Malaysia Daily, Maybank KE (2014-10-31)

Daily 31 October 2014 SECTOR UPDATE Rubber Gloves: Maintain Overweight Still a defensive sector Mild 2.3% hike in gas price has limited impact to bottomlines. Players are raising efficiency to counter future energy hikes. Maintain Overweight with Kossan as our top pick. Click here for full report » COMPANY UPDATE Kossan Rubber Industries: Maintain Buy A safe haven  Shariah-compliant Ebola-led orders limited to just a small fraction of business for now. A defensive, high-growth stock with DY of 2+%. BUY with an unchanged TP of MYR5.00 (17x FY15 PER). Click here for full report » RESULTS REVIEW Pavilion REIT: Maintain Buy Earnings uptrend intact 9M14 core net profit of MYR175m (+10% YoY) was in line. We like PavREIT for its superior asset quality. Maintain earnings forecasts, DCF-based TP of MYR1.52. BUY. Click here for full report » Technicals Poised For The Next Growth Phase The FBMKLCI rose 3.23 points to 1,842.78 yesterday and the FBMEMAS and FBM100 gained 39.00 points and 33.74 points respectively. In terms of market breadth, the gainer-to-loser ratio was 515-to-334 while 294 counters were unchanged. 1.88b shares were traded, valued at MYR2.15b. Today's trading idea is a Short-Term BUY CALL on KSL with target price of MYR4.62 and MYR5.52. Click here for full report » Other Local News Faber: Seals deal with Opus, Propel. Faber Group is poised to become one the largest asset development and management players in the region after completing its MYR1.5b merger with Opus Group and Projek Penyelenggaraan Lebuhraya (Propel). (Source: Business Times) AirAsia: Proposed MYR1b sukuk. Of the MYR1b, it plans to use MYR550m to part finance its capital expenditure and MYR300m to refinance its banking facility. (Source: The Star) PM clarifies on new fuel subsidy mechanism: Prime Minister, who is also the Finance Minister, said the Government is still studying the structure for the new fuel subsidy rationalization scheme. The three-tier system based on monthly income that was reported earlier this week quoting Second Finance Minister is only "just part of the proposal" and it is premature to disclose as it is still at a "request for proposals' stage. The present fuel subsidy mechanism will continue until the Government finalised the new system, and the public will be informed of the new system by mid-2015. (Source: The Sun) Outside Malaysia U.S: Stronger-than-forecast GDP affirms Fed view. The U.S. economy expanded more than forecast in the third quarter, validating the optimism that prompted Federal Reserve policy makers to stop pumping money into financial markets. Gross domestic product grew at a 3.5% annualized rate in the three months ended September after a 4.6% gain in the second quarter, Commerce Department figures showed. It marked the strongest back-to-back readings since the last six months of 2003. (Source: Bloomberg) E.U: Economic sentiment in the euro area unexpectedly rose October in a sign that the 18-nation region has moved one step away from a renewed economic downturn. An index of executive and consumer confidence increased to 100.7 from 99.9 in September, the European Commission in Brussels said. That's the first gain in three months. (Source: Bloomberg) Germany: Unemployment unexpectedly declined in October, dropping the most in six months in a sign of companies� confidence in the underlying strength of Europe's largest economy. The number of people out of work declined a seasonally adjusted 22,000 to 2.887 million in October, the Nuremberg-based Federal Labor Agency said. The adjusted jobless rate was unchanged at 6.7%, the lowest level in more than two decades. (Source: Bloomberg) U.K: House price growth slowed to a nine-month low October, adding to evidence that the market for residential property is cooling. Annual price gains dropped to 9% YoY from 9.4% YoY in September in a second month of declines, Nationwide Building Society said. Still, prices rose 0.5% MoM on the month after dropping 0.1% MoM. (Source: Bloomberg) China: Backs growth in housing again as slowdown prompts U-turn. With China headed for its slowest full-year expansion in a generation, the government has listed housing as one of the six consumption areas to be encouraged after years of trying to cool the property industry. China will "stabilize" property-related consumption and make it easier for people to access mandatory housing savings, the State Council said in a statement. (Source: Bloomberg) China: Said to investigate surge in precious metals exports. China sent investigators to the southern province of Guangdong to probe a sevenfold surge in precious-metals exports as the government intensifies scrutiny of irregularities in the country's trade figures. The team includes staff from the Ministry of Commerce and General Administration of Customs, according to people with knowledge of the matter who asked not to be identified because the information hasn�t been made public. Shipments of precious metals, including jewelry, rose to about USD 10.8b in September from USD 1.39b a year earlier, according to customs data released Oct. 13. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,842.8 (1.3) 0.2 JCI 5,058.8 18.4 (0.3) STI 3,234.3 2.1 0.3 SET 1,565.4 20.5 0.2 HSI 23,702.0 1.7 (0.5) KOSPI 1,958.9 (2.6) (0.1) TWSE 8,888.1 3.2 (0.2) DJIA 17,195.4 3.7 1.3 S&P 1,994.7 7.9 0.6 FTSE 6,463.6 (4.2) 0.1 MYR/USD 3.289 0.4 0.5 CPO (1mth) 2,275.0 (13.4) 0.7 Crude Oil (1mth) 81.1 (17.6) (1.3) Gold 1,205.5 0.3 (1.9) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.10 14.00 Axiata 7.07 7.60 Sime Darby 9.56 10.20 Gamuda 5.09 6.00 UMW O&G 3.25 5.15 AFG 4.79 5.50 Perdana Petroleum 1.65 2.48 Hock Seng Lee 1.94 2.25