R e t a i l M a r k e t M o n i t o r Monday, 9 May 2016

Transcription

1 MARKET NEWS FBMKLCI CHART The FBMKLCI rose 4.27pt (+0.3%) to close at 1, last Friday. Meanwhile, Asian stocks fell for a fifth day, with the regional benchmark index set for its worst weekly loss in almost three months as Japanese traders returned from a three-day holiday and investors awaited the monthly US jobs report for clues on the strength of the world s largest economy. The MSCI Asia Pacific Index slid 0.5% to The FBMKLCI s top gainers were Malayan Banking (+1.6%), Maxis (+1.1%), Public Bank (+1.1%) while the top losers were British American Tobacco (-2.7%), Petronas Chemicals Group (-2.0%) and Petronas Gas (-0.9%). In the broader market, gainers outpaced losers 426 to 346 with 367 counters unchanged. Turnover was 1.58b shares valued at RM1.82b. The FBMKLCI recorded gains last Friday, erasing fears after a few days of panic selling and setting a new mood among investors. The short-term bearish bias remains, particularly with the RSI line still treading below the 50pt threshold level and in view of the strong resistance at 1,674. We expect the uptrend to resume once selling pressure eases. We maintain our support and resistance levels as follows: Support: 1,630, 1,600 Resistance: 1,674, 1,700 US stocks bounced back from earlier weakness to close higher on Friday but logged their second straight week of losses. Main indexes were pressured after data showed that the economy added only 160,000 new jobs in April while the unemployment rate remained flat at 5%. However, the market shrugged off the disappointing data as investors focused on the possibility that the Federal Reserve may refrain from raising interest rates in the near future. S&P 500 rose 7pt, or 0.3%, to close at 2,057 while the Dow Jones Industrial Average added 80pt, or 0.5%, to finish at 17,740 and the Nasdaq gained 19pt, or 0.4%, to close at 4,736. WHAT S IN THE PACK Sarawak Election 2016 While Barisan s landslide win in the Sarawak state election is market-neutral, valuations of selected Sarawak infrastructure plays have eased to attractive levels. MISC (MISC MK/HOLD /RM8.34/Target: RM8.10) 1Q16: Core profit misses expectations; expect more earnings downgrades due to more headwinds on tanker rates, risk on LNG contracts and higher depreciation. Johan Holdings (JOH MK) Technical BUY with 33.3% potential return BUY with a target price of RM0.205 and stop-loss at below RM Since correcting from a high of RM0.215 to a low of RM0.105, share price is recovering gradually and has moved above the BBI line following last Friday s spike, effectively reversing its previous trend. KUB Malaysia (KUBM MK) Technical BUY on breakout with +25.4% potential return BUY on breakout with a target price of RM0.395 and stop-loss at below RM Share price has been climbing along the rising trendline in the past few months. Raya International (RAYA MK) Technical BUY on breakout with 34.0% potential return BUY on breakout with a target price of RM0.395 and stop-loss at below RM Based on the daily chart, RAYA is currently making higher highs and higher lows, a key characteristic of an uptrend pattern. Source: BursaStation KEY INDICES Prev Close Chg (%) YTD (%) DJIA 17, S&P 500 2, FTSE 100 6, (1.87) CSI 300 3, (2.60) (16.10) FSSTI 2, (1.34) (5.27) HSCEI 8, (1.80) (12.31) HSI 20, (1.66) (8.23) JCI 4, KLCI 1, (2.55) KOSPI 1, (0.49) 0.79 Nikkei , (0.25) (15.38) SET 1, (0.51) 7.97 TWSE 8, (0.26) (2.30) BDI (1.71) CPO (RM/mt) 2, (0.04) 5.75 Nymex Crude (US$/bbl) TOP VOLUME Stock Price (RM) Chg (%) Vol ( 000) R&A 0.01 (33.33) 57,959 Airasia X Bhd ,495 Awc Bhd ,975 Vivocom International 0.34 (1.47) 36,293 Airasia Bhd ,442 TOP GAINERS Stock Price (RM) Chg (%) Vol ( 000) Palette Multimedia ,813. Cuscapi Bhd ,264.0 Permaju Industries ,932.9 Pa Resources Bhd ,906.2 Kuantan Flour Mills TOP LOSERS Stock Price (RM) Chg (%) Vol ( 000) R&A 0.01 (33.33) 57,958. Maxwell International 0.02 (20.00) 1,136.0 Pinehill Pacific Bhd 0.25 (16.67) 2.0 Wintoni Group Bhd 0.03 (14.29) 21,325. Multi Sports Holdings 0.03 (14.29) 2,111.2 Source: Bloomberg w w w. u t r a d e. c o m. m y 1

2 TRADERS CORNER Johan Holdings (JOH MK) Technical BUY with 33.3% potential return Last price : RM0.135 Target price : RM0.18, RM0.205 Support : RM0.11 Stop-loss : RM0.105 BUY with a target price of RM0.205 and stop-loss at below RM Since correcting from a high of RM0.215 to a low of RM0.105, share price is recovering gradually and has moved above the BBI line following last Friday s spike, effectively reversing its previous trend. Last Friday s gain was also accompanied by a high trading volume and rising MACD and DMI indicators, implying the positive momentum will strengthen in the near term. This is supported by an uptick in the RSI. We peg our targets at RM0.18 and RM0.205 for the near term. Expected Timeframe: 2 weeks to 2 months KUB Malaysia (KUBM MK) Technical BUY on breakout with +25.4% potential return Last price : RM0.29 Target price : RM0.36, RM0.395 Support : RM0.27 Stop-loss : RM0.265 BUY on breakout with a target price of RM0.395 and stop-loss at below RM Share price has been climbing along the rising trendline in the past few months. A bullish bias has been established following an uptick in the RSI and a bullish crossover in the MACD and the DMI. We expect the stock will continue to move up once it penetrates the breakout level of RM 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 Raya International (RAYA MK) Technical BUY on breakout with 34.0% potential return Last price : RM0.245 Target price : RM0.355, RM0.395 Support : RM0.22 Stop-loss : RM0.215 BUY on breakout with a target price of RM0.395 and stop-loss at below RM Based on the daily chart, RAYA is currently making higher highs and higher lows, a key characteristic of an uptrend pattern. The price tried to penetrate the breakout level of RM0.265 last Friday amid the rising MACD and RSI indicators, implying the positive momentum will strengthen in the near term. We peg our targets at RM0.355 and RM0.395 for the near term. Expected Timeframe: 2 weeks to 2 months w w w. u t r a d e. c o m. m y 3

4 CORPORATE NEWS BAT: New MD soon. British American Tobacco (M) Bhd s (BAT) managing director (MD) Stefano Clini will vacate his current position as MD of the cigarette company after concluding his current assignment at the company. The company will soon appoint a new MD once the formalities are completed. Its latest quarterly net profit fell by about 30% from a year ago with a 7.7% drop in sales volume in the first quarter of its 2016 financial year compared with the fourth quarter of last year. Usually favoured for its dividends, the company cut its dividend declared in the first quarter from 78 sen a share previously to 55 sen in the latest quarter. (Source: The Star) Flonic Hi-Tec Bhd: Wins RM30.8m construction contract. Flonic Hi-Tec Bhd s wholly-owned unit, Jiwa Project Sdn Bhd, has accepted a contract worth RM30.86m for project management and sub-contract works from B.S. Civil Engineering Sdn Bhd. The precision system manufacturer and mechanical and electrical maintenance services provider told Bursa Malaysia that the contract was for the construction of 28 single-storey detached units, 150 double-storey semi-detached units and infrastructure works for an affordable housing project in Batu Berendam, Malacca. Construction work is to begin on 9 May and to be completed on 31 Mar next year. (Source: Bernama) Hiap Teck: Strong steel prices to boost earnings. Hiap Teck Venture Bhd, which has posted a net loss of RM60.03m for its half financial year ended 31 Jan 16 (6MFY16), is expecting things to look up for the remaining year, supported by higher steel prices and the strengthening of ringgit. The steel pipe manufacturer s executive director Foo Kok Siew said as steel prices have increased 30% to 50%, most steel players are expected to register better financial performances in (Source: The Edge Financial Daily) Icon Offshore: Gets RM42m charter contract. Icon Offshore Bhd has secured its first charter contract of the year -- providing ExxonMobil Exploration and Production Malaysia Inc with two straight supply vessels for two years, with a one-year extension option. The country s biggest offshore support vessel provider told Bursa Malaysia that the contracts, secured by its wholly-owned subsidiary Icon Offshore Group Sdn Bhd, had started this month and that they were valued at RM42m (inclusive of extension period). (Source: The Star) Ivory Properties Group: In RM1.8b Penang projects. Ivory Properties Group Bhd is carrying out RM1.8b worth of projects on Penang island this year. This includes the first phase of Penang WorldCity (PWC) called Tropicana Bay Residences with a gross development value (GDV) of RM933m, The Wave (GDV of RM494m), and The City Residence and City Mall (RM313m). The City Residence and City Mall and The Wave will be the main contributors to the group s 2017 fiscal year s revenue ending next 31 Mar. The City Residence and City Mall is expected to contribute RM40m, while The Wave RM90m. (Source: The Star) Sasbadi Holdings: Banks on direct sales licence. Syllabusbased content provider Sasbadi Holdings Bhd has a new business strategy direct sales and is banking on this to help it beef up its revenue starting from the current financial year ending 31 Aug (FY16). Co-founder and MD Law King Hui says the licence, which was given to its wholly-owned subsidiary, Mindtech Education Sdn Bhd by the Ministry of Domestic Trade, Co-operatives and Consumerism on 26 Apr, will enable the firm to sell its digital education products via direct sales members a first of a kind strategy for the firm. This new channel to contribute sales will start this current financial year. Gross margins will be somewhat similar to its other products at around 40%. (Source: The Star) w w w. u t r a d e. c o m. m y 4

5 Silk Holdings unit gets RM55.3m Islamic financing for tanker buy. Silk Holdings Bhd s wholly-owned unit, Jasa Merin (Labuan) PLC (JML), has been granted Islamic financing facilities by Affin Islamic Bank Bhd totaling RM55.27m to part-finance the purchase of three oil/chemical tankers, one each from BHIC Marine Carriers Sdn Bhd, BHIC Marine Ventures Sdn Bhd and BHIC Marine Transport Sdn Bhd. The facilities would provide financing for up to 70% of the tanker acquisition. (Source: Bernama) SKP Resources: EPF substantial shareholder in SKP Resources. The Employees Provident Fund (EPF) Board has emerged as a substantial shareholder in plastic moulding company, SKP Resources Bhd with a 5% stake. A filing with Bursa Malaysia on Friday showed it was triggered after the EPF bought 155,200 shares on May 3. The transaction saw its shareholding rise to 5% or m shares. (Source: The Star) Telekom Malaysia: A 'convergence champion' as telco battle rages. Telekom Malaysia Bhd is expected to be a "serious contender" in the Malaysian mobile telecommunication sphere after the fixed-line champion rebranded its mobile arm. The rebranding of Telekom Malaysia's mobile arm Packet One Networks (M) Sdn Bhd (P1) to Webe was indication of Telekom Malaysia's commitment to expand into the mobile sphere. Telekom Malaysia is expected to join the fray later this year as it tries its hand at quad-play. No date has been announced yet but the rebranding of its mobile arm from P1 to Webe was completed last month. (Source: The Edge Financial Weekly) w w w. u t r a d e. c o m. m y 5

6 SECTOR Banking: Bank Negara s international reserves at RM380b. Bank Negara's international reserves amounted to RM381.4b (equivalent to US$97b) as at 29 Apr 16. In a statement yesterday, the central bank said the reserves position was sufficient to finance 7.9 months of retained imports. It added that the reserves position was 1.1 times the short-term external debt. The main components of the international reserves were foreign currency reserves (US$89.1b), International Monetary Fund position (US$0.8 b), Special Drawing Rights (SDRs)(US$1.2b), gold (US$1.4b) and other reserve assets (US$4.5b). (Source: The Star) Oil & Gas: Saudi to maintain stable oil policies. The new energy minister of Saudi Arabia, the world s biggest oil exporter, yesterday pledged continuity in the kingdom s oil policy, after being named in a major government overhaul. Saudi Arabia will maintain its stable petroleum policies, Khalid al-falih said in a statement a day after King Salman appointed him to replace long-time former oil minister Ali al-naimi. We remain committed to maintaining our role in international energy markets and strengthening our position as the world s most reliable supplier of energy, Falih added. (Source: The Edge Financial Daily) Property: Investment haven in the making. Iskandar Malaysia in Johor is moving closer towards becoming a sustainable international metropolis, and spurring economic developments that actuate Malaysia s global potential. According to Iskandar Regional Development Authority (Irda) chief executive Datuk Ismail Ibrahim, the economic region, which is three times bigger than Singapore, had accumulated a total of RM202.45b in committed investments from 2006 until March. Of the total 51% represents investments that have been realised. The foreign investors contributed RM81.01b, or 40%, to the total cumulative committed investments, while the remaining 60%, or RM121.44b, was from local investors. (Source: The Business Times) ECONOMICS Exports: Rebound by 1% in Q1: MITI. Exports rebounded by 1% during the first quarter of 2016 compared to a decline during the same period a year ago. The trade surplus registered a double digit growth of 12.2% during the first three months to reach a value of RM346.38b. The International Trade and Industry Ministry said for March, exports rose marginally while imports decreased by 5.5% with total trade recorded at a decline of 2.5%. In Mar 2016, exports of manufactured goods increased mainly due to higher demand for manufactures of metal especially nickel, machinery, equipment and parts, optical and scientific equipment, processed food, textiles, apparels and footwear, chemicals and chemical products as well as electrical and electronic products (E&E). (Source: The Business Times) w w w. u t r a d e. c o m. m y 6

7 FROM THE REGIONAL MORNING NOTES... Sarawak Election 2016 Barisan s landslide win in the Sarawak state election is not unexpected, and is largely market neutral. We do not expect the Sarawak state election results to have a direct bearing on the FBMKLCI and Sarawak-listed companies (we note that in past elections, Sarawak-listed companies post-election stock price performances have been mixed). Nevertheless, we highlight that the US$27b Pan-Borneo highway will benefit construction and building material companies. MISC: 1Q16: Results Miss Expectations; Rough Seas Ahead For LNG And Tankers (MISC MK/HOLD /RM8.34/Target: RM8.10) 1Q16 core profit missed expectations due to lower core LNG profit after a one-off termination fee. MISC is now in an earnings de-rating, given volatility in tanker rates (and higher oil prices), stricter depreciation policy, and headwinds on more LNG uncertainties that are material but difficult to predict. Our revised earnings forecasts are now 20-30% below consensus. Although we like MISC s long-term strategies, we maintain HOLD and cut target price to RM8.10. Entry price: RM7.00. 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 7

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