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Top Story : Media – 9M10 print and tv adex up by 18.2% yoy Overweight
Sector Update
- According to Nielsen Media Research, Sep’s gross ad spend for print and TV media rose 3.4% yoy with
print adex up 7.0% yoy, while adex for TV remain flat yoy. Mom, total print and TV gross adex fell by
14.5%. This was not too surprising considering that Aug adex benefited from the Merdeka celebrations and
Hari Raya festival.
- For print media, Sep’s adex was led by Chinese dailies, where adex grew 13.8% yoy followed by English
dailies, which grew 8.7% led by Malay Mail and Star. Adex for the Malay segment remained relative flat yoy
largely due to weaker adex by Utusan and Harian Metro, offset by stronger adex from Berita Harian.
- Sep’s TV adex growth was flat yoy due to weaker adex recorded by the Media Prima channels (-6.1% yoy),
offset by the stronger numbers from TV2 and TV1.
- While 9M10 adex growth stood at 18.2% yoy, we expect the growth rate to slowdown in 4Q10 as adex will
now be coming from a higher base. Nevertheless, adex growth should continue to remain healthy,
supported by the year-end festivities.
- Media Prima (FV=RM2.75) remains our preferred pick as we believe adex (especially TV) will be a prime
beneficiary of a recovering economy. We maintain our Outperform call on Media Chinese (FV=RM1.21)
and Trading Buy call on Star (FV=RM4.34). Maintain Overweight for the sector.
Macro View
Economy : Leading index bounced back in Aug, pointing to a resilient economic activities ahead
Economic Highlights (published 20 Oct 2010)
- The Leading Index, which provides an early signal of the direction that the economy is heading, rebounded
to increase by 0.9% mom in August, from -0.1% in July and -0.2% in June. This was the first increase in
five months, suggesting that the leading index, though weakening, remains resilient.
- The pick-up was underpinned by increases in real money supply (+0.8%) and CPI for services (+0.1%;
inverted) as well as a stronger growth in the Bursa Malaysia Industrial index (+0.1%). These were,
however, offset partially by sharper declines in trade with eight major trading partners (-0.2%) and unit
labour cost in the manufacturing sector (-0.2%) as well as a slowdown in the number of housing permits
approved (+0.2%).
- As a result, the leading index’s six-month smoothed growth rate bounced back to +2.2% in Aug, after
moderating to +0.9% in Jul but off the peak of +11.2% recorded in Mar. This was the first rebound, after
four consecutive months of slowing down, indicating that the economy is likely to sustain its growth in the
months ahead, albeit at a more moderate pace.
Sector Call
WCT : Secures RM1.36bn building job in Qatar and RM128m hospital project in Sabah Underperform
News Update
- WCT has secured two key contracts, namely: (1) A QAR1.59bn (RM1.36bn) government administrative
building job in Doha, Qatar; and (2) The Tuaran hospital project in Sabah worth RM127.8m.
- The latest contracts have boosted its YTD new contracts secured to RM2.1bn and its outstanding
construction orderbook by 53% to RM4.3bn.
- Assuming an EBIT margin of 8-10%, the latest contracts will fetch RM119-149m EBIT over the construction
period ending Apr/May 2013.
- We expect limited reaction from the market as WCT had been hinting on the Qatar job for a while by now.
- We are raising FY12/10-12 net profit forecasts by 6-13%, having reflected RM2.1bn new contracts secured
in FY12/10 vis-à-vis our previous assumption of RM1.5bn.
- Fair value is raised to RM2.56 from RM2.30. Maintain Underperform.
BAT : Impact of less than 20’s ban cushioned by relaunch of Peter Stuyvesant Underperform
3QFY10 Results
- 9MFY12/10’s net profit of RM548.4m (-4.4% yoy) was within expectations, accounting for 76% of both our
and consensus forecasts. This was on the back of a 3.6% growth in revenues.
- Besides the impact on margins, the ban also affected market share of BAT’s premium segment. 3Q10
premium market share of 72.1% was lower by 0.5%-pt from 3Q09.
- To capture the down-trading market, BAT in June relaunched Peter Stuyvesant as a VFM brand. We were
positively surprised at the response as Peter gained 2.6% market share after just four months of being
launched, with minimal canibalisation towards the other brands’ market shares.
- Cigarette prices could yet again be increased if the proposal 0.5 sen/stick cess is implemented by the
Government. Assuming BAT fully passes on the cess to customers without any increase in sales tax, a
price of 20’s would cost RM10.10.
- We have revised our FY11-12 earnings forecasts up by 0.5-0.7% after increasing our VFM market share
assumptions to 42-44% (from 37%).
- Our fair value is thus raised to RM42.92 (from RM42.90 previously) based on unchanged WACC of 7.6%.
Technical Highlights
Daily Trading Strategy : Recapturing the 10-day sma will renew upbeat sentiment…
- Despite failing to reclaim the 10-day SMA of 1,488 yesterday, we see a good chance for further near-term
recovery as the local and regional markets’ performance appeared more resilient than we had expected.
- Apart from that, we were encouraged by the solid rotational plays on the lower liners and the selective
sectors, which have kept the trading sentiment on an upbeat mode with robust participation in recent
sessions.
- Therefore, in our opinion, further recovery to above the 10-day SMA today will attract further follow-through
buying support in the near term.
- And once the recent high of 1,503.82 can be cleared, the short-term technical scenario will return to
positive as the benchmark gears up to rechallenge the historical high at 1,524.69.
- On the downside, the solid medium-term support at 1,450 level and the 40-day SMA of 1,458 are expected
to keep sellers at bay.
Daily Technical Watch: Alliance Financial Group – Medium- to long-term uptrend remains largely intact…
- 10-day SMA: RM3.225
- 40-day SMA: RM3.151
- Support: IS = RM3.10 S1 = RM2.95 S2 = RM2.80
- Resistance: IR = RM3.30 R1 = RM3.48 R2 = RM3.68
Bulletin Board
Important Dates
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Stock Ratings
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Industry/Sector Ratings
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