Malaysia Daily, Maybank KE (2014-09-23)

Daily 23 September 2014 COMPANY UPDATE Gamuda: Maintain Buy Another record year?  Shariah-compliant Expect another record year in earnings delivery. Awaiting KVMRT2 formal go-ahead, revised offer for SPLASH; FY15 property sales target to be lowered. Maintain earnings forecasts, MYR5.30 TP, BUY call. Click here for full report » Petronas Chemical Group: Maintain Hold ASP pressure on petrochemicals  Shariah-compliant Global commodity sell-off threatens petrochemical ASPs. Crude oil price is also on a downtrend, which negatively impacts petrochemical ASPs. Trim FY15 ASP assumption by 2% and earnings cut by 6.7%. Target price lowered to MYR6.50 (from MYR6.90). Click here for full report » British American Tobacco: Maintain Sell Price hike reversed A surprising U-turn: pre-Sep 8 prices restored. Forecasts unchanged for we had expected higher operating costs to mitigate the higher revenue from the price hike. SELL on lofty valuations and DCF TP of MYR62 maintained. Click here for full report » Technicals Will test & break key 1,836 level The FBMKLCI fell 3.44 points to 1,846.05 yesterday, while the FBMEMAS and FBM100 also closed lower by 19.93 points and 20.57 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on GENM with downside target areas at MYR3.97 & MYR3.90. Click here for full report » Other Local News O&G: Shapadu delays IPO to Q1 2015. Shapadu Corp Sdn Bhd has deferred its paperwork submission to the Securities Commission for an initial public offering of its oil and gas (O&G) business to the first quarter of next year. The company aims to raise up to MYR300m from the IPO. On the O&G business, Shapadu group executive director Datuk Rosthman Ibrahim said the company had tendered for contracts worth MYR3b this year. (Source: The New Straits Times). Toyo Ink Group: Expects approval for power plants in 2 years. Toyo Ink Group, which is negotiating with the Vietnamese government on terms relating to a project to build-operate-transfer (BOT) two 1000-megawatt (MW) coal-fired power plants worth a combined MYR7b, expects to obtain approvals in two years. (Source: The Edge Financial Daily) Sunsuria: To launch Phase 2 of Seventh Avenue by year-end. Property developer Sunsuria plans to launch Phase 2 of its Seventh Avenue mixed development project in Setia Alam, Shah Alam by December this year. The project will feature street malls, high-rise offices and residences and, together with its Seventh Avenue shop-office development, it will have a combined gross development value of more than MYR1b. (Source: The Edge Financial Daily) Outside Malaysia U.S: Sales of existing homes fall in August as investors balk. A decrease in investor purchases prompted an unexpected decline in sales of existing homes, indicating the housing rebound is not yet self-sustaining. Purchases of previously owned houses dropped 1.8% to a 5.05 million annual pace from a 5.14 million rate in July, the National Association of Realtors reported. The share of properties sold to investors was the lowest in almost five years, the group said. (Source: Bloomberg) Brazil: Government lowered its 2014 growth estimate but maintained its inflation forecast after the economy slipped into recession during the first six months of the year. GDP will expand 0.9%, compared with July's estimate of 1.80%, the country's Planning Ministry said. Annual inflation will reach 6.2% at year-end, unchanged from the previous estimate. (Source: Bloomberg) E.U: Consumer confidence declined in September as the European Central Bank strives to avert a downward spiral in prices amid political tensions in Eastern Europe. An index of household sentiment in the euro zone decreased for a fourth straight month to minus 11.4 from minus 10 in August, the European Commission in Brussels said. (Source: Bloomberg) E.U: Draghi says ECB actively managing balance sheet for stimulus. The European Central Bank will actively manage its balance sheet and is willing to implement more stimulus if required to stave off the threat of deflation in the euro area, ECB President Mario Draghi said. "We are starting a transition from a monetary-policy framework predominately founded on passive provision of central-bank credit to a more active and controlled management of our balance sheet," Draghi said in his quarterly testimony to European lawmakers in Brussels. (Source: Bloomberg) China: Beige book shows economy stuck in low gear on housing drag. China's economy remained stuck in "low gear" this quarter, with struggling retail and residential real-estate industries countering improvements in manufacturing and transportation, a private survey showed. Growth in investment slowed further, borrowing costs rose and the share of firms applying for and getting bank loans remained at "rock bottom levels," according to the China Beige Book, a report published quarterly by New York-based China Beige Book International. In contrast, hiring picked up and corporate profit margins improved, suggesting widespread government efforts to reignite growth are unlikely, it said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,846.1 (1.1) (0.2) JCI 5,219.8 22.1 (0.1) STI 3,296.6 4.1 (0.3) SET 1,589.5 22.4 0.3 HSI 23,955.5 2.8 (1.4) KOSPI 2,039.3 1.4 (0.7) TWSE 9,134.7 6.1 (1.1) DJIA 17,172.7 3.6 (0.6) S&P 1,994.3 7.9 (0.8) FTSE 6,773.6 0.4 (0.9) MYR/USD 3.2 (0.9) 0.3 CPO (1mth) 2,123.0 (19.2) (0.6) Crude Oil (1mth) 91.5 (7.0) (1.0) Gold 1,215.1 1.1 (0.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.20 14.00 Axiata 6.96 7.60 Sime Darby 9.12 10.20 Gamuda 4.81 5.30 UMW O&G 3.85 5.15 AFG 4.99 5.50 Perdana Petroleum 1.78 2.55 Hock Seng Lee 1.84 2.25