Malaysia Daily, Maybank KE (2015-03-23)

Daily 23 March 2015 COMPANY UPDATE Gamuda: Maintain Buy Eyes on Penang project  Shariah-compliant KVMRT 2 slightly delayed by 3 - 6 months. Management has revised lower its FY7/15 property presales projection. Earnings revised while MYR6.00 TP and BUY call maintained. Penang Transport Project would lead orderbook to new high. Click here for full report » Petronas Chemicals: Maintain Hold ASPs have bottomed  Shariah-compliant Petrochemical ASPs have reached the floor in late Feb 2015; current levels are 16.5% above the bottom. Expect more stable ASPs for remainder 2015 on healthy supply-demand balance. Maintain HOLD with an unchanged TP of MYR5.35. 1Q15 earnings is likely to be weaker than market�s expectation. Click here for full report » ECONOMICS Malaysia CPI, Feb 2015 "Disinflation" on lower fuel prices Inflation rate dropped further in Feb 2015 to +0.1% YoY (Jan 2015: +1.0% YoY) mainly due to lower transport costs as plunging crude oil price led to cheaper fuel prices. Maintain our 2015 inflation forecast at 3.0%-4.0% (official forecast: 2.0%-3.0%). Recent disinflationary trend is expected to reverse course from Mar 2015 onwards. Click here for full report » Technicals Recovery from downward volatility The FBM KLCI gained 21.90 points WoW to close at 1,803.65, as some persistent bargain hunting activities were obvious throughout the week. Take profit at the resistance areas of 1,815 to 1,831. The support levels of 1,774 and 1,803 will be areas to nibble. Trading idea is a Short-Term Buy PHARMA with upside target areas at MYR6.55 & MYR7.35. Stop loss is at MYR5.37. Click here for full report » Other Local News Aviation: flymojo here to stay. Managing director Datuk Janardharan Gopala Krishnan has stated that Fly Mojo Sdn Bhd has line up sufficient cash to funds it operations and it would come from seven investors from Malaysia that consist of four individuals, two corporates and himself. The available cash currently stands at MYR50m and this does not include the cost of procuring aircraft. For now, Janardharan owns 90% of Fly Mojo and Ismail Hue Kor ming holds the remaining 10% but they will issue new shares to investors and this exercise will be completed by year-end. (Source: The Star) Nestle: Sees a challenging FY15. Nestle sees a challenging year for the group amid a weak ringgit and softening consumer sentiment on the back of the implementation of the goods and services tax (GST), which will also see the prices of its products increase by between 3% and 6% next month. With the the implementation of the GST at 6%, some of the savings from the lower tax compared to the previous 10% sales tax will be passed back to consumers according to managing director Alois Hofbauer. (Source: The Edge Financial Daily) Globetronics: Sensors to be Globetronics' largest contributor in 2015. Globetronics are anticipating that its sensors and optical, and imaging components to be its largest contributors for 2015, making up to 40% of group revenue compared with 30% in 2014. It has been reported that the group is planning to roll out three-dimensional (3D) sensors for smart devices in mid-2015 to tap a market worth an estimated USD3.4b (MYR12.61b) in 2020. Globetronics group CEO Heng Huck Lee said the company has set aside capital expenditure of MYR45m. which a bulk of it will go towards developing new sensor products. (Source: The Edge Financial Daily) External reserves as of 13 March 2015 amounted to MYR381.5b or USD109.2b - equivalent to 7.8 months of retained imports and 1.1 times of the country's short-term external debt. The reserves level was lower compared to MYR 386b or USD 110.5b at 27 February 2015. Ringgit weakened further against USD, trading above MYR3.70/USD so far this month and closed at MYR3.73/USD on 20th March 2015 - with global oil price dipped to lowest since beginning of 2015 at USD 43.46/bbl on the 17 March 2015 and the risk of rating being downgraded by credit rating agencies. Our FX team also cautioned the prospects of emerging market and regional currencies on the basis of the dollar debt exposure in the region. (Sources: BNM, MKE) Outside Malaysia China: Home prices fall in more cities amid economic slowdown. New-home prices fell in 66 of the 70 cities tracked by the government from a month earlier compared with 64 in January. Prices rose in two cities and were unchanged in another two. Two interest-rate cuts in three months and the removal of property restraints have yet to revive an industry that remains a drag on economic expansion as Premier Li Keqiang set the lowest growth target in more than 15 years. Demand was also dented by the weeklong Lunar New Year holiday, traditionally a slow period for home sales as many Chinese people travel back to their hometowns for family reunions. (Source: Bloomberg) Japan: Exports rise more than forecast, supporting recovery. The value of overseas shipments rose 2.4% YoY, the government said whilst imports fell 3.6% YoY, leaving a JPY 424.6b (USD 3.5b) trade deficit. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,803.7 (3.4) (0.3) JCI 5,443.1 27.3 (0.2) STI 3,412.4 7.7 0.8 SET 1,530.0 17.8 (0.1) HSI 24,375.2 4.6 (0.4) KOSPI 2,037.2 1.3 (0.0) TWSE 9,749.7 13.2 0.1 DJIA 18,127.7 9.4 0.9 S&P 2,108.1 14.1 0.9 FTSE 7,022.5 4.1 0.9 MYR/USD 3.733 14.0 0.7 CPO (1mth) 2,168.0 (17.5) (1.9) Crude Oil (1mth) 45.7 (53.5) 4.0 Gold 1,182.5 (1.6) 1.0 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.60 16.00 Sime Darby 9.26 10.20 Genting Malaysia 4.17 4.60 Gamuda 5.16 6.00 Westport 3.70 3.80 SP Setia 3.38 4.07 AFG 4.75 5.30 Hartalega 8.18 8.50 Inari 3.33 3.95 MBM Resources 3.26 4.20 Vitrox 3.49 4.05