Malaysia Daily, Maybank KE (2015-04-08)

Daily 08 April 2015 COMPANY UPDATE Dialog Group: Maintain Buy Activities at Pengerang shaping up  Shariah-compliant Moving into Phase 2-3 developments (dedicated terminals, regas, LNG) and eyeing subsequent phases for LT growth. Strong LT earnings growth prospects intact; FY18�s +28% net profit growth vs. FY14-17�s +9% CAGR. Reiterate BUY on unchanged MYR1.90 SOP-TP. Click here for full report » Technicals FBMKLCI to trend higher The FBMKLCI rose 13.57 points to 1,856.51 yesterday, while the FBMEMAS and FBM100 also closed higher by 80.93 points and 82.39 points, respectively. We expect some buying at the supports of 1,837 to 1,856, whilst liquidation activities may cap rebounds at the resistances of 1,858 and 1,870. Trading idea is a Short-Term Buy on OFI with upside target areas at MYR4.89 & MYR6.55. Stop loss is at MYR4.00. Click here for full report » Other Local News Malayan Banking: Opens branch in Yunnan. Maybank will be opening a new branch in Kunmin, Yunnan Province in China, making it the first Malaysian bank to set foot in the province to leverage on the growing trade and investment links between Southwest China and Asean. The group will also be opening its first branch in Myanmar in August this year. (Source: The Edge Financial Daily) In separate news, Maybank is also in talks with potential foreign investors for a planned issuance of US dollar-denominated bond under its USD5b (MYR18.2b) multi-currency medium-term note programme to bolster its capacity in lending more in foreign currencies especially the US dollar. (Source: The New Straits Times) Malaysian Resources Corp: Buys German Embassy land for MYR259.16m. MRCB is acquiring a 7,552.2 sq m piece of land in Jalan Kia Peng, Kuala Lumpur, which previously served as the site of the official residence of the German ambassador to Malaysia until June 2013 for MYR259.16m or MYR3,188 per sq ft. The acquisition is expected to be completed by early August this year and would be done via bank borrowings and/or internal funds. (Source: The Edge Financial Daily) AirAsia: To keep 'no fuel surcharge' policy for now. AirAsia will maintain its "no fuel surcharge" policy on all flights despite the rise of crude oil price to a seven-week high. Executive chairman and co-founder Datuk Kamarudin Meranun said the measure would continue for as long as there was no continuous increase in oil prices this year and is in line with AirAsia's niche as a low-cost flight services provider. (Source: The New Straits Times) Taliworks: To issue MYR210m sukuk. Public utilities operator Taliworks Corp has obtained the Securities Commission Malaysia's (SC) approval to issue up to MYR210m sukuk, proceeds of which will be used mainly to repay a loan facility of up to MYR200m and for working capital. Hong Leong Investment Bank is the principal adviser and lead arranger for the sukuk. (Source: The Edge Financial Daily) Dagang NeXchange: Trade, logistics costs to drop post-GST. E-commerce specialist Dagang NeXchange expects costs of trade and logistics to be lowered by 2% to 4% following the implementation of the goods and services tax (GST) on April 1 which will improve the country's global competitiveness. The regional average cost lies somewhere between 14% and 15%, much higher than developed markets where cost of logistics would only be about 5% and 7%. (Source: The Edge Financial Daily) External reserves fell in USD terms but rose in MYR on quarterly revaluation gains as MYR depreciated in Mar 2015. As of 31 March 2015m, it amounted to MYR389.7b or USD105.1b - equivalent to 8.1 months of retained imports and 1.1 times of the country's short-term external debt. The reserves level was higher compared to MYR381.5b at 13 March 2015, but was lower in US dollars term compared to USD109.2b. Ringgit remains soft against USD, although it gained so far this month to close at 3.64 on 7tl April 2015 compared with 3.70 at the end of Mar 2015 (end-Feb 2015: 3.60). Net out flow of foreign capital from the Malaysian equity market slowed down, amounted to -MYR0.5b in March 2015, compared to -MYR2.4b in January 2015. In 1Q 2015, a total of -MYR3.4b foreign portfolio left the Malaysian equities market. Meanwhile, latest available data showed foreign holdings of total debt securities dropped slightly to MYR218.7b in Feb 2015 (Jan 2015: MYR218.8b).Global reserves declined to USD 11.6t in Mar 2015 from a record USD 12.03t in Aug 2014, according to data compiled by Bloomberg. The values of many global currencies such as Euro and Chinese Yuan were affected by the strengthening of US Dollar. (Sources: BNM, Bloomberg, MKE) Outside Malaysia U.S: Consumer credit increases on jump in non-revolving debt. The USD 15.5b advance in household credit followed a USD 10.8b gain in January that was smaller than initially reported. A surge in non-revolving loans such as those for automobile purchases and education more than offset the biggest drop in revolving credit since November 2010. (Source: Bloomberg) U.S: Job openings at 14-year high signal companies upbeat. The number of positions waiting to be filled climbed by 168,000 to 5.13 million, the most since January 2001, a report from the Labor Department showed. Dismissals dropped to the lowest level since November 2013. More employment opportunities in February, led by construction companies, retailers and restaurants, indicate the labor market probably will keep improving after a slowdown in March hiring. A drop in the number of Americans who quit their jobs shows faster wage growth may still take time to develop. (Source: Bloomberg) U.K: Services index hits seven-month high as economy strengthens. U.K. services growth accelerated to a seven- month high in March as the broader economy gained momentum in the first three months of 2015. Markit Economics said its Purchasing Managers' Index rose to 58.9 from 56.7 in February. (Source: Bloomberg) India: Central bank left interest rates unchanged as commercial lenders in Asia's third-largest economy have yet to pass on two previous cuts to customers. Governor Raghuram Rajan kept the benchmark repurchase rate at 7.50%, the Reserve Bank of India said in a statement. "Going forward, the accommodative stance of monetary policy will be maintained, but monetary policy actions will be conditioned by incoming data," Rajan said. The bank will watch for transmission of previous rate cuts, price rises, government moves to ease supply and normalization of U.S. policy even as India is "better buffered" against volatility, he said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,856.5 (0.6) 0.7 JCI 5,523.3 29.2 0.8 STI 3,465.6 9.4 0.4 SET 1,549.5 19.3 0.9 HSI 25,275.6 8.4 0.0 KOSPI 2,047.0 1.8 0.0 TWSE 9,641.9 12.0 0.4 DJIA 17,875.4 7.8 (0.0) S&P 2,076.3 12.3 (0.2) FTSE 6,961.8 3.2 1.9 MYR/USD 3.639 11.1 0.2 CPO (1mth) 2,194.0 (16.5) (1.3) Crude Oil (1mth) 54.0 (45.2) 3.5 Gold 1,209.9 0.7 (0.8) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.56 16.00 Sime Darby 9.29 10.20 Genting Malaysia 4.36 4.60 Gamuda 5.17 6.00 Westport 4.00 4.50 SP Setia 3.44 4.07 AFG 4.78 5.30 Hartalega 8.45 8.50 Inari 3.41 3.95 MBM Resources 3.46 4.20 Vitrox 3.50 4.05