MIB Research Summary - 25 Nov 2014

Axiata Group: Maintain BUY Celcom weak as guided  Shariah-compliant

9M14 net profit and EBITDA were below both ours and consensus forecasts; Celcom was weak as guided. Celcom’s IT issues have been well-flagged and are largely resolved; revenue should trend higher going forward. Cut FY14 net profit by 10%; BUY rating and MYR7.60 TP unchanged UMW Oil & Gas Corporation: Maintain Buy No surprises  Shariah-compliant 9M14 results within our and consensus expectations. UMWOG is Shariah compliant, has strong earnings growth prospects with quality assets to capitalise on new JUs in Asia. Maintain BUY with an unchanged SOP-based MYR3.90 TP. WCT Holdings: Maintain Hold 3Q14: Dragged by property  Shariah-compliant Results disappointed; both property progress billings and margins were weak. Lower FY14-16 net profit forecasts by 3%-8%. Potential downside to FY15-16 forecasts. Maintain HOLD. Petronas Gas: Maintain Hold More colour on Pengerang ventures  Shariah-compliant Raising FY18 net profit by 6% to account for the Pengerang re-gas plant. Further earnings accretion in FY19 from the Pengerang air separation JV with Linde. TP raised to MYR24.00 (+50sen), maintain HOLD. NCB Holdings: Upgrade to Hold MMC eyeing a stake in NCB?  Shariah-compliant The potential emergence of MMC as a substantial shareholder (if true) should shore up interests in NCB. NCB now trades at a multi-year low and a re-rating to 1x P/BV indicates a 28% upside. Upgrade to HOLD (from SELL); share price has since trended down to our unchanged DCF-derived TP of MYR2.25. Singapore CPI, October 2014 Dis-inflationary pressure continues Headline inflation eased further to +0.1% YoY in Oct 2014 (Sep 2014: +0.6% YoY), mainly on lower costs on COE, accommodation and oil-related items. Core inflation rate (CPI ex-accommodation and private road transport) remains sub-2.0% (Oct 14: +1.7% YoY; Sep 14: +1.9% YoY). Cut 2014 CPI estimate to +1.0% (YTD 2014: +1.3%; previous 2014: +1.3%) and expect 2015 inflation rate to stay subdue at 1.0%-1.5% TECHNICAL: Temporary low of 1,805.35 in place The FBMKLCI rose 24.64 points to 1,833.77 yesterday, while the FBMEMAS and FBM100 also closed higher by 170.11 points and 167.62 points, respectively. We recommend a “Buy on Dips” stance for the index. Trading idea is a short-term buy on MAXIS with upside target areas at MYR7.46 & MYR7.70. Stop loss is at MYR6.68. NEWS  IPO: Weststar valued at up to MYR4.8b. The long-awaited listing of Weststar Aviation Services is set to proceed with Tan Sri Syed Azman Syed Ibrahim aiming to raise about MYR1.4b from the exercise. Sources indicate that the company was valued by investment banks at between MYR4.2b and MYR4.8b. The firm is raising funds to pare debts. (Source: The Star) IHH Healthcare: Unit awards MYR1.07b for HK hospital job. IHH Healthcare, via its indirect 60%-owned subsidiary GHK Hospital Ltd, has awarded the main contract for superstructure works on a private hospital to Hip Hung-Chun Woo Joint Venture (HHCW) for HKD 2.48b (MYR1.07b). Under the contract, HHCW will carry out the superstructure works comprising the design completion and maintenance of the main contract works for the development of a private hospital at Aberdeen Inland in Hong Kong. The contract is for 24 months. (The Edge Financial Daily) Sona Petroleum: Remains committed to Thai deal. Sona Petroleum's nearly MYR1b deal to buy oil and gas assets in Thailand owned by UK-listed Salamander Energy plc appears to be all but over after the latter accepted the takeover offer by Ophir Energy plc. Salamander yesterday announced it had agreed to Ophir's firm offer to buy the entire stake in the company. The offer was on the condition that Salamander cancels its deal with Sona. (The Star) Infrastructure: IJM, Silk abort MYR395m Kajang highway deal. IJM Corp unit Road Builder (M) Holdings and Silk Holdings have mutually decided to abort the MYR395m acquisition of 100% equity interest in Sistem Lingkara--Lebuhraya Kajang Sdn Bhd. It was called off following the non-fulfillment of certain conditions precedent within the agreed timeline. (Source: The Star) The leading index (LI) in Sep 2014 rose at the same pace as in Aug 2014 i.e. +1.6% YoY as the increases in some of its components like "Real Money Supply" (Sep 2014: +0.6% YoY; Aug 2014: -0.5% YoY) and "Real Imports of Semiconductors" (Sep 2014: +0.3% YoY; Aug 2014: -0.3% YoY) were offset by declines other components such as "Housing Permits Approved" (Sep 2014: -0.2% YoY; Aug 2014: -0.6% YoY) and "Expected Manufacturing Sales Value" (Sep 2014: -0.1% YoY; Aug 2014: -0.3% YoY). The stable but moderate rise in LI - a gauge on economic growth in the next 3 months at least - suggests that the real GDP growth momentum is positive albeit moderate in 4Q 2014. This is amid a challenging external demand situation given the lack of breadth and depth in global economic and trade growth on top of the soft commodity prices. In addition, there are moderations in certain areas within the domestic economy like property as well as consumer and Government spending due to property-cooling and fiscal consolidation measures, although investment activities will be key in supporting domestic demand. (Source: BNM, MKE) Germany: Business confidence unexpectedly rose for the first time in seven months after the country's economy returned to growth and the European Central Bank added stimulus to the euro area. The Ifo institute's business climate index, based on a survey of 7,000 executives, advanced to 104.7 in November from 103.2 in October. (Source: Bloomberg) Russia: Sees USD 140b annual loss from oil plunge, sanctions. Russia stands to lose as much as USD 140b a year as a result of lower oil prices and U.S. and European sanctions, Finance Minister Anton Siluanov said, underlining the risks of a prolonged stalemate over Ukraine. "We've seen a contraction of capital inflows into the country," Siluanov said at conference in Moscow. "We're losing about USD 40b a year because of geopolitical sanctions, and we're losing about USD 90b to USD 100b on the basis of a 30% decline in oil prices." (Source: Bloomberg)