Malaysia Daily, Maybank KE (2015-05-22)

Daily 22 May 2015 ECONOMICS 11th Malaysia Plan The �last miles� to 2020 Key macroeconomic targets reaffirmed People-oriented for quality growth and development To achieve high-income economy that is sustainable and inclusive, with productivity gains as the key enabler Click here for full report » MARKET STRATEGY Malaysia Strategy: Maintain Neutral 11MP: Targets reaffirmed We are positive that the LT macro targets are reaffirmed and structural reforms will continue. Construction sector will benefit as it continues to enjoy sustainable job replenishment; maintain OVERWEIGHT. No change in our other sector nor stock calls; maintain 1,830 end-2015 KLCI target. Click here for full report » RESULTS REVIEW YTL Power: Maintain Hold Seraya drag 9MFY15 core net profit was in line, although segmentals were a mixed bag. As 4QFY15 approaches, there is potential for upside surprise to DPS in the absence of M&A. Maintain HOLD with a lower TP of MYR1.60 (from RM1.65). Click here for full report » UEM Sunrise: Maintain Hold Expect a stronger 2H  Shariah-compliant 1Q15 net profit of MYR53m (-14% YoY) was in line. Potential land sales at Puteri Harbour should boost 2H15 earnings. Management is confident of achieving its internal sales target of MYR2b for FY15. Maintain earnings forecasts, MYR1.27 RNAV-TP, HOLD rating. Click here for full report » AEON Co. (M): Maintain Hold Within expectations  Shariah-compliant 1Q15 core net profit of MYR49m (+5% YoY) was in line. Anticipated slowdown in consumer spending post-GST implementation could affect 2Q-3Q15�s revenue growth. Maintain HOLD; MYR3.05 TP and earnings are unchanged. Click here for full report » Kossan Rubber Industries: Maintain Buy Solid results; stronger ahead  Shariah-compliant 1Q15 net profit (+23% YoY, +20% QoQ) above expectations. Expect stronger earnings ahead on full commercialisation of Plant 2 and 3. Raise FY15-17 EPS by 11-17% and TP to MYR6.85 (19x 2016 PER). Maintain BUY. Click here for full report » MPHB Capital: Maintain Hold 1Q15 in line, earnings cut post sale 1Q results in line but we lower FY15/16/17 earnings by 10%/26%/26% to reflect the minority interest post-MPI sale. Sale of 49% stake in MPI for MYR356m completed on 7 May, P/BV of 2.45x. Lowering SOP TP to MYR2.07 from MYR2.20 on a higher holding co discount of 25% (20% before). HOLD maintained. Click here for full report » KNM Group: Maintain Buy No surprises; eyeing renewables  Shariah-compliant 1Q15 core earnings in line. Europe, Asia & Oceania operations anchor growth. Still eyeing RAPID works; transformation into a renewable energy play is a major positive. Maintain BUY; unchanged MYR1.00 TP (0.6x EV/backlog). Click here for full report » Hock Seng Lee: Maintain Buy Riding on the construction boom  Shariah-compliant Results were in line with strong 20% YoY growth. Will continue to ride on rising construction activities in Sarawak. Maintain BUY with unchanged MYR2.15 TP (12.5x 2015 EPS). Click here for full report » Perdana Petroleum: Maintain Buy Below expectations; cut earnings 1Q15 core earnings were soft, on lower OSV utilisation and dry-docking works on Sovereign. Cut 2015 earnings by 10% for the weak 1Q15, in anticipation of a weaker 2Q15 (vs. 1Q15) but a stronger 2H15 (vs. 1H15). Reiterate BUY and MYR1.70 TP (10x 2016 PER). Click here for full report » ViTrox Corp: Maintain Buy First step to another record year  Shariah-compliant 1Q15 core earnings within our and consensus forecasts. Declared a 4sen dividend (3.5sen special, 0.5sen final). A play on replacement cycle of inspection equipment (mainly AXI); strengthening USD is another boost to earnings. Forecasts unchanged pending briefing today. Maintain BUY with an unchanged MYR4.05 TP (13.5x CY16 PER). Click here for full report » Alam Maritim: Maintain Sell No surprises; challenging outlook  Shariah-compliant 1Q15 in line but operationally challenging amidst a low OSV utilisation backdrop and vessel oversupply. Optimising utilisation at the expense of lower DCRs for cashflow sustenance is key in 2015. No catalyst in sight. Maintain SELL and MYR0.50 TP (9x 2016 PER). Click here for full report » Technicals Index is headed down towards 1,774 The FBMKLCI plunged 15.07 points to 1,795.04 yesterday and the FBMEMAS and FBM100 tumbled 93.25 points and 90.27 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 258-to-629 while 284 counters were unchanged. A total of 2.45b shares were traded valued at MYR2.29b. Our Take-Profit pick for today is UEMS with very weak supports of MYR1.03 and MYR1.11 as well as clear downside target areas of MYR1.10, MYR0.86 and MYR0.50. Click here for full report » Other Local News Construction: MRT Line 2 will cost over MYR30b. The cost taking into account the private land acquisition that is estimated to be between MYR4b and MYR5b. Construction works are expected to commence in the second quarter of next year (2Q16). The MYR28b estimation does not include the project delivery partner (PDP)�s cost and consultant�s fee. (Source: The Edge Financial Daily) CIMB: to reduce cost-to-income ratio. CIMB Group Holdings wants to reduce its cost to income ratio (CIR) to 55 percent this year from 58 per cent last year, and further down to 50 per cent by 2018. The group has already closed its investment bank in Australia and offered mutual separation scheme (MSS) to its staff in Malaysia and Indonesia. (Source: New Straits Times) Sime Darby: main MVV beneficiary? Sime Darby could be the main beneficiary of the 108,000ha Malaysia Vision Valley (MVV) project announced under the 11th Malaysia Plan, where it has 28,328ha in Nilai and Seremban originally. Sime Darby had in 2009 unveiled a master framework for Sime Darby Malaysian Vision Valley (SDVV), outlining two main components, namely Selangor Vision City and Negeri Sembilan Vision City. The vision cities have been touted to have a collective estimated gross development value (GDV) of up to MYR30b. (Source: New Straits Times) Outside Malaysia U.S: Sales of previously owned homes unexpectedly decline in April, a sign the industry's recovery remains uneven. Contract closings dropped 3.3% to a 5.04 million annualized rate after a 5.21 million pace that was the strongest in almost two years, figures from the National Association of Realtors showed. Prices jumped as the number of houses for sales declined from the same time last year. (Source: Bloomberg) Germany: Loses further momentum as manufacturing, services weaken. Markit Economics said its composite index of services and manufacturing dropped to 52.8 from 54.1 in April. While that's above the 50 mark that divides expansion from contraction, it's the second straight decline and was less than the reading of 53.8 forecast by economists in a Bloomberg survey. (Source: Bloomberg) U.K: London luxury building boom fails to boost affordable homes. London's most expensive boroughs for housing are failing to secure construction of affordable homes even as the number of luxury developments surges. Low-cost properties accounted for 28 out of every 100 homes started in Westminster, Camden and Kensington & Chelsea last year, according to property magazine Estates Gazette. That's down from 70 for every 100 in 2011, the highest proportion in five years. (Source: Bloomberg) China: Factory gauge remains sluggish on economic slowdown. A gauge of Chinese manufacturing remained sluggish, underscoring the tepid response to government efforts to cushion a slowdown in the world�s second-largest economy. The preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 49.1 for May. Numbers below 50 indicate contraction. The government has escalated efforts to prevent a hard landing, adding fiscal loosening to monetary easing. In the latest moves, it relaxed financing rules for local governments in a bid to boost demand for credit, while three interest-rate cuts since November aim to lower borrowing costs. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,795.0 1.9 (0.8) JCI 5,313.2 1.7 0.4 STI 3,439.9 2.2 0.0 SET 1,526.3 1.9 0.4 HSI 27,523.7 16.6 (0.2) KOSPI 2,122.8 10.8 (0.8) TWSE 9,578.6 2.9 (1.1) DJIA 18,285.7 2.6 0.0 S&P 2,130.8 3.5 0.2 FTSE 7,013.5 6.8 0.1 MYR/USD 3.602 3.0 (0.4) CPO (1mth) 2,154.0 (6.0) 0.2 Crude Oil (1mth) 60.7 14.0 3.0 Gold 1,204.9 1.7 (0.4) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.00 16.00 Sime Darby 8.94 10.20 Genting Malaysia 4.33 4.60 Gamuda 5.20 6.00 SP Setia 3.39 4.07 AFG 4.76 5.30 Inari 3.42 4.05 MBM Resources 3.50 4.20 Vitrox 3.63 4.05