Malaysia Daily, Maybank KE (2014-03-10)

Daily 10 March 2014 COMPANY UPDATE Petronas Chemicals Group: Maintain Hold Updates from management meeting  Shariah-compliant 2014 will be a busy year for heavy maintenance shutdowns, but expect higher plant utilisation rate compared to 2013's. Many potential exercises in the pipeline, namely Aromatics plant investment decision, PCHEM's involvement in PETRONAS' RAPID Project, and possible acquisition. Maintain HOLD, with an unchanged target price of MYR6.85 based on FY14 PER of 15.0x ─ 10% premium to peers. Click here for full report » Malaysian Airlines System: Hold (under review) Pray for flight MH370  Shariah-compliant Flight MH370 to Beijing has been missing since 8 Mar 2014; last contact was off the Malaysia-Vietnamese water. There will be direct financial impact relating to this incident, while near-term customer perception will likely be affected. Expect share price weakness; our earnings forecasts, HOLD call and target price are under review. Click here for full report » ECONOMICS External Trade, January 2014 Strong start to 2014 Both exports and imports grew in Jan 2014 by +12.2% YoY (Dec 2013: +14.4% YoY) and +7.2% YoY (Dec 2014: +14.8% YoY) while trade surplus narrowed to +MYR6.4b (Dec 2013: +MYR9.6b). A better year for external trade amid simultaneous expansions in G3 and firming up in the prices of key export commodities, namely crude oil and CPO. Maintain full-year exports and import growth forecasts of +5.9% (2013: +2.4%) and +8.0% (2013: +7.0%). Click here for full report » Technicals SP500 leads the market charge The FBM KLCI lost 3.40 points WoW as some foreign profit-taking emerged last week. With the firm buying since late Jan near the 1,769 and 1,777 areas, we advise clients to play with the broader 1,769 support and the 1,882 resistance levels. Clear support areas lie at the 1,769 to 1,832 zone. The resistance levels of 1,839 and 1,882 may witness profit taking activities. Trading idea is a Short-Term Buy on POHUAT with upside target areas at MYR1.45 & MYR 1.76.Stop loss is at MYR1.04. Click here for full report » Other Local News FGV: Forms JV in Myanmar to build rubber processing plants. Felda Global Ventures Holdings Bhd (FGV) plans to build a rubber processing plant worth MYR30m to MYR45m in Myanmar this year as part of its initiative to venture into rubber business in the country. The group, via its subsidiary FGV Myanmar (L) Pte Pld, on Saturday signed a JV agreement with local partner Pho La Min Trading Ltd (PLM) to set up rubber processing plants and to look for rubber plantation opportunities in that country. FGV would hold a 51% equity interest while PLM would have the remaining 49% stake in the JV company, FGV Pho La Min Co Ltd. FGV expects the JV company�s first plant to be completed by the first quarter of 2015, adding that it would look for 10,000ha brownfield rubber plantation and would plant rubber trees on 30,000ha. (Source: The Star) CMS: Set to make its cash work harder. Sitting on a MYR614m cash pile as at end-Dec 2013, Cahya Mata Sarawah Bhd (CMS) is looking out for more investment opportunities in the construction material sector and related services, stating that it will only invest locally. The group will still have plenty of cash left even after taking up 20% in Australia-listed OM Holdings Ltd�s USD500m manganese and ferro silicon smelting plant project, and 40% in a MYR1b integrated phosphate complex. Both projects are in Samalaju Industrial Park, one of the five growth nodes of the Sarawak Corridor of Renewable Engery (SCORE). CMS is also looking to renew its two road concessions that are expiring in 2015 which will give them the mandate to maintain 2,000km of state roads. (Source: The Edge Financial Daily) Property: MYR4.5b worth of property to be developed in Penang. Kuala Lumpur and Penang-based developers will develop MYR4.56b worth of residential and commercial projects in Penang this year amid a challenging environment where the domestic property market is expected to soften. About MYR1.86b worth of residential and commercial projects are being planned in the mainland � Seberang Prai � while the remaining MYR2.7b will be launched on the island. Developers set to launch new projects include IJM Land Bhd (GDV of MYR538.5m), Mah Sing Group Bhd (MYR280m), DNP Land Sdn Bhd (MYR800m), Wing Tai Malaysia Bhd�s subsidiary Ideal United Bintang (MYR935m), Tambun Indah Land Bhd (MYR616m), Sunway Bhd (MYR290m), S P Setia Bhd (MYR300m), and Eastern & Oriental Bhd (MYR800m). (Source: The Star) Outside Malaysia Global: Debt exceeds USD 100tr as governments binge, BIS says. The amount of debt globally has soared more than 40% to USD 100tr since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements. The USD 30tr increase from USD 70tr between mid-2007 and mid-2013 compares with a USD 3.86tr decline in the value of equities to USD 53.8tr in the same period, according to data compiled by Bloomberg. The jump in debt as measured by the Basel, Switzerland-based BIS in its quarterly review is almost twice the U.S.'s gross domestic product. (Source: Bloomberg) Germany: Industry output rises as mild winter boosts construction. German industrial output rose for a third consecutive month in January as mild winter weather boosted construction activity. Production, adjusted for seasonal swings, increased 0.8% MoM from December, when it gained a revised 0.1% MoM, the Economy Ministry in Berlin said. The ministry had initially reported a December decline in output of 0.6% MoM. Production jumped 5% YoY in January from the previous year when adjusted for working days. (Source: Bloomberg) China: Exports unexpectedly decline in blow to confidence. Shipments abroad dropped 18.1% YoY, the customs administration said in Beijing, trailing the median estimate for a 7.5% YoY increase. (Source: Bloomberg) China: Inflation slows to 13-month low as producer prices decline. China's inflation slowed more than estimated to a 13-month low in February while factory-gate deflation deepened as prices cooled following a week-long holiday. The consumer price index rose 2% YoY, the National Bureau of Statistics said. The producer-price index fell 2% YoY, more than estimated, extending to 24 months the longest decline since 1999. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,832.3 (1.9) (0.3) JCI 4,685.9 9.6 (0.0) STI 3,136.3 (1.0) 0.2 SET 1,355.1 4.3 0.2 HSI 22,660.5 (2.8) (0.2) KOSPI 1,974.7 (1.8) (0.0) TWSE 8,714.0 1.2 0.0 DJIA 16,452.7 (0.7) 0.2 S&P 1,878.0 1.6 0.1 FTSE 6,712.7 (0.5) (1.1) MYR/USD 3.3 (0.5) (0.1) CPO (1mth) 2,890.0 10.0 0.9 Crude Oil (1mth) 102.6 4.2 1.0 Gold 1,340.0 11.5 (0.8) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.98 12.50 Genting Msia 4.29 4.74 HLBK 14.18 16.40 AMMB Holdings 7.18 8.50 Bumi Armada 3.93 5.00 IJM Corp 5.82 6.75 Time dotCom 3.84 4.40 Cahya Mata Swak 9.00 8.40 MPHB Capital 1.88 2.42