Malaysia Daily, Maybank KE (2015-04-29)

Daily 29 April 2015 ECONOMICS National Transformation Programme On track thus far Quantitatively on the track. Another key achievement is on fiscal consolidation and reforms. Focus going forward is on qualitative aspect, especially "trickle down" impact to the bottom-40% of the income group. Click here for full report » Sovereign Credit Rating Risk from Fitch�s Japan downgrade...? Fitch downgraded Japan�s sovereign credit rating to "A" from "A+" after being under "negative" watch since May 2012. Malaysia�s "A-" sovereign rating is under Fitch's "negative" watch since July 2013. Muted reactions in JPY, Nikkei 225 and 10-year JGB could be a pointer for Malaysia in the event of Fitch downgrade. Click here for full report » MARKET STRATEGY Malaysia Strategy: Maintain Neutral Staying the course All KPI targets under the ETP, SRI and GTP for 2015 have been met, exceeded in fact. Construction sector will continue to be prominently featured with substantial jobs offerings over the longer term. No change to our market view, sector and stock calls. Click here for full report » RESULTS REVIEW British American Tobacco: Maintain Hold 1Q15 driven by pre-GST demand 1Q15 results within expectations, at 26% of our and consensus full-year forecasts. Results driven mainly by pre-GST demand; a softer 2Q15 should follow. Maintain HOLD with an unchanged DCF-TP of MYR63. Click here for full report » IGB REIT: Maintain Hold 1Q15 on track 1Q15 core net profit of MYR70m (+21% YoY) was in line. Strong earnings fairly reflected, re-rating catalysts for the near-term lacking. Maintain earnings forecasts, MYR1.45 DCF-based TP. HOLD. Click here for full report » COMPANY UPDATE Sarawak Oil Palms: Maintain Buy A new source of growth in motion  Shariah-compliant Sarawak Oil Palms has kicked off two property development projects in Miri, providing a new source of earnings growth. Expect a slow start to 2015 with 1Q15 net profit of ~MYR20m due to seasonal and biological low yield cycle factors. 2015-17F profit forecasts raised by 1-5% including maiden property earnings. BUY with adjusted TP of MYR6.72 (+2.5%). Click here for full report » Technicals Profit taking as investors weigh earnings The FBMKLCI fell 4.52 points to 1,855.06 yesterday, while the FBMEMAS and FBM100 also closed lower by 48.36 points and 33.57 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Take Profit call on PMETAL with MYR2.68 & MYR2.24. Click here for full report » Other Local News Banking: Bank Negara appoints new assistant governor. Bank Negara has appointed new assistant governor, Mohd Adhari Belal Din, effective May 1. He would be responsible for the strategic management, human capital development centre, IT services and strategic human capital departments. He will also continue as the director of strategic human capital department. Replacing him would be assistant governor, Shaik Abdul Rasheed Abdul Ghaffour. (Source: The Star) Property: JCorp plans to list MYR900m Islamic REIT, Al-Salam in 3rd quarter. JCorp chief executive officer, Datuk Kamaruzzaman Abu Kassim said the initial portfolio of As-Salam would include 31 assets to be acquired from Damansara Assets Sdn Bhd (DASB) and QSR Brands (M) Holdings Sdn Bhd. (Source: The Star) CIMB: considers the worst to be over in Indonesia. CIMB Group Holdings, which has been weighed down by its operations in Indonesia, expects PT Bank CIMB Niaga Tbk's bottom line to improve going forward and an overall loan growth of 10% this year. The group's operations in Indonesia, Singapore and Thailand would likely contribute a teen double-digit loan growth to the group�s overall performance this year. (Source: The Star) Bintulu Port Holdings: Six Bintulu Port projects planned. BPHB plans to invest MYR550m in six major port development projects to reduce its dependency on liquefied natural gas (LNG) cargo. (Source: The Star) KKB Engineering: KKB associate, OceanMight Sdn Bhd bids for MYR550m projects. OceanMight which delivered its maiden fabrication project for the oil and gas industry last week has bid for four more projects and expects the outcome of one or two of the four tenders to be known in the second half of 2016. (Source: The Star) Outside Malaysia U.S: Confidence ebbs, catching up with spending slowdown. The Conference Board's consumer confidence index dropped to a four-month low of 95.2 in April, weaker than the most pessimistic forecast in a Bloomberg survey of economists, according to figures from the New York-based private research group. (Source: Bloomberg) U.S: Home prices in 20 cities increase at faster pace, a sign the housing industry may be gaining momentum amid low borrowing costs and continued job growth. The S&P/Case-Shiller index of property values increased 5% YoY from February 2014, the biggest year-to-year gain since August, after rising 4.5% YoY in the year ended in January, the group said. Nationally, prices rose 4.2% YoY. (Source: Bloomberg) U.K: Economic growth slowed more than forecast in the first quarter, dealing a potential blow to Prime Minister David Cameron's claim that his Conservative Party is best placed to manage the economy's recovery. The 0.3% pace was just half the rate of the previous three months and marked the weakest reading since the fourth quarter of 2012. (Source: Bloomberg) Japan: Retail sales slump flashes warning signal for Kuroda. Sales dropped 9.7% YoY, when there was a run-up in purchases ahead of an April sales-tax increase, according to trade ministry data released. Sales sank 1.9% from the previous month. (Source: Bloomberg) Indonesia: Investment climbs to record in fillip for Widodo. Investment in Indonesia climbed to a record in the first full quarter since Joko Widodo became president, providing a boost to the leader's goal of revitalizing Southeast Asia's biggest economy. Total investment rose 16.9% to a quarterly record of IDR124.6tr (USD 9.6b) in the first three months of 2015, helped by a weaker rupiah, Franky Sibarani, the head of the Indonesia Investment Coordinating Board, said in Jakarta. Approved foreign investment climbed 14% in rupiah terms, faster than the 10.5% rate the previous quarter. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,855.1 (0.6) (0.2) JCI 5,242.2 22.6 (0.1) STI 3,495.1 10.3 (0.6) SET 1,531.5 17.9 (1.1) HSI 28,442.8 22.0 0.0 KOSPI 2,147.7 6.8 (0.5) TWSE 9,956.8 15.6 (0.2) DJIA 18,110.1 9.3 0.4 S&P 2,114.8 14.4 0.3 FTSE 7,030.5 4.2 (1.0) MYR/USD 3.557 8.6 (0.3) CPO (1mth) 2,098.0 (20.2) (1.1) Crude Oil (1mth) 57.1 (42.0) 0.1 Gold 1,212.2 0.9 0.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.60 16.00 Sime Darby 9.25 10.20 Genting Malaysia 4.35 4.60 Gamuda 5.24 6.00 Westport 4.28 4.50 SP Setia 3.47 4.07 AFG 4.80 5.30 Hartalega 8.20 8.50 Inari 3.17 3.95 MBM Resources 3.38 4.20 Vitrox 3.62 4.05 Axiata 6.90 7.60