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SECTOR RESEARCH
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Sector Note
by
Mohshin Aziz
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New airport
passenger service charges
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The new Passenger Service Charges (PSC) will take
effect 1 Jan 2017 with the following rates: (i) domestic standardized
to MYR11 (+22% hike), (ii) international from other airports at MYR73
(+3%) and from klia2 at MYR50 (+56%). Also, the introduction of PSC
for ASEAN flights of MYR35. We view this as a pro-growth policy and
balancing the rift between the full-service carriers (FSC) and
low-cost carriers (LCC). Maintain BUY on MAHB and AirAsia, HOLD on
AirAsia X.
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Sector Note
by
Desmond Ch'ng
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Sep 2016 loan growth was stable at 4.2% YoY, which is
a consolation, since growth has been down-trending since Aug 2015. On
an annualized basis, growth of 3.6% does imply that our forecast of
5.3% for 2016 is optimistic at this stage. We forecast a similar
growth rate of 5.3% for 2017. We maintain our BUY calls on BIMB, AFG
and HL Bank.
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NEWS
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Outside Malaysia:
U.S. Consumer spending in September climbs by most in
three months, signaling momentum in the biggest part of the U.S. economy.
The 0.5% advance in spending, which accounts for about 70 percent of the
economy, followed a 0.1% decline the prior month that was revised lower,
a Commerce Department report showed. While the results indicate a solid
handoff into the final quarter of 2016, disposable income, or the
inflation-adjusted money left over after taxes, was little changed for a
second month, indicating wages will need to pick up to boost spending
even more. Such support is needed to drive faster economic growth, which
picked up last quarter despite softer household purchases. (Source:
Bloomberg)
E.U: Inflation pickup comes with bad news for ECB.
Euro-area inflation accelerated at the fastest pace in more than two
years in October. But what looks like progress in stoking consumer prices
actually contains some bad news for the European Central Bank. Policy
makers including ECB chief economist Peter Praet have warned repeatedly
that they're lacking convincing signs of underlying price pressures, and
inflation data published proved them right. Digging deeper into the
figures shows the core rate, which excludes volatile items such as food
and energy, fell to the lowest in six months. That's critical since the
central bank views the measure as a guide for where headline inflation
will settle. (Source: Bloomberg)
Thailand: Overseas investors are pulling money from stocks
at the fastest pace this year. Foreign funds sold a net USD 514m of Thai
equities last month, more than five times as much as from the
Philippines, with the bulk of the outflows coming after the Oct. 13 death
of King Bhumibol Adulyadej, who had been a source of political stability
in a country wracked by numerous coups. (Source: Bloomberg)
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Other News:
Ekovest: Obtains development order for MYR2.6b EkoGateway.
The property development and infrastructure concession businesses, has
obtained the Development Order (DO) for its MYR2.6b property project –
EkoGateway @ KL River City, which spans across 14.5 acres in the northern
region of Kuala Lumpur. The DO comprises three 42 storey service
apartments, one 42 storey hotel and offices, two 36 storey serviced
apartments and a 27 storey civil service housing block. Kuala Lumpur
River City is a project that spans 3km along the Gombak River and is
located 5km from the city’s golden triangle. Additionally, after the
completion of this project, the government will allocate a total of
MYR130m facilitation fund to Ekovest. (Source: The Sun Daily)
Coastal Contracts: Aborts Indonesia LNG venture. The group
has aborted its plan to tap into Indonesia's liquefied natural gas (LNG)
supply chain after its proposed joint venture with an Indonesian firm
fell through. This came after the memorandum of understanding (MoU) it
inked in August with PT Jaya Samudra Karunia Gas Internasional and Yudha
Kurniawan Tanos in relation to the purchase of a 49% stake in PT Jaya
Samudra Karunia Gas (JSK Gas) — a Jakarta-based coal transporter — lapsed
last Friday. It was supposed to fork out USD6.55m (MYR26.44m) for the
stake. Under the deal, JSK Gas was to issue 1,500 new ordinary shares at
an issue price of USD9,465 per share, which amounts to USD14.19m in
total, to Coastal Contracts, subject to adjustment on completion.
(Source: The Edge Financial Daily)
KPS: Shareholders give nod to Century Bond buy. Kumpulan
Perangsang Selangor (KPS) has today received its shareholders' approval
for the proposed acquisition of an approximately 71.44% stake in Century
Bond, via its wholly-owned subsidiary Perangsang Packaging S/B, for
MYR150.03m .Century Bond is involved in the manufacturing of cement bags
and holds a 60% market share in Malaysia, as well as having a presence in
Indonesia, Singapore and Thailand. The prooposed buy, together with a
mandatory general offer it plans to make for the balance of the Century
Bond shares, and a proposal to diversify its business into manufacturing
, was met with shareholders’ approval at an extraordinary general meeting
yesterday. (Source: The Edge Financial Daily)
Infrastructure: East Coast Rail Link project to be built,
funded by China. The East Coast Rail Link (ECRL), a 620km high-impact
project under the 11th Malaysia Plan, will be built and funded by China,
Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah
confirmed today. The EPC contract will be awarded to China Communication
Construction Company Ltd (CCCC) while the financing agreement will be
with Export-Import Bank of China (EXIM). Mohd Irwan said when completed,
the ECRL will make products from the East Coast more competitive due to
cheaper transport costs, and raise the income of industries and
businesses located along the rail link route. Mohd Irwan said the
government hopes to finalise the ECRL by end of this year so that
construction on the project can start in early 2017. (Source: New Straits
Time)
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