Kenanga - 25 Nov 2014

IDEAS OF THE DAY

l  Results Note: AFFIN, AXIATA, HARBOUR, PARKSON, WCT

l  On Our Radar: PPHB

l  On Our Technical Watch: DIALOG, DUFU

NEWS HIGHLIGHTS

l  Syed Mokhtar in talks to buy stake in NCB Holdings (Comments included in Kenanga Today)

l  IJM, Silk abort RM395.0m Kajang highway deal (Comment included in Kenanga Today)

l  Sona remains committed to Thai deal

l  UEM Sunrise's Aurora Melbourne Central project receives overwhelming response

l  IHH awards RM1.1b Hong Kong job

FOREIGN NEWS HIGHLIGHTS

l  Bayer said to explore sale of USD2.5b diabetes unit

l  RenaissanceRe to buy Platinum Underwriters for USD1.9b

l  Carlyle said to seek USD5.0b for fund with longer life

l  BioMarin to buy Prosensa in USD840.0m deal

 

ECONOMIC NEWS HIGHLIGHTS (MACRO BITS) 

Global

l  Global Business Confidence At Five-Year Low

Malaysia

l  No Inflationary Effects, Says Zeti

l  Govt To Intervene If Global Oil Prices Rise Too High

l  IMF: Malaysia Budget Deficit Could Fall Below 3% Of GDP In 2015

Asia

l  Vietnam Gets US$11.2b In Investments

USA

l  U.S. Services Sector Activity Grows, November Rate Slows: Markit

Europe

l  German Business Morale Rebounds In November

l  Russia Sees $140b Annual Loss From Oil, Sanctions

Currencies

l  Dollar Shows Gains Against Yen After Two Sessions Of Losses

Commodities

l  Oil Ends Down After Swinging On OPEC Speculation; Brent Below $80/Bbl

l  Gold Eases Slightly As Buying On China Rate Cut Wanes

RHB Research Summary - 25 Nov 2014

Allianz Malaysia (ALLZ MK, BUY, TP: MYR13.50)
New Leadership for Life
Company Update
In Allianz’s 3Q14 briefing yesterday, we met with the new CEO for life insurance and gathered business updates. Allianz retained its view that the environment ahead remains challenging, but expects its strategies to sustain its above-industry growth. Its key targets, namely 10k life agents by FY15 and <90% non-life combined ratio, are still intact. Maintain BUY, SOP TP MYR13.50 (12% upside).

TDM Berhad (TDM MK, NEUTRAL, FV: MYR0.85)
Dragged Down By Higher Costs And Taxes
Results Review
TDM’s 9M14 results were below expectations, with net profit comprising 61-62% of our and consensus’ FY14 projection, due to higher unit costs and higher effective tax rates. Post-earnings revision, we reduce our SOP-based fair value to MYR0.85 from MYR0.90, implying downside risk of 5.5%. We maintain our Neutral recommendation, as valuations remain fair at current levels

WCT (WCTHG MK, NEUTRAL, FV: MYR2.02)
9M14 Core Net Profit Declines 16% YoY
Results Review
WCT’s 9MFY14 results met our forecast but missed consensus estimates. We maintain our NEUTRAL call and forecasts but cut TP by 13% to MYR2.02 (implying a 5% upside). WCT is not an ideal proxy to the construction sector as it has yet to secure any work packages from the Klang Valley MRT project. Also, its property business is facing headwinds amid various cooling measures.

Affin (AHB MK, NEUTRAL, FV: MYR3.30)
Elevated Costs Dampens 3Q14 Results
Results review
Affin’s 3Q14 results were below our and consensus estimates due to higher-than-expected overheads and credit cost. That said, 3Q14 net profit surged 27% QoQ, underpinned by stronger operating income (NIM expansion, higher non interest income) and lower credit cost. Overheads, however, stayed elevated, partly due to integration costs. Maintain Neutral with revised MYR3.30 TP (8% upside).
Axiata Group (AXIATA MK, NEUTRAL, TP: MYR7.20)
Dragged Down By Celcom and Forex Losses
Results Review
Axiata’s 9MFY14 net profit came in below expectations following an abysmal showing from Celcom and forex losses. Management appears cautiously optimistic on its outlook (the worst of Celcom’s IT issues are behind), although we note competition remains a key risk. We cut FY14/15 earnings by 12%/6% to reflect the poorer showing for Celcom. SOP-based TP is lowered slightly to MYR7.20. Maintain NEUTRAL.

Parkson Holdings (PKS MK, SELL, TP: MYR2.06)
Challenging Outlook
Results Review
Parkson Holdings’ results were below expectations, with 1QFY15 (FYE June) net profit down 34.2% y-o-y to MYR20.2m. SSSG has now turned negative across most of its market, below management’s earlier targets. We expect conditions to remain challenging over the next twelve months and maintain SELL, with a lower SOP-derived FV of MYR2.06 (previously MYR2.31).

Research Summary: 20 August 2014

Research Summary: 20 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Tune Ins	Integrating its associate business in Thailand	Buy	RM3.00
RHB	Sector update	Auto	Non-national marques gain market share	Neutral
RHB	Results preview	AirAsia	Look beyond this 2QFY14 earnings	Buy	RM2.78
RHB	Results review	Matrix	Property sales pick up in 2Q	Buy	RM3.80
RHB	News flash	Bumi Armada	Nine FPSO and counting	Buy	RM4.54
RHB	Results review	Perdana Petroleum	Bright prospects ahead	Buy	RM2.20
RHB	Results review	Tambun Indah	High property demand in Pearl City	Buy	RM3.00
RHB	Results review	TH Plantations	Expect a stronger 2H2014	Neutral	RM2.06
RHB	Results review	MBM Resources	Light at the end of the tunnel?	Neutral	RM2.88
RHB	Results review	AirAsiaX	Going through a tough period	Sell	RM0.68
CIMB	Flash note	Tune Ins	Tuning up the volume in 2H14	Add	RM2.71
CIMB	Results note	Perdana Petroleum	Counting ship	Add	RM2.40
CIMB	Results note	Uchi Technologies	Weaker coffee brew	Hold	RM1.35
CIMB	Results note	AirAsiaX	Losses can’t get any worse but…	Reduce	RM0.72
Maybank	Results review	AirAsiaX	On a wing and a prayer	Sell	RM0.72
Maybank	Results review	Perdana Petroleum	1H14 results in line	Buy	RM2.55
Maybank	Results review	MBM Resources	2Q14: within radar	Buy	RM3.60
Maybank	Results review	TH Plantations	Bogged down by higher cost	Sell	RM1.65
Maybank	Sector	Automotive	Seasonally stronger 2H begins	Overweight
Maybank	Company update	Bumi Armada	Secures LOI for FPSO Madura	Buy	RM4.55
Maybank	Technical	IHH		Short-term buy
Kenanga	Sector update	Automotive	Slowing down	Neutral
Kenanga	Results note	Perdana Petroleum	Stable 2Q14 results	Outperform	RM2.47
Kenanga	Results note	MBM Resources	Within expectations	Underperform	RM2.92
Kenanga	Results note	Matrix	Steady performance	Under review	Under review
Kenanga	Quick bites	Parkson	Divestment of Festival City Mall for RM349m	Underperform	RM2.48
Kenanga	Company update	Maxis	Still transforming	Market perform	RM6.87
HL	Sector	Automotive	Continuous sales momentum in July	Overweight
HL	Results review	Tambun Indah	Sustainbale demand underpins healthy sales	Buy	RM2.60
HL	Results review	Matrix	Results on the rebound	Buy	RM3.74
HL	Results review	Perdana Petroleum	Sustainable growth	Buy	RM2.18
HL	Results review	MBM Resources	In line – expect stronger 2H14	Buy	RM4.00
HL	Newsbreak	Bumi Armada	Madura landed	Buy	RM4.70