Harimau Capital

東方新聞網

Written by Max Koh
Tuesday, 14 June 2011 11:05

KUALA LUMPUR: Auto parts supplier Delloyd Ventures Bhd expects to see brisk sales in its auto parts division as orders are rising to pre-crisis levels sooner than expected.

Deputy managing director Datuk Leon Tee Wee Leng said the supply chain disruption caused by the disaster in Japan was not as bad as expected.

“When the earthquake hit Japan in March, our production capacity fell to 40% of our usual volume,” Tee told The Edge Financial Daily.

“Orders in April were badly hit with volume from Perusahaan Otomobil Kedua Sdn Bhd (Perodua) shrinking to about 1,000 units at that time. However, we are seeing orders recovering: to 5,000 units in April and 7,000 units this month. We are expecting to reach 8,000 next month,” he added.

Delloyd Ventures is a leading original equipment manufacturer (OEM) for carmakers such as Proton, Perodua and Toyota. For FY11 ended March 31, its auto division derived 34% of its revenue from Proton, 18% from Toyota and 12% from Perodua.

“We expected the (supply chain) problem to last until the second half of the year. However, things are definitely looking up. Perodua is currently operating at 90% of its total capacity while Toyota has reached 80%. We expect production to resume pre-crisis levels next month as orders are returning,” said Tee.

According to Tee, the improving production is due to priority given by carmakers in Japan to supply parts to the Southeast Asian market.

“The Japanese think it prudent to transport their parts here as there is demand locally compared to their homeland. Some OEM makers in Japan appear to have recovered sooner than expected as well,” he said.


Tee: We expect production to resume pre-crisis levels next month.
As such, Tee is confident its auto division will continue to grow in FY11 although its quarterly results for the April to June period will be affected.

“Earnings will no doubt be affected for 1QFY11 ending June 30. Regardless, we anticipate good demand for the new Myvi replacement model. Besides, Perodua is maintaining its annual sales target of 195,000 units for 2011, which certainly bodes well for us,” said Tee.

He added that Perodua and its OEM suppliers could easily make up for the slow production in April by ramping up capacity to 9,000 units a month.

On its plantation division, Delloyd Ventures is also looking at acquiring 10,000ha to 15,000ha of plantations in Palembang, Indonesia this year.

“Prior to this, we were looking at land surrounding our current plantations in Pulau Belintung but we faced a lot of obstacles in terms of social issues. As such, we are now considering Palembang as it is friendlier to foreign investors,” said Tee.

Delloyd Ventures currently has 1,449ha and 14,422ha in Sungai Rambai and Pulau Belintung respectively.

“We are looking at about US$500 per ha, which translates to around US$4.5 million (RM13.7 million) for the total land acquisition. We hope to secure this land within this financial year,” said Tee.

The group saw total fresh fruit bunch production more than triple to 135,000 tonnes in FY11 from 44,524 tonnes in FY06. Tee said another 1,000ha of plantation in Pulau Belintung would mature this year and it plans to plant 500ha more. As at March this year, about 77% of the Pulau Belintung estates have been planted and 40% has reached maturity.

For FY11 (15-month period) ended March 31, Delloyd Ventures posted a net profit of RM59.2 million on the back of RM510.31 million in revenue.

Its auto division continues to be the main earner, contributing 57% or RM48.8 million to the group’s total pre-tax profit. Meanwhile, contributions from its plantations increased 41% to RM34.7 million from RM7.9 million for FY09.

Tee said contribution from its plantations is expected to grow to 50% or more of its total net profits for FY12 on higher yield and strong CPO prices.

“We have an internal guidance of about 20% top line and bottom line growth for FY12 compared with the 12-month period ended Dec 31, 2010. We think this will be possible as the auto industry recovers and CPO prices continue to grow,” said Tee.

PETALING JAYA (March 13, 2011): Delloyd Ventures Bhd’s plantation business could be on the road for a listing on Bursa Malaysia, with 2012 being the earliest targeted date, once it provides significant contribution to the group. For this year, the company is already expecting the plantation operations to overtake its automotive components division as the main contributor to profits for the first time. Delloyd is looking at a 20% rise in its 2011 revenue and net profit for the group. "We expect the group to generate more profit contribution from the plantation business than from the automotive components business this year, mainly due to higher crude palm oil (CPO) prices and improved fresh fruit branches (FFB) yield," Delloyd deputy CEO of corporate and business development, Leon Tee Wee Leng, told SunBiz in a recent interview.

When this happens, Delloyd may spin off its plantation business into a separate unit to be listed on Bursa Malaysia. "We plan to split our plantation and automotive operations into two separately listed units. We are still looking at the options that we have, but more importantly, the plantation business must grow sizeable enough to go for listing on the Main Market of Bursa Malaysia ... to report a net profit of at least RM40 million to RM50 million before it goes public," said Tee, adding that a spin-off and listing may happen in 2012 at the earliest. "If we were to go listing on the plantation counter, then we will acquire more stake in our 60%-owned Indonesian subsidiary (PT Rebinmas Jaya) which owns the three oil palm plantations in Pulau Belitung," he added.

Under Indonesian regulations, foreign investors can hold up to 95% of local plantation firms.
The total yield of Delloyd’s oil palm FFB is expected to increase by 20% this year from 110,000 tonnes in 2010, as the total matured area for oil palm at its three plantation estates in Pulau Belitung, Indonesia increased and start bearing fruits. The group also owns a 1,449ha estate in Sungai Rambai, Selangor. Tee said its first palm oil mill in Indonesia, which started operating in May last year, will also help boost Delloyd’s profits in 2011, as it processes its own crops as well as surrounding smallholders into CPO and palm kernels.

In the fourth quarter to Dec 31 2010, the group already saw profit contribution from the plantation business exceeding the amount made by its automotive components unit. Plantation accounted for RM11.14 million in earnings for the Oct-Dec period compared with RM10.77 million for the automotive components segment. For the full year, however, the automotive components segment was still the group’s top earnings contributor at RM43.37 million, compared with RM21.59 million from the plantation segment. Delloyd posted a net profit of RM47.55 million on revenue of
RM396.1 million.

Tee said given the positive outlook for the palm oil industry, particularly when CPO prices are on an upswing, Delloyd is looking at acquiring more oil palm land in Malaysia and Indonesia to add to its total landbank of 15,871ha now. "We are on the lookout for new plantation land in both Malaysia and Indonesia. We are looking for brown field plantations with part-mature and mature trees, measuring a minimum size of 1,200-1,600ha," he added. "The plantation business will gradually become a significant contribution to the group, as more of the oil palm plantation area in Indonesia mature. We foresee that the plantation division will probably outshine the automotive components business in terms of profit contribution," said Tee. – The Sun
By KANG SIEW LI

KUALA LUMPUR - Delloyd Ventures Bhd is planning to expand its auto parts operations and is considering mergers and acquisitions (M&A) to capitalise on the improving automotive sector in the region.

Its deputy CEO Leon Tee Wee Leng said Delloyd is in talks with other auto parts makers of similar size for a possible corporate exercise to fortify its position as a regional player in the industry.

“We are in talks at the moment but it is still in the early stage. If it comes through, the consolidation would be a good boost for both parties, as it would improve our operations size and help solve any problems of excess capacity,” he told The Edge Financial Daily.

He said the tie-up would result in a stronger and well-capitalised entity with a stronger reach in the regional market given its exposure in Indonesia and Thailand.

While he declined to name the party that Delloyd is in talks with, he said the deal could see the emergence of a new shareholder in the company.

“All this is still premature at the moment. But if it comes through, it will happen sometime this year,” he said.

The lookout for new M&A deals is part of Delloyd’s strategy to tap the booming auto parts market in the region.

Motor vehicle sales in Malaysia reached an all-time high of 605,156 units last year, up 12.7% from the previous year, and is predicted by industry observers to grow by 4% this year.

Despite the moderate forecast growth for 2011 vehicle sales, Delloyd said it could capitalise on new models being introduced in the market this year, including the new Myvi and Persona replacement models.

“We recently secured contracts to produce parts for the new Myvi replacement model, Proton Inspira, and the Persona replacement model,” said Tee, adding that it is planning to invest RM18 million for a new plant in Tanjung Malim to cater to the Persona replacement model.

Delloyd is also investing RM9 million to expand its Indonesia operations. It recently secured new contracts to supply auto parts for Toyota and Nissan vehicles in Indonesia.

“Our Indonesian operations is showing a lot of potential as total industry volume (TIV) increased some 36% from 550,000 vehicles in 2009 to 750,000 last year. With more cars being sold in the market, we are looking at higher demand for auto parts as TIV is expected to hit one million in 2014,” said Tee.

Tee said the paint shop at the new Indonesian plant is expected to begin commissioning in June 2011, and would have thrice the production capacity of its current plant in Indonesia which is running at full capacity.

“With the new plant, we will begin to produce other components such as sun visor, inner mirror and window regulator. When the new plant runs in full capacity, we could see our Indonesia operations contribute about RM90 million to our total revenue,” he said.

Delloyd is an automotive parts and component manufacturer with a long-standing relationship as Tier-1 vendor to national carmakers Proton and Perodua. lthough the company has also ventured into plantations, the automotive segment remains the biggest contributor to the group’s earnings. It recently changed its financial year-end from Dec 31 to March 31.

For 12MFY2010, Delloyd saw its net profit rise 26% to RM42.5 million from RM33.8 million a year earlier. Revenue increased 38.3% to RM396.1 million from RM286.3 million. Basic earnings per share (EPS) also improved to 47.12 sen from 33.8 sen. About 70% of the group’s earnings came from its automotive sector while 30% came from its plantations segment which saw higher fresh fruit bunches (FFB) production, and higher FFB and crude palm oil (CPO) selling prices.

While the auto segment continues to be the main contributor to the group’s earnings, the plantation segment is beginning to yield better profits for the group.

According to Tee, Delloyd’s FFB yield to expected to improve 20% annually and to contribute half of its earnings in FY2013.

“Our plantations division has grown to be a formidable contributor to the group’s earnings. Last year, it contributed about 30% of the group’s total profits. As more trees began to mature, we should see our plantations side contributing half to our group’s earnings in FY2013,” he said.

To recap, Delloyd first ventured into plantations in 1999 when it acquired 1,449ha of oil palm estate in Sungai Rambai, Selangor.

Delloyd now has a total of 15,871ha in oil palm plantations and as at Dec 2010, some 84% of its Malaysian plantation has matured while 77% of its Indonesian plantations are planted.

The group’s FFB production volume rose by 150% to 111,120 tonnes last year from 44,524 tonnes in 2006.

“By 2014, we target FFB output to reach 194,000 tonnes from our Indonesia production. As for our Malaysian estates, Delloyd plans to replant an average of 10ha annually over the next seven years and complete replanting of palm trees of more than 25 years old by 2021,” said Tee.

經商不外乎創新變通
鄭文記小本創出大事業
經濟好轉、政府措施均鼓勵汽車領域發展，原件商生意應聲叫好，上市公司立羅（DELLOYD，6505，主要板工業）前景在業務多元化策略加持下，穩定上揚。
經商之道不外乎創新變通，立羅公司董事經理拿督鄭文記認為，做什麼行業都好，以賺取自己薪水為目標，自會有出路。
鄭文記認為，創業要趁年輕，以賺取個人薪水為目標前進，是邁向成功的一大動力。

公司發展至今日規模，曾經歷過高潮迭起，鄭文記做生意的訣竅之一，就是以賺取自己的薪水為目標而前進。惟鄭文記亦非一創業就成功，他也曾面臨被伙伴捲保費而逃、引進熱水器產品受人嘲笑等經驗。儘管如此，他說：“所幸起步得早，人脈和經驗累積得多，即使現在想回流賣熱水器，還是能夠拿到貨源。” 鄭文記最想要表達的是，創業要趁資本和風險都尚小時大膽嘗試，才會有更多站起來的本錢。
以賺取薪水為目標
“資本和費用較少時，就應該以較為大膽的方式嘗試經營，並且設立明確方向，作為前進的目標。” 他認為，趁年輕、薪水不高時創業較容易，扣除基本資金后以賺取自己薪水為目標，將刺激提高本身薪水的意志。鄭文記做生意的另一項訣竅就是，與其等顧客上門，還不如自己上門找顧客。“當然這需視生意本質和種類而定，但若能出門找客，盈利增長速度將大大增加。” 對經商之道侃侃而談的鄭文記，從小因受父親影響，對做生意和油棕業產生興趣。鄭爸爸經營小本生意，並有小片油棕園，儘管養育家中多口綽綽有余，但兄弟姐妹眾多，不可能個個都掌管生意。
“家中有 4 男 3 女，如果全家大小都在父親店里工作，將分薄小本生意盈利，可行性不高。”
于是，鄭文記毅然決定離開溫暖的家庭庇護，外出尋找其他出路，趁年輕以小資本創業，至今日成為上市公司董事經理。
風暴后 學會分散投資立羅旗下三大主要業務得以穩健發展，有賴于公司在 1998 年金融風暴后，分散投資的
重要決定。
鄭文記指出，當年公司上市不久，業務以普騰控股旗下汽車零件和配件為主，在購車率受金融風暴衝擊時，生意大受挫。立羅在經歷危機后，以多元化業務分散投資，穩固業務成長和前景。 “金融風暴大大打擊消費市場，購車率也減少許多，直接影響零件和配件市場，公司業務受影響。”
鄭文記指出，那次經驗后，管理層便決定分散投資，增加售后以及海外業務，加強公司根基。隨后，公司亦將業務衍生至巴士製造和種植領域，業務已漸上軌道，惟為了更專注公司各項發展，短期內沒有新的業務開發計劃。鄭文記指出，接下來會將重點放在拓展現有業務，暫不會有新計劃。

汽車業上看種植業 崛起
汽車領域上看、種植業務崛起，立羅有信心主要客戶策略聯盟不影響業務，本財年有望向過去 5 年的 20%盈利增長水平看齊﹗
目前，立羅主要客戶普騰控股（PROTON，5304，主要板消費），曾多次透露欲與全球原件裝配商合作，加強國際市場競爭力。汽車原件業務為公司主要收入來源，已拓展至泰國和印尼兩地。受詢及是否擔憂公司業務受影響，鄭文記表示，原件商要獲得認證，並非一時三刻可行。“認證過程可耗時 3 年甚至 5 年，須將工廠生產的配件送往審核、檢測，受官方承認后方正式成為合格原件商。” 之前盛傳與普騰合作的福士偉根，也是立羅客戶之一，鄭文記認為任何進展，都將推動汽車領域，應該也是好事一樁。隨著整體經濟上看，大馬汽車公會亦預測汽車銷量將在未來 3 年內，平均每年以 3%增幅成長，銷量為指標的零件商，有望同步成長。“目前，公司本地主要車廠合作，尤其主要客戶普騰和第二國產車市佔率已成長至65%，一併帶動公司業務表現。”

印尼生產巴士 潛能大
在重新規劃管理方針和施行新策略后，立羅的巴士製造及汽車分銷業務已成功轉虧為盈，接下來希望進一步強化此業務。鄭文記指出，收購印尼公司后擁有現成的生產執照，前年測試性為當地政府製造的 13輛巴士已全部在路上川行。
“單是耶加達，基本需求量為 200 至 300 輛巴士，目前數量明顯不足，市場潛能極大。” 再者，公司製造的巴士已獲好評，應該會趁勝追擊，進一步打開旅遊巴士或廠巴等不同需求的市場。立羅為本地受承認的汽車原件商，為本地最暢銷的 5 大汽車廠牌生產汽車零件和配件。“今年首季已錄得盈利，未來希望繼續發展，成為旗下另一項重要業務。” 鄭文記也放眼，透過東協自由貿易協議（AFTA），將在印尼製造的巴士，在本地市場出售。儘管看似一帆風順，公司進軍印尼初期亦受中國業者挑戰，惟中國業者盲目生產巴士，相比下可用性不高。“公司明白適者生存的道理，在生產巴士時，以當地的路面情況作為考量，製造符合要求的巴士，很快脫穎而出。” 他認為，這項業務未來前景可期，將繼續專注發展，冀很快能為公司業績作出顯著貢獻。細心播種耕耘 才有成果1999 年進軍種植業、2006 年將種植地拓展至印尼，鄭文記強調，進入任何行業都需經過努力耕耘才有成果。“由于小時候曾經在爸爸的油棕園幫忙，對這個領域有認識，但在進入任何行業前，每顆種子都需要重新研究。”

公司在印尼增設棕油提煉廠，未來將進一步增加此業務賺幅。
他指出，本地油棕種植受土地減少限制，才將種植地拓展至印尼，目前后者土地面積是前者的 10 倍。“一旦物色到合適土地，公司將繼續拓展種植地。” 該公司亦以 3800 萬令吉在當地設原棕油提煉廠，估計將在今年 5 月投入運作，屆時能直接出售賺幅較明顯原棕油，提高收入。目前，立羅種植地以油棕樹鮮果串（FFB）居多，並將油棕樹鮮果轉賣其他公司作為提煉用途.從汽車原件生產業務跨足至種植業，兩項業務各司其職，公司放眼未來業務比重能夠慢慢達致平衡。鄭文記指出，與原件業務相比，種植領域目前佔總營業額約 15%，盈利卻佔總數約62%，短短幾年內已成公司盈利的主要增長動力。

獲福特合約下 財年投產
Page 5 of 6汽車原件生產為立羅主要業務，剛獲頒福特在泰國的製造合約，新生產線將在下財年正式投入大量生產。
這項公司的核心業務，在本地主要為普騰和第二國產車生產零件，為其他在本地設廠的流行車款供應零件，包括豐田、本田、日產等。鄭文記說，此業務並已涉足海外，同時為泰國通用汽車和印尼 PT 豐田汽車廠牌生產原裝配件，並剛獲得福特汽車在泰國的配件合約。巴士製造將成為公司未來重點發展的項目之一，冀接下來透過東協貿易協議，將巴士銷售回本地。“這是公司的核心業務，估計佔總營業額逾 77%，是收入增長主要動力；本地和海外貢獻比重為 80%和 20%。”儘管需求上揚，大致上公司生產線仍遊刃有余，泰國將增生產線、印尼方面則會設新廠。尼新廠預計將耗資 300 萬美元（約 968 萬令吉）建設。”
鄭文記指出，零件業務不僅是按要求生產，必要時也得衡量市場需求，自行設計后向廠商建議更換設計。“公司每年會固定撥出 100 萬令吉作為模型和設計經費，必要時才挪動資金。” 他強調，這也是公司能在茫茫競爭者中脫穎而出的主因，不停研發創新、開發具品質的新產品，準時交貨，贏取顧客信賴。

Delloyd’s thrust into plantations, bus assembly pays off

KUALA LUMPUR: Automotive components manufacturer Delloyd Ventures Bhd’s decision to venture into plantations and later the assembling of buses in Indonesia was an unusual strategy to diversify its revenue and earnings base.

However, these diversification ventures appear to be paying off. Delloyd has successfully expanded its earnings and revenue base, and buffered the cyclical nature of the automotive industry and its reliance on national carmaker Proton.

Investors were initially sceptical when the company acquired Sungai Rambai Estate just over a decade ago in 1999, since it had no prior experience managing an oil palm plantation.

At that time, the country was still reeling from effects of the 1997-98 Asian financial crisis.

The crisis claimed many casualties, including automotive parts producers that were specially set up to support the growth of Proton since the early 1980s.

The Asian financial crisis had an adverse impact on overall car sales and Proton’s finances. Compounded with further liberalisation of the automotive market, Proton’s previously dominant lion share shrank over the years, reducing sales and margins for its parts suppliers.

For them, the days of depending solely on Proton for a living were coming to an end.
CASE FOR DIVERSIFICATION... Delloyd Ventures Bhd group MD Datuk Tee Boon Kee says the auto component maker’s main challenge is competition from abroad. Thus he sees the need for the company to continue to look for opportunities to expand. Already, its diversification into plantations and bus assembly has paid dividends.



This was when many industry players decided to restrategise and expand their earnings base, either by expanding their customer base to other carmarkers, or by diversifying into other industries, even into semiconductors in one case. The results were often mixed.

Delloyd is one of the better success stories. Its diversification into plantations and bus manufacturing is paying dividends, and is expected to grow further in the coming years.

Group managing director Datuk Tee Boon Kee said in an interview with The Edge Financial Daily that Delloyd was targeting to double the revenue from its plantation segment in three years due to higher fresh fruit bunches (FFB) production from its Indonesian estates.

He said the FFB yields soared from three tonnes per ha in 2006 to 12.96 tonnes per ha in 2009.

“With the revised FFB output, Delloyd anticipates yield to rise further to 13.75 tonnes per ha in 2010. By 2014, Delloyd targets output to reach 194,000 tonnes.

“For Malaysian estates, Delloyd plans to replant an average of 100ha annually over the next seven years and complete replanting of palm trees more than 25 years old by FY2021,” he said.

To recap, in 1999, Delloyd acquired its first plantation, the Sungai Rambai Estate in Kuala Selangor which covers 1,449ha, and has since also ventured into Indonesia.

Its Indonesian estates cover 14,422ha, which it acquired a 60% share in 2006 for RM42.9 million.

The Indonesian estates have a 30-year lease expiring in 2020 with an option to renew another 25 years and another 30 years.

The total planted area in Indonesia as at end of June 2010 was 11,157ha, of which 52% or 5,818ha are mature, ranging from six- to 11-year-old trees.

Tee said that as peak yields would be between 10 and 18 years, he expected the estates to continue to see rising yield in the near to medium term.

Delloyd targets the yield to increase from 12.96 tonnes per ha in 2009 to increase to 18.22 tonnes in 2014.

Based on the second quarter ended June 30, 2010, plantations accounted for a small but growing part of the group’s revenue.

Of the revenue of RM90.08 million, plantations accounted for RM11.47 million, automotive components RM68.27 million while the rest came from vehicle distribution.

However, the plantation sector’s performance was affected by lower output and yield due to heavy rainfall in Indonesia despite better FFB prices.

Indonesia bus venture zooms ahead Delloyd’s venture into Indonesia’s commercial vehicle assembly industry in 2008 is also paying dividends.

Through 51%-owned PT Asian Auto International (PT AAI ), it is involved in the assembly of high-floored articulated compressed natural gas (CNG) buses. Each bus is capable of accommodating 180 passengers and caters to the bus rapid transit system in Jakarta.

Tee said the subsidiary had delivered 17 CNG buses this year and would supply an additional 25 buses.

It is understood that PT AAI plans to tender for new orders to supply another 48 and 50 new buses by FY2011 and FY2012, respectively.

Tee said the expansion of transportation networks in Jakarta and major cities in Indonesia provided opportunities for Delloyd Ventures to supply more buses.

If all goes well, the group is also looking to expand its commercial bus and bus chassis manufacturing business in Indonesia to Malaysia by developing a prototype chassis for the Malaysian market.

Automotive continues to contribute bulk of earnings
As for the automotive parts and component manufacturing division, this had contributed between 75% and 80% of Delloyd’s total revenue and earnings over the last four years.

Delloyd’s main automotive products are door mirrors, cylinder key lock, door trims, bumpers, door latches and actuactors, which are produced in plants located in Klang, Tanjung Malim, Jakarta and Thailand.

The group’s main customers are Proton, Perodua and Toyota, as well as other foreign marques like General Motors and Honda.

“Currently, we are involved in the development of parts of the facelift models for Perodua and Proton,” he said, adding that the company is a Tier 1 supplier to the two companies.

Tee said Delloyd Ventures invested about RM2 million a year in research and development for the automotive industry.

“However, the main challenge ahead is the FTA (Free Trade Agreement), due to more competition from other countries and manufacturers in the automotive industry.

“Therefore, Delloyd is diversifying, looking for opportunities to expand, as there is a need to be more competitive,” he said.

Analysts positive on the stock
Delloyd’s strong earnings and decent valuations have also attracted the attention of the investment community.

For the six months to June 30, 2010, the company’s net profit grew 61.4% to RM18.38 million, from RM11.39 million a year earlier. This was achieved on the back of a 25.9% growth in revenue from RM135.48 million to RM170.54 million. The earnings in the first half of 2009 were adjusted to exclude the foreign exchange gains, the company said.

Earnings per share for the six-month period rose from 15.9 sen to 20.2 sen. At the current share price of RM3.15, this suggests the stock is trading at around eight times annualised earnings for 2010.

The stock is also trading 14% below its latest net assets per share of RM3.67. As at June 30, 2010, Delloyd had cash of RM65.34 million and RM84.78 million in borrowings. Its net debt of RM19.44 million translates into a minimal net gearing ratio of 5.8%, based on shareholders’ funds of RM333.27 million.

OSK Research maintains a buy call on Delloyd with a target price of RM3.90 based on 7.7 times FY2011 earnings per share. It said Delloyd’s valuation remained attractive, with its fair value at discount to the stock’s sum of parts valuation of RM4.23.


This article appeared in The Edge Financial Daily, October 7, 2010.

Public Bank - Organic growth regionally. TP for next 3 year RM20
Mahsing
Paramount
Maxis

LPI CAPITAL (8621) - The stock has gone up to RM 13.18 from RM 11.50 within one month recently. Based on estimated EPS 78 sen on FY2011, the stock is fully value now. But you can start to accumulate the stock if it fail below RM12. Target Price for next 3 year: RM16.

Delloyd Venture (6505) - Delloyd is a tier one manufacturer of automotive parts and components that has in the past few years made a foray into palm oil plantation with a total planted area of 12,300 ha. Delloyd’s auto segment also manufactures bus chassis in Indonesia through a JV with an Indonesia partner, in addition to owning an exclusive distributorship for Beiqi Foton to import buses and bus chassis. On the local front, it also owns several dealerships in Malaysia selling
a variety of marques. Its core activity is the manufacturing of door mirrors and
window regulators to a wide range of automotive manufacturers.Currently profit contribution from automotive and palm oil division are 2:1 ratio.

Palm oil prices are currently trading at good levels and in recent months CPO and Palm Kernel prices have increased to around RM3,000 and RM2,000 per metric tonne
respectively. Due to the increase in yield in the Group's oil palm plantation in Indonesia, and coupled with the strong CPO price, this sector has produced substantially higher profits for the period under review. With the increase in the acreage of matured areas in the plantation in Indonesia resulting from newly matured plantings, the gradual increase in the production of CPO from the oil mill there and CPO prices expected to remain firm, the outlook for the Group's plantation sector is will be very soon equal or exceed the automotive division. TP price for next 3 years : RM5.50

Carlsberg
Ajinomoto Malaysia (2658) - Should accumulate at < RM4 for long term.

Turnaround in car sales should bode well for automotive parts manufacturers like DVB: Bulk of DVB’s FY09 topline comes from the automotive business, which comprise of auto component manufacturing; trading and distribution of automotive parts; and accessories and manufacturing and assembly of bus and bus chassis. Currently DVB manufactures over 40 car component products -- with door mirrors, door latches and power windows as their top selling products. With a 2.5% y/y passenger car sales projected in 2010, from 2.2%y/y decline in 2009 driven by new launches and a better economic outlook shoul d bode well for automotive parts manufacturers like DVB.

¨ Higher contribution from foreign market segment: Their f oreign market segment contributes 15.0% to the automotive segment and 11.3% of the top line. DVB plans to make greater inroad into the foreign market i.e. Indonesia and Thailand. Currently their 2 largest foreign customers are PT Toyota Motor Manufacturing Indonesia and GM Thailand. Having secured the contract with PT Honda Indonesia in June09, DVB is expected to enjoy its impact from FY10 onwards. We project higher foreign market segment contribution to their automotive segment in FY10, i.e. 17% and 20% in FY11.

Contribution from bus manufacturing is expected to lift earnings: DVB ventured into commercial vehicle manufacturing after acquiring 51% stake from PT Asian Auto International (PT AAI) which is based in Indonesia in March 2008. PT AAI is involved in manufacturing and assembling of compressed natural gas (CNG) busses. The passenger bus is 18 meter long as opposed to the standard 12 meter long passenger bus in Malaysia. Contribution from the bus manufacturing division in Indonesia is about 4% of FY09’s 77% automotive segment. PT AAI has bid to build 25 new passenger buses which they are confident of securing. Assuming they secure the bid to build the 25 new passenger buses, this together with another 4 more buses currently being built would mean they would deliver 29 buses in FY10, a marked jump from 5 buses delivered
in FY09. With an indicating revenue of RM1.2mn per bus, we can expect contribution from bus to grow from RM6mn in FY09 to RMRM35mn in FY10 lifting its bottomline by RM5.3mn and add another RM0.06sen per share into our fair value.

Plantation growth from Indonesia: DVB ventured into oil palm plantation in FY99, focusing at Kuala Selangor, Malaysia with a total planted area of 1449ha. The oil palm yield stood at 25 ton per hectare, which is above the industry average of 19.2 ton per hectare. The high yield was due to the mature average age profile of above 20 years which cover over 78.9% of the total planted area. In 2006, DVB expanded their palm oil plantation into Indonesia, with a total planted area of 6843 ha and yield of 3 ton per hectare. End FY09, the total planted area in Indonesia climbed to 10,851ha, with yield improving to 12.96 ton per hectare. Nonetheless, the lower FFB yield in Indonesia vis-à-vis Malaysia was due to young tree age profile
which ranges from 6 to 11 years and with another 46.4% of their total planted area below 5 years. We expect FY10 FFB yield to improve to 14 tons per hectare driven by higher mature tree profile. Contribution from plantation to their top line improved from 12.1% in FY07 to 15.3% in FY09. We project earnings contribution to improve further to 16.6% in FY10.

Delloyd is a tier one manufacturer of automotive parts and components that has in the past few years made a foray into palm oil plantation with a total planted area of 12,300 ha. Delloyd’s auto segment also manufactures bus chassis in Indonesia through a JV with an Indonesia partner, in addition to owning an exclusive distributorship for Beiqi Foton to import buses and bus chassis. On the local front, it also owns several dealerships in Malaysia selling a variety of marques. Its core activity is the manufacturing of door mirrors and window regulators to a wide range of automotive manufacturers.

KEY HIGHLIGHTS
A recovery play on TIV volume. We see Delloyd Ventures well-positioned in the domestic automotive market given its status as a tier-1 supplier to the two national automakers. This bodes well for Delloyd as TIV is expected to touch a new high this year. The company has been able to nurture long term relationships by offering workable product designs from the conceptual stage to the prototype stage, and subsequently to the end product itself. The recovery in volume augurs well for Delloyd’s car dealership business as the company
trims down the number of branches from 7 to 4 to improve productivity. Venturing into bus chassis in Indonesia. Delloyd’s venture into the commercial vehicle manufacturing segment following a 51% stake acquisition of PT Asian Auto International will broaden its future overseas revenue base as more orders of its CNG buses are delivered. Delloyd expects to clinch
29 additional buses sometime within the next 2 months. The CNG buses, named KOMODO, will be supplied to the Indonesian government to cater for the growing needs for public transportation in Jakarta. We understand that PT Asian Auto International stands is the strongest bidder, noting that it has already supplied 13 CNG buses and has received satisfactory feedback on the stability of the buses as the bus platforms had to be elevated to enable them to park into the high platforms at bus stations.

Plantation a new engine of growth. Delloyd currently owns two palm oil estate with a total area of 14422 ha and 1449 ha in Belitung (in Kalimantan) and Malaysia respectively. We see more room for growth on the Indonesia side as its immature and unplanted area represents 60% of the estate. Yield there has also improved drastically from 3 tonne/ha to 12.96 tonne/ha at a total FFB production of 75,408 tonnes last year. The company also began constructing
its frst palm oil mill in May 2008 with an initial capacity of processing 60 tonnes
FFB / hour. This mill, which was completed in early 2010, will serve all its estates in Belitung and accept FFB from surrounding smallholder plantations. With the existence of its mill, Delloyd expects to improve revenue and margins from selling CPO rather than non processed FFB.Strong balance sheet. Compared with its local auto peers, Delloyd has a sound balance sheet backed by a low gearing, which is a rarity among its peers. Historically, Delloyd has been known for its sound net cash position. We understand that the venture into plantations has required substantial capex, thus raising its net gearing to 6% as of end-FY0