Tuesday, March 22, 2016

[Maybank IB] Today's Research - Malaysia






Malaysia Semiconductor | Ringgit strikes back?
Ivan Yap









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SECTOR RESEARCH






Sector Note
by Ivan Yap


Ringgit strikes back?





Having recorded strong gains in 2015, semiconductor stocks are easy unwinding targets for investors amid: (i) a strengthening MYR and (ii) a weak 1QCY16 semiconductor demand. We make no change to our USD1/MYR4.10 average forecast for 2016 for now but caution on further volatility in semiconductor/technology stocks (perceived to be net USD exporters) should the MYR’s strength continues. We remain Positive on this sector on the back of demand recovery ahead of new smart devices launches in 2HCY16.









MACRO RESEARCH






Technical Research
by Lee Cheng Hooi


Will re-test the key 1,727 level





The FBMKLCI gained 2.02 points to close at 1,718.36 yesterday, while the FBMEMAS and FBM100 dropped 0.58 points and 4.32 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 453-to-424, while 330 counters were unchanged. A total of 2.01b shares were traded valued at MYR2.05b.







NEWS


Outside Malaysia:

U.S: Previously owned home sales decline more than forecast in February after reaching the second-highest level since 2007 as low inventory levels continue to limit progress in housing. Closings on existing homes, which usually take place a month or two after a contract is signed, decreased 7.1% to a three-month low 5.08 million annual rate after a 5.47 million pace in January, the National Association of Realtors said. (Source: Bloomberg)

E.U: ECB says Germany could boost Euro-Area growth by borrowing more. Germany could give itself and the euro area a boost if it takes advantage of low interest rates to finance a public-investment program, the European Central Bank said. That’s the key finding from an ECB study released that simulates the effect of an expansion of public investment equal to 1% of gross domestic product over five years in a large euro area country such as Germany. It concludes that the stimulus would have a greater impact if it were financed by debt or higher revenue and accompanied by an expansive monetary policy. (Source: Bloomberg)

S. Korea: China rising sway seen in bonds as holdings exceed U.S. In a sign of China’s increasing presence in Asia’s No. 4 economy, its companies are buying up South Korean counterparts at a record pace and the country has now surpassed the U.S. as the biggest foreign holder of won-denominated bonds. China has been a steady buyer of South Korean sovereign debt in the past several years as officials sought to diversify investments in foreign exchange reserves. China’s Korean holdings rose to KRW 17.5tr (USD 15b) last month, accounting for almost one-fifth of bonds owned by foreigners. Chinese companies’ investment in South Korean firms rose to a record high last year as China seeks a transition to an economy led by services and domestic demand. (Source: Bloomberg)





Other News:

Oil & Gas: Petronas, Japan’s Toho Gas sign 10-year LNG deal. Petronas LNG Ltd, a wholly-owned subsidiary of Petronas entered into a 10-year contract with Japanese gas utility Toho Gas Co Ltd, under which Toho Gas will buy liquefied natural gas (LNG) from Petronas LNG. Under the deal, Toho Gas plans to buy seven to nine cargoes per year, with the contract starting from April 2017. (Source: The Edge Financial Daily)

Kerjaya Prospek: Wins maiden infrastructure project. Kerjaya Prospek Group, the company formerly known as Fututech, has won its maiden infrastructure project worth MYR181.3m for reclamation works of the second phase of Seri Tanjung Pinang (STP2) Penang and increasing its outstanding unbilled order book to MYR2.2b from MYR1.9b previously. With this win Kerjaya Prospek is diversifying its business and putting it on track to deliver its targeted minimum of MYR600m worth of orderbook this year. The reclamation works project comes from China Communications Construction Co (M) Sdn. Bhd. It has appointed Kerjaya Prospek the subcontractor to undertake the entire channel dredging works under Package 1 of the project. It is due for completion on March 18, 2018. (Source: The Star)

Pesona Metro JV bags teaching hospital project worth MYR313.8m. Builder Pesona Metro Holdings (PMHB) and its joint-venture partners have secured a MYR313.85m contract from GPQ Sdn Bhd for the construction of Universiti Sultan Zainal Abidin’s (UniSZA) teaching hospital in Terengganu. GPQ is a subsidiary of Terengganu Incorporated Sdn Bhd that is involved in the business of construction works. PMHB, via its unit Pesona Metro Sdn Bhd, with its partners GPQ and Semarak Korporat Sdn Bhd yesterday received a letter of acceptance from GPQ for the proposed project, which is scheduled to be completed within 182 weeks. (Source: The Sun Daily)

TRC Synergy: Bags MYR231m Brunei airport works job. TRC Synergy has bagged yet another contract, this time for MYR235.43m to undertake airfield pavement rehabilitation works at the Brunei International Airport. Its wholly-owned unit Trans Resources Corp Sdn Bhd on March 15 received a letter of acceptance from Brunei’s Public Works Department in relation to the tender for airfield pavement rehabilitation works at Brunei International Airport- phase 1. The project will commence on April 25 and is expected to be completed on Nov 24,2017. (Source: The Edge Financial Daily)

KPS: Enters JV to maintain water pipelines. Kumpulan Perangsang Selangor(KPS) plans to participate in the non-revenue water (NRW) reduction programme under the Federal Government and Selangor state. KPS, a subsidiary of Selangor state investment arm Kumpulan Darul Ehsan(KDEB) unit Nadi Biru Sdn Bhd proposed to invest 51% in the equity of Smartpipe Technology Sdn Bhd (SPT) for MYR5.1m. (Source: The Star)


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