Malaysia Daily, Maybank KE (2014-11-06)

Daily 06 November 2014 COMPANY UPDATE Tenaga Nasional: Maintain Buy Getting compensated  Shariah-compliant To receive MYR848m for its higher-than-budgeted fuel costs from Jan 2014 to Dec 2014; this effectively signifies the presence of a pass-through mechanism. That TNB�s fuel cost would still be above budget in 2H14 suggests its base earnings could be higher than we expected. Reiterate BUY with an unchanged TP of MYR16.00. Click here for full report » Gas Malaysia: Maintain Hold Downside to volume growth?  Shariah-compliant It appears GMB�s purchase price for subsidised gas was raised by MYR1.50/mmBTU, in tandem with its recent MYR0.45/ mmBTU average selling price increase. This implies a lower proportion of LNG (assuming spreads are maintained), which indicates lower overall volumes. FY14/15/16 earnings are lowered by 1%/7%/10%, TP lowered to MYR3.40 (-11%), maintain HOLD. Click here for full report » Petronas Gas: Maintain Hold On dividends and Pengerang  Shariah-compliant PTG is still maintaining a 70% dividend payout target for 2014, to be paid on a quarterly basis. Parent PETRONAS could soon announce the award of the Pengerang re-gasification plant to PTG; commissioning date could be earlier than we expected. Maintain HOLD, TP unchanged at MYR23.50. Click here for full report » SPECIAL FEATURE IFCA MSC: Not Rated Superior earnings performance  Shariah-compliant 9M14 net profit exceeded full-year expectations by 34-36%. Our new FV is MYR1.00 (on 19.2x CY15 PER). Main Market transfer, M&As are further re-rating catalysts. Click here for full report » RESULTS REVIEW Malaysia Marine & Heavy Engineering: Downgrade To Hold In line; downgrade earnings & TP  Shariah-compliant 9M14 results within our expectation, above consensus. Cut 2016 earnings by 13%, on expected lower order wins in 2015 (-20%); maintain 2014/15 forecasts. Downgrade to HOLD. TP reduced to MYR2.30, on lower EV/ order backlog valuation peg of 2.4x (-1SD) vs. 2.9x (mean). Click here for full report » Perisai Petroleum: Downgrade To Hold Sub-par 3Q, downgrade to HOLD  Shariah-compliant Results significantly disappoint. Cut 2014-16 earnings by 37%-84%, on lower DCRs for its upcoming 2 JUs, MOPU and E3 vessels, and higher OPEX. Downgrade to HOLD with a lower MYR1.00 TP (14x 2015 PER); rising risk of immobilisation of E3 and MOPU. Click here for full report » REGIONAL SECTOR UPDATE Macau Gaming: Maintain Overweight Positive data points is key Roadshow feedback was positive; Clients are looking out for narrower Macau GGR YoY contractions before investing. We believe it will happen as Oct 2014 Macau GGR contraction was the worst on record and comparisons will get easier. BUY Galaxy, MGM China, Sands China, and Wynn Macau for Macau exposure. BUY GENM and Travellers for ASEAN exposure. Click here for full report » Technicals Further index softness? The FBMKLCI declined 8.07 points to 1,839.29 yesterday, while the FBMEMAS and FBM100 also closed lower by 67.86 points and 61.12 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Short-Term Buy call on MMSV with upside target areas at MYR0.615 & MYR0.81. Stop loss is at MYR0.37. Click here for full report » Other Local News Power: 1MDB says it has filed FY14 financial statement with SSM. 1Malaysia Development (1MDB) issued a one-line statement yesterday, saying it had filed its financial year 2014 ended March 31 (FY14) statement with the Companies Commission of Malaysia (SSM). However, a check with the regulator showed that the accounts were still not available for public viewing. (Source: The Edge Financial Daily) PDZ: Plans Kazakhstan LPG venture. Shipping company PDZ Holdings is proposing to set up a liquefied petroleum gas production plant in Kazakhstan and lauch itself into the cooking gas business in a MYR656m deal. The company said it would raise at least MYR672m via the sale of new shares and a rights issue with warrants to pay for the new business venture. (Source: The Star) MAS: MAS's biggest trade union backs alternative proposal. Malaysian Airline System's (MAS) influential and biggest trade union, the Malaysian Airline System Employees' Union (Maseu), has given its backing to an alternative proposal by Jentayu Danaraksa Sdn Bhd. This will avert the need to lay off 6,000 MAS workers as stated in Khazanah Nasional's rescue plan for the loss-making national carrier. (Source: The Edge Financial Daily) Outside Malaysia U.S: Services sustained pace of expansion in October, indicating the world's largest economy is overcoming a global slowdown. While the Institute for Supply Management's non-manufacturing index fell to 57.1 from the prior month's 58.6, readings greater than 50 signal growth and last month�s outcome exceeded the 54.4 average for the first six months of 2014. (Source: Bloomberg) U.K: Services companies slowed to the least in 17 months in October as demand cooled, preventing companies from raising prices. Markit Economics said its Purchasing Managers' Index dropped to 56.2, the lowest since May 2013, from 58.7 in September. A reading above 50 indicates expansion. (Source: Bloomberg) Japan: Wages rose by the most in more than six years amid efforts by Prime Minister Shinzo Abe and the central bank to spur sustained price gains in the world's third-largest economy. Average monthly salaries excluding bonuses and overtime payments rose 0.5% YoY in September to JPY 242,211 (USD 2,124), the largest increase since February 2008, the labor ministry said. The total cash earnings including bonuses and overtime payments advanced for a seventh month and summer bonuses were the biggest in six years. (Source: Bloomberg) Indonesia: Growth at weakest pace since the global financial crisis as commodity prices fell, increasing the challenge for President Joko Widodo as he seeks to revitalize Southeast Asia's biggest economy. GDP rose 5.01% YoY in the three months ended Sept. 30, the statistics bureau said. (Source: Bloomberg) Thailand: Kept its interest rate unchanged for a fifth straight meeting to spur economic growth after the government pledged to accelerate spending. The Bank of Thailand held its one-day bond repurchase rate at 2%, with monetary policy committee members voting 6 to 1 in favor, it said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,839.3 (1.5) (0.4) JCI 5,066.8 18.5 (0.1) STI 3,287.7 3.8 0.2 SET 1,577.4 21.5 (0.5) HSI 23,695.6 1.7 (0.6) KOSPI 1,931.4 (4.0) (0.2) TWSE 8,962.6 4.1 (0.3) DJIA 17,484.5 5.5 0.6 S&P 2,023.6 9.5 0.6 FTSE 6,539.1 (3.1) 1.3 MYR/USD 3.353 2.3 0.5 CPO (1mth) 2,228.0 (15.2) (2.5) Crude Oil (1mth) 78.7 (20.1) 1.9 Gold 1,145.9 (4.6) (2.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.46 16.00 Axiata 7.07 7.60 Sime Darby 9.68 10.20 Gamuda 5.15 6.00 UMW O&G 3.22 5.15 AFG 4.78 5.50 Perdana Petroleum 1.55 2.48 Hock Seng Lee 1.92 2.25