Malaysia Daily, Maybank KE (2015-06-01)

Daily 01 June 2015 RESULTS REVIEW Telekom Malaysia: Maintain Hold Cost pressures, but not alarming  Shariah-compliant 1Q15 normalised net profit was below expectations due to cost pressures. P1 aside (likely EBITDA loss-making), cost inflation was also partly due to timing (front-loaded costs for managed projects). Earnings unchanged; maintain HOLD with an unchanged TP of MYR7.30. Click here for full report » RHB Capital: Maintain Hold 1Q15 results within expectations 1Q15 net profit of MYR476m (+6% YoY) was in line. Nevertheless, trimming FY15/16/17 earnings by 3%/4%/4% on higher NIM compression estimates. HOLD and MYR8.60 TP maintained. Click here for full report » SECTOR UPDATE Malaysia Banking: Maintain Neutral Post-GST slowdown Loan growth normalized to 8.8% YoY in Apr from 9.2% YoY in Mar. Annualized loan growth was 5% for first four months. Industry LDR stable at 86.8% while asset quality continued to improve. NEUTRAL on the sector; BUY BIMB, HL Bank, HLFG. Click here for full report » ECONOMICS Money Supply, Apr 15 Post-GST blues� Money supply growth eased amid slower credit growth. Government deposits jumped as GST kicks in. Narrow money supply, together with indicators like credit card spending, showed slower consumer spending post-GST. Click here for full report » Technicals FBMKLCI to trend lower The FBMKLCI declined 8.04 points to 1,747.52 yesterday, while the FBMEMAS and FBM100 also closed lower by 36.74 points and 34.26 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on MEDIA with downside target areas at MYR1.45 & MYR1.37. Click here for full report » Other Local News Oil & Gas: Fuel prices up 10 sen across the board for June. Malaysia's fuel prices will go up at midnight, with a 10 sen hike across the board. RON 95 petrol and diesel would be priced at MYR2.05 a litre in June, up from MYR1.95 in May. RON 97 fuel will cost MYR2.35 per litre inclusive of Goods and Service Tax, up from MYR2.25 last month. (Souce: The Star) Property: Five townships worth MYR10b planned for S'gor. Five new townships, with a gross development value (GDV) of MYR10b are being planned for Selangor this year and will be developed by Darul Ehsan Investment Group Sdn Bhd (DEIG), Selangor�s newly-incorporated sovereign wealth fund, jointly with private developers. DEIG will develop its biggest mixed township at a GDV of MYR5b in Shah Alam. The other developments will be in Gombak and Section 14, Petaling Jaya with a smaller GDV of up to MYR1b. (Source: The Edge Financial Daily) EcoWorld: GBP614m London City Island launch sees strong sales. Eco World Ballymore Holding Co Ltd launched 417 units out of its 1,145 units in its 12-acre (4.85ha) London City Island project in Kuala Lumpur, London and Singapore on Saturday and saw a take-up rate of 80%. Eco World Ballymore Group is a joint venture between UK-based Ballymore Group and Eco World Development Group sister�s company- Eco World International. (Source: The Edge Financial Daily) 7-Eleven: Enables 24/7 e-bill payments. 7-Eleven Malaysia Sdn Bhd has started providing 24 hours bill payment service nationwide to further complement its existing line-up in-store services. The bill payment service encompass three major utility providers namely U-Mobile, Astro and Telekom Malaysia with more providers in the pipeline moving forward. The new service is made possible by 7-Eleven's strategic partnership with MOL Global Inc, a leading technology provider for in-store payment services. (Source: The Sun Daily) Eastern & Oriental (E&O): Plans to list unit to help reduce gearing. E&O proposed listing of its UK-based subsidiary, Eastern & Oriental Property (UK) Ltd, on the London Stock Exchange by year-end will help the developer to reduce its gearing level. The initial public offering (IPO) of E&O is expected to be completed sometime within the year but the proposal is still in the preliminary stages. (Source: The Edge Financial Daily) Petronas Dagangan: Practices JIT inventory. Facing volatile crude oil prices, which have tumbled from a peak of USD115 in June last year to USD63 (MYR230) now, Petronas Dagangan, the country's largest petrol operator, needs to adopt a JIT inventory strategy to sustain its profit margin. It is crucial to look for the optimal inventory level to make sure that its retailing segment does not keep too much stock as the possibility of a further fall on oil prices lurks. (Source: The Edge Financial Daily) Outside Malaysia U.S: Revised GDP shrinks in 1Q 2015. Gross domestic product shrank at a 0.7% annualized rate in the first quarter, revised from a previously reported 0.2% gain, according to Commerce Department figures issued. That�s the weakest reading since frigid winter temperatures derailed growth at the start of 2014. While bad weather once again probably contributed to last quarter�s slump, other impediments were also at work - including a swelling trade deficit caused by a strong dollar and plunging investment in oil exploration following the drop in fuel prices. Federal Reserve officials are among those who believe the slowdown will be temporary, helping explain why they are considering raising interest rates later this year. (Source: Bloomberg) U.S: Consumer sentiment decreased in May to six-month low. The University of Michigan said that its final index of sentiment for the month decreased to 90.7 from 95.9 in April. It marked the biggest decline since the end of 2012. Household concerns that the economy is stumbling and wages will be slow to increase combined to depress spirits at the same time gradually rising gas prices took a bit more of consumers' incomes. Continued improvement in the labor market that includes greater job security probably needs to be accompanied by pay gains to encourage more spending and propel growth. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,747.5 (0.8) (0.5) JCI 5,216.4 (0.2) (0.4) STI 3,392.1 0.8 (0.8) SET 1,496.1 (0.1) 0.2 HSI 27,424.2 16.2 (0.1) KOSPI 2,114.8 10.4 0.2 TWSE 9,701.1 4.2 (0.1) DJIA 18,010.7 1.1 (0.6) S&P 2,107.4 2.4 (0.6) FTSE 6,984.4 6.4 (0.8) MYR/USD 3.668 4.9 0.7 CPO (1mth) 2,170.0 (5.3) 0.0 Crude Oil (1mth) 60.3 13.2 4.5 Gold 1,190.6 0.5 0.2 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.36 16.00 Genting Malaysia 4.25 4.60 Gamuda 4.99 6.00 SP Setia 3.35 4.07 Inari 3.50 4.05 MBM Resources 3.41 4.20 Vitrox 3.41 4.05