AmWatch - Banking Sector : Highlights of business segment debt from Bank Negara Annual Report NEUTRAL, 31 Mar 2014

SECTOR FOCUS OF THE DAY

Banking Sector : Highlights of business segment debt from Bank Negara Annual Report                 NEUTRAL

Generally lower leverage position for businesses in 2013. Bank Negara Malaysia (BNM) reported that businesses recorded a lower aggregate leverage position with a debt-to-equity ratio of 39.7% in 2013 (2012: 41.3%). BNM further said that, in addition, businesses continued to demonstrate strong debt servicing capacity as reflected in the improvement of interest coverage ratio to 7.7 times (2012: 5.4 times). Overall business debt-to-GDP ratio at 97.1%. BNM also reported that the level of overall business debt-to-GDP ratio has increased to 97.1% in 2013 (2012: 92%), but remained well below the 131.7% level recorded in 1998 during the Asian financial crisis. Business Sentiment Index slid to 92.0 points in 4Q13. MIER reported that the business sentiment index (BSI) has slid further to 92.0 points in 4Q13, from 98.6 in 3Q13. According to MIER, this was due to perception of deterioration in sales performance, sluggishness in domestic orders, and fewer increases in export orders. Macro data indicates corporate and business segments are less leveraged compared to the household segment. BN’s annual report confirms our view that the corporate and business segments are generally less leveraged than the household segment. Based on our latest company visits, loan disbursements and drawdowns seemed to be strong in January, although we expect the month of February to be quiet. Maintain NEUTRAL. We maintain our stance of a likely less ample domestic liquidity situation ahead, given the high foreign holdings of MGS. We expect slowing deposit to affect loans growth. Maintain NEUTRAL on the sector.

Others :

IJM Plantations : To be flushed with cash from warrants conversion         HOLD

QUICK TAKE

Plantation Sector : Newsflow for week 24-28 March        OVERWEIGHT

NEWS HIGHLIGHTS

Mah Sing Group Bhd : Eyes bigger affordable housing stake

Malayan Banking : Growing Singapore ops

Property Sector : Medini to continue enjoying 10-year extension for special tax holidays and other packages for investments

Oil and Gas Sector : Malaysia positioned as regional oilfield services hub

DISCLAIMER:

The information and opinions in this report were prepared by AmResearch Sdn 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 AmResearch Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmInvestment Group 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 judgement as of this date and are subject to change without notice.