PP16795/03/2013(031743)

Transcription

1 Tuesday, 5 December, Dec-16 Jan-17 Feb Apr Jun Aug Oct Research Team research@bimbsec.com.my PP16795/03/2013(031743) Reports Published Economics Malaysia Economy: GDP growth climbs to 3-year high Corporate News Al-Salam REIT to buy 22 properties for RM115m, seeks to raise RM60m via placement UOA Development ups stake in property developer firm for RM159.5m Ireka partners with Beijing-based CRRC to venture into urban rail projects UMW-OG bags US$6.8m job from ConocoPhillips Sarawak IJM Corp and Sunway set up four-party consortium for KL- Singapore High Speed Rail IOI Corp sees higher CPO prices at RM2,500 to RM2,650 in next 2 months Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 13, Volume (m) 1, Value (MYR m) 2, , Economic News Malaysia's Oct export growth seen climbing 18.5% y/y Malaysia s manufacturing at 43-month high in ember Underground land acquisitions now regulated nationally RAM: Malaysia's 2.8% fiscal deficit target in 2018 achievable OPEC oil output falls in to lowest since October passenger demand rebounds from weather-impacted tember KLCI Performance KLCI Year-End Target: 1,790 points Regional Indices Commodities (Last Close) Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 24, 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 29, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 10, (per USD) BIMB (YE Forecast) Close Chg +/- Chg % STI 3, MYR JCI 5, JPY SET 1, EUR PSEi 8, SGD

2 Major Rates Daily Participation % Participation Bought Sold Net KLIBOR 3-mth 3.43 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.56 Local Insti , , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.59 Foreign yr MGS 3.85 Total , , Performance of BIMB Stock Coverage Top Gainers Source: Bank Negara Malaysia Top Losers Source: The Sun, BIMB Securities Research Close Chg +/- Chg % Close Chg +/- Chg % Westports % IJM Corp % Dagang Nexchange % SP Setia % Kawan Food % Hartalega % Econpile Holdings % Eco World Development % MCT % Ikhmas Jaya Group % 2

3 Jan'13 Jan'14 Jan'15 Jan'16 Jan'17 REPORTS PUBLISHED Malaysia Economy Economics GDP growth climbs to 3-year high Malaysia manufacturing rises to 43-month high Global manufacturing growth accelerates to 80-month high US manufacturing index indicates modestly slower growth in ember Eurozone factory growth near record high UK manufacturing sector growth fastest since 2013 China s manufacturing activity holds up ASEAN manufacturing improves further in ember Malaysia manufacturing rises to 43-month high Manufacturing PMI in Malaysia surged to 52.0 in ember from 48.6 in October. It was the first expansion in manufacturing activity since August and the strongest since April The overall upturn reflected accelerated growth in both output and new orders, supported by improvements in domestic and overseas demand conditions. Output grew at the fastest pace since December 2014 as it rises to 52.2 from 50.2 in October. Output growth was reportedly supported by stronger inflows of new work. New orders rose the most since October 2014 and new export order growth accelerated to the jointsecond fastest since the survey began in mid In addition, job creation went up at the quickest rate since December 2012 and buying activity rose for the first time in seven months. However, firms continued to face further sharp inflationary pressures. This placed pressure on profit margins as companies were unable to fully pass on higher cost burdens to price-sensitive customers. Meanwhile, the degree of business confidence towards the 12- month outlook for output was the strongest in nearly four years. Positive projections for stronger demand conditions and new projects were cited as the key factors behind positive sentiment. Chart 1: Malaysia Manufacturing PMI Source: kit, BIMB Securities 3

4 CORPORATE NEWS Al-Salam REIT to buy 22 properties for RM115m, seeks to raise RM60m via placement Al-Salam Real Estate Investment Trust (Al-Salam REIT) is acquiring 22 properties located across Malaysia for a combined RM115m in a related party transaction. The properties are in Penang, Perak, Selangor, Kuala Lumpur, Negeri Sembilan, Melaka, Johor, Sabah and Sarawak. The proposed acquisitions mark the continuous growth of the REIT where it leverages on its major unitholder JCorp by tapping into its pool of assets or suitable properties in the market for acquisition opportunities. JCorp directly owns 23.54m units or 4.06% in Al- Salam REIT has entered into 3 conditional SPAs with Kentucky Fried Chicken (Malaysia) SB, KFC (Peninsular Malaysia) SB KFC (Sabah) SB and SPM Restaurants SB (collectively known as vendors) on 30 to acquire the 21 restaurant properties and one warehouse/office. Damansara REIT Managers is a wholly-owned subsidiary of Damansara Assets SB, which is a wholly-owned subsidiary of JCorp. The vendors are subsidiaries of QSR, which is 51% owned by JCorp. (Source: The Edge) UOA Development ups stake in property developer firm for RM159.5m UOA Development is buying a further 35% stake in Everise Project SB from Kaginic Assets Holdings SB for RM159.54m, which would bring its total shareholding in the property development company to 74%. Kaginic Assets had made an offer to dispose of its entire interest in Everise and UOA, as an existing major shareholder, had accepted the offer. Everise will continue its existing activities. It yesterday entered into a share sale agreement (SSA) with its 39%-owned associate Everise and Kaginic Assets for the stake acquisition. The proposed buy involves Kaginic Assets 105,000 shares worth RM152.07m and 7.46m redeemable preference shares at RM7.46m. As at t 30, 2017, Everise had bank borrowings amounting to RM26.3m. The acquisition will be satisfied by cash from internal funds. The purchase consideration will be paid within 30 days from the date of the SSA. (Source: The Edge) Ireka partners with Beijing-based CRRC to venture into urban rail projects Property development and construction outfit Ireka has teamed up with the world s largest manufacturer of rolling stock and rail-related products and systems CRRC Urban Traffic (Europe) Co Ltd (CRRC UT) to venture into rail projects. The MoU served the purpose for the collaboration in rail, urban traffic solution, tourism and infrastructure projects in Malaysia and Southeast Asia. Ireka and CRRC UT will work together exclusively to explore business opportunities in areas such as logistics, trading of construction and building materials as well as specific rail and infrastructure construction projects. The MoU entered between Ireka and CRRC UT establishes a formal working relationship between the parties to jointly pursue projects in the areas set out. Simultaneous to the MoU, Ireka had also signed a share subscription agreement with CRRC UT, a member of the China-based CRRC Group to invest in Ireka and subsequently establish a joint venture relationship between both parties, of which Ireka holding 51% and CRRC UT holding 49%. (Source: The Edge) UMW-OG bags US$6.8m job from ConocoPhillips Sarawak UMW-OG has bagged a US$6.8m (RM27.64m) contract to provide a jack-up drilling rig for ConocoPhillips Sarawak Ltd. The contract is to drill 2 firm wells, with the option of 2 additional wells. It is anticipated that drilling activities for one well will span about 50 days with the activities on the 1 st well commencing in the 2Q18, off the coast of Sarawak. The contract was clinched through UMW Offshore Drilling SB (UOD), a wholly-owned subsidiary of UMW Malaysian Ventures SB, which in turn is a wholly-owned unit of UMW-OG, will assign its UMW NAGA 4 jack-up drilling rig for this contract. It added that the contract is expected to contribute positively to the group's earnings and net assets for the FY18. UMW-OG shares closed down one sen or 3.03% at 32 sen, with 22.31m shares done, bringing it a market capitalisation of RM2.24bn. (Source: The Edge) IJM Corp and Sunway set up four-party consortium for KL-Singapore High Speed Rail IJM Corp announced its wholly-owned IJM Construction SB has entered into a pre-bid agreement with 3 companies to participate in the tender for the Kuala Lumpur-Singapore High Speed Rail (HSR) project. The agreement was signed last Wednesday with Sunway Construction SB, Jalinan Rejang SB and Maltimur Resources SB, with a consortium set up on an equal shareholding of 25% each. These companies are to work with each other on an exclusive basis in tendering for the project delivery partner of the HSR, and undertake the project in the event the bid is successful. IJM will make announcements to the stock exchange if the consortium has successfully secured the project. Shares in IJM Corp fell 19 sen or 6.15% to close at RM2.90 today after seeing some 9.13 million shares exchanged, giving it a market capitalisation of RM10.52bn. (Source: The Edge) IOI Corp sees higher CPO prices at RM2,500 to RM2,650 in next 2 months IOI Corp sees a strong support for CPO prices at RM2,500 to RM2,650 per tonne in the next 2 months. This is a slightly higher (by 7%) forecast, compared to the current level of CPO prices, which according to Malaysian Palm Oil Board, was at RM2,472 per tonne on 30. CPO prices had dropped substantially in the last 3 weeks due to the unexpected stability in production of oil palm fruits. Normally at this period of time, you see a peak in production and in ember, there will be a lowering of production, but this year, they are not seeing that happening. Stocks have increased more than expected, so that resulted in the drop in CPO prices. Another important factor is the strengthening of the ringgit; internationally in USD, CPO prices has not dropped that much, but because the ringgit has strengthened in the last few weeks by 3 to 4% against the dollar, this has led to the drop in CPO prices. (Source: The Edge) 4

5 ECONOMIC NEWS Malaysia's Oct export growth seen climbing 18.5% y/y Malaysia's exports in October are expected to snap a two-month streak of slowing annual growth, a Reuters poll showed, accelerating from the previous month, buoyed by robust demand in manufacturing sector. The median forecast from 10 economists surveyed was for exports in October to expand 18.5% from a year ago, up from 14.8% growth in tember. Individual estimates ranged between 10.1% and 25%. Malaysia has enjoyed double-digit growth in exports over the past 10 months, peaking at 32.5% in. Imports are seen growing 20.4% annually in October, up from 15.2% the previous month. The trade surplus in October is expected to come in at RM10.4bn (US$2.55bn), up from RM8.6bn ringgit in tember. (Source: Reuters) Malaysia s manufacturing at 43-month high in ember The overall upturn in Malaysia s manufacturing sector as reflected in ember 2017 s data, saw the headline Nikkei Malaysia Manufacturing Purchasing Managers Index TM (PMI) rising to a 43-month high of 52, the strongest improvement since April This, according to IHS kit which compiles the Nikkei survey, was a recovery from October s 3 month low of 48.6 and was consistent with the strongest improvement in the health of the sector since April Additionally, the headline PMI in ember recorded above the neutral 50 threshold for the first time in 3 months. The rise in the headline PMI index was supported by the fastest expansion in output in nearly 3 years. Output growth was reportedly supported by stronger inflows of new work. (Source: The Edge) Underground land acquisitions now regulated nationally The National Land Council (MTN) has agreed to set a minimum depth for acquisition of underground land for development purposes, said Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi. Under the National Land Code (Underground Land) (Minimum Depth) Regulations 2017, the minimum depth is 6 metres for agricultural land, 10 metres for building land, and 15 metres for industrial land. This was in line with the needs and requirements of rapid underground land development, such as in the mass rapid transit (MRT), Kuala Lumpur-Singapore High Speed Rail (HSR), and Bandar Malaysia. Meanwhile, Natural Resources and Environment Minister Datuk Seri Wan Junaidi Tuanku Jaafar, said the regulation is expected to be gazetted on Dec 1 and will take immediate effect. The regulation would also enable the government to acquire underground land before the value of the land has been ascertained, and that the system would also not cause the land owner to lose their right to the land. (Source: The Edge) RAM: Malaysia's 2.8% fiscal deficit target in 2018 achievable The projected narrowing of Malaysia s fiscal deficit target to 2.8% of GDP under Budget 2018, from an estimated 3% in 2017, is achievable and underscores the government s commitment to long-term fiscal consolidation, said RAM Rating Services. It also deems the adjustment to the government s Medium-Term Fiscal Framework (MTFF) targeted fiscal deficit to an average 2.4% of GDP throughout , from a near-balance target by 2020, "realistic", saying it indicates a more gradual pace of fiscal consolidation. "Fiscal revenue is expected to increase 6.5% to RM240bn in 2018 as negative pressures ease. This will be largely driven by resilient economic growth (which should support GST collections) and a gradual recovery in global commodity prices (which will be positive for the government s O&G related revenue). Notably, O&G revenue is projected to exceed the government s budgeted amount given its conservative assumed oil price of US$52 per barrel. Nevertheless, RAM noted that the government s contingent liabilities remained significant at 16.9% of GDP in the 1H17, which imposes a continuous risk on its fiscal position. (Source: The Edge) OPEC oil output falls in to lowest since OPEC oil output fell in ember by 300,000 bpd to its lowest since, pressured by a drop in Angolan and Iraqi exports, strong compliance with a supply cut deal and involunary declines. OPEC's adherence to pledged supply curbs rose to 112% from October's 92%. Top exporter Saudi Arabia pumped below its OPEC target, as did all other members except Ecuador, Gabon and the United Arab Emirates. OPEC is reducing output by about 1.2 million bpd as part of a deal with Russia and other non-member producers, which have also committed to production cuts. (Source: Reuters) October passenger demand rebounds from weather-impacted tember Global airline passenger traffic results for October showed that demand (measured in revenue passenger kilometers, or RPKs) rose 7.2% yoy, according to the International Air Transport Association (IATA). Capacity grew 6.2% and load factor climbed 0.8% points to 80.8%, which was a record for the month. The October's performance was a strong bounce-back after the hurricane-related disruptions in tember. Domestic and international travel growth largely was in balance. IATA director general and CEO Alexandre de Juniac said as expected, the recent severe weather in the Americas region had only a temporary impact on the healthy travel demand we have seen this year. (Source: The Edge) 5

6 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 12/05/ :30 JN Nikkei Japan PMI Services /05/ :30 JN Nikkei Japan PMI Composite /05/ :45 CH Caixin China PMI Composite /05/ :45 CH Caixin China PMI Services /05/ :00 SP Industrial Output NSA YoY Oct % -- 12/05/ :00 SP Industrial Output SA YoY Oct 3.60% % -- 12/05/ :00 SP Industrial Production MoM Oct 0.40% % -- 12/05/ :30 SW Industrial Orders MoM Oct % -- 12/05/ :30 SW Industrial Orders NSA YoY Oct % -- 12/05/ :30 UK kit/cips UK Services PMI /05/ :30 UK kit/cips UK Composite PMI /05/ :30 UK Official Reserves Changes $30m -- 12/05/ :00 IR Industrial Production MoM Oct % -- 12/05/ :00 IR Industrial Production YoY Oct % -- 12/05/ :30 US Trade Balance Oct -$47.5b -- -$43.5b -- 12/05/ :45 US kit US Services PMI F /05/ :45 US kit US Composite PMI F /05/ :00 US ISM Non-Manf. Composite /05/2017 PD Poland Base Rate Announcement Dec % % -- 12/06/ :00 GE Factory Orders MoM Oct -0.20% % -- 12/06/ :00 GE Factory Orders WDA YoY Oct 7.00% % -- 12/07/ :50 JN Official Reserve Assets $1260.9b -- 12/07/ :00 DE Industrial Production MoM Oct % -- 12/07/ :00 GE Industrial Production SA MoM Oct 0.90% % -- 12/07/ :00 GE Industrial Production WDA YoY Oct 4.30% % -- 12/07/ :45 FR Trade Balance Oct -4675m m -- 12/07/ :45 FR Current Account Balance Oct b -- 12/07/ :00 CZ Construction Output YoY Oct % -- 12/07/ :00 CZ Industrial Output YoY Oct 10.30% % -- 12/07/ :00 CZ Trade Balance National Concept Oct 15.3b b -- 12/07/ :00 LN International Reserves m -- 12/07/ :00 PD Official Reserves /07/2017 CH Foreign Reserves $3123.5b -- $3109.2b -- 12/08/ :50 JN BoP Current Account Balance Oct b b -- 12/08/ :50 JN BoP Current Account Adjusted Oct b b -- 12/08/ :50 JN Trade Balance BoP Basis Oct 418.1b b -- 12/08/ :50 JN GDP SA QoQ 3Q F 0.40% % -- 12/08/ :50 JN GDP Annualized SA QoQ 3Q F 1.50% % -- 12/08/ :50 JN GDP Nominal SA QoQ 3Q F 0.70% % -- 12/08/ :50 JN GDP Deflator YoY 3Q F 0.10% 0.10% 0.10% -- 12/08/ :50 JN GDP Private Consumption QoQ 3Q F -0.50% % -- 12/08/ :50 JN GDP Business Spending QoQ 3Q F 0.40% % -- 12/08/ :30 NE Manufacturing Production MoM Oct % -- 12/08/ :30 NE Manufacturing Production YoY Oct % -- 12/08/ :30 NE Industrial Sales YoY Oct % -- 12/08/ :00 FI Trade Balance Oct P m -- 12/08/ :00 FI Industrial Production MoM Oct % -- 12/08/ :00 GE Trade Balance Oct 21.9b b -- 12/08/ :00 FI Industrial Production WDA YoY Oct % -- 12/08/ :00 GE Current Account Balance Oct 20.0b b -- 12/08/ :00 GE Exports SA MoM Oct 1.00% %

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