Malaysia Daily, Maybank KE (2014-11-18)

Daily 18 November 2014 MARKET STRATEGY MY Strategy: Maintain Neutral Nov Shariah compliance review Seven stocks could drop off, IOI Corp and SapuraKencana being the two largest. Five could be added, the more prominent ones being Amway and Padini. No change in stock calls for those identified. Click here for full report » RESULTS REVIEW IOI Corporation: Maintain Sell Hurt by low downstream earnings  Shariah-compliant 1QFY6/15 core PATMI of MYR229m was below expectations. Potential stock overhang if heavyweight IOI drops off the Hijrah Shariah and EMAS Shariah indices end-November. Maintain SELL with a new TP of MYR3.73 (vs. MYR3.97) on unchanged 20x 2015 PER peg as we cut FY6/15 EPS by 12%. Click here for full report » ECONOMICS Singapore Exports, Oct'14 Volatile NODX and NORX NODX fell -1.5% YoY in Oct 2014, reversing gains in Aug-Sep 2014 NORX also fell, by-5.4% YoY, the fourth time in the last six months The volatility in NODX is spreading to NORX Click here for full report » Technicals Definitely headed to 1,800 and below The FBMKLCI declined 7.31 points to 1,806.48 yesterday, while the FBMEMAS and FBM100 also closed lower by 58.93 points and 54.91 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on MUHIBAH with downside target areas at MYR2.19 & MYR1.88. Click here for full report » Other Local News Oil & Gas: Petronas to review MYR300b capex allocation. Petroliam Nasional will be reviewing its capital expenditure allocation of MYR300b, following the decline in global crude oil prices. Executive vice-president Datuk Wee Yiaw Hin mentioned that the review with help them be more effective in their cost management. However, he said there will not be a reduction in Petronas' exploration and production (E&P) programme, despite rising costs. (Source: The Edge Financial Daily) FGV: FGV plans to invest MYR1b in Cambodia. Felda Global Ventures (FGV) is planning a MYR1b investment in Cambodia's plantation sector. Sources said the company was eyeing sugar, palm oil and rubber plantation businesses in Cambodia and might venture into an integrated livestock project in the future. (Source: The News Straits Times) AirAsia X: AirAsia X flies into greater turbulence. AirAsia X, the long-haul, low-cost affiliate of AirAsia, is said to be facing payment problems relating to staff salaries and their fixed and variable allowances, said sources. In view of these financial problems, according to sources, AirAsia co-founder and group chief executive officer Tan Sri Tony Fernandes will take on a "more prominent role" in the management of the AirAsia X to revive the airline. (Source: The Edge Financial Daily) Outside Malaysia U.S: Industrial production unexpectedly fell in October, weighed down by declines at utilities, mines and automakers that signal manufacturing started the fourth quarter on soft footing. Output fell 0.1% MoM after a 0.8% MoM increase in September that was smaller than previously estimated, figures from the Federal Reserve in Washington. Factory production rose 0.2% MoM, matching the prior month's advance that was also revised down. (Source: Bloomberg) Japan: Unexpectedly sank into a recession last quarter as the world's third-largest economy struggled to shake off the impact of an April sales-tax boost, raising the odds of a delay in a second bump in the levy. GDP shrank an annualized 1.6% in the three months through September, a second straight drop - matching the textbook definition of a recession. Unadjusted for price changes, the economy contracted an annualized 3%, the Cabinet Office said. (Source: Bloomberg) Indonesia: Raises fuel price to free funds for economic stimulus. Indonesian President Joko Widodo raised fuel prices to reduce state energy subsidies, enacting a key election pledge less than a month after taking office to narrow the budget deficit and free funds for development plans. The price of subsidized gasoline increased to IDR 8,500 (USD 0.70) a liter from IDR 6,500, Widodo told reporters in Jakarta. Diesel has been raised to 7,500 rupiah a liter from IDR 5,500, he said. (Source: Bloomberg) Australia: Opens China's services market with free trade accord. Australia hailed a free-trade agreement with China that it says provides unparalleled access to the services market of the world's second-largest economy. The deal, once signed in 2015, will mean 85% of Australian goods exports to China will be tariff free, rising to 95% when fully implemented, Prime Minister Tony Abbott said. Tariffs will be removed from some resources and energy including aluminum oxide and coking coal, and phased out on thermal coal over two years. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,806.5 (3.2) (0.4) JCI 5,053.9 18.2 0.1 STI 3,288.7 3.8 (0.8) SET 1,569.1 20.8 (0.4) HSI 23,797.1 2.1 (1.2) KOSPI 1,943.6 (3.4) (0.1) TWSE 8,884.4 3.2 (1.1) DJIA 17,647.8 6.5 0.1 S&P 2,041.3 10.4 0.1 FTSE 6,672.0 (1.1) 0.3 MYR/USD 3.348 2.2 (0.3) CPO (1mth) 2,208.0 (16.0) 0.8 Crude Oil (1mth) 75.6 (23.1) (0.2) Gold 1,187.8 (1.2) 2.9 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.50 16.00 Axiata 7.01 7.60 Sime Darby 9.65 10.20 Gamuda 5.12 6.00 AFG 4.58 5.50 Perdana Petroleum 1.33 2.40 Hock Seng Lee 1.85 2.25 SP Setia 3.24 3.98