Malaysia Daily, Maybank KE (2014-04-17)

Daily 17 April 2014 COMPANY UPDATE TIME dotCom: Downgrade to Hold Extending its footprint  Shariah-compliant Participation in the AAE-1 cable would allow TDC to own bandwidth capacity from Asia to MENA/Europe. This allows increased flexibility to TDC's internet transit offering, thus raising TDC�s standing among clients. Raise TP to MYR4.60 (+20sen), but downgrade to HOLD following the stock�s recent rally. Click here for full report » Hartalega Holdings: Maintain Hold Keeping a cool head  Shariah-compliant 4QFY3/14 results could be weaker on price competition. However, we think this is a near-term blip and earnings will be on a growth trajectory again from FY3/16. Lowering earnings; maintain HOLD with a slightly lower TP of MYR6.70 (-40sen). Click here for full report » Malayan Banking: Not Rated DRP price fixed at MYR8.95 DRP price fixed at MYR8.95/share, a 5.1% discount to its 5-day ex-div VWAMP. Estimated EPS dilution in FY13 is about 5%, CET1 still healthy at 11%, assuming 86% reinvestment rate. Click here for full report » RESULTS REVIEW CapitaMalls Malaysia Trust: Maintain Buy Earnings on track 1Q14 net profit of MYR38.2m (+7% YoY) was in line. No DPU was declared given its bi-annual distribution policy. No change to earnings forecasts and MYR1.74 DCF-based TP. Maintain BUY. CMMT currently offers a 2014 net yield of 6.1% (vs. industry�s 6.2%). Click here for full report » ECONOMICS Malaysia CPI, Mar 2014 Steady but stays elevated Inflation rate stays elevated but steady in Mar 2014 at +3.5% YoY, the same as Feb 2014. Our measure of core inflation (excluding the key subsidised components of CPI) edges to +2.0% YoY (Feb 2014: +1.9% YoY). YTD CPI inflation at 3.4% YoY more than doubled the 1.5% YoY posted in Jan-Mar 2013. No change in our full-year inflation rate forecast of 3.5%. Click here for full report » China GDP 1Q 2014 Growth anxiety China's economy expands by 7.4% YoY and 1.4% QoQ (seasonally adjusted) in 1Q 2014, down from 7.7% YoY and 1.7% QoQ in 4Q 2013. Trimming slightly our full-year growth forecast to 7.3% from 7.5%. Key thing to watch: policy responses given downside risk to official full-year 7.5% growth target. We have already seen shift in exchange rate policy and mini-fiscal stimulus announcement. Keep eyes on handling of emerging debt problems and shadow banking issue, as well as potential further adjustments in monetary/banking policy, especially on liquidity measures. Click here for full report » Technicals Index does a bearish turn The FBMKLCI fell 8.51 points to close at 1,845.37 yesterday, while the FBMEMAS and FBM100 also closed lower by 29.52 points and 36.73 points, respectively. Due to the KLCI April Futures moving into a small 0.87-points discount against the FBMKLCI, we expect profit taking to emerge near the resistance zone of 1,845 to 1,860. Trading idea is a Short-Term Buy on UEMS with upside target areas at MYR2.48 & MYR2.75. Stop loss is at MYR2.17. Click here for full report » Other Local News Property: Another developer from China comes to Johor Bahru, plans MYR10b project. The Greenland Group is the latest developer from China to purchase land for a property project in Danga Bay, Johor Baru. It entered an agreement yesterday to buy 13.96 acres from Iskandar Waterfront Holdings Sdn Bhd (IWH) for MYR600m with plans to develop projects with a potential gross development value (GDV) of MYR2.2b. (Source: The Star) Water: The Federation of Malaysian Manufacturers (FMM) seeks PM�s �urgent attention� on water crisis. Water crisis are affecting businesses in Selangor due to high cost-incurred for alternative supply of water. Through feedback, FMM was informed that a beverage company in Shah Alam requires about 120 tankers a day, costing about MYR150,000. (Source: Business Times) Petronas Dagangan: To beef up cooking gas distribution in Philippines. It has allocated MYR200m in capex over the next three years mainly to beef up its cooking gas distribution operations in the Philippines. (Source: The Star) Petronas Dagangan: Earmarks MYR700m in capex. Petronas Dagangan Bhd has allocated MYR700m in capex. MYR500m to be spent on domestic operations and MYR200m for the international subsidiaries over the period of two to three years. (Source: Business Times) Kian Joo: Another See booted out. The See family is seeing their presence dwindling in the Kian Joo Can Factory Bhd (KJCF) group, having swallowed two boardroom defeats over the past two days. Teow Koon, who is against the takeover offer by Aspire, fails to get re-elected to KJCF Board. (Source: The Edge Financial Daily) Outside Malaysia U.S: Factories lead rebound from harsh winter as housing lags. Factory production climbed 0.5% MoM in March after a revised 1.4% MoM surge in February that marked the biggest gain in almost four years, figures from the Federal Reserve showed. Housing starts rose 2.8% to a 946,000 annualized rate last month, falling short of the median forecast of economists surveyed by Bloomberg, according to Commerce Department data. (Source: Bloomberg) U.S: Fed saw continued growth as harsh weather abated. The Federal Reserve said the U.S. economy continued to expand in most regions as businesses benefited from a bounce back from harsh winter weather earlier in the year. Eight of 12 Fed districts characterized growth as "modest or moderate," the Fed said in its Beige Book business survey, based on reports gathered before April 7. Economic growth in Chicago "picked up" while New York and Philadelphia saw a rebound from weather-related slowdowns, the report said. The Cleveland and St. Louis districts reported declines. (Source: Bloomberg) E.U: Euro-area core inflation rate falls more than estimated in March , keeping pressure on the European Central Bank to take action to boost prices. The annual core rate, which excludes volatile items such as energy, food, alcohol and tobacco, dipped to 0.7% YoY from 1% YoY the prior month, the European Union's statistics office in Luxembourg said. That's below Eurostat's March 31 estimate of 0.8% YoY. (Source: Bloomberg) U.K: Unemployment falls to 5-year low as economy strengthens. The jobless rate measured by International Labour Organization methods dropped more than forecast to 6.9% in the three months through February from 7.2% in the quarter through January, the Office for National Statistics said. The report also showed that wage growth accelerated in the period to 1.7%, matching the inflation rate in February. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,845.40 -1.2 -0.5 JCI 4,873.00 14 0.1 STI 3,253.20 2.7 0.2 SET 1,401.80 7.9 0.9 HSI 22,696.00 -2.6 0.1 KOSPI 1,992.20 -1 0 TWSE 8,923.80 3.6 0.1 DJIA 16,424.90 -0.9 1 S&P 1,862.30 0.8 1 FTSE 6,584.20 -2.4 0.7 MYR/USD 3.2 -1 -0.1 CPO (1mth) 2,736.00 4.1 2.1 Crude Oil (1mth) 103.8 5.4 0 Gold 1,302.50 8.4 0 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.9 14 Genting Msia 4.2 4.74 HLBK 13.96 16.4 AMMB Holdings 7.13 8.5 Bumi Armada 3.99 5 IJM Corp 6.43 6.75 MPHB Capital 1.98 2.42