MIB Research Summary - 3 Nov 2014

Tenaga Nasional: Maintain Buy A strong finish indeed  Shariah-compliant

FY14 core net profit of MYR5.4b (a record-high) was in line with ours and consensus expectations. Positive earnings outlook as 1) coal generation trends up, 2) coal prices remain suppressed and 3) tax rate stays low. Raising FY15/16 earnings by 11%/13%, and TP to MYR16.00 (+14%); reiterate BUY. MY Banking: Maintain Neutral Loan growth ticks up in September Industry loan growth ticked up to 9% YoY in Sep 2014 (8.6% YoY in Aug) supported by non-HH loan growth (+6.7% YoY); Positively, interest spreads continue to expand; keeping an eye on liquidity and consumer asset quality. Our 2014 loan growth forecast of 8.7% maintained. NEUTRAL on sector; BUY RHB, AFG, HL Bank, and HLFG Felda Global Ventures: Maintain Hold Bigger downstream plans in China?  Shariah-compliant FGV proposal to gain a 100%-control (presently 50%) of its downstream business in China is positive for the long term. Due to insufficient details, we are unable to assess its financial impact but we believe it is likely to be marginal. Maintain HOLD with unchanged SOP-based TP of MYR3.97. Technical: Autumn correction is over The FBM KLCI rose 36.29 points WoW to close at 1,855.15, as some consistent buying activities led the index up above the 1,850-mark. Volume rose from 1.58b to 2.75b shares. The index traded from 801.27 to 936.63 from Oct 2008 to Apr 2009, but broke above 936.63 (Wave a/B) in Apr 2009. Its Wave b/B low was 836.51. We traced out a Wave C/B (of a 3-3-5 Flat) rebound phase, and the extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from 801.27 stalled at 1,896.23 (8 Jul 2014 all-time high). Today's trading idea is a Short-Term BUY on Hap Seng Consolidated with target price of MYR4.62, MYR4.78, MYR5.00 and MYR5.85

RHB Research Summary - 3 Nov 2014

Tenaga Nasional (TNB MK, BUY, TP: MYR15.50)

FY14 Core Net Profit Grows 15.8%

Results Review

TNB’s FY14 (Aug) results met our forecast. We raise our FY15 net profit forecast by 13% on lower coal costs. Correspondingly, we raise our TP by 13% to MYR15.50, implying a 16% upside. We maintain our BUY call. We continue to advocate owning TNB as a proxy to the economy and stock market. We also like the “renaissance” in TNB’s involvement in the more lucrative power generation business.

 

Felda Global (FGV MK, NEUTRAL, TP: MYR3.68)

Proposes To Acquire Chinese Refining Facility

Company Update

FGV has proposed to acquire Felda IFFCO South China for MYR172m, a company with 630,000 tonnes of annual refining capacity. While the pricing seems reasonable on an EV/tonne basis, we are not too sure of the profitability of this facility. We make no changes to our earnings forecasts and TP of MYR3.68 (implying a 0.3% upside), until we get more clarity on the potential earnings impact. Maintain NEUTRAL.

 

Banking (NEUTRAL)

A Mixed Bag

Sector Update

System loan growth in September picked up pace to 9% YoY from 8.6% YoY in Aug due to a pickup in business loan disbursements. Business loan applications and approvals also strengthened in September, pointing to stronger business lending activities in 4Q14. However, asset quality deteriorated but impairment allowance data suggest that credit cost could remain fairly benign. Stay NEUTRAL.

 

 

Economic Highlights

Broad Monetary Aggregate And Loan Growth Picked Up In September

The broader money supply, M3, picked up to 5.2% YoY in September (Aug 2014: +4.8%). Loan growth also inched higher to 9.0% YoY in September (Aug 2014: +8.6%). A stronger growth in corporate loans mitigated the weaker growth in household loans during the month. We continue to expect the Overnight Policy Rate (OPR) to be kept at 3.25% for the rest of the year. However, the OPR could still be raised by another 25 bps in 1Q15.

 

Research Summary: 1 August 2014

Research Summary: 1 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Sector update	Banking	June statistics: marginal improvements noted	Neutral
RHB	Company update	CIMB	A mixed bag	Neutral	RM7.75
RHB	Results review	Caring	A subdued 4Q	Neutral	RM1.95
RHB	Cease coverage	Johore Tin	Ceasing coverage	Not rated
CIMB	Sector update	Banks	Jun 14 tracker – business loan growth still in doldrums	Underweight
CIMB	Eco update	Economics	Loans growth slower but still healthy
Maybank	Sector update	Banking	Loan growth down YoY but up MoM	Neutral
Maybank	Company update	Star	More to come?	Hold	RM2.50
Maybank	Technical	FGV		Take profit
Kenanga	Sector update	Banking	BNM Statistics (June 2014) – still lacklustre	Neutral
Kenanga	Results note	Redtone	Slightly off-colour results	Market perform	RM0.77
Kenanga	Company update	CIMB	Mediocre days ahead	Market perform	RM8.00

Research Summary: 25 July 2014

Research Summary: 25 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Sector update	O&G	Storage, the preferred play over refineries	Overweight
RHB	Results review	Public Bank	Still tracking targets	Neutral	RM19.85
RHB	Company update	CIMB	CIMB Niaga 2Q14 results show muted numbers	Neutral	RM7.75
RHB	Results review	IGB REIT	Steady as expected	Neutral	RM1.27
RHB	Company update	MRCB	Taking up 100% stake in Penang Sentral	Buy	RM1.87
RHB	Company update	Sunway	Sales picked up strongly in 2Q	Buy	RM3.60
RHB	Company update	Dialog	Now neutral pending re-rating catalyst	Neutral	RM1.90
RHB	Results briefing	Daibochi	Fundamentals still intact	Neutral	RM4.10
RHB	Results review	Airport	Hit by higher depreciation and interest costs	Buy	RM8.51
RHB	Results review	Unisem	Finally back in the black	Buy	RM2.16
RHB	Eco highlights	Economics	Leading Index slowed in May, economic activities will likely grow at a moderate pace ahead
CIMB	Results note	Public Bank	Time to cash in on the price rally	Reduce	RM17.50
CIMB	Results note	IGB REIT	Stable Gardens and Valley	Hold	RM1.25
CIMB	Results note	Airport	Uncertainty is the enemy	Hold	RM7.50
CIMB	Results note	Unisem	Sequential improvement	Add	RM2.09
CIMB	Flash note	Daibochi	Stable raw material prices	Hold	RM4.38
CIMB	Eco update	Economics	May LI: Still favourable outlook
Maybank	Company update	Yinson	Sells Petroleo Nautipa for USD59m	Buy	M3.03
Maybank	Results review	Public Bank	Tepid growth in 1HFY14	Sell	RM19.20
Maybank	Results review	Airport	Surprise loss	Hold	RM6.90
Maybank	Results review	IGB REIT	Beat expectations	Hold	RM1.29
Maybank	Technical	FGV		Take profit
Kenanga	Results note	Unisem	Impressive turnaround	Market perform	RM1.64
Kenanga	Quick Bites	Yinson	Trading Petroleo Nautipa for longer-term plans	Underperform	RM2.31
Kenanga	Results note	Airport	Lower on KLIA2 opening	Market perform	RM8.06
Kenanga	Results note	CIMB	CIMB Niaga: weak showing	Market perform	RM8.00
Kenanga	Results note	IGB REIT	1H14 within expectations	Outperform	RM1.35
Kenanga	Results note	Public Bank	Looking to grow better yielding assets	Market perform	RM20.00