Malaysia Daily, Maybank KE (2014-04-02)

Daily	02 April 2014
MARKET STRATEGY Regional - INVESTASEAN 2014 IDEAS BOOK InvestASEAN 2014 Click here for full report » COMPANY UPDATE SapuraKencana Petroleum: Maintain Buy Rigs galore  Shariah-compliant Secures 3 rig charter extensions and 1 new rig contract. Contracts for 3 other rigs to expire in 2Q14. Maintain BUY and MYR5.30 SOP TP. Click here for full report » SECTOR UPDATE Banking Sector: Maintain Neutral Stable loan growth in February Industry loan growth was decent at 10.7% YoY in Feb 2014 versus 11.0% in Jan 2014. Loan applications rebounded to 9.7% YoY in Feb 2014 vs -14.2% YoY in Jan 2014 but 3M MA trend still down Still NEUTRAL on the banking sector; BUYs are AMMB, HL Bank and HL Financial Group. Click here for full report » Technicals Poised to test 1,850 & 1,870 The FBMKLCI declined 1.45 points to close at 1,847.76 yesterday, while the FBMEMAS and FBM100 also closed lower by 7.20 points and 13.12 points, respectively. We recommend a �Buy on Dips� stance for the index. Trading idea is a Short-Term Buy call on LONBISC with upside target areas at MYR0.94 & MYR1.15. Stop loss is at MYR0.73. Click here for full report » Other Local News Banking: Bank Negara says it did not direct banks to raise interest rates for car loans. BNM said it was the individual banks which determined the borrowers� credit rating history and pursuant to that the banks also determined the appropriate interest rate. �Financial institutions set their own lending rates, determined by various factors including (an) assessment of a borrowers� credit standing, market funding rates and competitive considerations,� Bank Negara�s statement said. (Source: The Star) Oil & Gas: Malaysia closer to becoming regional O&G education hub. Petroliam Nasional Bhd (Petronas) launched a new training facility in Bukit Rakit, Terengganu at a cost of some MYR250m. It is called INSTEP Integrated Oil and Gas Training Centre (IIOGTC). It houses a replica of the actual upstream and downstream facilities as well as a drilling rig, a drilling simulator and an engineering workshop. (Source: The Edge Financial Daily) Technology: Malaysia Debt Ventures approves MYR6b to 450 technology companies. These technology companies are from various sectors. More than 70% of approved projects are SMEs. (Source: The Edge Financial Daily) AirAsia: It will stay put in current LCCT, won�t budge. AirAsia and AirAsia X refused to move to KLIA2, until all the safety and security issues have been resolved, even after May 9.(Source: The Star) AirAsia: Inks entertainment deal worth MYR109m. The deal is done with Tune Box Avionics Sdn Bhd, a company indirectly owned by the airline�s substantial shareholders and directors Tan Sri Tony Fernandes and Datuk Kamarudin Meranun. Tune Box Avionics will sell to and maintain for AirAsia the in-flight entertainment and connectivity solutions for seven years. (Source: The Edge Financial Daily) Maybank: Maybank Kim Eng seeks to boost profit contribution. Kim Eng�s contribution now is about 7% to 8% and hopes to see it cross 10% of group's pre-tax profit. However, CEO John Chong did not specific a time-frame to achieve this. Kim Eng currently has presence in 10 countries, six of which are ASEAN, and has no immediate plans to enter new markets. (Source: The Edge Financial Daily) Outside Malaysia U.S: Rising manufacturing orders signal further growth. The U.S. manufacturing expansion accelerated in March, driven by gains in production and orders, in the latest sign that the economy is shaking off its winter doldrums and building momentum into the second quarter. The Institute for Supply Management's index increased to 53.7 from 53.2 a month earlier, the Tempe, Arizona-based group said. Readings above 50 indicate expansion. (Source: Bloomberg) Europe: EU recovery diverges as Italy jobless at record. Europe's two-speed economy was underscored in data showing strengthening in the German labor market just as Italy's jobless rate reached a record. Overall euro-area unemployment was at 11.9% in February. In Italy it rose to 13%, while in Germany the locally defined jobless rate for March stayed at the lowest in at least two decades. (Source: Bloomberg) China: Factory gauges show weakness as Li eyes stimulus. Chinese manufacturing gauges pointed to weakness in the world's second-biggest economy that could prompt the Communist Party leadership to roll out additional support measures. A Purchasing Managers' Index fell to 48 in March, the lowest reading since July, from 48.5 in February, HSBC Holdings Plc and Markit Economics said. A separate PMI from the government, with a larger sample size, was at 50.3 from 50.2 the previous month. (Source: Bloomberg) Japan: Corporate sentiment gains seen short-lived as tax rises. Sentiment among large Japanese manufacturers rose to the highest level since 2007, a gain that may be short-lived sales-tax increase weighs on consumption and confidence. The Tankan index was at 17 in March, climbing from 16 in December, a Bank of Japan report showed. The index is forecast to drop to 8 in June, worse than economists' forecast of 13. (Source: Bloomberg) India: Rajan leaves key rate unchanged as inflation eases. India's central bank left its key interest rate unchanged as consumer-price inflation eased to a two-year low and the rupee strengthened, increasing scope to support growth ahead of national elections starting this month. Governor Raghuram Rajan kept the repurchase rate at 8%, the Reserve Bank of India said in a statement. He has boosted the rate by 75 basis points since taking office in September. (Source: Bloomberg) Australia: Central bank left its benchmark interest rate unchanged at a record low to spur employment-intensive industries such as residential construction as a once-in-a-century mining investment boom ebbs. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5%, the Reserve Bank of Australia said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,847.8 (1.0) (0.1) JCI 4,873.9 14.0 2.2 STI 3,198.5 1.0 0.3 SET 1,387.5 6.8 0.8 HSI 22,448.5 (3.7) 1.3 KOSPI 1,992.0 (1.0) 0.3 TWSE 8,873.2 3.0 0.3 DJIA 16,532.6 (0.3) 0.5 S&P 1,885.5 2.0 0.7 FTSE 6,652.6 (1.4) 0.8 MYR/USD 3.3 (0.3) 0.1 CPO (1mth) 2,689.0 2.3 (1.1) Crude Oil (1mth) 99.7 1.3 (1.8) Gold 1,284.9 6.9 (0.7) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.96 14.00 Genting Msia 4.16 4.74 HLBK 14.12 16.40 AMMB Holdings 7.17 8.50 Bumi Armada 3.94 5.00 IJM Corp 6.14 6.75 Time dotCom 3.86 4.40 MPHB Capital 1.81 2.42 Cahya Mata Swak 10.12 10.50