CIMB Research Summary - 24 Nov 2014

Economic Update - Float on RON95 and diesel
Today, the government announced that subsidies for RON95 and diesel will be eliminated and the pricing for these two fuels will transition to a managed float similar to the one currently in place for RON97. This is in line with the government’s subsidy rationalisation agenda and a positive signal indicating that fiscal reforms are progressing in the right direction. The decision to float is timely as the switch should have a benign impact on inflation given that the average market price is close to the current fixed retail price. Moving forward, falling global oil prices put the possibility of lower inflation on the table, given a more direct pass-through of falling global oil prices to domestic pump prices. Furthermore, the government will now have more fiscal space and more control over the fiscal deficit. We understand that the government has earmarked about RM12bn for fuel subsidy spending in 2015, and is likely to channel the savings through BR1M handouts or other means of targeted assistance.

Genting Bhd - No excitement
GENT’s 9M14 core net profit of RM1.4bn was below our expectations, at 62% of our previous full-year and consensus forecasts on poor performance across the board at GENM, GENP and GENS. No interim dividend was declared in 3Q, as expected. Upon transfer of coverage, our FY14-16 EPS forecasts are cut following our earnings cuts for GENP, GENM and GENS. We also introduce a new target price of RM9.90, still based on 20% holding company discount to our RNAV of RM12.40 (lowered from RNAV of RM14.34 after GENS’s target price was lowered from S$1.72 to S$1.22). With total return of only 6.2%, we downgrade our rating from add to Hold as continued operational headwinds faced by GENS and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment. We advise investors to switch from GENT to GENM for exposure to the gaming sector.


SMRT Holdings Bhd - MEGB’s white knight

7-Eleven Malaysia Holdings Berhad - Growing but below expectations

Genting Malaysia - More bad luck in Genting

Lafarge Malaysia Bhd - Preventing cracks from volatility

Pharmaniaga Bhd - Dividend surprise in 3Q

SBC Corp - Jesselton Quay is the key…

Star Publications - Still cloudy skies

Thong Guan Industries - Feeling Japan’s blues

Economic Update - Oct inflation rises slightly

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

Research Summary: 25 August 2014

Research Summary: 25 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	WCT	Improved “visibility” for new jobs	Neutral	RM2.31
RHB	Results review	MayBulk	A weak quarter as rates at depressed level	Buy	RM2.00
RHB	Results review	Karex	Grand finale	Buy	RM3.41
RHB	Results review	Daya	Going full steam ahead	Neutral	RM0.35
RHB	Results review	Tan Chong	Freshly squeezed and battered	Sell	RM4.30
RHB	Results review	Time dotCom	A more cautious tone	Neutral	RM5.20
RHB	Results review	AMMB	Lifted by gains from sale of stakes in insurance units	Buy	RM8.00
RHB	Results review	MRCB	Earnings boosted by gains from DUKE’s disposal	Buy	RM2.05
RHB	Results review	Dayang	Going full steam ahead	Buy	RM4.80
RHB	Briefing	GAB	Another challenging year ahead	Neutral	RM13.10
CIMB	Sector	Plantations	The CPO price conundrum	Neutral
CIMB	Results note	Karex	Good FY14 results	Add	RM3.38
CIMB	Flash note	GAB	More challenges ahead	Reduce	RM12.00
CIMB	Results note	AMMB	Cash in on divestment gains	Hold	RM7.10
CIMB	Sector	Banks	Ruled by negative sentiment	Underweight
CIMB	Results note	MRCB	Driven by gains from DUKE	Add	RM2.08
CIMB	Flash note	SapuraKencana Petroleum	All gassed up and everywhere to go	Add	RM7.00
CIMB	Results note	Tan Chong	Braking hard due to competition	Hold	RM5.26
CIMB	Results note	Thong Guan	Moving up the value chain	Add	RM3.95
CIMB	Results note	TH Heavy Engineering	A lightweight 1H	Add	RM1.23
CIMB	Eco update	Economic	Jun LI: Chugging along
CIMB	Flash note	WCT	Good enough to get by	Hold	RM2.32
Maybank	Results review	AMMB	A weak start to the financial year	Hold	RM7.70
Maybank	Results review	Tan Chong	Disheartening 1H14; cut to sell	Sell	RM4.00
Maybank	Results review	Time dotCom	Back on track	Hold	RM5.00
Maybank	Special Feature	IFCA MSC	At the cusp of a significant rerating	Not rated	RM0.42
Maybank	Briefing	WCT	When the going gets tougher…	Hold	RM2.30
Maybank	Company update	UMW	Wins MYR200m Myanmar contract	Buy	RM13.82
Maybank	Company update	GAB	Still a cloudy outlook	Hold	RM13.20
Maybank	Technical	OKA		Short-term buy
Kenanga	Sector update	Plantation	Imputing Indonesia foreign ownership limit risk	Neutral
Kenanga	Results note	MRCB	Going as planned	Outperform	RM2.48
Kenanga	Company update	GAB	Banking on innovation and efficiency	Underperform	RM12.93
Kenanga	Results note	AMMB	Subdued quarter	Market perform	RM7.02
Kenanga	Quick bites	UMW	Headway in Myanmar	Market perform	RM13.93
Kenanga	Company update	WCT	Facing challenging times	Market perform	RM2.21
Kenanga	Results note	Thong Guan	2Q14 results within expectations	Outperform	RM3.70
Kenanga	Results note	Tan Chong	Below expectations	Underperform	RM4.62
Kenanga	Results note	Pestech	2Q14 on track	Outperform	RM4.36
Kenanga	Results note	MayBulk	1H14 within expectations	Outperform	RM2.53
Kenanga	Results note	Dayang	A quiet 2Q14 but firm FY15 prospects	Outperform	RM4.82
HL	Eco insight	Economic	Weak CPO price: lower CA surplus?
HL	Results review	Time dotCom	1H14 results in line	Hold	RM5.09
HL	Results review	MRCB	2Q results: swung back to losses	Buy	RM1.97
HL	Results review	Dayang	Margin improving…	Buy	RM4.07
HL	Results review	Tan Chong	Further margin deterioration	Sell	RM4.00
HL	Newsbreak	SapuraKencana Petroleum	Makes big gas discovery	Buy	RM5.52
HL	Briefing	Vitrox	Another quantum leap year	Hold	RM2.95
HL	Company insight	Scomi Energy	Multiple growth drivers ahead….	Buy	RM1.23
HL	Briefing	WCT	Expecting a quiet year	Hold	RM2.26
HL	Sector	Plantations	Bleak near-term outlook	Underweight
HL	Briefing	GAB	Innovation’s the next engine of growth	Hold	RM14.39
HL	Results review	AMMB	Weak results boosted by profit from sale	Hold	RM7.77