Malaysia Daily, Maybank KE (2014-09-12)

Daily 12 September 2014 COMPANY UPDATE SP Setia, Sime Darby Battersea: Re-writing history BPS's demand, selling price and deliveries have exceeded our expectations. Total GDV could well be GBP10b now. Phase 1 handover targeted in June 2016 with Sime and SP Setia estimated to recognise lumpy profits of MYR263m each. Maintain BUY on Sime with unchanged TP of MYR10.20 while SP Setia is a HOLD at a higher MYR3.47 TP (+11sen). Click here for full report » RESULTS PREVIEW SP Setia: Maintain Hold 2016, the tipping point  Shariah-compliant Massive jump in FY16 earnings as contribution from Battersea Power Station comes in earlier than expected. Cut FY14/15 earnings forecasts by -27%/-6% but raise FY16 by +42%. Our TP is raised to MYR3.47 (on 0.7x P/RNAV); maintain HOLD. Potential asset injection by PNB is a catalyst. Click here for full report » ECONOMICS Industrial Production (IP), July 2014 Slow start to 2H 2014... Industrial production growth in Jul 2014 fell off a cliff to +0.5% YoY (Jun 2014: +7.0% YoY) in part due to the high base from last year. IPI data was in line with trade data signaling tapering of GDP growth after robust 1H 2014. No change to our 2014 IPI forecast for now. Global IP trends remain stable in June 2014 as near-term outlook remains positive. Click here for full report » Manufacturing Sales July 2014 Momentum continue to slow Manufacturing sales growth continued to slide in July 2014 mirroring recently released weaker export trends. High base, festive holiday season and stronger MYR may have had negative effect on manufacturing sales growth as it was only half the growth in production index. Productivity or average sales per employee rose by +2.8% MoM or +0.1% YoY (YTD 2014: 6.3%). Click here for full report » Technicals Late index and component suppression The FBMKLCI fell 4.74 points to 1,866.11 yesterday, while the FBMEMAS and FBM100 also closed lower by 17.89 points and 20.02 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Short-Term Buy on MELEWAR with upside target areas at MYR0.53 & MYR0.75. Stop loss is at MYR0.36. Click here for full report » Other Local News Aviation: Brahim's confident will not lose contract in Malaysia Airlines revamp. Brahim's Holdings is confident that the company's 70%-owned Brahim's Airline Catering Sdn Bhd will not lose its contract with Malaysia Airlines, even as its lucrative 25-year contract is being renegotiated under the airline's massive restructuring exercise. Meanwhile, Malindo Air and AirAsia are in talks with Brahim's for catering services. (Source: The Star) Consumer: JTI raises cigarette price today. JT International (JTI Malaysia) has followed in the footsteps of British American Tobacco (Malaysia) in raising the prices of all its cigarette brands, effective today. The company said the price of a pack of 20s will go up by MYR1 to MYR13 for its Mevius and Salem range. The price of Winston cigarettes will increase to MYR11.50 per pack, while the Camel range will now cost MYR12 a pack for filter cigarettes and MYR13.50 for a pack of non-filter ones. (Source: The Edge Financial Daily) YTL: Talks with India�s NSL Group to acquire 49% in the latter's energy unit. YTL Corp is said to be in talks with India's NSL Group to acquire up to a 49% stake in NSL Orissa Power and Infratech, a company with the mandate to build and operate a thermal power plant. (Source: The Star) MAHB: Jan-Aug passenger traffic up 7.9% y-o-y. Passenger traffic between January and August this year grew 7.9% year-on-year, underpinned by a healthy growth in the international and domestic segments, said Malaysia Airports Holdings (MAHB). (Source: The Edge Financial Daily) Outside Malaysia U.S. Joining EU on Russian sanctions sets stage for retaliation. The U.S. will "deepen and broaden" measures against Russia's financial, energy, and defense industries, President Barack Obama said in a statement, hours after an announcement by the EU. European companies and taxpayers "will have to pick up the costs" for the penalties, Dmitry Peskov, a spokesman for Russian President Vladimir Putin, told Interfax. (Source: Bloomberg) U.K: London house prices rose at the slowest pace in more than three years last month, leading a cooling across the country. The Royal Institution of Chartered Surveyors said its monthly index for the capital dropped to 9 in August from 11 in July. RICS blamed the slowdown on tougher mortgage rules that took effect earlier this year and the prospect of higher interest rates. Property outside London is showing more resilience because in some areas, "the recovery has only recently taken hold and affordability is rather less stretched," it said. (Source: Bloomberg) China: Consumer inflation eased to a four-month low in August while factory-gate prices extended their decline to 30 months, adding room for government stimulus to support the economy amid a property slump. The consumer price index rose 2% YoY, the National Bureau of Statistics said. The producer price index in the meantime fell 1.2% YoY. (Source: Bloomberg) Indonesia: Central bank held its benchmark interest rate for a 10th straight meeting to help narrow a current-account deficit, even as economic growth and inflation slow. Bank Indonesia Governor Agus Martowardojo and his board maintained the reference rate at 7.5%, the central bank said. It also kept the deposit facility rate unchanged at 5.75%. (Source: Bloomberg) Philippines: Raises its benchmark interest rate for a second straight meeting, persisting with its first tightening cycle since 2011, and said it may take further action as inflation risks stay elevated. Bangko Sentral ng Pilipinas raised the rate it pays lenders for overnight deposits to 4% from 3.75%, it said. Policy makers also increased the rate on special deposit accounts to 2.5% from 2.25%. (Source: Bloomberg) Australia: Employers added a record number of jobs in August, underscoring the central bank's reluctance to cut interest rates further and sending the local currency higher. The number of people employed increased by 121,000, led by a surge in part-time jobs, as the statistics bureau said. The jobless rate fell to 6.1% from a 12-year high of 6.4%. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,866.1 (0.0) (0.3) JCI 5,133.0 20.1 (0.2) STI 3,347.3 5.7 0.3 SET 1,580.9 21.7 (0.1) HSI 24,662.6 5.8 (0.2) KOSPI 2,034.2 1.1 (0.7) TWSE 9,323.0 8.3 (0.4) DJIA 17,049.0 2.8 (0.1) S&P 1,997.5 8.1 0.1 FTSE 6,799.6 0.7 (0.4) MYR/USD 3.2 (2.4) (0.2) CPO (1mth) 2,090.0 (20.5) 2.0 Crude Oil (1mth) 92.8 (5.7) 1.3 Gold 1,240.9 3.3 (1.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.48 14.00 Axiata 6.95 7.60 Sime Darby 9.25 10.20 Gamuda 4.83 5.30 UMW O&G 3.90 5.15 AFG 5.00 5.50 Perdana Petroleum 1.81 2.55 Hock Seng Lee 1.89 2.25