Malaysia Daily, Maybank KE (2014-09-03)

Daily 03 September 2014 MARKET STRATEGY MY Strategy: Maintain Neutral 2Q report card: Disappointing 2Q14 core net profit of our research universe was down 3.3% YoY; the results season has been disappointing. 2014/2015 KLCI core earnings are now expected to grow a slower 4.1%/7.8% after our earnings cut by 2.8%/3.0%. Maintain our 1,940 end-2014 KLCI target, implying 16.7x 12M forward earnings. Click here for full report » Technicals Last minute �treading-water� buying The FBMKLCI advanced 1.58 points to 1,867.69 yesterday, while the FBMEMAS and FBM100 also closed higher by 7.28 points and 10.70 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Take profit call on TCHONG with down side target areas at MYR4.34 & MYR4.28. Click here for full report » Other Local News Banking: No push to set up mega bank. Bank Negara Malaysia is not pushing for the setting up of mega Islamic banks, said its governor Tan Sri Dr Zeti Akhtar Aziz. Also, she mentioned that we do not want a mega bank for the sake of having it and want to ensure that it will achieve the objective of having scale; able to undertake international business and facilitate cross-border financial flows and support trade and cross-border activities. (Source: Business Times) Banking: Bank Muamalat eyes first Islamic private banking. It is looking to launch the first Islamic private banking in Malaysia in a year's time to tap into a strong growth market to expand its revenue stream. CEO told reporters of this after signing a memorandum of understanding with the Bank of London and the Middle East plc (BLME) yesterday. (Source: The Star) Gloves: Malaysian rubber glove makers rule out price war. Hartalega said competition remains healthy as of now, while Supermax Corp said they expect competition to worsen next year. Also, Supermax Corp mentioned that they could see average profit margins for nitrile gloves dwindle to between 9% and 11% during the remainder of the year from above 15%. (Source: The Star) Astro, Maxis: Clarify no impact from India. Astro Malaysia Holdings and Maxis have clarified that the charge-sheets from Central Bureau of Investigation of India will not implicate and impact both companies. The charge-sheet were in relation to Astro All Asia Networks Ltd's (AAANL) acquisitions of shares in Sun Direct TV Private Ltd in 2007 and Maxis Communications Bhd's (MCB) Aircel Ltd from Siva Ventures Limited in 2006. (Source: The Star) Outside Malaysia U.S: Manufacturing powering expansion in August as orders surge. The Institute for Supply Management's index unexpectedly climbed to 59, the highest level since March 2011, from July's 57.1, beating all forecasts in a Bloomberg survey of economists. The orders gauge was the strongest in a decade, the Tempe, Arizona-based group reported. (Source: Bloomberg) Japan: Wages rose in July by the most since 1997, helping consumers cope with increasing living costs as Prime Minister Shinzo Abe tries to reflate the world's third-biggest economy. Average monthly earnings climbed 2.6% YoY after a 1% YoY gain in June, the labor ministry said. Adjusted for inflation, pay shrank 1.4% YoY, the 13th straight month of declines. (Source: Bloomberg) India: Current- account deficit widened to a one-year high after policy makers eased some restrictions on gold imports, while staying below the level the central bank considers sustainable. The April-June shortfall in the broadest measure of trade rose to USD 7.8b from USD 1.2b the previous quarter, the Reserve Bank of India said. That's lower than USD 21.8b a year earlier and amounts to 1.7% of GDP. The RBI considers a deficit of 2.5% of GDP as sustainable. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,867.7 0.0 0.1 JCI 5,201.6 21.7 0.5 STI 3,328.3 5.1 0.4 SET 1,568.6 20.8 0.2 HSI 24,749.0 6.2 (0.0) KOSPI 2,051.6 2.0 (0.8) TWSE 9,399.7 9.2 (1.2) DJIA 17,067.6 3.0 (0.2) S&P 2,002.3 8.3 (0.1) FTSE 6,829.2 1.2 0.1 MYR/USD 3.2 (2.9) 0.7 CPO (1mth) 1,964.0 (25.3) 1.4 Crude Oil (1mth) 92.9 (5.6) (3.2) Gold 1,271.3 5.8 (1.3) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.42 14.00 Axiata 6.94 7.60 Sime Darby 9.48 10.20 Gamuda 4.79 5.30 UMW O&G 3.88 5.15 AFG 4.92 5.50 Perdana Petroleum 1.81 2.55 Hock Seng Lee 1.88 2.25