Malaysia Daily, Maybank KE (2015-06-02)

Daily 02 June 2015 MARKET STRATEGY Malaysia Strategy: Maintain Neutral 1Q15 results roundup: Slow start 1Q15 core net profit up just 1.8% YoY, down 1.1% QoQ. KLCI core earnings growth forecasts slower at 5.2% for 2015, slightly higher at 9.7% for 2016. Maintain our KLCI target; oil & gas/port sectors downgraded; we continue to advocate a defensive strategy into 3Q15. Click here for full report » Technicals Downward volatility to persist The FBMKLCI fell 4.11 points to 1,743.41 yesterday, while the FBMEMAS and FBM100 also closed lower by 14.35 points and 15.96 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on PBA with downside target areas at MYR1.03 & MYR0.96. Click here for full report » Other Local News Plantation: Malaysian palm price soars nearly 4%, lifted by soy markets. Malaysian palm oil futures rallied nearly 4% to their highest in 2.5 months on Monday, tracking a jump in overseas soy oil markets and further underpinned by strong exports for the month of May. A weak Malaysian currency also stoked buying interest in the ringgit-priced feedstock. The MYR slid to 3.68 per USD, its weakest in almost seven weeks, on concerns that lower crude oil may hurt the country's trade and fiscal accounts. (Source: The Star) Plantation: Dolphin International IPO oversubscribed 6.17 times. It said a total of 4.47 applicants for 107.6m IPO shares were received from the Malaysian public, for a total of 15m IPO shares. 7.5m IPO shares had been set aside for allotment under the bumiputera category, which represents 50% of the shares offered for public subscription, while the balance of 7.5m shares were allotted under the public category. (Source: The Edge Financial Daily) Bank Islam: Eyes MYR2b fund size. Bank Islam is aiming for a fund size of MYR2b for the newly launched Waheed Investment Account (WIA Wakalah) and Special Investment Account(Mudarabah) products under the Term Investment Account over the next six months. Another account also launched today was the Al-Awfar Account. The bank also plans to maintain a MYR2b fund size under its Transactional Investment Account, with 1.2m account holders for Al-Awfar Account, which targets individual and retail institutions. (Source: The Star) WZ Satu: Bags MYR58.2m Kuantan Port expansion project. WZ Satu Bhd's wholly-owned unit, WZS KenKeong Sdn Bhd, has clinched a subcontract worth MYR58.2m for works related to the expansion of Kuantan Port. The subcontract entails the construction of a bridge to Kuantan Port, with the scope of works including earthworks, infrastructure works, street lighting services, relocation of utilities services and landscaping works. The construction period for the project is 120 weeks. (Source: The Sun Daily) Outside Malaysia U.S: Factories in May grow more than forecast on stronger orders. The Institute for Supply Management's factory index rose to a three-month high of 52.8 from 51.5 in April, figures from the Tempe, Arizona-based group showed. The pickup in bookings and the strongest reading for order backlogs since November point to production gains that will probably help the economy bounce back after shrinking last quarter. While two months of improved business investment and the end of a labor dispute at West Coast ports are allowing manufacturing to stabilize, progress may be halting as a strong dollar hampers export sales. (Source: Bloomberg) E.U: Manufacturing grew at a "modest" pace in May and factories struggled to respond to rising costs with price increases. Markit Economics said its Purchasing Managers Index for the 19-nation region rose to 52.2 from 52 in April. While that's above the key 50 mark that divides expansion from contraction, it's below the initially reported reading of 52.3. Manufacturing has expanded for 23 consecutive months, and a rebound in oil prices and a weaker euro are boosting input costs by the most in three years. Nevertheless, the Markit report indicated that companies' margins are being squeezed, with an index of output prices slipping to 50 from 50.1. (Source: Bloomberg) U.K: Manufacturing expanded less than forecast in May as producers struggled to attract demand from foreign markets. A factory Purchasing Managers' Index rose to 52 from a revised 51.8 in April, Markit Economics said. The report highlights Britain's reliance on domestic demand while an economic recovery has yet to gain momentum in Europe, its biggest trading partner. (Source: Bloomberg) China: Factory gauge shows sign of stabilization after easing. A Chinese factory gauge rose last month, suggesting the government's monetary easing and relaxation of fiscal rules have helped cushion the economy. The official manufacturing Purchasing Managers' Index was at 50.2 in May, according to the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. Numbers above 50 signal expansion. (Source: Bloomberg) S. Korea: Exports fell the most in almost six years in May, underscoring concern that the slump in overseas sales is harming a recovery in Asia's fourth-biggest economy. Shipments slid 10.9% YoY, the fifth straight monthly decline, the Ministry of Trade, Industry and Energy said. Imports fell 15.3% YoY and the trade surplus was USD 6.32b. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,743.4 (1.0) (0.2) JCI 5,213.8 (0.3) (0.0) STI 3,392.1 0.8 0.0 SET 1,496.1 (0.1) 0.0 HSI 27,597.2 16.9 0.6 KOSPI 2,102.4 9.8 (0.6) TWSE 9,625.7 3.4 (0.8) DJIA 18,040.4 1.2 0.2 S&P 2,111.7 2.6 0.2 FTSE 6,953.6 5.9 (0.4) MYR/USD 3.686 5.4 0.5 CPO (1mth) 2,270.0 (0.9) 4.6 Crude Oil (1mth) 60.2 13.0 (0.2) Gold 1,189.2 0.4 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.40 16.00 Axiata 6.33 7.60 Genting Malaysia 4.24 4.60 Gamuda 4.99 6.00 SP Setia 3.36 4.07 MBM Resources 3.40 4.20 Inari Amertron 3.53 4.05 Vitrox 3.39 4.05