Malaysia Daily, Maybank KE (2015-06-03)

Daily 03 June 2015 SECTOR UPDATE Malaysia Banking: Maintain Neutral An uninspiring 1Q15 results season Aggregate operating profit up 4% YoY, core net profit down 1% YoY in 1Q15. FY15 net profit growth trimmed to 5.1% from 7.3%. FY16 net profit growth of 8.9%. NEUTRAL on sector: BUY BIMB, HL Bank, HLFG. Click here for full report » Technicals Index inched lower The FBMKLCI fell 2.04 points to 1,741.37 yesterday. The FBMEMAS closed higher by 1.35 but the FBM100 closed lower by 11.92 points. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Short-Term Buy on SKPRES with upside target areas at MYR1.17 & MYR1.40. Stop Loss is at MYR0.82. Click here for full report » Other Local News Construction: Feasible to extend MRT to Seremban on elevated line. The MRT system may be extended to the Malaysian Vision Valley (MVV) in Negeri Sembilan, in a move to improve public transportation and enhance the development. It was possible to extend the MRT line from Putrajaya to Seremban via an elevated line. Based on current estimates, the MRT extension may cost around MYR400m for each kilometre of elevated line. (Source: New Straits Times) Aviation: MAS exploring potential partnerships to widen route network. Malaysian Airlines System (MAS) is currently exploring potential partnerships to widen its route network to Africa, the United States and Europe. The new company, Malaysia Airlines (MAB) will remain a full-service international airline and will maintain its current domestic routes and a regional "backbone", with a broader global network through partnerships. The airline will also offer refreshed premium products for all its long-haul flights, which include flatbeds on business-class flights and an improved in-flight entertainment system. (Source: The Edge Financial Daily) Cocoaland: Gets MYR463.3m takeover offer from First Pacific. Cocoaland Holdings has received a take-over offer from Hong Kong-listed First Pacific Co Ltd to acquire its entire business for MYR2.7 per share or MYR463.3m in cash. It has received an indicative non-binding proposal dated May 29 from First Pacific, just four days after it rejected an MYR377.5m takeover offer at MYR2.2 per share from Navis Asia BII Management Company Ltd. The First Pacific proposed takeover of its business and undertaking, including all its assets and liabilities, will be undertaken by a special purpose vehicle (proposed acquiror). (Source: The Sun Daily) MSM: Aims to control Singapore sugar market by 2018. MSM Malaysia Holdings aims to control the Singaporean midstream sugar market as well as a major player in the Malaysian market by 2018, soon after its new refinery in Johor kick starts. Currently MSM has a 18% to 20% market share in Singapore, and a 64% share in Malaysia. MSM's new third refinery in Tanjung Langsat, Johor is on track to start operating by mid-2017. The ground breaking will be some time in August and should be complete in 22 months. (Source: The Sun Daily) Hua Yang: On track to build MYR800m high-rise project in Selayang. Hua Yang is on track to begin construction of a high-rise mixed-development project in Selayang with a GDV of MYR800m after shareholders approved its proposed acquisition of a piece of land measuring 8.09 acres (3.27ha) in Selayang. The land will be purchased entirely by cash amounting to MYR120m, which will be raised through internally-generated funds or from the Sukuk Murabahah programme or a combination of both. (Source: The Edge Financial Daily) Outside Malaysia U.S: Automakers' May sales top estimates, aided by holiday push. General Motors Co. and Fiat Chrysler reported bigger sales increases than analysts had anticipated as Memorial Day promotions drew Americans to dealerships, signaling that the U.S. economy is gathering momentum after the winter doldrums. Fiat Chrysler Automobiles NV said U.S. sales last month rose 4% from a year earlier for its best May in a decade, GM's gained 3% and Ford Motor Co.'s slipped 1.3%, a smaller decline than analysts projected. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. also posted better-than-expected results. An improved job market has consumers headed to showrooms and paying higher prices by taking out longer loans. (Source: Bloomberg) E.U: Consumer prices rose for the first time in six months in May, easing concerns among European Central Bank policy makers after a deflation scare that drove them to unleash a trillion-euro stimulus program. The 0.3% annual increase exceeded the 0.2% forecast by economists in a Bloomberg News survey. Core inflation accelerated to 0.9%, the fastest in nine months, the European Union's statistics office said. (Source: Bloomberg) Germany: Unemployment declined for an eighth month in May as companies increased hiring in a sign of confidence that Europe's largest economy will continue growing. Joblessness fell a seasonally-adjusted 6,000 to 2.79 million, the Federal Labor Agency in Nuremberg said. The unemployment rate remained at 6.4%, the lowest level since German reunification. (Source: Bloomberg) U.K: Mortgage approvals rose to the highest level in more than a year in April in a sign the housing market is strengthening. Approvals rose to 68,076, the most since February 2014, from an upwardly revised 61,945 in March, the Bank of England said. Economists had forecast 63,500. The 6,131 increase on the month was the largest since February 2009. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,741.4 (1.1) (0.1) JCI 5,213.8 (0.3) 0.0 STI 3,340.8 (0.7) (1.5) SET 1,476.9 (1.4) (1.3) HSI 27,466.7 16.4 (0.5) KOSPI 2,078.6 8.5 (1.1) TWSE 9,614.3 3.3 (0.1) DJIA 18,011.9 1.1 (0.2) S&P 2,109.6 2.5 (0.1) FTSE 6,928.3 5.5 (0.4) MYR/USD 3.699 5.8 0.3 CPO (1mth) 2,291.0 0.0 0.9 Crude Oil (1mth) 61.3 15.0 1.8 Gold 1,190.3 0.5 0.4 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.38 16.00 Axiata 6.34 7.60 Genting Malaysia 4.24 4.60 Gamuda 5.00 6.00 SP Setia 3.37 4.07 MBM Resources 3.40 4.20 Inari Amertron 3.48 4.05 Vitrox 3.52 4.05