FW: RHB | Economic Research | Tracking Global News

 

 

 

 

Economic Research			31 May 2018
Global News
Economic Update
Tracking Global News     US 1Q18 GDP Revised to 2.2%   Eurozone Economic Sentiment Stutters in May to A 9-Month Low   Japan Retail Sales Ahead of Forecasts in April   Japan's Consumer Confidence Improved Marginally in May   Thailand April Industrial Production Rises 3.99% YoY     Economists:  Arup Raha  | +65 6232 3896 Peck Boon Soon  | +603 9280 2163 Vincent Loo Yeong Hong  | +603 9280 2172 Ahmad Nazmi Idrus  | +603 9280 2179 Aris Nazman Maslan | +603 9280 2184
To access our recent reports please click on the links below:   30 May 2018 25 May 2018 24 May 2018 23 May 2018 21 May 2018 18 May 2018
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

 

 

 

 

 

 

FW: AmBank Research - N2N Connect: Offering end-to-end solutions Buy, 31 May 2018

 

 

STOCK FOCUS OF THE DAY

N2N Connect: Offering end-to-end solutions                                                                      Buy

 

We initiate coverage on N2N Connect (N2N) with a BUY and a fair value of RM1.52/share. Our fair value is pegged to an FY19F PE of 25x, a discount to the peer average of 33x given its smaller market capitalisation (see Exhibit 7). The stock has been trading at an average PE of 35x in the past 3 years. Including an expected dividend yield of 3%, the stock offers an implied upside of 49%.

 

We believe the market has not fully priced in a major earnings boost from the acquisition of AFE Solutions (AFE) last year. N2N’s revenue more than doubled in FY17, lifting its core net profit by 36% after a 9-month consolidation of AFE’s results. Moving forward, N2N's earnings are expected to accelerate further as the group fully unlocks synergies from the acquisition. 

 

 

Others:

CIMB Group: Lower provisions with an improved CI ratio                                              Buy

BIMB Holdings: Asset quality remains strong albeit upticks in impairment              Buy

HLFG: 9MFY18 earnings ahead of expectations                                                                  Buy

Bonia Corp: Takes a hit in 3QFY18                                                                                              Hold

Hong Leong Bank: Bank of Chengdu contribution still strong                                        Hold

IJM Corp: FY18 core net profit declines 16% YoY                                                                 Hold

IJM Plantations: Hit by declines in CPO production and price in 4Q                             Hold

Kimlun Corp: A soft patch in 1QFY18                                                                                        Hold

Media Chinese: Prospects remain unexciting                                                                      Hold

TH Plantations: In the red in 1QFY18                                                                                        Hold

Oil & Gas Sector: Lower volume and stronger ringgit dent Petronas’ profit            Neutral

 

 

 

ECONOMIC HIGHLIGHT

Indonesia: Asia policymakers under pressure to raise rates

 

 

NEWS HIGHLIGHTS

Hap Seng Consolidated: Targets RM1.3b GDV in launches this year

MyEG Services: Hopeful on relationship with new govt

I-Bhd: Maintains its stellar quarterly performance

Paramount Corp: Sees better year in 2018

 

 

 

 

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: RHB FIC Rates & FX Market Update - 31/5/18

 

 

 

31 May 2018

 

 

Rates & FX Market Update

 

 

Italian-related Market Tensions Eased

 

Highlights

 

¨   Global Markets: Financial markets somewhat recovered from the knee-jerk reaction caused by the Italian political turmoil as concerns about the country leaving the EU eased;   the EURUSD bounced back above 1.1500 closing +1.10% higher, Italian BTP rallied with the 2y yield closing 110bps lower at 1.6000 and US Treasuries dropped. On the currency side, the move was also triggered by a reversal of the economic surprise differential between the US and the EU: the second reading for the US 1Q18 GDP growth disappointed and was revised lower  to 2.2% from 2.3% while German CPI beat expectations printing at 2.2% YoY (1.9% expected) boding well for today’s release of inflation for the Eurozone. We however prefer to remain neutral EURUSD at this juncture; given the recent sharp drop, a stabilisation is likely in the 1.1500 / 1.1855 zone.

¨   AxJ Markets: Over in Indonesia, BI hiked its 7D RRR by another 25bps to 4.75% in an extra-ordinary policy meeting, and remains receptive towards such meetings if the need arises. Markets cheered the decision, with the USDIDR pair firmly below the 14,000 level this morning; IMF also praised the decision as appropriate. While another rate hike remains on the table, BI will likely monitor: (i) USD movements; (ii) FOMC decisions; (iii) domestic data, before committing to another tightening. We continue to remain neutral on the IDR, with BI’s pro-active approach likely to anchor the currency, relative to peers with similar fundamentals.

¨   The USDJPY held above 108 rising modestly 0.24% as the risk sentiment partially improved. While the country’s economy contracted in the first quarter, the Ministry of Economy Trade and Industry reported that April retail sales rose and beat anticipations alleviating fears of a protracted slowdown. Over the long term, the USDJPY remains in a multi-month descending range between 104 and 111 where opportunities are to be sought on the range’s limits. In the short-term, we are neutral between 107.20 and 108.90/109. The Japanese Yen is likely to benefit from the renewed trade tensions between the US and China, geopolitical risk and the Italian situation.

 

 

 

 

FW: ADB Publications Monthly Newsletter: May 2018

 

 

This is a monthly newsletter from the Asian Development Bank View this email in your browser                               May 2018 Vol. 5 No. 5   FEATURED PUBLICATIONS     Forward this email to a friend Order print copies from ADB's book distributors     Economic and Fiscal Impacts of Disasters in the Pacific Asian Development Bank Pacific island countries need to build their fiscal and economic resilience to climate change and natural disasters as these have lasting consequences on their livelihoods, economies, and fiscal balances. This publication examines the often-overlooked dimension of resilience planning—how to brace economies for shocks caused by climate change and hazard events. It analyzes the exposure and vulnerability of Pacific economies to disaster events and outlines key resources for building fiscal and economic resilience.     Download     Guide to Performance-Based Road Maintenance Contracts Asian Development Bank This guide serves as a reference for implementing performance-based road maintenance contracts in Central Asia Regional Economic Cooperation (CAREC) countries to promote effective and efficient maintenance of road networks. This guide aims to help policy makers in CAREC member countries understand and implement performance-based road maintenance contracts (PBCs)—an essential element of road asset management—to promote effective and efficient maintenance of road networks.     Download     Promoting Green Local Currency Bonds for Infrastructure Development in ASEAN+3 Asian Development Bank ASEAN+3 policy makers are exploring options to promote green local currency-denominated bonds to meet the region's infrastructure development needs. This publication highlights an assessment study of green bond markets in ASEAN+3, identifies the barriers to green bond market development, and proposes recommendations to scale up green bond markets for infrastructure development in ASEAN+3.     Download     NEW PUBLICATIONS   ENVIRONMENT, CLIMATE CHANGE, AND DISASTER RISK MANAGEMENT Decoding Article 6 of the Paris Agreement    FINANCE SECTOR DEVELOPMENT Asian Development Outlook (ADO) 2018: How Technology Affects Jobs Economic Corridors and Regional Development: The Malaysian Experience Labor Market Regulations in the Context of Structural Transformation Macroeconomic Update: Nepal (April 2018) Thailand's Automotive Manufacturing Corridor Why has the Philippines' Growth Performance Improved? From Disappointment to Promising Success   GENDER AND DEVELOPMENT Tip Sheet: Gender-Inclusive Approaches in the Energy Sector   REGIONAL COOPERATION AND INTEGRATION Increasing Benefits Through Economic Corridor Development in the Lao People's Democratic Republic Trade Facilitation and Innovation: Evidence from South Asia Subregional Economic Cooperation Countries   ABOUT ADB ADB Annual Report 2017 About the Trade Finance Program Fact Sheets Highlights of ADB'S Cooperation with Civil Society Organizations 2017 Trade Finance Program Brochure       LinkedIn Facebook Twitter Website Email       To unsubscribe from our list, click the unsubscribe button below. unsubscribe from this list    update subscription preferences

FW: CIMB Fixed Income Daily - 31 May 2018 - IDR up and ID bonds firm as Bank Indonesia raises policy rate again

 

 

CIMB Fixed Income Daily - 31 May 2018 - IDR up and ID bonds firm as Bank Indonesia raises policy rate again

 

On Wednesday, US Treasury yields moved 7-10bps higher to pullback from Tuesday's gains (down as much as 18bps) but we think mainly on profit taking pressure. Safe haven demand, in our opinion, remains in play. US-China trade concerns remain whilst US-North Korea geopolitics remains a worry. Meantime, the Italian government conflict with prospects of a snap election rising remains a pressure on risk appetite. Meanwhile, the Fed released its Beige book report, which indicated the economy is on moderate expansion. The report pointed to stronger manufacturing activity but called consumer spending as being 'soft'. There was more risk to growth ‑ the ADP jobs report indicated an increase of 178k in May which is below consensus (+190k) whilst the April number was revised down to 163k from 204k prior estimate. Also, the second reading of 1Q18 GDP was cut to +2.2% qoq from 2.3%.

 

In Malaysia, the MGS market was mixed whilst players were still focused on incoming government policy announcements. As it were, the market wasn't perturbed by the RM1.0t government debt reveal but was still apprehensive on the fiscal plan with GST set to taken away on 1 June. Aside, the government's heavy RM4.0b auction of 5.5y GII (GII Nov'23) received strong demand with bid-cover at 1.989x. To compare, bid-cover at the previous 5y auction being a similarly heavy RM4.0b sale of MGS Apr'23 was 1.563x. Demand was pretty late coming in to yesterday's auction as we saw WI falling towards 4.090/085% ahead of the tender closing compared with bids around 4.15% late last week. Still, overall bids by the end were not overwhelmingly aggressive, with average yield at 4.094% and high-low of 4.11/07% or well within the WI trading range.

 

In Thailand, bonds consolidated in a tight range after investors returned from holiday. Thai bonds posted small gains with yields declining by 1bps as foreign investors maintained their interest since 23 May amid UST rally. Moreover, front-ends demand from local funds remained firm since the beginning of the week as rates hit a reasonable benchmark interest rate level at 1.50% and there was excess local liquidity after continued period of bond selling. Outright trading activities slowed to Bt23b on Wednesday as the market waited for the court ruling on the bill on election of MPs and US jobs report on Friday. After the court reached verdict on 30 May that the clauses of the organic law on electing MPs did not violate the constitution, local sentiment improved with higher SET index and rising THB. Therefore, we expect limited upside on THB yield for the rest of this week. Moreover, front-end THB rates did not react higher with the external environment when Bank Indonesia raised interest rates by 25bps to 4.75% at a special meeting on Wednesday.

 

On Wednesday, IndoGBs opened soft with global markets down due to risk-off sentiment amid the Italian political crisis. Yields rose 8-10bps early but recovered after the BI additional meeting, where it raised the 7-day reverse repo rate by 25bps to 4.75%. On the back of the two rate hikes in the same month, the Rupiah strengthened to below 14,000 and bond buyers emerged at benchmark series especially 10y FR64.

 

Asian dollar bonds were traded mixed. Overnight rally in US Treasuries were due mainly to safe haven demand amid fresh risks especially geopolitics. This ensured Asian dollar bonds were down amid lower risk appetite. The iTraxx Asia ex-Japan IG index widened by about half a basis point Wednesday.

 

CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
Find us on Bloomberg at CIMR <Go>

 

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FW: Results: MMS Ventures (MMSV MK; BUY; TP: MYR2.02) - No surprises

 

 

Good morning,

 

We have a results note on MMSV today.

Results: MMS Ventures (MMSV MK; BUY; TP: MYR2.02) - No surprises

• Attractive entry point. Despite 1Q18 core net profit easing by 1% YoY, we keep our FY18 net profit forecast (-16% YoY) as we expect slower quarters ahead, due to a softer equipment replacement cycle. Against local automation equipment peers’ average 18.9x CY19 PER, MMSV’s valuation at just 9.0x CY19 PER (7.7x CY19 PER ex-cash) is attractive for a tech name with a strong global clientele. Our unchanged MYR2.02 TP is based on 13.5x CY19 PER (+1SD to 5-year mean of 9.4x).Maintain BUY
• QoQ results distorted by adoption of MFRS15. 1Q18 saw the adoption of MFRS15 which allows revenue recognition only upon transfer of control of goods & services to customers (i.e. upon installation of equipment whereby customers are able to use and benefit from the said equipment). Previously, revenue recognition was upon the transfer of risk to customers (i.e. upon delivery of equipment to customers’ designated premises). For this, MYR3.7m of revenue was moved from 4Q17 to 1Q18. Similarly some of 1Q18’s revenue has been deferred to 2Q18.

Comparing YoY results, despite an 8% improvement in 1Q18 revenue, core net profit declined by 1% YoY to MYR4.0m, meeting 23% of our FY18 forecast. YoY EBIT margin contraction of 2.4ppts was largely due to (i) forex losses (MYR0.5m in 1Q18 vs. MYR0.2m in 1Q17) from MYR’s strength YTD and (ii) fair value loss for its unit-trust investments (MYR0.1m loss in 1Q18 vs MYR0.2m gain in 1Q17).

• Imminent transfer to the Main Board. With shareholders’ approval in its EGM yesterday, MMSV’s proposed transfer from the ACE Market to the Main Market is on track and should complete by early June 2018. This should enhance visibility among institutional investors which would narrow its valuation gap to its peers.

 

 

Ivan Yap | Analyst, Equity Research

Maybank Investment Bank Berhad (15938-H)
7^th Floor, Tower C, Dataran Maybank, 1, Jalan Maarof, 59000, Kuala Lumpur, Malaysia

Tel: +603 2297 8612 | Fax: +603 2284 2137
Email: ivan.yap@maybank-ib.com

 

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