Malaysia Daily, Maybank KE (2014-07-22)

Daily 22 July 2014 SECTOR UPDATE MY Construction,O&G: Maintain Overweight From Construction to O&G Construction-based Muhibbah and KKB are on track to win several O&G related projects, a major re-rating catalyst. Maiden O&G contracts would give them direct exposure to the booming sector, lifting earnings and allowing them to re-rate closer towards O&G�s valuations. We derive up to MYR3.90/MYR2.75 fair values for Muhibbah/ KKB, assuming O&G job wins, offering 17%/15% upside. Click here for full report » Technicals Ominous and bearish market tone The FBMKLCI declined by 4.33 points to 1,868.64 yesterday, while the FBMEMAS and FBM100 fell 20.84 points and 27.25 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on MMCCORP with downside target areas at MYR2.28 & MYR1.47. Click here for full report » Other Local News MAS: Said to present options for turnaround this week. Malaysian Airline Systems Bhd (MAS), the state-backed carrier will present turnaround plans this week to majority owner Khazanah Nasional Bhd. Plans include taking the company private or allowing it to go bankrupt and then renegotiating contracts with the workers� unions. Khazanah said last month it had time to come up with a restructuring plan as the carrier has funds to last about a year. It is expected to make a decision as soon as next month. (Source: The Edge Financial Daily) Sona: To develop O&G fields in Thailand. Sona Petroleum Bhd, a special purpose acquisition company (SPAC), is buying a 66.7% stake in Salamander Energy (Bualuang) Ltd (SEBG) for USD281.2m (MYR891.4m) cash, which gives Sona a 40% participating interest in the G4/50 and B8/38 oil and gas (O&G) blocks in Thailand. The transaction will be funded via a mix of proceeds from Sona�s initial public offering in July last year of USD141.2m and bank borrowings of about USD140m. It is expected to be completed in the fourth quarter 0f this year. (Source: The Edge Financial Daily) Uzma: Expects to maintain double-digit profit growth. Uzma Bhd expects to extend the double-digit growth in its net profit into its third year. This would be achieved from the realization of its current order book which stands at MYR1.8b. Chief executive officer Datuk Kamarul Redzuan Muhamed said the current order book would be able to sustain the group�s earnings until the end of 2017. Its bid book presently stands at MYR2.8b. (Source: The Edge Financial Daily) Gadang: Eyes 70% of PT Dewata. Gadang Holdings Bhd has announced a proposed acquisition of 70% of PT Dewata Bangun Tirta, a water treatment and supply consession, for MYR15.1m yesterday. The company said its unit, Asian Utilities Pte Ltd, which was incorporated in Singapore, has entered into a sale and purchase of shares agreement with Nanang Mohamed Sjahbudi, Thomas Luciana and Johanes Himawan for the proposed acquisition. DBT holds a 200 litres per second water treatment and supply concession in Kabupaten Gresik, near Surabaya City, Indonesia. (Source: The Edge Financial Daily) Banking: Jitters over Indonesia�s proposed banking bill. Malaysian ownership of Indonesian banks came under the spotlight again following a proposed bill that compels foreign banks to trim their interests to 40%. Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, which have majority interest in banks there, could come under pressure if the law was applied retrospectively. Maybank has an interest of about 80% in Bank Internasional Indonesia (BII), while the CIMB Group owns a 97.9% stake in CIMB Niaga. The proposed bill called for investments by foreign banks to be evaluated according to �reciprocity� or whether Indonesian banks could have similar market access to these banks� home countries. It also called for foreign banks to be locally incorporated, which would force them to ring-fence a pool of capital in Indonesia to protect customers from losses if the lender ran into trouble overseas. (Source: The Star) Outside Malaysia U.K: Asking prices for London property fell for a second month in July as an increase in the number of homes for sale softened the market for sellers, Rightmove Plc said. Prices sought in the U.K. capital fell 0.4% MoM from June to an average GBP 587,174 (USD 1m), the property-website operator said. Across England and Wales, prices fell 0.8% MoM, their first decline since December. (Source: Bloomberg) Indonesia: Election results due as Widodo leads unofficial counts. Indonesia is due to announce the winner of the closest presidential vote in a decade as unofficial tallies put Jakarta Governor Joko Widodo on course to become the first leader without ties to the Suharto era. Widodo, known as Jokowi, is leading the count against former general Prabowo Subianto after polls showed them neck-and-neck before the July 9 vote. Prabowo's team has said it�ll file a police report against the General Elections Commission, known as the KPU, for proceeding with the count after it called on July 20 for a delay and questioned the validity of the vote. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,868.6 0.1 (0.2) JCI 5,127.1 20.0 0.8 STI 3,314.3 4.6 0.1 SET 1,538.6 18.5 0.3 HSI 23,387.1 0.3 (0.3) KOSPI 2,018.5 0.4 (0.0) TWSE 9,441.0 9.6 0.4 DJIA 17,051.7 2.9 (0.3) S&P 1,973.6 6.8 (0.2) FTSE 6,728.4 (0.3) (0.3) MYR/USD 3.2 (3.1) (0.3) CPO (1mth) 2,373.0 (9.7) (0.5) Crude Oil (1mth) 104.6 6.3 1.4 Gold 1,312.5 9.2 0.1 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.30 14.00 Axiata 6.87 7.60 Sime Darby 9.65 10.30 Genting Msia 4.26 4.70 Gamuda 4.26 5.30 UMW O&G 4.10 5.15 AFG 5.05 5.50 MPHB Capital 2.23 2.42 Perdana Petroleum 1.86 2.55 Hock Seng Lee 1.94 2.25