Malaysia Daily, Maybank KE (2014-10-09)

Daily 09 October 2014 SECTOR UPDATE MY Aviation Sector: Maintain Neutral The year of living dangerously 2Q14 results season was a disappointment; sector core loss of MYR534m versus a profit of MYR31m in 2Q13. Industry has reached the bottom, but 2015 looms with cost challenges and other uncertainties. Maintain Neutral; both AirAsia and MAHB are trading close to fair value. AirAsia X is the sole SELL. Click here for full report » COMPANY UPDATE Axiata Group: Maintain Buy Showcasing its expertise  Shariah-compliant Celcom�s IT issues have been resolved, new product launches are in the pipeline. XL-Axis integration has progressed smoothly, and is expected to be completed by end-2014. Reiterate BUY with an unchanged TP of MYR7.60. Click here for full report » Technicals Next downward stops at 1,802 & 1,800 The FBMKLCI declined 9.22 points to 1,824.32 yesterday, while the FBMEMAS and FBM100 also closed lower by 115.57 points and 91.42 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is Take Profit call on COASTAL with downside target areas at MYR4.09 & MYR3.33. Click here for full report » Other Local News Utilities: 1MDB's project 3B to rely on Islamic bonds for MYR8.4b financing. 1MDB is partners with Mitsui & Co Ltd on the 2,000MW coal-fired plant, known as Project 3B. The consortium will rely on Islamic bonds to cover most of the MYR11b needed for the project, after plans to raise MYR8.4b via a debt program led by Japan Bank for International Cooperation fell through, according to International Financial Review. (Source: The Star) Technology: HP to invest MYR1b in Penang, expected to sign land deal with state government. Over MYR1b investment will be made by Hewlett-Packard (HP) to set up a manufacturing facility to produce printer heads for high-speed inkjet printers. According to sources, HP would sign a deal with the state government by the end of this month to acquire a property estimated to be about 20.2ha in Batu Kawan, Penang, to set up the plant. (Source: The Star) TM: Has 55.3% stake in P1. TM has emerged as the controlling shareholder in Packet One Networks (M) Sdn Bhd (P1) with a 55.3% stake. TM said the investment was a significant opportunity for it to solidify its integrated information and communications provider position to become the leading converged communications services provider. (Source: The Star) IFCA: Seeks to enter Japan's IT market. IFCA MSC has set its sights on the Japanese market for its overseas expansion and will leverage on its relationship with Japanese real estate giant Mitsui-Fudosan Co Ltd to achieve this. To recap, IFCA had, two months ago, won a contract (MYR2m) to implement a mall management IT system for Mitsui Outlet Park located near the KLIA. Also, as most malls do not have centralized IT systems, IFCA hopes to tap into it. (Source: The Star) LBS Bina Group: To focus on affordable housing. LBS Bina Group sees increasing demand from first-timer buyers and young single professionals. The property developer also said in a statement that it was confident the buying momentum in the second half of 2014 would pick up, driven by continued demand from first-time home buyers, as well as, prospective buyers who would buy ahead of the implementation of the goods and services tax next year. (Source: The Star) External reserves as of 30 September 2014 amounted to MYR416.9b or USD127.3b - equivalent to 8.7 months of retained imports and 1.2 times of the country's short-term external debt. This was down from MYR422.3b or USD131.5b at 15 September 2014.The current reserves level reflects the resurgence of US Dollar against the Ringgit recently as well as fund flow trend in Sept. Foreigners were net sellers of Malaysian equities with the total net selling has been a sizeable MYR1.35b. (Source: BNM, MKE) Outside Malaysia U.S: Fed officials fretted about global risk as they kept rate pledge. Federal Reserve policy makers last month worried that slowing global growth and a stronger dollar posed risks to the U.S. economy as they decided to maintain a pledge to keep interest rates low for a "considerable time." A number of officials said the U.S. expansion "might be slower than they expected if foreign economic growth came in weaker than anticipated," according to minutes of the Sept. 16-17 Federal Open Market Committee meeting released in Washington. (Source: Bloomberg) Thailand: Stimulus seen insufficient to aid growth this year. Thailand's government is trying to bolster a struggling economy that is at risk of trailing its peers with a stimulus package that analysts say is insufficient to counter the damage from falling exports and weakening domestic demand. The cabinet last week approved a THB 364.5b (USD 11b) budget that Deputy Prime Minister Pridiyathorn Devakula said will be "more than enough to jumpstart the economy" this year. The government also said it will speed up approvals for 380 projects worth THB 429.2b and quicken investment spending for the 2014 and 2015 fiscal years. (Source: Bloomberg) Australia: Record jobs growth in August was too good to believe. The statistics bureau said it will drop the widely watched seasonally adjusted figure, which showed the nation of 23 million people added 121,000 jobs in August, in favor of its raw data, which showed 32,100 started work. Large swings in employment data are making it difficult for policy makers and investors to gauge the strength of the economy, with central bank Governor Glenn Stevens describing the figures as "unusually volatile." The jump in August jobs followed a surge in seasonally adjusted unemployment to a 12-year high of 6.4% in July. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,845.3 (1.2) (0.1) JCI 5,140.9 20.3 0.1 STI 3,264.1 3.1 (0.4) SET 1,587.4 22.2 0.1 HSI 22,933.0 (1.6) 0.0 KOSPI 1,991.5 (1.0) (1.4) TWSE 8,990.3 4.4 0.3 DJIA 16,804.7 1.4 (1.4) S&P 1,946.2 5.3 (1.3) FTSE 6,557.5 (2.8) (1.0) MYR/USD 3.3 (0.1) (0.2) CPO (1mth) 2,210.0 (15.9) (1.0) Crude Oil (1mth) 90.7 (7.8) (0.5) Gold 1,213.8 1.0 0.5 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.32 14.00 Axiata 7.01 7.60 Sime Darby 9.18 10.20 Gamuda 4.80 5.30 UMW O&G 3.86 5.15 AFG 4.95 5.50 Perdana Petroleum 1.85 2.55 Hock Seng Lee 1.88 2.25