BT biznewz4u 06 Mac 2009

Bursa Malaysia (BURSA MK, RM4.86)
• Bursa Malaysia has proposed for the first time to seek shareholders’ approval to buy back up to 10% of its own shares. Financing would be from its internal funds and/or external borrowings. Bursa also said all shares purchased might be cancelled or retained as treasury shares or a combination of both. CIMB has a SELL call with a target price of RM2.90.

Mah Sing Group (MSGB MK, RM1.58)
• Mah Sing expects to launch its RM1.35bn Southbay Penang by mid-2009. Group MD and chief executive Datuk Seri Leong Hoy Kum said the project would coincide with the completion of Southbay Penang's showhouses. On whether the global recession would delay the completion of Southbay Penang, Leong said the group was committed to completing all its projects on schedule. On the future of the property market in Penang in view of the global recession, he said the group expected the non-speculative range of properties to hold up well. CIMB has a SELL call on the stock with a target price of RM1.41.

Gamuda (GAM MK, RM1.95)
• Gamuda Land's maiden overseas project in Vietnam, the 500-acre Yen So Park integrated development, will be launched later this year after a delay of about 6 months from its initial June launch. The project was delayed after Vietnam succumbed to inflationary pressures and its currency fell last year, and more recently, the impact of the US-led global financial crisis. The project has a GDV of RM8bn and will be completed in 10 years. According to Gamuda Land MD Chow Chee Wah, the property market has stabilised in Hanoi. CIMB has a TRADING BUY call on the stock with a target price of RM2.95.

Media Prima (MPR MK, RM0.98)
• Media Prima is excited about the move towards digital broadcast, which would increase valueadded content, such as more channels, improved clarity and uninterruptible signals, but is concerned about the cost to the people and industry. "Early estimates indicates that the total industry costs may well exceed RM1bn. There is a real need to carefully weigh the costs incurred versus the benefits that will accrue from it," said group managing director and chief executive Abdul Rahman Ahmad. Rahman said that the government, industry and the public would have to dig deep into their pockets for new digital transmitters nationwide as well as either digital set-up boxes or digital-ready television sets for viewers. He added that the public should be offered incentives to ensure the cost of adopting digital television would not become a burden. Media Prima is a HOLD
with a target price of RM1.13.

Brokers’ Actions

Resorts World Deutsche keeps HOLD with a lower
target price of RM2.07 (RM2.72
previously).

Genting Deutsche keeps BUY with a lower
target price of RM4.45 (RM5.90
previously).

Oil & Gas Sector
Maybank keeps UNDERWEIGHT on
the sector.

MISC Citigroup keeps SELL with a lower
target price of RM7.80 (RM8.53
previously).

Public Bank Citigroup keeps SELL with a lower
target price of RM5.77 (RM5.83
previously

KLCC Property HwangDBS keeps BUY with a target
price of RM3.40.

Petra Perdana OSK keeps BUY with a target price of
RM2.13

Malaysian Resources Corp (MRCB)
OSK initiates with a TRADING BUY and
a target price of RM1.14.


􀂉 The Malaysian Institute of Economic Research said a second fiscal stimulus package of RM30bn-RM40bn may help to bolster Malaysia's economy which is at a downward risk.

􀂉 Prices of condominiums in the luxury Kuala Lumpur City Centre enclave could fall as much as 30% as waning demand erodes sellers’ bargaining power to dictate prices, according to real estate consultancy Rahim & Co Chartered Surveyors. (The Edge)

􀂉 PPB Group expects a fall of 10% to 20% in demand for its products, including sugar and flour, due to the current economic downturn that has affected consumer sentiment. (The Edge)

KLSE Announcements

􀂉 Parkson bought back 15k shares at an average price of RM3.36.
Cumulative net outstanding treasury shares are 21.3m.
􀂉 YTL Power announced additional 21.2m shares of RM0.50 each
arising from the exercise of warrants 2000/10 will be granted listing
and quotation with effect from 9.00 a.m., Friday, 6 March 2009.

􀂉 Malaysia’s total public and private debt to GDP currently stands at
141%. 28% or RM245bn of total government and private debt
securities (PDS) are due this year.

􀂉 While BNM has lowered interest rates, yields for PDS remain high. With
expectations for the government to raise RM75bn in debt this year,
firms will have to compete for liquidity at higher borrowing costs.

􀂉 YTL Power, Tanjong and Tenaga turn up on our screen for companies
with low interest coverage ratio and high total debt to EBITDA levels.
These companies also have high net debt/equity ratio and/or refinancing
needs within 1-year. We see potential refinancing difficulties
for these companies given the higher costs of borrowing and more
challenging operating environment ahead.

Debt revisited
Malaysia’s total public and private debt to GDP currently stands at 141%, one of the highest in the Asia-Pacific region. With 28% or RM245bn of total government and private debt securities (PDS) are due this year, we see heightened risks in the credit markets given that the Malaysian government have run a higher fiscal deficit to fund its stimulus plan and encourage spending amid slowing global economic environment.

Market is pricing in higher risks for M’sian debt papers The global economic crisis has heightened risk of credit defaults and capped liquidity of the corporate bond market. Spreads for Malaysia’s sovereign credit default swaps has increased 100bps in the past 3 months while CDS spreads for Maybank, IOI and Telekom Malaysia’s bonds have all spiked up significantly. While we are of view that default risks from sovereign debt are low, there are higher default risks from corporate debt papers given the more difficult operating environment and expectations of earnings contraction in 2009-10. As foreign capital dries up, firms will find it harder to refinance maturing debts or to raise new loans. We have also seen a spate of rating downgrades by rating agencies recently.