Malaysia Daily, Maybank KE (2014-08-12)

Daily 12 August 2014 COMPANY UPDATE Mah Sing Group: Upgrade to Buy Stronger into affordable housing  Shariah-compliant Positive on MSGB's latest land purchase in Negeri Sembilan. The new landbank enhances our RNAV/shr est. by +23sen; it will start contributing to earnings from 2H16 onwards. Upgrade to BUY with a higher TP of MYR2.72 (+18sen) on unchanged 0.79x P/RNAV target (MYR3.44 RNAV [+23sen]). Click here for full report » Petronas Gas: Maintain Hold All is well  Shariah-compliant No new negatives from PTG's 2Q14 results call; expect stable earnings going forward. Recent share price correction was likely tactical, but valuations are not yet compelling. Maintain HOLD, TP unchanged at MYR23.50. Click here for full report » Kuala Lumpur Kepong: Maintain Hold Buys a small downstream player  Shariah-compliant KLK's acquisition of a global supplier of surfactants for EUR16m (or ~MYR70m) cash is long-term positive. Expect muted earnings impact relative to KLK�s MYR11.7b asset size and MYR0.9b net profit in FY13. Maintain HOLD with an unchanged TP of MYR24.00. Click here for full report » TSH Resources: Maintain Hold Proposes a 1-for-2 bonus issue  Shariah-compliant Bonus issue will lift share base by 50%, to c.1.35m shares. This will improve its trading liquidity and affordability. Earnings unchanged. Maintain HOLD at MYR3.40 TP. Click here for full report » TIME dotCom: Maintain Hold Another Trans-Pacific cable  Shariah-compliant Participation in the FASTER cable would raise TDC's trans-pacific bandwidth capacity (presently through Unity cable). Management still views the trans-pacific route as being lucrative; FASTER would also allow TDC the ability to offer redundancy services. Muted earnings impact; maintain HOLD, MYR5.00 TP. Click here for full report » RESULTS REVIEW Alliance Financial Group: Maintain Buy Expect better NIMs ahead 1QFY15 core net profit within expectations at 24% of our full-year forecast and consensus. Expect earnings to gather pace on better NIMs and cost control. BUY, with an unchanged MYR5.50 TP; 4.7% dividend yield. Click here for full report » Petronas Chemical Group: Maintain Hold 2Q14 below expectations  Shariah-compliant 2Q14 core PATAMI of MYR555m (-42% YoY, -26% QoQ) was below expectations; our FY15 earnings cut by 12%. Plant utilization rates to pick up in absence of major maintenance, ASP to be higher YoY in 2H14. Maintain HOLD. Rollover to FY15 as base year and raise target price marginally to MYR6.90 (from MYR6.85). Click here for full report » KLCC Property: Maintain Hold No earnings surprises  Shariah-compliant 1H14 core net profit of MYR335m (+67% YoY) was in line. Unit price would continue to be supported by strong demand from the Shariah/FBMKLCI Index funds. Maintain earnings but raise TP to MYR6.49 (+4%). KLCCP is fairly priced at 5% yield (net) vs. industry�s 6%. HOLD. Click here for full report » Sunway REIT: Maintain Hold Above expectations FY6/14 core net profit of MYR232m (+6% YoY) beat our expectations. NPI margin to be better in coming quarters on higher service charge and potential reversal of assessment charges. DCF-based TP raised to MYR1.42 (+17sen). Maintain HOLD. Click here for full report » REGIONAL SECTOR UPDATE Regional Plantations: Maintain Neutral Limited CPO price downside MPOB's July 2014 stockpile was marginally higher MoM mainly due to seasonally higher July production. We believe there is limited downside to current CPO price as we anticipate stronger demand from the energy sector. It is important for stockpile to stay below 2m MT level for the rest of 2014. Maintain our 12M NEUTRAL view. Click here for full report » ECONOMICS Industrial Production, June 2014 Another knock-out quarter Industrial production growth hit an 11-month high of +7.0% YoY in June 2014 (revised May 2014: +5.9% YoY). It expanded +5.9% YoY in 2Q 2014 (1Q 2014: +4.7% YoY). Consequently, 2Q 2014 real GDP growth is likely to sustain the momentum in 1Q 2014. Click here for full report » Manufacturing Sales June 2014 Slowing growth but fundamentals intact Manufacturing sales growth in June 2014 slowed for the fourth consecutive months to an eight month low. Likely to have been affected by exporters being hit by translation losses as MYR appreciated. Underlying growth trend remains positive as per the sector's employment situation. Click here for full report » Technicals Not out of the bear woods yet The FBMKLCI rose 9.45 points to 1,849.32 yesterday, while the FBMEMAS and FBM100 also closed higher by 60.91 points and 57.02 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Short-Term Buy call on KSL with upside target areas at MYR3.23 & MYR3.52. Stop loss is at MYR2.83. Click here for full report » Other Local News Mah Sing: Plans MYR7.5b township. Mah Sing Group, the country�s second-largest property developer by sales value, plans to develop a gated-and-guarded township with a potential gross development value (GDV) of MYR7.5b on a 960-acre (388.5ha) tract of prime freehold land in Seremban, Negeri Sembilan. The proposed township will be its biggest project in the south of the Klang Valley. (Source: The Edge Financial Daily) Berjaya Corp: Sells land in Selangor for MYR743m. Berjaya Corp (BCorp) is disposing of 15 parcels of land totaling 10,726.17 acres (4,047ha) together with a palm oil mill in Selangor to Tagar Properties Sdn Bhd for MYR743m or MYR70,000 per acre cash. The proceeds will be used to repay borrowings and as working capital. Tagar Properties is a private limited company principally involved in forest plantation with an authorized share capital of MYR400,000. The land, located near Rawang and Kuala Selangor and just off the west side of the North-South Highway, has been mostly used to cultivate oil palm. (Source: The Edge Financial Daily) Taliworks: EPF buys 32% stake in Cheras-Kajang Highway from Taliworks. The Employee Provident Fund (EPF) is acquiring from Taliworks Corp a 31.85% indirect stake in Cerah Sama Sdn Bhd, which owns Grand Saga Sdn Bhd � the concession holder of the 11.5km Cheras-Kajang Highway for MYR68.68m cash. This will reduce Taliworks� stake in Cerah Sama from 55% to 23.15%. Taliworks� original cost of investment of 55% of Cerah Sama in 2007 was MYR55m. (Source: The Edge Financial Daily) Bintai Linden: Gets MYR176m Singapore project. Bintai Kinden Corp (BKCB) has clinched subcontracts worth SGD68.8m (MYR176m) from Singaporean firm Greatearth Construction Pte Ltd. One subcontract involves a proposed construction of a 19-storey block at the Lee Kong Chiam School of Medicine in Mandalay Road in Singapore. The project is valued at SGD44.65m. The other contract, worth SGD24.15m, involves the construction of a seven-storey school of medicine building with a link to the existing school of biological sciences building at the Nanyang Technological University in Nanyang Drive. (Source: The Edge Financial Daily) Outside Malaysia Greece: Recession exit hopes seen stumbling on Russia. "The estimated total cost of Russian counter-sanctions for the Greek economy may look tolerable, but the impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy," said Thanos Dokos, director-general of the Hellenic Foundation for European and Foreign Policy, a Greek think-tank. "It also raises questions about energy security in the coming autumn and winter." (Source: Bloomberg) Singapore: Economy unexpectedly expanded in 2Q 2014 amid recoveries in advanced countries and a government plan to boost productivity and attract new industries. Gross domestic product rose an annualized 0.1% in the three months through June from the previous quarter, when it climbed a revised 1.8%, the trade ministry said in a statement. That compares with a July estimate of a 0.8% contraction. (Source: Bloomberg) Indonesia: May consider cutting public stakes in banks and imposing lending quotas in an effort to channel more credit to industrial companies, as policy makers prepare reform proposals for incoming President Joko Widodo. Financial regulators and economic officials from the current administration will meet next week to forge a set of plans to address persistently high domestic borrowing costs and insufficient lending going to manufacturers, according to Edi Prio Pambudi, an assistant deputy minister at the Coordinating Ministry for Economic Affairs. He said quotas and privatizing state-owned banks are among the scenarios under discussion. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,849.3 (0.9) 0.5 JCI 5,113.2 19.6 1.2 STI 3,306.5 4.4 0.5 SET 1,520.3 17.1 0.0 HSI 24,646.0 5.7 1.3 KOSPI 2,039.4 1.4 0.4 TWSE 9,172.9 6.5 1.0 DJIA 16,570.0 (0.0) 0.1 S&P 1,936.9 4.8 0.3 FTSE 6,632.8 (1.7) 1.0 MYR/USD 3.2 (2.4) (0.4) CPO (1mth) 2,230.0 (15.1) (2.7) Crude Oil (1mth) 98.1 (0.3) 0.4 Gold 1,308.5 8.9 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.06 14.00 Axiata 6.96 7.60 Sime Darby 9.51 10.30 Genting Msia 4.31 4.70 Gamuda 4.31 5.30 UMW O&G 4.05 5.15 AFG 4.88 5.50 Perdana Petroleum 1.87 2.55 Hock Seng Lee 1.94 2.25