Malaysia Daily, Maybank KE (2015-05-27)

Daily 27 May 2015 RESULTS REVIEW Hong Leong Bank: Maintain Buy Better loan traction in 3Q 9MFY15 net profit (+3% YoY) within expectations. FY15 net profit forecast maintained, cut FY16/FY17 by 2%/3%. No news yet on capital raising, but we estimate the need to raise MYR2.7b, which entails a 1-for-7 rights issue. BUY maintained, TP trimmed to MYR15.70 (-40sen) on unchanged P/BV of 1.6x (CY15 ROE 13.8%). Click here for full report » Hong Leong Financial Group: Maintain Buy Lower insurance earnings in 3Q 9MFY15 net profit of MYR1.18b (-6% YoY) in line. Capital raising likely to be lower in quantum than HL Bank�s, we estimate about MYR1.2b or a 1-for-11 rights issue. RNAV-based TP lowered to MYR18.50 from MYR18.90 on lower TP for HL Bank. BUY maintained. Click here for full report » BIMB Holdings: Maintain Buy STMB leads growth in 1Q15  Shariah-compliant BIMB's 1Q15 results within expectations, STMB leads growth with pretax profit up 35% YoY from a low base in 1Q14. Forecasts maintained. Expect financing growth of about 13%, 23bp profit spread compression in FY15 for Bank Islam. BUY maintained; SOP-derived TP unchanged at MYR4.70. Click here for full report » IJM Corporation: Maintain Buy Stronger growth ahead  Shariah-compliant Flattish YoY FY3/15 core net profit in line with our estimate. Strong earnings visibility and potential beneficiary of 11MP. Still positive; BUY with unchanged RNAV-TP of MYR7.80. Click here for full report » Bumi Armada: Maintain Buy No surprises; shaping up operations  Shariah-compliant 1Q15 core earnings in line, accounting for 20%/19% of ours/ consensus full-year forecasts. Shaping up to be leaner; eyeing to deliver projects in time. Maintain BUY with an unchanged MYR1.60 SOP-TP. Click here for full report » Barakah Offshore Petroleum: Maintain Buy No surprises; T&I works slowdown  Shariah-compliant 1Q15 results in line; activities slowdown a concern but still active on bidding/market survey/pre-qualification works. Cut 2015 net profit by 14%, mainly on timing lag on its T&I Package A works, where works is pushed back to 2016. Maintain BUY on unchanged MYR1.15 TP (10x FD 2016 PER). Click here for full report » Felda Global Ventures: Maintain Hold A washout quarter  Shariah-compliant 1Q15 core loss of MYR36m was below our and street expectations on low FFB output, ASP and downstream losses. Our FY15-17F net profit forecasts lowered by 19-26% to reflect lower FFB output and downstream losses. Maintain HOLD with a lower TP of MYR1.94 (from MYR2.44) on unchanged 16x FY16 PER peg. Click here for full report » UMW Holdings: Maintain Hold Within our expectation  Shariah-compliant 1Q15 core earnings within our street-low forecast, below consensus. No dividend was declared. Trim FY15/16/17 earnings by 4%/3%/3% after lowering our forecasts for UMWOG on lower rig DCRs and operating days. Maintain HOLD with a lower SOP-based TP of MYR9.50 (-6%), having incorporated our lower TP for UMWOG. Click here for full report » Sunway: Maintain Hold No surprises  Shariah-compliant 1Q15 core net profit of MYR124m (+12% YoY) is in line. Expect property sales and construction job wins to pick up in 2H15. Maintain earnings forecasts, HOLD rating but raise RNAV-TP to MYR3.32 on a higher TP for its ≈36%-owned SunREIT. Click here for full report » QL Resources: Maintain Hold A decent finish to FY15  Shariah-compliant FYE3/15 results within our expectation, below consensus. All three divisions posted double digit pretax profit growth in FY15. Maintain HOLD but with a higher DCF-TP of MYR4.00 (+55sen) on rolling forward our DCF valuations. Click here for full report » MSM Malaysia: Downgrade to Hold Margin expansion on lower costs  Shariah-compliant 1Q15 net profit (+52% YoY, -14% QoQ) within expectations. Will continue to benefit from low sugar prices. Downgrade to HOLD with limited upside to TP of MYR5.50. Click here for full report » COMPANY UPDATE WCT Holdings: Downgrade to Hold HOLD for now  Shariah-compliant 1Q15 construction margins negated by timing of projects. Property sales YTD remained lacklustre and it seems challenging to achieve its 2015 sales target. Lowering earnings estimates. Downgrade to HOLD with a lower TP of MYR1.80 (-14%) Click here for full report » ECONOMICS Singapore 1Q 2015 GDP Better than expected 1Q 2015 real GDP growth of +2.6% YoY and +3.2% QoQ SAAR were better than the advanced estimates. Thanks to expansions in services and construction sectors amid weak manufacturing sector. Maintain our 2015 growth forecast of +2.5% (2014: +2.9%). Click here for full report » Singapore Industrial Production Apr '15 Down on drugs Down for the third month in a row by -8.7% YoY Drop in pharmaceuticals dragged biomedical Smaller decline of -1.9% ex-biomedical Click here for full report » Technicals The index is headed lower The FBMKLCI declined 3.31 points to 1,764.07 yesterday and the FBMEMAS and FBM100 fell 11.79 points and 16.08 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Short-Term Buy on EWEIN with upside target areas at MYR1.11 & MYR1.30. Stop loss is at MYR0.88. Click here for full report » Other Local News Construction: French firm keen to bid for HSR project. French multinational, Alstom is keen to bid for the 300km High-Speed Rail (HSR) linking Kuala Lumpur and Singapore project to further strengthen its presence in Malaysia. Alstom, a global leader in power generation, power transmission and rail infrastructure, believes it could make a valuable offer. (Source: The Star) MRCB: Plans new mix project. The MYR20b Kuala Lumpur Sentral transportation hub in Brickfields will get a boost as developer MRCB is planning a new project nearby, adding more than MYR1b to its order book. MRCB plans to build three 40-storey residential towers and a retail portion on a two-hectare-site- Lot 349/100 at the intersection of Lorong Chan Ah Tong and Jalan Tun Sambathan. The project will be linked to KL Sentral via a covered walkway, possibly from Ascott Sentral. (Source: New Straits Times) Nexgram Holdings: Eyes 1MDB TRX project. The property developer said the group is interested to participate in 1MDB projects especially the multi-billion Tun Razak Exchange (TRX) development. The group is looking for a piece of land at the TRX project in Kuala Lumpur City Centre and plans to have a joint venture with its partners or investors to build some developments there. (Source: The Sun Daily) WZ Satu: Bags MYR499m West Coast Expressway construction contract. WZ Satu has been awarded a project to construct part of West Coast Expressway Section 9 mainline works from the Kampung Lekir interchange to Changkat Cermin Interchange. The project will be undertaken by WZS KenKeong and Laksana Amanbina Sdn Bhd through an unincorporated 80:20 joint venture. The length of the expressway to be constructed is 28km and should be completed within 39 months. (Source: The Edge Financial Daily) Bina Puri: Bina Puri, MPCorp to build MYR204m project. Bina Puri Holdings has teamed up with Malaysia Pacific Corp to jointly develop 412 units of two-storey terraced houses with a gross development value (GDV) of MYR204m on 24.41 acres (9.87ha) of land in LakeHill Resort City, a township near Masai, Johor. Under the joint venture , LakeHill Resort Development will be entitled to a payment of the land cost at MYR21.27m or MYR20psf and 20% of the project's profit. (Source: The Edge Financial Daily) Outside Malaysia U.S: Consumer confidence index increased to 95.4 in May as Americans grew more sanguine about the economy and employment opportunities. The Conference Board's index of sentiment advanced to 95.4 from a revised April reading of 94.3, the New York-based private research group said. Higher home values, near-record stock prices and a stronger job market have helped stabilize confidence even in the face of rising gasoline prices. A sustained pickup in wage growth is probably needed to propel consumer spending after a first-quarter setback. (Source: Bloomberg) U.S: Purchases of new homes rose more than projected in April, a sign this part of the market is picking up steam during the busiest selling period of the year. Sales increased 6.8% to a 517,000 annualized pace from a 484,000 rate in the prior month, figures from the Commerce Department showed. Prices picked up and inventory was little changed. (Source: Bloomberg) U.S: Home prices in 20 cities rose at a faster pace than projected in the year through March, reflecting a limited number of available properties on the market. The S&P/Case-Shiller index of property values increased 5% YoY from March 2014 for a second month, the group said. Nationally, prices rose 4.1% YoY from March 2014. (Source: Bloomberg) U.S: Orders for capital equipment climb for second month a sign U.S. business investment could pick up in the second half of the year. Bookings for non-military capital goods excluding aircraft, a proxy for future corporate spending on new equipment, advanced 1% after a 1.5% gain in March that was larger than previously estimated. Total durable goods demand declined 0.5%, as forecast. (Source: Bloomberg) China: IMF says CNY is no longer undervalued amid reserve currency bid. The International Monetary Fund officially dropped its long-held view that the Yuan is undervalued, strengthening China's case for the currency to win reserve status at the lender. "The substantial real effective appreciation over the past year has brought the exchange rate to a level that is no longer undervalued," said the IMF mission to China, which is led by its deputy director of Asia and Pacific Markus Rodlauer. "We believe that China should aim to achieve an effectively floating exchange rate within two to three years." (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,764.1 0.2 (0.2) JCI 5,320.9 1.8 0.6 STI 3,460.0 2.8 (0.0) SET 1,498.0 0.0 (0.7) HSI 28,249.9 19.7 0.9 KOSPI 2,143.5 11.9 (0.1) TWSE 9,669.4 3.9 0.3 DJIA 18,041.5 1.2 (1.0) S&P 2,104.2 2.2 (1.0) FTSE 6,949.0 5.8 (1.2) MYR/USD 3.630 3.8 0.4 CPO (1mth) 2,167.0 (5.4) 1.4 Crude Oil (1mth) 58.0 8.9 (2.8) Gold 1,187.3 0.2 (1.6) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.30 16.00 Genting Malaysia 4.23 4.60 Gamuda 4.99 6.00 SP Setia 3.37 4.07 AFG 4.67 5.30 Inari 3.36 4.05 MBM Resources 3.44 4.20 Vitrox 3.47 4.05