Malaysia Daily, Maybank KE (2015-04-27)

Daily 27 April 2015 COMPANY UPDATE Malaysia Airports: Maintain Hold Undergoing a capital heavy period  Shariah-compliant 1Q15 passenger traffic growth at the Malaysia airports below expectation, unlikely to reverse anytime soon. Main new assets will only contribute positively from 2016 onwards; lowering our earnings forecasts. Maintain HOLD, with a new TP of MYR6.85. Click here for full report » SECTOR UPDATE Malaysia Media: Maintain Neutral Mar 2015 adex: Pre-GST fears weighed Mar 2015 total gross adex eased 7% YoY despite low Mar 2014 base dented by MH370 tragedy then. Smaller advertisers held back due to pre-GST fears. We maintain 2015 total gross adex forecast of -5% YoY for now. Ex-Astro, media companies are inexpensive at Click here for full report » ECONOMICS Singapore IPI, March 2015 Output down despite NODX surge Industrial Production (IP) contracted -5.5% YoY in Mar 2015 (Feb 2015: -3.3% YoY). IP also shrank -2.7% YoY in 1Q 2015, but less than the -3.4% YoY decline in the preliminary manufacturing GDP. With 1Q 2015 likely to be better than the advanced estimate of +2.1% YoY, maintain our 2015 real GDP growth forecast of +2.5%. Click here for full report » Technicals DJIA and FBMKLCI look likely to rise The FBM KLCI rose 16.72 points WoW to close at 1,862.58, as some firm local and foreign nibbling activities took place last week. The support levels of 1,815 and 1,862 will be areas to buy. Take profit at the resistance areas of 1,864 to 1,896. Trading idea is a Short-Term Buy call on SASBADI with upside target areas at MYR2.35 & MYR3.13. Stop loss is at MYR1.95. Click here for full report » Other Local News Aviation: MAS eyes JVs with OEMs for expansion. Malaysian Airline System Bhd's maintenance and engineering arm, Malaysian Aerospace Engineering Sdn Bhd, is looking to emulate Singapore International Airline (SIA) by partnering with original equipment manufacturers (OEMs) to make aircraft parts as part of its expansion plans from 2020 onwards. Also, it is mulling the set up of repair centres to grow. (Source: The Edge Financial Daily) Plantation: New rule for plant-related exports to Vietnam. Malaysia External Trade Development Corp (Matrade) has urged Malaysian companies exporting plant-related products to Vietnam to submit their details and products to the Plant Protection Department (PPD) of Vietnam before July 31, 2015. This follows a new regulation on plant quarantine announced by the Vietnamese government recently whereby all exports of plant-related products to the country must undergo pest risk analysis. (Source: The Sun) Malton: Gets MYR703m Pavilion Damansara Heights project. The job is for construction works involving the site clearance, demolition, foundation, retaining wall system, basement car parks, retail podium and infrastructures. (Source: The Sun) Bina Puri: Bags MYR123.3m Sabah State Administrative complex. The contract is for interior design works for Blocks A and B of the state administrative complex in Kota Kinabalu. With this new contract, the group's un-built book order stands at MYR2.17b to-date. The project is expected to contribute positively to the Group's net assets and earnings for the financial year ending Dec 31, 2015. (Source: The Sun) Automotive: Perodua sales up 30% to 57,200 units in 1Q. Sales are up due to strong demand for its current models such as Axia. March represented the highest monthly sales record for Perodua, with an expected market share of 34% based on the estimated total industry volume of 65,500 units in March. (Source: The Edge Financial Daily) GHL: Strides forward with CIMB PSP agreement. It intends to grow its transaction payment acquisition business. It has recently signed a payment service provider arrangement with CIMB Bank. This agreement will allow GHL to commence acquisition of merchants on behalf of CIMB for the next three years to accept e-payment services at point of sale terminals. The company's revenue from this arrangement will be derived from terminal rental and a share of the merchant discount rates. (Source: The Edge Financial Daily) Pestech: Strengthening its rail electrification unit. It seeks to increase its participation in Southeast Asia's infrastructure development. CEO says business can generate a profit margin of 15% to 17%. (Source: The Edge Financial Daily) QL: To take up stake in Sunsuria. The company is believed to have purchased a stake of at least 5% in Sunsuria. The owners of QL Resources know Sunsuria's major shareholders and have confidence in his ability to deliver on the property projects. (Source: The Star) The leading index (LI) decreased further in Feb 2015 by -1.4% MoM (Jan 2015: -0.3% MoM) as the drop in "Approved Housing Permits" (Feb 2015: -0.7% MoM; Jan 2015: -0.1% MoM), "New Companies Registered" (Feb 2015: -0.5% MoM; Jan 2015: -0.1% MoM) and "Real Imports and Other Metals" (Feb 2015: -0.6% MoM; Jan 2015: +0.2% MoM) countered the rise in "Expected Manufacturing Sales Value" (Feb 2015: +0.1% MoM; Feb 2015: -0.4% MoM) and "Real Money Supply (M1)" (Feb 2015: +0.2% MoM; Jan 2015: -0.1% MoM). LI slowed to +0.9% YoY (Feb 2015: +2.3% YoY). This indicates that economic activities will likely expand at a more moderate pace in the coming 6-9 months. (Source: Department of Statistics Malaysia, MKE) Malaysia's February 2015 unemployment rate increased slightly to 3.2% compared with 3.1% in January 2015. The higher rate was due to the increase of unemployed, which grew +1.9% YoY as compared to the negative growth last month (Jan 2015: -3.4% YoY) to 454,900 people. Total labour force grew +1.7% YoY in Feb 2015 (Jan 2015: +0.4% YoY) to 14.1 million people, which was supported by strong employment growth of +1.7% YoY in Feb 2015 (Jan 2015: +0.5% YoY). The labour force participation rate (LFPR) increased to 67.4% in February 2015 (Jan 2015: 67.2%). We are expecting a full-year unemployment rate of 3.1%, up from 2.9% last year. (Source: Department of Statistics Malaysia, MKE) Outside Malaysia U.S: Orders for business equipment falls for seventh month. Orders for business equipment unexpectedly fell in March for a seventh consecutive month, a sign business investment will remain sluggish. Bookings for non-military capital goods excluding aircraft, a proxy for future corporate spending on new equipment, dropped 0.5%, data from the Commerce Department showed. Demand for all durable goods - items meant to last at least three years-rose 4%on aircraft and autos. (Source: Bloomberg) U.S: Claims hovering near 15-year low signal payroll rebound. An average 284,500 workers a week filed claims for jobless benefits over the past month, according to Labor Department data. The 282,500 average reached in early April was the lowest since June 2000. Another report showed sales of new homes slumped more than forecast in March, ending the strongest quarter in seven years on a weak note. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,862.6 (0.2) 0.9 JCI 5,435.4 27.2 (0.0) STI 3,513.0 10.9 0.3 SET 1,555.5 19.8 0.7 HSI 28,061.0 20.4 0.8 KOSPI 2,159.8 7.4 (0.6) TWSE 9,913.3 15.1 1.2 DJIA 18,080.1 9.1 0.1 S&P 2,117.7 14.6 0.2 FTSE 7,070.7 4.8 0.2 MYR/USD 3.578 9.2 (1.6) CPO (1mth) 2,166.0 (17.6) (0.4) Crude Oil (1mth) 57.2 (41.9) (1.0) Gold 1,191.4 (0.9) 0.1 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.60 16.00 Sime Darby 9.28 10.20 Genting Malaysia 4.48 4.60 Gamuda 5.24 6.00 Westport 4.36 4.50 SP Setia 3.50 4.07 AFG 4.82 5.30 Hartalega 8.08 8.50 Inari 3.39 3.95 MBM Resources 3.38 4.20 Vitrox 3.75 4.05 Axiata 6.99 7.60