Malaysia Daily, Maybank KE (2015-03-13)

Daily 13 March 2015 COMPANY UPDATE Genting Malaysia: Maintain Buy Holding its own GITP construction (esp. Tower 2A and Sky Plaza) is on track. Gaming operations, especially mass market, remain resilient. Maintain BUY, MYR4.60 TP. More upside in Tower 3 and 4. Click here for full report » Oldtown: Maintain Buy Strong white coffee market share  Shariah-compliant Strong market share still in Malaysia, Hong Kong, Singapore for FMCG; growth to resume post set-backs earlier. F&B margins could be impacted by possibly higher A&P costs. BUY maintained, with a higher TP of MYR2.15 (+15sen) on rolling forward valuations on unchanged 2016 PER of 18x. Click here for full report » ECONOMICS Industrial Production (IP), Jan 2015 Sustained broad-based growth Industrial output rose on expansions in all three sectors-manufacturing, mining, electricity Sixth consecutive months of broad-based growth Mainly on higher output of both export-based and domestic-based manufacturing industries as well as crude oil. Click here for full report » Technicals Take profit before the weekend The FBMKLCI rebounded 8.71 points to 1,786.87 yesterday, while the FBMEMAS and FBM100 also closed higher by 58.94 points and 58.48 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take Profit call on WASEONG with downside target areas at MYR1.23 & MYR0.93. Click here for full report » Other Local News Oil & Gas: Petronas prices USD5b bond and sukuk offering. Petroliam Nasional (Petronas) yesterday priced a USD5b (MYR18.4b) multi-tranche offering, comprising a USD1.25b five-year sukuk tranche, and USD750m seven-year, USD1.5b 10-year and USD1.5b 30-year conventional notes. The notes are expected to be assigned the rating of A1 by Moody's Investor Services and A- by Standard & Poor's. (Source: The Edge Financial Daily) Quill Capita Trust: Senior management remains intact. Quill Capita Trust (QCT) will keep the existing senior management team largely intact amidst the emergence of Malaysian Resources Corp (MRCB) as its largest shareholder with a 41% stake. In separate news, QCT unit holders have also approved the real estate investment trust's (REIT) acquisition of Platinum Sentral here from MRCB for MYR740m of which MYR476m will be satisfied via cash and MYR264m via a unit swap at MYR1.28 per unit in QCT. (Source: The Edge Financial Daily) Tenaga Nasional: Renegotiating 4,000 contracts to include GST. Tenaga Nasional (TNB) will renegotiate its existing contracts with some 4,000 vendors to accommodate the GST and all future contracts will be in line with the GST requirements. The impact will be neutral for TNB. (The New Straits Times) CCM Duopharma Biotech: Buys units for MYR245m. CCM Duopharma Biotech is set to become one of Malaysia's largest pharmaceutical manufacturers following its purchase of six pharmaceutical units from parent company, Chemical Company of Malaysia (CCM) for MYR245.1m. (Source: The New Straits Times) Manufacturing sales were up +2.7% YoY to MYR57.1b in Jan 2015 (Dec 2014: +2.2% YoY). It also reported back-to-back monthly gains of +1.5% MoM in Jan 2015 following the +3.6% MoM reported a month earlier. �E&E� was the primary growth driver in the first month of 2015 as it rose +6.7% YoY (Dec 2014: +4.8% YoY), followed by �Transport Equipment & Other Manufactures� (Jan 2015: +10.7% YoY; Dec 2014: +0.8% YoY). This helped offset the weaker performance of �Petroleum, Chemical, Rubber & Plastic Products� which fell -2.3% YoY in Jan 2015 (Dec 2015: -1.0% YoY). Exports-oriented manufacturing sales was stable (Jan 2015: +1.9% YoY; Dec 2014: +1.9% YoY), while domestic-based manufacturing sales improved (Jan 2015: +3.9% YoY; Dec 2014: +3.1% YoY). �Salaries and wages growth was up +4.4% YoY in Jan 2014 to MYR2.98b �(Dec 2014: +0.4% YoY). �Employment growth moderated to +0.5% YoY (Dec 2015: +1.3% YoY) which was the slowest rise since June 2014. (Source: DOS Malaysia) Outside Malaysia U.S: Budget deficit narrowed in February from a year earlier as a stronger economy helps improve the nation's fiscal position, Treasury Department figures showed. Spending exceeded revenue by USD 192.3b last month, compared with a USD193.5b deficit in the same month the prior year, the department said in a report released. (Source: Bloomberg) U.S: Cold temperatures hurt retailers as sales drop. The bitter cold that swept over parts of the U.S. chilled retail sales in February as the world's largest economy began the year on weak footing. Purchases unexpectedly dropped 0.6%, a third consecutive decline, according to figures issued by the Commerce Department. (Source: Bloomberg) S.Korea: Hops on rate-cut bandwagon with quarter-point move. The central bank unexpectedly lowered its key interest rate to an all-time low to prevent the nation from falling into deflation and support economic growth. The Bank of Korea lowered the seven-day repurchase rate to1.75%. (Source: Bloomberg) Australia: Unemployment exceeded 6% for a ninth month in February even as hiring improved, with fewer people seeking work in an economy struggling to gain momentum. The jobless rate eased to 6.3% from 6.4%, the statistics bureau said. The number of people employed advanced by 15,600, erasing a revised drop of 14,600 in January. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,786.9 (4.3) 0.5 JCI 5,439.8 27.3 0.4 STI 3,373.6 6.5 (0.1) SET 1,544.3 18.9 0.0 HSI 23,798.0 2.1 0.3 KOSPI 1,970.6 (2.0) (0.5) TWSE 9,596.0 11.4 0.8 DJIA 17,895.2 8.0 1.5 S&P 2,066.0 11.8 1.3 FTSE 6,761.1 0.2 0.6 MYR/USD 3.680 12.4 (0.6) CPO (1mth) 2,248.0 (14.5) (1.7) Crude Oil (1mth) 47.1 (52.2) (2.3) Gold 1,160.5 (3.4) 0.2 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.64 16.00 Sime Darby 9.26 10.20 Genting Malaysia 4.07 4.60 Gamuda 5.20 6.00 Westport 3.66 3.80 SP Setia 3.36 4.07 AFG 4.74 5.30 Hartalega 8.05 8.50 Inari 3.28 3.95 MBM Resources 3.22 4.20 Vitrox 3.31 4.05