Affin Daily Insight (LV) - 21 August 2014 - BAB / IOI / KLK / AIRA / GMB / MSM / KOSSAN / ECONOMY - CPI

Top Calls

Results Note � Bumi Armada (ADD, maintain) - Strong qoq improvement in FPSO and T&I earnings Bumi Armada�s 2Q14 net profit increased by 51.9% qoq to RM98.4m on higher activities in the FPSO and T&I business units. Notwithstanding the commendable earnings recovery in 2Q14, Bumi Armada�s 1H14 net profit of RM163.2m (-26.4% yoy) still fell short of consensus and our expectations due to higher-than-expected effective tax rate and weaker-than-expected OSV earnings as a results of lower vessel utilisation of 71%. We have revised our FY14/15/16E earnings forecast by -10%/+4%/+2% respectively, imputing: (i) higher earnings for the FPSO segment following the signing of Eni 1506 FPSO and Madura BD FPSO contracts; (ii) higher effective tax rate; and (iii) lower OSV utilisation rate and weaker T&I earnings due to our expectation of a weaker global upstream O&G capex. We maintain our ADD recommendation but lowered out SOP-derived TP to RM3.75 (from RM3.97).

Other Calls

Results Note � IOI Corp (REDUCE, maintain) - FY14 core net profit below expectations

Results Note � KL Kepong (ADD, maintain) - CPO price considerably weaker, below expectations

Results Note - Air Asia (BUY, maintain) - Muted 2Q14 results

Results Note � Gas Malaysia (REDUCE, maintain) - Steadfast earnings delivery, within expectations

Results Note � MSM (REDUCE, maintain) - Lower sugar costs save the day

Results Note � Kossan (BUY, maintain) - Margins continue to improve

Economy � CPI - Inflation improved to 3.2% yoy in July, food prices lower

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