Boustead - The Next Giant in Malaysia

Boustead

-The Future Is Brighter Ahead
- FY11 core results (excluding exceptional) below HLIB and consensus expectations due to the heavy industry division (cost escalation and lapse in new contract) and lower plantation contribution in 4Q.
-4th interim single-tier dividend of 9 sen, making total of 29 sen, below our projection of 34.5 sen but not disappointing is add the dividend in species of Pharmaniaga shares.
- Despite the earnings disappointment, the new petrol vessel contract and maiden full year contribution from Pharmaniaga will revive earnings expansion from FY12 onwards.
- Rare stock that provide earnings growth and high yield.
- FY12-13 forecasts cut by 7-9% following the results.
- Maintain Buy.
-Target price raised to RM6.20 (10% discount to estimated SOP of RM6.89) from RM5.91, incorporating our higher TP for Affin, latest BHIC price and fine-tuning post FY11 results.

Affin : Acquires Bank Ina, Indonesia

Acquires Bank Ina, Indonesia

*To acquire 80% for indicative RM138.1m (blended P/B of 1.7x) with option to acquire another 18.01% (for 3.15x P/B).
*Bank Ina is small with 22 branches as well as FY09 net profit of RM4.7m but has strong asset quality.
* Marginal impact (-0.2%) on earnings while it has ample excess capital to complete the deal without jeopardizing its capital ratios.
* Neutral – gains access to fast growing market with low penetration at decent pricing and potential M&A in Indonesia in the future (given Bank Ina’s strong capital position). Offset by marginal impact on earnings and lack of size to compete with the big players.
* Maintain HOLD, TP: RM3.19 (Gordon growth – ROE of 9.8% and WACC of 9.9%).