MIB Research Summary - 19 Nov 2014

CIMB Group Holdings: Maintain Hold Poor showing as expected

9M14 core net profit down 7% YoY mainly due to drag from CIMB Niaga and weak capital markets. Forecasts maintained but near term risk is to the downside with guidance for higher provisions out of Indonesia in 4Q14. Maintain HOLD on CIMB; BUY RHB for exposure to the merged entity. Dialog Group: Maintain Buy RAPID & Pengerang to fuel growth  Shariah-compliant 1QFY6/15 results within our expectation, below consensus. A steady stock with sound business model and management. Reiterate BUY and MYR1.90 TP (SOP-based) with upside bias. Lafarge Malaysia: Maintain Buy Waiting to raise ASPs  Shariah-compliant 3Q results were below ours and market’s expectations. Cut FY14 EPS by 25% to impute the weak results. TP unchanged at MYR10.75 (21x mid-2016 PER). Downgrade to HOLD on limited upside. Dividend yield of 4% is decent. Hartalega: Downgrade to Hold Near-term weakness  Shariah-compliant 2Q below expectations due to high start-up cost of its next generation glove manufacturing complex (NGC). Expect weakness in near-term earnings on start-up costs. Cut FY3/15-16 EPS by 7-8%; TP lowered to MYR7.00 (19x mid-2016 PER) and downgrade to HOLD (from BUY). TSH Resources: Maintain Buy 3Q14: In line  Shariah-compliant Results within our expectation but above consensus. Young tree age profile would drive strong production growth. BUY with an unchanged TP of MYR2.45 on 19x 2015 PER. MBM Resources: Maintain Buy Stronger ahead  Shariah-compliant 9M14 earnings within our forecast but below consensus. Cheapest exposure to our preferred small car segment, in light of higher cost of living, via 22.6%-owned Perodua. Our FY14/15/16 forecasts are raised by 2% p.a.. New TP of MYR3.50 (+2%) is based on unchanged 9x FY15 PER. BUY. Sunway: Maintain Hold Earnings on track  Shariah-compliant 9M14 core net profit of MYR386m (+19% YoY) is in line. Property sales on track to meet target, but construction job wins lagging behind. Maintain earnings forecasts, HOLD rating and MYR3.05 TP (on 0.59x P/RNAV target). Padini Holdings: Maintain Buy Stable growth, attractive yields Looking at moderate 6-7% YoY revenue growth in 1QFY6/15, but this should pick up as new stores are opened. Trimmed FY15-FY17 net profits by 2% per annum on lower sales growth and margin assumptions. BUY - TP unchanged at MYR2.20 on 14.8x FY15 PER, dividend yield attractive at 5.7%, providing support to share price. TECHNICAL: Index’s decline was arrested at 1,805 The FBMKLCI rose 11.90 points to 1,818.38 yesterday, while the FBMEMAS and FBM100 also closed higher by 72.10 points and 69.72 points, respectively. We recommend a “Range Trading” stance for the index. Trading idea is a Take profit call on PCHEM with downside target areas at MYR5.29 and MYR4.80.   NEWS KSK Group: KSK Land's 8 Conlay to offer branded residences. KSK Group, via property unit KSK Land Sdn Bhd, is set to fulfill the growing demand for branded residences with its MYR4b mixed development project in Jalan Conlay. The project on 1.60ha next to Prince Hotel & Residence will have two residence towers and one tower comprising a five-star hotel and serviced residence by Europe’s oldest luxury group, Kempinski Hotels S.A. (Source: The New Straits Times) Telekom: TM to provide DTT services worth MYR1b to MTVB. Telekom Malaysia (TM) has signed a framework agreement with MYTV Broadcasting Sdn Bhd (MTVB) to provide digital terrestrial television (DTT) infrastructure, network facilities and related services in Malaysia. The DTT service will be accorded to MTVB for a period of 15 years, with an annual contract value of MYR70.47m. (Source: The Edge Financial Daily) RON97 petrol down 20 sen per litre to MYR2.55 per litre from MYR2.75 per litre effective today. RON97 price is on managed float and thus is ultimately influenced by the global crude oil prices - which has fallen by around 30% from the recent high in June 2014 - on a lagged basis as the Government reset its price monthly. Meanwhile, the subsidies on RON95 and diesel prices has also been shrinking as a result of the 20 sen per litre price hikes in Oct 2014 and compounded by the falling crude oil prices. To note, the subsidy per litre on RON95 and diesel dropped from MYR0.47 per litre and MYR0.59 per litre in Sep 2014 to MYR0.28 per litre and MYR0.32 per litre in Oct 2014, and further to MYR0.13 per litre and MYR0.12 per litre this month. (Sources: TheSun, Maybank KE) U.S: Homebuilder confidence in November rebounds as buyers more enthusiastic as low interest rates and a strengthening job market helped boost sales. The National Association of Home Builders/Wells Fargo builder sentiment gauge advanced to 58, matching the second-highest level since 2005, from 54 in October, figures from the Washington-based group showed. (Source: Bloomberg) Germany: Investor confidence rose for the first time in 11 months after Europe's largest economy avoided relapsing into a recession. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 11.5 in November from minus 3.6 in October. (Source: Bloomberg) U.K: Inflation unexpectedly accelerated last month as transport prices fell less than a year earlier and the cost of toys rose in the run-up to Christmas. The rate of consumer-price growth increased to 1.3% YoY from 1.2% YoY in September, the Office for National Statistics said. (Source: Bloomberg) Indonesia: Bank Indonesia raises key interest rate as fuel prices increase. Indonesia's central bank raised its policy interest rate for the first time this year to guard against inflation after President Joko Widodo increased subsidized fuel prices. Bank Indonesia Governor Agus Martowardojo and his board raised the reference rate to 7.75% from 7.5%, the central bank said after an unscheduled meeting in Jakarta. The authority kept unchanged the rate it pays lenders on overnight deposits, known as the Fasbi, at 5.75%. (Source: Bloomberg)