Malaysia Daily, Maybank KE (2014-04-11)

Daily 11 April 2014 REGIONAL SECTOR UPDATE Plantations: Neutral Strong rebound in CPO output Malaysian CPO output in Mar 2014 (+17% MoM) surprises on the upside, leading to higher-than-expected inventories. CPO price usually weakens towards the middle of the year; we turn Neutral on the sector as we approach mid-year. Key risk to our view is the return of a strong El Ni�o as weather models now predict a possible weak El Ni�o in 2H14. Click here for full report » COMPANY UPDATE Dialog Group: Maintain Buy In dispute with TLP  Shariah-compliant Enters into arbitration with Tanjung Langsat Port on a fire incident at the tank terminal facility in 2008. Premature to assess impact but should this arbitration fail to resolve, either party can take this case to court. Maintain BUY and MYR3.90 SOP-TP. Click here for full report » Quill Capita Trust: Maintain Hold Seals office block deal with MRCB Neutral on this development, as we remain cautious on the broader office market which is over-supplied. We estimate potential dividend accretion of +0.11sen for FY15. Maintain HOLD with MYR1.16 unchanged TP as we maintain earnings forecasts pending the completion of the deal. Click here for full report » ECONOMICS Industrial Production, Feb�14 Firmer growth IP growth reaches seven month high of +6.7% YoY in Feb 2014. Expands by +5.1% YoY in Jan-Feb 2014 (Jan-Feb 2013: -0.7% YoY; 4Q 2013: +2.8% YoY), hinting at firmer real GDP growth in 1Q 2014 (1Q 2013: +4.1% YoY; 4Q 2013: +5.1% YoY) Global manufacturing activities maintain positive momentum year-to-date but are uneven amid expansions in G3 (US, Europe, Japan) and lacklustre Large Emerging Economies, with the rest of East Asia caught in between. Click here for full report » Technicals Pre-weekend profit taking The FBMKLCI rose 3.77 points to close at 1,859.52 yesterday, while the FBMEMAS and FBM100 also closed higher by 47.22 points and 42.70 points, respectively. Due to the KLCI April Futures moving into a small 4.52-points discount against the FBMKLCI, we expect profit taking to emerge near the resistance zone of 1,861 to 1,874, with pre-weekend selling activities due to the American markets tumbling badly last night. Trading idea is a Short-Term Buy on WCT with upside target areas at MYR2.42 & MYR2.50. Stop loss is at MYR2.04. Click here for full report » Other Local News TNB: Megasteel to pay TNB MYR305.6m. Megasteel Sdn Bhd, a subsidiary of Lion Corp Bhd, has agreed to pay TNB MYR305.6m for unpaid electricity bills and over-due interest. Megasteel is also to provide, subject to the approval of its shareholders and lenders, a corporate guarantee to TNB for MYR30m. Effective this month, the supply of electricity to the company is on advance payment basis. (Source: The Edge Financial Daily) Perisai Petroleum: Completes private placement. It has successfully completed a private placement which raised proceeds of MYR165.9m. The funds raised in the exercise will be used to repay borrowings, capital investments, as well as, working capital for the company. (Source: Business Times) AirAsia: Signs brand license agreement with Thai AirAsia. AirAsia Bhd has signed a brand license agreement with Thai AirAsia X Co Ltd (TAAX), to enable the use of AirAsia X Bhd�s brand name, trade mark and logos in Thailand. TAAX is a Thai joint-venture company of AirAsia X. (Source: The Edge Financial Daily) Outside Malaysia U.S: Jobless claims drop to lowest level since May 2007, pointing to more progress in the labor market. Jobless claims decreased by 32,000 to 300,000 in the week ended April 5, the lowest since May 2007, a Labor Department report showed. The figure was lower than the most optimistic forecast in a Bloomberg survey of 52 economists. (Source: Bloomberg) U.K: BOE keeps rate at record low as recovery puts slack in focus. The Bank of England kept its key interest rate at a record low as policy makers try to gauge the amount of spare capacity in the economy. With the Monetary Policy Committee bound by Governor Mark Carney�s forward guidance, officials held the benchmark rate at 0.5%, where it�s been since March 2009. (Source: Bloomberg) China: Exports and imports unexpectedly fell in March as Premier Li Keqiang said the nation will roll out more policies to support growth while avoiding stronger stimulus. Overseas shipments declined 6.6% YoY, the customs administration said, attributing the drop partly to distortions from inflated data in early 2013. Imports fell 11.3% YoY, in part on falling commodity prices, leaving a trade surplus of USD 7.71b. (Source: Bloomberg) S. Korea: BOK raised its growth forecast for this year after leaving its key rate unchanged as Governor Lee Ju Yeol said the priority is to spur Asia�s fourth-biggest economy while ensuring price stability. Meeting for the first time since Lee took the helm last week, the policy board left the seven-day repurchase rate at 2.5% for an 11th straight month, according to a statement released. The BOK lifted its 2014 growth projection to 4% from 3.8%, Lee said at a press conference. (Source: Bloomberg) Australia: Unemployment rate unexpectedly fell in March , sending the Aussie to a 4 1/2 month high as traders added to bets on an interest-rate increase. The jobless rate declined to 5.8% from a revised 6.1%, the statistics bureau said. That�s the biggest drop since August 2010 and defied economists� estimates for unemployment of 6.1%. The number of people employed rose by 18,100 after climbing a revised 48,200 a month earlier. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,859.5 (0.4) 0.2 JCI 4,765.7 11.5 (3.2) STI 3,203.6 1.1 (0.2) SET 1,389.6 7.0 0.5 HSI 23,187.0 (0.5) 1.5 KOSPI 2,008.6 (0.1) 0.5 TWSE 8,948.1 3.9 0.2 DJIA 16,170.2 (2.5) (1.6) S&P 1,833.1 (0.8) (2.1) FTSE 6,642.0 (1.6) 0.1 MYR/USD 3.2 (1.6) (0.1) CPO (1mth) 2,655.0 1.0 0.2 Crude Oil (1mth) 103.4 5.1 (0.2) Gold 1,319.0 9.8 0.5 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.92 14.00 Genting Msia 4.29 4.74 HLBK 14.12 16.40 AMMB Holdings 7.15 8.50 Bumi Armada 3.95 5.00 IJM Corp 6.56 6.75 Time dotCom 4.33 4.40 MPHB Capital 1.95 2.42