A Volative 2010 can be expected

Volatility can be expected throughout 2010 and the spotlight will increasely fall on the central bank who will have the difficult task of controlling inflation and asset price appreciate at a time when economic support measures and borrowing needs remain significant. Higher inflation from  rising commodities prices will remain a sticky issue for the authorities in 2010.


Special Situation Team's Strategy
As global growth is expected to pick up over the coming months with a possible return of inflation, we will likely add exposure to commodities such as agriculturals, oil.

Maybank: Above market expectations

The bank posted 1H10 net profit of RM1.875bn, up 44% yoy and 21% above expectations. Key takeaways from the results: (1) Net interest income increased 18% yoy to RM3.31bn due to the higher contribution from its 97.5%-owned PT Bank Internasional Indonesia (2) Income from Islamic banking operations increased 25% yoy to RM738m due to higher income derived from investing of depositors’ fund. (3) Non interest income increased 78% yoy to RM2.36bn on higher fee income, unrealized gains on revaluation of derivatives, forex profits and gain on sales of securities. (4) NPL ratio improved to 1.43% from FY09’s 1.64%.
It is currently trading at FY11E 1.7x P/BV, in-line with banking peers.

(HLB Research)

Genting SP and Genting Berhad

Genting Singapore (GENS SP) SELL

Price/Tgt: S$1.11/1.00 Mkt Cap: US$9.4b Daily: Vol 79.8m 1-Yr Hi/Lo: S$1.32/0.39
Receives casino licence; ready for opening anytime soon. Resorts World Sentosa (RWS) received its casino license from the Casino Regulatory Authority of Singapore (CRA) on 6 Feb 10 and is set to commence operations anytime soon.

Comment: The timing of the receipt of RWS' casino license is within our expectation, and we believe that RWS will officially open its casino just before Chinese New Year (CNY) to take advantage of the festive season. The event is expected to generate favorable market sentiment and may temporarily boost GENS' share price. However, we reckon any share price upside would be capped by concerns over the strict junket regulatory environment, and Genting Singapore's (GENS SP) lofty valuations relative to regional peers (average 2010 EV/EBITDA of 10.5x). Currently, GENS is trading at 17.1x 2010 and 13.6x of 2011 EV/EBITDA.