Malaysia Daily, Maybank KE (2014-07-03)

Daily 03 July 2014 SECTOR UPDATE MY Property Sector: Maintain Neutral Sentiment still strong, BUT � Buying sentiment is still strong but housing affordability stays an issue. Not discounting more tightening measures; household debt at a high in end-2013 and could climb further by end-2014. Maintain Neutral; top BUY pick is Eco World (MYR6.59 TP), the other BUY is Glomac (MYR1.24 TP). Click here for full report » COMPANY UPDATE Eco World Development: Maintain Buy Strengthening presence in Semenyih  Shariah-compliant Positive on ECW's latest land purchase in Semenyih. The new landbank enhances our RNAV/shr est. by +23sen; it starts contributing to earnings from FY17 onwards. Maintain BUY with a higher TP of MYR6.59 (+19sen; unchanged 0.84x P/RNAV; MYR7.85 RNAV [+23sen]). Click here for full report » SP Setia: Maintain Hold Something�s brewing?  Shariah-compliant Share price probably fuelled by potential M&A involving unlisted property companies held by its major shareholder. The M&A is just a matter of time; SPSB could emerge as the largest listed developer in Malaysia, if it materialises. Maintain HOLD and MYR3.36 TP (0.7x P/RNAV) for now. Click here for full report » SPECIAL FEATURE Tanah Makmur: Not Rated Deep in value  Shariah-compliant TMK's core business is oil palm plantation; it also has a property arm and a mining unit. We project 14.9% 3-year (FY13-16) EPS CAGR, underpinned by higher CPO ASP, higher FFB production, stronger property earnings, and maiden contribution from the sale of bauxite. We derive an indicative fair value of MYR1.63, suggesting a 31% upside potential. Click here for full report » RESULTS REVIEW UMW Oil & Gas Corporation: Maintain Buy On a roll in the Philippines  Shariah-compliant Has won a maiden short-term (ST) charter for its Naga 7. Expect more contract announcements in 2H14 as the two other new deliveries (Naga 5 & 6) are still unchartered. Reiterate BUY; TP unchanged at MYR5.15 on 23x 2015 PER. Click here for full report » Technicals Advancing towards 1,892.33 again The FBMKLCI advanced 7.72 points to 1,886.84 yesterday, while the FBMEMAS and FBM100 rose 59.65 points and 55.69 points, respectively. We recommend a �Buy on Dips� stance for the index. We recommend a �Buy on Dips� stance for the index. Trading idea is a Short-term buy call on SPSETIA, with up side target areas at MYR3.48 & MYR3.80. Stop loss is at MYR3.07 Click here for full report » Other Local News SapuraKencana: Starts offshore ops in Brazil. SapuraKencana�s pipe-laying support vessal, has started work in the pre-salt waters off Brazil for the state run oil company Petrobras, months ahead of schedule. Brazil represents SapuraKencana's single largest foreign market and SNM was previously been awarded two contracts worth MYR13.1b to build and operate six PLSVs by Petrobras. These contracts make up a substantial part of SapuraKencana�s current order book which is currently stands at around MYR28b. The second PLSV, is expected to enter service in Brazil by the end of the year while the others are still under construction and expected to go into service in mid-2015. (Source: The Edge Financial Daily) MAS: Khazanah plans to take national carrier private. According to sources, state investor Khazanah Nasional Berhad is planning to take the loss-making airline private as the first step in a major restructuring program. Khazanah�s board which is chaired by the Prime Minister is expected to meet and discuss the plan at the end of July. However, the restructuring and potential sale of MAS may be hampered by its powerful labour union which had blocked previous revival plans. Still, several of its units are profitable including MAS Engineering, Airport Terminal Services and the budget airline unit Firefly. (Source: The Edge Financial Daily) Axis REIT: Dismisses buyout talk. The manager of Axis Real Estate Investment Trust has dismissed recent news reports that Axis-REIT and Axis REIT Managers Bhd (ARMB) are potential buyout targets by Sime Darby Bhd. The company went on to assure its unit holders and investing public that it is "business as usual" at Axis-REIT and that the fund will continue to grow. (Source: The Edge Financial Daily) GBH Bhd: In MYR632m RTO by Dynac. Goh Ban Huat Berhad (GBH) will be acquiring the entire equity interest in oil & gas services company Dynac Sdn Bhd following a MYR632m reverse takeover by Dynac. GBH intends to fund the proposed acquisition via MYR210m in cash and MYR422m by the issuance of new GBH shares at a price of MYR2 per share. After the proposed RTO, GBH will also acquire a 35% stake in Dynac's subsidiary Globalmariner Offshore Services Sdn Bhd (GMOS) thereby inheriting GMOS' secured order book of MYR304m. (Source: The Edge Financial Daily) Outside Malaysia U.K: London home prices jumped the most in 27 years in the second quarter as Nationwide Building Society warned that Bank of England measures to cool the U.K. property market won't stem further gains in the short term. Values in the capital surged 26% YoY in the three months through June, the biggest increase since 1987, Britain's third-largest mortgage lender said in a statement. At an average GBP 400,404 (USD 686,700), prices in the city stand 30% above their 2007 peak. (Source: Bloomberg) India: Gets lowest June rain in five years as El Nino looms. India, the world's second-biggest rice, sugar and cotton grower, recorded the lowest June rainfall since 2009 amid predictions for an El Nino that previously caused droughts and cut crop output, the state forecaster said. The country got 92.4 millimeters (3.6 inches) of rain last month, or 43% less than the average between 1951 and 2000, the India Meteorological Department said on its website. The monsoon has made no progress over India's western and central regions since June 15. (Source: Bloomberg) Thailand: Central Bank sees recovery as political tensions ease. Monetary Policy Committee says it's monitoring effectiveness of ECB liquidity-injection measures, shadow banking risks in Chin and changes in trade network as intra-Asean trade increasingly replaces exports to China. Some committee members highlighted risks including outflow of migrant workers, trade ramifications due to consequences of domestic policies such as labor and the efficiency of budget disbursement. Central bank raised 2015 economic growth estimate to 5.5% on increased public spending and recovery in private demand; MPC kept key interest rate at 2% on June 18. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,886.8 1.1 0.4 JCI 4,908.3 14.8 0.5 STI 3,263.9 3.0 0.7 SET 1,491.8 14.9 0.4 HSI 23,549.6 1.0 1.5 KOSPI 2,015.3 0.2 0.8 TWSE 9,485.0 10.1 0.5 DJIA 16,976.2 2.4 0.1 S&P 1,974.6 6.8 0.1 FTSE 6,816.4 1.0 0.2 MYR/USD 3.2 (2.2) (0.1) CPO (1mth) 2,450.0 (6.8) 0.6 Crude Oil (1mth) 104.5 6.2 (0.8) Gold 1,326.9 10.4 0.0 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.38 14.00 Genting Msia 4.15 4.70 HLBK 13.86 16.20 AMMB Holdings 7.16 8.50 Bumi Armada 3.37 4.55 IJM Corp 6.68 7.20 MPHB Capital 2.17 2.42