Malaysia Daily, Maybank KE (2015-01-13)

Daily 13 January 2015 SECTOR UPDATE Malaysia Construction: Maintain Overweight Lower tone, but still steady Infrastructure projects to be the key driver in 2015 with 11MP and Sarawak state election as sentiment boosters. Prefer potential beneficiaries of major infrastructure projects and Sarawak construction. Reiterate Overweight; top BUY is Gamuda. Click here for full report » REGIONAL SECTOR UPDATE Regional Plantations: Maintain Neutral Strengthening fundamentals Malaysia�s Dec 2014 stockpile at 2.01m MT (-12% MoM, +1% YoY) sets a positive tone for near term CPO price uptrend. We maintain our view that 1Q15 is a good opportunity for a trade as CPO price makes a seasonal recovery. Top BUYs in the region: BAL, FR, GENP, SOP, and SIME. SELL IOI Corp for its steep valuation. Click here for full report » COMPANY UPDATE SP Setia: Maintain Buy A good start  Shariah-compliant Strong response to first launch in 2015 - all 144 units are close to 100% booked. Stock valuation is attractive, fundamentally sound. Maintain earnings forecasts, MYR4.07 TP (on an unchanged 0.73x P/RNAV) and BUY rating. Click here for full report » Technicals Recovering some poise The FBMKLCI gained 2.64 points to 1,735.08 yesterday, while the FBMEMAS and FBM100 also closed higher by 21.02 points and 17.11 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Short-Term Buy on VS with upside target areas at MYR2.97 & MYR3.31. Stop loss is at MYR2.44. Click here for full report » Other Local News Property: Sime Darby top brass moots plan for its takeover by Sime Darby. A high level initiative has started for a proposal for the property arm of Sime Darby to take over SP Setia. The proposal was mooted by a few senior management of SP Setia about two months ago and conveyed to the top brass of Permodalan Nasional Bhd (PNB) and Sime Darby. PNB is the major shareholder of SP Setia as well as Sime Darby. The takeover is to resolve the current problem at SP Setia. The departure of its former president and CEO Tan Sri Liew Kee Sin on April 30, 2014 left a huge vacuum, which has gone increasing larger. (Source: The Star) Property: EW Investment to develop GBP2.2b London projects. Eco World Investment Co Ltd (EW Investment), a private vehicle controlled by Tan Sri Liew Kee Sin and Datuk Voon Tin Yow, will develop three large-scale residential projects in central London together with Ireland-based Ballymore Group, with a total gross development value of GBP2.2b (MYR11.8b). The projects are likely to be injected into Eco World International Bhd (EWI-SPAC), a special purpose acquisition company (SPAC) that Liew plans to list on Bursa Malaysia. (Source: The Edge Financial Daily) Telekom Malaysia: Sulaiman Mahbob appointed new chairman of TM. Sulaiman, who is also chairman of the Malaysia Institute of Economic Research (Mier) and Jambatan Kedua Sdn Bhd, replaces Datuk Seri Dr Halim Shafie, who is taking up a position at the Malaysian Communications and Multimedia Commission (MCMC) as its chairman. Halim has served as chairman of TM since July 2009. (Source: The Edge Financial Daily) Axiata: Celcom Axiata to grow business by enhancing present one and develop new models. Celcom would intensify efforts to drive its data business while continuing to focus on the core traditional business of providing postpaid and prepaid mobile voice services. Additionally, Celcom will grow adjacent and other upstream services (including continuing to embrace over-the-top or OTT, digitisation and business solutions). The main focus will also be on providing best customer experience. (Source: The Star) Outside Malaysia Commodities: Drops to 12-year low as oil slumps amid global glut. Commodities fell to a 12-year low on concern that the global surplus in crude oil will continue, while slowing economic growth in China and Europe means less demand for raw materials. The Bloomberg Commodity Index of 22 energy, agriculture and metal prices dropped to 101.95, the lowest since November 2002. In 2014, the gauge declined 17%, the most since the global financial crisis in 2008. The measure rose to a record in July 2008, more than doubling from the start of 2000. (Source: Bloomberg) Japan: Plans record budget for next fiscal year to support an economy that fell into recession after Prime Minister Shinzo Abe's government increased the sales tax. Government ministers and the ruling coalition parties approved the JPY 96.34t (USD 814b) budget proposal for the 12 months starting April 2015, Finance Minister Taro Aso told reporters. Government raises FY15 real GDP growth forecast to 1.5% from 1.4%. (Source: Bloomberg) India: Inflation quickens less than predicted in Dec 2014 as output grows. Consumer prices rose 5% YoY in December, the Statistics Ministry in New Delhi said. That compared with November�s 4.38% YoY that was the slowest since the index was created in January 2012. Industrial production rose 3.8% YoY in November after output shrank 4.2% YoY in the previous month. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,735.1 (7.1) 0.2 JCI 5,187.9 21.4 (0.6) STI 3,344.9 5.6 0.2 SET 1,531.2 17.9 0.1 HSI 24,026.5 3.1 0.4 KOSPI 1,921.0 (4.5) (0.2) TWSE 9,178.3 6.6 (0.4) DJIA 17,640.8 6.4 (0.5) S&P 2,028.3 9.7 (0.8) FTSE 6,501.4 (3.7) 0.0 MYR/USD 3.567 8.9 0.2 CPO (1mth) 2,375.0 (9.6) 0.7 Crude Oil (1mth) 46.1 (53.2) (4.7) Gold 1,233.3 2.6 0.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.96 16.00 Axiata 7.07 7.60 Sime Darby 9.40 10.20 Genting Malaysia 4.02 4.60 Gamuda 5.02 6.00 Westport 3.32 3.60 SP Setia 3.35 3.98 AFG 4.80 5.50 Hartalega 7.01 8.50