Bursa Malaysia Daily Market Report - 25 July

Transcription

1. Tuesday , 25 July, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. Automotive Sector: Shorter Working Month Causes Slight Dip 2. Axiata Group Berhad: XL On Better Footing 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, 25 July 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (24.07.2017) Volume (mil) +/-chg (RMmn) Main Market 1,049.2 -117.3 1,563.5 Warrants 100.5 -37.5 11.4 ACE Market 508.3 -46.2 100.9 Bond 10.1 5.1 1.9 ETF 0.0 -0.11 0.0 Total 1,668.2 1,677.8 Off Market 70.8 -91.4 76.6 Value +/-chg -67.3 -2.8 -31.0 0.4 -0.15 -406.0 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP July 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 Up Down 231 367 43 80 38 63 1 5 1 1 314 516 % chg % YTD chg 1,761.99 12,556.07 17,298.12 1,761.00 2.83 16.06 -24.49 -1.00 0.16 0.13 -0.14 -0.06 7.33 9.50 17.55 7.67 21,513.17 6,410.81 7,377.73 19,975.67 2,451.53 26,846.83 3,310.80 1,576.73 5,801.59 3,250.60 1,854.67 5,688.07 -66.90 23.05 -75.18 -124.08 1.47 140.74 -3.32 3.22 36.16 12.62 8.85 -34.77 -0.31 0.36 -1.01 -0.62 0.06 0.53 -0.10 0.20 0.63 0.39 0.48 -0.61 8.86 19.09 3.29 4.51 20.98 22.03 14.93 2.19 9.53 4.74 -5.81 0.39 @ @ @ @ @ @ @ (RM) 0.24 4.40 0.07 0.10 0.26 1.15 0.24 Counter Mkt Cap. (RM’mn) TENAGA 80,245 PBBANK 78,697 SIME 64,948 CIMB 56,000 AXIATA 43,348 DIGI 37,320 GENM 34,294 IOICORP 32,318 KLK 26,369 HAPSENG 22,781 Chg (RM) 0.06 0.02 0.01 0.03 0.01 0.09 0.07 0.12 0.02 0.04 Bursa Malaysia shares ended a cautious Monday session mixed, with the lack of key domestic leads dampening trading participation. The KLCI rose 2.83 points to close at the day's high of 1,761.99, off an early low of 1,757.22, as losers beat gainers 516 to 314 on cautious trade totaling 1.67bn shares worth RM1.68bn. Stocks are likely to extend sideways trade with most investors sidelined ahead of the two-day monetary policy meeting from the US Fed later this week. Immediate support from the 100-day moving average level now at 1,756 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,708. Immediate resistance stays at the 50-day moving average now at 1,771, next 1,782, followed by the recent peak of 1,796. RHBBank shares remains in base building mode above the crucial 200day moving average support (RM5.00), pending rebound to challenge the 76.4%FR (RM5.18) for convincing breakout and re-visit the 3/5/17 peak (RM5.59). Stronger retracement support is from the 61.8%FR (RM4.93). Likewise, Tenaga should rebuild support above the 61.8%FR support (RM14.02) pending decisive breakout above the 76.4%FR (RM14.36) to target RM14.60 and the 26/8/16 peak (RM14.90) ahead. The crucial 200day ma support is at RM13.95. News Bites • • • • Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) THRIVEN 29.8 BIMB 14.8 THRIVEN-WB 14.7 TANCO 6.0 MEXTER 2.0 TAWIN 1.2 L&G 1.0 Value/ Volume 1.49 0.11 0.20 0.19 0.95 1.01 1.08 Vol. (mn) 8.56 8.06 7.78 3.89 3.90 2.63 4.22 0.80 0.73 0.23 Important Dates VITROX - 1:1 Bonus Issue - BI of 236.3m shares. 1 bonus share for every 1 existing share. LISTING ON: 24/07/2017. ORION - 7:2 Rights Issue - RI of up to 465.9m shares together with up to 232.9m free detachable warrants. 7 rights shares together every 2 existing shares held, at an issue price of RM0.17 per rights share, with 1 free warrant for every 2 rights shares subscribed. LISTING ON: 02/08/2017. • • • • • • • • • The Malaysian Automotive Association is urging the government to defer the implementation of the ruling requiring new vehicles to install an emergency call system until the industry is ready for it. Scomi Engineering Bhd announced that its independent auditors, Messrs KPMG PLT has issued a statement of material uncertainty related to going concern in respect of its financial statements for FY17. Wah Seong Corporation Berhad is disposing 126.6acres of leasehold land with properties in Kuantan to Axis Real Estate Investment Trust for RM155.0mn. Dagang NeXchange Bhd is in merger talks for its technology and energy businesses, betting acquisitions will boost its profit growth target to double digits this year. Rohas Tecnic Berhad announced the proposed acquisition of a 75% stake in HG Power Transmission Sdn Bhd for RM91.7mn. Settlers' cost of Felda Global Ventures Holdings Bhd shares will be reduced by half following the latest set of measures announced by the Federal Land Development Authority. ManagePay Systems Berhad's associate, Trustgate Berhad, intends to apply for listing on the LEAP Market of Bursa Securities. Bursa Malaysia Securities Berhad has decided that the trading of China Automobile Parts Holdings Limited will be further suspended until further notice. AmMetLife Takaful Bhd has received regulatory approval from Bank Negara Malaysia for the appointment of Noor Azam Mohd Yusof as Chief Executive Officer, effective July 1, 2017. As a consequence of the buy-back offer, Lotte Chemical Titan Holding Berhad's IPO proceeds will be reduced by RM226.3mn to RM3.5bn and an extension of time will be requested to rectify the shortfall in public shareholding spread of 24%. Axis Real Estate Investment Trust's 1HFY17 net profit fell 25.4% YoY to RM45.9mn as a fair value gain on investment properties of RM16.2mn was reported in the previous year. The International Monetary Fund has upgraded its 2017 growth forecast for Malaysia to 4.8% from 4.5%. The US existing home sales fell 1.8% in June from the previous month to a seasonally adjusted annual rate of 5.52 million. Exchange Rate USD/MYR 4.2780 -0.0063 USD/JPY 110.72 -0.7500 EUR/USD 1.165 0.0004 Commodities Futures Palm Oil (RM/mt) 2,556.00 -16.00 Crude Oil ($/Barrel) 46.48 0.88 Gold ($/tr.oz.) 1,255.30 0.30 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 , July 25, 2017 FBMKLCI: 1,761.99 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 Cautious Ahead of Fed Meeting Bursa Malaysia shares ended a cautious Monday session mixed, with the lack of key domestic leads dampening trading participation. The KLCI rose 2.83 points to close at the day’s high of 1,761.99, off an early low of 1,757.22, as losers beat gainers 516 to 314 on cautious trade totaling 1.67bn shares worth RM1.68bn. Support at 1,756, Resistance at 1,771 Stocks are likely to extend sideways trade with most investors sidelined ahead of the two-day monetary policy meeting from the US Fed later this week. Immediate support from the 100-day moving average level now at 1,756 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,708. Immediate resistance stays at the 50-day moving average now at 1,771, next 1,782, followed by the recent peak of 1,796. Buy RHBBank & Tenaga RHBBank shares remains in base building mode above the crucial 200-day moving average support (RM5.00), pending rebound to challenge the 76.4%FR (RM5.18) for convincing breakout and re-visit the 3/5/17 peak (RM5.59). Stronger retracement support is from the 61.8%FR (RM4.93). Likewise, Tenaga should rebuild support above the 61.8%FR support (RM14.02) pending decisive breakout above the 76.4%FR (RM14.36) to target RM14.60 and the 26/8/16 peak (RM14.90) ahead. The crucial 200-day ma support is at RM13.95. Asian Markets Mixed Amid Cautious Trade Asian stock markets traded mixed on Monday as U.S political uncertainties dampened hopes for quick passage of President Donald Trump's stimulus and tax reform agendas, weighing on investors' risk appetite. The Trump administration, took a fresh hit last Friday after White House spokesman Sean Spicer resigned, highlighting an upheaval within the president's inner circle. Investors are also in a cautious mode ahead of the U.S Federal Reserve's monetary policy meeting later this week. Japanese stocks dropped to more than two-week lows after Wall Street retreated and a stronger yen dampened sentiment. The Nikkei shares average lost 0.62 percent to 19,975.67, while Korean Kopsi ended higher by 0.06 percent to 2,451.33 points. In down under, the benchmark ASX200 ended lower by 0.61 percent to close at 5,688.10, with most sectors finishing lower. Meanwhile, China's blue-chip index hovered near 18-month highs as institutional investors stepped up their buying into industry leading big caps, but small-cap shares continued to languish as their earnings disappointed. The blue-chip CSI300 index rose 0.40 percent to 3,743.47 points, while the Shanghai Composite Index gained 0.39 percent to 3,250.49 points. Wall Street Mixed Ahead of Earnings U.S stock markets traded mixed on Monday, with the Dow and S&P 500 posting their third straight session of declines, while the Nasdaq closed at a record as investors kicked off a busy week of earnings, a Federal Reserve policy meeting and economic data. Approximately 180 S&P 500 companies are scheduled to report quarterly results this week, including tech giants Facebook and Amazon. Tech and financials were the only two of the 11 major S&P sectors to finish in positive territory. Johnson & Johnson shares ended down 1.7 percent, the biggest weight Page 1 of 8
4. TA Securities 25-Jul-17 A Member of the TA Group on the S &P 500 and the Dow as it faces discounted competition to its big-selling rheumatoid arthritis drug. Meanwhile, Google-parent Alphabet posted better than expected quarterly results after the bell. However, it shares were down 3 percent in after-hours trading, as the company reported a dip in quarterly profit after taking a hit from last month's US$2.74 billion European anti-trust fine. The Dow Jones Industrial Average fell 66.90 points, or 0.31 percent, to 21,513.17, the S&P 500 lost 2.63 points to 2,469.91 and the Nasdaq Composite rose 23.05 points, or 0.36 percent, to 6,410.81. Page 2 of 8
5. TA Securities 25-Jul-17 A Member of the TA Group News In Brief Corporate The Malaysian Automotive Association is urging the government to defer the implementation of the ruling requiring new vehicles to install an emergency call system until “the industry is ready for it”. If the ruling is enforced, the on-the-road price of vehicles will go up due to the increase in excise duty, import tax and goods and services tax. (The Edge) Rohas Tecnic Berhad announced the proposed acquisition of a 75% stake in HG Power Transmission Sdn Bhd for RM91.7mn. This will be satisfied via the issuance of 72.8mn new shares at an issue price of RM0.95/share and RM22.5mn in cash. Post-acquisition, the group will become a one-stop fabrication base and turnkey solutions provider for the provision of fabrication of power transmission and telecommunication steel towers, and construction of transmission lines in Malaysia and the ASEAN region. (Bursa) Scomi Engineering Bhd announced that its independent auditors, Messrs KPMG PLT has issued a statement of material uncertainty related to going concern in respect of its financial statements for FY17. This is in relation to its dispute with and legal proceedings against Prasarana Malaysia Bhd over the RM494mn Kuala Lumpur Monorail Expansion contract. (Bursa) Wah Seong Corporation Berhad is disposing 126.6acres of leasehold land with properties in Kuantan to Axis Real Estate Investment Trust for RM155.0mn. The disposal is to realise and unlock the capital appreciation of its assets. Proceeds will be used for working capital requirements and to pare down short term borrowings. For Axis, the acquisition is in line with its investment and growth objectives, enabling it to diversify and enlarge its portfolio of properties. (Bursa) Dagang NeXchange Bhd is in merger talks for its technology and energy businesses, betting acquisitions will boost its profit growth target to double digits this year. It IT unit, is in advanced talks to acquire a company, while negotiations about the energy unit are still preliminary. (The Edge) Settlers’ cost of Felda Global Ventures Holdings Bhd shares will be reduced by half following the latest set of measures announced by the Federal Land Development Authority. As part of a package of incentives amounting close to RM1.6bn, some 77,934 Felda settlers, who are still paying for loans taken to subscribe for FGV shares, will see their amounts outstanding being reduced significantly in a scheme whereby Felda matches their liabilities ringgit-for-ringgit, said an official close to the details. (The Star) ManagePay Systems Berhad’s associate, Trustgate Berhad, intends to apply for listing on the LEAP Market of Bursa Securities. M&A Securities Sdn Bhd has been appointed as the adviser for the proposed listing exercise. (Bursa) Bursa Malaysia Securities Berhad has decided that the trading of China Automobile Parts Holdings Limited will be further suspended until further notice. This is due to its failure to reissue the audited financial statements for FY15, within 1 month from 5 June 2017. (Bursa) AmMetLife Takaful Bhd has received regulatory approval from Bank Negara Malaysia for the appointment of Noor Azam Mohd Yusof as Chief Executive Officer, effective July 1, 2017. AmMetLife Takaful is a strategic partnership between AmBank Group and MetLife International Holdings, Inc. (Bernama) Page 3 of 8
6. TA Securities 25-Jul-17 A Member of the TA Group As a consequence of the buy-back offer , Lotte Chemical Titan Holding Berhad’s IPO proceeds will be reduced by RM226.3mn or 6% to RM3.5bn. It received valid acceptances from 4.1k shareholders holding a total of 34.8mn shares. Following the buy-back, its public shareholding spread now stands at 24.0%. An extension of time will be requested to rectify the shortfall. (Bursa) Bursa Malaysia Securities Berhad has publicly remanded Eksons Corporation Berhad in respect to the announcement of its third quarterly report for FY14. There was an RM11.8mn or 18.5% variance in its amended profit due to it failing to eliminate intercompany sales when preparing the consolidated financial statements. (Bursa) Axis Real Estate Investment Trust reported a 25.4% YoY fall in its 1HFY17 profit to RM45.9mn. A fair value gain on investment properties of RM16.2mn was reported in the previous year. Revenue increased 1.6% YoY to RM84.3mn. For the second interim income distribution, it will distribute 99.6% of total distributable income, translating into 2.17sen (YTD: 4.32sen). (Bursa) Page 4 of 8
7. TA Securities 25-Jul-17 A Member of the TA Group News In Brief Economy Global IMF Sees U .S. Fading as Global Growth Engine The world is leaning less on its biggest economy to sustain the global recovery, according to the International Monetary Fund. The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook. The world economy will expand 3.5% this year, up from 3.2% in 2016, and by 3.6% next year. The forecasts for this year and next are unchanged from the fund’s projections in April. Beneath the headline figures, though, the drivers of the recovery are shifting, with the world relying less than expected on the U.S. and U.K. and more on China, Japan, the Eurozone and Canada. The dollar fell to its lowest in 14 months last week as investors discounted the ability of President Donald Trump’s administration to deliver on its economic agenda after efforts by the Republican Senate to overhaul health care collapsed. The IMF estimated U.S. growth at 2.1% this year and again in 2018, consistent with what the fund said June 27 in its annual assessment of the U.S. economy. In the April world economic outlook, it had forecast U.S. growth of 2.3% and 2.5%, respectively, in 2017 and 2018. The economy expanded by 1.6% in 2016. Meanwhile, as the U.K. works through its Brexit negotiations, the IMF also chopped its forecast for U.K. growth this year by 0.3 percentage point to 1.7% on weaker-than-expected activity in the first quarter. Other countries are picking up the slack. The IMF’s projection for growth in China is 6.7% for 2017 -- the same as its estimate made June 14 in an annual staff report, and up 0.1 point from April’s world economic outlook. For 2018 the fund sees Chinese growth at 6.4%, an increase of 0.2 points from three months ago. The euro area as a whole will grow 1.9% this year, up 0.2 points from three months ago, and 1.7% in 2018, up 0.1 point. Spain appears to be the bright spot in both years. (Bloomberg) Figure 1: Overview of the World Economic Outlook Projections Estimate Projections Difference from April 2017 WEO Projections 2015 3.4 2.1 2.6 2.0 1.5 1.1 0.8 3.2 1.1 2.2 0.9 2.0 2016 3.2 1.7 1.6 1.8 1.8 1.2 0.9 3.2 1.0 1.8 1.5 2.2 2017 3.5 2.0 2.1 1.9 1.8 1.5 1.3 3.1 1.3 1.7 2.5 2.3 2018 3.6 1.9 2.1 1.7 1.6 1.7 1.0 2.4 0.6 1.5 1.9 2.4 2017 0.0 0.0 -0.2 0.2 0.2 0.1 0.5 0.5 0.1 -0.3 0.6 0.0 2018 0.0 -0.1 -0.4 0.1 0.1 0.1 0.2 0.3 0.0 0.0 -0.1 0.0 4.3 4.3 4.6 4.8 0.1 0.0 -2.2 0.4 1.7 2.1 0.0 0.0 -2.8 -0.5 6.8 6.9 8.0 4.9 -0.2 1.8 6.4 6.7 7.1 4.9 1.4 2.5 6.5 6.7 7.2 5.1 1.4 3.5 6.5 6.4 7.7 5.2 0.0 0.0 0.1 0.1 0.0 0.1 0.0 0.0 0.1 0.2 0.0 0.0 Emerging and Developing Europe 4.7 3.0 3.5 3.2 0.5 -0.1 Latin America and the Caribbean Brazil Mexico Middle East, North Africa, Afghanistan, and Pakistan Saudi Arabia Sub-Saharan Africa Nigeria South Africa 0.1 -3.8 2.6 -1.0 -3.6 2.3 1.0 0.3 1.9 1.9 1.3 2.0 –0.1 0.1 0.2 -0.1 -0.4 0.0 2.7 5.0 2.6 3.3 0.0 -0.1 4.1 3.4 2.7 1.3 1.7 1.3 -1.6 0.3 0.1 2.7 0.8 1.0 1.1 3.5 1.9 1.2 -0.3 0.1 0.0 0.2 -0.2 0.0 0.0 -0.4 World Output Advanced Economies United States Euro Area Germany France Italy Spain Japan United Kingdom Canada Other Advanced Economies Emerging Market and Developing Economies Commonwealth of Independent States Russia Excluding Russia Emerging and Developing Asia China India ASEAN-5 Source: World Economic Outlook Update, July 2017 Page 5 of 8
8. TA Securities 25-Jul-17 A Member of the TA Group Asia IMF Upgrades Forecast for Malaysia 's 2017 Growth to 4.8% The International Monetary Fund has upgraded its 2017 growth forecast for Malaysia to 4.8% from 4.5%. The upgrade was announced at a news conference in Kuala Lumpur for the release of the Fund's updated World Economic Outlook. Maurice Obstfeld, economic counsellor and director of the IMF Research Department, said there is "a very steady hand in monetary policy for Malaysia and we are optimistic here in Malaysia". Southeast Asia's third-largest economy is seeing a gradual economic recovery, after tepid demand for Malaysia's oil and other commodity exports slowed growth over the two previous ears. In the first quarter of 2017, Malaysia's economy grew at a better-than-expected 5.6% annual rate - the quickest pace in two years - on robust exports and strong domestic demand. Second-quarter growth data will be released on Aug. 18. The Malaysia currency ringgit has also recovered from being among the weakest emerging Asian currencies in 2016, following measures by the central bank to reduce volatility in the ringgit and domestic forex market. It has strengthened more than 4% against the dollar this year. Separately, Malaysia’s Leading Index (LI), which monitors the economic performance in advance, registered a growth of 1.2% in May 2017 to 118.6 points from 117.2 points in the previous month. The Coincident Index (CI) which measures the current economic activity, rose by 0.9% in the reference month. The annual change of CI recorded the highest growth in 2017, increased to 4.5%. Gross Domestic Product at constant price for the Q1 2017 continued to expand with a growth of 5.6% as compared to 4.5% in the previous quarter. Concurrently, both Diffusion Indexes above 80.0% in the reference month. This implies that the economic activity will continue to expand in the 2H2017. (The Star/Department of Statistics) Singapore Headline Inflation Falls More-than Expected to 0.5% in June Singapore's headline inflation fell more than expected to 0.5% in June, from 1.4% in the preceding month and a market consensus of 0.7%. This was due to sharply lower housing and maintenance and repairs inflation associated with the timing effects of the disbursement of service and conservancy charges rebates, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry. Core inflation, which strips out private road transportation costs and accommodation, edged down to 1.5% from 1.6%, due to lower services and food inflation. Also, based on the data released by the Department of Statistics Singapore, the consumer price index (CPI) for Singapore households rose by 0.7% YoY in the 1H17, reversing the 0.2% decline in the 2H2016. (The Business Times) Japan Manufacturing PMI Slips to 52.2 - Nikkei The manufacturing sector in Japan continued to expand in June, albeit at a slightly slower pace, the latest survey from Nikkei revealed with an eight-month low manufacturing PMI score of 52.2. That's down from 52.4 in June, although it remains well above the boom-orbust line of 50 that separates expansion from contraction. Individually, the output index sank to 51.4, marking the weakest reading in 10 months. Export orders stagnated. Backlogs of work, stocks of purchases and stocks of finished goods all swung to contraction in July. Other news in Japan: • Japan's leading index which measures the future economic activity, increased to 104.6 in May from 104.2 April. The reading for May was revised down slightly from 104.7. Meanwhile, the coincident index that reflects the current economic activity fell to 115.8 in May from 117.1 in the prior month. The flash reading for May was 115.5. The lagging index declined to 116.4 in May from 117.1 in the preceding month. • Bank of Japan (BOJ) dot plot paints a pessimistic picture of inflation. A close look at the individual projections of the board’s nine members released after its July 1920 policy meeting is cause for even more pessimism. Eight of them see risks “tilted to downside” for their price forecast for fiscal 2019, the year when the BOJ currently hopes to reach its inflation goal. (RTT News/Bloomberg) Page 6 of 8
9. TA Securities 25-Jul-17 A Member of the TA Group China Money Rates Come Off Highs as PBOC Boosts Cash Injections China ’s benchmark money-rate rate came off this month’s high, with the central bank boosting its cash injections by the most in five weeks amid concern mounting maturities may trigger a liquidity squeeze. The People’s Bank of China pumped in a net CNY220bn ($32.5bn) via open-market operations, the most since June 16. That followed the biggest weekly injection since January, when funding demand spiked ahead of the Lunar New Year holidays. A combined CNY678.5bn of reverse-repurchase contracts and Medium-term Lending Facility loans are coming due this week, which will drain cash from the financial system. The seven-day repo rate, a measure of interbank funding availability, fell nine basis points to 2.82% as of 1:18 p.m. in Shanghai, according to weighted average prices. The overnight money rate dropped six basis points to 2.68%. Separately, China will cooperate to narrow US trade deficit as both countries realize that the existing trade imbalance is unsustainably large and disruptive for their more stable political and security ties. In the case of China, the current state of economic exchanges with the U.S. runs counter to Beijing's fundamental foreign policy doctrine — "win-win cooperation" — enshrined in documents of the country's highest executive and legislative authorities. (Bloomberg/CNBC) United States Existing-Home Sales Slide as Prices Surge on Tight Inventory Sales of previously owned U.S. homes fell in June and prices jumped as strong demand overwhelmed a pinched supply of available homes. Existing home sales fell 1.8% in June from the previous month to a seasonally adjusted annual rate of 5.52 million, the National Association of Realtors said. The median sales price in June hit a record high of $263,800, up 6.5% from a year earlier. Adjusted for inflation, prices remained about 9% below the 2006 peak. Sales have essentially been flat since March, when home purchases reached the highest level since 2007. A number of indicators suggest demand is surging due to a strong economy and millennials entering the housing market in force for the first time. But severe supply shortages are depressing sales. The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines. There was a 4.3-month supply of homes on the market at the end of the month, down from 4.6 months a year earlier. (The Wall Street Journal) Europe and United Kingdom Euro Area Economy Grows at Slowest Pace in Six Months Growth in the euro-region economy started the third quarter at the weakest pace in six months as manufacturing cooled. A composite Purchasing Managers’ Index fell to 55.8 from 56.3 in June, IHS Markit said The figures indicate that gross domestic product is expanding at a 0.6% quarterly pace, compared with 0.7% in the second three months of the year. European Central Bank President Mario Draghi said last week that that the region isn’t yet ready for a reduction in the unprecedented stimulus. While growth appears to be firming, prices aren’t picking up fast enough to get to the ECB’s target without help from record low interest rates and continued bond buying. Increases in manufacturing costs are starting to slow, with the rise in input costs the lowest since November. Growth in new orders and employment is still strong. Earlier reports showed that French and German economies lost some momentum this month. (Bloomberg) UK Households Face Sharpest Squeeze in 3 Years British households' financial situation has deteriorated at the fastest rate in three years this month, as families increasingly shy away from big purchases like cars, holidays and household appliances, a survey showed. Financial data company IHS Markit said its monthly Household Finance Index dropped to 41.8 from June's 43.7, its lowest since July 2014, reflecting an ongoing squeeze on household incomes as inflation rises faster than wages. Official data due on Wednesday is forecast to show that economic growth picked up only slightly in the three months to the end of June. Analysts polled by Reuters see an expansion of 0.3 % compared with 0.2 % in the first quarter - half Britain's long-term Page 7 of 8
10. TA Securities 25-Jul-17 A Member of the TA Group average growth rate . Subdued growth may stay the hand of the Bank of England when it considers next week whether to raise interest rates for the first time in a decade. Some policymakers have already called for a rate hike due to worries of persistent price pressures. IHS Markit said just 27 % of the households it surveyed expected rates to rise in the next six months, the lowest proportion since October. (The Star) German PMI Surveys Miss Forecasts The recent strength of the German economy shows little sign of stopping, but the shine is beginning to fade a little, with businesses reporting slower than expected growth in July in a series of closely-watched surveys. The composite purchasing managers’ index, which is compiled from individual surveys of the construction, manufacturing and services sectors, came in at 55.1, compared to last month’s 56.3. Economists had expected only a minor dip to 56.2. The weaker than expected figures echoes Germany’s neighbours in France, who also reported their weakest pace of growth since the start of the year this month. Subindices for the two most important sectors, manufacturing and services, both missed forecasts, with the services index falling from 54 to 53.5, and the manufacturing index falling from 59.6 to 58.3. (Financial Times) Share Buy-Back: 24 July 2017 Company GRANFLO PRESBHD SUPERMX TROP UNIMECH Bought Back Price (RM) Hi/Lo (RM) 10,000 101,000 1,000,000 49,100 54,400 0.24 1.99/1.96 1.95/1.92 0.965/0.95 1.02/1.00 0.235/0.23 2.05/1.93 1.95/1.90 0.97/0.945 1.05/0.995 Total Treasury Shares 6,517,600 1,648,500 15,200,000 3,352,042 5,263,610 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. liability for any direct or indirect loss arising from the use of this document. the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 8 of 8 We accept no We, our associates, directors, employees may have an interest in
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 24-Jul-17 1.93 2.20 5.82 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 2.37 2.28 5.04 0.94 0.62 1.26 10.3 24.1 19.8 15.8 25.3 30.6 18.7 9.1 29.4 12.2 8.7 19.0 6.1 4.1 2.2 8.2 4.1 3.4 2.44 2.70 6.47 -20.9 -18.5 -10.0 1.88 2.08 4.09 2.7 5.8 42.2 -9.4 2.8 37.8 4.80 3.70 5.70 8.00 17.50 11.00 23.60 5.80 10.00 1.29 0.97 1.32 1.39 0.67 0.96 0.79 1.32 0.69 33.6 29.4 43.9 49.6 105.2 73.4 137.2 50.7 40.3 30.5 33.6 48.4 55.2 115.5 82.9 142.4 54.5 39.0 11.7 8.8 11.4 12.8 15.0 13.1 14.9 10.0 25.3 12.9 7.7 10.3 11.5 13.7 11.6 14.3 9.3 26.1 4.1 3.1 3.5 3.2 2.6 5.2 2.7 2.4 3.3 4.1 3.1 3.6 3.6 2.6 5.2 2.8 2.4 3.3 4.49 3.00 5.70 6.87 16.30 9.68 20.66 5.59 11.14 -12.2 -13.3 -12.3 -7.7 -3.1 -0.5 -1.4 -8.9 -8.6 3.60 2.08 3.90 4.12 12.70 7.50 19.30 4.53 8.20 9.4 25.0 28.2 53.8 24.4 28.4 5.6 12.4 24.1 5.9 8.8 16.0 40.6 17.0 17.4 3.3 8.1 15.0 0.38 1.30 5.35 3.50 0.64 1.17 2.06 1.92 5.98 0.45 1.57 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.80 0.64 1.04 1.08 1.00 1.29 na 1.10 0.10 5.6 14.6 28.1 15.3 4.9 8.3 12.6 11.9 42.0 5.6 13.5 34.8 20.3 5.7 9.6 12.5 12.0 45.8 6.7 8.9 19.1 22.8 12.8 14.1 16.3 16.1 14.2 6.8 9.6 15.4 17.2 11.1 12.1 16.4 16.0 13.1 0.0 2.2 2.2 2.1 3.9 0.9 2.7 1.6 4.2 0.0 2.2 2.2 2.7 3.9 0.9 2.7 1.6 4.2 0.51 1.37 5.52 3.61 0.74 1.39 2.15 2.48 6.15 -25.5 -5.1 -3.1 -3.0 -13.6 -15.8 -4.2 -22.4 -2.8 0.38 0.89 4.65 3.07 0.37 0.41 1.56 1.50 5.57 1.3 46.9 15.1 14.0 74.0 188.9 32.1 27.9 7.4 -12.6 23.8 11.9 9.4 5.0 103.5 21.2 11.7 1.7 1.97 2.00 0.49 11.0 11.5 17.9 17.1 5.1 5.1 2.19 -10.0 1.93 2.1 -2.0 14.98 17.72 17.84 21.08 0.50 0.59 74.8 93.1 81.3 20.0 101.9 19.0 18.4 17.4 5.0 4.7 5.4 5.2 15.30 19.10 -2.1 -7.2 13.72 15.56 9.2 13.9 7.6 8.2 2.20 7.38 24.98 1.20 83.92 3.64 1.94 4.91 0.91 2.23 8.62 27.41 1.50 88.66 4.10 2.46 4.41 1.23 0.50 0.35 0.32 0.47 0.36 0.48 0.65 0.42 0.57 6.7 26.4 121.1 6.5 290.1 22.3 27.5 15.7 8.1 7.9 40.6 151.0 6.6 327.7 24.7 27.0 16.6 11.6 32.7 28.0 20.6 18.4 28.9 16.3 7.1 31.3 11.2 27.9 18.2 16.5 18.1 25.6 14.7 7.2 29.5 7.9 1.8 1.4 2.8 5.0 3.3 4.1 3.1 0.9 2.7 2.2 2.0 3.0 5.0 3.3 4.7 4.1 1.0 3.8 3.00 8.89 26.52 1.32 85.20 3.89 2.04 5.00 1.07 -26.7 -17.0 -5.8 -9.0 -1.5 -6.4 -4.9 -1.8 -15.0 2.11 7.30 22.44 1.13 74.12 2.26 1.47 4.14 0.78 4.3 1.1 11.3 6.1 13.2 61.0 32.0 18.5 16.7 -14.4 0.7 6.4 4.3 7.3 43.3 12.1 13.4 14.5 44.88 52.08 1.01 198.6 187.4 22.6 23.9 4.5 4.5 55.46 -19.1 40.61 10.5 1.6 9.51 6.05 11.51 6.54 1.35 1.29 49.3 25.7 54.7 27.7 19.3 23.5 17.4 21.8 0.5 1.3 0.6 1.5 10.00 6.38 -4.9 -5.2 7.50 4.22 26.8 43.3 19.7 33.9 2.29 0.12 3.34 0.13 0.75 1.26 19.3 0.4 23.2 0.4 11.9 33.1 9.9 33.3 6.1 0.0 7.0 0.0 3.42 0.16 -33.0 -25.0 2.28 0.05 0.4 140.0 -22.6 140.0 5.97 4.19 6.39 4.70 0.77 0.51 9.5 13.3 15.0 16.5 62.6 31.4 39.9 25.4 0.6 1.5 0.6 1.8 6.73 4.37 -11.3 -4.1 5.54 3.85 7.8 8.8 -6.0 0.2 6.96 7.00 1.94 5.72 1.56 6.85 7.60 1.80 6.05 2.20 0.57 0.16 0.33 -0.19 0.30 19.5 35.8 12.3 26.4 3.7 24.6 40.0 15.1 29.8 5.5 35.7 19.5 15.7 21.6 41.8 28.3 17.5 12.9 19.2 28.4 1.1 2.6 1.9 2.3 0.6 1.6 2.9 2.3 2.6 0.9 7.40 7.15 2.38 5.94 2.64 -5.9 -2.1 -18.5 -3.7 -40.9 4.06 5.62 1.88 4.20 1.51 71.4 24.6 3.2 36.2 3.3 44.1 6.2 -8.1 6.9 -33.9 INDUSTRIAL SCIENTX SKPRES 8.60 1.34 9.71 1.75 0.52 0.50 54.5 8.6 66.3 10.6 15.8 15.6 13.0 12.6 2.1 3.1 2.3 3.9 8.99 1.44 -4.3 -6.9 6.01 1.15 43.1 16.5 28.4 3.9 MEDIA ASTRO MEDIA PRIMA STAR 2.57 0.90 2.36 3.45 0.60 1.40 1.05 0.65 0.64 13.2 1.7 7.1 14.5 2.8 6.5 19.4 52.7 33.3 17.8 31.9 36.4 4.9 1.5 7.6 5.1 2.5 7.6 3.01 1.48 2.67 -14.6 -39.2 -11.6 2.47 0.87 2.19 4.0 4.0 7.8 -1.2 -21.7 5.4 -15.2 -4.0 -35.3 -6.6 -5.3 -10.3 -25.2 -69.2 0.20 6.21 0.74 7.03 0.44 6.48 1.33 0.29 200.0 1.0 1.4 5.0 44.8 8.0 18.0 12.3 129.4 -3.5 -18.0 0.4 41.6 0.3 -3.1 -63.4 -21.7 1.30 19.2 -8.8 BANKS & FINANCIAL SERVICES AFG 3.94 AFFIN 2.60 AMBANK 5.00 CIMB 6.34 HLBANK 15.80 MAYBANK 9.63 PBBANK 20.38 5.09 RHBBANK BURSA 10.18 CONSTRUCTION BPURI GADANG GAMUDA IJM PESONA SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N HUPSENG 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 DNEX 0.59 0.76 1.04 3.7 4.6 16.0 12.8 1.7 1.7 0.69 LCTITAN 6.27 7.41 na 60.3 71.5 10.4 8.8 4.1 5.6 6.53 MHB 0.75 0.87 1.83 -1.2 1.3 na 57.3 0.0 0.0 1.16 MISC 7.38 6.85 0.79 56.4 48.9 13.1 15.1 4.1 4.1 7.90 PANTECH 0.63 0.69 1.27 4.1 4.9 15.2 12.8 2.9 3.1 0.67 PCHEM 7.00 7.74 1.06 39.2 40.5 17.9 17.3 3.0 3.1 7.80 SENERGY 1.57 1.71 2.49 6.6 4.0 23.8 39.6 0.6 0.6 2.10 UMWOG 0.32 0.80 2.11 -11.7 -3.5 na na 0.0 0.0 1.04 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.55 1.55 1.48 12.0 12.6 13.0 12.3 0.0 0.0 1.98
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.69 3.00 4.48 24.76 9.55 6.35 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.79 0.47 1.07 0.86 1.23 0.43 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.7 111.8 34.0 37.6 8.5 15.7 21.0 119.1 37.5 34.5 40.1 24.4 23.9 22.2 28.1 16.9 19.9 19.1 21.3 20.8 25.5 18.4 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 3.0 2.3 2.2 2.2 2.6 3.6 3.0 2.7 2.7 2.4 3.2 2.7 2.52 3.70 4.81 25.50 9.70 6.55 -32.9 -18.9 -6.9 -2.9 -1.5 -3.0 1.42 2.96 4.21 22.92 7.42 5.50 PROPERTY GLOMAC 0.64 0.70 0.56 1.6 6.3 39.8 10.1 4.7 4.7 0.83 -23.0 0.61 HUAYANG 0.87 0.96 0.66 17.3 10.2 5.0 8.5 4.6 2.3 1.43 -39.3 0.85 IBRACO 0.91 1.00 0.39 5.2 11.1 17.4 8.2 3.8 4.4 1.05 -13.3 0.76 IOIPG 2.17 2.25 0.86 17.4 17.4 12.5 12.4 3.2 3.5 2.46 -11.8 1.85 MAHSING 1.58 1.76 0.73 14.3 13.5 11.0 11.7 4.1 4.1 1.70 -7.1 1.34 SNTORIA 0.85 0.98 0.27 6.2 10.3 13.8 8.2 1.2 1.2 1.00 -15.0 0.69 SPB 4.88 5.98 0.59 25.6 22.8 12.7 14.3 2.5 2.5 5.19 -6.0 4.32 SPSETIA 3.25 4.10 0.68 27.1 29.5 15.3 14.1 4.3 4.3 4.50 -27.8 2.93 SUNWAY 4.15 4.15 0.48 18.3 18.4 13.3 13.1 2.9 2.9 4.20 -1.2 2.84 Note: SUNWAY proposed bonus issue of shares and warrants. Ex-Target price RM1.69. For more details please refer to 15.06.17 report. REIT SUNREIT 1.70 1.86 0.51 8.9 10.1 19.2 16.8 5.2 5.9 1.84 -7.6 1.63 CMMT 1.55 1.72 0.59 8.1 8.6 19.2 18.0 5.4 5.8 1.72 -9.9 1.45 % Chg YTD 19.0 1.4 6.4 8.0 28.7 15.4 9.0 -11.8 1.8 3.2 17.9 6.3 4.1 2.4 20.5 17.5 17.9 23.2 12.9 10.9 46.0 -8.6 -23.0 -9.0 11.3 10.5 6.2 10.4 3.8 38.3 4.3 6.9 -1.2 1.3 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.03 23.70 18.80 14.18 1.42 1.13 21.47 19.60 17.37 1.45 0.76 0.76 0.77 1.02 0.53 7.1 98.4 88.2 131.9 8.2 6.4 102.3 101.3 130.8 10.6 14.5 24.1 21.3 10.7 17.2 16.1 23.2 18.6 10.8 13.4 6.8 3.1 3.3 3.1 7.0 5.8 3.2 3.8 3.2 7.0 1.80 25.70 22.50 14.90 1.64 -42.8 -7.8 -16.4 -4.8 -13.4 1.01 22.92 18.10 13.00 1.39 2.0 3.4 3.9 9.1 2.2 -24.8 -0.4 -11.7 2.0 -4.7 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.69 4.80 5.55 6.33 5.20 4.90 5.85 7.50 1.31 0.93 0.71 0.66 14.6 20.0 25.5 21.4 16.0 20.4 25.7 22.3 32.2 24.0 21.8 29.5 29.3 23.5 21.6 28.4 1.6 4.2 3.6 3.0 1.7 4.3 3.6 3.2 5.99 5.19 6.60 6.90 -21.7 -7.5 -15.9 -8.3 4.11 4.63 5.48 5.81 14.1 3.7 1.3 9.0 -0.6 -0.6 -7.2 6.4 TECHNOLOGY Semiconductor & Electronics IRIS 0.17 INARI 2.39 MPI 13.80 UNISEM 3.63 0.28 2.30 15.60 3.95 1.34 0.79 0.51 0.82 -2.6 10.3 94.2 26.9 -0.3 na 12.4 23.2 112.9 14.7 27.1 13.5 na 19.3 12.2 13.4 0.0 3.3 2.0 3.3 0.0 2.0 2.0 3.3 0.24 2.49 13.94 3.72 -29.2 -4.0 -1.0 -2.4 0.10 1.50 7.20 2.27 70.0 59.7 91.7 59.9 54.5 44.0 86.2 53.8 3.28 8.83 3.34 8.10 1.12 1.44 37.6 17.2 37.1 17.5 8.7 51.2 8.8 50.5 1.2 1.1 1.5 1.1 3.59 9.45 -8.6 -6.6 2.16 5.77 51.9 53.0 43.2 45.7 1.73 3.70 2.05 4.05 0.76 0.67 14.3 17.1 22.7 15.1 12.1 21.6 7.6 24.5 2.5 3.5 4.0 3.1 1.87 4.59 -7.5 -19.4 1.47 3.61 17.7 2.5 8.8 -14.0 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 21.46 OCBC 11.04 UOB 24.09 PLANTATIONS WILMAR IFAR 3.38 0.47 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 1.23 1.17 1.08 173.8 87.7 195.6 190.2 12.4 92.4 12.6 209.3 12.3 11.3 11.9 11.5 2.8 5.7 2.9 2.8 6.7 2.9 22.0 11.3 24.3 -2.2 -1.9 -0.9 14.72 8.84 17.51 45.8 33.5 37.6 23.8 23.8 18.1 3.72 0.53 0.93 1.10 28.9 4.9 31.1 5.2 10.9 9.1 2.4 2.5 2.7 2.7 4.0 0.6 -15.5 -21.0 2.97 0.44 13.8 6.8 -5.8 -10.5 11.7 9.7 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
13. 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, July 25, 2017 FBM KLCI: 1,761.99 Sector: Automotive Underweight Automotive Sector Shorter Working Month Causes Slight Dip THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Abel Goon Tel: +603-2072 1277 ext. 1641 abelgoon@ta.com.my Slight Drop in June TIV Total Industry Volume (TIV) in June was within expectations, at 50.3k units (MoM: -0.6%, YoY: -12.4%). MAA attributed the slight drop in sales due to the shorter working month. This was partially offset by the ramp up of Hari Raya promotional activities. Note that most dealerships took a one-week holiday in conjunction with Hari Raya. We are expecting TIV in July to recover given the longer working month and continuation of promotional activities. YTD TIV of 284.5k units (+3.3%) is still within expectations and constitutes 48.5% and 48.2% of ours and MAA’s forecast respectively. We expect sales in 2H17 to be greater than 1H17, which is the prevailing trend in the industry. Passenger Vehicle Registers MoM Gains Although TIV registered a MoM decline, passenger vehicle volume registered a slight 0.4% MoM gain. This was offset by the 9.6% MoM decline in the commercial vehicle volume. Luxury car sales continued to impress with Mercedes (MoM: +13.6%, YoY: +0.6%) and BMW (MoM: +8.4%, YoY: +21.7%) posting both MoM and YoY gains, bucking the prevailing trend in the industry. Besides the luxury brands, Perodua (MoM: +3.5%, YoY: -11.1%), Proton (MoM: +0.7%, YoY: +3.8%), Nissan (MoM: +6.8%, YoY: -40.5%), and VW (MoM: +34.7%, YoY: +42.3%) contributed to the MoM gain in the passenger segment. In contrast, all commercial vehicles posted MoM and YoY declines except Mitsubishi (MoM: +11.8%, YoY: -21.5%). Going forward, we believe the situation will improve for commercial vehicles as the latest reading of the MIER Business Conditions Index passed the threshold level of 100pts. National Cars Maintain Market Share The national cars have maintained its market share at 54.4% in the passenger segment in 1H2017 (1H2016: 54.5%). This was achieved despite the impressive sales volume recognised by Honda and luxury marques, Mercedes and BMW. We note that Proton has gained circa 0.7% market share as a result of its aggressive model launches last year. Although Perodua lost 0.8% market share, we believe it will recover in 2H2017 as it plans to launch its much anticipated 3rd Gen Myvi later this year. That said, we believe the scene will continue to be extremely competitive as many non-national marques have planned launches in 2H2017. For example, Mazda’s CX-5 and Honda’s City Hybrid. MAA Maintains Forecast MAA has maintained its original forecast of 590k units (+1.7%). Its forecast is underpinned by 1) strict hire purchase loan requirements, 2) introduction of new models in 2017, 3) slight recovery in consumer sentiment and 4) aggressive promotional activities conducted by car companies. We also maintain our TIV forecast of 586.5k units (1.1%). 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. On the other hand, stringent HP loan requirements will continue to subdue growth in TIV. BAuto is rated as Buy with TP of RM2.37 due to its handsome dividends and potential growth from the export market. Meanwhile, UMW is rated as Sell with TP of RM5.04 whilst we upgrade MBM to Hold with unchanged TP of RM2.28 as we believe all negative news has been priced in after the recent share price correction. Page 1 of 6 www.taonline.com.my
14. TA Securities 25-Jul-17 A Member of the TA Group Figure 1 : Breakdown of TIV May-17 45,139 5,461 50,600 Jun-17 45,339 4,936 50,275 % MoM 0.4 (9.6) (0.6) % YoY (11.1) (22.7) (12.4) 1H2016 244,377 31,106 275,483 1H2017 255,749 28,711 284,460 % YoY 4.7 (7.7) 3.3 Jun-16 May-17 Jun-17 % MoM % YoY 1H2016 1H2017 % YoY 20,044 6,961 27,005 17,211 7,176 24,387 17,821 7,225 25,046 3.5 0.7 2.7 (11.1) 3.8 (7.3) 97,370 35,727 133,097 99,675 39,393 139,068 2.4 10.3 4.5 Non-national BMW Mercedes Honda Nissan Toyota Mazda VW Others Total 760 1,204 9,254 3,579 4,862 1,273 461 2,580 23,973 853 1,066 9,153 1,992 4,236 869 487 2,096 20,752 925 1,211 8,808 2,128 3,707 787 656 2,071 20,293 8.4 13.6 (3.8) 6.8 (12.5) (9.4) 34.7 (1.2) (2.2) 21.7 0.6 (4.8) (40.5) (23.8) (38.2) 42.3 (19.7) (15.4) 3,964 6,023 39,654 17,707 18,854 7,146 4,480 13,452 111,280 4,816 5,926 52,527 10,208 23,947 4,664 2,717 11,876 116,681 21.5 (1.6) 32.5 (42.4) 27.0 (34.7) (39.4) (11.7) 4.9 Grand Total 50,978 45,139 45,339 0.4 (11.1) 244,377 255,749 4.7 Commercial vehicles Hino Isuzu Mitsubishi Nissan Toyota Mazda Others Total Source: MAA, TA Research Jun-16 452 1,286 662 675 1,941 22 1,346 6,384 May-17 503 991 465 658 1,836 31 977 5,461 Jun-17 394 904 520 610 1,623 14 871 4,936 % MoM (21.7) (8.8) 11.8 (7.3) (11.6) (54.8) (10.8) (9.6) % YoY (12.8) (29.7) (21.5) (9.6) (16.4) (36.4) (35.3) (22.7) 1H2016 2,551 5,984 4,132 3,441 8,395 200 6,403 31,106 1H2017 2,054 5,285 3,306 3,329 9,776 107 4,854 28,711 % YoY (19.5) (11.7) (20.0) (3.3) 16.5 (46.5) (24.2) (7.7) Passenger Commercial TIV Jun-16 50,978 6,384 57,362 Source: MAA, TA Research Figure 2: Breakdown of TIV by segments Passenger vehicles National Perodua Proton Total Figure 3: Breakdown by main manufacturers/distributors UMW Toyota (Passenger cars) Lexus Toyota (Commercial) Total Perodua Grand total Jun-16 4,862 101 1,941 6,904 20,044 26,948 May-17 4,236 80 1,836 6,152 17,211 23,363 Jun-17 3,707 55 1,623 5,385 17,821 23,206 % MoM (12.5) (31.3) (11.6) (12.5) 3.5 (0.7) % YoY (23.8) (45.5) (16.4) (22.0) (11.1) (13.9) 1H2016 18,854 631 8,395 27,880 97,370 125,250 1H2017 23,947 410 9,776 34,133 99,675 133,808 % YoY 27.0 (35.0) 16.5 22.4 2.4 6.8 Tan Chong Nissan (Passenger cars) Renault Nissan (Commercial) Total Jun-16 3,579 48 675 4,302 May-17 1,992 73 658 2,723 Jun-17 2,128 33 610 2,771 % MoM 6.8 (54.8) (7.3) 1.8 % YoY (40.5) (31.3) (9.6) (35.6) 1H2016 17,707 226 3,441 21,374 1H2017 10,208 295 3,329 13,832 % YoY (42.4) 30.5 (3.3) (35.3) Bermaz Auto Mazda (Passenger cars) Mazda (Commercial) Total Jun-16 1,273 22 1,295 May-17 869 31 900 Jun-17 787 14 801 % MoM (9.4) (54.8) (11.0) % YoY (38.2) (36.4) (38.1) 1H2016 7,146 200 7,346 1H2017 4,664 107 4,771 % YoY (34.7) (46.5) (35.1) MBM Resources VW Volvo Mitsubishi Hino Daihatsu Total Source: MAA, TA Research Jun-16 461 34 662 452 105 1,714 May-17 487 94 465 503 44 1,593 Jun-17 656 95 520 394 41 1,706 % MoM 34.7 1.1 11.8 (21.7) (6.8) 7.1 % YoY 42.3 179.4 (21.5) (12.8) (61.0) (0.5) 1H2016 4,480 302 4,132 2,551 516 11,981 1H2017 2,717 430 3,306 2,054 322 8,829 % YoY (39.4) 42.4 (20.0) (19.5) (37.6) (26.3) Page 2 of 6
15. Sep-13 Source : MAA, TA Research Page 3 of 6 May-17 30% Jul-15 Apr-15 Jan-15 Oct-14 Apr-17 Jan-17 Apr-17 Jan-17 35% Oct-16 40% Oct-16 45% Jul-16 50% Jul-16 55% Apr-16 60% Apr-16 65% Jan-16 Non-National Jan-16 75% Oct-15 Figure 5: Passenger Vehicle Market Share (National vs. non-national manufacturers) Oct-15 Source: MAA, TA Research Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 Apr-14 Jan-14 Oct-13 A Member of the TA Group Mar-17 Jan-17 Others Nov-16 Sep-16 Jul-16 May-16 Mar-16 Honda Jan-16 Nov-15 Sep-15 Jul-15 Nissan May-15 Mar-15 Jan-15 Nov-14 Sep-14 Toyota Jul-14 Apr-14 National Jul-14 May-14 Jan-14 Oct-13 Jul-13 Apr-13 TIV (LHS) Mar-14 Jan-14 Perodua Nov-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 unit Jul-13 May-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 70% Mar-13 Proton Jan-13 Nov-12 Sep-12 Jul-12 May-12 % 45 Mar-12 Jan-12 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 TA Securities 25-Jul-17 Figure 4: TIV vs. YoY growth 80,000 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% Source: MAA, TA Research Figure 6: Total Market Share by Brand Mazda 40 35 30 25 20 15 10 5 0
16. TA Securities 25-Jul-17 A Member of the TA Group Figure 7 : TIV (MoM change) Jan + + + - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Feb + + - Mar + + + + + + + + + + + + + + *+ : increase, - : decrease Apr + - May + + + + + + + + + Jun + + + + + + + + + + - Jul + + + + + + + + + - Aug + + + + + + Sep + + + + - Oct + + + + + + + - Nov + + + + + + Dec + + + + + + + + + + Hari Raya Month Source: MAA, TA Research Figure 8: Cumulative Sales Volume (YoY growth) 6M17 5M17 Figure 9: TIV On Half Year Basis (unit) 4M17 1H 350,000 2H 32% Honda 44% 40% 300,000 -36% -36% -41% Nissan 250,000 200,000 24% Toyota 39% 56% 150,000 2% 6% 4% Perodua 100,000 10% 12% 5% Proton 50,000 0 -40% -20% 0% 20% 40% 60% 80% 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 (%) May-17 Jun-17 % Jun-16 20,044 17,211 17,821 40 25,000 20,000 May-17 Jun-17 34.9 34.0 35.4 Jun-16 35 30 10 16.1 18.1 17.5 7.4 5.2 5.4 11.9 12.0 10.6 8,751 7,438 7,552 9,254 9,153 8,808 15 1,295 900 801 5,000 4,254 2,650 2,738 6,803 6,072 5,330 6,961 7,176 7,225 10,000 20 12.1 14.2 14.4 25 15,000 2.3 1.8 1.6 -60% 5 0 0 Proton Perodua Source: MAA, TA Research Toyota Nissan Honda Mazda Others Proton Perodua Source: MAA, TA Research Page 4 of 6 Toyota Nissan Honda Mazda
17. TA Securities 25-Jul-17 A Member of the TA Group Figure 12 : YTD Sales Volume Breakdown by Brand (unit) 1H2016 1H2017 100,000 1H2016 % 1H2017 35.3 35.0 40 97,370 99,675 120,000 Figure 13: YTD Market Share (%) 35 30 14.4 18.5 10 2.7 1.7 7.7 4.8 15 9.9 11.9 13.0 13.8 20 7,346 4,771 20,000 46,989 40,834 39,654 52,527 21,148 13,537 40,000 27,249 33,723 35,727 39,393 60,000 25 17.1 14.4 80,000 5 0 0 Proton Perodua Toyota Nissan Honda Mazda Others Proton Perodua Toyota Nissan Honda Mazda Others Source: MAA, TA Research Source: MAA, TA Research Figure 14: National vs. Non-national (Sales Volume)-Monthly Figure 15: National vs. Non-national (Market share)-Monthly National 45,000 National Non-National Source: MAA, TA Research Source: MAA, TA Research Figure 16: Forecast for Passenger and Commercial Vehicles Figure 17. Forecasts for TIV ('000) 700.0 Passenger 544 535 552 577 588 ('000) Commercial 548 YoY Change (RHS) 522 15% 599 587 576 May-17 Jan-17 Sep-16 May-16 Jan-16 Sep-15 May-15 Jan-15 Sep-14 Jan-14 May-14 Sales Volume (LHS) 750 591 515 Sep-13 Jan-13 May-13 Jan-11 Jan-17 May-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 May-11 15,000 Sep-12 20,000 Jan-12 25,000 May-12 30,000 Sep-11 35,000 May-11 40,000 600.0 Non-National 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 700 656 500.0 650 667 651 628 605 400.0 666 664 678 5% 619 600 600 580 10% 590 0% 300.0 78 450 -15% 2010 -10% 2021F 2020F 2019F 2018F 2017F 2016 2015 2014 2013 2012 2011 2010 0.0 500 Source: MAA, TA Research 2021F 77 2020F 75 2019F 71 68 2018F 66 2017F 75 2016 78 2015 79 76 2014 65 2013 61 -5% 2012 100.0 550 2011 200.0 Source: MAA, TA Research Figure 18: Peers Comparison Company MBM Resources UMW BAuto Average Price (RM) 2.20 5.82 1.93 Tgt.Price (RM) 2.28 5.04 2.37 Call Hold Sell Buy PE (x) CY17 9.1 29.5 13.8 17.5 CY18 8.7 19.0 11.2 13.0 Page 5 of 6 PB(x) CY17 0.4 1.4 4.4 2.1 CY18 0.4 1.3 4.2 2.0 Dividend Yield (%) CY17 CY18 4.1 4.1 2.2 2.2 7.5 8.9 4.6 5.1 ROE (%) CY17 CY18 4.8 4.9 4.7 6.9 31.7 37.1 13.7 16.3
18. TA Securities 25-Jul-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) 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
19. COMPANY UPDATE TA Securities Tuesday , July 25, 2017 FBMKLCI: 1,761.99 Sector: Telco A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM5.20 (+10.9%) Axiata Group Berhad Last Traded: RM4.69 XL On Better Footing UNDER REVIEW THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap, CFA Tel: +603-2167 9603 paulyap@ta.com.my We organised a telecommunications themed visit to Indonesia. XL Axiata was among the companies we visited. It has been more than two years since it embarked on its 3R transformation strategy. There have been some hits and misses, with issues pertaining to its distribution channels and positioning of its XL brand. However, these issues appear to be under control now and should perform better ahead. Meanwhile, the group seems to be ahead of the curve with regards to a shift to data, which should be aided by improved pricing discipline in the industry. A relatively underpenetrated ex-Java market provides a promising growth angle, but costly network rollouts and uncertainties regarding spectrum sharing regulations are stumbling blocks. Updating our model with the latest data, we lower our TP for Axiata to RM5.20/share. Our call is placed Under Review, pending the release of XL’s results next week. www.taonline.com.my Share Information Bloomberg Code AXIATA MK Stock Code 6888 Listing Main Market Share Cap (mn) 8,998.1 Market Cap (RMmn) 42,201.2 52-wk Hi/Lo (RM) 5.99/4.11 12-mth Avg Daily Vol ('000 shrs) 6,103.3 Estimated Free Float (%) 23.6 Beta 1.31 Major Shareholders (%) Khazanah Nasional Bhd - 37.5 EPF - 16.1 Skim Amanah Saham - 11.9 Forecast Revision (%) Hits and Misses Implemented over two years ago, XL embarked on a 3R strategy, revamp, rise and reinvent. Not without its challenges, we are beginning to see progress on its initiatives. It has successfully revamped its customer base, having driven out most of its lower value subs in 2015. However, top line traction has not been as encouraging – impaired by problems within its distribution channels and efforts to move XL up the value chain. Table 1 : 3R Strategy Revamp Rise Reinvent Description Improve subscriber quality and profitability Overhaul data packages to improve quality and profitability of subscriber base Implement abuser management policies and expand modern distribution channels Enable XL brand to rise up the value chain AXIS brand to cater to subscribers more focused on affordability Continued reinvention of the subscriber digital lifestyle experience FY17 FY18 Forecast Revision (%) - - Core Net Profit (RMm) 1,309 1,434 Consensus 1,398 1,631 TA/Consensus 93.6 87.9 Previous Rating Hold (Under Review) Financial Indicators FY17 FY18 Net debt/EBITDA (x) 1.8 1.6 CFPS (sen) 70.2 81.9 P/CFPS (x) 6.7 5.7 ROE (%) 5.5 5.9 ROA (%) 1.8 1.9 NTA/Share (RM) 1.0 1.2 P/NTA (x) 4.5 4.0 Share Performance Price Change (%) Axiata FBMKLCI 1 mth (5.1) (1.0) 3 mth (8.8) (0.2) 6 mth (4.5) 4.6 12 mth (18.9) 5.6 Source: Companies, TA Securities (12-Mth) Share Price relative to the FBM KLCI Under revamp, one of its listed objectives was to expand its modern distribution channels, such as hypermarkets, banks, convenience stores and online websites. Successfully enacting this, 40% (2015: 25%) of its business now stems from modern distribution channels. We understand this led to dissatisfaction among its traditional distribution channels, which still forms the bulk of acquisition activities. This was made worse by aggressive discounting and incentives by its competitors. To rectify the situation, commission schemes were made more attractive and has resulted in improved traction and working relationship with its traditional channels. Source: Bloomberg Page 1 of 5
20. TA Securities 25-Jul-17 A Member of the TA Group Another stumbling block was in relation to its rise objective . Adopting a dual brand approach, XL is catered to white collar individuals, who are mid to high value data subscribers. Axis, on the other hand, is targeted at cost conscious individuals, such as teenagers and students. While Axis has been doing well, XL failed to gain traction. Previously positioned as an affordable brand, the group faced challenges with regards to consumer perception for XL. This led to increased spending on marketing expenses to clearly distinguish XL’s brand proposition. Enacted in second half of 2016, we gather XL is now on a stronger footing, with growth being derived from both brands. Figure 1 : Dual Brand Strategy Source: Companies, TA Securities Tides Have Turned Encouragingly, it was noted during the last quarter that the group has reached a tipping point, with regards to the growth of data revenues outpacing a decline in legacy revenues. Growing 48.7% YoY, data revenues now makes up slightly more than half of the group’s revenue at 50.2%. Appearing to be ahead of the curve, this is higher in comparison to Indosat and Telkomsel’s ratio of 43.1% and 34.0%. Figure 2 : Data Revenues Rpbn Data Non-data % % of revenue 4,000 60.0 50.2 3,500 50.0 3,000 2,650 40.0 2,500 2,003 2,000 30.0 1,500 20.0 1,000 10.0 500 1QFY17 4QFY16 3QFY16 2QFY16 1QFY16 4QFY15 3QFY15 2QFY15 0.0 1QFY15 0 Source: Companies, TA Securities XL’s smartphone penetration rate has reached 65% of its subscriber base. Similarly, 68% of its subscribers are now data users. Total traffic exhibited explosive growth, increasing 178.0% YoY to 236.7PB. This is supported by a Page 2 of 5