FW: [Maybank IB] Today's Research - Malaysia

 

 

COMPANY RESEARCH MISC Bhd | Secures new FSO contract Yen Ling Lee Top Glove | Material acquisition hits a snag Yen Ling Lee Kimlun Bhd | Precast recovery in 2H18 Adrian Wong MACRO RESEARCH Malaysia | Second month of decline in external reserves Suhaimi Ilias Regional | S&P 500 Index Set to Rally Higher as Trade Wars Impact has been Price-in Nik Ihsan Raja Abdullah NEWS Outside Malaysia Other News COMPANY RESEARCH Malaysia TP Revision MISC Bhd (MISC MK) by Yen Ling Lee Share Price: MYR5.92 Target Price: MYR6.30 Recommendation: Hold Secures new FSO contract The FSO job win is MISC's first offshore job win this year. However, impact to earnings is minimal and unlikely to excite the market. Maintain our earnings forecasts as we have already imputed for this FSO. Our HOLD call and SOP-based TP of MYR6.30 are also retained. We think the poor share price performance has already priced in the weak 2Q18 and DY of 5.1% should provide some support to the share price. The stock now trades about in line with its 12M rolling forward PER of 16x (mean). FYE Dec (MYR m) FY16A FY17A FY18E FY19E Revenue 9,597.2 10,037.7 8,709.5 9,141.9 EBITDA 3,898.8 4,074.3 3,717.4 4,098.5 Core net profit 1,914.0 2,027.7 1,568.6 1,761.9 Core EPS (sen) 42.9 45.4 35.1 39.5 Core EPS growth (%) (31.2) 5.9 (22.6) 12.3 Net DPS (sen) 30.0 30.0 30.0 30.0 Core P/E (x) 18.5 16.2 16.8 15.0 P/BV (x) 0.9 0.9 0.8 0.7 Net dividend yield (%) 3.8 4.1 5.1 5.1 ROAE (%) na na na na ROAA (%) 3.7 3.8 3.1 3.5 EV/EBITDA (x) 10.3 9.8 9.4 8.8 Net debt/equity (%) 15.4 16.1 20.8 23.5 Yen Ling Lee    (603) 2297 8691    lee.yl@maybank-ib.com Malaysia Rating Change Top Glove (TOPG MK) by Yen Ling Lee Share Price: MYR12.10 Target Price: MYR12.90 Recommendation: Hold Material acquisition hits a snag It is unclear at this stage what issues have prompted Top Glove's legal action against the vendors of Aspion. Stripping out the profit guarantees would affect our FY18-19 EPS forecasts by 8/20% respectively. We maintain our earnings forecasts and TP of MYR12.90 (30x 2019 PER; 10% discount to our target PER for Hartalega), pending more clarity from the management. Nevertheless, we downgrade the stock to HOLD given the reduced upside to our fair value and the uncertainties surrounding Aspion. FYE Aug (MYR m) FY16A FY17A FY18E FY19E Revenue 2,888.5 3,409.2 4,090.9 5,070.2 EBITDA 523.3 485.0 666.8 842.8 Core net profit 361.1 332.7 447.2 533.1 Core EPS (sen) 28.9 26.5 35.5 41.7 Core EPS growth (%) 27.9 (8.0) 33.6 17.5 Net DPS (sen) 14.5 14.5 17.7 20.8 Core P/E (x) 17.5 19.6 34.1 29.0 P/BV (x) 3.5 3.2 6.8 6.2 Net dividend yield (%) 2.9 2.8 1.5 1.7 ROAE (%) 21.1 17.4 21.1 22.5 ROAA (%) 13.5 11.9 11.6 10.8 EV/EBITDA (x) 9.6 14.4 25.2 20.2 Net debt/equity (%) net cash net cash 67.8 59.8 Yen Ling Lee    (603) 2297 8691    lee.yl@maybank-ib.com Malaysia TP Revision Kimlun Bhd (KICB MK) by Adrian Wong Share Price: MYR1.37 Target Price: MYR1.45 Recommendation: Hold Precast recovery in 2H18 Construction would support earnings in FY18, with recovery at the manufacturing segment only expected in 2H18. YTD FY18 job wins for both construction and manufacturing stand at MYR310m and MYR150m respectively. We make no change to our earnings forecasts for now, but given uncertainties in the sector, we re-peg our valuation for Kimlun at a lower 6x FY18 PER (-1 SD, 7x previously or -0.5 SD) deriving a new TP of MYR1.45 (rounded) (-25 sen). Kimlun remains a HOLD. FYE Dec (MYR m) FY16A FY17A FY18E FY19E Revenue 940.7 985.2 1,286.2 1,289.2 EBITDA 130.9 121.8 124.4 133.8 Core net profit 80.7 80.1 74.4 80.8 Core EPS (sen) 26.4 26.2 24.3 26.4 Core EPS growth (%) 23.0 (0.7) (7.2) 8.6 Net DPS (sen) 6.5 5.5 6.6 7.1 Core P/E (x) 7.1 8.6 5.6 5.2 P/BV (x) 1.1 1.1 0.6 0.6 Net dividend yield (%) 3.5 2.5 4.8 5.2 ROAE (%) na na na na ROAA (%) 8.2 7.4 5.9 5.9 EV/EBITDA (x) 5.1 5.9 3.7 3.3 Net debt/equity (%) 6.7 7.1 7.1 3.7 Adrian Wong    (603) 2297 8675    adrian.wkj@maybank-ib.com MACRO RESEARCH MY: Malaysia External Reserves, end-Jun 2018 Second month of decline in external reserves by Suhaimi Ilias Economics Research External reserves fell for the second month by –USD3.5b to USD104.7b at end-Jun 2018 from USD108.5b at end-May 2018 amid continued net foreign sells in Malaysian equities and bonds (June 2018: -MYR11.6b; May 2018: -MYR18.5b). The latest external reserves figure is equivalent to 7.5 months of retained imports and 1.1 times of short-term external debt (inclusive of foreign holdings of Ringgit bonds and deposits). Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli     (603) 2082 6818     zamros.d@maybank-ib.com RN: Regional Traders' Almanac S&P 500 Index Set to Rally Higher as Trade Wars Impact has been Price-in by Nik Ihsan Raja Abdullah Technical Research Despite current uncertainties, such as US-China trade war and a rising interest rate environment, S&P 500 continues to hold on steady above its upward trajectory. Recent pullback is just a short-term hiccup, as the candles remain above its 50-day EMA line and the lower regression line. With RSI rising above its average line and the 50pts mark, we believe a stronger rebound is underway. We expect S&P 500 Index to challenge previous high within 2,802 in the near-term. Nik Ihsan Raja Abdullah    (603) 2297 8694    nikmohdihsan.ra@maybank-ib.com Tee Sze Chiah     (603) 2082 6858     szechiah.t@maybank-ib.com NEWS Outside Malaysia: U.S: Jobs report shows room to run as trade war threatens gains. Job gains of 213,000 in June topped projections, Labor Department figures showed. At the same time, more people entered the labor force to look for work, helping push the unemployment rate up for the first time in almost a year. Wages missed forecasts, with the relatively tepid pace remaining a puzzle for economists. Altogether, the data depicted a labor market that's not as tight as previously thought, easing any pressure on Federal Reserve policy makers to step up the pace of interest-rate hikes and potentially heartening employers who have had difficulty finding skilled workers. Yet the monthly figures landed the same day as President Donald Trump intensified a global trade war with U.S. levies on USD34b of Chinese goods, spurring retaliatory tariffs. That risks weighing on economic growth and the pace of hiring and investment. (Source: Bloomberg) Germany: Factory output surges as growth sees long-awaited rebound. German industrial production picked up in May, signaling that the economy is beginning to stabilize after a stumble earlier in the year. The 2.6% increase was the best in six months. It follows data showing a surge in factory orders in May, the first increase this year. While the industrial numbers can be volatile month to month, they do provide signs for Europe's largest economy that the ongoing expansion isn't under threat. The composite PMI for the euro area, a broad measure of private-sector activity, has also stopped falling, and an economic surprise index has rebounded in recent weeks. (Source: Bloomberg) U.K: Brexit Ministers Davis and Baker quit in major blow to May. U.K. Brexit Secretary David Davis and his deputy Steve Baker quit the government in what threatens to be a major blow to Prime Minister Theresa May's authority. The resignations comes just two days after May secured the backing of her cabinet for a plan to keep close ties to the European Union after leaving the bloc. Davis and Baker, both longstanding Eurosceptic, decided they could not support the policy, a person familiar with the matter said. May's office confirmed that Davis had resigned but had no comment yet on the reasons. Davis, Baker and other pro-Brexit members of May's Conservative party held deep concerns about her plans for keeping the U.K. tied to EU rules for goods and adopting a close customs arrangement with the other 27 member countries. They feel Britain should have a clean break from the bloc and be liberated to pursue new trade deals with other countries. (Source: Bloomberg) Japan: Investment income supports current account surplus in May. Investment income and a smaller-than- expected decline in goods trade helped Japan to a current account surplus that beat forecasts in May, according to finance ministry data released. The current account surplus was JPY1.94tr in May. The deficit in goods trade was JPY303.9b. The primary income surplus was JPY2.4tr. (Source: Bloomberg) Other News: Construction: MYR6.3b Penang project to start soon with undersea tunnel. Consortium Zenith Construction S/B (CZC), the contractor of Penang's MYR6.3b integrated infrastructure project, is confident that the project will continue with its original plan of an undersea tunnel to connect Penang Island with the mainland, instead of a bridge that has been proposed as an alternative. The tunnel will be built by China Railway Construction Co Ltd, which is CZC's engineering, procurement, commissioning and construction contractor. The tunnel is expected to be built in 2023. (Source: The Edge Markets) TSH Resources: TSH Resources set to gain from Indonesia's biodiesel mandate. TSH Resources' large exposure to Indonesia puts it in good stead as the republic ramps up its biodiesel mandate to B25 in 2019. Indonesia has planned to increase its biodiesel mandate from its current rate of 20% to 25% from 2019. The B25 could double Indonesia's consumption of palm oil to between 5.5m and 6m kilolitres in 2019. TSH is unfazed by the near term pressure on crude palm oil prices. (Source: The Edge Markets) KUB Malaysia: To dispose entire interest in A&W for MYR34m. Its wholly-owned subsidiary, Restoran Kualiti S/B, entered into a sale and purchase agreement today with Inter Mark Resources S/B for the disposal of its entire 100% interest in A&W S/B for MYR34m. The proposed disposal is expected to record a one-off estimated net gain of about MYR18.9m, including the reimbursement of intercompany balances of MYR4m. (Source: The Edge Markets)   Our team profiles: Regional, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Philippines, Greater China & India Disclaimer This email and its attachment(s) are confidential and are intended solely for the use of the individual to whom it is addressed. Any views or opinions expressed are solely those of the author and do not necessarily represent those of Maybank Kim Eng or any of its affiliates. Intended recipients of this email are prohibited from disseminating, forwarding, printing and/or copying its contents. If you are not the intended recipient of this email, you are strictly prohibited to take any action based upon them, which also includes dissemination, forwarding, printing and copying of its contents. Maybank Kim Eng Research sent this e-mail to you because your Notification Preferences indicate that you want to receive information about our daily research reports. If you wish to read Disclaimer in details, please click HERE. 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FW: RHB | Malaysia | Forex Reserves Fall Further

 

 

 

 

Economic Research			9 July 2018
Malaysia
Economics View
Forex Reserves Fall Further   u Malaysia’s forex reserves fell USD3.8bn to USD104.7bn as at end-June, from USD108.5bn in May. This was likely on the back of portfolio outflows as concerns over government debt weighed on investor sentiment. u MYR weakened further by 1.1% to USD to MYR4.046 in the first week of July 2018, as the latter currency strengthened. We expect the ringgit to remain rangebound before settling at MYR4.10 by end-2018. u Meanwhile, the amount of excess liquidity (including repos) mopped up by BNM remained stable at MYR134.8bn as at end-June.   Economist: Vincent Loo Yeong Hong   | +603 9280 2172
To access our recent reports please click on the links below:   05 Jul: Exports Lose Steam In May 02 Jul: M3 Hits The Brake; Loan Growth Inched Up 20 Jun: Inflation Resumes Climb In May 11 Jun: IPI Climbs Further in April
Economics Team
Arup Raha	Group Chief Economist	arup.raha@rhbgroup.com		+65 6232 3896
Peck Boon Soon	Chief ASEAN Economist	bspeck@rhbgroup.com		+603 9280 2163
Vincent Loo Yeong Hong	Malaysia, Singapore	vincent.loo@rhgroup.com		+603 9280 2172
Ahmad Nazmi Idrus	Indonesia	ahmad.nazmi.idrus@rhbgroup.com		+603 9280 2179
Aris Nazman Maslan	Thailand, Philippines , Vietnam	mohd.aris.nazman@rhbgroup.com		+603 9280 2184

 

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FW: CIMB Fixed Income Daily - 09 Jul 2018 - More demand for MY bonds expected; Bank Negara Malaysia policy meeting mid-week

 

 

US Treasuries posted modest gains, after NFP showed a stronger-than-expected increase of 213k in June (against +195k consensus expectation) but average hourly earnings was short of expectation at +0.2% mom (versus +0.3% consensus). Meanwhile, global trade concerns were elevated after countries especially China hit back at Trump’s tariffs –imposing 25% tariffs on 545 US products worth $34b. Trump had imposed 25% tariffs on $34b Chinese products.

 

As it were, the US Treasuries yield curve was at its flattest in 10 years with the 2x10T spread at 28bps from about 60bps at end 1Q2018 when the 10y yield was nearer to 3.00%. Keeping the UST curve flat was last week’s release of the June 2018 FOMC minutes which confirmed policymakers’ agenda for continued but gradual rate hikes. However, policymakers also signaled they are watching for signs of slack in economic growth, especially as trade concerns have accelerated. This ensured longer tenors pared any rise in yields especially as Trump was preparing to impose 25% tariffs on $34 billion of imports from China. China had indicated it will retaliate, raising real doubts on global trade and growth prospects.

 

Last Friday, Malaysian government bonds closed steady, though there was some weakness along selected benchmark papers. Yet for the week, bonds generally strengthened. Gains were led at first by net buying interest along off-the-run (or non-benchmark) papers as well as along the Islamic GII segment. We noted there had been recent absence of large corporate bond offerings especially of higher grade AAA-rated and government-guaranteed bonds. We think this absence spurred the demand for the non-benchmark and off-the-run papers which offer attractive spreads against the benchmark papers. Then, nearer the end of the week, benchmark bonds showed strength with 5-10y papers down 5-7bps for the week. We expect continued demand for MGS this week even as we head towards MPC meeting mid-week (the first with new Bank Negara governor Datuk Nor Shamsiah but we expect the central bank to remain accommodative).

 

IndoGBs rallied as we noted signs of demand from foreign onshore banks. As the market saw incoming bids there was also thin supply as locals were a bit reluctant to sell. After lunch, we started seeing more action as FR64 hit 7.50%. Volume traded fell to IDR10.2t with flows mainly seen along the tail end of the curve.

 

In Thailand, net selling pressure on LB316A and LB326A led losses especially within 5-18y segments but yields rose mildly by 1-2 bps due to support from UST gains in the pm session. Overall activities in Thai bonds remained relatively quiet as investors continued interpreting impact from US imposing tariffs on China's product. The auction of 14d CB drew firm demand at average yield 1.1739% and 1.69 bid-cover compared with last sell on 29 June at average yield of 1.2205% and 1.87 bid-cover.

 

CIMB Treasury & Markets Research-Fixed Income

Tel: +603 2261 8557

www.cimb.com

Find us on Bloomberg at CIMR <Go> 

 

 

 

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FW: AmBank Research - Technology Sector : Riding high in 2H18, 9 Jul 2018

 

 

FOCUS OF THE DAY

Technology Sector : Riding high in 2H18                Overweight

 

2H18 earnings to be driven by sensors, radio frequency chips and operational efficiencies. We are upgrading our stance on the technology sector from NEUTRAL to OVERWEIGHT. The sector’s outlook over the next 6 months is positive in 2H18.

 

The key theme of the sector in 2H18 should revolve around connected cars, smart homes and automation. This paints a positive outlook for sensor and radio frequency (RF) chip manufacturers, automated equipment manufacturers and companies looking to improve operational efficiencies through automation. In the smartphone segment, while sales volume is plateauing in developed markets, sensor and RF content continues to increase. Overall, earnings prospects are looking positive for local semiconductor companies.

 

Key beneficiaries. In 2H18, companies in the limelight are Inari Amertron (BUY, FV: RM2.50), Malaysian Pacific Industries (MPI) (BUY, FV: RM11.42), Unisem (HOLD, FV: RM2.56) and Globetronics (UNRATED) given sensors and RF are imperatives in a connected world, while prospects of ViTrox Corporation (UNRATED) and Pentamaster Corporation (UNRATED) are also exciting amid the rising adoption of automation.

 

Others:

MISC : Marginal contribution from FSO Mekar Bergading               Hold

 

QUICK TAKE

Plantation Sector : News flow for week 2 – 6 July              Neutral

 

 

RETAIL RESEARCH

Stocks On Radar: Magnum, PMB Technology, Astro Malaysia Holdings, Coastal Contracts

 

 

ECONOMIC HIGHLIGHTS

US – Robust labour market; rate hikes seen on track

 

 

NEWS HIGHLIGHTS

Construction Sector : Prasarana mulls taking over LRT 3

MMC Corp : Northport plans biomass hub

Astino : RM60mil plant to be ready by end-2018

Property Sector : Concorde Kuala Lumpur redevelopment plans on hold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCLAIMER:

The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FW: 20180709 AmBank FX Daily Outlook

 

 

Highlights of today’s AmBank FX Daily Outlook as follows:-

Dollar consolidates as tariffs imposed MYR to fluctuate in the range of 4.0343 – 4.0453 against US dollar Key Watch: (i) US Fed Kashkari Speech; (ii) EU EU-Ukraine Summit, Praet & Draghi Speeches; (iii) Jun US Consumer Inflation Expectations; (iv) May Germany Trade Balance; (v) May Germany & Japan Current Account; (vi) Jun Indonesia Consumer Confidence

 

Best regards,

FX Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2255 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

 

 

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