Wednesday, July 16, 2014

Malaysia Daily, Maybank KE (2014-07-16)



Daily
16 July 2014
SPECIAL FEATURE
Heng Huat Resources: Not Rated
Turning waste to gold
  • The largest biomass material manufacturer in Malaysia with a lion share of 47.4%.
  • Recent acceptance of biomass materials and eco-friendly policies, mainly in China, to drive growth.
  • Attaching a 40% discount to the markets PER of 16.1x, we derive an indicative fair value of MYR0.49.
COMPANY UPDATE
AirAsia: Maintain Buy
Trading on the cheap, BUY
  • AirAsia's share price is barely off its 3-year low despite recording a respectable 1Q14 earnings.
  • FY14 outlook is positive, with scope for market share gain and higher yields, factors that will lead to earnings recovery.
  • Maintain BUY with an unchanged TP of MYR2.65 as valuation is attractive relative to global peers.
ACQUISITIONS / DISPOSAL
TSH Resources: Maintain Hold
Acquiring greenfield land  Shariah-compliant
  • We are positive on TSHs proposed acquisition of 9,000ha greenfield land in Indonesia, lifting its landbank by 10%.
  • Previously proposed acquisition of Sabah estate which has lapsed, is not a concern due to sufficient plantable reserves.
  • Our earnings forecasts are unchanged. Maintain Hold.
Technicals
Index inched up slightly

The FBMKLCI inched up by 1.72 points to 1,884.87 on Monday, while the FBMEMAS and FBM100 rose 8.05 points and 5.82 points, respectively. We recommend a
Nibble on Dips stance for the index.

Trading idea is a Take Profit call on MEDIA with downside target areas at MYR2.19 & MYR2.01.
Click here for full report »
Other Local News
MSM: Plans global expansion. MSM Malaysia Holdings Bhd, the countrys largest refined sugar maker, aims to be one of the worlds top three producers by 2016. MSM president and chief executive officer Datuk Dr Sheikh Awab Sheikh Abod said the firm is on an expansion drive and wants to do it fast via mergers and acquisitions. If it materialises, MSM will produce some 13m tonnes of refined sugar per year, from 1.25 tonnes at present. MSM is the sugar arm of Felda Global Ventures Holdings Bhd (FGV) and it has a war chest of some MYR650m. (Source: Business Times)

Scomi: Powers Brazil monorail project. Scomi Engineering Bhd
s monorail technology will power the So Paulo Line 18 project in Brazil, which is scheduled to begin early, next year, says its chief executive officer Kanesan Veluppillai. He said it would function as the technology provider to Consorcio ABC Integrado, which was awarded the Public Private Partnership project for a concession period of 25 years. Scomi Engineering would provide services in design of rolling stock and track switches, supply of vehicle management system and bogies as well as system integration. The Line 18 project spans 14.35km. (Source: The Star)

Notion VTec: Close to securing deals. Precision parts maker Notion Vtec Bhd is close to clinching two to three deals from Japanese and South Korean firms to manufacture smartphone components, which could bring in MYR40m to MYR50m in annual revenue, said its executive chairman Thoo Chow Fah. While the deals would start contributing to the group
s bottom line late next year, Thoo declined to name the firms involved. However, the results will be known in a few weeks time and an announcement is expected to be made soon. (Source: The Edge Financial Daily)

Property: TREC expected to be completed by end-2015. TREC, a MYR152m lifestyle and entertainment development at Jalan Tun Razak here, is expected to be completed by the end of next year. The project is developed by Avant City Sdn Bhd, a company 35%-owned by Modern Falcon Sdn Bhd, which is led by Cher Ng, the founder and managing director of TREC. The seven-acre lifestyle and entertainment hub located across the Tun Razak will be similar to Hong Kong
s Lan Kwai Fong, Chinas Xin Tian Di in Shanghai and Singapores Clark Quay. It will be built on land owned by the Royal Selangor Golf Club that has lease tenure of 34 years. According to Ng, a 70% tenant mix had been secured so far and the company is still actively courting other tenants. (Source: The Star)

Infrastructure: MYR400m KTM tender in the works. A tender to help refurbish a Keretapi Tanah Melayu Bhd (KTMB) railway line for about MYR400m may be called this year. It is understood that the Economic Planning Unit under the Prime Minister
s Department has approved a plan to refurbish 13 stations and 300km of tracks between Gemas, Negri Sembilan, and Gua Musang, Kelantan. Transport Ministry sources said around MYR30m will be allocated to fund critical works during the refurbishment. The Land Public Transport Commission (SPAD) has requested KTMB to stop operating the line, effective June 27, to make way for the refurbishment. KTMB, however, submitted a proposal to delay it to August 15, which is after the Hari Raya celebrations. (Source: Business Times)
Outside Malaysia
U.S: Broad-based sales gain in June points to stronger growth. The 0.2% MoM gain in purchases followed a 0.5% MoM advance in May that was larger than previously reported, Commerce Department figures showed. While the increase was less than projected, due to an unexpected decline in auto sales, demand climbed in nine of 13 major retail categories. (Source: Bloomberg)

Germany: ZEW investor confidence in July declines for seventh month as slower growth and geopolitical risks weighed on the outlook for Europe's largest economy. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 27.1 from 29.8 in June. The gauge has dropped every month since reaching a seven-year high in December. (Source: Bloomberg)

U.K: Inflation accelerates more than forecast in June; fueling speculation the Bank of England could raise interest rates within months. Consumer prices rose 1.9% YoY, up from 1.5% YoY in May, the Office for National Statistics said. Upward pressure came mainly from clothing, food and air travel. (Source: Bloomberg)

India: CPI lowest in 2-1/2 years as monsoon poses price risk. Consumer prices rose 7.31% YoY in June, compared with 8.28% YoY in May, the Statistics Ministry in New Delhi said. That's the slowest pace since the index was created. The wholesale-price index moderated to 5.43 % YoY after a 6.01% YoY gain in May, the Commerce Ministry separately reported. (Source: Bloomberg)
   
Key Indices
Value
YTD (%)
Daily (%)
KLCI
1,884.9
1.0
0.0
JCI
5,070.8
18.6
1.0
STI
3,291.4
3.9
0.0
SET
1,524.5
17.4
(0.3)
HSI
23,460.0
0.7
0.5
KOSPI
2,012.7
0.1
0.9
TWSE
9,569.2
11.1
0.5




DJIA
17,060.7
2.9
0.0
S&P
1,973.3
6.8
(0.2)
FTSE
6,710.5
(0.6)
(0.5)




MYR/USD
3.2
(2.6)
0.2
CPO (1mth)
2,375.0
(9.6)
0.0
Crude Oil (1mth)
100.0
1.6
(0.9)
Gold
1,294.1
7.7
(1.0)












TOP STOCK PICKS



Buy rated large caps

Price
Target
Tenaga

12.50
14.00
Axiata

6.91
7.60
Sime Darby

9.63
10.30
Genting Msia

4.24
4.70
Gamuda

4.24
5.30
UMW O&G

4.18
5.15
AFG

5.10
5.50
MPHB Capital

2.23
2.42
Perdana Petroleum

1.85
2.55










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