Malaysia Daily, Maybank KE (2014-11-05)

Daily 05 November 2014 COMPANY UPDATE IOI Corporation: Maintain Sell Stay cautious  Shariah-compliant Potential stock overhang if IOI drops off the Hijrah Shariah and EMAS Shariah indices this end-November. We expect IOI to report an in-line ~MYR186m PATMI for 1QFY6/15, dragged by ~MYR142m in unrealised forex loss. Maintain SELL with an unchanged TP of MYR3.97 on 20x 2015 PER peg; it trades at ~25x 2015 PER with tepid growth. Click here for full report » REGIONAL SECTOR UPDATE Plantations: Maintain Neutral Rainfall deficit drives hope Unexpected rainfall deficit has returned; planters in Central Kalimantan and South Sumatra affected this round. Slowdown in Indonesia�s new planting will bode well for CPO price in next 2-3 years as supply growth slows. We see sustained CPO price recovery to above MYR2,400/t in 1Q15. Maintain our 12M NEUTRAL view. Click here for full report » RESULTS REVIEW Petronas Gas: Maintain Hold Steady earnings, dividend surprise  Shariah-compliant 9M14 core net profit was within expectations at 76% of ours and 74% of consensus full-year forecasts. An interim 20sen DPS was declared; timing was a surprise as dividends are usually announced in fiscal 2Q and 4Q. Maintain HOLD, TP unchanged at MYR23.50. Click here for full report » Technicals Further profit-taking is setting in The FBMKLCI declined 5.98 points to 1,847.36 yesterday and the FBMEMAS and FBM100 lost 42.68 points and 41.05 points respectively. We recommend a �Nibble on Dips� stance for the index. The KLCI Nov Futures moved into a larger 6.14-point premium against the FBMKLCI. Trading idea is a Short-Term Buy on LUXCHEM with upside target areas at MYR1.98 & MYR2.17. Stop loss is at MYR1.60. Click here for full report » Other Local News Kinsteel: No extension for Perwaja and Kinsteel. Shares of Kinsteel and its subsidiary Perwaja Holdings, which had failed to submit their annual audited accounts for the financial period ended June 30, 2014 (FY14), are at risk of being suspended from trading from November 10. Bursa Malaysia informed the two companies that the stock exchange was unable to consider their application for an extension of time to release the annual financial statements for FY14, until November 14. (Source: The Edge Financial Daily) Axiata: Celcom sees full Sabah network coverage in 2 years. Celcom Axiata is optimistic of reaching 100 per cent network coverage in Sabah within two years, said East Malaysia sales head Choo Meng Chung. (Source: The News Straits Times) Outside Malaysia U.S: Exports declined in September in sign of global slowdown. The trade gap grew by 7.6% to USD 43b, the biggest since May, from USD 40b in August, Commerce Department figures showed. For September, exports decreased 1.5% to USD 195.6b, the least since April, from a record USD 198.6b the prior month. The decline was widespread, including industrial supplies such as fuel, business equipment, cars and parts and consumer goods. (Source: Bloomberg) E.U: The European Commission cut its growth forecasts for the euro area as the bloc's largest economies struggle to put the ravages of the debt crisis behind them after two recessions in six years. GDP in the 18-nation region will rise by 0.8% this year and 1.1% in 2015, down from projections for 1.2 and 1.7% in May, the Brussels-based commission said. It lowered its projections for Germany, Europe's largest economy, and said inflation in the euro area will be even weaker than the ECB predicts. (Source: Bloomberg) Indonesia: One-stop permit shop to cut investment red tape. Indonesia will streamline the government's permit process by combining ministry licenses in a one-stop service, as the country seeks to attract investment to narrow a trade deficit. Permits from ministries such as mining, forestry and transport will be moved to the investment coordinating board, said Coordinating Minister for Economic Affairs Sofyan Djalil. (Source: Bloomberg) Australia: Labor market is weaker than previously reported, the nation's statistics bureau said in a review released, sending the currency lower as traders bet on an extended interest-rate pause. The total number of Australians employed in September was 24,400 fewer than previously reported and the jobless rate was 6.2%, compared with the prior 6.1%, the Australian Bureau of Statistics said in a statement. (Source: Bloomberg) Australia: Central bank kept its key interest rate at a record low as the sustained strength of the currency slows an economic transition and hampers hiring. Reserve Bank of Australia Governor Glenn Stevens left the overnight cash rate target at 2.5% for a 15th month, as expected, and said the currency "remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices." (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,847.4 (1.0) (0.3) JCI 5,070.9 18.6 (0.3) STI 3,281.6 3.6 (0.3) SET 1,585.2 22.1 0.4 HSI 23,845.7 2.3 (0.3) KOSPI 1,935.2 (3.8) (0.9) TWSE 8,989.2 4.4 (0.2) DJIA 17,383.8 4.9 0.1 S&P 2,012.1 8.9 (0.3) FTSE 6,454.0 (4.4) (0.5) MYR/USD 3.329 1.6 0.3 CPO (1mth) 2,285.0 (13.1) (1.3) Crude Oil (1mth) 77.2 (21.6) (2.0) Gold 1,168.4 (2.8) 0.2 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.64 16.00 Axiata 7.07 7.60 Sime Darby 9.68 10.20 Gamuda 5.18 6.00 UMW O&G 3.25 5.15 AFG 4.77 5.50 Perdana Petroleum 1.63 2.48 Hock Seng Lee 1.90 2.25