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Alliance Research keeps Buy on RHB Cap, unch TP RM8.89
KLCI weakens, consumer stocks fall
Aussie employment beats forecasts for 2nd straight month

Alliance Research keeps Buy on RHB Cap, unch TP RM8.89

Posted: 08 Nov 2012 07:13 PM PST

KUALA LUMPUR: Alliance Research is maintaining a Buy recommendation on RHB Capital with an unchanged target price of RM8.89.

"RHB Cap remains our top pick for exposure to the domestic banking sector," it said on Friday.

Alliance Research said RHB Cap had completed the acquisition of OSK Investment Bank after issuing 245 million new ordinary shares.

"With the completion of the exercise, we believe that the removal of implied cap price of RM7.95 will serve as a key re-rating catalyst for RHB Cap," it said. The research house was also positive on the management's initiative to provide guidance on the quantified synergistic benefits at the upcoming analyst briefing could lead to further re-rating going forward.

"The 245 million new ordinary shares issued by RHB Cap will effectively be kept in the books of OSK Holdings Bhd (OSKH).

"We understand that some investors may be concern about the potential share overhang in the market should OSKH decide to either dispose the RHBC's shares in the market and pay out special dividend to existing OSKH shareholders, and/or, distribute dividend-in-specie by returning new RHB Cap shares to existing OSKH shareholders," it said.

Alliance Research said the concern was largely unfounded, referring to OSKH founder and majority shareholder Tan Sri Ong Leong Huat's recent indication there was no such plan and OSKH would hold the RHB Cap shares as a long term investment.

"As such, we opine that the new RHB Cap shares will be 'locked up' in OSKH book and there will not be RHB Cap's share overhang in the near future," said the research house. Alliance Research said despite the recent relative outperformance of RHB Cap's share price versus its peers, the group was still trading at an unjustifiably low forward price-to-earnings of 8.8 times and price-to-book value of 1.2 times.

"We wish to highlight that our forecasts of forward earnings and book values only take into account of RHB Cap's standalone earnings and present share capital, since we are awaiting for management guidance of the potential quantified synergistic benefits at the upcoming analyst briefing before revising our earnings and book value forecasts," it said.

It said RHB Cap was still trading at an unjustifiably low forward P/E of 9.7 times.

This was on the assumption of a steep 10% earnings dilution from the acquisition exercise, which was conservative as it was effectively assuming there were no synergistic benefits and virtually no earnings contributions from OSK to the enlarged entity.

KLCI weakens, consumer stocks fall

Posted: 08 Nov 2012 06:59 PM PST

KUALA LUMPUR: Blue chips gave up their early gains and slipped into the red on Friday, with consumer stocks among the major decliners.

At 10.41am, the FBM KLCI fell 3.95 points to 1,637.12. Turnover was 190.40 million shares valued at RM173.49mil. There were 143 gainers, 233 losers and 259 counters unchanged.

Asian stocks fell, with the regional benchmark index headed for the biggest two-day loss in more than three months, amid concern Greece's bailout may be delayed and as Australia's central bank cut its growth forecast, Bloomberg reported.

Maybank KE Research said the KLCI -- which shed 0.10 point to close at 1,645.53 on Thursday -- expected its resistance level at 1,645 and 1,669 to cap market gains, whilst weaker support areas were at 1,621 and 1,638.

"The KLCI made an all-time high of 1,679.37 on Oct 29, 2012. With last Friday's and this week's negative price action, the index formed a Bearish Engulfing Pattern for its weekly chart with further downside confirmation.

"As such, all rebound rallies should be sold. That 1,679.37 high looks extremely ominous for now. With the Dow's plunge, expect a volatile day to the downside locally," said Maybank KE Research.

At Bursa Malaysia, BAT fell the most, down 74 sen to RM58.36, Nestle lost 70 sen to RM64.30, Dutch Lady 36 sen to RM45.14 and GAB 14 sen to RM16.20.

PetDag lost 32 sen to RM21.50 and PetGas 14 sen to RM19.26. Among the plantations, TAHPS tumbled 22 sen to RM5.33 and KL Kepong 14 sen to RM20.86.

Aussie employment beats forecasts for 2nd straight month

Posted: 08 Nov 2012 05:41 PM PST

SYDNEY: Australian employment rose by more than expected for a second straight month in October, helping keep the jobless rate steady and forcing the market to lengthen the odds of a cut in interest rates before year end.

The Australian dollar rose a quarter of a cent after government data showed employment increased 10,700 in October, beating forecasts of a flat outcome. The jobless rate held at 5.4%, when analysts had expected a tick up to 5.5%. Full-time jobs also rose a solid 18,700.

The better data seemed to diminish the chance of an easing in December after the Reserve Bank of Australia (RBA) surprised some by not cutting the 3.25% cash rate at its policy meeting this week.

"The full-time component has been up for four consecutive months now. We're a bit surprised by that in particular," said SuLin Ong, a senior economist at RBC Capital Markets.

"It probably falls on the side of the ledger of the RBA staying on the sidelines for a bit longer. It's going to sit with their view that the labour market is softer but still in reasonable shape. We have them moving again in Q1 of next year."

Interbank future slipped to show a 48% chance of a move next month, compared with 60% before yesterday's figures. The Australian dollar firmed to US$1.0415, while short-term government bond yields nudged up to 2.66%.

The market had already been on edge after New Zealand reported a 7.3% jump in its unemployment rate, the highest in 13 years. — Reuters

Kredit: www.thestar.com.my

Khamis, 8 November 2012

The Star Online: Business

The Star Online: Business

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