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

Daily 05 June 2014 INITIATING COVERAGE KNM Group: Buy (New) Reformed and ready to grow  Shariah-compliant Initiate BUY and MYR1.00 TP (13x FY15) on improving risk-reward outlook. KNM is now on a more solid footing for growth, with a stronger balance sheet and improving outlook. RAPID play is a short-term catalyst; executing the Peterborough waste-to-energy project is a game changer. Click here for full report » COMPANY UPDATE Sunway Berhad: Maintain Hold Launching Iskandar project soon  Shariah-compliant Management remains confident on its Iskandar Malaysia project. First phase of Sunway Iskandar project to launch by July 14. TP is unchanged at MYR2.80 (on 0.58x P/RNAV). HOLD. Click here for full report » Technicals A re-test of the 1,861 level The FBMKLCI declined 7.35 points to 1,865.20 yesterday, while the FBMEMAS and FBM100 fell 37.12 points and 39.19 points, respectively. We expect some poor buying interest to emerge near the weak supports of 1,845 to 1,861, whilst some heavy liquidation will emerge at the resistances of 1,865 and 1,882. Trading idea is a Take profit call on ARMADA with downside target areas at MYR3.41 & MYR3.21. Click here for full report » Other Local News Power: Mitsui to develop USD3.3b Jimah power plant in Malaysia in partnership with local state-owned company. The plant will have an annual capacity of 2,000 megawatts and begin generation in 2018 to meet a 25-year sales contract with state-owned utility TNB. (Source: Business Times) RAM: Corporate bond issues to hit MYR95b. RAM Holding expects gross corporate bond issuance to be higher at between MYR90b and MYR95b this year, compared with MYR84b last year. This expected growth to be mainly driven by projects under the Economic Transformation Programme. (Source: Business Times) MRCB: Regeneration plan for KL Sentral. MRCB Group MD Datuk Mohamad Salim Fateh Din said this to upgrade the infrastructure and facilities of the country�s largest transit hub which is 14 years old. He expects work to begin immediately after obtaining approval and is hopeful that it can be completed by 2017. (Source: Business Times) YTLPower: YTLP's unit to buy KJS for MYR49.8m. YTLP will acquire a 60% stake in bumiputra outfit Konsortium Jaringan Selangor Sdn Bhd and Ingress Software (M) Sdn Bhd for MYR49.8m. The proposed acquisition is expected to contribute to earnings in the medium to long term. (Source: The Edge Financial Daily) AirAsia: Construction of new AirAsia HQ at klia2 will start next month. The HQ will be built on land leased from MAHB and will be completed by end of 2015. (Source: The Edge Financial Daily) Outside Malaysia U.S: Service industries grow at fastest pace since August as orders picked up, indicating improving sales will help the U.S. economy strengthen. The Institute for Supply Management's non-manufacturing index climbed to 56.3 last month from 55.2 in April, the Tempe, Arizona-based group said. Readings greater than 50 signal expansion. The gauge of orders reached a more than three-year high. (Source: Bloomberg) U.S: The trade deficit ballooned in April to the widest in two years as Americans bought record amounts of consumer goods, business equipment and automobiles from abroad. The gap grew by 6.9% MoM to USD 47.2b from the prior month's USD 44.2b, which was larger than previously estimated, Commerce Department figures showed. (Source: Bloomberg) U.S: Fed saw modest to moderate growth as labor market improved. The Federal Reserve said the economy expanded at a modest to moderate pace last month as auto sales led household spending and the labor market improved. "Consumer spending expanded across almost all districts," the report said. "Labor market conditions generally strengthened" with "hiring activity steady to stronger" in most regions. Seven of 12 districts saw "moderate" growth, with the rest characterized as "modest," the Fed said in its Beige Book business survey, which is based on reports from its district banks. (Source: Bloomberg) E.U: Services output expanded at the strongest pace in almost three years last month, helping create jobs in a region suffering from low inflation, anemic growth and unemployment close to a record high. A Purchasing Managers' Index rose to 53.2 from 53.1 in April, Markit Economics said, staying above the key 50 mark that indicates growth for a 10th month. In a sign of how fragile the economy remains. (Source: Bloomberg) U.K: Services grew faster than forecast in May and confidence about the outlook prompted companies to boost hiring. Markit Economics said the economy "continued to boom" last month as its Purchasing Managers' Index for the services industry came in at 58.6, exceeding the 58.2 median of 30 estimates in a Bloomberg News survey. That's above the 50 level that divides expansion from contraction and compares with a reading of 58.7 in April. (Source: Bloomberg) Australia: Economy grew at the fastest pace in two years as surging exports and home building showed record-low borrowing costs are sustaining a 22-year expansion even as mining investment slows. First-quarter GDP advanced 1.1% QoQ from the previous three months, government data showed. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,865.2 (0.1) (0.4) JCI 4,932.6 15.4 (0.2) STI 3,280.2 3.6 (0.5) SET 1,449.4 11.6 (0.3) HSI 23,151.7 (0.7) (0.6) KOSPI 2,008.6 (0.1) 0.0 TWSE 9,120.0 5.9 (0.0) DJIA 16,737.5 1.0 0.1 S&P 1,927.9 4.3 0.2 FTSE 6,818.6 1.0 (0.3) MYR/USD 3.2 (1.0) 0.3 CPO (1mth) 2,440.0 (7.2) 1.7 Crude Oil (1mth) 102.6 4.3 (0.0) Gold 1,245.3 3.6 (0.0) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.98 14.00 Genting Msia 4.25 4.74 HLBK 13.88 16.20 AMMB Holdings 7.22 8.50 Bumi Armada 3.61 4.55 IJM Corp 7.00 7.20 MPHB Capital 2.03 2.42