Monday, October 23, 2017

FW: AmBank Research - Protasco : Extending beyond road maintenance BUY, 23 Oct 2017

 

 

STOCK FOCUS OF THE DAY         

Protasco : Extending beyond road maintenance                                                                BUY

 

We initiate coverage of Protasco with a BUY call and an SOP-based fair value of RM1.33. Founded more than two decades ago, Protasco specialises in the maintenance of federal, state and rural roads in Malaysia. It is also engaged in construction, property development, engineering and consultancy, education, and trading/manufacturing of building materials and products.

 

Protasco is the largest of the three federal road maintenance concessionaires in Peninsular Malaysia. Via 51%-owned Roadcare (M) Sdn Bhd (Roadcare), it controls the central and eastern regions covering Selangor, Pahang, Terengganu and Kelantan, while its peers, private companies Belati Wangsa (M) Sdn Bhd and Selia Senggara Sdn Bhd are in charge of the northern region (Perlis, Kedah, Penang and Perak) and the southern region (Negeri Sembilan, Melaka and Johor) respectively. Based on our estimates, Roadcare has a 49% market share in terms of total annual billings of Peninsular Malaysia’s federal road maintenance concessionaires.

 

We project its FY18/19 earnings to grow by 24%/8% underpinned by: 1) strong outstanding road maintenance concession order book of RM4.2bil; 2) strong earnings visibility over the long term from the road maintenance concession which will last till FY2026; and 3) potentially new affordable housing projects.

 

 

Others :

Oil & Gas Sector : Impending equilibrium on lower US rig count?                                NEUTRAL

Plantation Sector : No excitement yet                                                                                    NEUTRAL

 

 

 

QUICK TAKE

Plantation Sector : News flow for week 16 – 20 October                                                NEUTRAL            

 

 

ECONOMIC HIGHLIGHT

Malaysia : Negative real returns for 9th straight month

 

 

NEWS HIGHLIGHTS

Takeovers & Mergers : MGOs in question

Hartalega : Higher capacity boost

Transportation & Logistics : ‘PSC should also be based on airport type’

Nationwide Express : Sees Airpak buy as growth catalyst

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FW: RHB | Economic Research | Tracking Global News

 

 

 

Economic Research

23 October 2017

Global News

 

Economic Update

 

 

 

Tracking Global News

 

Abe Set to Lead Japan Through 2021 After Big Election Win

 

US Existing Home Sales Rebound In September, Implying Softer Drag on 3Q Growth

 

US Fed Chair Defends Past Policies, Noting the Economy is Doing Well

 

China’s Jobless Rate Lowest In Years, But Challenges Persist

 

Philippines’ Overall BOP Position Posts USD24m Surplus in September

 

Economist: 

Peck Boon Soon  | +603 9280 2163

Vincent Loo Yeong Hong  | +603 9280 2172

Ng Kee Chou  | +603 9280 2179

Rizki Fajar  | +6221 2970 7065

Aris Nazman Maslan | +603 9280 2184

 

 

 

To access our recent reports please click on the links below:

 

20 October 2017

19 October 2017

17 October 2017

16 October 2017

13 October 2017

 

Economics Team

 

 

 

 

Peck Boon Soon

Chief ASEAN Economist

bspeck@rhbgroup.com

+603 9280 2163

Vincent Loo Yeong Hong

Malaysia, Vietnam

vincent.loo@rhgroup.com

+603 9280 2172

Ng Kee Chou

Singapore, Thailand

ng.kee.chou@rhbgroup.com

+603 9280 2179

Rizki Fajar

Indonesia, Philippines

rizki.fajar@rhbgroup.com

+6221 2970 7065

Aris Nazman Maslan

Malaysia, Vietnam

mohd.aris.nazman@rhbgroup.com

+603 9280 2184

 

 

 

 

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FW: [Maybank] USD To Run Higher?

 

 

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GBL: USD To Run Higher?

Global Markets Daily
by Saktiandi Supaat

FX Research

USD index was lifted higher underpinned by prospects for US tax reforms and the possibility of a new hawkish Fed Chair to replace Yellen. More importantly, PM Abe's election victory over the weekend saw the re-emergence of JPY bears that weighed on the JPY and lifted the USD. US equities could continue its run higher with a slew of corporate earnings on tap in the week ahead including Amazon, Alphabet, Microsoft, Facebook, Twitter, GM, Boeing, MacDonald's etc ...

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FW: Credit Market Watch: Summary for week ending 20-Oct

 

 

Credit Market Watch: Summary for week ending 20-Oct

·         MYR Credit:

Ø  In MGS, yields moved rangebound in the holiday shortened week amid subdued liquidity, with the 5y yield up 2bps and 10y yield up 1bp WoW. Corporate bonds softened a tad with yields higher by 1-3bps WoW as the underlying tone remain cautious. Traded volume totalled MYR3.8b.

Ø  PR1MA: Printed 5y and 7y government-guaranteed IMTN at 4.08%/MGS+49 and 4.34%/MGS+46 respectively and in sizes of MYR0.75b and MYR1.75b raising a total of MYR2.5b. The use of proceeds is to fund the development of public housing projects.

Ø  Econs: Headline inflation was higher in September at 4.3% YoY vs 3.7% in August, attributed to higher fuel and F&B costs. Nonetheless, core inflation remained steady at 2.4% (Aug: 2.4%). Adjusting for higher crude oil price assumption, our economic research expects full-year to inflation to be around 4.0%, the upper end of their initial forecast range (3.5%-4.0%). We continue to see little reason for BNM to change its monetary policy stance given stable core inflation, improving external reserves which rose USD0.2b in the first two weeks of October to USD101.4b and stable unemployment rate (3.4% in August).

Ø  Relative value: QSP papers still offer good pickup, last seen ≥25bps wide from our fitted AA3/AA- curve. Credit wise, solar power plants has less construction and operational risks compared to coal/gas power plants, although is susceptible to weather conditions. DSCR levels are decent at a projected 1.48x minimum and 1.70x on average under the more conservative P99 scenario.

·         Asian Credit:

Ø  UST curve bear-steepened along the 2y10y with 10y yield up 11bps WoW, more than reversing prior week's gain. A combination of Trump's tax deal gaining some traction and John Taylor's, a perceived hawk, was speculated to be one of the preferred candidates to replace Fed Chair Yellen had prompted a selloff in UST while the USD strengthened against most regional currencies.

Ø  Asian credits generally traded weaker although spreads were slightly tighter with JACI composite -3bps, JACI IG -2bps and JACI HY -6bps WoW. Regional USD sovereign curves were sold higher by about 3-8bps for INDONS, 2-7bps for PHILIP, 5-10bps for MALAYS and 1-4bps for KOREA WoW.

Ø  China: Moderation in residential property prices continued as NBS data showed that new home prices rose in 44/70 cities on a MoM basis in September compared to 46/70 in August, 9 cities were flat while 17 cities showed deceases. Tier-1 cities continued to underperform, with Beijing -0.1% and Guangzhou -0.5% while Shanghai and Shenzhen flat MoM. For the 70 cities, on average, home prices still grew at a modest 0.2% MoM rate (Aug: 0.2% MoM).

·         CDS: EM Asia 5y CDS spreads remained stable, with China and Indonesia -3bps each, Malaysia and Philippines -2bps each, Thailand -1bp while Korea +1bp WoW.

 

Thank you.

 

 

Regards,

 

 

 

FW: RHB FIC Rates & FX Market Weekly - 23/10/17

 

 

23 October 2017

 

 

Rates & FX Market Weekly

 

 

Powell, Taylor the Frontrunners for the Top Fed Job

 

 

Highlights

 

Global Markets

¨   While the Fed Chairperson succession race should continue to drive bouts of volatility, markets' attention would probably shift towards the heavy economic calendar due in the week ahead: the US economy is expected to have expanded at 2.5% in 3Q17, while durable goods orders will be watched as well as a gauge of manufacturing growth. Although the economy remains for now on a firm path, we remain neutral on the USD as the political risks increase the chances of having no major legislation enacted before year end and even the 2018 midterm election despite a budget resolution adopted by the US Senate renewing optimism for a tax reform.

¨   In Europe, all eyes on the ECB anticipated to announce the future of its stimulus plan on Thursday. The sustained economic recovery in the Eurozone could lead to a potential upside rate surprise with the QE's recalibration although the recent ECB's rhetoric point towards a mild adjustment rather than an aggressive one in our view with monthly purchases likely to be halved for 6/9 months. While a taper tantrum is still possible, we rather defend the view of a gradual appreciation of the common currency in the medium term at this juncture as the APP reduction brings the end of QE in a nearer sight, although downside risks persist should the ECB turn more dovish than expected. The key EURUSD support remains at 1.1680. In the UK, GDP growth is also expected for 3Q17 and baring any negative surprise it should not alter the strong likelihood of BoE increasing rates in November. Brexit developments could however contain any upside pressure on the GBP as PM May and Brexit Secretary Davis are making statements before the Parliament and UK lawmakers respectively on the progress of the Brexit negotiations; remain neutral GBP.

¨   In Japan, PM Abe retained his coalition's two-third majority which subsequently weakened the Yen as the risk sentiment improved ensuring political continuity. However the room for further upside on the USDJPY remains capped at 115 resistance as global developments should resume driving the pair; remain neutral JPY.  Lastly in Australia, markets will likely focus on the 3Q17 CPI print due in the week ahead, with expectations for both the headline and average core numbers at 2.0% y-o-y. Any upside surprises will likely spur hawks into renewed RBA tightening bets, although our current base case remains for no rate hikes over the remainder of 2017; stay neutral AUD.

 

AxJ Markets

¨   With only Industrial Profit due in the week ahead, Chinese watchers will likely focus on the CPC meeting alongside the composition of the new PSC. While the outcome is unlikely to have a direct impact on asset movements over the near-term, the closing of the CPC may result in higher volatility in Chinese assets as trading activities resume. Still, recent Chinese data continues to reinforce a stable economic trajectory, where we continue to eye a neutral CNY stance at this juncture. Over in Singapore, September CPI due in the week ahead is not expected to tick higher from the 0.4% y-o-y logged in August, with MAS likely to retain its policy stance till at least the next review in April; an extraordinary policy review appears unlikely at this stage. Industrial Production data due in the week ahead will be closely watched, given the recent huge miss in trade numbers (often volatile), although the downturn is likely temporary as external conditions remain robust; stay neutral SGD.

¨   With little or no key economic data due in Thailand, Malaysia and Indonesia in the week ahead, expect global and regional sentiment to drive asset movements, alongside the usual month-end portfolio rebalancing flows.

  

Weekly Positioning

 

 

Rates

FX

Overweight

 

 

Mild Overweight

 

EUR

Neutral

UST, GILT, Core EGBs, ACGB, SGS, CGB, ThaiGB, MGS, IndoGB

USD, GBP, AUD, JPY, MYR, THB, SGD, IDR, CNY

Mild Underweight

KTB

KRW

Underweight

JGB

 

 

 

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FW: 20171023 AmBank FX Daily Outlook

 

 

 

Highlights of today’s AmBank FX Daily Outlook as follows:-

 

v  Dollar rebounds after Senate approved 2018 budget

v  MYR to fluctuate in the range of 4.2180-4.2328 against US dollar

v  Key Watch: (i) ECB Praet Speech; (ii) Sep US Chicago Fed National Activity; (iii) Aug US S&P/Case-Shiller Home Price; (iv) Oct UK Industrial Trends Orders;
(v) Oct EU Consumer Confidence Flash; (vi) Sep Singapore Inflation Rate                                                                                             

 

Best regards,

FX Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2292 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

 

 

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FW: [Maybank IB] Today's Research - Malaysia

 

 

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FEATURED
CALLS

Malaysia | CIMB Group Holdings
Slight uplift in ROEs post MFRS9?
Desmond Ch'ng

break

break

COMPANY RESEARCH

Malaysia

Company Update

CIMB Group Holdings (CIMB MK)
by Desmond Ch'ng

Share Price:

MYR6.19

Target Price:

MYR7.50

Recommendation:

Buy

Slight uplift in ROEs post MFRS9?

The key takeaway from our meeting with management is that the group's credit cost guidance is likely to be little changed post-MFRS9, which is of some comfort. Based on our computation, there could a slight uplift in the group's ROEs post-MFRS9 as well. We maintain our BUY call and TP of MYR7.50 which tags on a FY18 PBV of 1.3x.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Operating income

15,395.8

16,065.3

17,022.2

18,119.9

Pre-provision profit

6,146.8

7,413.6

8,155.8

8,984.3

Core net profit

3,411.2

3,414.4

4,440.2

5,151.8

Core EPS (MYR)

0.40

0.39

0.50

0.58

Core EPS growth (%)

5.6

(2.4)

27.4

16.0

Net DPS (MYR)

0.14

0.20

0.26

0.30

Core P/E (x)

15.4

15.8

12.4

10.7

P/BV (x)

1.3

1.2

1.2

1.1

Net dividend yield (%)

2.3

3.2

4.2

4.8

Book value (MYR)

4.87

5.24

5.37

5.65

ROAE (%)

8.7

7.9

9.6

10.6

ROAA (%)

0.8

0.7

0.9

1.0

MACRO RESEARCH

MY: Malaysia CPI, Sep 2017

Fuelled-up headline inflation
by Suhaimi Ilias

Economics Research

Inflation in Sep 2017 accelerated to +4.3% YoY (Aug 2017: +3.7% YoY) while core inflation stable at +2.4% YoY (Aug 2017: +2.4% YoY). Similarly in Jan-Sep 2017, inflation faster at +4.0% YoY (Jan-Sep 2016: +2.2% YoY) while core inflation steady at +2.5% YoY (Jan-Sep 2016: +2.6% YoY). Adjust 2017 and 2018 forecasts to +4.0% (3.5%-4.0% previously) and 2.5%-3.0% (2.0%-2.5% previously) on higher crude oil price assumption.

MY: External Reserves, mid-Oct 2017

Reserves rebuilding continues
by Suhaimi Ilias

Economics Research

Total gross external reserves rose +USD0.2b to USD101.4b at mid-Oct 2017 (end-Sep 2017: USD101.2b) equal to 7.5 months of retained imports and 1.1 times of short-term external debt. This was despite indication of subdued foreign flows in the equities and bond market this month, suggesting contributions from trade and FDI flows. Year to date, external reserves rose +7.2%, and at current pace, it could be at USD103b-USD104b by end-2017.

RN: Regional Traders' Almanac

Correction on MXAPJ Index an Opportunity to Hunt ASEAN Construction Stocks
by Nik Ihsan Raja Abdullah

Technical Research

After breaking out of its "Ichimoku Cloud" in Jan 2017, the MSCI Asia Pacific ex. Japan Index (MXAPJ Index) continued to trend higher. There were intermittent pullbacks along the way but the index remained above the "Cloud", implying that the bull is still strong here. However, with the MXAPJ Index hitting a near-term peak of 554, we expect some correction to take place. The index could trend towards the lower support at between 533 and 538 over the next few days.

NEWS

Outside Malaysia:

U.S: Posts largest fiscal-year budget shortfall since 2013, as a pickup in spending exceeded revenue gains. The federal government's gap grew to USD 665.7b in the 12 months through Sept. 30, compared with a USD 585.6b shortfall in fiscal 2016, the Treasury Department said. That was in line with the Congressional Budget Office's estimate of USD 668b. Treasury Secretary Steven Mnuchin and Budget Director Mick Mulvaney, in a statement accompanying the report, blamed weaker- than-expected tax receipts on historically "sub-par" economic growth. (Source: Bloomberg)

China: Vows no return for shuttered steelmakers as curbs bite. China will prevent shuttered or illegal steel plants from returning to the market, according to an official at the nation's lead economic planning body, signaling a commitment to a campaign by the world's top producer that has helped to raise prices. The nation will stick to its capacity-cuts mission this year, Ning Jizhe, vice chairman of the National Development and Reform Commission, told reporters at a weekend briefing during the 19th Communist Party Congress. Separately, NDRC Chairman He Lifeng said cuts to steel and coal capacity had resulted in more than 1.1 million workers being "reemployed" after job cuts. (Source: Bloomberg)

Japan: Abe placed to lead through 2021 after big election win. Prime Minister Shinzo Abe's gamble on an early election may have just won him a chance to lead Japan through 2021. Abe, 63, saw his ruling coalition retain its two-thirds majority in the 465-member lower house in an election. That boosts his chances at winning another term next year as head of his Liberal Democratic Party, which could make him Japan's longest serving leader. The landslide win -- helped along by a disparate and weak opposition -- paves the way for more ultra-easy monetary policy that has boosted stocks to the highest level in two decades and helped Asia's second-biggest economy expand for six straight quarters. Yet pressure is also growing for Abe to tackle Japan's swollen debt, increase stagnant wages and overhaul the labor market to replenish a rapidly aging workforce. (Source: Bloomberg)

Crude Oil: Extends gains as OPEC says all options open on re-balancing. OPEC and its partners including Russia achieved a record level of compliance to output cuts during September, according to a statement from the committee responsible for monitoring the agreement. In the U.S., drillers reduced the rig count a third week to the lowest since June, according to Baker Hughes. Brent for December settlement was USD 58.05/bbl. (Source: Bloomberg)

Other News:

Aviation: Bellew resigned on Oct 8 without a job. Malaysia Airlines Berhad's outgoing CEO Peter bellew resigned without a job on Oct 8. According to Bellew, Khazanah Nasional and the airline's chairman, had done everything to persuade him to stay the course. His resignation letter was given to the chairman. More than a week later, Malaysia Airlines said in a statement that it was caught off-guard by the announcement that Bellew would be returning to Ryanair Holdings as COO. Speaking at the press conference yesterday, Bellew explained that Malaysia Airlines did not make any announcement on his resignation sooner could be because the chairman was trying his best to retain him. It is apparent that Ryanair might have approached Bellew again after his resignation from the airline. (Source: The Edge Financial Daily)

Hartalega: Higher capacity boost for the company. The company expects stronger revenue growth this year, surpassing its average YOY revenue growth of 28%. Managing director Kuan Mun Leong told StarBiz that he anticipated higher revenue growth this year on the back of higher capacity from its new plants at the Next Generation Integrated Glove Manufacturing Complex (NGC) facilities in Sepang. The NGC facilities will have a total of six plants by 2021. "We have completed the construction of three plants which are running currently. We have also commissioned the fourth. Each plant will have 12 lines. Over the next five years, Hartalega aims to have an average growth of 15% per annum in terms of manufacturing output via capacity expansion. (Source: The Star Online)

Nationwide Express: Sees Airpak buy as growth catalyst. Following the signing of a new deal for its acquisition of Airpak Express (M) Sdn Bhd, loss-making Nationwide Express Holdings maintains it is on track for a turnaround in FY18. According to the managing director Rozilawati Basir, "This is why we want to push for integration as soon as possible. It is going to be tough but it's something we are committed to be doing". She added that the Airpak acquisition is expected to be a catalyst of growth although the new deal is smaller than an earlier negotiated agreement. The new agreement, which encompasses Airpak's assets, all of its staff, as well as some of its liabilities excluding old trade receivables, is targeted to be completed 1Q18. (Source: The Edge Financial Daily)

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