Bursa Malaysia Daily Market Report - 15 May

Transcription

1. Monday , 15 May, 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. 3. Gaming Sector: Repeat Your Bets Malaysian Economy: BNM Stands Pat; Sticking to Growth Mandate Star Media Group Berhad: Disposing Stake in Cityneon 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) 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, 15 May 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (12.05.2017) (mil) Main Market 1,592.5 Warrants 265.5 ACE Market 842.5 Bond 3.6 ETF 0.0 Total 2,704.1 Off Market 101.8 Volume +/-chg (RMmn) -668.9 2,015.0 -14.9 34.4 -155.8 125.8 -9.0 0.2 -0.02 0.0 2,175.6 23.9 208.5 Value +/-chg -1275.8 -4.5 -21.3 -1.0 -0.03 -88.1 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP May 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 SGB GOCEAN MAYBANK HUBLINE SPSETIA KANGER FSBM VERSATL WTHORSE BJASSET Up Down 295 373 61 96 63 44 3 1 2 2 424 516 % chg % YTD chg 1,775.87 12,718.10 17,681.41 1,771.50 0.48 -0.79 6.15 -4.50 0.03 -0.01 0.03 -0.25 8.17 10.91 20.15 8.32 20,896.61 6,121.23 7,435.39 19,883.90 2,286.02 25,156.34 3,255.29 1,543.94 5,675.22 3,083.51 1,820.20 5,836.90 -22.81 5.27 48.76 -77.65 -10.35 30.79 -15.82 -6.33 22.21 22.01 1.05 -41.44 -0.11 0.09 0.66 -0.39 -0.45 0.12 -0.48 -0.41 0.39 0.72 0.06 -0.70 5.74 13.71 4.10 4.03 12.81 14.34 13.00 0.06 7.15 -0.65 -7.56 3.02 Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) 33.7 20.2 14.7 10.0 9.5 5.0 2.4 2.3 1.5 1.0 Value/ Volume 1.27 0.13 0.15 0.07 1.22 0.80 2.05 @ @ @ @ @ @ @ @ @ @ (RM) 0.65 0.13 9.36 0.07 3.67 0.23 0.21 1.30 2.02 1.10 Exchange Rate USD/MYR 4.3445 -0.0031 USD/JPY 113.78 -0.2700 EUR/USD 1.088 0.0006 Counter Mkt Cap. (RM’mn) MAYBANK 96,114 PBBANK 77,153 CIMB 53,860 MAXIS 49,344 AXIATA 47,831 DIGI 39,653 GENTING 36,909 MISC 33,389 IOICORP 29,157 KLK 26,539 Chg (RM) 0.07 0.02 0.04 0.01 0.02 0.02 0.16 0.06 0.02 0.06 Vol. (mn) 12.68 1.63 19.91 2.56 4.08 2.02 3.82 3.06 3.86 0.55 Commodities Futures Palm Oil (RM/mt) 2,582.00 -20.00 Crude Oil ($/Barrel) 47.82 0.00 Gold ($/tr.oz.) 1,227.80 2.80 Review & Outlook The return of bullish signals on most momentum and trend indicators on the FBM KLCI that we track following last week's rebound suggests that the present profit-taking consolidation had run its course, thus paving the way for uptrend resumption. Trading momentum should stay robust, especially on lower liners or small cap construction and technology related counters on hopes for China plays. Immediate upside hurdles for the benchmark stays at 1,782, the 76.4%FR of the 1,867 to 1,503 downswing closely matching the recent two-year high of 1,784, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Immediate uptrend supports stays at the rising 30 and 50day moving average levels, currently at 1,753 and 1,745, with better support from the lower Bollinger band at 1,728. Strategy-wise, investors should look to accumulate blue chips such as Axiata, Genting Malaysia, Sime Darby and Tenaga for longer-term upside, while bargain construction related stocks like Gadang, Kim Lun, Mudajaya and Sunway Construction given the positive outlook on the sector. • • • • • • • • • • • • • • Important Dates SAMCHEM - 1:1 Bonus Issue - BI of 136.0m shares. LISTING ON: 15/05/2017. L&G - 8:5 Rights Issue - RI of up to 1,914.1m shares. 8 rights shares for every 5 existing share held, at an issue price of RM0.21 per rights share. LISTING ON: 18/05/2017. 3A - 1:4 Bonus Issue - BI of 98.4m shares. Ex-Date: 23/05/2017. Entitlement Date: 25/05/2017. LISTING ON: 26/05/2017. • • • News Bites At its May's meeting, the Monetary Policy Committee of Bank Negara Malaysia decided to maintain the Overnight Policy Rate at 3.00%. The Malaysia Competition Commission is proposing to renew the block exemption order for the vessel sharing agreements and voluntary discussion agreements in respect of liner shipping services for another two years. Malaysia Digital Economy Corporation has signed a three-way memorandum of understanding with Hangzhou Municipal Government and Alibaba Company Ltd to facilitate cross-border trade among small and medium-sized enterprises under the Electronic World Trade Platform. Tenaga Nasional Bhd has completed the acquisition of a 50% interest in one of Britain's largest portfolios of operating solar power assets with a combined net installed capacity of 365 MW. Genting Singapore Plc's 1QFY17 earnings surged five-fold to S$210.2mn from S$40.2mn a year ago, on the back of the group's disposal of its 50% interest in an integrated resort in Jeju, Korea that reaped a gain on disposal of S$96.3mn. RHB Bank Bhd had fully redeemed its existing USD500.0mn senior unsecured notes issued pursuant to its Euro Medium Term Note Programme. AirAsia Bhd has signed a memorandum of understanding with China Everbright Group and Henan Government Working Group to establish a low-cost carrier in China. The merger and acquisition talks between Malaysia Building Society Bhd and Asian Finance Bank Bhd are on track with the only concern being valuation. Bursa Malaysia Bhd has signed a memorandum of understanding with the Shanghai Stock Exchange to explore potential ways for the two exchanges to improve their visibility and accessibility to market participants in Malaysia and China. According to a person with knowledge of the matter, DRB-Hicom Bhd, the owner of Malaysian automaker Proton Holdings Bhd plans to hold a board meeting this week to discuss a sale of a stake in the unprofitable business. Star Media Group Bhd has decided to dispose its entire 52.5% equity interest in Cityneon Holdings Ltd to Lucrum 1 Investment for a cash consideration of SGD115.6mn. Dayang Enterprise Holdings Bhd has proposed to divest 37.5% of its 98.0% stake in Perdana Petroleum Bhd by way of dividend-in-specie to the group's shareholders. Titijaya Land Bhd has formalized a collaboration with CREC Development (M) Sdn Bhd for a RM575mn property development project known as The Shore in Kota Kinabalu. KNM Group Bhd has secured a THB1,273mn contract from Impress Ethanol Co. Ltd to undertake the EPCC works for the 300,000 liters per day Impress Ethanol Plant expansion project located at Chachaengsao Province, Thailand. Borneo Oil Bhd's bonus issue of up to 2.1bn new shares as well as 528.1mn warrants will be credited on 26 May 2017. CME Group Bhd is teaming up with China-based bus manufacturer Shanghai Shenlong Bus Co Ltd to venture into the Malaysian market for the supply of buses and other vehicles. The Trump administration has agreed with Beijing on a broad range of measures aimed at improving the access of American beef producers, electronic-payments providers and natural-gas exporters, among others, to China. 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 , May 15, 2017 FBMKLCI: 1,775.87 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 FBMKLCI to Sustain Positive Momentum The local stock market proved resilient last week, with the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) bouncing back led by banks on hopes for higher dividends after Bank Negara removed reserve fund requirements. On the foreign front, the election victory of euro friendly French president Macron and oil price and ringgit strength helped improve sentiment as weekly US oil supplies fell and Saudi exports to Asia declined, but profit-taking interest resumed on the weaker earnings from US retailers which increased fears over the sustainability of US economic growth. Week-on-week, the FBM KLCI rose 13.13 points, or 0.7 percent to 1,775.87, helped by gains on BAT (+RM1.27), PPB Group (+25sen), KLK (+22sen), and financial institutions Hong Leong Bank (+20sen), HLFG (+16sen) and CIMB (+14sen). Average daily traded volume moderated to 3.37 billion shares, while value eased to RM2.7 billion, compared with the 3.7 billion shares and RM2.98 billion average respectively the previous week, as buying momentum continued to concentrate on the small cap and ACE Market sector. As widely expected, Bank Negara Malaysia maintained its Overnight Policy Rate at 3% in last Friday’s meeting, saying it is accommodative and supportive of economic activities. It is not surprising as the inflationary pressures that we have witnessed in recent months were not demand-pull and driven by increase in input prices, which was largely driven by a reversal in crude oil prices. However, continued recovery in the domestic economy, tightening bias to US monetary policy and the corresponding weakness in ringgit against US dollar, sustained rebound in crude oil prices (especially if OPEC agrees to deepen its production cuts in the upcoming May 25 meeting) and a prolonged negative real interest rate (as it would dampen the process of saving and affect investment) could undermine its policy stance in the second half of this year. Malaysia will announce its 1Q17 GDP growth figure this Friday. Actual growth is expected to fall much within consensus forecast of 4.6% year-on-year (YoY), after expanding 4.5% YoY in the final quarter of 2016, as the central bank has provided a clue in its last Friday’s monetary policy statement by saying the growth momentum since the second half of 2016 is expected to strengthen in the first quarter of 2017, and to be sustained for the rest of the year. This is highly possible supported by greater domestic activities and better trade. Manufactured exports are expected to strengthen given the broad-based expansion in both E&E and non-E&E products. E&E exports will be bolstered by a recovery in demand for semiconductors, particularly in new segments such as the automotive, industrial and storage markets, in addition to the steady demand for telecommunication devices. This was reflective in the recent Industrial Production data that showed overall production increased 4.3% YoY in 1Q17 after posting growth of 5.0% YoY the prior quarter and 2.8% in the 1Q16. Manufacturing sectors had been improving and was trending in tandem with the exports growth momentum during the same period. Page 1 of 8
4. TA Securities 15-May-17 A Member of the TA Group The equity market could react positively to this anticipation of better 1Q17 GDP , supported further by the prime minister Datuk Seri Najib Tun Razak’s statement last weekend that a new deal on Bandar Malaysia will be announced soon, which will have great content, with cultural values and tremendous entertainment attractions. His assertion that China had assured Malaysia that it would continue to encourage financially strong and credible companies to invest in the country will definitely negate worries about China’s retaliation post cancellation of Bandar Malaysia deal to IWH CREC Sdn Bhd. The owner of Dalian Wanda Group has added more colour to it by expressing his desire to participate in the Bandar Malaysia development with much greater investment of USD10 billion. As this mammoth project is likely to involve other equity partners based on PM’s statement, we cannot brush aside the involvement of government-linked funds, large corporate entities and a state government (Johor may get another chance). Thus, construction and building material related stocks could be back in the limelight this week and the benchmark FMKLCI could see new high for the year. Nonetheless, we only have Gadang (TP:RM1.62) as a Buy in the sector as share prices of most other stocks have ran ahead of its fundamental. We remain our Neutral call on the sector and will review the call upon the release of more concrete details and award of the impending multibillion infrastructure projects. Page 2 of 8
5. TA Securities 15-May-17 A Member of the TA Group News In Brief Corporate The Malaysia Competition Commission is proposing to renew the block exemption order for the vessel sharing agreements and voluntary discussion agreements in respect of liner shipping services for another two years . (Bernama) Malaysia Digital Economy Corporation has signed a three-way memorandum of understanding with Hangzhou Municipal Government and Alibaba Company Ltd to facilitate cross-border trade among small and medium-sized enterprises under the Electronic World Trade Platform. (The Star) Sarawak shipping companies, already facing prolonged depressed freight rates, are in for tougher times with the scrapping of the cabotage policy. The policy change means that foreign cargo ships will be allowed to call directly at ports in Sarawak, Sabah and Labuan, and to transport cargo from Peninsular Malaysia to the East Malaysian states and Labuan. (The Star) Tenaga Nasional Bhd has completed the acquisition of a 50% interest in one of Britain’s largest portfolios of operating solar power assets with a combined net installed capacity of 365 MW. The acquisition was through Vortex Solar UK Ltd which is an indirect wholly owned subsidiary of a TNB joint venture, Vortex Solar Investments S.a.r.l. (Vortex), which acquired a 100% interest in the portfolio. TNB has a 50% shareholding in Vortex with Beaufort Investments S.a.r.l. which holds the balance of 50%. (Bursa Malaysia) Genting Singapore Plc’s 1QFY17 earnings surged five-fold to S$210.2mn from S$40.2mn a year ago. The robust growth was on the back of the group’s disposal of its 50% interest in an integrated resort in Jeju, Korea that reaped a gain on disposal of S$96.3mn. (The Edge) RHB Bank Bhd had fully redeemed its existing USD500.0mn senior unsecured notes issued pursuant to its Euro Medium Term Note Programme. (Bursa Malaysia) AirAsia Bhd has signed a memorandum of understanding (MoU) with China Everbright Group and Henan Government Working Group to establish a low-cost carrier in China. The MoU outlines how the parties will incorporate a joint-venture to be known as AirAsia (China) for the purposes of operating a low-cost aviation business based in Zhengzhou, the capital of Henan province in central China. (The Edge) Comment: Considering the huge population in China, we are positive on AirAsia’s venture into the China aviation industry, only if the MOU can turn out to be an official agreement later on. At this juncture, the information pertaining to AirAsia China is scarce in terms of shareholding structure, aviation base, and domestic or international operations. As such, we maintain our target price of RM3.02 for AirAsia. Maintain Sell. The merger and acquisition talks between Malaysia Building Society Bhd (MBSB) and Asian Finance Bank Bhd are on track with the only concern being valuation. MBSB president and chief executive officer Datuk Ahmad Zaini Othman alluded that the non-bank lender was in the midst of formulating reports and negotiating the valuations for the merger. (The Star) Bursa Malaysia Bhd has signed a memorandum of understanding with the Shanghai Stock Exchange to explore potential ways for the two exchanges to improve their visibility and accessibility to market participants in Malaysia and China. (The Edge) According to a person with knowledge of the matter, DRB-Hicom Bhd, the owner of Malaysian automaker Proton Holdings Bhd plans to hold a board meeting this week to discuss a sale of a stake in the unprofitable business. (The Star) Page 3 of 8
6. TA Securities 15-May-17 A Member of the TA Group Star Media Group Bhd has proposed to dispose its entire 52 .5% equity interest in Cityneon Holdings Ltd (Cityneon) to Lucrum 1 Investment for a cash consideration of SGD115.6mn (RM360.2mn). The proposed disposal allows the group to unlock its investment in Cityneon at a PBR of 3.2x as well as to concentrate on the expansion of its primary business activities. (Bursa Malaysia) Dayang Enterprise Holdings Bhd (Dayang) has proposed to divest 37.5% of its 98.0% stake in Perdana Petroleum Bhd (Perdana) by way of dividend-in-specie to the group’s shareholders. The proposed dividend-in-specie is undertaken to improve the public shareholding spread of Perdana as well as to reward the shareholders of Dayang for their continuous support and to provide them with an opportunity to invest directly in Perdana at no cost. (Bursa Malaysia) GHL Systems Bhd announced that Actis Stark (Mauritius) Ltd together with persons acting in concert with it only managed to raise their stake in the group from 63.31% to 63.51% via an unconditional mandatory takeover exercise. The 0.2% stake comprising 1.3mn shares was acquired at the offer price of RM1.00 per share. (Bursa Malaysia) Property developer Titijaya Land Bhd has formalized a collaboration with CREC Development (M) Sdn Bhd for a RM575mn property development project known as The Shore in Kota Kinabalu. Both parties signed a memorandum of understanding in Beijing, China. (The Star) KNM Group Bhd has secured a THB1,273mn (RM159mn) contract from Impress Ethanol Co. Ltd to undertake the engineering, procurement, construction, and commissioning works for the 300,000 liters per day Impress Ethanol Plant expansion project located at Chachaengsao Province, Thailand. (Bursa Malaysia) Borneo Oil Bhd’s bonus issue of up to 2.1bn new shares as well as 528.1mn warrants will be credited on 26 May 2017. The group had resolved to fix the exercise price of the warrants at RM0.07 per warrant, representing a discount of approximately 41.3% to the theoretical ex-bonus price after the share and warrant bonus issues of RM0.1192, based on the 5-day weighted average market price of the group’s shares up to and including 11 May 2017. (Bursa Malaysia) Oriental Interest Bhd’s 3QFY17 revenue increased by 6.0% YoY to RM57.3mn but PBT fell 63.8% YoY to RM6.0mn. The poor bottom line performance was mainly due to the property division’s lower average contribution margin for housing projects. (Bursa Malaysia) Lebtech Bhd was awarded two construction contracts from Basco Sdn Bhd amounting to RM108.0mn. The first is for the construction of a 14-storey office block measuring 1.3 acres at Jalan Hospital, Perak with an estimated value of RM60.0mn. The second is for the construction of a 10-storey office block measuring 1.0 acre at Jalan Stadium Perak, Perak with an estimated value of RM48.0mn. (Bursa Malaysia) Y&G Corporation Bhd’s 1QFY17 revenue increased by 9.8% YoY to RM23.4mn. Earnings however declined by 61.8% YoY to RM1.0mn primarily due to the lower development profit margin for certain on-going projects and higher operating expenses from completed projects. (Bursa Malaysia) Ancom Bhd is teaming up with two Indonesian companies (PT. Alternatif Media Group and PT. Avabanindo Perkasa) and a Thai firm (VGI Global Media Public Company Ltd) to secure the tender of consulting services and the provision of advertising media for the Mass Rapid Transit infrastructure project in Jakarta. (Bursa Malaysia) Page 4 of 8
7. TA Securities 15-May-17 A Member of the TA Group Ire-Tex Corporation Bhd announced that the group had made a police report in respect of a claim of RM25 ,000 made by Kong Hon Kay, requesting that the police investigate the unauthorized withdrawal of funds from the group. Concurrently, the group’s subsidiary, Ire-Tex Malaysia Sdn Bhd, had also made a police report pertaining to cumulative payments of around RM1.8mn to OGL Asia Resources approved by Kong Hon Kay and Christopher Purcell. (Bursa Malaysia) CME Group Bhd is teaming up with China-based bus manufacturer Shanghai Shenlong Bus Co Ltd to venture into the Malaysian market for the supply of buses and other vehicles. (The Edge) Page 5 of 8
8. TA Securities 15-May-17 A Member of the TA Group News In Brief Economy Asia BNM : OPR Maintain at 3.00% At its May’s meeting, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00%. The global economy continues to expand. Industrial activity and global trade have picked up. Growth is also becoming more synchronised across the advanced and emerging economies. Indicators suggest that the outlook for the global economy will continue to improve. In the advanced economies, the revival in investment is expected to provide additional impetus to economic activity. In the emerging economies, growth is projected to be supported by sustained domestic activity and stronger external demand. Nevertheless, there remain risks to global growth arising from threats such as protectionism, geopolitical developments, and commodity price volatility. These risks could also reignite financial market volatility. For Malaysia, the growth momentum since the second half of 2016 is expected to strengthen in the first quarter of 2017, and to be sustained for the rest of the year. Growth will be mainly driven by domestic demand amid continued wage and employment growth, and the implementation of new and on-going investment projects. On the external front, given the improvement in global growth, exports are expected to perform more strongly and contribute positively to Malaysia’s economic performance. (Bank Negara Malaysia) Singapore Retail Sales Rise More than Expected in March Singapore's retail sales increased at a faster-than-expected pace in March, figures from the Department of Statistics revealed. Retail sales rose 2.1% year-over-year in March, reversing a 2.6% decline in February. Economists had expected only a 0.3% gain for the month. Sales at petrol service stations surged 11.3% annually in March and sales of watches and jewellery climbed by 7.8%. Sales of motor vehicles grew 6.9% in March from last year. Excluding the same, total sales went up by 0.7%. On a monthly basis, retail sales dropped a seasonally adjusted 0.3% from February, when it rose by 2.5%. It was forecast to decrease by 1.2%. (RTT News) United States. U.S. Consumer Prices Rose Modestly in April Moderating price increases show inflationary pressures are stabilizing this spring after a month long acceleration. The consumer-price index, which measures what Americans pay for everything from radishes to rent, advanced a seasonally adjusted 0.2% in April from the prior month, the Labor Department said. Excluding the often volatile categories of food and energy, so-called core prices rose just 0.1% from March. The annual increase in consumer prices slowed for the second straight month, with prices rising 2.2% in April from a year earlier. February’s 2.8% annual increase was the largest in five years. Prices excluding food and energy were up 1.9% on the year. It was the first time the annual gain in core prices had been below 2% since October 2015. Overall prices had declined 0.3% on the month in March, and advanced 0.1% in February. The March decline was partly due to an unusual decrease in the cost for mobile-phone services and a fall in seasonally adjusted gasoline prices. In April, gasoline prices increased 1.2% from March, and were up 14.3% from a year earlier. Food prices rose 0.2% last month, and were up 0.5% from a year earlier. Shelter costs—which account for about a third of the overall price index—increased 0.3% on the month and rose 3.5% on the year in April. Prices for cars, apparel and prescription drugs all fell last month. (The Wall Street Journal) U.S. Retail Sales Rose 0.4% in April Better consumer spending and confidence add to a growing body of evidence that U.S. economic growth is picking up this spring following another weak winter. Sales at U.S. stores, restaurants and online retailers increased a seasonally adjusted 0.4% in April from the prior month, the largest gain in three months, the Commerce Department said. Also, the University of Michigan reported its consumer-sentiment index rose to 97.7 in early May— the strongest reading since January, when sentiment reached a 13-year high. The reports were a striking counterpoint in a week marked by dismal earnings reports by brick-andmortar U.S. retailers like Macy’s Inc., and Kohl’s Corp. and Nordstrom Inc., which are Page 6 of 8
9. TA Securities 15-May-17 A Member of the TA Group struggling to adjust to a U .S. consumer shift to online shopping. On Friday, J.C. Penney Co. added to the parade of retailer gloom. It reported a surprise adjusted profit, but its revenue came in below expectations and investors yanked the stock down 14%. (The Wall Street Journal) US Businesses Increased Stockpiles Slightly in March U.S. businesses increased their stockpiles slightly in March, while their sales were flat. The Commerce Department says business inventories rose by a seasonally adjusted 0.2% in March, matching February's gain. And sales were unchanged in March after inching up 0.2% in February. An effort by businesses to rebuild their stockpiles had added a full percentage point to economic growth in the October-December quarter, a period when the economy grew by a tepid 2.1% as measured by the gross domestic product. But growth slowed in the January-March quarter, in part analysts say because inventories subtracted from overall economic activity. Annual GDP growth was just 0.7% in the first quarter. (CNBC) Trump Administration Announces Deal With China to Boost Exports After months of bashing China for its trade practices, the Trump administration said it had agreed with Beijing on a broad range of measures aimed at improving the access of American beef producers, electronic-payments providers and natural-gas exporters, among others, to the world’s second-largest economy. Some items on a 10-point plan the White House released address longstanding irritants between the two countries, as both governments strive to show warming ties while seeking cooperation on a range of economic and diplomatic issues like North Korea’s nuclear-weapons program. Others are general principles and may not ensure concrete policy changes beyond promises to try to expand commerce in certain sectors. “U.S.-China relationships are now hitting a new high especially in trade,” Commerce Secretary Wilbur Ross said in unveiling the package at the White House. The plan was reached as part of a new economic dialogue launched when Chinese President Xi Jinping visited President Donald Trump at his Mar-a-Lago Florida resort home in early April and was unveiled shortly before a high-profile global economic summit Mr. Xi is hosting Sunday in Beijing. Chinese officials have been eager for the U.S. to signal support for that meeting. The Trump administration said the plan reflected an agreement reached with Chinese Vice Premier Wang Yang, and it portrayed its announcement as a “joint release” with the Chinese government. (The Wall Street Journal) Europe and United Kingdom Eurozone March Industry Output Unexpectedly Dips Eurozone industrial output declined slightly in March for the second straight month, against market expectations of an increase, due a sharp drop of energy production. The European Union's statistics office Eurostat said industrial production in the 19-country single currency bloc fell by 0.1% from February, but rose by 1.9% year-on-year. Both figures were lower than market expectations of increases of 0.3% in the month and of 2.3% from a year earlier. The unexpected fall is, however, unlikely to change the growth outlook for the bloc at the start of the year, with preliminary estimates showing a healthy 0.5% rise in the first quarter. This is mostly because the March drop was offset by upwardly revised data for February, when output dropped only by 0.1% instead of a previously estimated 0.3% fall. On the year, production went up by 1.4% in February, more than the 1.2% rise estimated by Eurostat a month ago. The March monthly output decrease was due to a 3.2% decline in energy production, the only indicator that recorded a drop. (Reuters) German GDP Growth Fastest in A Year The German economy expanded the most in a year at the start of 2017 as global demand underpinned exports and investment advanced substantially. Gross domestic product grew 0.6% sequentially, faster than the 0.4% expansion seen in the fourth quarter, provisional results published by Destatis showed. This was the fastest growth since the first quarter of 2016, when GDP climbed 0.7%. On a yearly basis, the calendar-adjusted growth slowed slightly to 1.7% from 1.8% a quarter ago. Both quarterly and annual growth rates were in line with economists' expectations. At the same time, the price-adjusted GDP climbed 2.9%, following the previous quarter's 1.3% expansion. Quarter-on-quarter, positive Page 7 of 8
10. TA Securities 15-May-17 A Member of the TA Group contributions came from both domestic and foreign demand . Capital formation increased substantially as mild weather boosted fixed capital formation in construction and in machinery and equipment. (RTT News) Share Buy-Back: 12 May 2017 Company AMPROP FITTERS TEXCHEM Bought Back Price (RM) Hi/Lo (RM) 60,000 100,000 1,000 0.83 0.41 1.46 0.83/0.82 0.415/0.405 1.46/1.44 Total Treasury Shares 13,616,300 18,451,900 2,543,200 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. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 12-May-17 2.16 2.54 5.79 Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 2.36 2.04 5.12 0.97 0.58 1.22 10.8 22.7 17.7 15.8 23.8 27.6 20.1 11.2 32.8 13.7 10.7 21.0 5.5 3.5 1.9 7.3 3.5 3.1 2.44 2.70 7.00 -11.5 -5.9 -17.3 1.95 1.95 4.43 10.8 30.3 30.7 1.4 18.7 26.7 4.10 3.40 5.40 6.10 15.80 9.20 22.10 4.70 10.00 1.29 0.96 1.32 1.34 0.66 0.96 0.79 1.31 0.71 35.8 29.4 46.4 50.6 101.3 73.6 136.6 49.0 40.3 37.7 33.1 50.6 55.6 109.8 82.6 140.4 51.7 39.0 12.5 10.0 11.9 11.8 13.8 12.7 14.6 11.3 25.3 11.9 8.9 10.9 10.7 12.7 11.3 14.2 10.7 26.1 3.3 2.7 2.9 3.4 2.9 5.3 2.8 2.2 3.3 3.3 2.7 3.3 3.7 2.9 5.3 2.9 2.2 3.3 4.49 3.00 5.70 5.98 14.12 9.68 20.58 5.59 10.38 0.0 -1.7 -3.2 -0.5 -0.8 -3.1 -2.9 -0.9 -1.9 3.60 2.08 3.90 4.11 12.70 7.50 18.72 4.46 8.20 24.7 41.8 41.5 44.7 10.2 25.1 6.7 24.2 24.1 20.7 23.4 28.1 31.9 3.7 14.4 1.3 17.6 15.0 0.44 1.31 5.40 3.54 0.99 2.05 2.25 5.86 0.49 1.62 5.49 3.27 0.58 1.90 1.50 5.58 0.80 0.69 1.06 1.09 1.20 na 1.10 0.12 5.7 14.6 31.6 16.8 9.6 12.6 11.9 44.3 5.7 13.5 36.4 20.9 9.9 12.5 11.8 45.8 7.7 9.0 17.1 21.1 10.3 16.2 19.0 13.2 7.7 9.7 14.8 16.9 10.0 16.3 19.1 12.8 0.0 2.1 2.2 2.7 1.0 2.7 1.3 4.3 2.3 2.1 2.2 2.7 1.0 2.7 1.3 4.3 0.51 1.35 5.40 3.61 1.05 2.13 2.49 6.13 -13.7 -3.1 0.0 -1.9 -5.7 -3.8 -9.6 -4.4 0.36 0.80 4.65 3.07 0.41 1.42 1.41 5.15 22.2 64.6 16.1 15.3 144.4 44.4 59.6 13.8 1.1 24.8 13.0 10.6 72.2 20.6 30.1 -0.3 2.00 2.00 0.46 15.4 15.6 13.0 12.8 5.0 5.0 2.40 -16.7 1.93 3.6 -0.5 14.86 18.60 15.41 21.08 0.54 0.57 69.6 93.1 77.5 21.3 101.9 20.0 19.2 18.3 4.7 4.5 5.2 4.9 15.30 18.74 -2.9 -0.7 12.84 14.58 15.7 27.6 6.8 13.6 2.39 7.65 24.68 83.30 3.41 1.82 4.96 1.02 2.23 9.59 27.41 88.66 3.76 2.74 4.17 1.10 0.49 0.35 0.35 0.38 0.51 0.69 0.43 0.58 6.5 35.9 120.5 293.6 22.3 25.1 12.7 9.3 7.5 40.5 148.1 326.2 24.7 25.3 15.8 12.8 36.8 21.3 20.5 28.4 15.3 7.3 39.1 11.0 31.7 18.9 16.7 25.5 13.8 7.2 31.5 8.0 0.8 3.9 2.8 3.2 4.4 4.4 0.9 4.9 0.9 5.0 3.0 3.4 5.0 4.4 1.0 4.9 3.00 9.29 27.00 83.68 3.58 2.04 5.00 1.07 -20.3 -17.6 -8.6 -0.5 -4.7 -10.8 -0.8 -4.7 2.11 7.30 22.44 74.12 2.13 1.43 4.14 0.78 13.3 4.8 10.0 12.4 60.1 27.3 19.7 30.8 -7.0 4.4 5.1 6.5 33.7 5.2 14.5 28.3 46.20 52.08 1.05 198.6 187.4 23.3 24.6 4.3 4.3 55.64 -17.0 40.61 13.8 4.6 9.89 5.80 11.53 6.58 1.35 1.27 49.4 25.7 55.6 27.9 20.0 22.6 17.8 20.8 0.5 1.4 0.6 1.6 10.00 6.07 -1.1 -4.4 7.50 4.17 31.9 39.0 24.5 28.4 2.77 0.14 3.81 0.10 0.72 1.34 22.1 0.2 24.6 0.3 12.5 70.9 11.2 46.4 5.8 0.0 6.9 0.0 3.42 0.15 -19.0 -3.4 2.73 0.05 1.5 180.0 -6.4 180.0 6.17 4.16 6.40 4.61 0.78 0.52 13.9 13.3 17.9 16.5 44.4 31.2 34.4 25.3 0.7 1.5 0.7 1.8 6.73 4.37 -8.3 -4.8 5.78 3.85 6.7 8.1 -2.8 -0.5 5.69 6.32 2.10 5.18 2.16 6.05 6.80 1.90 5.05 2.55 0.60 0.14 0.32 -0.21 0.29 19.5 35.8 16.2 26.6 4.3 24.4 40.5 18.3 30.2 7.1 29.2 17.6 12.9 19.5 50.4 23.3 15.6 11.5 17.1 30.6 1.4 2.8 2.3 2.6 0.5 1.9 3.2 2.6 2.9 0.8 5.85 7.07 2.69 5.45 2.64 -2.7 -10.6 -21.9 -5.0 -18.2 3.87 5.62 1.88 4.20 1.96 47.0 12.5 11.7 23.3 10.2 17.8 -4.1 -0.5 -3.2 -8.5 INDUSTRIAL SCIENTX SKPRES 8.72 1.31 8.50 1.75 0.57 0.48 67.9 9.1 78.0 14.1 12.8 14.4 11.2 9.3 2.4 3.4 2.8 5.2 8.99 1.44 -3.0 -9.0 5.94 1.12 46.8 17.0 30.1 1.6 MEDIA ASTRO MEDIA PRIMA STAR 2.74 1.13 2.50 3.20 0.95 1.75 1.03 0.68 0.64 13.2 7.8 10.6 14.5 8.1 9.1 20.7 14.6 23.7 18.9 14.0 27.6 4.6 5.5 7.2 4.7 5.8 7.2 3.01 1.52 2.70 -9.0 -25.7 -7.4 2.56 1.00 2.20 7.0 13.0 13.6 5.4 -1.7 11.6 0.45 0.84 7.03 0.44 6.05 1.29 0.61 29.2 14.3 6.4 47.1 19.5 48.1 0.8 -7.3 4.9 1.8 43.8 3.6 17.9 -30.3 1.30 39.2 6.5 BANKS & FINANCIAL SERVICES AFG 4.49 AFFIN 2.95 AMBANK 5.52 CIMB 5.95 HLBANK 14.00 MAYBANK 9.38 PBBANK 19.98 5.54 RHBBANK BURSA 10.18 CONSTRUCTION BPURI GADANG GAMUDA IJM SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N NESTLE PADINI POHUAT QL SIGN Tobacco BAT GAMING Casino GENTING GENM NFO BJTOTO LUSTER HEALTHCARE Hospitals IHH KPJ Rubber Gloves HARTA KOSSAN SUPERMX TOPGLOV KAREX OIL & GAS EATECH 0.58 0.45 1.03 11.5 11.9 5.0 4.8 0.0 0.0 1.18 -51.3 MHB 0.96 0.95 1.80 -1.2 1.3 na 73.3 0.0 0.0 1.23 -22.0 MISC 7.48 7.65 0.82 56.8 54.7 13.2 13.7 4.0 4.0 7.84 -4.6 PANTECH 0.64 0.69 1.28 4.1 5.0 15.4 12.8 2.8 3.1 0.67 -3.8 PCHEM 7.23 7.91 1.06 34.7 39.3 20.8 18.4 2.6 2.6 7.80 -7.3 SENERGY 1.91 2.02 2.42 5.3 4.6 36.4 41.2 0.0 0.0 2.10 -9.0 UMWOG 0.61 0.80 2.01 -12.0 -3.6 na na 0.0 0.0 1.04 -41.3 Note: UMWOG proposed 14 for 5 rights issue shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.81 1.40 1.39 11.3 12.2 16.0 14.8 0.0 0.0 2.02 -10.4
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 1.91 3.10 4.64 24.92 9.33 6.17 1.53 3.88 3.93 22.75 8.24 7.52 1.80 0.46 1.09 0.91 1.25 0.50 6.3 13.7 18.7 111.8 30.8 32.7 11.1 15.7 21.1 119.1 35.3 34.5 30.1 22.6 24.8 22.3 30.3 18.8 17.2 19.7 22.0 20.9 26.4 17.9 2.6 2.3 2.2 2.2 2.4 2.6 2.6 2.6 2.6 2.4 3.0 2.8 2.52 3.70 4.81 25.50 9.55 6.51 -24.2 -16.2 -3.5 -2.3 -2.3 -5.2 1.31 3.00 4.07 22.62 7.10 5.53 45.8 3.3 14.0 10.2 31.4 11.6 23.2 -8.8 5.5 3.8 15.2 2.8 0.70 1.07 0.85 2.17 1.53 0.78 3.63 3.56 0.69 1.07 1.00 2.10 1.60 0.80 4.10 3.40 0.65 0.66 0.32 0.94 0.71 0.30 0.67 0.49 3.4 20.0 7.3 14.7 14.5 6.4 25.6 27.2 7.0 17.4 11.2 15.3 12.5 9.7 22.8 29.1 20.2 5.3 11.7 14.7 10.5 12.3 14.2 13.1 9.9 6.1 7.6 14.2 12.2 8.1 15.9 12.3 5.8 3.7 4.1 3.2 3.9 1.3 3.9 3.4 5.8 3.3 4.7 3.5 3.6 1.3 3.9 3.4 0.83 1.43 1.05 2.46 1.70 1.00 3.77 3.66 -15.8 -25.3 -19.0 -11.8 -10.0 -22.0 -3.7 -2.7 0.68 1.05 0.85 1.85 1.34 0.69 2.80 2.84 2.2 1.9 0.6 17.5 14.2 13.0 29.6 25.3 0.0 -5.3 -15.0 11.3 7.0 -2.5 16.0 18.7 1.71 1.48 1.86 1.72 0.54 0.59 8.9 8.1 10.1 8.6 19.3 18.3 16.9 17.2 5.2 5.7 5.9 6.0 1.84 1.72 -7.1 -14.0 1.60 1.44 6.9 2.8 -0.6 -3.3 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.21 24.00 18.60 13.90 1.53 1.45 20.19 19.02 17.37 1.81 0.71 0.75 0.76 1.01 0.59 6.6 98.4 88.2 131.9 8.8 6.1 102.3 101.3 130.8 10.6 18.4 24.4 21.1 10.5 17.5 19.7 23.5 18.4 10.6 14.5 5.8 3.0 3.3 3.2 6.5 5.8 3.2 3.8 3.3 6.5 1.80 25.70 22.66 14.90 1.64 -32.8 -6.6 -17.9 -6.7 -6.7 1.14 22.60 18.10 13.00 1.38 6.1 6.2 2.8 6.9 10.9 -11.7 0.8 -12.7 0.0 2.7 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 5.33 5.10 6.57 6.46 5.25 4.95 5.95 6.95 1.26 0.96 0.71 0.68 16.7 20.8 25.1 21.4 17.6 21.1 25.4 22.3 31.9 24.5 26.2 30.1 30.3 24.2 25.8 29.0 1.6 4.1 3.0 3.0 1.7 4.1 3.0 3.1 5.99 5.19 6.60 6.90 -11.0 -1.7 -0.5 -6.4 4.11 4.37 5.36 5.81 29.7 16.7 22.6 11.2 12.9 5.6 9.9 8.6 TECHNOLOGY Semiconductor & Electronics IRIS 0.20 INARI 2.15 MPI 13.00 UNISEM 3.53 0.14 2.35 13.15 3.55 1.42 0.79 0.51 0.82 -1.2 10.5 94.2 26.9 0.9 na 12.6 20.5 115.7 13.8 29.1 13.1 21.6 17.1 11.2 12.1 0.0 1.9 2.1 3.4 0.0 2.3 2.1 3.4 0.24 2.16 13.10 3.70 -18.8 -0.5 -0.8 -4.6 0.10 1.28 7.02 2.20 95.0 67.7 85.2 60.5 77.3 29.5 75.4 49.6 3.48 8.05 3.02 8.10 1.17 1.44 33.5 17.2 34.9 17.5 10.4 46.7 10.0 46.0 1.1 1.2 1.4 1.2 3.53 8.31 -1.4 -3.1 2.12 5.76 64.2 39.8 52.0 32.8 1.73 3.87 1.88 4.51 0.81 0.68 15.4 19.3 21.5 17.4 11.2 20.0 8.0 22.2 3.2 3.7 4.0 3.4 1.87 4.59 -7.5 -15.7 1.23 3.74 40.7 3.5 8.8 -10.0 PROPERTY GLOMAC HUAYANG IBRACO IOIPG MAHSING SNTORIA SPSETIA SUNWAY REIT SUNREIT CMMT TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.68 OCBC 10.55 UOB 23.59 PLANTATIONS WILMAR IFAR 3.76 0.50 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 21.40 11.10 23.60 1.23 1.13 1.09 173.8 87.8 195.7 190.2 11.9 92.5 12.0 209.4 12.1 10.9 11.4 11.3 2.9 5.7 3.0 2.9 6.7 3.0 21.0 10.6 24.0 -1.5 -0.4 -1.8 14.72 8.84 17.41 40.5 28.3 35.5 19.3 18.3 15.6 3.72 0.53 0.91 1.12 28.9 3.9 31.1 4.3 12.1 11.7 2.1 1.9 2.4 2.1 4.0 0.6 -6.0 -16.0 2.96 0.44 27.0 13.6 4.7 -4.8 13.0 12.8 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. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
13. T e c h n i c a l TA Securities V i e w Monday , May 15, 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: 1,775.87 (+13.13, +0.74%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Bullish Momentum Support Uptrend Extension The local stock market proved resilient last week, with the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) bouncing back led by banks on hopes for higher dividends after Bank Negara removed reserve fund requirements. On the foreign front, the election victory of euro friendly French president Macron and oil price and ringgit strength helped improve sentiment as weekly US oil supplies fell and Saudi exports to Asia declined, but profit-taking interest resumed on the weaker earnings from US retailers which increased fears over the sustainability of US economic growth. Week-on-week, the FBM KLCI rose 13.13 points, or 0.7 percent to 1,775.87, helped by gains on BAT (+RM1.27), PPB Group (+25sen), KLK (+22sen), and financial institutions Hong Leong Bank (+20sen), HLFG (+16sen) and CIMB (+14sen). Average daily traded volume moderated to 3.37 billion shares, while value eased to RM2.7 billion, compared with the 3.7 billion shares and RM2.98 billion average respectively the previous week, as buying momentum continued to concentrate on the small cap and ACE Market sector. Bursa Malaysia shares rose on Monday, led by banks on hopes for higher dividends after Bank Negara removed reserve funds requirement and the election victory of euro friendly French president Macron over the weekend. The KLCI gained 5.41 points to close at the day’s high of 1,768.15, off an early low of 1,763.29, as gainers led losers 546 to 388 on active trade totaling 4bn shares worth RM2.42bn. The local market traded sideways the next day, as profit-taking interest increased amid uncertainties over the Bandar Malaysia project and ahead of the Wesak Day holiday. The KLCI eased 1.59 points to settle at 1,766.56, after moving within a narrow range bordering 1,770.43 and 1,765.14, as losers edged gainers 455 to 427 on slower turnover totaling 3.23bn shares worth RM2.73bn. Blue chips rose on Thursday, with Petronas counters leading gains along with crude oil price after weekly US oil supplies fell and Saudi exports to Asia declined. The KLCI climbed 8.83 points to end at 1,775.39, near the day’s low of 1,774.59 and off an early high of 1,780.49, as gainers led losers 560 to 379 on better turnover of 3.55bn shares worth RM3.48bn. Stocks slipped back into profit-taking correction mode into the weekend, as investors reduced positions following the weaker earnings from US retailers which increased fears over the sustainability of US economic growth. The index closed up 0.48 points Friday at 1,775.87, off an early high of 1,778.64 and low of 1,773.15, as losers edged gainers 516 to 424 on much slower turnover totaling 2.7bn shares worth RM2.17bn. Trading range for the blue-chip benchmark index last week shrank to 17.2 points, compared to the wide 30.56-point range the previous week, as blue chips mostly went into sideways trade. For the week, the FBM-EMAS Index added 120.57 points or 0.96 percent to 12,718.10, but the FBM-Small Cap Index eased 29.57 points, or 0.17 percent to 17,681.41. Page 1 of 3
14. TA Securities 15-May-17 A Member of the TA Group Last week ’s rebound encouraged the daily slow stochastic momentum indicator for the FBM KLCI to hook back up and trigger a buy signal in the upper zone (Chart 1), while the weekly indicator re-hooked upwards in overbought territory. The 14-day Relative Strength Index (RSI) indicator also re-hooked upwards to a bullish reading of 64.20 as of last Friday, while the 14-week RSI hooked up to a slightly overbought reading of 70.88. Chart 1 Meantime, the daily Moving Average Convergence Divergence (MACD) trend indicator’s trigger line expanded positively to suggest renewed upside momentum, reinforced by the uptrend momentum on the weekly MACD indicator which remained intact (Chart 2). As for the 14-day Directional Movement Index (DMI) trend indicator, the +DI and –DI lines showed bullish expansion on a mildly rising ADX line, signaling a reinstatement of the prior uptrend. Chart 2 Page 2 of 3
15. TA Securities 15-May-17 A Member of the TA Group Conclusion The return of bullish signals on most momentum and trend indicators on the FBM KLCI that we track following last week ’s rebound suggests that the present profit-taking consolidation had run its course, thus paving the way for uptrend resumption. Trading momentum should stay robust, especially on lower liners or small cap construction and technology related counters on hopes for China plays. Immediate upside hurdles for the benchmark stays at 1,782, the 76.4%FR of the 1,867 to 1,503 downswing closely matching the recent two-year high of 1,784, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Immediate uptrend supports stays at the rising 30 and 50-day moving average levels, currently at 1,753 and 1,745, with better support from the lower Bollinger band at 1,728. Strategy-wise, investors should look to accumulate blue chips such as Axiata, Genting Malaysia, Sime Darby and Tenaga for longer-term upside, while bargain construction related stocks like Gadang, Kim Lun, Mudajaya and Sunway Construction given the positive outlook on the sector. 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
16. TA Securities SECTOR UPDATE Monday , May 15, 2017 FBM KLCI: 1,775.87 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Gaming Sector Overweight (Maintained) Repeat Your Bets THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Tan Kam Meng, CFA Tel: +603-2167 9605 kmtan@ta.com.my Genting Berhad’s (GENT) 52%-owned subsidiary, Genting Singapore (GENS), reported a strong 1Q17 performance with core earnings of S$181.0mn. This was above market expectation and the variance was largely due to higherthan-expected savings from the cost efficiency initiatives. In terms of share price performance, GENT, Genting Singapore (GENS) and Genting Malaysia (GENM) share prices advanced more than 15%, in line with regional gaming counters (except Sands and MGM). This was premised on a strong recovery in gaming revenue in Macau and also the investment euphoria around the integrated resort in Japan. We roll forward our valuation to FY18 for all the subsidiaries under Genting group. We maintain Buy on both GENT and GENM with higher target price of RM11.53 and RM6.58, respectively. GENS’ 1Q17 financial & briefing highlights Despite a 3.5% contraction in revenue to S$586.6mn, GENS’ 1Q17 core earnings surged 90.3% YoY to S$181.0mn. The significant increase in profit and margins can be attributed to savings from cost-cutting initiatives started in mid-16. Also, a substantially lower impairment on trade receivables (S$15.0mn vs S$92.4mn in 1Q16) also contributed to 1Q17 earnings growth. For this quarter, GENS achieved higher VIP and premium mass volume. The VIP win rate was 2.95%, contributing 35% of the group’s total gross gaming revenue in 1Q17. In a separate announcement, GENS announced that it intends to redeem its S$1.8bn perpetual subordinated capital securities (PERP) and S$500mn PERP on their next call dates of 12 Sep 2017 and 18 Oct 2017, respectively. The group intends to pay off the PERP using its internal cash of S$5.6bn. According to management, the group is expected to have more than S$2bn cash balance and this would not affect the group’s ability to borrow to fund any future projects. Management indicated that future dividend payments will likely be maintained at 3 cent/share. Besides, the group will spend a significant amount to refresh its Singapore integrated resort (IR). According to management, the property refresh is needed to energise its competitiveness as the IR has been in operations for 7 years. On Japan front, management has seen some growing activities surrounding the IR bill development, including the criteria for the bidding process. In essence, a prefecture would have to select the operators and partners to work with. Then the prefecture and consortium would apply to the federal government to be accepted to bid. In terms of timeline, management believes the actual bidding process to begin next year. Page 1 of 6 www.taonline.com.my
17. TA Securities 15-May-17 A Member of the TA Group Forecast We raise GENT ’s FY17/18/19 earnings projections by 9.7/9.0/8.4% after revising GENS’ FY17/18/19 earnings estimates higher by 37.3/46.5/43.5%. This is to account for 1) higher-than-expected savings from the cost-cutting initiatives, and 2) savings from early redemption of PERP. Sector rating – maintain Overweight We remain optimistic on the outlook for gaming sector. In Macau, the monthly gaming revenue rose for a ninth month in Apr-17 and this rising tide have lifted all casino stocks in the region. YTD, those Hong Kong listed Macau casinos have registered a positive average gain of 15%, which outperformed Hang Seng Index. In Singapore, GENS’ share price also chalked up a decent gain of 19% YTD vs 13% increase in STI. In Malaysia, both GENT and GENM recorded YTD growth of 24% and 28% respectively, which was relatively higher than FBMKLCI performance (see Figure 1-4). The sequential rise in gaming revenue signals that the sector is on a firm recovery path from a slowdown caused by China’s anti-corruption campaign. Both Wynn Macau and Melco Resorts reportedly saying that 1Q17 results performance was partially lifted by the increase in VIP volume. Junkets have seen returning to the market in a big way with favourable trend in collection of credit. The excitement and anticipation on Japan’s proposed Integrated Resort casino development also contributed to the recent share price rally. We expect to see investors increasing their bets on Japan IR-candidate stocks given the enormous lottery effect if the winners are correctly spot-on. At this juncture, those casino operators who have expressed interest include Vegas Sands, Wynn, Melco, MGM, Galaxy and Genting Singapore. We reaffirm our overweight stance on the sector and expect a slew of positive news to sustain investment interest in the sector, which we believe GENT and GENM would benefit from it, directly or indirectly. Rolling forward our valuation to FY18, we raise GENM and GENT’s target price to RM6.58 and RM11.53 respectively. Maintain Buy on both GENM and GENT given the decent upside of more than 12%. Table 1: 1Q17 Results Performance – Genting Singapore FYE Dec (SG$'mn) Revenue - Gaming - Non gaming Adjusted EBITDA Depr. & Amort. Finance cost JV & associate EI Core PBT Tax Reported PAT Core PAT before MI Adj EBITDA margin (%) PBT margin (%) Net margin (%) Tax rate (%) 1Q16 608.0 450.5 157.1 192.5 (76.6) (14.0) (1.5) (54.9) 121.5 (26.4) 40.2 95.1 4Q16 557.7 398.6 158.5 233.7 (73.0) (8.8) (4.5) 54.9 167.7 (33.7) 188.9 134.0 1Q17 586.6 434.4 151.4 283.2 (70.2) (9.2) 0.9 29.1 224.1 (43.1) 210.2 181.0 QoQ% 5.2 9.0 (4.5) 21.2 (3.7) 4.1 >100 (46.9) 33.7 28.0 11.3 35.1 YoY% (3.5) (3.6) (3.6) 47.1 (8.3) (34.5) >100 >100 84.4 63.3 422.4 90.3 3M16 608.0 450.5 157.1 192.5 (76.6) (14.0) (1.5) (54.9) 121.5 (26.4) 40.2 95.1 3M17 586.6 434.4 151.4 283.2 (70.2) (9.2) 0.9 29.1 224.1 (43.1) 210.2 181.0 YoY% (3.5) (3.6) (3.6) 47.1 (8.3) (34.5) >100 >100 84.4 63.3 422.4 90.3 31.7 20.0 15.6 21.7 41.9 30.1 24.0 20.1 48.3 38.2 30.9 19.2 %pts 6.4 8.1 6.8 (0.9) %pts 16.6 18.2 15.2 (2.5) 31.7 20.0 15.6 21.7 48.3 38.2 30.9 19.2 %pts 16.6 18.2 15.2 (2.5) Page 2 of 6
18. TA Securities 15-May-17 A Member of the TA Group SOP Valuation Genting Malaysia Mgmt fee from Genting Malaysia Power Genting Singapore Genting Plantations Landmarks Bhd Property Oil & Gas Total net cash at holding campany level Total Conversion of warrants @ RM7.96 Enlarged share base (m) Valuation Method % stake Value (RM m) DCF-TP of RM6.58 DCF @ 15% Target PER of 12x DCF @ 11.2% 23x CY18 EPS Fair Value of RM1.00 Target PER of 10x DCF 47% 100% 100% 52% 55% 30% 55% 100.0% 18,402 3,584 1,032 21,863 5,117 144 825 283.0 923.7 52,173 7,402 4649 RNAV/ share (RM) Holding company discount Fair value/ share (RM) 12.81 10% 11.53 Figure: All gaming stocks (excluding Sands and MGM) outperformed HSI Figure 1: YTD performance of gaming counters 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% -20% -20% 1/1/2017 1/2/2017 1/3/2017 1/4/2017 Sands Wynn MGM Galaxy SJM GENS GENM GENT 1/5/2017 -30% 1/1/2017 1/2/2017 Sands Figure 3: GENS chalked up 19% return YTD Wynn 1/3/2017 MGM 1/4/2017 Galaxy 1/5/2017 SJM HSI Figure 4: Both GENT and GENM outperformed FBMKLCI 30% 20% 25% 15% 20% 10% 15% 10% 5% 5% 0% -5% 1/1/2017 0% 1/2/2017 1/3/2017 GENS 1/4/2017 1/5/2017 -5% 1/1/2017 1/2/2017 Series1 STI Page 3 of 6 1/3/2017 Series2 1/4/2017 Series3 1/5/2017
19. TA Securities 15-May-17 A Member of the TA Group Genting Berhad Income Statement (RM'mn) FYE 31 Dec Revenue EBITDA Depreciation & Amortisation EBIT Finance cost Associate & JV EI PBT Tax MI Net profit Core Net Profit 2015 18100.4 7844.4 (1904.6) 5939.8 (558.9) 94.7 (1014.8) 3446.0 (848.3) (1209.7) 1388.0 2402.8 2016 18365.8 6124.7 (1923.3) 4201.4 (678.8) (116.4) 543.1 5522.8 (991.4) (2384.9) 2146.5 1603.4 2017F 19968.1 6910.4 (1960.6) 4949.7 (538.9) (100.0) 0.0 4310.8 (952.7) (1508.8) 1849.3 1849.3 2018F 21605.6 7518.4 (2053.4) 5465.0 (523.9) (90.0) 0.0 4851.1 (1072.1) (1697.9) 2081.1 2081.1 2019F 22774.4 7903.2 (2029.6) 5873.6 (508.9) (81.0) 0.0 5283.7 (1167.7) (1849.3) 2266.7 2266.7 64.2 17.2 15.4 3.5 0.4 42.8 (33.4) 23.1 12.5 1.3 49.3 15.3 20.1 5.0 0.5 55.5 12.5 17.8 5.5 0.6 60.4 8.9 16.4 6.5 0.7 Cash Flow (RM'mn) FYE 31 Dec PBT Depreciation & Amortisation Changes in WC Others CFO 2015 3446.0 1904.6 (928.7) 321.6 4743.5 2016 5522.8 1923.3 404.9 (1573.6) 6277.4 2017F 4310.8 1960.6 (1445.5) (313.8) 4512.2 2018F 4851.1 2053.4 8.1 (458.2) 6454.5 2019F 5283.7 2029.6 (17.6) (577.8) 6718.0 Capex Others CFI (4472.9) 1526.4 (2946.5) (5863.8) 2883.9 (2979.9) (4000.0) 0.0 (4000.0) (4000.0) 0.0 (4000.0) (3999.0) 0.0 (3999.0) Dividend Net Borrowing Others CFF (111.5) (624.3) 3278.3 2542.5 (130.3) (721.4) (1203.1) (2054.8) (140.6) (500.0) (538.9) (1179.6) (154.7) (500.0) (523.9) (1178.6) (182.8) (499.0) (508.9) (1190.8) Net Increase/(Decrease) in Cash FCFE FCF/share (RM) 4339.5 1797.0 0.5 1242.7 3297.5 0.9 (667.4) 512.2 0.1 1275.8 2454.5 0.7 1528.2 2719.0 0.7 Core EPS (sen) EPS growth (%) PE (x) GDPS (sen) Dividend yield (%) Key Assumptions (RM'mn) FYE 31 Dec Revenue breakdown L&H (Malaysia) L&H (Singapore) L&H (UK) L&H (US) Adj EBITDA breakdown L&H (Malaysia) L&H (Singapore) L&H (UK) L&H (US) 2015 2016 2017F 2018F 2019F 5576.6 6807.7 1350.3 1288.2 5622.5 6686.2 1816.2 1365.0 6363.0 7526.8 1913.5 1448.1 7039.9 8074.3 2066.6 1520.6 7353.8 8545.3 2231.9 1657.4 2474.0 2610.0 (124.2) 112.8 2505.6 2392.1 260.4 191.5 2063.6 3368.6 287.0 130.3 2359.0 3562.0 310.0 136.9 2485.6 3719.5 334.8 165.7 Page 4 of 6 Balance Sheet (RM'mn) FYE 31 Dec PPE Intangibles Others Non-current Assets 2015 31,139.4 6,666.6 19,210.5 57,016.5 2016 32,667.6 6,527.4 21,105.1 60,300.1 2017F 34,707.0 6,527.4 21,005.1 62,239.5 2018F 36,653.6 6,527.4 20,915.1 64,096.1 2019F 38,623.0 6,527.4 20,834.1 65,984.5 Inventories Trade & Other Receivable Others Cash & Bank Balances Current Assets 480.6 3,751.5 3,944.7 24,239.2 32,416.0 583.0 2,344.9 3,434.2 25,883.6 32,245.7 820.6 3,173.0 3,434.2 25,216.2 32,644.0 947.1 3,492.4 3,434.2 26,492.0 34,365.7 1,060.7 3,743.7 3,434.2 28,020.3 36,258.9 Total Assets 89,432.5 92,545.8 94,883.5 98,461.8 102,243.4 Share Capital Reserve Treasury share MI Total Equity 374.3 32,463.1 (219.6) 30,173.3 62,791.1 375.0 34,650.2 (221.2) 30,949.3 65,753.3 375.0 36,358.9 (221.2) 32,458.1 68,970.8 375.0 38,285.3 (221.2) 34,156.0 72,595.1 375.0 40,369.2 (221.2) 36,005.3 76,528.3 Borrowings Other Non-current Liabilities 17,017.4 2,656.9 19,674.3 15,745.0 3,079.6 18,824.6 15,495.0 3,079.6 18,574.6 15,245.0 3,079.6 18,324.6 14,995.5 3,079.6 18,075.1 Borrowings Trade & Other Payables Others Current Liabilites 1,487.3 5,009.4 470.4 6,967.1 2,219.6 5,194.0 554.3 7,967.9 1,969.6 4,814.2 554.3 7,338.1 1,719.6 5,268.2 554.3 7,542.1 1,470.1 5,615.6 554.3 7,640.0 Total Liabilities 26,641.4 26,792.5 25,912.7 25,866.7 25,715.1 NTA/share (RM) P/NTA (x) EV/EBITDAR (x) 6.9 1.4 4.0 7.5 1.3 4.8 8.0 1.2 4.2 8.5 1.2 3.7 9.1 1.1 3.2 Ratio FYE 31 Dec Profitability EBITDA margin Core net profit margin ROE (%) ROA (%) 2015 2016 2017F 2018F 2019F 43.3 13.3 8.1 3.0 33.3 8.7 4.8 1.8 34.6 9.3 5.2 2.0 34.8 9.6 5.6 2.2 34.7 10.0 5.7 2.3 Liquidity Current Ratio (x) Quick Ratio (x) 4.7 4.6 4.0 4.0 4.4 4.3 4.6 4.4 4.7 4.6 Net cash 14.0 Net cash 9.0 Net cash 12.8 Net cash 14.3 Net cash 15.5 Leverage Net gearing (x) Interest Coverage (x)
20. TA Securities 15-May-17 A Member of the TA Group Genting Malaysia Income Statement FYE 31 Dec (RMmn) Revenue EBITDA Depr & Amor. EBIT Finance cost Associate & JV EI PBT Tax MI Net profit Core Net Profit Core EPS (sen) EPS growth (%) PE (x) GDPS (sen) Dividend yield (%) Cash Flow FYE 31 Dec (RMmn) PBT Depr & Amor. Changes in WC Others CFO Capex Others CFI 2015 8395.9 2155.0 (684.1) 1470.9 59.1 0.0 (65.8) 1530.0 (287.0) 14.9 1257.9 1323.7 23.4 (1.3) 24.8 7.1 1.2 2016 8931.6 3726.0 (800.7) 2925.3 165.3 0.0 1342.7 3090.6 (289.9) 79.4 2880.1 1537.4 25.9 10.9 22.4 16.5 2.8 2017F 2018F 2019F 9858.1 10767.2 11390.2 2528.5 2855.7 3038.5 (885.6) (994.8) (1002.7) 1642.9 1860.9 2035.8 152.2 86.5 123.8 0.0 0.0 0.0 0.0 0.0 0.0 1795.1 1947.4 2159.6 (269.3) (292.1) (323.9) 0.0 0.0 0.0 1525.8 1655.3 1835.6 1525.8 1655.3 1835.6 25.7 (0.8) 22.6 8.0 1.4 27.9 8.5 20.8 9.0 1.6 2015 2016 2017F 2018F 1530.0 3090.6 1795.1 1947.4 684.1 800.7 885.6 994.8 (237.8) (124.4) (1280.5) (422.0) (119.3) (1357.5) (152.2) (86.5) 1857.0 2409.4 1248.0 2433.7 30.9 10.9 18.8 10.0 1.7 2019F 2159.6 1002.7 28.6 (123.8) 3067.1 (2536.5) (3117.3) (2500.0) (1000.0) (1000.0) (38.0) 1810.5 0.0 0.0 0.0 (2574.5) (1306.8) (2500.0) (1000.0) (1000.0) Balance Sheet FYE 31 Dec (RMmn) PPE Intangibles Others Non-current Assets Inventories 119.8 Trade & Other Receivable 1,242.8 Others 2,579.0 Cash & Bank Balances 4,599.7 Current Assets 8,541.3 Borrowings Other Non-current Liabilities 3,840.9 906.9 4,747.8 3,223.2 894.1 4,117.3 3,023.2 894.1 3,917.3 2,823.2 894.1 3,717.3 2,623.2 894.1 3,517.3 Borrowings Trade & Other Payables Others Current Liabilites 784.0 2,647.7 234.9 3,666.6 1,103.4 2,738.5 189.8 4,031.7 1,053.4 1,836.6 189.8 3,079.8 1,003.4 1,769.9 189.8 2,963.1 953.4 1,760.5 189.8 2,903.7 Total Liabilities 8,414.4 8,149.0 6,997.1 6,680.4 6,421.0 2.3 2.5 16.0 2.5 2.3 9.1 2.7 2.1 14.0 2.9 2.0 12.0 3.2 1.8 10.7 2015 2016 2017F 2018F 2019F 25.7 15.8 7.5 5.5 41.7 17.2 7.9 5.5 25.6 15.5 7.5 5.5 26.5 15.4 7.6 5.8 26.7 16.1 8.0 6.2 2.3 2.3 1.5 1.5 1.5 1.4 1.8 1.8 2.3 2.2 0.0 (24.9) Net Cash (17.7) 0.0 (10.8) (400.7) 0.0 (250.0) 86.5 (564.2) (445.2) 0.0 (250.0) 123.8 (571.5) NTA/share (RM) P/NTA (x) EV/EBITDAR (x) Change in Cash FCFE FCF/share (RM) 1432.1 (717.5) (0.1) 366.1 1102.6 0.2 (1705.9) (1252.0) (0.2) 869.6 1433.7 0.2 1495.6 2067.1 0.3 Ratios FYE 31 Dec Profitability EBITDA margin Core net profit margin ROE (%) ROA (%) 2018F 2019F 5576.6 1350.3 1288.2 5623.2 1816.3 1365.0 6363.0 1913.5 1448.1 7039.9 2066.6 1520.6 7353.8 2231.9 1657.4 Adj EBITDA breakdown Leisure - Malaysia Leisure - UK Leisure - US 1905.8 (168.9) (13.0) 1894.6 288.0 193.4 2063.6 287.0 130.3 2359.0 310.0 136.9 2485.6 334.8 165.7 Page 5 of 6 101.2 374.5 573.4 5,550.0 6,599.0 593.8 593.8 593.8 593.8 593.8 19,393.3 20,182.5 21,352.2 22,606.9 23,997.2 (906.7) (911.3) (911.3) (911.3) (911.3) 26.0 (119.6) (119.6) (119.6) (119.6) 19,106.4 19,745.4 20,915.1 22,169.8 23,560.1 (356.1) 0.0 (250.0) 152.2 (453.9) 2017F 100.2 737.5 573.4 4,054.4 5,465.4 Share Capital Reserve Treasury share MI Total Equity (413.0) 0.0 (201.2) (122.3) (736.5) 2016 99.2 675.2 573.4 3,184.8 4,532.6 27,520.8 27,894.4 27,912.2 28,850.2 29,981.1 (356.7) 0.0 2663.2 (156.9) 2149.6 2015 98.2 566.9 573.4 4,890.7 6,129.2 Total Assets Dividend Equity raised Net Borrowing Others CFF Key Assumption FYE 31 Dec Revenue breakdown Leisure - Malaysia Leisure - UK Leisure - US 2018F 2019F 2015 2016 2017F 10,475.1 12,158.6 13,892.6 14,017.4 14,134.3 5,367.2 5,036.3 4,916.7 4,797.1 4,677.5 3,137.2 4,570.3 4,570.3 4,570.3 4,570.3 18,979.5 21,765.2 23,379.6 23,384.8 23,382.1 Liquidity Current Ratio (x) Quick Ratio (x) Leverage Net gearing (x) Interest Coverage (x) Net Cash Net Cash (21.5) (16.4)