Malaysia Daily, Maybank KE (2014-04-09)

Daily	09 April 2014
COMPANY UPDATE Malaysia Airports Holdings: Maintain Sell KLIA2 launch date: Pie in the sky Deputy Minister of Transport says KLIA2 is on track to start operations on 2 May, and the LCCT will close on 9 May. AirAsia Group says it will stay put at LCCT until the safety and security issues are fully resolved at KLIA2. Maintain SELL as MAHB is expensive relative to peers. Our forecasts considered a delayed KLIA2 opening, but are revised down on acquisition of 40% in Sabiha G�k�en airport. Click here for full report » SECTOR UPDATE Water Sector S114 conditionally approved Cabinet has conditionally approved S114 invocation but the commencement date is not decided yet. The issue here is pricing rather than operational failure; we still believe a willing buyer, willing seller price is the way. We downgrade Gamuda to HOLD. Click here for full report » REGIONAL SECTOR UPDATE Regional Plantations: Maintain Neutral Rising risk of a weak El Ni�o in 2H Australia Bureau of Meteorology raises the odds of an El Ni�o developing in 2H14 at above 70%. Other climate models are projecting a likelihood of a weak El Ni�o, which may only have muted impact on CPO price. CPO price usually weakens towards the middle of the year. We turn Neutral on the sector as we approach mid-year. Click here for full report » Technicals Profit taking above 1,860 The FBMKLCI fell 10.59 points to close at 1,852.31 yesterday, while the FBMEMAS and FBM100 also closed lower by 59.98 points and 61.43 points, respectively. We recommend a �Buy on Dips� stance for the index. Trading idea is a Short-Term Buy on CHOOBEE with upside target areas at MYR2.27 & MYR2.59. Stop loss is at MYR1.84. Click here for full report » Other Local News Oil & Gas: Malaysia�s national petroleum company reorganizes. Petronas is splitting its exploration and production (E&P) division into domestic and international segments to make the businesses more focused and accountable. Also to note that it is benchmarking this move against what Shell, ExxonMobil and Total had done recently. (Source: The Star) Banking: Maybank Islamic issues its maiden Basel III-compliant Tier-2 capital subordinated sukuk. This MYR1.5b is pursuant to a subordinated sukuk murabahah programme of up to MYR10b in nominal value established in March 2014. It was the largest (single) issuance of ringgit by an Islamic Financial Institution. Proceeds raised can be used to augment business of the bank, positioning Maybank Islamic for growth domestically and regionally. (Source: The Star) Property: Oxley�s project sees interest from funds. Oxley Holdings (M) Sdn Bhd, the local unit of Singapore Oxley Holdings Ltd, is in talks with several government linked funds to invest in its MYR3.5b mixed development planned on Jalan Ampang land, to feature luxury hotels and theme park. At the moment, Oxley Malaysia has eight ongoing projects with total estimated GDV of MYR8b. (Source: The Edge Financial Daily) Property: EUPE plans MYR720m projects in Cheras, Bangsar. Kedah-based property developer EUPE Corp Bhd expects to launch its maiden Kuala Lumpur projects with a combined GDV of RM720mil this year. Group MD and CEO Datuk Beh Huck Lee said the residential projects in Cheras and Bangsar, with a tentative GDV of MYR260m and MYR460m, respectively, would start contributing to the company�s earnings in the financial year ending Feb 28, 2016. (Source: The Star) Outside Malaysia Global: IMF says U.S. growth leads as Russia, Brazil soften. Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund said. The U.S. is providing a "major impulse" to global growth that's still lumbering amid weakness in Japan and parts of Europe, the IMF said in a report. While the U.K. and Germany are adding to momentum, developing nations face new risks and Russia's takeover of Crimea last month injects geopolitical tension that�s "casting a pall" on the region, the fund said. (Source: Bloomberg) U.K: Pay growth accelerated to the fastest pace in almost seven years at the end of the first quarter as companies reported stronger overseas demand. An index of wage growth for full-time employees rose to 62.2 in March, the highest since July 2007, from 61.7 in February, KPMG LLP and the Recruitment and Employment Confederation said. Separately, the British Chambers of Commerce said measures of export sales at manufacturers and services companies increased in the first quarter, as did their employment intentions. (Source: Bloomberg) U.K: Industrial production rose more than forecast in February bolstered by a surge in factory output that points to a continuing economic recovery. Production increased 0.9% MoM from January, when it was unchanged, the Office for National Statistics said. Manufacturing output surged 1% MoM, compared with a forecast of 0.3% MoM. (Source: Bloomberg) Japan: Current account rebounded into surplus in February from a record deficit the previous month as income from overseas investments outweighed deficits in trade and services. The JPY 613b (USD 5.9b) surplus was the first in five months, the Ministry of Finance reported. (Source: Bloomberg) Indonesia: Central bank kept its key interest rate unchanged for a fifth straight meeting, extending a pause in monetary tightening as inflation slowed. Bank Indonesia Governor Agus Martowardojo and his board maintained the reference rate at 7.5%, the central bank said. It also kept the deposit facility rate unchanged at 5.75%. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,852.3 (0.8) (0.6) JCI 4,921.4 15.1 0.0 STI 3,204.1 1.2 0.3 SET 1,379.3 6.2 (0.9) HSI 22,597.0 (3.0) 1.0 KOSPI 1,993.0 (0.9) 0.2 TWSE 8,888.3 3.2 0.1 DJIA 16,256.1 (1.9) 0.1 S&P 1,852.0 0.2 0.4 FTSE 6,590.7 (2.3) (0.5) MYR/USD 3.2 (1.1) (0.9) CPO (1mth) 2,619.0 (0.3) (1.8) Crude Oil (1mth) 102.6 4.2 2.1 Gold 1,311.8 9.2 0.9 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.80 14.00 Genting Msia 4.20 4.74 HLBK 14.08 16.40 AMMB Holdings 7.15 8.50 Bumi Armada 3.98 5.00 IJM Corp 6.32 6.75 Time dotCom 4.20 4.40 MPHB Capital 1.95 2.42