Local bond yields continued to drop further today by 3-5bps as buying spree in the market continue today.

Good evening!
Today’s trade recap by our trading desk:-
·         Local bond yields continued to drop further today by 3-5bps as buying spree in the market continue today. Foreign funds are driving up the market as real money are flowing from EU into Asian space on the back of the Brexit referendum. 30Y MGS auction closed with a strong BTC of 2.369x and averaging 4.613%. Strong interest from local real money accounts and some foreign players looking to catch the high yielding stock. Post auction, the bond was well bided slightly below auction average. On the back of strong foreign bond buying, MYR strengthen today to close at 4.0400 levels.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.165 -1.0 47 5-yr 3.390 -2.5 140 7-yr 3.615 -5.0 665 10-yr 3.735 -4.5 413 15-yr 4.080 -5.5 164 20-yr 4.270 -2.5 205 30-yr 4.605 -3.5 652 Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.515 0.5 3-yr 3.510 0.0 5-yr 3.580 -0.5 7-yr 3.695 -1.5 10-yr 3.860 -1.0 Source: Bloomberg, AmBank
Local News:
·         None.

► Results Note – Gamuda (BUY, maintain) - Better earnings visibility

Today’s Highlights

►    Results Note – Gamuda (BUY, maintain) - Better earnings visibility

►    Results Note  – HAI-O (SELL, maintain) - MLM division rises among weaker divisions

Quick bites            

►    Tenaga: ICPT rebate remained

Outside Malaysia            

►    US stocks rally as anxiety diminishes over UK Brexit impact

►    Fed’s Powell says Brexit shifts global risks further to downside

►    Consumer spending in US rose 0.4% in May, income growth cooled

►    Pending sales of existing homes in US Fall more than forecast

►    ECB’s Constancio says tools available to handle Brexit hit

►    Euro area economic confidence declined on eve of Brexit vote

►    Japan’s retail sales in May unchanged, showing weak recovery

►    Oil erases Brexit selloff as US crude supplies, dollar decline

Gamuda | 3QFY16 in line; expect more job wins

COMPANY RESEARCH Gamuda | 3QFY16 in line; expect more job wins Li Shin Chai Gas Malaysia | A healthy hike Chi Wei Tan Yinson Holdings | 1QFY1/17 results preview Thong Jung Liaw

SECTOR RESEARCH Malaysia Media | No catalyst from UEFA Euro Cup and Summer Olympics Samuel Yin Shao Yang

MACRO RESEARCH Malaysia | Take profit on window dressing Lee Cheng Hooi

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Results Review Gamuda (GAM MK) by Li Shin Chai Share Price: MYR4.81 Target Price: MYR5.65 Recommendation: Buy 3QFY16 in line; expect more job wins 3QFY7/16 net profit of MYR153m (-5% YoY, -5% QoQ) led 9MFY7/16 net profit to MYR474m (-10% YoY), meeting 71%/75% of our/consensus full-year forecasts. Earnings would recover in FY17 on stronger construction orderbook. Upcoming infrastructure job awards would boost orderbook further. The stellar take-up of its Singapore property is a positive surprise and would offset the slower domestic sales. A 2nd interim 6sen DPS (unchanged YoY) was announced. Reiterate as TOP BUY. FYE Jul (MYR m) FY14A FY15A FY16E FY17E Revenue 4,636.4 2,399.9 2,587.7 3,116.7 EBITDA 775.2 638.0 770.0 828.0 Core net profit 712.2 682.1 663.9 701.1 Core EPS (sen) 31.0 28.9 27.6 29.1 Core EPS growth (%) 4.9 (6.6) (4.6) 5.6 Net DPS (sen) 12.0 12.0 12.0 12.0 Core P/E (x) 15.5 16.6 17.4 16.5 P/BV (x) 2.0 1.8 1.8 1.7 Net dividend yield (%) 2.5 2.5 2.5 2.5 ROAE (%) 13.8 11.6 10.5 10.7 ROAA (%) 7.6 5.8 4.9 4.9 EV/EBITDA (x) 17.2 22.7 19.7 18.4 Net debt/equity (%) 30.1 43.7 49.8 47.5 Li Shin Chai    (603) 2297 8684    lishin.c@maybank-ib.com

Malaysia Company Update Gas Malaysia (GMB MK) by Chi Wei Tan Share Price: MYR2.36 Target Price: MYR2.50 Recommendation: Hold A healthy hike By our estimates, GMB’s MYR1.52/mmBTU price hike for 2H16 appears to be slightly better than expected, thus implying possible upside risk to our 2016 earnings forecast. Nevertheless, with possible uncertainties on the regulatory front in 2017, we think GMB’s risk-reward is not yet attractive. Maintain HOLD, with an unchanged MYR2.50 TP. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 2,773.5 3,619.0 4,047.6 4,792.3 EBITDA 258.1 191.0 212.5 217.0 Core net profit 167.6 106.2 118.8 119.1 Core EPS (sen) 13.1 8.3 9.2 9.3 Core EPS growth (%) (2.2) (36.7) 11.9 0.3 Net DPS (sen) 13.1 8.3 9.3 9.3 Core P/E (x) 18.1 28.5 25.5 25.4 P/BV (x) 3.0 3.1 3.1 3.1 Net dividend yield (%) 5.5 3.5 3.9 3.9 ROAE (%) 16.6 10.7 12.2 12.3 ROAA (%) 10.2 5.5 5.8 5.7 EV/EBITDA (x) 14.6 14.9 13.1 12.7 Net debt/equity (%) net cash net cash net cash net cash Chi Wei Tan    (603) 2297 8690    chiwei.t@maybank-ib.com

Malaysia Results Preview Yinson Holdings (YNS MK) by Thong Jung Liaw Share Price: MYR2.70 Target Price: MYR4.35 Recommendation: Buy 1QFY1/17 results preview 1QFY1/17 results, due today, are unlikely to spring any surprises. Its 4 FSO/FPSOs will remain the Group’s earnings driver, with high operational uptime. The conversion of its FPSO Genesis is on track to meet the 2017 delivery target. A potential 15sen special DPS post sale of non O&G business by 2QFY1/18 (earliest) is a short-term catalyst. Yinson remains in position to capitalise on new FPSO opportunities. Reiterate BUY and MYR4.35 SOP-based TP. FYE Jan (MYR m) FY15A FY16A FY17E FY18E Revenue 1,083.4 986.0 996.0 1,286.2 EBITDA 225.4 261.0 288.5 417.8 Core net profit 142.6 173.1 184.2 220.0 Core EPS (sen) 13.8 16.2 17.3 20.6 Core EPS growth (%) 114.7 17.5 6.4 19.4 Net DPS (sen) 2.0 1.9 2.0 2.4 Core P/E (x) 19.6 16.6 15.6 13.1 P/BV (x) 1.9 1.3 1.2 1.1 Net dividend yield (%) 0.7 0.7 0.7 0.9 ROAE (%) 13.9 9.4 7.9 8.7 ROAA (%) 6.1 4.8 3.5 3.5 EV/EBITDA (x) 15.1 15.6 14.6 10.1 Net debt/equity (%) 31.6 51.9 55.2 51.3 Thong Jung Liaw    (603) 2297 8688    tjliaw@maybank-ib.com Ivan Yap    (603) 2297 8612    ivan.yap@maybank-ib.com

SECTOR RESEARCH MY: Malaysia Media Sector Note by Samuel Yin Shao Yang No catalyst from UEFA Euro Cup and Summer Olympics May 2016 total gross adex fell 11% YoY despite being less than a month away from the UEFA Euro Cup. We understand that ad bookings for the UEFA Cup and Summer Olympics continue to be weak due to overarching economic concerns. At best, we can only expect adex share migration from print to FTA TV this year. We cut 2016 total adex growth forecast from +5% to -3%. We still have no BUY calls in the Malaysian media sector but prefer ASTRO for its more stable subscription based-based business model. Samuel Yin Shao Yang    (603) 2297 8916    samuel.y@maybank-ib.com Jade Tam    (603) 2297 8687    jade.tam@maybank-ib.com

MACRO RESEARCH MY: Technicals Technical Research by Lee Cheng Hooi Take profit on window dressing The FBMKLCI rose by 8.17 points to close at 1,642.21 yesterday, while the FBMEMAS and the FBM100 gained 64.24 points and 62.78 points respectively. In terms of market breadth, the gainer-to-loser ratio was 463-to-302, while 376 counters were unchanged. A total of 1.35b shares were traded valued at MYR1.54b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Consumer purchases moderated last month after the biggest advance since August 2009 as American households realigned outlays with slower income growth. Personal spending climbed 0.4% in May after a 1.1% jump a month earlier that was more than initially estimated, Commerce Department figures showed. Incomes climbed a less-than-forecast 0.2%. Even with the smaller advance in spending, steady job growth and a nascent pickup in wages will probably bolster household purchases after a first-quarter slowdown. With rising global uncertainty expected to stymie business investment, a resilient consumer will needed to keep the U.S.’s growth prospects intact. (Source: Bloomberg) E.U: Economic confidence weakened in June in anticipation of a U.K. referendum that unexpectedly saw Britons choosing to leave the European Union. An index of executive and consumer sentiment fell to 104.4 from a revised 104.6 in May, the European Commission in Brussels said. Data were collected before the British vote on June 23. (Source: Bloomberg) India: Approves USD13b pay increase for government employees. A payout of roughly INR 849b (USD 13b) - including arrears - will be made to 4.7 million workers and 5.2 million pensioners in the year through March 2017. This could rise to at least INR 1t if other allowances are approved, Finance Minister Arun Jaitley said in a briefing. The federal budget accounted for only part of this amount, leading to concern the government may miss its deficit target in case of a full rollout this year. (Source: Bloomberg) Brazil: Recorded in May a wider-than-expected fiscal deficit before interest payments as Finance Minister Henrique Meirelles anticipated 2017 will be another year of budget shortfalls for Latin America’s largest economy. The so-called primary deficit that includes results of states, municipalities and state-owned companies was BRL 18.1b (USD 5.6b), the central bank said. That compares with a median forecast for a BRL 15.8b deficit by analysts in a Bloomberg survey. (Source: Bloomberg) Other News: IPO: HSS Engineering to use IPO proceeds for overseas expansion. The soon to be listed company will allocate MYR24m out of MYR31.91m to be raised from its listing on the Ace Market of Bursa Malaysia to fund its expansion plans, which include strengthening its oversea presence and venturing into new business segments. Out of the MYR 24m, MYR 15m will be allocated to expand its presence in India. The group also sees opportunities in the Middle East, aiming to capitalize on the roll-out of infrastructure projects ahead of the Expo 2020 in Dubai and the 2022 Fifa World Cup in Qatar. The company will be listed on the market on 10 Aug 2016. (Source: The Edge Financial Markets) Maxis: Maxis Broadband plans MYR 10b sukuk programme. The sukuk murabahah to be issued by the company’s subsidiary, Maxis Broadband Sdn bhd will have tenure of more than one year and up to 30 years, depending on the issuer’s choice. Maxis Broadband will use the sukuk proceeds to finance the settlement of acquisitions from two other Maxis subsidiaries, Maxis Mobile Sdn Bhd and Maxis Mobile Service Sdn Bhd. It will also be used as capital expenditure and working capital needs as well as other general funding requirements and general corporate purposes, including refinancing of other debt or financing obligations and any maturing sukuk murabahah. (Source: The Sun Daily) E&O: Brexit won’t hit value of UK properties. The company said Brexit will not negatively impact the total net realizable value of the group’s properties in the UK. Investments in London was done before the sharp rise of properties, at a time when the ringgit to the sterling pound exchange rate was lower. The company’s bank borrowings are conservative with a low loan-to-value and its properties are in prime locations. (Source: The Edge Financial Markets) SP Setia: Still positive on Battersea project. The company is still positive on the long-term prospects of Battersea Power Station and remains committed to the development of the entire project, which is expected to be fully developed by 2025. As of Tuesday, the group has sold approximately 85% of the 1661 units launched for Battersea in three phases. (Source: The Edge Financial Markets)