- Foreign companies with existing Indonesian plantation operations will not be affected by Indonesia’s new rule.
- If foreign limit is set too low, we expect new planting to slow in Indonesia and help boost CPO price in the long term.
- Neutral impact for now. Maintain our 12M NEUTRAL view on the sector.
| BANKING: Loan growth stable in August |
- Industry loan growth was stable at 8.6% YoY in August; our 2014 loan growth forecast of 8.7% maintained.
- Of concern is that deposit growth continued to slip further to 5.6% YoY – this will intensify deposit competition.
- NEUTRAL on sector; BUYs are AFG, HL Bank and HLFG.
| UTILITIES: A relook at reserve margins |
- Peninsular Malaysia’s reserve margin would drop below 20% in 2014-2020 (from 30% in 2013).
- Reserve margin could fall further to 10% if some of the new plants are indeed delayed; extending expiring SLAs/PPAs appears the most convenient fix.
- New capacity will be required beyond 2020; IPPs would benefit if PPA terms become less onerous.
TECHNICAL: Range trading for the index The FBMKLCI inched down by 0.03 points to 1,846.31 yesterday, while the FBMEMAS and FBM100 also closed lower by 3.15 points and 2.82 points, respectively. We recommend a “Range Trading” stance for the index.
Trading idea is a Short-Term buy on ELSOFT with upside target areas at MYR1.78 & MYR2.04. Stop loss is at MYR1.38. |
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