Malaysia Daily, Maybank KE (2014-08-04)

Daily 04 August 2014 REGIONAL SECTOR UPDATE Oil & Gas: Maintain Overweight Roadshow feedback RAPID, rigs, Indonesian OSVs and build-to-stock (BTS) risk-reward were highlights during our marketing trip. South China Sea�s geopolitical risks, global capex cuts and rig oversupply were some of investors� concerns. Our key BUYs are KNM, Perdana Petroleum, Ezion and Nam Cheong. Click here for full report » Technicals Autumn selling spree The FBM KLCI tumbled 14.00 points WoW to close at 1,863.34, as some persistent selling activities led the index down in a holiday-shortened week. We advise clients to sell at the resistance areas of 1,863 to 1,896. The support levels of 1,834 and 1,860 will see very weak nibbling activities. Trading idea is a Take Profit call on PETGAS with downside target areas at MYR21.95 & MYR21.00. Click here for full report » Other Local News Banking: Exim Bank Targets to grow assets to MYR30b by 2018. Export-Import Bank of Malaysia Bhd (Exim Bank) is targeting to grow its total assets to MYR30b by 2018, said president and chief executive officer Datuk Adissadikin Ali. The company aims to achieve year-on-year growth of 30%, equivalent to total asset to gross domestic product contribution of at least 3%. The growth target is part of the bank�s five year transformation plant which kicked off last year and will last until 2018. (Source: The Edge Financial Daily) Infrastructure: MYR7.65b offer final. The Selangor government is sticking to its collective MYR7.65b takeover offer as the state's water impasse edges a step closer to closure. The federal and Selangor governments yesterday signed a heads of agreement (HoA) on the restructuring of the state's water supply and distribution industry. Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili represented the federal government, while Menteri Besar Tan Sri Khalid Ibrahim signed on behalf of Selangor. Khalid said the collective MYR7.65b offer to the state's four water concessionaires remain unchanged, adding that the federal government is due to invoke Section 114 of the Water Services Industry Act 2006 (Wasia). Once invoked, it will reduce the takeover cost of the four companies by MYR2b from the initial offer of MYR9.65b. (Source: Business Times) Property: UDA to develop Tradewinds' land bank. Government-linked property developer UDA Holdings is close to sealing a deal with Tradewinds Corp to develop part of the latter's 2,000-acre (4,942.11ha) land bank in prime locations in Peninsular Malaysia. Chairman Datuk Johari Abdul Chani said they are in the process of working out the details for the company's relisting to raise fresh capital for the development. Tradewinds' land bank is located in Johor, Selangor and Penang. (Source: The Edge Financial Daily) KNM: KNM and foreign partner put in bids worth MYR3.2b for Rapid jobs. KNM Group and its foreign partner have put in aggressive bids for the process equipment jobs at Petroliam Nasional Bhd's (Petronas) Refinery and Petrochemical Integrated Development (Rapid) project worth in excess of USD1b (MYR3.21b), sources said. It is learnt that KNM�s share in the joint venture is 33% and that the foreign partner was also a company with technical expertise in the oil and gas field. They said any possible wins would boost investors� confidence towards the local process equipment manufacturer as it works towards gaining investors interest in the company. (Source: The Star) Petronas: Petronas-backed LNG project in Queensland nearly complete. The Gladstone LNG Project in Queensland, backed by Petroliam Nasional Bhd (Petronas) is 80% complete and on track to deliver its first cargo in 2015. The project is a joint venture in which Santos Ltd owns 30%, Petronas 27.5%, Total of France 27.5% and Kogas of South Korea 15%. Once the plant becomes operational, each of its tanks will be able to store 140,000 cu m of LNG before it is exported to customers in Malaysia and South Korea. (Source: The Edge Financial Daily) Outside Malaysia U.S: Payrolls growing as more Americans search for work. The 209,000 advance in employment in July followed a 298,000 June increase that was stronger than initially reported, figures from the Labor Department showed. Unemployment climbed to 6.2% from 6.1%, while wages and hours were little changed from the prior month. (Source: Bloomberg) U.S: Manufacturing expands at fastest pace in three years. The Institute for Supply Management's index increased to 57.1, the highest since April 2011, from 55.3 a month earlier, the Tempe, Arizona-based group's report showed. Readings above 50 indicate growth. Orders and production expanded last month at the fastest pace of the year as factories responded to increased purchases of automobiles and business equipment. (Source: Bloomberg) U.K. Manufacturing cools to weakest in year after boom. A factory index slipped to 55.4 in July from a revised 57.2 in June, the London-based data provider said. An index of orders declined to 57.8 from 60.6 and a separate gauge of output also fell. Italian manufacturing grew at its slowest pace in eight months, a separate report from Markit showed. For the euro area as a whole, factory growth was little changed from a previous estimate. (Source: Bloomberg) China: Central Bank signals refrain on broad monetary easing. The People's Bank of China warned that the country's credit and money supply have increased rapidly and indicated that it will refrain from broader monetary easing to support growth. "The total debt level has been rising relatively quickly," the PBOC said in its second-quarter monetary policy report on Aug. 1. "Our existing money supply and credit are already relatively large and their growth is also high." The International Monetary Fund said last week that China's reliance on debt and investment has created "rising vulnerabilities" and that failure to change its growth pattern increases the likelihood of a sharp economic slowdown. (Source: Bloomberg) China: Services index drops to six-month low on real estate slump. The non-manufacturing Purchasing Managers' Index fell to 54.2 from 55.0 in June, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. A reading over 50 indicates expansion. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,863.30 -0.2 -0.4 JCI 5,088.80 19.1 0 STI 3,344.40 5.6 -0.9 SET 1,500.20 15.5 -0.1 HSI 24,532.40 5.3 -0.9 KOSPI 2,073.10 3.1 -0.1 TWSE 9,266.50 7.6 -0.5 DJIA 16,493.40 -0.5 -0.4 S&P 1,925.20 4.2 -0.3 FTSE 6,679.20 -1 -0.8 MYR/USD 3.2 -1.9 0.5 CPO (1mth) 2,357.00 -10.3 1.2 Crude Oil (1mth) 97.9 -0.5 -0.3 Gold 1,293.80 7.7 0.9 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.4 14 Axiata 6.94 7.6 Sime Darby 9.55 10.3 Genting Msia 4.27 4.7 Gamuda 4.27 5.3 UMW O&G 4.04 5.15 AFG 4.88 5.5 MPHB Capital 2.45 2.54 Perdana Petroleum 1.87 2.55 Hock Seng Lee 1.9 2.25