Malaysia Daily, Maybank KE (2014-10-30)

Daily	30 October 2014
COMPANY UPDATE Gamuda: Maintain Buy Wins PDP for KVMRT 2, TP raised  Shariah-compliant Clinching the PDP role for KVMRT 2 significantly enhances its construction orderbook. Further major infrastructure job wins would further elevate its construction orderbook size. We raise our sustainable construction orderbook assumption and revise our RNAV-based TP to MYR6.00 (+13%). Click here for full report » Gas Malaysia: Maintain Hold A milder than expected hike?  Shariah-compliant The 2.3% selling price hike appears to be insufficient for a full pass-through of a MYR1.50/mmBTU hike in the purchase price of subsidised gas. Our forecasts are unchanged pending further clarifications from the company. Maintain HOLD with an unchanged TP of MYR3.80. Click here for full report » WCT Holdings: Maintain Hold Clinches MYR652m job  Shariah-compliant New MYR652m building construction works lifts outstanding external construction orderbook by 35%. Eyeing more jobs from TRX, RAPID, WCE and Qatar. Positive, but not re-rating our call yet; maintain HOLD with an unchanged TP of MYR2.30. Click here for full report » Perdana Petroleum: Maintain Buy Sells Superior, gains MYR1m  Shariah-compliant A decent sale price, MYR1m gain. Proceeds to help part-finance fleet rejuvenation. Lowering 2015-16 earnings forecasts by 2-3%, taking into account this deal. Maintain BUY, but TP adjusted to MYR2.48 (unchanged 15x 2015 PER) from MYR2.55 post earnings revision. Click here for full report » Axiata Group: Maintain Buy XL: Weak revenue trends  Shariah-compliant XL�s 9M14 EBITDA was in line at 72% of ours and 71% of consensus full year forecasts; net profit was below. The integration of Axis has been completed; Axis to be EBITDA-neutral by 1Q15. XL�s FY14 earnings are significantly distorted; our BUY rating and MYR7.60 TP for Axiata are unchanged. Click here for full report » RESULTS REVIEW CIMB Group: Maintain Hold Provisions higher at CIMB Niaga CIMB Niaga�s results below expectations; FY14/15 net profit cut by 34%/20%. CIMB Group earnings trimmed by 8%/6%. TP trimmed to MYR7.40 from MYR7.60 for CIMB Group, to MYR10.20 from MYR10.45 for RHB � still 15% upside for both. BUY RHB for exposure to the merger, HOLD CIMB. Click here for full report » IGB REIT: Maintain Hold Earnings on track 9M14 core net profit of MYR176.4m was in line. Maintain our earnings forecasts, MYR1.29 DCF-based TP. Lacks strong asset pipeline to re-rate over the short term; maintain HOLD. Click here for full report » Technicals Index may head to 1,840 and higher The FBMKLCI rose 13.87 points to 1,839.55 yesterday and the FBMEMAS and FBM100 gained 82.22 points and 78.41 points respectively. In terms of market breadth, the gainer-to-loser ratio was 587-to-231 while 280 counters were unchanged. 2.01b shares were traded, valued at MYR2.11b. Today's trading idea is a Short-Term BUY CALL on MMSV with target price of MYR0.59, MYR0.64 and MYR0.81. Click here for full report » Other Local News Banking: EPF will not trim stake in CIMB. The Employee Provident Fund (EPF) will not pare down its stake in CIMB Group Holdings although Bursa Malaysia disallows the provident fund to vote on the merger of three banks which it holds substantial stake. There will be no change to investment strategy, said CEO Datuk Shahril Ridza Ridzuan. (Source: The Edge Financial Daily) Infrastructure: KL-Singapore HSR may miss 2020 deadline. This is even after using government land as much as possible to avoid property acquisition disputes. The project may take six to seven years to complete once construction starts by 2016, Land Public Transport Commission (SPAD) chairman Tan Sri Syed Hamid Albar. (Source: The Edge Financial Daily) Outside Malaysia U.S: Oil exports seen gaining as EIA readies gas-price study. The push to end a four-decade limit on exporting U.S. oil may get a boost from a government study set for release that will explain the relationship between crude oil and domestic gasoline prices. Supporters of lifting the ban anticipate the Energy Information Administration analysis will affirm what they suspect: that overseas sales won't raise the price Americans pay at the pump because the price of gasoline is tied to the global oil supply. (Source: Bloomberg) U.S: Fed cites improved labor market while ending QE as planned. The Federal Reserve said it sees further improvement in the labor market while confirming it will end an asset-purchase program that has added USD 1.66tr to its balance sheet. "Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate," the Federal Open Market Committee said in a statement in Washington. "A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing," the panel said, modifying earlier language that referred to "significant underutilization" of labor resources. (Source: Bloomberg) Brazil: Unexpectedly lifts rate on Rousseff vow to tame CPI. Brazil unexpectedly raised its key rate for the first time since April, after President Dilma Rousseff said she would vigorously fight inflation in her second term. Policy makers, led by central bank President Alexandre Tombini, voted 5-to-3 to raise the benchmark Selic by a quarter-point to 11.25%, saying the move would reduce the cost of ensuring a better inflation outlook in 2015 and 2016. (Source: Bloomberg) Japan: Industrial production rose the most since January in a sign that companies are recovering from the blow of a higher sales tax. Output increased 2.7% in September from the previous month, the trade ministry said, beating the 2.2% median estimate of economists. That trimmed the decline for the third quarter to 1.9%, following a drop of 3.8% in the three months through June. (Source: Bloomberg) Indonesia: May raise fuel prices by year-end, Minister says. Indonesia will probably raise subsidized fuel prices before the end of the year as President Joko Widodo seeks to trim subsidies and create more fiscal space, Finance Minister Bambang Brodjonegoro said. The magnitude and timing of the increase haven�t been decided, Brodjonegoro, 48, said in an interview in Jakarta, his first since becoming finance chief this week. The government aims to change the subsidy system to free up funds for more productive use, he said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,839.6 (1.5) 0.8 JCI 5,074.1 18.7 1.5 STI 3,224.0 1.8 0.4 SET 1,562.7 20.3 0.4 HSI 23,819.9 2.2 1.3 KOSPI 1,961.2 (2.5) 1.8 TWSE 8,903.7 3.4 1.5 DJIA 16,974.3 2.4 (0.2) S&P 1,982.3 7.2 (0.1) FTSE 6,453.9 (4.4) 0.8 MYR/USD 3.273 (0.1) (0.1) CPO (1mth) 2,260.0 (14.0) 1.7 Crude Oil (1mth) 82.2 (16.5) 1.0 Gold 1,212.2 0.9 (1.3) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.12 14.00 Axiata 7.08 7.60 Sime Darby 9.50 10.20 Gamuda 4.99 6.00 UMW O&G 3.28 5.15 AFG 4.80 5.50 Perdana Petroleum 1.68 2.48 Hock Seng Lee 1.96 2.25