Malaysia Daily, Maybank KE (2014-11-10)

Daily 10 November 2014 COMPANY UPDATE Ta Ann: Maintain Buy Positives get better  Shariah-compliant New logging method and maiden harvesting from forest plantation would boost logs production volume. New plywood plant in Tasmania could turnaround the unit. 2015-16 FFB output growth to remain robust. Reiterate BUY. Click here for full report » Magnum Berhad: Maintain Hold New game yet to excite Magnum introduced 4D Jackpot Gold over the weekend. Indications are that early sales may be soft and immaterial. Maintain estimates, HOLD call and MYR3.05 TP. Click here for full report » British American Tobacco: Upgrade to Hold Competitors follow suit  Shariah-compliant JTI and Philip Morris raise prices by MYR1.50/pack as well. Our forecasts assume 10% contraction in 2015 industry volumes (-6% in 2014). HOLD maintained on BAT with an unchanged TP of MYR64; dividend yield of >4% provides support. Click here for full report » RESULTS REVIEW MISC Bhd: Maintain Buy Positive near-term outlook  Shariah-compliant Strong 3Q14 was above our expectation but within street�s. Earnings momentum to sustain into 4Q; potential injection of LNG vessels by PETRONAS will serve as catalyst. Raise forecasts and upgrade TP to MYR8.00. Maintain BUY. Click here for full report » KLCC Property: Maintain Hold Beat expectations  Shariah-compliant 9M14 net profit above our expectation, within consensus. Raise earnings forecasts by 6%, DCF-based TP to MYR7.17. Unit price should continue to be supported by strong demand from the Shariah/FBMKLCI Index funds. HOLD. Click here for full report » ECONOMICS External Trade, September 2014 Subdued growth Tepid growth in both exports and imports Signal lower contribution of external demand to 3Q 2014 GDP Eyes will be on impact from recent plunge in crude oil price Click here for full report » Technicals Very firm Dow, but weak FBMKLCI The FBM KLCI fell 30.96 points WoW to close at 1,824.19, as some clear and persistent foreign activities led the index down to close at the week�s low. We advise clients to sell at the resistance areas of 1,824 to 1,896. Trading idea is a short-term buy on MMSV with upside target areas at MYR0.715 & MYR0.81. Stop loss is at MYR0.48. Click here for full report » Other Local News Sarawak Energy: MYR1.5b jobs for Balingian power plant to be tendered out. Sarawak Energy, which is seeing rising demand for electricity for its Sarawak Corridor of Renewable Energy (SCORE), will call for tenders for the remaining six packages of work for the 600-MW Balingian coal-fired power plant project in the Mukah division. (Source: The Star) MAS: Foreign carriers keen on MAS pilots as MAS restructures. Foreign airlines have started courting pilots from Malaysia Airlines (MAS) following reports that the national carrier will undergo a restructuring exercise. (Source: The Star) External reserves as of 30 October 2014 amounted to MYR419.7b or USD128.1b - equivalent to 8.8 months of retained imports and 1.2 times of the country's short-term external debt. The reserve was up compared to MYR416.3b or USD127.1b at 15 October 2014. Foreigners were net sellers of equities for the second consecutive month by -MYR0.5b in October 2014 after the net selling of -MYR1.4b in September 2014 amid global market volatility as the Fed completed its QE Taper that resulted in weaker Ringgit against the US Dollar i.e. -2.6% between start of July and end of October to 3.29. The Ringgit eased further so far this month to just under 3.35. The rise in the external reserves suggested offsetting flows from foreign direct investment and trade surplus. (Source: BNM, MKE) Outside Malaysia U.S: Joblessness drops as economy powers past global slump. The American labor market is powering past a global slowdown as unemployment decreased to a six-year low in October and 214,000 workers were added to payrolls. The jobless rate fell to 5.8%, the lowest since July 2008, from 5.9% in September, Labor Department figures showed. The increase in hiring last month followed a 256,000 advance that was larger than first estimated as job gains head for their best showing in 15 years. (Source: Bloomberg) U.S: Consumer credit in September climbs on demand for car, student loans. The USD 15.9b increase in credit followed a revised USD 14b advance in August, the Federal Reserve reported in Washington. Non-revolving loans, including borrowing for motor vehicles and college tuition, rose USD 14.5b in September. Gains in the labor market and stock portfolios, the lowest gasoline prices in four years, and cheap borrowing costs are giving Americans the confidence to borrow. Faster wage growth would provide a bigger boost for households wary of taking on more debt. (Source: Bloomberg) Germany: Industrial production rises less than forecast in September signaling that Europe's largest economy is struggling to recover. Production, adjusted for seasonal swings, rose 1.4% MoM from August, when it contracted a revised 3.1% MoM, the biggest decline since January 2009, the Economy Ministry in Berlin said. Production declined 0.4% in the third quarter. (Source: Bloomberg) China: Xi dangles USD 1.25tr as country counters U.S. refocus to Asia. President Xi Jinping sought to counter U.S. efforts aimed at boosting influence in Asia by flexing China's economic muscle days before a Beijing summit with his counterpart Barack Obama. Speaking to executives at a CEO gathering in Beijing, Xi outlined how much the world stands to gain from a rising China. He said outbound investment will total USD 1.25tr over the next 10 years, 500 million Chinese tourists will go abroad, and the government will spend USD 40b to revive the ancient Silk Road trade route between Asia and Europe. (Source: Bloomberg) China: Exports bolster economy in October, as external demand strengthens. Overseas shipments increased 11.6% YoY while imports rose 4.6% YoY leaving a trade surplus of USD 45.4b, the customs administration said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,824.2 (2.3) (0.4) JCI 4,987.4 16.7 (0.9) STI 3,286.4 3.8 (0.1) SET 1,578.4 21.5 (0.2) HSI 23,550.2 1.0 (0.4) KOSPI 1,939.9 (3.6) 0.2 TWSE 8,912.6 3.5 0.2 DJIA 17,573.9 6.0 0.1 S&P 2,031.9 9.9 0.0 FTSE 6,567.2 (2.7) 0.2 MYR/USD 3.344 2.1 0.1 CPO (1mth) 2,192.0 (16.6) (1.2) Crude Oil (1mth) 78.7 (20.1) 0.9 Gold 1,145.5 (4.7) 0.1 TOP STOCK PICKS Buy rated large caps Price Target Tenaga 13.00 16.00 Axiata 6.96 7.60 Sime Darby 9.60 10.20 Gamuda 5.15 6.00 UMW O&G 3.20 5.15 AFG 4.75 5.50 Perdana Petroleum 1.48 2.48 Hock Seng Lee 1.90 2.25