Malaysia Daily, Maybank KE (2015-05-06)

Daily 06 May 2015 RESULTS REVIEW Hartalega: Downgrade to Hold Superior growth priced-in  Shariah-compliant Stronger 4QFY3/15 net profit within expectations. Superior growth largely priced in at CY16 PER of 21x. Downgrade to HOLD with just 3% upside to MYR8.50 TP. Click here for full report » KLCC Property: Maintain Buy No surprises 1Q15 core net profit of MYR179m (-3% YoY) was in line. Earnings forecasts and MYR7.65 TP unchanged. We continue to like KLCCP for its resilient rental income from its prime office and retail assets; maintain BUY. Click here for full report » Malaysia Airports: Maintain Hold No surprises  Shariah-compliant 1Q15 core net profit in line with ours and consensus. 2015 outlook remains cautious due to slow traffic growth coupled with impending route cuts by Malaysian Airlines. Maintain HOLD with a slightly reduced target price of MYR6.75 (from MYR6.85). Click here for full report » Technicals A late afternoon pyrrhic rebound The FBMKLCI advanced 9.15 points to 1,827.42 yesterday, while the FBMEMAS and FBM100 also closed higher by 50.36 points and 53.15 points, respectively. We expect weaker buying at the supports of 1,800 to 1,822, whilst profit-taking activities will cap rebounds at the resistances of 1,827 and 1,848. Trading idea is a Take Profit call on MASTEEL with downside target areas at MYR0.58 & MYR0.39. Click here for full report » Other Local News Oil & Gas: Petronas seeks Canadian community support for project. Petroliam Nasional (Petronas), which is leading a group that is developing a multi-billion-ringgit liquefied natural gas (LNG) export terminal in Canada, is offering CAD1.15b in compensation to an aboriginal community, as it seeks to win local support for the proposed project. (Source: The Star) Sime Darby: Shelves IPO plan for the motor unit. Sime Darby, the world's largest listed palm oil firm, has indefinitely postponed an initial public offering (IPO) of its automotive business that bankers had said could raise up to USD500m (MYR1.8b). The company had in February deferred the IPO of Sime Darby Motors to the second half of this year, but three people with knowledge of the matter said the deal has been put off for now. (Source: The New Straits Times) AirAsia: Not ruling out another joint venture in Asean. AirAsia is not ruling out the possibility of another joint venture (JV) within the Asean region. "New JVs are not out of the question," said group chief executive officer Tan Sri Tony Fernandes, when asked about expansion plans in Asean. Fernandes did not reveal which country he has earmarked for the next possible venture, but said the move would further strengthen AirAsia�s Asean network. (Source: The Edge Financial Daily) Outside Malaysia U.S: Trade gap swells to six-year high as imports surge. The U.S. trade deficit widened in March to the highest level in more than six years, fueled by a record surge in imports as commercial activity resumed at West Coast ports following a resolution to labor disputes. The gap increased 43.1% YoY, the biggest jump in 18 years, to USD 51.4b, the largest since October 2008, the Commerce Department reported. Imports increased 7.7% while exports climbed at a slower rate of 0.9%. (Source: Bloomberg) U.S: Pickup in service industries points to growth rebound. The biggest part of the U.S. economy awoke from its first-quarter torpor as service industries from real estate to transportation and banking picked up in April. The Institute for Supply Management�s non-manufacturing index rose to 57.8, the highest since November, from 56.5 in March, the Tempe, Arizona-based group�s report showed. Readings above 50 signal expansion. Services, which constitute about 90% of the economy, are benefiting from a plunge in oil prices that is giving consumers extra cash to spend at retailers, restaurants and movie theaters even as it heaps damage on factories. (Source: Bloomberg) E.U: Raises growth outlook as ECB action counters Greek threat. The European Commission raised its euro-area growth forecast as the impact of a weaker euro and unprecedented monetary stimulus help the economy overcome pressure on confidence from the continuing crisis in Greece. Gross domestic product in the 19-nation currency bloc is forecast to increase 1.5% this year, up from 1.3% in February, according to the commission, the European Union executive in Brussels. It slashed its growth projections for Greece at a time when the cash-strapped country is struggling to persuade its euro-area partners to help pay its bills. (Source: Bloomberg) Japan: Pushes big companies to pass Yen benefits on to suppliers. The Abe administration plans to push Japan�s large exporters to pass on benefits from the weaker yen to suppliers hurt by higher costs for imported raw materials, Deputy Economy Minister Yasutoshi Nishimura said. �While the weak yen has been good for the Japanese economy overall, there has also been a negative side to that,� Nishimura, 52, said in an interview. �We will win an agreement by asking via the Keidanren that the big companies that benefited from the weaker yen pass on those benefits by lifting prices to suppliers.� The Keidanren is Japan�s biggest business lobby. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,827.4 (2.1) 0.5 JCI 5,160.3 20.7 0.4 STI 3,471.2 9.6 (0.3) SET 1,526.7 17.6 0.0 HSI 27,755.5 19.1 (1.3) KOSPI 2,132.2 6.0 0.0 TWSE 9,820.1 14.0 (0.3) DJIA 17,928.2 8.2 (0.8) S&P 2,089.5 13.0 (1.2) FTSE 6,927.6 2.6 (0.8) MYR/USD 3.611 10.2 0.4 CPO (1mth) 2,136.0 (18.7) 3.2 Crude Oil (1mth) 60.4 (38.6) 2.5 Gold 1,193.3 (0.7) 0.4 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 14.28 16.00 Sime Darby 9.12 10.20 Genting Malaysia 4.40 4.60 Gamuda 5.26 6.00 Westport 4.23 4.50 SP Setia 3.40 4.07 AFG 4.74 5.30 Hartalega 8.22 8.50 Inari 3.24 3.95 MBM Resources 3.40 4.20 Vitrox 3.65 4.05 Axiata 6.80 7.60