Spice i2i -cimb

• The company once known as Mediaring. After the recent rights issue, we noted that the share price has some large volume and interest from the market.

• The stock formed a short term bullish wedge pattern and prices broke out last Friday. Yesterday, it closed above its 50-day SMA for the first time since the 3rd May’s negative crossover.

• With a bullish divergence seen on its MACD and RSI, we think that this breakout could take prices back up towards its neckline support turned resistance at S$0.155. If prices can break this level then we expect prices to test S$0.18 next.

• This bullish view is premised on the recent low of s$0.155 is not breached to the downside

Monday, September 6, 2010

Malaysia Top laggard plays- cimb

1,441.1 @02/09/10
Opportunities abound in laggards Target Index: 1,520

• Opportunities in stragglers. The KLCI has performed strongly YTD, driven by bigcap blue chips from the banking, gaming and infrastructure sectors. Aggressive buying by foreign funds over the past couple of months has pushed up prices of Malaysian heavyweights even more. But small- to mid-caps are trailing far behind. We believe the gap will narrow as investors scour for value and rotational play helps to re-rate laggards. We maintain our OVERWEIGHT on Malaysia and end-11 KLCI target of 1,520 points but advise investors to look at some laggards as they offer significant value with lower downside risk in the event of a major correction.

• Foreign funds are back. To our delight, foreign funds were massive net buyers of Malaysian equities in July. Statistics from EPFR revealed a huge net inflow of US$308m, which pushed YTD net flows into positive territory. If the inflows are sustainable, it makes for a positive trend. The last time that inflows were this strong was end-06, which heralded the start of the 2007 bull market. The net buying should persist in Aug and Sep as the KLCI continued to scale new highs for the year and the ringgit firmed to a 13-year high. Many foreign fund managers are also making a beeline for Malaysia where they will be visiting a string of companies in the coming weeks.

• Big caps the market’s anchor. Big caps from the banking and gaming sectors have been conspicuously in the vanguard of the KLCI’s resurgence. Infrastructure companies including MAHB and PLUS have fared well too. The KLCI is up 13.2% YTD against 12.8% for FBM Emas and 7.3% for FBM Fledgling. Our top-3 laggard picks from the big-cap category are Tenaga, Public Bank and MAS. Tenaga is our top GLC laggard play as we believe the long-awaited tariff hike could beforth coming. Public Bank is our laggard banking pick as its performance has trailed behind Maybank and CIMB. MAS is our strong conviction airline pick, both locally and regionally.

• Small- to mid-caps to play catch-up. The small- to mid-cap stocks under our coverage are showing gains of only 10-14% YTD, lagging behind the big caps which are up 16%. Our top-3 mid cap picks are JCY, Mudajaya and WCT. JCY and Mudajaya have been beset by uncertainties which have hammered their share prices. We believe their selldown is overdone and expect a strong rebound when the uncertainties clear and fundamentals come to the fore. Uncertainties, this time over Bakun provisions, are also behind WCT’s underperformance relative to Gamuda and IJM Corp. But WCT should benefit from the new wave of pumppriming. As for small caps, our top-3 picks are Adventa, Latexx and E&O. Small-cap rubber glove stocks have been disproportionately sold down while E&O should benefit from the strong property sales of late.

Malaysia Airlines System (MAS)-cimb

MAS – We like MAS because its significant fleet renewal plan will remove one of the key impediments to its operating efficiency. The aged aircraft currently in its fleet not only consume more fuel per seat and require more maintenance, but are also not configured to serve MAS's customer base properly. 68 aircraft currently on order will be delivered gradually from late-2010 to 2016, but will reach a high in 2012 when six A380s are delivered to replace the B747s.

Naturally, fleet replacement is a stretchedout process and investors cannot expect quick returns. However, when the returns do come, they are expected to be large. Over the next 18 months, MAS will continue to suffer from its expensive fuel hedges. Its yield recovery has also lagged behind the recovery of business-focused airlines like SIA and Cathay, and also trailed LCCs like AirAsia which benefited from robust ancillary income.

Due to continuing poor results, MAS's share price has underperformed airlines which are showing more immediate earnings recoveries. Also, the A380 deliveries were recently delayed from 2011 to 2012, though not without compensation. Nevertheless, MAS is gaining institutional interest gradually. As evidence of the efficiency gains from the new fleet comes through, we can expect a fundamental re-rating of this laggard aviation stock.

深圳特區成立三十週年胡錦濤接見李嘉誠TVB新聞片段06 09 2010

Publish date:06/09/10


Publish date:06/09/2010
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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