Malaysia Daily, Maybank KE (2015-03-19)

Daily 19 March 2015 RESULTS REVIEW Top Glove: Maintain Buy Solid earnings recovery  Shariah-compliant Strong 2QFY8/15 net profit (+14% YoY) supports our BUY call. Subdued rubber prices and high USD/MYR favour the stock. Maintain forecasts, BUY call and TP of MYR5.95 (mean 15x 2016 PER). Click here for full report » Berjaya Sports Toto: Maintain Hold Bracing for GST impact Earnings and dividends within expectations. Outlook still challenging. PCSO contract at risk. Maintain HOLD call and MYR3.18 TP. Click here for full report » Glomac: Maintain Hold Below expectations  Shariah-compliant 9MFY4/15 core net profit fell short. Management remains confident on achieving its MYR600m sales target for FY4/15. Lowering FY15 net profit forecast by 14%, TP largely intact at MYR1.03 (0.5x P/RNAV; MYR2.07 RNAV). HOLD. Click here for full report » COMPANY UPDATE Hong Leong Financial Group: Maintain Buy Trading on HL Cap to be suspended Trading of HL Cap shares to be suspended from Thursday 26 Mar 2015. Does not impact our valuations for HLFG where we have pegged on a P/BV of just 1.5x for HL Cap. Maintain BUY on HLFG, SOP-derived TP of MYR18.90. Click here for full report » ECONOMICS US FOMC Patience out, but no rush to hike Target fed funds rate (FFR) maintained at 0%-0.25%. FOMC statement removes the key word "patient" but indicates no imminent - neither rush to � hike the FFR. Maintain our view of Sep 2015 hike at the earliest totalling 50-75bps by end-2015. Click here for full report » Technicals A rebound towards 1,800 and higher The FBMKLCI advanced 9.70 points to 1,797.57 yesterday, while the FBMEMAS and FBM100 also closed higher by 41.36 points and 48.92 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a Short-Term Buy on PRLEXUS with upside target areas at MYR2.07 & MYR2.41. Stop loss is at MYR1.58 Click here for full report » Other Local News Utilities: Strategic sale option for 1MDB power assets. The Ministry of Finance (MoF) has asked CIMB Investment Bank to look at a strategic sale of the power assets of 1MDB as an alternative to the planned initial public offering (IPO), initially planned for last last year and now targeted for mid-2015 amidst worries that it may not materialize according to sources. 1MDB are in need of cash to help them pay off their debts. It was understood that the MoF had asked CIMB to handle the job because it is not involved in the proposed IPO and is also not a lender to 1MDB and thus would provide objectivity in handling the delicate matter. The MoF will have the last say on whether to do an outright sale or an IPO based on what is doable and the timeline. (Source: The Edge Financial Daily) Oil & Gas: Petronas wins Indonesia O&G auctions. It's exploration arm, Petronas Carigali were successful in the latest bidding round for 16 Indonesian oil and gas (O&G) blocks. The Indonesian government has awarded the North Madura II offshore east Java working region spanning 1,200km to Petronas and the 8,029km Kualakurun onshore Central Kalimantan blocks to Petronas' joint venture with PT Petcon Resources. A Reuters report has mentioned that Petronas' planned investments is estimated at around USD68m for the North Maduru II and USD2m in Kualakurun. (Source: The Star) Tenaga Nasional: TNB's earnings won't be affected by tariff cut. Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the tariff cut of 2.25 sen/kWj for users in Peninsular Malaysia was due to savings from the imbalance cost pass-through (ICPT) mechanism and TNB will not be incurring any loss or decline in profit following the tariff cut that is being enforced from March 1 to June 30. The tariff cut for the period of four months will not involve and review on the base tariff including annual profit earned by TNB. (Source: The Edge Financial Daily) Outside Malaysia E.U: ECB said to grant Greece less emergency liquidity than requested. The European Central Bank raised the maximum amount of emergency liquidity available to Greek lenders by EUR 400m (USD 435m), less than the Greek central bank requested, people familiar with the decision said. The increase was approved by the ECB's Governing Council, the people said, asking not to be identified as the council meeting was private. Greece requested about EUR 900m, one of the people said. (Source: Bloomberg) U.K: Unemployment fell to its lowest level in more than six years and real pay growth accelerated in a boost for Chancellor of the Exchequer George Osborne as he prepares to announce his final budget before the election. Unemployment based on International Labor Organization methods fell 102,000 to 1.86 million in the three months through January, the Office for National Statistics said. The jobless rate held at 5.7%. Regular pay grew by 1.6%YoY, outstripping inflation by the biggest margin since 2008. (Source: Bloomberg) China: Home prices dropped in more cities last month as an economic slowdown weighed on demand even after the government removed property curbs and reduced borrowing costs. New-home prices fell in 66 of the 70 cities tracked by the government from a month earlier, the National Bureau of Statistics said, compared with 64 in January. Prices rose in two cities and were unchanged in another two. (Source: Bloomberg) China: Foreign lending to Chinese borrowers is showing signs of peaking, suggesting policymakers' efforts to tighten credit conditions have started to take hold, the Bank of International Settlements said. Cross-border claims on China by banks reporting to the BIS rose just 3% in the three months through September from the previous quarter, the Basel, Switzerland-based institution said in a report. Banks' claims on Chinese lenders fell in the quarter, according to the report. (Source: Bloomberg) Japan: Exports rose more than forecast in February, supporting the nation's emergence from a recession last year. The value of overseas shipments rose 2.4% YoY, the government said, compared with a median estimate for a 0.3% increase. Imports fell 3.6% YoY, leaving a JPY 424.6b (USD 3.5b) trade deficit. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,797.6 (3.7) 0.5 JCI 5,413.2 26.6 (0.5) STI 3,361.8 6.1 (0.2) SET 1,531.5 17.9 1.2 HSI 24,120.1 3.5 0.9 KOSPI 2,028.5 0.9 (0.1) TWSE 9,653.4 12.1 1.2 DJIA 18,076.2 9.0 1.3 S&P 2,099.5 13.6 1.2 FTSE 6,945.2 2.9 1.6 MYR/USD 3.708 13.2 0.3 CPO (1mth) 2,195.0 (16.5) 2.1 Crude Oil (1mth) 44.7 (54.6) 2.8 Gold 1,167.6 (2.8) 1.6 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.66 16.00 Sime Darby 9.28 10.20 Genting Malaysia 4.15 4.60 Gamuda 5.16 6.00 Westport 3.60 3.80 SP Setia 3.38 4.07 AFG 4.70 5.30 Hartalega 8.05 8.50 Inari 3.25 3.95 MBM Resources 3.28 4.20 Vitrox 3.29 4.05