Malaysia Daily, Maybank KE (2014-08-07)

Daily 07 August 2014 SECTOR UPDATE MY Banking Sector: Maintain Neutral Merger stirs some interest Foreign investors we met in Singapore and Hong Kong mainly sidelined Malaysian banks. Recent CIMB-RHB-MBSB merger stirred some interest, as has ownership liberalisation in the Philippines. Remain sector Neutral. OSK and MBSB are our preferred exposure to the CIMB merger. AFG still our top pick. Click here for full report » RESULTS REVIEW MISC Bhd: Maintain Buy Financial muscle for growth  Shariah-compliant Seasonally weaker 2Q results within expectations. Stronger war chest for its forte LNG business. Maintain BUY and MYR7.20 SOP-TP. Click here for full report » ECONOMICS External Trade, June 2014 Lost in translations...? Export and import growth slowed in June 2014. But external trade growth accelerated in 2Q 2014. No change in our full-year forecasts, which implies moderating trade growth after the strong showing YTD. Click here for full report » Technicals Index may re-test 1,860 soon The FBMKLCI fell 6.77 points to 1,869.92 yesterday, while the FBMEMAS and FBM100 also lost 36.68 points and 34.16 points, respectively. We recommend a �Take Profit� stance for the index. Trading idea is a Take Profit call on DAIMAN with downside target areas at MYR3.44 & MYR3.31. Click here for full report » Other Local News Axiata: China Mobile holds talks on Axiata stake purchase. Sources say China Mobile Ltd has held talks about purchasing a minority stake in Axiata Group Bhd, Malaysia�s largest wireless carrier by market value. The Beijing-based company asked to buy about 20% of Axiata, a stake worth USD3.7b (MYR11.8b) based on yesterday�s closing price. No agreement was reached as Axiata and its largest shareholder, Khazanah Nasional, are unwilling to sell that much stock and consider the indicated offer price too lower, they added. (Source: The Edge Financial Daily) Ivory Prop: Cancels Plaza Rakyat buy. Ivory Place Sdn Bhd, a 65%-owned unit of Ivory Properties Group Bhd (Ivory Prop) has terminated its conditional acquisition and rehabilitation agreement (ARA) with Plaza Rakyat Sdn Bhd (PRSB). Ivory Prop said both parties had not been able to come to an agreement to extend the conditional period of the ARA. In September 2013, Ivory Place signed the ARA with Plaza Rakyat to acquire the development rights from the latter for the 15.3-acre (6.15ha) parcel in Jalan Pudu for MYR400m. (Source: The Edge Financial Daily) MBM: MBM unit to be Iveco distributer. MBM Resources, via its unit, F.A. Trucks Sdn Bhd, will be the authorised distributor for Iveco vehicles and Iveco genuine spare parts in Malaysia. MBM, which signed a distributorship agreement with Iveco S.p.A, said the deal enables the group to expand its motor trading division, broaden its revenue base and complement its existing operations. MBM said in a filing that it expects a positive contribution from the Iveco distributorship to its earnings in the coming years. (Source: Business Times) Boustead: Boustead Holdings acquires PFCE to expand presence in O&G sector. Boustead Holdings (BHB) announced it had entered into a conditional share sale agreement (SSA) with shareholders of PFC Engineering Sdn Bhd (PFCE) to buy eight million shares in PFCE for MYR20m cash. PFCE is principally involved in the provision of project engineering services specializing in engineering, procurement, construction and commissioning services, facilities maintenance services and the trading of oil and gas industry-related mechanical parts and equipment for both onshore and offshore facilities. (Source: The Edge Financial Daily) High-5: Regulation plan rejected. The ray of hope for High-5 Conglomerate to turn around seems to have been dashed by Bursa Malaysia, which has rejected its proposed regularization plan. Consequently, the bread producer may be delisted should it fail to appeal against Bursa�s decision by Sept 5. High-5 said Bursa had rejected the proposal on the grounds that the company and its principal adviser Inter-Pacific Securities Sdn Bhd had not satisfactorily addressed the regulator�s concerns about the ability of the revised regularization plan to resolve all problems. The trading of High-5 shares will be suspended from Aug 14 and the company faces a possible delisting on Sept 10. (Source: The Edge Financial Daily) Outside Malaysia U.S: Trade gap shrinks as imports retreat from record. The gap shrank 7% to USD 41.5b, the smallest since January, from May's USD 44.7b, Commerce Department figures showed. The drop in purchases of foreign goods from the highest levels on record included declines in autos, cellular phones and the lowest petroleum imports in more than three years. (Source: Bloomberg) E.U: Italy recession as German orders fall shows strain. Italy unexpectedly returned to recession and German factory orders dropped the most since 2011 as slowing global growth and rising tensions with Russia over Ukraine threaten the euro area�s recovery. Italy's economy shrank 0.2% QoQ in the second quarter after contracting 0.1% QoQ in the previous three months. German orders slid 3.2% MoM in June from May. (Source: Bloomberg) U.K: Industrial production rose less than forecast in June and the output estimate for the second quarter was revised lower. Production increased 0.3% from May, when it fell 0.6%, the Office for National Statistics said. Output in the second quarter rose 0.3%, below the 0.4% estimate published in last month's gross domestic product data. (Source: Bloomberg) U.K: House prices rose the fastest in almost eight years in the three months through July, as the strengthening economy and increasing confidence bolstered demand, according to Halifax. Values jumped 3.6% compared with the previous three months to an average GBP 186,322 (USD 314,195), the Lloyds Banking Group Plc mortgage unit said. From June, prices rose 1.4%. (Source: Bloomberg) Thailand: Kept its key interest rate unchanged for a third straight meeting as spending and consumer confidence improved after a military coup ended months of political unrest. The Bank of Thailand held its one-day bond repurchase rate at 2%, with monetary policy committee members voting unanimously in favor of the decision, it said in Bangkok. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,869.9 0.2 (0.4) JCI 5,058.2 18.3 (1.0) STI 3,320.2 4.8 (0.2) SET 1,522.4 17.2 (0.4) HSI 24,584.1 5.5 (0.3) KOSPI 2,060.7 2.5 (0.3) TWSE 9,144.0 6.2 0.0 DJIA 16,443.3 (0.8) 0.1 S&P 1,920.2 3.9 0.0 FTSE 6,636.2 (1.7) (0.7) MYR/USD 3.2 (2.3) 0.4 CPO (1mth) 2,318.0 (11.8) (0.4) Crude Oil (1mth) 96.9 (1.5) (0.5) Gold 1,305.9 8.7 1.3 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.30 14.00 Axiata 6.95 7.60 Sime Darby 9.48 10.30 Genting Msia 4.28 4.70 Gamuda 4.28 5.30 UMW O&G 3.99 5.15 AFG 4.95 5.50 Perdana Petroleum 1.87 2.55 Hock Seng Lee 1.88 2.25