Malaysia Daily, Maybank KE (2014-11-20)

Daily 20 November 2014 RESULTS REVIEW AirAsia X Bhd: Maintain Sell Fighting for survival 3Q14 core net loss of MYR185m (vs. profit MYR16m in 3Q13) was greater than forecast on weak yields and higher cost. All sectors were loss making with the exception of Nepal. Maintain SELL with a lower TP of MYR0.57 (from MYR0.63). Click here for full report » AirAsia Bhd: Maintain Hold Losing the low cost advantage 3Q14 core net income of MYR112.4m (-28% YoY, +342% QoQ) was within expectations. Credible signs that market has bottomed, but expect slow yield recovery. Earnings growth driven by lower fuel cost. Maintain HOLD, target price raised to MYR2.60 (from MYR2.30) due to positive earnings revision. Click here for full report » AMMB Holdings: Maintain Hold Better, on lower provisions 2QFY15 core net profit rebounded 35% QoQ, but 1HFY15 core earnings still down 14% YoY. FY15 forecast maintained, trimming FY16-17 by 5% p.a. to factor in slower loans growth and lower NIMs. HOLD maintained, lowering TP to MYR6.90 from MYR7.70 on a lower CY15 P/BV peg of 1.5x (1.7x previously). Click here for full report » Kuala Lumpur Kepong: Maintain Hold Set back by oleochemicals business  Shariah-compliant FY9/14 results hurt by weak downstream earnings. Muted earnings outlook in FY9/15 as oleo-chemical, refinery and property businesses remain challenging. Maintain HOLD on unchanged TP of MYR23.20 after rolling forward our valuation on unchanged 23x PER target. Click here for full report » Boustead Plantations: Maintain Buy Rich land value caps downside  Shariah-compliant 3Q14 results disappointed due to low CPO ASP achieved and lower-than-expected FFB output. Share price downside limited, backed by strategic land that has development potential, offering a RNAV of e.MYR2.96/sh. Maintain BUY with a revised SOP-TP of MYR2.03 (previously MYR2.16). Click here for full report » TH Plantations: Maintain Hold Hit by dry spell  Shariah-compliant Results below our and consensus forecasts. Cut FY14 net profit by 9% on lower production and CPO ASP. FY15-16 forecasts unchanged but have downside potential. Maintain HOLD and TP of MYR1.65 on 15x 2015 PER. Click here for full report » Star Publications: Maintain Buy Dividend yields look enticing  Shariah-compliant 3Q14 results slightly below; trim estimates by 6-11%. 18sen p.a. DPS may still hold; yields very attractive at 7.8%. Trim TP from MYR2.89 to MYR2.65 but upgrade to BUY. Click here for full report » MSM Malaysia: Maintain Buy Expect a pickup in 4Q14  Shariah-compliant 9M14 results were above expectations at 80%/77% of our and consensus full-year forecasts. Anticipating a better 4Q14 on higher margin assumption, FY14 net profit forecast raised 5%. Upgrade to BUY with a higher TP of MYR5.50 (14x FY15 PER). Click here for full report » RESULTS PREVIEW Inari Amertron: Maintain Buy 1QFY6/15: Expect a strong start Expect net profit of MYR32-35m (+4-13% QoQ), supported by strong growth in overall smartphone demand. Inari is a beneficiary of the stronger USD, providing upside to our earnings forecasts. Reiterate BUY with a Street-high cum-rights TP of MYR4.20 (on unchanged 17x CY15 PER peg). Click here for full report » REGIONAL SECTOR UPDATE Plantations: Maintain Neutral El Nino Alert! The Australia Bureau of Meteorology (ABM) upgraded the threat of an upcoming El Nino; with at least 70% probability. The new El Nino threat may boost sentiment and drive CPO price higher, aided by seasonal price recovery in 1Q15. Investors should position for a short term trade. BUY First Resources, Bumitama Agri, Sime Darby, Sarawak Oil Palms, Ta Ann and TSH Resources for earnings recovery play. Click here for full report » Technicals Low of 1,805 with rebound confirmation The FBMKLCI advanced 6.01 points to 1,824.39 yesterday, while the FBMEMAS and FBM100 also closed higher by 32.19 points and 34.44 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Short-Term Buy on GAB with upside target areas at MYR13.94 & MYR14.17. Stop loss is at MYR12.48. Click here for full report » Other Local News MSM: MSM plans to expand through acquisitions. MSM Malaysia Holdings, the sugar refiner remains focused on growing through acquisitions, having set its sight on its only local competitor, Central Sugars Refinery Sdn Bhd, that is owned by Tradewinds (M). MSM is already in talks to acquire an Asian upstream company and is also in discussions with a foreign partner to buy over a sugar plantation company in the region. (Source: The Star) Bina Puri: Bina Puri eyes listing of Indonesian power assets. Bina Puri Holdings plans to list its Indonesian power assets, possible as early as next year, saide group executive director Matthew Tee Kai Woon. The group has seven micro diesel-generated power plants across Indonesia, with a total capacity of 25MW. (Source: The Edge Financial Daily) Outside Malaysia U.S: Housing starts fall on multifamily as permits climb. Residential-construction permits in the U.S. climbed in October to a six-year high, pointing to a pickup in homebuilding after a slowdown in multifamily projects led to a drop in activity. Groundbreakings for single-family homes, condominiums and apartments fell 2.8 %to a 1.01 million annualized rate following September's 1.04 million pace, which was stronger than previously reported, the Commerce Department reported. Permits for future projects rose to the highest level since June 2008. (Source: Bloomberg) U.S: Fed officials saw need to watch for price expectations drop. Many Federal Reserve policy makers last month said they should be on the lookout for signs of a decline in expectations for inflation, minutes of their meeting show. "Many participants observed the committee should remain attentive to evidence of a possible downward shift in longer- term inflation expectations," according to a record of the Oct. 28-29 Federal Open Market Committee meeting released in Washington. "Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered." (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,824.4 (2.3) 0.3 JCI 5,127.9 20.0 0.5 STI 3,334.6 5.3 0.6 SET 1,577.6 21.5 (0.2) HSI 23,373.3 0.3 (0.7) KOSPI 1,966.9 (2.2) (0.0) TWSE 8,963.2 4.1 1.2 DJIA 17,685.7 6.7 (0.0) S&P 2,048.7 10.8 (0.2) FTSE 6,696.6 (0.8) (0.2) MYR/USD 3.365 2.7 0.2 CPO (1mth) 2,234.0 (15.0) 0.2 Crude Oil (1mth) 74.6 (24.2) (0.0) Gold 1,200.5 (0.1) (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.74 16.00 Axiata 7.27 7.60 Sime Darby 9.65 10.20 Gamuda 5.13 6.00 AFG 4.58 5.50 Perdana Petroleum 1.32 2.40 Hock Seng Lee 1.89 2.25 SP Setia 3.25 3.98