SECTOR
RESEARCH
Regional Plantations | 2017 Outlook
Chee Ting Ong
MACRO
RESEARCH
Malaysia | Fund flows
Chew Hann Wong
Singapore | Better than expected
Suhaimi Ilias
NEWS
Outside Malaysia
Other News
SECTOR RESEARCH
MY: Regional Plantations
2017 Outlook
by Chee Ting Ong
Sector Note
There is opportunity for a trade in 1Q17, as CPO price will stay lofty at ~MYR3,000/t during the low crop months. But we will turn cautious once yield recovery happens from 2Q17. Our 12M fundamental view for the sector remains a NEUTRAL. 2017’s outlook will largely be a mirror image of 2016 with a year of two halves. We prefer Indonesia planters over Malaysia given their cheaper valuations and faster yield recovery. Our BUYs in the region are BPLANT, SOP, BAL, AALI, LSIP, and TBLA.
Chee Ting Ong
(603) 2297 8678
ct.ong@maybank-ib.com
MACRO RESEARCH
MY: Malaysia Strategy
Fund flows
by Chew Hann Wong
Strategy Research
Foreign investors net sold MYR1b of Malaysia equities in Dec 2016, bringing 12M 2016 foreign fund flows to that of a net sell of MYR3.1b. This represents the third straight year of foreign fund outflow from equities. We estimate that cumulative foreign net buy since early-2010 has tapered to just MYR4.1b as of end-2016 versus a high of MYR49.4b end-May 2013. We take the view that the downside for Malaysia equities from foreign selling should be limited, barring another global rout.
Chew Hann Wong
(603) 2297 8686
wchewh@maybank-ib.com
SG: Singapore 4Q 2016 GDP (Advanced)
Better than expected
by Suhaimi Ilias
Economics Research
Advanced 4Q 2016 real GDP growth based on Oct-Nov 2016 data was a better than expected +1.8% YoY. Even if full-year 2016 growth come above our expected +1.5%, maintain our 2017 forecast of +1.5% amid the uncertain, volatile and thus challenging global environment.
Suhaimi Ilias
(603) 2297 8682
suhaimi_ilias@maybank-ib.com
Zamros Dzulkafli
(603) 2082 6818
zamros.d@maybank-ib.com
NEWS
Outside Malaysia:
U.S: Manufacturing in December expands at fastest pace in two years, reflecting firmer output and the biggest pickup in orders growth since August 2009. The Institute for Supply Management said that its index increased to 54.7, the fourth straight advance, from 53.2 a month earlier. The ISM’s measure of orders surged 7.2 points, while its gauge of prices paid for materials climbed to the highest level since June 2011. The jump in bookings, including the strongest pace of export orders since May 2014, will help keep factories on solid footing early this year as business confidence improves. Plant managers responded to the brighter outlook by adding to staff at the fastest pace since the middle of 2015, according to the ISM’s report. (Source: Bloomberg)
Germany: Unemployment extended its decline in December amid signs that growth in Europe’s largest economy accelerated at the end of last year. The number of people out of work fell by a seasonally adjusted 17,000 to 2.638 million, data from the Federal Labor Agency in Nuremberg showed. The jobless rate remained unchanged at 6%, matching the lowest level since reunification. (Source: Bloomberg)
U.K: Manufacturing grew at the fastest pace in 2 1/2 years in December, helped by the pound’s depreciation since the vote to leave the European Union. After dipping sharply in the wake of the Brexit referendum -- dropping below the key 50 level in July -- the IHS Markit Purchasing Managers Index has since recovered strongly and was at 56.1 last month. That’s up from 53.6 in November and marks the highest reading since June 2014. A measure of new orders also rose. (Source: Bloomberg)
China: PBOC injects markets with record MLF funds amid outflow pressure. China has made unprecedented injections into the financial system through one lending tool amid acceleration in capital flowing out of the world’s second- largest economy. The balance in the Medium-term Lending Facility increased CNY 721.5b (USD 104b) in December, People’s Bank of China data showed. That was the biggest jump since the central bank started publishing information about the liquidity tool in September 2014. The total outstanding for those operations was CNY 3.46tr, also a record, PBOC data show. Capital outflow pressures have intensified as the yuan posted its steepest annual drop in more than two decades. The central bank is stepping up its push to maintain sufficient funding in the market while also transitioning to a more neutral monetary policy and putting more focus on reducing risks from high debt levels. (Source: Bloomberg)
Australia: House values increased at the fastest pace in seven years in 2016, as record-low interest rates helped fuel demand for property despite warnings such price increases may be unsustainable. The average dwelling value in the nation’s eight state and mainland territory capitals rose 10.9% last year, compared to 7.8% in 2015, data from CoreLogic Inc.showed. That’s the biggest increase since 2009. (Source: Bloomberg)
Other News:
Vivocom: Wins job worth MYR71.3m. Its subsidiary Vivocom Enterprise S/B (VESB) has won two contracts worth a combined MYR71.3m for construction works. VESB has bagged a MYR19.3m contract from Oriental Mace S/B to construct a factory, warehouse and office buildings in Bandar Baru Enstek, Seremban, Negeri Sembilan. This project will be completed within 15 months from the date of commencement. VESB also won a MYR52m contract from Udaran S/B to construct a mixed development comprising two-storey terrace houses and commercial buildings in Marang, Terengganu. This project will be completed within 24 months from the date of commencement. (Source: The Edge Financial Daily)
Favelle Favco: Secures MYR64m orders. The group has secured MYR64m worth of orders in December 2016 to supply tower cranes to ALE UK Holdings, Marr Contracting Pty Ltd, TES Inc and Stride High Pty Ltd. Favelle Favco said the four orders to supply tower cranes were bagged via its wholly-owned subsidiaries Kroll Cranes A/S, Favelle Favco Cranes Pty Ltd and Favelle Favco Cranes (USA) Inc. The tower cranes will be delivered during the second and third quarter of 2017. (Source: The Edge Financial Daily)
Gunung Capital: To provide bus transport for armed forces’ children. Its unit GPB Corp S/B has clinched a three-year contract worth up to MYR43.9m to provide school bus services for children of the Malaysian Armed Forces personnel nationwide. The duration of the contract is from Jan 1, 2017, to Nov 30, 2019. Gunung Capital estimated that a total of 233 44-seater buses and 85 25-seater buses would be required to fulfill its obligations under the deal. (Source: The Star)
Wah Seong: In JV to sell building material online. The group has tied up with Hong Kong firm Lesso Home Service Holdings Ltd to sell products and services via an online platform facilitated by the latter. Its wholly-owned unit Syn Tai Hung Trading S/B (STHT) has inked a joint venture (JV) and shareholders' agreement to effect the tie-up with Lesso today, which will see the two companies combining their capabilities and expertise via a JV company to become an integrated sales and service centre. The proposed new JVco will be 49%-held by STHT and 51% by Lesso. (Source: The Edge Financial Daily)
Petronas: Among 29 firms shortlisted to bid for Iran projects. Iran has published a list of 29 major companies from Europe and Asia approved to bid for oil and gas projects after the lifting of sanctions over its nuclear programme. Among those from Asia were China’s CNPC and Sinopec International, the Japanese Mitsubishi Corporation and Japan Petroleum Exploration, Malaysia’s Petroliam Nasional Bhd (Petronas), and South Korea’s Korea Gas Corporation and Posco Daewoo. The National Iranian Oil Co is to offer tenders for exploration and production projects at oil and gas fields in the country, the oil ministry’s news service Shana reported yesterday. (Source: The Sun Daily)
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