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| | | SECTOR RESEARCH | | | | | | Turn of the cycle
by Mohshin Aziz |
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| | | | | | We believe the sector is at the tail-end of the recovery cycle and is moving on towards a more normalized growth phase. We see pressure on unit revenues and operating costs for the airlines which will result in a flat earnings growth outlook in 2018. Cost of compliance will rise as MAVCOM implements a service level standard to the aviation players. AirAsia X remains a HOLD and with the appreciation in share prices, we have downgraded AirAsia to HOLD (from BUY) and MAHB to SELL (from HOLD). | |
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| | | | | | Stockpile highest in 2 years | NEUTRAL
by Chee Ting Ong |
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| | | | | | MPOB's December stockpile closed high in 2017 as Malaysia's output remained strong. But with anticipated seasonal decline in output in 1Q18 coupled with the recent suspension of CPO export taxes to stimulate demand, the market is hopeful that the present high inventories will quickly shrink to less worrisome levels by mid-2018. We maintain our NEUTRAL call on the sector with selected BUYs on IOI (trading), SOP, BAL. | |
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| | MACRO RESEARCH | | | | | | Record Trade Deficit
by Suhaimi Ilias |
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| | | | | | Trade in USD for Nov 2017 saw exports growth slowed to +1.6% YoY (Oct 2017: +7.1% YoY) while imports accelerated to +18.5% YoY (Oct 2017: +13.1% YoY) leading to record trade deficit of –USD3.78b (Oct 2017: -USD2.82b). Trade figures in Oct-Nov 2017 suggest 4Q 2017's real GDP growth will be driven by domestic demand amid negative contribution of net external demand. | |
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| | | | | | FBMSCAP Index: The Bull is Taking a Breather
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI slipped 4.03pts to 1,822.92 yesterday amid profit-taking. Losses were led by declines in GENM, ASTRO, HLBK. Market breadth continued to stay weak with losers outpacing gainers by 630 to 426. A total of 5.75b shares worth MYR3.77b changed hands. With US Wall Street closed broadly lower overnight, local sentiment is expected to stay lackluster today. Auto stocks may also face increasing selling pressure as Yen strengthened the past two days. | |
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| NEWS | | | Outside Malaysia:
U.K: Businesses are warning that more price increases are ahead, according to a survey by the British Chambers of Commerce. The proportion of services firms expecting to raise prices in the next three months climbed to the highest since 2008 last quarter, the lobby group said in a report – a percentage balance of 36%. Among manufacturers, that figure rose to 50%, from 35% previously. (Source: Bloomberg)
Asia-Pacific: Outlook stable by Moody's on growth environment. Asia-Pacific emerging markets to grow by 6.5% in 2018, frontier economies by 5.9% and advanced economies by 1.8%, Moody's says in report. India, China remain fastest growth economies in region, the rating agency says. Gradual moderation in growth in China (A1 stable) and slowdown in India (Baa2 stable) will be balanced by robust growth in other Asian economies. Medium-term challenges relate to ongoing re-balancing in China, which will likely constrain its imports. Goverment debt is particular concern for frontier markets and Japan (A1 stable) as interest rates are more likely to rise than fall further, Moody's says. Electoral schedule may slow reform momentum in some economies, with Malaysia (A3 stable), Cambodia (B2 stable), Fiji (Ba3 stable), Thailand (Baa1 stable) and Pakistan (B3 stable) set to hold parliamentary elections, and the Maldives (B2 stable) presidential election. (Source: Bloomberg)
China: Softer factory inflation leaves PBOC focus on debt, not prices. China's producer-price index slid to the lowest level since November 2016 last month and consumer price growth remained largely stable, taking pressure off the People's Bank of China to restrain inflation even as it raises market borrowing costs to curb debt growth. Producer price index rose 4.9% YoY in December from 5.8% YoY in November. The consumer price index climbed 1.8% YoY, the statistics bureau said. (Source: Bloomberg)
Crude Oil: Holds gains near 3-year high as U.S. crude stockpiles shrink. Inventories fell by 4.95 million barrels last week, according to the Energy Information Administration. Crude stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, extended a drop below the five-year average, while oil output slid a second time in three weeks. Brent for March settlement was USD69.20/bbl a barrel. (Source: Bloomberg) | |
| | | | | Other News:
My EG: Gets nod to issue electronic money. The group has been granted approval by Bank Negara Malaysia to issue electronic money via its iPayEasy e-wallet. Its sub-subsidiary MY E.G. Alternative Payment Services S/B has received a letter of approval from the central bank allowing it to issue electronic money via its designated payment instrument, with a maximum wallet limit of MYR1,500 per customer.(Source: The Edge Financial Daily)
LPI Capital: Proposes 1-for-5 bonus issue, declares dividend 45 sen. The group has proposed to undertake a bonus issue on the basis of one bonus share for every five existing shares. It also declared a second interim single tier dividend of 45sen per share, to be paid on Feb 6. Its net profit for the fourth quarter ended Dec 31, 2017 (4QFY17) rose 2% to about MYR83m from MYR81.45m in 4QFY16, largely driven by contribution from the general insurance segment, which rose 4.3% YoY to MYR110.4m from MYR105.8m. (Source: The Edge Financial Daily)
Ayer: To complete Bukit Puchong restructuring master plan in a few months. The group which has undergone a rebranding exercise from TAHPS Group,is in the midst of restructuring its master plan for Bukit Puchong. The group will be looking at launching landed and non-landed properties this year, while also working on adding recreational, education and healthcare components to enhance the value of their township. (Source: The Edge Financial Daily) | |
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