Malaysia Daily, Maybank KE (2015-04-23)

Daily 23 April 2015 RESULTS REVIEW CIMB Group Holdings: Downgrade to Sell Niaga: Weak operating environment Operating environment still subdued due to weak economic conditions; hoping for activity to pick up in 2H15. Asset quality continues to deteriorate, provisioning to remain elevated in 2Q15. Cutting Niaga�s FY15 earnings by 23%, 11% for FY16; � 6% and -3% impact to CIMB Group�s earnings. Downgrade CIMB Group to SELL with an unchanged TP of MYR5.70. Click here for full report » Bursa Malaysia: Maintain Hold No surprises in 1Q15 MYR47m net profit (+4% YoY) was within expectations. We maintain our forecasts, expect another special dividend. No change to our MYR8.40 TP; maintain HOLD. Click here for full report » COMPANY UPDATE MBM Resources: Maintain Buy Deep value re-rating play  Shariah-compliant Perodua�s 1Q15 vehicle sales jumped 30% YoY, adding 6.4ppts market share, ahead of all other domestic marques. MBM offers a cheaper and purer exposure to Perodua�s strong near-term growth prospects via its 22.6% stake. Potential special dividend post sale of its property asset. Reiterate BUY with an unchanged MYR4.20 TP (9x FY15 PER). Click here for full report » Nestle Malaysia: Maintain Hold Stabilising export sales  Shariah-compliant 2015 will likely be the year of stabilisation for export sales. Expect a pick-up in sales post a potentially softer 2Q15 on (i) normalisation of consumer buying behaviour and (ii) contribution from a new plant. Maintain HOLD with an unchanged DCF-TP of MYR68. Click here for full report » UEM Sunrise: Maintain Hold Shift of focus  Shariah-compliant Positive on the shift; sales should pick up on new launches. Surprise could come from land sales in Puteri Harbour. Maintain earnings forecasts, MYR1.27 TP and HOLD rating. Click here for full report » SECTOR UPDATE Malaysia Automotive: Maintain Neutral �Mar�velous jump in TIV sales Mar 2015 TIV jumped 34% MoM to 67.3k units as buyers locked in purchases ahead of GST. Our 2015 TIV forecast of 660k units (-1% YoY) is unchanged, considering weaker consumer sentiment ahead post GST. Maintain NEUTRAL with no near-term re-rating catalyst just yet. BUYs are MBM and BAuto. HOLD UMWH and TCM. Click here for full report » ECONOMICS Malaysia CPI, Mar 2015 Beginning of the end to disinflation Inflation rate rebounded in Mar 2015 to +0.9% YoY after slumping to +0.1% YoY in Feb 2015 from +1.0% YoY in Jan 2015. Expect inflation rate to jump to between +2.8% YoY and +3.5% YoY in Apr 2015 following the introduction of GST on 1 April 2015. Maintain our 2015 inflation forecast at 3.0%-4.0% (official forecast: 2.0%-3.0%). Click here for full report » Technicals Minor weakness on profit taking The FBMKLCI declined 8.03 points to 1,854.77 yesterday, while the FBMEMAS and FBM100 also closed lower by 54.49 points and 51.10 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Short-Term Buy on SBCCORP with upside target areas at MYR1.23 & MYR1.36. Stop loss is at MYR0.96. Click here for full report » Other Local News Coastal Contracts: Secures rig sale worth MYR807m. Its wholly-owned subsidiary Thaumas Marine Pte Ltd secured the order for one unit of jack up drilling rigs to a �reputable� oil company. The deal is to reduce the company�s exposure to a potential downturn in the drilling market. The sale will increase the firm's sales order-book to MYR1.92b. (Source: The Edge Financial Daily) Iskandar Waterfront City: To buy freehold Johor land for MYR629m development. It plans to acquire three adjoining parcels of freehold land which measures a collective 67.5 acres (27.3ha) for MYR156m or MYR53 per sq ft for a proposed development with a GDV of MYR629m. It is expected to fund the proposed acquisition via bank borrowings and/or internally generated funds. The proposed acquisition could be completed by the fourth quarter of 2015. (Source: The Edge Financial Daily) MRCB: Sells 51% stake in Nu Sentral to Pelbauran Hartanah for MYR119m. It has signed the share sale agreement with Pelbauran Hartanah to dispose of its stake, comprising of 10.20 million shares and 91.80 redeemable non-convertible preference shares. The disposal is part of MRCB group�s macro strategy to monetize its non-core assets and focuses its resources on the core businesses of property development, specialised infrastructure and environment projects. (Source: The Star) Icon Offshore: CEO and COO remanded by MACC. The oil and gas services-related company said on Wednesday they had been remanded to �facilitate and assist� investigations currently being conducted by the MACC. The company has no details of the nature of the investigations or their status, it said in the announcement to Bursa Malaysia. (Source: The Star, The Edge Financial Daily) Outside Malaysia U.S: Housing market nears busy sales season on positive note. Sales of previously owned homes jumped in March by the most in four years, putting the U.S. residential real estate market on firm footing heading into the busiest time of year. Purchases increased 6.1% to a 5.19 million annualized rate, the highest level since September 2013, figures from the National Association of Realtors showed. Houses were snapped up in 52 days on average, the fastest since July, and property values appreciated. (Source: Bloomberg) Germany: Raises 2015 growth forecast to 1.8% on consumer spending. The new figure compares with a previous outlook from January for 1.5% growth in 2015, the Economy Ministry said. "Driven by a continued strong performance in the labor market with rising wages and increasing employment, Germany is on a solid growth path," Economy Minister Sigmar Gabriel said in an e-mailed statement. (Source: Bloomberg) S. Korea: Growth picks up from slowest pace since 2009. Gross domestic product rose 0.8% from the previous quarter, the Bank of Korea said. From a year earlier, the economy grew 2.4% YoY. The central bank cut its GDP forecast for this year to 3.1% as Governor Lee Ju Yeol waits for the benefits of three interest-rate cuts since August to support growth. Finance Minister Choi Kyung Hwan told parliament this week that the government will consider action to boost growth if necessary in the second half of the year. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,854.8 (0.7) (0.4) JCI 5,437.1 27.2 (0.4) STI 3,496.2 10.4 (0.4) SET 1,552.0 19.5 (1.1) HSI 27,933.9 19.9 0.3 KOSPI 2,143.9 6.6 (0.0) TWSE 9,613.0 11.6 0.8 DJIA 18,038.3 8.8 0.5 S&P 2,108.0 14.0 0.5 FTSE 7,028.2 4.1 (0.5) MYR/USD 3.611 10.2 (0.7) CPO (1mth) 2,179.0 (17.1) (1.1) Crude Oil (1mth) 56.2 (42.9) 1.6 Gold 1,187.1 (1.2) (1.3) TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.48 16.00 Sime Darby 9.27 10.20 Genting Malaysia 4.38 4.60 Gamuda 5.23 6.00 Westport 4.10 4.50 SP Setia 3.50 4.07 AFG 4.80 5.30 Hartalega 8.19 8.50 Inari 3.46 3.95 MBM Resources 3.38 4.20 Vitrox 3.84 4.05 Axiata 6.98 7.60