Kenanga - 21 Nov 2014

IDEAS OF THE DAY

l  Sector Update: Automotive

l  Results Note: AEON, ALAM, CBIP, GENP, KOSSAN, MAHSING, POS, QL, RHBCAP, TGUAN, YTLPOWR

l  Quick Bites: SKPETRO

l  On Our Technical Watch: CYPARK, SMRT

NEWS HIGHLIGHTS

l  IJM secured RM355.7m building jobs (Comments included in Kenanga Today)

l  KPJ gets nod for RM1.5b sukuk scheme

l  BDB unit to complete 323 PR1MA houses

l  MUI shares suspended

l  RM420.0m financing for MRCB unit

FOREIGN NEWS HIGHLIGHTS

l  Janus says Soros’s Quantum puts USD500.0m with Gross

l  GoDaddy aims to list next year, seeks USD4.5b valuation

 

ECONOMIC NEWS HIGHLIGHTS (MACRO BITS) 

Asia

l  Japan’s Exports Rise Most In 8 Months In Recovery Sign

l  China Manufacturing Activity Hits Six Month Low

USA

l  U.S. Factory Activity Growth Slips In November: Markit

l  U.S. Underlying Inflation Rising; Economy Firming Broadly

l  U.S. Jobless Claims Fall; Continuing Claims Lowest Since 2000

l  U.S. Existing Home Sales Hit One-Year High In October

l  Leading Economic Indicators In U.S. Rise More Than Forecast

Europe

l  Euro-Area Growth At Risk As Factories, Services Weaken

l  Euro Zone Consumer Confidence Falls In November

l  French Business Slump Eases Slightly In November But New Business Drying Up: PMI

l  UK Retail Sales Rose By 0.8% In October As Prices Fell

Currencies

l  Dollar Falls From Seven-Year High Against Yen

Commodities

l  Oil Up After 3-Day Loss On Strong U.S. Data, OPEC Cut Speculation

l  Gold Rises As Price Drop Tempts Physical Buyers

RHB Research Summary - 21 Nov 2014

Auto (NEUTRAL)

Auto Sales Rebound

Sector Update

October auto sales rebounded +13.4% MoM to 54,187 units from a 6.6% MoM contraction in September as deliveries of the Perodua Axia gathered pace. However, cumulative 10M14 TIV sales continued to slow to +0.6% YoY from a higher base, in addition to consumers’ anticipation of year-end discounts and some choosing to defer their purchases until the GST impact on car prices becomes clearer. Maintain NEUTRAL.  

 

 

Mah Sing (MSGB MK, NEUTRAL, TP: MYR2.41)

Rights Issue To Pay Off Landbank

Results Review

Mah Sing’s 3Q14 results met expectations. 3Q new sales hit MYR900m, up from MYR780m in 2Q, on track to hit its MYR3.6bn sales target. In conjunction with the results, the company has called for a rights issue exercise to raise about MYR630m. The proceeds will largely be utilised for landbanking. Assuming a 3-for-10 entitlement basis for the rights, our TP is lowered to MYR2.41 (4.3% upside). Maintain NEUTRAL

 

 

Genting Plantations (GENP MK, BUY, TP: MYR11.60) 

Indonesia The Growth Catalyst

Results Review

GP’s 9M14 earnings were in line, with continued strength seen from its Indonesian plantations. Maintain BUY and SOP-based TP of MYR11.60 (11% upside), as we believe GP’s strong FFB production growth would help offset the lower CPO prices somewhat. We also highlight that stripping out the RNAV of the company’s property landbank from its current market capitalisation would bring its P/E down by 5-6x.

 

 

CB Industrial Products (CBP MK, NEUTRAL, TP: MYR2.10) (Upgraded from Take Profit)

Upgrade To NEUTRAL

Results Review

CBIP’s 9M14 results were within expectations, with no major surprises. Given the relatively smaller downside risk to our TP now, we upgrade the stock to NEUTRAL. We adjust our SOP-based TP to MYR2.10 (from MYR4.10, 3.7% downside), after taking into account the bonus issue and CBIP’s latest net cash. We await the next earnings catalyst, ie the patent approval and commercialisation of its zero-discharge mill.

 

YTL Power (YTLP MK, NEUTRAL, TP: MYR1.68)

1QFY15 Operating Profit Declines 16% YoY

Results Review

YTL Power (YTLP)’s 1QFY15 (June) results missed expectations. We cut our FY15 forecast by 27% but raise our TP by 9% to MYR1.68 (implying a 2% upside) after we update our WACC assumptions. We maintain our NEUTRAL call. YTLP lacks a strong appeal to investors as it has yet to secure any new power plant project in Malaysia, while its existing ones are pending retirement.

 

 

Pos Malaysia (POSM MK, BUY, TP: MYR5.60)

Higher Expenses For Future Growth

POS Malaysia’s 1HFY15 (Mar) results were in line with our estimate, as we expect higher operating expenses due to its transformation plans while 2H is normally a stronger period. We maintain BUY with a new TP of MYR5.60 (12% upside, 17x FY16F PE) vs MYR5.60 previously. Future growth would continue to be driven by its courier division while the potential development of its Brickfields land remains a rerating catalyst.

 

Kossan Rubber Industries (KRI MK, BUY, TP: MYR5.12)

Outlook Remains Bright

Results Review

We keep our BUY recommendation and TP of MYR5.12 (12.8% upside, 17x FY15F P/E). 9M14 earnings came in weaker than expected due to lower contributions from all divisions, but we see a bright outlook for FY15 when its new lines commence operations. Kossan declared a dividend of 3.5 sen in the quarter under review. We remain positive on the company’s future growth prospects.

 

 

QL Resources (QLG MK, BUY, TP: MYR3.90)

All On Track

Results Review

QL’s 1HFY15 (Mar) core earnings of MYR88.2m made up 44.5%/45.4% of our/consensus estimates. We deem the results in line, as 1H typically contributes 44-46% of its full-year earnings. Maintain BUY and a MYR3.90 TP (12.8% upside), as we remain upbeat on QL’s outlook. 1HFY15 revenue and earnings improved by 10.6% and 14.3% YoY respectively, driven by better performances from all its business segments.

 

 

AEON (AEON MK, NEUTRAL, TP: MYR3.67)

Affected By Higher Operating Costs

Results Review

AEON’s 9M14 core earnings of MYR137.4m missed expectations, at 54.3%/57.5% of our/consensus full-year estimates. We attribute this to higher utilities and promotional expenses, as well as initial start-up costs for new stores. Maintain NEUTRAL with a revised DCF-based TP of MYR3.67 (4.6% upside). We cut our FY14/FY15 earnings forecasts by 20.5%/19.2% respectively.

 

 

Faber Group (FAB MK, NEUTRAL, TP: MYR2.97)

Down But Not Out

Results Review

9M14 earnings came in below our and consensus estimates. Maintain NEUTRAL, with a SOP-based MYR2.97 TP (from MYR3.20, 1% upside). Core profit fell by 8.4% YoY on lower IFM concession and non-concession contributions. We slash our FY14-15 earnings forecasts by 25.3-40.5% to incorporate the challenging operating environment and lower revenue from IFM concession and non-concession businesses.

 

 

Bumi Armada (BAB MK, NEUTRAL, MYR1.49) (Downgraded from BUY)

Another Quarter Of Disappointment

Results Review

Bumi Armada’s 9MFY14 core earnings came in at MYR249.4m, missing our and street estimates by 22%/27%. We downgrade Bumi Armada to NEUTRAL with a lower SOP-based TP of MYR1.49, representing only an 8% upside, from MYR2.25. We also cut our earnings FY14F/FY15F earnings by 21%/13%, adjusting for a lower contribution from its FPSO as well as OSV segments.

 

 

SapuraKencana Petroleum (SAKP MK, BUY,  TP: MYR4.02)

Boosting E&P Portfolio With Sabah and Vietnam

Company Update

SapuraKencana has added Vietnam and Sabah blocks to its E&P assets – part of its long-term plan to have a balanced and fast-growing E&P portfolio. Maintain BUY. While we factored it in our SOP, we also rationalised its valuations to reflect a moderated global O&G outlook and, despite this conservatism, our adjusted MYR4.02 TP (from MYR5.33, 30% upside) implies that most downside risks are priced in.

 

 

Alam Maritim (AMRB MK, NEUTRAL, TP: MYR0.85)

Weak Results Widely Anticipated

Results Review

Alam Maritim’s 9M14 core profit of MYR55m was in line with our but below consensus estimates from lower vessel utilization rates and lower revenue recognition in subsea. Maintain NEUTRAL with a lower TP of MYR0.85 (9x P/E, 5% upside). We view its share price downtrend as an effect of the sector’s derating, and do not recommend a strong upside at this juncture given the earnings volatility and execution risks.

HLIB Research Summary - 21 Nov 2014

Automotive (NEUTRAL  çè)

Rebound in Oct, Driven by Perodua

• Oct TIV rebounded mom to 54.3k units (-1.6% yoy; +13.4% mom) from maiden contribution of Perodua Axia. YTD, TIV was 546.5k units (+0.6% yoy). We expect stronger sales in Nov & Dec, driven by Perodua Axia and Proton Iriz, as well as aggressive campaigns by foreign OEMs.
• Perodua reported strong sales of 17.7k units (+13.8% yoy; +46.0% mom) due to deliveries of newly launched Axia.
• Proton sales disappointing at 8.1k units (-37.2% yoy; +1.0%mom), due to mass production hiccups.
• YTD, Toyota and Nissan sales was relatively weak, behind FY14 sales target, while Honda is on track to achieve its FY14 target.
• Maintained NEUTRAL on automotive sector with top picks: MBM (TP: RM4.00) and DRB (TP: RM3.00).

SapuraKencana (BUY çè)

Expanding Reserves..

• SKP announced to acquire three blocks of oil assets from Petronas Carigali in Vietnam with total purchase consideration of US$400m.
• SKP also awarded PSC for Block SB331 and SB332 onshore Sabah with participating interest of 70%
• We expect the Vietnam acquisitions to increase 2P oil reserves by 80% to 39mm boe.
• Assuming net production of 11k bbl/d from Vietnam asset with oil price at US$80/bbl, we estimate it to contribute ~13% to FY01/16 bottomline.
• Maintain BUY call with an unchanged TP of RM4.26 based on unchanged 16x FY01/16 EPS of 26.6 sen/share.  

RHB Cap (BUY çè)

Growth Traction Gained Momentum

• 9MFY14 results in line with HLIB and consensus.
• Strong 3Q on sustained double-digit loans growth, stronger non-interest income (+24% qoq) and wider sequential JAW. 
• 9MFY14 ROE slightly below KPI but it is not changing as momentum in 3Q to sustain into 4Q, absence of additional provision and lower credit charge vis-à-vis earlier guidance.
• RHB-OSK integration on track to exceed initial synergy projection.  Coupled with new transformation (IGNITE 2017) progressing well, both has already contributed to the traction in Islamic and non-interest income growth.
• M&A with CIMB and MBSB to benefit the group and its shareholders.  Dedicated team to deal with integration to ensure BAU momentum is sustained
• Asset quality continued to improve with comfortable capital ratios.           
• Target price maintained at RM10.00 or 1.4x merger P/B (vs. RM10.028 merger valuation).  Maintain BUY.

YTLP (SELL ê)

1Q15 Within Expectations

• Within Expectations - Reported 1QFY06/15 core earnings of RM254.6m, accounting for 27.9% of HLIB and 24.0% of consensus.
• Main concern on the margin compression for Singapore Seraya Power (due to market overcapacity) and UK Wessex Water (regulatory reform to cut return on WACC).
• We believe the possibility of concession extension of domestic power plants relatively low.
• Given the continued earnings risk and lack of catalyst, we downgrade YTLP to SELL (from Hold) with unchanged Target Price of RM1.44, based on 10% discount to SOP.

Bumi Armada (BUY çè)

• Slightly Below mainly due to slower progress recognition of Kraken and Angola projects.
• Currently, Bumi is targeting 3 major FPSO bids in Ghana , Nigeria and Namibia and expects the result of tenders to be known by 1QFY15.
• FY14 earnings adjusted downward by 7% to reflect slower earnings recognition for Kraken and Angola projects under finance lease and lower margin for T&I.
• We maintain our BUY call with TP reduced from RM2.06 to RM1.74 based on SOP valuation method following adjustment to the group net debt position and lower value from T&I segment.

Genting Plantations (HOLD çè)

Within our expectation

• 9MFY14 core net profit of RM235m (+21.9%) came in within our expectation, accounted for 75.7% of our full-year forecast.
• We nudged up our FY15-16 net profit forecasts by 2.1-2.5%, largely to account for earnings contribution from the biodiesel production.
• SOP-derived TP raised by 10.4% to RM10.50 to reflect higher net profit forecasts and its latest net cash position. Maintain HOLD recommendation.  

Aeon (HOLD çè)

3QFY14: Well below expectations

• Below expectations – Aeon’s revenue of RM2733.8m (+6% yoy) translated into core earnings of RM123.3m (excluding RM14.2m exceptional gain occurred in previous quarter) came in well below our expectations, accounting for 53% of ours and 52% of streets’ full year estimates.
• YTD core net profit was depressed by 21% yoy, largely due to (1) higher utilities costs resulting from the electricity tariff hike; (2) greater initial start-up costs from the opening of new stores; (3) Aeon’s 30th anniversary promotional costs; and (4) higher marketing costs that was needed to boost consumer spending.
• Cut FY14, FY15, FY16 earnings by 25%, 12% and 10%, respectively, to reflect the short term macro headwinds, weak business and consumer sentiment as well as higher than expected operating costs.
• As a result, TP slashed by ~12% to RM3.42 pegged to unchanged 21.9x P/E FY15 EPS of 15.6 sen, based on 1 SD above 3-year historical average. Maintain HOLD.

Mah Sing (BUY çè)

9MFY14 Results & Corporate Exercises

• MSGB’s 9MFY14 PATAMI of RM254.7m came in within expectations.
• MSGB achieved property sales of circa RM2.45bn YTD. It has also grown its landbank by 1,134 acres, bringing the group’s undeveloped land bank to 3,658 acres with GDV of RM44.8bn. Unbilled sales stood at an outstanding RM5.1bn, representing 2.94x of FY13 property revenue.
• MSGB also proposed (1) renounceable rights issue with free detachable warrants to raise up to RM630m; and (2) a 1 for 4 bonus issue following the rights issue.
• Based on the indicative scenario of 3 rights for every 10 MSGB shares, there will be a total of 442.7m rights issued. This will result in dilution of FY14-15 EPS by 16.6% and 1101% while RNAV will be diluted by 13.8%.
• However, this is expected to be mitigated by the potential earnings from the launch of the development in Puchong (1HFY15) and Seremban (2HFY15).
• Gearing will be lowered significantly to 0.13x from 0.37x, allowing more room to gear up. The expected completion for the proposed rights issue with free warrants and bonus issue are by 1QFY15 and 3QFY15, respectively.
• BUY recommendation and TP of RM2.90 remained unchanged.

Kossan (HOLD é)

9M14 Results

• 9M14 core net profit accounted for 65.5% and 61.2% of HLIB and consensus full year estimates, respectively.
• We deem this to be in line as we are expecting a stronger quarter ahead from the contribution of new capacity.
• Declared 1^st interim dividend of 3.5 sen per share (9M13: 3.5 sen).
• QoQ: 3Q14 revenue grew (+8.1%) on the back of stronger sales from gloves and clean-room divisions, despite slower sales from TRP division, translating into higher core earnings (+7.4%).
• YoY: 9M14 revenue contracted (-4.5%) due to lower ASP in gloves division, offsetting the higher sales in clean-room division. Earnings turned positive thanks to improved margin.
• Upgrade from SELL to HOLD as we roll forward our valuation to CY16, leading to a higher TP of RM4.49.
• Our valuation is pegged to 12.8x of CY16 EPS, based on 1SD above 5-year historical average P/E.

PosM (SELL ê)

Weak 2Q15; Dragged by Mail and Retail

• Below - Reported 2QFY03/15 core earnings of RM8.2m and 1HFY03/15 of RM37.2m, which is 27.1% of HLIB and 22.9% of consensus.
• The weak performance was mainly due to higher than expected cost structures (related to staff and transportations).
• Recognized gain of RM25.5m from expired postal order in 2Q15.
• Cut earnings by 25-36% for FY03/15-17, after adjusting for the higher than expected cost structures.
• Downgrade PosM to SELL (from Hold) with lower Target Price of RM3.65 (from RM4.60), based on 18x P/E for FY03/16.

Scomi Energy (BUY çè)

Drag by marine segment.

• Below expectations due to lower margin as a result of change in product mix coupled with losses from marine segment.
• Marine segment under pressure with PAT swung from profit to losses. This was mainly due to lower utilisation of vessels and volume coal transported.
• We understand the company is still looking for opportunity in RSCs, brownfield and EOR businesses in the near future.
• We maintained our BUY call with a TP of RM1.07 (pending review of earnings forecasts).

CBIP (HOLD çè)

Within expectations

• 9MFY14 reported net profit of RM67m (+12.6%) accounted for 69.4% and 67.9% of our and consensus full-year forecasts. We consider the results within expectations, as we expect stronger 4Q (the special purpose vehicle division is seasonally stronger in 4Q). 
• Proposed a 2^nd interim DPS of 3 sen, bringing total DPS YTD to 5.5 sen.
• Maintain earnings forecasts, TP of RM2.13, as well as HOLD recommendation.  

ViTrox (BUY çè)

9M14 Results – Exceed Expectations

• 9M14 core net profit of RM35.4m was higher-than-expected, accounted for 84.6% of HLIB full year estimate.
• The sequential slowdown is very much guided and expected mainly due to industry’s seasonality. Even so, 3Q14 revenue of RM39.5m is another remarkable milestone as the second highest quarterly sales in its history.
• Gartner expects global semiconductor capital spending to be robust in 2015, growing 11.3% yoy to reach USD43.6bn.
• China’s enormous investment (Rmb1tr) into semiconductor industry may lead to potential multi-year high demand of ViTrox’s products.
• Reiterate BUY with unchanged TP of RM3.17, pegged to 1SD above 5-year historical average P/E multiple of 16.2x.

Traders Brief

Follow-through rebound still intact to retest 1836-1850 resistance zones

• The follow-through rebound remained intact as reversal pattern of “Bullish Engulfing” on 17 and 18 Nov is still in force and the traditional year-end Nov/Dec window dressing activities would spur some positive impacts. Further upside targets are 1836 (23.6% FR) and 1850 (downtrend line and 200- SMA) and 1860.
• However, near-term outlook for KLIC is not out of the woods yet since downtrend line has not been taken out yet. Thus, KLCI will continue to trap in range bound consolidation mode within 1800-1850, unless the 1850 resistance is taken out decisively.
• Short term supports are 1812 (50% FR) and 1800
• Took profit on PENTA yesterday as it hit R1.
• Today’s recommendation: Impulse Trading BUY on ESCERAM.

Impulse Trading - ESCERAM

ESCERAM: Resumption of uptrend on the card

• Share price movement has caught our attention as Downtrend Channel and Flag pattern on hourly and daily chart respectively have been taken out by a bullish candlestick, inducing sign of resumption of its uptrend.
• Our target price projection is pegged at RM0.255, RM0.27 and RM0.29. However, always prepared to set cut loss if situation changes. Support at RM0.23 with cut loss below RM0.22.

CIMB Research Summary - 21 Nov 2014

Mah Sing Group - Sales picking up pace
Mah Sing's 9M results were in line with our expectations but above consensus as net profit made up 74% of our full-year forecast and 79% of consensus. It achieved new sales of RM2.45bn, 68% of its full-year target of RM3.6bn. We expect 4Q new sales to be stronger on the back of the conversion of the record bookings achieved in 2H14. Mah Sing has also proposed to undertake a rights issue with free warrants to raise up to RM630m as well as a 1-for-4 bonus. We have tweaked our EPS forecasts for the conversion of ESOS and warrants. We retain our Add call and target basis of parity with RNAV. Mah Sing remains one of our top picks for the sector, with potential re-rating catalysts that include its 1) strong and consistent earnings growth, 2) record sales in the face of tough market conditions, and 3) aggressive landbanking efforts.


YTL Power International - 1Q15 core net profit grew 3.8%
YTL Power's 1Q15 core net profit of RM243.8m was in line with our and consensus estimates, accounting for 24% of our full-year forecast. While revenues declined yoy to RM3.36bn (from RM3.98bn in 1Q14), earnings rose 3.8% yoy due to forex gains in its investment-holding division. No dividends were declared during the quarter, which was expected. We make no changes to our earnings forecasts while our SOP-based target price is reduced to RM2.34 (from RM2.39 previously) as we roll forward our valuation base year. We maintain our Add call on the stock, with new power plant bids and a turnaround of its WiMax division as potential re-rating catalysts.


QL Resources - Strong as usual
QL’s 1HFY54 net profit came in line with our expectation (meeting 47.5% of our full-year forecast) and consensus (45%). We deem this to be in-line as 1H is seasonally weak. 1H revenue rose 10.6% yoy, driven by stronger sales volume and selling prices. Despite higher operating costs, net profit increased by a larger extent of 14.3% yoy, thanks to the lower net interest expense and higher associate profit. Given the in-line results, we maintain our FY15-17 EPS forecasts, Add call and target price, still based on the consumer sector average of 23x CY15 P/E. QL remains our top pick in the sector. The turnaround of its Indonesia, Vietnam, palm oil and shrimp farming businesses is a key potential re-rating catalyst. As we had expected, no dividend was declared, in line with our forecast.

AirAsia X Bhd - Excellent strategic manoeuvres

Bumi Armada - Madura still floats our boat

Eco World Development Group Bhd - Strong start to maiden year

Genting Plantations - Stronger 4Q earnings in store

Kossan Rubber Industries - Non-core punctures 3Q

Oriental Holdings - Forex gain from yen debt

SapuraKencana Petroleum - New kid on the blocks

YTL Corporation - Let's focus on the HSR

MIB Research Summary - 21 Nov 2014

SapuraKencana Petroleum: Maintain Buy On E&P assets expansion  Shariah-compliant

Buys PCSB’s 3 E&P blocks in Vietnam for USD400m, awarded 2 onshore E&P blocks in Sabah. Risk-reward outlook turning favourable; GSA signing on track, to be completed by end-2014. Earnings forecasts unchanged for now; maintain BUY and MYR3.80 SOP-based TP. IJM Corporation: Maintain Buy Another sizeable landing  Shariah-compliant Wins MYR356m building construction job. Further orderbook enhancement from WCE and Kuantan Port. Maintain BUY with an unchanged TP of MYR7.40. RHB Capital: Maintain Buy Decent results for the quarter 9M14 net profit of MYR1.55b (+17% YoY) within expectations; trimmed FY15-16 net profit forecasts by 3-4%. Merged entity’s proforma FY15 ROE now estimated to be a lower 10.4% vs 11% previously. Cut RHB’s TP to MYR9.45 (from MYR10.20) and CIMB’s TP to MYR6.85 from MYR7.40. BUY RHB, HOLD CIMB. Bumi Armada: Maintain Buy Risk-reward turning positive  Shariah-compliant 9M14 results within our expectation but below consensus. Risk-reward outlook is improving; FPSO business is less susceptible to oil price weakness/ volatility. Maintain BUY on a reduced SOP-TP of MYR2.05, on lower valuations for its OSV operations. Eco World Development: Maintain Buy Sales beat expectations  Shariah-compliant 12MFY10/14 net profit was below expectations but property sales beat internal target by 59%. Corporate restructuring exercises to complete by 1QCY15. Adjust our earnings forecasts by -48% to +103%. Maintain BUY and MYR6.59 TP (0.84x P/RNAV). Mah Sing Group: Buy (Under Review) Results on track; proposes cash call  Shariah-compliant 9M14 net profit of MYR255m (+21% YoY) was in line. Latest fund-raising to relieve MSGB from overstretching its balance sheet due to aggressive landbanking. Our earnings forecasts, MYR2.96 TP (on 0.79x P/RNAV target) and BUY rating are under review pending further details. Genting Plantations: Maintain Hold Save the best for the last quarter  Shariah-compliant 3Q14 core PATMI below expectations on high tax expenses but operational earnings were in line. GENP is poised to deliver its best performance in 4Q14; boosted by MYR142m land sale and seasonal peak crop. Earnings forecasts unchanged. Given limited upside, we maintain our HOLD call on sum-of-parts TP of MYR11.20. YTL Power: Maintain Hold Earnings momentum still weak 1QFY6/15 core net profit was below expectation due to poor showings from PowerSeraya and the broadband business. No dividend was declared in the quarter; there remains no clarity on the corporate action front. Maintain HOLD with an unchanged TP of MYR1.65. AEON Co. (M): Downgrade to Sell Sell, weak retail performance  Shariah-compliant 9M14 core net profit disappointed at 52% of our original and consensus 2014 forecasts. We cut our FY14-16 earnings forecasts by 14-16%, assuming lower retail margins and slower sales. Downgrade to SELL on a lower TP of MYR3.05 (vs. MYR3.65), pegged to an unchanged 20x FY15 PER. QL Resources: Maintain Hold A steady catch  Shariah-compliant 2QFY3/15 net profit was within expectations at 46% of our and consensus full-year forecasts respectively. Expect a pick-up in 2HFY15, backed by seasonal effects. Maintain HOLD with an unchanged TP of MYR3.20. Kossan Rubber Industries: Maintain Buy Stronger growth ahead  Shariah-compliant Flattish 3Q outperformed peers but still below expectations. Stronger earnings ahead on commencement of new capacity. Lower FY14-16 EPS by 9%/4%/5%; TP is unchanged after we roll forward our valuation base (17x mid-2016 PER). BUY. Alam Maritim: Maintain Sell Results disappoints  Shariah-compliant Sub-par 9M14 earnings, hit largely by weak OSV contributions at both subsidiary and associates level. Cut 2014 EPS by 9% to reflect lower OSV utilisation. Reiterate SELL on unchanged MYR0.80 TP (10x 2016 PER). MY Automotive Sector: Downgrade to Neutral Headwinds ahead Oct TIV recovered to 54k units (+13% MoM), driven by new model launches but capped by tighter financing guidelines. Cut 2014 TIV forecast to 660k units, introduce 2015 TIV forecast of 660k units, premised on the normal replacement cycle and in-house 2015 real GDP growth forecast of 5.2%. Downgrade the sector to Neutral. BUY MBM for Perodua exposure and BAuto for weakness in Yen. TECHNICAL: An uncertain index tone The FBMKLCI fell 2.10 points to 1,822.29 yesterday, while the FBMEMAS and FBM100 also closed lower by 22.07 points and 18.01 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 264-to-497 while 317 counters were unchanged. A total of 1.64b shares were traded valued at MYR1.62b. Trading idea is a Take Profit on CIMB with weaker supports and clear downward target areas of MYR5.61, MYR4.70 and MYR4.20.   NEWS KPJ: Gets nod for MYR1.5b sukuk scheme. KPJ Healthcare has received the authorization from the Securities Commission for the proposed Islamic commercial papers and Islamic medium-term notes with a combined limit of up to MYR1.5b. (Source: The Star) Malton: Lines up MYR1.2b property launches for FY15. Builder and property developer, Malton, has lined up three new property launches with a total gross development value of up to MYR1.2b for the financial year ending June 30, 2015, said its director of corporate finance Ng Chee Kiet. (Source: The Edge Financial Daily) AirAsia X: No Management shake-up. AirAsia X founder Tan Sri Tony Fernandes, founder of AirAsia X has denied that the low-cost medium haul airline is facing management issues. He also brushed off media reports that AirAsia X was facing problems paying salaries and allowances to its staff. (Source: The Star) U.S: Previously owned home sales increase to one-year high in October as low borrowing costs helped sustain the recovery in residential real estate. Existing homes sold at a 5.26 million annual pace, the strongest since September 2013 and up 1.5% from a revised 5.18m pace in September, the National Association of Realtors reported. It was the fifth consecutive month that the sales pace topped 5 million. Prices also climbed, the group said. (Source: Bloomberg) U.S: Leading economic indicators rise more than forecast in October, as gains in manufacturing and easier credit boosted the world's largest economy. The Conference Board's index of U.S. leading indicators, a gauge of the outlook for the next three to six months, climbed 0.9% last month, the most since July, after rising 0.7% in September. (Source: Bloomberg) E.U: Euro-area economy risks a renewed slowdown. A Purchasing Managers Index for factories and services activity unexpectedly fell to 51.4 in November, the lowest in 16 months, from 52.1 in October, London-based Markit Economics said. A reading above 50 indicates expansion. (Source: Bloomberg) Germany: Manufacturing and services expanded at the slowest pace in 16 months in November, signaling that growth in Europe's largest economy will remain sluggish. A Purchasing Managers Index for both industries unexpectedly declined to 52.1 from 53.9 in October, London-based Markit Economics said. While the gauge has been above the 50-point mark that divides expansion from contraction since early last year, the reading was below the median forecast of economists for an increase to 54. (Source: Bloomberg) U.K: Retail sales rose at the fastest pace in six months in October, boosted by sales of household goods such as furniture and spending on food. The volume of sales including auto fuel jumped 0.8%from September, when they fell 0.4%, the Office for National Statistics said. Sales excluding fuel also rose 0.8% on the month. (Source: Bloomberg) China: Factory gauge fell to a six-month low in November, adding to signs broader stimulus is needed to halt a slowdown in the world's second-largest economy. The preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 50.0 which came in lower than last month's 50.4. (Source: Bloomberg) Japan: Exports rose the most in eight months in October, supporting an economy that fell into recession last quarter. Overseas shipments rose 9.6% YoY to the highest level since October 2008, the finance ministry said. Imports grew 2.7% YoY leaving a trade deficit of JPY 710b (USD 6b). (Source: Bloomberg)