PP16795/03/2013(031743) Jul-16

Transcription

1 Tuesday, 1 August, 2017 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Research Team research@bimbsec.com.my PP16795/03/2013(031743) Reports Published Economics Malaysia Economy: Banking Sector Monetary and Financial Developments Corporate News Economic News Mudajaya bags 2 Rapid jobs worth RM151m Lotte Chemical Titan shares fall after posting 2Q results United Plantations 2Q net profit up 52% on higher production, average selling prices ManagePay named partner, service provider to govt's e-wallet programme for foreigners Perstima 1Q earnings tumbles 76% on lower profit margin Producer price index rises 6.4pc in June Malaysia to sign FTAs with HK, Iran by year end OPEC oil output jumps to 2017 high on further Libya recovery Hot and cold: Eurozone grows but inflation slows China July factory growth cools but construction boom fortifies economy Bursa Malaysia KLCI Performance Close Change +/- Change % 1820 FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 13, Volume (m) 1, Value (MYR m) 2, FBMKLCI YTD performance KLCI Year-End Target: 1,800 points Regional Indices Commodities (Last Close) Close Change +/- Change % YTD Change (%) Close Change +/- Change % DJIA 21, Brent Crude (USD/bbl) NASDAQ 6, WTI Crude (USD/bbl) S&P 500 2, CPO (RM/MT) 2, FTSE 100 7, Gold (USD/ounce) 1, Nikkei , Latex (sen/kg) HSI 27, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 10, (per USD) BIMB (YE Forecast) Close Change +/- Change % STI 3, MYR JCI 5, JPY SET 1, EUR PSEi 8, SGD

2 Major Rates Daily Participation Market Insight % Participation Bought Sold Net KLIBOR 3-mth 3.43 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.55 Local Insti , , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.70 Foreign yr MGS 3.99 Total , , Performance of BIMB Stock Coverage Top Gainers Source: Bank Negara Malaysia Top Losers Source: The Sun, BIMB Securities Research Close Change +/- Change % Close Change +/- Change % Padini % Hua Yang % IJM Plantations % Eco World Development % Mah Sing % TSH Resources % QL Resources % UEM Sunrise % TH Plantations % GHL Systems % 2

3 Reports Published Malaysia Economy Economics Banking Sector Monetary and Financial Developments Broad money (M3) grew marginally lower in June Loan growth was stable on yearly basis Loan application plunged Loan approval rate increased Impaired loan growth edged down Broad money (M3) recorded a modest annual growth of 4.3% in June (May: 4.7%). Nevertheless, on monthly basis, it dropped 0.4% or RM5.9bn from a positive growth of 0.8% registered in the preceding month. The declining growth was mainly driven by the significant drop of negotiable instruments of deposit (NID) at -29.4% in June. The narrow money supply or M1 decelerated for three consecutive months and grew by 9.3% yoy or RM33.8bn in June. (May: 9.8%; Apr: 11.0%). Chart 1: Money Supply Growth Trend (%YoY) 20.0% 15.0% 10.0% 5.0% 0.0% Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16 May % M3 M2 M1 Source: Bank Negara Malaysia, BIMB Securities Stable loan growth. Loans growth for the banking sector inched up to 5.7% yoy in June from 5.5% registered in the prior month, driven by the higher growth in business loans. The improvement in business loan growth was attributed to higher growth in loans extended to businesses other than SMEs (June: 6.3%; May: 4.1%), specifically to businesses in major sectors such as construction, manufacturing, and wholesale and retail trade, restaurant and hotels. 3

4 CORPORATE NEWS Mudajaya bags 2 Rapid jobs worth RM151m Mudajaya has bagged 2 contracts worth RM151.38m from Petronas to undertake procurement, construction and commissioning (PCC) works for the utilities, interconnecting and offsite (UIO) facilities of the refinery and petrochemical integrated development (Rapid) project in Pengerang, Johor. Its wholly-owned unit Mudajaya Corp Bhd was awarded the 2 contracts on July 25 and 26 by PRPC Utilities and Facilities SB, a subsidiary of Petronas. Project 1 involves PCC of a data centre and telecom equipment room and an electrical substation for the UIO facilities at the Rapid project, while Project 2 involves PCC of civil and infrastructure works at Area 8100 for the UIO facilities. The projects are expected to contribute positively to the earnings of the group for the financial year ending 2017 and onwards. (Source: The Edge) Lotte Chemical Titan shares fall after posting 2Q results Shares of Lotte Chemical Titan Holding (LCT) have declined 67 sen in active trade after its net profit for the 2QFY17 slumped 72% yoy. LCT's 2QFY17 net profit dropped 72% to RM113.62m, from RM404.03m in the same quarter last year, due to high inventory cost carried forward from turnaround activities in 1QFY17, and also higher unit production cost due to water interruption in April Revenue dipped 11% YoY to RM1.78bn from RM2bn on lower sales volume in the period. For the 1HFY17, LCT's net profit was down 33% yoy to RM455.77m from RM676.2m, with revenue declining 7% to RM3.69bn from RM3.99bn. (Source: The Edge) United Plantations 2Q net profit up 52% on higher production, average selling prices United Plantations's 2Q net profit rose 51.7%, mainly due to higher production, higher CPO and palm kernel (PK) prices, and lower costs of production. Net profit for the 2QFY17 rose to RM109.75m from RM72.35m a year ago. Earnings per share grew to sen in 2QFY17 from sen in 2QFY16. Quarterly revenue also increased 27.9% to RM355.26m from RM277.73m in 2QFY16. For the cumulative 6 months 1HFY17, the group posted a 41.9% increase in net profit to RM187.42m from RM132.12m a year ago, while revenue grew 36.7% to RM734.5m from RM537.31m in 1HFY16. CPO and PK production increased by 22.5% and 22.1% YoY respectively in 1HFY17, while cost of production of CPO and PK fell by 21.6% and 4.1% YoY respectively. (Source: The Edge) ManagePay named partner, service provider to govt's e-wallet programme for foreigners ManagePay (MPay) has been appointed by the Malaysia Economic Development Council (Mapem) as partner and service provider for the latter's Mapem/MPay Prepaid MasterCard programme for foreigners in Malaysia. It has received a LoA from the council regarding the appointment, which will see the group partnering with and providing e-wallet and MasterCard services with Mapem for the said programme. The programme, has received full support from the Malaysian Prime Minister's Department via a letter issued on July 17 this year. Under the agreement, MPay will provide foreigners with financial services namely MPay Wallet mobile application for smartphones, physical MPay MasterCard prepaid cards, salary crediting programme and remittance services. (Source: The Edge) Perstima 1Q earnings tumbles 76% on lower profit margin Perstima has reported a 76% drop in net profit for its 1QFY18 to RM2.84m, from RM11.79m a year earlier, due to a lower profit margin, despite higher sales volume. The group, which manufactures and exports high-quality tinplate was not able to pass through the production cost hike to customers, in order to maintain price competitiveness. Revenue for the quarter rose 34.7% to RM237.5m, from RM176.29m a year ago (1QFY17), due partly to higher selling price amid high sales volume. Perstima expects the operating environment to remain challenging and competitive, due to greater presence of imports from overseas, in addition to volatility of the Malaysian ringgit against the USD. (Source: The Edge) 4

5 ECONOMIC NEWS Producer price index rises 6.4pc in June The Producer Price Index (PPI) for local production rose 6.4% on a yoy basis in June Among the sectors which showed significant increases during the period were Mining, which increased by 10.2%, Manufacturing, 6.6%; Agriculture, forestry & fishing, 5.0%; and Electricity & gas supply which was up by 0.8%. The index for Water supply, however, decreased by 0.7%. On a monthly basis, PPI for local production was down 1.1% in June 2017 compared to May 2017 due to decreases in four sectors - Mining, Agriculture, forestry & fishing, Manufacturing, and Water supply. Electricity & gas supply remained unchanged. The PPI for local production by stage of processing (SOP) declined 1.1% in June 2017 compared to the previous month, due to decreases in the index for Crude materials for further processing, intermediate materials, supplies and components, and Finished goods. (Source: StarBiz) Malaysia to sign FTAs with HK, Iran by year end Malaysia is expected to sign free trade agreements (FTAs) with Hong Kong and Iran by year-end. To-date Malaysia has signed 13 FTAs with its Asean and dialogue partners. However, there was a concern on the palm oil sector as the EU has adopted a discriminatory policy towards palm oil. The EU is Malaysia s biggest palm oil market and in 2016, palm oil export stood at RM10bn. The FTA between Malaysia and 27 EU countries is expected to boost total trade by 20-30% from 10% currently. The EU is Malaysia s 3 rd largest trading partner with total trade in January this year increased 9.7% to RM12.9bn from the same month a year ago. In 2016, trade with the EU edged up 0.4% to RM149.1bn. (Source: Bernama) OPEC oil output jumps to 2017 high on further Libya recovery OPEC oil output has risen this month by 90,000 bpd to a 2017 high, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal. A dip in supply from Saudi Arabia and lower Angolan exports helped to boost OPEC's adherence to its supply curbs to 84%. While this is up from a revised 77% in June, compliance in both months has fallen from levels above 90% earlier in the year. The extra oil from Libya means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target. Libya and Nigeria were exempt from the cuts because conflict had curbed their production. A gain in Libyan and Nigerian output has added to the challenge the OPEC-led effort is facing to get rid of excess supply on world markets. (Source: Reuters) Hot and cold: Eurozone grows but inflation slows Data in the coming week should confirm the eurozone economy is running hot, after the International Monetary Fund (IMF) upgraded growth forecasts and Greece returned to the debt market, although inflation figures could throw cold water on ECB plans to start tightening policy. Growth in the single currency area outstripped paltry expansion in the United States and Britain in the first quarter and the pace did not let up in the April-June period. The eurozone may not be growth champion in the second quarter, after the US rebounded to an annualised 2.6% thanks to consumer spending and business equipment investment. But it should again fare better than Britain, whose economy failed to build momentum. A forecast expansion of 0.6% in the April-June period, equivalent to an annualised 2.4%, would be the 3 rd consecutive quarter in which the eurozone has grown at or above a half percentage point, for the 1 st time since (Source: Reuters) China July factory growth cools but construction boom fortifies economy Growth in China s manufacturing sector cooled slightly in July as foreign demand for Chinese goods slackened, but a government-led infrastructure push kept construction humming and helped prop up the world s 2 nd largest economy. The official Purchasing Managers Index (PMI) held above the 50-point mark that separates growth from contraction for the 12 th straight month, as China poured funds into a construction boom that has fuelled demand for everything from cement to steel and other building materials. But the broad consensus among China watchers is that economic growth will cool in coming months as a government crackdown on financial risks raises borrowing costs for businesses and squeezes profits. Export orders, which helped Chinese factories stage a strong recovery in June, had ebbed this month, with manufacturers reporting slackening foreign demand. Overall factory production expanded less quickly compared with June. (Source: Reuters) 5

6 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 08/01/ :30 JN Nikkei Japan PMI Mfg Jul F /01/ :45 CH Caixin China PMI Mfg Jul /01/ :00 HU Trade Balance May F m -- 08/01/ :30 UK Markit UK PMI Manufacturing SA Jul /01/ :30 US PCE Deflator MoM Jun 0.00% % -- 08/01/ :30 US PCE Deflator YoY Jun 1.30% % -- 08/01/ :30 US PCE Core MoM Jun 0.10% % -- 08/01/ :30 US PCE Core YoY Jun 1.40% % -- 08/01/ :45 US Markit US Manufacturing PMI Jul F /01/ :00 US ISM Manufacturing Jul /01/ :00 US ISM Prices Paid Jul /01/ :00 US ISM New Orders Jul /01/ :00 US ISM Employment Jul /01/ /07 JN Official Reserve Assets Jul $1249.8b -- 08/02/ :30 UK Markit/CIPS UK Construction PMI Jul /02/ :00 DE Foreign Reserves Jul /02/ :00 DE Change in Currency Reserves Jul b -- 08/03/ :30 JN Nikkei Japan PMI Services Jul /03/ :30 JN Nikkei Japan PMI Composite Jul /03/ :45 CH Caixin China PMI Composite Jul /03/ :45 CH Caixin China PMI Services Jul /03/ :30 UK Markit/CIPS UK Services PMI Jul /03/ :30 UK Markit/CIPS UK Composite PMI Jul /03/ :30 UK Official Reserves Changes Jul $491m -- 08/03/ :00 UK Bank of England Bank Rate 3-Aug 0.25% % -- 08/03/ :00 UK BOE Asset Purchase Target Aug 435b b -- 08/03/ :00 UK BOE Corporate Bond Target Aug 10b -- 10b -- 08/03/ :00 CZ Repurchase Rate 3-Aug 0.25% % -- 08/03/ :45 US Markit US Services PMI Jul F /03/ :45 US Markit US Composite PMI Jul F /03/ :00 US ISM Non-Manf. Composite Jul /04/ :00 GE Factory Orders MoM Jun 0.50% % -- 08/04/ :00 GE Factory Orders WDA YoY Jun 4.40% % -- 08/04/ :00 SP Industrial Output NSA YoY Jun % -- 08/04/ :00 SP Industrial Output SA YoY Jun 2.80% % -- 08/04/ :00 SP Industrial Production MoM Jun -0.20% % -- 08/04/ :00 IR Industrial Production MoM Jun % -- 08/04/ :00 IR Industrial Production YoY Jun % -- 08/04/ :30 US Trade Balance Jun -$44.5b -- -$46.5b -- 08/04/2017 RO Interest Rate Announcement 4-Aug 1.75% % -- 08/07/ :00 GE Industrial Production SA MoM Jun % -- 08/07/ :00 GE Industrial Production WDA YoY Jun % -- 08/07/ :00 FI Trade Balance Jun P m -- 08/07/ :00 DE Industrial Production MoM Jun % -- 08/07/ :00 CZ Construction Output YoY Jun % -- 08/07/ :00 CZ Industrial Output YoY Jun 7.00% % -- 08/07/ :00 CZ Trade Balance National Concept Jun 18.0b b -- 08/07/ :00 LN International Reserves Jul m -- 08/07/ :00 PD Official Reserves Jul /07/2017 CH Foreign Reserves Jul $3069.0b -- $3056.8b -- 08/08/ :50 JN BoP Current Account Balance Jun b -- 08/08/ :50 JN BoP Current Account Adjusted Jun b -- 08/08/ :50 JN Trade Balance BoP Basis Jun b

7 DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10 in the next 12 months. TRADING BUY Share price may exceed 15 over the next 3 months, however longer-term outlook remains uncertain. HOLD Share price may fall within the range of +/- 10 over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15 in the next 3 months. SELL Share price may fall by more than 10 over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analyst s coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analyst s coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analyst s coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn may from time to time have a position in or either the securities mentioned herein. Members of the BIMB and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this date and are subject to change without notice. BIMB Securities Sdn accepts no liability for any direct, indirect or consequential loss arising from use of this report. Printed and published by BIMB SECURITIES SB ( X) A Participating Organisation of Bursa Malaysia Securities Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, Kuala Lumpur Tel: Fax: Azharuddin Nordin Head of Research 7