Malaysia Daily, Maybank KE (2014-07-17)

Daily 17 July 2014 RESULTS REVIEW Tenaga Nasional: Maintain Buy Improving operational trends  Shariah-compliant 3QFY14 core net profit of MYR1.56b was in line with our expectation; coal generation trended up QoQ. There remains no clarity from management on the execution of the fuel-cost pass-through mechanism. 2014 is the trial year (for the new tariff framework) after all, reiterate BUY with an unchanged MYR14.00 TP. Click here for full report » ECONOMICS Malaysia CPI, June 2014 Staying above -3% Inflation rate remain elevated in Jun 2014 at +3.3% YoY from +3.2% YoY posted in May 2014. Our measure of core inflation (excluding the key subsidised components of CPI) was stable at +2.1% YoY (May 2014: +2.2% YoY). Keeping our full-year inflation rate forecast of +3.5% for now (YTD 2014: 3.4% YoY), pending the timing of government's revamp on the fuel subsidy mechanism. Click here for full report » COMPANY UPDATE Public Bank: Maintain Sell To fully own VID Public Bank VPB accounts for Overseas operations make up just 7% of group earnings. Maintain SELL with an unchanged TP of MYR19.20 (FY14 P/BV of 2.7x). Click here for full report » SECTOR UPDATE Oil & Gas, Property: Key takeaways from Corporate Day The O&G drilling space and affordable housing investment themes are likely to continue to gain traction. We see cyclical growth in the O&G sector; the property space will see selective preference (KVMRT 2nd line, RRIM, M&A). We remain Overweight on the O&G sector and Neutral on the property sector. Click here for full report » Technicals Treading water at lofty levels The FBMKLCI inched up by 1.84 points to 1,886.71 yesterday, while the FBMEMAS and FBM100 rose 35.68 points and 25.02 points, respectively. We expect obvious buying interest near the supports of 1,863 to 1,882, whilst heavy profit taking will emerge at the resistances of 1,886 and 1,896. Trading idea is a Short-Term Buy on MMSV with upside target areas at MYR0.355 & MYR0.46.Stop loss is at MYR0.22. Click here for full report » Other Local News FGV: Identifying units to list. Felda Global Ventures (FGV) is in the process of identifying companies within its six business clusters that have the potential to be listed on Bursa Malaysia. The clusters are part of FGV�s new organizational structure and are divided into palm oil upstream, palm oil downstream, sugar, rubber and research and development as well as TLMO (transport, logistics, marketing and others). FGV currently has more than 15 companies under its six clusters. (Source: The Edge Financial Daily) DRB-HICOM: Uni.Asia Cap sells UAG stake. DRB-HICOM Bhd�s unit, Uni.Asia Capital Sdn Bhd (UAC), has entered into an agreement with Liberty Seguros of Spain to sell its 68.1% stake in Uni.Asia General Insurance Bhd (UAG) for MYR374.5m cash. DRB-HICOM told Bursa Malaysia yesterday that the agreement involved the sale of 68.1m ordinary shares of MYR1 each in UAG to the Spanish company. The other shareholder of UAC is United Overseas Bank (Malaysia) Bhd, which holds the remaining 49%. (Source: Business Times) Titijaya: Plans MYR2.5b project. Titijaya Land Bhd, a property developer with a market capitalization of MYR948.6m, plans to develop a mixed integrated project with a gross development value (GDV) of MYR2.5b on a piece of land located in Jalan Eaton next year. The move will mark Titijaya�s first foray into the high-end residential market in Kuala Lumpur. The proposed project, pending confirmation of an award from the relevant authorities which is expected by 3Q15, will consist of serviced apartments as well as a hotel. (Source: The Edge Financial Daily) Automotive: Perodua posts lower sales in H1. Perodua registered a lower market share of 28.4%, or 94,500 units, for the first half of the year, compared with 30.9% for the same period last year due to stiffer competition from the non-national car segment and the tightening of the financing guidelines. Following the development, the second national carmaker is revising down its 2014 sales target to 193,000 units from 197,000 units announced earlier. Perodua also estimates that the total industry volume grew by 6.2% to 332,800 for the first half, compared with 313,500 units in the same period last year. (Source: Business Times) Outside Malaysia U.S: Factory output gain provides boost to growth. A 0.2% MoM increase in output at factories, mines and utilities last month followed a revised 0.5% MoM advance in May, figures from the Federal Reserve showed. While the June gain fell short of expectations, production rose at a 5.5% annualized rate from April through June, the most since the third quarter of 2010. (Source: Bloomberg) Brazil: Holds key rate at 11% as economy risks stagflation. The central bank's board, led by its President Alexandre Tombini, held the benchmark Selic at 11%. The central bank lifted borrowing costs by 375 basis points in the year through April before halting May 28. (Source: Bloomberg) E.U: ECB says investor demand for E.U debt increased last year. The European Central Bank said improving sentiment toward the euro area fueled demand for the region's debt, even as the single currency's share in global foreign-exchange reserves declined. Foreign demand for euro-area portfolio investments increased to 3.7% of GDP in 2013 from 3% in 2012, reaching the highest level since the onset of the financial crisis, the Frankfurt-based ECB said. The capital inflows reflect an improving economic recovery and a rebalancing of investments away from emerging market securities, the central bank said. (Source: Bloomberg) U.K: Unemployment slid to the lowest in 5 1/2 years and the number of people in work rose to a record as the economic recovery strengthened. The jobless rate fell to 6.5% in the three months through May, the lowest since the fourth quarter of 2008, from 6.6% in period ending April, the Office for National Statistics said. Jobless claims, a narrower measure of unemployment, fell 36,300 in June from May, more than economists forecast. (Source: Bloomberg) Russia: U.S., EU escalates sanctions as Putin ignores ultimatum. The Obama administration, acting in concert with the European Union, imposed sanctions on Russian banks, energy companies and defense firms in the latest attempt to punish the country over Ukraine. The U.S. and EU, which say Russia is supporting the rebels in Ukraine, sought to squeeze the country's USD 2tr economy by limiting access to financing. Among the companies hit by the U.S. penalties were OAO Rosneft, Russia�s largest oil company, natural gas producer OAO Novatek, OAO Gazprombank, the country's third-largest lender, and state economic development lender Vnesheconombank, the U.S Treasury Department said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,886.7 1.1 0.1 JCI 5,113.9 19.6 0.9 STI 3,304.4 4.3 0.4 SET 1,530.4 17.8 0.4 HSI 23,523.3 0.9 0.3 KOSPI 2,013.5 0.1 0.0 TWSE 9,484.7 10.1 (0.9) DJIA 17,138.2 3.4 0.5 S&P 1,981.6 7.2 0.4 FTSE 6,784.7 0.5 1.1 MYR/USD 3.2 (2.7) (0.1) CPO (1mth) 2,378.0 (9.5) 0.1 Crude Oil (1mth) 101.2 2.8 1.2 Gold 1,299.2 8.1 0.4 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.46 14.00 Axiata 6.95 7.60 Sime Darby 9.65 10.30 Genting Msia 4.25 4.70 Gamuda 4.25 5.30 UMW O&G 4.17 5.15 AFG 5.10 5.50 MPHB Capital 2.28 2.42 Perdana Petroleum 1.85 2.55 Hock Seng Lee 1.98 2.25