Malaysia Daily, Maybank KE (2015-05-21)

Daily 21 May 2015 COMPANY UPDATE Axiata Group: Maintain Buy Cautious as expected  Shariah-compliant 2Q15 to remain challenging as expected, but operating trends could improve in 2H15. Tepid guidance for FY15 revenue and EBITDA targets partly due to limited visibility at Celcom and XL. Our BUY rating and MYR7.60 TP are unchanged. Click here for full report » RESULTS REVIEW CIMB Group Holdings: Maintain Sell Guiding for larger NIM compression Results below expectations; FY15 net profit forecast cut by 8.5%, but we raise FY16/17 forecasts by 2%/7%. NIM compression now expected to be up to 20bps this year vs 5-10bps earlier. Have factored in MYR202m IB restructuring cost, MSS could cost another MYR300m-400m. SELL maintained � little near-term catalyst; TP trimmed to MYR5.60 from MYR5.70 on unchanged P/BV of 1.2x. Click here for full report » Kuala Lumpur Kepong: Maintain Hold Boosted by other income  Shariah-compliant 2QFY9/15 net profit boosted by other income. Else, core net profit met our expectation, but below consensus. FY9/15 core net profit cut by 2% as we adjust our FFB output growth forecast to 3% (from 6%). Lacks near term catalyst. Maintain HOLD with an unchanged TP of MYR21.40 on 23x FY9/16 PER peg. Click here for full report » Oldtown: Downgrade to Hold Near term hiccup?  Shariah-compliant Core net profit was flat YoY, within expectations. F&B sees margin contraction YoY; FMCG results hint at slower growth. Downgrade to HOLD with a lower TP of MYR1.78 from MYR2.15. Click here for full report » Lafarge Malaysia: Maintain Hold Dull, as expected 1Q15 net profit (flattish YoY, +48% QoQ) within expectations. The falling coal price has limited impact on LMC because of the mild ASP competition. Maintain forecasts, HOLD and MYR9.30 TP (22x FY16 PER). Click here for full report » TSH Resources: Downgrade to Hold Temporary blip in production  Shariah-compliant Results were below our and consensus forecasts, on lower-than-expected FFB production. Cut 2015-17 EPS by 5%-7% after adjusting production lower. Downgrade to HOLD given limited upside to our revised TP of MYR2.32 (-5%) following our earnings cut. Click here for full report » MRCB-Quill REIT: Maintain Hold Earnings on track 1Q15 core net profit of MYR8.3m (+1.4% YoY) was in line. Full earnings contribution from Platinum Sentral from 2Q15 onwards; high gearing of 44% could entail fundraising. Maintain HOLD, earnings and MYR1.17 TP. Click here for full report » SECTOR UPDATE Malaysia Automotive: Maintain Neutral April TIV fell Apr 2015 TIV took a dive (-33% MoM) to 45.2k units from an unusually high base in Mar from purchases ahead of GST. Our 2015 TIV forecast of 660k units (-1% YoY) is unchanged. 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 » Technicals Indices remains quiet and lacklustre The FBMKLCI inched up 0.39 points to 1,810.11 yesterday, but the FBMEMAS and FBM100 closed lower by 0.60 points and 1.09 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 342-to-413 while 349 counters were unchanged. A total of 1.92b shares were traded valued at MYR1.94b. Our short-term buy pick for today is SLP with upside targets of MYR1.23, MYR1.46 and MYR1.74. Stop-loss is at MYR0.96. Click here for full report » Other Local News IPO: Dolphin International to raise MYR31.28m in IPO. Dolphin International, a trader of products for the palm oil milling machinery sector, is preparing for an initial public offering (IPO) to raise MYR31.28m, over a third of which will be used to renovate and expand its one-acre (0.4ha) factory in Shah Alam, Selangor. The IPO, slated for June 9, entails a public issue of 46m new shares at an issue price of 68 sen apiece. (Source: The Edge Financial Daily) RHB: Bullish on SME financing growth this year. RHB Banking Group hopes to lead the pack in the small and medium enterprise (SME) business segment with a double-digit growth in SME financing this year. Its SME business banking head Jeffrey Ng Eow Oo said the bank�s SME financing business had been growing faster than the industry, with an 18% expansion YoY compared with the industry 13% growth (inclusive of Islamic finance) last year. (Source: The Star) Tanjung Offshore: Former Tanjung Offshore director held in graft investigation. A former Tanjung Offshore director has been detained by the Malaysia Anti-Corruption Commission (MACC) to assist in investigations into the acquisition of a gas company. Sources said the director was among four people who had their statements recorded yesterday in relation to a graft probe into the purchase of Tanjong Offshore�s subsidiary, Gas Generators (M) Sdn Bhd (Gastec). (Source: The New Straits Times) Outside Malaysia U.S: Treasuries rise after minutes show Fed in no rush to raise rates. Treasuries rose after minutes from the Federal Reserve's latest policy-setting meeting showed policy makers are likely to keep interest rates lower for longer. Fed officials last month didn�t expect to raise rates at their next meeting in June even as they concluded that a first- quarter economic slowdown was unlikely to persist, minutes of the meeting show. U.S. debt rose earlier as the central bank weighs whether U.S. economic growth can withstand a rise in borrowing costs. Reports showing below-target inflation and a strong labor market were released after the Fed's meeting. (Source: Bloomberg) Germany: Investor confidence falls amid slower economic growth. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 41.9 in May from 53.3 in April. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,810.10 2.8 0 JCI 5,292.70 1.3 0.4 STI 3,439.70 2.2 -0.4 SET 1,520.10 1.5 -0.4 HSI 27,585.10 16.9 -0.4 KOSPI 2,139.50 11.7 0.9 TWSE 9,685.30 4.1 -0.3 DJIA 18,285.40 2.6 -0.1 S&P 2,125.90 3.3 -0.1 FTSE 7,007.30 6.7 0.2 MYR/USD 3.616 3.4 0.7 CPO (1mth) 2,150.00 -6.2 -0.7 Crude Oil (1mth) 59 10.7 3 Gold 1,209.80 2.1 0.2 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.98 16 Sime Darby 8.94 10.2 Genting Malaysia 4.32 4.6 Gamuda 5.2 6 SP Setia 3.45 4.07 AFG 4.76 5.3 Inari 3.49 4.05 MBM Resources 3.44 4.2 Vitrox 3.76 4.05