Malaysia Daily, Maybank KE (2015-02-23)

Daily 23 February 2015 RESULTS REVIEW Petronas Chemicals: Maintain Hold Final FY14 disappoints  Shariah-compliant FY14 core PATAMI of MYR2,465m (-21.6% YoY) was below expectations. ASPs fell significantly, in tandem with falling crude oil prices. Maintain HOLD. No change to target price of MYR5.35 pending analyst briefing later today. Click here for full report » RESULTS PREVIEW AirAsia Bhd: Maintain Buy 4Q14 earnings to fall short? 4Q14 operating statistics below expectation, our FY14 core net profit forecast lowered by 6%. AirAsia will sell its 25% stake in AAE Travel for a net disposal gain of USD78.8m (MYR279.6m) which equates to 10sen/shr. Maintain BUY with a reduced TP of MYR2.94 (from MYR3.00) after imputing lower associate contribution from AAE Travel sale. Click here for full report » COMPANY UPDATE CIMB Group Holdings: Maintain Hold Clarifies coal sector exposure 34% of CIMB Niaga's coal-related loans are non-performing (not 68%); LLC higher at 54% (vs initial guidance of 20%). Our forecasts for CIMB Niaga maintained � implying a 4% cut to our FY15 net profit forecast for CIMB Group. HOLD and MYR5.70 TP for CIMB Group maintained pending results on 27 Feb. Click here for full report » SECTOR UPDATE Malaysia Automotive: Maintain Neutral Slow start post year-end party Jan 2015 TIV fell 22% MoM to 50.6k units from a high base in Dec 2014 due to year-end sales campaigns. Our 2015 TIV forecast of 660k units (-1% YoY) is unchanged, having considered weaker consumer sentiment ahead of GST. Maintain Neutral with no near-term re-rating catalyst just yet. BUYs are MBM and BAuto. HOLD UMWH and TCM. Click here for full report » ECONOMICS Malaysia CPI, Jan 2015 Temporary disinflation� Inflation rate dropped sharply in Jan 2015 to +1.0% YoY (Dec 2014: +2.7% YoY) mainly due to lower transport costs as crude oil price plunge led to cheaper fuel prices. Adjust our 2015 inflation forecast to 3.0%-4.0% from 4.0%. Amid volatility and mixed trends in key factors influencing inflation, namely volatility in crude oil price and MYR; application of incentive-based regulation (IBR) on electricity tariff; still uncertain price impact of GST. Click here for full report » Technicals Dow in all-time high territory The FBM KLCI gained 6.92 points WoW to close at 1,807.87, as some local nibbling activities took place ahead of CNY. Take short-term profits at the resistance areas of 1,809 to 1,896. The support levels of 1,738 and 1,807 will witness minor nibbling activities. Trading idea is a Take profit call on TEKSENG with downside target areas at MYR0.525 & MYR0.45. Click here for full report » Other Local News Utilities: 1MDB chief: PetroSaudi deal made MYR1.78b in profits. Troubled sovereign fund 1Malaysia Development (1MDB) on Saturday claimed that a joint venture with a Saudi Arabian company six years ago, which critics claimed was shady, had earned it a profit of USD488m (MYR1.78B). In a statement on the company's website, 1MDB president Arul Kanda Kandasamy also claimed that the money it had invested in the JV had been converted into murabaha notes when the plan did not go through. (Source: The Edge Financial Daily) Telecommunications: U Mobile on track to IPO. U Mobile Sdn Bhd's chief executive officer Wong Heang Tuck still doesn't have a definite answer as to when the telecommunications services provider will float its shares. But since U Mobile has finally drawn earnings before interest, taxes, depreciation, and amortization, it is definitely on the road to an initial public offering (IPO). Wong denied market rumour of a possible merger-and-acquisition exercise between U Mobile and REDtone International, both of which are affiliated with Tan Sri Vincent Tan. (Source: The Edge Financial Daily) Westports: On the prowl for M&As in Asean region. Westports Holdings is eyeing a suitable merger and acquisition (M&A) target particularly in the Asean region that would be able to chart good growth to the benefit of terminal operators here. Chief executive officer Ruben Emir Gnanalingam told StarBiz that he was keen on pursuing a deal but had yet to find a terminal in the region that could join the group. (Source: The Star) Outside Malaysia U.K. Has biggest surplus in seven years on income-tax surge. Income tax receipts rose an annual 6.1% to GBP 26.7b (USD 41b) in January, with self-assessed tax filings surging almost 16%, according to data published. The surplus excluding public-sector banks was GBP 8.75b. Government spending fell 0.1%. (Source: Bloomberg) Russia: Gets second junk rating from Moody's on Ukraine, oil. Russia's credit rating was cut to below investment grade by Moody's Investors Service, which joined Standard & Poor's in ranking the country's debt as junk, citing the conflict in Ukraine and plunging oil prices. The rating company downgraded Russia one step to Ba1, the highest non-investment level and in line with countries including Hungary and Portugal. Moody�s has a negative rating outlook on the country, according to a report released. Standard & Poor's decision cut the country to speculative grade in January. (Source: Bloomberg) Greece: Deal reached as finance chiefs agree on funding extension. Euro-area finance ministers reached an accord that would keep bailout funds flowing to Greece in return for a commitment to meet certain conditions, buying time to work out the detail of longer-term Greek financing. Talks in Brussels between officials from the 19 euro-area finance officials concluded Friday evening with an agreement to extend aid to Greece for four months. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,807.9 (3.2) (0.1) JCI 5,390.4 26.1 1.0 STI 3,435.7 8.5 0.6 SET 1,603.1 23.4 1.0 HSI 24,832.1 6.5 0.2 KOSPI 1,961.5 (2.5) 0.0 TWSE 9,529.5 10.7 0.0 DJIA 18,029.9 8.8 (0.1) S&P 2,099.7 13.6 (0.0) FTSE 6,898.1 2.2 (0.0) MYR/USD 3.621 10.4 1.1 CPO (1mth) 2,302.0 (12.4) 0.7 Crude Oil (1mth) 52.1 (47.0) (2.6) Gold 1,204.5 0.2 (1.4) TOP STOCK PICKS Buy rated large caps Price Target Axiata 7.17 7.80 Tenaga Nasional 14.82 16.00 Sime Darby 9.53 10.20 Genting Malaysia 4.18 4.60 Gamuda 5.15 6.00 AirAsia 2.78 3.00 Westport 3.50 3.60 SP Setia 3.54 3.98 AFG 4.80 5.50 Hartalega 7.55 8.50