Bursa Malaysia Daily Market Report - 10 July

Transcription

1. Monday , 10 July, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. 2. 3. Daily Market Commentary Weekly Strategy Weekly Technical Outlook Fundamental Reports 1. 2. Bina Puri Holdings Berhad: Listing of PT Megapower Makmur Tbk Malaysian Economy: Sturdy Exports Growth in May 2017 Technical Reports 1. Weekly Technical Stock Picks 2. Daily Money Flow Technical Stock Picks FBMKLCI Stocks Under Coverage PLANTATION Sector CONSTRUCTION Sector PROPERTY Sector 3. Weekly Ace Market Stock Watch 4. Weekly Small Cap Stock Watch 5. Weekly Stock Screen Foreign Technical Reports 1. Foreign Stock Watch (AUS) 2. Foreign Stock Watch (HK) 3. Foreign Stock Watch (FSSTI) 4. Foreign Stock Watch (US) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research
2. Daily Note Daily Market Commentary (A Participating Organisation of Bursa Malaysia Securities Bhd) Menara TA One, 22 Jalan P Ramlee, 50250 Kuala Lumpur Tel : 603 - 2072 1277. Fax : 603 - 2032 5048 Monday, 10 July 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (07.07.2017) (mil) Main Market 903.1 Warrants 114.4 ACE Market 260.5 Bond 29.9 ETF 0.0 Total 1,307.9 Off Market 58.5 Volume +/-chg (RMmn) -149.3 1,466.5 -56.5 12.6 -39.2 60.3 -0.9 7.5 0.00 0.0 1,547.0 16.7 193.4 Value +/-chg -166.8 -9.4 -19.9 -2.4 0.01 9.0 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP July Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA (mn) 20.0 18.7 10.0 5.0 1.6 Up Down 145 453 31 125 31 61 1 5 1 0 209 644 % chg % YTD chg 1,759.93 12,550.77 17,378.13 1,759.00 -10.60 -80.98 -103.41 -9.00 -0.60 -0.64 -0.59 -0.51 7.20 9.46 18.09 7.55 21,414.34 6,153.08 7,350.92 19,929.09 2,379.87 25,340.85 3,229.01 1,569.44 5,814.79 3,217.96 1,918.13 5,703.57 94.30 63.61 13.64 -64.97 -7.94 -124.37 2.67 -0.20 -34.78 5.51 3.55 -55.20 0.44 1.04 0.19 -0.32 -0.33 -0.49 0.08 -0.01 -0.59 0.17 0.19 -0.96 8.36 14.30 2.91 4.26 17.44 15.18 12.09 1.72 9.78 3.68 -2.59 0.67 Top 10 KLCI Movers Based on Mkt Cap. Off Market PTRANS BIMB SIME WZSATU MEDAINC Value/ Volume 1.62 0.11 0.23 0.25 1.29 1.18 3.31 @ @ @ @ @ (RM) 0.30 4.50 9.52 1.15 0.32 Counter Mkt Cap. (RM’mn) MAYBANK 101,447 TENAGA 79,905 PBBANK 78,311 IHH 59,291 CIMB 56,720 PCHEM 48,693 AXIATA 42,880 MAXIS 42,178 DIGI 38,875 PETGAS 36,567 Chg Vol. (RM) (mn) -0.02 10.66 -0.02 6.44 -0.04 2.63 -0.05 13.06 -0.06 5.06 -0.03 7.03 -0.01 2.62 -0.09 4.26 -0.01 3.20 -0.12 0.49 Important Dates TDM - 1:10 Bonus Issue - BI of 150.5m shares. 1 bonus share for every 10 existing shares. Entitlement Date: 03/07/2017. LISTING ON: 04/07/2017. SCC - 1:10 Bonus Issue - BI of 4.3m shares. 1 bonus share for every 10 existing shares. Ex-Date: 06/07/2017. Entitlement Date: 10/07/2017. LISTING ON: 11/07/2017. The weak technical picture on the FBM KLCI after the recent three-week correction suggests that further correction is likely before base building can resume. The bearish sell signals on weekly MACD and 14-day DMI indicators, and weak technical momentum confirms more correction is needed to neutralize or lessen the bearish momentum, before oversold recovery can follow. Immediate resistance for the index stays at the 50-day moving average (1,773), next 1,782, followed by the recent peak of 1,796, and then the 1,800 psychological level. Immediate support will be from the 100-day moving average at 1,751, with stronger support seen at 1,729, a prior support level in April, while crucial uptrend support is from the 200-day moving average at 1,703. Sector-wise, while most blue chips are expected to stay in correction mode given the weak technical condition of the benchmark index, budget aviation counters AirAsia and AirAsia X should attract bargain hunters looking for rebound upside. The same can be said for construction and oil & gas related counters such as Ekovest, MRCB, UEM Sunrise, WCT Holdings, Sapura Energy and Wah Seong. News Bites • • • • • • • • • • • • • Malaysia's exports saw stronger growth of 32.5% to RM79.4 billion, while imports grew by 30.4% to RM73.91 billion in May 2017, the first time export growth has outpaced imports since May 2016. Genting Malaysia Bhd announced that it is working to recover its investment of US$347.4mn in an integrated gaming resort in Taunton, Massachusetts, US, which has been put on hold pending the resolution of a legal case. TSH Resources Bhd has proposed to raise approximately RM43.3mn from the issuance of 1.8% of its issued share capital where nearly all of the proceeds would be utilised for working capital. Star Media Group Bhd has received shareholders' approval to dispose of its 52.5% stake in Singapore-listed Cityneon Holdings Ltd. Media Prima Bhd's Datuk Seri Amri Bin Awaluddin will be stepping down from the group managing director position and Datuk Kamal Bin Khalid will be taking over the top post. DiGi.Com Bhd announced that it has appointed current Telenor Hungary's chief financial officer Nakul Sehgal as the company's CFO effective 1 August 2017. SCGM Bhd is slated to set up its first manufacturing facility in the Klang Valley to capture more market share in the Central Peninsular. Only World Group Holdings Group Bhd has proposed to undertake a private placement of up to 10% of its issued share capital at an issue price to be determined and announced later. Sunzen Biotech Bhd plans to diversify into the manufacturing and trading of traditional Chinese medicine and herbal health food and beverages business via the proposed acquisition of a 70% stake in Ecolite Biotech Manufacturing Sdn Bhd for RM12.1mn. Alam Maritim Resources Bhd and its related companies are currently in active discussions and negotiations with their respective financiers and sukuk holders to restructure the repayment terms and conditions of the existing loans/financing facilities and sukuk programme. PUC Founder (MSC) Bhd will be traded and quoted under its new name of PUC Bhd with effect from Wednesday, 12 July 2017. Sime Darby Bhd announced the incorporation of an indirect 65%owned subsidiary Kunming Bow Chuang Motor Sales and Services Co Ltd in the People's Republic of China on 4 July 2017. U.S. employers added a seasonally adjusted 222,000 jobs in June and the unemployment rate rose slightly to 4.4% with more people actively looking for work. Exchange Rate USD/MYR 4.2983 -0.0018 USD/JPY 113.70 0.4400 EUR/USD 1.141 0.0045 Commodities Futures Palm Oil (RM/mt) 2,529.00 -4.00 Crude Oil ($/Barrel) 44.33 -1.00 Gold ($/tr.oz.) 1,211.90 -12.80 DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Monday , July 10, 2017 FBMKLCI: 1,759.93 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kaladher Govindan Market View Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my Further Correction Likely before Base Building The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) stayed in correction mode for a third week, adversely affected by rising geopolitical tensions after North Korea launched a missile which landed in Japanese waters. Profit-taking came to a head Friday after being range bound mid-week, as regional peers fell amid fears over rising geopolitical risks from North Korea, volatile oil prices and weaker US private sector employment data. Week-on-week, the FBM KLCI slipped another 3.74 points, or 0.21 percent to 1,759.93, with losses from BAT (-RM1.16), PPB Group (-40sen) and HLFG (-36sen) overshadowing gains on Hong Leong Bank (+34sen) and Genting Malaysia (+16sen). Average daily traded volume and value stayed low at 1.6 billion shares, the slowest since late January, and RM1.7 billion, compared with the 1.43 billion shares and RM1.9 billion average respectively the previous week. Stronger-than-expected Malaysia’s Trade Numbers Continued strength in Malaysia’s trade data for May underscores the belief that the nation’s 2017 GDP could emerge much stronger than widely publicized official forecast of 4.3% to 4.8%. Nonetheless, there won’t be much positive impact on market sentiment as investors should continue to look for global cues for direction this week, but the bias will be on the downside, after the stronger-than-expected US non-farm payroll data, rising geopolitical tensions and weak crude oil prices keep investors on the edge. Malaysia’s exports surpassed import growth by 2.1 percentage points in May after recording a strong growth of 32.5%, higher than consensus expectations of 23.4% YoY, to RM79.4bn as shipments to China grew by 51.5% to RM10.7bn and demand for manufactured products rose 32.7% YoY. The strong 33.8% YoY growth in intermediate imports implied that exports are likely to remain vibrant in the coming months. Perhaps, China’s trade numbers for June, which will be released this Thursday, can attest to that. In USD terms, China’s exports growth is expected to be slightly better at 9% YoY (8.7% in May) but imports are forecast to be a tad weaker at 14% (14.8% in May). US Non-farm Payroll Higher but Creates a Mixed Feeling The US non-farm payroll that rose by 222,000 in June versus expected 179,000 took many by surprise as the unemployment level held up at 4.4% and wage growth was relatively unchanged from the previous month for an economy that is said to be in a full employment level. The increase to 62.8 in labour force participation level could be one reason for that as more people entered the job market. With weak inflation and wage growth muted, expectations for a delay in the next US rate hike could be positive for emerging markets, especially if the trend continues in the coming months. Page 1 of 8
4. TA Securities 10-Jul-17 A Member of the TA Group This could lift the pressure on the ringgit , especially with exports continued to show signs of improvement. Ringgit may receive a boost, if Bank Negara raises its Overnight Policy Rate in this Friday’s meeting but the central bank is not expected to budge from its pro-growth stance, even though real interest rate has been lingering in negative territory for the past five months and the economy has shown progress, due to prevailing external uncertainties. Rising Geopolitical Tensions The conflict over North Korea’s nuclear programme has been around for a long time but it has reached the critical stage after Kin Jung Un ascended to power and pursued more aggressive and powerful missile tests that have shaken the regional stability. With its recent launch of intercontinental ballistic missile that can reach anywhere in the world, the odds are stacked not only against South Korea and Japan but also the US. If the US feels China is not doing enough to contain North Korea, it will not only increase its naval presence off the Korean Peninsula but also engage closer military ties with South Korea and Japan. China will definitely view it as a threat to its regional hegemony after exerting its influence directly through its military presence in the South-China Sea and subtly through various economic measures. Any misaction by either party may have devastating consequences and add to the current uncertainty. However, if the tension escalates, it may become a saving grace for certain asset classes like crude oil, bonds and gold that took a beating recently. Page 2 of 8
5. TA Securities 10-Jul-17 A Member of the TA Group News In Brief Corporate Sime Darby Bhd announced the incorporation of an indirect 65 %-owned subsidiary Kunming Bow Chuang Motor Sales and Services Co Ltd (KMBC) in the People's Republic of China on 4 July 2017. The principal activities of KMBC are retail of motor vehicles and spare parts and provision of after-sales services. (Bursa Malaysia) DiGi.Com Bhd announced that it has appointed current Telenor Hungary's chief financial officer (CFO) Nakul Sehgal as the company's CFO effective 1 August 2017. (The Edge) Genting Malaysia Bhd announced that it is working to recover its investment of US$347.4mn (RM1.5bn) in an integrated gaming resort in Taunton, Massachusetts, US, which has been put on hold pending the resolution of a legal case. (The Star) Comment: Genting Malaysia subscribed to the promissory notes issued by Mashpee Wampanoag Tribe to finance the pre-development expenses of a gaming resort in Taunton, Massachusetts, known as First Light Resort and Casino. As at June 30, 2017, Genting has invested a total of US$347.4 million (or RM1.49bn) in interest-bearing promissory notes, which carry fixed interest rates of 12% and 18% per annum. FY16 annual report stated that the assessment on the legal case above and review performed on the operational cash flows of the casino did not indicate any issue in the recoverability of the promissory notes. As such, the notes are not impaired in FY16. In our forecast, we have not factored in the impairment as we do not believe the recoverability is in doubt. However, in the worst case scenario which Genting Malaysia has to impair the entire investment in notes, the impact on the group’s net debt is insignificant from estimated 0.04x to 0.05x for FY17. Maintain Buy on Genting Malaysia with an unchanged target price of RM6.54. TSH Resources Bhd has proposed to raise approximately RM43.3mn from the issuance of 1.8% of its issued share capital where nearly all of the proceeds would be utilised for working capital. This is based on an illustrative issue price of RM1.73 per placement share being the 5-day volume weighted average price. The issue price will be fixed at a date to be determined by the board of directors and announced after receiving all requisite approvals for the proposed placement. (Bursa Malaysia) Star Media Group Bhd has received shareholders’ approval to dispose of its 52.5% stake in Singapore-listed Cityneon Holdings Ltd. At its extraordinary general meeting, the group received 94.5% of the votes to sell the stake for S$115.6mn or about RM360.2mn to Lucrum 1 Investment Ltd. The disposal translates into a gain on disposal of RM214.1mn. (The Star) Comments: We have already accounted for the impact of the disposal in our model. To recap, we are negative on the divestment, as the group will now need to search for new acquisition targets to offset the existing decline in print. Of the RM360.2mn in gross proceeds, 55.5% or RM200.0mn has been earmarked for future investments. As we understand, preference will be but are not limited to assets that are related to its core print and digital businesses. As it stands, it seems the likelihood of special dividends are unlikely. However, we believe the group will be able to sustain its existing DPS of 18.0sen/share for the immediate future. We maintain our SELL call on Star Media Group with a TP of RM1.40/share. Media Prima Bhd’s Datuk Seri Amri Bin Awaluddin will be stepping down from the group managing director position and Datuk Kamal Bin Khalid will be taking over the top post. (The Edge) Comments: Taking over the helm, we believe Media Prima is in good hand with the appointment of Datuk Kamal Bin Khalid as Managing Director. Datuk Kamal is no stranger to the group, having joined since 2009. Currently, he is the CEO of Media Prima Television Networks, the group’s largest revenue contributor. We believe the group’s strategic direction will remain the same. Having recently unveiled its Odyssey transformation programme, focus will be on reducing its reliance on traditional adex revenue and increasing digital Page 3 of 8
6. TA Securities 10-Jul-17 A Member of the TA Group contributions . We make no changes to our earnings. We maintain our SELL call on Media Prima with a TP of RM0.60/share. While digital revenues are growing at an encouraging pace, these contributions remain small and are unable to offset the decline in its core television and print business. SCGM Bhd is slated to set up its first manufacturing facility in the Klang Valley to capture more market share in the Central Peninsular. The group has allocated RM20.0mn in capital expenditure for machinery. With four thermoform machines and two extruders, the Klang Valley factory would have a production capacity of 5.0mn kg per annum. Factory operations are expected to start by end-2017. (Bursa Malaysia) Only World Group Holdings Group Bhd has proposed to undertake a private placement of up to 10% of its issued share capital at an issue price to be determined and announced later. At an illustrative issue price of RM1.52 per placement share which represents a discount of approximately 9.9% to the 5-day volume weighted average market price of RM1.69 per share, the proposed private placement is expected to raise gross proceeds of up to approximately RM36.9mn. RM25.0mn of the gross proceeds would be utilised for setting-up at least 3 new food service outlets and 4 new family attractions in Resort World Genting, Genting Highlands. (Bursa Malaysia) ACE Market-listed company PUC Founder (MSC) Bhd will be traded and quoted under its new name of PUC Bhd with effect from Wednesday, 12 July 2017. (Bursa Malaysia) Sunzen Biotech Bhd (Sunzen) plans to diversify into the manufacturing and trading of traditional chinese medicine and herbal health food and beverages business via the proposed acquisition of a 70% stake in Ecolite Biotech Manufacturing Sdn Bhd (Ecolite) for RM12.1mn to be wholly satisfied by the allotment and issuance of 37.7mn new ordinary shares in Sunzen at an issue price of RM0.32 per Sunzen share. Ecolite is principally involved in the manufacturing and sales of herbal drinks, food stuffs and related health products. (Bursa Malaysia) Alam Maritim Resources Bhd announced that the group along with its subsidiaries, jointventure companies and associated companies are currently in active discussions and negotiations with their respective financiers and sukuk holders to restructure the repayment terms and conditions of the existing loans/financing facilities and sukuk programme. (Bursa Malaysia) Page 4 of 8
7. TA Securities 10-Jul-17 A Member of the TA Group News In Brief Economy Asia Malaysia 's Exports Grew 32.5% in May, Trade Surplus at RM5.49 billion Malaysia’s exports saw stronger growth of 32.5% to RM79.4 billion, while imports grew by 30.4% to RM73.91 billion in May 2017, the first time export growth has outpaced imports since May 2016. In a statement, stronger export growth for the month resulted in a trade surplus of RM5.49 billion, the 235th consecutive month of trade surplus recorded since November 1997. Trade for the month totalled RM153.3 billion, up 31.5% from RM116.6 billion a year earlier, amid increased trade among all trading partners, including ASEAN, China, US, EU, India, Taiwan and Australia. Exports to China recorded the highest year-onyear growth since February 2010, up 51.5% at RM10.73 billion. All major sectors saw double digit growth, led by exports of manufactured goods which grew 32.7% to RM66.61 billion. The higher exports was on account of increased exports of electrical and electronic (E&E) products, petroleum products, chemicals and chemical products, rubber products, iron and steel products, machinery, equipment and parts, as well as manufactures of metal. Exports of agriculture goods increased 25.4% to RM6.95 billion, supported by higher exports of palm oil, while exports of mining goods grew 32% to RM5.07 billion, amid higher exports of crude petroleum. (Department of Statistics) Stronger Ringgit Impacting BNM International Reserves Bank Negara issued a follow-up statement to its news release last week on the nation's international reserves, which it said stood at US$98 billion as of June 30. It said although the ringgit is continuing to rise in US dollar terms, it is moving in the opposite direction in terms of value. "In US dollar terms, the level of reserves continues to increase. However, in ringgit terms, it declined following a stronger (performance in) the second quarter. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt. (New Straits Times) Japan's Leading Index Rises in May Japan's leading index strengthened in May, while coincident index fell from April, preliminary data from the Cabinet Office showed. The leading index that measures the future economic activity, rose to 104.7 in May from 104.2 in April. The score was forecast to rise to 104.6. Meanwhile, the coincident index dropped to 115.5 in May, in line with expectations, from 117.1 in the previous month. The index reflects the current economic activity. The lagging index came in at 116.7 in May versus 117.1 a month ago. Separately, total labor cash earnings in Japan increased for the second straight month in May, and at a faster-than-expected pace, preliminary report from the Ministry of Health, Labor and Welfare showed. Gross earnings rose 0.7% year-over-year in May, faster than the 0.5% climb in April. Economists had expected a 0.4% gain for the month. Contractual gross earnings also grew 0.7% annually in May, while special cash earnings dropped by 1.6%. Real cash earnings went up 0.1% in May after remaining flat in the preceding month. (RTT News) Indonesian State Firms Lure Foreign Funds with Share in Future Revenue Indonesian state firms are courting foreign pension funds by offering a share in future revenue from toll roads, power stations and other infrastructure projects, as part of a presidential drive to secure $10 billion in additional inflows. The state budget is not enough to fund President Joko Widodo's ambitious plan to expand infrastructure in Southeast Asia's biggest economy, a sprawling archipelago where the costs of moving goods around are among Asia's highest. Widodo told Reuters this week that he had instructed ministers to market the country aggressively to investors, capitalising on Standard & Poor's May 19 upgrade of its credit rating to investment grade. Indonesia is hoping to attract the likes of Canada Pension Plan, Japan's Government Pension Investment Fund (GPIF) and other institutional investors, Thomas Lembong, chairman of Indonesia's investment coordinating board, told Reuters. (The Star/Reuters) Page 5 of 8
8. TA Securities 10-Jul-17 A Member of the TA Group United States U .S. Jobs Growth Picks Up, but Wage Gains Lag Behind U.S. employers are churning out jobs unabated as the economic expansion enters its ninth year, but the inability to generate more robust wage growth represents a missing piece in a largely complete labor recovery. U.S. employers added a seasonally adjusted 222,000 jobs in June, the Labor Department said, and the unemployment rate rose slightly to 4.4% with more people actively looking for work. The U.S. has added jobs every month since October 2010, a record 81-month stretch that has absorbed roughly 16 million workers and slowly repaired much of the damage from the 2007-09 recession. The unemployment rate touched a 16-year low in May and the number of job openings hit a record earlier this year. Still, average hourly earnings for private-sector workers rose slightly in June, 2.5% compared with a year earlier, a level little changed since March. As recently as December, the figure was 2.9% and in the months before the recession, wage gains consistently topped 3%. Since mid-2009, when the expansion started, hourly earnings of blue-collar workers—for which long-run data series are available—have grown on average 2.2% a year, much less than the 3% expansion of the 2000s, the 3.2% expansion of the 1990s or the 3.3% expansion of the 1980s. (The Wall Street Journal) Fed Report Cautions on Hazards of Monetary Policy Rules The Federal Reserve defended having the flexibility to set interest rates without new scrutiny from Capitol Hill in its semiannual report to Congress on Friday, warning of potential hazards if it were required to adopt a rule to guide monetary policy. Fed Chairwoman Janet Yellen is set to testify on the report Wednesday before the House of Representatives, which last month approved on a party-line vote financial regulatory legislation that would require the Fed to set a mathematical rule guiding monetary policymaking and explain instances when it diverges from that rule. She will testify Thursday in the Senate, which doesn’t appear likely to advance the bill soon. The Fed’s report didn’t provide new clues about the immediate policy or economic outlook. The economy has largely performed in line with Fed expectations with two exceptions: Inflation has softened in recent months after it appeared to converge earlier this year toward the central bank’s 2% target, and financial conditions have eased even though the Fed has now raised interest rates three times in as many quarters. The Fed raised its benchmark federal-funds rate in June to a range between 1% and 1.25%. Officials have penciled in one more quarter-point increase this year, and they unveiled plans to begin slowly shrinking their portfolio of more than $4 trillion in Treasury and mortgage securities. The Fed said in the report it expects to begin implementing the plan this year, in line with recent statements. In Friday’s report, the Fed weighed in on a longrunning academic debate about the use of mathematical rules to guide monetary policy. The debate has taken on added urgency because House Republican lawmakers, who have been critical of the Fed’s approach to keeping rates low in recent years, have advanced legislation that would require the Fed to more closely adhere to prescriptive rules in setting policy. (The Wall Street Journal) Europe and United Kingdom U.K. Industrial Production Misses Forecasts for 4th Straight Month The pound weakened morning after official data showed growth in the U.K.’s industrial sector missed forecasts for a fourth successive month in May, compounding worries about an economic slowdown. Total industrial production contracted after a month of growth in April, falling by 0.1% and missing a forecast of 0.4% expansion. On an annual basis, contraction slowed from 0.8% to 0.2%, but was still significantly worse than the 0.2% growth that had been predicted. Sterling, which was practically flat on the day before the data were released, was 0.4% weaker against the dollar at publication time, at $1.2919. Manufacturing, the single biggest sub-sector of the overall figures, continued its slow start to the second quarter, falling by 0.2%. Consensus forecasts had predicted 0.5% monthly growth. Year on year growth picked up slightly, with 0.4% expansion compared to stagnation in the year to April, but again the figure was well below forecasts. (Financial Times) Page 6 of 8
9. TA Securities 10-Jul-17 A Member of the TA Group U .K. House Price Growth Falls to Four-Year Low – Halifax More signs of a summer slowdown in the UK’s residential property market. House prices contracted for the second month this year in June, falling by a worse than expected 1%, according to Halifax. June’s figures were below forecasts for the index to rise by 0.2%, following a 0.3% expansion in May. Halifax’s three-month growth measure also fell back to 2.6% from 3.3% in June – the lowest in four years. It means the average cost of a U.K. home is now £218,290. Weakness in the housing market reflects wider developments in the U.K. economy where consumers are being pinched by rising inflation. Still Halifax expects the U.K.’s “acute shortage of properties” to support prices in the longer run. The building society said there were 162,704 first time UK buyers in the market so far this year – 15% below a 2006 peak of 190,900. (Financial Times) U.K. GDP Growth Expected to Improve Slightly in Q2 – NIESR Economic growth in the UK is likely to have picked up slightly in the second quarter but remain below its long-run average and weaker than the Eurozone, according to estimates from an influential think-tank. The National Institute of Economic and Social Research estimates that economic output increased by 0.3% in the three months to June, compared to 0.2% in the first quarter. Disappointing data released earlier reinforced expectations of a decline in industrial output over the quarter, but this was offset by growth in the larger services sector. The think-tank expects the economy to grow by a total of 1.7% this year, lower than Bank of England forecasts of 1.9% growth. (Financial Times) German Industrial Output Growth Exceeds Expectations Germany's industrial production grew at a faster-than-expected pace in May, largely driven by energy and capital goods output. Industrial production grew 1.2% month-on-month in May, faster than the revised 0.7% increase seen in April, Destatis reported. Production has increased over the past five months. Output was forecast to grow slightly by 0.2% in May. This was the largest growth since February, when output climbed 1.5%. Excluding energy and construction, industrial output grew 1.3%. Energy production advanced 2.9% in May, while output fell 1% in construction. Among other sectors, capital goods output rose 2.6% and the production of consumer goods by 1.4%. Meanwhile, the production of intermediate goods showed a decrease of 0.2%. On a yearly basis, growth in production accelerated more-than-expected to 5% in May from 2.8% in April. Economists had forecast 4% annual growth. (RTT News) Page 7 of 8
10. TA Securities 10-Jul-17 A Member of the TA Group TA RESEARCH – Remisiers’ Briefing Topic: Weekly Market Outlook Speaker: Kaladher/ Stephen Soo Venue: Auditorium, 10th Floor Menara TA One Date: 10 July 2017 (Today) Time: 12.40pm Share Buy-Back: 07 July 2017 Company GLBHD GRANFLO SALCON UNIMECH Bought Back Price (RM) Hi/Lo (RM) 100,000 10,000 150,000 5,000 0.61 0.23 0.54/0.53 1.06 0.61/0.60 0.23 0.54/0.53 1.07/1.06 Total Treasury Shares 7,264,800 6,428,800 36,281,000 5,163,310 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. liability for any direct or indirect loss arising from the use of this document. the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 8 of 8 We accept no We, our associates, directors, employees may have an interest in
11. T e c h n i c a l TA Securities V i e w Monday , July 10, 2017 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Technical Outlook FBM KLCI: 1,759.93 (-3.74, -0.21%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my More Downside to KLCI Supports at 1,751 and 1,729 The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) stayed in correction mode for a third week, adversely affected by rising geopolitical tensions after North Korea launched a missile which landed in Japanese waters. Profit-taking came to a head Friday after being range bound mid-week, as regional peers fell amid fears over rising geopolitical risks from North Korea, volatile oil prices and weaker US private sector employment data. Week-on-week, the FBM KLCI slipped another 3.74 points, or 0.21 percent to 1,759.93, with losses from BAT (-RM1.16), PPB Group (-40sen) and HLFG (-36sen) overshadowing gains on Hong Leong Bank (+34sen) and Genting Malaysia (+16sen). Average daily traded volume and value stayed low at 1.6 billion shares, the slowest since late January, and RM1.7 billion, compared with the 1.43 billion shares and RM1.9 billion average respectively the previous week. Bursa Malaysia shares rose Monday, with Petronas heavyweights leading gains as oil prices climbed on short-covering and as drilling in the US for new oil production fell for the first time since January. The KLCI was up 5 points to close at the day’s high of 1,768.67, off an early low of 1,756.37, but losers edged gainers 448 to 419 on total turnover of 1.76bn shares worth RM1.73bn. Stocks fell further the following day, led by Petronas blue chips as oil prices eased and regional markets dip on increased geopolitical concerns after North Korea launched a missile which landed in Japanese waters. The KLCI shed 6.59 points to end at the day’s low of 1,762.08, off the opening high of 1,768.3, as losers beat gainers 488 to 348 on higher turnover of 1.89bn shares worth RM1.8bn. Sideways trade persisted Wednesday with investors mostly sidelined amid increased geopolitical concerns over the recent North Korea missile test and lack of positive domestic leads. The KLCI ended up 6.08 points at the day’s high of 1,768.16, off an opening low of 1,761.17, as gainers edged losers 424 to 388 on slower trade totaling 1.48bn shares worth RM1.69bn. The local market stayed range bound the subsequent day as the cautious tone prevailed in line with the US Federal Reserve’s FOMC meeting minutes and volatile oil prices. The KLCI added 2.37 points to again close at the day’s high of 1,770.53, off an intra-day low of 1,765.75, as losers beat gainers 508 to 362 on moderate turnover of 1.55bn shares worth RM1.74bn. Blue chips turned lower Friday, dampened by profit-taking as regional peers fell amid fears over rising geopolitical risks from North Korea, volatile oil prices and weaker US private sector employment data. The index lost 10.6 points to close near session lows at 1,759.93, off an early high of 1,768.61, as losers swarmed gainers 644 to 209 on very cautious trade totaling 1.3bn shares worth RM1.54bn. Trading range for the blue-chip benchmark index last week shrank to 14.16 points, compared with the 33.22-point range the previous week, as most index heavyweights stayed in sideways ranging mode. For the week, the FBM-EMAS Index shed another 48.17 points or 0.38 percent to 12,550.77, while the FBM-Small Cap Index fell 65.83 points, or 0.38 percent to 17,378.13, as trading momentum in the lower liner and small cap space slowed. Page 1 of 3
12. TA Securities 10-Jul-17 A Member of the TA Group The profit-taking correction in the last three weeks has weakened the daily slow stochastic momentum indicator for the FBM KLCI , which may slip back into oversold territory on further losses, while the weekly indicator’s signal line registered a steep decline below the neutral mark. The 14-day Relative Strength Index (RSI) indicator hooked back down for a bearish reading of 40.02, while the 14-week RSI declined to a weaker reading of 57.54 as of last Friday. Chart 1 On trend indicators, the daily Moving Average Convergence Divergence’s (MACD) signal line expanded negatively in bearish territory, mirroring the bearish expansion on the weekly MACD indicator which triggered a sell signal the prior week (Chart 2). The -DI and +DI lines on the 14-day Directional Movement Index (DMI) trend indicator also expanded bearishly after flashing a sell signal the previous week, suggesting an emerging bearish trend. Chart 2 Page 2 of 3
13. TA Securities 10-Jul-17 A Member of the TA Group Conclusion The weak technical picture on the FBM KLCI after the recent three-week correction suggests that further correction is likely before base building can resume . The bearish sell signals on weekly MACD and 14-day DMI indicators, and weak technical momentum confirms more correction is needed to neutralize or lessen the bearish momentum, before oversold recovery can follow. Immediate resistance for the index stays at the 50-day moving average (1,773), next 1,782, followed by the recent peak of 1,796, and then the 1,800 psychological level. Immediate support will be from the 100-day moving average at 1,751, with stronger support seen at 1,729, a prior support level in April, while crucial uptrend support is from the 200-day moving average at 1,703. Sector-wise, while most blue chips are expected to stay in correction mode given the weak technical condition of the benchmark index, budget aviation counters AirAsia and AirAsia X should attract bargain hunters looking for rebound upside. The same can be said for construction and oil & gas related counters such as Ekovest, MRCB, UEM Sunrise, WCT Holdings, Sapura Energy and Wah Seong. Chart 3 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
14. C O M P A N Y U P D A T E TA Securities A Member of the TA Group Monday , 10 July 2017 FBMKLCI: 1,759.93 Sector: Construction MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 ur Bina Puri Holdings Berhad TP: RM0.45(+8.4%) Last traded: RM0.415 Listing of PT Megapower Makmur Tbk HOLD THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Ooi Beng Hooi Tel: 603-2167 9612 benghooi@ta.com.my Bina Puri has successfully listed its power unit, PT Megapower Makmur Tbk (PT Megapower) on Indonesia Stock Exchange on 5 July 2017. PT Megapower has raised Rp49.0bn (approximately RM15.9mn) from the IPO exercise, of which 50% of the IPO proceeds shall be used for repayment of debt owning to Bina Puri Power Sdn Bhd (80% owned subsidiary of Bina Puri Holdings Bhd), while the remaining 50% of the IPO proceeds would be used as additional working capital. The listing would also allow the company to have access to the capital market for future expansion. Upon listing, public shareholders will hold 30% of the enlarged share base and Bina Puri’s effective stake in the power unit will be diluted from 64.0% to 44.8%. www.taonline.com.my Share Information Bloomberg Code BIN MK Bursa BPURI Stock Code 5932 Listing Main Market Share Cap (mn) 266.4 Market Cap (RMmn) 110.5 Par Value 0.50 52-wk Hi/Lo (RM) 0.51/0.37 12-mth Avg Daily Vol ('000 shrs) 920.5 Estimated Free Float (%) 54.6 Beta 0.79 Major Shareholders (%) Jentera Jati Sdn Bhd - 7.65 Tee Hock Seng - 6.94 Ng Keong Wee - 5.29 Forecast Revision Currently, PT Power is operating a total of 28MW capacity of micro diesel generated power plants at 8 locations in Indonesia. A mini hydro power plant in Bantaeng, Sulawesi Selatan, Indonesia, started operation in June 2016, added another 4.2MW to its capacity. Major electricity capacity expansion in Indonesia According to Deloitte Indonesia, Indonesia is still facing an issue with electricity supply. The installed capacity as of 2016 was able to fulfill only 86.4% of the electricity demand, versus 100% in Singapore and Brunei, 99% in Thailand and Malaysia, and 98% in Vietnam. It is a challenge to the government to meet the rising domestic energy demand of a growing population and economy in Indonesia. In 2015, the government of Indonesia has launched the 35,000MW programme to meet the national demand for electricity, and expects 23% of electricity to be sourced from renewable energy by 2025. Seeing the opportunity, Bina Puri is looking at developing two more hydropower plants in Sulawesi. The locations have been identified, one of which is targeted in South Sulawesi with a capacity of about 10MW. Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating Financial Indicators Net Debt / Equity (%) CFPS (sen) Price / CFPS (x) ROA (%) NTA/Share (RM) Price/NTA (x) FY17 173.7 (3.4) (12.2) 0.9 0.9 0.5 Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth BPURI FBM KLCI (1.2) (1.6) (8.8) 1.2 (3.5) 5.3 12.2 7.0 Page 1 of 3 FY18 150.1 3.7 11.1 1.0 0.9 0.4 (12-Mth) Share Pricerelative to the FBM KLCI Outlook We are positive on the prospects of the utilities segment. Besides providing stable and recurring income which would smoothen the cyclical earnings from its construction and property development businesses, the strong demand for additional electricity capacity is expected to bode well for the power division in the near to medium term. Impact Factoring in earnings dilution and interest saving from the IPO exercise, we estimate that FY17 to FY19 earnings to reduce by 1.1% to 2.2%. FY17 FY18 (1.1) (2.2) 14.7 14.6 Hold (Maintained) Source: Bloomberg
15. TA Securities 10-Jul-17 A Member of the TA Group While there is immediate earnings dilution arising from the IPO , we are optimistic on the future of the power generation business. The listing would allow the company to have an option to raise fund in the capital market to finance future expansion, if required. Valuation Following the revision in earnings, we tweak the target price from RM0.455 to RM0.45, based on unchanged target PE multiple to 8x CY16 EPS. Maintain our HOLD call on BPURI. Financial Statements Profit & Loss (RMmn) YE Dec 31 Revenue EBITDA Dep. & amortisation Finance cost Associates Jointly controlled entity Investment income PBT Taxation MI Net profit Core net profit Core EPS (sen) GDPS (sen) Div yield (%) Cash Flow (RMmn) YE Dec 31 PBT Adjustment Dep. & amortisation Changes in WC Operational cash flow Capex Others Investment cash flow Debt raised/ (repaid) Equity raised/ (repaid) Dividend Others Financial cash flow Net cash flow Opening cash Forex adjustment Ending Cash 2015 2016 2017F 2018F 2019F 1,227.9 1,035.3 1,086.1 1,150.4 1,070.3 76.5 73.9 70.0 66.5 63.9 (13.8) (15.3) (24.8) (20.7) (19.0) (15.9) (20.0) (15.3) (14.4) (13.3) (11.0) (7.5) 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 24.0 8.8 0.2 0.2 0.2 35.7 26.8 30.2 31.7 32.0 (12.9) (13.4) (11.5) (12.7) (12.8) (19.5) (12.3) (4.0) (4.4) (5.0) 3.4 1.1 14.7 14.6 14.2 7.5 8.1 14.7 14.6 14.2 3.6 3.4 5.6 5.6 5.5 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 2.4 2015 35.7 42.6 13.8 (17.9) 17.6 (13.0) 5.1 (7.9) 3.5 24.2 (4.3) (6.6) 16.8 26.5 66.9 (14.0) 81.0 2016 26.8 61.7 15.3 (38.8) 22.5 (29.6) 5.5 (24.1) 1.0 4.2 0.0 (29.3) (24.1) (4.3) 81.0 (10.6) 59.8 2017F 30.2 40.0 24.8 (65.7) (22.3) (9.8) 3.8 (6.0) 9.8 9.0 0.0 (24.8) (6.0) (8.9) 59.8 0.0 50.9 2018F 31.7 35.0 20.7 17.8 57.4 (10.4) 3.2 (7.2) (40.2) 0.0 0.0 33.0 (7.2) 9.8 50.9 0.0 60.7 2019F 32.0 32.1 19.0 32.8 70.8 (9.6) 2.9 (6.7) (44.2) 0.0 (2.6) 40.1 (6.7) 17.4 60.7 0.0 78.1 Page 2 of 3 Balance Sheet (RMmn) YE Dec 31 Fixed assets Others Total NCA Cash Others CA 2015 2016 2017F 2018F 175.2 191.0 159.4 145.8 305.9 294.7 294.8 294.9 481.1 485.6 454.2 440.7 81.0 59.8 50.9 60.7 1,221.8 1,149.3 949.8 953.9 1,302.8 1,209.1 1,000.7 1,014.5 Total Assets 1,783.8 1,694.7 1,454.8 1,455.2 1,400.5 ST debt Others CL 458.5 760.8 1,219.3 438.1 668.1 1,106.2 408.1 403.5 811.6 358.1 425.1 783.2 308.1 398.0 706.1 183.4 89.6 273.0 204.8 79.2 284.0 231.9 79.2 311.1 241.7 79.2 320.9 247.5 79.2 326.7 115.3 121.4 101.6 101.6 75.0 81.4 216.5 223.0 (0.4) 0.0 291.5 304.4 1,783.8 1,694.7 130.4 116.3 85.4 246.7 0.0 332.1 1,454.8 130.4 130.9 89.8 261.3 0.0 351.1 1,455.2 130.4 142.5 94.8 272.9 0.0 367.7 1,400.5 LT borrowings Others LT Liabilities Share cap Reserves NCI Shareholders' fund Treasury shares Total Equity Total Equity & Liabilities Ratio YE Dec 31 EBITDA margin (%) Core EPS (sen) EPS Growth (%) PER (x) GDPS (sen) Div Yield (%) Net cash (RMm) Net gearing (x) ROE (%) ROA (%) NTA/share (RM) P/NTA (x) 2019F 133.6 295.0 428.6 78.1 893.9 972.0 2015 6.2 3.6 (10.9) 11.7 0.0 0.0 2016 7.1 3.4 (4.2) 12.2 0.0 0.0 2017F 6.4 5.6 65.5 7.4 0.0 0.0 2018F 5.8 5.6 (0.9) 7.4 0.0 0.0 2019F 6.0 5.5 (2.5) 7.6 1.0 2.4 (553.3) 1.9 3.7 0.5 0.9 0.5 (571.1) 1.9 3.7 0.5 0.9 0.5 (577.1) 1.7 6.3 0.9 0.9 0.5 (527.1) 1.5 5.7 1.0 0.9 0.4 (465.5) 1.3 5.3 1.0 1.0 0.4
16. TA Securities 10-Jul-17 A Member of the TA Group ( T HI S P AGE I S I NT E N T I ON AL L Y L E FT B L ANK) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the CBRS or the subject company. For more information about CBRS and other research reports, please visit Bursa Malaysia’s website at: http://www.bursamalaysia.com/market/listed-companies/research-repository/research-reports for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
17. TA Securities ECONOMIC REPORT Monday , July 10, 2017 FBMKLCI: 1,759.93 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Malaysian Economy Sturdy Exports Growth in May 2017 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage shazma@ta.com.my farid@ta.com.my Tel: +603-2167 9608 www.taonline.com.my Summary • Trade activities posted a strong growth in May 2017, with exports growing at double digit rate for the past 6 months. Total exports grew by a substantial 35.6% YoY to RM79.4bn in May 2017, significantly above expectations and also the highest since March 2010. Double-digit growth was seen across all sectors, led by the manufacturing sector, due to increased exports of electrical and electronic (E&E) products, while higher palm oil exports and crude petroleum also pushed agriculture goods and mining exports. By countries, China remained as our largest export partner, with total shipments of more than 50% YoY for second month in a row. Trade with ASEAN countries also grew by 34.1% YoY and accounted for 27.5% of our total trade, as trade with Singapore grew by a hefty 45% YoY. The weak ringgit exchange rate also played a role in the double-digit export trend, exports volume growth and expansion over the past five months. • Greater intermediate imports pushed total imports higher by more than 30% YoY to RM73.9Bbn during the month. We also noted that this was the first time since May last year that YoY exports growth outpaced imports. Trade surplus was RM5.5bn in May 2017. • We may see some bumpy path in the second half of the year. June’s PMI – a proxy for manufacturing over the 6 months – was below than the 50-point threshold, 46.9. Apart from the high base factor especially towards the second half, expectations that Ringgit will strengthen further may indicate an unfavorable export outlook. Nevertheless, improvement in commodities prices as well as continued global economic and trade recovery should cushion further slowdown in our trade activities. As long as global demand for Malaysian manufactured goods persists, the strong export growth trend could be sustainable. • Our full year trade projections are left unchanged at this juncture. The exports segment is likely to increase significantly by about 12.3% YoY in 2017 (2016: 1.1% YoY), while imports probably register a 14.7% YoY rise. As such, we forecast trade surplus for this year to be around RM81bn. In 5M17, trade surplus was RM33.0bn as compared with RM36.3bn in the same period last year. Robust growth this month also supporting our view that the second quarter of 2017 real GDP growth will stay resilient after registering 5.6% YoY in the first quarter. (TA forecast: +5.2% YoY). Figure 1: Statistical Summary of Malaysia’s Trade Performance (January 2017 - May 2017) Trade Performance Exports (RMbn) YoY % 2016 785.9 1.1% MoM % Imports (RMbn) YoY % MoM % Total Trade (RMbn) YoY % MoM % Trade Balance (RMbn) YoY % MoM % 698.7 1.9% 1,484.6 1.5% 87.3 -4.7% Jan-17 70.2 13.6% Feb-17 71.8 26.5% Mar-17 82.6 24.1% Apr-17 74.0 20.6% May-17 79.4 32.5% -7.0% 2.2% 15.1% -10.5% 7.5% 65.5 16.1% -2.0% 135.8 14.8% -4.6% 4.7 -12.6% -46.0% 63.1 27.7% -3.8% 134.8 27.1% -0.7% 8.7 18.5% 84.8% 77.2 39.4% 22.5% 159.9 31.1% 18.5% 5.4 -51.7% -38.1% 65.2 24.7% -15.6% 139.2 22.5% -12.9% 8.8 -3.3% 62.1% 73.9 30.4% 13.3% 153.3 31.5% 10.2% 5.5 67.3% -36.5% Source: DOS, TA Securities Page 1 of 4 5M17 378.0 23.3% 344.9 27.7% 722.9 25.4% 33.0 -9.0%
18. TA Securities 10-Jul-17 A Member of the TA Group Malaysia ’s Exports Beats Consensus Estimate In May 2017, exports increased by 32.5% YoY to RM79.4bn, better than prior month’s 20.4% YoY and consensus estimate of 23.4% YoY. On a MoM basis, exports inched up by 7.5%. In May 2017, the gain in exports was largely contributed by higher exports by most sectors as well as stronger demand from our top major trading partners. Total exports rose by 23.3% YoY to RM378bn in the 5M17 as compared with RM306.5bn in the 5M16. Figure 2: Malaysia’s Exports Growth (January 2012 – May 2017) RMbn RMbn 90 YoY % YoY % Change 50% 40% 80 30% 70 20% 60 10% 50 0% May-17 Sep-16 May-15 Sep-14 May-13 Jan-16 -20% Jan-14 30 Sep-12 -10% Jan-12 40 Source: DOS, TA Securities Strong Growth Across the Board The gain in exports during the month was contributed by higher shipment of manufactured goods. The sector, which constitutes about 83.9% of total exports in May 2017, increased by 32.8% YoY to RM66.6bn as compared with 17.3% YoY in April 2017. Namely, E&E products (36% of total exports in May 2017) accelerated by a double-digit growth of 31.3% YoY to RM28.6bn (April 2017: +22.2% YoY). However, a decrease was recorded for machinery, equipment and parts, which contracted by 1.4% YoY to RM3.5bn during the month. Exports by the mining sector moderated to 32.0% YoY from April’s 51.8 while exports by the agriculture sector grew by 25.6% YoY in the month of May as compared with 21.2% YoY gain previously. Currently, both mining and agriculture products accounts for 15.1% of total exports. In term of products, Liquefied natural gas (LNG) increased by only 3.8% YoY to RM1.9bn which pull down growth in the mining index. Additionally, crude petroleum grew by a sturdy 56.8% to RM2.1bn as both average unit value and export volume increased by 31.5% YoY and 19.2% YoY, respectively. In the same vein, palm oil and palm oil-based products registered an increase of RM1.4bn (equivalent to 27.5% YoY) to RM4.8bn in April. Exports of palm oil, the major commodity in this group of products rose 25% YoY due to the increase in both average unit value and export volume by 14.1% YoY and 9.5% YoY, respectively. (Please refer to figure 4) Figure 3: Malaysia’s Exports by Sector (January 2016 – May 2017) 60.0% 40.0% YoY % 20.0% 0.0% -20.0% -40.0% Manufacturing Agriculture Source: DOS, TA Securities Page 2 of 4 May-17 Apr-17 Feb-17 Mining Mar-17 Jan-17 Dec-16 Nov-16 Oct-16 Sep-16 Jul-16 Aug-16 Jun-16 May-16 Apr-16 Feb-16 Mar-16 Jan-16 -60.0%
19. TA Securities 10-Jul-17 A Member of the TA Group Figure 4 : Major Exports Market by Products (November 2016 – April 2017) Major Exports Products Electrical and Electronic (E&E) Palm Oil & Palm-Based Products Liquefied natural gas (LNG) Chemicals and chemical products Optical and scientific equipment Petroleum products Manufactures of metal Crude petroleum Rubber Products Source: DOS, TA Securities 2016 3.5% 5.9% -28.2% 7.0% 10.2% -0.1% -4.3% -14.6% 0.3% Jan-17 11.4% 21.7% 2.8% 15.2% 0.2% 81.7% 10.8% 48.1% 17.1% Feb-17 22.4% 63.5% 2.1% 37.5% 14.3% 50.9% -0.4% 50.3% 38.4% Mar-17 21.2% 22.9% 11.5% 20.6% 15.2% 52.8% -6.2% 74.1% 53.4% Apr-17 22.2% 20.8% 50.2% 18.0% 10.5% 5.4% 17.3% 65.7% 36.3% May-17 31.3% 27.5% 3.8% 21.0% 14.7% 88.2% 12.8% 56.8% 50.8% 5M17 21.7% 30.2% 12.3% 22.3% 10.9% 52.3% 6.2% 59.2% 39.1% Shipment to China Continues to Grow In May 2017, exports to China expanded further by 51.5% YoY to RM10.7bn (following the 50.6% increase in the previous month). This is in fact the eight month that exports to China had notably increased on a YoY basis. Hereby, the increase was mainly attributed to higher exports of petroleum products, E&E products, petroleum products, chemicals and chemical products as well as rubber products. In the 5M17, total shipment to China rose by 44.3% YoY to RM50bn. Note that, shipment to China contributed 13.2% of total exports in May 2017. Exports to the U.S. (9.6% of total exports) rose by 16.3% YoY to RM7.4bn as compared with 11% YoY previously. Products that contributed to the increase in exports were E&E products, rubber products, machinery, equipment and parts as well as petroleum products. In the first five months of 2017, exports increased by 12.6% YoY to RM36.1bn To the ASEAN region, total exports were valued at RM24.1bn or 30.3% of Malaysia’s total exports during the month, an increase of 33.9% YoY. Details shows that, Singapore continues to lead the bulk of Malaysia’s exports, with 15.5% of Malaysia’s exports are directed to Singapore. Moreover, May’s exports to Singapore grew at a hefty pace of 45% YoY as compared with 15.8% YoY previously, which pull up the overall ASEAN growth in May 2017. Figure 5: Exports Growth of Malaysia’s Top Trading Partners (January 2017 - May 2017) % YoY 60.0% Singapore EU China ASEAN U.S. Figure 6: Percentage Share of Exports by Countries (5M17) Germany 50.0% 3.6% India 3.8% Indonesia 3.9% Hong Kong 40.0% 2.9% Australia Thailand 4.4% 5.5% Japan 30.0% 8.4% U.S. 20.0% 9.6% EU 10.3% China 10.0% 13.2% Singapore 14.6% ASEAN 0.0% Jan-17 Feb-17 Source: DOS, TA Securities Mar-17 Apr-17 0.0% May-17 29.5% 5.0% 10.0% 15.0% Source: DOS, TA Securities Imports Grow 24.7% YoY in April 2017 As exports recorded an increase, imports also saw a 30.4% YoY increase (which is a 13.3 % MoM growth). Hereby, the imports for May 2017 totals RM73.9bn. • 20.0% Intermediate goods that are valued at RM42.3bn (which also accounts for 57.2% of total imports) had driven the imports for May. Meanwhile, intermediate goods rose by 33.8% YoY. On the other hand, capital goods was at RM9.9bn (13.4% of imports), which registered a 6.6% YoY gain in May 2017. Consumption goods rose 8.3% YoY; thus valuing at RM6.7bn (9.1% out of imports). Considering that E&E products are the main export products, the primary import products are also E&E which accounts for RM21.3bn (28.8%) of total imports. Chemicals and chemical products are second largest imports which amount for 10.2% of imports which is equivalent to RM7.6bn. Page 3 of 4 2 7 . 25.0% 30.0% 35.0%
20. TA Securities 10-Jul-17 A Member of the TA Group Figure 7 : Malaysia’s Total Imports (January 2012 – May 2017) RMbn RMbn 80 Figure 8: Percentage Share of Imports by Countries (5M17) YoY % YoY % Change Germany 50% 3.0% India 75 40% 70 65 3.3% South Korea 4.4% Indonesia 30% 60 4.9% Thailand 55 5.8% 20% Taiwan 50 10% 45 40 6.2% Japan 7.5% U.S. 0% 35 9.3% Singapore 9.9% China May-17 Sep-16 Jan-16 May-15 Sep-14 Jan-14 May-13 Sep-12 -10% Jan-12 30 19.3% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Source: DOS, TA Securities Source: DOS, TA Securities Figure 9: Imports Performance by Products (January 2017 – May 2017) Import Performance Intermediate Goods (RMbn) YoY % MoM % Capital Goods (RMbn) YoY % MoM % 2016 399.1 -0.1% Jan-17 38.4 10.4% -0.4% 9.6 35.2% 6.5% 100.2 4.9% Consumption Goods (RMbn) YoY % Feb-17 39.4 10.4% -0.4% 10.6 35.2% 6.5% Mar-17 43.1 36.3% 11.9% 13.5 82.4% 85.8% Apr-17 38.4 29.2% -10.9% 8.0 14.8% -40.9% May-17 42.3 33.8% 10.2% 9.9 6.6% 23.5% 5M17 200.6 29.3% 48.3 28.2% 67.0 5.7 4.6 6.1 5.7 6.7 28.7 7.4% -1.6% -1.6% 14.0% 1.0% 8.3% 4.3% -10.1% -10.1% 33.1% -7.1% 17.7% MoM % Source: DOS, TA Securities Lower Trade Surplus in May 2017 May’s trade surplus surged 67.3% YoY to RM5.5bn. Nevertheless, it declined 36.5% MoM. Meanwhile, total trade rose to RM153.3bn, an expansion of 31.5% YoY. Figure 10: Malaysia’s Trade Balance (January 2012 – May 2017) RMbn 16 14 12 5.5 10 8 6 4 2 May-17 Sep-16 Jan-16 May-15 Sep-14 Jan-14 May-13 Sep-12 Jan-12 0 Source: DOS, TA Securities Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 4 of 4