Bursa Malaysia Daily Market Report - 18 December

Transcription

1. Monday , 18 December, 2017 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only News 1. 2. 3. Daily Market Commentary Weekly Strategy Weekly Technical Outlook Fundamental Reports 1. 2. Gamuda Berhad: Strong YoY Growth Driven by Construction Division Scientex Berhad: Buying More Land in Pulai Technical Reports 1. 2. 3. 4. 5. Weekly Technical Stock Picks Daily Money Flow FBMKLCI Weekly Ace Market Stock Watch Weekly Small Cap Stock Watch Weekly Stock Screen 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
2. Daily Market Commentary Monday , 18 December 2017 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (15.12.2017) (mil) Main Market 1,695.9 Warrants 179.1 ACE Market 452.3 Bond 10.4 ETF 0.3 LEAP 0.0 Total 2,337.9 Off Market 74.5 Volume +/-chg (RMmn) 173.8 3,384.3 -122.6 27.1 -135.5 95.5 -3.7 2.5 -0.34 0.4 0.00 0.0 3,509.8 -135.9 40.7 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP December 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 1,753.07 12,588.84 16,802.68 1,749.50 24,651.74 6,936.58 7,490.57 22,553.22 2,482.07 28,848.11 3,416.94 1,717.69 6,119.42 3,266.14 1,901.20 5,996.97 Off Market (mn) DNEX-WD ATTA INARI BTM SEG STERPRO VITROX OPCOM VERTICE LEESK BARAKAH 44.0 12.5 5.0 2.7 2.6 2.0 1.2 1.0 1.0 1.0 1.0 @ @ @ @ @ @ @ @ @ @ @ -5.93 -11.61 -37.99 -7.50 Up Down 267 311 109 98 32 59 4 5 2 2 0 0 414 475 % chg % YTD chg -0.34 -0.09 -0.23 -0.43 6.78 9.79 14.18 6.97 Counter 0.18 0.56 2.85 0.32 0.67 0.15 5.03 0.39 1.14 0.33 0.33 PBBANK CIMB AXIATA MAXIS SIMEPLT GENTING HLBANK PETGAS GENM IOICORP Mkt Cap. Chg (RM’mn) (RM) 80,165 58,213 48,135 46,317 35,704 34,391 34,080 32,135 32,027 27,712 -0.04 -0.06 -0.04 -0.01 -0.02 -0.26 -0.42 -0.06 -0.04 -0.06 As for the index, it will need to sustain above the 200-day moving average resistance, currently at 1,755, to enhance upside momentum and enable challenge of stronger upside hurdles from 1,765 and 1,782, with the double-top peak of 1,793 and 1,796 acting as major resistance. On the downside, immediate support is seen at 1,737, the 50-day ma level, followed by 1,729, the 30-day ma, while crucial support will be the 5 Dec pivot low of 1,708. News Bites Vol. (mn) 7.38 26.13 9.73 7.54 23.40 7.26 1.44 1.56 9.10 22.09 Commodities Futures Palm Oil (RM/mt) 2,547.00 58.00 Crude Oil ($/Barrel) 57.36 0.19 Gold ($/tr.oz.) 1,258.10 2.80 Important Dates Last week's rally spike on the FBM KLCI to a two-month high lifted daily momentum indicators into deeply overbought territory, suggesting profittaking is needed to consolidate short-term gains and neutralize excessive overbought momentum. On the other hand, emerging positive weekly momentum and trend indicators imply that further strength may be forthcoming, if buying momentum is able to sustain at a healthy pace to encourage firmer investor commitments going into the year-end holidays. Stock-wise, core banking stocks are expected to consolidate their recent strong gains before resuming higher for year-end window-dressing upside, while oil & gas and construction related shares like Bumi Armada, Dialog, UEM Sunrise and WCT Holdings may attract rotational buying interest. 143.08 0.58 24.74 80.06 1.17 28.86 42.45 0.57 4.87 -141.23 -0.62 17.99 12.59 0.51 22.48 -318.27 -1.09 31.12 -18.84 -0.55 18.61 2.70 0.16 11.33 5.77 0.09 15.53 -26.30 -0.80 5.24 -13.80 -0.72 -3.45 -14.29 -0.24 5.85 Top 10 KLCI Movers Based on Mkt Cap. (RM) Exchange Rate USD/MYR 4.0790 -0.0050 USD/JPY 112.71 0.0000 EUR/USD 1.175 -0.0087 Review & Outlook Value Value/ +/-chg Volume 267.7 2.00 -5.7 0.15 -13.8 0.21 -0.8 0.24 -0.61 1.53 0.00 0.00 1.50 -920.5 0.55 • • • • • • • • • • • • • • • • Eco World International Bhd and UK-based Willmott Dixon Holdings Ltd's development arm Be Living Holdings Ltd will jointly develop 12 sites in Greater London and the South East of England (GDV at least £2.6bn) under a proposed JV. Higher work progress by Gamuda Bhd's construction division lifted the group's net profit for 1QFY18 by 25.2% YoY to RM203.0mn. It was within expectations. Eco World Development Group Bhd's FY17 net profit rose to RM209.7mn from RM129.3mn a year earlier. REDtone International Bhd has aborted plans to jointly explore business opportunities with PT Sigma Cipta Caraka TelkomSigma. Scientex Bhd is buying a 336-acre piece of freehold land in Pulai, Johor for RM284.2mn cash, which it hopes to develop into a mixed property development. Metronic Global Bhd is venturing into the development of a 50-acre halal industrial park in China's Sichuan province called Metronic Global Halal Industrial Hub. Straits Inter Logistics Bhd plans to place out new shares to third party investors to be identified later, to raise up to RM13.8mn for working capital and raw material expenses. Ta Win Holdings Bhd plans to undertake a rights issue, involving the issuance of 192.9mn rights shares at 20 sen apiece, to raise RM51.4mn to finance its working capital and debt repayment. Hubline Bhd has proposed a private placement of up to 10% of its issued capital to raise maximum gross proceeds of about RM23.0mn. LBS Bina Bhd will set up a RM500.0mn Sukuk Murabahah programme to finance future acquisitions and development cost of the projects undertaken by the group to repay borrowings, as well as for working capital. Sunway Bhd will set up a RM5.0bn perpetual Islamic medium-term note programme to finance its investment activities, capital expenditure and for working capital. Uzma Bhd is undertaking an internal reorganisation exercise, so that the group's core activities are not housed under one single subsidiary. Jaks Resources Bhd is aligning its business portfolio, after a loss-making property development venture, and will focus on construction and its power generation business in Vietnam. Green Packet Bhd is teaming up with Asia Television Digital Media (M) Sdn Bhd to jointly operate television channels in Malaysia. Bank Negara said it will discontinue a special deposit facility for exporters from next year, rolling back a measure that it had introduced last year to stem the currency's slide against the US dollar. The government will not bail out property developers, particularly those building high-end projects, who failed to sell their units and faced financial difficulties, said Second Finance Minister Datuk Seri Johari Abdul Ghani. The New York Fed said its general business conditions index dropped to 18.0 in December from 19.4 in November, although a positive reading still indicates growth in regional manufacturing activity. ECONBHD - 1:4 Bonus Issue - BI of up to 267.5m new split shares. 1 bonus share for every 4 split shares held. • ECONBHD - 1:4 Bonus Issue - BI of up to 267.5m free warrants. 1 warrant for every 4 split shares held, on the same entitlement as the bonus issue of shares. Ex-Date: 26/12/2017. Entitlement Date: 28/12/2017. LISTING ON: 29/12/2017. 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. Monday , December 18, 2017 FBMKLCI: 1,753.07 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks Kaladher Govindan Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my M a r k e t V i e w Rally to Resume Post Minor Consolidation The blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) enjoyed a steep rally to a two-month high last week, mostly aided by strong windowdressing gains in key banking stocks. Profit-taking following corrections in the region after the US Fed raised interest rates and growth outlook for next year, and potential for delay on passage of the US tax reforms stalled the rally ahead of the weekend. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) surged 31.82 points, or 1.8 percent to 1,753.07, with core banking stocks Public Bank (+74sen), Hong Leong Bank (+66sen), AMBank (+38sen), HLFG (+36sen), CIMB (+35sen) and Maybank (+27sen) contributing the most to the index’s gains. Daily traded volume and value improved to 2.21 billion shares worth RM2.73 billion, compared to the 1.76 billion shares and RM2.41 billion respectively the previous week. The US equity markets hit new highs last week but the positive vibe may not spillover to our local market immediately as the FBMKLCI’s sharp rebound last week needs some consolidation before continuing the upward trajectory. The rebound, driven by banking stocks, in the FBMKLCI benchmark index was not surprising given the deep value in those stocks after languishing for most part of this year. The banking sector’s average forward price-to-book (PB) multiple stands at 1.1x currently and zooming into each of the banking stocks’ historical PB value cycle revealed that most of them continued to trade below -1 standard deviation. While reasons for softer valuations could be due to weaker return-on-equity (ROE) vis-à-vis other regional banks and worries over potential asset quality risks, the sector should be poised for a recovery by 2019. The decline in ROEs has stabilized, underpinned by the banks’ healthy capitalization levels and liquidity buffers, more positive outlook in terms of asset quality and expectations of stronger earnings growth. Earnings will be supported by sustained loan expansion, steadier margins, benign asset quality, a possibly more vibrant capital market and higher fee income. Bank Negara requirement for foreign insurers to comply with the 70% equity limit by June 2018 should be positive for capital market activities as it could involve a fund raising of slightly more than RM12 billion. Debt issuance could increase as well in anticipation potential hike in interest rate. Worries about regulatory hurdles should ease given that the sector is prepared for the implementation of Malaysian Financial Reporting Standards 9 and the implementation in 2018 should not have any material impact to bottomline and capital levels. Besides, job security among working population, improving discretionary and disposable income through various government measures (including BR1M, raise in minimum salary, lower income tax, etc.) and still low interest rate (the expected 25 basis points increase in the Overnight Policy Rate in 2018 is minimal) should sustain loan repayment capability. On the same token, about three quarters of the banks are also ready for the net stable funding ratio and the delay in implementation to 2019 will give them some reprieve. Page 1 of 9
4. 18-Dec-17 Thus , the rally in banking stocks can continue, supported further by expanding PB multiples during elections years. Its 1.1x multiple is a steep discount to historical PB multiple seen in recent general elections (GE), which was at 4.1x, 3.4x and 1.7x in 2004, 2008 and 2013 respectively. Given the sector’s slightly more than 30% weightage on the FBMKLCI index, the usual year-end window dressing activities and any moves to spice the equity market ahead of the 14th GE should prop up the banking stocks ( Buy CIMB TP:RM7.00, AMMB TP: RM5.10, Public Bank TP: RM23.60 ) which usually outperformed during preelection period, and some other undervalued index-linked counters, such as Tenaga (TP: RM17.38), Telekom (TP: RM7.20), Nestle (TP: RM120.50 ), Sime Darby Plantation (TP: RM6.25), etc. 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 Monday, December 18, 2017, the HOD, Kaladher Govindan, 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 9
5. 18-Dec-17 N e w s I n B r i e f Corporate Eco World International Bhd and UK-based Willmott Dixon Holdings Ltd 's development arm Be Living Holdings Ltd will jointly develop 12 sites in Greater London and the South East of England under a proposed JV. Eco World International is acquiring a 70% stake in the JV. The group said the estimated gross development value of the 12 sites is at least £2.6bn (RM14.0bn). The JV also contemplates the acquisition of a development management company (DMco) with a full multi-disciplinary team of highly experienced personnel. Eco World International’s net loss narrowed to RM32.6mn in 4QFY17, from a net loss of RM55.1mn a year earlier. Full-year net loss stood at RM87.6mn versus a net loss of RM220.1mn previously. (The Edge Markets / Bursa Malaysia) Eco World Development Group Bhd's 4QFY17 net profit rose 15% YoY to RM33.7mn, on higher revenue. Revenue climbed to RM899.0mn from RM741.0mn, due to a higher percentage and relatively more advanced stage of completion achieved by the above projects in the quarter. Full-year FY17 net profit rose to RM209.7mn, from RM129.3mn a year earlier. Revenue was higher at RM2.9bn versus RM2.6bn. (The Edge Markets / Bursa Malaysia) Higher work progress by Gamuda Bhd’s construction division lifted the group's net profit for 1QFY18 by 25.2% YoY to RM203.0mn. Quarterly revenue rose 52.9% YoY to RM771.8mn, mainly due to higher work progress from the group’s various construction projects, coupled with stronger overseas property sales and several new property projects in Malaysia. The group declared a first interim dividend of 6 sen per share, payable on Jan 25. On prospects, Gamuda said the cumulative progress of its work portion under the Pan Borneo Highway project is on track at 11.7% as at November 2017. Its property arm is also poised to hit RM3.5bn sales target in FY18, up from RM2.4bn a year earlier. (The Edge Markets / Bursa Malaysia) REDtone International Bhd has aborted plans to jointly explore business opportunities with PT Sigma Cipta Caraka TelkomSigma to offer managed information and communication technology value-added services and solutions for the Indonesian market. Additionally, REDtone posted a profit for the third straight quarter in 2QFY18, registering a net profit of RM1.3mn, compared with a net loss of RM2.6mn a year ago. It attributed the improvement in quarterly earnings to higher gross margins. Quarterly revenue, fell 25.9% YoY to RM29.1mn in 2QFY18, on lower contribution from its continuing operations and managed telecommunication network services segment. (The Edge Markets / Bursa Malaysia) Scientex Bhd is buying a 336-acre piece of freehold land in Pulai, Johor for RM284.2mn cash, which it hopes to develop into a mixed property development. The group’s dormant wholly-owned subsidiary Amber Land Bhd has entered into a sale and purchase agreement with DKTMG Land Sdn Bhd for the proposed land acquisition. Scientex said the acquisition will enable it to expand on its existing landbank in Johor, besides providing the group adequate landbank to sustain its property development over the medium and longer term. (The Edge Markets / Bursa Malaysia) Carimin Petroleum Bhd is buying a 21,130 sq metre land at Kawasan Perindustrian Teluk Kalung in Kemaman, Terengganu, from Noorfauziah Mat Fauzi and Mohd Fauzi Musa, for RM1.6mn cash. The proposed acquisition will enable it to develop the land and expand its fabricating facilities for its business operations. Carimin said its wholly-owned subsidiary Carimin Engineering Services Sdn Bhd has executed a share sale agreement with the two individuals to acquire the currently dormant Fazu Resources (M) Sdn Bhd, which holds the rights to the land. (The Edge Markets / Bursa Malaysia) Page 3 of 9
6. 18-Dec-17 Metronic Global Bhd , which is fresh from the completion of a special audit that found several corporate governance issues, is venturing into the development of a 50-acre halal industrial park in China’s Sichuan province called Metronic Global Halal Industrial Hub. This development — in collaboration with MB Longji Holdings Sdn Bhd (MBLH) — will enable Metronic to secure some engineering work, so it refocuses on its core business. (The Edge Markets / Bursa Malaysia) Straits Inter Logistics Bhd plans to place out new shares to third party investors to be identified later, to raise up to RM13.8mn for working capital and raw material expenses. The private placement entails an issuance of up to 55.2mn shares or 10% of its issued share capital, at an issue price to be determined later. Assuming an indicative issue price of 25 sen per placement share, Straits said the exercise is expected to raise gross proceeds of up to RM13.8mn. (The Edge Markets / Bursa Malaysia) Ta Win Holdings Bhd plans to undertake a rights issue to raise RM51.4mn to finance its working capital and debt repayment. The enameled copper wire and copper rod manufacturer said the exercise will involve the issuance of 192.9mn rights shares at 20 sen apiece. The group is also planning to issue 257.2mn redeemable convertible preference shares (RCPS) at five sen apiece, together with 128.6mn free detachable warrants. This is to be issued on the basis of three rights shares and four RCPS, together with two warrants attached, for every one existing Ta Win share held on the entitlement date. (The Edge Markets / Bursa Malaysia) Hubline Bhd is raising fresh funds again to pare down debts. The loss-making shipping company has proposed a private placement of up to 10% of its issued capital to raise maximum gross proceeds of about RM23.0mn. The proposal comes on the heel of the company's issuance of redeemable convertible notes to raise RM80.0mn fresh capital. Proceeds from the proposed share placement would be used for partial repayment of borrowings, capital expenditure, partial payment of secured container shipping business creditors, working capital, as well as expenses related to the exercise. (The Edge Markets / Bursa Malaysia) LBS Bina Bhd will set up a RM500.0mn Sukuk Murabahah programme to finance future acquisitions and development cost of the projects undertaken by the group to repay borrowings, as well as for working capital. The sukuk programme will provide the group with flexibility in its fundraising exercise, with varying amount and tenures for optimal assetliability matching. The programme has a tenure of up to 20 years from the date of its first issue. (The Edge Markets / Bursa Malaysia) Sunway Bhd will set up a RM5.0bn perpetual Islamic medium-term note (IMTN) programme to finance its investment activities, capital expenditure and for working capital. The group has lodged the required information and relevant documents in relation to the sukuk programme, with Securities Commission Malaysia. The first issuance of the IMTNs is expected by 1Q of 2018. (The Edge Markets / Bursa Malaysia) Ire-Tex Corp Bhd dropped its legal action against Datuk Tey Por Yee and 19 others today, saying the lawsuit is unsustainable. It said for cost reasons, the suit should not be maintained due to numerous applications to strike out filed by several defendants. The suit was filed at the High Court on June 21, after Ire-Tex’s substantial shareholder Elite Cosmo Group Ltd appointed two directors of its choice into the company and removed four directors through an EGM on Aug 25. (The Edge Markets / Bursa Malaysia) Page 4 of 9
7. 18-Dec-17 Not wanting to have all eggs in one basket , Uzma Bhd is undertaking an internal reorganisation exercise, so that the group’s core activities are not housed under one single subsidiary. The exercise also aims to streamline the group's structure and management. Uzma noted many of its core projects are undertaken by Uzma Engineering Sdn Bhd (UESB), since most of the Petronas licenses are housed under this wholly-owned unit. In order to mitigate over concentration on contracting risk at UESB, it is crucial to transfer some of UESB’s businesses to individual entity according to its nature of business, Uzma said. (The Edge Markets / Bursa Malaysia) Jaks Resources Bhd is aligning its business portfolio, after a loss-making property development venture which was hit hard by the slowdown. Chief financial officer Steven Ang said after the group’s EGM today that Jaks Resources will focus on construction and its power generation business in Vietnam. However, he said the group did not set a timeline to cease its property development business. At its EGM, Jaks Resources shareholders gave the greenlight to dispose of four parcels of land measuring 5.99ha within the Sungai Penaga Industrial Park in Subang Jaya, for RM167.6mn million cash. (The Edge Markets / Bursa Malaysia) Green Packet Bhd is teaming up with Asia Television Digital Media (M) Sdn Bhd (ATVM) — whose ultimate holding company is Hong Kong-listed Co-Prosperity Holdings Ltd — to jointly operate television channels in Malaysia. Green Packet said ATVM is desirous of collaborating with the group and will invest HK$50 million in the project. Green Packet will also enter into a service agreement with MYTV Broadcasting Sdn Bhd for the leasing arrangement of the broadcasting channels' rights. (The Edge Markets / Bursa Malaysia) Kinsteel Bhd’s external auditor Messrs Crowe Horwath has expressed a disclaimer of opinion in the company's audit report for FY17. The basis for the disclaimer of opinion was due to the ability of the steel manufacturer to continue as a going concern. The going concern for Kinsteel, which is undergoing a regularisation plan — including debt restructuring measures — is also dependent on support from its lenders and shareholders, combined with its ability to run a cashflow-healthy operation. The auditor said in the event that these are not forthcoming, the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Kinsteel had booked a net loss of RM343.0mn in FY17. As at June 30, 2017, the group’s current liabilities had exceeded its current assets by RM961.5mn. The figure has since climbed to RM696.0mn. (The Edge Markets / Bursa Malaysia) Page 5 of 9
8. 18-Dec-17 N e w s I n B r i e f Economy Asia RM113 .5bil in Investments Approved Over Nine Months Malaysia’s approved investments in the manufacturing, services and primary sectors fell to RM113.5bil in January to September of 2017 due to a higher base effect last year and subdued property market. The Malaysian Investment Development Authority (Mida) said that these investments involved 3,886 projects and would have a capacity to create 91,500 jobs. Local sources accounted for three-quarters of the approved investments at 73.5% and the rest were foreign sources. This was in line with the subdued property market that is expected to persist until the end of the year. The manufacturing sector too declined 15.5% partly due to the higher base reported previously as a result of approvals associated with lumpy projects (Pengerang and Rapid project in Johor). A second reason was the softening global foreign direct investments trend for the sector, as highlighted by UNCTAD’s World Investment Report 2017. Nonetheless, Malaysia’s strategy of positioning local companies as the primary driver of growth is paying off with Malaysian companies took the lead in the main sectors, namely manufacturing, services and primary. The higher composition of approved domestic investments was in line with the government’s drive to ensure sustainable future economic growth. Under the Economic Transformation Programme, domestic investments are targeted to account for 73% of total investments by 2020. (The Star) Bank Negara to Halt Scheme of Higher Deposit Rates for Exporters Bank Negara said it will discontinue a special deposit facility for exporters from next year, rolling back a measure that it had introduced last year to stem the currency’s slide against the US dollar. Last December, the central bank clamped down on offshore ringgit trade and announced measures to boost liquidity and encourage more domestic trade of the ringgit as the currency fell to 13-month lows in the aftermath of Donald Trump’s US presidential election win. As a sweetener to keep more cash at home, the central bank said all ringgit proceeds from exporters can earn a higher deposit rate of 3.25% annually under the special deposit facility. The ringgit is among the best performing currencies in the region this year, up around 9.8% against the US dollar so far this year, as the economy registered better-than-expected growth over the past three quarters. Outstanding balances in the deposit facility, however, can continue to earn a return of 3.10% per annum up to March 31 next year, the central bank said in the letter dated Dec 14. (The Star) Government Will Not Rescue Troubled Developers The government will not bail out property developers, particularly those building high-end projects, who failed to sell their units and faced financial difficulties, said Second Finance Minister Datuk Seri Johari Abdul Ghani. The government has frozen approvals for luxury developments from Nov 1, 2017 to stabilise the property market. “This is a temporary freeze and not a blanket ban and when we see that things are better, we will review the situation. There is no particular timeline for the freeze. “The concern is at the fringes of the Klang Valley, Johor and Penang. We want developers to look into the details and the right target market, because at the end of the day, if you (developers) have problems, and the bank have problems, we (the government) will have a problem,” he said. Johari said problems would arise when developers failed to sell the high-end properties, priced between RM2mil and RM3mil. (The Star) Japan Tankan Index Shows Best Quarter for Big Manufacturers Since 2006 Business conditions in Japan improved still further in the fourth quarter as the Bank of Japan’s Tankan index registered the best quarter for the country’s big manufacturers in eleven years. The central bank survey’s reading for large manufacturers rose by three points to +25 in the fourth quarter, besting a median estimate of +24 from economists polled by Reuters and hitting the highest level since the fourth quarter of 2006. The overall Tankan index climbed one point higher in the quarter ended December to +16. The survey Page 6 of 9
9. 18-Dec-17 samples more than 10 ,000 companies with a response rate of nearly 100%. The index for mid-sized manufacturers also climbed two points to +19 while that for small manufacturers jumped five points to +15. By industry, the index for production machinery rose ten points to +46 as that for electrical machinery held steady at +27. However, non-manufacturing business conditions were flat overall at +23. Business services dipped four points to +36, while construction fell three points to +45. Companies of all sizes and sectors reported labour shortages had continued to worsen in the December quarter as the Tankan index for employment conditions fell three more points to -31. (Financial Times) China, UK Vow to Bolster Economic Cooperation China and Britain have vowed to continue and strengthen cooperation on a wide range of economic, financial and trade issues, including speeding the introduction of a LondonShanghai stock connect programme. In a joint statement, coinciding with an official visit to China by British finance minister Philip Hammond, the countries also said they opposed trade protectionism and reaffirmed their support for the World Trade Organisation as a key pillar of the global trade system. The statement comes as China, in an unusual step, accused the United States and the European Union of breaking promises that they made when China joined the WTO. Speaking at a press conference in Beijing together with Chinese Vice Premier Ma Kai, Hammond said the two countries were also discussing a long-awaited London-Shanghai stock connect programme, as well as a possible scheme to connect their bond markets. "We have agreed to accelerate the final preparations for the London-Shanghai stock connect initiative and we've agreed to commence feasibility studies for a UK-China bond connect and for mutual recognition of funds between the two jurisdictions," he said. Hammond, who also visited a separate forum on Saturday where the London and Shenzhen stock exchanges signed a pact on supporting innovative companies, said he hopes to see more Chinese small firms "make the most of our country's startup expertise, networks and capital raising capabilities." Fang Xinghai, vice chairman of China Securities Regulatory Commission, told the forum that China is looking to increase cooperation with Britain. (The Star) Indonesia Exports Rise More than Expected in November Indonesia's exports and imports grew more than expected in November, data from statistics bureau revealed. Exports rose 13.18% year-over-year in November, faster than the 12.63% growth economists had forecast. Imports surged 19.62% in November from a year ago, well above the expected spike of 13.0%. As result, the trade surplus shrank notably to around $130 million in November from $833 million in the corresponding month of 2016. The expected surplus was $844 million. In October, the surplus totaled $1.0 billion. (RTT News) United States U.S. Industrial Production Rose 0.2% in November on Oil and Gas Rebound U.S. industrial production rose slowly in November, with the increase entirely due to a post-hurricane recovery in oil and gas extraction. Industrial production—a measure of output at factories, mines and utilities—rose a seasonally adjusted 0.2% in November from the prior month, the Federal Reserve said. This was slightly below the 0.3% rise forecast by economists. October industrial production was revised up to a 1.2% gain from an initial estimate of a 0.9% increase. From a year earlier, industrial production rose 3.4% in November. Output in the volatile mining sector jumped 2.0% in November, aided by a gain in oil and gas extraction that the Fed said “returned to normal levels after being held down in October by Hurricane Nate. Without this rebound, industrial production would have remained flat last month, the Fed noted. Manufacturing output, the biggest component of industrial production rose 0.2% in November, a sharp slowdown from October’s 1.4% increase. Capacity utilization, a measure of slack in the industrial economy, increased 0.1 percentage point to 77.1% in November. Economists had expected capacity utilization of 77.2% in November. U.S. manufacturing activity has picked up steam this year because of a weaker dollar, more-stable oil prices and global economic growth. (The Wall Street Journal) Page 7 of 9
10. 18-Dec-17 New York Manufacturing Index Indicates Slower Growth in December Growth in New York manufacturing activity slowed by more than anticipated in the month of December , according to a report released by the Federal Reserve Bank of New York. The New York Fed said its general business conditions index dropped to 18.0 in December from 19.4 in November, although a positive reading still indicates growth in regional manufacturing activity. The index had been expected to dip to 18.6. The bigger than expected decrease by the headline index was partly due to a slowdown in the pace of job growth, as the number of employees index slid to 5.1 in December from 11.5 in November. The new orders index also edged down to 19.5 in December from 20.7 in November, while the shipments index climbed to 22.4 from 18.4. On the inflation front, the prices paid index advanced to 29.7 in December from 24.6 in November and the prices received index rose to 11.6 from 9.2. The New York Fed said firms remained optimistic about the six-month outlook, though to a somewhat lesser extent than in November. The index for future business conditions dropped to 46.6 in December from a multi-year high of 49.9 in the previous month. (RTT News) Europe and Uni ted Kingdom Eurozone Goods Trade Surplus Narrows in October from Previous Year A bigger rise in imports than in exports left the Eurozone’s goods trade surplus a little slimmer in October than in the same period in 2016. The surplus clocked in at €18.9bn in October 2017, from €19.2bn in the same period last year, according to data from Eurostat. Imports grew 10.1% on a year over year basis to €168.9bn, with exports rising 8.8% to €187.9bn. For the January – October period this year, the surplus is running at €187.9bn, from €213.8bn over the same time span in 2016. The goods surplus has been booming since the end of 2011 Eurozone debt crisis, something that has helped to power the Eurozone’s economic growth. Germany, the bloc’s powerhouse, has by far the biggest year to date surplus to countries outside of the EU at €148.1bn. This has been sharply criticised by US President Donald Trump, who has accused the country of suppressing the euro in order to provide a boost to its factories. (Financial Times) Britain Looking at Distinct Trade Deal with EU British finance minister Philip Hammond said it is likely Britain will want to negotiate a bespoke arrangement for a future trade deal with the European Union, rather than copying existing arrangements like the Canada-EU deal. The European Union agreed to move Brexit talks onto trade and a transition pact but some leaders cautioned that the final year of divorce negotiations before Britain's exit could be fraught with peril. Summit chair Donald Tusk said the world's biggest trading bloc would begin "exploratory contacts" with Britain on what London wants in a future trade relationship, as well as starting discussion on the immediate post-Brexit transition. Speaking in Beijing, Hammond said it was probably not helpful to think in terms of off-the-shelf models like the Canada-EU deal. (The Star) Page 8 of 9
11. 18-Dec-17 Share Buy-Back : 15 December 2017 Company BORNOIL E&O FIAMMA GLOMAC GRANFLO KSENG LEESK MALAKOF PECCA SCGM UNIMECH Bought Back Price (RM) Hi/Lo (RM) 30,900,000 1,200,000 105,000 3,000 10,000 10,000 599,000 100,000 16,200 9,000 20,000 0.09 1.42/1.39 0.515/0.51 0.62 0.24 4.60 0.35/0.345 0.93 1.46/1.44 2.62/2.60 1.03/1.02 0.09/0.085 1.42/1.38 0.52/0.495 0.62/0.60 0.24/0.235 4.60/4.55 0.35/0.34 0.94/0.91 1.47/1.44 2.62/2.59 1.03/1.02 Total Treasury Shares 103,571,000 22,103,747 21,511,000 5,015,400 7,854,000 2,143,500 2,376,900 624,400 3,115,800 272,400 6,129,310 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 9 of 9
12. 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 15-Dec-17 AUTOMOBILE BAUTO 2.16 2.50 0.75 10.2 14.3 21.2 15.1 5.4 5.3 2.24 -3.6 1.84 17.4 MBMR 2.17 2.32 0.88 20.7 23.2 10.5 9.4 1.9 2.1 2.60 -16.5 2.01 8.0 1.4 1.4 PECCA 1.47 1.69 na 7.7 11.1 19.0 13.2 3.4 3.8 1.70 -13.5 1.28 14.8 -7.5 SIME 2.12 1.98 1.36 11.8 12.0 18.0 17.7 10.8 1.4 2.55 -16.9 1.83 15.7 14.7 UMW 4.98 4.20 1.30 -0.4 19.2 na 25.9 0.0 2.0 6.08 -18.1 4.09 21.7 17.9 BANKS & FINANCIAL SERVICES ABMB 3.96 4.20 1.40 33.1 30.6 12.0 13.0 4.0 4.0 4.49 -11.8 3.62 9.4 6.5 AFFIN 2.33 2.50 0.89 23.5 24.2 9.9 9.6 3.4 3.4 2.98 -21.7 2.22 4.9 -1.7 AMBANK 4.46 5.10 1.25 43.9 48.6 10.1 9.2 3.9 4.0 5.70 -21.8 4.06 9.9 3.5 CIMB 6.31 7.00 1.54 48.7 50.9 13.0 12.4 3.9 4.0 7.08 -10.9 4.49 40.5 39.9 HLBANK 16.66 17.50 0.67 104.9 114.2 15.9 14.6 2.7 2.7 17.08 -2.5 13.02 28.0 23.4 MAYBANK 9.54 9.70 0.99 68.4 70.9 14.0 13.5 5.2 5.2 9.86 -3.2 7.68 24.2 16.3 PBBANK 20.76 23.60 0.64 137.2 142.4 15.1 14.6 2.7 2.8 21.08 -1.5 19.60 5.9 5.3 RHBBANK 5.12 5.20 1.59 50.6 52.2 10.1 9.8 2.9 2.9 5.59 -8.4 4.62 10.8 8.7 BURSA 9.95 11.10 0.81 40.2 39.0 24.7 25.5 3.4 3.4 10.98 -9.4 8.08 23.1 14.1 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 CONSTRUCTION GADANG 1.08 1.73 0.61 15.2 14.3 7.1 7.6 2.8 2.8 1.37 -21.2 0.97 11.3 2.9 GAMUDA 4.75 6.00 0.92 28.5 34.5 16.6 13.8 2.5 2.5 5.52 -13.9 4.58 3.7 -0.6 IJM 2.73 2.89 0.76 15.3 13.7 17.9 19.9 2.7 3.5 3.61 -24.4 2.71 0.7 -14.7 PESONA 0.46 0.55 0.97 3.5 5.8 13.0 7.9 3.3 3.3 0.74 -38.1 0.44 4.6 -24.8 53.0 SENDAI 0.88 0.58 1.24 8.2 9.6 10.7 9.2 1.1 1.1 1.39 -36.7 0.51 74.3 SUNCON 2.38 2.65 na 11.3 14.7 21.0 16.2 2.3 2.3 2.44 -2.5 1.65 44.2 40.0 WCT 1.52 1.64 1.01 11.5 12.6 13.2 12.0 2.0 2.0 2.48 -38.6 1.46 4.1 -11.6 LITRAK 5.61 6.26 0.28 41.9 45.6 13.4 12.3 4.5 4.5 6.15 -8.8 5.56 0.9 -4.6 ANNJOO 3.80 4.40 1.29 41.2 45.3 9.2 8.4 4.2 5.8 3.98 -4.5 2.10 81.0 75.1 CHINHIN 1.21 1.36 na 5.7 9.7 21.2 12.4 2.5 4.1 1.49 -18.8 0.86 41.5 39.1 CARLSBG 15.44 18.06 0.74 79.3 86.2 19.5 17.9 5.1 5.6 16.00 -3.5 13.90 11.1 10.9 HEIM 18.46 19.14 0.43 79.6 84.0 23.2 22.0 3.9 4.1 19.58 -5.7 15.78 17.0 12.7 AEON 1.72 1.97 0.41 4.7 6.7 36.4 25.7 2.0 2.3 2.70 -36.3 1.70 1.2 -33.1 AMWAY 7.30 8.18 0.36 35.7 43.9 20.4 16.6 4.1 5.2 8.18 -10.7 7.04 3.7 -0.4 F&N 26.16 27.41 0.19 102.6 155.7 25.5 16.8 2.2 2.3 26.20 -0.2 22.64 15.5 11.4 Building Materials CONSUMER Brewery Retail HUPSENG 1.12 1.25 0.45 5.2 5.4 21.7 20.6 4.0 4.0 1.28 -12.5 1.08 3.7 -2.7 JOHOTIN 1.20 1.48 0.64 9.7 12.5 12.3 9.6 3.8 4.2 1.76 -31.8 1.16 3.4 -3.2 NESTLE 100.00 120.50 0.39 292.7 330.1 34.2 30.3 2.8 3.0 102.40 -2.3 74.12 34.9 27.9 PADINI 5.46 4.67 0.68 23.5 27.0 23.3 20.3 2.1 2.3 5.50 -0.7 2.26 141.5 115.0 POHUAT 1.75 2.50 0.73 26.8 26.8 6.5 6.5 3.4 4.6 2.08 -15.9 1.62 8.0 1.2 QL 4.35 3.26 0.29 12.1 12.8 36.0 33.9 1.0 1.0 4.35 0.0 3.26 33.6 30.6 SIGN 0.75 0.92 1.03 6.7 6.9 11.1 10.7 3.4 3.4 1.07 -30.4 0.73 2.1 -6.3 38.12 52.08 1.29 198.6 187.4 19.2 20.3 5.2 5.2 51.04 -25.3 35.78 6.5 -13.7 GENTING 8.99 11.53 1.50 48.7 54.4 18.5 16.5 1.6 1.8 10.00 -10.1 7.67 17.3 13.2 GENM 5.65 6.51 1.59 18.7 27.0 30.1 20.9 1.4 1.6 6.38 -11.4 4.47 26.4 25.0 BJTOTO 2.30 3.34 0.80 18.3 21.5 12.6 10.7 6.1 7.0 3.07 -25.1 2.25 2.2 -22.3 LUSTER 0.11 0.15 1.93 0.4 0.4 28.9 29.1 0.0 0.0 0.16 -34.4 0.05 110.0 110.0 24.2 Tobacco BAT GAMING Casino NFO HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO 2.46 2.70 0.66 14.0 15.0 17.6 16.4 3.8 4.0 2.46 0.0 1.90 29.5 IHH 5.81 6.40 0.76 6.7 11.9 86.3 48.9 0.5 0.5 6.45 -9.9 5.42 7.2 -8.5 KPJ 0.93 1.09 0.41 3.2 3.6 28.8 26.0 1.9 2.2 1.14 -18.9 0.90 2.8 -11.5 HARTA 9.75 7.30 0.82 19.4 25.8 50.3 37.8 0.9 1.2 9.80 -0.5 4.53 115.2 101.9 KOSSAN 7.95 8.80 0.23 29.1 38.3 27.4 20.8 1.8 2.4 8.31 -4.3 5.62 41.5 20.6 SUPERMX 1.94 1.80 0.36 10.2 15.3 19.0 12.7 1.6 2.7 2.18 -11.0 1.69 14.8 -8.1 TOPGLOV 6.92 6.30 -0.01 26.4 29.4 26.2 23.5 2.1 2.1 7.05 -1.8 4.56 51.8 29.3 KAREX 1.30 1.00 0.44 2.8 2.8 46.6 47.0 1.5 0.5 2.52 -48.4 1.20 8.3 -44.9 SCIENTX 8.77 9.84 0.42 52.3 68.2 16.8 12.9 1.8 2.4 9.85 -11.0 6.68 31.3 30.9 SKPRES 2.24 2.20 0.45 8.3 10.4 27.1 21.6 1.9 2.3 2.32 -3.4 1.24 80.6 73.6 ASTRO 2.59 3.10 1.19 13.2 14.0 19.6 18.6 4.8 5.0 2.94 -11.9 2.47 4.9 -0.4 MEDIA PRIMA 0.61 0.45 0.55 -7.6 -3.8 na na 0.0 0.0 1.28 -52.7 0.58 4.3 -47.4 STAR 1.43 1.25 0.85 5.6 6.7 25.4 21.3 29.4 8.4 2.22 -35.5 1.31 9.2 -26.6 Rubber Gloves INDUSTRIAL MEDIA
13. 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 0.46 0.75 1.28 3.6 4.5 12.6 10.1 2.2 2.2 0.69 -34.1 0.25 85.7 78.4 LCTITAN 4.79 6.66 na 42.8 63.4 11.2 7.6 4.8 5.2 6.53 -26.6 4.14 15.7 -26.3 MHB 0.85 0.78 1.66 -2.0 -0.5 na na 0.0 0.0 1.16 -27.2 0.63 35.2 -7.7 MISC 7.24 6.56 1.07 57.2 46.8 12.7 15.5 4.1 4.1 7.90 -8.4 6.89 5.1 -1.5 PANTECH 0.65 0.69 1.19 4.0 6.1 16.3 10.5 2.8 4.3 0.74 -12.8 0.44 48.3 44.9 PCHEM 7.45 8.05 0.99 52.7 49.8 14.1 15.0 3.1 3.0 7.81 -4.6 6.69 11.4 6.7 SAPNRG 0.79 1.25 2.59 6.6 -6.5 11.9 na 0.0 0.0 2.10 -62.6 0.78 0.6 -51.5 SERBADK 3.22 3.40 na 22.9 25.7 14.1 12.5 2.1 2.4 3.29 -2.1 1.51 113.2 114.7 UMWOG 0.29 0.51 1.58 -1.7 0.4 na 71.8 0.0 0.0 0.92 -68.6 0.27 7.4 -66.1 UZMA 1.32 1.56 1.06 11.6 13.2 11.4 10.0 0.0 0.0 1.98 -33.3 1.28 3.1 -22.4 FGV 1.73 2.01 1.76 2.1 3.7 82.7 46.7 2.9 2.9 2.18 -20.6 1.47 17.7 11.6 IJMPLNT 2.76 2.69 0.26 12.3 9.1 22.4 30.3 2.5 2.9 3.60 -23.3 2.75 0.4 -18.8 IOICORP 4.41 4.12 1.19 17.3 21.0 25.4 21.0 2.2 3.6 4.81 -8.3 4.31 2.3 0.2 KFIMA 1.57 1.89 0.51 19.9 13.3 7.9 11.8 5.7 5.7 1.96 -19.9 1.56 0.6 -7.6 KLK 24.46 26.18 0.75 100.5 120.7 24.3 20.3 2.0 2.5 25.50 -4.1 23.00 6.3 1.9 SIMEPLT 5.25 6.25 na 17.6 21.0 29.9 24.9 2.7 2.7 5.65 -7.1 4.58 14.6 -6.1 UMCCA 6.68 7.52 0.41 37.5 31.8 17.8 21.0 3.4 2.5 7.08 -5.6 5.67 17.7 11.9 GLOMAC 0.60 0.50 0.61 1.4 3.0 41.5 20.3 4.5 3.3 0.75 -19.5 0.58 3.4 -13.7 HUAYANG 0.65 0.59 0.78 17.3 1.8 3.8 35.5 6.2 0.8 1.21 -46.3 0.60 9.2 -42.5 IBRACO 0.88 0.92 na 3.3 9.1 27.0 9.6 2.3 4.5 1.02 -13.7 0.76 16.6 -12.0 IOIPG 1.94 2.02 0.73 18.9 16.5 10.3 11.7 3.1 3.1 2.22 -12.6 1.85 4.9 -0.5 MAHSING 1.55 1.69 1.04 13.8 13.0 11.2 11.9 4.2 4.2 1.64 -5.5 1.38 12.3 8.4 SIMEPROP 1.42 1.54 na 7.0 9.2 20.2 15.4 0.0 1.4 1.52 -6.6 1.04 36.5 -5.3 SNTORIA 0.69 0.85 0.34 6.8 8.3 10.1 8.3 0.0 1.5 0.91 -24.7 0.60 14.2 -5.8 PLANTATIONS PROPERTY Note: SNTORIA proposed bonus issue of warrants & right issue of shares. For more details please refer to 25.09.17 report. SPB 5.50 4.83 0.80 17.6 21.2 31.3 26.0 2.2 2.2 5.50 0.0 4.32 27.2 24.4 SPSETIA 3.40 3.77 0.81 21.3 21.3 16.0 16.0 3.5 3.5 4.38 -22.4 3.03 12.2 11.5 SUNWAY 1.70 1.74 0.79 11.5 11.9 14.8 14.3 2.9 2.9 1.96 -13.2 1.25 35.8 32.2 SUNREIT 1.70 1.87 0.72 9.2 10.0 18.4 16.9 5.4 5.9 1.81 -6.1 1.64 3.7 -1.2 CMMT 1.43 1.72 0.41 8.1 8.6 17.7 16.6 5.9 6.3 1.72 -16.9 1.39 2.9 -6.5 -32.5 REIT POWER & UTILITIES MALAKOF 0.93 1.16 0.66 6.3 6.0 14.7 15.4 7.6 7.6 1.43 -35.3 0.88 5.7 PETDAG 24.30 22.08 0.54 102.8 105.1 23.6 23.1 3.2 3.2 25.70 -5.4 21.00 15.7 2.1 PETGAS 16.24 19.10 0.95 89.1 98.8 18.2 16.4 4.1 4.2 21.76 -25.4 15.82 2.7 -23.8 TENAGA 15.44 17.38 0.70 131.6 129.9 11.7 11.9 3.0 3.0 15.68 -1.5 13.00 18.8 11.1 YTLPOWR 1.28 1.17 0.81 8.2 9.7 15.6 13.3 3.9 3.9 1.50 -14.7 1.11 15.3 -12.4 TELECOMMUNICATIONS AXIATA 5.32 5.75 1.35 14.3 16.0 37.2 33.2 1.4 1.5 5.47 -2.7 4.24 25.5 12.7 DIGI 4.77 5.20 0.81 19.5 20.0 24.4 23.9 4.1 4.2 5.19 -8.1 4.36 9.4 -1.2 MAXIS 5.93 6.10 0.75 26.0 26.2 22.8 22.6 3.4 3.4 6.60 -10.2 5.48 8.2 -0.8 TM 6.10 7.20 0.63 22.6 23.2 27.0 26.3 3.3 3.4 6.69 -8.8 5.81 5.0 2.5 96.6 TECHNOLOGY Semiconductor & Electronics ELSOFT 2.76 2.70 0.60 11.3 15.0 24.4 18.4 2.9 3.8 2.95 -6.4 1.36 102.3 IRIS 0.15 0.25 1.83 -1.3 0.6 na 26.2 0.0 0.0 0.22 -34.1 0.10 45.0 31.8 INARI 3.36 3.05 0.96 11.2 14.2 30.0 23.7 2.9 3.0 3.39 -0.9 1.61 109.1 102.8 MPI 12.00 15.40 0.42 89.5 105.5 13.4 11.4 2.3 2.7 14.52 -17.4 7.36 63.0 61.9 UNISEM 3.41 3.85 1.02 23.5 27.1 14.5 12.6 3.5 3.5 4.25 -19.8 2.32 47.0 44.5 TRANSPORTATION Airlines AIRASIA 3.35 3.83 1.03 53.1 38.3 6.3 8.8 1.2 1.5 3.59 -6.7 2.16 55.1 46.3 AIRPORT 8.50 8.47 1.27 19.6 19.7 43.4 43.0 1.2 1.2 9.45 -10.1 5.91 43.8 40.3 Freight & Tankers PTRANS 0.28 0.44 na 2.1 2.3 13.6 12.3 2.5 2.5 0.38 -26.7 0.14 98.7 92.5 TNLOGIS 1.32 1.80 1.13 12.0 13.6 11.0 9.7 3.2 3.8 1.83 -28.0 1.29 2.3 -15.3 WPRTS 3.57 4.06 0.89 17.1 16.8 20.8 21.2 3.6 3.5 4.36 -18.1 3.34 6.9 -17.0 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 24.58 23.30 1.26 172.7 189.1 14.2 13.0 2.4 2.4 -3.1 17.2 43.32 41.8 0.0 OCBC 12.30 13.50 1.20 95.5 104.0 12.9 11.8 5.7 6.7 -2.3 8.9 8.84 37.9 0.0 UOB 26.05 26.90 1.07 200.8 215.4 13.0 12.1 2.7 2.7 -3.0 20.1 29.93 27.7 0.0 PLANTATIONS WILMAR 3.12 3.63 0.85 25.6 29.9 12.2 10.4 2.2 2.6 -22.0 3.1 1.96 -13.1 0.0 IFAR 0.38 0.53 0.98 4.9 5.2 7.7 7.2 3.2 3.4 -35.3 0.4 2.74 -28.6 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.
14. Technical View Monday , December 18, 2017 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Technical Outlook FBM KLCI: 1,753.07 (+31.82, +1.85%) Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Need to Consolidate Gains Before Heading Up Again The blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) enjoyed a steep rally to a two-month high last week, mostly aided by strong windowdressing gains in key banking stocks. Profit-taking following corrections in the region after the US Fed raised interest rates and growth outlook for next year, and potential for delay on passage of the US tax reforms stalled the rally ahead of the weekend. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) surged 31.82 points, or 1.8 percent to 1,753.07, with core banking stocks Public Bank (+74sen), Hong Leong Bank (+66sen), AMBank (+38sen), HLFG (+36sen), CIMB (+35sen) and Maybank (+27sen) contributing the most to the index’s gains. Daily traded volume and value improved to 2.21 billion shares worth RM2.73 billion, compared to the 1.76 billion shares and RM2.41 billion respectively the previous week. Bursa Malaysia shares ended slightly easier on Monday, with market sentiment dented by the stronger-than-expected November US jobs data which increased the likelihood for interest rate hike. The KLCI shed 1.78 points to settle at 1,719.47, off an early high of 1,725.74 and low of 1,718.30, as gainers edged losers 444 to 409 on slow turnover totaling 1.64bn shares worth RM1.96bn. Strong rebound in key banking stocks the next day helped lift the local benchmark to close at a one-month high, while buying momentum spilled over to lower liners. The KLCI ended up 10.10 points at the day’s high of 1,729.57, off an early low of 1,717.32, as gainers led losers 500 to 372 on improved turnover of 2.15bn shares worth RM2.33bn. Key banking and gaming stocks extended gains Wednesday to shore up the index for a strong close, spilling over to lift sentiment on the broader market. The KLCI climbed another 8.09 points to again close at the day’s high 1,737.66, off an early low of 1,725.95, as gainers led losers 563 to 353 on robust turnover totaling 2.51bn shares worth RM2.57bn. The local benchmark index rallied to a two-month high the subsequent day on robust window-dressing gains in key heavyweight banking stocks, despite the softer regional tone after the US Fed raised interest rates and growth outlook for next year. The KLCI surged 21.34 points, or 1.2% to end at 1,759, off an early low of 1,736.07, as gainers led losers 631 to 328 on strong turnover of 2.42bn shares worth RM3.26bn. Profit-taking activity picked up ahead of the weekend to check the substantial gains seen on key banking stocks, as selling interest increased given the overbought momentum triggered by the recent three-day rally, and corrections in the region on potential delay on passage of the US tax reforms. The index retraced 5.93 points to settle at 1,753.07, off an early high of 1,760.02 and low of 1,745.65, as losers edged gainers 475 to 414 on steady turnover totaling 2.33bn shares worth RM3.51bn. Trading range for the local blue-chip benchmark index last week ballooned to 42.7 points, compared to the 16.36 points range the previous week, as key banking stocks rallied for three days to lift it up to a fresh two-month high. For the week, the FBM-EMAS Index rallied 243.44 points, or nearly 2 percent to 12,588.84, while the FBM-Small Cap Index climbed 324.10 points, or a similar 2 percent to close the week at 16,802.68. Page 1 of 3
15. 18-Dec-17 Due to last week ’s steep rally, the daily slow stochastic momentum indicator for the FBM KLCI spiked up deep into overbought territory (Chart 1), but is hooking down due to last Friday’s pullback, while the weekly indicator triggered a buy signal in oversold territory. The 14-day Relative Strength Index (RSI) indicator climbed up to a robust reading of 63.91 as of last Friday but is also hooking down, while the 14-week RSI rose to a bullish reading of 52.88. Chart 1 On trend indicators, the daily Moving Average Convergence Divergence (MACD) improved on its bullish trend reading, while the weekly MACD indicator’s signal line has finally hooked up from the prolonged decline into negative territory (Chart 2). The +DI and –DI lines on the 14-day Directional Movement Index (DMI) trend indicator had crossed for buy, but the ADX line has yet to turn upwards to confirm an emerging trend. Chart 2 Page 2 of 3
16. 18-Dec-17 Conclusion Last week ’s rally spike on the FBM KLCI to a two-month high lifted daily momentum indicators into deeply overbought territory, suggesting profit-taking is needed to consolidate short-term gains and neutralize excessive overbought momentum. On the other hand, emerging positive weekly momentum and trend indicators imply that further strength may be forthcoming, if buying momentum is able to sustain at a healthy pace to encourage firmer investor commitments going into the year-end holidays. As for the index, it will need to sustain above the 200-day moving average resistance, currently at 1,755, to enhance upside momentum and enable challenge of stronger upside hurdles from 1,765 and 1,782, with the double-top peak of 1,793 and 1,796 acting as major resistance. On the downside, immediate support is seen at 1,737, the 50-day ma level, followed by 1,729, the 30-day ma, while crucial support will be the 5 Dec pivot low of 1,708. Stock-wise, core banking stocks are expected to consolidate their recent strong gains before resuming higher for year-end window-dressing upside, while oil & gas and construction related shares like Bumi Armada, Dialog, UEM Sunrise and WCT Holdings may attract rotational buying interest. Chart 3 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 Monday, December 18, 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 3 of 3
17. RESULTS UPDATE Monday , December 18, 2017 FBMKLCI: 1,753.07 Sector: Construction THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM6.00 (+26.3%) Gamuda Berhad Last Traded: RM4.75 Strong YoY Growth Driven by Construction Division Ooi Beng Hooi Tel: +603-2167 9612 BUY benghooi@ta.com.my Review Gamuda’s 1QFY18 net profit of RM203.0mn came in within expectations, accounting for 24.0% and 25.6% of ours and consensus’ full-year estimates. First interim dividend of 6sen/share was declared, maintaining the same amount declared in the corresponding quarter last year. YoY, 1QFY18 core profit jumped 25.2% to RM203.0mn as the revenue surged 52.9% to RM771.8mn. The strong improvements in both the top and bottom-lines were boosted mainly by the construction division, which saw construction revenue surged 54.0% to RM302.3mn while the construction PBT almost double (+95.2%) to RM100.3mn. These were driven by higher work progress at MRT2. Its property division recorded a strong 88.4% YoY surge in revenue in the reporting quarter to RM344.7mn. However, the property PBT grew at a much lower rate at 10.3% to RM45.1mn as its property operating margin dropped 5.3%-pts to 8.3%. The property margin was dragged by higher share of overseas property projects, which typically carry lower margins as compared with local projects, more affordable housing sold, as well as high upfront costs for local township projects. Its concession division recorded a relatively flat performance YoY. QoQ, the core profit was flat (+0.9%). The Improved construction performance and lower taxation were offset by weaker property earnings (high base effect) and higher finance cost. www.taonline.com.my Share Information Bloomberg Code Bursa Stock Code Listing Share Cap (mn) Market Cap (RMmn) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) GAM MK GAMUDA 5398 Main Market 2,455.3 11662.7 5.52/4.58 5788.7 61.9 0.92 EPF - 11.89 Skim Amanah Saham Bumiputera - 8.72 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 847.2 875.7 793.1 921.6 106.8 95.0 Buy (Maintained) Financial Indicators Net Debt / Equity (%) CFPS (sen) Price / CFPS (x) ROA (%) NTA/Share (RM) Price/NTA (x) FY18 50.9 25.0 19.0 5.2 3.3 1.4 FY19 49.1 4.0 119.3 5.1 3.5 1.3 % of FY 24.0 25.6 Within Within GAMUDA (0.4) (11.5) (11.5) (1.2) FBM KLCI 1.8 (1.7) (2.1) 7.0 Scorecard Impact Maintain our FY18 and FY19 earnings forecasts. Outlook The outstanding construction order book stood at RM7.8bn. Going forward, we expect a stronger contribution from the construction division as construction activities of MRT 2 and Pan Borneo Highway package accelerate. We expect the property division to perform well, driven by strong sales achieved in FY17 and positive outlook for the overseas property projects. For domestic property projects, sales of landed properties in townships are expected to remain resilient. vs. TA vs. Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth (12-Mth) Share Price relative to the FBMKLCI Valuation Maintain our BUY call and target price of RM6.00, based on 20xCY18 construction earnings, 14xCY18 property earnings and 16xCY18 earnings from toll road and water concessions. Source: Bloomberg Page 1 of 2
18. 18-Dec-17 Exhibit 1 : Earnings Summary (RMmn) FYE 31 J ul R evenue E BITDA E BITDA ma rg in P BT Adj P BT Net profit Adj net profit Adj E P S E P S Growth (Core) PER GDP S Div Yield E V/E BITDA R OE 2016 2121.9 615.7 29.0 780.7 780.7 626.1 626.1 26.0 (10.2) 18.3 12.0 2.5 12.2 9.5 (% ) (s en) (% ) (x) (s en) (% ) (x) (% ) 2017 3211.4 830.1 25.8 826.0 924.5 602.1 700.5 28.6 10.0 16.6 12.0 2.5 13.7 9.8 2018F 3899.3 895.6 23.0 1078.1 1078.1 847.2 847.2 34.2 19.5 13.9 12.0 2.5 13.7 10.8 2019F 4117.3 924.4 22.5 1116.3 1116.3 875.7 875.7 34.9 2.1 13.6 12.0 2.5 13.6 10.3 2020F 4535.8 948.6 20.9 1096.3 1096.3 858.7 858.7 33.8 (3.1) 14.1 12.0 2.5 13.8 9.4 Exhibit 2: 1QFY18 Results Analysis (RMmn) YE 31 J ul 1Q17 4Q17 1Q18 QoQ YoY 3MFY17 3MFY18 YoY Turnover - C ons truc tion - P rope rty - Wate r and toll 504.9 196.3 183.0 125.6 1013.2 281.5 600.0 131.6 771.8 302.3 344.7 124.8 (23.8) 7.4 (42.5) (5.2) 52.9 54.0 88.4 (0.6) 504.9 196.3 183.0 125.6 771.8 302.3 344.7 124.8 52.9 54.0 88.4 (0.6) E BIT F ina nce cos ts JV As s ocia tes A dj P B T - C ons truc tion - P rope rty - Wa ter a nd toll 133.7 (26.5) 43.2 55.3 205.6 51.4 40.9 113.4 210.0 (17.5) 42.9 43.5 278.9 72.5 87.5 118.9 183.2 (25.9) 49.6 52.5 259.3 100.3 45.1 114.0 (12.8) 48.3 15.7 20.6 (7.0) 38.2 (48.5) (4.1) 37.1 (2.2) 14.7 (5.1) 26.1 95.2 10.3 0.5 133.7 (26.5) 43.2 55.3 205.6 51.4 40.9 113.4 183.2 (25.9) 49.6 52.5 259.3 100.3 45.1 114.0 37.1 (2.2) 14.7 (5.1) 26.1 95.2 10.3 0.5 Ta xa tion MI R eported Net P rofit Core Net P rofit Core E P S GDP S (sen) (sen) (sen) (30.6) 12.9 162.1 162.1 6.7 6.0 (56.9) 20.8 102.8 201.2 8.2 0.0 (41.6) 14.8 203.0 203.0 8.3 6.0 (27.0) (29.0) 97.6 0.9 0.6 na 35.7 14.5 25.2 25.2 23.4 0.0 (30.6) 12.9 162.1 162.1 6.7 6.0 (41.6) 14.8 203.0 203.0 8.3 6.0 35.7 14.5 25.2 25.2 23.4 0.0 (% ) (% ) (% ) (% ) 26.5 40.7 32.1 14.9 20.7 27.5 19.9 31.5 23.7 33.6 26.3 16.0 % pts 3.0 6.1 6.4 (15.5) % pts (2.7) (7.1) (5.8) 1.1 26.5 40.7 32.1 14.9 23.7 33.6 26.3 16.0 % pts (2.7) (7.1) (5.8) 1.1 E BIT Ma rg in Core P BT Ma rg in Core Net Ma rg in Ta x R a te Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Monday, December 18, 2017, the analyst, Ooi Beng Hooi, 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 2
19. COMPANY UPDATE Monday , December 18, 2017 FBMKLCI: 1,753.07 Sector: Consumer THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM9.84 (+12.2%) Scientex Berhad Last Traded: RM8.77 Buying More Land in Pulai Damia Othman Tel: +603-2167 9602 BUY damia@ta.com.my Last week, Scientex announced that the group has entered into a sale and purchase agreement to acquire a piece of land measuring 335.6 acres in Pulai, Johor for a total cash consideration of RM284.2mn (RM19.50/sqft). We are positive on this news as this will replenish Scientex’s total landbank in Pulai to fuel future earnings growth. We make no change to our earnings forecast. Maintain BUY on Scientex with an unchanged target price of RM9.84/share based on SOP valuation. Next to Existing Pulai Development To recap, Scientex already has been developing housing projects in Pulai since June 2015. The flagship project namely, Taman Pulai Mutiara has an estimated Gross Development Value (GDV) of RM2.5bn. Currently, the group is undergoing projects worth RM449mn with balance undeveloped GDV of RM2.1bn within the existing Pulai land. The proposed land acquisition in Pulai is located adjacent to the existing integrated township developments, which are within the Iskandar Malaysia region. Additionally, the land is in close proximity to Singapore, which is 25KM away from the Second Link Customs Checkpoint and 5KM away from the new Pulai Jaya Interchange exit to the Second Link Expressway. The land is also 33KM away from Johor Bahru city centre. Focusing on Affordable Market Management guided that Scientex will continue to focus on affordable landed housing project for this new Pulai land. For the time being, there is no GDV guided by management as the acquisition is still at a preliminary stage. However, we believe that the GDV will be similar to its existing Pulai developments (see Figure 1). This will increase Scientex’s Pulai development projects to a total of RM5.0bn in GDV. Fairly Valued Land In comparison, the acquisition price for the new Pulai land is at a 21.9% premium to its previous Pulai lands bought in Jun-15. However, according to online sources, plantation lands in Pulai are currently selling at an average price of RM25.25/sqft. As such, we believe the acquisition price, which is at a discount to market price, is fair given the huge land size. (see Figure 1). www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par value (RM) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Scientex Holdings Sdn Bhd Scientex Leasing Sdn Bhd Lim Teck Meng Sdn Bhd TM Lim Sdn Bhd SCI MK 4731 Main Market 483.7 4,242.0 0.5 9.85/6.68 266.0 40.5 0.42 20.8 9.6 7.8 5.0 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.0 0.0 329.8 362.1 328.3 353.7 100.4 102.4 Buy (Maintained) Financial Indicators Net debt/ equity (%) ROE (%) ROA (%) NTA/Share (RM) Price/ NTA (x) Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth FY18 29.3 18.0 11.2 3.8 2.3 FY19 26.0 17.5 11.2 4.3 2.1 SCIENTEX (0.8) 0.7 3.8 29.5 FBM KLCI 1.8 (1.7) (2.1) 7.0 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 4
20. 18-Dec-17 Figure 1 : Scientex’s Pulai Land Purchases Old Pulai New Pulai Acquisition Date Jun-15 Dec-17 Acreage 326 336 Price (RMmn) 219.0 284.2 Price (RM/sqf) 16.00 19.50 Original Land Agricultural Freehold Source: Bursa Malaysia, TA Securities Impact We make no change to our earnings forecast. In average, Scientex’s net profit is expected to grow at 20% per year between FY18 – FY20. As such, the net gearing is expected to increase slightly to 0.4x (from 0.3x previously) for FY19, if we assume the land purchase is financed via 80% of borrowings. According to announcement, the acquisition will be paid by internally-generated funds and borrowings. Recommendation Maintain our BUY call on Scientex with an unchanged target price of RM9.84/share based on SOP valuation. Downside risks to our call includes i) lower-than-expected product margins from manufacturing segment ii) lowerthan-expected unbilled sales from property segment and iii) higher-thanexpected increase in fossil fuel resin price. Figure 2: Property Segment Projects Status as of 4QFY17 Project Area (acres) Pasir Gudang 1,100 Kulai 298 Skudai: Taman Mutiara Mas 150 Ayer Keroh & Durian Tunggal: Taman Muzaffar Heights 334 Purpose Residential & commercial Completed GDV On-going Projects Future Development (RMmn) (RMmn) (RMmn) 2,200 1,391 152 657 1,000 375 144 481 Premium 2,700 718 359 1,623 Premium 900 175 275 450 NA 1,200 514 92 594 Affordable 5,000 0 449 4,551 Affordable 600 35 0 565 Afforadable TBD NA NA NA 13,600 3,208 1,471 8,921 Target Market GDV (RMmn) Affordable Residential & Affordable & commercial Premium Residential & commercial Residential & commercial Industrial, Senai 250 residential & commercial Pulai* 662 Ipoh 80 Rawang 65 Total 2,939 Residential & commercial Residential & commercial Residential & commercial *Included the new Pulai land acquisition Source: Company, TA Securities Sum-of-Parts Valuation Sum-of-Parts Manufacturing Property PAT (RMmn) FY18 FY19 CY18 164.9 181.1 171.6 164.9 181.1 171.6 Target PER (x) 20 8 Equity value (RMmn) Share cap (mn) Target Price (RM) Segment Value (RMmn) 3,495.6 1,373.1 Comment 20% premium to peer's PE average In-line with small-cap property players 4,759.0 483.7 9.84 Page 2 of 4