Friday, March 10, 2017

LBS Bina: To raise MYR165.66m for projects. LBS Bina Group is planning to sell convertible preferance shares as it is seeking to raise up to MYR165.66m for projects in Selangor and Johor. The proposed rights issue entails the issuance of up to 150.59m redeemable and convertible preference share (RCPS) units on a basis of one RCPS for every five existing LBS shares to the e


FEATURE
CALLS

Malaysia | Malaysia Construction
ECRL to take off
Chew Hann Wong








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Malaysia Telcos | Life is not that bad
Chi Wei Tan









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Malaysia | Oil war again?
Tee Sze Chiah








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SECTOR RESEARCH






ECRL to take off
by Chew Hann Wong


Sector Note





The East Coast Rail Line (ECRL) is targeted to start construction in Jul 2017. Spanning 600.3km, the total project cost is an estimated MYR55b. Malaysian contractors are expected to feature in the civil works. Other beneficiaries are the building material suppliers and IJM’s Kuantan Port and MCKIP. We continue to be POSITIVE on the construction sector, with Gamuda as our top BUY pick. IJM is also a BUY.












Life is not that bad
by Chi Wei Tan


Sector Note





Our view of mobile revenue reverting back to growth in 2017 remains intact post the conclusion of the 4Q16 results release. We do not expect significant developments on industry consolidation in the near-term, as potential benefits remain too skewed to sellers. We still have HOLD ratings on all our stocks. On a relative basis, our big-cap preference is now for Axiata (HOLD, TP: MYR5.00).









MACRO RESEARCH






Oil war again?
by Tee Sze Chiah


Technical Research





FBMKLCI fell 8.12pts to close at 1,717.42 yesterday amid profit taking activities. Market breath was equally negative with losers outpacing gainers by 558 to 345. A total of 3.36b shares worth MYR2.44b changed hands yesterday. Despite the current setback, we believe overall trend remains bullish bias. Downside is likely limited as the index heads towards its buffer zone at 1,705-1,713. Expect FBMKLCI to range within 1,705 to 1,725 today. Support is at 1,705 and 1,690.







NEWS


Outside Malaysia:

U.S: Household wealth rose USD 2.04tr in 4Q 2016 as financial assets and real-estate values appreciated, figures from the Federal Reserve’s financial accounts reports, previously known as the Flow of Funds, showed. Net worth for households and non-profit groups rose by USD 2.04tr, or 2.3%, to a record USD 92.81tr from the prior three months. Value of financial assets, including stocks and pension-fund holdings, rose USD 1.59tr. Household real-estate assets climbed by USD 499.1b; owner’s equity as a share of total real-estate holdings increased to 57.8% from 57.1%. (Source: Bloomberg)

France: Factory sentiment jumped to its highest in almost six years last month, prompting the Bank of France to lift its forecast for growth this quarter. Sentiment among manufacturing executives rose two points to 104, its highest since May 2011, the central bank said. It raised its prediction for first-quarter economic expansion to 0.4% from 0.3% a month ago. That would match the pace in the last three months of 2016. The improvement underlines the French economy may be strengthening after years of underperformance as voters prepare to chose their next president. The expansion is even generating jobs. National statistics office Insee said that non-farm payrolls increased 0.4% in the fourth quarter. (Source: Bloomberg)

China: Trade deficit masks strength risking U.S. trade spat. Despite the rare trade deficit China chalked up in February as imports surged the most in five years, underlying data suggest exports are on a rising trajectory that risks fanning trade tensions with the U.S. Shipments in January and February combined rose 13.3% and both the official and Caixin purchasing managers indexes for exports rose last month to the highest levels in more than two years. Analysts said seasonal factors linked to the annual week-long Lunar New Year holiday help explain February’s trade deficit, the first in three years. (Source: Bloomberg)

China: Factory prices surged at the fastest pace since 2008, further lifting the outlook for global reflation as manufacturers in the exporter to the world look to pass on higher costs. Producer price index rose 7.8% YoY last month and a 6.9% YoY in January. Factory prices only swung out of 4 1/2 years of deflation in September. (Source: Bloomberg)

China: Money supply growth slows amid campaign to contain risk. China’s broadest measure of new credit moderated in February as shadow banking activities slumped, signaling policy makers are making good on pledges to cut leverage and deflate asset bubbles. Aggregate financing was CNY 1.15t (USD 166b) while new yuan loans stood at CNY 1.17t. M2 money supply increased 11.1% YoY. (Source: Bloomberg)





Other News:

Oil & Gas: Petronas in 10-year deal to supply LNG to Hokkaido Electric Power. Petronas, via subsidiary Malaysia LNG S/B (MLNG), signed a 10-year liquefied natural gas (LNG) supply agreement with Hokkaido Electric Power Company (HKE) on March 2, 2017. HKE is primarily engaged in the generation and distribution of electricity in the Hokkaido region. It is one of the utility companies in Japan responsible for the stable supply of electricity to Hokkaido Prefecture. MLNG will deliver up to 130,000 tonnes of LNG per year to HKE's receiving facilities. (Source: The Sun Daily)

LBS Bina: To raise MYR165.66m for projects. LBS Bina Group is planning to sell convertible preferance shares as it is seeking to raise up to MYR165.66m for projects in Selangor and Johor. The proposed rights issue entails the issuance of up to 150.59m redeemable and convertible preference share (RCPS) units on a basis of one RCPS for every five existing LBS shares to the entitled shareholders. The indicative price for the RCPS is RM1.10 a unit with 6% of proposed dividends. (Source: The Star)

Datasonic: Clinches MYR79.7m contract for additional 2.8m passports. Datasonic Group has clinched a MYR79.7m contract from the Home Affairs Ministry to supply an additional 2.8m units of Malaysian passports for the Immigration Department. The total contract value has increased to MYR364.4m from MYR284.7m, for the supply of 12.8m units from 10m units. It is required to furnish a performance bond for MYR797,160, which is valid until Jan 31, 2019. (Source: The Sun Daily)

Icon Offshore: Unit bags MYR72.06m contract. Icon Offshore’s unit Icon Bahtera (B) S/B has secured a MYR72.06m contract for the chartering of accommodation workboat within the group’s fleet of vessels. The long-term charter contract was awarded by SPHI Marine S/B, a company operating in Brunei. The contract shall commence on March 1, 2017 being the date of hire and shall continue for a period of three years with an option for an extension period of up to two years, of which, further extensions shall be on yearly basis. (Source: The Star)


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