Malaysia Daily, Maybank KE (2015-01-22)

Daily 22 January 2015 COMPANY UPDATE Star Publications (Malaysia): Maintain Buy The stars are still aligned  Shariah-compliant NST and New Sunday Times cover price hikes are marginally positive. Not easy for Star to raise its cover prices though. A Star FTA TV station is viable if the Western and Chinese FTA TV adex market is split equally three ways. 4Q14 results also likely to be within expectations. 2H14 DPS of 9sen still on the cards. Maintain BUY call and MYR2.65 TP. Click here for full report » SECTOR UPDATE MY Automotive: Maintain Neutral Ending 2014 with style Dec TIV surprised positively, jumping 17% MoM to 64.7k units, driven by strong deliveries across the board. Our 2015 TIV forecast of 660k units (-1% YoY) is unchanged, in view of weaker consumer sentiment ahead of GST. Maintain Neutral on the sector. BUY MBM for Perodua exposure and BAuto for weakness in Yen. Click here for full report » ECONOMICS Malaysia CPI, Dec 2014 Down below 3.0% YoY Inflation rate slowed in Dec 2014 to +2.7% YoY (Nov 2014: +3.0% YoY) as the full year 2014 inflation settled at +3.2%. Mainly due to slower increase in prices of food & non-alcoholic beverages as well as transport on lower fuel prices under managed float mechanism following the end of blanket subsidy. 2015 inflation forecast adjusted to 4.0% from 4.0%-5.0% previously as lower fuel prices as well as no hikes in electricity tariff and industrial sector�s gas prices mitigate GST impact. Click here for full report » Technicals Index negated bearishness to 1,630 The FBMKLCI rose 19.98 points to 1,770.09 yesterday, while the FBMEMAS and FBM100 also closed higher by 120.09 points and 116.13 points, respectively. We recommend a �Buy on Dips� stance for the index. Trading idea is a Short-Term buy on SUNZEN with upside target areas at MYR0.61 & MYR0.73. Stop loss MYR0.45. Click here for full report » Other Local News Econpile: Bags MYR129m construction work. Its subsidiary Econpile Sdn Bhd (EMSB) had won a contract for a mixed development project on Jalan Conlay, Kuala Lumpur. It will undertake bored piling, earthworks, foundation, and sub-structure works.The duration of the contract is approximately 23 months, with completion set for December 2016. (Source: The Star, The Edge Financial Daily) Fitters Diversified: Sees MYR90m revenue from new business. Fitters is expecting its newly added pipe-manufacturing business to contribute a maximum of MYR90m to its revenue for the financial year ending Dec 31, 2015. Also, Fitters was looking at an average of 20% in profit margin. (Source: The Star) Kuantan Flour Mills: In RTO deal with NEP Holdings. It has proposed a reverse takeover exercise with water filtration systems provider NEP Holdings, whose products are sold under the "Diamond" brand. This includes creation of a new entity and securities exchange. (Source: The Edge Financial Daily) Brahim Holdings: Confident of keeping Malaysia Airlines contract. Brahim is currently renegotiating its in-flight catering contract with Khazanah Nasional Bhd, is confident of the continuity of the contract and is expecting to finalise it soon. As a recap, The in-flight caterer, via its 70%-owned Brahim�s Airline Catering Sdn Bhd (BAC), has a 25-year contract that expires in 2028 to serve meals and related services at the KL International Airport and Penang International Airport. BAC currently services 37 airlines and MAS is its biggest customer. Separately, Brahim also has plans to form a joint-venture with Sevair Investissements Aeroportuaires, a subsidiary of Societe Air France SA< for the purpose of exchanging expertise. (Source: The Star, The Edge Financial Daily) Outside Malaysia U.S: Fed officials reassess outlook amid global weakness. Federal Reserve officials are starting to reassess their outlook for the economy as global weakness and disappointing data on American consumer spending test their resolve to raise interest rates this year. San Francisco Fed President John Williams last week said he will trim his U.S. estimate because of slower growth abroad. Atlanta�s Dennis Lockhart said Jan. 12 that he advocates a "cautious" approach to rate increases and inflation readings "may be pivotal." Both are voters on the Federal Open Market Committee in 2015 and repeated that rates could be raised in the middle of the year. (Source: Bloomberg) Canada: Cuts key rate to 0.75% as inflation drops on oil shock. The Bank of Canada unexpectedly cut its main interest rate, saying the oil-price shock will drag down inflation and weigh on everything from exports to business and consumer spending. The bank cut its rate on overnight loans between commercial banks by a quarter percentage point to 0.75%, a decision none of the 22 economists in a Bloomberg News survey predicted. The rate, which influences everything from car loans to mortgages, had been at 1% since September 2010. The last cut was in April 2009. (Source: Bloomberg) E.U: Draghi urges historic ECB step with trillion-euro QE pan. Mario Draghi called on the European Central Bank to make its biggest push yet to fend off deflation and revive the economy by unleashing a debt-buying spree of EUR 1.1tr (USD 1.3tr). The ECB president and his Executive Board proposed spending EUR 50b a month through December 2016, two euro-area central-bank officials said. The plan still faces a tense debate in the Governing Council and may change before the final decision on Thursday, the people said, asking not to be identified as the talks are private. An ECB spokesman declined to comment. (Source: Bloomberg) China: Don't worry about growth slowdown, Premier Li tells Davos. China will avoid a hard landing and is focused on ensuring long-term medium-to-fast growth, Premier Li Keqiang told global leaders in Davos, after the country reported the slowest expansion since 1990. While the economy will still face large downward pressures in 2015, China won�t have systemic financial risks and will seek to improve the quality of growth to ensure an �appropriate� pace of expansion, Li said in a speech at the World Economic Forum in the Swiss ski town. (Source: Bloomberg) Japan: BOJ cuts price forecast, maintains record stimulus. Japan's central bank cut its inflation forecast and kept its unprecedented monetary easing unchanged as tumbling oil prices handicap efforts to reflate the world's third-biggest economy. The Bank of Japan will increase the monetary base at an annual pace of JPY 80tr (USD 674b), it said in a statement. The BOJ lowered its core inflation projection to 1% for the fiscal year starting in April, from 1.7%. (Source: Bloomberg) GCC: IMF says Gulf States set to swing into deficit as oil falls. The six nations of the Gulf Cooperation Council will have a collective fiscal gap of 6.3% of gross domestic product, a swing of about 11 percentage points from last year�s surplus, the IMF said in a report published in Washington on Wednesday. While many nations have enough savings to avoid steep cuts and "limit the drag on growth," they will need to adjust spending plans in the longer term, it said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,770.1 (5.2) 1.1 JCI 5,215.3 22.0 1.0 STI 3,354.5 5.9 0.6 SET 1,537.4 18.4 0.1 HSI 24,352.6 4.5 1.7 KOSPI 1,921.2 (4.5) 0.2 TWSE 9,319.7 8.2 0.7 DJIA 17,554.3 5.9 0.2 S&P 2,032.1 9.9 0.5 FTSE 6,728.0 (0.3) 1.6 MYR/USD 3.617 10.4 0.3 CPO (1mth) 2,291.0 (12.8) (2.0) Crude Oil (1mth) 47.8 (51.5) 3.0 Gold 1,293.1 7.6 (0.2) TOP STOCK PICKS Buy rated large caps Price Target Axiata 7.05 7.60 Sime Darby 9.50 10.20 Genting Malaysia 4.00 4.60 Gamuda 5.00 6.00 AirAsia 2.75 3.00 Westport 3.57 3.60 SP Setia 3.60 3.98 AFG 4.78 5.50 Hartalega 7.10 8.50