Affin Daily Insight (LV) - 12 May 2014 - GAB / MISC / KLCCP / TRCB / ECONOMY - ASEAN OUTLOOK / ECONOMY - US OUTLOOK

Top Calls

Results Note � Guinness (REDUCE, downgrade) - Lesser cheers for FY14 GAB's 9MFY06/14 topline fell 5.3% yoy to RM1.2bn. This is due to: 1) the group�s planned reduction of distributor stocks in 1Q-2Q14; 2) an overall slowdown in discretionary spending brought by inflationary pressure (higher petrol price and electricity tariff); and 3) an overall decline in tourist arrivals. Together with: 1) a higher interest expense; and 2) a higher depreciation charges (+16,6% yoy), GAB's 9M14�s core earnings had declined by 18% yoy to RM151.3m. Results were below both our and consensus expectation, accounting for 69% and 71% of both full FY14 forecasts. In view of the disappointing set of results, largely due to: 1) the weaker-than-expected sales; 2) higher-than-expected depreciation charges as well as interest expense; and 3) lower tourist arrivals, we are slashing our FY14-16 EPS forecast by 14%/14%/14.6% respectively. Though we like GAB�s strong brand name and good corporate governance, we are however concern on GAB�s volume sales, typically on its premium beer segment. Underpinned by GAB�s FY14-16 earnings CAGR of only 4.3%, we also reckon that GAB�s current valuation of 22x FY15 EPS is lofty. Therefore, we downgrade GAB from ADD to REDUCE rating and DCF-derived TP is also lower to RM13.95/share (from RM15.85/share)

Other Calls

Results Note � MISC (ADD, maintain) - Improving freight rates

Results Note � KLCC Property (ADD, maintain) - Hotel and retail revenues drive 1QFY14 higher

Results Note � Tropicana (BUY, maintain) - Lower earnings yoy on absence of land sales

Economy � ASEAN Outlook � Weekly Wrap (5 � 9 May 2014) - Both BNM and BI kept their policy rates unchanged

Economy � US Outlook � Weekly Wrap (5 � 9 May 2014) - Improved US economic indicators in exports and ISM

Moring News & Market Summary