Results Review
Top Glove Corporation RM6.50: Buy
– Top Class 3Q results. Maintain Buy.
Not resting on laurels. As expected, 3QFY09 net profit of RM42m (+18% QoQ, +62% YoY) and interim DPS of 7 sen (net) were in line. 9MFY09 net profit of RM112m (+32% YoY) met 74% of our full year forecast of RM151m and surpassed FY08 earnings. We maintain earnings forecast, Buy recommendation and RM7.00 DCF-based TP.

Other Local News
Khazanah: To co-invest RM130m with Boustead on Kidzania
Water: RM2.5bn jobs up for grabs
John Master: Intends to sell entire business
Supermax: Will allocate RM24m in capex
MAS: Expands code-share pact with Sri Lanka
CBS Tech: To purchase Infodata for RM29m
Tan Chong Consolidated: Feuding factions in TCC agree to settle

Outside Malaysia
U.S: Home-price decline in May spurs second straight monthly increase in resales
U.S: Executives still pessimistic about economic outlook, survey shows
E.U: Manufacturing, service industries contracted at slower pace in June
Germany: Recession will probably continue into 2010, Ifo Institute forecasts
U.K: Mortgage approvals increased in May, BBA says
Singapore: Consumer prices fall for second month in May
Crude Oil: USD 69/bbl as the U.S. currency slipped

Results Preview

Top Glove Corporation (RM6.15): Buy
– Earnings beater. Forecasts and target price raised.
Results to surprise. Top Glove’s 3QFY09 results (due on 23 Jun 09) are expected to beat our and streets’ estimates. Interim DPS may also be higher and the group would stay net cash for the 2 nd consecutive quarter. We have raised our estimates by 3-6% for the next three years and the target price by 18% to RM7.00. Buy call is maintained.


Other Local News
Resorts: Sees no hindrance to Macau investment
BIMB: Talks to sell takaful is still on
Mudajaya: Bidding fro RM1.65b worth of projects
Perwaja: Dispute with Petronas
Leader: Update on Leader’s 100MW coal fired power project in Cambodia
Delloyd Ventures: Signing of agreement between PT Asian Auto, Indonesia and Beiqi Foton Motor, China
Health (H1N1): Filipino traveller confirmed as 18th case
Petronas: PSC operator makes 2 offshore discoveries
KNM: To invest RM44m in Aussie firm
AirAsia X: Orders 10 A350s for US$2.2b
Asiatic: To be renamed Genting Plantations

Outside Malaysia
US: Mixed housing data offer cautionary tale about green shoots of recovery
US: Industrial production dropped 1% MoM in May
US: Producer price index (PPI) slipped further in May
Europe: Inflation rate fell to zero in May
Japan: BOJ kept its interest rate at 0.1%
UK: Inflation rate little changed in May as higher sin taxes and weak GBP sustained price pressures
Germany: Investor confidence rose to a three-year high
South Korea: Department-store sales rose for the third month in May
Crude oil: Price fell 15 cents to USD70.47 a barrel yesterday

Technicals
The local bourse tumbled yesterday, as commodities sank and investors questioned the pace of the economic recovery

Sector Update
Banking: Underweight
–NPLs yet to peak. Underweight

Be cautious into 3Q. 1Q09 results of the six banking stocks we cover were generally in line, with combined net profit down 2.1% QoQ and 13.1% YoY. However, the weak 1Q09 GDP suggests growing stress in system loans over the coming months. We remain cautious on banks’ profits, especially from 3Q09. Underweight the sector.

Company Update
Berjaya Sports Toto RM4.80: Buy
–Special draws are good news. Buy

Special draws positive. B Toto has been awarded 12 special draws, two more than expected. While earnings accretion is minimal, we are encouraged that the government has chosen to raise revenues by more special draws rather than raising gaming tax and/or betting duty. Buy.

Comment On News
S P Setia RM4.10: Sell
– Knocking on China’s door

Signs MoU with Chinese party. S P Setia entered into a co-operation agreement with Hangzhou Ju Shen Construction Engineering Ltd (HJS) for a joint mixed real property development on a 25-acre land (initial development: 5 acres) in Hangzhou, China. While LT positive, there is no immediate earnings impact. At pricey valuations, S P Setia is a Sell.

Economics
External Trade, Apr ‘09
– A mixed bag of data…

YoY drop in exports returned to above-20% in Apr 09 after slowing in the preceding two months. It fell 26.3% YoY compared with the slower declines in Feb 09 (-16% YoY) and Mar 09 (-15.7% YoY) after the plunge in Jan 09 (-29% YoY). High base effect last year (Apr 08: +20.9% YoY – one of the three months of over-20% YoY increase in 2008), mostly from sharp gains in commodity prices last year was a factor.

Other Local News

PLUS: To set aside RM800m for dividends

PLUS: Gets this year’s first compensation of RM92m

Celcom: Expects 500,000 AirCash users by year-end

Boustead: Gets letter of intent for navy contract

Sime: Ramunia extend date again

MAHB: MAHB and JSC agree to terminate pact.

Outside Malaysia

US: Jobless claims fell last week by 4,000 to 621,000

US: Same store sales excluding Wal-Mart fell 4.6% YoY in May

Eurozone: Apr’s retail sales up MoM for the first time in seven months

Japan: Companies slashed spending by record in 1Q09 as profits slumped

UK: Bank of England (BoE) left the benchmark interest rate at a record low of 0.5%

UK: House prices unexpectedly rose in May

India: More liberalization measures coming

Russia: The central bank, Bank Rossii, cut the main interest rates for the third time in six weeks

Iceland: The central bank lowered the benchmark interest rate by a percentage point

Crude oil: Price rose to a seven-month high

Technicals