Malaysia Daily, Maybank KE (2015-06-09)

Daily 09 June 2015 INITIATING COVERAGE Harbour-Link Group: BUY (New) Sarawak logistics leader  Shariah-compliant Earnings naturally leveraged to the construction upcycle and rising logistics demand in East Malaysia. Project double-digit EPS growth in FY6/15-16; yet, the stock is trading at an undemanding CY16 PER of 8.4x (ex-property). Initiate with a BUY and SOP-based TP of MYR3.65. Click here for full report » COMPANY UPDATE Felda Global Ventures: Maintain Hold Uninspiring purchase  Shariah-compliant FGV�s proposed acquisition of 8,478 ha of oil palm planted area in Sabah for MYR655m cash appears expensive. Keeping our earnings forecasts unchanged for now. Maintain HOLD and TP of MYR1.94 on 16x 2016 PER peg. Click here for full report » Technicals Foreign selling The FBMKLCI declined 5.88 points to 1,739.45 yesterday, while the FBMEMAS and FBM100 also closed lower by 44.92 points and 41.33 points, respectively. Continue to sell into the rebounds as the FBMKLCI trend remains biased to the downside. Trading idea is a Take Profit call on TM with downside target areas at MYR6.38 & MYR6.20. Click here for full report » Other Local News Plantation: B10 plan expected to be implemented nationwide by Oct. The government aims to implement the B10 biodiesel programme nationwide by October. The full implementation of the B10 biodiesel programme in Malaysia would see domestic annual consumption of crude palm oil (CPO) reaching one million tonnes. B10 is the combination of 10% palm oil-based methyl ester and 90% fossil fuel-based diesel aimed at reducing Malaysia�s dependence on diesel. Biodiesel will also support weak CPO prices as well as bolster the use of sustainable resources such as palm oil. (Source: New Straits Times) MBSB: Targets 8% loan growth for 2015 despite weak consumer sentiment. Malaysia Building Society (MBSB) is targeting a loan growth despite weak consumer sentiment caused by the weakening ringgit, which hit a nine-year low yesterday. "Most of our loans and exposures are in ringgit, so we don�t have much currency exposure". This weakening of ringgit against the USD and also other currencies will not affect MBSB line of business. MBSB currently has a corporate-to-retail ratio of 12% to 88%, but hopes to see the corporate segment grow to 35% against the retail of 65% within the next three years. (Source: The Edge Financial Daily) Outside Malaysia Germany: Industrial production increased in April, as a recovery in the euro area and accelerating growth at home buoyed demand. Output, adjusted for seasonal swings and inflation, rose 0.9% after falling a revised 0.4% in March, data from the Economy Ministry showed. Output climbed 1.4% from a year earlier. (Source: Bloomberg) China: Exports fell for a third month in May, while imports slumped the most in three months, underscoring a sluggish domestic environment in need of more monetary policy support. Overseas shipments fell 2.8% from a year earlier in yuan value, the customs administration said. Imports slid 18.1%, leaving a trade surplus of CNY 366.8b (USD 59.1b). U.S. demand helped prevent a deeper decline in shipments abroad. (Source: Bloomberg) Japan: Economy grew at a faster pace than initially estimated in the first quarter, on a stronger pickup in business investment and inventory buildup. Gross domestic product expanded an annualized 3.9%, more than a preliminary 2.4%, according to revised data from the Cabinet Office. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,739.5 (1.2) (0.3) JCI 5,015.0 (4.1) (1.7) STI 3,320.3 (1.3) (0.4) SET 1,508.3 0.7 0.1 HSI 27,316.3 15.7 0.2 KOSPI 2,065.2 7.8 (0.1) TWSE 9,368.4 0.7 0.3 DJIA 17,766.6 (0.3) (0.5) S&P 2,079.3 1.0 (0.6) FTSE 6,790.0 3.4 (0.2) MYR/USD 3.772 7.9 1.4 CPO (1mth) 2,320.0 1.3 0.0 Crude Oil (1mth) 58.1 9.1 (1.7) Gold 1,173.5 (0.9) 0.1 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.36 16.00 Axiata 6.47 7.60 Genting Malaysia 4.20 4.60 Gamuda 4.96 6.00 SP Setia 3.32 4.07 MBM Resources 3.47 4.20 Inari Amertron 3.45 4.05 Vitrox 3.46 4.05