Malaysia Daily, Maybank KE (2015-05-14)

Daily 14 May 2015 SECTOR UPDATE Malaysia Telcos: Maintain Overweight Closure on GST?  Shariah-compliant Prepaid users to be charged GST upon usage, not upon purchase of reloads; telcos have six months to implement. Wireless telcos have also been asked to reduce tariffs; our base case already takes into consideration elasticity (lower usage) and competition (lower price points). This verdict should be deemed as a satisfactory outcome to telcos. Our telco earnings are unchanged; sector picks remain Maxis (BUY, TP: MYR7.40), Axiata (BUY, TP: MYR7.60). Click here for full report » Malaysia Plantations: NEUTRAL 1Q15 results: Poor showing ahead Upcoming 1Q15 results will disappoint on low FFB output and ASP. Planters with USD debt will suffer huge forex losses. Looking forward to better quarters ahead as El Nino returns, possibly driving CPO price higher in the coming months. Maintain NEUTRAL on the sector. IOI Corp and FGV upgraded to HOLD (from SELL) yesterday on El Nino�s confirmation. Click here for full report » COMPANY UPDATE Petronas Gas: Maintain Hold A temporary boost  Shariah-compliant Elevated 1Q15 margins due to lower repair/maintenance activities; margins to normalise going forward. Minor headwinds to 2Q15 utilities revenue (from electricity tariff rebate) to be offset by tax incentives; Lahad Datu re-gas terminal is delayed indefinitely. Maintain HOLD, TP unchanged at MYR24.00. Click here for full report » RESULTS PREVIEW Media Chinese International: Maintain Hold More conservative on valuations  Shariah-compliant 4QFY3/15 results may outperform but forward adex visibility remains uncertain. Newsprint prices in MYR unchanged. Raise FY3/15 net profit forecast by 11% but trim FY3/16 by 4%. Further downside risk to FY3/16 earnings possible. Migrate valuation methodology from PER to P/BV. New TP of MYR0.71 is premised on 1.3x end-CY15 P/BV. Maintain HOLD. Click here for full report » RESULTS REVIEW Perisai Petroleum: Downgrade to Sell Challenging outlook; D/G to SELL  Shariah-compliant 1Q15 results in line, but 1st rig may succumb to rate cuts, while delivery of 2nd rig is likely to be delayed till end-2015. Cut 2015/16/17 net profit forecasts by 50%/36%/17%, largely on lower profits from rigs operation. Downgrade to SELL; TP lowered to MYR0.42 (-35%), based on 7x 2016 PER (unchanged). Click here for full report » Guinness Anchor: Downgrade to Hold Gradual volume recovery 9MFY15 results are within expectations at 82%/78% of our and consensus full-year forecasts. 3QFY15 results mainly driven by (i) better festive sales, (ii) market share gain, and (iii) overall increase in legal volumes. Downgrade to HOLD as valuations are fair. Dividend yield of >4% is worth holding on to. Click here for full report » Tan Chong Motor: Maintain Hold Pleasant surprises, but �  Shariah-compliant 1Q15 earnings above our expectation, below consensus. Raise our FY15-17 net profit forecasts by 18% p.a., TP by 1% to MYR3.45 (+1%) on unchanged 0.8x FY15 NTA peg. Maintain HOLD. Current 0.7x FY15 NTA limits downside, but no re-rating catalyst just yet. Click here for full report » Technicals Back above the 1,800 level The FBMKLCI gained 4.41 points to 1,803.02 yesterday, while the FBMEMAS and FBM100 also closed higher by 30.98 points and 27.15 points, respectively. We recommend a �Range Trading� stance for the index. Trading idea is a short-term buy on TOMYPAK with upside target areas at MYR1.80 & MYR2.13. Stop loss is at MYR1.48. Click here for full report » Other Local News Property: 1MDB ropes in Indonesian property developer. 1MDB Real Estate Sdn Bhd (1MDB RE), a wholly-owned unit of 1MDB has signed the sales and purchase agreement with Indonesia property developer, the Mulia Group for the development rights of a plot of 70-acre land believed to be valued at MYR665m to build its Signature Tower in the Tun Razak Exchange (TRX). (Source: The Edge Financial Daily) Oil & Gas: Aboriginal group against Petronas offer. Members of a Canadian aboriginal community, the Lax Kw'alaams First Nations have rejected a deal worth MYR3b that sought their support for a Petronas-led liquefied natural gas export terminal, setting the stage for the bands council to turn down the offer. The rejection however does not mean the project cannot go ahead, but would pose challenges for Petronas which is looking to smooth relationships with the aboriginal groups as it moves towards its final investment on the USD11b (MYR39.4b) project. (Source: The Star) Dayang Enterprise Holdings: To make takeover bid for Perdana Petroleum. Dayang is seeking to privatize its 29.88%-owned unit Perdana Petroluem after the two companies sought suspension from trading yesterday. Key to this privatization is pilgrim's fund Lembaga Tabung Haji which has an 8.43% stake in Perdana which could mean Dayang forking out a chunk for Perdana at MYR1.80 per share for Lembaga Tabung Haji's block of shares. (Source: The Edge Financial Daily) NCB Holdings: Cautious about hiring MD for Kontena. Port operator NCB Holdings is cautious about hiring a managing director for its loss-making subsidiary Kontena Nasional, given the situation of its former CEO Hood Osman, which has been charged with criminal breach of trust of company funds amounting to MYR9.9m. Separately, discussions for NCB's plans to collaborate with MMC Corp on how to expand Northport (M) business' are ongoing according to chairman Tun Ahmad Sarji Abdul Hamid. (Source: The Star) Outside Malaysia U.S: Retail sales little changed as Americans reluctant to splurge. Sales at U.S. retailers were flat in April, starting the second quarter on a weak note as Americans remained reluctant to splurge. The reading followed a revised 1.1% gain in March that was the biggest in a year and larger than previously estimated, Commerce Department figures showed. (Source: Bloomberg) E.U: Euro-area growth quickened in 1Q 2015 as stronger-than-predicted performances from France and Italy made up for weaker momentum in Germany. GDP in the region rose 0.4% QoQ in the first three months of the year after expanding 0.3% QoQ in the previous three months, the European Union's statistics office in Luxembourg said. Greece fell back into recession. (Source: Bloomberg) U.K: Unemployment fell to its lowest since 2008 and pay growth rebounded in a sign the British labor market is continuing to strengthen. Unemployment based on International Labor Organization methods fell 35,000 to 1.83 million in the first quarter, taking the jobless rate to 5.5% from 5.6%, the Office for National Statistics said. Wages grew by 1.9%, with regular pay jumping 2.2%- the biggest increase since 2011. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,803.0 2.4 0.2 JCI 5,246.1 0.4 0.8 STI 3,453.2 2.6 0.3 SET 1,496.0 (0.1) 0.7 HSI 27,249.3 15.4 (0.6) KOSPI 2,114.2 10.4 0.8 TWSE 9,724.1 4.5 0.4 DJIA 18,060.5 1.3 (0.0) S&P 2,098.5 1.9 (0.0) FTSE 6,949.6 5.8 0.2 MYR/USD 3.597 2.8 (0.5) CPO (1mth) 2,190.0 (4.4) (0.7) Crude Oil (1mth) 60.5 13.6 (0.4) Gold 1,215.8 2.6 1.8 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 13.80 16.00 Sime Darby 9.04 10.20 Genting Malaysia 4.30 4.60 Gamuda 5.19 6.00 SP Setia 3.49 4.07 AFG 4.76 5.30 Inari 3.31 3.95 MBM Resources 3.40 4.20 Vitrox 3.66 4.05 Axiata 6.73 7.60