Malaysia Daily, Maybank KE (2014-08-14)

Daily 14 August 2014 RESULTS PREVIEW AirAsia: Maintain Buy 2Q14F: Earnings growth begins 2Q14 results will be released on 20th Aug. Expect core net profit of MYR157m, a growth of 44% YoY. Yields have stabilised and unit cost has reduced due to lower fuel prices in the period. Maintain BUY with an unchanged target price of MYR2.65 pending an analyst briefing post the results announcement. Click here for full report » AirAsia X: Downgrade Sell 2Q14F: Test of faith 2Q14 results will be released on 19th Aug. Expect core net loss of MYR133m (+434% YoY, +120% QoQ). Lower load factor, weak yields, and higher unit cost were the main culprits. Take profit with a lower MYR0.72 TP (from MYR0.79); 2Q14 losses will stretch Company�s capital structure. Click here for full report » RESULTS REVIEW Perisai Petroleum: Maintain Buy Remodelling in motion  Shariah-compliant Subdued 2Q results are expected; we cut 2014 earnings by 50% on longer immobilisation of its E3 vessel up to end-2015. Focus on 2015-16 as it remodels its business and improves charter visibility for E3 and MOPU. Maintain BUY and MYR1.76 TP, pegged to 14x FY15 PER. Click here for full report » Regional - Cebu Pacific: Maintain Buy Come and join the party 2Q14 core net profit was above than ours and consensus. Yields have soared by 11.8% YoY to PHP3.11/RPK whilst unit cost gained a modest 1.2% YoY to PHP2.44/ASK. Maintain BUY. Expect a positive revision to our target price of PHP62.5/share, pending analyst briefing later today. Click here for full report » Regional - Cathay Pacific: maintain Sell 1H14 in line, challenges persist 1H14 core profit of HKD359m (+14.7% YoY) was within expectations. Management guides 2H14 will be better than 2H13, buoyed by better cost efficiency and higher load factor. Maintain SELL. No change to our earnings forecasts and HKD13.50 target price. Click here for full report » Regional - Bumitama Agri: Maintain Buy Long-term value proposition Maintain BUY and TP of SGD1.38, at 16x FY15E P/E, implying just 0.7x PEG. Catalyst: 21% FFB output CAGR over 2013-16 which is among the highest in the industry. 2Q14 net profit exceeded market and our expectations on higher-than-expected FFB output and ASPs. Continues to guide for 25% FFB growth for 2014. Click here for full report » Regional - First Resources: Maintain Buy Look forward to better 2H Maintain BUY with a revised TP of SGD2.43 on 15x FY15E P/E after cutting our FY14E-16E EPS by 15%/9%/7%. 2Q results were below our and market expectations on low nucleus FFB output, higher tax expenses and higher costs. We expect better 2H earnings on seasonally higher FFB output, lower costs, and stronger biodiesel contribution. Click here for full report » COMPANY UPDATE Nestle Malaysia: Maintain Hold 2H14 earnings to catch up  Shariah-compliant Lifted product prices should allow Nestle to play catch-up in 2H14. Maintenance and A&P costs to be more evenly incurred rather than being seasonally skewed towards year end. Maintain HOLD with an unchanged DCF-based TP of MYR64. Click here for full report » Technicals Rebound may be gaining momentum The FBMKLCI rose 7.65 points to 1,858.04 yesterday, while the FBMEMAS and FBM100 also closed higher by 54.44 points and 51.69 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Short-Term Buy on IBHD with upside target areas at MYR2.25 & MYR2.40. Stop loss is at MYR1.79. Click here for full report » Other Local News CIMB: Nazir upbeat on merger with RHBcap, MBSB. On concerns raised by shareholders, Nazir said to wait for the proposal before taking a position. On the other hand, although there is less attention on expansion plans in markets like the Philippines, Nazir mentioned that it will still go on. Meanwhile, he said the banking industry expects loans growth to grow at a slower 8-9% pace. (Source: Business Times) Gamuda: RAM Rating sees Gamuda debt load rising as projects increase. RAM expects Gamuda�s debt load to increase substantially over the next three years as it would need to finance its property and construction operations. However, its balance sheet is envisaged to remain healthy with gearing of about 0.6 times and adequate funds from operations (FFO) debt coverage of between 0.15 and 0.18 times, it said, adding this was before taking into consideration the effects from the sale of SPLASH. (Source: The Star) Uzma: Eyes O&G solution services contracts. Uzma�s unit Uzma Engineering Sdn Bhd (UESB) has teamed up with information management firm Smart Core Technologies Sdn Bhd (STSB) to provide integrated solution services in the O&G sector. UESB will form a JV with STSB, (60:40). UESB will be responsible for business development and marketing support while STSB will provide the technical know-how. (Source: The Edge Financial Daily) Oil & Gas: Petronas reports stronger performance. It recorded higher sales and production. Q2FY14 net profit rose 38% to MYR21.1b, but the group has issued a profit warning for the next six months due to potentially weaker crude oil prices in the second half. (Source: Business Times) Automotive: Perodua Axia open for bookings at 180 outlets. Perodua Axia is the first energy-efficient vehicle to be launched after the National Automotive Policy (NAP) 2014. It has a tentative starting price of MYR24,900. Axia is the next-generation Perodua model that is produced via the company�s modern and ecologically-friendly new manufacturing plant. Among the key features of the plant include a water-based paint formula, which is less abrasive compared with the solvent-based paints it currently uses. The high level of automation also improves quality while at the same time reduces cost. (Source: Business Times) Outside Malaysia U.S: Retail sales little changed in July as wages lag behind. Purchases were little changed, the weakest performance in six months, after a 0.2% MoM advance in June, the Commerce Department said. Gains in sales of clothing, groceries and personal-care goods were offset by declines at department, electronics and furniture stores. (Source: Bloomberg) Spain: Consumer prices fell at the fastest pace since the depths of the credit crunch in 2009 as falling wages curbed the pricing power of retailers. Spanish prices dropped 0.4% YoY as measured by a harmonized European Union method. Prices slid 1.5% MoM on the month while core inflation, which excludes energy and fresh food prices, was flat. (Source: Bloomberg) China: Industrial output and fixed-asset investment growth unexpectedly slowed last month, putting a recovery at risk as the government copes with a property slump and rising bad loans. Factory production rose 9% YoY, the National Bureau of Statistics said, compared with June's 9.2% YoY pace. Fixed-asset investment increased 17% YoY in the January-July period and retail sales gained a less-than-projected 12.2% YoY last month. (Source: Bloomberg) China: Credit gauge plunges in July 2014. Aggregate financing was CNY 273.1b (USD 44.3b) in July, the central bank said, China's broadest measure of new credit plunged to the lowest since the global financial crisis, adding risks to growth as the government grapples with a property slump. (Source: Bloomberg) Indonesia: Ban on ore exports will remain in place under the next government as the curbs spur as much as USD 18b in investment in processing plants by 2017, said the Energy and Mineral Resources Ministry. Mostly Chinese investors are planning at least 64 facilities to process nickel, bauxite and other metals, R. Sukhyar, director general of mineral and coal, said in an interview. Investments reached USD 4.9b so far this year, said Sukhyar, who'll keep his post in the new administration. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,858.0 (0.5) 0.4 JCI 5,168.3 20.9 0.7 STI 3,301.4 4.2 (0.1) SET 1,544.6 18.9 1.6 HSI 24,890.3 6.8 0.8 KOSPI 2,062.4 2.5 1.0 TWSE 9,231.3 7.2 0.7 DJIA 16,651.8 0.5 0.6 S&P 1,946.7 5.3 0.7 FTSE 6,656.7 (1.4) 0.4 MYR/USD 3.2 (2.5) (0.0) CPO (1mth) 2,215.0 (15.7) (0.6) Crude Oil (1mth) 97.6 (0.8) 0.2 Gold 1,312.9 9.3 0.3 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.22 14.00 Axiata 6.95 7.60 Sime Darby 9.51 10.30 Genting Msia 4.37 4.70 Gamuda 4.37 5.30 UMW O&G 4.05 5.15 AFG 4.93 5.50 Perdana Petroleum 1.87 2.55 Hock Seng Lee 1.95 2.25