Malaysia Daily, Maybank KE (2014-10-29)

Daily 29 October 2014 COMPANY UPDATE CIMB Group Holdings: Maintain Hold No change in merger views Merger views unchanged � estimated 11% accretion to FY15 EPS, 19% enhancement to BVPS, 0.9ppt ROE dilution. Already have a BUY on RHB (TP: MYR10.45) for exposure to the merger. HOLD maintained on CIMB but it is currently a 2% cheaper entry to the merger based on the 1.38 share swap ratio. Click here for full report » Nestle Malaysia: Maintain Hold Slow and steady  Shariah-compliant Nestle�s 9M14 domestic sales rose 5.8% YoY, while export sales declined 13.1% YoY. Slip in export sales is not a major concern as the domestic market is still the main earnings driver in the longer term. Maintain HOLD with an unchanged DCF-TP of MYR63.60. Click here for full report » SPECIAL FEATURE Carimin Petroleum: Not Rated Proxy to Peninsular HUC The 5-year MYR899m Peninsular Malaysia HUC project underpins Carimin�s forward earnings. Earnings are on the uptrend due to expanding margins on ownership of vessels and the absence of minority interest. Indicative fair value of MYR1.35 is pegged to CY15 PER of 12x, giving a 23% upside potential. Click here for full report » Technicals Index creeping up on its rebound The FBMKLCI rose 2.53 points to 1,825.68 yesterday, but the FBMEMAS and FBM100 closed lower by 22.06 points and 12.74 points. In terms of market breadth, the gainer-to-loser ratio was 285-to-528 while 274 counters were unchanged. 1.58b shares were traded valued at MYR1.79b. Today's trading idea is a Short-Term BUY CALL on SLP Resources with target price of MYR0.735, MYR1.01 and MYR1.15. Click here for full report » Other Local News Property: GBP1.35b loan inked. The Malaysian consortium which consists of SP Setia, Sime Darby and the Employees Provident Fund developing the Battersea Power Station project has finalised a GBP1.35 billion (MYR7.14b) syndicated loan. The financing comprises a GBP750m loan for the development of the Power Station building and GBP600m for the development of London�s newest high street, the Electric Boulevard. (Source: Business Times) Sona Petroleum: Gets USD140m loan to purchase 40% stake in Salamander. The USD140m (MYR459m) loan facility is to part-finance the purchase of its first qualifying asset, a 40% stake in Thailand-based marine oil and gas firm Salamander Energy for USD281.2m. (Source: The Edge Financial Daily) AirAsia: Government wants AirAsia to move from KKIA Terminal 2. The government wants AirAsia to move its operations from Terminal 2 of the Kota Kinabalu International Airport (KKIA) to the newly upgraded Terminal 1 so that passengers can enjoy better facilities, said Deputy Transport Minister Datuk Abdul Aziz Kaprawi. (Source: The Edge Financial Daily) Lay Hong: Tussle likely at Lay Hong. The major shareholders of Lay Hong Bhd, the Yap family, are inclined to reject the buyout offer for their company from QL Resources, the independent advisor to the deal has revealed. The independent advisor also revealed the reason for the Yap family's decision to reject the offer: Their intention was solely based on their own personal investment objectives and aspirations to continue their participation in the future growth of the Lay Hong group. (Source: The Star) Outside Malaysia U.S: Consumer confidence increases to a seven-year high in October as Americans enjoyed further price drops at the gas pump and the job market continued to improve. The Conference Board's index climbed to 94.5 this month, the highest since October 2007, from a September reading of 89 that was stronger than initially estimated, the New York-based private research group said. (Source: Bloomberg) U.S: Durable goods orders fall for second straight month in September, on waning demand for machinery and computers that signals companies are reluctant to invest in updating equipment. Bookings for goods meant to last at least three years decreased 1.3% after declining 18.3% in August, a Commerce Department report showed in Washington. (Source: Bloomberg) E.U: Euro outflows at record pace as ECB promotes exodus. Domestic and foreign investors spurred EUR 187.7b (USD 239b) of fixed-income outflows from the euro area in the six months through August, the most in ECB data going back to the currency�s debut in 1999. That's helped push the euro down 2.7% versus a basket of nine developed-market peers tracked by Bloomberg Correlation-Weighted Indexes this year, the biggest decline since 2010, when the euro-region debt crisis was getting started. (Source: Bloomberg) Japan: Retail sales rose the most in four months, a sign the economy is shaking off a blow from a sales-tax increase in April as Prime Minister Shinzo Abe weighs another bump in the levy. Sales climbed 2.7% in September from August when they rose 1.9%, the trade ministry said. For the third quarter, sales were up 1.4% YoY after a 1.8% YoY drop in the second quarter. (Source: Bloomberg) Singapore: Economy to grow at moderate pace in 2014 and 2015. Expected cyclical uplift from external demand will be tempered by domestic supply-side constraints, Monetary Authority of Singapore says in economic review released. Inflation has eased and should stay subdued for rest of 2014 and in 2015, while core inflation is likely to remain firm, given cost pressures from the tight labor market and higher prices of food imports from the region. Central bank reiterates forecast for real GDP growth of 2.5%-3.5% in 2014, with broadly similar pace of expansion next year. MAS reiterates inflation forecast of 1%-1.5% in 2014 with core inflation to average 2%-2.5%. (Source: Bloomberg) Vietnam: Cuts key interest rate to boost lending, GDP growth. The State Bank of Vietnam's dong deposit rate cap for terms between one month and less than six months was lowered to 5.5% from 6%, deputy head of monetary policy Nguyen Thu Ha said in Hanoi. The refinance, discount and repurchase rates will remain unchanged. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,825.7 (2.2) 0.1 JCI 5,001.3 17.0 (0.5) STI 3,211.7 1.4 (0.4) SET 1,556.5 19.9 0.6 HSI 23,520.4 0.9 1.6 KOSPI 1,925.7 (4.3) (0.3) TWSE 8,773.6 1.9 1.7 DJIA 17,005.8 2.6 1.1 S&P 1,985.1 7.4 1.2 FTSE 6,402.2 (5.1) 0.6 MYR/USD 3.275 (0.0) (0.1) CPO (1mth) 2,222.0 (15.4) 1.6 Crude Oil (1mth) 81.4 (17.3) 0.5 Gold 1,228.5 2.2 0.2 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.08 14.00 Axiata 7.09 7.60 Sime Darby 9.44 10.20 Gamuda 5.00 5.30 UMW O&G 3.26 5.15 AFG 4.76 5.50 Perdana Petroleum 1.68 2.55 Hock Seng Lee 1.98 2.25