Stocks Update >>> 27 Feb 2009

Dataprep Holdings Bhd’s (DATA MK, MYR0.20)
3QFY09 (Mar) results were ahead of our expectations, largely due to ICT contracts secured during the quarter. Revenue increased by 98.5% QoQ (26.6% YoY) to MYR18.8 mln, narrowing losses to MYR0.2 mln vs. MYR0.72 mln in the preceding quarter. Segmental wise, revenue was notably higher from its core business - outsourcing and managed services division (-71.9% QoQ, -19.5% YoY), which was the only profitable unit during the quarter. Our most recent recommendation is Sell with a 12-month target price of MYR0.18.
KLCC Property Holdings (KLCC) (KLCC MK, MYR2.90)
results for 9MFY09 (Mar) is below expectations as 9MFY09 net profit amounted to only 65% of our full-year net profit forecast. Despite a 2.8% YoY improvement in 9MFY09 turnover to MYR649.6 mln, KLCC recorded a 2.1% YoY drop in net profit to MYR173.1 mln. The lower net earnings were due to the weaker performance if its hotel division. In 3QFY09, however, turnover rose 4.3% YoY to MYR218.8 mln, while net profit improved 14.4% YoY to MYR58.9 mln. Our analysis of the results is ongoing and our last recommendation was 3-STARS (Hold) with a 12-month target price of MYR3.10.
Rexit Berhad’s (REXI MK, MYR0.54)
results were ahead of our expectations. 2QFY09 (Jun) revenue grew by 31.8% to MYR5.71 mln, driven mainly by higher transaction and subscription fees, and system software sales. While we had expected lower QoQ earnings arising to higher cost from workforce expansion, net profit surged 51.0% to MYR2.61 mln. Management cited its slowdown in recruitment drive following the delay of its e-Cover project with Sompo Japan. We await further details from the management on this. Our most recent recommendation is Buy with 12-month target price of MYR1.20.
IGB Corporation (IGB) (IGB MK, MYR1.43)
with an increased 12-month target price of MYR1.60 (from MYR1.50). Although IGB’s shares trade at higher prospective PER of 12.x and 11.3x for 2009 and 2010 respectively at the present price compared to the average industry prospective PER of 7.0x for 2009, we think valuations are fair on the strength of the stable cashflow stream generated by its
portfolio of investment properties and hotel businesses. The stable cashflows also serves as a hedge against the slower property development activities over the next two years.
Jadi Imaging's (JADI MK, MYR0.085)
4Q08 results were below expectations,with full-year earnings falling 29% short of our forecast. This, nevertheless, was due to several one-off items which if excluded, would have brought results in line. We expect demand to remain relatively stable, for in this current economic slowdown, businesses may be compelled to switch over to compatible toners which are cheaper. Nevertheless, we expect selling prices to come under pressure and thus project a 15% decline in 2009 revenue. We also expect the strong JPY to have impacted 1Q09 earnings. We cut our 2009 net profit forecast by 7.8% and introduce our 2010 net profit forecast. We maintain our Hold call and 12-month target price of MYR0.12, having rolled forward our valuations.
Lingkaran Trans Kota Holdings (Litrak) (LTK MK, MYR1.98)
We maintain our Buy recommendation for Lingkaran Trans Kota Holdings (Litrak) (LTK MK, MYR1.98) with an unchanged 12-month target price of MYR2.60. Litrak has declared an unexpected dividend of MYR0.20 in 3QFY09. In total, this would translate to a MYR0.25 dividend in 9MFY09 or a yield of 13.2%. We are positive on this as it suggests that management is willing to increase dividend payout to reward shareholders. We have forecast a dividend of MYR0.17 in FY10 (80% payout ratio)
Malaysian Pacific Industries (MPI) (MPI MK,MYR5.50)
We cut our recommendation on Malaysian Pacific Industries (MPI) (MPI MK, MYR5.50) to Strong Sell from Sell and reduce our 12-month target price to MYR3.60 (from MYR3.90 previously), amid the deeper-than-expected semiconductor downturn. Capex spending in 2HFY09 is expected to fall to ~MYR60 mln, translating to overall MYR150 mln for FY09. Management also plans to undertake further cost-cutting measures to arrest falling margins, which include reducing headcount through VSS and terminating contracts with 1,700 foreign workers this year. In line with the weaker outlook, we
have reduced our sales forecast for FY09-FY10 by 9%-10% and EBITDA margins to 19%-23%, from 28% previously. We think a dividend cut is likely for FY09, reducing our DPS projections to 10 sen/share.
Mudajaya, (MDJ MK, MYR1.19)
we maintain our Strong Buy recommendation with an unchanged 12-month target price of MYR1.80. At current levels, Mudajaya is trading on projected PERs of 4.8x for 2009 and just 3.3x for 2010, which in our view, have yet to reflect its near-term growth potential (2-year forward EPS CAGR of about 74%). 2008 results were broadly within expectations.
Sarawak Plantations' (SPLB MK, MYR1.71)
4Q08 results were below our expectations. The group would have incurred a small net loss of MYR0.8 mln for the quarter due to the fall in palm oil prices, but bottomline was saved by a MYR8.9-mln gain from the sale of a piece of land in Miri. We cut net profit for 2009 by 16.6% after trimming projected margins and reducing our projected growth in CPO output to 4%-5% (from 10%). The growth in production, however, will be muted by our expectations of a drop in the average CPO price to about MYR1,800/ton in 2009 from MYR2,800/ton in 2008. We maintain our Sell recommendation on the stock with a revised 12- month target price of MYR1.50 (from MYR1.80) following the earnings revision.
MISC’s (MISC MK, MYR8.50)
9MFY09’s results came in below our and market expectations as net profit of MYR1.22 bln (-26.2% YoY) accounted for only 58% of our total FY09 projections. This is despite a modest increase in revenue in 3QFY09 to MYR3.68 bln (+10.8% YoY). We believe the variance arose from larger-than-expected losses in the liner division of MYR328.8 mln (from MYR171.2 mln loss in 2QFY09). Going forward, earnings will come under pressure as MISC will feel the full impact of the weakened economy in FY10. In line with the weakened market conditions, we have reduced our FY09 and FY10 net profit forecasts by 25.5% and 22.8%, respectively. We maintain our Hold call but lower our 12-month target price to MYR9.20 (from MYR9.50)

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