Malaysia Daily, Maybank KE (2014-05-06)

Daily 06 May 2014 SECTOR UPDATE MY Plantations: Maintain Neutral Expect stronger YoY 1Q14 profits 1Q14 plantation earnings will generally be stronger compared to a year ago but weaker compared to the last quarter. 1Q14 upstream margins will be higher YoY, while refiners� margins will be weak. Maintain 12M NEUTRAL view. Key risk to our view is the return of a strong El Nino. Click here for full report » MARKET STRATEGY MY Strategy: Maintain Neutral April fund flows Foreigners turned net buyers in April, but small, vs. more aggressive net buying in the other Emerging ASEAN markets. KLCI valuations sustained at rather high 16.0x 12M forward earnings and almost 2x PEG. We maintain our end-2014 KLCI target of 1,940 and sector weights; we also remain selective on stocks. Click here for full report » Technicals A very bad sinking feeling The FBMKLCI tumbled 8.54 points to close at 1,860.54 yesterday, while the FBMEMAS and FBM100 also closed lower by 70.38 points and 63.28 points, respectively. We recommend a �Sell on Rallies� stance for the index. We expect heavy selling to emerge near the resistances of 1,860 to 1,873. Trading idea is a Take Profit call on VIS with downside target areas at MYR0.19 & MYR0.06. Click here for full report » Other Local News UMW-OG: Confident of winning 3 jobs this year. UMW Oil & Gas Corp Bhd (UMW-OG) is confident of securing at least three contracts this year, out of the 20 that it is currently bidding for, said president Rohaizad Darus. The 20 contracts the company is aiming for are worth MYR1.9b. It is set to receive two more rigs � the Naga 6 and Naga 7 � in September and December, respectively. (Source: The Star) Barakah: To know result of USD1b Saudi tender in Aug. Barakah Offshore Petroleum Bhd (Barakah) is expected to receive the final word on its USD1b (MYR3.26b) tender for a five-year contract from Saudi Arabia's national oil and gas company, Saudi Aramco, in August. The project comprises transport and installation works, hook-up commissioning and pipeline commissioning works on a call-out basis. (Source: Business Times) HSL: KNH nears phase 1 completion of MYR2.5b wastewater project. The Kumpulan Nishimatsu-Hock Seng Lee (KNH) consortium is in the final stages of negotiations with Sarawak state authorities on the Kuching centralised wastewater management system project package 2 contract. As at March 31, 2014, about 92.6% of the MYR530m package 1 had been completed, according to the Sarawak Sewerage Services Department. (Source: The Star) Petronas Gas: To set aside MYR6b capex. Petronas Gas Bhd (PGB) plans to set aside MYR6b in capital expenditure (capex) to support its business growth over five years. MD and CEO Yusa� Hassan said about 60% of the MYR6b allocation will be reserved for potential growth while the remaining one-third is for ongoing projects and to support plants operations. The company is expecting its Sungai Udang liquefied natural gas regasification terminal (RGT) in Malacca to contribute up to 10% to its bottom line for 2014. (Source: Business Times) Benalec: Secures MYR203.9m contract for job in Malacca. Benalec Holdings Bhd's subsidiary Benalec Sdn Bhd has been awarded a MYR203.9m contract by Oriental Holdings Bhd's unit for the construction, completion and maintenance of coastal reclamation and associated works in Malacca. The contract sum excludes rock revetment works. The project is scheduled to start in the third quarter of 2014 and is expected to be completed by the fourth quarter of 2016. (Source: Bursa Malaysia) Outside Malaysia U.S: Orders in April lift service companies as sales improve. The Institute for Supply Management's non-manufacturing index rose to 55.2, the highest level since August, from 53.1 in March, the Tempe, Arizona-based group's report showed. Readings above 50 indicate expansion. (Source: Bloomberg) U.S: Banks eased commercial loan policies, Fed says. Banks in the U.S. eased policies for loans to businesses including real estate companies during the first quarter amid stronger demand for credit, according to a Federal Reserve survey. For households, banks reported easier standards on consumer credit card and auto loans, the Fed said in Washington in its quarterly survey of senior loan officers. The central bank surveyed 74 domestic banks and 23 U.S. units of foreign banks from April 1-15. (Source: Bloomberg) E.U: The European Commission trimmed its economic growth forecast for the euro area and predicted low inflation to remain a threat to expansion for at least the next two years. The 18-nation euro zone's gross domestic product will rise 1.7% in 2015, compared with a February prediction of 1.8%, the Brussels-based commission said. The inflation rate will be 0.8% this year and 1.2% in 2015, both lower than previously forecast and well below the European Central Bank's target of just below 2%. (Source: Bloomberg) China: Manufacturing contracted for a fourth month in April, according to a private survey that missed estimates and sent stocks in the region lower on concern the economy's slowdown is deepening. A purchasing managers' index was at 48.1, HSBC Holdings Plc and Markit Economics said. Numbers below 50 indicate contraction. (Source: Bloomberg) Indonesia: Economic growth missed analysts' estimates last quarter, weakening to the slowest pace since 2009 after interest-rate increases last year curbed investment and a mineral-ore ban hurt the mining industry. GDP rose 5.21% YoY in the three months ended March 31, the Central Bureau of Statistics said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,860.5 (0.3) (0.5) JCI 4,842.5 13.3 0.1 STI 3,241.6 2.3 (0.3) SET 1,421.5 9.5 0.0 HSI 21,976.3 (5.7) (1.3) KOSPI 1,959.4 (2.6) 0.0 TWSE 8,870.4 3.0 0.0 DJIA 16,530.6 (0.3) 0.1 S&P 1,884.7 2.0 0.2 FTSE 6,822.4 1.1 0.0 MYR/USD 3.3 (0.6) (0.3) CPO (1mth) 2,640.0 0.5 (0.8) Crude Oil (1mth) 99.5 1.1 (0.3) Gold 1,310.3 9.0 0.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.90 14.00 Genting Msia 4.22 4.74 HLBK 13.74 16.40 AMMB Holdings 7.14 8.50 Bumi Armada 3.99 5.00 IJM Corp 6.35 6.75 MPHB Capital 1.93 2.42