Malaysia Daily, Maybank KE (2015-04-15)

Daily 15 April 2015 SECTOR UPDATE Malaysia Construction: Maintain Overweight Action-packed ahead 11MP would enhance sector outlook, leading to a post-11MP construction stocks rally. Sarawak players are in a sweet spot for a major re-rating. Reiterate OVERWEIGHT with Gamuda as Top Pick. Click here for full report » REGIONAL SECTOR UPDATE Regional Plantations: Maintain Neutral Dejavu ABM raises the ENSO Tracker to El Ni�o ALERT (from El Ni�o WATCH), raising the probability of an El Ni�o occuring in 2015 to a 70% chance (from 50%). The return on an El Ni�o could bring below-average rainfall to this region, impacting yield but offset by higher CPO price. A confirmation of an El Ni�o event may change current market sentiment. NEUTRAL for now. Click here for full report » COMPANY UPDATE Cahya Mata Sarawak: Maintain Buy More construction wins soon?  Shariah-compliant First major job win since 2009, lifting orderbook by 51%. Minor earnings impact but could be a prelude to more wins. Reiterate BUY. TP is under review. Click here for full report » Bumi Armada: Maintain Buy Wins Malta FSU contract Positive but not unexpected on the win - an 18-year charter for USD300m, to start ops in 2H16. Expect to add MYR25m net profit p.a.; 3% of 2017 EPS; NPV of MYR340m (6 sen/shr). Maintain BUY with an unchanged MYR1.60 SOP-TP. Click here for full report » Oldtown: Maintain Buy Service charge anyone?  Shariah-compliant For every 1-ppt of the 10% service charge being passed down to its employees, earnings could be impacted by MYR1m. However, we believe OTB could limit the impact by either raising prices, reducing expenses or both. We maintain our earnings forecasts pending further developments. Maintain BUY with an unchanged MYR2.15 TP. Click here for full report » Technicals Softer index tone on profit taking The FBMKLCI fell 2.47 points to 1,839.61 yesterday, while the FBMEMAS and FBM100 also closed lower by 13.00 points and 13.79 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a short-term buy on SLP with upside target areas at MYR0.95 & MYR1.23. Stop loss is at MYR0.70. Click here for full report » Other Local News Boustead Holdings: Buys Irat stake at a higher price of MYR199m. Boustead Holdings has acquired a 50% stake in Irat Properties Sdn Bhd for MYR199m cash, which will see the conglomerate invest in the governments automated enforcement system (AES). The proposed acquisition of Beta Tegap Sdn Bhd is currently pending the fulfilment of the conditions precedent to the SPA. (Source: The Edge Financial Daily) Tenaga Nasional: Latest power plant in Manjung starts operations. TNB's latest coal-fired power plant in Manjung, Perak has begun its commercial operations, transmitting an additional 1,000MW into the national grid. The Manjung 4 plant raised the generating capacity of TNB Janamanjung Sdn Bhd to 3,100MW, turning it into peninsular Malaysia's largest independent power producer to date. (Source: The Star) Bioalpha Holdings: To spend MYR3m to beef up its R&D. Bioalpha Holdings will set aside MYR3m from the proceeds of its IPO to enhance its research and development (R&D) to maintain a sustainable growth and market expansion of its business. It plans to use part of the funds raised to upgrade the laboratory facility, develop their proprietary fermentation process for four new medicinal mushroom strains, and also develop new product formulations. Another MYR3m from the expected MYR20m of proceeds raised from the IPO will be used as capex to set up a herb processing plant in Pasir Raja, Terengganu. (Source: The Edge Financial Daily) Benalec Holdings: Engages Pestech. It's wholly-owned subsidiary, Tanjung Piai Maritime Industries Sdn Bhd has entered into a memorandum of understanding (MoU) with Pestech Sdn Bhd (wholly-owned unit of Pestech) to look at avenues to establish the power supply infrastructure for Benalec's Tanjung Piai Integrated Petroleum and Maritime Industrial Park in Pontian, Johor. The two parties shall initiate discussions and form a definitive contract within six months from the date of the MoU, or in a further period to be mutually agreed upon, for the establishment of the power supply (Source: The Edge Financial Daily) Outside Malaysia Global: Surging USD boosts Europe, Japan as U.S. slows, IMF says. The strengthening dollar is boosting growth in the euro area and Japan while taking some steam out of the U.S. recovery, the IMF said in its latest forecast. The International Monetary Fund left its projection for global growth in 2015 unchanged from three months ago at 3.5%, according to its World Economic Outlook released. Underneath the stable forecast, however, the IMF depicts a global economy being reshaped by swings in currency markets and the drop in oil prices. The Washington-based crisis lender cut its U.S. expansion forecast by 0.5 ppts to 3.1%, still the fastest among major developed economies. The Japan growth outlook increased to 1% from 0.6% and the euro area is projected to expand 1.5% as weakening currencies provide a "welcome boost," the IMF said. (Source: Bloomberg) U.S: Lackluster rebound in sales shows consumers hesitant. The March rebound in U.S. retail sales was less impressive than economists forecast, signaling consumers are in no rush to spend the windfall from cheaper fuel prices. Purchases increased 0.9%, the first gain in four months, according to Commerce Department figures. Other reports showed inflation is tame and small-business confidence ebbed. (Source: Bloomberg) U.K: Consumer prices stagnated for a second month in March as restaurants and hotels spared the country from outright deflation. The inflation rate remained at zero. Core inflation slowed to the weakest in nine years, reflecting a drop in clothing prices. Weak price growth means there's little pressure on the Bank of England to raise its key interest rate from a record-low 0.5%, where it's been for more than six years. Governor Mark Carney has said any period of falling prices will be temporary and an expected pickup in inflation at the end of the year means the next move in interest rates is likely to be an increase. (Source: Bloomberg) Indonesia: Central bank kept its main interest rate unchanged for a second month, refraining from easing policy as inflationary pressures reappear. Governor Agus Martowardojo and his board kept the reference rate at 7.5%, Bank Indonesia said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,839.6 (1.5) (0.3) JCI 5,419.1 26.8 (1.3) STI 3,521.1 11.2 1.4 SET 1,547.8 19.2 0.0 HSI 27,561.5 18.3 1.1 KOSPI 2,111.7 5.0 1.1 TWSE 9,642.2 12.0 0.3 DJIA 18,036.7 8.8 (0.1) S&P 2,095.8 13.4 (0.3) FTSE 7,075.3 4.8 (0.2) MYR/USD 3.701 13.0 0.9 CPO (1mth) 2,148.0 (18.3) 1.3 Crude Oil (1mth) 53.3 (45.9) 3.2 Gold 1,192.8 (0.7) (1.2) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.42 16.00 Sime Darby 9.26 10.20 Genting Malaysia 4.56 4.60 Gamuda 5.16 6.00 Westport 4.06 4.50 SP Setia 3.43 4.07 AFG 4.74 5.30 Hartalega 8.29 8.50 Inari 3.51 3.95 MBM Resources 3.40 4.20 Vitrox 3.59 4.05