Malaysia Daily, Maybank KE (2014-08-27)

Daily 27 August 2014 RESULTS REVIEW Hong Leong Financial Group: Maintain Buy Strong insurance earnings FY14 results above expectations with net profit up 15% YoY to MYR1.7b. Strong earnings growth expected from insurance division as it shifts to more profitable investment-linked products. BUY � SOP derived TP raised to MYR19.10 from MYR17.30. Click here for full report » Hong Leong Bank: Maintain Buy A decent end to the financial year FY14 results within expectations with net profit up a decent 13% YoY to MYR2.1b. Targeting loan growth of 10% in FY15, NIM above 2%. BUY � MYR16.20 TP maintained on unchanged CY14 P/BV target of 1.9x, supported by ROEs of ~15%. Click here for full report » IJM Corporation: Maintain Buy Delivering steady growth  Shariah-compliant 1QFY3/15 results met our estimate but below consensus�. Strong construction order book, high unbilled property sales and strong FFB production will support earnings growth. Reiterate BUY at a higher MYR7.40 RNAV-based TP (+20sen). Click here for full report » TSH Resources: Upgrade to Buy Outperformed, upgrade to BUY  Shariah-compliant 2Q14 results were above our and street estimates. 1H14 FFB production (+28% YoY) was higher than expected. Revise FFB output forecasts and raise FY15 net profit (+7%). TP raised to MYR3.70 (+9%). Upgrade to BUY; 15% upside. Click here for full report » Sarawak Oil Palms: Maintain Buy Accumulate on weakness  Shariah-compliant 2Q14 core net profits were within expectations. We lower 2014 earnings by 12% on lower CPO ASP, lower refining margins and delayed biodiesel contributions. Stock price corrected by 15% from its recent peak; this presents an opportunity to BUY. TP unchanged at MYR6.90. Click here for full report » Inari Amertron: Maintain Buy The best is yet to come  Shariah-compliant FY6/14 core net profit tracked our/consensus expectations. Better results beginning 1QFY6/15 underpinned by (i) ramp up in RF production for Avago�s increased requirements and (ii) more meaningful contribution from ISK and Ceedtec. Reiterate BUY with an unchanged MYR4.20 cum-rights TP (17x CY15 PER), offering 30% upside. Click here for full report » Carlsberg Brewery Malaysia: Maintain HOLD A decent quarter, results in line 1H14 results were within expectations. The group's dynamic brand portfolio to cushion weaker consumer sentiment, increasing focus on cost efficiency. Maintain HOLD with a DCF-based TP of MYR12.40. Click here for full report » COMPANY UPDATE Icon Offshore: Maintain Buy Delivery blip; eyes regional markets  Shariah-compliant Trim FY14 net profit forecast by 4% to account for delivery delays for 2 new OSVs (PSV: Icon Piai 2 and FCB: SWATH). Targets Indonesia as its next destination for an OSV footprint � likely via a JV and/or M&A. Maintain BUY and MYR2.00 TP (15x 2015 PER, comparable to peer average). Click here for full report » ECONOMICS Singapore IPI, July 2014 Narrow-base pick up Industrial output YoY growth picked up to a three-month high. Higher biomedical and chemicals output offset lower production in Transport Engineering, Electronics and General Manufacturing Industries. Output growth is likely to remain "choppy" amid uneven global economic expansion Click here for full report » Technicals Index to pressurize 1,859 and lower The FBMKLCI inched down by 0.49 points to 1,861.82 yesterday, while the FBMEMAS and FBM100 also closed lower by 2.10 points and 2.77 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on GENP with downside target areas at MYR9.50 & MYR8.75. Click here for full report » Other Local News Aviation: No MAS role for Pemandu, Axiata chiefs. Neither former Malaysia Airlines (MAS) CEO Datuk Seri Idris Jala nor Axiata Group chief Datuk Seri Jamaludin Ibrahim will helm the ailing national carrier. Both yesterday dismissed rumours of them being candidates to replace Ahmad Jauhari Yahya as MAS CEO as part of its �radical� restructuring plan. (Source: Business Times) FGV: Indonesia beckons for Felda Global Ventures. The proposed laws to restrict foreign ownership of plantations in Indonesia is not a deterrent to FGV's plants to expand its operations in that country. FGV group president and chief executive Mohd Emir Mavani Abdullah said the group would continue to expand its plantations in Indonesia through acquisitions and additional planting in its existing plantations this year. (Source: The Star) Hartalega: To expand glove output. Hartalega expects its top line growth to remain flat for its financial year ending March 31, 2015, as its operations are currently running at full production capacity. However, production was expected to go up by another 5 billion in the financial year 2016, bringing the total capacity projection to around 18 billion pieces. (Source: The Star) Outside Malaysia U.S: Surge in durables orders affirms factory pickup. Bookings for goods meant to last at least three years soared 22.6% MoM after a revised 2.7% MoM gain in June that was bigger than previously estimated, according to Commerce Department data issued in Washington. (Source: Bloomberg) U.S: Consumer confidence rises to almost seven-year high in August, reinforcing signs of a strengthening outlook for the second half of 2014. The Conference Board's sentiment gauge rose to 92.4, the highest since October 2007, from a revised 90.3 a month earlier, the New York-based private research group said. (Source: Bloomberg) U.S: Home prices in 20 cities rose in June at a slower pace as declining affordability and weak wage gains kept appreciation in check. The S&P/Case-Shiller index of property values increased 8.1% YoY from June 2013, the smallest 12-month gain since January 2013, the group reported. Price gains are slowing as more houses are coming up for sale and investors retreat to the sidelines. That, combined with an improving job market, could put homeownership within reach of more Americans grappling with disappointing wage growth and strict lending rules. (Source: Bloomberg) Russia: At odds over fiscal stimulus as consumer demand pinched. Russia cut its forecasts for economic growth and consumer spending, leaving the ministries of finance and economy at loggerheads over using fiscal stimulus to counter risks from the crisis over Ukraine. Gross domestic product will rise 1% in 2015, compared with an earlier estimate of 2%, the Economy Ministry said. This year's projection was kept at 0.5%, the slowest since a contraction in 2009. Consumer spending, which accounts for half of GDP, is also set to slow this year and next, according to the ministry. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,861.8 (0.3) (0.0) JCI 5,146.6 20.4 (0.7) STI 3,323.0 4.9 (0.2) SET 1,560.2 20.1 (0.2) HSI 25,074.5 7.6 (0.4) KOSPI 2,068.1 2.8 0.3 TWSE 9,394.0 9.1 0.0 DJIA 17,106.7 3.2 0.2 S&P 2,000.0 8.2 0.1 FTSE 6,822.8 1.1 0.7 MYR/USD 3.2 (3.6) (0.2) CPO (1mth) 2,035.0 (22.6) (0.7) Crude Oil (1mth) 93.9 (4.6) 0.5 Gold 1,287.9 7.2 0.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.42 14.00 Axiata 6.95 7.60 Sime Darby 9.47 10.30 Genting Msia 4.45 4.70 Gamuda 4.45 5.30 UMW O&G 4.00 5.15 AFG 4.94 5.50 Perdana Petroleum 1.82 2.55 Hock Seng Lee 1.94 2.25