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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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DJ MARKET TALK: OSK Research Starts Pos Malaysia At Buy
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0321 GMT [Dow Jones] OSK Research starts Pos Malaysia (4634.KU) at Buy, with target price of MYR3.52; government approval for hike in postal tariffs from July came earlier than expected, says analyst Ahmad Maghfur Usman. Thinks revision in tariffs, first in 18 years, may result in 11% decline in mail volume in FY10; but, tariff increase will more than compensate for lower mail volume, planned 20% pay rise for postal workers. "We see yields on mail items ultimately jumping 80%, thus boosting total revenue and bottom-line by 38.5% and 174% respectively in 2011," Ahmad Maghfur says. Adds, with improved earnings, Pos Malaysia's gross dividend expected to double to 20 sen by FY11, for a gross yield of 7%. Pos Malaysia +12.2% at MYR3.21.

DJ MARKET TALK:HwangDBS Ups Petronas Gas To Hold; MYR10.60 Target
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0121 GMT [Dow Jones] STOCK CALL: HwangDBS Vickers Research raises Petronas Gas (6033.KU) to Hold from Fully Valued, with higher target price of MYR10.60 vs MYR8.00 previously; upgrade comes after company held briefing to explain recent revision in processing, transportation pricing terms with parent Petronas; cost savings derived from internal gas consumption to reach MYR400-MYR500 million, higher than earlier estimates, says house; adds new structure enables Petronas Gas to take on gas supply from other sources in the future as production from Terengganu fields declines. "We believe new supply might come from the Santos-Petronas LNG project in Australia, which is expected to come on stream in 2013." Stock trading at 17.2X 2011 PE vs 18.1X for regional peers. Untraded so far today, ends down 0.1% at MYR9.89 yesterday. (benjamin.low@dowjones.com)


DJ MARKET TALK: OSK Research Starts AEON Credit Malaysia At Buy
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0144 GMT [Dow Jones] STOCK CALL: OSK Research starts AEON Credit Malaysia (5139.KU) at Buy, with target price of MYR4.95. Notes AEON Credit, which provides payment plans for purchases of consumer durables, achieved revenue and earnings CAGR of 27% and 57% respectively in past 2 years, while keeping non-performing loans at under 2%; company also had profit margin of 23% and 35%, with high net interest margin of above 19% in past 2 years; analyst Lim Mei Ching says earnings momentum on track with fundamentals still solid. "Overall, the group is poised for organic growth on the back of a bigger clientele, improved consumer spending and rising demand for micro-credit financing," says Lim. AEON Credit untraded so far; ended +0.3% yesterday at MYR3.93.


DJ MARKET TALK: Pos Malaysia +11.9% On Postal Rate Hike
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0302 GMT [Dow Jones] Pos Malaysia (4634.KU) +11.9% at MYR3.20 after Malaysian government announces first increase in domestic postal rates in 18 years, to be effective July 1. AmResearch estimates Pos' EPS to be boosted by 168% in FY10, 60% in FY11, while EBITDA margins improving to 23% from 15% currently. "However this is still significantly lower than Singapore Post's EBITDA margin of 36%," says AmResearch. Adds, impending sale of Khazanah's 32.2% stake in Pos would now be more certain with the new tariff rates. Keeps Buy call, raises target to MYR3.80 from MYR2.30 previously; stock hit fresh 3-year high of MYR3.22 earlier. .


DJ MARKET TALK: OSK Research Starts Pos Malaysia At Buy
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0321 GMT [Dow Jones] OSK Research starts Pos Malaysia (4634.KU) at Buy, with target price of MYR3.52; government approval for hike in postal tariffs from July came earlier than expected, says analyst Ahmad Maghfur Usman. Thinks revision in tariffs, first in 18 years, may result in 11% decline in mail volume in FY10; but, tariff increase will more than compensate for lower mail volume, planned 20% pay rise for postal workers. "We see yields on mail items ultimately jumping 80%, thus boosting total revenue and bottom-line by 38.5% and 174% respectively in 2011," Ahmad Maghfur says. Adds, with improved earnings, Pos Malaysia's gross dividend expected to double to 20 sen by FY11, for a gross yield of 7%. Pos Malaysia +12.2% at MYR3.21.



DJ MARKET TALK: Maybank Research Rates Kencana As Accumulate
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0328 GMT [Dow Jones] STOCK CALL: Maybank Research rates oil and gas services provider Kencana Petroleum (5122.KU) as Accumulate based on charts. "Kencana recently made a Wave 4 low in February 2010 and is now on its Wave 5 uptrend," says chartist Lee Cheng Hooi; adds stock price went above its 19- and 50-day moving average, confirmed by positive crossovers on its firm technical indicators. Thinks stock has great potential to reach its stipulated resistance levels of MYR1.72, MYR1.81 and target areas of MYR1.83, MYR2.11. Tips support at MYR1.67, then areas MYR1.46 with stop-loss at MYR1.44. Stock last down 0.6% at MYR1.66

Summary

*DJ Petronas Gas Raised To Buy From Hold By AmResearch
*DJ Pos Malaysia Target Lifted To MYR3.80 From MYR2.30- AmResearch
*DJ Proton Target Upgraded To MYR6.30 From MYR5.50 By AmResearch
*DJ Telekom Target Raised To MYR3.90 From MYR3.25 By AmResearch
*DJ Telekom Malaysia Upgraded To Buy From Hold By AmResearch
*DJ Unisem Target Lifted To MYR3.30 From MYR2.68 By Affin Research

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