M A L A Y S I A. R e t a i l M a r k e t M o n i t o r Tu esday, 30 May 20 17

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1 MARKET NEWS F B M K L C I C H A R T The FBMKLCI fell 7.41pt to close at 1, yesterday. Meanwhile, stocks in Asia were mixed amid low trading volume, and the yen held to a narrow range as investors weighed the latest comments from Federal Reserve officials on interest rates and the economy. The MSCI Asia Pacific Index lost 0.1%, with almost an equal number of shares rising and falling. The FBMKLCI s top gainers were Genting Malaysia (+1.5%), Axiata Group (+1.2%) and YTL Corporation (+0.66%), while the top losers were Genting Bhd (-2.19%), Petronas Chemicals Group (-2.0%) and Petronas Gas (-1.9%). In the broader market, losers outpaced gainers 688 to 224 with 345 counters unchanged. Turnover was 2.32b shares valued at RM1.87b. Given the marginal change of the FBMKLCI, we maintain our outlook for the time being. From a technical perspective, the near-term outlook suggests the FBMKLCI has the potential to move up higher while the medium-term outlook remains neutral with movement expected to range from 1,755 to 1,785. However, given the weaker external market, particularly within the region, the index may succumb to selling pressure if the immediate support of 1,755 is breached. Nevertheless, the index could continue to move sideways for now. Support and resistance levels are as follows: Support: 1,755,1,729 Resistance: 1,787, 1,800 The US markets were closed on 29 May for Memorial Day. WHAT S IN THE PACK Genting Berhad (GENT MK/HOLD/RM9.73/Target: RM10.85) 1Q17: Above expectations on GENS margin expansion. While GENT s valuation is relatively more compelling than its subsidiaries, it lacks near-term catalysts. Maintain HOLD. Genting Malaysia (GENM MK/SELL/RM6.11/Target: RM5.15) 1Q17: Results largely in line. Operations in Malaysia are sluggish while overseas operations remain unexciting. No nearterm catalysts foreseen, while risks are ignored. Maintain SELL. Hong Leong Bank (HLBK MK/BUY/RM13.96/Target: RM15.30) 3QFY17: Earnings were 5% above our estimate. The stock is trading at an undemanding 1.20x FY1F P/B. A sustained growth recovery at Bank of Chengdu should help catalyse a re-rating. Upgrade to BUY. Sunway (SWB MK/BUY/RM3.60/Target: RM3.93) 1Q17: Results broadly in line with expectations. Key catalyst would be potential contract wins from its construction division. Gabungan AQRS (AQRS MK) Technical BUY with 21.0% potential return BUY with a target price of RM1.73 and stop-loss at RM1.34. Based on the daily chart, AQRS has formed a series of higher highs and higher lows that indicate an uptrend pattern. OKA Corporation (OKAC MK) Technical BUY on breakout with +16.1% potential return BUY on breakout with a target price of RM1.87 and stop-loss at RM1.49. On yesterday s trading activity, share price managed to form a breakaway gap and we expect OKAC to continue the upward movement thereafter. Eonmetall Group (EONM MK) Technical BUY on breakout with 26.4% potential return BUY on breakout with a target price of RM0.935 and stop-loss at RM Based on the daily chart, EONM s upside trend is intact if prices can penetrate the RM0.74 level. Source: Bursa Station K E Y I N D I C E S Prev Close Chg (%) YTD (%) DJIA 21, (0.01) 6.67 S&P 500 2, FTSE 100 7, CSI 300 3, (0.15) 5.15 FSSTI 3, (0.15) HSCEI 10, HSI 25, JCI 5, (0.08) 7.85 KLCI 1, (0.42) 7.50 KOSPI 2, (0.10) Nikkei , (0.02) 2.97 SET 1, (0.07) 1.64 TWSE 10, (0.06) 9.17 BDI (0.65) (5.10) CPO (RM/mt) 2, (1.53) (19.07) Nymex Crude (US$/bbl) (12.05) T O P V O L U M E Stock Price (RM) Chg (%) Vol ( 000) China Automobile 0.01 (60.00) 191,719 Borneo Oil Bhd ,880 Airasia X Bhd 0.41 (1.22) 47,587 Careplus Group Bhd ,428 Tiger Synergy Bhd ,819 T O P G A I N E R S Stock Price (RM) Chg (%) Vol ( 000) Careplus Group Bhd ,428 Compugates Holdings ,489 Ablegroup Bhd ,268 Key Alliance Group ,841 At Systematization ,361 T O P L O S E R S Stock Price (RM) Chg (%) Vol ( 000) China Automobile 0.01 (60.00) 191,719 Ark Resources Bhd 0.52 (25.71) 5 Maxwell International 0.03 (16.67) 41 Alam Maritim 0.23 (16.36) 7,581 Tfp Solutions Bhd 0.16 (16.22) 967 Source: Bloomberg w w w. u t r a d e. c o m. m y 1

2 TRADERS CORNER Gabungan AQRS (AQRS MK) Technical BUY with +21.0% potential return Last price: RM1.43 Target price: RM1.64, RM1.73 Support: RM1.35 Stop-loss: RM1.34 BUY with a target price of RM1.73 and stop-loss at RM1.34. Based on the daily chart, AQRS has formed a series of higher highs and higher lows that indicate an uptrend pattern. A buying signal has been given as the price has been trading above the Ichimoku cloud. This supported by the Heat Wave indicators - Tenkan-sen line, Kinjun-sen line and the Chikao span line - showing bullish signals. The uptick in the DMI together with the high trading volume suggests that buying momentum is set to continue in the near term. We peg our targets at RM1.64 and RM1.73 in near to medium term. Expected Timeframe: 2 weeks to 2 months OKA Corporation (OKAC MK) Technical BUY on breakout with +16.1% potential return Last price: RM1.61 Target price: RM1.77, RM1.87 Support: RM1.50 Stop-loss: RM1.49 BUY on breakout with a target price of RM1.87 and stop-loss at RM1.49. On yesterday s trading activity, share price managed to form a breakaway gap and we expect OKAC to continue the upward movement thereafter. This bullish movement was supported by the DMI that is currently showing a positive signal. This also consistent with the uptick in the RSI which suggests stronger buying momentum ahead. We peg our targets based on 1.38x and 1.61x Fibonacci Extension level at RM1.77 and RM1.87. Expected Timeframe: 2 weeks to 2 months. w w w. u t r a d e. c o m. m y 2

3 TRADERS CORNER Eonmetall Group (EONM MK) Technical BUY on breakout with +26.4% potential return Last price: RM0.70 Target price: RM0.845, RM0.935 Support: RM0.68 Stop-loss: RM0.675 BUY on breakout with a target price of RM0.935 and stop-loss at RM Based on the daily chart, EONM s upside trend is intact if prices can penetrate the RM0.74 level. Positive readings from the RSI show buying momentum has overcome selling momentum. This is supported by a bullish crossover in the DMI. We expect the stock price to continue the upward movement towards our targets at RM0.845 and RM0.935 in the near term. Expected Timeframe: 2 weeks to 2 months ANALYST Mohd Fakhrul Asyraq, MSTA, CFTe mohdfakhrulasyraq@uobkayhian.com w w w. u t r a d e. c o m. m y 3

4 CORPORATE NEWS AirAsia: Progresses towards becoming an Asean airline. AirAsia is continuing its expansion in the region to become a truly Asean airline, group chief executive officer Tan Sri Tony Fernandes said. He said the expansion continued with the impending joint venture (JV) in Vietnam and interest expressed by the Cambodian government for AirAsia to venture into the country. So, the Asean story goes from strength to strength, he said in a video message on the overview of the airline s performance last year and outlook in Kuala Lumpur on Monday. AirAsia Bhd chief executive officer and executive director Aireen Omar said outside of Asean, the company s newly set-up Japanese subsidiary was expected to start operations in the second half of this year. (Source: The Star) Anzo: Plans RM420m car showroom centre in PJ. Anzo Holdings Bhd is partnering with a landowner to develop a car showroom centre with four blocks of office towers, worth an estimated gross development value of RM420m, on a plot in Petaling Jaya, Selangor. Anzo's wholly-owned unit Harvest Court Properties Sdn Bhd inked a collaboration agreement (CA) with the owner of the 2.87-acre land, Captivate Max Sdn Bhd, today. In a Bursa Malaysia filing, Anzo said the two companies which are in the midst of negotiations on the partnership, have agreed that a joint venture agreement (JVA) shall be executed between them to set out the scope of their partnership on the development. (Source: The Edge Financial Daily) Harn Len: To buy firm for RM28m. Oil palm plantation operator Harn Len Corp Bhd has inked an agreement to fully acquire a company that comes with a strategic landbank in Johor Baru for RM28m. In a filing with Bursa Malaysia, the company said it had entered into a share sale agreement with Datuk Azizi Yom Ahmad, Datuk Abdul Gani Yusof and Piagam Wira Sdn Bhd to acquire the entire issued and paid up share capital of Midwest Equity Sdn Bhd (MESB) for RM28mil. Upon completion of the proposed acquisition, MESB will be consolidated as a wholly-owned subsidiary of Harn Len. (Source: The Star) Iris Corp: Proposes placement exercise to raise RM40m. Iris Corp Bhd has proposed a private placement exercise of up to 224 million Iris shares, representing 10% of the issued share capital of the company, to raise up to RM40.49m. The company intends to use the proceeds from the placement exercise to fund working capital requirements and for future projects and investments. However, it said it has yet to determine the nature of the new business projects or investments, adding it will make the required announcement as and when it is confirmed. Upon completion of the placement exercise, Iris enlarged issued share capital will expand to 2.47b shares, from 2.25b shares currently. (Source: The Edge Financial Daily) Malakoff: Tabung Haji chief Johan Abdullah joins board. Lembaga Tabung Haji group managing director and chief executive officer (CEO) Datuk Johan Abdullah has been appointed as a non-independent and non-executive director of Malakoff Corp Bhd. Johan was the former CEO of Islamic banking group BIMB Holdings Bhd. He also sits on the board of TH Plantations Bhd and TH Heavy Engineering Bhd. Tabung Haji has a 10.17% stake in Malakoff. Malakoff shares closed down two sen or 1.7% at RM1.17 today, for a market capitalisation of RM5.85b. (Source: The Edge Financial Daily) w w w. u t r a d e. c o m. m y 4

5 Media Prima: Appoints Ismee Ismail as director. Media Prima Bhd has appointed Tan Sri Ismee Ismail as an independent non-executive director with effect from June 1. Ismee, 52, is currently chairman of Al Hijrah Media Corp, who runs the local free-to-air Islamic television network TV Alhijrah. He is also deputy chairman of TH Plantations Bhd. Ismee served as the managing director and chief executive officer of Lembaga Tabung Haji from 2006 to 2016, and as chairman of Syarikat Takaful Malaysia Bhd from 2009 to He began his career as a management accountant at Arab Malaysian Development Bhd, and later served in key leadership positions with the Shell Group of Companies in Malaysia. (Source: The Edge Financial Daily) Petronas: Okay Shell selling North Sabah PSC stake to Hibiscus. Petroliam Nasional Bhd (Petronas) has given the greenlight to Royal Dutch Shell PLC for the sale of the latter's 50% stake in the 2011 North Sabah enhanced oil recovery production sharing contract (PSC) to Hibiscus Petroleum Bhd's indirect unit SEA Hibiscus Sdn Bhd. Hibiscus announced last October that it had reached an agreement with Shell for the US$25m or RM104.63m stake buy, subject to Petronas' approval. The PSC includes the Labuan Crude Oil Terminal, and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah. Sabah Shell Petroleum Co (25%) is the operator, with partner Shell Sabah Selatan (25%) and Petronas' subsidiary, Petronas Carigali Sdn Bhd (50%), in the PSC. (Source: The Edge Financial Daily) Voir Holdings: Looking to enter construction and logistics. Voir Holdings Bhd will study a proposal to venture into the construction and logistics business as part of a move to diversify its income base. According to chairman of the fashion apparel company, Datuk Zarul Ahmad Mohd Zulkifli, the group is currently working out a rationalisation plan, which includes a business diversification programme, with a final decision to be made within this year. He adds that the group will likely introduce a dividend policy in the future as its business expands to benefit its shareholders. We are working out on a rationalisation (plan). That is a paper that will be presented to the board. "One of the things that will be considered is how my own private business can fit into Voir to enhance the shareholders' earnings. (Source: The Star) SECTOR Consumer: Tea price likely to rise further this year. The price of tea is likely to climb further this year after dry weather slashed production of the commodity in key suppliers India and Kenya, while recent deadly flooding could disrupt shipments from Sri Lanka, another key exporter. Output in top tea shipper Kenya dropped by over a third from a year ago in the first quarter after drought ravaged parts of the country, while production was down over 16 percent during that period in India, the world s biggest black tea producer. Flooding and landslides in Sri Lanka over the weekend that have killed over 150 people were expected to interfere with tea transportation in the major exporter, although an industry official in the country said the impact on production would be limited. (Source: The Star) ECONOMICS General: Bank Negara kicks off fintech sandbox. Bank Negara has approved four firms to operate within its regulatory sandbox, marking a significant milestone in the growth of financial technology (fintech) in Malaysia. Bank Negara opened applications for parties intending to create innovative ways to improve the quality, efficiency and accessibility of financial services in Malaysia last year, in line with global trends. It also saw the central bank creating a unit called the Financial Technology Enabler Group (FTEG) which would oversee the entry of technological innovations in financial services. Companies operating in the sandbox will be allowed to commercially launch their services albeit within limits set by the central bank and under close watch by the regulator. (Source: The Star) w w w. u t r a d e. c o m. m y 5

6 FROM THE REGIONAL MORNING NOTES... Genting Berhad: 1Q17: Above Expectations (GENT MK/HOLD/RM9.73/Target: RM10.85) GENT's strong results were mainly driven by subsidiary GENS margin expansion on better cost efficiency and lower impairment on receivables. While GENT s valuation is relatively more compelling than its subsidiaries, we do not foresee significant rerating catalysts emerging in the near term. Greenfield opportunities, i.e, Japan and Las Vegas serve as longer-term catalysts. Maintain HOLD. Target price: RM Genting Malaysia: 1Q17: A Longer Wait For Catalysts (GENM MK/SELL/RM6.11/Target: RM5.15) 1Q17 results were largely in line. Operations in Malaysia recorded a decline in luck adjusted revenue amid lower visitor arrivals despite the phased opening of Sky Avenue (from Dec 16), while the theme park opening is now targeted for 2Q18. In the US, Bimini continued to chalk up losses (turnaround is expected only in 2019) while the impairment risk on GENM s investment in tribal casino project remains. Maintain SELL. Target price: RM5.15. Hong Leong Bank: 3QFY17: Laggard With A Solid Franchise And Growth Recovery Catalyst Upgrade to BUY (HLBK MK/BUY/RM13.96/Target: RM15.30) HLBK s 3QFY17 earnings came in 5% above our estimate. Strong NIM expansion and the recovery at the Bank of Chengdu contributed positively. The stock is currently trading at an undemanding 1.20x FY18F P/B. The market has yet to appreciate its solid liquidity profile (lowest LDR in the industry) and high regulatory reserve buffers. A sustained growth recovery at Bank of Chengdu should help to catalyse a re-rating. Post earnings revision and rolling forward our valuations to FY18, we upgrade to BUY with a higher TP of RM15.30 (10.1% ROE, 1.36x FY18F P/B). Sunway: 1Q17: Expect A Strong 2H17 (SWB MK/BUY/RM3.60/Target: RM3.93) Sunway s 1Q17 results came broadly in within expectations at RM107.9m, accounting for 18% of our full-year estimate. Both the investment property and construction division were key earnings drivers this quarter. The group clinched RM142m in property sales during the quarter despite not undertaking any major launches. Key catalysts for the group include potential contract wins for its construction division. Maintain BUY. Target price: RM3.93. For more reports, please log in to or open an account now to gain access. Explore our trading tools designed to assist you in your trading ShareXplorer, ChartGenie, TechAnalyzer, Stock Alerts! Broaden your knowledge through our educational events. Contact us now at to find out more about our ongoing promotions (get FREE* live feed on foreign markets). *T&C apply. w w w. u t r a d e. c o m. m y 6

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