PP16795/03/2013(031743) Apr-16

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1 Thursday, 13 April, 2017 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Research Team PP16795/03/2013(031743) Reports Published News Flash GHL Systems: Another Growth Partner Corporate News Economic News SP Setia tops Singapore property bid Lion Industries sells steel plant to Yinson for RM47.7m PDZ will take steps to defend arrest of its vessel MNC Wireless to tie up with M3Tech for DFTZ venture RHB partners Funding Societies to help SMEs Malaysian banks to see 6%-7% loan growth this year MWIA inks MoU with Guangxi Forestry Industry Trade Association Huge potential in southern Thailand-Malaysia cross-border trade China's CB quietly increases its power in battle to curb risks UK households feel the pinch as real earnings almost stagnate Opec says oil deal bearing fruit, but US pumping more Bursa Malaysia KLCI Performance Close Change +/- Change % FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 14, Volume (m) 4, Value (MYR m) 2, FBMKLCI YTD performance KLCI Year-End Target: 1,755 points Regional Indices Commodities (Last Close) Close Change +/- Change % YTD Change (%) Close Change +/- Change % DJIA 20, Brent Crude (USD/bbl) NASDAQ 5, WTI Crude (USD/bbl) S&P 500 2, CPO (RM/MT) 2, FTSE 100 7, Gold (USD/ounce) 1, Nikkei , Latex (sen/kg) HSI 24, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 9, (per USD) BIMB (YE Forecast) Close Change +/- Change % STI 3, MYR JCI 5, JPY SET 1, EUR PSEi 7, 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 3.54 Local Insti , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.84 Foreign yr MGS 4.12 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 % Uzma % Scomi Energy % Eversendai % Freight Management % Dayang Enterprise % Hovid % QL Resources % Kimlun % Xin Hwa % Sapura Energy % 2

3 CORPORATE NEWS SP Setia tops Singapore property bid SP Setia is the highest bidder for a residential project in Toh Tuck Road in Singapore with an estimated bid of SD265m (RM837.66m). The property developer was among 24 bidders for the tender of the 18,721.4-sq m plot, which is located in a suburban area near Bukit Timah. The site is to be able to yield a maximum gross floor area of 26,210 sq m or about 325 units. SP Setia s bid is said to be the highest at SD265m, which translates to about SD939 per square foot per plot ratio (psf ppr). This, in turn, exceeds initial analyst expectations of around 8 to 16 bidders, with the highest bid expected to be no more than SD750 psf ppr. (Source: StarBiz) Lion Industries sells steel plant to Yinson for RM47.7m Lion Industries is selling one of its steel factories to Yinson Corp for RM47.7m through a sale and leaseback arrangement. Through the sale and leaseback arrangement, Lion Industries could use the proceeds to partly settle its debt to Yinson without disrupting its plant operations. Its unit Lion Metal Industries had entered into a sale and purchase agreement with Yinson for the disposal of a 3.23-ha parcel of land in Klang, Selangor, for RM45m excluding tax. Meanwhile, another unit of Lion Industries, Amsteel Mills, has entered into a lease agreement with Yinson for the lease of the property on the land for a period of 5 years, with an option to renew for another 5 years. (Source: StarBiz) PDZ will take steps to defend arrest of its vessel PDZ would take steps to defend the arrest of its PDZ Maju vessel, which had received a warrant of arrest from Continental Platform (M) SB (CPSB). The arrest of the vessel was made pursuant to the claim by CPSB of RM563,311 for the non-payment of supply of bunkers to PDZ Mewah in December last year, costs and any further or other relief that the High Court may deem fit. The company had been in negotiations with CPSB since the arrest of the vessel with a view to reach an out-of-court settlement. However, the board is of the opinion that negotiations with CPSB has since fell through and, upon obtaining legal advice, has resolved to take steps to defend the arrest of the vessel and any claims that may subsequently be filed and set it aside. (Source: StarBiz) MNC Wireless to tie up with M3Tech for DFTZ venture MNC Wireless and M3 Technologies (Asia) (M3Tech) have emerged as among the 1 st technology firms to establish a presence in the Malaysia Digital Free Trade Zone (DFTZ) after entering a MoU for the development of an e-commerce platform. The collaboration would entail an inclusive e-commerce platform with integrated payment gateway solutions and end-to-end logistics support, which will be operated in the DFTZ. M3Tech, which was incorporated in 1999, is a specialised mobile value-added service provider with hardware capabilities and is listed on the Ace Market. As a mobile content provider, the firm covers a wide range of consumer, enterprise and partnership products and services. (Source: StarBiz) RHB partners Funding Societies to help SMEs RHB Banking Group has partnered Funding Societies Malaysia, a regional peer-to-peer (P2P) financing platform, to expand funding opportunities for the underserved SME segment in the country. RHB s SME business had grown at a compounded annual growth rate of 17% per annum from As they continue to focus on growing our SME customer base, substantial energy and resources will be devoted to creating a differentiated and tailored value proposition for SME owners and their businesses, as the SME sector forms the backbone of Malaysia s economy. About 97% of business enterprises in Malaysia are SMEs. (Bernama) 3

4 ECONOMIC NEWS Malaysian banks to see 6%-7% loan growth this year Moody s Investors Service expects Malaysian banks to record loan growth of between 6% and 7% this year compared to 5.3% in The improvement could be largely driven by stable operating conditions in the country on the back of robust domestic economic activities. They are thinking of the possibility that businesses will have better clarity, with operating conditions stabilising and business sentiment might improve towards the 2H2017. Improved sentiment in business sectors will also trickle down to stable consumer spending. That would perhaps provide an uplift to a better loan growth in the 2H compared to the 1H. A continued slowing of household loan growth is positive amid a mild deterioration in bank asset quality. (Source: Bernama) MWIA inks MoU with Guangxi Forestry Industry Trade Association The Malaysian Wood Industries Association (MWIA) has signed a MOU with Guangxi Forestry Industry Trade Association to promote collaboration and exchange of information between the 2 countries on timber trade. The collaboration would create an informationsharing platform to strengthen cooperation on market development, technology, human resources, management and trade for mutual benefits. The collaboration would also optimise the association member s resources in planting as well as trading sawn timber, veneers and wood-working machineries. The MoU also included training and transfer of relevant technologies in sawn timber processing, panel product development and eucalyptus plantation, based on the needs of both association. (Source: Bernama) Huge potential in southern Thailand-Malaysia cross-border trade The cross-border trade between southern Thailand and Malaysia has the potential to grow about 400, ft equivalent unit (TEUs) of cargo per annum. The current trade volume was 120,000 TEUs per year. Rail operators should take advantage of the double-tracking system in the country, as it is only 20% utilised. Since the double-tracking system was under-utilised, Keretapi Tanah Melayu Bhd (KTMB) should review its business plans. This will include exploring potential JV to maximise usage. KTMB should submit to them their business plans. (Source: StarBiz) China's CB quietly increases its power in battle to curb risks China's CB has been quietly boosting its policy independence and regulatory reach as it seeks to contain risks to the financial system, to help ensure stability ahead of a 5-yearly leadership team transition this year. By greater use of market mechanisms to adjust interest rates instead of changing the official benchmark rates, which need political approval, the People's Bank of China has assumed more targeted, timely and effective control of its principal policy objective to calibrate the cost of capital in the economy. And by broadening the scope of the tools it uses to assess and limit the accumulation of risky assets in the banking system, it has expanded its oversight powers without getting embroiled in the kind of bureaucratic infighting that has beset plans to create a financial super-regulator. (Source: Reuters) UK households feel the pinch as real earnings almost stagnate UK living standards are under more pressure than at any time in 2½ years and the squeeze is getting tighter. Adjusted for inflation, regular pay rose just 0.1% in the 3 months through February, the weakest since the 3Q2014. That figure could turn negative in the coming months if forecasts for a further pickup in price growth to 3% or even higher come to pass. Inflation has jumped in the past year because of the pound s decline since the Brexit vote and that, coupled with lackluster wage growth, is eating into the spending power of consumers, the engine of the economy. But there was some hope for shoppers that the outlook might not be as bad as feared. (Source: Bloomberg) Opec says oil deal bearing fruit, but US pumping more World oil production fell in March thanks to a deal to cut output, but the cartel s efforts to fight a global glut are threatened by American firms pumping oil with gusto. The world produced a total of mb/d last month, a fall of 230,000 barrels from February. The production by Opec itself, which accounts for about a 3 rd of the world s output, fell by 153,000 mb/d to mb/d. This takes it below a target included in an output reduction deal by Opec and some non-opec producers including Russia which came into force on Jan 1 for an initial run of 6 months. The initiative has prompted a recovery in global oil prices, in turn attracting many American highercost producers back into the market as they can operate profitably again. (Source: AFP) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 04/13/ :50 JN Money Stock M2 YoY Mar 4.20% % -- 04/13/ :50 JN Money Stock M3 YoY Mar 3.60% % -- 04/13/ :00 FI Current Account Balance Feb b -- 04/13/ :00 LN Current Account Balance Feb m -- 04/13/ :00 CZ Current Account Monthly CZK Feb 32.85b b 29.40b 04/13/ :00 PD Current Account Balance Feb -31m m -- 04/13/ :00 PD Trade Balance Feb 24m m -- 04/13/ :30 US PPI Final Demand MoM Mar 0.00% % -- 04/13/ :30 US PPI Ex Food and Energy MoM Mar 0.20% % -- 04/13/ :30 US PPI Final Demand YoY Mar 2.40% % -- 04/13/ :30 US PPI Ex Food and Energy YoY Mar 1.80% % -- 04/13/2017 CH Trade Balance CNY Mar 75.80b b -- 04/13/2017 CH Imports YoY CNY Mar 15.00% % -- 04/13/2017 CH Exports YoY CNY Mar 8.00% % -- 04/13/2017 CH Imports YoY Mar 15.50% % -- 04/13/2017 CH Exports YoY Mar 4.30% % -- 04/13/2017 CH Trade Balance Mar $12.50b -- -$9.15b -- 04/12/ /15 CH Money Supply M2 YoY Mar 11.10% % -- 04/12/ /15 CH Money Supply M1 YoY Mar 19.30% % -- 04/12/ /15 CH Money Supply M0 YoY Mar 4.00% % -- 04/14/ :30 JN Industrial Production YoY Feb F % -- 04/14/ :30 JN Industrial Production MoM Feb F % -- 04/14/ :30 JN Capacity Utilization MoM Feb % -- 04/14/ :00 PD Money Supply M3 MoM Mar 0.80% % -- 04/14/ :00 PD Money Supply M3 YoY Mar 8.60% % -- 04/14/ :30 US CPI MoM Mar 0.00% % -- 04/14/ :30 US CPI Ex Food and Energy MoM Mar 0.20% % -- 04/14/ :30 US CPI YoY Mar 2.60% % -- 04/14/ :30 US CPI Ex Food and Energy YoY Mar 2.30% % -- 04/14/ :30 US CPI Core Index SA Mar /14/ :30 US CPI Index NSA Mar /14/ :30 US Real Avg Weekly Earnings YoY Mar % -0.60% 04/14/ :30 US Real Avg Hourly Earning YoY Mar % -- 04/17/ :00 CH Industrial Production YoY Mar 6.30% % -- 04/17/ :00 CH Industrial Production YTD YoY Mar 6.30% % -- 04/17/ :00 CH GDP YoY 1Q 6.80% % -- 04/17/ :00 CH GDP YTD YoY 1Q 6.80% % -- 04/17/ /20 IR Trade Balance Feb m -- 04/18/ :00 BE Trade Balance Feb m -- 04/19/ :00 IT Trade Balance EU Feb m -- 04/19/ :00 IT Trade Balance Total Feb m -- 04/19/ :00 EC Trade Balance SA Feb b -- 04/19/ :00 EC Trade Balance NSA Feb b -- 04/20/ :50 JN Trade Balance Mar b 813.5b 04/20/ :50 JN Trade Balance Adjusted Mar b -- 04/20/ :50 JN Exports YoY Mar % -- 04/20/ :50 JN Imports YoY Mar % -- 04/20/ :00 CZ Export Price Index YoY Feb % -- 04/20/ :00 CZ Import Price Index YoY Feb % -- 04/20/ :00 PD Sold Industrial Output MoM Mar 13.20% %

6 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. 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 6