[Maybank IB] Today's Research - Malaysia

FEATURE CALLS Malaysia | Malaysia Construction Next: KVMRT 2 awards Li Shin Chai

MACRO RESEARCH Malaysia | 1,700 was a tough barrier Lee Cheng Hooi

NEWS Outside Malaysia Other News

SECTOR RESEARCH MY: Malaysia Construction Sector Note by Li Shin Chai Next: KVMRT 2 awards Following award from Pan Borneo, we expect further awards from other key infra to boost positive sentiment in the construction sector. Major awards from the KVMRT 2 are expected in Mar/Apr, 2-3 months ahead of timeline. The total value could exceed the initial estimate of MYR28b which would provide positive surprise to construction players via higher-than-expected job wins. Reiterate Positive on the construction sector with Gamuda as Top BUY and SCG as top mid-cap pick. Li Shin Chai    (603) 2297 8684    lishin.c@maybank-ib.com

MACRO RESEARCH MY: Technicals Technical Research by Lee Cheng Hooi 1,700 was a tough barrier The FBMKLCI fell 9.39 points to close at 1,690.92 yesterday, while the FBMEMAS and FBM100 dropped 38.69 points and 40.91 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 411-to-381, while 359 counters were unchanged. A total of 1.52b shares were traded valued at MYR1.70b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Sluggish retail sales cast pall on consumer spending. American retailers had little to cheer about in February and previously reported strong readings for the prior month were wiped away, putting the highly anticipated pickup in consumer spending on hold yet again. Sales declined 0.1% last month, reflecting setbacks in eight of 13 major merchant categories, figures from the Commerce Department showed. But the real disappointment came in revisions to January that turned what had been a surprisingly robust 0.2% gain into a dramatic 0.4% flop. (Source: Bloomberg) U.S: Confidence among homebuilders holds at nine-month low as sales prospects waned, a sign the housing market may be struggling to accelerate as the spring- selling season approaches. The National Association of Home Builders/Wells Fargo builder sentiment index was 58 this month, matching the February reading that was the weakest since May, figures from the Washington-based group showed. Nonetheless, readings greater than 50 mean more respondents reported good market conditions. (Source: Bloomberg) India: Trade deficit shrinks to 2013 low as export drop slows. The shortfall was USD 6.5b in February compared with USD 7.6b the previous month, the Commerce Ministry said in a statement. Exports fell 5.7% YoY compared with an average 17% YoY drop in the past year and imports eased 5% YoY versus an average 15% YoY decline. (Source: Bloomberg) Other News: Transport: Prasarana won’t cancel contract with Scomi based on earlier notices. Prasarana Malaysia, which operates the monorail and light rail transit lines in the Klang Valley, will not rely on its two earlier notices to Scomi Transit Projects Sdn Bhd - sent prior to its “notice to remedy” dated March 8 - to terminate the Kuala Lumpur Monorail expansion contract given to Scomi. The company has been advised by its solicitors that by this conduct, Prasarana has, in effect, admitted that these two notices are defective and will not be used as a basis to terminate the KL Monorail expansion contract. (Source: The Star) Pos Malaysia: To complete KL Airport Services purchase by July. Pos Malaysia expects to complete its acquisition of KL Airport Services Sdn Bhd (KLAS) latest by July. The acquisition of KLAS, an airport-related ground-handling company and a wholly-owned susbsidiary of DRB-Hicom, for MYR749.35m was expected to help Pos Malaysia improve its postal services especially for e-commerce. The acquisition would put us ahead of the competition in the provision of end-to-end services to customers, allowing us to better handle international deliveries. (Source: The Star) BLD Plantation: Expands Sarawak land bank. BLD Plantation (BLDP) is acquiring 100% equity interest in Pekan Semangat Sdn Bhd, whose 70% owned subsidiary owns 5,442ha of plantation land in Sarawak, for MYR155.22m. Pekan’s subsidiary, Agrogreen Ventures Sdn Bhd, owned the two parcels of land in Stungkor, of which at least 5,000ha have been developed into oil palm plantation. The proposed acquisition is expected to be completed within 150 days from the date of the share sale agreement (March 15, 2016). (Source: The Star) Nexgram: Selangor project hits stumbling block. Nexgram Holdings MYR266.2m construction project in Selangor has hit a major stumbling block following the rejection of the development order for the mixed development. The company received a letter from Top Valley Properties Sdn Bhd dated March 4, 2016 informing it that the Sepang Municipal Council had rejected the current version of the development order for the project, which sits on a piece of land neighbouring Putrajaya. Given the failure in obtaining the development order on time, the landowner of the project has terminated the sale and purchase agreement with Top Valley. (Source: The Sun Daily) AirAsia X: Eyes Russia flights. AirAsia X has added Russia to its route prospects. AirAsia Group chief executive officer (CEO), Tan Sri Tony Fernandes met Russian Federation Council chairman, Valentina Matvienko. The meeting today was organised by the Asian Strategy & Leadership Institute (Asli), Russian Embassy in Malaysia and Business Council for Cooperation with Malaysia. (Source: The Edge Financial Daily)