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| | | SECTOR RESEARCH | | | | | | PETRONAS' FY17 report card | POSITIVE
by Thong Jung Liaw |
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| | | | | | PETRONAS' FY17 performance echoed that of its global peers. 2017 was the year of delivery, with 3 key focuses: cost reduction, capex discipline and portfolio optimization. Confidence is rising. We expect higher activities for PETRONAS and industry worldwide as the sector has earmarked higher capex for FY18. We expect a revival of new awards by 1H18. Our key BUYs are Bumi Armada, Dialog, Wah Seong and Yinson. | |
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| | | | | | India did it again!
by Chee Ting Ong |
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| | | | | | If the +14-ppts import duty hike imposed last night was only confined to palm oil, palm oil's landed cost in Indonesia would have increased by c.USD95/t. This is likely to lead to some demand weakness as it cancels out the positive move by the Malaysia government to temporarily suspend CPO export duty in Jan 2018. Expect some short-term CPO price pressure, but over the long run, India will continue to rely on imports to meet its growing domestic demand. Maintain our NEUTRAL call on the sector. | |
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| | MACRO RESEARCH | | | | | | ASEAN Equities: Soaking the Temporary Pressure
by Nik Ihsan Raja Abdullah |
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| | | | | | Since 2007, there were three occasions where MXSO Index ended lower MoM in Feb. By and large, the feel good factor extended into Mar, with the index ended lower only in the year 2008 and 2015. At this juncture, although the index is still in a consolidation mode, we believe downside risk is limited, supported by the 100-day EMA (red) line, Ichimoku Cloud and major uptrend line, between 840.00 and 858.00. Given the seasonality odd, we expect recovery by end-Mar. | |
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| NEWS | | | Outside Malaysia:
U.S: Steady price gains in January masked shifts below the surface that Federal Reserve officials may ultimately find unfavourable in their quest to bring inflation back up to their 2% target. So-called procyclical inflation -- a measure containing the prices of goods and services that typically rise faster when employment is increasing -- decelerated last month to the lowest level on an annual basis since April 2014. A bounce in acyclical inflation -- the prices of goods and services that don't appear to correlate with labor-market conditions -- left the Fed's preferred gauge little changed overall. The so-called core inflation rate they watch closely, which strips out volatile food and energy prices, was just 1.5% in January, and the cell-phone pricing change that hit the index in March 2017 is only holding it down by about a tenth of a percentage point. (Source: Bloomberg)
China: Set a 2018 growth target of around 6.5% as leaders intensify their push to ensure financial stability without derailing the economic expansion. The target was released ahead of Premier Li Keqiang's report to the National People's Congress gathering in Beijing, compared with last year's objective for "growth of around 6.5%, or higher if possible in practice." President Xi Jinping, set to be bolstered by the legislature's approval of an end to presidential term limits, has been intensifying his push to curb pollution, poverty and debt risk at a time when the world's second-largest economy is on a long-term growth slowdown. As a result, numerical GDP targets have been de-emphasized in favor of higher-quality expansion since last year. (Source: Bloomberg)
Crude Oil: Biggest Libya oil field is said to stop pumping on pipeline halt. Libya's Sharara oil field stopped pumping crude oil several days after output plunged at another of the OPEC member's biggest deposits. The halt resulted from the closing of a pipeline from Sharara to the Zawiya refinery, according to a person with knowledge of the matter. The North African country's largest field halted production on Sunday, a second person with knowledge said. Libya had been pumping 1.1 million barrels a days of March 1, with Sharara contributing 300,000 of that. The field is run by a joint venture between the National Oil Corp. and Repsol SA, Total SA, OMV AG and Statoil ASA. (Source: Bloomberg) | |
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Maxis: Appoints Robert Nason as interim CEO. Maxis has appointed Robert Nason as its executive director and interim CEO with effect from April 1, 2018, as current executive director and CEO Morten Lundal will be leaving the company upon expiry of his contract on March 31, 2018. Nason will remain in this role until the new CEO is appointed. Maxis will make an announcement on the new CEO at the appropriate time. Nason was appointed to Maxis board in 2016 as its independent director. He is also the chairman of the Audit Committee and the Business & IT Transformation Committee. With this appointment, Nason will relinquish his role as chairman and member of the Audit Committee and step down as chairman of the Business & IT Transformation Committee but will continue as its member. These changes take effect today. (Source: The Sun Daily)
Berjaya Sports Toto: Philippine unit to appeal against tribunal's ruling. Philippine Gaming Management Corporation (PGMC), a unit of Berjaya Sports Toto's 88.26%-owned subsidiary Berjaya Philippines Inc, will be appealing against the ruling of the Arbitral Tribunal of the Philippines on its exclusive right to supply an online lottery system for Luzon. The tribunal had found that Philippine Gaming Management Corporation does not have an exclusive contractual right to supply an online lottery system for Luzon because the 1995 Equipment Lease Agreement and the 2004 Amendments to the Equipment Lease Agreement do not grant such exclusivity in their terms. The tribunal had also ordered PGMC to pay all of PCSO's reasonable costs and expenses in the arbitration, amounting to PHP53.59m (MYR4m) as well as to reimburse the advance cost amounting to USD200,000 (MYR780,000). (Source: The Sun Daily)
Kumpulan Perangsang Selangor: To see higher gearing with MYR120m facility. Kumpulan Perangsang Selangor's (KPS) gearing is expected to rise from 0.2 to 0.52 times with the acceptance of MYR120 million facility from Bank Islam Malaysia. Its 51%-owned subsidiary KPS-HCM S/B had on March 2 accepted a Business Cash Line-I (Tawarruq) facility of MYR120m for a period of one year, subject to yearly review. The facility is intended to be used to part finance KPS-HCM's infrastructure works for the development of Phase 3C of the Pulau Indah Industrial Park, which was awarded by Central Spectrum (M) S/B in June last year. (Source: The Sun Daily)
Lion Diversified: Accepts MYR9.9m compensation for land acquisition under protest. Practice Note 17 (PN17) company Lion Diversified Holdings has received a total of MYR9.9m from the government for the compulsory acquisition of part of its land in Kuala Langat, Selangor. The compensation sum was accepted under protest without further elaboration. The land has been compulsorily acquired by Pejabat Daerah/Tanah Kuala Langat for Tenaga Nasional (TNB) for the purpose of routing of 500kV power transmission by TNB. (Source: The Sun Daily) | |
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