Malaysia Daily, Maybank KE (2014-11-03)

Daily 03 November 2014 RESULTS REVIEW Tenaga Nasional: Maintain Buy A strong finish indeed  Shariah-compliant FY14 core net profit of MYR5.4b (a record-high) was in line with ours and consensus expectations. Positive earnings outlook as 1) coal generation trends up, 2) coal prices remain suppressed and 3) tax rate stays low. Raising FY15/16 earnings by 11%/13%, and TP to MYR16.00 (+14%); reiterate BUY. Click here for full report » SECTOR UPDATE MY Banking: Maintain Neutral Loan growth ticks up in September Industry loan growth ticked up to 9% YoY in Sep 2014 (8.6% YoY in Aug) supported by non-HH loan growth (+6.7% YoY); Positively, interest spreads continue to expand; keeping an eye on liquidity and consumer asset quality. Our 2014 loan growth forecast of 8.7% maintained. NEUTRAL on sector; BUY RHB, AFG, HL Bank, and HLFG Click here for full report » COMPANY UPDATE Felda Global Ventures: Maintain Hold Bigger downstream plans in China?  Shariah-compliant FGV proposal to gain a 100%-control (presently 50%) of its downstream business in China is positive for the long term. Due to insufficient details, we are unable to assess its financial impact but we believe it is likely to be marginal. Maintain HOLD with unchanged SOP-based TP of MYR3.97. Click here for full report » Technicals Autumn correction is over The FBM KLCI rose 36.29 points WoW to close at 1,855.15, as some consistent buying activities led the index up above the 1,850-mark. Volume rose from 1.58b to 2.75b shares. The index traded from 801.27 to 936.63 from Oct 2008 to Apr 2009, but broke above 936.63 (Wave a/B) in Apr 2009. Its Wave b/B low was 836.51. We traced out a Wave C/B (of a 3-3-5 Flat) rebound phase, and the extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from 801.27 stalled at 1,896.23 (8 Jul 2014 all-time high). Today's trading idea is a Short-Term BUY on Hap Seng Consolidated with target price of MYR4.62, MYR4.78, MYR5.00 and MYR5.85 Click here for full report » Other Local News Property: Promising his best. Battersea Project Holding Co (BPHC) chairman Tan Sri Liew Kee Sin will ensure that the Battersea Power Station project in London runs smoothly before his departure from the company next year. He said there was no word yet on extending his chairmanship at BHPC. (Source: The News Straits Times) Aviation: KLIA2 operating without final cert. Six months after the opening of klia2 in Sepang on May 2, Malaysia Airports Holdings (MAHB) has yet to issue a Certificate of Practical Completion (CPC) for the main terminal building of the MYR4b low-cost carrier terminal. Without the CPC, the terminal building is still under the responsibility of the main contractor - UEM Construction Sdn Bhd and Bina Puri Sdn Bhd joint venture - and not MAHB. (Source: The Edge Financial Daily) ViTrox: ViTrox's '555' target pushed back. ViTrox Corp has pushed back its '555' target to attain MYR500m in revenue with 500 staff in 2015 by another two to three years, said chief executive officer and president Chu Jenn Weng. He mentioned that out of the MYR500m, 30% will come from merger and acquisition activities and the remaining 70% from organic growth. (Source: The Edge Financial Daily) Money supply (M3) grew +5.2% YoY in Sep 2014 (Aug2014: +4.8% YoY). Net financing to the private sector (Sep 2014: +8.9% YoY; Aug 2014: +8.8% YoY) was the main driver of M3 growth, underpinned by the total outstanding banking system loans (Sep 2014: +9.0% YoY; Aug 2014: +8.6% YoY) as net issuance of private debt securities moderated (Sep 2014: +10.7% YoY; Aug 2014: +11.5% YoY). Banking system loans growth was supported by higher volume of loans extended to businesses (Sep 2014: +7.8% YoY; Aug 2014: +6.7% YoY) which includes wholesale and retail trade, manufacturing, business services, restaurants and hotels, and real estate sectors as household loans slowed slightly (Sep 2014: +10.7% YoY; Aug 2014: +11.0% YoY). The overall credit growth offset the continued decline in net foreign assets (Sep 2014: -6.3% YoY; Aug -1.0% YoY) that reflect the -MYR7.3b (-USD4.7) drop in external reserves during the month (end-Sep 2014: MYR416.9b or USD127.3b; end-Aug 2014: MYR424.2b or USD132b). (Source: BNM, MKE) Outside Malaysia U.S: Consumer sentiment rises to highest since July 2007 as employment opportunities and declining gasoline prices boosted Americans' spirits. The Thomson Reuters/University of Michigan final index of sentiment increased to 86.9, the highest since July 2007, from 84.6 in September. (Source: Bloomberg) Russia: Surprise rate increase fails to stem ruble selloff. The ruble tumbled the most since 2011 after a larger-than-forecast increase of Russia's key interest rate failed to ease concern that the economy will remain hobbled by sanctions and capital flight. The Bank of Russia raised its key rate to 9.5% from 8%, according to a website statement. Governor Elvira Nabiullina is resorting to higher borrowing costs to halt a currency run even after three earlier increases failed to assuage investors concerned about President Vladimir Putin�s stance on Ukraine. Policy makers said that tighter monetary conditions haven't offset the impact of a weaker ruble and trade restrictions imposed in August amid lower oil prices, inflation at a three-year high and sanctions levied by the U.S. and its allies over the conflict in Ukraine. (Source: Bloomberg) China: October manufacturing slows as growth pressures deepen. The government's Purchasing Managers' Index was at 50.8 in October compared with September�s 51.1. Readings above 50 indicate expansion. (Source: Bloomberg) Japan: Kuroda's surprise stimulus turns focus back to Abe's third arrow. The Bank of Japan's unexpected expansion of stimulus puts the spotlight back on Prime Minister Shinzo Abe's economic policies and the decision he faces on raising the sales tax. While corporate profits are higher, the yen is lower and stocks have surged 57% since Abe came to office 22 months ago, sustained economic expansion remains elusive. Consumer price gains are only halfway to the central bank's target and gross domestic product contracted the most in five years in the second quarter after a first-installment increase of the sales levy. (Source: Bloomberg) S. Korea: Trade surplus hits unexpected record as exports jump on demand from the U.S. for products such as steel pipes and computers. The USD 7.5b surplus was the highest for any month, the trade ministry said in an emailed statement. Exports rose 2.5% YoY, while imports dropped 3% YoY. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,855.20 -0.6 0.7 JCI 5,089.50 19.1 0.6 STI 3,274.30 3.4 1.2 SET 1,584.20 22 1.2 HSI 23,998.10 3 1.2 KOSPI 1,964.40 -2.3 0.3 TWSE 8,974.80 4.2 1 DJIA 17,390.50 4.9 1.1 S&P 2,018.10 9.2 1.2 FTSE 6,546.50 -3 1.3 MYR/USD 3.299 0.7 0.3 CPO (1mth) 2,295.00 -12.7 0.9 Crude Oil (1mth) 80.5 -18.2 -0.7 Gold 1,174.50 -2.3 -2.6 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.36 16.00 Axiata 7.05 7.60 Sime Darby 9.68 10.20 Gamuda 5.12 6.00 UMW O&G 3.27 5.15 AFG 4.79 5.50 Perdana Petroleum 1.62 2.48 Hock Seng Lee 1.96 2.25