Bursa Malaysia Daily Market Report - 25 September

Transcription

1. Monday , 25 September, 2017 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. We ek ly St r at e g y 3. We ek ly Te ch n i c a l Ou t lo ok Fu nd a me n tal Rep o r ts 1 . A f f i n H o ld in g s Bh d : Pr o p o se d R e o rg a n i sa tio n 2 . L o t t e C h e m ic a l T it a n H o l d in g B h d : M i l d F i re I n c id e n t a t T E 3 3 . S e n t o r ia Gr o u p Bh d : B u il d in g U p Wa r C h e s t Te ch n ic al R ep o rt s 1 . We e k ly T e c h n ic a l S to c k Pic k s 2 . Da ily M o n e y F lo w Technical Stock Picks FBMKLCI Stocks Under Coverage PLANTATION Sector CONSTRUCTION Sector PROPERTY Sector 3. Weekly Ace Market Stock Watch 4. Weekly Small Cap Stock Watch 5. Weekly Stock Screen Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2031 6608 www.ta.com.my
2. Daily Market Commentary Monday , 25 September 2017 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (21.09.2017) Volume (mil) +/-chg (RMmn) Main Market 2,440.4 -105.9 2,271.0 Warrants 207.1 -9.8 19.0 ACE Market 599.6 217.5 122.4 Bond 3.2 0.2 1.5 ETF 0.0 -0.04 0.1 Total 3,250.4 2,414.0 Off Market 51.4 -422.6 42.4 Value +/-chg -27.7 0.3 56.7 1.0 -0.05 -2,724.7 Major Indices Index +/- chg Malaysia FBMKLCI 1,771.04 FBMEMAS 12,625.72 FBMSCAP 17,159.40 September Futures 1,765.00 Other Markets DOW JONES 22,349.59 NASDAQ (US) 6,426.92 FTSE (UK) 7,310.64 NIKKEI (JAPAN) 20,296.45 KOSPI (KOREA) 2,388.71 HANG SENG (HK) 27,880.53 FSSTI (S'PORE) 3,220.25 SET (BANGKOK) 1,659.05 JCI (JAKARTA) 5,911.71 SHANGHAI 3,352.53 SHENZHEN 1,988.59 AUSTRALIA 5,682.14 @ @ @ @ @ Review & Outlook Up Down 259 356 61 77 62 37 3 1 0 2 385 473 % chg % YTD chg -2.54 -18.40 -27.83 -3.00 -0.14 -0.15 -0.16 -0.17 7.88 10.11 16.61 7.92 -9.64 4.23 46.74 -51.03 -17.79 -229.80 6.43 -11.44 5.13 -5.28 -6.83 26.72 -0.04 0.07 0.64 -0.25 -0.74 -0.82 0.20 -0.68 0.09 -0.16 -0.34 0.47 13.09 19.39 2.35 6.18 17.88 26.73 11.78 7.53 11.61 8.02 0.99 0.29 (RM) 0.80 0.59 0.81 1.30 0.23 Counter TENAGA PBBANK PCHEM GENTING PETGAS IOICORP GENM HLBANK PETDAG TM Mkt Cap. (RM’mn) 81,716 79,470 47,787 37,233 35,657 32,523 31,743 28,906 24,061 23,938 With technical momentum and trend indicators weakening again following last week's four-day fall on the index, blue chips are likely to extend profittaking consolidation with downside bias as buying momentum stay muted. On the other hand, small cap and ACE Market stocks may attract more vibrant retail participation as the revival of rotational plays on oil & gas, technology and construction sectors highlight trading interest. Uptrend support for the index remains at 1,770, the 50-day moving average, with stronger supports seen from the end-August low of 1,757, and mid-July low of 1,751. Immediate resistance will be from the 13 Sept high of 1,793 and 16 June peak of 1,796, with tougher hurdles from 1,800, 1,815 and subsequently 1,823, the May 2015 peak. Stock-wise, key defensive telcos and gaming stocks like Axiata, DiGI.com, Maxis,TM, Genting Berhad and Genting Malaysia are likely to retrace some of their recent gains due to profit-taking interest, before bargain hunters return to nibble again at cheaper levels. News Bites • • • • • • • Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) WILLOW 31.4 DESTINI 7.5 KKB 5.7 WELLCALL 2.1 SCOPE 1.6 Value/ Volume 0.93 0.09 0.20 0.46 1.80 0.74 0.83 Chg Vol. (RM) (mn) -0.06 10.33 -0.02 1.13 -0.03 3.51 -0.11 1.57 -0.34 0.20 -0.08 0.25 -0.09 3.90 -0.03 1.17 -0.02 0.16 -0.04 0.98 • • • • • • • • • Lotte Chemical Titan Holding Bhd revealed that the fire incident at its TE3 project site had no impact on normal production and all other plants are running as normal. OldTown Bhd has been forced to temporarily shut its central food processing centre at Subang Jaya after an explosion. UEM Edgenta Bhd has bagged an engineering services contract from Malaysia Airlines Bhd worth RM6.75mn. Spritzer Bhd is planning a private placement to raise about RM64mn to build an automated warehouse in Taiping, Ipoh. Asia Bioenergy Technologies Bhd has disposed of its entire 8.88mn shares, representing a 2.33% stake, in T7 Global Bhd for RM3.65mn. Sentoria Group Bhd proposed a 1-for-10 bonus issue of up to 52.8mn new shares, and a rights issue of up to 211.2mn warrants at 25 sen each on the basis of four warrants for every 10 shares held. FoundPac Group Bhd is proposing a 2-for-5 bonus issue and a share buy-back exercise that will involve the purchase of up to 10% of its total issued shares. Tanco Holdings Bhd has proposed the issuance of free warrants to reward shareholders, on the basis of one warrant for every two existing ordinary Tanco shares held. Lien Hoe Corp Bhd has withdrawn its Letter of Demand issued on Sept 7 to claim for some RM50.46mn in outstanding instalment payments and accrued interest from Gabungan AQRS Bhd. Mega First Corp Bhd's 65%-owned subsidiary, Idaman Harmoni Sdn Bhd, has been sued by the Inland Revenue Board to claim for RM26.33mn in owed tax. Poh Kong Holdings Bhd's net profit leapt over five times in 4QFY17 to RM14.32mn from RM2.84mn previously, thanks to brisk sales. NTPM Holdings Bhd's net profit grew 29% in 1QFY18 to RM12.12mn from RM9.38mn a year ago, thanks to higher contribution from both its paper products and personal care products segments. Japan's all industry activity index dropped 0.1% MoM in July, reversing a 0.2% rise in June. First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 16th, according to a report released by the Labor Department. U.S. key economic indicator increased more-than-expected in August, continuing momentum of an improving economic outlook. Eurozone private businesses ended the third quarter with much stronger growth than predicted, bolstered by manufacturers. Important Dates Exchange Rate USD/MYR 4.1905 -0.0072 EG - 1:4 Rights Issue - RI of up to 67.3m Redeemable Convertible USD/JPY 112.02 -0.5200 Preference Shares ("RCPS") 1 rights RCPS for every 4 existing shares held, at an issue price of EUR/USD 1.197 0.0063 RM0.95 per rights RCPS. EG - 1:1 Bonus Issue - BI of up to 67.3m shares. 1 bonus share for every 1 RCPS subscribed. Trading of Rights: 21/09 - 28/09/2017. Application Closed: 06/10/2017. LISTING ON: 19/10/2017. Disclaimer Commodities Futures Palm Oil (RM/mt) 2,737.00 -32.00 Crude Oil ($/Barrel) 50.66 -0.08 Gold ($/tr.oz.) 1,296.10 6.00 The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Monday , September 25, 2017 FBMKLCI: 1,771.04 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks Kaladher Govindan Market View Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my Further Correction Before Oversold Rebound Later This Week The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) fell for four consecutive days last week, dragged lower by profit-taking and losses in key banking stock CIMB after its major shareholder Mitsubishi UFJ sold a significant stake at a lower price. Concern over the US Federal Reserve’s definite plans to unwind its bloated USD4.5 trillion balance sheet from next month was also a major dampener, but lower liners fared better, led by oil & gas related stocks, which rallied on resurgent bargain hunting interest from retailers. The FBM KLCI lost 15.29 points, or 0.86 percent week-on-week to close last Thursday at 1,771.04, as losses in Petronas Gas (-56sen), CIMB (-40sen), Genting Malaysia (-22sen), IHH Healthcare (-20sen) and Tenaga (-12sen) overshadowed gains on RHB Bank (+18sen) and Maybank (+15sen). Average daily traded volume and value remained steady at 2.6 billion shares and RM2.08 billion respectively, compared with the 2.62 billion shares and RM2.15 billion average the previous week. As expected, in a meeting last week, the US Federal Reserve maintained its fund target rate. It also kept earlier indication for another interest hike by this December and announced the QE tapering beginning October, which came to the surprise of many as the policy makers were expected to be more dovish post Hurricane Harvey and Irma, on the back of still tame inflation. Our benchmark index seemed to have absorbed the news well on last Thursday, having corrected by only 2.54 points but that could be attributed to the fact it has been on a steady slide in the last six of seven trading days, after failing to break the year’s high of 1,797 by closing four points lower. News of S&P’s downgrade of China’s credit rating by one step to A+ on last Thursday could be an immediate-term dampener if any negative reaction persists but market expectations are for it to be temporary based on the price movements post similar downgrade by Moody’s last May. The impending leadership congress of China’s communist party next month is the key reason for such expectations as domestic funds are expected to absorb any foreign selling pressure and push the equity markets higher. That aside, we do not have any major economic indicators or news due this week. On the US front, the August core PCE data on Friday may continue to show sluggish inflation and stir hopes for a change in the Fed’s undertone in its next meeting. Nevertheless, rebuilding activities and recovery in crude oil/gasoline prices after recent storms could help boost the economy and inflationary pressures and dash those hopes. No doubt, although gradual, continued increases in US interest rate will eventually lead to unwinding of US dollar carry trades but the timing of the tipping point is anybody’s guess. This factor could continue to undermine investor sentiment in the immediate-term in the absence of fresh drivers. The unwinding in a big way may not happen this year due to the comfortable spread between 10-year US Treasury and Malaysian Government Securities, the still favourable outlook for the Ringgit backed by the stronger economic growth and Page 1 of 9
4. 25-Sep-17 improving economic fundamentals , and resilient equity market. Besides, expectation of an election rally could be another important catalyst for the benchmark index. The domestic drivers are fortified by external factors like the Fed’s forecast of a stronger US economic growth of 2.4% this year (versus 2.2% previously) and 2.1% in 2018, lower unemployment rate of 4.1% and subdued inflationary pressures at 1.9% next year. China too is expected to maintain above 6% economic growth next year, which will sustain our external demand. Thus, despite immediate-term weakness, the benchmark index could still see one more push late this year or in 1Q next year, provided election is held in next March or April, before we see any sudden volatility. As such, any price weakness in undervalued heavy weight blue chips, such as Astro (RM3.40), Tenaga (RM17.38), TM (RM7.40) and CIMB (RM8.00) should be viewed as a buying opportunity. We do not expect the recent stake sale by Mitsubishi UFJ Financial Group (MUFG) to have any material impact on the CIMB group although sentiments were likely affected due to the discount offered. Page 2 of 9
5. 25-Sep-17 N e w s I n B r i e f Corporate Lotte Chemical Titan Holding Bhd revealed that the fire incident at its TE3 project site at about 2 :23pm on Sept 20, 2017, had no impact on normal production and all other plants are running as normal. The fire was put out within 18 minutes at 2:41pm. (Bernama) OldTown Bhd has been forced to temporarily shut its central food processing centre at Subang Jaya after an explosion. The explosion affected the production floor of the centre and injured several employees, although it did not impact its coffee and beverage manufacturing and warehousing facilities. It believes insurance should adequately cover damages pending assessment. (Bursa Malaysia) UEM Edgenta Bhd has bagged an engineering services contract from Malaysia Airlines Bhd worth RM6.75mn. The contract, awarded to its 80%-owned unit KFM Holdings Sdn Bhd, covers rectification works, making good defects for mechanical and electrical systems, and civil and structure services over a period of six months. (Bursa Malaysia) Spritzer Bhd is planning a private placement to raise about RM64mn to build an automated warehouse in Taiping, Ipoh. It intends to place out some 27.39mn new shares — representing some 15% of its current issued shares — to Tasik Puncak Holdings Bhd. (The Edge) Asia Bioenergy Technologies Bhd has disposed of its entire 8.88mn shares, representing a 2.33% stake, in T7 Global Bhd for RM3.65mn. Proceeds from the disposal will be channelled back to its technology incubator funds, which will be used for future investments in a three-year timeframe. (Bursa Malaysia) Sentoria Group Bhd proposed a 1-for-10 bonus issue of up to 52.8mn new shares, and a rights issue of up to 211.2mn warrants at 25 sen each on the basis of four warrants for every 10 shares held. The group is seeking to raise up to RM52.8mn from the rights issue to be used mainly as working capital for its property development projects in Kuantan, Kuching and Morib. (Bursa Malaysia) FoundPac Group Bhd is proposing a 2-for-5 bonus issue and a share buy-back exercise that will involve the purchase of up to 10% of its total issued shares. The group is looking to buy up to 10% of its total number of issued shares, to be financed via internal funds or external bank borrowings. The group also proposed the establishment of an ESOS involving up to 10% of its total number of issued shares. (Bursa Malaysia) Tanco Holdings Bhd has proposed the issuance of free warrants to reward shareholders, on the basis of one warrant for every two existing ordinary Tanco shares held on an entitlement date to be announced later. The proposed warrant issuance will involve the distribution of up to 410.82mn warrants, at no cost, to entitled shareholders. (Bursa Malaysia) Lien Hoe Corp Bhd has withdrawn its Letter of Demand issued on Sept 7 to claim for some RM50.46mn in outstanding instalment payments and accrued interest from Gabungan AQRS Bhd. This was after receiving an unrevealed sum payment from Gabungan AQRS’ unit, AQRS The Building Company Sdn Bhd. (Bursa Malaysia) Mega First Corp Bhd’s 65%-owned subsidiary, Idaman Harmoni Sdn Bhd, has been sued by the Inland Revenue Board to claim for RM26.33mn in owed tax. It may challenge the suit on the grounds that the assessments for 2009 and 2010 cited by the board are statutebarred and erroneous in law. (Bursa Malaysia) Page 3 of 9
6. 25-Sep-17 Poh Kong Holdings Bhd 's net profit leapt over five times in 4QFY17 to RM14.32mn from RM2.84mn previously, thanks to brisk sales. For FY17, its net profit more than doubled to RM29.57mn from RM11mn in FY16, while revenue grew 13% to RM876.99mn from RM776.53mn. (Bursa Malaysia) NTPM Holdings Bhd's net profit grew 29% in 1QFY18 to RM12.12mn from RM9.38mn a year ago, thanks to higher contribution from both its paper products and personal care products segments. The group is eyeing new ventures if the expansion synergizes with the group’s current business model. (Bursa Malaysia) Page 4 of 9
7. 25-Sep-17 N e w s I n B r i e f Economy Asia SMEs Growth Outpaces Country 's GDP Growth Small and medium enterprises (SMEs), which account for more than a third of the country's economy, recorded stronger growth compared with the national gross domestic product (GDP) in 2016. The Statistics Department said SMEs recorded GDP growth of 5.2% compared with the national GDP of 4.2%, reflecting the importance of SMEs in boosting national economic growth. Notably, the contribution of SMEs GDP to the Malaysia GDP increased steadily to 36.6% from 36.3% in 2015. The department said in 2016, value added of SMEs at constant 2010 prices was RM405.5bil (2015: RM385.6bil). In nominal terms, SMEs GDP registered a value of RM463.2bil, an increment of RM34.2bil compared to 2015. Other news in Malaysia: • The Leading Index (LI), which monitors the economic performance in advance, rose 0.2% to 118.1 points in July 2017 compared to 117.8 points in June. The annual change of LI improved to 2.7% in July 2017 from 0.6% in June, while the Coincident Index (CI), which measured the current economic activity, rose 0.9%. • Bank Negara Malaysia's (BNM) international reserves rose US$300mil to US$100.80bil as at Sept 15, 2017 and were sufficient to finance 7.7 months of retained imports and was 1.1 times the short-term external debt. (Bernama/The Star) S&P Says Downgraded China as Credit Growth Still Too Fast China’s attempts to reduce risks from its rapid buildup in debt are not working as quickly as expected and credit growth is still too fast, S&P Global Ratings said, a day after it downgraded the country’s sovereign credit rating. While S&P warned in June that a cut may be on the cards, it said it decided to make the call after concluding that China’s “derisking” drive that started early this year was having less of an impact on credit growth than initially expected. “Despite the fact that the government has shown greater resolve to implement the deleveraging policy, we continue to see overall credit in the corporate sector to stay at a 9% point,” Kim Eng Tan, an S&P senior director of sovereign ratings, said in a conference call to discuss the one-notch downgrade to A+ from AA-. “We’ve now come to the conclusion that while we do expect some deleveraging in the next few years, this is likely to be much more gradual than we thought could have been the case early this year.” China’s finance ministry said the downgrade was “a wrong decision” that ignored the economic fundamentals and development potential of the world’s secondlargest economy. “China is able to maintain the stability of its financial systems through cautious lending, improved government supervision and credit risk controls,” it said on its website. S&P’s move put its rating in line with those of Moody’s and Fitch, though the timing raised eyebrows as it came just weeks ahead of one of the country’s most politically sensitive events, the twice-a-decade Communist Party Congress (CPC). (Reuters) China's Dangerous House Price Boom is Spreading Beijing and Shanghai are now well known for their ballooning house prices -- double-digit gains last year prompted more regulatory tightening. But the risk factors that could decide the fate of China’s property boom can be found well beyond the capital and biggest city. Shanghai and Beijing -- facing lower population growth, moderate increases in wages and elevated home prices. They’ve got among the strictest curbs on who can own property and how it is financed. Small cities that have little population inflow, flat income growth but rising home prices, are often regarded as more prone to risks of a property bust, said Zhao Yang, Nomura Holdings Inc.’s chief China economist. In general, it’s debt that’s the warning sign. As developers and households become more leveraged, the risk is that a price downturn doesn’t remain contained within the property market. Once home prices Page 5 of 9
8. 25-Sep-17 tumble , about 40% of Chinese banks will be hit hard, according to a recent research note from Ping An Securities. (Bloomberg) Australia Central Bank Sees No 'Automatic Implications' From Global Rate Hikes Australia's top central banker said that rising global interest rates would have no "automatic implications" for the country and that policymakers were well aware of the impact of rate hikes on heavily indebted households. Global rate rises would ultimately flow through to the country but the Reserve Bank of Australia (RBA) has the independence to decide on the timing of its move, Governor Philip Lowe said at a business event in Perth. A 25-basis-point increase in Australia's cash rate to 1.75% is now almost fully priced in by June next year, while two major domestic banks recently changed their views to tip two hikes in the second half of 2018. The RBA last raised rates by a quarter point in November 2010 to 4.75%. There then followed 12 successive easings, taking the cash rate to a record low of 1.50%. Lowe said policymakers will be mindful of the fact that households are highly indebted and any increase in interest rates could hurt economy-wide spending. Household debt, at a record high, has outpaced growth in incomes. (The Edge Market) Bank of Japan Voted 8-1 to Maintain Monetary Stimulus The Bank of Japan maintained its monetary stimulus but a new member voted against the decision, as he demanded more easing. The BoJ policy board, led by Governor Haruhiko Kuroda, voted 8-1 to hold the central bank's target of raising the amount of outstanding Japan government bond holdings at an annual pace of about JPY 80tn. The BoJ board also voted to retain the -0.1% interest rate on current accounts that financial institutions maintain at the bank. The central bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around 0%. Goushi Kataoka sought additional stimulus as he assessed that the possibility of inflation rising toward 2% from 2018 onward was low at this point. He joined the BoJ board in July. The bank remained upbeat about the economy. The BoJ said the economy is likely to continue its moderate expansion. The bank said annual inflation is likely to continue on an uptrend and increase toward 2%, mainly on the back of an improvement in the output gap and a rise in inflation expectations. Other news in Japan: • Japan’s all industry activity index dropped 0.1% MoM in July, reversing a 0.2% rise in June. Industrial output contracted 0.8% monthly in July, while construction activity showed no variations. Tertiary activity registered an increase of 0.1%. On a yearly basis, all industry activity growth moderated to 2.0% in July from 2.2% in the prior month. • Supermarket sales, after store adjustment, fell 0.5% YoY in August. Before adjustment, sales decreased 0.6%. On a monthly basis, supermarket sales dropped 2.4% in August. (RTT News) Thailand August Exports See Sharp Surge, Despite Strong Baht Thailand's customs-cleared annual exports in August grew at their fastest pace since January 2013, despite a strong baht, suggesting an economic recovery is gaining more traction. Exports account for about two-thirds of Southeast Asia's second-largest economy, whose growth still lags regional peers. In August, exports climbed 13.2% from a year earlier, handily beating a forecast of a 4.93% rise, and against July's 10.5% growth. Exports to the United States, Thailand's biggest market in August, were at record while those to China saw an annual rise of over 20% for 10 consecutive months, the ministry said. The export gains were helped by an annual 13.5% rise in electronics shipments and a surge of 139% in gold exports. However, shipments of cars and parts slumped 20.8%. In JanuaryAugust, exports grew 8.9% YoY, while imports rose 15.4%. (The Edge Market) Page 6 of 9
9. 25-Sep-17 United States Fed Says Total U .S. Household Net Worth Rose in Second Quarter The total net worth of U.S. households pushed farther into record territory, propped up by improving home values and stock prices. The net worth of U.S. households and nonprofits, defined as the total of all assets minus all liabilities, rose by $1.7 trillion in the second quarter of 2017 to $96.2 trillion, according to a report from the Federal Reserve. The increase was smaller than the $2.3 trillion advance in the first three months of the year, but marked the seventh straight quarter overall wealth rose in the U.S. Meanwhile, total household liabilities rose by a modest $146 billion to $15.2 trillion. Household liabilities relative to net worth is at the lowest share since 2000. The healthy state of the U.S. household balance sheet continues to be one of the key themes underpinning our broad economic view that the current expansion is far from over. Household wealth in the stock market climbed by $1.1 trillion in the second quarter. While a slightly smaller increase than in the first quarter, the improvement still reflected a steady upward trend in equities prices supported by solid business and consumer confidence and broad economic growth around the globe. The value of real estate rose by $564 billion last quarter, a better gain than the prior quarter, showing that home prices are rising at time when demand for housing is high and unemployment is low. (The Wall Street Journal) U.S. Weekly Jobless Claims Unexpectedly Drop To 259,000 First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 16th, according to a report released by the Labor Department. The report said initial jobless claims fell to 259,000, a decrease of 23,000 from the previous week's revised level of 282,000. The continued decrease surprised economists, who had expected jobless claims to climb to 300,000 from the 284,000 originally reported for the previous week. With the unexpected decrease, jobless claims pulled back further off the two-year high of 298,000 set in the week ended September 2nd. The jobless claims data has recently been impacted by Hurricanes Harvey and Irma, which caused significant damage in Texas and Florida. The Labor Department said the four-week moving average climbed to 268,750, an increase of 6,000 from the previous week's revised average of 262,750. The increase lifted the less volatile four-week moving average to its highest level since reaching 269,500 in June of 2016. (RTT News) Leading Economic Indicators Increase 0.4%, More Than 0.2% Expected A key economic indicator increased more-than-expected in August, continuing momentum of an improving economic outlook. Leading indicators increased 0.4% in August, greater than the 0.2% increase economists polled by Reuters anticipated. This is up from a gain of 0.3% in the prior month, according to the Conference Board. Ataman Ozyildirim, Director of business cycles and growth research at the Conference Board said that while the economic impact of recent hurricanes is not fully reflected in the leading indicators yet, the underlying trends suggest that the current solid pace of growth should continue in the near term. The index is a closely followed indicator for how healthy the U.S. economy is. The Conference Board tracks 10 components, including manufacturers' new orders, stock prices and average weekly initial claims for unemployment insurance. (CNBC) Europe and Uni ted Kingdom Eurozone Businesses End The Third Quarter on s High Note Eurozone private businesses ended the third quarter with much stronger growth than predicted, bolstered by manufacturers, who had their best month since early 2011, a survey showed. That growth, alongside rising inflationary pressures, is likely to increase expectations the European Central Bank will announce plans next month to reduce its monthly spending on quantitative easing. IHS Markit's Eurozone Flash Composite Purchasing Managers' Index for September, seen as a good guide to economic growth, bounced to 56.7 from August's 55.7, comfortably above the 50 level that separates growth from contraction. September's reading was above all expectations in a poll, which had forecast a dip to 55.5. The upturn came despite businesses increasing prices at one of the fastest rates this year. The output price index rose to 52.6 from 52.1. A PMI covering Page 7 of 9
10. 25-Sep-17 manufacturers soared to 58 .2 from 57.4, confounding expectations for a fall to 57.1 and chalking up its highest reading since February 2011. An index measuring output rose to a 6½-year high of 59.5 from 58.3. Suggesting the solid pace would be maintained next month, factories built up a surplus of orders at the steepest rate in the sub-index's 15-year history. The backlogs of work index was 57.8, compared with August's 57.1. (The Edge Market) ECB's Draghi Says Economic Recovery Will Reduce Youth Unemployment The strengthening of the recovery will continue to reduce the extent of youth unemployment, European Central Bank Mario Draghi said. In order to address structural causes of youth unemployment, a uniform degree of protection among workers, flexible labor arrangements, vocational training and trade openness are necessary conditions, he said in Dublin. The employment prospects of the young also depend on the existence of efficient labor market institutions, he noted. The persistence and heterogeneity of youth unemployment rates across the euro area countries even before the crisis, suggests that there is need for specific policies to improve education and labor market functioning in some countries. Segmentation of the labor market and poor vocational training are among the main reasons for the persistent high level of youth unemployment in several countries, Draghi added. Labor mobility across countries and sectors is bound to increase. Draghi said this will require adequate supranational policies. (RTT News) UK Leader Theresa May Wants Transitional Brexit Deal but Offers Little Detail U.K. Prime Minister Theresa May said her government wants a transition phase before her country leaves the EU completely, but failed to provide solid details on what this period would ultimately look like. Speaking to an audience in Florence, Italy, May said that businesses and citizens will need a period to adapt to a world where the United Kingdom no longer belongs to the EU. One of the key changes will be a new immigration system, she said, which could take two years to implement. "It will take time to put in place the new immigration system required to re-take control of the U.K.'s borders. So during the implementation period, people will continue to be able to come and live and work in the U.K.; but there will be a registration system – an essential preparation for the new regime. As of today, these considerations point to an implementation period of around two years," May said. Such a transition period should be agreed as soon as possible and be time-limited, May added. (CNBC) UK Posts Smallest August Budget Deficit in 10 Years, Sale Tax Revenues Strong Britain unexpectedly posted its smallest budget deficit for any August since 2007, helped by record sales tax revenues for the month in a boost for finance minister Philip Hammond. The deficit in August stood at 5.7bn pounds, down 18% compared with the same month last year, the Office for National Statistics said, citing figures that exclude state-controlled banks. August’ s surprisingly strong performance followed an unexpected budget surplus in July, a boon for Hammond who is under pressure to relax his grip on spending when he announces budget plans in November. Value-added tax receipts rose 5.6% on the year to 11.6bn pounds in August, the highest for that month on record, and stood 3.1% higher in the April to August period at 56.5bn pounds. Income tax and capital gains receipts, which were unusually strong in July, were almost flat in August at 13.2bn pounds but were up 2.1% for the first five months of the financial year. However, corporation tax revenues fell 4.3% to 4.8bn pounds in August and were flat for the financial year so far. Debt interest payments fell by nearly 4% to 4.6bn pounds, reflecting slower growth in the retail price index - but were still up 17% in the year so far at 26.3bn pounds, pushed up by the postBrexit vote rise in inflation. (Reuters) Page 8 of 9
11. 25-Sep-17 Share Buy-Back : 21 September 2017 Company AMPROP FFHB GRANFLO HARNLEN JCBNEXT KSL NIHSIN PWF TROP UNIMECH Bought Back Price (RM) Hi/Lo (RM) 19,400 11,000 10,000 3,457,700 11,000 67,500 300,000 139,000 108,200 15,700 0.80/0.795 0.625/0.62 0.25 0.72 1.70/1.68 1.26 0.25 1.16/1.13 0.94 1.09/1.07 0.805/0.79 0.63/0.615 0.245/0.24 0.72 1.70/1.67 1.28/1.25 0.255/0.25 1.16/1.11 0.94/0.93 1.09/1.07 Total Treasury Shares 14,710,700 314,000 7,114,800 10,759,700 167,300 9,865,200 22,123,500 6,053,718 5,365,742 5,605,010 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2031 6608 www.ta.com.my Page 9 of 9
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) PER (X) Div Yield (%) 52weeks 52weeks % Chg FY17 FY18 FY17 FY18 FY17 FY18 High Price % Chg Low Price % Chg YTD 21-Sep-17 AUTOMOBILE BAUTO 2.08 2.40 0.92 10.2 16.1 20.4 13.0 5.6 7.7 2.33 -10.7 1.84 13.0 -2.3 MBMR 2.13 2.09 0.70 20.7 23.2 10.3 9.2 1.9 2.2 2.67 -20.2 2.08 2.4 -0.5 PECCA 1.52 1.69 na 7.8 10.6 19.5 14.4 3.3 3.5 2.00 -24.0 1.45 4.8 -4.4 UMW 5.44 5.04 1.43 19.7 30.6 27.6 17.8 2.4 3.7 6.08 -10.5 4.09 32.9 28.8 BANKS & FINANCIAL SERVICES AFG 3.87 4.80 1.34 33.6 31.0 11.5 12.5 4.1 4.1 4.49 -13.8 3.60 7.5 4.0 AFFIN 2.60 3.70 0.81 29.4 33.6 8.8 7.7 3.1 3.1 3.00 -13.3 2.12 22.6 8.8 AMBANK 4.50 5.70 1.15 43.9 48.6 10.2 9.3 3.9 4.0 5.70 -21.1 3.90 15.4 4.4 CIMB 6.35 8.00 1.54 49.6 55.2 12.8 11.5 3.9 4.4 7.08 -10.3 4.49 41.4 40.8 HLBANK 15.90 17.50 0.63 104.9 114.2 15.2 13.9 2.8 2.8 16.30 -2.5 12.78 24.4 17.8 MAYBANK 9.85 10.20 0.89 69.7 76.1 14.1 12.9 5.1 5.1 9.86 -0.1 7.50 31.3 20.1 PBBANK 20.58 23.60 0.67 137.2 142.4 15.0 14.5 2.7 2.8 20.90 -1.5 19.40 6.1 4.4 RHBBANK 5.28 5.80 1.28 50.6 55.0 10.4 9.6 2.8 2.8 5.59 -5.5 4.53 16.6 12.1 BURSA 9.98 11.10 0.72 40.2 39.0 24.8 25.6 3.4 3.4 10.98 -9.1 8.08 23.5 14.4 CONSTRUCTION BPURI 0.36 0.38 0.76 4.7 4.6 7.6 7.8 0.0 0.0 0.51 -30.4 0.33 9.2 -18.4 GADANG 1.23 1.75 0.35 15.3 14.3 8.1 8.6 2.4 2.4 1.37 -10.2 0.89 39.0 17.1 GAMUDA 5.36 6.00 0.99 27.8 34.5 19.3 15.5 2.2 2.2 5.52 -2.9 4.65 15.3 12.1 IJM 3.38 3.50 0.89 15.3 20.2 22.1 16.7 2.2 2.8 3.61 -6.4 3.07 10.1 5.6 PESONA 0.56 0.78 0.87 4.9 5.7 11.2 9.7 4.5 4.5 0.74 -24.5 0.40 38.8 -8.3 SENDAI 0.88 0.58 1.30 8.3 9.6 10.6 9.1 1.1 1.1 1.39 -36.7 0.46 93.4 53.0 SUNCON 2.25 2.26 na 12.7 12.5 17.8 17.9 2.4 2.4 2.41 -6.6 1.56 44.2 32.4 WCT 1.75 1.49 0.88 11.5 11.7 15.2 15.0 1.7 1.7 2.48 -29.3 1.58 10.7 1.8 LITRAK 5.80 6.26 0.28 41.9 45.7 13.8 12.7 4.3 4.3 6.15 -5.7 5.57 4.1 -1.4 Building Materials CHINHIN 1.31 1.58 na 8.6 11.8 15.2 11.1 3.1 4.6 1.49 -12.1 0.85 55.0 50.6 WTHORSE 1.97 1.67 0.43 6.7 10.0 29.4 19.8 5.1 5.1 2.19 -10.0 1.92 2.6 -2.0 CARLSBG 14.86 18.06 0.54 79.3 86.2 18.7 17.2 5.3 5.8 15.30 -2.9 13.72 8.3 6.8 HEIM 18.80 19.14 0.50 79.6 84.0 23.6 22.4 3.8 4.0 19.58 -4.0 15.56 20.8 14.8 AEON 2.05 2.23 0.48 6.5 7.5 31.4 27.3 2.0 2.3 2.93 -30.0 1.98 3.5 -20.2 AMWAY 7.40 8.62 0.33 30.6 38.7 24.2 19.1 4.4 4.7 8.49 -12.8 7.05 5.0 1.0 F&N 24.60 27.41 0.21 121.1 150.9 20.3 16.3 2.8 3.0 26.00 -5.4 22.44 9.6 4.8 CONSUMER Brewery Retail HUPSENG 1.16 1.50 0.38 6.5 6.6 17.8 17.5 5.2 5.2 1.28 -9.4 1.13 2.6 0.8 NESTLE 84.92 92.76 0.40 292.7 325.4 29.0 26.1 3.2 3.3 85.98 -1.2 74.12 14.6 8.6 72.9 PADINI 4.39 4.67 0.54 23.5 27.0 18.7 16.3 2.6 2.8 4.65 -5.6 2.26 94.2 POHUAT 1.89 2.46 0.73 27.4 27.4 6.9 6.9 3.2 4.2 2.06 -8.3 1.50 26.0 9.2 QL 3.89 4.32 0.44 15.7 16.7 24.8 23.3 1.1 1.2 4.03 -3.5 3.26 19.5 16.8 SIGN 0.87 1.23 0.63 8.5 11.6 10.2 7.5 2.9 4.0 1.07 -19.2 0.78 10.9 8.8 44.00 52.08 1.14 198.6 187.4 22.2 23.5 4.5 4.5 51.04 -13.8 40.61 8.4 -0.4 GENTING 9.75 11.51 1.40 45.6 54.4 21.4 17.9 1.4 1.6 10.00 -2.5 7.50 30.0 22.7 GENM 5.60 6.53 1.44 21.0 27.1 26.6 20.6 1.4 1.6 6.38 -12.2 4.42 26.7 23.9 BJTOTO 2.36 3.34 0.89 18.3 23.2 12.9 10.2 5.9 6.8 3.42 -31.0 2.25 4.9 -20.3 LUSTER 0.13 0.15 1.92 0.4 0.4 35.8 36.1 0.0 0.0 0.16 -18.8 0.05 160.0 160.0 IHH 5.80 6.41 0.78 7.9 13.1 73.1 44.3 0.6 0.6 6.60 -12.1 5.54 4.7 -8.7 KPJ 1.08 4.67 0.39 13.3 16.2 8.1 6.6 5.7 6.9 1.14 -5.3 0.96 12.2 3.3 HARTA 6.48 6.87 0.60 17.2 24.6 37.7 26.3 1.3 1.7 7.40 -12.4 4.53 43.0 34.2 KOSSAN 6.72 7.60 0.19 33.9 40.0 19.8 16.8 2.5 3.0 7.36 -8.7 5.62 19.6 2.0 SUPERMX 1.75 1.80 0.30 10.6 15.1 16.6 11.6 1.9 2.6 2.38 -26.5 1.74 0.6 -17.1 TOPGLOV 5.50 6.05 -0.16 26.4 29.8 20.8 18.4 2.4 2.7 5.94 -7.4 4.56 20.6 2.8 KAREX 1.51 1.60 0.32 2.8 4.6 54.2 32.6 1.3 0.8 2.62 -42.4 1.37 10.2 -36.0 SCIENTX 8.59 9.38 0.50 52.3 64.9 16.4 13.2 1.9 2.1 9.85 -12.8 6.18 39.0 28.2 SKPRES 1.50 1.75 0.59 8.4 10.4 17.9 14.5 2.8 3.4 1.55 -3.2 1.24 21.0 16.3 ASTRO 2.75 3.40 1.19 13.2 14.6 20.8 18.9 4.5 4.7 2.94 -6.5 2.47 11.3 5.8 MEDIA PRIMA 0.75 0.60 0.58 0.9 2.8 87.4 26.4 0.9 3.0 1.39 -46.4 0.66 13.7 -35.2 STAR 2.36 1.35 0.46 3.3 4.0 71.2 58.4 17.8 7.6 2.60 -9.2 2.19 7.8 5.4 Tobacco BAT GAMING Casino NFO HEALTHCARE Hospitals Rubber Gloves INDUSTRIAL MEDIA OIL & GAS DNEX 0.49 0.76 1.11 3.7 4.6 13.4 10.7 2.0 2.0 0.69 -29.0 0.23 117.8 92.2 LCTITAN 5.25 6.88 na 44.1 65.0 11.9 8.1 3.4 6.1 6.53 -19.6 4.14 26.8 -19.2 MHB 0.80 0.78 1.64 -2.0 -0.5 na na 0.0 0.0 1.16 -31.5 0.63 27.2 -13.1 MISC 7.38 6.56 0.96 56.3 46.9 13.1 15.7 4.1 4.1 7.90 -6.6 7.03 5.0 0.4 PANTECH 0.64 0.69 1.17 4.0 6.1 16.1 10.4 2.8 4.3 0.68 -5.9 0.44 47.1 43.8 PCHEM 7.30 7.62 1.08 44.3 44.7 16.5 16.3 2.6 2.7 7.80 -6.4 6.53 11.8 4.6 SENERGY 1.65 1.71 2.67 6.6 4.0 25.0 41.6 0.6 0.6 2.10 -21.4 1.33 24.1 1.9 SERBADK 2.15 2.77 na 22.1 25.2 9.7 8.5 3.1 3.5 2.30 -6.5 1.51 42.4 43.3 UMWOG 0.35 0.80 1.84 -12.0 -3.5 na na 0.0 0.0 0.92 -62.6 0.27 26.2 -59.6 0.0 0.0 1.98 -29.3 1.28 9.4 -17.6 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.40 1.55 1.49 11.3 12.3 12.4 11.4
13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) FGV 1.67 1.52 1.71 IJMPLNT 2.95 3.58 0.38 IOICORP 4.60 4.14 1.28 KFIMA 1.70 1.89 0.47 KLK 24.54 26.18 SIME 9.13 UMCCA BETA EPS (sen) FY17 PER (X) Div Yield (%) 52weeks 52weeks % Chg FY18 FY17 FY18 FY17 FY18 High Price % Chg Low Price % Chg YTD 1.0 2.5 168.9 65.6 3.0 3.0 2.47 -32.4 1.42 17.6 7.7 12.3 14.1 24.0 21.0 2.4 2.7 3.70 -20.3 2.95 0.0 -13.2 17.3 21.0 26.5 21.9 2.1 3.5 4.81 -4.4 4.30 7.0 4.5 19.9 13.3 8.5 12.8 5.3 5.3 1.96 -13.3 1.68 1.2 0.0 0.74 103.4 120.4 23.7 20.4 2.1 2.4 25.50 -3.8 23.00 6.7 2.3 9.80 1.52 34.2 37.3 26.7 24.5 2.5 2.5 9.70 -5.9 7.59 20.3 12.7 6.55 7.52 0.46 37.5 31.8 17.4 20.6 3.5 2.6 6.83 -4.1 5.50 19.0 9.7 GLOMAC 0.64 0.70 0.67 1.4 5.7 44.2 11.2 4.3 4.2 0.80 -20.0 0.61 4.9 -7.9 HUAYANG 0.84 0.96 0.49 17.3 10.2 4.8 8.2 4.8 2.4 1.43 -41.7 0.80 4.4 -26.1 IBRACO 0.88 0.94 na 3.3 10.5 27.0 8.4 2.3 4.5 1.05 -16.2 0.76 16.6 -12.0 IOIPG 2.04 2.23 1.11 18.9 16.9 10.8 12.1 2.9 2.9 2.39 -14.5 1.85 10.4 4.6 MAHSING 1.49 1.76 0.89 14.3 13.5 10.4 11.0 4.4 4.4 1.69 -11.8 1.34 11.2 4.2 SNTORIA 0.80 0.98 0.34 6.2 10.3 13.0 7.8 1.3 1.3 1.00 -20.0 0.69 15.9 0.0 SPB 4.85 5.98 0.48 25.6 22.8 13.4 15.1 2.5 2.5 5.19 -6.6 4.32 12.2 9.7 SPSETIA 3.43 4.10 0.84 11.6 12.5 38.0 35.4 4.1 4.1 4.50 -23.8 3.10 10.6 9.6 SUNWAY 4.41 4.15 0.49 15.8 15.3 17.2 17.7 1.1 1.1 4.57 -3.5 2.89 52.5 47.0 PLANTATIONS PROPERTY 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 1.72 1.86 0.60 8.9 10.1 19.4 17.0 5.3 5.8 1.84 -6.5 1.63 5.5 0.0 CMMT 1.45 1.72 0.36 8.1 8.6 17.9 16.8 5.8 6.2 1.72 -15.7 1.44 0.7 -5.2 -21.9 POWER & UTILITIES MALAKOF 1.07 1.22 0.68 6.8 6.9 15.6 15.6 6.5 6.5 1.68 -36.3 1.00 7.5 PETDAG 24.22 21.47 0.81 98.2 102.3 24.7 23.7 3.0 3.1 25.70 -5.8 23.00 5.3 1.8 PETGAS 18.02 19.37 0.84 87.6 100.1 20.6 18.0 3.5 3.9 22.50 -19.9 17.82 1.1 -15.4 TENAGA 14.44 17.38 0.79 131.8 130.4 11.0 11.1 3.0 3.2 14.80 -2.4 13.00 11.1 3.9 YTLPOWR 1.40 1.40 0.57 8.4 11.4 16.7 12.2 3.6 3.6 1.64 -14.6 1.38 1.4 -6.0 TELECOMMUNICATIONS AXIATA 5.08 5.40 1.38 15.7 16.9 32.4 30.0 1.6 1.7 5.50 -7.6 4.11 23.6 7.6 DIGI 4.87 4.90 0.84 20.0 20.4 24.3 23.9 4.1 4.2 5.19 -6.2 4.63 5.2 0.8 MAXIS 5.76 5.85 0.76 24.5 24.7 23.5 23.3 3.5 3.5 6.60 -12.7 5.48 5.1 -3.7 TM 6.37 7.40 0.62 22.7 23.4 28.1 27.2 3.2 3.3 6.84 -6.9 5.81 9.6 7.1 ELSOFT 2.62 3.00 0.64 11.3 14.1 23.2 18.6 3.0 3.8 2.95 -11.2 1.20 118.4 86.6 IRIS 0.18 0.25 1.50 -1.3 0.6 na 31.6 0.0 0.0 0.22 -20.5 0.10 75.0 59.1 INARI 2.50 2.75 0.71 11.4 13.1 22.0 19.1 3.9 3.7 2.65 -5.5 1.59 56.9 50.9 MPI 13.66 15.40 0.16 89.5 110.2 15.3 12.4 2.0 2.0 14.30 -4.5 7.20 89.7 84.3 UNISEM 3.88 4.30 0.54 26.9 32.1 14.4 12.1 3.1 3.1 4.25 -8.7 2.27 70.9 64.4 TECHNOLOGY Semiconductor & Electronics TRANSPORTATION Airlines AIRASIA 3.41 3.76 0.94 44.0 37.6 7.7 9.1 1.2 1.5 3.59 -5.0 2.16 57.9 48.9 AIRPORT 8.64 8.10 1.16 17.2 17.5 50.1 49.4 1.2 1.2 9.45 -8.6 5.91 46.2 42.6 TNLOGIS 1.58 1.80 0.79 12.0 13.6 13.1 11.6 2.7 3.2 1.83 -13.8 1.48 6.7 1.4 WPRTS 3.77 4.05 0.76 17.1 15.1 22.0 24.9 3.4 3.0 4.45 -15.3 3.58 5.3 -12.3 % Chg Low Price Freight & Tankers SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) Beta EPS (cent) FY17 FY18 PER (X) FY17 FY18 Div Yield (%) FY17 FY18 52week High Price 52week % Chg % Chg YTD BANKS & FINANCIAL SERVICES DBS 20.61 23.30 1.23 172.9 189.2 11.9 10.9 2.9 2.9 22.3 -7.4 14.80 39.3 18.9 OCBC 11.15 12.00 1.16 87.7 92.4 12.7 12.1 5.7 6.7 11.5 -3.0 8.84 33.9 25.0 UOB 23.47 25.40 1.06 192.9 206.5 12.2 11.4 3.0 3.0 24.6 -4.6 17.98 30.5 15.0 PLANTATIONS WILMAR 3.23 3.72 0.96 28.9 31.1 11.2 10.4 2.5 2.8 4.0 -19.3 3.08 4.9 -10.0 IFAR 0.46 0.53 1.05 4.9 5.2 9.4 8.8 2.6 2.8 0.6 -23.5 0.44 3.4 -13.3 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
14. Technical View Monday , September 25, 2017 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Technical Outlook FBM KLCI: 1,771.04 (-15.29, -0.86%) Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Blue Chips Congest as Small Caps Highlight The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) fell for four consecutive days last week, dragged lower by profit-taking and losses in key banking stock CIMB after its major shareholder Mitsubishi UFJ sold a significant stake at a lower price. Concern over the US Federal Reserve’s definite plans to unwind its bloated USD4.5 trillion balance sheet from next month was also a major dampener, but lower liners fared better, led by oil & gas related stocks which rallied on resurgent bargain hunting interest from retailers. The FBM KLCI lost 15.29 points, or 0.86 percent week-on-week to close last Thursday at 1,771.04, as losses in Petronas Gas (-56sen), CIMB (-40sen), Genting Malaysia (-22sen), IHH Healthcare (-20sen) and Tenaga (-12sen) overshadowed gains on RHB Bank (+18sen) and Maybank (+15sen). Average daily traded volume and value remained steady at 2.6 billion shares and RM2.08 billion respectively, compared with the 2.62 billion shares and RM2.15 billion average the previous week. Blue chips on Bursa Malaysia eased on mild profit-taking Monday, ignoring regional gains as concerns persist over the US central bank’s plans to shrink its balance sheet. The KLCI fell 2.67 points to close at 1,783.66, off an early low of 1,780.20 and high of 1,787.01, as losers edged gainers 457 to 406 on total turnover of 1.99bn shares worth RM1.61bn. Profit-taking interest sustained the next day to drag blue chips lower, while the broader market was softer with rotational interest focused only on selected oil & gas stocks. The KLCI fell 7.00 points to close at 1,776.66, off an opening high of 1,783.68 and low of 1,775.30, as losers beat gainers 517 to 337 on turnover of 2.01bn shares worth RM1.92bn. The local benchmark ended lower for a third straight session Wednesday, dragged down by key banking stock CIMB after its core shareholder Mitsubishi UFJ launched the sale of a significant stake at a lower price, but oil & gas stocks rallied on strong bargain hunting interest. The KLCI closed 3.08 points down at 1,773.58, off an opening high of 1,777.03 and low of 1,770.44, as losers beat gainers 476 to 377 on robust turnover totaling 3.15bn shares worth RM2.38bn. Blue chips stayed under profit-taking pressure the following day amid worries over the US Federal Reserve’s definite plans to shrink its balance sheet from next month, while rotational interest on selective small cap and ACE Market stocks highlighted keen retail bargain hunting interest. The index shed another 2.54 points Thursday to settle at 1,771.04, off an early high of 1,776.31 and low of 1,770.70, as losers edged gainers 473 to 385 on strong total volume of 3.25bn shares worth RM2.41bn. The trading range for the blue-chip benchmark index last week stabilized at 16.57 points, compared to the 16.35-point range the previous week. For the week, the FBM-EMAS Index slipped 97.96 points or 0.77 percent to close at 12,625.72, but the FBM-Small Cap Index climbed 174.44 points, or 1.03 percent to 17,159.40, as small cap stocks rose further on continued rotational bargain hunting interest. Page 1 of 3
15. TA Securities 25-Sep-17 A Member of the TA Group The daily slow stochastics indicator for the FBM KLCI is in a negative bias following last week ’s four-day correction on the index, with the bearish position reinforced by a hookdown on the weekly stochastics indicator. The 14-day Relative Strength Index (RSI) indicator weakened to a bearish reading of 45.41 after last week’s losses, while the 14-week RSI hooked down sharply to a weaker reading of 55.71. Chart 1 Meanwhile, the daily Moving Average Convergence Divergence (MACD) trend indicator flashed a sell signal mid last week, and the weekly MACD indicator’s signal line is turning south again to suggest weaker trend ahead (Chart 2). The weaker trend signal is echoed on the -DI and +DI lines on the 14-day Directional Movement Index (DMI) trend indicator which crossed for a fresh sell signal, but the ADX line is turning down to indicate absence of trend. Chart 2 Page 2 of 3
16. TA Securities 25-Sep-17 A Member of the TA Group Conclusion With technical momentum and trend indicators weakening again following last week ’s fourday fall on the index, blue chips are likely to extend profit-taking consolidation with downside bias as buying momentum stay muted. On the other hand, small cap and ACE Market stocks may attract more vibrant retail participation as the revival of rotational plays on oil & gas, technology and construction sectors highlight trading interest. Uptrend support for the index remains at 1,770, the 50-day moving average, with stronger supports seen from the end-August low of 1,757, and mid-July low of 1,751. Immediate resistance will be from the 13 Sept high of 1,793 and 16 June peak of 1,796, with tougher hurdles from 1,800, 1,815 and subsequently 1,823, the May 2015 peak. Stock-wise, key defensive telcos and gaming stocks like Axiata, DiGI.com, Maxis, TM, Genting Berhad and Genting Malaysia are likely to retrace some of their recent gains due to profit-taking interest, before bargain hunters return to nibble again at cheaper levels. Chart 3 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2031 6608 www.ta.com.my Page 3 of 3
17. COMPANY UPDATE Monday , September 25, 2017 FBMKLCI: 1,771.04 Sector: Banks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Affin Holdings Bhd TP: RM3.70 (+42.3%) Last Traded: RM2.60 Proposed Reorganisation Kaladher Govindan Tel: +603-2167 9609 BUY kaladher@ta.com.my Announced details of proposed reorganisation Affin announced details of its proposed reorganisation exercise, which would ultimately end with Affin’s listing status on the Main Market of Bursa Securities to be transferred to Affin Bank Listing status to improve the bank‘s profile In more detail, the proposed reorganisation will involve the transfer of the Investment Banking business, moneybroking, life and general insurance business to Affin Bank. New ABB (Affin Bank Bhd) shares amounting to 254.2mn will be issued for AHIB (Affin Hwang Investment Bank), AMB (Affin Moneybrokers) and AALI (AXA Affin Life Insurance Bhd). This would result in both Affin and Affin Bank (which currently has 1,688.8mn shares in issue) having the same resultant number in shares in issue, i.e. 1,942.9mn. With the equal amount of shares, Affin will be able to undertake a distribution-in-specie of 1 Affin Bank Share for each existing Affin share. As such, the proposed reorganisation will not have any effect on the substantial shareholding of Affin. Meanwhile, the proposed transfer of AAGI (AXA Affin General Insurance Bhd) will be via a cash consideration. www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) AHB MK 5185 Main Market 1,943 5,052 3.00/2.12 408.5 12.9 0.8 LTAT (35.4%) Forecast Revision (%) Forecast Revision (%) Core Net Profit (RM mn) Consensus TA/Consensus (%) Previous Rating FY17 FY18 572.0 652.1 563.1 597.6 101.6 109.1 Buy (Maintained) Financial Indicators New corporate structure to improve capital and ROE Affin’s proposed reorganisation follow on the heels of similar exercises recently undertaken by peers such as RHB Bank and Alliance Financial Group. Nevertheless, we are positive on Affin’s proposed reorganisation plan, as the new corporate structure is expected to enhance the bank’s capital adequacy ratios. As previously guided by management, fully loaded CET1 and total capital ratio could improve to 13.8% and 18.7% from 12.3% and 16.2% while ROE is estimated to increase by some 1.5% points. Management expects the entire exercise to complete by 1Q 2018. Recommendation and valuation No change to our earnings estimates. Going forward, we remain positive on the Affin’s new transformation programme. Coined the “Affinity Program,” the bank has embarked on a comprehensive transformation plan to address the challenges and opportunities it currently faces in the industry. However, competition will continue to pose a challenge to the group’s efforts as loan growth remains modest and margins compress as demand for deposit gathers pace. We maintain Affin’s TP at RM3.70 for now. This represents an implied FY18 PBV of around 0.8x. Affin is currently trading at FY17 PBV of 0.6x, still a steep discount compared to industry peers average of 1.1x. BUY reiterated. ROE (%) ROA (%) CTI Ratio (%) Gross NPL Ratio (%) BV/ Share (RM) Price/ BV (x) FY17 6.5 0.8 58.5 1.7 4.6 0.6 FY18 7.1 0.9 56.9 1.6 4.9 0.5 Share Performance (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 2
18. 25-Sep-17 Earnings Summary Profit & Loss Statement FYE 31 Dec (RMm) Interest income Interest expense Net interest income Islamic banking income Total non-interest income Total income Overhead expenses Pre-provisioning profit Loan loss provisioning Finance costs Associates contributions Profit before tax Taxation MI Net profit FY15 2,534.7 (1,586.9) 947.8 238.9 615.7 1,802.5 (1,085.7) 716.8 (164.6) (40.9) 8.1 519.3 (137.1) (12.9) 369.3 FY16 2,553.1 (1,582.6) 970.5 272.8 692.5 1,935.9 (1,142.9) 793.0 (43.4) (56.6) 48.9 741.8 (162.0) (15.8) 564.0 FY17e 2,623.5 (1,641.6) 981.9 305.5 742.7 2,030.2 (1,188.0) 842.2 (67.7) (56.6) 48.9 766.7 (176.3) (18.4) 572.0 FY18e 2,750.1 (1,696.5) 1,053.6 342.2 796.8 2,192.6 (1,246.8) 945.8 (69.1) (56.6) 48.9 868.9 (199.8) (17.0) 652.1 FY19e 2,884.7 (1,768.1) 1,116.7 383.3 855.1 2,355.1 (1,315.2) 1,039.9 (88.1) (56.6) 48.9 944.0 (217.1) (14.2) 712.7 Balance Sheet Statement FYE 31 Dec (RMm) Cash and short-term funds Marketable securities Net loans and advances Other assets Statutory deposits Goodwill Total assets FY15 4,938.9 14,512.4 43,345.3 1,210.6 1,782.5 1,612.5 67,402.0 FY16 4,836.2 15,605.0 43,747.4 1,431.5 1,659.7 1,606.5 68,886.3 FY17e 7,296.8 13,404.7 45,309.4 1,454.2 1,714.2 1,606.5 70,785.9 FY18e 8,215.8 12,781.3 47,801.4 1,477.6 1,784.0 1,606.5 73,666.6 FY19e 8,574.7 12,781.3 50,908.5 1,501.5 1,873.2 1,606.5 77,245.7 Customer deposits Deposits from other FIs Borrowings Bills and acceptances Other liabilities Total liabilities Shareholders' funds + MI 50,548.7 3,385.4 1,306.0 77.1 3,757.6 59,074.9 8,327.1 51,505.6 3,894.0 1,606.6 37.7 3,111.3 60,155.3 8,731.0 53,050.8 4,088.7 1,606.6 37.7 3,074.7 61,858.6 8,927.3 55,172.8 4,293.2 1,606.6 37.7 3,074.7 64,185.1 9,481.5 57,931.5 4,507.8 1,606.6 37.7 3,074.7 67,158.4 10,087.3 Key Financial Ratios and Margins FYE 31 Dec (RMm) FY15 Return and efficiency ROE (%) 4.6% ROA (%) 0.6% Int income/total income (%) 52.6% Non-interest/total income (%) 34.2% Cost-to-income (%) 60.2% FY16 FY17e FY18e FY19e 6.6% 0.8% 50.1% 35.8% 59.0% 6.5% 0.8% 48.4% 36.6% 58.5% 7.1% 0.9% 48.1% 36.3% 56.9% 7.3% 0.9% 47.4% 36.3% 55.8% Balance sheet Loans growth (%) Gross NPL ratio (%) Loan loss coverage (%) Deposit growth (%) LD ratio (%) 6.9% 1.9% 64.0% -0.1% 86.8% 0.6% 1.7% 55.0% 1.9% 85.7% 4.5% 1.7% 105.5% 3.0% 87.0% 5.5% 1.6% 111.4% 4.0% 88.2% 6.5% 1.5% 121.9% 5.0% 89.5% Investment statistics PER (x) PBT growth rate (%) EPS (sen) EPS growth rate (%) BV per share (RM) P/NBV (x) DPS (sen) Dividend payout (%) Dividend yield (%) 16.15 -35.6% 16.10 -37.7% 4.26 0.61 7.99 49.6% 3.1% 10.57 42.9% 24.60 52.7% 4.47 0.58 8.00 32.5% 3.1% 10.42 3.4% 24.94 1.4% 4.57 0.57 8.00 32.1% 3.1% 9.14 13.3% 28.44 14.0% 4.86 0.54 8.00 28.1% 3.1% 8.37 8.6% 31.08 9.3% 5.17 0.50 8.00 25.7% 3.1% Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Monday, September 25, 2017, the analyst, Kaladher Govindan, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2031 6608 www.ta.com.my Page 2 of 2
19. COMPANY UPDATE Monday , September 25, 2017 FBMKLCI: 1,771.04 Sector: Oil & Gas THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Lotte Chemical Titan Holding Bhd TP: RM6.88 (+31.0%) Last Traded: RM5.25 Mild Fire Incident at TE3 Kylie Chan Sze Zan BUY Tel: +603-2167 9601 kyliechan@ta.com.my What Happened A small fire incident occurred at the site of Lotte Chemical Titan Holding Bhd's (TTNP) TE3 project at about 2:23pm on 20 Sept-17. The fire was extinguished 18 mins later, at about 2:41pm, with no reported personnel injuries. Management indicated that TE3's targeted startup date in 4Q17 (guidance: Nov-17) is on-track. Furthermore, other plants within the integrated facility at Pasir Gudang were not affected. Insurance claims are possible, depending on the outcome of current investigations on the incident. To recap, TE3 comprises part of TTNP's multi-year expansion plans, using IPO proceeds. It comprises a KBR Catalytic Olefins Technology catalytic cracking reactor that will be attached to TTNP's existing 2nd naphtha cracker in Pasir Gudang, Johor. TE3 will improve upstream product yields by 397k tpa (cracking capacity: +41%). It is an extension to two of TTNP's existing naphtha crackers with total capacity of 1mn tpa). www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Forecast Revision (%) Forecast Revision (%) Core Net Profit (RM mn) Consensus TA/Consensus (%) Previous Rating TTNP MK 5284 Main Market 2,273 11,933 6.53/4.14 n.a. 26.4 n.a. Lotte Group - 74% FY17 FY18 2 0 1,001.8 1,477.3 1,099.9 1,393.5 91.1 106.0 Buy (Maintained) Financial Indicators Our Take and Impact We expect muted impact on earnings due to the mild severity of this fire incident. For our forecasts, we defer the startup of TE3 to Nov-17, in-line with management's guidance. Previously we had assumed earlier startup in Aug-17. Additionally, we also assume higher product spreads for PE (73% of TTNP's downstream volumes) in FY17E. Our expectations of higher spreads for polyethylene (PE) is premised on shutdowns of US ethylene capacity (circa 40%) arising from Hurricane Harvey. This has led to a 7%/8% QoQ jump in ethylene prices/naphthaethylene cracking spreads for 3Q17-to-date. We expect stronger product prices to persist for the remainder of FY17E due to potential delays in recommissioning of US crackers. The net impact of these changes is an increase of 2.2% to our FY17E forecasts. Net Debt/Equity (x) ROA (%) ROE (%) NTA/Share (RM) P/NTA (x) FY17 Net Cash 7.4 8.2 5.3 1.0 FY18 Net Cash 10.0 11.4 5.6 0.9 Share Performance Price Change (%) 1 mth 3 mth 6 mth 12 mth TTNP (2.4) n.a. n.a. n.a. FBMKLCI 0.1 (0.5) 1.4 6.0 (12-Mth) Share Price relative to the FBMKLCI Nevertheless, we do not discount the possibility that TE3's startup date may be deferred due to prolonged investigations and precautionary measures. Assuming the black skies scenario of a 3 month delay to Feb 2018, this could potentially result in a cut of 4.5%/2.0% to our FY17E/FY18F forecasts (Figure 1). Figure 1 : Earnings Impact from Delayed Startup of TE3 Impact to Earnings Start-Up Date FY17E FY18E Base Case Nov-17 Source: Bloomberg TE3 Delayed Startup Date Dec-17 Jan-18 -2.2% -4.5% Feb-18 -2.0% Page 1 of 4
20. 25-Sep-17 Valuation We maintain Buy on TTNP with unchanged TP of RM6 .88 based on unchanged 7x FY18 EV/EBITDA. Our optimism is underpinned by attractive risk-reward, multi-year capacity expansion, and expectations of sequential rebound in 3Q17 after an exceptionally weak 2Q17. For 2H17, we expect PE prices to escalate on the back of expensive ethylene feedstock. TTNP is a major beneficiary given that PE comprises the bulk of sales (FY16: 57%), coupled with integrated naphtha cracker operations that benefit from subdued feedstock price. [ TH E RE M A ININ G OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Page 2 of 4