Malaysia Daily, Maybank KE (2014-05-12)

Daily 12 May 2014 SECTOR UPDATE MY Property Sector: Maintain Neutral Subdued interest Minimal interest in Malaysian property stocks; foreigners' focus is more on property sector in other emerging markets. GST-themed is overplayed; housing affordability is an issue. Maintain NEUTRAL; Eco World could be the new bellwether in the property sector. Click here for full report » RESULTS REVIEW MISC Bhd: Maintain Buy Petroleum ops fuelled 1Q14  Shariah-compliant 1Q14 results in line; petroleum ops the key positive outlier. Expect QoQ weakness in 2Q14 as petroleum ops softens. Maintain BUY and MYR7.20 SOP-TP. Click here for full report » Sarawak Oil Palms: Maintain Buy Off to a good start in 2014  Shariah-compliant 1Q14 core PATMI of MYR34m (+60% YoY, -8% QoQ) met 22% of our 2014 net profit forecast, within our expectation. SOP's FFB output is highly skewed towards 2H. Historically, ~58% of its full year output was recorded in 2H. Maintain earnings, BUY with an unchanged TP of MYR6.90 Click here for full report » KLCC Property: Maintain Hold Hit by minority interest 1Q14 pretax profit of MYR244m was in line but net profit was dragged down by higher-than-expected minority interest. Net DPU of 8.2sen was within expectations. Maintain earnings forecasts, MYR6.25 DCF-based TP, HOLD. Click here for full report » Guinness Anchor: Maintain Hold 9MFY14: Below expectations GAB's 9MFY14 results came in below expectations at 71% of our and consensus original full-year forecasts. 3QFY14 revenue fell 16% YoY to MYR373m on weaker consumption and the earlier CNY in 2014. Cutting our earnings forecasts for FY14-16 by 8-12%, Maintain HOLD with a lower DCF-based TP of MYR13.20 (-8%). Click here for full report » Bumitama Agri: Maintain Buy 1Q14 results � no surprises 1Q14 results met our and market expectations. An interim DPS of 1.3 SGD cts was declared. Reiterate BUY with an unchanged TP of SGD1.38, based on 16x FY15E P/E. Click here for full report » Technicals Creeping up in a very tired manner The FBM KLCI inched down 2.36 points WoW on some profit taking activities last week. With the local buying that emerged recently at 1,802, we advise clients to nibble at the support areas of 1,802 to 1,859. The resistance levels of 1,866 and 1,882 will see heavy profit taking activities. Trading idea is a Take profit call on PETDAG with downside target areas at MYR25.44 & MYR22.18. Click here for full report » Other Local News Construction: MYR9b LRT to Klang, study completed. National infrastructure company Syarikat Prasarana Negara Bhdhas completed the feasibility study on the third light rail transit line (LRT 3) covering 36km from Bandar Utama in Damansara to Klang, estimated at MYR9b. It comes to MYR250m per km � all inclusive except for land acquisition cost. (Source: The Star) Eco World: Plans MYR1.3b projects. Eco World Development Group Bhd plans to launch two residential and commercial property projects in Penang, with a gross development value (GDV) of MYR1.26b, in 2014 and 2015. According to Henry Butcher Seberang Prai, vacant land prices in Seberang Prai, especially those in South Seberang Prai where the second bridge is located, were now hovering around MYR40-MYR50 per sq ft, compared with MYR8-MYR9 per sq ft prior to the announcement of the second link project in 2006. Tebrau: In talks to develop 400ha Johor site. Tebrau Teguh Bhd (TTB), which made its first foray into high-end property development last week, is in talks with local and international property players to jointly develop strategic waterfront land parcels, sprawled over 400ha (1,000 acres) in the Tebrau-Plentong river basin in Johor. (Source: The Sun) Retail: Tesco Malaysia to invest MYR200m to expand stores. Tesco Stores (M) Sdn Bhd will invest MYR100m to open four new stores and another MYR100m to revwamp its three existing stores in the financial year ending Feb 2015. (Source: The Sun) Outside Malaysia U.K. Manufacturing rises more-than-forecast in March, adding to evidence that the economic recovery is gathering strength. Output rose 0.5% MoM from February, when it gained 1% MoM, the Office for National Statistics said. Industrial production fell 0.1% MoM as oil and gas extraction plunged, though the decline was less than estimated. (Source: Bloomberg) Portugal: Rating raised by Moody's on improving fiscal health. Portugal's government bond rating was raised to Ba2 from Ba3 by Moody's Investors Service, which cited faster-than-projected improvement in fiscal health. The rating, still below investment grade, was placed on review for possible further upgrade. The budget deficit was reduced a full percentage point of gross domestic product more than envisaged last year, indicating the government's strong commitment to fiscal consolidation, New York-based Moody's said in a statement. The bond rating outlook had been revised to stable from negative on Nov. 8. (Source: Bloomberg) China: Inflation decelerates to slowest pace in 18 months giving the government more scope to loosen policies if a growth slowdown deepens. The consumer price index rose 1.8% YoY in April, the National Bureau of Statistics said in Beijing. That compares with the 2.4% YoY gain in March. The producer-price index fell 2% YoY, the 26th straight decline, after a 2.3% YoY drop the previous month. (Source: Bloomberg) China: Xi says country must adapt to 'new normal' of slower expansion. Chinese President Xi Jinping said the nation needs to adapt to a "new normal" in the pace of economic growth and remain "cool-minded" amid a slowdown that analysts forecast will lead to the weakest expansion since 1990. China's growth fundamentals haven't changed and the country is still in a "significant period of strategic opportunity," Xi said, according to a Xinhua News Agency report on the central government website on May 10. At the same time, the government must prevent risks and take "timely countermeasures to reduce potential negative effects," he said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,866.7 (0.0) 0.2 JCI 4,898.1 14.6 0.8 STI 3,252.1 2.7 0.1 SET 1,377.4 6.1 (0.1) HSI 21,863.0 (6.2) 0.1 KOSPI 1,956.6 (2.7) 0.3 TWSE 8,889.7 3.2 (0.5) DJIA 16,583.3 0.0 0.2 S&P 1,878.5 1.6 0.2 FTSE 6,814.6 1.0 (0.4) MYR/USD 3.2 (1.5) (0.3) CPO (1mth) 2,645.0 0.6 0.5 Crude Oil (1mth) 100.0 1.6 (0.3) Gold 1,288.9 7.3 (0.0) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.00 14.00 Genting Msia 4.19 4.74 HLBK 14.00 16.40 AMMB Holdings 7.16 8.50 Bumi Armada 3.98 5.00 IJM Corp 6.34 6.75 MPHB Capital 1.92 2.42