Malaysia Daily, Maybank KE (2014-08-25)

Daily 25 August 2014 RESULTS REVIEW AMMB Holdings: Downgrade to Hold A weak start to the financial year 1QFY15 core net profit of MYR329m (-10% YoY) was just 17% of our full-year forecast and consensus. Lowering our FY15-FY17 net profits by 13-14% on lower loans growth and NIMs, higher credit charge assumptions. Downgrade to HOLD with a reduced TP of MYR7.70 (from MYR8.50) on lower CY14 P/BV of 1.7x (previously 1.8x). Click here for full report » Tan Chong Motor: Downgrade to Sell Disheartening 1H14; cut to SELL  Shariah-compliant 1H14 core net profit of MYR54m made up just 28%/21% of our/consensus initial full-year forecasts. Cut FY14/15/16 earnings forecasts by 43%/24%/24% on lower vehicle sales and EBITDA margin assumptions. Downgrade to SELL; TP lowered by 24% to MYR4.00 (unchanged 12x FY15 PER). Click here for full report » TIME dotCom: Maintain Hold Back on track  Shariah-compliant 1H14 net profit was in line with our expectation at 46% of our full-year forecast. TDC's favourable thematics have, to a large extent, been priced in following the stock�s 36% YTD rally. Maintain HOLD, TP unchanged at MYR5.00. Click here for full report » SPECIAL FEATURE IFCA MSC: Not Rated At the cusp of a significant rerating  Shariah-compliant A GST play, to benefit from the property industry spanning upgrades for GST. Massive jump in earnings expected; IFCA is ready to reward shareholders. We value IFCA at MYR0.42, based on 14.5x FY15 PER. The stock is an under-researched gem. Click here for full report » COMPANY UPDATE WCT Holdings: Downgrade to Hold When the going gets tougher�  Shariah-compliant WCT is cutting its FY14 property sales target of MYR1.2b. We lower our earnings forecasts to reflect lower property sales and margin assumptions. Our new SOP-based TP is MYR2.30 (-11%) after revising our property RNAV; we downgrade WCT to HOLD (from BUY). Click here for full report » UMW Holdings: Maintain Buy Wins MYR200m Myanmar contract  Shariah-compliant UMWH's new contract to supply Komatsu heavy equipment to the jade-mining industry in Myanmar is positive. We maintain our earnings forecasts which have imputed contract wins. Maintain BUY with an unchanged MYR13.82 SOTP-based TP. Click here for full report » Guinness Anchor: Maintain Hold Still a cloudy outlook Outlook is cloudy due to on-going rationalisation of subsidies which would continue to affect consumer sentiment. New products will be launched to drive growth. We keep our recommendation and DCF-based TP unchanged. Click here for full report » Technicals Stalling rebound? The FBM KLCI rose 6.68 points WoW to close at 1,870.99, as market nibbling activities led the index up after the previous fortnight's sell-off. Volume rose from 2.99b to a record 7.67b shares last week. The index consolidated in a range of 801 to 936 from Oct 2008 to Apr 2009, but broke above 936.63 (Wave a/B) in Apr 2009. Its Wave b/B low was 836.51. We traced out a Wave C/B (of the Flat 3-3-5 variety) rebound phase, and the current extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low to 1,896.23 (its 8 July 2014 peak) with obvious bearish divergence signals. After its most recent swing low of 1,802.88, heavy liquidation activities below 1,896.23 caused the index to fall to its recent low of 1,837.28. Click here for full report » Other Local News Infrastructure: HSR for 70pc less. A group of local companies says it can build the high-speed rail (HSR) link from Kuala Lumpur to Johor Baru for about 70% less that the current estimate. Group plans to use KTMB infrastructure and integrate system with EDTP, sources say. (Source: Business Times) Felda: Felda needs to become an economic powerhouse. The Federal Land Development Authority needs to take steps to become an economic power house in its efforts to generate higher profit for the settlers, said Prime Minister Datuk Seri Najib Razak. (Source: The Edge Financial Daily). MAS: About 200 MAS crew members have resigned. Notably, after the double airline tragedies. Malaysia Airline System Employees Union (Maseu) secretary general Abdul Malek Ariff said they were down to only about 3,000 cabin crew staff now. (Source: The Edge Financial Daily) External reserves as of 15 August 2014 amounted to MYR422.7b or USD131.6b - equivalent to 8.9 months of retained imports and 1.2 times of the country's short-term external debt. This was down from MYR423.5b or USD131.8b at end-July 2014. Amid sustained trade and current account surplus, net capital flows is the prime suspect for the drop in reserves, especially as MYR weakened against the US Dollar to as low as 3.20-3.21 during the first half of August versus July's high of 3.1675. Latest data also showed foreigners have been net sellers of Malaysian equities and bonds. In July 2014, foreigners turned net sellers of Malaysian equities (-MYR 0.3b) from net buyers in June 2014 (+MYR 0.5b). Debt securities holding by foreigners fell to MYR248.2b in June 2014 versus MYR249.5b in May 2014. Overall, the figures on external reserves, MYR trend and foreign trade in Malaysian equities and Malaysian debt securities point to volatility in the capital markets, hence capital flows. Outside Malaysia U.S: Jackson Hole theme is labor markets can�t take higher rates. Global central bankers led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before their economies can weather higher interest rates. Even as they signaled international monetary policies are set to diverge as economic recoveries increasingly differ, officials meeting over the weekend in Jackson Hole, Wyoming, placed jobs at the center of their decision making by saying stronger hiring and wages are still needed to drive demand. (Source: Bloomberg) Canada: Inflation rate slows in July as gasoline prices fall. Canada's inflation rate slowed for the first time in five months in July, supporting policy maker views that recent price pressures were temporary and didn't reflect tightening slack in the economy. Annual consumer price inflation slowed to 2.1% YoY in July following June's 2.4% YoY pace, which was the highest in two years. The core rate, which excludes more volatile items such as gasoline, also slowed. (Source: Bloomberg) ECB: Ready to act as Draghi sees inflation expectations slide. Mario Draghi said inflation expectations have deteriorated across the euro area and signaled policy makers are ready to add fresh monetary stimulus. In his strongest indication yet that officials aren't finished with measures to stave off a Japan-style stagnation, the European Central Bank president told his international counterparts in Jackson Hole, Wyoming, that investor bets on euro-area inflation have "exhibited significant declines at all horizons" in August. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,871.0 0.2 (0.2) JCI 5,198.9 21.6 (0.1) STI 3,325.5 5.0 0.0 SET 1,557.0 19.9 0.4 HSI 25,112.2 7.7 0.5 KOSPI 2,056.7 2.3 0.6 TWSE 9,380.1 8.9 1.4 DJIA 17,001.2 2.6 (0.2) S&P 1,988.4 7.6 (0.2) FTSE 6,775.3 0.4 (0.0) MYR/USD 3.2 (3.4) (0.2) CPO (1mth) 2,021.0 (23.1) (1.7) Crude Oil (1mth) 93.7 (4.8) (0.3) Gold 1,281.0 6.6 (0.0) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.50 14.00 Axiata 6.95 7.60 Sime Darby 9.49 10.30 Genting Msia 4.44 4.70 Gamuda 4.44 5.30 UMW O&G 4.05 5.15 AFG 5.03 5.50 Perdana Petroleum 1.82 2.55 Hock Seng Lee 1.97 2.25