Malaysia Daily, Maybank KE (2015-02-25)

Daily 25 February 2015 RESULTS REVIEW Felda Global Ventures: Downgrade To Sell Second year of disappointment  Shariah-compliant FY14 core net profit of c.MYR131m significantly fell shot � 2nd year of earnings disappointment. Our FY15-16 net profit forecasts lowered by 13%/19%. High valuations; cut to SELL with a reduced TP of MYR2.44 (from MYR3.00) on unchanged 16x FY16 PER target. Click here for full report » AirAsia X Bhd: Maintain Sell Disappoints again FY14 core net loss of MYR514m (>23x YoY) was a big miss to our and consensus expectations. Company is strapped for capital, the upcoming rights-issue may not be entirely sufficient, in our view. Maintain SELL, with a lower target price of MYR0.46 (from MYR0.49) post earnings revision. Click here for full report » TSH Resources: Maintain Buy Fundamentals still intact  Shariah-compliant 4Q14 largely in line. Nudge down FY15 EPS by 5% after revising output forecast. Medium term growth prospect remains intact. Reiterate BUY with unchanged MYR2.45 TP based on 19x FY16 PER. Click here for full report » COMPANY UPDATE AEON Co. (M): Upgrade To Hold Cautious ahead of GST  Shariah-compliant Targets three new store openings in FY15-16. Current valuations fair following drop in share price; positive SSSG sustained but lack of near-term earnings catalyst. Upgrade to HOLD with an unchanged TP of MYR3.05 (20x FY15 PER). Click here for full report » UMW Oil & Gas: Maintain Buy Abundant opportunities  Shariah-compliant Trim FY15/16/17 net profit forecasts by 7%/6%/6% having considered higher effective tax rates, but stronger MYR/USD. Sea of opportunities in 2015: (i) 33 contracts in SEA to expire and 13-18 old rigs to be scrapped, (ii) sub-yard price for new speculative rigs and (iii) tapping into the Middle East market. Maintain BUY with an unchanged SOP-based TP of MYR3.45. Click here for full report » Nestle Malaysia: Maintain Hold Challenging 1H15  Shariah-compliant Positively, export sales expected to stabilize. However, GST and price reduction campaign starting 1 Mar could pressure sales and margins in the near term. Maintain HOLD but with an unchanged TP of MYR68. Click here for full report » Technicals Index may rise to 1,820 and 1,831 The FBMKLCI gained 9.29 points to 1,818.68 yesterday, while the FBMEMAS and FBM100 also closed higher by 62.22 points and 68.03 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Short-Term Buy on POHUAT with Upside target areas at MYR2.32 & MYR2.80. Stop loss is at MYR1.92. Click here for full report » Other Local News Dialog: Second phase of Dialog's RSC postponed? Dialog Group's risk service contract (RSC) for the Balai Cluster marginal oil-field project could be facing a setback as Petroliam Nasional will likely postpone the project's second phase until crude oil prices go back to at least USD80 per barrel, said industry sources. The Balai Cluster marginal oil field is part of Petronas� enhanced oil recovery (EOR) programme to revive flagging production from mature and depleting oil wells. As such, Petronas views it as a costly, non-essential expense. (Source: The Edge Financial Daily) Brahim's Holdings: Fresh MAS deal in March? Brahim's Holdings outfit, Brahim's Airline Catering Sdn Bhd (BAC), is expected to sign a fresh contract with Malaysia Airlines (MAS) as early as next month for in-flight catering services. This will replace the existing MYR6.25b contract spanning 25 years that BAC has with MAS. (Source: The New Straits Times) Malaysian Bulk Carriers: To build five more ships. Malaysian Bulk Carriers (Maybulk) is building five new ships to expand its fleet size to 27 vessels by 2018. The group has set aside some MYR400m for capital expenditure in the next three years for expansion. The expansion will increase the group's capacity to ship iron ore, fertilizer and coal to 1.5 million deadweight tonnes (dwt) from 1.2 million dwt. (Source: The Star) Decline in external reserves easing. As at 13 Feb 2015, the external reserves totalled MYR385.9b or USD110.5b versus MYR386.5b or USD110.6b as at end-Jan 2015. This is equivalent to 7.8 months of retained imports and 1.1 times the short-term external debt. In US Dollar terms, the fortnightly trend indicates the decline in reserves is easing, from the drop of -USD5.0b in the two-week period ended 15 Dec 2014, the decline in reserves eased to between -USD4.7b in the 15-31 Dec 2014 period and -USD4.8b in the 1-15 Jan 2015 period before moderating to -USD0.6b in the second half of Jan 2015 and -USD0.1b in the first half of Feb 2015. This trend also coincided with the stabilisation of MYR against the USD, which depreciated from 3.38 at end-Nov 2014 to 3.60-3.63 in late-Jan 2015 and early Feb 2015, before improving slightly to between 3.55-3.60 in mid-Feb 2015. However, Ringgit exhibits its volatility again in current half of the month as it weakened again to 3.64 at yesterday's close, suggesting the country's external reserves position may be equally volatile. (Sources: BNM, Bloomberg, Maybank KE) Outside Malaysia U.S: Yellen signals Fed's patience with zero interest rate has limits. Federal Reserve Chair Janet Yellen signaled that the central bank�s patience with holding interest rates near zero has its limits as she began laying the groundwork for a possible increase in borrowing costs later this year. While she made clear no rate increase is imminent, she told the Senate Banking Committee that the economy is on solid ground and she saw hints wages may be starting to pick up. Although inflation is still too low for the Fed's liking, she ascribed its recent softness mainly to lower oil prices and said central bankers expect it to rise gradually to its 2% target in the medium term. (Source: Bloomberg) U.S: Americans less upbeat as job gains hard to sustain. American households curbed their enthusiasm in February on expectations the recent surge in hiring will be difficult to sustain. The Conference Board's consumer confidence index decreased to 96.4 from a revised January reading of 103.8 that was the highest since August 2007, the New York-based private research group said. This month's drop was led by diminished optimism about prospects for employment and income. (Source: Bloomberg) U.S: Home-price gains in 20 cities accelerated in December. The S&P/Case-Shiller index of property values increased 4.5% YoY from December 2013, after rising 4.3 % YoY in November, a report from the group showed. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,818.7 (2.6) 0.5 JCI 5,417.3 26.7 0.3 STI 3,437.6 8.5 0.5 SET 1,598.7 23.1 0.3 HSI 24,750.1 6.2 (0.3) KOSPI 1,976.1 (1.8) 0.4 TWSE 9,629.4 11.8 1.0 DJIA 18,209.2 9.8 0.5 S&P 2,115.5 14.5 0.3 FTSE 6,949.6 3.0 0.5 MYR/USD 3.643 11.1 0.0 CPO (1mth) 2,273.0 (13.5) 1.2 Crude Oil (1mth) 49.3 (49.9) (0.3) Gold 1,198.3 (0.4) 0.4 TOP STOCK PICKS Buy rated large caps Price Target Axiata 7.17 7.80 Tenaga Nasional 14.82 16.00 Sime Darby 9.53 10.70 Genting Malaysia 4.18 4.60 Gamuda 5.15 6.00 AirAsia 2.78 2.94 Westport 3.50 3.80 SP Setia 3.54 4.07 AFG 4.80 5.30 Hartalega 7.55 8.50