Malaysia Daily, Maybank KE (2015-05-13)

Daily 13 May 2015 REGIONAL SECTOR UPDATE Regional Plantations: Maintain Neutral El Ni�o is back. This time for real! ABM declared an imminent return of El Nino. Market sentiment should turn positive with this confirmation. Conversely, the present ample supply of soybean will water down overall optimism unless weather impacts major soybean producing nations as well. Maintain NEUTRAL on the sector from a valuation perspective. But Indonesia and Singapore stocks still provide good trading opportunities after recent price corrections. Click here for full report » ECONOMICS Index of Services Pre-GST pick up Index of Services (IOS) rose by +7.1% YoY in 1Q 2015 (4Q 2014: +6.8% YoY). Pre-GST boosts to services activities like distributive trade, professional services, and computer & information services. We estimated 1Q 2015 real GDP growth of +6.2% YoY (4Q 2014: +5.8% YoY). Click here for full report » RESULTS REVIEW Petronas Gas: Maintain Hold Margin boost  Shariah-compliant 1Q15 net profit was ahead of expectations as margins expanded across all segments. 14sen DPS declared, thus maintaining recent practice of paying out dividends on a quarterly basis. Maintain HOLD, TP unchanged at MYR24.00; PTG remains a stock with a very stable earnings profile. Click here for full report » Dialog Group: Maintain Buy In line; Pengerang to drive growth  Shariah-compliant Stronger QoQ performance, associates turn around. Pengerang operations (oil, product, LNG terminals, regas plant) to drive long-term growth. Reiterate BUY and MYR1.90 TP (SOP-based). Click here for full report » REGIONAL COMPANY UPDATE Bumitama Agri: Maintain Buy Low CPO ASPs, weak FFB growth 1Q core below on lower-than-expected CPO ASPs & FFB production & associate losses. Expect strong FFB output in 2H15. Cut EPS by 4-7% for Indonesia�s new export levy. Maintain BUY with lower SGD1.14 TP from SGD1.30 on unchanged 13x FY16 EPS. Catalysts from FFB output growth. Click here for full report » MARKET STRATEGY Malaysia Strategy: Maintain Neutral FBM KLCI 30 review Felda Global is likely to be out, Westports to feature. Negligible rises in weightings of the other constituent stocks. No change to our stock calls on this matter. Click here for full report » Technicals Broke critical support at 1,800 level The FBMKLCI declined 6.88 points to 1,798.61 yesterday, while the FBMEMAS and FBM100 also closed lower by 45.10 points and 41.38 points, respectively. We expect some very weak buying at the supports of 1,774 to 1,790, whilst heavy liquidation activities will cap rebounds at the resistances of 1,798 and 1,824. Trading idea is a Take profit call on TEOSENG with retracement target areas at MYR1.61 & MYR1.47. Click here for full report » Other Local News Construction: PDP for LRT3 to be unveiled in July. The Project Delivery Partner (PDP) for the MYR9b light rail transit 3 (LRT3) will be unveiled by the first week of July, said Prasarana Malaysia group managing director Azmi Abdul Aziz. "So far, seven copies of the application documents were taken up. The deadline for the PDP submission is 12 noon on June 9. From then, we�ll been a month to evaluate the submissions. We'll announce the successful PDP for LRT3 by the first week of July, he said". (Source: The New Straits Times) Tenaga: Discussing with 1MDB on stake in Project 3B. Tenaga Nasional is in discussion with 1Malaysia Development (1MDB) over acquiring the biggest equity in the 2,000MW coal-fired power plant known as Project 3B. Energy, Green Technology and Water Minister Datuk Seri Maximus Ongkili said the ministry was made aware of the discussion, but no conclusion had been communicated to it thus far. He said the plan is to take the biggest stake in the project, but they are still in discussion. (Source: The Edge Financial Daily) Aeon Credit: To raise up to MYR1b via sukuk. Aeon Credit Service (M) plans to raise up to MYR1b via the issuance of sukuk to repay debts, provide financing for its customers based on Islamic principles, and for working capital. The Bursa Malaysia filing stated that the utilization of the proceeds from the sukuk murabahah shall at all times be shariah-compliant. (Source: The Edge Financial Daily) Outside Malaysia U.S: Record revenue boosts April budget surplus to 7-year high as hiring improved during a month when Americans file tax returns. Revenue exceeded spending by USD 156.7b last month, compared with a USD 106.9b surplus a year earlier, the Treasury Department said. (Source: Bloomberg) U.K: Industrial production rose the most since September as oil and gas extraction surged and manufacturing increased for a second month. Output gained 0.5% in March from the previous month, the Office for National Statistics said. In the first quarter, industrial output was revised to a 0.1% increase from a 0.1% decline, though the ONS said the impact on GDP would be "minimal." (Source: Bloomberg) China: Adopted the IMF standards for its latest balance of payments data as the nation seeks to obtain reserve-currency status for the CNY. The changes, effective this year, include putting reserve assets under the financial rather than the current account, according to a statement posted on the State Administration of Foreign Exchange website. With the adjustment, the country's first-quarter current-account surplus of USD 78.9b is the same as the deficit under the financial and capital heads. The authority didn't give a reason for the shift. (Source: Bloomberg) Japan: Current-Account surplus widens to biggest in seven years. Japan's current-account surplus widened to the most since 2008 in March, helped by an improvement in the trade balance and increased income from overseas. Japan had a JPY 2.8tr (USD 23b) excess in its broadest measure of trade, the finance ministry said. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,798.6 2.1 (0.4) JCI 5,205.6 (0.4) 0.6 STI 3,442.3 2.3 (0.8) SET 1,485.7 (0.8) (1.0) HSI 27,407.2 16.1 (1.1) KOSPI 2,096.8 9.5 (0.0) TWSE 9,680.7 4.0 0.2 DJIA 18,068.2 1.4 (0.2) S&P 2,099.1 2.0 (0.3) FTSE 6,933.8 5.6 (1.4) MYR/USD 3.616 3.4 0.4 CPO (1mth) 2,201.0 (3.9) 1.1 Crude Oil (1mth) 60.8 14.0 2.5 Gold 1,193.9 0.8 0.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.82 16.00 Sime Darby 8.95 10.20 Genting Malaysia 4.27 4.60 Gamuda 5.19 6.00 SP Setia 3.45 4.07 AFG 4.76 5.30 Inari 3.30 3.95 MBM Resources 3.40 4.20 Vitrox 3.65 4.05 Axiata 6.76 7.60