Malaysia Daily, Maybank KE (2014-03-07)

Daily 07 March 2014 COMPANY UPDATE Star Publications (Malaysia): Upgrade Buy Cost cuts, undervalued; up to BUY  Shariah-compliant Trading at trough valuations, upgrade Star to contrarian BUY. A new and more cost-conscious management is in place. Attractive yields of 6.8% p.a. will also limit downside risk. Click here for full report » SECTOR UPDATE MY Aviation Sector: Downgrade Neutral 2013: A year to forget 4Q13 results were a big disappointment, with the worse yield and profit decline since the GFC of 2008-09. Overcapacity was the root of the underperformance, forcing the industry to dump fares in favour of loads. Cut to Neutral (from Overweight), AirAsia and AirAsia X are our BUY list, NEUTRAL on MAS, SELL on MAHB. Click here for full report » ECONOMICS BNM Monetary Policy OPR maintained at 3.0% Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 3.00%, during the second Monetary Policy Committee (MPC) meeting in 2014 yesterday. Preserve the "neutral" tone of the Monetary Policy Statement (MPS) as the central bank is still assessing the balance of risk between growth and inflation as well as signs of destabilising risks of financial imbalances. Maintain our call of no change in OPR this year as the current trend of rising inflation is predominantly "cost-push" coupled with temporary weather-related factor. Click here for full report » Technicals Will break above 1,839.26 today The FBMKLCI advanced 9.58 points to close at 1,838.69 yesterday, while the FBMEMAS and FBM100 also closed higher by 78.89 points and 72.41 points, respectively. We expect a firm tone for the local index before the weekend due to the US markets� strong main board performance overnight. Trading ideas is Short-Term Buy on TITIJYA with upside target areas at MYR1.89 & MYR2.00. Stop loss is at MYR1.61. Click here for full report » Other Local News MAHB: KL International Airport to expand? Malaysia Airports Holdings Bhd (MAHB) is said to be in the preliminary stages of planning for another satellite building at the KL International Airport (KLIA). The new satellite building will have more than 30 gates to cater for 25m passengers. Initial estimates say it will cost nearly MYR2b. There will be a rail link from the main terminal building, similar to the existing satellite building at KLIA. The original plan for KLIA was to have four satellite buildings, each to cater for 25m passengers, totaling 100m passengers. (Source: The Star) Cahya Mata Sarawak: May take up Deutsche�s stake in Kenanga. Cahya Mata Sarawak Bhd (CMS) may take up Deutsche Bank AG�s 13.84%-stake in Malaysia�s third biggest brokerage by trading volume, K&N Kenanga Holdings Bhd. This follows Deutsche�s plan to sell its holdings in the investment bank as part efforts to optimize its capital under Basel III guidelines. The 13.84% equity interest in Kenanga is valued at about MYR60m based on yesterday�s closing share price of 59 sen. (Source: The Edge Financial Daily) DiGi: MYR900m plan to boost coverage, but non-committal on P1 buy. DiGi.Com Bhd will spend MYR900m this year to boost coverage but decline to comment on speculation linking it to the possible acquisition of Green Packet Bhd unit Packet One Networks (M) Sdn Bhd (P1). P1 is 57% owned by listed Green Packet and owns valuable wireless spectrum. South Korea�s SK Telecom is the second largest shareholder in P1 with a 26% stake. (Source: The Star) PPB: Eyes more water jobs, unit chemQuest aims to double order book. PPB Group Bhd�s environmental engineering, waste management and utilities arm, chemQuest Sdn Bhd, is aiming to double its order book next year from the current MYR330m as it targets bigger jobs in Selangor and Kuala Lumpur. One of its current job is a MYR140m sewerage contract at Old Klang Road that would last for about four years. Over the years, it completed more than 100 projects worth over MYR1b. It contributed 3% to PPB group topline and 2% to its bottom line for the financial year ended Dec 31, 2013 (FY13). (Source: The Star) Oil & Gas: Petronas bags two contracts to supply LNG. Petroliam Nasional Bhd (Petronas) has signed two contracts to supply CPC Corp of Taiwan with up to 2.6m tonnes of liquefied natural gas (LNG) per year for six years. The contracts were signed on Wednesday by two Petronas� subsidiaries � Malaysia LNG Sdn Bhd (MLNG) and Petronas LNG Limited (PLL). The delivery to CPC was scheduled from the second quarter of 2014 and 2015 respectively. The volume, which would ship from the Petronas LNG Complex in Bintulu, Sarawak and other supply sources, is to meet the demand and requirements of CPC�s customers in Taiwan, primarily the country�s power sector. (Source: The Star) Telco: Billion-ringgit undersea cable project. Telekom Malaysia Bhd (TM) will team up with global telecommunications companies in a multi-billion ringgit project to lay optical-fibre submarine cable linking three continents. The cable-connecting Asia, Africa and Europe will offer faster and resilient Internet link with better international reach and more dependable network. TM will sign a pact with international telecommunications players today to form a consortium to undertake the project, called Southeast Asia-Middle East-Western Europe 5 (SEA-ME-WE 5). It is learnt that SEA-ME-WE 5 will be more expensive than SEA-ME-WE 4, which was completed in December 2005 at a reported cost of MYR1.63b. (Source: Business Times) Outside Malaysia U.S: Drop in jobless claims shows employers are upbeat. Jobless claims declined by 26,000 to 323,000 in the week ended March 1, the least since the end of November and fewer than any economist forecast in a Bloomberg survey, a Labor Department report showed. Other data showed consumers' views of the economy reached an almost seven-month high, according to Bloomberg's weekly index of sentiment. Falling dismissals set the stage for additional hiring, helping spur household confidence and giving Americans the wherewithal to boost spending. (Source: Bloomberg) E.U: ECB keeps rates on hold as economic signals hand Draghi reprieve. The European Central Bank kept interest rates unchanged as stronger inflation and economic output reduced the need for officials to take action. The Governing Council left the main refinancing rate at a record low of 0.25% at its meeting in Frankfurt. The deposit rate was kept at zero and the marginal lending rate at 0.75%. A month after saying he needed more information on the economy before deciding whether to act against the threat of deflation, ECB President Mario Draghi has been handed a better-than-forecast report card on the 18-nation euro area's economy. While measures to rekindle lending and help banks are still on the table, including the release of cash linked to crisis-era bond purchases, Draghi's main scenario is to let the recovery erode idle productive capacity and boost prices. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,838.7 (1.5) 0.5 JCI 4,687.9 9.7 0.6 STI 3,129.2 (1.2) 0.4 SET 1,352.2 4.1 0.0 HSI 22,703.0 (2.6) 0.5 KOSPI 1,975.6 (1.8) 0.2 TWSE 8,713.8 1.2 0.9 DJIA 16,421.9 (0.9) 0.4 S&P 1,877.0 1.6 0.2 FTSE 6,788.5 0.6 0.2 MYR/USD 3.3 (0.4) (0.3) CPO (1mth) 2,865.0 9.0 1.2 Crude Oil (1mth) 101.6 3.2 0.1 Gold 1,350.8 12.4 1.0 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.12 12.50 Genting Msia 4.35 4.74 HLBK 14.20 16.40 AMMB Holdings 7.17 8.50 Bumi Armada 3.90 5.00 IJM Corp 5.80 6.75 Time dotCom 3.83 4.40 Cahya Mata Swak 8.66 8.40 MPHB Capital 1.89 2.42