Malaysia Daily, Maybank KE (2014-10-02)

Daily 02 October 2014 REGIONAL SECTOR UPDATE Regional O&G Services Key takeaways from Corporate Day Positive investors� traction on 13 ASEAN O&G corporates at our one-day event last week. Perdana and Ezion are our picks for OSV play while Yinson is for FPSO. KNM is an emerging renewable energy play. The AusGroup angle, on the supply base operations in Australia, is an interesting prospect, if executed well. Click here for full report » COMPANY UPDATE Axiata Group: Maintain Buy XL finalising its tower sale  Shariah-compliant Positive on XL�s sale of 3,500 towers for IDR5,600b, or USD132k per tower. Proceeds to pare down USD500m shareholder loan extended by Axiata for Axis acquisition. Bumper dividend unlikely at Axiata, but a YoY increase in DPS is highly probable. Reiterate BUY. Click here for full report » ECONOMICS Fuel Subsidy Rationalisation Another 20 sen per litre hike RON95 petrol and diesel prices raised by 20 sen to MYR2.30 per litre and MYR2.20 per litre respectively effective today. Maintain our 2014 inflation rate forecast of 3.5%, but adjust 2015 inflation rate projection to 4.5%-5.0% from 4.0%-4.5%. The move sends a clear message of the Government's commitment to fiscal reform. Click here for full report » Technicals A very unstable index tone today The FBMKLCI inched down by 0.99 points to 1,845.32 yesterday, while the FBMEMAS and FBM100 also closed lower by 19.75 points and 17.79 points, respectively. We expect weaker buying interest at the supports of 1,830 to 1,843, whilst heavy liquidation would be at the resistances of 1,845 and 1,870. Trading idea is a Take Profit call on OLDTOWN with downside target areas at MYR1.65 & MYR1.51. Click here for full report » Other Local News Felda Global Ventures Holdings: FGV back in for NBPOL. Felda Global Ventures Holdings (FGV) has initiated talks with Kulim (M) to buy the latter's controlling stake in London-listed New Britain Palm Oil Ltd (NBPOL), said people familiar with the matter. FGV has emerged as the next preferred candidate for the 48.97 per cent stake, which could cost up to MYR5b, after Sime Darby turned down the chance to acquire it. (Source: The New Straits Times) Maybank: Maybank gets Myanmar license. Malaysian Banking (Maybank), the country's biggest lender, has emerged as one of the nine regional banks and the only one from Malaysia to be awarded a foreign bank license in Myanmar. According to Central Bank of Myanmar, the license will allow Maybank to open a branch office and provide banking services in the country. (Source: The New Straits Times) Outside Malaysia U.S: Factories in September help weather weaker global markets. While the Institute for Supply Management's index dropped to 56.6 from 59 in August, the gauge's average over the past three months was the highest since early 2011. Readings greater than 50 indicate growth. Other figures showed companies added more than 200,000 workers for a sixth straight month in September, including 35,000 at factories. (Source: Bloomberg) E.U: Draghi buying spree seen starting modestly as ECB readies plan. While the European Central Bank president pledged to start a program this month to buy asset-backed securities and covered bonds, initial buying in those markets will probably be modest, according to two euro-zone central bank officials who asked not to be identified because the matter is private. That will keep investors guessing on the scope of his intentions as they bet the ECB will expand the range of securities it can buy. (Source: Bloomberg) U.K: Manufacturing grew at the slowest pace in 17 months in September as growth in new orders almost stalled. Markit Economics said its Purchasing Managers' Index fell to 51.6 from 52.2 in August, the lowest since April 2013. A measure of new orders dropped to a 19-month low of 50.5, close to the 50 level that divides expansion from contraction. (Source: Bloomberg) Hong Kong: Students threaten escalation as councilor seeks talks. Hong Kong's pro-democracy student leaders threatened to besiege government offices if demands for free elections and the resignation of the city's top official aren't heeded, as the government sought to start talks. Demonstrations swelled for a sixth day, with one student leader estimating the crowd at close to 200,000 people. Police haven't given any official estimates. (Source: Bloomberg) Thailand: Cabinet approved a THB 364.5b (USD 11b) budget for the remainder of the year to create jobs and boost incomes to spur economic growth, even as the central bank said a broad-based recovery hasn't taken hold. Of the budget, THB 23b will be spent in repairing schools, government buildings and roads, and THB 40b will go to rice farmers to help them cope with low prices, Deputy Prime Minister Pridiyathorn Devakula said. The government will also speed up approvals for 380 projects worth THB 429.2b and quicken investment spending for fiscal 2014 and 2015. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,845.3 (1.2) (0.1) JCI 5,140.9 20.3 0.1 STI 3,264.1 3.1 (0.4) SET 1,587.4 22.2 0.1 HSI 22,933.0 (1.6) 0.0 KOSPI 1,991.5 (1.0) (1.4) TWSE 8,990.3 4.4 0.3 DJIA 16,804.7 1.4 (1.4) S&P 1,946.2 5.3 (1.3) FTSE 6,557.5 (2.8) (1.0) MYR/USD 3.3 (0.1) (0.2) CPO (1mth) 2,210.0 (15.9) (1.0) Crude Oil (1mth) 90.7 (7.8) (0.5) Gold 1,213.8 1.0 0.5 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.32 14.00 Axiata 7.01 7.60 Sime Darby 9.18 10.20 Gamuda 4.80 5.30 UMW O&G 3.86 5.15 AFG 4.95 5.50 Perdana Petroleum 1.85 2.55 Hock Seng Lee 1.88 2.25