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SECTOR RESEARCH
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Sector Note
by Thong
Jung Liaw
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A positive cut,
if it materializes
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The informal Algiers meet among big oil producing
nations yielded a positive surprise. The agreement by key OPEC
members to cut production, is sentiment positive, as reflected in the
rally in oil price. Further details will be worked out at the next
OPEC meet on 30 Nov. That said, execution remains key. Our preferred
BUYs are: (i) CNOOC (TP: HKD11.74; upstream play), (ii) IRPC (TP:
THB5.5) & PTTGC (TP: THB72) for down streamers and (iii) Yinson
(TP: MYR4.35) & Ezion (SGD0.45) for services play.
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Thong Jung
Liaw
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Yupapan
Polpornprasert
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Sector Note
by Liew
Wei Han
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Coming from a low base and with stepped up efforts to
market ready meals by both the suppliers and convenience stores, we
believe there is much room for growth in this F&B segment. In the
medium term, earnings enhancement for the convenience players would depend
on their product offerings and consumers’ shifting preference for
their potential offerings. Bison remains a BUY with a TP of MYR2.05
(CY17 PER of 25.0x; regional retailer peer average). SEM remains a
HOLD.
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NEWS
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Outside Malaysia:
U.S: The number of applications to collect jobless
benefits rose less than forecast last week, indicating employers are
leery of dismissing workers as the labor market tightens. Jobless claims
rose by 3,000 to 254,000 in the week ended Sept. 24 from a five-month low
in the previous period, a Labor Department report showed. The number of
Americans already on benefit rolls declined to the lowest level since
2000. (Source: Bloomberg)
China: Home prices rose the most in six years last month,
defying new policies to curb excessive speculation in big cities and
government warnings about asset bubbles. While gains have been most
pronounced in big cities like Shenzhen, where home prices are up about
60% in the past year, smaller cities such as Xiamen have also seen
runaway growth, where prices have risen more than 38%. (Source:
Bloomberg)
Japan: Consumer prices fell for a sixth straight month in
August, underscoring the challenge that Bank of Japan Governor Haruhiko
Kuroda faces as he tries to spur 2% inflation and reflate the nation’s
economy. Consumer prices excluding fresh food, the Bank of Japan’s
primary gauge of inflation, dropped 0.5% in August from a year earlier
(forecast -0.4%). Overall consumer prices slipped 0.5%. Consumer prices
excluding food and energy rose 0.2%. (Source: Bloomberg)
Brazil: Budget gap widens more than forecast as revenue
falls. The central government’s budget deficit before interest payments
widened to BRL 20.3b (USD 6.3b) last month, more than the BRL 18.8b
recorded in July. In the 12 months through August, the deficit that
excludes states, municipalities and state controlled companies widened to
BRL 172b. The main drag in the country’s fiscal performance was the
pension system, whose deficit is expected to balloon to BRL 149b this
year, according to Treasury secretary Ana Paula Vescovi. (Source:
Bloomberg)
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Other News:
Sime Darby: Sells entire stake in SDP Alexandra. Sime
Darby has disposed of its entire equity interest in Sime Darby Property
(Alexandra) Private Ltd (SDP Alexandra) to Aster Investment Holding Pte
Ltd for a total cash consideration of SGD82.5m (MYR249.2m). Following the
disposal, SDP Alexandra has become an associate company and has ceased to
be an indirect wholly-owned subsidiary company of Sime Darby. The
disposal will not have any material effect on the earnings or net assets
of the Sime Darby group for the financial year ending June 30, 2017.
(Source: The Star)
PRG Holdings: Plans to list manufacturing arm in Hong
Kong. The proposed listing would allow the group and its manufacturing
business to have separate fundraising platforms in the debt and equity
capital markets. The proposed listing will facilitate a more efficient
group structure by way of promoting a better segregation of business
responsibilities and operations, which will then enhance the
decision-making process and responsiveness to market changes. (Source:
The Sun Daily)
Lion Corp: Faces delisting after failing to secure time
extension. Bursa Malaysia has rejected Lion Corp’s application for a
further extension of time to submit its regularisation plan, which has
put the steel giant in danger of being delisted. Trading in its shares
will be suspended from Oct 10 and delisted on Oct 12 if there is no
appeal made. Lion Corp has been a Practice Note 17 (PN17) company since
October 2013 due to its distressed financials arising from the unfavourable
operating environment in the steel industry. (Source: The Sun Daily)
CIMB: Unit in Vietnam officially gets banking licence.
CIMB Bank (Vietnam) Ltd, a unit of CIMB Bank, has officially received its
banking licence from the Vietnamese central bank. The licence allows CIMB
Vietnam to offer the full range of commercial and retail banking products
in the country. Only seven foreign banks have been awarded a licence to
operate a 100% banking subsidiary in Vietnam and CIMB Vietnam was the
first to be awarded such a licence after a seven-year hiatus, during
which the country undertook major reforms in its financial and banking
sector. (Source: The Star)
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