Bursa Malaysia Daily Market Report - 18 September

Transcription

1. Monday , 18 September, 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. Singapore Banking Sector: Outlook Tempered With Caution 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 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, 18 September 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (15.09.2017) Volume (mil) +/-chg (RMmn) Main Market 1,543.9 346.6 2,585.6 Warrants 140.9 17.6 20.5 ACE Market 455.0 -109.5 84.7 Bond 6.2 0.5 2.1 ETF 0 -0.01 0 Total 2,145.9 2,692.8 Off Market 127.6 55.2 330.6 Value +/-chg 904.4 4.0 -24.4 0.1 -0.01 155.3 Major Indices Index +/- chg Malaysia FBMKLCI 1,786.33 FBMEMAS 12,723.68 FBMSCAP 16,984.96 September Futures 1,781.00 Other Markets DOW JONES 22,268.34 NASDAQ (US) 6,448.47 FTSE (UK) 7,215.47 NIKKEI (JAPAN) 19,909.50 KOSPI (KOREA) 2,386.07 HANG SENG (HK) 27,807.59 FSSTI (S'PORE) 3,209.56 SET (BANGKOK) 1,660.53 JCI (JAKARTA) 5,872.39 SHANGHAI 3,353.62 SHENZHEN 1,987.99 AUSTRALIA 5,695.02 Value/ Volume 1.67 0.15 0.19 0.33 0 1.25 2.59 Review & Outlook Up Down 272 336 49 106 42 64 6 3 0 0 369 509 % chg % YTD chg 4.96 36.39 -29.63 3.50 0.28 0.29 -0.17 0.20 8.81 10.96 15.42 8.90 64.86 19.38 -79.92 102.06 8.41 30.39 -11.39 1.43 20.39 -17.81 -5.55 -43.65 0.29 0.30 -1.10 0.52 0.35 0.11 -0.35 0.09 0.35 -0.53 -0.28 -0.76 12.68 19.79 1.02 4.16 17.75 26.39 11.41 7.62 10.87 8.05 0.96 0.52 Even though there's a general improvement in momentum and trend indicators on the FBM KLCI following last week's recovery, followthrough buying and market breadth need to further strength and sustain upside, given that the index is approaching the formidable two-year high resistance. Key upside catalysts, such as further recovery in the local currency or global oil prices, will be crucial to support a convincing breakout above the 1,796 peak. On the index, expect formidable resistance from the 16 June peak of 1,796, with tougher hurdles from 1,800, 1,815 and subsequently 1,823, the May 2015 peak. Immediate uptrend support is at 1,780 and 1,775, the respective rising 10 and 30-day moving averages, with better support at 1,769, the 50-day moving average. In the blue-chip space, banking counters AMBank and RHBBank should attract buyers again after recent base building, similarly for IHH Healthcare and Sime Darby. On lower liners, investors should re-look aviation stocks AirAsia and AirAsia X, and also construction related counters MRCB and Sunway Construction for rotational interest. News Bites • • • • • Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) ALCOM MAYBANK MTRONIC AT DESTINI BREM VERSATL SERBADK TOMYPAK G3 STRAITS 39.7 27.0 24.0 13.7 7.5 3.5 2.4 2.0 1.5 1.3 1.0 (RM) @ @ @ @ @ @ @ @ @ @ @ 1.12 9.70 0.06 0.12 0.60 0.90 0.79 2.20 0.87 0.81 0.14 Counter Mkt Cap. (RM’mn) MAYBANK 102,415 TENAGA 82,395 PBBANK 79,315 PCHEM 58,640 MAXIS 44,989 PETGAS 36,765 MISC 32,854 KLK 26,198 PETDAG 24,061 YTLCORP 14,644 Chg Vol. (RM) (mn) -0.02 7.54 -0.02 13.49 -0.04 5.65 -0.07 8.98 -0.03 5.37 -0.02 1.04 -0.03 2.76 -0.10 2.21 -0.08 1.10 -0.02 12.84 • • • • • • Important Dates PPHB - 5:7 Bonus Issue - BI of 78.5m shares. 5 bonus shares for every 7 existing shares. LISTING ON: 18/09/2017. Petroliam Nasional Berhad denied an allegation made by a blogger saying that it planned to terminate 5,000 employees next year in what was claimed as another round of 'staff reduction' exercise, group-wide. Kimlun Corporation Berhad had accepted the letter of award worth RM214.8mn from Hillcrest Gardens Sdn Bhd for the construction of 2 blocks of condominiums and ancillary buildings at Mukim Petaling, Selangor. Berjaya Corporation Berhad announced the proposed disposal of a 100% stake in Berjaya Green Resources Environmental Engineering (Foshan) Co. Ltd. to Foshan Water & Environmental Investment Co. Ltd. for RMB78.5mn. Proton Holdings Bhd CEO Datuk Ahmad Fuaad Kenali will step down effective Sept 30 as the automotive company's shareholders DRBHicom Bhd and Zhejiang Geely Holding Group Co Ltd draw close to concluding their corporate exercise. Titijaya Land Bhd is in an advance stage of negotiation with a few parties, the frontrunner being a large foreign property company that are looking to buy a stake in the developer, according to sources. Enra Group Bhd plans to acquire an Australian company dealing in chemical supply to expand its downstream oil and gas segment beyond Malaysia, which could instantly increase its order book to RM70mn annually. AIA Bhd has placed a portfolio of 15 assets up for sale as part of its rationalization exercise that could fetch the country's leading life insurer some RM100mn. Daya Materials Berhad entered into a MoU with Mimos Semiconductor Sdn Bhd to establish collaborative and/or partnership engagements in the provision of a crowd management and passenger system. After announcing its plan to sell its college campus in Kota Baru, Kelantan, last month, Asiamet Education Group Bhd is still actively seeking to sell more of its assets as it struggles to return to the black. Omesti Bhd is looking to raise its recurring income contribution to more than 50% from current 20% of its total revenue within two to three years, mainly through longer term collaborations with existing clients. Spending at U.S. retailers fell 0.2% in August, and sales earlier in the summer were less robust than previously estimated, the Commerce Department said. Exchange Rate USD/MYR 4.1897 -0.0152 USD/JPY 111.23 0.8100 EUR/USD 1.195 0.0050 Commodities Futures Palm Oil (RM/mt) 2,833.00 -7.00 Crude Oil ($/Barrel) 49.83 0.11 Gold ($/tr.oz.) 1,319.70 -9.90 BRIGHT - 1:4 Bonus Issue - BI of 163.9m shares. 1 bonus share for every 4 existing shares. LISTING ON: 18/09/2017. 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. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Monday , September 18, 2017 FBMKLCI: 1,786.33 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 Drivers Needed to Sustain Gains After the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) climbed to a near three-month high last Wednesday on easing geopolitical tensions over North Korea, subsequent profit-taking interest following weaker-than-expected economic numbers from China kept gains in check. However, late buying in selected index heavyweights ahead of the weekend managed to lift the index for a positive close for the week. The FBM KLCI added 6.43 points, or 0.36 percent week-on-week to close last Friday at 1,786.33, with gains in Petronas Gas (+40sen), Hong Leong Bank (+34sen), AmBank (+24sen) and HLFG (+22sen) offsetting losses on KLK (-14sen) and Petronas Chemicals (-12sen). Average daily traded volume and value steadied at 2.62 billion shares and RM2.15 billion respectively, compared with the 2.58 billion shares and RM2.16 billion average the previous week. The benchmark index’s performance early this week is expected to be muted, mainly confined by what will transpire in the United Nations General Assembly this week and the US Federal Reserve’s (Fed) policy meeting tomorrow and Wednesday. Investors will be watching closely what transpires in the United Nations General Assembly, which usually starts on Tuesday in the third week of September. President Trump is supposed to deliver his keynote address tomorrow, which is likely to highlight three key issues – containing North Korea and Iran’s nuclear programme, global terrorism and reform of United Nations’ management. Other important issues that may evolve during the assembly are pertaining to Myanmar refugees and climate change. Interestingly, leaders of two key nations that hold veto power in UN Security Council, Russian President Vladimir Putin and Chinese President Xi Jinping will not attend these meetings. Investors’ anxiety can be triggered by the US president’s unpredictable nature and potential controversial statements that could invite retaliations from the US’ foes as we are already treading on thin ice with North Korea’s anti-American rhetoric and its refusal to give up on nuclear ambitions stoking fear of another world war. The Federal Open Market Committee meeting this week is associated with a Summary of Economic Projections and a press conference by the Chairwoman, Jennet Yellen. It will be interesting to hear her assessment of current economic conditions in the US, subsequent to the damage caused by hurricanes Harvey and Irma in Texas and Florida, as that may provide some clues on the timing of next interest rate hike and the unwinding of quantitative easing in the world’s largest economy. The Fed indicated in its last July meeting that the unwinding of its balance sheet will happen relatively soon. The impact should be negative for equities as the unwinding will eventually lower prices of treasuries and mortgage backed securities and push up interest rate. That would be positive for the US dollar and could induce unwinding of US dollar carry trades from the emerging economies. However, if the Fed’s undertone has changed since the nature’s fury and the recent increase in geopolitical risks, it should be a good enough reason for our benchmark index to sustain its northbound direction. Page 1 of 8
4. TA Securities 18-Sep-17 A Member of the TA Group Locally , the August inflation and mid-September foreign reserves data will be announced this Wednesday and Friday respectively. Consensus expectations are for the Consumer Price Index (CPI) to come in a tad lower at 3.1% YoY versus July’s 3.2%. Actual data could turn out to be slightly higher than expected (at around 3.5%) due to pressure on food and transportation prices due to an increase in average fuel prices in August. Nonetheless, it is not expected to change Bank Negara’s accommodative monetary policy direction for the rest of this year. On the other hand, the uptick in exports, lower MGS yield and recovery in ringgit, point to sustained increase in foreign reserves. Page 2 of 8
5. TA Securities 18-Sep-17 A Member of the TA Group News In Brief Corporate Astro Malaysia Holdings Bhd 's pre-tax profit increased to RM608.7mn for 1HFY18 from RM449.0mn in the corresponding period in 2016. Revenue for 1HFY18 increased to RM2.7bn from RM2.8bn previously. ARPU in H1FY18 rose to RM100.8, driven by take-up of value-added products and services. (Bursa Malaysia/ Bernama) Eco World Development Group Bhd recorded a 76% YoY jump in net profit for 9MFY17, to RM175.9mn from RM99.9mn, thanks largely to a gain from the dilution of interest in then wholly-owned Paragon Pinnacle Sdn Bhd in the first quarter of the year. Topline for the period also came in 12% higher at RM2.0bn compared with RM1.8bn a year ago. (Bursa Malaysia/ The Edge) Eco World International Bhd recorded a net loss of RM55.1mn for 9MFY17, which is 66.6% lower than RM165mn in the prior year. Revenue slipped 7.8% to RM461k in 9MFY17 from RM500k a year ago. The group said for the remaining 2 months in FY17, it would work towards achieving its sales target of RM2.5bn. Sunway Construction Group Bhd has bagged a construction contract worth RM581.7mn for the construction of PPA1M apartments in Kelantan. The project is for about 30 months, to be completed by 1Q20. (Bursa Malaysia/ The Edge) Magni-Tech Industries Bhd's net profit fell 17% to RM19.6mn in 1QFY18, from RM23.5mn a year ago, due to net forex loss recorded for the quarter. Revenue for the quarter, however, improved 12% YoY to RM293.7mn from RM271.4mn. (Bursa Malaysia/ The Edge) AirAsia Bhd has appointed BDO Unibank Inc, the Philippines’ largest bank by assets, to conduct preparatory work on the IPO of Philippines AirAsia, according to a source. It was reported that the proposed IPO is expected to raise as much as US$200mn. (The Edge) TRC Synergy Bhd, via Konsortium Kontraktor Melayu Sdn Bhd-TRC joint-venture, has secured a new contract worth RM348.3mn for the construction and completion of Serdang Maintenance Depot, external works and other associated works for MRT Line 2. (Bursa Malaysia/ New Straits Times) Tenaga Nasional Bhd´s unit, Southern Power Generation Sdn Bhd (SPG), has proposed to issue sukuk of up to RM4.0bn in nominal value based on the Shariah principle of Wakalah Bi Al-Istithmar. SPG was incorporated as the special purpose vehicle for the development of 2x720MW combined cycle gas turbine power plant in Pasir Gudang, Johor. (Bursa Malaysia/ The Edge) Magna Prima Bhd has launched a RM271mn condominium development dubbed The View Residences in Sultan Abdul Aziz Shah Golf Club, Shah Alam. Sitting on a 5.25-acre leasehold site, The View Residences is the only residential condominium in the golf course and the first project by the developer this year. It is targeted for completion in 2021. (The Edge) AbleGroup Bhd has received a conditional mandatory takeover offer from Parallel Pinnacle Sdn Bhd, the private vehicle of its managing director Datuk Lim Kim Huat, after the latter bought 28.3mn AbleGroup shares or a 10.7% stake in the company. Parallel offered to buy the remaining shares at 13 sen per share, a 1 sen or 7% discount to the stock's closing price of 14 sen on Sept 13. (Bursa Malaysia/ The Edge) Pestech International Bhd has inked a MoU with Universiti Tunku Abdul Rahman to explore areas of cooperation for research opportunities and to facilitate industrial study visits and industrial placements for students. (Bursa Malaysia/ The Edge) Page 3 of 8
6. TA Securities 18-Sep-17 A Member of the TA Group Straits Inter Logistics Bhd 's unit, Selatan Bunker (M) Sdn Bhd, has secured a RM45mn oil bunkering contract from Tumpuan Megah Development Sdn Bhd. (Bursa Malaysia/ Bernama) Bina Puri Holdings Bhd will undertake road pavement and diversion works along the Federal Road's Sungai Buloh-Assam Jawa stretch in Selangor, under a RM35.5mn contract. The works under the contract are expected to be completed within 31 months from the commencement date on 16 December 2017. (Bursa Malaysia/ The Edge) AWC Bhd has been awarded a subcontract for the provision of plumbing works for the 8 Conlay project developed by Damai City Sdn Bhd. The subcontract, worth RM32.6mn, is expected to be completed in phases, from May 14, 2019, until May 31, 2021. (Bursa Malaysia/ The Edge) CB Industrial Product Holding Bhd has secured a palm oil mill-related contract from Sime Darby Plantation Bhd. The RM8.8mn contract entails replacing existing front-end vertical sterilizer with continuous sterilizer system at Sime Darby Plantation's palm oil mill in Layang Layang, Johor. (Bursa Malaysia/ The Edge) G3 Global Bhd, formerly known as Yen Global Bhd, announced that it has appointed its major shareholder, Puan Chan Cheong, as its new non-executive chairman. Puan is replacing Goh Kok Beng, who has been redesignated as executive director. Puan is the founder of Green Packet Bhd. (Bursa Malaysia/ The Edge) Palette Multimedia Bhd, which provides solutions in the areas of broadband, wireless and networking products and services, said it intends to change its name to UCrest Bhd. The use of the proposed name UCrest Bhd has been approved and reserved by the Companies Commission of Malaysia. (Bursa Malaysia/ The Edge) Page 4 of 8
7. TA Securities 18-Sep-17 A Member of the TA Group News In Brief Economy Asia Malaysia Rakes in RM405 .50mn Sales at CAEXPO, Exceeding Target Malaysia raked in RM405.50mn in sales at the just-concluded 14th China-ASEAN Expo (CAEXPO) 2017, exceeding the target of RM329.60mn, Malaysia External Trade Corporation Bhd (MATRADE) Director of China Unit Ong Yew Chee said. He said the bulk of the sales were mainly from food and beverages (RM268.83mn), followed by health and wellness (RM119.22mn) and lifestyle (RM17.45mn). He told reporters that Malaysia is strong in food and beverages and durian-based products were what attracted Chinese consumers most. Hence, they capitalised on the popularity of the 'King of Fruits'. (Bernama) China August Yuan Loans Surprisingly Strong, but Growth May Have Peaked Chinese banks extended more credit than expected in August, buoyed by demand from home buyers and companies, but there are signs that credit growth may have reached a peak as tighter monetary conditions filter into the broader economy. Beijing is trying to reduce financial risks by containing rising debt and defusing property bubbles amid fears they could derail the world’s second-largest economy, although policymakers are seen treading warily before a key party meeting next month. Chinese banks extended 1.09 trillion Yuan ($166.5bn) in net new Yuan loans in August, central bank data showed, and well above analysts’ expectations. Analysts polled by Reuters had predicted new Yuan loans of 900bn Yuan, up from 825.5bn Yuan in July. Household loans, mostly mortgages, rose to 663.5bn Yuan in August from 561.6bn Yuan in July, according to Reuters calculations based on the central bank’s data. Household loans accounted for 61% of total new loans last month, down from 68% in July. Short-term household loans in August doubled from July to 216.5bn Yuan, reflecting a surge in consumer lending as some home buyers may have turned to short-term consumer loans due to curbs on mortgages, analysts said. Corporate loans climbed to 483bn Yuan in August from 353.5bn Yuan in July. Broad M2 money supply (M2) in August grew 8.9% from a year earlier, hitting a fresh low since records began in 1996 and missing forecasts for an expansion of 9.1% and compared with July’s 9.2%. China’s central bank has said that the slowing M2 growth could be a “new normal” due to the stepped-up crackdown on risky shadow lending activities. Total social financing (TSF), a broad measure of credit and liquidity in the economy, rose to 1.48tn Yuan in August from 1.22tn Yuan in July, the data showed. Some economists had expected an increase in the TSF to 1.3tn Yuan. Combined trust loans, entrusted loans and undiscounted bankers’ acceptances, which are common forms of shadow banking activity, rose by 130.3bn Yuan in August, versus a fall of 64.4bn Yuan in July, according to Reuters calculations. (Reuters) Indonesia Trade Balance Swings to Surplus in August Indonesia's foreign trade balance turned to a surplus in August from a deficit in the previous month, as exports grew and imports fell, data from the Central Statistical Agency showed. The trade balance came in at a surplus of $1.72bn in August versus a shortfall of $274.4mn in July. Economists had expected a surplus of $548mn for the month. In the corresponding month last year, the surplus was $368.7mn. Exports advanced 11.73% MoM in August, while imports dropped by 2.88%. On a yearly basis, exports surged 19.24% in August, much faster than the 8.3% rise economists had forecast. Imports climbed 8.89% annually in August, just below the expected growth of 9.6%. Separately, Indonesia's central bank expects economic growth to slightly improve in the third quarter and reach a range of 5.1-5.2%, a senior official told reporters. The acceleration from the 5.01% growth in the second quarter may come from improving private consumption, said Dody Budi Waluyo, Bank Indonesia's executive director of economic and monetary policy, pointing to the result of August survey of retail sales. Mr Waluyo said the impact of BI's benchmark rate cut last month to credit growth would take two to three quarters to materialise. Thus, it would affect 2018 GDP growth more than this year, he added. (The Business Times/RTT News) Page 5 of 8
8. TA Securities 18-Sep-17 A Member of the TA Group India Current Account Widens to 4-Year High as Imports Surge India 's April-June current account deficit widened to its highest in four years as imports surged, but strong capital inflows comfortably financed the gap, data from the Reserve Bank of India showed on. The current account deficit widened to 2.4% of gross domestic product, or US$14.3bn, as imports pushed the trade deficit to US$41.2bn from US$23.8bn in the same period a year ago. In the quarter ending in June last year, the current account deficit was 0.1% or US$401mn. It is now at its highest level since the June quarter of 2013. The widening of the YoY deficit was primarily due to a larger increase in merchandise imports relative to exports, the RBI said in its release. While imports rose, some exportoriented sectors also slowed after India imposed its new goods and services tax (GST) in July, adding to the current account gap, analysts said. Analysts expect the current account deficit to narrow as exports pick up, but capital flows are likely to slow as the foreign investment limits for debt have been fully used up. Despite a wider current account gap, the balance of payments surplus was US$11.4bn in April-June, compared with US$6.97bn a year ago, helped by strong dollar inflows that boosted the rupee 0.43% during the quarter. India's capital surplus, which includes foreign direct investment and portfolio inflows, stood at US$25.4bn compared with a US$7.18bn surplus a year ago. (The Edge Market) Ex-Bank of Japan Economist Says Central Bank May Allow Rates to Rise in 2018 A well-connected former central bank executive said the Bank of Japan may allow longterm interest rates to rise more next year if continued strength in the economy pushes inflation to around 1%. Hideo Hayakawa, a former top Bank of Japan economist who retains close contact with incumbent policymakers, said the central bank would not be able to cap long-term rates for long if they rose because of improving economic fundamentals. But if rates were driven up by external, temporary factors such as a spike in U.S. yields, the BOJ would have little trouble capping bond yields, he told Reuters in an interview. Hayakawa said “core-core” consumer inflation, which strips away the effect of volatile fresh food and oil costs, could accelerate to around 1 percent in the fiscal year ending March 2019 thanks to the strengthening economy. Under its yield curve control (YCC) framework adopted last year, the BOJ pledges to keep short-term interest rates at minus 0.1% and the 10-year bond yield around zero percent. Hayakawa, who was among the few experts who predicted the adoption of YCC, said the BOJ may either raise the 10-year yield target or allow long-term rates to rise further by targeting the shorter 5 or 8-year segment of the curve. Any such step could come before inflation hits the BOJ’s 2% target and would not be tantamount to monetary tightening as the bank would still keep borrowing costs very low, he added. (Reuters) United States U.S. Economic Growth Hampered by Recent Hurricanes Hurricane damage and an unexpected drop in consumer spending have softened the economic outlook just as it appeared to be gaining momentum. A pair of severe hurricanes—Harvey, which hit Texas and Louisiana in late August, and Irma, which struck Florida in early September—are set to jumble economic indicators this fall. Early evidence came when the Federal Reserve reported that U.S. industrial production dropped a seasonally adjusted 0.9% in August from the prior month, its largest decline since the 200709 recession. The Fed said Hurricane Harvey was responsible for most of the decline by depressing oil drilling, petroleum refining and other industrial activity. But slower growth in certain key pockets of the economy began months before the storms. Spending at U.S. retailers fell 0.2% in August, and sales earlier in the summer were less robust than previously estimated, the Commerce Department said. Retail sales increased a revised 0.3% in July, down from an originally reported 0.6% increase. Sales fell in June, compared with a prior estimate of an increase. Consumer spending is the main engine of the U.S. economy, accounting for more than two-thirds of total economic output. Growth in this segment of the economy has remained surprisingly tepid given soaring consumer sentiment. The hurricanes also caused everyday Americans’ outlook to dim, but not by much. An index of consumer sentiment slipped 1.5% to a reading of 95.3 in September, partly because of concerns about hurricane damage. Weak auto sales were a leading drag on overall retail Page 6 of 8
9. TA Securities 18-Sep-17 A Member of the TA Group sales , but excluding this volatile category, sales were up only 0.2% last month. Sales in August were soft in most categories. But gasoline-station sales rose 2.5% in August from the prior month, reflecting higher prices at the pump. Gas prices surged in the wake of Hurricane Harvey, as Texas refineries temporarily shut down, but were up even before Harvey made landfall. Sales were uneven across other categories last month. They nudged up at home furnishings stores and grocery stores. They declined at building-material and garden stores and department stores, even though hurricanes typically translate into increased spending on preparations. Meanwhile, sales at non-store retailers, mostly onlineshopping outlets, fell 1.1% in August. That was the largest decline for the category since April 2014. (The Wall Street Journal) Europe and United Kingdom Eurozone Trade Surplus Shrinks More than Forecast The euro area trade surplus declined more-than-expected in July, as exports fell and imports rose, data from Eurostat showed. The seasonally adjusted trade surplus shrank to EUR 18.6bn in July from EUR 21.7bn in June. Economists had expected the surplus to fall to EUR 20.3bn. Exports dropped 1.1% MoM in July, while imports increased by 0.7%. On an unadjusted basis, the trade surplus totalled EUR 23.2bn in July versus EUR 24.8bn in the corresponding month last year. Both exports and imports grew by 6.1% and 8.2%, respectively in August from a year ago. (RTT News) Eurozone Wage Growth Surges, Making ECB Taper More Likely Eurozone wages grew at their fastest rate in two years in the second quarter, data released showed, increasing the chances that the European Central Bank will set out plans next month to rein in its economic stimulus. Hourly labour costs rose by 1.8% in the April-June period, from a revised 1.4% in the first quarter, its highest growth since the first quarter of 2016, EU statistics office Eurostat said. Wages were 2.0% higher year-on-year in the second quarter from 1.3% in the first, the highest rate since the first quarter of 2015. Weak consumer price inflation is a particular problem for the ECB. It has undershot its inflation target - close to but under 2% - for more than four years despite unprecedented stimulus and will not reach its goal before the end of the decade. The rate was 1.5% in August. It is now debating whether to ease back on stimulus, a decision likely to come in October, accepting that more patience is needed to lift inflation. Capital Economics said the labourcost data reinforced its view that the ECB would set out plans next month to taper its assets purchases in the first nine months of 2018. The ECB is keeping a close eye on wages, hoping that robust economic growth and rapid job creation will finally push earnings higher and give inflation a badly needed boost. Seasonally adjusted data only showed growth in wages accelerated to 1.8% from 1.6% - not a sharp jump but at least an indication that economic improvements were leading prices to rise. (Reuters) First Cracks Emerge in EU Plan to Raise Online Giants' Tax Bill First signs of open scepticism appeared over a European Union plan to raise the tax bill of digital multinationals, as some finance ministers from smaller EU states raised concerns about the economic impact. France is pushing for a new way of taxing online giants on the basis of their turnover, rather than their profits, to increase tax revenues from companies such as Google or Facebook, which are accused of paying too little in Europe. It has gathered the support of about a third of the 28 EU governments but would need the backing of all member states to reduce risks of legal challenges. Denmark's Finance Minister Kristian Jensen remarks were echoed by Luxembourg's Finance Minister Pierre Gramegna, who acknowledged there was an issue with online giants' taxation, but said a tax on turnover would hit loss-making companies which are otherwise exempted from paying. He said any EU solution would need to be backed at global level to avoid affecting Europe's competitiveness. "It does not make any sense" for Europe to move without a global agreement, he said. The Czech Republic and Malta both said technical work on a turnover tax would be very complicated. France's Finance Minister Bruno Le Maire urged the EU Commission, which is in charge of making legislative proposals, to come up with a formal text by mid-2018. (The Star) Page 7 of 8
10. TA Securities 18-Sep-17 A Member of the TA Group Share Buy-Back : 15 September 2017 Company CHEETAH E&O FFHB KSL PWF TROP Bought Back Price (RM) Hi/Lo (RM) 547,100 50,000 34,400 550,000 50,000 45,000 0.53 1.58/1.57 0.62/0.615 1.24 1.16/1.15 0.94/0.93 0.535/0.525 1.58/1.56 0.62/0.615 1.25/1.23 1.16/1.14 0.94/0.93 Total Treasury Shares 11,302,600 6,060,847 287,000 9,102,700 5,686,118 4,771,542 TA RESEARCH – Remisiers’ Briefing Topic: Weekly Market Outlook Speaker: Kaladher/ Stephen Soo Venue: Auditorium, 10th Floor Menara TA One Date: 18 September 2017 (Monday) Time: 12.40pm 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 8 of 8
11. T e c h n i c a l TA Securities V i e w Monday , September 18, 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: 1,786.33 (+6.43, +0.36%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Upside Catalyst Needed to Break Above 1,796 After the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) climbed to a near three-month high last Wednesday on easing geopolitical tensions over North Korea, subsequent profit-taking interest following weaker-than-expected economic numbers from China kept gains in check. However, Late buying in selected index heavyweights ahead of the weekend managed to lift the index for a positive close for the week. The FBM KLCI added 6.43 points, or 0.36 percent week-on-week to close last Friday at 1,786.33, with gains in Petronas Gas (+40sen), Hong Leong Bank (+34sen), AmBank (+24sen) and HLFG (+22sen) offsetting losses on KLK (-14sen) and Petronas Chemicals (-12sen). Average daily traded volume and value steadied at 2.62 billion shares and RM2.15 billion respectively, compared with the 2.58 billion shares and RM2.16 billion average the previous week. Bursa Malaysia shares gained Monday on rotational buying interest in lower-liner steelrelated counters, while blue chips recovered mildly in line with the region as geopolitical tensions over North Korea eased. The KLCI rose 2.84 points to close at 1,782.74, off an early low of 1,778.27 and high of 1,784.25, as gainers led losers 527 to 350 on robust turnover of 2.73bn shares worth RM2.16bn. Lessening worries over damage from hurricanes on the US economy and easing North Korea geopolitical concerns helped the local market surge further the subsequent day. The KLCI jumped 7.12 points to close at the day’s high of 1,789.86, off an early low of 1,781.54, as gainers led losers 489 to 395 on strong total trade of 3.66bn shares worth RM2.25bn. Despite the record highs on overnight US stocks, the local benchmark slipped from a near three-month high early Wednesday as profit-taking and selling checked gains. The KLCI fell 3.79 points to close at 1,786.07, off an early high of 1,793.22 and low of 1,785.50, as losers beat gainers 480 to 385 on lower turnover of 2.69bn shares worth RM1.85bn. Stocks extended profit-taking the following day, as weaker-than-expected economic numbers from China raised concerns the world’s second largest economy is gradually slowing. The KLCI fell 4.7 points to close at 1,781.37, off an early high of 1,788.47 and low of 1,780.79, as losers beat gainers 492 to 397 on much slower turnover of 1.89bn shares worth RM1.81bn. Late buying in selected index heavyweights ahead of the weekend managed to offset earlier profit-taking interest on Friday, as market sentiment stayed cautious amid revived geopolitical concerns following another missile launch from North Korea over Japan. The index ended up 4.96 points at the day’s high of 1,786.33, off an earlier low of 1,776.87, as losers edged gainers 509 to 369 on higher turnover totaling 2.14bn shares worth RM2.69bn. The trading range for the blue-chip benchmark index last week shrank slightly to 16.35 points, compared to the 19.64-point range the previous week. For the week, the FBM-EMAS Index increased 34.40 points or 0.27 percent to close at 12,723.68, while the FBM-Small Cap Index added 106.80 points, or 0.63 percent to 16,984.96, as small cap stocks managed to sustain retail bargain hunting interest as rotational plays persisted. Page 1 of 3
12. TA Securities 18-Sep-17 A Member of the TA Group A short-term sell signal flashed on the daily slow stochastics indicator for the FBM KLCI from the overbought zone following the profit-taking dip in the later part of last week , but this was offset by a rising weekly stochastics indicator. The 14-day Relative Strength Index (RSI) indicator also hooked up to a better reading of 58.73 after last Friday’s late spike, while the 14-week RSI improved to a more positive reading of 63.69. Chart 1 Meantime, the daily Moving Average Convergence Divergence (MACD) trend indicator strengthened further after triggering a buy the previous week, while the weekly MACD indicator’s signal line is beginning to level off (Chart 2). The +DI and -DI lines on the 14-day Directional Movement Index (DMI) trend indicator registered bullish expansion on a rising ADX line, suggesting good potential to move back into trending mode. Chart 2 Conclusion Even though there’s a general improvement in momentum and trend indicators on the FBM KLCI following last week’s recovery, follow-through buying and market breadth need to further strength and sustain upside, given that the index is approaching the formidable twoyear high resistance. Key upside catalysts, such as further recovery in the local currency or global oil prices, will be crucial to support a convincing breakout above the 1,796 peak. Page 2 of 3
13. TA Securities 18-Sep-17 A Member of the TA Group On the index , expect formidable resistance from the 16 June peak of 1,796, with tougher hurdles from 1,800, 1,815 and subsequently 1,823, the May 2015 peak. Immediate uptrend support is at 1,780 and 1,775, the respective rising 10 and 30-day moving averages, with better support at 1,769, the 50-day moving average. In the blue-chip space, banking counters AMBank and RHBBank should attract buyers again after recent base building, similarly for IHH Healthcare and Sime Darby. On lower liners, investors should re-look aviation stocks AirAsia and AirAsia X, and also construction related counters MRCB and Sunway Construction for rotational interest. Chart 3 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
14. TA Securities A Member of the TA Group SECTOR REPORT Monday , September 18, 2017 STI: 3,209.56 Sector: Finance MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Overweight Singapore Banking Sector Outlook Tempered With Caution THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kaladher Govindan Tel: +603-2167 9609 kaladher@ta.com.my Stronger growth momentum Recent data point towards a recovery for the economy. Continued strong gains from the manufacturing sector and surprise pick-up in the services sector resulted in better-thanexpected 2Q17 GDP data. Rising 2.9% YoY, the broad improvement in the macro backdrop helped support better loan growth for the sector. Total loans and advances steadily increased to 7.6% in June. We maintain our loan growth projection of 6% for 2017. To recap, matching weaker GDP increase of 1.8% for 2016, total loans and advances in the system registered an increase of only 2.9% YoY. Figure 1: Loan growth vs. GDP (YoY Chg) Source: Monetary Authority of Singapore, TA Research Pickup in business loans Driving the positive momentum, business loans led the recovery in loans. Climbing to a yearly high of 10.5% YoY in June, demand was led by financial institutions, business services, general commerce and transport, storage and communications. Meanwhile, consumer loans was stable, with growth of between 3.1% and 3.8%. Contributing to most of the increase was the pickup in demand for housing and bridging loans. To a lesser extent, demand for car loans grew steadily after registering yearly contractions since 2013. Accounting for some 1.3% of total loans in the industry, the rise in auto loans is not expected to contribute significantly to the banking sector. Page 1 of 6 TA Research Team Coverage
15. TA Securities 18-Sep-17 A Member of the TA Group Figure 2 : Loan growth – Business vs. Consumer loans (YoY Chg) Source: Monetary Authority of Singapore, TA Research Support from property market upcycle On the other hand, we foresee possible improvements in housing and bridging loans to augur well for banks with exposure to property loans. Making up more than 75% of total consumer loans and 30% of total loans in the system, mortgage loans appears to have bottomed and is expected to ascend. According to media sources, the property market is seeing signs of an imminent turnaround from sharply rising transaction volumes. Demand is largely driven by local buyers. On the funding side, limits for: 1) outstanding bridging loans and new housing loans, 2) limit granted for owner occupied and 3) investment property surged 51.4%, 32.4% and 51.8% in 2Q17. According to DBS, new bookings in 2Q17 climbed to its highest in 5 years, bringing market share to 28.7% vs. 27.9% a year ago. Despite the sharp rise in exposure to this segment, the average LTV for property loans in the banking system stood at 53.6% while housing loan and bridging loan NPL stood at 0.5%. Figure 3: Loan growth – Housing and bridging loans (YoY Chg) Source: Monetary Authority of Singapore, TA Research Page 2 of 6
16. TA Securities 18-Sep-17 A Member of the TA Group Figure 4 : New housing loans limit granted (YoY Chg) Source: Monetary Authority of Singapore, TA Research Figure 5: New housing and bridging loans LTV and NPL ratio (%) Source: Monetary Authority of Singapore, TA Research Competition heating up in the mortgage space Despite the healthy growth prospects for the property loan market, competition is intense. Reflecting fierce rivalry in this space, average interest rates for banks and finance companies have softened. According to media reports, Singapore's biggest banks have commenced competition in the area of mortgage loans. The price war has begun with banks offering lower interest rates for a longer duration to attract home buyers. This will create pressure on loan yields. Furthermore, we do not foresee higher interest rates from financing of new vehicles to have any material impact on margins due to the segment’s smaller base. Page 3 of 6
17. TA Securities 18-Sep-17 A Member of the TA Group Figure 6 : Average Yield on Loans vs. Cost of Funds (%) Source: Companies, TA Research Figure 7: Fin. Co. Housing Loans for 15 years vs. HP for New Vehicles for 3 years (%) Source: Monetary Authority of Singapore, TA Research Losing some steam, earnings may lag in the 2H Tempering the robust outlook, consensus is foreseeing some slowdown in the 2H. Moderation would likely come from a slowdown in China’s economy, underlying weak sentiments in the services sector and lacklustre labour market. Elevated geo-political risks and concerns over possible armed conflicts would also dampen macro growth prospects. Reflecting cautious sentiments, we note that loan growth in the system eased to 5.9% in July. IB activities are envisaged to remain unexciting. Additionally, the Singapore banking sector continues to face the challenges of rising impaired loans. Asset quality to remain under pressure Singapore’s oil and gas sector is not out of the woods yet. Learning from our visits to some Singapore and Malaysian banks operating in the Lion City, DBS expects heightened credit cost to persist with low oil prices, warning that specific provisions could be higher than previous guidance. DBS reports total exposure of S$7bn for the support services sector while UOB has an exposure of $S4.3bn to upstream industries. Combined with downstream industries, UOB’s total exposure to the O&G industry is S$14.4bn or 4% in terms of total loans exposure. In comparison, OCBC’s total exposure in a bit higher at S$15.8bn or 6% of total consumer loans. Page 4 of 6
18. TA Securities 18-Sep-17 A Member of the TA Group Nevertheless , proactive management of O&G exposures should help contain the ongoing sector’s doldrums. We believe the Singapore banks have sufficient buffers and liquidity coverage to withstand potential losses while as a group, Malaysian banks operating there should be also be able to resist the gloom due to its smaller exposure, i.e. c. S$300mn for CIMB Singapore and S$430mn for RHB Singapore. Meanwhile, other areas that may see some asset quality deterioration in Singapore is the retail space. Wealth Management and Transaction Banking bright spots DBS, OCBC and UOB are focusing aggressively on the WM business. Boosting increases in asset under management (AUM) are recent M&A exercises undertaken. DBS expects an additional $20bn added to total AUMs of $175bn (which had accelerated by 16% YoY in 2Q), from its recent acquisition of ANZ’s WM and retail banking business in five markets. Management added that ANZ’s migration to DBS is on track for full completion by early 2018. Expanding at a more organic pace for UOB, the group reported steady growth for both mass affluent and High Net Worth segments with AUM rising 12% YoY to S$99bn AUM as at end-Jun 2017. Quoting media sources, in 2015, Asia created a new billionaire every three days. Of 210 new billionaires created, 113 billionaires were Asian entrepreneurs. Asia, we opine, is the place to be in wealth creation. However, given the slew of M&A activities led by Singapore banks in recent years, we foresee the intense competition created by the larger financial institutions (and foreign players) sidelining smaller players in this WM management space. That said, we believe Malaysian players like CIMB and RHB Singapore would have to be more innovative and target more specific segments such as the ultra-rich. Tapping on their strength in regional IB, we foresee the ability for CIMB and RHB Singapore to offer more niche or bespoke products and solutions to its wealth customers. Ranked the world’s top 3 global financial centers (based on the Global Financial Index), Singapore banks are benefiting from rising regional trades and transaction banking. With Singapore banks also actively embracing the advantages and economic benefits of FinTech, UOB noted that transaction banking – in particular cash management, is a key income generator for its wholesale banking division. In 1H17, overall transaction banking income for the group grew 9% YoY. Meanwhile, DBS’ cash/SFS income under its Global Transaction Services division recorded robust growth of 28% YoY. Upgrade to OVERWEIGHT We raise our sector recommendation to OVERWEIGHT from neutral as the potential upside for UOB and OCBC’s share prices have widened to more than 12%. Nevertheless, we maintain our cautiously optimistic stance on Singapore’s banking sector, noting potential downgrades premised on possible softer 2H earnings from narrower NIM (due to competitive pressures in Singapore and regional operations) and non-NII, and higherthan-expected increase in credit charges. Despite the improved data on the broader economy, we note that underlying sentiments are still mixed. A survey by Mastercard Index of Consumer Confidence for H1 2017 showed that optimism in consumer confidence improved, probably lifted by stronger car sales (which was driven by the decline in certificate of entitlement (COE) premiums) and increase in demand for private home sales. However, a survey by Thomson Reuters and INSEAD showed that business optimism dipped in 4Q17. That said, we understand that the economic recovery is not broad based with growth being led mostly by manufacturing and services. Except for some bright spots in WM and transaction banking, capital market activities in Singapore appear dull. Furthermore, the asset quality outlook may worsen for the O&G sector while banks are also keeping a lookout for potential deterioration in the retail industry. On a positive note, sufficient capital buffers and liquidity coverage should help the banks weather through this credit cycle downturn. Page 5 of 6
19. TA Securities 18-Sep-17 A Member of the TA Group Riding on Asia ’s rising income and wealth, we believe the Singapore banks are in best position to tap on growing connectivity opportunities arising from their integrated platforms and regional franchise. But while we sense more excitement about growth prospects from the Singapore banks, we believe the smaller players are less optimistic due to the challenging operating environment and intense competition from 111 commercial banks currently operating in the city-state. Table 1: Peer comparison - Singapore ` Price TP (S$) (S$) DBS 20.06 23.30 BUY UOB 23.05 25.40 BUY OCBC 10.95 12.00 BUY Simple average P/BV DBS UOB OCBC Simple average FY17 (x) 1.0 1.1 1.2 1.1 Mkt Cap (S$ mil) 51,006.6 38,249.2 45,852.0 45,035.9 Implied P/BV FY17 FY18 (x) (x) 1.2 1.1 1.2 1.1 1.3 1.2 1.2 1.1 FY18 (x) 1.0 1.0 1.1 1.0 Net profit FY17 FY18 S$ S$ 4,418 4,837 3,202 3,427 3,673 3,870 3,764.2 4,044.3 Profit growth FY17 FY18 (%) (%) 4.2 9.5 3.3 7.0 5.8 5.4 4.5 7.3 ROE FY17 (%) 9.5 9.5 9.8 9.6 ROA FY18 (%) 9.7 9.6 9.8 9.7 FY17 (%) 0.9 0.9 0.9 0.9 FY18 (%) 0.9 0.9 0.9 0.9 PER FY17 (x) 11.5 18.3 7.6 12.5 FY18 (x) 10.5 17.1 7.2 11.6 Div yield FY17 FY18 (%) (%) 3.0 3.0 3.0 3.0 3.3 3.3 3.1 3.1 Source: TASecurities, Companies, Bloomberg Sector Recommendation Guideline OVERWEIGHT: The industry, as per our coverage universe, is expected to outperform the FBMKLCI over the next 12 months. NEUTRAL: The industry, as per our coverage universe, is expected to perform in line with the FBMKLCI over the next 12 months. UNDERWEIGHT: The industry, as per our coverage universe, is expected to underperform the FBMKLCI over the next 12 months. 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. As of Monday, September 18, 2017, the analyst, Kaladher Govindan, who prepared this report, has interest in the following securities covered in this report: (a) nil for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 6 of 6
20. Monday , 18 September, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED LOCAL TECHNICAL REPORTS’ Local Technical Reports 1. Weekly Technical Stock Picks 2. Daily Money Flow 3. Technical Stock Picks a. FBMKLCI b. Stocks Under Coverage c. PLANTATION Sector d. CONSTRUCTION Sector e. PROPERTY Sector 4. Weekly Ace Market Stock Watch 5. Weekly Small Cap Stock Watch 6. Weekly Stock Screen 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