Malaysia Daily, Maybank KE (2015-06-04)

Daily 04 June 2015 SECTOR UPDATE Malaysia Oil & Gas: Maintain Neutral In a rebalancing mode Shale oil development is a structural change, leading OPEC to abdicate its market manager role and create price volatility. Oil price level of USD40-70/bbl in mid-term. Unlikely to break USD80/bbl as shale oil plays a 'price ceiling' role. NEUTRAL on sector. BUY BArmada, Yinson and KNM. Click here for full report » Technicals Bargain hunting lifts index The FBMKLCI advanced 7.80 points to 1,749.17 yesterday, while the FBMEMAS and FBM100 also closed higher by 54.02 points and 53.81 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Short-Term Buy on HOMERIZ with upside target areas at MYR1.52 & MYR1.82. Stop loss is at MYR1.34. Click here for full report » Other Local News Melati Ehsan: Bags MYR653m hospital project. A 49%-controlled unit, B.H.O Melati Sdn Bhd (BHOME) has secured a MYR652.98m concession to undertake the development of Universiti Malaysia Sabah (UMS) Teaching Hospital in Kota Kinabalu, Sabah, and its asset management services for 30 years. The construction is expected to be completed within 36 months from the construction commencement date. (Source: The Star) Wah Seong: Upbeat on projects. Wah Seong Corp which has an international tender book of up to MYR5b, is confident of weathering the current low oil prices and volatile market, as it is still able to tap gas-related infrastructure projects. Wah Seong would continue to rise to the current market challenges and proven capabilities in the regional and global markets. Wah Seong has an order book of MYR1.2b for the oil and gas division, MYR208.5m for the renewable energy (RE) division and MYR209.2m for its industrial reading and service arm. (Source: New Straits Times) MPHB: Rides on Rawang project. MPHB Capital is upbeat on its earnings for the next six months, backed by ongoing Rawang joint-venture project with Bandar Raya Development, along with Generali Asia N.V. The group would also be looking at potential growth of its insurance arm, Multi-Purpose Insurance (MPIB), which holds 51% of the entity following the disposal of its 49% stake to Generali Asia N.V for MYR355.8m. (Source: New Straits Times) Felda Global Ventures: To keep 3 non-core entities. FGV will not dispose of three of its non-core businesses to outside entities, despite saying that it would earlier in the year. The firm had earlier said it would dispose of Felda Travel, Felda Property and Felda Prodata Systems through open tender process as the three entities have proven to be less profitable. The Group had revised its decision not to dispose of the three entities to outside parties, but would instead absorb them into different parts of the group. (Source: New Straits Times) Outside Malaysia U.S: Slower services growth signals subdued economic rebound. The Institute for Supply Management's non-manufacturing index declined to 55.7 from April�s 57.8, the Tempe, Arizona- based group said. Fewer purchasing managers reported gains in orders at the same time service-related employment eased, underscoring a tempered economy as American consumers save rather than spend and companies limit investment. Even with the decline in May, the ISM�s gauge is hovering close to the average for all of 2014, when the economy grew 2.4%. (Source: Bloomberg) Brazil: Boosts rate for sixth time as investors doubt Tombini. Brazil raised interest rates for a sixth straight time as policy makers work to convince investors that inflation will reach target. The bank's board, led by its President Alexandre Tombini, in a unanimous vote raised the benchmark rate by a half-point to 13.75%, the highest since January 2009. The statement accompanying the decision uses the same language as the prior communique. (Source: Bloomberg) E.U: Euro-Area services lose momentum as recovery still fragile. Markit Economics said its Purchasing Managers Index fell to 53.8 in from 54.1 in April, where a reading above 50 signals expansion. A composite of services and manufacturing slipped to 53.6 from 53.9. Both are higher than initial estimates published on May 21. (Source: Bloomberg) E.U: ECB keeps interest rates on hold as deflation risk fades. The Governing Council, meeting in Frankfurt, maintained the benchmark rate at 0.05%. The deposit rate and the marginal lending rate stayed at minus 0.2% and 0.3%, respectively. (Source: Bloomberg) U.K: Services grow least in five months casting doubt on the economy's recovery from the weakest performance since 2012 in the first quarter. An index of business activity fell to 56.5 from 59.5 in April, Markit Economics Ltd. said. (Source: Bloomberg) Crude Oil: OPEC braces for more oil as Iran, Iraq declare plans to grow. Iraq will increase exports this month as fighting with Islamic State militants spares its biggest-producing regions, the country's oil minister said. His counterpart from Iran urged the group to make room for more output when global sanctions recede. The prospect of more supply led BP Plc's chief executive officer to predict price "softness" will persist. The Organization of Petroleum Exporting Countries has been pumping above its production quota for months, determined to subdue supply from higher-cost producers. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,749.2 (0.7) 0.4 JCI 5,130.5 (1.8) (1.6) STI 3,349.8 (0.5) 0.3 SET 1,482.1 (1.0) 0.4 HSI 27,657.5 17.2 0.7 KOSPI 2,063.2 7.7 (0.7) TWSE 9,556.5 2.7 (0.6) DJIA 18,076.3 1.4 0.4 S&P 2,114.1 2.7 0.2 FTSE 6,950.5 5.9 0.3 MYR/USD 3.685 5.4 (0.4) CPO (1mth) 2,267.0 (1.0) (1.0) Crude Oil (1mth) 59.6 12.0 (2.6) Gold 1,185.2 0.1 (0.7) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.40 16.00 Axiata 6.36 7.60 Genting Malaysia 4.20 4.60 Gamuda 5.00 6.00 SP Setia 3.34 4.07 MBM Resources 3.40 4.20 Inari Amertron 3.52 4.05 Vitrox 3.52 4.05