Malaysia Daily, Maybank KE (2014-07-24)

Daily 24 July 2014 COMPANY UPDATE Hartalega: Upgrade to Buy Transitioning to higher growth; U/G to BUY  Shariah-compliant Capacity expansion on track; positive that existing customers have indicated full take-up for the new capacity. Strong earnings growth in FY3/16 now more plausible; we forecast +29% YoY (unchanged). Upgrade to BUY with a higher MYR7.30 TP. Click here for full report » RESULTS REVIEW Westports Holdings: Maintain Buy Waiting for tariff revision  Shariah-compliant Strong 2Q14 net profit within expectations. Expect defensive growth from the ASEAN import-export activities and EU recovery. Potential tariff revision is a key re-rating catalyst; BUY. Click here for full report » ECONOMICS Singapore CPI, Jun �14 Lower than expected at 1.8% YoY Inflation rate in Jun 2014 eased to +1.8% YoY (May 2014: +2.7% YoY), mainly on moderate increase in car prices. Core inflation rate (CPI ex-accommodation and private road transport) settled at +2.1% YoY from +2.2% YoY in May 2014. Lower our 2014 CPI forecast to +2.0% from +2.3% (1H 2014: +1.7% YoY) with domestic cost pressures to remain as main drivers for Singapore�s inflation this year. Click here for full report » Technicals Index may plunge quite soon The FBMKLCI inched up 0.47 points to 1,871.83 yesterday, while the FBMEMAS and FBM100 closed higher by 11.62 points and 7.06 points, respectively. We expect weak buying interest at the supports of 1,855 to 1,869, whilst heavy liquidation will be at the resistances of 1,871 and 1,895. Trading idea is a Take Profit call on KPS with downside target areas at MYR1.45 & MYR1.25. Click here for full report » Other Local News Boustead: Buying Pulau Indah land. Boustead Holdings (BHB) has proposed to acquire nine parcels of land totaling 69.88 acres (28.27ha) in Pulau Indah, Selangor for MYR310m which include prime sea-fronting land and the Port Klang Cruise Centre (PKCC). BHB via its unit Boustead Heavy Industries Corp Bhd (BHIC), may develop parts of the land into a fabrication yard that specializes in oil and gas (O&G) support services. Some parts of the land are strategically located alongside a 10-metre deep water frontage. (Source: The Edge Financial Daily) Berjaya Food: BFood to wholly own Starbucks franchise in Malaysia. Berjaya Food Bhd (BFood) will soon be the sole owner of the Starbucks franchise in Malaysia. BFood announced yesterday that it had entered into a conditional share purchase agreement (SPA) with Starbucks Coffee International Inc (SCI) to acquire the remaining 50% equity interest it does not own in Berjaya Starbucks Coffee Co Sdn Bhd (BStarbucks) for USD88m (MYR279m) cash. (Source: The Edge Financial Daily) Sime Darby: Completes E&O share sale agreement. The share sale agreement between Sime Darby Bhd and Datuk Terry Tham Ka Hon with regards to a 9.9% stake in the property development company, Eastern and Oriental Bhd (E&O), was completed yesterday. Tham, who is the managing director of E&O, had entered into an agreement with Sime Darby on May 29 to acquire 110m shares at MYR2.90 each in a transaction worth MYR319m. (Source: The Star) Ahmad Zaki: Wins MYR185.1m Putrajaya job. Ahmad Zaki Resources Bhd�s unit Ahmad Zaki Sdn Bhd has been awarded a MYR185.14m contract from Putrajaya Resources Sdn Bhd for the proposed construction and completion of certain buildings and infrastructure in Putrajaya. The deal includes two blocks of office buildings, retail spaces and external works on Plots Z1 and Z2. (Source: Bernama) Infrastructure: MRT Line 1 within MYR30b budget. MASS Rapid Transit Corp Sdn Bhd (MRT Corp) says the total cost to build the 51km Klang Valley MRT (KVMRT) Sungai Buloh-Kajang line or Line 1, will be within the MYR30b budget and ready for opening at the end of 2016. Chief executive officer Datuk Wira Azhar Abdul Hamid said MYR23b is the cost for systems and construction, while MYR7b includes fees for consultants and reimbursables to the project delivery partner (PDP), MMC-Gamuda KVMRT (T) Sdn Bhd. The line is now 47.6% completed and 77 out of 85 packages with a value of MYR21.1b have been awarded by MRT Corp. (Source: Business Times) O&G: Bentara field hits first oil. BC Petroluem Sdn Bhd, a joint venture of Australia�s Roc Oil Co Ltd, Dialog Group Bhd and Petronas Carigali Sdn Bhd, has achieved its first oil production from Bentara field in the Balai cluster risk service contract (RSC) area, located off Sarawak on May 25. The field is expected to produce more than 1,000 barrels of oil per day. The Bentara field is the second field in the Balai cluster, which successfully achieved oil production on Nov 6, 2013. The Balai cluster RSC covers four fields namely Balai, Bentara, Spaoh and West Acis and was awarded to BC Petroleum on Aug 16, 2011. (Source: The Edge Financial Daily) Outside Malaysia U.S: IMF says Fed may have scope to keep rates low past mid-2015. The IMF cut its U.S. growth forecast for this year to 1.7% from 2% predicted in June, citing a first-quarter contraction, after a 1.9% advance last year. The fund left its 2015 forecast at 3%, the fastest expansion since 2005. "Even with that relatively good growth outlook, we still see there's a lot of slack in the economy," Nigel Chalk, deputy director of the IMF's western hemisphere department, said on a conference call. (Source: Bloomberg) Spain: GDP expanded 0.5% QoQ in 2Q 2014 the Madrid-based Bank of Spain said in its monthly bulletin. Spanish growth accelerated in the second quarter as the euro region's fourth-largest economy is set to enter a second year of recovery from the deepest recession in the nation's democratic history. GDP rose 1.1% YoY from a year ago, the central bank said. (Source: Bloomberg) S. Korea: Growth slows more than forecast on consumption drop. GDP grew 0.6% QoQ in the April-June period from the previous quarter, the Bank of Korea said. That was the weakest pace since the first quarter last year. From a year earlier, the economy expanded 3.6% YoY. (Source: Bloomberg) Australia: Core consumer prices gained more than forecast last quarter, sending the Australian dollar to its highest in two weeks and creating a hurdle to further monetary policy easing. The trimmed mean gauge rose 0.8% QoQ from the previous quarter, the Bureau of Statistics said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,871.8 0.3 0.0 JCI 5,093.2 19.2 0.2 STI 3,340.7 5.5 0.7 SET 1,541.6 18.7 1.4 HSI 23,971.9 2.9 0.8 KOSPI 2,028.3 0.8 (0.0) TWSE 9,499.4 10.3 0.0 DJIA 17,086.6 3.1 (0.2) S&P 1,987.0 7.5 0.2 FTSE 6,798.2 0.7 0.0 MYR/USD 3.2 (3.3) (0.3) CPO (1mth) 2,342.0 (10.9) (1.0) Crude Oil (1mth) 103.1 4.8 (1.2) Gold 1,304.6 8.6 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.42 14.00 Axiata 6.89 7.60 Sime Darby 9.64 10.30 Genting Msia 4.29 4.70 Gamuda 4.29 5.30 UMW O&G 4.06 5.15 AFG 5.04 5.50 MPHB Capital 2.30 2.42 Perdana Petroleum 1.87 2.55 Hock Seng Lee 1.99 2.25