Bursa Malaysia Daily Market Report - 10 November

Transcription

1. Friday , 10 November, 2017 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1 . D ai l y M arke t C om men t a ry 2 . D ai l y B ri ef Fu nd a me n tal Rep o r ts 1. 2. 3. 4. M al a y si a n E c o n om y: I PI Sof t en s t o 4 .7 % Yo Y , Pro je ct 3 Q1 7 G D P at 5 . 4 % Yo Y M al a y si a n E c o n om y: W rap p in g Up 2 0 1 7 at 3 . 0 0 % M al a y si a n Pac i fi c I n d u st ri e s Be r ha d: Un der go in g Po rt fo li o Tr an sfor ma t io n Pet r o na s C h em i c al s G r o up B h d: Su st ain ed Qo Q We akn ess du e t o Pl an t Sh u t o dow n s 5 . S P Set i a Be r ha d: B at t erse a B o ost ! Te ch n ic al R ep o rt s 1 . D ai l y Te ch n ic a l St o ck Pi cks 2 . D ai l y St o ck S cr een 3 . Fore i gn Te ch n i ca l St o c k W at ch ( A US , H K & F SS TI) 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
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Daily Market Commentary Friday , 10 November 2017 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (09.11.2017) (mil) Main Market 1,827.0 Warrants 201.7 ACE Market 1,047.0 Bond 15.5 ETF 0.4 LEAP 0.2 Total 3,091.8 Off Market 141.1 Volume +/-chg (RMmn) -3.5 2,119.6 -52.6 26.7 542.7 190.0 6.2 2.3 0.21 0.6 -0.94 0.1 2,339.4 106.0 413.1 Value Value/ +/-chg Volume Up Down 98.6 1.16 285 297 2.8 0.13 79 86 97.8 0.18 62 42 0.7 0.15 4 1 0.26 1.46 1 0 -0.39 0.37 0 2 0.76 431 428 400.7 2.93 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP November 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) 88.5 27.2 10.0 5.0 3.3 3.0 1.0 1.0 2.61 18.42 30.68 -0.50 0.15 0.15 0.18 -0.03 6.40 9.87 18.18 6.54 23,461.94 6,750.05 7,484.10 22,868.71 2,550.57 29,136.57 3,423.91 1,703.03 6,042.46 3,427.80 2,028.69 6,049.43 -101.42 -39.07 -45.62 -45.11 -1.83 228.97 2.66 -11.62 -6.92 12.34 14.98 33.16 -0.43 -0.58 -0.61 -0.20 -0.07 0.79 0.08 -0.68 -0.11 0.36 0.74 0.55 18.72 25.39 4.78 19.64 25.86 32.44 18.85 10.38 14.08 10.44 3.03 6.77 1.42 4.40 1.31 9.07 25.50 6.21 2.32 1.10 Exchange Rate USD/MYR 4.2003 -0.0247 USD/JPY 113.47 -0.1400 EUR/USD 1.161 0.0008 Counter MAYBANK IHH GENTING PETGAS HLBANK KLK PPB AMBANK WPRTS Mkt Cap. Chg (RM’mn) (RM) 98,601 56,214 36,265 35,024 28,089 26,390 19,080 13,202 11,381 0.01 0.03 0.31 0.64 0.01 0.10 0.08 0.04 1.50 News Bites Vol. (mn) 10.31 5.43 2.06 4.01 1.81 0.17 0.08 1.52 0.42 Commodities Futures Palm Oil (RM/mt) 2,821.00 -12.00 Crude Oil ($/Barrel) 57.03 0.21 Gold ($/tr.oz.) 1,285.60 3.60 Important Dates SOLID - 1:6 Bonus Issue - BI of 82.5m shares. 1 bonus share for every 6 existing shares. LISTING ON: 10/11/2017. ATTA - 8-1 Rights Issue - RI of up to 2,515.0m ICPS . 8 ICPS for every 1 existing share held, at an issue price of RM0.08 per ICPS. Trading of Rights: 07/11 - 13/11/2017. Application Closed: 21/11/2017. LISTING ON: 06/12/2017. Given the return of local fund buying offsetting foreign selling and improving buying momentum in the small cap and ACE Market sector, the local market should attract more domestic funds and retail participation to improve sentiment ahead of the weekend. On the index, immediate resistance remains the prior 2 Oct pivot low of 1,750, with next hurdle from 1,765, the 100-day moving average, followed by the 8 Aug peak of 1,782. Immediate support is retained at Tuesday's low of 1,742 matching yesterday's low, followed by the pivot low of 1,733, and next from the April low of 1,729. Any selling dips on Binapuri shares towards the lower Bollinger band (35sen) will be attractive to bargain for rebound upside towards the 38.2%FR (40sen), with a confirmed breakout to aim for the 50%FR (42sen) ahead. Crucial chart supports are at 34sen and the 14/8/17 low (32.5sen). Gadang remains in base building mode above the 61.8%FR (RM1.18) support, matching the lower Bollinger band, pending rebound upside to the 76.4%FR (RM1.25), with a confirmed breakout to target RM1.31 and the 3/7/17 peak (RM1.37) going forward. Top 09 KLCI Movers Based on Mkt Cap. (RM) @ @ @ @ @ @ @ @ % YTD chg 1,746.81 12,598.46 17,390.72 1,742.50 Off Market SENERGY BIMB YTL SIME SYCAL CIMB HUMEIND VOIR % chg Review & Outlook Stocks recovered Thursday with strong gains on BAT (+RM1.50) and core oil & gas heavyweights lifting the benchmark up on renewed local fund buying interest due to the firm global oil prices. The KLCI recouped 2.61 points to settle at 1,746.81, off an early low of 1,742.32 and high of 1,749.31, as gainers narrowly edged losers 431 to 428 on improved turnover totaling 3.09bn shares worth RM2.34bn. • Bank Negara Malaysia maintained the Overnight Policy Rate at 3.00% in yesterday's meeting. • Malaysia's industrial output in September rose at a slower pace of 4.7% from a year ago, which was below a Bloomberg survey of 6.3%, due to slower manufacturing growth. • Petronas Chemicals Group Berhad's 9M17 core profit of RM3.2bn (+52% YTD) exceeded our expectations and consensus by 15% and 12% respectively. • S P Setia Bhd's 9MFY17 net profit grow 29.1% to RM494.7mn, riding on its UK power station project. It was within expectations as anticipate lumpy recognition in the 4QFY17. • Gas Malaysia Bhd's pretax profit for 3Q17 decreased to RM55.2mn from RM55.6mn reported in 3Q16. • MYEG Services Bhd has proposed to diversify its existing principal activities and its units to include the foreign workers accommodation programme. • Malaysia Smelting Corp Bhd registered a 55.8% drop in net profit for 3QFY17 at RM7.7mn due to the impact from forex differences, higher production cost and operating expenses. • Aeon Co (M) Bhd has filed a suit against WCT Holdings Bhd's unit Gemilang Waras Sdn Bhd at the Kuala Lumpur High Court to renew its lease for Aeon Mall Bukit Tinggi. • Hong Leong Industries Bhd's 1QFY18 net profit rose 26.3% YoY to RM81.9mn mainly attributable to higher revenue from the consumer products segment. • Independent adviser AmInvestment Bank deems the takeover offer for Hovid Bhd at 38 sen a share and 20 sen a warrant as "fair" and "reasonable", advising shareholders to accept the offer. • Hibiscus Petroleum Bhd hopes to increase oil production at Anasuria Cluster by up to 56% over the next 2 years, to 5,000 bbls/day from 3,204 bbls/day in its FY17. • Zecon Bhd expects a hospital project it is undertaking to bring in some RM100mn per year over a 10-year period from FY19. • Sunzen Biotech Bhd aborted plans to buy a 70% interest in Ecolite Biotech Manufacturing Sdn Bhd for RM12mn on issues arising from due diligence conducted on Ecolite and its subsidiaries. • Tan Sri Mokhzani Mahathir has sold 385.0mn shares in Sapura Energy Bhd, marking his exit from the oil and gas firm, some 5 years after the merger of Kencana Petroleum Bhd and Sapuracrest Petroleum Bhd • SCH Group Bhd has terminated its MoU with Dataran 888 Sdn Bhd in relation to the collaboration on the excavation, removal, distribution and sale of quarry sand and other related deposits from flood mitigation ponds located in Kuala Lumpur. • Asia Bioenergy Technologies Bhd's subsidiary Asiabio Petroleum Sdn Bhd has entered a tripartite MoU with Peri Formwork Malaysia Sdn Bhd and AT Engineering Solution Sdn Bhd to research the scaffolding and formwork market in Malaysia. • The public portion of Kejuruteraan Asastera Bhd's IPO received an oversubscription rate of 57.3x. • The U.S. Senate Republican tax cut plan being unveiled on Thursday would delay until 2019 a reduction in the corporate tax rate and fully repeal the federal income tax deduction for state and local taxes 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. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Friday , November 10, 2017 FBMKLCI: 1,746.81 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Daily Brief Market View, News In Brief: Corporate, Economy, and Share Buybacks Chartist: Stephen Soo Tel: +603-2167-9607 stsoo@ta.com.my www.taonline.com.my M a r k e t V i e w Better Sentiment on Improving Local Commitments Stocks recovered Thursday with strong gains on BAT (+RM1.50) and core oil & gas heavyweights lifting the benchmark up on renewed local fund buying interest due to the firm global oil prices. The KLCI recouped 2.61 points to settle at 1,746.81, off an early low of 1,742.32 and high of 1,749.31, as gainers narrowly edged losers 431 to 428 on improved turnover totaling 3.09bn shares worth RM2.34bn. Resistance at 1,750, Support at 1,742 Given the return of local fund buying offsetting foreign selling and improving buying momentum in the small cap and ACE Market sector, the local market should attract more domestic funds and retail participation to improve sentiment ahead of the weekend. On the index, immediate resistance remains the prior 2 Oct pivot low of 1,750, with next hurdle from 1,765, the 100-day moving average, followed by the 8 Aug peak of 1,782. Immediate support is retained at Tuesday’s low of 1,742 matching yesterday’s low, followed by the pivot low of 1,733, and next from the April low of 1,729. Buy Binapuri & Gadang Any selling dips on Binapuri shares towards the lower Bollinger band (35sen) will be attractive to bargain for rebound upside towards the 38.2%FR (40sen), with a confirmed breakout to aim for the 50%FR (42sen) ahead. Crucial chart supports are at 34sen and the 14/8/17 low (32.5sen). Gadang remains in base building mode above the 61.8%FR (RM1.18) support, matching the lower Bollinger band, pending rebound upside to the 76.4%FR (RM1.25), with a confirmed breakout to target RM1.31 and the 3/7/17 peak (RM1.37) going forward. Asian Markets Fluctuate as Investors Keep an Eye on Trump’s Asia Tour Asian stocks traded mixed Thursday as Japanese stocks erased all the gains they made during morning trade, as traders digested the release of Chinese inflation data and kept an eye on President Donald Trump's stop in Beijing. China October consumer prices rose 1.9 percent compared to one year ago, a touch above the 1.8 percent rise forecast in a Reuter’s poll. Producer prices also topped expectations, increasing 6.9 percent on year compared to the 6.6 percent forecast. President Donald Trump's tour of Asia also remained in the spotlight. Trump addressed the U.S.-China trade deficit during a Thursday speech in Beijing and said he would work on fixing "unfair trade practices." Japanese shares ended down after dramatic intraday swings took the Nikkei and Topix indexes to multi-decade highs only to plunge in the late afternoon as the yen strengthened. The Nikkei 225, which had climbed some 2 percent to trade above the 23,000 mark in the morning, edged down 0.20 percent at 22,868.71 in the late afternoon. Across the Korean Strait, the Kospi shed 0.7 percent, while Australia’s S&P/ASX 200 advanced 0.55 percent to close at 6,049.42 as the material sub-index climbed. Meanwhile, China stocks rose, led by the blue-chip index scaling a fresh two-year high, as investors were encouraged by strong inflation data that showed economic momentum remains robust. The blue-chip CSI300 index rose 0.7 percent, to 4,075.90 points, while the Shanghai Composite Index closed up 0.4 percent to 3,427.79 points. Page 1 of 8
4. 10-Nov-17 Dow Snaps Winning Streak on Tax-Delay Jitters U .S. stocks closed lower Thursday in their worst session in two weeks with the Dow snapping a seven-day winning streak on worries over a possible delay in much-anticipated corporate tax cut. However, main indices trimmed losses after the House Ways and Committee approved a bill to overhaul the tax code, setting up a vote by the full House. Stocks were initially battered by fears that tax cuts would be delayed as the Senate Finance Committee on Thursday released its version of a tax plan that would defer implementing a 20 percent corporate tax until 2019, versus next year, as proposed by House Republicans. But some of those jitters were soothed when the House Ways and Committee passed the bill put forth by the Republicans which proposes cutting corporate taxes to 20 percent from 35 percent, repeals the estate tax over time, and revise the existing seven tax brackets into four. The bill will move to the House floor for a vote, possibly as soon as next week. Technology stocks in the S&P 500, the best-performing sector of the year so far, fell 0.9 percent. The group is still up 37 percent this year. Chip makers were among the biggest decliners, with Advanced Micro Devices down 5 percent and Nvidia off 1.8 percent. The Dow Jones Industrial Average lost 101.42 points, or 0.43 percent to end at 23,461.94, while the S&P 500 declined 9.76 points, or 0.38 percent, to 2,584.62 and the Nasdaq Composite dropped 39.06 points, or 0.58 percent, to 6,750.05. 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. As of Friday, November 10, 2017, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 8
5. 10-Nov-17 N e w s I n B r i e f Corporate Petronas Chemicals Bhd (PetChem) registered 2.5% growth in net profit in the 3QFY17 to RM913mn, thanks to higher production and sales volume achieved upon commissioning of its Sabah Ammonia Urea plant in May this year. For 9MFY17, PetChem posted a 63.1% increase in net profit to RM3.2bn, contributed by better performance by both its core segments. (Bursa Malaysia/ The Edge) S P Setia Bhd announced today an 88.9% surge in its net profit for 3QFY17 at RM253.2mn, riding on its UK power station project. For 9MFY17, the property developer saw its net profit grow 29.1% to RM494.7mn, from RM383.2mn in 9MFY16. (Bursa Malaysia/ The Edge) Gas Malaysia Bhd's pretax profit for 3Q17 decreased to RM55.2mn from RM55.6mn reported in 3Q16. This was mainly due to higher operating expenses despite higher gross profit in line with the increase in volume of gas sold and higher assets contributed by customers. For 9M17, pretax profit increased to RM117.2mn from RM113.3mn reported in 9M16. (Bursa Malaysia/ Bernama) Hong Leong Industries Bhd recorded a higher net profit of RM81.9mn for 1QFY18, up 26.3% from RM64.8mn for the corresponding quarter in the previous year, mainly attributable to higher revenue from the consumer products segment. (Bursa Malaysia/ The Edge) For 9MFY17, Malayan Flour Mills Bhd reported a 4% increase in net profit to RM64.6mn, from RM62.1mn, on higher margins in its flour and grains trading segment, arising from net unrealised gain on future and option contracts recorded. (Bursa Malaysia/ The Edge) Tien Wah Press Holdings Bhd remained in the red after posting a net loss of RM7.1mn for 3QFY17, following the cessation of its printing operations in the country. It reported a net loss of RM17.4mn in 9MFY17, compared to a net profit of RM15.9mn a year ago, though revenue grew 31.2% to RM323.4mn. (Bursa Malaysia/ The Edge) Malaysia Smelting Corp Bhd registered a 55.8% drop in net profit for 3QFY17 at RM7.7mn. Its tin smelting segment was less profitable for the quarter under review due to the impact from forex differences, higher production cost and operating expenses. For 9MFY17, net profit came in at RM29.3mn, down 8.3% from RM32.0mn in the corresponding period last year. (Bursa Malaysia/ The Edge) RCE Capital Bhd’s 1HFY19 net profit was 19% higher at RM42.7mn, compared with RM35.9mn in the previous period. Revenue grew 9.8% to RM118.7mn. The group said the double-digit growth in its profit was driven by higher net interest income and lower operating expenses, partially offset by higher staff costs arising from share options granted under the employee shares scheme. (Bursa Malaysia/ The Edge) Page 3 of 8
6. 10-Nov-17 MYEG Services Bhd has proposed to diversify its existing principal activities and its units to include the foreign workers accommodation programme . The programme entailed the setting up and management of centralised and integrated living quarters or hostels for the purpose of housing the foreign workers. (Bursa Malaysia/ Bernama) Tan Sri Mokhzani Mahathir has sold 385.0mn shares in Sapura Energy Bhd, marking his exit from the oil and gas firm, some 5 years after the merger of Kencana Petroleum Bhd and Sapuracrest Petroleum Bhd. (Bursa Malaysia/ The Sun) Aeon Co (M) Bhd has filed a suit against WCT Holdings Bhd’s unit Gemilang Waras Sdn Bhd at the Kuala Lumpur High Court to renew its lease for Aeon Mall Bukit Tinggi. It is seeking court intervention to stop Gemilang Waras and those tied to the company from terminating the lease agreement dated Nov 23, 2007 and from trying to evict the company or its tenants from Aeon Mall Bukit Tinggi, pending the court’s decision. (Bursa Malaysia/ The Sun) Independent adviser AmInvestment Bank deems the takeover offer for Hovid Bhd at 38 sen a share and 20 sen a warrant as “fair” and “reasonable”, advising shareholders to accept the offer. (Bursa Malaysia/ The Sun) Hibiscus Petroleum Bhd expects oil prices to remain high over the next few months, providing a "sweet spot" for the oil and gas group after undergoing challenging conditions in the last 2 years. Hibiscus hopes to increase oil production at Anasuria Cluster by up to 56% over the next 2 years, to 5,000 bbls/day from 3,204 bbls/day in its FY17. (Bursa Malaysia/ The Edge) Zecon Bhd expects a hospital project it is undertaking to bring in some RM100mn per year over a 10-year period from FY19. Describing the project as a cash cow, Zecon's corporate finance and accounts vice president Jamil Jamaludin said, however, that the group's gearing level is likely to be 3x more from the current 1.36x next year as it hits the peak funding period for the project. (Bursa Malaysia/ The Edge) Sunzen Biotech Bhd aborted plans to buy a 70% interest in Ecolite Biotech Manufacturing Sdn Bhd for RM12mn on issues arising from due diligence conducted on Ecolite and its subsidiaries. The company did, however, state that should those issues be resolved to the satisfaction of the company it may reconsider them after due and careful deliberation by the board. (Bursa Malaysia/ The Sun) The public portion of Kejuruteraan Asastera Bhd's IPO received an oversubscription rate of 57.3x. The placement agent confirmed that 56mn issue shares by way of private placement to institutional and selected investors and 32mn existing shares by way of private placement to institutional and selected investors had been fully placed out, respectively. (Bursa Malaysia/ Bernama) Page 4 of 8
7. 10-Nov-17 SCH Group Bhd has terminated its MoU with Dataran 888 Sdn Bhd in relation to the collaboration on the excavation , removal, distribution and sale of quarry sand and other related deposits from flood mitigation ponds located in Kuala Lumpur. The company and Dataran 888 Sdn Bhd have mutually agreed to terminate the MoU. (Bursa Malaysia/ The Sun) Asia Bioenergy Technologies Bhd's subsidiary Asiabio Petroleum Sdn Bhd has entered a tripartite MoU with Peri Formwork Malaysia Sdn Bhd and AT Engineering Solution Sdn Bhd — a subsidiary of AT Systematization Bhd — to research the scaffolding and formwork market in Malaysia. (Bursa Malaysia/ The Edge) Page 5 of 8
8. 10-Nov-17 N e w s I n B r i e f Economy Asia BNM Keeps OPR Unchanged at 3 .00% Bank Negara Malaysia (BNM)'s Monetary Policy Committee (MPC) is keeping the Overnight Policy Rate (OPR) at 3%, as it expects Malaysia's growth to remain strong in 2018, amid a strengthening global economy. In a statement, it said that at the current key rate level, the stance of monetary policy remains accommodative. "Both the domestic and external sectors continue to register strong performance. Growth momentum has been lifted by stronger spillovers from the external sector to the domestic economy as firms invest in productive capacity, raise wages and hire more workers," it said. "For 2018, domestic demand is expected to remain the key source of growth. Private consumption will remain the largest driver of growth, supported by continued improvements in income and overall labor market conditions," it added. (The Edge Market) Slower Industrial Output in September as Manufacturing Drags Malaysia's industrial output in September rose at a slower pace of 4.7% from a year ago, which was below a Bloomberg survey of 6.3%, due to slower manufacturing growth. The Statistics Department said that the manufacturing index expanded by 5.7%, mining 2.1% and electricity (2.2%). The department said the major sub-sectors, which recorded an expansion in September 2017 were petroleum, chemical, rubber and plastic products (4.9%); electrical and electronic products (6.6%) and food, beverages and tobacco products (8.0%). As for the mining sector, output increased at a much slower pace of 2.1% in September 2017 compared with August's expansion of 5.3%. It pointed out to a 0.7% increase in the index for crude oil and 3.9% in the index for natural gas. The department said electricity sector output expanded 2.2% in September 2017 on a yearly basis. (The Star) Chinese Inflation Tops Expectations for October China's consumer inflation rate accelerated to 1.9% in October from a year earlier, beating market expectations, the National Bureau of Statistics (NBS) said. The consumer price index (CPI) had been expected to rise 1.8% on-year compared with an increase of 1.6% in September. Producer prices rose 6.9% on-year, unchanged from previous month's increase. Analysts had predicted the PPI would rise 6.6%. China's economy recorded better-thanexpected growth of nearly 6.9% through the first nine months of this year, buoyed largely by a recovery in its manufacturing and industrial sectors thanks to strong government infrastructure spending, a resilient property market and unexpected strength in exports. (CNBC) Japan Overall Bank Lending Rises 2.8% in October Overall bank lending in Japan was up 2.8% on year in October, the Bank of Japan said on Thursday - coming in at 518.090 trillion Yen. That was shy of forecasts for an increase of 3.0% following the downwardly revised 2.9% gain in September (originally 3.0%). Excluding trusts, bank lending again advanced an annual 2.8% to 450.429 trillion yen - also shy of forecasts for 3.0%, which would have been unchanged. Lending from trusts gained 2.6% on year to 67.661 trillion Yen, while lending from foreign banks plummeted 24.5 percent to 2.052 trillion yen. (RTT News) United States U.S. Senate Plan Would Delay Corporate Tax Rate Cut Until 2019 The U.S. Senate Republican tax cut plan being unveiled on Thursday would delay until 2019 a reduction in the corporate tax rate and fully repeal the federal income tax deduction for state and local taxes, two key differences with a House tax plan. President Donald Trump and fellow Republicans who control Congress have promised deep tax cuts that they say would energize the economy, but emerging differences in the Senate and House of Representatives proposals could complicate congressional passage. As the House tax-writing committee put the finishing touches on its bill to provide the biggest U.S. tax-code overhaul in decades, Senate Republicans were set to announce their separate plan later on Thursday. Page 6 of 8
9. 10-Nov-17 Congressional Republicans are aiming to pass the legislation by the end of the year . The Senate plan, like the House version, would cut the corporate tax rate to 20 percent from 35 percent, but would delay this by one year until 2019, said Republican Senator Bill Cassidy, a member of the tax-writing Finance Committee. (Reuters) U.S. Jobless Claims Rose Last Week The number of Americans filing applications for new unemployment benefits rose last week. Initial jobless claims, a proxy for layoffs across the U.S., increased 10,000 to a seasonally adjusted 239,000 in the week ended Nov. 4, the Labor Department said. Economists surveyed by The Wall Street Journal expected 230,000 new claims last week. In previous weeks, Puerto Rico began processing a backlog of applications the U.S. territory built up in the aftermath of recent hurricanes. Power outages and infrastructure damage in Puerto Rico and the U.S. Virgin Islands caused many applying for unemployment benefits to submit paper applications, causing what usually would have been a spike in claims to slow to a trickle, a Labor Department economist said. Though the ability to process claims has improved in Puerto Rico, the claims-taking procedure remains disrupted in the U.S. Virgin Islands. Nationally, jobless claims are trending near a 44-year low, showing the overall health of the labor market. Claims numbers have remained below 300,000 a week for more than two and a half years. Jobless claims data can be volatile. The four-week moving average, a steadier measure, dropped 1,250 to 231,250 last week, the lowest level since the beginning of 1973. (The Wall Street Journal) Wholesale Inventories Rise 0.3%, Meeting Expectations U.S. wholesale inventories increased 0.3% in September, on par with analysts' estimates, while the strong growth in August was revised slightly downward from 0.9% to 0.8%. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - rose 0.42%. Sales at wholesalers in September rose 1.3%, compared to an upwardly revised 1.9% growth rate in August. The figure is slightly stronger than the 0.9% growth rate expected by economists polled by Reuters. Wholesale auto sales rose 0.7% after surging at a revised 4.4% rate the month before. At the September sales pace it would take wholesalers 1.27 months to clear their stock of goods, down from 1.28 months in August. (CNBC) Europe and Uni ted Kingdom EU Cuts UK Growth Forecast as Eurozone Motors Ahead The European commission enters key Brexit talks with the government with the Eurozone economy in its best shape for a decade and activity in the UK weaker than expected six months ago. In its half-yearly health check, the commission sharply cut its forecast for UK growth this year and said it was likely to continue struggling in 2018 and 2019 even on the assumption that trade would not be disrupted by its departure from the EU. Forecasts produced by economists in Brussels said the UK economy would grow by 1.5% this year rather than the 1.8% penciled in when the last assessment was made in May. The International Monetary Fund is expecting UK growth of 1.7% this year, while the Organization for Economic Cooperation and Development is forecasting growth of 1.6%. Brussels believes that the UK economy will slow further to 1.3% in 2018 and 1.1% in 2019 – with growth of just 0.3% in every quarter for the next two years. It is gloomier about the outlook than the Bank of England, which expects growth of 1.7% in both years. Separately, the weakening outlook for the UK contrasts with the commission’s growth upgrade for the Eurozone. Helped by a pick up in the world economy and by the stimulus provided by the European Central Bank, the Eurozone is expected to expand by 2.2% this year, up from 1.7% six months ago. (The Guardian) German Exports Dip, But Robust Orders Brighten Outlook Germany’s imports and exports both fell in September as its trade surplus widened, highlighting the importance of domestic consumption as a driver of growth in Europe’s largest economy. Seasonally adjusted exports fell by 0.4% on the month while imports were Page 7 of 8
10. 10-Nov-17 down by 1 .0%, Federal Statistics Office data showed. The reading, which followed months of growth in both exports and imports, showed sales of German goods and services abroad barely grew overall in the third quarter. Economists said trade would not make any significant contribution to growth in the quarter, but they were optimistic about the outlook given continuing strong demand for German goods. (Reuters) Share Buy-Back: 09 November 2017 Company AMPROP BORNOIL FFHB LIENHOE NIHSIN PECCA SCGM UNIMECH Bought Back Price (RM) Hi/Lo (RM) 30,600 500,000 15,000 100,000 500,000 20,000 50,000 10,000 0.79 0.10 0.67 0.35 0.28 1.29/1.28 2.76/2.68 1.05/1.04 0.795/0.78 0.095/0.09 0.685/0.665 0.355/0.35 0.28/0.27 1.34/1.28 2.76/2.65 1.05/1.03 Total Treasury Shares 15,516,800 40,400,000 772,800 14,146,200 22,623,500 2,120,000 214,400 6,066,810 Source: Bursa Malaysia 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 8 of 8
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) PER (X) Div Yield (%) FY17 FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD 09-Nov-17 AUTOMOBILE BAUTO 2.10 2.50 0.81 10.2 14.3 20.6 14.7 5.5 5.5 2.25 -6.7 1.84 14.1 MBMR 2.14 2.09 1.00 20.7 23.2 10.4 9.2 1.9 2.2 2.60 -17.7 2.01 6.5 -1.4 0.0 PECCA 1.30 1.69 na 7.8 11.1 16.6 11.7 3.8 4.2 1.86 -30.1 1.28 1.6 -18.2 UMW 5.18 5.04 1.38 19.7 30.6 26.3 16.9 2.5 3.9 6.08 -14.8 4.09 26.5 22.7 BANKS & FINANCIAL SERVICES ABMB 3.70 4.80 1.39 33.1 30.6 11.2 12.1 4.3 4.3 4.49 -17.6 3.60 2.8 -0.5 AFFIN 2.51 3.00 0.88 29.4 33.6 8.5 7.5 3.2 3.2 3.00 -16.3 2.19 14.6 5.0 AMBANK 4.38 5.70 1.20 43.9 48.6 10.0 9.0 4.0 4.1 5.70 -23.2 3.90 12.3 1.6 CIMB 6.21 8.00 1.47 49.6 55.2 12.5 11.2 4.0 4.4 7.08 -12.3 4.49 38.3 37.7 HLBANK 15.96 17.50 0.58 104.9 114.2 15.2 14.0 2.8 2.8 16.48 -3.2 12.80 24.7 18.2 MAYBANK 9.16 10.20 0.97 69.6 75.9 13.2 12.1 5.5 5.5 9.86 -7.1 7.63 20.1 11.7 PBBANK 20.46 23.60 0.60 137.2 142.4 14.9 14.4 2.7 2.8 20.90 -2.1 19.40 5.5 3.8 RHBBANK 4.90 5.80 1.44 50.6 55.0 9.7 8.9 3.1 3.1 5.59 -12.3 4.58 7.0 4.0 BURSA 9.85 11.10 0.78 40.2 39.0 24.5 25.3 3.5 3.5 10.98 -10.3 8.08 21.9 12.9 CONSTRUCTION BPURI 0.37 0.38 0.55 4.7 4.6 7.8 8.0 0.0 0.0 0.49 -24.7 0.33 12.3 -16.1 GADANG 1.21 1.75 0.39 15.2 14.3 8.0 8.5 2.5 2.5 1.37 -11.7 0.89 36.7 15.2 GAMUDA 4.81 6.00 0.97 27.8 34.5 17.3 13.9 2.5 2.5 5.52 -12.9 4.65 3.4 0.6 IJM 3.12 3.50 0.89 15.3 20.2 20.4 15.4 2.4 3.0 3.61 -13.6 3.07 1.6 -2.5 PESONA 0.54 0.64 0.68 4.4 6.6 12.3 8.1 4.6 4.6 0.74 -26.5 0.48 13.7 -10.7 SENDAI 0.96 0.58 1.22 8.2 9.6 11.6 10.0 1.0 1.0 1.39 -30.9 0.51 90.1 67.0 SUNCON 2.35 2.55 na 12.7 14.7 18.6 16.0 2.3 2.3 2.43 -3.3 1.58 48.7 38.2 WCT 1.68 1.61 1.01 11.5 12.5 14.6 13.5 1.8 1.8 2.48 -32.1 1.49 12.8 -2.3 LITRAK 5.80 6.26 0.33 41.9 45.7 13.8 12.7 4.3 4.3 6.15 -5.7 5.57 4.1 -1.4 ANNJOO 3.91 4.40 1.17 41.3 45.4 9.5 8.6 5.3 5.6 3.98 -1.8 1.97 98.5 80.2 CHINHIN 1.30 1.58 na 8.3 11.3 15.7 11.5 3.1 4.6 1.49 -12.8 0.85 53.8 49.4 WTHORSE 1.96 1.67 0.50 6.7 10.0 29.2 19.7 5.1 5.1 2.19 -10.5 1.92 2.1 -2.5 CARLSBG 15.72 18.06 0.65 79.3 86.2 19.8 18.2 5.0 5.5 16.00 -1.7 13.72 14.6 12.9 HEIM 18.60 19.14 0.48 79.6 84.0 23.4 22.1 3.9 4.1 19.58 -5.0 15.56 19.5 13.6 AEON 2.00 2.23 0.45 6.5 7.5 30.7 26.6 2.0 2.4 2.85 -29.8 1.95 2.6 -22.2 AMWAY 7.10 8.62 0.33 30.6 38.7 23.2 18.4 4.6 4.9 8.18 -13.2 7.05 0.7 -3.1 F&N 25.44 27.41 0.17 102.6 150.9 24.8 16.9 2.3 2.4 26.00 -2.2 22.44 13.4 8.3 HUPSENG 1.13 1.50 0.37 6.5 6.6 17.3 17.1 5.3 5.3 1.28 -11.7 1.12 0.9 -1.8 17.7 Building Materials CONSUMER Brewery Retail JOHOTIN 1.46 1.80 0.43 13.5 15.1 10.8 9.7 2.9 3.4 1.76 -17.0 1.00 46.7 NESTLE 88.50 92.76 0.39 292.7 325.4 30.2 27.2 3.1 3.2 90.00 -1.7 74.12 19.4 13.2 PADINI 5.10 4.67 0.51 23.5 27.0 21.7 18.9 2.3 2.5 5.23 -2.5 2.26 125.6 100.8 POHUAT 1.98 2.50 0.65 27.3 27.3 7.3 7.3 4.0 4.0 2.08 -4.8 1.55 27.7 14.5 QL 3.94 3.26 0.31 12.1 12.8 32.6 30.7 1.1 1.1 4.03 -2.2 3.26 21.0 18.3 SIGN 0.88 1.08 0.88 6.7 8.6 13.2 10.3 2.8 4.0 1.07 -17.8 0.79 12.1 10.7 39.86 52.08 1.30 198.6 187.4 20.1 21.3 5.0 5.0 51.04 -21.9 37.00 7.7 -9.8 GENTING 9.48 11.54 1.46 50.2 54.4 18.9 17.4 1.5 1.7 10.00 -5.2 7.50 26.4 19.3 GENM 5.15 6.53 1.53 21.0 27.1 24.5 19.0 1.6 1.7 6.38 -19.3 4.42 16.5 14.0 BJTOTO 2.37 3.34 0.79 18.3 21.5 12.9 11.0 5.9 6.8 3.19 -25.7 2.25 5.3 -19.9 LUSTER 0.13 0.15 2.00 0.4 0.4 34.4 34.7 0.0 0.0 0.16 -21.9 0.05 150.0 150.0 Tobacco BAT GAMING Casino NFO HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO 2.18 2.45 0.58 12.7 13.6 17.2 16.0 3.9 4.1 2.43 -10.3 1.90 14.7 10.1 IHH 5.64 6.41 0.71 7.9 13.1 71.1 43.1 0.6 0.6 6.60 -14.5 5.50 2.5 -11.2 KPJ 1.02 1.17 0.39 3.3 4.1 30.8 25.1 1.5 1.8 1.14 -10.5 0.96 6.0 -2.4 HARTA 8.30 6.87 0.66 19.4 24.6 42.8 33.8 1.0 1.3 8.38 -1.0 4.53 83.2 71.8 KOSSAN 7.41 7.35 0.03 33.9 40.0 21.8 18.5 2.3 2.7 7.45 -0.5 5.62 31.9 12.4 SUPERMX 1.81 1.80 0.27 10.6 15.2 17.1 11.9 1.8 2.5 2.38 -23.9 1.69 7.1 -14.2 TOPGLOV 6.75 6.00 -0.31 26.4 29.4 25.6 22.9 2.1 2.2 6.89 -2.0 4.56 48.0 26.2 KAREX 1.58 1.60 0.17 2.8 4.6 56.7 34.1 1.3 0.7 2.62 -39.7 1.37 15.3 -33.1 SCIENTX 8.92 9.38 0.40 52.3 64.9 17.1 13.7 1.8 2.0 9.85 -9.4 6.63 34.5 33.1 SKPRES 1.96 2.20 0.45 8.3 10.4 23.7 18.9 2.1 2.6 2.02 -3.0 1.24 58.1 51.9 ASTRO 2.78 3.40 1.32 13.2 14.5 21.0 19.1 4.5 4.7 2.94 -5.4 2.47 12.6 6.9 MEDIA PRIMA 0.83 0.60 0.47 0.9 2.8 96.8 29.3 0.8 2.7 1.28 -35.5 0.66 26.0 -28.3 STAR 1.52 1.00 0.67 3.3 4.0 45.8 37.6 27.6 11.8 2.22 -31.5 1.51 0.7 -22.0 Rubber Gloves INDUSTRIAL MEDIA
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) FY17 PER (X) Div Yield (%) FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.47 0.75 1.10 3.6 4.5 13.0 10.4 2.1 2.1 0.69 -31.9 0.23 108.9 84.3 LCTITAN 5.34 6.66 na 42.8 63.4 12.5 8.4 4.3 4.7 6.53 -18.2 4.14 29.0 -17.8 MHB 0.92 0.78 1.73 -2.0 -0.5 na na 0.0 0.0 1.16 -20.7 0.63 47.2 0.5 MISC 7.45 6.56 1.06 57.2 46.8 13.0 15.9 4.0 4.0 7.90 -5.7 6.91 7.8 1.4 PANTECH 0.68 0.69 1.13 4.0 6.1 17.0 11.0 2.7 4.1 0.74 -8.8 0.44 55.2 51.7 PCHEM 7.40 8.05 0.99 52.7 49.8 14.0 14.9 3.1 3.0 7.80 -5.1 6.54 13.1 6.0 SENERGY 1.46 1.66 2.83 6.6 -0.4 22.1 na 0.7 0.0 2.10 -30.5 1.33 9.8 -9.9 SERBADK 2.74 3.40 na 22.9 25.7 12.0 10.6 2.5 2.8 2.79 -1.8 1.51 81.5 82.7 UMWOG 0.33 0.48 1.70 -3.2 -0.9 na na 0.0 0.0 0.92 -64.8 0.27 20.4 -62.0 -14.7 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.45 1.55 1.31 FGV 1.89 1.52 1.79 IJMPLNT 2.87 3.58 0.32 IOICORP 4.47 4.14 1.29 KFIMA 1.69 1.89 0.46 KLK 24.78 26.18 SIME 9.06 9.80 UMCCA 7.05 GLOMAC HUAYANG 11.3 12.3 12.8 11.8 0.0 0.0 1.98 -26.8 1.28 13.3 1.0 2.5 191.1 74.2 2.6 2.6 2.18 -13.3 1.42 33.1 21.9 12.3 14.1 23.3 20.4 2.4 2.8 3.60 -20.3 2.83 1.4 -15.6 17.3 21.0 25.8 21.2 2.1 3.6 4.81 -7.1 4.32 3.5 1.6 19.9 13.3 8.5 12.7 5.3 5.3 1.96 -13.8 1.65 2.4 -0.6 0.78 103.4 120.4 24.0 20.6 2.1 2.4 25.50 -2.8 23.00 7.7 3.3 1.51 34.2 37.3 26.5 24.3 2.5 2.5 9.70 -6.6 7.85 15.4 11.9 7.52 0.39 37.5 31.8 18.8 22.2 3.3 2.4 7.08 -0.4 5.54 27.2 18.1 0.65 0.60 0.53 1.4 5.0 44.9 12.9 4.2 4.2 0.77 -15.6 0.61 6.6 -6.5 0.72 0.69 0.65 17.3 1.8 4.2 39.3 5.6 0.7 1.21 -40.5 0.71 1.4 -36.3 IBRACO 0.87 0.94 na 3.3 10.5 26.7 8.3 2.3 4.6 1.05 -17.1 0.76 15.2 -13.0 IOIPG 1.99 2.23 0.81 18.9 16.9 10.5 11.8 3.0 3.0 2.28 -12.5 1.85 7.7 2.1 MAHSING 1.55 1.76 1.00 14.3 13.5 10.8 11.5 4.2 4.2 1.64 -5.5 1.34 15.7 8.4 SNTORIA 0.74 0.98 0.27 6.2 10.3 12.0 7.2 1.4 1.4 1.00 -26.0 0.69 7.2 -7.5 PLANTATIONS PROPERTY Note: SNTORIA proposed bonus issue of warrants & right issue of shares. For more details please refer to 25.09.17 report. SPB 4.75 5.97 0.67 25.6 22.8 12.9 14.5 2.5 2.5 5.19 -8.5 4.32 9.9 7.4 SPSETIA 3.30 4.10 0.91 11.6 12.7 14.4 13.1 4.2 4.2 4.50 -26.7 3.10 6.5 5.4 SUNWAY 1.67 1.83 0.73 15.8 15.2 12.4 12.9 3.0 3.0 1.96 -14.7 1.24 34.8 29.9 SUNREIT 1.70 1.87 0.75 9.2 10.0 18.4 16.9 5.4 5.9 1.81 -6.1 1.63 4.3 -1.2 CMMT 1.46 1.72 0.42 8.1 8.6 18.1 16.9 5.8 6.1 1.72 -15.1 1.40 4.3 -4.6 -26.3 REIT POWER & UTILITIES MALAKOF 1.01 1.22 0.61 6.8 6.9 14.8 14.7 6.9 6.9 1.51 -33.1 1.00 1.5 PETDAG 21.44 21.47 0.68 98.2 102.3 21.8 21.0 3.4 3.5 25.70 -16.6 21.00 2.1 -9.9 PETGAS 17.70 19.37 0.89 87.6 100.1 20.2 17.7 3.6 4.0 22.16 -20.1 16.64 6.4 -16.9 TENAGA 14.90 17.38 0.77 175.7 130.0 8.5 11.5 3.0 3.0 15.46 -3.6 13.00 14.6 7.2 YTLPOWR 1.33 1.40 0.68 8.2 11.2 16.2 11.9 3.8 3.8 1.50 -11.3 1.28 3.9 -9.0 TELECOMMUNICATIONS AXIATA 5.44 5.40 1.35 15.7 16.9 34.7 32.2 1.4 1.6 5.47 -0.5 4.11 32.4 15.3 DIGI 4.87 5.20 0.76 19.5 20.0 24.9 24.4 4.0 4.1 5.19 -6.2 4.63 5.2 0.8 MAXIS 6.00 6.10 0.74 26.0 26.2 23.1 22.9 3.3 3.3 6.60 -9.1 5.48 9.5 0.3 TM 6.15 7.20 0.63 22.6 23.2 27.2 26.5 3.3 3.4 6.69 -8.1 5.81 5.9 3.4 TECHNOLOGY Semiconductor & Electronics ELSOFT 2.59 3.00 0.57 11.3 14.1 22.9 18.4 3.1 3.8 2.95 -12.2 1.29 101.5 84.5 IRIS 0.17 0.25 1.84 -1.3 0.6 na 30.7 0.0 0.0 0.22 -22.7 0.10 70.0 54.5 INARI 2.90 2.75 0.80 11.3 13.0 25.8 22.4 3.4 3.2 2.95 -1.7 1.61 80.5 75.1 MPI 13.80 15.00 0.16 89.5 105.5 15.4 13.1 2.0 2.3 14.52 -5.0 7.20 91.7 86.2 UNISEM 3.90 3.85 0.77 23.5 27.1 16.6 14.4 3.1 3.1 4.25 -8.2 2.27 71.8 65.3 TRANSPORTATION Airlines AIRASIA 3.26 3.76 0.92 44.0 37.6 7.4 8.7 1.2 1.5 3.59 -9.2 2.16 50.9 42.4 AIRPORT 8.40 8.10 1.23 17.2 17.5 48.7 48.0 1.2 1.2 9.45 -11.1 5.91 42.1 38.6 106.3 Freight & Tankers PTRANS 0.30 0.44 na 2.1 2.3 14.6 13.2 2.1 2.3 0.38 -21.4 0.14 112.9 TNLOGIS 1.43 1.80 1.12 12.0 13.6 11.9 10.5 3.0 3.5 1.83 -22.0 1.43 0.0 -8.3 WPRTS 3.74 4.05 0.87 17.1 15.1 21.8 24.7 3.4 3.0 4.41 -15.2 3.58 4.5 -13.0 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) Beta EPS (cent) FY17 FY18 PER (X) FY17 FY18 Div Yield (%) FY17 52week 52week % Chg FY18 High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 24.30 23.30 1.25 172.7 189.1 14.1 12.8 2.5 2.5 0.0 15.4 58.00 40.1 0.0 OCBC 11.84 13.50 1.20 95.5 104.0 12.4 11.4 5.7 6.7 -1.2 8.5 8.84 32.7 0.0 UOB 25.38 26.90 1.07 200.8 215.5 12.6 11.8 2.8 2.8 -0.3 18.6 36.82 24.4 0.0 PLANTATIONS WILMAR 3.34 3.72 0.85 28.9 31.1 11.5 10.7 2.4 2.7 -16.5 3.1 8.44 -7.0 0.0 IFAR 0.46 0.53 1.01 4.9 5.2 9.5 8.9 2.6 2.8 -22.7 0.4 5.75 -12.4 0.0 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. 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.
13. ECONOMIC UPDATE Friday , November 10, 2017 FBMKLCI: 1,746.81 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Malaysian Economy IPI Softens to 4.7% YoY, Project 3Q17 GDP at 5.4% YoY Shazma Juliana Abu Bakar Farid Burhanuddin Tel: +603-2167 9608 Tel: +603-2167 9220 shazma@ta.com.my farid@ta.com.my www.taonline.com.my Review Total industrial output softened to 4.7% YoY in September 2017 (August 2017: +6.8% YoY), lower than consensus estimate of 6.3% YoY. The moderation was due to lower output across the board. On a monthly comparison, total production contracted by a 0.9% in seasonally adjusted terms. In particular, manufacturing output (65.9% of total IPI) slowed to 5.7% YoY as compared with August’s 7.6% YoY. This was on the back of lower production of both export-oriented and domestics industries. On a monthly basis, factory production declined by 0.2% MoM seasonally adjusted terms. - Output of export-oriented industries (47.4% of total IPI) lessened to 5.4% YoY (August 2017: +6.7% YoY) due to the slower growth of electronic and electrical (E&E) output by 6.6% YoY as compared with August’s 8.6% YoY and July’s 10.5% YoY. Details showed that the sub-components of computer, electronics & optical products increased by 7.0% YoY during the month, slower than 8.9% YoY gain in August 2017; manufacture of electrical equipment also eased to 4.6% YoY (August 2017: +8.4% YoY); and manufacture of machinery & equipment registered an increase of 4.4% YoY (August 2017: +5.7% YoY). Similarly, output of petroleum, chemical, rubber and plastic products increased by 4.9% YoY. This is compared to 6.9% YoY in the preceding month. The moderation in the manufacturing sector was also due to lower output wood products, furniture, paper products & printing (September 2017: +1.3% YoY) and textiles, wearing apparel, leather products & footwear (September 2017: +8.6% YoY). - The domestic sector also continued to moderate in September 2017. Production of transport equipment continued to ease from 9.9% YoY in August 2017 to 8.2% YoY gain during the month, while output of non-metallic mineral products, basic metal and fabricated metal products moderated from 7.1% YoY to 4.5% YoY in September 2017. As a results, production of domestic-oriented industries (18.5% of total IPI) increased by 6.6% YoY in September 2017 (August 2017: +7.6% YoY). In the meantime, mining output (28.9% of total IPI) rose by only 2.1% YoY during the month, lesser than 5.3% YoY gain registered previously due to weak natural gas output. On the other hand, production of crude oil turned positive to register 0.7% YoY gain, as compared with 1.7% YoY decrease previously. On a seasonally adjusted terms, output for the mining sector increased by 0.7% compared to August 2017. In the same vein, the electricity output (5.2% of total IPI) also slowed to 2.2% YoY in September 2017 as compared with 3.0% YoY gain observed in the previous month. On a seasonally adjusted terms, electricity output dropped by 2.2% as compared to the previous month. Page 1 of 3
14. 10-Nov-17 In tandem with slower manufacturing output , the sales value of the manufacturing sector grew by 10.6% YoY to RM65.4bn in September 2017. In August 2017, the sales value came in at RM65.1bn, which was a 16.5% YoY increase. There had been hiring in the manufacturing sub-division, which employment rose by 2.5% YoY. Cumulatively, sales value increased by 16.2% YoY to RM565.6bn in January to September period (9M17). The cumulative IPI index for 9M17 increased by 4.8% YoY. That matched 2017 full year IPI forecast as per Economic Report 2017/2018. The increase was due to: (1) Manufacturing improvement of 6.3% YoY; (2) Mining sector rose by 1.0% YoY; and (3) increase of 2.1% YoY in Electricity. Despite the weak September’s IPI result, we still opine that 3Q17 GDP growth to remain resilient. Indeed, it won’t be a surprise should the result turned out to be stronger than our forecast of 5.4% YoY premised on the favourable 3Q17 trade and production data. Manufacturing production in July – September 2017 improved further to 7.1% YoY from 6.2% YoY average growth in April – June 2017 period. The government is scheduled to release third quarter's GDP result on 17th November 2017. The economy rose by 5.7% YoY in 1H17, reflecting the resilient domestic and external demand. Figure 1: Statistical Summary of Malaysia’s Industrial Production (2010=100) IPI Mining Electricity Manufacturing Manufacturing Sales Value 2016 3.8% 1.6% 8.5% 4.3% 1.3% Apr-17 4.2% -2.0% -1.5% 6.7% 15.6% May-17 4.6% -2.3% 2.5% 7.3% 19.5% Jun-17 4.0% 2.4% 2.1% 4.7% 11.5% Jul-17 6.1% 0.2% 7.9% 8.0% 22.2% Aug-17 6.8% 5.3% 3.0% 7.6% 16.5% Sep-17 4.7% 2.1% 2.2% 5.7% 10.6% 9M17 4.8% 1.0% 2.1% 6.3% 15.0% Source: DOS, TA Securities Malaysia: Industrial Production Figure 2: Overall IPI (2014-September 2017) Figure 3: IPI by Sector (2014-September 2017) YoY % YoY % 10.0% Mining Production Electricity Production Manufacturing Production 20% 9.0% 15% 8.0% 7.0% 10% 6.0% 5.0% 5% 4.0% 0% 3.0% 2.0% -5% 1.0% -10% Sep-17 Oct-16 Nov-15 Dec-14 -15% Jan-14 Sep-17 Oct-16 Nov-15 Dec-14 Jan-14 0.0% Overall Production Source: DOS, TA Securities Source: DOS, TA Securities Page 2 of 3
15. 10-Nov-17 Figure 4 : Manufacturing Sales vs. Output (2014-September 2017) % YoY Manufacturing Sales Figure 5: Manufacturing: IPI vs. GDP (2012-2017e) YoY % Manufacturing Output 8.0 25.0 7.0 20.0 6.0 15.0 5.0 4.0 10.0 3.0 5.0 2.0 0.0 1.0 0.0 -5.0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17e 4Q17e -1.0 Source: DOS, TA Securities Sep-17 Oct-16 Nov-15 Dec-14 Jan-14 -10.0 GDP Growth GDP Manufacturing IPI Manufacturing Source: DOS, TA Securities 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 3 of 3
16. ECONOMIC UPDATE Friday , November 10, 2017 FBMKLCI: 1,746.81 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Malaysian Economy Wrapping Up 2017 at 3.00% Shazma Juliana Abu Bakar Farid Burhanuddin Tel: +603-2167 9608 Tel: +603-2167 9220 shazma@ta.com.my farid@ta.com.my www.taonline.com.my The Decision • As widely expected, Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 3.00%. The meeting marked the last monetary policy meeting scheduled for this year. The decision was within expectation due to resilient growth recorded in the 1H17 as well as considerable YTD inflation rate. There was also no change in the Statutory Reserve Requirement (SRR) – remaining at 3.50%. Bank Negara cited that the current stance of monetary policy remains accommodative. Figure 1: OPR vs. SRR (2005 - 2017) Source: BNM, TA Securities The Statement • According to the accompanied statement, the global economy continues to strengthen and growth has become more entrenched and synchronised across regions. In the meantime, global trade has picked up significantly as per highlighted in most global economic outlook report. In Asia, growth is driven by sustained domestic activity and strong external demand. Financial markets have also been relatively calm in the recent period. For 2018, the global economy is projected to experience sustained growth. While there are risks arising from geopolitical and policy developments in major economies, economic prospects are expected to remain healthy. • Domestically, growth prospects will be sustained by the more positive global growth outlook and stronger spillovers from the external sector to the domestic economy. Going forward, domestic demand will remain the key driver of growth, supported by improving incomes and overall labour market conditions. Maintain our 2017 and 2018 GDP growth forecast at 5.5% and 5.4%, respectively, underpinned by both domestic and external demand. • In terms of inflation, domestic inflation has been driven mostly by movements in global oil prices. To recap, headline inflation increased by 4.3% YoY in September 2017 (YTD 2017: 4.0% YoY) on the back of higher food and transportation prices. For 2017 as a whole, policy makers view that the headline inflation is expected to be at the upper end Page 1 of 2
17. 10-Nov-17 of the forecast range (3.0% YoY to 4.0% YoY) before moderating to below 3.5% YoY in 2018. Rate Hike is Expected in 2018 • The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation. There will be heightened risks from inflationary pressures on the back of volatility of global crude oil which could lead build-up in domestic inflationary pressure as well as to stimulant effects from the expansionary fiscal policy. More importantly, a shift towards monetary tightening could minimize the capital outflows. As such, we opine that there is room for Bank Negara Malaysia to increase the OPR, if they needed to, by a small quantum of 25bps to 3.25% next year. • Expectations for a rate hike may build up should economic growth continues to surprise on the upside, rising inflation expectations and continuous negative rate of return (now for the nine consecutive month). Figure 2: OPR vs. Headline & Core-CPI Source: DOS, TA Securities • The meeting also approved the schedule of MPC meetings for 2018 as shown below. Figure 2: Schedule of Monetary Policy Committee Meetings for 2018 No MPC Meeting 1 24 and 25 January 2018 2 3 4 5 6 Source: BNM, TA Securities 6 and 7 March 2018 9 and 10 May 2018 10 and 11 July 2018 4 and 5 September 2018 7 and 8 November 2018 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 2
18. COMPANY UPDATE Friday , November 10, 2017 FBMKLCI: 1,746.81 Sector: Technology THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Malaysian Pacific Industries Berhad TP: RM15.00 (+8.7%) Last Traded: RM13.80 Undergoing Portfolio Transformation Paul Yap, CFA Tel: +603-2167 9603 HOLD paulyap@ta.com.my We attended MPI’s 1QFY18 results briefing. 1QFY18 earnings came below expectations, as margins were impacted by higher commodity prices and a stronger ringgit. Although wafer constraint issues persisted into the 1QFY18, the situation appears to have subsided into the 2QFY18, which should lead to improved results. As part of its portfolio transformation strategy, legacy products with low single digit margins will be weeded out. Focus will be on sustainable growth, as priorities are redirected to areas of strengths such as automotive, sensors and copper clips. Cutting our margins on the back of higher commodity prices, we lower our FY18-20 earnings by 3.7-4.2%. We downgrade our recommendation for MPI to HOLD with a lower TP of RM15.00/share. 1QFY18 Review Profits for the 1QFY18 came below expectations, with lower margins a result of higher commodity prices and a stronger ringgit. Wafer constraint issues persisted in the existing quarter, with USD revenues growing at a marginal 1.1% QoQ vs. Unisem’s 6.3% QoQ. While there are opportunities to accelerate revenue growth, this will not be done at the expense of profitability, with management prioritising a sustainable growth approach. As it stands, wafer constraint issues have subsided into the 2QFY18, which should lead to better results. Revenue growth targets of 5.5-7.5% YoY for FY18 remain intact, unless there is a further deterioration of the wafer situation. Portfolio Transformation During the briefing, the group announced that it was currently undergoing a portfolio transformation strategy. Legacy products with low single digit margins will be weeded out. In cases where permissible, ASPs for these low margin products will be renegotiated upwards instead. For the existing financial year, the size of the portfolio to be weeded out was guided at double digit figures, in USD absolute terms. Efforts are already in place, evident by a 6.5% QoQ decline in consumer/communications revenues. Rather than competing on pricing alone, priorities will be diverted to areas of strengths such as automotive, sensors and copper clips. In the consumer segment, more attention will be placed on sensors, such as gyroscopes and proximity sensors for mobile phones. With a medium term goal of achieving fully automated factories, investments will also be made in “hands free” lines, with a pilot line expected to be ready in 2018. With the above efforts in place, we believe this will help translate into sustainable margin expansion in the future. www.taonline.com.my Share Information Bloomberg Code MPI MK Stock Code 3867 Listing Main Market Share Cap (mn) 198.9 Market Cap (RMmn) 2,744.8 52-wk Hi/Lo (RM) 14.52/7.20 12-mth Avg Daily Vol ('000 shrs) 271.0 Estimated Free Float (%) 35.6 Beta 0.16 Major Shareholders (%) Hong Leong Co Malaysia Bhd - 52.5 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 (4.2) (3.9) 209.9 241.0 192.0 204.9 109.3 117.7 Buy (Downgraded) Financial Indicators Net gearing (x) CFPS (sen) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth FY18 Net cash 234.7 5.9 12.3 17.6 6.0 2.3 FY19 Net cash 224.4 6.2 12.7 17.9 6.8 2.0 MPI (1.8) 4.5 7.5 75.1 FBM KLCI (0.8) (1.7) (1.1) 5.7 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg External Woes Negatives, however, come in the form of external fluctuations. Two factors contributing to the lower margins during the quarter were higher commodity Page 1 of 4
19. 10-Nov-17 prices and a stronger ringgit . Over the last two quarters, there has been a significant increase in commodity metal prices such as copper (+26%), gold (+5%), silver (+7%), nickel (+30%), palladium (+21%) and aluminium (+15%). Apart from gold, margins have suffered due to the inability to pass on the cost increases. Varying by package, we understand material cost makes up ~70-80% of total cost. Separately, the average USD/MYR rate decreased 1.6% QoQ to RM4.26 in 1QFY18. We see little upside to existing rates, as we forecast a USD/MYR rate of RM4.30 for 2018. We estimate every 1% increase/decrease in the USD/MYR rate increases/decreases our earnings by 3.6%. Cut Margins Adjusting our numbers for higher commodity prices, we cut our margins by ~1pp and reduce our FY18/FY19/FY20 earnings by 4.2%/3.9%/3.7% to RM209.9mn/RM241.0mn/RM276.9mn. Valuation We lower our TP for MPI to RM15.00/share (from RM15.40/share) – based on an unchanged EV/EBITDA multiple of 6.0x and CY18 EBITDA. While we remain positive on ambitions to grow automotive revenues, we believe this has been largely reflected in the existing share price. The stock has risen 75.1% from a year ago. We also see increased external challenges from higher commodity prices, which may continue to impact margins. We downgrade our recommendation on the stock to HOLD, Figure 1 : USD Revenue Figure 2 : Revenue Mix – Carsem and Dynacraft all % US$mn 100.0 94.0 92.0 91.0 90.0 89.0 92.0 92.0 Dynacraft 94.0 93.0 94.0 94.0 94.0 90.0 92.0 90.0 Carsem 95.0 80.0 70.0 89.0 60.0 88.0 88.0 50.0 86.0 40.0 86.0 84.0 30.0 84.0 20.0 82.0 10.0 80.0 0.0 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 4QFY18 5.0 8.0 8.0 7.0 6.0 6.0 6.0 6.0 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 4QFY18 Source: Company, TA Securities Source: Company, TA Securities Figure 3 : 1QFY17 Revenue Mix – End Segment Figure 4 : 1QFY18 Revenue Mix – End Segment all PC/Notebook, 10 PC/Notebook, 11 Other, 1 Other, 3 Automotive, 24 Consumer/ Communications , 39 Automotive, 28 Industrial, 24 Industrial, 23 Source: Company, TA Securities Consumer/ Communications , 37 Source: Company, TA Securities Page 2 of 4
20. 10-Nov-17 P &L FYE Jun 30 (RMmn) Revenue EBITDA Depreciation & amortisation EBIT Net finance costs Share of associates EI PBT Taxation MI Net profit Core net profit EPS (sen) DPS (sen) Ratios FYE Jun 30 (RMmn) Valuations PER (x) EV/EBITDA (x) Dividend yield (%) PBV (x) Profitability ratios (%) ROAE ROAA EBITDA margin PBT margin FY16 FY17 FY18F FY19F FY19F 1,463.3 1,544.5 1,648.2 1,746.6 1,864.6 420.2 444.6 499.6 540.1 588.6 (209.4) (193.0) (182.8) (179.7) (177.4) 210.8 251.6 316.7 360.3 411.3 (1.1) (0.6) 11.3 16.3 21.4 0.0 0.0 0.0 0.0 0.0 (13.3) 0.0 0.0 0.0 0.0 196.4 251.0 328.0 376.6 432.7 0.4 (32.2) (65.6) (75.3) (86.5) (39.3) (40.8) (52.5) (60.3) (69.2) 157.5 177.9 209.9 241.0 276.9 170.8 177.9 209.9 241.0 276.9 81.4 84.8 100.0 114.8 131.9 23.0 27.0 32.0 32.0 32.0 FY16 FY17 FY18F FY19F FY19F 17.0 5.8 1.7 3.0 16.3 5.4 2.0 2.6 13.8 4.8 2.3 2.3 12.0 4.5 2.3 2.0 10.5 4.1 2.3 1.8 18.6 12.4 28.7 13.4 16.9 11.9 28.8 16.2 17.6 12.3 30.3 19.9 17.9 12.7 30.9 21.6 18.0 12.9 31.6 23.2 Balance Sheet FYE Jun 30 (RMmn) Fixed assets Associates + Subsidiaries Goodwill Others LT assets FY16 753.4 0.0 0.0 0.0 753.4 FY17 FY18F FY19F FY19F 703.7 690.9 681.2 673.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 703.7 690.9 681.2 673.8 Inventories Trade receivables Cash Others Current assets 87.7 212.4 317.3 0.0 617.4 110.8 109.9 116.4 124.3 275.8 253.6 268.7 286.9 535.8 731.5 933.0 1,207.2 4.5 4.5 4.5 4.5 926.9 1,099.4 1,322.7 1,622.9 Total assets Trade payables ST borrowings Others Current liabilities LT borrowings Others LT liabilities Share capital Reserves Shareholders' funds MI Total liabilities and equity Liquidity ratios (x) Current ratio Quick ratio 3.1 2.7 3.4 3.0 4.2 3.8 5.4 5.0 6.3 5.8 Leverage ratios (x) Total liabilities/equity Net debt/equity Int. coverage ratio 0.2 (0.2) 188.7 0.2 (0.3) 390.7 0.2 (0.5) (28.1) 0.1 (0.5) (22.1) 0.1 (0.6) (19.2) Growth ratios (%) Sales Pretax Earnings Total assets 5.3 28.4 57.5 (1.1) 5.6 27.8 4.2 19.0 6.7 30.7 18.0 9.8 6.0 14.8 14.8 11.9 6.8 14.9 14.9 14.6 Cash Flow FYE Jun 30 (RMmn) PBT Depreciation and amortisation Net finance cost Other non-cash Changes in WC Tax paid Net finance cost Others Operational cash flow 1,370.8 1,630.6 1,790.4 2,003.9 2,296.7 160.6 33.3 2.9 196.8 205.5 63.5 2.0 270.9 229.7 29.0 2.0 260.7 241.3 0.0 2.0 243.3 255.2 0.0 2.0 257.2 0.0 3.9 3.9 28.6 2.2 30.8 3.2 2.2 5.5 0.0 2.2 2.2 0.0 2.2 2.2 104.9 352.4 352.4 352.4 352.4 874.7 767.6 910.4 1,084.3 1,294.0 979.6 1,120.0 1,262.8 1,436.6 1,646.4 190.5 209.0 261.4 321.7 390.9 1,370.8 1,630.6 1,790.4 2,003.9 2,296.7 FY16 196.4 209.4 1.1 14.3 32.3 (38.1) (1.1) 4.4 418.7 FY17 FY18F FY19F FY19F 251.0 328.0 376.6 432.7 193.0 182.8 179.7 177.4 0.6 (11.3) (16.3) (21.4) 12.8 0.0 0.0 0.0 (60.0) 47.4 (10.1) (12.1) (39.0) (65.6) (75.3) (86.5) (0.6) 11.3 16.3 21.4 9.2 0.0 0.0 0.0 367.0 492.6 470.9 511.4 Capex Others Investing cash flow (125.1) 0.6 (124.5) (129.0) 2.2 (126.8) (170.0) 0.0 (170.0) (170.0) 0.0 (170.0) (170.0) 0.0 (170.0) Net share issue Dividend paid Net change in debts Others Financial cash flow 0.0 (64.7) (59.7) (4.5) (128.9) 0.0 (72.1) 56.7 (9.2) (24.7) 0.0 (67.2) (59.8) 0.0 (127.0) 0.0 (67.2) (32.2) (0.0) (99.4) 0.0 (67.2) 0.0 0.0 (67.2) 165.3 152.0 0.0 317.3 215.6 317.3 2.9 535.8 195.7 535.8 0.0 731.5 Net cash flow Opening cash flow Forex Closing cash flow 201.5 274.2 731.5 933.0 0.0 0.0 933.0 1,207.2 Page 3 of 4