Malaysia Daily, Maybank KE (2015-06-19)

Daily 19 June 2015 COMPANY UPDATE Gamuda: Maintain Buy Solid earnings visibility  Shariah-compliant PTMP PDP award and KVMRT 2 PDP finalisation coming soon. Higher-than-expected project values and job wins from PTMP and KVMRT 2 are potential upside surprises. Reiterate Gamuda as our Top Pick of the construction sector. Click here for full report » RESULTS REVIEW Berjaya Sports Toto: Maintain Hold Calm before the �GST� storm Earnings and dividends were within expectations. Outlook still challenging due to the 6% GST. Maintain HOLD call but tweak TP from MYR3.18 to MYR3.22. Click here for full report » ECONOMICS US FOMC FFR �liftoff� later this year � just a matter of timing and quantum� Target fed funds rate (FFR) unchanged at 0%-0.25%. Fed is telegraphing that FFR hike will start this year but to proceed very gradually. We are pencilling in FFR liftoff in Sep at the earliest, totalling 50bps by end-2015 and 100bps in 2016 in a "go-stop-go" motion. Click here for full report » Technicals Headed towards 1,714 & 1,700 The FBMKLCI declined 8.74 points to 1,718.12 yesterday, while the FBMEMAS and FBM100 also closed lower by 37.62 points and 41.71 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a Take profit call on MYEG with downside target areas at MYR2.40 & MYR2.20. Click here for full report » Other Local News Kossan Rubber Industries: Lays out five year expansion plan. Plan includes spending MYR600m in capex to double glove maker�s annual production output from 22 billion pieces of gloves currently. Kossan aims to build manufacturing plants in Meru, where it has land totaling 38 acres and in Batang Berjuntai, Selangor where it owns 56 acres. The group currently has 15 plants which are operating at 85% capacity. (Source: The Edge Financial Daily) Mah Sing: Sees stronger momentum in second half. Its first quarter sales of MYR560m fell short of its target of MYR800m and second quarter sales is expected to be impacted by the implementation of the Goods and Service Tax (GST). Momentum should pick with the launches planned in second half, it is still premature to adjust the sales target, said Mah Sing. Mah Sing said some of the group's launches have been deferred to the second half of the year because of the weak sentiment in the first half of the year. Feedback from home buyers also revealed that the processing of loan takes longer and it is harder to obtain financing. (Source: The Sun) Tropicana Corp: Founder Danny Tan retires. He has retired as group executive vice chairman and relinquished his day-to-day management role in the group effective Thursday, June 18. Day-to-day management to group chief executive officer (CEO) Datuk Yau Kok Seng and deputy group CEO Datuk Dickson Tan. (Source: The Star) AISB: Banking on property development. Amalgamated Industrial Steel Bhd (AISB) sees the property development business as a new growth driver for the company, as its steel business continues to suffer from intense competition. Since AISB targets the commencement of the project around early 2016, it expects its financial year 2016 results to be good. The project, which is located on its 11.5-acre land in Jalan Pelaya, Shah Alam will feature 12 units of semi-detached factories, two units of warehouses and six units of single-storey building, with an estimated total gross development value (GDV) of MYR150m to MYR160m. (Source: The Sun) Outside Malaysia E.U: The European Central Bank handed EUR 73.8b (USD 84.2b) to euro-area banks in the fourth round of a program designed to boost their lending to the real economy. Banks borrowed EUR 98b in a similar operation in March, and have now taken EUR 384b in total. (Source: Bloomberg) U.K: Pound climbs to seven-month high as retail sales boost optimism. Sterling climbed for a fifth day after a report showed sales excluding auto fuel rose 0.2% MoM in May from the prior month. With the Bank of England saying that headwinds facing the economy are ebbing, traders brought forward their calls for when the central bank will raise interest rates. (Source: Bloomberg) Greece: Stumbling towards Euro exit as meeting ends in Rancor. Greece lurched closer to an exit from the euro as a meeting of finance officials to reach a deal over aid dissolved in acrimony, forcing leaders to call for an emergency summit. As the European Central Bank prepared for its own emergency session on Friday to discuss Greece's liquidity, thousands of Greeks piled outside parliament in Athens asking for the nation to be saved from default as Prime Minister Alexis Tsipras's government blamed a conspiracy to blackmail Greece for the rancorous breakdown in talks. (Source: Bloomberg) China: Home prices fell in fewer cities for a third month as buyers' confidence returned after the government removed some property curbs and interest rates fell. New-home prices declined in May in 41 of the 70 cities tracked by the National Bureau of Statistics, compared with declines in 47 in April. China eased mortgage policies and down-payment requirements for some homebuyers at the end of March, adding to easing measures since September to aid an industry that has been weighing on economic growth. Home sales rose for the first time this year in April and extended gains in May. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,718.1 (2.4) (0.5) JCI 4,945.5 (5.4) (0.0) STI 3,300.4 (1.9) (0.8) SET 1,508.0 0.7 (0.4) HSI 26,694.7 13.1 (0.2) KOSPI 2,041.9 6.6 0.3 TWSE 9,218.4 (1.0) 0.3 DJIA 18,115.8 1.6 1.0 S&P 2,121.2 3.0 1.0 FTSE 6,707.9 2.2 0.4 MYR/USD 3.709 6.1 (1.3) CPO (1mth) 2,230.0 (2.7) (2.5) Crude Oil (1mth) 60.5 13.5 0.9 Gold 1,201.9 1.5 1.4 TOP STOCK PICKS Buy rated large caps Price Target Tenaga Nasional 12.60 16.00 Axiata 6.50 7.60 Genting Malaysia 4.21 4.60 Gamuda 5.02 6.00 SP Setia 3.39 4.07 MBM Resources 3.50 4.20 Inari Amertron 3.30 4.05 Vitrox 3.35 4.05