Maybank+Bumi-Commerce

Merger of the two could be a win-win for both banks as they complement each other.
Maybank's strengths - Strong deposit and retail franchise - Strong presence in Singapore and Phillipines - Good fee income stream from transactions and insurance - Good asset quality - Strong capital position
Maybank's weaknesses - Could face top mgt vacuum if Amirsham retires in mid-2008 - Lacks presence in Indonesia and looking out for acquisition - Weak IB franchise and lack of capital market presence - Starting to lose consumer loan share , particularly in mortgage loans Bumi-Commerce's strengths -
Leading IB with growing regional presence - Strong presence in Indonesia with option to further expand with Lippo acquisition - Strong mgt team led by Nazir Razak - Good wealth mgt product
Bumi-
Commerce's weaknesses - Weak retail deposit franchise - Lacks banking presence in other ASEAN markets other than Malaysia+Indonesia - No insurance product - Less room to further gear up compared to Maybank
Benefits of a merger :
- Addresses Maybank's management vacuum should Amirsham leave
- Much larger entity and cements top domestic position (close to 40% market share) and emerge as possibly top 3 ASEAN bank
- Good combination of Maybank's strong retail franchise and BCHB's dominant IB
- Combined entity will have better regional footprint (Malaysia, Singapore, Indonesia, Phillipines)
- Room for capital mgt post-merger
- Dispels concerns over Maybank's acquisition plans in Indonesia
- BCHB can tap Maybank's low cost funds and strong retail deposit franchise
- Good cross-selling opportunities : bancassurance (Maybank's), credit card (both equally strong), IB (BCHB), wealth mgt (BCHB), offer trade finance solutions (Maybank), structured products (BCHB) , unit trust and asset mgt (BCHB).

BURSA-CF (RM0.47) BUY

Bursa Malaysia - Super-monopolistic play
Key drivers:
1- Potential 10% stake sale to CME/foreigners at RM20/share;
2- Huge trading volume/value;
3- US Dollar palm oil futures contract;
4- Generous cash pay-out (i.e special cash,dividend yield >5%p.a)
Risks:
1- Slower local economic activities in 2008;
2- Global market sell-down +recession
Recommendation:
Trading BUY on Bursa-CF, best entry price:RM0.40-0.44, sell at RM0.51 or higher. (premium:<6%, expiry date: 4 Apr'08, ex-price:RM10.30, ex-ratio:1m for 10w), assuming Bursa to reach RM20 before April'08, Bursa-CF should be fairly valued at RM0.97.

Strong run-up towards election.

Bursa Malaysia is in a bullish tone this week, underpinned by strong feeling that general election is just around d corner. Few election stocks worth looking for:
1- MRCB: To secure more projects under 9MP, i.e Penang Monorail;
2-Equine: Trading stock with wide interest in NCER;
3-UEMWorld: IDR, UEMBuilder
4-Tebrau: IDR
5-GLCs: Maybank, TM, MAS, Timecom, MAHB
6- Construction: Gamuda, WCTEng
7-Water play: KPS, JAKS
8- Steel: Kinstel,Mastel
9- Plantation: Sime, IOICorp, KLK, Kulim, etc
To date- Oil n gas ctrs has yet to gain in a big way despite recent huge jump in global oil price. Some believe that oil may hit $200/brl by end of this yr- as fresh statements by OPEC (not upping production) and problems at a couple of the biggest wells sent oil prices skywards. Taking into account inflation and a weaker USD for 2008 (as the Fed would be pressed to reduce rates by a bigger quantum), traders piled into oil futures. There were significant big bets for oil to hit US$200 in 2008 options as well. My pick for oil n gas: Kencana (RM2.50-affordable, net cash position), forget abt KNM and UMW.

Telekom - Sale n Leaseback (Outperform- RHB)

Telekom: Enters Into Agreement For Sale and Leaseback Of Its Buildings Ou
- TM announced yesterday that it had entered into a conditional SPA and Master Ijarah Agreement with Menara ABS Berhad (MAB) for the proposed sale and leaseback transaction of four buildings.
- These buildings will be disposed for RM1bn and leased back to TM for up to 15 years. The proposed transaction is expected to be completed by end-Jan 2008.
- This proposed transaction would facilitate TM’s strategy in monetising its non-core assets. In addition, the amount raised would also facilitate the payment of the special gross dividend of 65 sen/share (or RM1.6bn) that was announced last month.
- RHB maintain an Outperform recommendation on TM with a SOP-derived fair value of RM12.90.

Hiaptek - Best Yet to Come (BUY!)

Hiaptek (HTVB MK)

Its price has yet to move in a big way despite of hitting RM2.02 yesterday (2/1/08). I believe Hiaptek will go higher once it starts to generate income from the oil n gas pipes segment.

Key drivers:

1- Demand from domestic infra projects;

2- Higher margin for O&G pipes;

3- Higher plant utilisation rate.

Risks:

1- Slow implementation of 9MP;

2- Unexepected d/turn in steel price (which is unlikely at d moment);

3- High inventory level;

4- Highly-geared.

Recommendation:

BUY

Target Price:

RM1.94 (RHB), RM3.13 (Affin), RM3.36 (OSK), RM1.75 (Alliance), RM2.82 (AM),RM2.66 (Merill)

Welcome 2008

Its been a not so good 2007 for me as i've failed to beat KLCI's +30% return...2007 also saw commodities price continue to surge, benefiting those holding plantation stocks, 9MP stories- construction, bulding materials, steel as well as oil and gas players...we also see lot of china dolls in d market (i.e petroch,cnooc,sinopec,ccc,angang,zijin) as well as american babes (i.e google,exxon and apple) being actively underwritten and traded. As for 2008, i see some trading restriction on my side as RM40 vs RM15 minimum brokerage fee can be regarded as too much for me, small trader. Nonetheless, prospect for this yr would be less interesting, as KLCI oredi at its peak of 1,445+ and upside seems to be limited. I see more risks than opportunities at this juncture. Some key points in Malaysia market to consider this yr:

Key drivers:
1- Pre-election rally on GLCs, and politically-run Companies;
2- Stable CPO prices;
3- W/drawal of EPF Acc 2;
4- 9MP, again?
5- GLCs reform, again?

Risks:
1- Revision of fuel,electricity,gas tariff, building materials;
2- Rising inflation;
3- Political instability;
4- Regional sell-down to continue on subprime issue;
5- Higher minimum brokerage fee;
6- Softer consumer spending (also impact from GST in 2009?)

My picks (which oredi in d portfolio) include Kencana, Hiaptek, Jaks, Bursa-cf and looking for some undervalued ctrs...