Bursa Malaysia Daily Market Report - 28 June

Transcription

1. Wednesday , 28 June, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. 2. 3. Daily Market Commentary Weekly Strategy Weekly Technical Outlook Fundamental Reports 1. 2. 3. Gamuda Berhad: Growth to be Driven by Construction Segment Lotte Chemical Titan Holding: Coming Of the Titan Selangor Properties Berhad: Results Driven by Steady Investment Income Technical Reports 1. Weekly Technical Stock Picks 2. Daily Money Flow Technical Stock Picks FBMKLCI Stocks Under Coverage PLANTATION Sector CONSTRUCTION Sector PROPERTY Sector 3. Weekly Ace Market Stock Watch 4. Weekly Small Cap Stock Watch 5. Weekly Stock Screen Foreign Technical Reports 1. Foreign Stock Watch (AUS) 2. Foreign Stock Watch (HK) 3. Foreign Stock Watch (FSSTI) 4. Foreign Stock Watch (US) 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
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Daily Note Daily Market Commentary Wednesday , 28 June 2017 For Internal Circulation Only (mil) Main Market 915.5 Warrants 126.0 ACE Market 247.7 Bond 20.9 ETF 0.1 Total 1,310.1 Off Market 112.0 Value +/-chg -237.7 -1.2 -16.6 3.9 0.08 -12.8 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP June Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA (mn) 30.1 23.8 14.5 13.9 10.0 3.2 3.0 3.0 2.8 2.0 1.7 1.0 1.0 Up Down 330 226 59 58 45 33 1 2 3 2 438 321 % chg % YTD chg 1,779.45 12,648.43 17,383.95 1,788.00 2.02 16.92 97.54 3.00 0.11 0.13 0.56 0.17 8.39 10.31 18.13 9.32 21,310.66 6,146.62 7,434.36 20,225.09 2,391.95 25,839.99 3,219.53 1,586.45 5,829.71 3,191.20 1,898.54 5,714.19 -98.89 -100.53 -12.44 71.74 3.29 -31.90 10.06 0.84 0.00 5.75 1.74 -5.97 -0.46 -1.61 -0.17 0.36 0.14 -0.12 0.31 0.05 0.00 0.18 0.09 -0.10 7.83 14.18 4.08 5.81 18.04 17.45 11.76 2.82 10.06 2.82 -3.58 0.85 Top 10 KLCI Movers Based on Mkt Cap. Off Market EDUSPEC XINGHE APPASIA STERPRO MQTECH SEAL TENAGA KPOWER SGB-PA PNEPCB SCOPE BKOON-WA MEXTER Value/ Volume 1.61 0.12 0.21 0.34 1.54 1.18 0.53 (RM) @ 0.15 @ 0.01 @ 0.25 @ 0.10 @ 0.06 @ 0.42 @ 14.16 @ 0.75 @ 0.07 @ 0.50 @ 0.22 @ 0.15 @ 0.23 Exchange Rate USD/MYR 4.2880 -0.0010 USD/JPY 111.77 0.1200 EUR/USD 1.126 0.0082 Counter Mkt Cap. (RM’mn) MAYBANK 101,064 SIME 65,356 CIMB 60,468 MAXIS 42,359 GENM 33,047 HLBANK 31,786 TM 24,878 PETDAG 24,061 YTLCORP 15,592 ASTRO 13,805 TA Research e-mail : taresearch@ta.com.my Review & Outlook KLSE Market Statistics (23.06.2017) Volume +/-chg (RMmn) -114.5 1,470.3 -54.0 15.6 -176.0 50.9 11.2 7.0 0.05 0.1 1,543.9 -48.5 59.9 (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 Chg (RM) 0.02 0.01 0.03 0.05 0.27 0.14 0.02 0.04 0.01 0.02 Vol. (mn) 9.43 2.50 8.93 8.55 10.41 2.29 1.92 0.45 6.95 0.77 Commodities Futures Palm Oil (RM/mt) 2,439.00 0.00 Crude Oil ($/Barrel) 43.72 0.23 Gold ($/tr.oz.) 1,247.50 2.20 Given the recent weak follow-through buying momentum and cautious market undertone, stocks should remain under profit-taking pressure during this Hari Raya holiday shortened three-day trading week. On top of that, with technical indicators in near-term bearish mode and lingering worries over the political impact from the US Department of Justice's ongoing investigations into the 1MDB debacle which has attracted prime time global media attention, the local market should suffer low-volume consolidation with mild downside bias, unless positive domestic catalysts emerge. Immediate uptrend supports for the index stays at the 50-day moving average at 1,769, with better support from 1,761, the lower Bollinger band, and subsequently the 100-day ma at 1,744. Immediate upside hurdle remains at the 1,800 psychological level, followed by the 18 May 2015 high of 1,823. Sector-wise, blue chips such as CIMB, Genting Berhad, Maybank and Tenaga are likely to stay under pressure from near-term profit-taking interest, while aviation stocks AirAsia and AirAsia X and construction related counters like Ekovest and Sunway Construction attract buyers on dips due to the weak oil price trend and good potential for construction-related positive news flows during the coming weeks. News Bites • Gamuda Berhad's 9MFY17 net profit of RM499.3mn came in below expectations mainly due to lower-than-expected contributions from JVs and associates. • Excluding the uladhernrealized forex gains amounted to RM27.2mn, Selangor Properties Bhd's 1HFY17 normalised net profit of RM27.1mn came within our expectation. • DRB-Hicom Bhd and China's Zhejiang Geely Holding Group Co Ltd inked a definitive shareholders agreement to bring in the latter as the new 49.9% substantial shareholder in Proton Holdings Bhd for a total consideration of RM460mn. • Global Oriental Bhd's wholly-owned subsidiary Fame Action Sdn Bhd is teaming up with Malton Bhd's wholly-owned unit Layar Raya Sdn Bhd for a mixed development project on 38.3 acres of land in Cheras. • Felda Global Ventures Holdings Bhd has agreed to give suspended president and CEO Datuk Zakaria Arshad another week to respond to its show-cause letter concerning alleged improprieties at one of its subsidiaries. • Bina Darulaman Bhd has issued a RM50mn sukuk, the first tranche of its seven-year, RM100mn Sukuk Wakalah programme. • Perisai Petroleum Teknologi Bhd's 51%-owned subsidiary Perisai Offshore Sdn Bhd has executed a contract that gives it about 20 months more to provide the service of its jack-up drilling rig PP101 to Petronas Carigali Sdn Bhd. • Microlink Solutions Bhd has bagged a government contract worth RM38mn for the implementation of a loan management system via its wholly-owned subsidiary Microlink Systems Sdn Bhd. • MCE Holdings Bhd said it has secured contracts worth RM60mn to supply various electronic and mechatronic components and parts for a new Perodua model. • Datuk Seri Dr Yeoh Seong Mok has retired from Vivocom International Holdings Bhd with immediate effect after acting as the group's CEO since November 2015. • Carimin Petroleum Bhd's subsidiary Carimin Bina Sdn Bhd has been appointed as the exclusive subcontractor for a RM60mn civil engineering job in relation to a flood mitigation project on Jalan Temerloh, Taman Tasik Titiwangsa. • The IMF cut its forecast for U.S. economic growth for this year to 2.1% from a previous estimate of 2.3% due to policy uncertainties. Important Dates SEG - 5:7 Bonus Issue - BI of 516.8m shares. 5 bonus shares for every 7 existing shares. Entitlement Date: 28/06/2017. LISTING ON: 29/06/2017. DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Wednesday , June 28, 2017 FBMKLCI: 1,779.45 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kaladher Govindan Market View Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my Correction Continues in Holiday-Shortened Week The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) pulled back last week as overbought momentum encouraged profit-taking, especially on oil & gas heavyweights, as oil prices slumped into bear market territory after increased output from key producers offset a cut in production from OPEC and non-OPEC countries. Most investors were also sidelined ahead of the extended four-day Hari Raya Puasa festival holiday weekend, which caused stocks to slip into a low-volume consolidation phase. For the week, the FBM KLCI shed 11.86 points, or 0.66 percent to 1,779.45, with falls on BAT (-RM1.52), KLK (-50sen), PPB Group (-36sen), Tenaga (-28sen) and Maxis (-24sen) accounting for most of its loss. Average daily traded volume and value moderated further to 1.67 billion shares and RM1.96 billion, compared with the 1.99 billion shares and RM2.56 billion average respectively the previous week, as trading interest dwindled with most investors preferring to be sidelined ahead of the long Hari Raya break. Most investors are likely to maintain their stance in this holiday-shortened week as the benchmark index is likely to continue its correction phase in the absence of any positive drivers. The downside pressure on crude oil prices is a major dampener amidst growing supply from the Libya and Nigeria, which were exempted from the OPEC truce on oil prices. The pressure is unlikely to fade unless demand grow at a much faster pace than supply or OPEC and its non-OPEC allies agree to increase the current production cut of 1.8mn barrels per day (bpd), which will end in March next year. With the US Energy Information Administration projecting the US crude oil production hitting 10 million bpd in 2018, a new record high compared to previous high of 9.6 million bpd in 1970, from an estimated 8.9 million bpd in 2016 and 9.3 million bpd 2017, the price pressure will linger. This exerts more pressure on OPEC and its non-OPEC allies for strict compliance to their agreed production cuts and more drastic production cuts in the future. However, the million-dollar question now is how strong is the will among OPEC nations to comply to this production cut, especially if Qatar and its strong ally Iran balked away. This is after Saudi Arabia, UAE, Yemen, Egypt and Bahrain cut the diplomatic ties with Qatar early this month after accusing it supporting terrorism and cozying up to Iran. So far, compliance to production cut is voluntary and there is no provision to punish non-compliers. Iran and Qatar produced 3.8 and 0.6 million bpd or 11.7% and 1.9% of the total OPEC production of 32.2 million bpd in May respectively. Qatar may not agree with the 13 demands put forward by the Saudi-led bloc to end the crisis, especially if it construes them as an intrusion into domestic affairs, which affects the nation’s sovereignty. As such, investors will be wondering about the implications after the ten days deadline for Qatar to respond ends in early July. The 13 requirements include shutting the Al-Jazeera TV network, cutting back diplomatic ties with Iran, severing ties with all terrorist groups, ending Turkey’s military presence in Qatar and consent for scheduled audits after agreeing to demands. Thus, crude oil prices could remain in a limbo in the immediate term. Page 1 of 8
4. TA Securities 28-Jun-17 A Member of the TA Group That aside , the US core PCE data is due this week. As the core PCE is likely to indicate tame inflationary pressure, there will be expectations for the US Federal Reserve to delay its next interest rate hike in the second half of this year. This could be positive for the ringgit, which has eased to RM4.29 against the USD after crude oil prices dived into the bear territory. Page 2 of 8
5. TA Securities 28-Jun-17 A Member of the TA Group News In Brief Corporate DRB-Hicom Bhd and China 's Zhejiang Geely Holding Group Co Ltd inked a definitive shareholders agreement to bring in the latter as the new 49.9% substantial shareholder in Proton Holdings Bhd for a total consideration of RM460mn. Of the total consideration, Geely will provide a cash injection of RM170mn to Proton — unchanged from its previous announcement. The balance RM290mn will come from transfer of Geely's platform for its best-selling vehicle, the Boyue SUV. (The Edge) Global Oriental Bhd's wholly-owned subsidiary Fame Action Sdn Bhd is teaming up with Malton Bhd's wholly-owned unit Layar Raya Sdn Bhd for a mixed development project on 38.3 acres of land in Cheras. The seven plots of freehold land are to be developed as a mixed development at the absolute discretion of Fame Action as the developer. Layar Raya is entitled to 18% of the net development value of the project, which shall not be less than RM65mn. (Bursa Malaysia/The Edge) Felda Global Ventures Holdings Bhd has agreed to give suspended president and CEO Datuk Zakaria Arshad another week to respond to its show-cause letter concerning alleged improprieties at one of its subsidiaries. Zakaria has until noon on June 29 to reply to the letter and all documents requested has been given to him. (Bursa Malaysia/The Edge) Bina Darulaman Bhd has issued a RM50mn sukuk, the first tranche of its seven-year, RM100mn Sukuk Wakalah programme. The company said it plans to use the proceeds for its general corporate purposes including infrastructure development, potential land bank acquisitions, and working capital requirements of existing and future projects. (Bursa Malaysia/The Edge) The takeover offer for Wing Tai Malaysia Bhd at RM1.80 per share is "not fair but reasonable", says independent adviser Mercury Securities Sdn Bhd. "Accordingly, we recommend the holders to accept the offer," it said in a circular to the minority shareholders of the property development company. (Bursa Malaysia/The Edge) Perisai Petroleum Teknologi Bhd's 51%-owned subsidiary Perisai Offshore Sdn Bhd has executed a contract that gives it about 20 months more to provide the service of its jack-up drilling rig PP101 to Petronas Carigali Sdn Bhd. (Bursa Malaysia/The Edge) Microlink Solutions Bhd has bagged a government contract worth RM38mn for the implementation of a loan management system via its wholly-owned subsidiary Microlink Systems Sdn Bhd. (Bursa Malaysia/The Edge) MCE Holdings Bhd said it has secured contracts worth RM60mn to supply various electronic and mechatronic components and parts for a new Perodua model. The contracts are expected to commence in the first quarter of its financial year ending July 31, 2018, and is for a duration of six years, with an estimated total investment cost of RM1mn. (Bursa Malaysia/The Edge) Datuk Seri Dr Yeoh Seong Mok has retired from Vivocom International Holdings Bhd with immediate effect after acting as the group’s CEO since November 2015. Vivocom has yet to announce a replacement for Yeoh. (Bursa Malaysia/The Edge) UMW Oil & Gas Corp Bhd’s (UMWOG) non-executive director Badrul Feisal Abdul Rahim resigned last Friday ahead of the completion of UMW Holdings Bhd's planned distribution of its UMWOG stake to UMW Holdings shareholders. (Bursa Malaysia/The Edge) Page 3 of 8
6. TA Securities 28-Jun-17 A Member of the TA Group Carimin Petroleum Bhd ’s subsidiary Carimin Bina Sdn Bhd has been appointed as the exclusive subcontractor for a RM60mn civil engineering job in relation to a flood mitigation project on Jalan Temerloh, Taman Tasik Titiwangsa. (Bursa Malaysia/The Edge) Gamuda Bhd's net profit grew 11% to RM170.9mn in its third quarter ended April 30, 2017 from RM152.7mn a year earlier, driven by higher progress of works on the MRT2 project. For the cumulative nine months (9MFY17), net profit rose 5% to RM499.3mn from RM474.0mn, as revenue climbed 45% to RM2.2bn from RM1.5bn. (Bursa Malaysia/The Edge) Apollo Food Holdings Bhd posted a 57.8% increase in net profit for its fourth quarter ended April 30, 2017 (4QFY17) to RM2.7mn from RM1.7mn in 4QFY16, as revenue rose 12.1% to RM59.6mn from RM53.1mn. The increase in revenue was driven by an increase in sales from higher demand in both local and export markets. For the full FY17, Apollo Food said net profit fell 40.1% to RM17.8mn from RM29.7mn FY16. (Bursa Malaysia/The Edge) Berjaya Land Bhd swung into profit for the fourth quarter (4QFY17), recording RM88.6mn in net profit, compared to a net loss of RM458.5mn a year ago. The group said the turnaround in profit was mainly due to lower investment related expenses during the quarter. For the full year FY17, the group reported a net profit of RM275.6mn, rising significantly from the RM270.6mn net loss previously. The increased revenue was attributed to higher revenue from HR Owen, higher project contract sales recorded by International Lottery & Totalizator Systems Inc, and higher revenue from its hotels and resorts business. (Bursa Malaysia/StarBiz) Page 4 of 8
7. TA Securities 28-Jun-17 A Member of the TA Group News In Brief Economy Asia Japan Manufacturing Sector Slows in May – Nikkei The manufacturing sector in Japan continued to expand in May, albeit at a slower pace, the latest survey from Nikkei showed with a seven-month low manufacturing PMI score of 52.0. That's down from 53.1 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Individually, output posted its slowest growth in nine months, although exports expanded and job creation was sustained. Stocks of purchases, stocks of finished goods and backlogs of work all swung to contraction. (RTT News) Japan BOJ Summary of Opinions The BoJ has just released the Summary of Opinions' for the June 15th and 16th meeting. Within them, the BoJ states that the Japan's economy has been turning toward a moderate expansion: Economic activity has been broadly in line with the projection. The government expects that the Bank will work steadily toward achieving the price stability target of 2.0% in light of developments in economic activity and prices, as well as financial conditions. Increase in wages and prices have not been accelerating despite improvements incorporate profits. Increasing number of small and medium-sized firms are raising their wages, which is significant for achieving higher inflation. Remarkable improvement in CPI has yet to be seen, it would take some time for inflation to accelerate. Private consumption appears to be gaining momentum recently. Firms are concerned about the increase in fixed costs amid low growth expectations. The government expects the Bank to continue to work toward achieving the price stability target under "QQE with Yield Curve Control" in light of developments in economic activity and prices, as well as financial conditions. (FXStreet) Philippine Central Bank Leaves Rate Unchanged The Philippines' central bank on Thursday decided to maintain its key interest rate at a record low. The Monetary Board of the Bangko Sentral ng Pilipinas held the overnight reverse repurchase facility at 3.0%, in line with economists' expectations. The rates on the overnight lending and deposit facilities and the reserve requirement ratios were also left unchanged. The latest baseline forecast signals a lower path of future inflation with average inflation remaining within the target range of 2.0 – 4.0% for 2017-19. The bank observed that the assessment of risks to the inflation outlook remains tilted toward the upside. Meanwhile, policymakers said prospects for the global economy have improved, but risks to external demand remain tilted to the downside. Nonetheless, the Monetary Board emphasized that while global economic conditions remain challenging, prospects for domestic economic activity continue to be firm owing to buoyant consumer and business sentiment, ample liquidity, and sustained credit growth. (RTT News) Singapore Headline Inflation in May Rises to 1.4% Y-O-Y Singapore's headline inflation in May strengthened to 1.4%YoY due to the absence of rebates, while core inflation fell slightly to 1.6%. May's headline inflation of 1.4% was up from April's 0.4%, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry in a joint release. This was due to the base effects related to the disbursement of government rebates on service and conservancy charges, which lowered the costs of housing maintenance and repairs. For 2016, they were disbursed in May, but this year they were issued in April. Core inflation, which excludes accommodation and private road transportation costs, eased to 1.6% in May from April's 1.7%. This indicator is a key consideration for MAS' monetary policy moves. This was due to the fall in services inflation, which more than offset the pickup in food as well as electricity and gas inflation, said the release. Separately, Singapore's manufacturing output rose 5.0% in May 2017 compared to a year ago - lower than market consensus. Excluding biomedical manufacturing, output grew 13.1%. Private sector economists polled by Bloomberg had expected industrial production to grow at a median estimate of 7.5% year-on-year in May 2017. Output from the Page 5 of 8
8. TA Securities 28-Jun-17 A Member of the TA Group electronics cluster rose 35 .1% year-on-year, with all segments recording higher output except for the data storage segment. Notably, the semiconductors segment grew 48.3%. The precision engineering cluster's output grew 19.1%, while the chemicals cluster saw its output grow 5.3% year-on-year. However, the biomedical manufacturing cluster continued to post a drag, with its factory output shrinking 22.2% year-on-year. (The Business Times) China’s Pension Gap Is Growing as Aging Becomes Economic Risk Nearly a third of the inhabitants of the world's most populous country will be over 60 years old by 2050, according to United Nations data. By 2015, the pension of each retired resident was borne by the contributions of fewer than three wage-earners, government estimates show. The dynamic migration triggered by urbanization has led to a noticeable regional diversification in terms of the pension burden. The ratio of pensioners-to-working is about 1:1.5 in Jilin and Heilongjiang, two provinces in China's northeast rust belt, which has seen population outflows in recent years. (Bloomberg) United States IMF Lowers Forecast for U.S. Economy Amid Rising Policy Uncertainty The International Monetary Fund cut its forecast for the U.S. economy, saying it could no longer assume the Trump administration will be able to deliver pledged tax cuts and higher infrastructure spending. The IMF, in its annual review of the American economy, questioned the White House’s plan to accelerate output and said it was skeptical the administration would be able rev up the world’s largest growth engine to a sustained 3.0% annual rate. Instead, the fund forecasts the growth rate will steadily fall over the next five years to around 1.7%, assuming no major policy changes. (The Wall Street Journal) CB Consumer Confidence The Consumer Confidence Index rose in June to 118.9, despite expectations for it to drop. Economists were expecting the index to drop slightly to 116 for the month of June, according to Thomson Reuters consensus estimates. Last month, the index dipped to 117.9, down from its April reading, The Conference Board said. Consumer expectations improved to a nearly 16-year high, according to Director of Economic Indicators at The Conference Board Lynn Franco. (CNBC) Richmond Manufacturing Index The Richmond Fed manufacturing index strengthened to 7 for June from 1 the previous month and was above consensus forecasts of an increase to 4, although this recovery did follow a sharp decline for the April reading. The shipments component strengthened to 11 from -2 while the orders index advanced to 6 from zero, although there was a second successive decline in order backlogs. (Economic Calendar) Durable Goods Orders U.S. orders for business equipment unexpectedly declined for the month of May, falling 1.1%, nearly doubling expectations for a drop of 0.6%. Demand for long-lasting factory goods declined in May for the second straight month, driven by a pullback in airplane orders as the U.S. manufacturing sector continues to find its footing. (Bloomberg) US PMI Manufacturing & Services The flash US IHS Markit PMI manufacturing index for June declined to 52.1 from the final May reading of 52.7. This reading was below expectations of a figure close to 53.0 and also the weakest reading for 9 months. The services-sector index declined to 53.0 from 53.6 previously and was also below consensus expectations of 53.7. With a net decline in both sectors, the composite output index declined to a 3-month low of 53.0 from 53.6. There was a slowdown in the rate of growth in orders and output, although there was a stronger pace of growth in job creation and inventories. (Economic Calendar) Page 6 of 8
9. TA Securities 28-Jun-17 A Member of the TA Group US New Home Sales New home sales in the U .S. rebounded in May after a sharp pullback in the previous month, according to a report released by the Commerce Department on Friday. The Commerce Department said new home sales climbed by 2.9% to an annual rate of 610,000 in May from the upwardly revised April rate of 593,000. Economists had expected new home sales to jump by 5.4% to a rate of 600,000 from the 569,000 originally reported for the previous month. The rebound in new home sales came as sales in the West spiked by 13.3% to a rate of 162,000 and sales in the South surged up by 6.2% to a rate of 360,000. (RTT News) Yellen: Banks 'Very Much Stronger' Fed Chair Janet Yellen said that banks are "very much stronger" and another financial crisis is unlikely anytime soon. Speaking during an exchange in London with British Academy President Lord Nicholas Stern, the central bank chief said the Fed has learned lessons from the financial crisis and has brought stability to the banking system. Banks last week passed the first round of the Fed's stress tests to see how they would perform under adverse conditions like a 10.0% unemployment rate and turbulence in commercial real estate and corporate debt. (CNBC) Europe and United Kingdom Euro PMI Manufacturing The IHS Markit Eurozone flash PMI manufacturing index strengthened to a 74-month high of 57.3 for June from 57.0 in May and was above consensus forecasts of 56.9. There was a retreat in the services-sector index to a 5-month low of 54.7 from 56.3 the previous month and this was the lowest reading for 5 months. In this context, the composite output index also declined to a 5-month low of 55.7 from 56.8 the previous month. The second-quarter reading was still the strongest for over six years. (Economic Calendar) U.K. House Price Sentiment Rises at Slower Rate in June British households perceived that the value of their home increased in June, albeit at a slower rate than in the previous month, survey figures from IHS Markit and Knight Frank showed. The Knight Frank/Markit House Price Sentiment Index, or HPSI, declined to 53.3 in June. Any figure over 50 indicates that prices are rising. However, while it remains in positive territory, the index has been steadily ticking down for the last three months which suggests that the perceived rate of house price growth is slowing. On a regional basis, households in the South East reported the biggest rise in June, followed by the East of England and London. The future HPSI, a measure of expectations on house prices dropped to 61.3 in June from 64.5 in May. This indicates that UK households are also less confident that property prices will rise over the next few months. (RTT News) ECB's Draghi Seeks Prudence on Gradual Withdrawal of Stimulus The European Central Bank will need to be prudent in withdrawing monetary stimulus as that can be done only gradually with the euro area still in need of considerable policy support to bring inflation back to target in a sustainable way, ECB President Mario Draghi said. In its June 8 policy session, the ECB took its very first step towards exiting its massive stimulus - a mix of huge bond purchases and ultra-low interest rates - by shedding the downward bias on interest rates in its forward guidance. The EUR2.3tr asset purchase scheme is set to continue till the end of this year. Economists expect the ECB to announce a tapering move in September. The bank has already signaled that when it decides to withdraw stimulus, it would be gradual, meaning it will be distributed over several months. (RTT News) UK Set to Raise Lenders' Capital Requirement The Bank of England plans to raise capital requirement of lenders amid consumer credit growth. The Financial Policy Committee would lift the countercyclical capital buffer to 0.5% from 0.0%, with effect from June 2018. In the absence of any material change in the outlook, the bank expects to lift the rate again to 1.0% at its November 2018 meeting, the bank said in its Financial Stability Report. An increase of 0.5% itself lift the capital requirement by GBP5.7bn. (RTT News/ Financial Daily) Page 7 of 8
10. TA Securities 28-Jun-17 A Member of the TA Group Norway 's Wealth Fund Should be Split from Central Bank Norway's US$960bn wealth fund, the world's largest, should be split from the country's central bank, which has managed the fund since its launch in 1996, a governmentappointed commission said. Norwegians have built up the fund with revenues from the country's vast offshore oil and gas sector and it is regarded as an insurance policy for when those reserves run out, meaning any changes will be subject to close political and public scrutiny. In the future, the fund should be managed by a new state investment company with a government-appointed board and an investment mandate set by the finance ministry. Share Buy-Back: 23 June 2017 Company AMPROP BKAWAN GLBHD GRANFLO TEXCHEM TROP UNIMECH Bought Back Price (RM) Hi/Lo (RM) 40,000 31,800 29,000 10,000 2,000 80,000 6,300 0.785/ 0.78 18.80 0.615/ 0.61 0.23 1.42/ 1.41 0.98/ 0.96 1.09/ 1.08 0.785/ 0.775 18.86/ 18.78 0.615/ 0.61 0.23/ 0.225 1.42/ 1.38 0.98/ 0.96 1.10/ 1.08 Total Treasury Shares 13,954,100 32,558,031 7,065,800 6,283,800 2,579,400 2,896,942 5,136,710 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 8 of 8
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 23-Jun-17 1.91 2.28 6.02 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 5.41 1.00 0.61 1.26 10.3 24.1 19.7 15.8 25.3 29.8 18.5 9.5 30.6 12.1 9.0 20.2 6.1 3.9 2.2 8.3 3.9 3.2 2.44 2.70 7.00 -21.7 -15.6 -14.0 1.88 1.96 4.43 1.6 16.3 35.9 -10.3 6.5 31.7 4.80 3.70 5.70 7.80 17.30 10.80 23.30 5.60 10.00 1.29 0.97 1.36 1.38 0.67 0.96 0.79 1.33 0.70 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 11.6 9.1 11.3 13.5 14.8 13.1 14.9 10.1 25.9 12.8 8.0 10.3 12.1 13.5 11.6 14.3 9.4 26.7 4.1 3.0 3.5 3.0 2.6 5.2 2.7 2.3 3.3 4.1 3.0 3.6 3.4 2.6 5.2 2.8 2.3 3.3 4.49 3.00 5.70 6.87 15.74 9.68 20.58 5.59 11.14 -13.1 -10.7 -12.6 -2.8 -1.3 -0.8 -1.0 -8.2 -6.5 3.60 2.08 3.90 4.11 12.70 7.50 19.08 4.53 8.20 8.3 28.8 27.7 62.4 22.4 28.0 6.8 13.2 27.1 4.8 12.1 15.5 48.1 15.1 17.1 3.3 8.9 17.7 0.41 1.29 5.45 3.41 0.64 1.37 2.02 2.04 5.89 0.46 1.62 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.82 0.64 1.04 1.10 1.02 1.27 na 1.07 0.10 5.7 14.6 28.1 15.3 4.9 8.3 12.6 11.9 42.0 5.7 13.5 34.8 20.3 5.7 9.6 12.5 12.0 45.8 7.1 8.8 19.4 22.3 12.9 16.5 16.0 17.1 14.0 7.1 9.6 15.6 16.8 11.2 14.2 16.1 17.0 12.9 0.0 2.2 2.2 2.2 3.9 0.7 2.7 1.5 4.2 0.0 2.2 2.2 2.8 3.9 0.7 2.7 1.5 4.2 0.51 1.35 5.48 3.61 0.74 1.37 2.15 2.48 6.15 -20.6 -4.6 -0.5 -5.5 -12.9 0.0 -6.0 -17.6 -4.2 0.37 0.81 4.65 3.07 0.34 0.41 1.53 1.46 5.57 11.0 59.7 17.2 11.1 91.0 238.3 32.0 39.6 5.7 -6.9 22.9 14.0 6.6 5.8 138.3 18.8 18.6 0.2 2.00 2.00 0.48 11.0 11.5 18.2 17.4 5.0 5.0 2.19 -8.7 1.93 3.6 -0.5 14.74 17.96 17.84 21.08 0.51 0.59 74.8 93.1 81.3 19.7 101.9 19.3 18.1 17.6 5.1 4.7 5.5 5.1 15.30 19.10 -3.7 -6.0 13.00 15.04 13.4 19.4 5.9 9.6 2.21 7.47 25.00 1.22 83.50 3.46 1.96 4.88 0.91 2.23 8.62 27.41 1.39 88.66 4.10 2.50 4.41 1.36 0.50 0.36 0.33 0.48 0.36 0.51 0.66 0.44 0.58 6.7 26.4 120.5 6.1 293.5 22.3 27.5 15.7 9.3 7.9 30.5 148.1 6.2 326.2 24.7 27.5 16.6 12.7 32.9 28.3 20.7 20.1 28.4 15.5 7.1 31.1 9.8 28.1 24.5 16.9 19.6 25.6 14.0 7.1 29.3 7.1 1.8 4.0 2.8 4.9 3.3 4.3 3.1 0.9 5.5 2.1 4.7 3.0 4.9 3.4 4.9 4.1 1.0 5.5 3.00 8.89 27.00 1.35 83.68 3.66 2.04 5.00 1.07 -26.3 -16.0 -7.4 -9.5 -0.2 -5.3 -3.9 -2.4 -15.4 2.11 7.30 22.44 1.13 74.12 2.17 1.43 4.14 0.78 4.7 2.3 11.4 7.9 12.7 59.4 37.1 17.8 16.0 -14.0 1.9 6.5 6.0 6.8 36.3 13.3 12.7 13.8 44.00 52.08 1.03 198.6 187.4 22.2 23.5 4.5 4.5 55.64 -20.9 40.61 8.4 -0.4 9.72 5.83 11.53 6.58 1.35 1.27 49.3 25.7 55.5 27.9 19.7 22.7 17.5 20.9 0.5 1.4 0.6 1.5 10.00 6.38 -2.8 -8.6 7.50 4.19 29.6 39.0 22.3 29.0 2.56 0.12 3.34 0.13 0.73 1.28 19.3 0.4 23.3 0.4 13.2 33.1 11.0 33.2 5.5 0.0 6.3 0.0 3.42 0.16 -25.1 -25.0 2.48 0.05 3.2 140.0 -13.5 140.0 5.98 4.20 6.65 4.70 0.76 0.51 10.3 13.3 16.4 16.5 58.0 31.5 36.5 25.5 0.7 1.5 0.7 1.8 6.73 4.37 -11.1 -3.9 5.54 3.85 7.9 9.1 -5.8 0.5 6.99 6.36 1.98 5.66 1.70 6.05 7.70 1.80 5.80 2.40 0.58 0.16 0.35 -0.20 0.29 20.0 35.8 12.3 26.5 3.7 24.2 40.5 15.3 30.2 6.1 34.9 17.8 16.0 21.4 45.6 28.8 15.7 12.9 18.7 28.1 1.3 2.8 1.9 2.3 0.5 1.6 3.2 2.3 2.7 0.9 7.12 7.07 2.38 5.94 2.64 -1.8 -10.0 -16.8 -4.7 -35.6 4.06 5.62 1.88 4.20 1.65 72.2 13.2 5.3 34.8 3.0 44.7 -3.5 -6.2 5.8 -28.0 INDUSTRIAL SCIENTX SKPRES 8.40 1.31 9.69 1.90 0.54 0.52 54.4 8.6 66.4 11.4 15.4 15.3 12.6 11.5 2.1 3.2 2.4 4.2 8.99 1.44 -6.6 -9.0 5.99 1.12 40.2 17.0 25.4 1.6 MEDIA ASTRO MEDIA PRIMA STAR 2.65 0.94 2.32 3.45 0.60 1.40 1.04 0.69 0.63 13.2 1.7 7.1 14.5 2.8 6.5 20.0 54.8 32.7 18.3 33.1 35.8 4.7 1.5 7.8 4.9 2.4 7.8 3.01 1.52 2.70 -12.0 -38.5 -14.1 2.51 0.94 2.19 5.6 0.0 5.9 1.9 -18.7 3.6 -13.8 -28.9 -6.3 -9.8 -8.3 -25.2 -54.3 0.19 0.83 7.03 0.44 6.41 1.31 0.48 213.2 0.0 5.3 37.9 11.5 19.8 0.0 133.3 -9.8 0.7 34.8 2.4 -3.1 -45.7 -16.2 1.30 27.7 -2.4 BANKS & FINANCIAL SERVICES AFG 3.90 AFFIN 2.68 AMBANK 4.98 CIMB 6.68 HLBANK 15.54 MAYBANK 9.60 PBBANK 20.38 5.13 RHBBANK BURSA 10.42 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 0.60 0.74 1.04 3.5 4.3 17.1 14.0 1.7 1.7 0.69 MHB 0.83 0.95 1.84 -1.2 1.3 na 63.0 0.0 0.0 1.16 MISC 7.40 7.65 0.79 61.4 54.7 12.1 13.5 4.1 4.1 7.90 PANTECH 0.60 0.69 1.27 4.1 5.0 14.5 12.0 3.0 3.3 0.67 PCHEM 7.15 7.91 1.07 39.2 41.6 18.3 17.2 2.9 3.1 7.80 SENERGY 1.57 2.01 2.51 6.6 4.0 23.8 39.6 0.0 0.0 2.10 UMWOG 0.48 0.80 2.04 -12.0 -3.6 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 1.66 1.55 1.46 12.0 12.9 13.9 12.8 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 1.75 3.10 4.48 24.80 9.61 6.09 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.77 0.47 1.07 0.86 1.23 0.46 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 41.5 25.2 23.9 22.2 28.2 16.2 20.6 19.7 21.3 20.8 25.6 17.7 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 2.9 2.3 2.2 2.2 2.6 3.8 2.9 2.6 2.7 2.4 3.2 2.8 2.52 3.70 4.81 25.50 9.67 6.51 -30.6 -16.2 -6.9 -2.7 -0.6 -6.5 1.42 3.00 4.21 22.84 7.41 5.53 PROPERTY GLOMAC 0.66 0.70 0.60 1.6 6.3 41.4 10.5 4.5 4.5 0.83 -20.0 0.65 HUAYANG 1.06 1.07 0.66 17.3 17.4 6.1 6.1 3.8 3.3 1.43 -26.0 1.05 IBRACO 0.84 0.92 0.36 4.9 10.2 17.2 8.2 4.2 4.8 1.05 -20.0 0.79 IOIPG 2.14 2.25 0.89 17.4 17.4 12.3 12.3 3.3 3.5 2.46 -13.0 1.85 MAHSING 1.54 1.70 0.76 14.4 14.2 10.7 10.9 4.2 4.2 1.70 -9.4 1.34 SNTORIA 0.85 0.98 0.29 6.2 10.3 13.8 8.2 1.2 1.2 1.00 -15.0 0.69 SPB 4.84 5.98 0.59 25.6 22.8 13.3 14.9 4.1 4.1 5.19 -6.7 4.32 SPSETIA 3.40 4.10 0.69 11.7 12.6 33.5 31.0 1.3 1.3 4.50 -24.4 2.80 SUNWAY 3.91 3.95 0.47 15.5 15.8 17.0 16.6 6.9 7.0 4.05 -3.5 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 1.72 1.86 0.52 8.9 10.1 19.4 17.0 5.2 5.9 1.84 -6.5 1.63 CMMT 1.52 1.72 0.59 8.1 8.6 18.8 17.6 5.5 5.9 1.72 -11.6 1.45 % Chg YTD 23.2 3.3 6.4 8.6 29.7 10.1 12.9 -8.8 1.8 3.3 18.6 1.5 1.5 1.0 7.0 15.8 14.9 23.2 12.0 21.4 37.6 -5.0 -6.2 -16.0 9.8 7.7 6.2 9.5 8.6 30.3 5.5 4.8 0.0 -0.7 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.07 24.22 18.90 14.16 1.45 1.23 21.47 19.60 17.37 1.90 0.75 0.77 0.77 1.02 0.54 7.1 98.4 88.2 131.9 8.2 6.4 102.3 101.3 130.8 10.7 15.0 24.6 21.4 10.7 17.6 16.7 23.7 18.7 10.8 13.6 6.5 3.0 3.3 3.1 6.9 6.5 3.1 3.7 3.2 6.9 1.80 25.70 22.66 14.90 1.64 -40.6 -5.8 -16.6 -5.0 -11.6 1.04 22.92 18.10 13.00 1.39 2.9 5.7 4.4 8.9 4.3 -21.9 1.8 -11.3 1.9 -2.7 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.94 4.99 5.64 6.62 5.50 4.95 6.05 7.50 1.30 0.92 0.70 0.66 15.0 20.8 25.4 21.4 16.7 21.1 26.1 22.3 32.9 23.9 22.2 30.9 29.7 23.7 21.6 29.7 1.5 4.2 3.5 2.9 1.7 4.2 3.5 3.0 5.99 5.19 6.60 6.90 -17.5 -3.9 -14.5 -4.1 4.11 4.64 5.50 5.81 20.2 7.5 2.5 13.9 4.7 3.3 -5.7 11.3 TECHNOLOGY Semiconductor & Electronics IRIS 0.17 INARI 2.14 MPI 13.26 UNISEM 3.48 0.28 2.40 15.90 4.10 1.35 0.79 0.52 0.82 -2.6 10.3 94.2 26.9 -0.3 na 12.6 20.8 115.7 14.1 29.1 12.9 na 17.0 11.5 12.0 0.0 3.7 2.0 3.4 0.0 2.3 2.0 3.4 0.24 2.23 13.50 3.70 -29.2 -4.0 -1.8 -5.9 0.10 1.41 7.20 2.27 70.0 52.1 84.2 53.3 54.5 28.9 78.9 47.5 3.19 8.70 3.23 8.10 1.14 1.46 37.6 17.2 35.9 17.5 8.5 50.5 8.9 49.7 1.3 1.1 1.6 1.1 3.59 9.45 -11.1 -7.9 2.16 5.76 47.7 51.0 39.3 43.6 1.76 3.71 2.05 4.05 0.75 0.67 14.3 17.1 22.7 15.1 12.3 21.6 7.7 24.5 2.4 3.5 4.0 3.0 1.87 4.59 -5.9 -19.2 1.42 3.62 23.9 2.5 10.7 -13.7 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.35 OCBC 10.73 UOB 22.93 PLANTATIONS WILMAR IFAR 3.48 0.48 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.22 1.13 1.08 173.8 87.7 195.6 190.2 11.7 92.4 12.2 209.3 11.7 10.7 11.6 11.0 2.9 5.7 3.1 2.9 6.7 3.1 21.2 10.8 24.0 -3.9 -0.3 -4.5 14.72 8.84 17.41 38.2 30.2 31.7 17.4 20.3 12.4 3.72 0.53 0.92 1.13 28.9 4.9 31.1 5.2 11.2 9.2 2.3 2.5 2.6 2.7 4.0 0.6 -13.0 -19.3 2.96 0.44 17.6 9.1 -3.1 -8.6 12.0 9.9 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. T e c h n i c a l TA Securities V i e w Wednesday , June 28, 2017 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Technical Outlook FBM KLCI: 1,779.45 (-11.86, -0.66%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Mild Downward Bias in Short 3-day Week The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) pulled back last week as overbought momentum encouraged profit-taking, especially on oil & gas heavyweights, as oil prices slumped into bear market territory after increased output from key producers offset a cut in production from OPEC and non-OPEC countries. Most investors were also sidelined ahead of the extended four-day Hari Raya Puasa festival holiday weekend, which caused stocks to slip into a low-volume consolidation phase. For the week, the FBM KLCI shed 11.86 points, or 0.66 percent to 1,779.45, with falls on BAT (-RM1.52), KLK (-50sen), PPB Group (-36sen), Tenaga (-28sen) and Maxis (-24sen) accounting for most of its loss. Average daily traded volume and value moderated further to 1.67 billion shares and RM1.96 billion, compared with the 1.99 billion shares and RM2.56 billion average respectively the previous week, as trading interest dwindled with most investors preferring to be sidelined ahead of the long Hari Raya break. Bursa Malaysia shares fell Monday as overbought momentum encouraged profit-taking, ignoring the firmer external tone as investors await scheduled talks between the EU and UK regarding Brexit arrangements. The KLCI slid 2.41 points to close at 1,788.90, off an early high of 1,793.39 and low of 1,785.25, as losers swarmed gainers 715 to 231 on cautious trade totaling 1.92bn shares worth RM1.89bn. Blue chips closed lower the next day led by oil & gas heavyweights, as oil prices fell on global supply glut worries and investors profit-taking after recent gains. The KLCI ended at the day’s low of 1,780.71, off the early high of 1,787.70, as losers beat gainers 544 to 311 on total trade of 1.8bn worth RM2.18bn. Stocks fell further on Wednesday, dragged lower by regional weakness as oil prices slumped into bear market territory after increased output from key producers offset a cut in production from OPEC and non-OPEC countries. The KLCI slipped another 5.14 points to close at 1,775.57, off an early high of 1,782.09 and low of 1,773.66, as losers beat gainers 631 to 284 on slower total trade of 1.69bn worth RM2.41bn. The market closed mixed the following day, copying the region as investor caution prevailed with the weak oil price trend dampening market tone. The KLCI was up 1.86 points to end at 1,777.43 after oscillating between high of 1,778.68 and low of 1,775.07 as gainers led losers 459 to 389 on moderating turnover totaling 1.64bn worth RM1.79bn. The local market stayed in narrow range bound cautious trade Friday after China's banking regulator queried their banks on loans for overseas asset purchases and as oil prices bounced off 10-month lows, with most market players sidelined ahead of the extended four-day Hari Raya Puasa festival holiday weekend. The index ended 2.02 points up at 1,779.45, after moving between narrow range of 1,780.06 and 1,775.74, as gainers led losers 438 to 321 on slow trade totaling 131bn shares worth RM1.54bn. Trading range for the blue-chip benchmark index last week expanded to 19.73 points, compared to the 12.44-point range the previous week, caused by profit-taking due to the overbought momentum. For the week, the FBM-EMAS Index slid 103.41 points or 0.81 percent to 12,648.43, while the FBM-Small Cap Index fell 90.73 points, or 0.52 percent to 17,383.95. Page 1 of 3
14. TA Securities 28-Jun-17 A Member of the TA Group Due to last week ’s profit-taking correction, the daily slow stochastic momentum indicator for the FBM KLCI is in a bearish position and has fallen into neutral territory, while the weekly indicator’s signal line flashed a sell in overbought territory. However, the 14-day Relative Strength Index (RSI) indicator re-hooked upwards to a neutral reading of 51.35 after last Friday’s late spike, but the 14-week RSI dipped below the overbought reading for a bearish momentum position. Chart 1 On trend indicators, the daily Moving Average Convergence Divergence (MACD) crossed for a sell signal to reinforce the bearish divergence line, while the weekly MACD indicator’s signal line is easing to suggest weaker upside momentum (Chart 2). The +DI and –DI lines on the 14day Directional Movement Index (DMI) trend indicator have narrowed back on a declining ADX line, implying a significant weakening of the prior uptrend. Chart 2 Conclusion Given the recent weak follow-through buying momentum and cautious market undertone, stocks should remain under profit-taking pressure during this Hari Raya holiday shortened three-day trading week. On top of that, with technical indicators in near-term bearish mode and lingering worries over the political impact from the US Department of Justice’s ongoing investigations into the 1MDB debacle which has attracted prime time global media attention, the local market should suffer low-volume consolidation with mild downside bias, unless positive domestic catalysts emerge. Page 2 of 3
15. TA Securities 28-Jun-17 A Member of the TA Group Immediate uptrend supports for the index stays at the 50-day moving average at 1 ,769, with better support from 1,761, the lower Bollinger band, and subsequently the 100-day ma at 1,744. Immediate upside hurdle remains at the 1,800 psychological level, followed by the 18 May 2015 high of 1,823. Sector-wise, blue chips such as CIMB, Genting Berhad, Maybank and Tenaga are likely to stay under pressure from near-term profit-taking interest, while aviation stocks AirAsia and AirAsia X and construction related counters like Ekovest and Sunway Construction attract buyers on dips due to the weak oil price trend and good potential for construction-related positive news flows during the coming weeks. Chart 3 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
16. TA Securities RESULTS UPDATE Wednesday , 28 June, 2017 FBMKLCI: 1,779.45 Sector: Construction A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 \ Gamuda Berhad TP: RM6.00(+10.1%) Last traded: RM5.45 Growth to be Driven by Construction Segment Buy THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Ooi Beng Hooi +603-2167-9612 benghooi@ta.com.my Review Gamuda’s 9MFY17 net profit of RM499.3mn came in below expectations, accounting for 65.1% and 69.7% of our and street’s FY17 full-year estimates. The variance was due mainly to lower-than-expected contributions from JVs and associates. YoY, 9MFY17 net profit improved by only 5.3% to RM499.3mn despite revenue jumped as much as 45.8% to RM2,198.2mn. This was mainly due to decline in property PBT margin by 13.1%pts to 14.4% and decrease in JV contribution. Note that the construction division chalked up a decent revenue and PBT growth of 41.9% and 64.9% for 9MFY7 driven by acceleration of work progress for MRT line 2. Meanwhile, the property segment recorded higher revenue growth of 75.7% but a decline in PBT. It was weighted down by overseas property projects, which generally carry lower margins as compared with local ones, and high upfront costs for new townships. The QoQ performance was flattish. The quarterly net profit inched up 2.8% to RM170.9mn as the revenue was marginally lower at RM839.5mn. PBT for all 3 core segments, i.e. construction, property and concessions improved marginally by between 0.3% to 2.6%. As expected, a second interim dividend of 6 sen/share was declared, bringing the YTD dividend to 12sen/share (FY16: 12 sen/share). Share Information Bloomberg Code Bursa Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating Net Debt / Equity (%) CFPS (sen) Price / CFPS (x) ROA (%) NTA/Share (RM) Price/NTA (x) Construction The construction works for MRT line 1 have been completed and the entire line will be operational on 17 July 2017. Meanwhile, MRT line 2 has achieved 6% financial completion. It is currently focusing on preliminary and foundation works. Approval for MRT line 3 is expected by mid-2018, followed by project rollout by late 2018 or early 2019. vs TA vs Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth Exhibit 1: Outstanding Order Book MRT Line 2 (Underground) Pan Borneo Highway (65%) MRT Line 1 (Underground) Total Completion Status % now completion date 6 mid-2022 3 early 2021 100 mid-2017 Source: Gamuda, TA Research Page 1 of 4 FY17 45.2 30.5 17.9 4.8 3.0 1.8 FY18 46.3 (4.1) (134.2) 5.6 3.2 1.7 % of FY 65.1 69.7 Below Below GAMUDA 1.5 3.8 13.5 13.5 FBM KLCI 0.4 1.9 10.0 8.9 (12-Mth) Share Price relative to the FBM KLCI Gamuda’s outstanding order book stood at RM8.2bn (see Exhibit 1). Balance Works (RMbn) 7.2 1.0 0.0 8.2 FY17 FY18 (11.1) (4.2) 682.6 847.2 698.0 784.6 97.8 108.0 Sell (Upgraded) Financial Indicators Scorecard Major Projects GAM MK GAMUDA 5398 Main Market 2442.1 13309.6 1.00 5.48/4.65 4426.7 64.60 1.05 EPF - 11.33 KWAP - 5.20 Briefing highlights As for the Penang Transport Master Plan, submissions to SPAD and DoE for approvals have been completed. Validity of Letter of Award for the PDP role was extended to August 2017. www.taonline.com.my Source: Bloomberg
17. TA Securities 28-Jun-17 A Member of the TA Group Gamuda is targeting order book replenishment of RM10bn for CY17 and CY18 , mainly from rail-related mega projects. These include East Coast Rail Line, LRT line 3, MRT line 3 and KL-Singapore High Speed Rail. Property Development The group recorded strong property sales of RM630m in 3QFY17, bringing YTD property sales to RM1.6bn. Unbilled sales remains at RM2.0bn from a quarter ago. The management estimated FY17 sales to hit RM2.4bn to RM2.5bn, exceeding its FY17 sales target of RM2.1bn, boosted by the sales at Gamuda Gardens. FY18 sales target is likely to be raised to RM3bn. The management explained that the drop in property margin was due to less favourable sales mix as overseas projects contributed to lower margins, as well as high upfront costs for new townships. The management guided that in the near term, the property margin is expected to remain range bound as recent property sales are dominated by overseas property projects. Exhibit 2: Projected Property Sales Project Area Unsold (acre) Malaysia Kota Kemuning (50%) Valencia Bandar Botanic Horizon Hills (50%) Jade Hills Madge Mansions The Robertson HighPark Residences Serai Kundang Tanjong 12 KK257 Bukit Bantayan, Sabah Total (Malaysia) Overseas Gamuda City (Hanoi) Celadon City (HCMC) Chapel Street (Melbourne) Toa Payoh (Singapore, 50%) Total TOTAL Source: Gamuda, TA Research Remaining GDV (RMmn) Actual Sales FY16 (RMmn) Projected Sales FY17 (RMmn) 10 0 30 400 180 0 0 5 820 90 1530 257 18 3335 100 20 2070 3950 1300 80 500 570 6900 600 19000 3000 820 38910 0 0 50 240 40 30 30 60 0 0 0 0 70 520 0 0 60 250 50 50 50 60 150 50 0 0 70 790 400 170 0.4 10000 5000 350 490 140 70 450 200 80 3 2000 830 600 573 17350 1540 1330 3908 56260 2050 2120 Concessions Disposal of SPLASH has been delayed. We opine that the deal is more likely to be concluded post GE14. Page 2 of 4
18. TA Securities 28-Jun-17 A Member of the TA Group Forecast Earnings forecasts for FY17 /18/19 were lowered by 11.1%/4.2%/3.0% respectively after downgrading JVs and Associates’ contribution, and raising property sales assumptions for FY17 and FY18 from RM1.8bn to RM2.5bn. Outlook The outstanding construction order book stood at RM8.2bn. Going forward, we expect stronger contribution from the construction division as construction activities at MRT line 2 and Pan Borneo Highway package accelerate. While the property margin was dragged by lower margin for overseas property projects, strong property sales forecasted for FY17 and FY18 could see earnings recovery in future quarters. Valuation We raise the construction target PE multiple from 18x to 20x as we see plenty of opportunities in the construction industry for the next 2 to 3 years, especially for GAMUDA, a leading local contractor in rail projects. We have not factored in any new construction job win for FY17 to FY19 in our earnings model. We roll forward our valuation base year to CY18. All in, we raise GAMUDA’s target price from RM5.49 to RM6.00, based on 20xCY18 construction earnings, 14xCY18 property earnings and 16xCY18 earnings from toll road and water concessions. Given the total potential return of 12.3%, we upgrade GAMUDA from SELL to BUY. Earnings Summary FYE 31 Jul Revenue EBITDA EBITDA margin PBT Adj PBT Net profit Adj net profit Adj EPS EPS Growth (Core) PER GDPS Div Yield EV/EBITDA ROE (%) (sen) (%) (x) (sen) (%) (x) (%) 2015 2399.9 704.6 29.4 858.2 858.2 682.1 682.1 28.9 (6.6) 18.8 12.0 2.2 14.1 11.6 Page 3 of 4 2016 2121.9 615.7 29.0 780.7 780.7 626.1 626.1 26.0 (10.2) 21.0 12.0 2.2 14.9 9.5 2017F 3081.8 752.8 24.4 870.3 870.3 682.6 682.6 27.9 7.2 19.6 12.0 2.2 13.1 9.6 2018F 3899.3 875.9 22.5 1078.1 1078.1 847.2 847.2 34.2 22.6 15.9 12.0 2.2 10.9 11.0 2019F 4117.3 906.7 22.0 1116.3 1116.3 875.7 875.7 34.9 2.1 15.6 12.0 2.2 11.1 10.4
19. TA Securities 28-Jun-17 A Member of the TA Group 3QFY17 Results Analysis YE 31 Jul (RMmn) Turnover - Construction - Property - Water and toll 3Q16 467.3 203.3 144.8 119.3 2Q17 853.9 400.6 332.1 121.2 3Q17 839.5 355.7 370.8 113.0 QoQ (1.7) (11.2) 11.7 (6.8) YoY 79.6 75.0 156.1 (5.3) 9MFY16 1507.5 671.3 504.1 332.2 9MFY17 2198.2 952.6 885.9 359.7 YoY 45.8 41.9 75.7 8.3 EBIT Finance costs JV Associates Adj PBT - Construction - Property - Water and toll 106.7 (29.7) 50.8 57.9 185.8 37.0 39.7 109.1 168.2 (29.1) 26.1 53.4 218.6 71.7 43.2 103.8 170.3 (31.3) 25.7 56.6 221.3 73.5 43.3 104.4 1.3 7.5 (1.6) 5.9 1.2 2.6 0.3 0.6 59.6 5.3 (49.5) (2.4) 19.1 99.0 9.1 (4.3) 325.4 (89.1) 172.9 161.3 570.5 119.2 138.4 312.8 472.2 (86.8) 95.0 165.2 645.6 196.6 127.4 321.6 45.1 (2.5) (45.1) 2.4 13.1 64.9 (8.0) 2.8 Taxation MI Reported Net Profit Core Net Profit Core EPS GDPS (sen) (sen) (sen) (20.7) 12.5 152.7 152.7 6.3 6.0 (39.4) 12.9 166.3 166.3 6.9 0.0 (42.8) 7.5 170.9 170.9 7.0 6.0 8.6 (41.8) 2.8 2.8 2.6 na 107.4 (39.6) 11.9 11.9 11.0 0.0 (62.5) 34.0 474.0 474.0 19.7 12.0 (112.9) 33.3 499.3 499.3 20.6 12.0 80.6 (1.9) 5.3 5.3 4.6 0.0 (%) (%) (%) (%) 22.8 39.8 32.7 11.1 19.7 25.6 19.5 18.0 20.3 26.4 20.4 19.4 % pts 0.6 0.8 0.9 1.3 % pts (2.5) (13.4) (12.3) 8.2 21.6 37.8 31.4 11.0 21.5 29.4 22.7 17.5 % pts (0.1) (8.5) (8.7) 6.5 EBIT Margin Core PBT Margin Core Net Margin Tax Rate 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 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 4 of 4
20. INITIATE COVERAGE TA Securities Wednesday , June 28, 2017 FBM KLCI: 1,779.45 Sector: Oil & Gas A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM9.10 (+14%) Lotte Chemical Titan Holding MAIN Market Listing Coming Of the Titan BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kylie Chan Sze Zan +603 2167 9601 kyliechan@ta.com.my EXECUTIVE SUMMARY We initiate coverage on Lotte Chemical Titan Holding (LCT) with a Buy recommendation and TP of RM9.10 based on 7x FY18 EV/EBITDA (implied FY18 P/E: 13.6x). Our valuation translates to a discount of 14%26% versus LCT’s peers. We like LCT for its multi-year earnings growth (2015-18 3-year CAGR: 56%) from capacity expansion in 2017-19. We are also positive on LCT’s diversification into US shale gas feedstock and new western markets. Beyond 2019, LCT’s growth story will continue with its new petrochemical complex at the high growth Indonesian market. Furthermore, on the back of subdued oil price, naphtha crackers like LCT are experiencing a margin upcycle and resilient demand for petrochemicals. LCT is an integrated naphtha-based producer of olefins and polyolefins. The bulk of LCT’s revenue (80%) is derived from polyolefins, namely polyethylene (PE) and polypropylene (PP). The group has sizeable capacity at its key markets of Malaysia and Indonesia (67% of sales):- 1) largest integrated petrochemical producer in Malaysia, 2) 4th largest polyolefin producer in SEA, and 3) largest PE producer in Indonesia. LCT is able to leverage on its parent, Lotte Chemicals Corporation’s (LCC) operational expertise, technological prowess, and proven track record. LCC is one of Asia’s leading petrochemical producers, and is listed at Korea (market cap: USD11bn). LCT has ambitious expansion plans that result in multi-year capacity and earnings growth (2015-18 3-year CAGR: 56%). They comprise:- 1) 2017: Mini cracker expansion to improve yield by 397k tpa (cracking capacity: +41%) , 2) 2018: 200k tpa PP plant (PP capacity: +45%), 3) 2019 (US Shale Gas): Ethane cracker (net cracking capacity: +28%) and MEG Plant (700k tpa), and 4) 2023: Integrated Petroleum Facility (IPF), comprising a naphtha cracker (cracking capacity: +28%) at Indonesia and new downstream plants. The new US Shale Gas cracker enables LCT to expand its markets to Latin America, Europe, and China. Additionally, LCT is able to diversify into gas feedstock, which translates to more stable earnings that are less sensitive to oil price fluctuations. The new cracker at Indonesia will provide a margin boost, as it enables full geographical integration for LCT’s existing Indonesian plants. In addition, LCT will announce final development plans for new downstream plants at IPF by early-2018. Therefore, LCT’s expansion has legs to run beyond what was unveiled for 2017-22. We are positive on IPF, given robust demand growth (2017-27 CAGR: 4.9%) for polyolefins at Indonesia. Nexant expects Indonesia to remain as a major net importer of these products in 2017-27. LCT will continue to enjoy super normal product spreads in this current margin upcycle for naphtha crackers. This is underpinned by our outlook of subdued oil price in the next 2-3 years, which implies cheap naphtha feedstock and affordable petrochemical prices. In turn, this results in superior margins for LCT, and resilient demand for petrochemicals. Page 1 of 19 www.taonline.com.my Share Information Listing Enlarged Share Capital (mn) Market Cap (RM mn) Issue Price (RM) Oversubscription rate Estimated free float (%) Tentative Listing Date MAIN Market 2,468 19,746 8.00 NA 30 11 Jul 2017 Timetable Event Opening of the IPO Closing of the IPO Balloting of Applications Allotment of Shares Listing 16 Jun 2017 28 Jun 2017 3 Jul 2017 7 Jul 2017 11 Jul 2017 Financial Indicators Net Debt/Equity (x) ROA (%) ROE (%) NTA/Share (RM) P/NTA (x) FY17 Net Cash 8.9 9.8 5.9 1.4 FY18 Net Cash 9.9 10.7 6.2 1.3 RM mn 620 220 4,931 153 5,923.9 % 10 4 83 3 100 Utilisation of Proceeds New Propylene Plant Cracker Extension Integrated Petrochem Facility Listing Expenses TOTAL