Malaysia Daily, Maybank KE (2015-01-26)

Daily 26 January 2015 RESULTS PREVIEW Kossan Rubber Industries: Maintain Buy Growth is here Strong volume to drive its 4Q14 net profit (est. +8% QoQ. Prospective earnings growth in-hand with new capacities fully sold out. Maintain BUY and TP of MYR5.90 (19x 2016 PER). Click here for full report » REGIONAL SECTOR UPDATE The Cockpit View: Maintain Overweight (Issue #7) Let�s get technical The BPRAIRL Index is in firm daily and weekly uptrends. Longer term potential towards 165.75 and 185.15. Retracement to 141.92 and 133.05 would be sought after as attractive levels for accumulation. Maintain OVERWEIGHT, the sector�s fundamentals and technical trend both looks good. Click here for full report » ECONOMICS Singapore CPI, December 2014 Still in "deflation" mode Headline inflation contracted by -0.2% YoY in Dec 2014 (Nov 2014: -0.3% YoY), mainly on lower transport and housing costs. Core inflation rate (CPI ex-accommodation and private road transport) stayed at +1.5% YoY (Nov 14: +1.5% YoY). Full year 2014 CPI is at +1.0% (2013: +2.4%) and we expect 2015 inflation rate to stay subdued at 1.0%. Click here for full report » Technicals Confidence returns after Eurozone QE The FBM KLCI surged 59.51 points WoW to close at 1,803.08, as obvious local buying activities emerged. Volume rose from 1.92b to 2.61b shares. With the plunge from the 1,896.23 high to the low of 1,671.82, we advise clients to trade within the stipulated support and resistance zones. Trading idea is a Short-Term Buy on SUNZEN with upside target areas at MYR0.55 & MYR0.65. Stop loss is at MYR0.37. Click here for full report » Other Local News Materials: Shake-up for local steel makers. China-based Guanxi Beibu Gulf Iron & Steel Investment Co Ltd, through locally-incorporated Alliance Steel (M) Sdn Bhd is investing MYR3.5b to set up the country�s largest steel mill in Gebeng, Kuantan, which will have an annual capacity of 3.5 million tonnes producing long steel products. 10% of the production will be for the local market, with the rest for export to Asean. (Source: The Edge Financial Daily) UMW Holdings: Targets sales growth up to MYR100m for new Grantt lubricants over the next five years. UMW Engineering and Manufacturing Executive Director, Megat Shahrul Azmir, said the target was expected to be achieved through several phases of penetrating the South-East Asia and Asia-Pacific markets. (Source: Business Times) SP Setia: To be selective in launches. Backed by a massive unbilled sales of MYR11.1b, SP Setia will look towards delivering properties sold in the past and launch more mid-ranged products, said acting president and chief executive officer Datuk Khor Chap Jen. (Source: The Star) The leading index (LI) rebounded in Nov 2014 +0.2% MoM (Oct 2014:-0.8 % MoM), supported mainly by the rise in "Expected Sales in Manufacturing" (Nov 2014: +0.4%; Oct 2014: -0.3%), "Real Imports of Semi-Conductors" (Nov 2014: +0.2%; Oct 2014: -0.3%) and "KLSE Industrial Index" (Nov 2014: +0.2%; Oct 2014: 0.0%) which offset the notable fall in "Housing Permits Approved" (Nov 2014: -0.9%; Oct 2014: +0.3%). YoY, the index rose +1.4% (Oct 2014: +0.7%) and using the YoY trend in LI as a gauge on the direction of the economy 2-3 months ahead, it suggests that real GDP growth momentum remains stable in early-2015 versus 4Q 2014 when the 2-3 month forwarded LI YoY growth averaged +1.3% YoY. (Source: Department of Statistics Malaysia) Outside Malaysia U.S: Home-sales fall in 2014 has U.S. waiting for 2015. A three-year winning streak for sales of previously owned homes in the U.S. ended in 2014 as some investors stepped out of the market and first-time buyers failed to fill the void. Purchases totaled 4.93 million last year, down 3.1% from the 5.09 million houses sold in 2013, figures from the National Association of Realtors showed. The share of American homebuyers making their first purchase dropped in 2014 to its lowest level in almost three decades, according to the Realtors group. At the same time, employment gains, growing consumer confidence, mortgage rates at historically low levels and government efforts to lower purchasing costs probably will help bolster demand in 2015. (Source: Bloomberg) E.U: Euro-Area economy set to pick up as QE plan bolsters confidence. Euro-area manufacturing and services expanded at the fastest rate in five months at the beginning of 2015 amid increasing new orders and employment. A Purchasing Managers Index for manufacturing and services rose to 52.2 in January from 51.4 in December, London-based Markit Economics said. A reading above 50 indicates expansion. (Source: Bloomberg) China: Factory gauge recovers lost ground on stimulus. A Chinese manufacturing gauge recovered lost ground in January, suggesting stimulus measures have helped stabilize the world's second-largest economy. The preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 49.8, exceeding the median estimate of 49.5 in a Bloomberg survey and up from December's 49.6. Numbers below 50 indicate contraction. (Source: Bloomberg) Japan: Exports rise more than forecast, paring record deficit. Japan's exports rose more than forecast in December, paring a record annual trade deficit caused by energy purchases and a surge in imports before April's sales-tax increase. Overseas shipments rose 12.9% YoY, the finance ministry reported while imports gained 1.9% YoY, leaving a deficit of JPY 660.7b (USD 5.6b). The annual shortfall widened to a record JPY 12.8tr in 2014 from the previous year's JPY 11.5tr. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,803.1 (3.4) 1.2 JCI 5,323.9 24.6 1.3 STI 3,411.5 7.7 1.2 SET 1,598.3 23.1 2.4 HSI 24,850.5 6.6 1.3 KOSPI 1,936.1 (3.7) 0.8 TWSE 9,470.9 10.0 1.1 DJIA 17,672.6 6.6 (0.8) S&P 2,051.8 11.0 (0.5) FTSE 6,832.8 1.2 0.5 MYR/USD 3.600 9.9 0.1 CPO (1mth) 2,264.0 (13.9) (0.4) Crude Oil (1mth) 45.6 (53.7) (1.6) Gold 1,294.8 7.8 0.6 TOP STOCK PICKS Buy rated large caps Price Target Axiata 7.21 7.60 Tenaga Nasional 15.10 16.00 Sime Darby 9.56 10.20 Genting Malaysia 3.91 4.60 Gamuda 5.11 6.00 AirAsia 2.80 3.00 Westport 3.54 3.60 SP Setia 3.55 3.98 AFG 4.80 5.50 Hartalega 7.30 8.50