Isnin, 13 Januari 2014

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The Star Online: Business

Lion Industries on 'hold' with uncertainty in steel sector

Posted: 13 Jan 2014 08:00 AM PST



By AmResearch

Hold (re-initiation)

Fair value: 82 sen

WITH uncertainty now in the steel sector driven by higher operation costs due to the electricity tariff hike, overcapacity in China, which continued to suppress global steel prices and dumping of cheap wire rods and billets from China in the local market, AmResearch said it re-initiated coverage on Lion Industries Corp Bhd (LICB) with a "hold"' recommendation.

While the acceleration of Mass Rail Transit (MRT) jobs was expected to benefit steel players, it said the steel products manufacturer and property developer conglomerate's earnings would be negligible due to depressed margins given the rise in costs and weak selling prices.

Following a restructuring exercise that was completed early last year, Lion Corp Bhd had disposed of its 27% stake in LICB to Tan Sri William Cheng, who now holds a 30% direct stake in LICB.

The bank-backed research house said it was also positive over the recent termination of a proposed joint venture to develop a blast furnace.

Reflecting the tough operating environment, it has included a 75% discount to the sum-of-parts derived value of RM3.28 per share to arrive at a fair value of 82 sen per share.


By RHB Research Institute


Target price: RM2.25

WITH abundant pipe-coating work orders to rejuvenate margins, more overseas jobs to mitigate dependence on domestic works and higher associate income, RHB Research has rated Wah Seong Corp Bhd (WSC) a "buy".

It said it expected these factors to diminish the negatives of the international oil and gas and industrial services group's loss-making plantation venture and low margin jobs.

It added this was supported by a RM1.7bil oil & gas (O&G) orderbook backlog including Statoil and North Malay Basin jobs which will become full scale in financial year ending Dec 31, 2014 while it conservatively assumed Wah Seong's exposure to the recently-terminated Kristin project as minimal at RM20mil to RM30mil.

The bank-backed research house noted that the company was securing more overseas jobs, which boded well against the dependency on domestic works.

WSC said that any jobs related to Petronas' enhanced oil recovery projects, marginal oil fields and pipeline replacement works were expected to be small in value, but would provide some level of recurring orderbook replenishment.

With new bids for O&G jobs in Brazil and West Africa, and better prospects in the oleochemical market that directly supported the process equipment of its renewable energy division, RHB Research said the company was rated "buy" at a target price of RM2.25 at 16 times of its price-to-earnings ratio.



By RHB Research Institute


Target price: RM1.78

HAVING an established partnership with the reputable Dermalogica skincare group, committed family-led management and decent earnings growth, RHB Research Institute has rated Esthetics International Group (EIG) with a "buy" call.

The bank-backed research house said it expected the group to register core earnings of RM15.8mil to RM21.7mil, implying a three-year compounded annual growth rate of 11.2% in the financial year ending March 31, 2014 (FY14) to FY16 forecast respectively.

As part of management's plan to expand its regional presence by leveraging on Dermalogica's maturing brand, the group also intends to expand its products offering and brands via potential partnerships with international brand owners.

The company, which focuses on the distribution of skincare, cosmetics and wellness products as well as services through its network of self-owned and third-party salons, also owns and operates the AsterSpring chain of beauty salons, which carry Dermalogica's skincare products.

To strengthen its market presence, EIG is looking to increase the collective number of its own salons and retail kiosks to 100 outlets over the next three to five years from 70 currently.

It has forecast an annual dividend yield of 3.1% to 3.8% for FY15 to FY16 respectively, in view of EIG's current net cash of RM59.4mil.



By Hong Leong Investment

Bank Bhd

GREENTOWN China Holdings Ltd builds residential villas, low-rise and high-rise apartment for the middle and high-income people.

The developer's stock is currently trading at 3.7 times financial year 2014 (FY14) forward of price-to-earnings as compared with the industry average of 10.5 times.

Hong Leong Investment Bank Bhd noted that there were 19 analysts rating the stock with "buy" calls against two "hold" and two "sell" ratings. Compared with the consensus target price of HK$16.77, this will translate to a further 39% upside potential. 

Chart-wise, the share price is gaining upside momentum due to the hourly downtrend channel breakout; daily downtrend channel breakout and hourly and daily indicators that showed that bulls were gaining strong momentum.

The investment bank also noted that the upside targets were at HK$12.93 with a 50-day simple moving average (SMA) and HK$14 (100-day SMA), with long-term target price of HK$16.76 which was the high on Aug 15, 2013. Immediate supports are at HK$11.70 (100-hour SMA) and HK$11.49 (downtrend line). It also recommended cut loss at HK$11.37 (50-hour SMA).

Japan logs record current account deficit

Posted: 13 Jan 2014 08:02 PM PST

TOKYO: Japan's current account deficit in November tripled year-on-year to a record $5.7 billion as a weak yen pushed up the country's post-Fukushima energy bills, official data showed Tuesday.

The shortfall in the current account hit 592.8 billion yen, easily eclipsing a deficit of 179.6 billion yen in the same month a year earlier.
The latest data marked the largest monthly current account deficit based on comparable data stretching back to 1985, blowing past a 455.6 billion yen shortfall in January 2012, according to the finance ministry.
November's deficit largely stemmed from a growing trade imbalance stoked by Japan's heavy dependence on importing pricey fossil fuels to generate electricity, after the country's nuclear reactors were shut down in response to the 2011 tsunami-sparked atomic disaster.
The yen's sharp depreciation since late 2012 has also bloated costs.

The current account is the broadest measure of Japan's trade with the rest of the world, including not only trade in goods but also services, tourism and returns on the country's foreign investment. - AFP

Chinese military ordered to buy locally-made vehicles

Posted: 13 Jan 2014 07:46 PM PST

SHANGHAI: Chinese leader Xi Jinping has ordered the military to choose domestic brands when procuring vehicles, part of a broad effort to reduce costs and buy locally-produced goods, state media reported.

The decision, contained in a circular issued late on Monday, follows a ban in April on the use of military licence plates on luxury cars, most of which were foreign brands.

Xi, who became Communist Party chief in November 2012 and also serves as president and top military leader as head of the Central Military Commission, has launched a government-wide drive to encourage frugality and fight corruption.

Government officials have already been urged to drive home-produced brands, such as Red Flag, challenging Audi, the Volkswagen-owned brand that has dominated the government market for 20 years. The Foreign Ministry has said that minister Wang Yi is now chauffered in a Red Flag H7.

The circular, approved by Xi and issued by the People's Liberation Army's staff headquarters as well as the political, logistics and armament departments, said funds used by the army should be strictly regulated and the budgeting processes improved, the state-run Xinhua news agency said.

The purchase of new military cars should be arranged through a centralised system, it said. The document was "aimed at promoting frugality and cutting down on waste in military and armed police forces".

In line with similar calls to directed at government officials, it urged strengthened supervision over spending and banned "personal banquets financed with public funds".

The circular also banned giving or accepting money, securities, souvenirs and local products and called for strict controls on celebrations, forums, exhibitions and performances.- Reuters


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