Malaysia Daily, Maybank KE (2014-11-21)

Daily 21 November 2014 COMPANY UPDATE SapuraKencana Petroleum: Maintain Buy On E&P assets expansion  Shariah-compliant Buys PCSB�s 3 E&P blocks in Vietnam for USD400m, awarded 2 onshore E&P blocks in Sabah. Risk-reward outlook turning favourable; GSA signing on track, to be completed by end-2014. Earnings forecasts unchanged for now; maintain BUY and MYR3.80 SOP-based TP. Click here for full report » IJM Corporation: Maintain Buy Another sizeable landing  Shariah-compliant Wins MYR356m building construction job. Further orderbook enhancement from WCE and Kuantan Port. Maintain BUY with an unchanged TP of MYR7.40. Click here for full report » RESULTS REVIEW RHB Capital: Maintain Buy Decent results for the quarter 9M14 net profit of MYR1.55b (+17% YoY) within expectations; trimmed FY15-16 net profit forecasts by 3-4%. Merged entity�s proforma FY15 ROE now estimated to be a lower 10.4% vs 11% previously. Cut RHB�s TP to MYR9.45 (from MYR10.20) and CIMB�s TP to MYR6.85 from MYR7.40. BUY RHB, HOLD CIMB. Click here for full report » Bumi Armada: Maintain Buy Risk-reward turning positive  Shariah-compliant 9M14 results within our expectation but below consensus. Risk-reward outlook is improving; FPSO business is less susceptible to oil price weakness/ volatility. Maintain BUY on a reduced SOP-TP of MYR2.05, on lower valuations for its OSV operations. Click here for full report » Eco World Development: Maintain Buy Sales beat expectations  Shariah-compliant 12MFY10/14 net profit was below expectations but property sales beat internal target by 59%. Corporate restructuring exercises to complete by 1QCY15. Adjust our earnings forecasts by -48% to +103%. Maintain BUY and MYR6.59 TP (0.84x P/RNAV). Click here for full report » Mah Sing Group: Buy (Under Review) Results on track; proposes cash call  Shariah-compliant 9M14 net profit of MYR255m (+21% YoY) was in line. Latest fund-raising to relieve MSGB from overstretching its balance sheet due to aggressive landbanking. Our earnings forecasts, MYR2.96 TP (on 0.79x P/RNAV target) and BUY rating are under review pending further details. Click here for full report » Genting Plantations: Maintain Hold Save the best for the last quarter  Shariah-compliant 3Q14 core PATMI below expectations on high tax expenses but operational earnings were in line. GENP is poised to deliver its best performance in 4Q14; boosted by MYR142m land sale and seasonal peak crop. Earnings forecasts unchanged. Given limited upside, we maintain our HOLD call on sum-of-parts TP of MYR11.20. Click here for full report » YTL Power: Maintain Hold Earnings momentum still weak 1QFY6/15 core net profit was below expectation due to poor showings from PowerSeraya and the broadband business. No dividend was declared in the quarter; there remains no clarity on the corporate action front. Maintain HOLD with an unchanged TP of MYR1.65. Click here for full report » AEON Co. (M): Downgrade to Sell Sell, weak retail performance  Shariah-compliant 9M14 core net profit disappointed at 52% of our original and consensus 2014 forecasts. We cut our FY14-16 earnings forecasts by 14-16%, assuming lower retail margins and slower sales. Downgrade to SELL on a lower TP of MYR3.05 (vs. MYR3.65), pegged to an unchanged 20x FY15 PER. Click here for full report » QL Resources: Maintain Hold A steady catch  Shariah-compliant 2QFY3/15 net profit was within expectations at 46% of our and consensus full-year forecasts respectively. Expect a pick-up in 2HFY15, backed by seasonal effects. Maintain HOLD with an unchanged TP of MYR3.20. Click here for full report » Kossan Rubber Industries: Maintain Buy Stronger growth ahead  Shariah-compliant Flattish 3Q outperformed peers but still below expectations. Stronger earnings ahead on commencement of new capacity. Lower FY14-16 EPS by 9%/4%/5%; TP is unchanged after we roll forward our valuation base (17x mid-2016 PER). BUY. Click here for full report » Alam Maritim: Maintain Sell Results disappoints  Shariah-compliant Sub-par 9M14 earnings, hit largely by weak OSV contributions at both subsidiary and associates level. Cut 2014 EPS by 9% to reflect lower OSV utilisation. Reiterate SELL on unchanged MYR0.80 TP (10x 2016 PER). Click here for full report » SECTOR UPDATE MY Automotive Sector: Downgrade to Neutral Headwinds ahead Oct TIV recovered to 54k units (+13% MoM), driven by new model launches but capped by tighter financing guidelines. Cut 2014 TIV forecast to 660k units, introduce 2015 TIV forecast of 660k units, premised on the normal replacement cycle and in-house 2015 real GDP growth forecast of 5.2%. Downgrade the sector to Neutral. BUY MBM for Perodua exposure and BAuto for weakness in Yen. Click here for full report » Technicals An uncertain index tone The FBMKLCI fell 2.10 points to 1,822.29 yesterday, while the FBMEMAS and FBM100 also closed lower by 22.07 points and 18.01 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 264-to-497 while 317 counters were unchanged. A total of 1.64b shares were traded valued at MYR1.62b. Trading idea is a Take Profit on CIMB with weaker supports and clear downward target areas of MYR5.61, MYR4.70 and MYR4.20. Click here for full report » Other Local News KPJ: Gets nod for MYR1.5b sukuk scheme. KPJ Healthcare has received the authorization from the Securities Commission for the proposed Islamic commercial papers and Islamic medium-term notes with a combined limit of up to MYR1.5b. (Source: The Star) Malton: Lines up MYR1.2b property launches for FY15. Builder and property developer, Malton, has lined up three new property launches with a total gross development value of up to MYR1.2b for the financial year ending June 30, 2015, said its director of corporate finance Ng Chee Kiet. (Source: The Edge Financial Daily) AirAsia X: No Management shake-up. AirAsia X founder Tan Sri Tony Fernandes, founder of AirAsia X has denied that the low-cost medium haul airline is facing management issues. He also brushed off media reports that AirAsia X was facing problems paying salaries and allowances to its staff. (Source: The Star) Outside Malaysia U.S: Previously owned home sales increase to one-year high in October as low borrowing costs helped sustain the recovery in residential real estate. Existing homes sold at a 5.26 million annual pace, the strongest since September 2013 and up 1.5% from a revised 5.18m pace in September, the National Association of Realtors reported. It was the fifth consecutive month that the sales pace topped 5 million. Prices also climbed, the group said. (Source: Bloomberg) U.S: Leading economic indicators rise more than forecast in October, as gains in manufacturing and easier credit boosted the world's largest economy. The Conference Board's index of U.S. leading indicators, a gauge of the outlook for the next three to six months, climbed 0.9% last month, the most since July, after rising 0.7% in September. (Source: Bloomberg) E.U: Euro-area economy risks a renewed slowdown. A Purchasing Managers Index for factories and services activity unexpectedly fell to 51.4 in November, the lowest in 16 months, from 52.1 in October, London-based Markit Economics said. A reading above 50 indicates expansion. (Source: Bloomberg) Germany: Manufacturing and services expanded at the slowest pace in 16 months in November, signaling that growth in Europe's largest economy will remain sluggish. A Purchasing Managers Index for both industries unexpectedly declined to 52.1 from 53.9 in October, London-based Markit Economics said. While the gauge has been above the 50-point mark that divides expansion from contraction since early last year, the reading was below the median forecast of economists for an increase to 54. (Source: Bloomberg) U.K: Retail sales rose at the fastest pace in six months in October, boosted by sales of household goods such as furniture and spending on food. The volume of sales including auto fuel jumped 0.8%from September, when they fell 0.4%, the Office for National Statistics said. Sales excluding fuel also rose 0.8% on the month. (Source: Bloomberg) China: Factory gauge fell to a six-month low in November, adding to signs broader stimulus is needed to halt a slowdown in the world's second-largest economy. The preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 50.0 which came in lower than last month's 50.4. (Source: Bloomberg) Japan: Exports rose the most in eight months in October, supporting an economy that fell into recession last quarter. Overseas shipments rose 9.6% YoY to the highest level since October 2008, the finance ministry said. Imports grew 2.7% YoY leaving a trade deficit of JPY 710b (USD 6b). (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,822.3 (2.4) (0.1) JCI 5,093.6 19.2 (0.7) STI 3,315.6 4.7 (0.6) SET 1,568.7 20.8 (0.6) HSI 23,349.6 0.2 (0.1) KOSPI 1,958.0 (2.6) (0.4) TWSE 9,078.9 5.4 1.3 DJIA 17,719.0 6.9 0.2 S&P 2,052.8 11.1 0.2 FTSE 6,678.9 (1.0) (0.3) MYR/USD 3.366 2.8 0.0 CPO (1mth) 2,213.0 (15.8) (0.9) Crude Oil (1mth) 75.6 (23.2) 1.3 Gold 1,196.3 (0.4) (0.4) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.98 16.00 Axiata 7.20 7.60 Sime Darby 9.75 10.20 Gamuda 5.13 6.00 AFG 4.57 5.50 Perdana Petroleum 1.28 2.40 Hock Seng Lee 1.89 2.25 SP Setia 3.29 3.98