Malaysia Daily, Maybank KE (2014-08-28)

Daily 28 August 2014 RESULTS REVIEW RHB Capital: Maintain Hold Aided by lower provisions 1H14 net profit of MYR1.0b (+22% YoY) was in line at 50% of our and consensus full-year forecasts. Loans growth continues to be robust, efficiency management is a key priority. TP maintained at MYR8.70 on unchanged 2014 P/BV target of 1.2x (ROE: 11.3%). HOLD. Click here for full report » Axiata Group: Maintain Buy Stagnant Celcom  Shariah-compliant 1H14 core net profit and EBITDA were in line with both ours and consensus expectations. Celcom's service revenue has remained flat owing to "lost opportunities"; growth should resume in 2015. Uncertainty over XL's post-merger financials is clearing up, reiterate BUY on Axiata with an unchanged TP of MYR7.60 Click here for full report » Telekom Malaysia: Maintain Hold Lower DPS from normalising taxes  Shariah-compliant 1H14 net profit was below ours and consensus expectations on higher taxes; EBITDA was in line. Tax rates have normalised as per guidance, further tax incentives appear unlikely. Earnings and dividends lowered on normalisation of tax rates; maintain HOLD, with a revised TP of MYR6.55. Click here for full report » Genting Plantations: Maintain Hold Promising property sales  Shariah-compliant 2Q14 core net profit within expectations. 2014-16 EPS cut by 13%/5%/5% respectively on lower CPO ASP assumption, tax adjustments and higher biotech losses. Maintain HOLD and our sum-of-parts TP of MYR11.20. Click here for full report » UMW Holdings: Maintain Buy Impacted by taxes, non-cores  Shariah-compliant 1H14 core net profit disappointed, accounting for 40%/41% of our/consensus initial full-year forecasts. Lowering our FY14/15/16 earnings by 12%/8%/8% on higher taxes and bigger losses estimates at its non-core operations. Maintain BUY; our SOTP-based TP of MYR13.82 is unchanged. Click here for full report » Cahya Mata Sarawak: Downgrade to Hold Taking a breather  Shariah-compliant The strong set of 2Q14 results met our expectation. We raise our TP to MYR4.00 (+14%) after revising our SOP. Share price has risen 83% YTD and near term positive has been fairly priced-in. We now rate CMS a HOLD (from BUY). Click here for full report » Hock Seng Lee: Maintain Buy Construction projects took off  Shariah-compliant 2Q14 results were below estimates on slight margin shortfall. Positively, progress of its major construction projects have accelerated. Earnings and TP unchanged. Maintain BUY with MYR2.25 TP. Click here for full report » Padini: Maintain Buy FY14: Results below expectations Full year results came in at 93%/95% of our and consensus forecasts, below expectations. Store openings to drive growth but FY15/16 net profit forecasts lowered by 11%/9. Maintain BUY with a lower TP of MYR2.20 (-6%) on 14.8x FY15 PER (previously 14.8x CY14 PER). Click here for full report » Oldtown: Maintain Buy Weak 1Q on margin contraction  Shariah-compliant 1QFY3/15 results below expectations at 20% of our original full-year forecast and consensus. Preserving margins through better cost management is key to sustaining growth momentum. FY15/16 earnings cut by 10/14%. Still a decent consumer play - BUY with a lower TP of MYR2.40 (-10%). Click here for full report » KNM Group: Maintain Buy 1H on track; expect a stronger 2H  Shariah-compliant 1H's performance is on track to meet our FY forecast. Expect stronger 2H; more contract positives in the pipeline. Maintain BUY and MYR1.50 TP on 0.7x EV/backlog. Click here for full report » COMPANY UPDATE Bumi Armada: Maintain Buy Rights and private placement Rights issue priced at MYR1.35/unit to raise MYR2b. OBSB placed out up to 215m secondary shares (7.3% of share base), effectively reducing its stake to 35%. Maintain BUY; MYR4.55 SOP-TP (cum-price) under review. Click here for full report » Ann Joo Resources: Downgrade to Hold Turning cautious Share price gained 17% in 3-month on positive 1Q14 results. However, we are turning cautious on the influx of bars and wire rods import. Downgrade to HOLD with a lower TP of MYR1.36 (0.6x P/B). Click here for full report » Technicals A reversal of trend direction The FBMKLCI advanced 10.56 points to 1,872.38 yesterday, while the FBMEMAS and FBM100 also closed higher by 42.12 points and 44.56 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Short-term Buy on MMSV with upside target areas at MYR0.48 & MYR0.57. Stop loss is at MYR0.35. Click here for full report » Other Local News Auto: All geared up for global small car. Proton Holdings Bhd is ramping up its plant here, for the full-scale manufacturing of its first global small car (GSC). CEO did not elaborate on the GSC�s launch date, sales target and development cost but said it will be comparable to some of the B-segment cars in the market. (Source: Business Times) MAS: New post in revamp plan? MAS's comprehensive restructuring may involve the re-introduction of the executive chairman post, which was abolished after the era of its former boss Tan Sri Tajudin Ramli in the early 2000s. Should the post be reintroduced, the managing director post will be abolished. Also, the executive chairman will work hand-in-hand with the new CEO to steer MAS back to profitability. Meanwhile, cabinet has approved MAS�s latest revamp plan that will see up to 6,000 jobs being cut, said sources. (Source: Business Times, The Edge Financial Daily) Axiata: Not in talks with China mobile for stake sale. President and group CEO Datuk Seri Jamaludin Ibrahim mentioned that no one has approached them and that they do not need any cash or any kind of investment at Axiata level. Meanwhile, Axiata said it had no plans to divest its business in Pakistan just yet, despite the fibre optic business not being a part of Axiata's core business of mobile operation. (Source: The Star) Outside Malaysia U.S: Budget deficit narrows to smallest since 2007, CBO says. The projected shortfall will be USD506b in the 12 months ending Sept. 30, compared with an April prediction for USD 492b and a USD680b gap posted last year, the nonpartisan CBO said in a report. In 2015 it�s projected to shrink for a sixth straight year, to USD469b, capping the longest stretch of fiscal improvement since 2000, near the end of an era of surpluses. (Source: Bloomberg) France: Manufacturing confidence in August falls to lowest in 13 months, adding to signs that the economy may struggle to grow after a stagnant first half. A manufacturing-sentiment index slipped to 96, the lowest since July 2013, from 97 the previous month, the French national statistics office INSEE said in Paris. A separate business-confidence index also declined. (Source: Bloomberg) France: Appeals to investors as purged cabinet toes Hollande line. French President Francois Hollande�s new economy minister pledged to rebuild investor confidence, committing to the path of reform after the cabinet was purged of ministers who rebelled against spending cuts. Emmanuel Macron, Hollande�s former economic adviser, made his comments as he took over the economy and industry portfolios from Arnaud Montebourg. Montebourg and two other ministers were replaced after slamming the Socialist government's adherence to "absurd" austerity policies. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,872.4 0.3 0.6 JCI 5,165.2 20.8 0.4 STI 3,341.5 5.5 0.6 SET 1,564.6 20.5 0.3 HSI 24,918.8 6.9 (0.6) KOSPI 2,074.9 3.2 0.3 TWSE 9,485.6 10.2 1.0 DJIA 17,122.0 3.3 0.1 S&P 2,000.1 8.2 0.0 FTSE 6,830.7 1.2 0.1 MYR/USD 3.1 (4.0) (0.4) CPO (1mth) 1,996.0 (24.0) (1.9) Crude Oil (1mth) 93.9 (4.6) 0.0 Gold 1,285.2 7.0 (0.2) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.48 14.00 Axiata 6.94 7.60 Sime Darby 9.47 10.30 Genting Msia 4.67 4.70 Gamuda 4.67 5.30 UMW O&G 3.98 5.15 AFG 4.93 5.50 Perdana Petroleum 1.84 2.55 Hock Seng Lee 1.90 2.25