Malaysia Daily, Maybank KE (2015-05-29)

Daily 29 May 2015 MARKET STRATEGY Malaysia Strategy: Maintain Neutral Shariah compliant list, May 2015 19 new additions, 13 deletions from updated Shariah list. Takes the total number of Shariah compliant stocks to 674, representing 75% of stocks listed on Bursa Securities. Key additions: Bumi Armada, Malakoff, SapuraKencana. Key deletion: IOI Corporation. Click here for full report » RESULTS REVIEW Malayan Banking: Not Rated 1Q15 results within expectations 1Q15 net profit of MYR1.7b was 25% of consensus full-year net profit forecast � within expectations. 1Q15 ROE of 12.8% marginally short of 13-14% target for FY15. Operating environment still challenging but focus will still be on improving productivity, capital efficiency and international market performance. Click here for full report » Genting Malaysia: Maintain Buy Decent start to a challenging year 1Q15 results were within expectations. Expansion at RWG, GENUK and RWB are on track. Maintain estimates, BUY call and MYR4.60 SOP-TP. Click here for full report » Genting Bhd: Maintain Hold GENS continues to be a drag 1Q15 results missed due to GENS. GENS outlook uncertain but GENM outlook more stable. Maintain estimates and MYR9.30 SOP-TP for now. HOLD. Click here for full report » AirAsia Bhd: Maintain Buy He is heavy, but he�s my brother Below expectation, but market has already priced in. Loads and yields under attack, should improve when Malaysian Airlines (MAS) conduct capacity cuts. Maintain BUY with a new target price of MYR2.45 (from MYR2.65) on earnings revisions. Click here for full report » IHH Healthcare: Maintain Hold Healthy start in the price  Shariah-compliant 1Q15 core met, at 25% of our FY15E. Hospital ramp-up in Turkey & Singapore spurred growth. Mount Elizabeth Novena turned profitable. Maintain HOLD as positives may have been priced in. Raise EPS by 4-5% for consolidation of Continental Hospital. Raise SOTP TP to MYR5.35 from MYR5.21. Prefer Raffles Medical in sector. Click here for full report » 7-Eleven Malaysia Holdings: Maintain Hold 1Q15 results below expectations 1Q15 results below expectations, FY15-17 earnings cut 7-9%. Still cautious on 7EM�s near-term earnings outlook on softer consumer retail spending post GST. Maintain HOLD but with a marginally raised TP of MYR1.70 on rolling forward valuations to FY16, pegged to a PER of 24x. Click here for full report » Mah Sing Group: Maintain Hold Earnings on track  Shariah-compliant 1Q15 net profit of MYR99m (+18% YoY) is in line. Management expects sales to pick up in 2H15. No change in our earnings forecasts. A 1-for-4 new bonus issue will go ex- on 8 Jun. Our TP remains at MYR2.22 (ex-bonus TP: MYR1.62) based on unchanged 0.64x P/RNAV target. HOLD. Click here for full report » Magnum Berhad: Maintain Hold Great pre-GST help, but still wary 1Q15 net profit and dividend beat expectations. That said, revenue eased after the 6% GST was implemented. Maintain HOLD but tweak TP up by 4% to MYR2.75. Click here for full report » Media Chinese International: Maintain Hold Strong 4QFY3/15 but still wary  Shariah-compliant FY3/15 outperformed thanks to cost saving initiatives. Earnings outlook still weak though; our estimates unchanged. Maintain HOLD and MYR0.65 TP on 1.3x end-CY15 P/BV. Click here for full report » Eversendai Corp: Maintain Buy Recovery on track  Shariah-compliant Strong earnings rebound in 1Q15 surpassed expectations. Expect earnings momentum to sustain on its high orderbook. Maintain BUY and TP of MYR0.87 (12x FY15 PER). Click here for full report » Kimlun Bhd: Maintain Hold 1Q15: Above expectation  Shariah-compliant Strong 1Q15 was above expectation but could be lumpy. Earnings forecasts unchanged pending clarification with the management. Maintain HOLD at unchanged TP of MYR1.30 TP. Click here for full report » COMPANY UPDATE TIME dotCom: Maintain Hold Tempering expectations  Shariah-compliant Management maintains a 35% EBITDA margin guidance for 2015 despite margins having exceeded guidance in three of the past four quarters. Little incremental details on the CMC Telecom transaction; no near-term plans for the remaining Digi shares. Maintain HOLD, TP unchanged at MYR6.20. Click here for full report » Oldtown: Maintain Hold A mixed bag  Shariah-compliant FMCG should resume growth post operational setbacks in FY3/15. Taking charge of change in China distributorship. F&B could consider M&A opportunities; strong balance sheet makes this a possibility. Maintain HOLD with an unchanged TP of MYR1.78 (2016 PER of 16x. Click here for full report » Icon Offshore: Maintain Sell Delays deliveries of 5 new vessels  Shariah-compliant Cut 2015/16/17 earnings by 15%/42%/7%, largely to account for a 3-15 month delivery delay for 5 new OSVs. A client�s market now, DCRs to fall by 10-15% in 2015; seeks to enhance corporate governance structure. Cut TP to MYR0.25 (9x 2016 PER) post earnings downgrade. Click here for full report » Technicals FBMKLCI to close the week lower The FBMKLCI inched up 0.51 points to 1,755.56 yesterday, while the FBMEMAS and FBM100 closed lower by 9.37 points and 7.04 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 326-to-419 while 332 counters were unchanged. A total of 1.62b shares were traded valued at MYR1.90b. Trading idea is a Take Profit call on K1 with very weak supports of MYR0.31 and MYR0.425 as well as clear downside target areas of MYR0.425 and MYR0.31. Click here for full report » Other Local News Property: Felcra plans to go big on property venture. Felcra which has a total landbank of 1,000ha for property development, plans to go big on property business. The company has planned a few projects in Peninsular Malaysia with an estimated gross development value (GDV) of MYR8.05b. Felcra Properties Sdn Bhd with partner, WZR Property Sdn Bhd will kick start its maiden mixed development project here in the third quarter. The Menara Felcra project will house the company's new office, a new commercial centre and apartment units with an estimated GDV of MYR850m. Other projects include mixed developments and an apartment in Selangor and Malacca as well as a hotel in Langkawi, kedah. (Source: New Straits Times) EcoWorld: Plans MYR8b Kota Kemuning township. EcoWorld is planning a second township which the project is called Eco Sanctuary would be a 308.7-acre leasehold project with an "eco" concept. Currently EcoWorld is involved in 15 projects with a total GDV of MYR65b. Through its associates, EcoWorld has also expanded to the United Kingdom and Australia with several developments in London and Sydney lined up for launch in 2015. (Source: The Star) UEM Sunrise: Cancels MoU with Chinamall. UEM Sunrise has cancelled its memorandum of understanding (MoU) with Chinamall Holdings Pte Ltd (CHPL) to co-operate in the development of a trade and exhibition centre in Gerbang Nusajaya, Nusajaya, Johor. UEM Sunrise said its subsidiary UEM Land, had on May 27, 2015, communicated with CHPL that it wishes to terminate the MoU on the basis that both parties have not been able to make any significant headway on the project. (Source: The Edge Financial Daily) TH Heavy Engineering (TH Heavy): Eyes more Heera jobs in India, also Myanmar. The loss making TH Heavy is looking to secure more process platform projects in India and Myanmar, particularly in the Heera oilfield in the Arabian Sea, to ride the global oil price slump as it cuts down its reliance on local projects. The group is looking at building renewable energy plants as part of its oil and gas (O&G) diversification plan. (Source: The Edge Financial Daily) UMW Holdings: Eyes new businesses. UMW Holdings is exploring complementary businesses that can enhance its earnings and liquidity, and minimise reliance on automotive division. The group is managing its oil and gas (O&G) division as best it can, amid uncertain global oil prices. (Source: New Straits Times) Outside Malaysia U.S: Pending sales of existing homes increased 3.4% in April indicating a pickup in the housing market during the busy spring selling period. The index of pending home resales climbed to the highest level in nine years after a revised 1.2% gain the prior month, the National Association of Realtors said. (Source: Bloomberg) U.S: Applications for jobless benefits remained below 300,000 for the 12th straight week, signaling the labor market remains firm even as the economy has been slow to rebound from a first-quarter slump. Jobless claims increased by 7,000 to 282,000 in the week ended May 23, a Labor Department report showed. Readings this low typically coincide with healthy levels of hiring. (Source: Bloomberg) E.U: ECB Warns of contagion risk if Greece deal not reached fast. A failure to reach an agreement on Greece's aid program soon may drive yields on bonds issued by other euro- area countries higher, the European Central Bank said. "In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premium demanded on vulnerable euro-area sovereigns could materialize," the ECB said in its twice-yearly Financial Stability Review published. "The lengthy and uncertain process of negotiations between the newly formed Greek government and its creditors" has already contributed to bouts of extreme volatility in Greek markets, it said. (Source: Bloomberg) Japan: BOJ�s inflation gauge slows to zero as oil weighs. Consumer prices excluding fresh food and effects of last year's sales-tax increase were unchanged in April from a year earlier. Including the levy, core prices rose 0.3%, the statistics bureau said. (Source: Bloomberg) Japan: Retail sales rose less than forecast in April, signaling a weak start to the second quarter for an economy that is still weighed down by last year's sales-tax increase. Sales climbed 0.4% MoM from March, when they dropped 1.8% MoM, government data released showed. Sales jumped 5% YoY from April last year, when the first bump in the levy since 1997 hurt spending. (Source: Bloomberg) Philippines: Economic growth slid to a three-year low last quarter as exports and government spending faltered, putting at risk President Benigno Aquino's goal of faster expansion. Gross domestic product increased 5.2% YoY in the three months through March, the Philippine Statistics Authority said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,755.6 (0.3) 0.0 JCI 5,237.4 0.2 (0.3) STI 3,417.8 1.6 (0.2) SET 1,493.6 (0.3) (0.5) HSI 27,454.3 16.3 (2.2) KOSPI 2,110.9 10.2 0.2 TWSE 9,712.8 4.4 0.2 DJIA 18,126.1 1.7 (0.2) S&P 2,120.8 3.0 (0.1) FTSE 7,040.9 7.2 0.1 MYR/USD 3.642 4.1 0.1 CPO (1mth) 2,170.0 (5.3) 1.2 Crude Oil (1mth) 57.7 8.3 0.3 Gold 1,188.4 0.3 0.0 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.34 16.00 Genting Malaysia 4.26 4.60 Gamuda 5.03 6.00 SP Setia 3.35 4.07 AFG 4.52 4.90 Inari 3.33 4.05 MBM Resources 3.41 4.20 Vitrox 3.44 4.05