MIB Research Summary - 26 Nov 2014

WCT Holdings: Upgrade to Buy Unlocking values; uplift to BUY  Shariah-compliant

Accelerating the REIT-ing of its malls with MYR2b asset value; positive in unlocking the values of its property investments. Negatives on property and construction priced in after the share price fell 17% since Aug 2014. Lowering earnings forecasts, but upgrade the stock to BUY with a shaved TP of MYR2.20 (-2%). UMW Oil & Gas Corporation: Maintain Buy Cautiously optimistic on outlook  Shariah-compliant 70 newbuilds to enter market in 2015; expects softer DCRs. Cost/safety aspects, not DCR, to accelerate scrapping policy. Healthy tenders pipeline (6-to-1 bid-to-JU ratio), committed to grow JU fleet beyond 7 units; not ruling out M&A. Maintain BUY with an unchanged SOP-based MYR3.90 TP. 7-Eleven Malaysia Holdings: Maintain Hold Trimming earnings for one-off 9M14 results included a one-off provision write-back of MYR3.8m. Trimming FY14/15 earnings by 3%/2%. Positively, 7EM has tied up with 2 service providers. Maintain HOLD with lower a TP of MYR1.73 (from MYR1.78). Hong Leong Bank: Maintain Buy Title of report 1QFY15 results within expectations at 25% of our full-year forecast and consensus. As highlighted before, future fund raising cannot be ruled out; we are factoring this into our valuations. Forecasts and BUY maintained, TP raised to MYR16.50 from MYR16.20 on rolling forward valuations (CY15 P/BV of 1.8x). Hong Leong Financial Group: Downgrade to Hold Insurance earnings lowered 1QFY15 earnings lagged due to lower insurance contributions; cut FY15/16 earnings by 10%. RNAV based TP however raised to MYR19.45 from MYR19.10 on rolling forward HL Bank’s valuations. Share price has risen 17% YTD, outperforming peers. Cut to HOLD, prefer HL Bank (TP: MYR16.50) for exposure. BIMB Holdings: Maintain Hold Weaker takaful contributions  Shariah-compliant 3Q14 results within expectations; Takaful earnings weaker QoQ. FY15/16 forecasts trimmed by 4% to factor in lower NIM. HOLD maintained with an unchanged SOP TP of MYR4.40. IJM Corporation: Maintain Buy Orderbook to chalk new high  Shariah-compliant 1HFY3/15 results fall short mainly due to higher tax rates. Construction outstanding orderbook could reach a new high of MYR6.6b while property sales would remain robust. Earnings forecasts are unchanged. Reiterate BUY at an unchanged RNAV-based TP of MYR7.40. Ta Ann Holdings: Maintain Buy Earnings outperformed, TP raised  Shariah-compliant 3Q14 core PATMI beat expectations. FY14-15 EPS raised by 6%/5% on stronger timber earnings outlook but partly offset by weaker plantation earnings. Maintain BUY with a higher TP of MYR5.00 (+5%). Inari Amertron: Maintain Buy Accelerating onto the fast lane  Shariah-compliant 1QFY6/15 net profit within expectations. Inari is Shariah compliant, offering exposure to the growing smart devices market via its partnership with Avago. Reiterate BUY with an unchanged MYR4.20 cum-rights TP (17x CY15 PER), offering a 46% upside. Perdana Petroleum: Maintain Buy Results on track; pursuing growth  Shariah-compliant 9M14 earnings in line; 77% of ours/consensus 12M forecasts. Majority of contracts are long term. OSVs are new (4 years average) and utilisation level is the highest among peers. BUY with an unchanged MYR2.40 TP (12x 2016 PER). Barakah Offshore Petroleum: Maintain Hold Overshot expectations  Shariah-compliant 12MFY14 core net profit made up 84% of ours and consensus’15MFY14 forecasts. Raise 15MFY14 earnings by 16% for the strong 4QFY14 results. Maintain HOLD with an unchanged MYR1.35 TP (10x 2016 PER). TIME dotCom: Maintain Hold Sequentially weaker core showing  Shariah-compliant 9M14 EBITDA and net profit were in line with our expectation at 73% and 71% of our full-year forecasts respectively. Near-term risk-reward remains uncompelling, given the stock’s 48% YTD rally. Maintain HOLD, TP unchanged at MYR5.00. IHH Healthcare: Maintain Hold Seasonal weakness  Shariah-compliant 9M14 core roughly in line, at 69% of our FY14E & 70% of consensus. 3Q seasonally weaker, 4Q the strongest. Ramp-up of hospitals & new beds to spur growth. Lower EPS by 2% for higher tax rate. SOTP TP raised to MYR4.82 from MYR4.81 for marked-to-market stakes. Maintain HOLD given high valuation vs. peer. Singapore GDP 3Q 2014 Stabilising after slowdown 3Q 2014 real GDP growth revised up to +2.8% YoY from +2.4% YoY reported earlier as manufacturing and services expanded to offset weak construction. Adjust our 2014 growth estimate to +3.2% (2014 YTD: +3.3% YoY; 2014 previous: +3.3%). For 2015, we expect growth to moderate slightly to +3.0%. MTI estimates real GDP growth of around +3.0% for 2014 and +2.5-4.0% for 2015. TECHNICAL: Re-testing 1,843 and 1,858 The FBMKLCI gained 4.79 points to 1,838.56 yesterday, while the FBMEMAS and FBM100 also closed higher by 14.65 points and 16.47 points, respectively. We recommend a “Buy on Dips” stance for the index. Trading idea is a Short-Term Buy on TM with upside target areas at MYR7.87 & MYR8.44. Stop loss MYR6.97. NEWS Aviation: PAC lambasts MAHB for ignoring AirAsia's concerns. The Public Accounts Committee (PAC) yesterday slammed Malaysia Airports Holdings (MAHB) for ignoring the needs of stakeholders such as AirAsia when constructing klia2 in Sepang. PAC also called for the Auditor – General (AG) to audit MAHB's performance since it was first established. (Source: The Edge Financial Daily) Sona Petroleum: Gets SC approval, faces task to secure Salamander Energy asset. Sona Petroleum may have received approval from the Securities Commission (SC) but it faces a testing time to secure the asset it is eyeing which is owned by UK-listed Salamander Energy Plc. SC has approved the acquisition of a 40% stake in Salamander Energy's Thai unit Salamander Energy (Bualang Holdings) Ltd for USD282.2m (MYR912m). (Source: The Star) Berjaya Auto: MYR192m BAuto share placement. Berjaya Corp unit Berjaya Group (BGroup) has placed out 60 million ordinary shares of Berjaya Auto (BAuto) for MYR192m. This represented about 7.42% of BAuto’s existing issued and paid-up share capital. Following the completion of the placement, BGroup's shareholdings in BAuto will be reduced to 36.74% from 44.16% previously. (Source: The Star) Malaysia's September 2014 unemployment rate was stable at 2.7% as it dropped -0.4% YoY and -0.7% MoM to 377,200. Unemployment rate has been below 3% since April 2014, indicating a robust job market conditions and virtually a full-employment situation. Employment increased by +1.4% YoY and +1.3% YoY to 13.7m, while total labour force in September 2014 expanded by +0.9% YoY and +1.3% MoM to 14.1 million people, especially those in the 30-34 years age group. As labour force and employment rose and unemployment rate fell, the labour force participation rate (LFPR) increased to 67.9% in September (Aug 2014: 67.1%). (Source: Department of Statistics Malaysia) U.S: Consumer confidence unexpectedly dropped in November as Americans became less upbeat about the economy and labor market. The Conference Board's index fell to 88.7 this month from an October reading of 94.1 that was the strongest since October 2007, the New York-based private research group said. (Source: Bloomberg) U.S: Economy expands more than previously estimated reflecting bigger gains in consumer spending and business investment and capping the strongest six months of growth in a decade. Gross domestic product, the value of all goods and services produced, rose at a 3.9% annualized rate, up from an initial estimate of 3.5%, Commerce Department figures showed. After the 4.6% increase in the second quarter, it marked the biggest back-to-back advance since late 2003. (Source: Bloomberg) Germany: GDP gained by 0.1% QoQ in 3Q 2014, the Federal Statistics Office said. Germany relied on domestic consumers for economic growth last quarter as investment fell, putting the strength of the nation's recovery at risk. Private consumption climbed 0.7% QoQ, while capital investment sank 0.9% QoQ. (Source: Bloomberg) Vietnam: Expands foreign property ownership to boost economy. Vietnamese lawmakers approved a law allowing broad foreign ownership of property, as the government seeks to boost an ailing real-estate market and accelerate economic growth. Foreigners with a valid visa as well as foreign companies and international organizations operating in Vietnam now will be permitted to purchase houses and apartments. Current laws restrict ownership to foreigners married to Vietnamese and those foreigners deemed to make significant contributions to the nation's development. (Source: Bloomberg)