Malaysia Daily, Maybank KE (2014-09-18)

Daily 18 September 2014 REGIONAL SECTOR UPDATE Macau Gaming: Overweight (New) History on the side of optimism Resuming coverage at OVERWEIGHT. Top Picks: Galaxy, Sands China. Other BUYs: MGM China, Wynn Macau. Macau GGR growth to accelerate from 1% in 2014 to 15% in 2015 and further to 18% in 2016, in our view. Catalysts are improving liquidity, stabilising property prices in China and new casinos. Worst has likely passed. Click here for full report » COMPANY UPDATE Malaysia Airports Holdings: Maintain Hold Sabiha G�k�en gets a new suitor MAHB has yet to respond; it has the first right of refusal should it choose to block TAV�s offer for 40% in ISG. We are positive should both be partners to make ISG better. But, if MAHB exercises its right, it has to raise debt/equity. Maintain HOLD. This news validates MAHB�s gem ISG asset, but has no implication on its financials for now. Click here for full report » ECONOMICS Singapore Exports, August '14 Pleasant surprise NODX in August 2014 surprised on the upside as it expanded by +6.0% YoY in Aug 2014 (Jul 2014: -3.3% YoY). Growth was boosted by non-electronics (Petrochemicals and Pharmaceuticals) as South Korea and Taiwan were the major drivers by destination. Electronics exports continued to be sluggish with only IC parts posting positive growth. Click here for full report » Malaysia CPI, August 2014 Stays firm at 3.3% YoY Inflation rate remained firmed in Aug 2014 at +3.3% YoY from +3.2% YoY posted in July 2014. Our measure of core inflation (excluding the key subsidised components of CPI) was stable at +2.1% YoY (July 2014: +2.1% YoY). Keeping our full-year inflation rate forecast of +3.5% for now (YTD 2014: 3.3% YoY). Click here for full report » Technicals Persistent bearishness will prevail The FBMKLCI fell 3.52 points to 1,843.78 yesterday, while the FBMEMAS and FBM100 also closed lower by 34.59 points and 33.30 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on DAYANG with downside target areas at MYR3.25 & MYR3.10. Click here for full report » Other Local News Aviation: British Airways to resume KL-London flights after 13 years. British Airways (BA) will resume its daily direct flights from KL to London from May 27 next year, 13 years after suspending the route when global travel slowed down following Sept 11 attacks. "Asia-Pacific will be more and more important to the world's global aviation industry," said Jamie Cassidy, the airline's area general manager, adding that this is part of the airline's GBP5b (MYR26.26b) expansion plan.(Source: The Edge Financial Daily) Plantations: Indonesia withdraws 30% limit on foreign ownership in plantations. Malaysian plantation owners in Indonesia may breathe easier following a report that the government and the parliament have agreed to withdraw a cap on foreign ownership at no more than 30% from the maximum 95%. (Source: The Edge Financial Daily) Genting: Genting's MYR3.54b gaming hub to break ground in 90 days. Genting group's planned USD1.1b (MYR3.54b) Resorts World Bayshore City (RWBC) in the Philippines is set to take off under collaboration with Philippine-based partner Alliance Global Group Inc (AGI). RWBC will break ground within the next 90 days and the first phase is expected to be completed in 2018, AGI president Sian was quoted as saying. Meanwhile, Genting (M) Bhd (GenM), a unit of Southeast Asia's largest casino operator by market value, plans to raise MYR1.5b in its debut bond sale. The notes will be sold by GenM Capital Bhd , a unit of GenM to sell debt, and is part of a MYR5b program. GenM will use the proceeds of the sale for working capital. (Source: The Edge Financial Daily) UMW O&G: Frontier Oil ink rig deal. UMW Oil & Gas Corp Bhd (UMW O&G) has inked a USD20m (MYR64m) rig contract with Frontier Oil Corp, which will use the former�s "UMW Naga 7" jack-up rig for its drilling operations in Calauit field, Philippines. Frontier Oil development officer Marian Glorioso said the "UMW Naga 7" will be deployed at the Calauit field for the drilling operations in the first quarter of next year. (Source: Business Times) Outside Malaysia U.S: Homebuilder confidence increases to a nine-year high in September, showing the industry is gaining ground and will be a source of momentum for the economy. The National Association of Home Builders/Wells Fargo sentiment measure climbed to 59 exceeding the highest estimates, from 55 in August, the Washington-based group reported. Readings above 50 mean more respondents said conditions were good. (Source: Bloomberg) E.U: The euro-area inflation rate was higher than initially estimated in August, while remaining at the weakest level in almost five years. Annual consumer-price growth was 0.4% YoY. The rate was unchanged from July and remains a fraction of the European Central Bank's goal of just under 2%. (Source: Bloomberg) U.K: Unemployment fell to the lowest in six years, indicating continued strength in the labor market that Bank of England Governor Mark Carney says will eventually boost earnings. The jobless rate based on International Labor Organization methods dropped to 6.2% in the three months through July from 6.4%, a bigger decline than economists forecast. A separate measure for August put the claimant count rate at 2.9% Both are at their lowest since 2008. (Source: Bloomberg) China: Central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world's biggest economies as the U.S. reduces stimulus. The People's Bank of China is injecting CNY 500b (USD 81b) into the nation's largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown. Federal Reserve Chair Janet Yellen will announce another USD 10b cut to its monthly bond purchases after this week's meeting, economists forecast, as she steers toward gradual interest-rate increases. (Source: Bloomberg) Japan: Exports fall less than forecast in August. Overseas shipments fell 1.3% YoY, the finance ministry said in Tokyo while imports fell 1.5% YoY, leaving a trade deficit of JPY 948.5b (USD 8.7b). (Source: Bloomberg) Thailand: Kept its key interest rate unchanged for a fourth straight meeting to support the economy as Prime Minister Prayuth Chan-Ocha's newly appointed cabinet increases spending to spur growth. The Bank of Thailand held its one-day bond repurchase rate at 2%, with monetary policy committee members voting 5-0 in favor, it said in Bangkok. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,843.8 (1.2) (0.2) JCI 5,188.2 21.4 1.1 STI 3,296.5 4.1 0.7 SET 1,570.6 20.9 0.3 HSI 24,376.4 4.6 1.0 KOSPI 2,062.6 2.5 1.0 TWSE 9,195.2 6.8 0.7 DJIA 17,156.9 3.5 0.1 S&P 2,001.6 8.3 0.1 FTSE 6,780.9 0.5 (0.2) MYR/USD 3.2 (1.6) 0.0 CPO (1mth) 2,156.0 (18.0) (0.2) Crude Oil (1mth) 94.4 (4.1) (0.5) Gold 1,237.8 3.0 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.38 14.00 Axiata 6.96 7.60 Sime Darby 9.22 10.20 Gamuda 4.79 5.30 UMW O&G 3.82 5.15 AFG 4.97 5.50 Perdana Petroleum 1.77 2.55 Hock Seng Lee 1.83 2.25