CIMB Research Summary - 26 Nov 2014

UOA Development - Missed launch and sales targets
UOA Dev's 9MFY14 core net profit was broadly in line with expectations as it made up 69% of our full-year forecast and 75% of consensus estimates. 9M new sales amounted to RM1.37bn, of which nearly half came from 3Q. However, UOA Dev is unlikely to match 2013's record sales of around RM2bn due to launch delays. This is a disappointment. We cut our FY15-16 EPS forecasts by 5-10% and downgrade the stock from Add to Hold, after widening the target basis from 20% discount to RNAV to 30% as we factor in the missed launch and sales targets. The relatively high dividend yield of 5-6% remains the key reason to hold on to the stock. For exposure to the property sector, investors should switch to Mah Sing Group.

Hovid Bhd - Decent start to FY15
Hovid’s 1QFY6/15 core net profit was broadly in line, making up 27% of our and consensus full-year forecasts. Its sales and profit margin improved marginally due to higher selling prices and a favourable foreign exchange rate. As expected, no dividend was declared. We trim our FY15-17 EPS by 1-2% after updating our financial model with the latest numbers from its annual report. We keep our SOP-based target price at RM0.41, but upgrade it to Hold from Reduce as its share price has corrected by 18% since we downgraded it to Reduce in Aug 14. We prefer Pharmaniaga for its higher upside.

7-Eleven Malaysia Holdings Berhad - More to come

BIMB Holdings - Signs of weaknesses in underlying trend

Eksons Corporation - Backed by cash

Hong Leong Bank - Non-interest income dampener

IJM Corp Bhd - Construction piles up numbers

KPJ Healthcare - Hale and hearty in 3Q

Perdana Petroleum - Making waves with a record quarter and a surprise dividend

Ta Ann - Lifted by strong log earnings
UMW Oil & Gas - Middle East fuels future growth
Uzma - Fuelled by new acquisitions
WCT Holdings - Re-strategising for 2015

HLIB Research Summary - 25 Nov 2014

Axiata (HOLD çè)

Axiata (HOLD çè)

9M14 Results Below Expectations

• 9M14 recorded a disappointing core net profit of RM1.79bn, only accounting for 67.7% and 68.5% of HLIB and consensus FY forecasts, respectively, mainly due to weaker-than-expected Celcom results caused by prolonged IT related issues.
• Celcom: Sales contracted 4% yoy as subscriber base churned by 195k qoq ended with 13.2m. Data revenue inched up 20% yoy while small screen data by 41%.
• XL: Sales expanded 11% yoy as all product segment registered healthy growths led by data with 43% yoy and followed by VAS, voice and SMS with 42%, 4% and 4% yoy, respectively.
• Dialog: YTD sales grew 6% yoy with data and voice revenues expanded 55% and 4% yoy, respectively. Pay TV’s subscribers increased to 410k.
• Robi: YTD revenue and EBITDA grew 6%, 10%, respectively despite heightened competition. EBITDA margin improved by 1.7-ppt to 39.9%.
• Smart: YTD revenue, EBITDA and PAT grew 37%, 74% and 197%, respectively. YTD data revenue growth of 119% with data contributing 21% of total revenue.
• Maintain HOLD although SOP-derived TP was raised by 9.7% from RM6.92 to RM7.59 as valuations were rolled forward to FY16 and imputing higher consensus TP for Axiata’s associates.

Affin Holdings (NEUTRAL  çè)

Overheads The Culprit

• 9MFY14 results below HLIB and consensus expectations mainly due to higher-then-expected overheads.
• Additional RM24.1m integration cost (IC) in 3Q, on top of RM9.6m in 2Q.  Ex IC, overheads still jumped 9.5% qoq. 
• Interim div 15 sen, in line with its dividend policy of 50%.
• 3QFY14 stronger qoq due to acceleration in loans growth, higher NIM, higher non-interest income and lower provision.  Partly offset by higher overheads. 
• YTD integration cost RM33.7m, remaining RM20.3m over next 9-15 months based on guidance of RM54m total.
• Impaired loans ratio stable albeit rise in absolute amount.
• FY14 cut 11% while FY15-16 forecasts cut 6.4-6.5% to reflect higher cost and integration cost.
• Target price cut to RM2.90 (Gordon Growth with ROE at 8% and WACC at 9.3%) vs. RM3.44.  Maintain HOLD.   

UMW O&G (HOLD çè)

3Q Result: Below

• Below Expectation: Despite full contribution from Naga 5, higher than expected tax rate and lower margin from oilfield services have resulted in the shortfall against our expectations.
• FY14 and FY15 earnings reduced by 12% and 14% respectively after factored in  higher tax rate and readjust downward average charter rate from US$147k/day to US$142k/day in FY15 to reflect pressure from declining oil price.
• We maintain our HOLD call and TP reduced from of RM3.29 to RM2.90 based on unchanged 16x FY15 earnings, post earnings adjustment.  

WCT (HOLD çè)

Squeeze in margins

• 9M core earnings at RM100m (-40% YoY) wa​s below expectations.
• Disappointing results due to margin compression from additional cost for NDIA project.
• Orderbook at ​RM2.3bn, implying 2.1x revenue cover.
• Property sales target cut from RM1.2bn to RM617m.
• Maintain HOLD, TP lowered to RM2.04 from RM2.34. 

Momentum Idea - MMSV

MMSV: Uptrend likely to continue

• MMSV’s share price is in the midst of building Wave 3, a second uptrend. Yesterday’s white candlestick on improved volume resulted in RSI, MACD and Slow Stochastics gaining upward momentum. Thus, share price is expected to trend higher towards RM0.67 and RM0.695, with a long term objective of RM0.76. Supports are at RM0.63 and RM0.61. Cut loss below RM0.60.

Traders Brief

Likely to retest 1836-1850 resistance territory

• On technical front, KLCI could stage a follow-through technical rebound today as yesterday’s long white candlestick has broken above 10-, 30- and 50-d SMAs. Immediate resistances are 1836 (23.6% FR), 1850 (downtrend line and 200-d SMA) and 1860.
• However, since KLCI is still on medium-term downtrend line, the chart outlook for KLCI still remains weak and bearish unless 1850 is taken out. Next supports are pegged at 1823 (38.2% FR), 1812 (50% FR) and 1800 (psychological level).
• Today’s recommendation: Momentum BUY on MMSV

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

MIB Research Summary - 25 Nov 2014

Axiata Group: Maintain BUY Celcom weak as guided  Shariah-compliant

9M14 net profit and EBITDA were below both ours and consensus forecasts; Celcom was weak as guided. Celcom’s IT issues have been well-flagged and are largely resolved; revenue should trend higher going forward. Cut FY14 net profit by 10%; BUY rating and MYR7.60 TP unchanged UMW Oil & Gas Corporation: Maintain Buy No surprises  Shariah-compliant 9M14 results within our and consensus expectations. UMWOG is Shariah compliant, has strong earnings growth prospects with quality assets to capitalise on new JUs in Asia. Maintain BUY with an unchanged SOP-based MYR3.90 TP. WCT Holdings: Maintain Hold 3Q14: Dragged by property  Shariah-compliant Results disappointed; both property progress billings and margins were weak. Lower FY14-16 net profit forecasts by 3%-8%. Potential downside to FY15-16 forecasts. Maintain HOLD. Petronas Gas: Maintain Hold More colour on Pengerang ventures  Shariah-compliant Raising FY18 net profit by 6% to account for the Pengerang re-gas plant. Further earnings accretion in FY19 from the Pengerang air separation JV with Linde. TP raised to MYR24.00 (+50sen), maintain HOLD. NCB Holdings: Upgrade to Hold MMC eyeing a stake in NCB?  Shariah-compliant The potential emergence of MMC as a substantial shareholder (if true) should shore up interests in NCB. NCB now trades at a multi-year low and a re-rating to 1x P/BV indicates a 28% upside. Upgrade to HOLD (from SELL); share price has since trended down to our unchanged DCF-derived TP of MYR2.25. Singapore CPI, October 2014 Dis-inflationary pressure continues Headline inflation eased further to +0.1% YoY in Oct 2014 (Sep 2014: +0.6% YoY), mainly on lower costs on COE, accommodation and oil-related items. Core inflation rate (CPI ex-accommodation and private road transport) remains sub-2.0% (Oct 14: +1.7% YoY; Sep 14: +1.9% YoY). Cut 2014 CPI estimate to +1.0% (YTD 2014: +1.3%; previous 2014: +1.3%) and expect 2015 inflation rate to stay subdue at 1.0%-1.5% TECHNICAL: Temporary low of 1,805.35 in place The FBMKLCI rose 24.64 points to 1,833.77 yesterday, while the FBMEMAS and FBM100 also closed higher by 170.11 points and 167.62 points, respectively. We recommend a “Buy on Dips” stance for the index. Trading idea is a short-term buy on MAXIS with upside target areas at MYR7.46 & MYR7.70. Stop loss is at MYR6.68. NEWS  IPO: Weststar valued at up to MYR4.8b. The long-awaited listing of Weststar Aviation Services is set to proceed with Tan Sri Syed Azman Syed Ibrahim aiming to raise about MYR1.4b from the exercise. Sources indicate that the company was valued by investment banks at between MYR4.2b and MYR4.8b. The firm is raising funds to pare debts. (Source: The Star) IHH Healthcare: Unit awards MYR1.07b for HK hospital job. IHH Healthcare, via its indirect 60%-owned subsidiary GHK Hospital Ltd, has awarded the main contract for superstructure works on a private hospital to Hip Hung-Chun Woo Joint Venture (HHCW) for HKD 2.48b (MYR1.07b). Under the contract, HHCW will carry out the superstructure works comprising the design completion and maintenance of the main contract works for the development of a private hospital at Aberdeen Inland in Hong Kong. The contract is for 24 months. (The Edge Financial Daily) Sona Petroleum: Remains committed to Thai deal. Sona Petroleum's nearly MYR1b deal to buy oil and gas assets in Thailand owned by UK-listed Salamander Energy plc appears to be all but over after the latter accepted the takeover offer by Ophir Energy plc. Salamander yesterday announced it had agreed to Ophir's firm offer to buy the entire stake in the company. The offer was on the condition that Salamander cancels its deal with Sona. (The Star) Infrastructure: IJM, Silk abort MYR395m Kajang highway deal. IJM Corp unit Road Builder (M) Holdings and Silk Holdings have mutually decided to abort the MYR395m acquisition of 100% equity interest in Sistem Lingkara--Lebuhraya Kajang Sdn Bhd. It was called off following the non-fulfillment of certain conditions precedent within the agreed timeline. (Source: The Star) The leading index (LI) in Sep 2014 rose at the same pace as in Aug 2014 i.e. +1.6% YoY as the increases in some of its components like "Real Money Supply" (Sep 2014: +0.6% YoY; Aug 2014: -0.5% YoY) and "Real Imports of Semiconductors" (Sep 2014: +0.3% YoY; Aug 2014: -0.3% YoY) were offset by declines other components such as "Housing Permits Approved" (Sep 2014: -0.2% YoY; Aug 2014: -0.6% YoY) and "Expected Manufacturing Sales Value" (Sep 2014: -0.1% YoY; Aug 2014: -0.3% YoY). The stable but moderate rise in LI - a gauge on economic growth in the next 3 months at least - suggests that the real GDP growth momentum is positive albeit moderate in 4Q 2014. This is amid a challenging external demand situation given the lack of breadth and depth in global economic and trade growth on top of the soft commodity prices. In addition, there are moderations in certain areas within the domestic economy like property as well as consumer and Government spending due to property-cooling and fiscal consolidation measures, although investment activities will be key in supporting domestic demand. (Source: BNM, MKE) Germany: Business confidence unexpectedly rose for the first time in seven months after the country's economy returned to growth and the European Central Bank added stimulus to the euro area. The Ifo institute's business climate index, based on a survey of 7,000 executives, advanced to 104.7 in November from 103.2 in October. (Source: Bloomberg) Russia: Sees USD 140b annual loss from oil plunge, sanctions. Russia stands to lose as much as USD 140b a year as a result of lower oil prices and U.S. and European sanctions, Finance Minister Anton Siluanov said, underlining the risks of a prolonged stalemate over Ukraine. "We've seen a contraction of capital inflows into the country," Siluanov said at conference in Moscow. "We're losing about USD 40b a year because of geopolitical sanctions, and we're losing about USD 90b to USD 100b on the basis of a 30% decline in oil prices." (Source: Bloomberg)

CIMB Research Summary - 25 Nov 2014

Westports Holdings - Explosive catalysts on the horizon
Westports’ share price may be driven up in the months ahead by three potential catalysts: the start of the Ocean Three alliance, the renewal of the Investment Tax Allowance, and government approval to raise port tariffs. Westports is our top pick in the Malaysian transport space. We initiate Westports with an Add call and a probability-weighted DCF target price of RM4.57, incorporating different scenarios of the timing and quantum of the tariff hike. We expect the core EBIT 3-year CAGR of 10% to rise to 17% if port tariffs are raised 30% on 1 January 2016.

Petronas Dagangan - Fuel up!
Contrary to what the market thinks, the government’s decision to put RON95 petrol and diesel on a managed float system is positive for petroleum retailers, including PetDag. The managed float system will lead to the removal of subsidy receivables, thus potentially improving PetDag’s cash flow. Also, the automatic pricing mechanism (APM) remains in place, ensuring PetDag a fixed company margin of 5 sen/litre. In view of the sharp share price fall since the managed float system was announced on 21 Nov, we upgrade our call from Hold to a trading-oriented, non-consensus Add while maintaining our forecasts and target price. We continue to value the stock at 21.2x CY16 P/E, still at a 30% premium over our target market P/E of 16.3x.

Axiata Group - Celcom yet to regain footing
Axiata’s 3Q14 core net profit fell 15.2% qoq (-35.4% yoy). This missed our expectations, with 9M14 core net profit at 66%/69% of our/consensus full-year forecast. As expected, no dividends were declared for 3Q14. We cut our FY14-16 core net profit by 8-13% for weaker-than-expected Celcom and associate earnings, plus much higher depreciation. Our SOP-based target price is cut by 1.4% to RM7.10. With rebounds expected at Celcom and XL, we see stronger earnings for Axiata in FY15; though consensus numbers appear to have factored this in. Axiata is now guiding for steady to marginally higher capex in FY15, which is possibly a negative surprise for the market. Still, Axiata is our preferred Malaysian telco pick for its earnings recovery story.

Affin Holdings - Not taking full advantage of rate hike

Petronas Gas - Pengerang to drive excitement

Signature International - Gaining momentum

Uchi Technologies - A stronger brew

UMW Oil & Gas - Bigger fleet oils the way to record quarter and maiden dividend
WCT Holdings - Weighed down by property

Economic Update - Sep leading index holds steady

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).

RHB Research Summary - 24 Nov 2014

Genting Malaysia (GENM MK, NEUTRAL, TP: MYR4.21)
Blame It On The Luck Factor
9MFY14 Results Review
Genting Malaysia’s 9M14 core earnings of MYR950.5m fell below expectations due to subpar VIP holds in Malaysia, while its US segment continued to face headwinds from Bimini losses. Maintain NEUTRAL with our SOP-based TP reduced to MYR4.21 (3% upside). We lower our FY14 EPS by 5.6% and reduce our FY15-16 EPS forecasts by 7.1- 9.2% to factor in the impact from the GST implementation come Apr 2015.

IOI Properties Group (IOIPG MK, BUY, TP: MYR3.10)
Earnings On Track
Results Review
IOIPG’s 1QFY15 (Jun) results came in below expectations. Maintain BUY and MYR3.10 TP (26.5% upside). We expect 2H earnings to come in stronger as new projects are progressively rolled out in the coming months. New sales in 1QFY15 reached MYR370m, of which 85% were contributed by projects in Malaysia. Meanwhile, we expect IOI City Mall, which had a soft launch last weekend, to boost FY16 earnings.
Coastal Contracts (COCO MK, BUY, TP: MYR4.80)
Increased Sales of Premium OSVs
Results Review
9M14 MYR153m core profit was in line (met 79% of our/street estimates), buoyed by 14 vessel deliveries (9M13: 13 vessels). We retain our earnings forecast and BUY call, with our new TP at MYR4.80 (implied 13x P/E, 39% upside) after adjusting its shipbuilding valuations. Its MYR2.5bn orderbook is underpinned by vessel deliveries up to 2015 and GCSU long-term contract, while it expects JU rig delivery by 1H15.
Allianz Malaysia (ALLZ MK, BUY, TP: MYR13.50) (Upgraded)
Consistent Track Record
Results Review
Allianz’s 9M14 earnings of MYR225m was in line and met 76% of our FY14F forecasts, buoyed by AGIC’s double digit earned premium growth and underwriting margin of 16% (above industry’s 13%), ALIM’s strong investment performance and higher renewal premium. We upgrade to BUY with an unchanged SOP TP of MYR13.50 (13% upside). Valuations appear attractive again due to the recent retracement.

Genting (GENT MK, NEUTRAL, TP: MYR9.67) (Downgraded)
Lifted By Non-Gaming Divisions
9MFY14 Results Review
Genting’s 9MFY14 core earnings of MYR1.66bn were within our expectations as weakness in its gaming segments was offset by an improved showing from its plantation and O&G divisions. That said, we downgrade our TP to MYR9.67 (from MYR10.96) (a 2.8% upside) following our valuation revision on its listed subsidiaries in view of potential earnings headwinds ahead. Downgrade our call to NEUTRAL.

SKP Resources (SKP MK, BUY, TP: MYR0.85)
A Stronger 2HFY15 Awaits
Results Review
We deem SKP’s 1HFY15 (Mar) earnings of MYR20.2m in line despite reaching only 42.1% of our full-year estimate. Maintain BUY and MYR0.85 TP, a 17.2% upside. We expect 2HFY15 earnings to accelerate on the production of two new Dyson models, which started in early Nov 2014. No dividend was declared for the quarter under review. We make no changes to our earnings forecasts.

Petra Energy (PENB MK, NEUTRAL, TP:MYR2.08)
Results Review
Keeping Up The Pace
Petra Energy’s 9MFY14 core earnings of MYR17.4m came in above our expectations at 85% but missed consensus at only 50%. We maintain our NEUTRAL with a lower SOP-based TP of MYR2.08 (from MYR3.02). We raise our FY14 estimates by 10% on the back of higher work orders from its marine services segment but keep our FY15
numbers unchanged.

7-Eleven Malaysia (SEM MK, BUY, TP: MYR2.00)
Stronger Performance
Results Review
7-Eleven’s 3Q14 results were broadly in line, with net profit improving 109% YoY to MYR17.1m, partly contributed by an increase in ASP and stronger other operating income. We maintain our BUY call and MYR2.00 TP, derived from 28x FY15F P/E, offering a 21.2% upside. Its 9M14 net profit makes up 70% of consensus’ FY14 net profit. We are confident that its business expansion plans are progressing well.

Pintaras Jaya (PINT MK, BUY, TP: MYR4.92)
1QFY15 Net Profit Grows 9% YoY
Results Review
Pintaras Jaya’s 1QFY15 (Jun) results met our forecast. We maintain our BUY call, earnings forecasts and TP of MYR4.92 (implying a 13% upside). Being a dominant player, Pintaras Jaya is well-positioned to capitalise on the strong prospects of the piling segment, backed by the Klang Valley MRT project, a proliferation of high-rise developments and capacity shortage – which should boost piling rates.
Southern Steel (SSB MK, NEUTRAL, TP: MYR1.46)
In Red At The Start Of FY15
Results Review
Southern Steel’s 1QFY15 (Jun) results (MYR21.7m net loss) were below consensus and our estimates due to stiff competition from imported steel, a drop in steel prices and deeper losses from its associates. We maintain our NEUTRAL call, but cut our earnings forecasts for the next two years. Therefore, our book-based TP of 0.7x FY15F P/BV (-1 SD) is trimmed accordingly to MYR1.46 (from MYR1.49) (4.2% upside).

Sarawak Oil Palms (SOP MK, BUY, TP: MYR6.60)
Decent 3Q Earnings
Results Review
We continue to like SOP for its better production growth outlook and as the sole biodiesel supplier in Sarawak. Maintain BUY and MYR6.60 TP (11.9% upside). SOP’s production should benefit from drier conditions in Sarawak compared to its typically excessive rainfall. We trim our FY14 earnings forecast slightly although SOP’s 9M14 core earnings were in line, making up only 72% of our full-year forecast.

Economic Highlights - Inflation Inched Higher In October, BNM Could Revisit Raising Rates In March 2015
(Published 24 Nov 2014)
The headline inflation rate inched higher to 2.8% YoY in October (Sep: +2.6%). The fuel price hike on 2 Oct exerted some pressure on inflation but was mitigated by the higher base effect when the fuel prices were raised in Sep 2013. This was reflected in a faster increase in the core inflation rate, largely due to a sharp pick-up in transportation cost. In contrast, the prices of food & non-alcoholic beverages inched lower in September.