Daily
02 March 2015
RESULTS REVIEW
CIMB Group Holdings: Maintain Hold
Unexciting near-term prospects
FY14 core net profit of MYR3.2b (-25% YoY) below expectations on weaker NOII and surge in provisions.
Unexciting near-term prospects with still high provisions in 1Q15, restructuring costs.
FY15 11% ROE target does not include restructuring costs. HOLD and MYR5.70 TP (FY15 P/BV of 1.2x) maintained.
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RHB Capital: Maintain Buy
Looking to raise capital
FY14 net profit in-line; FY15 targets loan growth of 10%, CIR of 11.5%.
We see room for higher cost efficiencies, FY15/FY16 net profit forecasts raised 2% respectively.
We estimate a MYR1.5b rights issue, already reflected in our TP of MYR9.00 pegged to FY15 P/BV of 1.1x. BUY.
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IJM Corporation: Maintain Buy
Strong fundamentals Shariah-compliant
3QFY3/15 results disappointed but on timing difference.
Lowering earnings forecasts by 3%-11%; growth intact.
Still positive; BUY with a higher RNAV-TP of MYR7.80 (+5%).
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Carlsberg Brewery Malaysia: Maintain Hold
A surprise ending
9M14 results were above expectations.
MayBev acquisition and ongoing cost efficiency efforts are paying off.
Maintain HOLD with a higher DCF-TP of MYR13.60 (MYR12.40 previously).
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Sarawak Oil Palms: Maintain Buy
Missed estimates but value intact Shariah-compliant
4Q14 profit hit by lower-than-expected FFB output, downstream losses, and delayed export shipments.
SOP still trades at relatively cheap forward PER of 12.7x despite our FY15E-16E earnings cut of 21%/12%.
Prospects intact. BUY with a new TP of MYR6.55 (previously MYR7.44) on unchanged 15x 2016 PER peg.
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Sarawak Oil Palms: Maintain Hold
Missed estimates but value intact Shariah-compliant
4Q14 profit hit by lower-than-expected FFB output, downstream losses, and delayed export shipments.
SOP still trades at relatively cheap forward PER of 12.7x despite our FY15E-16E earnings cut of 21%/12%.
Prospects intact. BUY with a new TP of MYR6.55 (previously MYR7.44) on unchanged 15x 2016 PER peg.
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7-Eleven Malaysia Holdings: Maintain Hold
FY14: In line
FY14 core net profit of MYR63m within expectations.
Expect positive revenue momentum on new store openings and increased traffic coming from newly renovated stores.
Maintain HOLD with an unchanged TP of MYR1.73.
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Star Publications: Maintain Buy
7.2% dividend yield delivered!!! Shariah-compliant
4Q14 and 2014 core profits beat expectations due to low tax.
Importantly, 2H14 DPS of 9sen brought 2014 DPS to 18sen.
Offers 7.2% dividend yield!!! Maintain BUY and MYR2.65 TP.
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IHH Healthcare: Maintain Hold
Strong finish in the price Shariah-compliant
FY14 core met, at 96% of our FY14E.
Ramp-up of hospital openings in recent years & new beds to spur growth.
Maintain HOLD as positives priced in. SOTP TP raised to MYR5.21, from MYR4.82, to reflect higher ratings enjoyed by peers.
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TH Plantations: Maintain Hold
Dragged by higher cost Shariah-compliant
Results fell short due to higher cost of production.
Management expects 15-20% FFB production growth in FY15.
Fairly valued. Maintain HOLD at unchanged MYR1.60 TP.
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MBM Resources: Maintain Buy
Recovery in motion Shariah-compliant
FY14 earnings within our and consensus forecasts.
Earnings unchanged pending analyst briefing today.
Maintain BUY with an unchanged MYR3.50 TP (9x FY15 PER).
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NCB Holdings: Maintain Buy
Recovery in 2015? Shariah-compliant
4Q14 results above expectations on higher throughput.
Earnings could recover with the legacy volumes already out of the system; Jan 2015 container volume rose 13% YoY.
Maintain BUY and TP of MYR3.00 (1x P/BV).
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Alam Maritim: Maintain Sell
Challenging outlook, D/G to SELL Shariah-compliant
12M14 core results disappoint, on lower utilization for OSVs and losses at underwater operations.
Expect a weaker 2015. Daily charter rates (DCRs) will be depressed; optimising charter utilisation is key this year.
No immediate catalyst; downgrade to SELL. TP unchanged at MYR0.50 (9x 2016 PER).
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COMPANY UPDATE
UMW Holdings: Maintain Hold
Uninspiring outlook, lacks catalyst Shariah-compliant
Challenges in auto division to persist. Non-core division outlook remains bleak. O&G division to support earnings.
Cut FY15-17 earnings by 10% each, having factored in lower Toyota vehicle sales and bigger losses in non-core division.
Maintain HOLD with lower SOP-based TP of MYR10.30 (-8%).
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SECTOR UPDATE
Malaysia Oil & Gas: Maintain Overweight
PETRONAS� FY14 report card
MYR22b impairment loss hit 4Q14 results. Declared MYR22b/ MYR26b dividends in 4Q14/12M14.
Budget planning based on USD55/bbl oil ASP. 10%-15% capex cut in 2015/16, 30% OPEX cut. 3rd party RSC suspended.
Incoming President is business-driven, likely to be pro-local operators/content. Maintain tactical sector OVERWEIGHT. Key BUYs are BArmada, Dialog, Perdana, Yinson.
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Technicals
Dow is pulling the FBMKLCI up
The FBM KLCI gained 13.34 points WoW to close at 1,821.21, as some minor local nibbling activities took place in sluggish range trading. Take short-term profits at the resistance areas of 1,831 to 1,896. The support levels of 1,748 and 1,821 will witness minor nibbling activities.
Trading idea is a Short-Term Buy on POHUAT with upside target areas at MYR2.48 & MYR3.18. Stop loss is at MYR1.98.
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Other Local News
E&O: To award STP2 reclamation job by July. Eastern & Oriental (E&O), a lifestyle property developer, will award a tender for the MYR25b Phase Two of the Seri Tanjung Pinang (STP2) reclamation project by July. Seven contractors have been shortlisted for the proposed reclamation project. (Source: The Edge Financial Daily)
Hong Leong Bank: Upbeat, unperturbed by plunge in non-interest income. Hong Leong Bank (HLB) is unperturbed by the 29% plunge in its non-interest income in the first six months ended Dec 31, 2014. The fifth largest bank by asset size is optimistic that its portion of the non-interest income will improve in the current year and position it for better earnings growth. (Source: The Star)
RGB International: To expand concession business. RGB International expects to increase the number of gaming machines it is supplying on a concession basis in the Asean region to over 7,000 this year from 6,300 in 2014. This is in line with the group�s objective for the concession business segment to contribute about 60% of its net profit for 2015 compared with about 50% in 2014. (Source: The Star)
Money supply (M3) growth moderated in Jan 2015 to +6.1% YoY (Dec 2014: +7.0% YoY), as net financing to the private sector slowed (Jan 2015: +7.9 % YoY; Dec 2014: +8.8% YoY) and net foreign assets declined further (Jan 2015: -5.2% YoY; Dec 2014: -2.3% YoY). The slowdown in private sector net financing was mainly due to the deceleration in banking system�s total loans growth (Jan 2015: +8.6% YoY; Dec 2014: +8.7% YoY) on slower business loans growth (Jan 2015: +8.2% YoY; Dec 2014: +8.8% YoY) amid stable household loans growth of +9.7% YoY. The decline in net foreign assets reflected the drop in external reserves (Jan 2015: MYR386.5b/USD110.6b; Dec 2014: MYR405.3b/USD115.9b). Meanwhile, the other key determinant of M3, net claims on the government, maintain its double-digit growth (Jan 2015: +25.8% YoY; Dec 2014: +25.3% YoY). (Source: BNM)
Outside Malaysia
U.S: Sentiment among American consumers in February cools from 11-year high, reflecting recent gains in fuel costs and bad winter weather in parts of the U.S. The University of Michigan final index of sentiment fell to 95.4, the first decrease in seven months, from January's 98.1 that was the highest since the start of 2004. (Source: Bloomberg)
U.S. GDP grew less than previously estimated in 4Q 2014, restrained by a smaller gain in stockpiles and widening trade gap. Gross domestic product, the value of all goods and services produced, rose at a 2.2% annualized rate, down from an initial estimate of 2.6%, Commerce Department figures showed. (Source: Bloomberg)
China: Seeks to cushion economy as leaders meet to set 2015 goals. China showed its determination to combat a slowdown in the world's second-largest economy, cutting interest rates before a yearly gathering of the legislature where the Communist leadership typically unveils its goals for the year. The PBOC lowered the one-year deposit rate to 2.5% and the one-year lending rate to 5.35%, the Beijing-based central bank said. It increased the deposit-rate ceiling to 1.3 times from 1.2, meaning lenders can pay a larger margin over the benchmark. (Source: Bloomberg)
China: Factory gauge shows weakness that spurred rate cut. A Chinese factory gauge signaled contraction again in February, a day after the central bank's decision to step up support for the economy with its second cut to benchmark interest rates in three months. The government's manufacturing Purchasing Managers' Index was 49.9 last month from 49.8 in January, according to the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. Numbers below 50 signal contraction. (Source: Bloomberg)
India: Modi�s pro-growth budget keeps subsidies untouched. The shortfall will narrow to 3.9% of GDP in the year starting April 1, the smallest gap since 2008 but higher than a previous goal of 3.6%, Finance Minister Arun Jaitley told lawmakers. He also cut corporate taxes and increased infrastructure spending. "People who urge us to undertake big bang reforms also say the Indian economy is a super-giant that moves slowly but surely," Jaitley said. "Even our worst critics would say we have moved rapidly." (Source: Bloomberg)
Key Indices
Value
YTD (%)
Daily (%)
KLCI
1,821.2
(2.5)
0.0
JCI
5,450.3
27.5
(0.0)
STI
3,402.9
7.4
(0.7)
SET
1,587.0
22.2
(0.4)
HSI
24,823.3
6.5
(0.3)
KOSPI
1,985.8
(1.3)
(0.4)
TWSE
9,622.1
11.7
0.0
DJIA
18,132.7
9.4
(0.4)
S&P
2,104.5
13.9
(0.3)
FTSE
6,946.7
2.9
(0.0)
MYR/USD
3.610
10.1
1.0
CPO (1mth)
2,321.0
(11.7)
1.3
Crude Oil (1mth)
49.8
(49.4)
3.3
Gold
1,206.4
0.3
(1.0)
TOP STOCK PICKS
Buy rated large caps
Price
Target
Axiata
7.16
7.60
Tenaga Nasional
14.72
16.00
Sime Darby
9.33
10.20
Genting Malaysia
4.11
4.60
Gamuda
5.26
6.00
AirAsia
2.62
2.65
Westport
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