of  

or
Sign in to continue reading...

Bursa Malaysia Daily Market Report - 4 December

Mohd Noordin
By Mohd Noordin
6 years ago
Bursa Malaysia Daily Market Report - 4 December

Ard, Islam, Islamic banking, Mal, Provision, Sales


Create FREE account or Login to add your comment
Comments (0)


Transcription

  1. Monday , 04 December, 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 Be rh a d : 9 M 1 7 Da m p e n e d b y H ig h e r O p e ra t in g E x p e n se s 2 . A l l ia n c e B a n k M a la ys i a Be r h a d : So f te r 2 Q 1 8 R e su l ts b u t W i th in E x p e c ta tio n s ( 3 0 N o v 2017) 3 . Ba n k i n g S e c t o r : L o a n G ro w th E a se d in O c to b e r 4 . Bi n a P u r i H o ld i n g s Be rh a d : A D i sa p p o in t in g Q u a rt e r 5 . C a rls b e rg ( M ) Be r h a d : E x p e c t in g Se a so n a lly S t r o n g e r 4 Q E a rn in g s 6 . H o n g L e o n g Ba n k Be r h a d : Po s it iv e S ta rt t o th e F Y 7 . I RIS C o r p o ra t io n Be r h a d : E a rly D a y s , Bu t E n c o u ra g in g 8 . M a la ya n B a n k i n g Be rh a d : Be t te r 3 Q o n L o w e r C re d it C h a rg e 9 . O i l & G a s S e c t o r : O PE C & N O PE C C u t s U n t il e n d- 2 0 1 8 1 0 . P e ra k T ra n s it Be rh a d : F u n d in g f o r Gro w th C a p e x a n d Ge a rin g 1 1 . S t a r M e d ia G ro u p Be r h a d : F in d in g f o r th e R ig h t B ri de Te ch n ic al R ep o rt s 1 We ek ly Te ch n i c a l St o ck P i cks 2 We ek ly A ce M a r k e t S t o c k W at ch 3 We ek ly S m al l C ap St o ck W at ch 4 We ek ly St o ck S cre en 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 – 2032 5048 www.ta.com.my
  2. Daily Market Commentary Monday , 04 December 2017 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (30.11.2017) (mil) Main Market 1,827.7 Warrants 287.5 ACE Market 348.2 Bond 5.9 ETF 0.4 LEAP 0.0 Total 2,469.7 Off Market 71.7 Volume +/-chg (RMmn) 447.3 5,938.1 80.5 26.4 -16.7 63.4 1.7 0.8 0.04 0.4 0.00 0.0 6,029.0 -122.0 239.4 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP December 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 1,717.86 12,408.31 16,787.88 1,721.50 24,231.59 6,847.59 7,300.49 22,819.03 2,475.41 29,074.24 3,449.54 1,699.65 5,952.14 3,317.62 1,916.80 5,989.76 BIMB 27.2 JOHAN 9.1 JAG 6.2 TENAGA 6.0 CUSCAPI-WA 5.9 CUSCAPI 5.6 MYEG 5.0 HSSEB 3.2 PWROOT 2.0 (RM) @ @ @ @ @ @ @ @ @ -2.52 8.81 -75.27 6.00 -40.76 -26.39 -26.18 94.07 -0.96 -103.11 16.00 2.26 -109.23 0.43 14.95 19.86 % chg % YTD chg -0.15 0.07 -0.45 0.35 4.64 8.21 14.08 5.26 -0.17 -0.38 -0.36 0.41 -0.04 -0.35 0.47 0.13 -1.80 0.01 0.79 0.33 4.40 0.28 0.11 15.54 0.20 0.46 2.05 1.20 2.00 Exchange Rate USD/MYR 4.0916 0.0001 USD/JPY 112.35 -0.0300 EUR/USD 1.189 0.0058 Counter MAYBANK TENAGA CIMB AXIATA MAXIS DIGI MISC IOICORP KLK HAPSENG 99,573 87,596 55,815 48,225 46,317 36,076 31,470 28,026 25,964 24,075 0.05 0.06 0.11 0.01 0.03 0.04 0.04 0.02 0.02 0.19 News Bites • • • • Vol. (mn) 62.09 23.42 47.42 10.12 23.92 12.23 5.51 11.03 1.52 2.41 Commodities Futures Palm Oil (RM/mt) 2,604.00 41.00 Crude Oil ($/Barrel) 58.29 0.87 Gold ($/tr.oz.) 1,283.10 8.80 Important Dates On the index's downside, crucial retracement supports remains at 1,705 (50%FR) and 1,683 (38.2%FR), where the index may trough ahead of oversold rebound. On the immediate upside, overhead resistance rests at 1,727 (61.8%FR), followed by the 30-day and 50-day moving averages at 1,733 and 1,743 respectively, then 1,750, next will be 1,753, the 200-day moving average. • 22.61 27.20 2.21 19.38 22.15 32.15 19.74 10.16 12.37 6.89 -2.66 5.72 Mkt Cap. Chg (RM’mn) (RM) With technical momentum and trend indicators for the FBM KLCI staying weak given last week's shaky rebound, save for a mild buy signal on the daily MACD, more choppy trade is expected in the first trading week of December. Buying momentum and trading sentiment must improve significantly before a more sustainable rebound can emerge. Meantime, construction related shares like Gamuda, MRCB, Sunway Construction and WCT Holdings should recover further on rotational buying interest, same goes for oil & gas related counters such as Bumi Armada, Dialog, Sapura Energy and Wah Seong which should out-perform the broader market due to the resilient global oil prices. Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) Review & Outlook Value Value/ +/-chg Volume Up Down 3236.8 3.25 250 323 -0.3 0.09 99 101 -6.2 0.18 16 69 0.0 0.13 1 4 0.03 1.10 1 3 0.00 0.40 0 0 2.44 367 500 49.6 3.34 • • • • • • • • • • • Tenaga Nasional Bhd received a letter of acceptance of offer from the Energy Commission to develop a 30MWa.c. large scale solar photovoltaic plant at Bukit Selambau, Kedah. Hong Leong Bank Bhd received the approval of Bank Negara Malaysia to enter into an agreement with Tenpay Payment Technology Co Ltd, a subsidiary of Tencent, to provide payment services via WeChat Pay. Sime Darby Bhd's dividend policy of not less than 50% of PATMI will remain the same in its pure play form as when it was a conglomerate, according to group chief executive Jeffri Salim Davidson. The Malaysian Aviation Commission announced the completion of a full equilisation of the passenger service charges to be implemented across KLIA, KLIA2 and all other airports in Malaysia. Priceworth International Bhd may pay RM30mn, or 11.5%, less than the RM260mn purchase consideration for Forest Management Unit No 5, under a variation to the sale and purchase agreement. Nestle (M) Bhd and Press Metal Bhd will be added to the FBM KLCI list of 30 component stocks effective Dec 18 while, British American Tobacco (M) Bhd and IJM Corp Bhd will be dropped. Malayan Banking Bhd reported a 13% rise in 3QFY17 net profit at RM2.0bn, from RM1.8bn a year earlier, on higher net interest and Islamic Banking income. Hengyuan Refining Company Bhd, turned around in 3QFY17 with a net profit of RM361.8mn, as opposed to a net loss of RM80.9mn a year ago, as it enjoyed better refining margins, coupled with the gradual recovery of traded crude prices. Iskandar Waterfront City Bhd recorded a second consecutive profitable quarter with a net profit of RM89.6mn booked in 3QFY17, compared to a net loss of RM3.6mn last year, thanks to gain from land sale in Johor. Carlsberg Brewery Malaysia Bhd saw a slight decline of 2% YoY to RM42.9mn in net profit in 3QFY17 from RM43.6mn last year, as earnings were dragged down by trade offer adjustments in Singapore. Alliance Bank Malaysia Bhd's net profit for 2QFY18 slipped 7% YoY to RM122.8mn as operating expenses climbed. Hong Leong Financial Group Bhd's net profit in 1QFY18 grew 17.9% YoY to RM455.3mn, mainly due to higher contribution from the commercial banking and insurance divisions. Icon Offshore Bhd has appointed Captain Hassan Ali as its acting chief executive officer. Malaysia's producer price index for local production climbed 4.7% YoY in October, slower than the 6.0% rise in September. China's manufacturing purchasing managers' index came in at 51.8 in November, beating a median forecast of 51.4 from economists polled by Reuters. The Senate passed sweeping revisions to the U.S. tax code that included about $1.4tn in tax cuts, would lower the corporate rate to 20% from 35%, reshape international business tax rules and temporarily lower individual taxes. ASIABIO - 10:5 Rights Issue - RI of up to 1,163.2m ICPS together with up to 116.3m free detachable warrants. 10 ICPS together with 1 free warrant for every 5 existing shares held, at an issue price of RM0.08 per ICPS. LISTING ON: 11/12/2017. 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. 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 , December 04, 2017 FBMKLCI: 1,717.86 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks Kaladher Govindan Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my M a r k e t V i e w FBMKLCI Oversold but Market Could Remain Choppy The blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended its last four-day trading week of November in choppy trade near eight-month lows, as concerns over developments in China’s bond market, the U.S. Senate debate and vote on tax reforms offset fund buying encouraged by the firm ringgit, which rose to the strongest level since last September. Late selling of selected blue-chip heavyweights reversed a late afternoon recovery ahead of the long three-day weekend break. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) added 0.63 of a point to 1,717.86, as falls on Petronas Gas (-88sen), BAT (-62sen) and Public Bank (-42sen) overshadowed gains on Tenaga (+64sen), Petronas Dagangan (+60sen) and Sime Darby (+31sen). Average daily traded volume and value was at 1.96 billion shares worth RM3.17 billion, compared to the 2.08 billion shares and RM2.3 billion respectively the previous week, as trading interest picked up in higher-priced heavyweight blue chips. Foreigners have turned net buyers again and Ringgit sustained its strength last week despite the lastminute selling on last Thursday, ahead of the long three-day weekend break. Favourable news from OPEC and its allies to extend crude oil production cap by another nine months until December 2018 could sustain the foreign interest and ringgit appreciation, amid a few other related positive news. It was encouraging to see Nigeria and Libya joining the supply cap for the first time. OPEC has decided to cap the combined output of Nigeria and Libya at below 2.8 million barrels per day (bpd), which mirrors their current production level of 1.8mn and 1mn barrels per day respectively. Technically, both countries can produce 2.3 million and 1.6 million barrels per day respectively in 2018, if not for their domestic issues. On a related note, the researchers at Massachusetts Institute of Technology declared last week that the US Energy Information Administration (EIA) has vastly overstated future production forecasts. Based on a study at North Dakota’s Bakken shale deposit, they refuted EIA’s claim that better technology has been behind nearly all the recent output gains, and will be continue to be the reason for production gains in the future. Instead, their research concluded that it was driven by focus on sweet spots where oil and gas are easiest to extract. Thus, they asserted the EIA’s assumption of 10% production growth per year at new fields is misleading compared to their finding of 6.5%. Indication of slower than expected supply growth from US shale producers is definitely a big plus for oil prices, especially Brent that could surpass USD70 per barrel in 1Q18. Separately, a few other developments in the US will continue to exert their influence on global financial markets. The US faces a partial government shutdown after money runs out on December 8 if Congress can’t agree on a spending bill by then. As it requires a supermajority of 60 votes to pass a funding bill in the Senate, and Republicans hold just 52 seats, the republicans may push for a stop-gap bill to prevent a shutdown before they are forced to give concessions to Democrat to agree on the funding bill before December 22. Page 1 of 11
  4. 4-Dec-17 Meanwhile , the US non-farm payroll data that will be out this Friday is expected to support a rate hike decision by the Fed in its next week’s meeting. With jobless rate at 4.1% (at full employment), latest core PCE at 1.4% YoY and wage growth remain resilient at 0.4%, a potential hike next week is a foregone conclusion. Locally, the trade data for October will be released this Wednesday. Consensus expectations are for it to be stronger than the previous month with exports and imports growing by 19% and 19.7% respectively, resulting in a higher trade balance of RM10.1bn versus RM8.6bn in September. The numbers are not expected to disappoint based on strong October trade data at Malaysia’s key trading partners, China and Singapore. Besides, October data could reflect higher demand ahead of Christmas as well. Higher trade balance augurs well for Ringgit’s strength due to the central bank’s requirement for exporters holding earnings in foreign currency to convert 75% of it to ringgit. 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, December 04, 2017, the HOD, 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 – 2032 5048 www.ta.com.my Page 2 of 11
  5. 4-Dec-17 N e w s I n B r i e f Corporate The Malaysian Aviation Commission (MAVCOM) announced the completion of a full equilisation of the passenger service charges (PSC) to be implemented across KLIA, KLIA2 and all other airports in Malaysia. Effective 1 January 2018, the PSC rate for international destinations beyond ASEAN at KLIA2 will be RM73, being the same rate as those at other airports in Malaysia. All other PSC rates at KLIA2 and other airports remain unchanged. Comment: We are neutral on the news as the adjustment in PSC to RM73 (from RM50) for non-Asean destinations is expected to have a minimal impact on both Malaysia Airports Holdings Berhad (MAHB) and AirAsia Berhad. Note that any additional PSC collections to MAHB will be equilised by MARCS PSC, which is a form of compensation from the government to MAHB for the difference in actual and benchmark PSC. Also, the impact on AirAsia is negligible as the airline offers mainly domestic flights and flights to ASEAN countries. No change to our earnings estimates. Maintain Sell on MAHB (TP: RM8.47) and Buy on AirAsia (TP: RM3.83). Tenaga Nasional Bhd received a letter of acceptance of offer from the Energy Commission to develop a 30MWa.c. large scale solar photovoltaic plant at Bukit Selambau, Kedah. It won the contract from a competitive bid process. (Source: Bernama) Hong Leong Bank Bhd received the approval of Bank Negara Malaysia to enter into an agreement with Tenpay Payment Technology Co Ltd, a subsidiary of Tencent, to provide payment services via WeChat Pay. This collaboration will allow Chinese tourists to continue using their WeChat accounts when visiting Malaysia. (Source: Bernama) Sime Darby Bhd’s dividend policy will remain the same in its pure play form as when it was a conglomerate, according to group chief executive Jeffri Salim Davidson. The dividend policy of Sime Darby before was a payout ratio of not less than 50% of PATMI. (Source: The Edge) Priceworth International Bhd may pay RM30mn, or 11.5%, less than the RM260mn purchase consideration for Forest Management Unit No 5, under a variation to the sale and purchase agreement. The discount is part of a cash option granted by the vendor in consideration of Priceworth agreeing to make an advance payment. (Source: Bursa Malaysia) Nestle (M) Bhd and Press Metal Bhd, both of which had seen their share prices hitting record highs recently, will be added to the FBM KLCI list of 30 component stocks, following a semi-annual review on Bursa Malaysia’s index series. Meanwhile, British American Tobacco (M) Bhd and IJM Corp Bhd will be dropped from the benchmark index effective Dec 18. (Source: The Edge) Malayan Banking Bhd reported a 13% rise in 3QFY17 net profit at RM2.0bn, from RM1.8bn a year earlier, on higher net interest and Islamic Banking income. The group's higher net earned insurance premiums also contributed to Maybank's net profit rise. For 9MFY17, net profit rose to RM5.4bn, from RM4.4bn a year earlier. (Source: Bursa Malaysia) Hengyuan Refining Company Bhd, turned around in 3QFY17 with a net profit of RM361.8mn, as opposed to a net loss of RM80.9mn a year ago, as it enjoyed better refining margins, coupled with the gradual recovery of traded crude prices. The stronger ringgit against the USD during the quarter under review also helped to boost its earnings. Its net profit in 9MFY17 climbed 5.6 times YoY to RM725.7mn from RM127.5mn. (Source: Bursa Malaysia) Page 3 of 11
  6. 4-Dec-17 Iskandar Waterfront City Bhd (IWCity) recorded a second consecutive profitable quarter with a net profit of RM89.6mn booked in 3QFY17, compared to a net loss of RM3.6mn last year, thanks to gain from land sale in Johor. For 9MFY17, IWCity reported a net profit of RM33.3mn, against a net loss of RM12.2mn a year ago. (Source: Bursa Malaysia) Carlsberg Brewery Malaysia Bhd saw a slight decline of 2% YoY to RM42.9mn in net profit in 3QFY17 from RM43.6mn last year, as earnings were dragged down by trade offer adjustments in Singapore. As for 9MFY17, Carlsberg posted an after-tax profit of RM171.2mn, 8% higher YoY from RM157.9mn in the same period a year ago. (Source: Bursa Malaysia) DRB-Hicom Bhd returned to profitability after two quarters of losses, posting a net profit of RM736.6mn 2QFY18, compared with a net loss of RM309.6mn a year ago. The diversified conglomerate recorded a net profit of RM566.9mn in the cumulative six months, against a net loss of RM478.9mn in 6MFY17. (Source: Bursa Malaysia) BIMB Holdings Bhd declared an interim single tier dividend of 14 sen per share after it announced net profit of RM183.4mn, up 30.5% from RM140.6mn a year ago. The improved earnings were due to net write-back of allowances for impairment against a net allowance charged for impairment in the corresponding quarter in FY16. For 9MFY17 net profit grew 12.1% YoY to RM470.2mn from RM419.6mn in 9MFY16. (Source: Bursa Malaysia) Alliance Bank Malaysia Bhd's net profit for 2QFY18 slipped 7% YoY to RM122.8mn from RM132.6mn, as operating expenses climbed. For 1HFY18, Alliance Bank's net profit dipped 3% YoY to RM257.8mn from RM265.1mn. (Source: Bursa Malaysia) Hong Leong Financial Group Bhd's net profit in 1QFY18 grew 17.9% YoY to RM455.3mn from RM386.2mn last year, mainly due to higher contribution from the commercial banking and insurance divisions. (Source: Bursa Malaysia) Tropicana Corp Bhd's net profit rose 2% to RM35.5mn in 3QFY17 from RM34.8mn a year ago, mainly due to cost savings and higher progress billings from its ongoing projects in the Klang Valley and northern region. Tropicana declared a first interim dividend of 2.0 sen per share for FY17. For 9MFY17, the group's net profit expanded 45% to RM120.9mn from RM83.3mn a year ago. (Source: Bursa Malaysia) Iris Corp Bhd’s net loss 2QFY18 contracted by 31% to RM14.7mn from RM21.3mn a year ago, as the group recorded a share of profits of associates, compared with a share of losses in 2QFY17. For 1HFY18, Iris recorded a net loss of RM9.5mn versus a net loss of RM25.2mn in the same period of FY17. (Source: Bursa Malaysia) Vivocom International Holdings Bhd's net profit halved YoY to RM6.3mn in 3QFY17 from RM12.2mn, as higher cost offset revenue gains. The group's net profit for 9MFY17 weakened 68% YoY to RM17.2mn from RM53.0mn. (Source: Bursa Malaysia) Lafarge Malaysia Bhd posted its third straight quarter in the red blaming weak demand and stiff competition as it recorded a net loss of RM42.0mn compared to a net profit of RM3.7mn in 3QFY17. For 9MFY17, Lafarge saw a net loss of RM135.0mn, compared to a net profit of RM42.7mn a year ago. (Source: Bursa Malaysia) Sarawak Cable Bhd slipped into the red in 3QFY17, dragged down by higher expenses from its transmission lines construction segment. It reported a net loss of RM38.7mn compared with a net profit of RM7.2mn a year ago. For 9MFY17, the group posted a net loss of RM32.5mn versus a net profit of RM15.8mn a year ago, as projects in hand for its transmission lines construction segment are more than 90% completed. (Source: Bursa Malaysia) Page 4 of 11
  7. 4-Dec-17 Utusan Melayu (Malaysia) Bhd, which publishes Utusan Malaysia, Mingguan Malaysia and Kosmo, posted a net profit of RM31.5mn in 3QFY17 compared with a net loss of RM17.6mn a year ago mainly due to the recognition of gain on disposal of land of RM31.5mn in the current quarter under review. For 9MFY17, the group narrowed its net loss to RM2.1mn from RM60.1mn a year ago. (Source: Bursa Malaysia) UEM Edgenta Bhd chairman Amir Hamzah Azizan has joined UEM Group Bhd's board as a non-executive director effective Dec 1. Amir Hamzah has 27 years of industry and international experience as well as extensive knowledge of the oil and gas industry, and marine logistics sector. (Source: Bursa Malaysia) Icon Offshore Bhd has appointed Captain Hassan Ali as its acting chief executive officer effective today. Hassan has over 39 years of experience in the marine transportation industry. (Source: Bursa Malaysia) Page 5 of 11
  8. 4-Dec-17 N e w s I n B r i e f Economy Asia Mustapa : Strong Economy Attracts Investors Malaysia’s strong economic and stable political environment will strengthen investor’s confidence and continue to attract foreign investments into the country, said Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed. “The foreign investors have identified the Malaysian government’s pro-investor and pro-business policies, among them, the National Transformation 2050, 11th Malaysia Plan and the Economic Transformation Programme”. Malaysia, under the leadership of Prime Minister Datuk Seri Najib Tun Razak, has succeeded in creating economic and political stability, which the opposition does not have,” he told the media after attending Persidangan Kepimpinan Mahasiswa Nasional (Pemanas). (The Star) Malaysia PPI Inflation Eases Further in October Malaysia's producer price inflation eased for the third straight month October, figures from the Department of Statistics showed. The producer price index for local production climbed 4.7% year-over-year in October, slower than the 6.0% rise in September. The price index for mining sector grew the most by 19.6% annually in October, followed by agriculture, forestry and fishing sector with 4.3% increase. On a monthly basis, producer prices dropped 0.6% from September, when it rose by 1.1%. (DOSM) China Manufacturing Gauge Outperforms as Construction Activity Climbs China’s manufacturing sector picked up unexpectedly in November as construction growth rose markedly, according to official figures. The manufacturing purchasing managers’ index published by China’s National Bureau of Statistics came in at 51.8 in November, climbing further above the 50-point line separating growth from contraction and easily besting a median forecast of 51.4 from economists polled by Reuters. The gauge had dipped to 51.6 in October. A sub-index for output saw a jump of nearly one point to 54.3 in November, while new orders rose 0.7 points to 53.6, thanks in part to a rise of export order growth, based on a 0.7-point rise for that sub-index to 50.8. However, the pace of jobs shedding intensified slightly, according to a sub-index reading o f48.4. Meanwhile the official PMI for non-manufacturing activity rose half a point to 54.8, partially recovering from an October dip. A key sub-index for the services sector saw a marginal rise of 0.1 points to 53.6, while that for the construction industry climbed a full 2.9 points to 61.4. (Financial Times) Japan Industrial Production Picks Up in October Japan’s industrial production returned to growth in October but grew at a slower pace than forecast. Industrial production rose 0.5% month on month in October, according to preliminary data from the Ministry of Economy, Trade and Industry. This was below a median forecast compiled by Reuters of 1.9%. Industrial production fell 1 per cent month on month in September. Industries that contributed to growth during the period included electrical machinery, transport equipment and general-purpose production and business machinery, the ministry said. In year-on-year terms, production rose 5.9%. A survey conducted by the ministry forecasts production will increase in November and December. (Financial Times) Japan Housing Starts Fall More than Expected in October Japan's housing starts declined for the fourth straight month in October, and at a fasterthan-expected pace, data from the Ministry of Land, Infrastructure, Transport and Tourism showed. Housing starts fell 4.8% year-on-year in October, bigger than September's 2.9% decrease. That was also above the 2.8% drop economists had forecast. Annualized housing starts declined to 933,000 from 952,000 in the previous month. Data also showed that construction orders received by big 50 contractors recovered strongly by 6.7% yearly in October, reversing a 11.6% plunge in September. It was the first increase in three months. (RTT News) Page 6 of 11
  9. 4-Dec-17 Japan Consumer Prices , Household Spending Raise Doubts About Inflation Japan’s core consumer prices rose in October from a year earlier, marking the 10th straight month of gains, but a narrower measure that excludes energy showed inflation has not accelerated for three consecutive months. The nationwide core consumer price index, which includes oil products but excludes volatile fresh food prices, rose 0.8% in October from a year ago, due to gains in gasoline, kerosene, and healthcare costs. Stripping away the effect of fresh food and energy, so-called core-core consumer prices rose 0.2% in October from a year ago. Household spending was unchanged in October from a year ago as increased spending on mobile phone plans offset a decline in spending on travel. Compared with the previous month, household spending fell 2.0%, more than the median estimate for a 1.4% decline. Japan’s jobless rate held steady at 2.8% in October and the availability of jobs reached the highest in almost 44 years, separate data showed. Separately, capital expenditure rose strongly in the third quarter, suggesting an upward revision to gross domestic product growth. While buoyant capital expenditure numbers align with policymakers’ views that economic momentum is firm, the consumer price and household spending numbers reinforce wider expectations that the Bank of Japan will struggle to meet its 2.0% inflation target. Capital expenditure rose 4.2% in July-September, faster than a 1.5% gain in April-June, another report from the finance ministry showed. (Reuters) Japan Manufacturing PMI Points to Strongest Growth in 44 Months Japan’s manufacturing sector expanded at a solid rate again in November with conditions in the market showing the strongest improvement since March 2014, according to an industry gauge. The Nikkei-Market Japan manufacturing purchasing managers’ index rose to 53.8 in November from 52.8 in October and remaining well above the 50-point level separating expansion and contraction. Underpinned by strong demand from overseas, new orders placed with Japanese manufacturers increased at the most marked pace in 44 months in November. The rate of job creation also picked up, rising to a six-month high, and business optimism also strengthened from October’s 11 month low. However, pressure on supply chains continued to build, with higher volumes of unfinished work and lead times worsening for the nineteenth straight month. (Financial Times) Australia Capex Advances 1.0% in Q3 Private new capital expenditure in Australia was up a seasonally adjusted 1.0% on quarter in the third quarter of 2017, the Australian Bureau of Statistics said - standing at A$29.368 billion. That was in line with expectations following the 1.1 percent increase in the three months prior. On a yearly basis, capex gained 2.3%. Individually, capex for buildings and structures added 1.2% on quarter and 2.4% on year to A$16.462 billion, while capex for equipment and machinery added 0.7% on quarter and 2.2% on year to A$12.906 billion. (RTT News) Australia Private Sector Credit Gains 0.4% in October Private sector credit in Australia was up 0.4% on month in October, the Reserve Bank of Australia said - in line with expectations and up from 0.3% in September. On a yearly basis, credit climbed 5.3% - again in line with forecasts and down from 5.4% in the previous month. Housing credit was up 0.5% on month and 6.5% on year, while personal credit was flat on month and down 0.9% on year and business credit added 0.3% on month and 4.0% on year. Broad money gained 0.6% on month and 6.7% on year. (RTT News) Australia Building Approvals Advance 0.9% in October The total number of building approvals issued in Australia jumped a seasonally adjusted 0.9% on month in October, the Australian Bureau of Statistics said - coming in at 19,074. That beat forecasts for a decline of 1.0% following the downwardly revised 0.6% monthly increase (originally 1.5%). On a yearly basis, approvals surged 18.4% - again exceeding Page 7 of 11
  10. 4-Dec-17 expectations for 14 .1% after adding 0.2% in the previous month. Permits for private sector houses gained 1.5% on month and 6.2% on year to 10,063, while permits for dwellings excluding houses fell 1.0% on month but surged 37.6% on year. The seasonally adjusted estimate of the value of total building approved fell 1.1% in October. The value of residential building rose 5.4%, while the value of non-residential building fell 10.1%. (RTT News) Australia Manufacturing PMI Spikes In November The manufacturing sector in Australia continued to expand in November, and at an accelerated rate, the latest survey from the Australian Industry Group showed on Friday with a PMI score of 57.3. That's up sharply from 51.1 in October, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. It also marks the 14th straight month of expansion. Individually, new orders, exports, deliveries, production, sales, employment and stocks all expanded. (RTT News) United States Senate Passes Sweeping Revision of U.S. Tax Code The Senate passed sweeping revisions to the U.S. tax code after Republicans navigated a thicket of internal divisions over deficits and other issues to place their imprint on the economy. The bill, which included about $1.4 trillion in tax cuts, would lower the corporate rate to 20% from 35%, reshape international business tax rules and temporarily lower individual taxes. It also touched other Republican goals, including opening the Arctic National Wildlife Refuge to oil drilling and repealing the mandate that individuals purchase health insurance, which would punch a sizable hole in the 2010 Affordable Care Act. But some objectives, such as repealing the alternative minimum tax, fell by the wayside in lastminute wrangling. The bill passed 51-49, with all but one Republican voting for it and all Democrats voting against. The sole Republican, Sen. Bob Corker of Tennessee, stated his opposition before the vote, citing worries it would expand budget deficits. (Wall Street Journal) Manufacturing Expands at Slower Rate in November A gauge of U.S. manufacturing activity cooled modestly for the second straight month in November, but the reading still shows a strong factory sector. The Institute for Supply Management said its manufacturing index fell to 58.2 in November, but remained solidly in a growth mode. A reading above 50 indicates activity is expanding across the factory sector, while a number below 50 signals contraction. Economists surveyed by The Wall Street Journal had expected a November reading of 58.0. The October level was 58.7. The September level of 60.8 was the highest for the index since May 2004. (Wall Street Journal) U.S. Construction Spending Rises at Fastest Clip in Five Months U.S. construction spending rose more quickly than expected in October as public construction outlays surged and investment in private projects increased for the first time in four months. The Commerce Department said that construction spending increased 1.4% to $1.24 trillion, the swiftest advance in five months. Economists polled by Reuters had forecast construction spending to increase 0.5%. Construction spending increased 2.9% on a year-on-year basis. Outlays on public construction projects jumped 3.9%, the largest gain since 2014. Spending on state and local government construction projects climbed 3.3%. Federal government construction spending soared 11.1%. Investment on private construction projects increased 0.6% after slipping 0.2% in September. Spending had also declined in August and July. Spending on nonresidential structures rose 0.9%, snapping four consecutive months of declines in a positive sign for business investment. (Reuters) US Jobless Claims Post Second Weekly Decline The number of Americans filing for unemployment benefits fell last week, dropping for a second straight week as labor market conditions tightened further. Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 238,000 for the week ended Nov. 25, the Labor Department said. Data for the prior week was revised to show 1,000 Page 8 of 11
  11. 4-Dec-17 more applications received than previously reported . Economists polled by Reuters had forecast claims edging up to 240,000 in the latest week. The data included last Thursday's Thanksgiving holiday. Claims tend be volatile around shifting holidays. The labor market is near full employment, with the jobless rate at a 17-year low of 4.1%. (CNBC) US Personal Income Rose 0.4% in Oct vs. 0.3% Increase Expected U.S. consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, but a sustained increase in underlying price pressures suggested that a recent disinflationary trend had probably run its course. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3% last month after surging 0.9% in September. Last month's increase in consumer spending was in line with economists' expectations. Spending on long-lasting goods like autos fell 0.1% last month after surging 2.9% in September. The Federal Reserve's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose 0.2% in October after a similar gain in September. The so-called core PCE increased 1.4% in the 12 months through October, matching September's rise. Separately, personal income rose 0.4% last month after advancing by the same margin in September. Wages rose 0.3% last month. Savings increased to $457.3 billion in October from $429.9 billion in the prior month, which was the lowest level since August 2008. (CNBC) Europe and Uni ted Kingdom Eurozone Jobless Rate Lowest Since 2009 The euro area jobless rate fell to the lowest since early 2009, data from Eurostat showed. The unemployment rate dropped to 8.8% in October from 8.9% in September. This was the lowest since January 2009. The rate was forecast to remain unchanged at 8.9%. The number of unemployed decreased by 88,000 from the previous month to 14.344 million. Compared to previous year, unemployment fell by 1.473 million. The youth unemployment rate dropped marginally to 18.6% in October from 18.7% in September. The EU28 overall unemployment rate decreased to 7.4% in October from 7.5% in September. (RTT News) Eurozone Inflation Rate Ticks Up to 1.5%, but Misses Forecasts Inflation in the Eurozone hit 1.5% this month, up from 1.4% in October, but was weaker than the 1.6% reading economists had expected. Core inflation came in at 0.9% — the same as last month. The core inflation figure strips out price changes for more volatile items such as oil and food prices. The figure has fallen in recent months. The lack of a rebound in core inflation this month will stoke concern by the region’s central bankers, who view the measure as a better indicator of longer-term inflationary pressures. Central banks target inflation of just under 2%. (Financial Times) November Was Best Month For Eurozone Factories in Over 17 Years: PMI Eurozone factories had their busiest month for over 17 years in November in a broad based acceleration, a purchasing managers’ index showed, despite them hiking prices at the fastest rate in more than six years. Forward looking indicators pointed to the momentum continuing through to the end of 2017, capping off what is expected to be the best year for Eurozone economic growth in a decade. IHS Markit’s final manufacturing Purchasing Managers’ Index for the bloc climbed to 60.1 last month from October’s 58.5. That was above a preliminary estimate of 60.0 and the second-highest in the survey’s 20-year history. An index measuring output which feeds into a composite PMI due on Tuesday and seen as a good gauge of economic growth jumped to 61.0 from 58.8, its highest since February 2011. (Reuters) Page 9 of 11
  12. 4-Dec-17 U .K. Consumer Confidence Falls in Christmas Blow to Retailers U.K. consumer confidence slid to a four-month low in November, delivering a further setback to retailers ahead of the crucial Christmas shopping period. GfK said its key index fell by two points to minus 12, matching the level seen in the month after the Brexit vote last year. All five measures used to calculate the score declined, with the willingness of consumers to make major purchases posting the biggest drop. Household jitters following the recent interest-rate hike, squeezed incomes, higher inflation and economic uncertainty have dampened the consumer mood across the U.K. Many retailers have been hit by the slowdown in consumer spending as households begin to feel the pinch and cut back on their budgets. The most worrying aspect of its latest survey was the plunge in the Major Purchase Index, which dropped by 6 points to minus 3. (Bloomberg) Booming Orders Help UK Factories to Best Month Since 2013 British factories enjoyed their best month in more than four years in November, suggesting manufacturing will give a boost to the country’s otherwise sluggish economy going into 2018, a survey showed. The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) jumped to 58.2 from an upwardly revised 56.6 in October, hitting its highest level since August 2013 and topping all forecasts in a poll of economists. Overall, the survey added to signs that manufacturing could be a bright spot next year, when the slowdown in the overall economy is likely to deepen as Britain approaches its departure from the EU in March 2019. Still, the British PMI was not as strong as the Eurozone’s and export orders grew faster in other major European economies - suggesting the pound’s fall since last year’s Brexit vote has yet to give British factories a big advantage. (Reuters) ‘Surprisingly Weak’: German Retail Sales Log Biggest Decline in A Year German retail sales unexpectedly dropped in October, echoing weak data released earlier this week on France, and offering a dark splotch in the rebounding Eurozone economy. Turnover in retail trade, a metric that tracks the volume of sales, declined 1.2% in October from September on an inflation and seasonally adjusted basis, according to the Federal Statistics Office. The reading was much worse than the 0.3% uptick forecast by economists in a poll. Compared with the same month in 2016, retail turnover was down 1.4%, well below the 2.8% jump expected by economists. (Financial Times) UK Nationwide House Price Growth Steady at 2.5% UK house prices increased at a steady pace in November, figures published by the Nationwide Building Society showed. House prices increased 2.5% year-on-year in November, the same rate of growth as seen in October. Inflation was forecast to rise to 2.7%. On a monthly basis, house price inflation slowed to 0.1%, in line with forecast, from 0.2%. Low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. The lack of homes on the market is providing support to house prices, Gardner added. The economist said the decision to abolish the stamp duty for the first time buyers is likely to have only a modest impact on overall demand. (RTT News) German Unemployment Falls More than Forecast Germany's unemployment declined more than expected in November, reports said citing the Federal Labor Agency. The number of people out of work decreased 18,000 in November from October. Economists had forecast a monthly fall of 10,000. At the same time, the jobless rate held steady at 5.6% in November, the lowest since reunification in 1990. Data released by Destatis showed that jobless rate held steady at adjusted 3.6% in October. According to the labor force survey, the number of unemployed decreased around 12,000 to 1.55 million in October. The number of persons in employment in October climbed 105,000, or 0.2%, on the previous month due to the autumn upturn, Destatis said. (RTT News) Page 10 of 11
  13. 4-Dec-17 Share Buy-Back : 30 November 2017 Company DAIBOCI FFHB GLOMAC HAIO HEVEA LEESK LIENHOE LSTEEL NYLEX REXIT SUCCESS Bought Back Price (RM) Hi/Lo (RM) 200,000 92,900 29,700 8,000 40,000 150,000 8,000 500,000 158,000 110,000 1,000 2.23 0.65/0.615 0.60/0.595 5.14/5.11 1.29/1.28 0.32 0.35 0.54/0.53 0.815/0.80 0.845/0.825 2.68 2.23/.2.22 0.65/0.61 0.605/0.595 5.20/5.10 1.35/1.28 0.325/0.315 0.35 0.545/0.52 0.815/0.80 0.845/0.825 2.90/2.66 Total Treasury Shares 609,600 1,143,900 4,877,700 8,691,588 822,000 150,000 16,320,600 2,452,800 4,010,724 10,778,400 5,877,577 Source: Bursa Malaysia 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 – 2032 5048 www.ta.com.my Page 11 of 11
  14. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) PER (X) Div Yield (%) FY17 FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD 30-Nov-17 AUTOMOBILE BAUTO 2.05 2.50 0.78 10.2 14.3 20.1 14.3 5.7 5.6 2.20 -6.8 1.84 11.4 -3.8 MBMR 2.12 2.32 0.94 20.7 23.2 10.3 9.1 1.9 2.2 2.60 -18.5 2.01 5.5 -0.9 PECCA 1.46 1.68 na 7.7 11.1 18.9 13.2 3.4 3.8 1.70 -14.1 1.28 14.1 -8.2 SIME 2.35 1.98 1.50 11.8 12.0 20.0 19.6 9.8 1.3 2.55 -7.8 1.83 28.3 27.1 UMW 5.27 4.20 1.38 -0.4 19.2 na 27.4 0.0 1.9 6.08 -13.3 4.09 28.7 24.8 -0.8 BANKS & FINANCIAL SERVICES ABMB 3.69 4.20 1.40 33.1 30.6 11.2 12.1 4.3 4.3 4.49 -17.8 3.62 1.9 AFFIN 2.39 2.50 0.90 23.5 24.2 10.2 9.9 3.3 3.3 3.00 -20.3 2.27 5.3 0.0 AMBANK 4.15 5.10 1.21 43.9 48.6 9.4 8.5 4.2 4.3 5.70 -27.2 4.10 1.2 -3.7 CIMB 6.05 7.00 1.50 48.7 50.9 12.4 11.9 4.1 4.2 7.08 -14.5 4.49 34.7 34.1 HLBANK 15.14 17.50 0.57 104.9 114.2 14.4 13.3 3.0 3.0 16.48 -8.1 13.02 16.3 12.1 MAYBANK 9.25 9.70 0.96 68.4 70.9 13.5 13.1 5.4 5.4 9.86 -6.2 7.68 20.4 12.8 PBBANK 19.90 23.60 0.60 137.2 142.4 14.5 14.0 2.8 2.9 20.90 -4.8 19.50 2.1 0.9 RHBBANK 4.90 5.20 1.54 50.6 52.2 9.7 9.4 3.1 3.1 5.59 -12.3 4.62 6.1 4.0 BURSA 9.68 11.10 0.78 40.2 39.0 24.1 24.8 3.5 3.5 10.98 -11.8 8.08 19.8 11.0 GADANG 1.09 1.75 0.47 15.2 14.3 7.2 7.6 2.8 2.8 1.37 -20.4 0.89 23.2 3.8 GAMUDA 4.89 6.00 0.97 27.8 34.5 17.6 14.2 2.5 2.5 5.52 -11.4 4.58 6.8 2.3 IJM 3.09 2.89 0.84 15.3 13.7 20.2 22.5 2.4 3.1 3.61 -14.4 2.97 4.0 -3.4 PESONA 0.48 0.55 0.85 3.5 5.8 13.6 8.2 3.2 3.2 0.74 -35.4 0.48 0.0 -21.5 SENDAI 0.94 0.58 1.32 8.2 9.6 11.4 9.8 1.1 1.1 1.39 -32.7 0.51 85.1 62.6 SUNCON 2.40 2.65 na 11.3 14.7 21.2 16.3 2.3 2.3 2.44 -1.6 1.61 49.1 41.2 WCT 1.54 1.61 1.00 11.5 12.5 13.4 12.4 1.9 1.9 2.48 -37.8 1.49 3.4 -10.4 LITRAK 5.95 6.26 0.32 41.9 45.6 14.2 13.0 4.2 4.2 6.15 -3.3 5.61 6.1 1.2 ANNJOO 3.73 4.40 1.33 41.2 45.3 9.1 8.2 4.3 5.9 3.98 -6.3 1.99 87.4 71.9 CHINHIN 1.16 1.36 na 5.7 9.7 20.3 11.9 2.6 4.3 1.49 -22.1 0.85 36.5 33.3 CARLSBG 15.16 18.06 0.73 79.3 86.2 19.1 17.6 5.2 5.7 16.00 -5.3 13.72 10.5 8.9 HEIM 17.60 19.14 0.51 79.6 84.0 22.1 21.0 4.1 4.3 19.58 -10.1 15.78 11.5 7.4 AEON 1.81 1.97 0.45 4.7 6.7 38.3 27.1 1.9 2.2 2.70 -33.0 1.77 2.3 -29.6 AMWAY 7.05 8.18 0.35 35.7 43.9 19.7 16.1 4.3 5.4 8.18 -13.8 7.04 0.1 -3.8 F&N 25.66 27.41 0.18 102.6 155.7 25.0 16.5 2.2 2.3 26.00 -1.3 22.44 14.3 9.3 HUPSENG 1.11 1.25 0.43 5.2 5.4 21.5 20.4 4.1 4.1 1.28 -13.3 1.08 2.8 -3.5 CONSTRUCTION Building Materials CONSUMER Brewery Retail JOHOTIN 1.25 1.48 0.69 9.7 12.5 12.8 10.0 3.6 4.0 1.76 -29.0 1.15 8.7 0.8 NESTLE 97.30 120.50 0.40 292.7 325.4 33.2 29.9 2.8 3.0 97.30 0.0 74.12 31.3 24.4 98.9 PADINI 5.05 4.67 0.64 23.5 27.0 21.5 18.7 2.3 2.5 5.49 -8.0 2.26 123.4 POHUAT 1.78 2.50 0.68 26.8 26.8 6.6 6.6 3.4 4.5 2.08 -14.4 1.58 12.7 2.9 QL 4.20 3.26 0.30 12.1 12.8 34.8 32.8 1.0 1.1 4.20 0.0 3.26 29.0 26.1 SIGN 0.80 0.92 1.06 6.7 6.9 11.8 11.5 3.1 3.1 1.07 -25.7 0.79 1.3 0.0 37.38 52.08 1.30 198.6 187.4 18.8 19.9 5.4 5.4 51.04 -26.8 35.78 4.5 -15.4 GENTING 8.80 11.53 1.49 48.7 54.4 18.1 16.2 1.6 1.8 10.00 -12.0 7.67 14.8 10.8 GENM 5.09 6.51 1.52 18.7 27.0 27.2 18.8 1.6 1.8 6.38 -20.2 4.47 13.9 12.6 BJTOTO 2.32 3.34 0.82 18.3 21.5 12.7 10.8 6.0 6.9 3.12 -25.6 2.25 3.1 -21.6 LUSTER 0.12 0.15 2.09 0.4 0.4 31.7 31.9 0.0 0.0 0.16 -28.1 0.05 130.0 130.0 Tobacco BAT GAMING Casino NFO HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO 2.42 2.70 0.59 14.0 15.0 17.3 16.1 3.9 4.1 2.43 -0.4 1.90 27.4 22.2 IHH 5.64 6.40 0.74 6.7 11.9 83.8 47.5 0.5 0.5 6.45 -12.6 5.42 4.1 -11.2 KPJ 0.97 1.09 0.40 3.2 3.6 30.2 27.3 1.9 2.1 1.14 -14.9 0.96 0.8 -7.2 HARTA 9.56 6.87 0.75 19.4 24.5 49.3 38.9 0.9 1.2 9.80 -2.4 4.53 111.0 97.9 KOSSAN 7.69 8.80 0.08 29.1 38.3 26.5 20.1 1.9 2.5 8.31 -7.5 5.62 36.8 16.7 SUPERMX 1.89 1.80 0.16 10.2 15.3 18.5 12.4 1.7 2.8 2.20 -14.1 1.69 11.8 -10.4 TOPGLOV 6.73 6.30 -0.21 26.4 29.4 25.5 22.9 2.2 2.2 7.05 -4.5 4.56 47.6 25.8 KAREX 1.44 1.00 0.29 2.8 2.8 51.7 52.1 1.4 0.5 2.52 -42.9 1.37 5.1 -39.0 SCIENTX 8.60 9.38 0.42 52.3 64.9 16.5 13.3 1.9 2.1 9.85 -12.7 6.67 28.9 28.4 SKPRES 2.05 2.20 0.41 8.3 10.4 24.8 19.8 2.0 2.5 2.15 -4.7 1.24 65.3 58.9 ASTRO 2.84 3.40 1.33 13.2 14.5 21.5 19.5 4.4 4.6 2.94 -3.4 2.47 15.0 9.2 MEDIA PRIMA 0.65 0.45 0.59 -7.6 -3.8 na na 0.0 0.0 1.28 -49.6 0.62 4.0 -43.9 STAR 1.33 1.25 0.76 5.6 6.7 23.6 19.8 31.6 9.0 2.22 -40.0 1.31 1.5 -31.7 Rubber Gloves INDUSTRIAL MEDIA
  15. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) FY17 PER (X) Div Yield (%) FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.41 0.75 1.17 3.6 4.5 11.2 9.0 2.5 2.5 0.69 -41.3 0.23 80.0 58.8 LCTITAN 4.75 6.66 na 42.8 63.4 11.1 7.5 4.8 5.3 6.53 -27.3 4.14 14.7 -26.9 MHB 0.84 0.78 1.79 -2.0 -0.5 na na 0.0 0.0 1.16 -27.6 0.63 34.4 -8.2 MISC 7.05 6.56 1.08 57.2 46.8 12.3 15.1 4.3 4.3 7.90 -10.8 6.89 2.3 -4.1 PANTECH 0.64 0.69 1.18 4.0 6.1 16.0 10.4 2.8 4.3 0.74 -14.2 0.44 46.0 42.7 PCHEM 7.40 8.05 1.00 52.7 49.8 14.0 14.9 3.1 3.0 7.80 -5.1 6.69 10.6 6.0 SAPNRG 1.25 1.66 2.81 6.6 -0.4 18.9 na 0.8 0.0 2.10 -40.5 1.24 0.8 -22.8 SERBADK 3.20 3.40 na 22.9 25.7 14.0 12.4 2.2 2.4 3.22 -0.6 1.51 111.9 113.3 UMWOG 0.33 0.51 1.72 -1.7 0.4 na 81.7 0.0 0.0 0.92 -64.2 0.27 22.2 -61.4 UZMA 1.48 1.55 1.18 11.3 12.3 13.1 12.1 0.0 0.0 1.98 -25.3 1.28 15.6 -12.9 FGV 1.82 2.01 1.83 2.1 3.7 87.0 49.1 2.7 2.7 2.18 -16.5 1.47 23.8 17.4 IJMPLNT 2.82 2.69 0.30 12.3 9.1 22.9 30.9 2.5 2.8 3.60 -21.7 2.81 0.4 -17.1 IOICORP 4.46 4.14 1.23 17.3 21.0 25.7 21.2 2.1 3.6 4.81 -7.3 4.31 3.5 1.4 KFIMA 1.66 1.89 0.51 19.9 13.3 8.3 12.5 5.4 5.4 1.96 -15.3 1.60 3.7 -2.4 KLK 24.38 26.18 0.77 100.5 120.7 24.3 20.2 2.1 2.5 25.50 -4.4 23.00 6.0 1.6 SIMEPLT 5.01 6.25 na 17.6 21.0 28.5 23.8 2.8 2.8 5.65 -11.3 4.90 2.2 -10.4 UMCCA 6.60 7.52 0.41 37.5 31.8 17.6 20.8 3.5 2.6 7.08 -6.8 5.59 18.0 10.5 GLOMAC 0.60 0.50 0.56 1.4 3.4 41.5 17.7 4.5 4.5 0.75 -19.5 0.59 1.7 -13.7 HUAYANG 0.61 0.69 0.67 17.3 1.8 3.5 33.1 6.6 0.8 1.21 -50.0 0.61 0.0 -46.5 IBRACO 0.81 0.94 na 3.3 10.5 24.8 7.7 2.5 4.9 1.05 -22.9 0.76 7.3 -19.0 IOIPG 1.89 2.13 0.83 18.9 16.5 10.0 11.4 3.2 3.2 2.22 -14.9 1.85 2.3 -3.1 MAHSING 1.52 1.70 1.04 13.8 13.0 11.0 11.6 4.3 4.3 1.64 -7.3 1.38 10.1 6.3 SIMEPROP 1.20 1.65 na 7.0 9.2 17.1 13.0 0.0 1.7 1.32 -9.1 1.15 4.3 -20.0 SNTORIA 0.70 0.86 0.34 6.8 8.3 10.3 8.5 0.0 1.4 1.00 -30.0 0.66 6.1 -12.5 PLANTATIONS PROPERTY Note: SNTORIA proposed bonus issue of warrants & right issue of shares. For more details please refer to 25.09.17 report. SPB 4.62 5.97 0.67 25.6 22.8 13.6 15.3 2.6 2.6 5.19 -11.0 4.32 6.9 4.5 SPSETIA 3.49 4.10 0.87 11.5 12.1 14.2 13.5 4.0 4.0 4.38 -20.4 3.03 15.2 14.5 SUNWAY 1.63 1.75 0.75 13.3 13.2 13.0 13.1 3.1 3.1 1.96 -16.8 1.24 31.6 26.8 SUNREIT 1.68 1.87 0.74 9.2 10.0 18.2 16.7 5.5 6.0 1.81 -7.2 1.65 1.8 -2.3 CMMT 1.47 1.72 0.44 8.1 8.6 18.2 17.0 5.7 6.1 1.72 -14.5 1.40 5.0 -3.9 -32.1 REIT POWER & UTILITIES MALAKOF 0.93 1.16 0.64 6.3 6.0 14.8 15.5 7.5 7.5 1.43 -35.0 0.93 0.5 PETDAG 24.20 22.08 0.57 102.8 105.1 23.5 23.0 3.2 3.2 25.70 -5.8 21.00 15.2 1.7 PETGAS 15.88 19.10 0.95 89.1 98.8 17.8 16.1 4.2 4.3 21.98 -27.8 15.86 0.1 -25.4 TENAGA 15.46 17.38 0.74 131.6 129.9 11.7 11.9 3.0 3.0 15.60 -0.9 13.00 18.9 11.2 YTLPOWR 1.15 1.17 0.73 8.2 9.7 14.0 11.9 4.3 4.3 1.50 -23.3 1.11 3.6 -21.3 TELECOMMUNICATIONS AXIATA 5.33 5.75 1.36 14.3 16.0 37.2 33.3 1.4 1.5 5.47 -2.6 4.24 25.7 12.9 DIGI 4.64 5.20 0.79 19.5 20.0 23.8 23.2 4.2 4.3 5.19 -10.6 4.36 6.4 -3.9 MAXIS 5.93 6.10 0.77 26.0 26.2 22.8 22.6 3.4 3.4 6.60 -10.2 5.48 8.2 -0.8 TM 6.03 7.20 0.65 22.6 23.2 26.7 26.0 3.4 3.5 6.69 -9.9 5.81 3.8 1.3 TECHNOLOGY Semiconductor & Electronics ELSOFT 2.70 2.70 0.58 11.3 15.0 23.9 18.0 2.9 3.9 2.95 -8.5 1.29 110.1 92.3 IRIS 0.15 0.25 1.87 -1.3 0.6 na 27.1 0.0 0.0 0.22 -31.8 0.10 50.0 36.4 INARI 3.24 3.05 0.88 11.2 14.2 29.0 22.8 3.0 3.1 3.37 -3.9 1.61 101.7 95.6 MPI 12.94 15.00 0.24 89.5 105.5 14.5 12.3 2.1 2.5 14.52 -10.9 7.31 77.0 74.6 UNISEM 3.58 3.85 0.88 23.5 27.1 15.2 13.2 3.4 3.4 4.25 -15.8 2.29 56.3 51.7 TRANSPORTATION Airlines AIRASIA 3.14 3.83 1.02 53.1 38.3 5.9 8.2 1.3 1.6 3.59 -12.5 2.16 45.4 37.1 AIRPORT 8.25 8.47 1.28 19.6 19.7 42.1 41.8 1.2 1.2 9.45 -12.7 5.91 39.6 36.1 Freight & Tankers PTRANS 0.28 0.44 na 2.1 2.3 13.6 12.3 2.1 2.5 0.38 -26.7 0.14 98.7 92.5 TNLOGIS 1.33 1.80 1.10 12.0 13.6 11.1 9.8 3.2 3.8 1.83 -27.5 1.29 3.1 -14.7 WPRTS 3.44 4.06 0.89 17.1 16.8 20.1 20.5 3.7 3.7 4.39 -21.6 3.37 2.1 -20.0 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 52week 52week % Chg FY18 High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 24.58 23.30 1.25 172.7 189.1 14.2 13.0 2.4 2.4 -1.7 17.2 43.32 41.8 0.0 OCBC 12.42 13.50 1.20 95.5 104.0 13.0 11.9 5.7 6.7 -0.2 8.9 8.84 39.2 0.0 UOB 26.53 26.90 1.07 200.8 215.4 13.2 12.3 2.6 2.6 -0.3 20.1 32.32 30.0 0.0 PLANTATIONS WILMAR 3.15 3.63 0.85 25.6 29.9 12.3 10.5 2.2 2.5 -21.3 3.1 2.27 -12.3 0.0 IFAR 0.40 0.53 0.97 4.9 5.2 8.1 7.6 3.0 3.2 -33.6 0.4 1.28 -24.8 0.0 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.
  16. Technical View Monday , December 04, 2017 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Technical Outlook FBM KLCI: 1,717.86 (+0.63, +0.04%) Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Construction and Oil & Gas Seen to Out-Perform The blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended its last four-day trading week of November in choppy trade near eight-month lows, as concerns over developments in China’s bond market, the U.S. Senate debate and vote on tax reforms offset fund buying encouraged by the firm ringgit which rose to the strongest level since last September. Late selling of selected blue-chip heavyweights reversed a late afternoon recovery ahead of the long three-day weekend break. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) added 0.63 of a point to 1,717.86, as falls on Petronas Gas (-88sen), BAT (-62sen) and Public Bank (-42sen) overshadowed gains on Tenaga (+64sen), Petronas Dagangan (+60sen) and Sime Darby (+31sen). Average daily traded volume and value was at 1.96 billion shares worth RM3.17 billion, compared to the 2.08 billion shares and RM2.3 billion respectively the previous week, as trading interest picked up in higher-priced heavyweight blue chips. Late buying interest by local funds on selected blue chip heavyweights lifted the index higher on Monday, while key regional markets traded lower as investors kept an eye on developments in China’s bond market. The index rose 2.63 points to close at day’s high of 1,719.86, off an early low of 1,712.97, as losers edged gainers 548 to 343 on slower turnover of 1.64bn shares worth RM1.78bn. Blue chips slid on weak buying momentum the following day, with sentiment dented by waning market momentum across the region following a narrowly mixed close on Wall Street overnight, ahead of a crucial U.S. Senate debate and vote on tax-cut legislation. The KLCI fell 5.44 points to settle at 1,714.42, off an early high of 1,716.79 and low of 1,709.94, as losers trashed gainers 613 to 286 on cautious turnover totaling 1.80bn shares worth RM2.09bn. The local benchmark reversed the previous losses Wednesday, as blue chips recovered on fund buying encouraged by the firm ringgit which rose to 4.082 to the USD, the strongest in 14 months. The KLCI rose 5.96 points to end near the day’s high of 1,720.57, off an early low of 1,714.47, but losers beat gainers 477 to 400 on higher turnover of 1.95bn shares worth RM2.8bn. Late selling of selected blue chips weighed down the index into negative territory the next day, giving up afternoon gains ahead of the long three-day weekend break. The KLCI shed 2.52 points to close at 1,717.86 on Thursday, off a low of 1,716.76 and high of 1,727.62, as losers beat gainers 500 to 367 on active trade totaling 2.47bn shares worth RM6.03bn. Trading range for the local blue-chip benchmark index last week was 17.68 points, compared to the 14.92 points range the previous week. For the week, the FBM-EMAS Index gained 15.07 points, or 0.12 percent to 12,408.31, but the FBM-Small Cap Index shed 133 points, or 0.8 percent to close the week at 16,787.88. Page 1 of 3
  17. 4-Dec-17 Last week ’s feeble rebound saw the daily slow stochastic momentum indicator for the FBM KLCI still trapped in oversold territory despite hooking up (Chart 1), while the weekly indicator continue its retreat deeper into oversold territory. The 14-day Relative Strength Index (RSI) indicator hooked down to a weak reading of 37.21 following last Thursday’s lastminute pullback, while the 14-week RSI inched down to a reading of 36.49. Chart 1 On the other hand, the signal line on the daily Moving Average Convergence Divergence (MACD) trend indicator hooked upwards for a weak buy signal, but was negated by the weekly MACD indicator which slid lower into negative ground (Chart 2). Meantime, the +DI and –DI lines on the 14-day Directional Movement Index (DMI) trend indicator stayed apart negatively to sustain down-trend momentum reading. Chart 2 Page 2 of 3
  18. 4-Dec-17 Conclusion With technical momentum and trend indicators for the FBM KLCI staying weak given last week ’s shaky rebound, save for a mild buy signal on the daily MACD, more choppy trade is expected in the first trading week of December. Buying momentum and trading sentiment must improve significantly before a more sustainable rebound can emerge. On the index’s downside, crucial retracement supports remains at 1,705 (50%FR) and 1,683 (38.2%FR), where the index may trough ahead of oversold rebound. On the immediate upside, overhead resistance rests at 1,727 (61.8%FR), followed by the 30-day and 50-day moving averages at 1,733 and 1,743 respectively, then 1,750, next will be 1,753, the 200-day moving average. Meantime, construction related shares like Gamuda, MRCB, Sunway Construction and WCT Holdings should recover further on rotational buying interest, same goes for oil & gas related counters such as Bumi Armada, Dialog, Sapura Energy and Wah Seong which should out-perform the broader market due to the resilient global oil prices. 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. As of Monday, December 04, 2017, the chartist, Stephen Soo, 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 – 2032 5048 www.ta.com.my Page 3 of 3
  19. RESULTS UPDATE Monday , December 04, 2017 FBMKLCI: 1,717.86 Sector: Finance THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Affin Holdings Berhad TP: RM2.50 (+4.6%) Last Traded: RM2.39 9M17 Dampened by Higher Operating Expenses Kaladher Govindan Tel: +603-2167 9609 HOLD kaladher@ta.com.my Review Affin 9M17 results fell short of ours and consensus expectations. Accounting for around 68% and 61% of ours and consensus net profit forecast, results were dampened by higher-than-expected operating expenses and allowances. Topline growth was encouraging, led by a 37.1% YoY acceleration in noninterest income (non-NII). Total income climbed by 16.8% YoY. The increase helped support the rise in costs, which ballooned by some 27.4% YoY. Normalisation in credit costs saw Affin report total allowances of RM71.1mn vs. RM22.8mn in 9M16. Sequentially, net profit contracted by 50.6%, anchored by a combination of lower operating income (-7.1% QoQ) and higher overhead expenses (+13.8% QoQ). Yearly, total income accelerated, driven by higher contributions from Islamic banking operations and non-interest income (non-NII). 9M17 fee income surged 37.1% YoY to RM486.7mn from RM354.9mn a year ago, spurred by increases in brokerage fees, underwriting fees, portfolio management fees, commission and initial service charge fees. Stronger profit from disposal of financial assets and investments helped boost income from financial instruments to RM143.2mn vs. RM81.3mn in 9M16. Net interest income (NII) widened 1.7% YoY while contributions from Islamic Banking business advanced by 22% YoY. Gross loans broadened at a decent pace of 4.6% YoY, led by advances in consumer based loans (+9.2% YoY) such as for the purchase of securities (+45.9% YoY), credit cards (+22.3% YoY) and residential mortgages (+15.4% YoY). In the business segment, SME loans contracted by 2.9% but was supported by an increase of 4.2% from other (non-SME) businesses. Total deposits accelerated by 4.8% YoY - in tandem with loan growth, to RM51.6bn. The loan to deposit ratio improved marginally to 87.4% from 87.6% a year ago, on the back of slightly stronger deposit growth. Operating expenses surged 27.4% YoY, underpinned by jumps in personnel costs (+32.3% YoY), marketing expenses (+81.7% YoY), and admin & general expenses (+11.2% YoY). Higher personnel costs were driven by a one-off provision for VSS amounting to RM48mn. Marketing expenses surged on the back of doubling in commission and brokerage expenses to RM147.5mn from RM72.1mn a year ago. The cost-to-income (CTI) ratio climbed to 66% vs. 60% in 9M16. Compared to 9M16, total allowances increased to RM70.1mn vs. RM4.1mn. The increase in allowances were attributed to a combination of higher collective and individual impairments, decline in writebacks and lower bad debts recovered. The formation of new NPLs advanced by RM37.3mn during the quarter. While we note some increase in consumer impaired loans (due to mortgages and HP), bulk of the increase during the quarter was fuelled by impairments in the non-residential property space and overall business loans. The group’s gross impaired loans ratio climbed to 2.16% compared with 2.07% in the previous quarter. www.taonline.com.my Share Information Bl oomberg Code Stock Code Li s ti ng Sha re Ca p (mn) Ma rket Ca p (RMmn) 52-wk Hi /Lo (RM) 12-mth Avg Da i l y Vol ('000 s hrs ) Es ti ma ted Free Fl oa t (%) Beta AHB MK 5185 Ma i n Ma rket 1942.9 4,643.5 3.00/2.22 379.4 12.9 0.89 Major Shareholders (%) LTAT - 35.4 BEA - 23.5 Bous tea d - 20.7 Forecast Revision Foreca s t Revi s i on (%) Net profi t (RMmn) Cons ens us TA's / Cons ens us (%) FY17 (14.9) 455.7 562.1 81.1 FY18 (13.0) 470.7 597.6 78.8 FY17 5.2 0.7 65.6 1.6 4.5 0.5 FY18 5.2 0.6 67.2 1.6 4.7 0.5 % of FY 68.0 61.0 Bel ow Bel ow AHB (6.6) (6.3) (10.2) 6.2 FBM KLCI (1.7) (3.1) (2.7) 6.1 Financial Indicators ROE (%) ROA (%) CTI Ra ti o (%) Gros s NPL Ra ti o (%) BV/ Sha re (RM) Pri ce/ BV (x) Scorecard vs . TA vs . Cons ens us Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
  20. 4-Dec-17 Elsewhere , the CET1 and Total Capital Ratio for Affin Bank stood at 11.5% and 20.4%. Impact We raised our FY17 gross credit charge assumption to 26 bps from 22 bps on the back of slightly higher-than-expected allowances. Additionally, we also tweaked our growth forecast for operating expenses (in particular marketing expenses) on the back of a steeper-then-expected 27.4% YoY increase. No change to our FY18 and FY19 credit charge assumptions as we had earlier raised it in our report dated Oct 17, 2017 to reflect the potential increase from the implementation of MFRS9. Taken together, we revise our FY17/18/19 net profit estimates lower to RM455.7/470.7/545.3mn from RM535.4/541.2/590.3mn previously. Outlook While we remain positive over the group’s new transformation efforts, we believe competition among other industry players will continue to intensify. Nevertheless, with many of its competitors at more advance stages in terms of technology, Affin’s Internet and Mobile Banking upgrades are timely to help retain loyalty from its existing customer base, in our view. For now, management is maintaining ROE and CTI targets of 15% and 40% respectively by 2021 under the AFFINITY programme. However, keeping a more conservative stance and imputing more gradual improvements, we still expect CIR of 60% by 2021, higher average credit charge of 25 bps to incorporate impact from MFRS9, GIL ratio to improve to 1.30% and softer FY17/18/19 ROE of 5.2/5.2/5.8%. Projecting into 2021, we forecast ROE to improve to 7.3%. We foresee more meaningful growth driven by the AFFINITY programme from FY19 onwards. Valuation We lower Affin’s TP to RM2.50 from RM3.00 on the back of the downward adjustment to our earnings estimates. This represents an implied FY18 PBV of around 0.53x. Affin is currently trading at FY17 PBV of 0.5x, still a steep discount compared to industry peers average of 1.1x. Nevertheless, we downgrade Affin from buy to HOLD due to a narrower upside to our new TP. Table 1: Earnings Summary (RMmn) FYE Dec Net interest income Non-interest income Islamic Banking Total operating income Pre-provisioning profit Pretax profit Net profit EPS (sen) EPS growth (%) Gross div (sen) Div yield (%) 2015 947.8 615.7 238.9 1802.5 716.8 519.3 369.3 16.1 (37.7) 8.0 3.3 2016 970.5 692.5 272.8 1935.9 793.0 741.8 564.0 24.6 52.7 8.0 3.3 2017F 983.1 809.9 300.1 2093.1 719.3 615.7 455.7 19.9 (19.2) 8.0 3.3 2018F 1052.1 916.1 330.1 2298.3 753.2 633.4 470.7 20.5 3.3 8.0 3.3 2019F 1097.5 1037.6 363.1 2498.1 865.4 726.7 545.3 23.8 15.9 8.0 3.3 Page 2 of 3