Malaysia Daily, Maybank KE (2014-09-08)

Daily 08 September 2014 SECTOR UPDATE MY Banking Sector: Maintain Neutral Earnings growth further cut Sector core EPS growth cut yet again, to 5% from 7.6% for 2014 and to 9.1% from 9.8% for 2015. Average ROE to trend lower from 15.4% in 2013 to 14.1% in 2014 and 13.6% in 2015. Operating environment still challenging. Stay NEUTRAL. BUY AFG, HL Bank and HL Financial Group. Click here for full report » COMPANY UPDATE Mah Sing Group: Maintain Buy The �Manhattan� in Puchong  Shariah-compliant The upcoming Puchong project (near IOI Mall) will likely be the key sales driver from 2016 onwards. Management remains confident to hit its FY14 sales target; it does not discount the possibility of raising money from the capital market to fund its aggressive landbank expansion. Maintain earnings forecasts, MYR2.96 RNAV-based TP. BUY. Click here for full report » Felda Global Ventures: Maintain Hold Takeaways from analyst briefing  Shariah-compliant APL estates were offered at a 25% premium to market value. Profitability can only be achieved from FY17 onwards. Post-acquisition, the biodiesel plant will be retrofitted to use cheaper PFAD (non-food) feedstock to enhance return. Maintain HOLD with unchanged SOP-based TP of MYR3.97. Click here for full report » CIMB Group Holdings: Maintain Hold Negotiations commencing over APH Signing of HOA with a consortium led by ENOC is positive for potential rejuvenation of APH. CIMB's loan exposure purported to be MYR840m of which about 70% provided for. Resolution of issue is positive to the eventual recovery of this loan. HOLD maintained with an unchanged TP of MYR7.60 (CY14 P/BV of 1.7x). Click here for full report » British American Tobacco: Maintain Sell Smokers to cough out an extra buck 8-9% hike per cigarette box is a surprise. This is the third increase in over a year and takes prices up a total of 27-32%. Industry contraction likely to be larger than anticipated, higher revenue likely offset by higher costs. Forecasts and SELL maintained on lofty valuations. DCF TP of MYR62 maintained. Click here for full report » ECONOMICS External Trade, July 2014 Base effect & MYR gains kick in Export growth slumped while imports fell for the first time in 15 months in July 2014. Base effect is a key factor - especially for exports - given the rebound in 2H 2013 after the weak 1H 2013. In addition, there is also the translation loss from MYR gains versus USD. The numbers gel with our view that trade - and hence GDP - growth will taper in 2H 2014 after a robust 1H 2014. Click here for full report » Technicals Malaysia treads water, USA inches up The FBM KLCI inched up 2.35 points WoW to close at 1,868.46, as some minor nibbling activities led the index up after the previous week�s sell-off. We advise clients to take profit at the resistance areas of 1,868 to 1,896. The support levels of 1,802 and 1,860 may see weak buying activities. Trading idea is a Short-term buy on TEKSENG with upside target areas at MYR0.79 & MYR1.00. Stop loss is at MYR0.56. Click here for full report » Other Local News Mah Sing: Eyeing MYR1.5b from sales pitch. Mah sing Group, which is celebrating its 20th anniversary this year, expects to clinch MYR1.5b sales during its two-month sales and promotional campaign. There are 18 projects participating in the campaign. The group will continue to aggressively introduce its property projects at the year end, with MYR1.9b new launches remaining from the planned MYR4b this year. (Source: The New Straits Times) Coastal Contracts: Aims big. Targets doubling of market value to MYR5b with O&G upstream expansion. Sandakan-based shipbuilder and offshore support vessels operator Coastal Contracts is extending its participation in the oil and gas upstream segment and hopes to have its market capitalization doubled to at least MYR5b within the next five years. (Source: The Edge Financial Daily) Outside Malaysia U.S: The smallest employment gain so far this year probably strengthens Federal Reserve Chair Janet Yellen's hand in convincing colleagues to be patient in removing monetary stimulus when policy makers meet later this month. The unexpectedly weak 142,000 advance in payrolls in August followed a 212,000 gain in July and snapped a six-month hiring burst that had put more than 1.4 million Americans to work, data from the Labor Department showed. The unemployment rate fell to 6.1% from 6.2% in July because people left the workforce. (Source: Bloomberg) U.K: Races to extend powers to Scots to blunt independence drive. The U.K. government raced to put together a package of more powers for Scotland in a bid to persuade voters to reject independence in a referendum next week in favor of the promise of more autonomy within the union. Shocked into action by a poll showing the Yes campaign ahead for the first time this year, all three main U.K. parties said they would cede more control over the levers of policy making to the Scottish Parliament in Edinburgh. (Source: Bloomberg) Japan: Abe recasting cabinet cuts risk to six-year low. A cabinet overhaul has revived failing public support for Prime Minister Shinzo Abe's economic policies and invigorated markets that have shown more confidence in him than his predecessors. The cost to protect government debt against default slid to 34 basis points after the Sept. 3 shuffle, the lowest since October 2008, CMA data show. Abe presided over a 46 basis-point decline in bond risk, twice the drop overseen by his predecessor Yoshihiko Noda and the most in Bloomberg data going back to October 2004. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,868.5 0.1 0.2 JCI 5,217.3 22.1 (0.1) STI 3,341.7 5.5 (0.2) SET 1,584.3 22.0 0.1 HSI 25,240.2 8.3 (0.3) KOSPI 2,049.4 1.9 (0.1) TWSE 9,407.9 9.2 (0.4) DJIA 17,137.4 3.4 0.3 S&P 2,007.7 8.6 0.3 FTSE 6,855.1 1.6 (0.3) MYR/USD 3.2 (2.8) 0.0 CPO (1mth) 2,041.0 (22.3) 2.9 Crude Oil (1mth) 93.3 (5.2) (2.4) Gold 1,266.0 5.4 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.26 14.00 Axiata 6.92 7.60 Sime Darby 9.49 10.20 Gamuda 4.83 5.30 UMW O&G 3.85 5.15 AFG 5.00 5.50 Perdana Petroleum 1.78 2.55 Hock Seng Lee 1.93 2.25