Affin Daily Insight (LV) - 7 May 2014 - KLCI / PGAS / HARTA / DMR

Top Calls

Strategy � KLCI (OVERWEIGHT, maintain) - More at risk under May 2014 Shariah review Kneejerk reaction on some of the stocks that lost their Shariah-compliant status in the November 2013 review raised concerns on the outcome of the latest review by the SC. We ran checks for potential dropouts across our universe of Shariah compliant stocks based on either the annual audited accounts or latest annual report. Asia X, Perdana Petroleum, Petronas Chemicals and Sapura Kencana are potentially at risk. Notwithstanding this, the demanding Shariah conditions and already distinct scarcity premium for Shariah compliant stocks reinforce our view that valuations for the KLCI will further trend up in the future as ample liquidity is further narrowed down on a smaller pool of investable names. We remain positive on the KLCI given a compelling macro outlook and maintain our year end target of 1980 (+6% upside). In our Top 10 picks, IJM Plantation and SKP replaced Air Asia and Bumi Armada, respectively.

Other Calls

Results Note - PGas (REDUCE, maintain) - 1Q14 earnings driven by RGT, priced in

Results Note � Hartalega (ADD, maintain) - FY14 review: Hit by high start-up costs and tax expense

Debt Market Research - Softer day despite firmer MYR, awaiting MPC

Morning News & Market Summary

For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports.

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