KKB Engineering, Petrnonas Gas, Kurnia Asia, Kepong

DJ MARKET TALK: TA Cuts KL Kepong Target To MYR19.15; Keeps Buy
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0527 GMT [Dow Jones] STOCK CALL: TA Research lowers KL Kepong (2445.KU) target price to MYR19.15 from MYR19.42 to reflect 8% cut in FY10 earnings forecast following slight downward adjustment in crude palm oil price assumption, lower manufacturing margin. Keeps at Buy, says KL Kepong's earnings growth still likely to be ahead of peers on strong volume growth, strong selling prices for palm oil and rubber; oil palm fresh fruit bunch production forecast to grow by 6% in FY11 vs 3%-4% for IOI Corp. (1961.KU), Sime (4197.KU). Adds, stock trading at 16X-17X forward P/E vs historical average of 15X, but "the premium is reasonable given the growth strength in the upstream plantation segment and potential upside in the manufacturing, retailing, property segments," says analyst James Ratnam. KL Kepong unchanged at MYR16.50.

DJ MARKET TALK: OSK Keeps Kurnia Asia At Buy, MYR0.92 Target
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0503 GMT [Dow Jones] STOCK CALL: OSK Research keeps Kurnia Asia (5097.KU) at Buy, target unchanged at MYR0.92 (based on industry average P/E of 13X over FY10 earnings). Analyst Ngo Siew Teng says general, motor insurer's 1Q net profit at MYR23.8 million in line with consensus, 10.5% below house estimates due to higher tax charges. Notes gross, net premiums rose 5.0% and 3.9% on-quarter respectively after firm increases share of more profitable non-motor portfolio (non-motor business rises to 22% of total portfolio vs 17% previous quarter). "Being the major motor insurer in Malaysia, Kurnia is poised to benefit from a revision in motor tariffs, which is expected to be implemented by 3Q 2010," says Ngo. Stock last +1.0% at MYR0.53.


DJ MARKET TALK:Maybank Keeps Petronas Gas At Hold,MYR10.40 Target
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0305 GMT [Dow Jones] STOCK CALL: Maybank Investment keeps Petronas Gas (6033.KU) at Hold, target unchanged at MYR10.40. Analyst Andrew Lee says firm's full fiscal year to March 31 results met expectations, despite weaker 4Q (net profit down 23% on-year). Lee says PGas set to operate on "improved business model" for FY11 under new terms of 4th Gas Processing Transmission Agreement. "(Agreement) is earnings enhancing and comes with lower operating risks. It also shields PGas from fluctuations in gas prices and allows importation of a 3rd party gas supply (i.e. LNG) into its PGU lines, thus removing shortage of gas supply risks from Peninsular Malaysia gas fields from 2019-21," Lee says. Expects net profit to grow by 40% in FY11 to MYR1.3 billion from MYR940.9 million in FY10. Stock +0.4% at MYR9.92 vs KLCI down 0.1%.


DJ MARKET TALK: OSK Raises KKB Target To MYR11.88 From MYR7.01
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0240 GMT [Dow Jones] STOCK CALL: OSK Research raises KKB Engineering (9466.KU) target to MYR11.88 from MYR7.01 on higher expected earnings, keeps at Trading Buy after 1Q results "sparkled." Analyst Law Mei Chi notes 1Q net profit more than tripled to MYR19.1 million, surpassing house forecast, accounting for 40% of FY10 projection. "The significantly better numbers were mainly due to heightened activities, particularly for steel water pipes as its manufacturing segment registered strong on quarter and on year revenue growth of 64% and 86% respectively," says Law, adding more contracts in the pipeline could further boost earnings. Upgrades earnings forecast; net profit of MYR82.5 million expected in FY10, MYR95.7 million in FY11. Stock last +2.0% at MYR6.17.


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