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Bursa Malaysia Daily Market Report - 23 May

Mohd Noordin
By Mohd Noordin
6 years ago
Bursa Malaysia Daily Market Report - 23 May

Ard, Islam, Mal, Commenda, Rub, Sales


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  1. Tuesday , 23 May, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. Automotive Sector: TIV Declines MoM 2. Kuala Lumpur Kepong Berhad: Profit Helps From Plantation Segment 3. UMW Oil & Gas Corporation Bhd: Sl ow Start to the Year Technical Reports 1. Daily Technical Stock Picks 2. Daily Stock Screen 3. Foreign Technical Stock Watch (AUS, HK & FSSTI) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research
  2. Daily Note Daily Market Commentary (A Participating Organisation of Bursa Malaysia Securities Bhd) Menara TA One, 22 Jalan P Ramlee, 50250 Kuala Lumpur Tel : 603 - 2072 1277. Fax : 603 - 2032 5048 Tuesday, 23 May 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (22.05.2017) Volume (mil) +/-chg (RMmn) Main Market 2,449.4 357.0 2,740.5 Warrants 412.1 -4.6 54.1 ACE Market 1,228.5 468.4 154.9 Bond 6.2 2.0 1.6 ETF 0.0 0.00 0.0 Total 4,096.2 2,951.1 Off Market 23.2 -176.4 20.3 Value +/-chg -312.7 -7.3 31.8 0.8 0.00 -454.7 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP May Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA (mn) 8.0 5.0 3.4 2.5 1.0 1.0 1.0 Review & Outlook Up Down 386 268 107 93 44 55 5 2 0 2 542 420 % chg % YTD chg 1,774.95 12,740.72 17,984.55 1,774.00 6.67 54.84 142.45 4.50 0.38 0.43 0.80 0.25 8.11 11.11 22.21 8.47 20,894.83 6,133.62 7,496.34 19,678.28 2,304.03 25,391.34 3,213.57 1,557.73 5,749.45 3,075.68 1,828.22 5,771.21 89.99 49.92 25.63 87.52 15.55 216.47 -3.35 8.09 -42.44 -14.95 -25.49 43.80 0.43 0.82 0.34 0.45 0.68 0.86 -0.10 0.52 -0.73 -0.48 -1.38 0.76 5.73 13.94 4.95 2.95 13.70 15.41 11.55 0.96 8.55 -0.90 -7.16 1.86 @ @ @ @ @ @ @ The FBM KLCI ended firmer on Monday, led by gains in heavyweight Petronas stocks after the country registered a much stronger-thanexpected 1Q GDP growth of 5.6%, and regional strength in line with recovery in US stocks. The index rose 6.67 points to close at the day's high of 1,774.95, off a low of 1,768.98, as gainers led losers 542 to 420 on strong total turnover of 4.09bn shares worth RM2.95bn. While blue chips are likely to trade sideways, rotational buying interest on selected construction stocks deemed to be keen on the Bandar Malaysia project should highlight trading. Immediate uptrend supports for the index stays at the rising 30 and 50-day moving average levels, now at 1,759 and 1,752, reinforced by the lower Bollinger band at 1,755. Immediate upside hurdle for the benchmark stays at last Tuesday's new two-year high of 1,787, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Bearish momentum on CMSB point to further downside risk towards the 38.2%FR (RM4.12), with better supports from the 50%FR (RM3.94) and 61.8%FR (RM3.75) before oversold conditions attract buyers again. Key resistance are from the 23.6%FR (RM4.34) and 3/5/17 peak (RM4.70). Likewise, Naim Holdings could re-test the 14/11/16 low (RM1.35), while a breakdown may aim for better supports from RM1.20 or the 123.6%FP (RM1.06) before stalling on oversold momentum. Key overhead resistance is from the 76.4%FR (RM1.66). News Bites • • • • Top 10 KLCI Movers Based on Mkt Cap. Off Market CCK BJASSET-WA IBRACO ECOFIRS LIIHEN YINSON SEG Value/ Volume 1.12 0.13 0.13 0.26 1.69 0.72 0.87 (RM) 0.89 0.25 0.75 0.29 3.10 3.26 1.22 Counter TENAGA PBBANK PCHEM MAXIS PETGAS DIGI GENM MISC HLBANK IOICORP Mkt Cap. (RM’mn) 78,094 77,616 58,800 48,968 39,179 39,108 33,954 33,925 28,812 28,529 Chg (RM) 0.02 0.10 0.02 0.01 0.80 0.02 0.19 0.11 0.06 0.01 Vol. (mn) 5.69 3.74 10.10 1.29 1.10 4.59 7.18 1.99 1.08 3.88 • • • • • • Important Dates 3A - 1:4 Bonus Issue - BI of 98.4m shares. Ex-Date: 23/05/2017. Entitlement Date: 25/05/2017. LISTING ON: 26/05/2017. MKH - 1:10 Rights Issue - RI of up to 45.4m shares together bonus issue of up to 90.8m shares. 1 rights share for every 10 existing shares held, at an issue price of RM1.89 per rights share, together with 2 bonus shares for every 1 rights share subscribed. LISTING ON: 01/06/2017. • For 1HFY17, Kuala Lumpur Kepong Bhd's net profit declined 33% YoY to RM650.3mn mainly due to land disposal last year. It was within expectations. UMW Oil & Gas Corporation Bhd reported 1QFY17 headline net loss of RM104.1mn. It was within expectations. Lafarge Malaysia Bhd suffered a net loss of RM48.9mn for 1QFY17, versus a net profit of RM20.65mn a year ago, due to weak demand and worsening pricing pressure. IHH Healthcare Bhd has sold its entire 10.85% stake in India's largest healthcare group, Apollo Hospitals Enterprise Ltd, but reports emerged that it may be one of the front runners to take up equity in India's second-largest healthcare player Fortis Healthcare Ltd. KLCC Property Holdings Bhd closed its 1QFY17 with lower net profit of RM176.7mn( - 3.3% YoY), mainly due to the lease transition in Menara ExxonMobil and ongoing tenant remixing in Suria KLCC and Menara 3 Petronas retail podium. Econpile Holdings Bhd has secured sub-structure works worth RM48.5mn from Pembinaan Kery Sdn Bhd. Fajarbaru Builder Group Bhd has secured a RM29.5mn contract from Pos Aviation Sdn Bhd for the proposed renovation and refurbishment of the tenancy area at KLIA Air Cargo Terminal 1. Matrix Concepts Holdings Bhd plans to raise up to RM250mn from issuance of Islamic commercial papers and/or MTNs to finance future investments, working capital and capex. Perdana Petroleum Bhd is looking forward to be re-listed on Bursa Malaysia by mid-August this year as well as expecting better offshore support vessel utilisation rate this year. A unit of TSR Capital Bhd has entered into a MoU and with Globe Venture Holdings Inc in relation to the proposed mixed development project of over 52.2 acres situated at PD Waterfront, Port Dickson. The Organization for Economic Co-operation and Development said the combined economic output of its 35 members during the 1Q17 was 0.4% YoY higher but slower than the 0.7% YoY growth in 4Q16. Exchange Rate USD/MYR 4.3050 -0.0161 USD/JPY 111.42 0.0200 EUR/USD 1.123 0.0064 Commodities Futures Palm Oil (RM/mt) 2,659.00 24.00 Crude Oil ($/Barrel) 50.81 0.28 Gold ($/tr.oz.) 1,260.50 4.80 DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
  3. TA Securities Tuesday , May 23, 2017 FBMKLCI: 1,774.95 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Daily Brief Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Market View Tel: +603-2072 1277 taresearch@ta.com.my www.taonline.com.my Bandar Malaysia Plays to Highlight The FBM KLCI ended firmer on Monday, led by gains in heavyweight Petronas stocks after the country registered a much stronger-than-expected 1Q GDP growth of 5.6%, and regional strength in line with recovery in US stocks. The index rose 6.67 points to close at the day’s high of 1,774.95, off a low of 1,768.98, as gainers led losers 542 to 420 on strong total turnover of 4.09bn shares worth RM2.95bn. Uptrend Supports at 1,759/1,752 While blue chips are likely to trade sideways, rotational buying interest on selected construction stocks deemed to be keen on the Bandar Malaysia project should highlight trading. Immediate uptrend supports for the index stays at the rising 30 and 50-day moving average levels, now at 1,759 and 1,752, reinforced by the lower Bollinger band at 1,755. Immediate upside hurdle for the benchmark stays at last Tuesday’s new two-year high of 1,787, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Sell CMSB & Naim Holdings Bearish momentum on CMSB point to further downside risk towards the 38.2%FR (RM4.12), with better supports from the 50%FR (RM3.94) and 61.8%FR (RM3.75) before oversold conditions attract buyers again. Key resistance are from the 23.6%FR (RM4.34) and 3/5/17 peak (RM4.70). Likewise, Naim Holdings could re-test the 14/11/16 low (RM1.35), while a breakdown may aim for better supports from RM1.20 or the 123.6%FP (RM1.06) before stalling on oversold momentum. Key overhead resistance is from the 76.4%FR (RM1.66). Asian Markets Mostly Higher as Markets Settle Markets across Asia were mostly higher on Monday following modest gains in U.S. shares last week. News of yet another North Korean missile test at the weekend didn’t dampen investors’ vigor. The hermit state said the missile test on Sunday involved an intermediaterange ballistic missile, according to Reuters. With U.S. President Donald Trump touring in the Middle East and Europe and no major economic indicators due this week, investors are hoping for a week of consolidation after a flurry of U.S. political controversies rattled markets. In economic news, Japan trade data for the month of April reflected that exports rose 7.5 percent from a year ago, below analyst expectations of 7.8 percent. Imports, however, rose 15.1 percent, above the forecast of 14.8 percent. The Nikkei share average rose 0.45 percent to 19,678.28. The benchmark ASX 200 traded up 0.76 percent or 43.80 points to close at 5,771.20, driven largely by its energy and materials sub-indexes. China’s stocks ended mixed as lingering worries over economic growth and tighter regulations to curb speculative investments hurt risk appetite. The blue-chip CSI300 index rose 0.22 percent, to 3,411.24 points, while the Shanghai Composite Index lost 0.48 percent to 3,075.68 points. Page 1 of 8
  4. TA Securities 23-May-17 A Member of the TA Group U .S Markets Boosted by Technology and Defense Stocks U.S markets rose on Monday boosted by technology shares and defense companies, which gained after the United States and Saudi Arabia signed a multi-billion dollar arms deal. Shares of General Dynamics, Raytheon and Lockheed Martin all hit record highs early on but ended off those levels, with gains of between 0.6 percent and 1.6 percent. While every sector but energy ended higher on the day, tech shares were the day's best performers, with Amazon, Microsoft and Apple among the biggest drivers in the S&P 500 and the Nasdaq. Meanwhile, Boeing gave the Dow its biggest boost, ending up 1.6 percent at USD183.67. A much stronger-than-expected earnings season has also helped investor sentiment. With results in from nearly all of the S&P 500 names, year-over-year first-quarter growth is now estimated at 15.3 percent, Thomson Reuters data showed. Wall Street can looked ahead to the release of the minutes from the Federal Reserve's meeting on May 3. The minutes were slated for release Wednesday. The Dow Jones Industrial Average rose 89.99 points, or 0.43 percent, to 20,894.83, the S&P 500 gained 12.29 points, or 0.52 percent, to 2,394.02 and the Nasdaq Composite rose 49.92 points, or 0.82 percent, to 6,133.62. Page 2 of 8
  5. TA Securities 23-May-17 A Member of the TA Group News In Brief Corporate For 1HFY17 , Kuala Lumpur Kepong Bhd's net profit declined 33% to RM650.3mn from RM963.7mn in 1HFY16, though revenue climbed 36% to RM11.0bn from RM8.0bn. This was because 1HFY16 results had accounted for a surplus of RM485.6mn arising from the sale of plantation land to an associate. (The Edge/ Bursa Malaysia) Batu Kawan Bhd’s net profit for 1HFY17 dropped 25% to RM360.8mn although revenue gained 36% to RM11.2 billion, from RM8.3 billion in 1HFY16, mainly because the year before had included a RM485.6mn surplus from sale of plantation land to an associate. Its plantations performance for FY17 is expected to be better, based on achievement and committed forward sales for the half year. (The Edge/ Bursa Malaysia) Lafarge Malaysia Bhd suffered a net loss of RM48.9mn for 1QFY17, versus a net profit of RM20.65mn a year ago. Its financial performance was dragged by weaker cement business, no thanks to weak demand and worsening pricing pressure. The profitability was further exacerbated by the higher operating costs attributed mainly to higher fuel and electricity cost and one-off separation cost incurred in current quarter. (The Edge/ Bursa Malaysia) IHH Healthcare Bhd has sold its entire 10.85% stake in India’s largest healthcare group, Apollo Hospitals Enterprise Ltd, but the group is not likely to exit India yet. Reports have emerged that IHH may be one of the front runners to take up equity in India’s secondlargest healthcare player Fortis Healthcare Ltd. (The Edge) UMW Oil & Gas Corp Bhd plunged deeper into the red in 1QFY17 with a net loss of RM104.1mn, up 60.0% from RM65.1mn a year ago. The group attributed the bigger loss to subdued time charter rates and reduced foreign exchange gains. (The Edge/ Bursa Malaysia) KLCC Property Holdings Bhd (KLCCP) closed its 1QFY17 with lower net profit of RM176.7mn, down 3.3% from RM182.8mn in the previous corresponding quarter. The slight decline was mainly due to the lease transition in Menara ExxonMobil and ongoing tenant remixing in Suria KLCC and Menara 3 PETRONAS retail podium. (The Edge/ Bursa Malaysia) Kian Joo Can Factory Bhd’s net profit rose 55.4% in 1QFY17 to RM18.4mn, from RM11.9mn a year earlier. The better bottom line was contributed by its cans division, which benefitted from forex gains and higher fair value gain on commodity contracts. This was however partially offset by losses from its cartons division and lower profit from the contract packing division. (The Edge/ Bursa Malaysia) Tune Protect Group Bhd’s 1Q17 net profit fell 47.2% to RM11.9mn, from RM22.6mn a year earlier, mainly due to lower net earned premiums and higher net claims from motor insurance. Revenue saw a marginal 0.41% rise to RM130.1mn, from RM129.5mn in 1QFY16. (The Edge/ Bursa Malaysia) Prestariang Bhd’s net profit rose 5.9% to RM3.2mn for 1QFY17, from RM3.0mn a year earlier, as the company recorded higher contribution across all its segments. Revenue rose 7.9% to RM43.9mn, from RM40.7mn in 1QFY16, with contribution coming mainly from its software and services business segment, primarily the Microsoft Licensing Agreement (MLA) 2.0. (The Edge/ Bursa Malaysia) UOA Development Bhd’s net profit fell 55% to RM43.4mn in 1QFY17, from RM96.1mn a year ago, as revenue declined 23% to RM155.1mn. Its new property sales for 1QFY17 was approximately RM303.2mn. As at March 31, 2017, the group’s total unbilled sales amounted to approximately RM1.6bn. (The Edge/ Bursa Malaysia) Page 3 of 8
  6. TA Securities 23-May-17 A Member of the TA Group Gabungan AQRS Bhd 's 1Q17 net profit jumped nearly 4.4x on improved operating margin and sale of 2 pieces of land. It reported a net profit of RM16.1mn for 1QFY17 compared with RM3.8mn in 1QFY16. Revenue surged 99.6% to RM158.9mn from RM79.6mn in 1QFY16. (The Edge/ Bursa Malaysia) Hektar Real Estate Investment Trust's (REIT) net property income slipped 5.3% to RM17.7mn for 1QFY17 from RM18.7mn a year earlier, due to higher operating expenses. The REIT announced a distribution per unit of 2.3 sen for the quarter under review. (The Edge/ Bursa Malaysia) Rubberex Corp (M) Bhd registered an 8.2% fall in net profit to RM3.3mn for 1QFY17 from RM3.6mn a year earlier. The decline was mainly due to higher costs of production. Revenue rose 8.1% to RM80.5mn from RM74.5mn in 1QFY16. (The Edge/ Bursa Malaysia) Econpile Holdings Bhd has secured sub-structure works worth RM48.5mn from Pembinaan Kery Sdn Bhd. The contract comprises piling works, basement and substructure works of Phase 1 mixed development project which consists of 33-storey office block and eight-storey podium located at Jalan Conlay here. The overall duration of the contract is about 15 months. (Bernama/ Bursa Malaysia) Fajarbaru Builder Group Bhd has secured a RM29.5mn contract from Pos Aviation Sdn Bhd. The contract involved the proposed renovation and refurbishment of the tenancy area at KLIA Air Cargo Terminal 1. The contract is for 32 weeks commencing May 22, 2017. (Bernama/ Bursa Malaysia) Matrix Concepts Holdings Bhd plans to raise up to RM250mn from issuance of Islamic commercial papers and/or MTNs to finance future investments, working capital and capex. It has lodged with the Securities Commission Malaysia to establish a sukuk wakalah programme, which will have a tenure of 7 years. (The Edge/ Bursa Malaysia) Perdana Petroleum Bhd (PPB) is looking forward to be re-listed on Bursa Malaysia by mid-August this year as well as expecting better offshore support vessel utilisation rate this year. PPB shares have been suspended since Sept 30, 2015 as its public shareholding spread is still below 10%. The company had also submitted a request for lower public shareholding spread through a letter to the local bourse and the latter was considering the request. (The Star) A unit of TSR Capital Bhd has entered into a MoU and with Globe Venture Holdings Inc in relation to the proposed mixed development project of over 52.2 acres situated at PD Waterfront, Port Dickson. The MOU was intended to set the terms governing the collaboration between the parties, while a MoA was also signed to jointly develop a proposed water chalet resort to be built on the land. (The Star/ Bursa Malaysia) Samchem Holdings Bhd has received a special notice to relieve its executive director Ng Son Kian from the position. The notice was jointly issued by 7 unnamed shareholders, who together hold a 19.8% stake in the company. The board will convene an EGM 2016 and make the necessary announcement in due course. (The Edge/ Bursa Malaysia) Kinsteel Bhd’s net loss for 9MFY17 narrowed to RM31.3mn from RM32.7mn in 9MFY16. Revenue dropped 13.0% to RM184.7mn, from RM212.4mn. Going forward, the group said it is undertaking a debt restructuring exercise to address its liquidity issue. (The Edge/ Bursa Malaysia) Former managing director of Maxbiz Corp Bhd Datuk Vincent Leong Jee Wai was charged in the Kuala Lumpur Sessions Court this morning with insider trading of the company's shares. If found guilty, he faces up to 10 years in prison and a fine of not less than RM1 million. (The Edge) Page 4 of 8
  7. TA Securities 23-May-17 A Member of the TA Group News In Brief Economy Global Economic Growth in Developed Countries Slows , Says OECD Economic growth in developed countries slowed sharply in the first three months of 2017, as the U.S., the U.K. and France experienced weak starts to a year that is widely expected to yield an acceleration of the global recovery. The Organization for Economic Co-operation and Development said the combined economic output of its 35 members during the first quarter was 0.4% higher than in the final three months of 2016, a slowdown from the 0.7% rate of growth recorded at the end of last year. The slowdown underlines the still anemic nature of the recovery from the global financial crisis and the recession that followed. The weakening of growth was largely due to the U.S., which has regularly recorded tepid first quarters over recent years. While the U.K. and France also saw first-quarter slowdowns, they were partly offset by pickups in Germany and Japan. The first quarter slowdown across developed economies isn’t expected to persist through the rest of 2017, with the Federal Reserve Bank of Atlanta’s measure of U.S. economic growth pointing to a sharp rebound in the second quarter, while available indicators of activity for the U.K. and France point to more modest revivals. It is therefore unlikely to affect the policy decisions of the leading central banks over coming months. A number of international bodies have recently raised their global growth forecasts for this year, seeing signs of stronger trade flows and investment spending. The International Monetary Fund now expects the world economy to grow by 3.5% in 2017, having previously forecast a 3.4% expansion. If realized, that would be the fastest expansion in five years. (The Wall Street Journal) Asia Japan April Exports Rise Again, Trade Surplus with U.S. Narrows Japan's exports rose in April to mark their fifth straight month of gains, as shipments of semiconductors and steel expanded, signaling that more robust overseas demand could underpin a steady economic recovery. Exports rose 7.5% in April from a year ago, below the median estimate of 7.8% annual growth, finance ministry data showed. It followed a 12.0% rise in March. The data also showed Japan's trade surplus with the United States narrowed. Exports to the United States increased 2.6% in April from a year ago, gaining for the third straight month due to larger shipments of cars and auto parts. But Japan's trade surplus with the United States fell 4.2% in April from a year ago to 586.7 billion yen ($5.27 billion). Japan's exports are expected to continue rising as global economic growth gains momentum, but concerns about U.S. President Donald Trump's pledges to adopt protectionist trade policies cloud the outlook for export-reliant Japan. The drop in Japan's trade surplus with the United States, however, could take some pressure off Japan as it makes it more difficult for Trump to justify criticizing Japan for its trade practices. Japan's economy grew in the first quarter at the fastest rate in a year to mark the longest period of expansion in a decade, thanks to solid exports and a helpful boost from private consumption. In terms of volume, exports rose 4.1% in April from a year ago, the third consecutive month of gains, and another sign of overseas demand picking up. Exports to China rose 14.8% on-year in April, the sixth straight month of gains, boosted by shipments of optical equipment, auto parts and steel. (Reuters) South Korea Producer Prices Ease 0.1% in April Producer prices in South Korea were down 0.1% on month in April, the Bank of Korea said in line with estimates and unchanged from the march reading. Individually, prices for agricultural, forestry and marine products were down 0.8% on month, while manufacturing products dipped 0.2%, utilities were flat and services added 0.1%. On a yearly basis, producer prices were up 4.0% - slowing from 4.2% in the previous month. (RTT News) Page 7 of 8
  8. TA Securities 23-May-17 A Member of the TA Group China Tells US trade Representative Stronger Cooperation Needed China 's Commerce Minister Zhong Shan told new US Trade Representative Robert Lighthizer the two sides should strengthen cooperation and manage disputes in trade, according to a statement on the website of China's commerce ministry. The two met on the sidelines of the Asia-Pacific Economic Cooperation (Apec) forum. Lighthizer said in the meeting with Zhong Shan that trade wars are not in the interest of either country, according to the statement from China's commerce ministry. Disagreements over global trade negotiations came to the fore at the Apec forum, which failed to agree on its usual joint statement after US opposition to wording on fighting protectionism. With the US balking at multilateral trade agreements, Asian trade ministers met to discuss the China-led Regional Comprehensive Economic Partnership (RCEP), which would create a free trade area of more than 3.5 billion people, bringing together China, India, Japan, South Korea, Australia and New Zealand as well as South-East Asian nations. RCEP talks include the largest geographic area, the most dynamic economies, and the largest population of any regional trade pact, Zhong said, according to a statement on the website of the commerce ministry. He said RCEP parties should accelerate RCEP talks and that all sides should show more flexibility to overcome differences. (The Star) United States Trump Budget Proposes Cuts to Food-Stamp Program President Donald Trump’s budget on Tuesday will propose a $193 billion reduction in spending on the food-stamp program over a decade, according to people familiar with the plans. The proposed cuts to the Supplemental Nutritional Assistance Program, or SNAP, are part of a plan to reduce spending by around $1.7 trillion over a decade on programs such as Medicaid, food assistance and other anti-poverty efforts, according to people familiar with the plans. The SNAP cuts would represent a 29% reduction in funding from levels estimated in January by the Congressional Budget Office. The U.S. spent nearly $71 billion on SNAP last year. Mr. Trump’s budget would be able to project such spending declines in part by assuming the benefits of a much stronger economy, which would boost incomes and lift more Americans out of federal safety nets. It isn’t clear how much of the funding decline would come from changes to growth estimates and how much from changes to eligibility requirements. The budget also is expected to call for saving about $40 billion over a decade by changing eligibility rules for the earned-income tax credit and child tax credit, two programs that deliver money to low-income households through the tax code. (The Wall Street Journal) Share Buy-Back: 22 May 2017 Company CBIP FITTERS Bought Back Price (RM) Hi/Lo (RM) 374,000 300,000 2.11/2.06 0.41 2.13/2.04 0.41/0.405 Total Treasury Shares 14,629,127 19,266,300 Source: Bursa Malaysia Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. liability for any direct or indirect loss arising from the use of this document. the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 8 of 8 We accept no We, our associates, directors, employees may have an interest in
  9. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 22-May-17 2.05 2.40 5.88 Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 2.36 2.04 5.12 0.98 0.60 1.25 10.8 22.7 17.7 15.8 23.8 27.6 19.0 10.6 33.3 13.0 10.1 21.3 5.8 3.8 1.9 7.7 3.8 3.1 2.44 2.70 7.00 -16.0 -11.1 -16.0 1.95 1.95 4.43 5.1 23.1 32.7 -3.8 12.1 28.7 4.10 3.40 5.40 6.10 15.80 9.20 22.10 4.70 10.00 1.29 0.96 1.35 1.35 0.66 0.95 0.78 1.36 0.71 35.8 29.4 46.4 50.6 101.3 73.6 136.6 49.0 40.3 37.7 33.1 50.6 55.6 109.8 82.6 140.4 51.7 39.0 12.0 9.6 11.7 11.8 13.9 12.7 14.7 11.0 25.9 11.4 8.5 10.7 10.7 12.8 11.3 14.3 10.5 26.7 3.5 2.8 3.0 3.4 2.9 5.3 2.8 2.2 3.3 3.5 2.8 3.3 3.7 2.9 5.3 2.9 2.2 3.3 4.49 3.00 5.70 5.99 14.28 9.68 20.58 5.59 10.50 -4.2 -5.7 -5.1 -0.7 -1.7 -3.4 -2.3 -3.2 -0.8 3.60 2.08 3.90 4.11 12.70 7.50 18.72 4.52 8.20 19.4 36.1 38.7 44.7 10.6 24.7 7.4 19.6 27.1 15.6 18.4 25.5 31.9 4.0 14.0 1.9 14.9 17.7 0.43 1.30 5.40 3.52 0.92 2.15 2.29 5.90 0.49 1.62 5.49 3.27 0.68 1.90 1.50 5.58 0.80 0.63 1.06 1.11 1.24 na 1.08 0.10 5.7 14.6 31.6 16.8 10.4 12.6 11.9 44.3 5.7 13.5 36.4 20.9 11.4 12.5 11.8 45.8 7.5 8.9 17.1 20.9 8.9 17.0 19.3 13.3 7.5 9.6 14.8 16.8 8.1 17.1 19.4 12.9 0.0 2.2 2.2 2.7 1.1 2.6 1.3 4.2 2.3 2.2 2.2 2.7 1.1 2.6 1.3 4.2 0.51 1.35 5.48 3.61 1.05 2.15 2.49 6.13 -15.7 -3.8 -1.5 -2.5 -12.4 0.0 -8.0 -3.8 0.36 0.80 4.65 3.07 0.41 1.42 1.41 5.20 19.4 63.3 16.1 14.7 127.2 51.4 62.4 13.5 -1.1 23.8 13.0 10.0 60.0 26.5 32.4 0.3 2.02 2.00 0.47 15.4 15.6 13.1 12.9 5.0 5.0 2.40 -15.8 1.93 4.7 0.5 14.66 18.72 17.84 21.08 0.51 0.58 74.8 93.1 81.3 19.6 101.9 20.1 18.0 18.4 5.1 4.5 5.5 4.9 15.30 18.84 -4.2 -0.6 12.90 14.60 13.6 28.2 5.3 14.3 2.33 7.56 25.40 82.00 3.40 1.85 4.88 1.03 2.23 8.62 27.41 88.66 3.76 2.74 4.17 1.10 0.51 0.36 0.34 0.36 0.51 0.68 0.44 0.56 6.5 26.4 120.5 293.6 22.3 25.1 12.7 9.3 7.5 30.5 148.1 326.2 24.7 25.3 15.8 12.8 35.9 28.6 21.1 27.9 15.3 7.4 38.5 11.1 30.9 24.8 17.1 25.1 13.8 7.3 30.9 8.1 0.8 4.0 2.8 3.3 4.4 4.3 0.9 4.9 1.0 4.6 3.0 3.4 5.0 4.3 1.0 4.9 3.00 9.29 27.00 83.68 3.63 2.04 5.00 1.07 -22.3 -18.6 -5.9 -2.0 -6.3 -9.3 -2.4 -3.7 2.11 7.30 22.44 74.12 2.13 1.43 4.14 0.78 10.4 3.6 13.2 10.6 59.6 29.4 17.8 32.1 -9.3 3.2 8.2 4.9 33.3 6.9 12.7 29.6 45.00 52.08 1.05 198.6 187.4 22.7 24.0 4.4 4.4 55.64 -19.1 40.61 10.8 1.9 9.80 5.99 11.53 6.58 1.35 1.28 49.4 25.7 55.6 27.9 19.8 23.3 17.6 21.5 0.5 1.3 0.6 1.5 10.00 6.07 -2.0 -1.3 7.50 4.17 30.7 43.5 23.3 32.6 2.74 0.16 3.81 0.10 0.74 1.28 22.1 0.2 24.6 0.3 12.4 78.5 11.1 51.3 5.8 0.0 6.9 0.0 3.42 0.16 -19.9 0.0 2.70 0.05 1.5 210.0 -7.4 210.0 5.97 4.18 6.65 4.61 0.78 0.52 10.3 13.3 16.4 16.5 58.0 31.4 36.4 25.4 0.7 1.5 0.7 1.8 6.73 4.37 -11.3 -4.3 5.78 3.85 3.3 8.6 -6.0 0.0 6.05 6.56 2.11 5.52 2.23 6.05 6.80 1.90 5.75 2.55 0.59 0.15 0.32 -0.26 0.28 19.5 35.8 16.2 26.6 4.3 24.4 40.5 18.3 30.2 7.1 31.1 18.3 13.0 20.8 52.0 24.8 16.2 11.5 18.3 31.6 1.3 2.7 2.3 2.4 0.5 1.8 3.1 2.6 2.8 0.8 6.05 7.07 2.69 5.54 2.64 0.0 -7.2 -21.6 -0.4 -15.5 3.95 5.62 1.88 4.20 1.96 53.2 16.7 12.2 31.4 13.8 25.3 -0.5 0.0 3.2 -5.5 INDUSTRIAL SCIENTX SKPRES 8.54 1.35 9.69 1.75 0.57 0.50 54.4 9.1 66.4 14.1 15.7 14.9 12.9 9.6 2.5 3.3 2.8 5.1 8.99 1.44 -5.0 -6.3 5.96 1.12 43.3 20.5 27.5 4.7 MEDIA ASTRO MEDIA PRIMA STAR 2.70 1.09 2.47 3.20 0.65 1.75 1.05 0.65 0.65 13.2 4.3 10.6 14.5 5.0 9.1 20.4 25.5 23.4 18.7 21.9 27.3 4.6 3.1 7.3 4.8 3.7 7.3 3.01 1.52 2.70 -10.3 -28.3 -8.5 2.56 1.00 2.20 5.5 9.0 12.3 3.8 -5.2 10.3 0.45 0.84 7.03 0.44 6.16 1.29 0.61 24.7 11.9 8.1 43.7 19.3 51.2 2.5 -10.5 2.7 3.4 40.4 5.3 20.4 -29.1 1.30 37.7 5.3 BANKS & FINANCIAL SERVICES AFG 4.30 AFFIN 2.83 AMBANK 5.41 CIMB 5.95 HLBANK 14.04 MAYBANK 9.35 PBBANK 20.10 5.41 RHBBANK BURSA 10.42 CONSTRUCTION BPURI GADANG GAMUDA IJM SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N NESTLE PADINI POHUAT QL SIGN Tobacco BAT GAMING Casino GENTING GENM NFO BJTOTO LUSTER HEALTHCARE Hospitals IHH KPJ Rubber Gloves HARTA KOSSAN SUPERMX TOPGLOV KAREX OIL & GAS EATECH 0.56 0.44 1.02 11.5 11.9 4.8 4.7 0.0 0.0 1.18 -53.0 MHB 0.94 0.95 1.85 -1.2 1.3 na 71.8 0.0 0.0 1.23 -23.6 MISC 7.60 7.65 0.83 56.8 54.7 13.4 13.9 3.9 3.9 7.90 -3.8 PANTECH 0.63 0.69 1.28 4.1 5.0 15.1 12.5 2.9 3.2 0.67 -6.0 PCHEM 7.35 7.91 1.08 39.2 41.6 18.8 17.7 2.9 3.0 7.80 -5.8 SENERGY 1.95 2.02 2.48 5.3 4.6 37.1 42.0 0.0 0.0 2.10 -7.1 UMWOG 0.62 0.80 2.04 -12.0 -3.6 na na 0.0 0.0 1.04 -40.4 Note: UMWOG proposed 14 for 5 rights issue shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.79 1.40 1.41 11.3 12.2 15.9 14.6 0.0 0.0 2.02 -11.4
  10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 1.96 3.13 4.54 24.84 9.31 6.18 1.53 3.88 4.15 26.19 8.24 7.52 1.80 0.47 1.09 0.88 1.23 0.48 6.3 13.7 18.7 111.8 30.8 32.7 11.1 15.7 21.1 119.1 35.3 34.5 30.9 22.9 24.2 22.2 30.3 18.9 17.6 19.9 21.5 20.9 26.4 17.9 2.6 2.2 2.2 2.2 2.4 2.6 2.6 2.6 2.6 2.4 3.0 2.8 2.52 3.70 4.81 25.50 9.55 6.51 -22.2 -15.4 -5.6 -2.6 -2.5 -5.1 1.31 3.00 4.10 22.72 7.30 5.53 49.6 4.3 10.7 9.3 27.5 11.8 26.5 -7.9 3.2 3.5 14.9 3.0 0.71 1.07 0.85 2.10 1.53 0.84 3.82 3.62 0.69 1.07 1.00 2.26 1.67 0.80 4.10 3.40 0.62 0.66 0.32 0.91 0.73 0.28 0.66 0.46 3.4 17.2 7.3 14.7 14.5 6.4 25.6 27.2 7.0 17.4 11.2 15.3 13.9 9.7 22.8 29.1 20.5 6.2 11.7 14.3 10.5 13.1 14.9 13.3 10.0 6.1 7.6 13.7 11.0 8.6 16.8 12.5 5.7 3.7 4.1 3.3 3.9 1.2 3.7 3.3 5.7 3.7 4.7 3.6 3.9 1.2 3.7 3.3 0.83 1.43 1.05 2.46 1.70 1.00 4.50 3.68 -14.5 -25.3 -19.0 -14.6 -10.0 -16.5 -15.1 -1.6 0.68 1.05 0.84 1.85 1.34 0.69 2.80 2.84 3.7 1.9 1.2 13.7 14.2 21.0 36.4 27.4 1.4 -5.3 -15.0 7.7 7.0 4.4 22.0 20.7 1.70 1.49 1.86 1.72 0.52 0.56 8.9 8.1 10.1 8.6 19.2 18.4 16.8 17.3 5.2 5.6 5.9 6.0 1.84 1.72 -7.6 -13.4 1.60 1.45 6.3 2.8 -1.2 -2.6 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.20 25.04 19.80 13.80 1.52 1.45 21.47 19.60 17.37 1.81 0.74 0.76 0.76 1.01 0.57 6.6 98.4 88.2 131.9 8.8 6.1 102.3 101.3 130.8 10.6 18.2 25.5 22.4 10.5 17.4 19.6 24.5 19.5 10.6 14.4 5.8 2.9 3.1 3.2 6.6 5.8 3.0 3.6 3.3 6.6 1.80 25.70 22.66 14.90 1.64 -33.3 -2.6 -12.6 -7.4 -7.3 1.14 22.82 18.10 13.00 1.38 5.3 9.7 9.4 6.2 10.1 -12.4 5.2 -7.0 -0.7 2.0 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 5.24 5.03 6.52 6.50 5.75 4.95 5.95 6.95 1.29 0.94 0.71 0.68 16.7 20.8 25.1 21.4 17.5 21.1 25.4 22.3 31.4 24.1 26.0 30.3 29.9 23.9 25.6 29.1 1.6 4.1 3.1 3.0 1.7 4.2 3.1 3.1 5.99 5.19 6.60 6.90 -12.5 -3.1 -1.2 -5.8 4.11 4.40 5.36 5.81 27.5 14.3 21.6 11.9 11.0 4.1 9.0 9.2 TECHNOLOGY Semiconductor & Electronics IRIS 0.20 INARI 2.17 MPI 13.30 UNISEM 3.52 0.28 2.40 13.15 3.55 1.39 0.82 0.51 0.81 -1.3 10.3 94.2 26.9 -0.3 na 12.6 21.1 115.7 14.1 29.1 13.1 na 17.2 11.5 12.1 0.0 3.7 2.0 3.4 0.0 2.3 2.0 3.4 0.24 2.23 13.50 3.70 -16.7 -2.7 -1.5 -4.9 0.10 1.35 7.02 2.23 100.0 61.1 89.5 57.8 81.8 30.7 79.5 49.2 3.52 8.45 3.02 8.10 1.19 1.47 33.5 17.2 34.9 17.5 10.5 49.0 10.1 48.3 1.1 1.2 1.4 1.2 3.59 8.49 -1.9 -0.5 2.12 5.76 66.0 46.7 53.7 39.4 1.73 3.92 1.88 4.51 0.76 0.67 15.4 19.3 21.5 17.4 11.2 20.3 8.0 22.5 3.2 3.7 4.0 3.3 1.87 4.59 -7.5 -14.6 1.23 3.74 40.7 4.8 8.8 -8.8 PROPERTY GLOMAC HUAYANG IBRACO IOIPG MAHSING SNTORIA SPSETIA SUNWAY REIT SUNREIT CMMT TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.86 OCBC 10.30 UOB 23.38 PLANTATIONS WILMAR IFAR 3.73 0.50 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.22 1.13 1.08 173.8 87.8 195.7 190.2 12.0 92.5 11.7 209.4 11.9 11.0 11.1 11.2 2.9 5.7 3.0 2.9 6.7 3.0 21.0 10.7 24.0 -0.7 -3.3 -2.7 14.72 8.84 17.41 41.7 25.3 34.3 20.3 15.5 14.6 3.72 0.53 0.92 1.12 28.9 3.9 31.1 4.3 12.0 11.7 2.1 1.9 2.4 2.1 4.0 0.6 -6.8 -16.0 2.96 0.44 26.0 13.6 3.9 -4.8 12.9 12.8 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
  11. TA Securities A Member of the TA Group MENARA TA ONE , 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 SECTOR UPDATE Tuesday, May 23, 2017 FBM KLCI: 1,774.95 Sector: Automotive Underweight Automotive Sector TIV Declines MoM THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Abel Goon Tel: +603-2072 1277 ext. 1641 abelgoon@ta.com.my April TIV Declines as Expected Total Industry Volume (TIV) in April was broadly in-line with expectations, at 42.2k units (MoM: -20.4%, YoY: +1.3%). MAA attributed the weaker sales to stringent hire purchase loan approvals as well as confusion surrounding the SUV/4X4 excise duties. We note that April has registered MoM decline for the past 8 years. Hence, the decline is within expectations. We are expecting TIV in May to decline followed by a spike in June due to Hari Raya marketing campaigns. YTD TIV of 183.6k units (+5.8%) is within expectations and constitutes 31.3% and 31.1% of ours and MAA’s forecast respectively. Only Mazda and BMW Register MoM Gains Mazda (MoM:+19.6%, YoY: -25.2%) and BMW (MoM: +5.9%, YoY: +35.1%) were the biggest MoM gainers in April. We attribute the stronger Mazda sales to aggressive marketing campaigns as its financial year ended in April. Meanwhile, BMW sales remained resilient, as its attractive line-up of lower priced models enticed buyers. All other marques registered MoM declines in-line with the decline in TIV. The biggest losers were Mercedes (MoM: 38.8%, YoY: -33.3%), Honda (MoM: -33.8%, YoY: +22.1%), and Perodua (MoM: -26.1%, YoY: 3.5%) Excise Duty Uncertainties To recap, the government announced an excise rate hike on 7th April for budget MPVs by 5% (from 60% to 65%). Subsequently, Toyota announced price hikes of up to RM6k in-line with the excise duty hike. Whereas Honda and Perodua suggested that price hikes could be carried out on its Honda BR-V and Perodua Alza. However, on 13th April, the customs department reversed its decision, and thus the excise duty for budget MPVs reverted to 60%. Accordingly, Toyota followed suit and reversed its price hikes. We believe the uncertainties surrounding excise duties may have rendered purchasers more cautious, and thus, resulted in depressed April TIV. Toyota Sales Within Expectations Toyota and Lexus sales were within expectations, with total volume sales of 22.6k in 4M17 (YoY: +53.6%). This constitutes 32.3% of UMW’s sales target of 70k units. Given that car sales peak in December, we believe the target is within reach. The commendable sales were likely due to extremely attractive cash rebates given for Toyota cars. That said, we understand that the much anticipated Toyota C-HR will only be launched in 2018. This is slightly negative as we had expected the new model launch to boost Toyota’s sales volume in FY17. Maintain Underweight We maintain our Underweight stance on the industry and our 2017 TIV forecast at 586.5k units (+1.1% YoY). Our forecast reflects a slight recovery in TIV as we anticipate consumers that have delayed their purchases in 2016 will finally relent and yield to attractive packages and product offerings. Furthermore, new models such as the Honda BR-V, the all-new Mazda CX-5, and possibly a 3rd Gen Myvi will excite the market. On the other hand, stringent HP loan requirements will continue to subdue growth in TIV. BAuto is rated as Buy with TP of RM2.36 due to its handsome dividends and potential growth from the export market. Meanwhile, UMW and MBM Resources are rated as Sell with TP of RM5.12 and RM2.04, respectively. Page 1 of 6 www.taonline.com.my
  12. TA Securities 23-May-17 A Member of the TA Group Figure 1 : Breakdown of TIV Passenger Commercial TIV Apr-16 37,783 4,419 42,202 Mar-17 48,355 5,362 53,717 Apr-17 37,741 5,005 42,746 % MoM (22.0) (6.7) (20.4) % YoY (0.1) 13.3 1.3 4M2016 154,867 18,586 173,453 4M2017 165,271 18,314 183,585 % YoY 6.7 (1.5) 5.8 Mar-17 Apr-17 % MoM % YoY 4M2016 4M2017 % YoY 19,459 6,070 25,529 14,378 5,616 19,994 (26.1) (7.5) (21.7) (3.5) 25.4 3.2 62,079 23,702 85,781 64,643 24,992 89,635 4.1 5.4 4.5 Source: MAA, TA Research Figure 2: Breakdown of TIV by segments Passenger vehicles Apr-16 National Perodua 14,898 Proton 4,477 Total 19,375 Non-national BMW Mercedes Honda Nissan Toyota Mazda VW Others Total 666 1,046 5,964 2,391 3,465 1,289 1,407 2,180 18,408 850 1,140 10,994 1,963 4,391 806 491 2,191 22,826 900 698 7,283 1,548 3,898 964 481 1,975 17,747 5.9 (38.8) (33.8) (21.1) (11.2) 19.6 (2.0) (9.9) (22.3) 35.1 (33.3) 22.1 (35.3) 12.5 (25.2) (65.8) (9.4) (3.6) 2,479 3,708 24,741 11,525 10,235 4,704 2,999 8,695 69,086 3,038 3,649 34,566 6,088 16,004 3,008 1,574 7,709 75,636 22.5 (1.6) 39.7 (47.2) 56.4 (36.1) (47.5) (11.3) 9.5 Grand Total 37,783 48,355 37,741 (22.0) (0.1) 154,867 165,271 6.7 Commercial vehicles Hino Isuzu Mitsubishi Nissan Toyota Mazda Others Total Apr-16 455 1,009 642 624 624 16 1,049 4,419 Mar-17 239 1,111 800 663 1,771 12 766 5,362 Apr-17 492 854 420 612 1,920 24 683 5,005 % MoM 105.9 (23.1) (47.5) (7.7) 8.4 100.0 (10.8) (6.7) % YoY 8.1 (15.4) (34.6) (1.9) 207.7 50.0 (34.9) 13.3 4M2016 1,671 3,598 2,863 2,263 4,070 153 3,968 18,586 4M2017 1,157 3,390 2,321 2,061 6,317 62 3,006 18,314 % YoY (30.8) (5.8) (18.9) (8.9) 55.2 (59.5) (24.2) (1.5) Source: MAA, TA Research Page 2 of 6
  13. TA Securities 23-May-17 A Member of the TA Group Figure 3 : Breakdown by main manufacturers/distributors UMW Apr-16 Mar-17 Toyota (Passenger cars) 3,465 4,391 Lexus 138 73 Toyota (Commercial) 624 1,771 Total 4,227 6,235 Perodua 14,898 19,459 Grand total 19,125 25,694 Apr-17 3,898 84 1,920 5,902 14,378 20,280 % MoM (11.2) 15.1 8.4 (5.3) (26.1) (21.1) % YoY 12.5 (39.1) 207.7 39.6 (3.5) 6.0 4M2016 10,235 410 4,070 14,715 62,079 76,794 4M2017 16,004 275 6,317 22,596 64,643 87,239 % YoY 56.4 (32.9) 55.2 53.6 4.1 13.6 Tan Chong Nissan (Passenger cars) Renault Nissan (Commercial) Total Apr-16 2,391 26 624 3,041 Mar-17 1,963 66 663 2,692 Apr-17 1,548 50 612 2,210 % MoM (21.1) (24.2) (7.7) (17.9) % YoY (35.3) 92.3 (1.9) (27.3) 4M2016 11,525 135 2,263 13,923 4M2017 6,088 189 2,061 8,338 % YoY (47.2) 40.0 (8.9) (40.1) Bermaz Auto Mazda (Passenger cars) Mazda (Commercial) Total Apr-16 1,289 16 1,305 Mar-17 806 12 818 Apr-17 964 24 988 % MoM 19.6 100.0 20.8 % YoY (25.2) 50.0 (24.3) 4M2016 4,704 153 4,857 4M2017 3,008 62 3,070 % YoY (36.1) (59.5) (36.8) MBM Resources VW Volvo Mitsubishi Hino Daihatsu Total Apr-16 1,407 75 642 455 111 2,690 Mar-17 491 89 800 239 84 1,703 Apr-17 481 50 420 492 56 1,499 % MoM (2.0) (43.8) (47.5) 105.9 (33.3) (12.0) % YoY (65.8) (33.3) (34.6) 8.1 (49.5) (44.3) 4M2016 2,999 253 2,863 1,671 315 8,101 4M2017 1,574 241 2,321 1,157 237 5,530 % YoY (47.5) (4.7) (18.9) (30.8) (24.8) (31.7) Source: MAA, TA Research Figure 4: TIV vs. YoY growth unit TIV (LHS) YoY Growth (RHS) 40% 70,000 30% 60,000 20% 50,000 10% 40,000 0% 30,000 -10% 20,000 -20% 10,000 -30% 0 -40% Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 80,000 Source: MAA, TA Research Page 3 of 6
  14. TA Securities 23-May-17 A Member of the TA Group Figure 5 : Passenger Vehicle Market Share (National vs. non-national manufacturers) 75% National Non-National 70% 65% 60% 55% 50% 45% 40% 35% Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 Apr-14 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 30% Source: MAA, TA Research Figure 6: Total Market Share by Brand % 45 Proton Perodua Toyota Nissan Honda Others Mazda 40 35 30 25 20 15 10 5 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Jan-16 Mar-16 Nov-15 Sep-15 Jul-15 May-15 Jan-15 Mar-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Jul-13 Sep-13 May-13 Mar-13 Jan-13 Nov-12 Sep-12 Jul-12 May-12 Jan-12 Mar-12 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 0 Source: MAA, TA Research Figure 7: TIV (MoM change) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jan + + + - Feb + + - *+ : increase, - : decrease Mar + + + + + + + + + + + + + + Apr + - May + + + + + + + + Jun + + + + + + + + + + Hari Raya Month Source: MAA, TA Research Page 4 of 6 Jul + + + + + + + + + - Aug + + + + + + Sep + + + + - Oct + + + + + + + - Nov + + + + + + Dec + + + + + + + + + +
  15. TA Securities 23-May-17 A Member of the TA Group Figure 8 : Cumulative Sales Volume (YoY growth) 4M17 3M17 Figure 9: TIV On Half Year Basis (unit) 2M17 1H 350,000 40% 45% 43% Honda 2H 300,000 -41% Nissan -44% -48% 250,000 200,000 56% 62% Toyota 75% 100,000 5% 1% 50,000 Perodua Proton 150,000 4% 7% 4% -3% 0% 20% 40% 60% 80% 0 100% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: MAA, TA Research Source: MAA, TA Research Figure 10: Monthly Sales Volume Breakdown by Brand (unit) Figure 11: Market share (%) Mar-17 Apr-17 % Apr-16 40 14,898 19,459 14,378 9.7 11.5 13.6 15 10 5 0 0 Proton Perodua Toyota Nissan Honda Mazda Proton Others Perodua Toyota Source: MAA, TA Research Source: MAA, TA Research Figure 12: YTD Sales Volume Breakdown by Brand (unit) Figure 13: YTD Market Share (%) 4M2017 4M2016 % 40 Honda Mazda 4M2017 35 60,000 30 0 14.3 2.8 1.7 5 17.3 14.1 18.8 10 7.9 12.2 8.2 15 13.7 13.6 29,981 25,844 24,741 34,566 20 4.4 10,000 25 4,857 3,070 20,000 13,788 8,149 14,305 22,321 23,702 24,992 50,000 30,000 Nissan 35.8 35.2 4M2016 62,079 64,643 70,000 40,000 3.1 1.5 2.3 10.6 11.3 13.1 20 8,454 7,588 6,503 5,964 25 1,305 818 988 5,000 3,015 2,626 2,160 10,000 4,477 6,070 5,616 15,000 Apr-17 30 4,089 6,162 5,818 20,000 35 10,994 7,283 25,000 Mar-17 35.3 36.2 33.6 Apr-16 20.5 17.0 -20% 14.1 -40% 7.1 4.9 5.1 -60% 0 Proton Perodua Source: MAA, TA Research Toyota Nissan Honda Mazda Others Proton Perodua Source: MAA, TA Research Page 5 of 6 Toyota Nissan Honda Mazda Others
  16. TA Securities 23-May-17 A Member of the TA Group Figure 14 : National vs. Non-national (Sales Volume)-Monthly Non-National National Source: MAA, TA Research Jan-17 Sep-16 Jan-16 May-16 Sep-15 Jan-15 May-15 Sep-14 Jan-14 May-14 Sep-13 Jan-13 Jan-11 Jan-17 Sep-16 Jan-16 May-16 Sep-15 Jan-15 May-15 Sep-14 Jan-14 May-14 Sep-13 Jan-13 May-13 Sep-12 Jan-12 May-12 Sep-11 Jan-11 15,000 May-13 20,000 Sep-12 25,000 Jan-12 30,000 May-12 35,000 Sep-11 40,000 May-11 Non-National 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% May-11 National 45,000 Figure 15: National vs. Non-national (Market share)-Monthly Source: MAA, TA Research Figure 16: Peers Comparison Company MBM Resources UMW BAuto Average Price (RM) 2.40 5.88 2.05 Tgt.Price (RM) 2.04 5.12 2.36 Call Sell Sell Buy PE (x) CY17 10.6 33.3 14.5 19.5 PB(x) CY18 10.1 21.3 12.0 14.5 CY17 0.5 1.4 4.1 2.0 CY18 0.5 1.3 3.9 1.9 Dividend Yield (%) CY17 CY18 3.8 3.8 1.9 1.9 7.1 8.3 4.2 4.6 ROE (%) CY17 CY18 4.6 4.6 4.2 6.2 27.9 32.3 12.2 14.4 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. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 6 of 6
  17. TA Securities RESULTS UPDATE Tuesday , May 23, 2017 FBMKLCI: 1,774.95 A Member of the TA Group Sector: Plantation MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Kuala Lumpur Kepong Berhad TP: RM26.19 (+5.4%) Last Traded: RM24.84 Profit Helps From Plantation Segment Hold THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Angeline Chin Tel: +603-2072 9611 angelinechin@ta.com.my Review KLK’s 1HFY17 results came in within ours and consensus full-year estimates. Core net profit of RM656.2mn accounted for 55% of both ours and consensus full-year estimates. 1HFY17 reported net profit decreased by 32.5% YoY to RM650.2mn mainly due to a land disposal gain of RM485.6mn recorded last year. Excluding this and other exceptional items, the 1HFY17 core net profit actually increased by 59.1% YoY on the back of 36.4% growth in revenue. Plantation: Despite lower contribution from the processing and trading operations, 1HFY17 operating profit increased by 99.6% YoY to RM785.9mn, underpinned by higher FFB production as well as higher selling prices of CPO (+37.4% to RM2,851/tonne) and palm kernel (+81.9% to RM2,871/tonne). YTD, the FFB production grew 6.9% YoY to 2mn tonnes. Manufacturing: 1HFY17 revenue increased by 37.2% YoY, driven by higher selling price. However, high raw material cost (particular CPKO) has eroded margins and resulted in 56.4% drop in operating profit. The oleochemical division and other manufacturing units also suffered declines in profit. Property: Revenue increased 3-fold to RM83.1mn while the operating profit increased by >100% YoY to RM16.3mn. Nonetheless, there was a slowdown in property sales to RM22.9mn in 2QFY17. The group declared a single-tier dividend of 15 sen for the quarter under review, similar to the corresponding period last year. www.taonline.com.my Share Information Stock Code KLK Listing Main Market Share Cap (m) 1,065 Market Cap (RMm) 26,454 Par Value (RM) 1.00 52-wk Hi/Lo (RM) 25.5/22.72 12-mth Avg Daily Vol ('000 shrs) 1,269 Estimated Free Float (%) 25.9 Beta 0.88 Major Shareholders (%) Batu Kawan Bhd - 46.57 EPF - 16.1 Lembaga Kemajuan Tanah - 4.28 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 1,190 1,268 1,193 1,258 100 101 Sell (Upgraded) Financial Indicators Net debt/equity (%) CFPS (sen) P/CFPS (x) ROA (%) NTA/Share (RM) Price/ NTA (x) 3-year EPS CAGR (%) FY17 34.0 (26.2) (94.7) 6.4 10.0 2.5 4.5 FY18 32.3 (11.1) (224.8) 6.5 10.6 2.3 15.6 % of FY 55 55 Within Within KLK 2.1 2.2 4.6 7.6 FBM KLCI 1.1 4.1 8.9 8.6 Scorecard Impact No change to our earnings forecasts. vs TA vs Consensus Outlook Management guided that FFB production is expected to increase and may further reduce CPO price. However, the business performance of the oleochemical division is anticipated to recover in 2H but remains challenging. Note that FFB production of 908k in 2QFY17 is a new production record of being the highest quarterly production for 2Q. This suggests the trend of rising FFB production may continue into the 2H. Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth (12-Mth) Share Price relative to the FBM KLCI Valuation We upgrade KLK’s TP to RM26.19 (previously RM22.75) as we roll forward our SOP valuation to CY18. This translates into CY18 implied PER of 22x. Upgrade KLK from Sell to HOLD. Potential re-rating catalysts for the stock include i) stronger-than-expected FFB growth, ii) better-thanexpected downstream margin, and iii) higher CPO prices. Source: Bloomberg Page 1 of 3
  18. TA Securities 23-May-17 A Member of the TA Group Figure 1 : Plantation Statistics 2QFY16 1QFY17 2QFY17 % QoQ % YoY 1HFY16 1HFY17 FFB (tonnes) 771,309 1,044,615 908,474 (13.0) 17.8 1,826,859 1,953,089 6.9 CPO (tonnes) 177,635 229,273 199,475 (13.0) 12.3 417,013 428,748 2.8 4,429,687 3,999,283 3,714,657 (7.1) (16.1) 8,944,584 7,713,940 (13.8) 1QFY17 2,720 2,648 2QFY17 2,999 3,111 % QoQ 10.3 17.5 % YoY 36.0 75.8 1HFY16 2,075 1,578 1HFY17 2,851 2,871 % YoY 37.4 81.9 Rubber (kg) % YoY Source: Bursa Announcement, TA Research Figure 2: Average Selling Prices CPO (RM/tonne) Palm Kernel (RM/tonne) 2QFY16 2,205 1,770 Source: Bursa Announcement, TA Research Figure 3: Breakdown of Segmental Operating Profit RMmn 2QFY16 1QFY17 2QFY17 % QoQ % YoY 1HFY16 1HFY17 % YoY Plantation Manufacturing Prop. dev. Inv. Holdings/Others 128.0 108.8 2.3 7.4 422.3 38.9 15.6 43.9 363.6 67.2 0.7 (2.4) (13.9) 72.5 (95.2) nm >100 (38.3) (68.2) nm 393.8 243.2 2.4 35.0 785.9 106.1 16.3 41.4 99.6 (56.4) >100 18.5 Total 246.6 520.6 429.1 (17.6) 74.0 674.3 949.7 40.8 Source: Bursa Announcement, TA Research Earnings Summary (RM mn) FYE Sept 30 Revenue EBITDA EBITDA margin Pretax profit Reported net profit Core net profit Reported EPS Core EPS Core EPS growth PER Gross DPS Gross Div Yield ROE FY15 13,650.0 1,532.5 11.2 1,134.6 869.9 820.4 81.7 77.0 (21.4) 32.2 45.0 1.8 9.4 (%) (sen) (sen) (%) (x) (sen) (%) (%) FY16 16,505.8 1,749.4 10.6 1,712.3 1,592.2 1,088.8 149.5 102.2 32.7 24.3 50.0 2.0 10.8 FY17E 17,532.3 2,140.2 12.2 1,558.6 1,190.1 1,190.1 111.8 111.8 9.3 22.2 55.0 2.2 11.1 FY18F 17,960.3 2,262.8 12.6 1,660.6 1,268.0 1,268.0 119.1 119.1 6.5 20.9 59.0 2.4 11.2 FY19F 18,138.3 2,348.0 12.9 1,731.1 1,321.9 1,321.9 124.1 124.1 4.2 20.0 61.0 2.5 11.0 2QFY17 Results Analysis (RM mn) FYE Sept 30 Turnover EBIT Forex and EI Net interest Associates & JV Pretax Taxation MI Net profit Core net profit 1QFY16 3,702.6 291.5 (25.5) (24.6) 1.4 242.9 (55.5) (18.8) 168.5 194.0 1QFY17 5,496.1 525.0 (24.4) (28.2) 0.0 472.4 (96.3) (15.4) 360.7 385.1 2QFY17 5,470.9 401.9 18.4 (23.3) (1.4) 395.6 (92.5) (13.5) 289.6 271.2 QoQ% (0.5) (23.5) nm 17.2 nm (16.3) 4.0 12.2 (19.7) (29.6) YoY% 47.8 37.9 nm 4.9 nm 62.9 (66.5) 28.1 71.8 39.8 1HFY16 8,040.4 647.1 551.4 (46.7) 2.2 1,154.0 (136.3) (53.9) 963.7 412.4 1HFY17 10,967.1 926.8 (6.0) (51.5) (1.4) 868.0 (188.8) (29.0) 650.2 656.2 Core EPS (sen) GDPS (sen) (sen) (sen) 18.2 15.0 36.2 0.0 25.5 15.0 38.7 15.0 61.6 15.0 EBIT Margin Pretax Margin Tax Rate (%) (%) (%) 7.9 6.6 22.9 9.6 8.6 20.4 7.3 7.2 23.4 8.0 14.4 11.8 8.5 7.9 21.7 Page 2 of 3 YoY% 36.4 43.2 nm (10.4) nm (24.8) (38.5) 46.3 (32.5) 59.1
  19. TA Securities 23-May-17 A Member of the TA Group ( T HI S P AGE I S I NT E N T I ON AL L Y L E FT B L ANK) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. 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 or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
  20. RESULTS UPDATE TA Securities Tuesday , May 23, 2017 FBMKLCI: 1,774.95 Sector: Oil & Gas A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM0.80 (ex-rights: RM0.43) UMW Oil & Gas Corporation Bhd Last Traded: RM0.62 (ex-rights: RM0.38) Slow Start to the Year Buy THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Abel Goon Tel: +603 2072 1277 ext. 1641 abelgoon@ta.com.my Review UMW Oil & Gas Corporation Bhd (UMW-OG) reported 1QFY17 headline net loss of RM104.1mn. Excluding unrealised FX losses, core net loss came in at RM103.1mn (+19.9% QoQ, -11.6% YoY),which constitutes 40% and 39% of ours and consensus estimates. We deem this to be within expectations as we expected a weak 1Q17 followed by recovery in the subsequent three quarters. This was premised on the fact that UMW-OG would secure additional contracts and improve its utilisation rates. To recap, UMW-OG only had 2 rigs working in 1Q17 (NAGA 6 and 7). We expect 4 and 7 rigs to be working in 2Q17 and 3Q17 respectively. Assuming optional wells and new contract wins are secured, UMW-OG may have 7 rigs working in 4Q17 as well. UMW-OG was once again EBITDA loss-making in 1Q17, which is unsurprising given an underutilized fleet. However, we note that EBITDA losses narrowed to RM2mn from RM17.2mn in 4Q16. On the other hand, DCRs for jack-up rigs remain depressed albeit being cashflow positive. Management revealed that DCRs in 1Q17 was lower than DCRs in 1Q16, hence resulting in a 15.3% YoY decline in revenue. Note that 2 rigs were working in both quarters. According to management, UMW-OG is currently bidding on 13 local contracts and 20 international contracts. These contracts consist of both exploration and production operations. Share Information Bloomberg Code UMWOG MK Stock Code 5243 Listing Main Market Share Cap (mn) 2,162 Market Cap (RMmn) 1,340 Par Value (RM) 0.50 52-wk Hi/Lo (RM) 1.04/0.61 12-mth Avg Daily Vol ('000 shrs) 2,929 Estimated Free Float (%) 19.8 Beta 2.6 Major Shareholders (%) UMW Holdings - 55.7 Skim Amanah Saham - 8.4 EPF - 5.0 Forecast Revision (%) FY17 FY18 Forecast Revision (%) 0.0 0.0 Core Net Profit (RM mn) (259.5) (77.3) Consensus (263.6) (147.2) TA/Consensus (%) 98.4 52.5 Previous Rating Buy (Maintain) Scorecard vs TA vs Consensus Built/ Delivery NAGA 2* 2009 NAGA 3 2010 NAGA 4 2013 NAGA 5 May 2014 NAGA 6 Sep 2014 NAGA 7 Dec 2014 NAGA 8 Sep 2015 Contract Period Contract Tenure Current Location Starting 2Q17 4-5 mths** Terengganu 5-11 mths** Kemaman 2-5 mths** Kemaman 3-4 mths** Kemaman 2+1 yrs Sarawak 1.5 yrs Sabah 1.5+1 yrs NMB Client Ophir/ Vestigo Petronas Carigali Petronas Carigali Petrofac Petronas Carigali Petronas Carigali Hess Starting Jun 2017 Starting Jun 2017 Starting May 2017 May 2016May 2018 March 2017Sep 2018 Sep 2016March 2019 Net (Debt)/Equity (x) ROA (%) ROE (%) NTA/Share (RM) P/NTA (x) Share Performance Price Change (%) 1 mth 3 mth 6 mth 12 mth Within Within FY17 1.6 (4.2) (13.0) 0.9 0.7 FY18 1.7 (1.3) (4.0) 0.9 0.7 UMWOG (3.9) (12.1) (22.5) (31.5) FBMKLCI 1.1 4.1 8.9 8.6 (12-Mth) Share Price relative to the FBM KLCI *Two different contracts to Ophir and Vestigo **Estimated timeframe based on 1 month per well Impact Maintain our earnings forecasts. Source: Bloomberg Page 1 of 3 % of FY 40 39 Financial Indicators Figure 1: Jackup Fleet Status Rig www.taonline.com.my