Malaysia Daily, Maybank KE (2015-05-05)

Daily 05 May 2015 RESULTS REVIEW Westports Holdings: Downgrade to Hold Well done!  Shariah-compliant Strong 1Q within expectations, driven by intra-ASEAN trade. Tariff hike in 2015 is unlikely in an inflationary environment. Downgrade to HOLD as it already trades at our DCF-derived TP of MYR4.50 (implying 27x FY16 PER). Click here for full report » MISC Bhd: Downgrade to Hold Had a good run  Shariah-compliant 1Q15 results below expectations on weaker LNG earnings. Earnings could soften on lower LNG and petroleum rates. Downgrade to HOLD; SOP-based TP unchanged at MYR8.70. Click here for full report » COMPANY UPDATE UEM Sunrise: Maintain Hold Re-aligning strategies  Shariah-compliant Positive on the shift; management remains confident on its MYR2b sales target for FY15. UEMS is on the lookout for new landbank. No change to earnings forecasts, MYR1.27 TP and HOLD rating. Earnings surprises could come from land sales. Click here for full report » SECTOR UPDATE Malaysia Banking: Maintain Neutral Pre-GST led growth? Loan growth gained momentum to 9.2% YoY in Mar (+8.8% YoY in Feb) on faster non-HH loan growth (+8.5% vs +7.6%). Industry LDR took a breather (86.6% vs 87.4% end-Feb) while asset quality continued to improve. NEUTRAL on the sector; BUY AFG, HL Bank, HLFG. Click here for full report » Technicals FBMKLCI looks weak in May The FBM KLCI fell 44.31 points WoW to close at the week�s low of 1,818.27, as heavy selling activities emerged ahead of the Labour Day and Wesak holidays. The support levels of 1,770 and 1,806 may be weaker. Liquidation at the resistance areas of 1,818 to 1,867 will cap rebounds. Trading idea is a TAKE profit call on PESONA with downside target areas at MYR.665 & MYR0.43. Click here for full report » Other Local News IJM Corporation: Eyeing 1MDB's power generation assets. IJM Corp's former chief executive officer and managing director Datuk Teh Kean Ming who retired last month after having served the company for more than two decades, said all the divisions had a plan mapped out for their continued growth without burdening the group's balance sheet. Next on the horizon for IJM is its move into the power generation sector. The group is looking at a fast entry and is fishing for existing power plants. One option is the Tanjong and Genting power plants belonging to Edra Global Energy, which is under troubled 1Malaysia Development (1MDB). (Source: The Star) Scientex: To gain from weak ringgit. Scientex said it will stand to benefit - albeit "slightly" - from the weaker ringgit against the US dollar, going forward. The company saw its net profit growth for the second quarter ended January (2QFY15) dragged down by a foreign exchange loss of MYR9.7m, on a weaker ringgit due to its US-denominated borrowings. "As a substantial portion of our [manufacturing division] sales are generated in US dollars, we will stand to benefit slightly from a weaker ringgit against the US dollar" said managing director Lim Peng Jin. (Source: The Edge Financial Daily) Cahya Mata Sarawak: To expand cement production capacity by 60%. Cahya Mata Sarawak (CMS) will raise cement production capacity by almost 60% to 2.75m tonnes per annum when its third grinding plant, currently being built, is commissioned in the first quarter of 2016. Group managing director Datuk Richard Curtis said the proposed MYR190m plant project located adjacent to the group's clinker plant in Mambong, Penrissen Road was progressing well, with trial production scheduled by end-2015. (Source: The Star) Outside Malaysia U.S: Gain in April orders signals abating manufacturing headwinds. While the Institute for Supply Management's factory index held at an almost two-year low of 51.5, the more forward-looking indicator on bookings reached a four-month high, according to figures from the Tempe, Arizona-based group. Another report showed consumer sentiment rose to the second-highest level since 2007. (Source: Bloomberg) U.K: Manufacturing unexpectedly cools as Pound saps exports. Growth at U.K. factories unexpectedly cooled last month as the stronger pound hit demand for British goods abroad, adding to signs economic growth is losing momentum less than a week before the general election. A Purchasing Managers' Index for the manufacturing industry fell to a seven-month low of 51.9 from 54 in March, Markit Economics Ltd. said. New export orders shrank for the fifth time in seven months. (Source: Bloomberg) China: April manufacturing weakens further in final HSBC PMI. A Chinese manufacturing gauge trailed economists' estimates in April as new orders declined, underscoring forecasts for policy makers to step up stimulus to shore up growth. The final Purchasing Managers� Index from HSBC Holdings Plc and Markit Economics was at 48.9, lower than the preliminary reading of 49.2. Numbers below 50 indicate contraction. (Source: Bloomberg) Indonesia: Tax amnesty to lift budget revenue as growth slows. Indonesia is introducing a tax amnesty this month to boost revenues as slowing economic growth puts pressure on the government to increase spending, Finance Minister Bambang Brodjonegoro said. The amnesty will last until the end of the year and allows citizens to avoid penalties if they pay five years of unpaid taxes, Brodjonegoro told Bloomberg in an interview i. The government will use electronic invoices to avoid fraud as part of wider tax reforms, he said. (Source: Bloomberg) Money Supply: Broad money (M3) growth increased to +7.9% YoY in Mar 2015 from the +6.9% YoY recorded a month earlier. The expansion in M3 was driven mainly by the extension of credit to the private sector by the banking system. Net financing to the private sector grew by +8.3% YoY in Mar 2015, driven by higher growth of both outstanding banking system loans and net issuances of private debt securities (PDS). M1 growth in the meantime gained by +10.2% YoY (Feb 2015: +7.8% YoY). (Source: BNM, Maybank-KE)     Key Indices Value YTD (%) Daily (%) KLCI 1,818.3 (2.6) 0.0 JCI 5,141.1 20.3 1.1 STI 3,482.7 10.0 (0.1) SET 1,526.7 17.6 0.0 HSI 28,123.8 20.7 (0.0) KOSPI 2,132.2 6.0 0.2 TWSE 9,845.0 14.3 0.3 DJIA 18,070.4 9.0 0.3 S&P 2,114.5 14.4 0.3 FTSE 6,986.0 3.5 0.0 MYR/USD 3.601 9.9 0.8 CPO (1mth) 2,070.0 (21.2) 0.0 Crude Oil (1mth) 58.9 (40.1) (0.4) Gold 1,182.6 (1.6) 0.1 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.36 16.00 Sime Darby 9.06 10.20 Genting Malaysia 4.30 4.60 Gamuda 5.23 6.00 Westport 4.50 4.50 SP Setia 3.41 4.07 AFG 4.74 5.30 Hartalega 8.16 8.50 Inari 3.18 3.95 MBM Resources 3.40 4.20 Vitrox 3.60 4.05 Axiata 6.74 7.60