PP16795/03/2013(031743) Aug-16

Transcription

1 Monday, 28 August, 2017 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May- 17 Jun-17 Jul-17 Aug-17 Research Team PP16795/03/2013(031743) Reports Published Results Review Datasonic 1QFY18 (Inline): A strong respite ahead Results Review Padini 4QFY17 (Above): Strong end to another record year Corporate News Sime Darby makes record RM684m impairment to give pure plays a clean start UMW-OG expects rig utilisation rate to remain high in 2018 Bumi Armada racks up 2Q net profit of RM116.6m DRB-Hicom posts flat losses thanks to better contribution from Pos Malaysia Syed Mohamed is now Encorp chairman Bursa Malaysia Close Change +/- Change % FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 13, Volume (m) 2, Value (MYR m) 1, FBMKLCI YTD performance 7.76 Economic News Rise in US business spending bolsters economic outlook US, Mexico, Canada ink non-disclosure agreements for NAFTA talks Trump to begin tax reform push next week, White House adviser tells FT Yellen to Trump: don't expect a flip-flop on financial reforms China July industrial profits rise at slowest pace in 3 months Britain to urge EU to show "imagination" in Brexit talks KLCI 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 % 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 3.56 Foreign yr MGS 3.93 Total , , Performance of BIMB Stock Coverage Source: Bank Negara Malaysia Source: The Sun, BIMB Securities Research Top Gainers Weekly Participation Close Change +/- Change % Participation (%) Bought (MYR m) Sold (MYR m) Net (MYR m) Prestariang % Local Insti , , UEM Sunrise % Local Retail , , SP Setia % Foreign , , Mah Sing % Total , , Dagang Nexchange % Top Losers Close Change +/- Change % Hibiscus Petroleum % IJM Corp % My Eg % IHH Healthcare % Kossan % Source: The Sun, BIMB Securities Research 2

3 CORPORATE NEWS Sime Darby makes record RM684m impairment to give pure plays a clean start Sime Darby, which is set to list its plantation and property arms Sime Darby Plantation Bhd (SD Plantation) and Sime Darby Property Bhd (SD Property) separately on Bursa Malaysia by November, has undertaken a record impairment at the group level to provide a clean sheet for their financials, moving forward. Sime Darby charged a full-year impairment of RM684m to its books, where the 2 businesses have been listed as 'discontinuing operations'. This leaves it with the industrial, motors and logistics businesses under its continuing operations. The amount was the largest impairment the group has booked, to date. Following an intense and very detailed review and evaluation of the respective assets [of the group], the company decided it was appropriate to come up with the close to RM700m impairment provision. (Source: The Edge) UMW-OG expects rig utilisation rate to remain high in 2018 UMW-OG expects the utilisation rate across its seven jack-up drilling rigs to remain high in 2018, despite the impending expiration of some contracts by end of this year. The company are working very hard to replace these contracts with new ones. Even if they cannot maintain the utilisation rate of this year, but the company believe it will be stable in Just last week, the group's idle UMW Naga 5 jack-up rig commenced a RM113m contract with Repsol Malaysia, which will bring the overall utilisation rate of its assets to 100% by September from 68% at the end of June. The current rate is much higher compared to last year when it hit as low as 7% in June. Rohaizad acknowledged that UMW-OG is addressing the issue of low charter rate, which has mitigated some of the gains from the higher utilisation. (Source: The Edge) Bumi Armada racks up 2Q net profit of RM116.6m Bumi Armada posted a net profit of RM116.59m for its 2QFY17, from a net loss RM518.32m a year earlier. Revenue for the quarter 2QFY17 rose to RM694.42m, from RM402.87m a year earlier. Earnings per share was 1.99 sen, compared with a loss per share of 8.84 sen previously. For the 6 months ended June 30, it posted a net profit of RM164.69m, from a net loss of RM494.89m a year earlier, on the back of revenue of RM1.09bn, from RM833.64m in The floating production and operation (FPO) business segment revenues in Q increased by 116.9% yoy to RM337.6m, due to higher revenue from the Armada Olombendo floating production storage and offloading (FPSO) and the Armada LNG Mediterrana floating storage unit (FSU) respectively, as well as the absence of supplementary payments to the charterer of the Armada Kraken FPSO, which impacted Q revenue. (Source: The Edge) DRB-Hicom posts flat losses thanks to better contribution from Pos Malaysia DRB-Hicom remains in the red but its net loss did not widen thanks to smaller losses from Proton Holdings and higher profit contribution from Pos Malaysia. The diversified company posted a net loss of RM169.71m in the 1QFY18 compared with RM169.3m a year ago. DRB- Hicom, Proton Holdings continued dragging its earnings performance albeit a reduced quantum of losses. The saving grace is that higher profits chalked by Pos Malaysia helped to mitigate the losses. The financial statement, which was released this evening, revealed that DRB-Hicom s automotive division, largely contributed by Proton, saw an improved performance, as evident by the reduced pre-tax loss of RM171.28m in 1QFY17 compared with RM209.18m in the previous corresponding quarter. (Source: The Edge) Syed Mohamed is now Encorp chairman Encorp has appointed former banker Datuk Syed Mohamed Syed Ibrahim as its chairman, replacing Tan Sri Mohd Isa Abdul Samad, who resigned in mid-august amid an anti-graft probe over the purchase of a luxury hotel in Kensington, London. Syed Mohamed s appointment was following a series of nomination by the controlling shareholder Felda Investment Corp SB (FIC), which is the whollyowned investment arm of the Felda. Also chairing FIC, Syed Mohamed is now the president and executive director of Iskandar Waterfront Holdings SB. FIC has also nominated 2 other individuals, namely Hussein Ismail and Datuk Muzammil Mohd Noor, to Encorp s board, while ceasing the nomination of UMNO lawmaker Datuk Noor Ehsanuddin Mohd Harun Narrashid and Datuk Hanapi Suhada, the former director-general of Felda. (Source: The Edge) 3

4 ECONOMIC NEWS Rise in US business spending bolsters economic outlook New orders for key US-made capital goods rose slightly more than expected in July and shipments surged, pointing to an acceleration in business spending early in the 3Q. The economy continued to gather momentum after growth slowed at the start of the year. Strength in business investment bolsters the case for the Fed announce next month a plan to start unwinding its massive bond portfolio. Growth continues on a solid footing. The announcement of a September balance sheet reduction looks close to a done deal. A December rate hike and further hikes in 2018 remain contingent on increasing inflation. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month after being unchanged in June. (Source: Reuters) US, Mexico, Canada ink non-disclosure agreements for NAFTA talks The US, Mexico and Canada signed non-disclosure agreements before the 1 st round of negotiations to revamp the North American Free Trade Agreement (NAFTA). Initial talks between Mexico, the US and Canada to update NAFTA ended in Washington last weekend amid signs of deep division on key issues. Further discussions are due to start in Mexico City on Sept 1. This agreement does not compromise Mexico s priorities in the negotiations for the modernization of NAFTA, nor does it limit the information that Mexico can share with the legislative branch, local governments, productive sectors and society in general, in order to inform in a timely manner the negotiation process. (Source: Reuters) Trump to begin tax reform push next week, White House adviser tells FT US President Donald Trump will begin a major push to convince the public of the need for tax reform, shifting his focus to fiscal policy in an effort to win a big legislative victory by the end of the year. Trump would begin the effort with a speech in Missouri, the 1 st in a series of addresses to generate public support on the issue. They are completely engaged in tax reform. Starting next week the president's agenda and calendar is going to revolve around tax reform. He will start being on the road making major addresses justifying the reasoning for tax reform. Although Cohn, director of the National Economic Council stressed that tax reform would be front and center of Trump's agenda, the Republican-controlled Congress faces 2 other pressing issues when it returns from its August recess on Sept 5. (Source: Reuters) Yellen to Trump: don't expect a flip-flop on financial reforms Janet Yellen delivered a message to Trump, making it clear that if he re-nominates her as Fed chair she will not turn her back on the raft of US financial reforms that Republicans want to roll back. Her speech to the world's top central bankers in Jackson Hole, Wyoming, comes at a time when the chaos at the White House may make it more likely that she would be appointed to serve another 4 years to head the US CB. Yellen, whose term ends in February, warned that "for some" memories of the financial crisis may be fading, and that only "modest" adjustments could be made to regulations meant to protect the economy from runs on banks and other financial panics. (Source: Reuters) China July industrial profits rise at slowest pace in 3 months Earnings growth for China's industrial firms cooled in July after accelerating for 3 straight months, reinforcing expectations the economy will slow over coming quarters as higher lending costs and property market curbs bite. Profits earned by China's industrial companies in July rose 16.5% from a year earlier to 612.7bn yuan ($92.18bn), slower than the previous month. That was the slowest rate of growth since profits rose 14.0% in April. Profit growth slowed in July because some companies halted production due to especially high temperatures. For the 1 st 7 months of the year, the firms notched up profits of 4.25trn yuan, a 21.2% jump from the same period last year and a touch slower than the 22.0% annual growth in the January-June period. Earnings for the industrial sector were boosted by a year-long, government-led construction spree, which fuelled demand and prices for building materials. (Source: Reuters) Britain to urge EU to show "imagination" in Brexit talks Britain will urge the EU to show "imagination" in Brexit talks and help focus discussion on future ties rather than on a divorce settlement. Brexit minister David Davis will call on the EU to be more flexible in its approach at the start of negotiations with the bloc's chief negotiator Michel Barnier. Britain would point to the papers it has published over the past 2 weeks on both the future relationship and the divorce to show how officials have been working diligently to inform the negotiations. Now, both sides must be flexible and willing to compromise when it comes to solving areas where they disagree. Britain has published papers on everything from future customs arrangements to data, going beyond a brief set by the EU to first make progress on priority areas. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 08/28/ :30 SW Trade Balance Jul b -- 08/28/ :00 EC M3 Money Supply YoY Jul 4.90% % -- 08/28/ :30 US Advance Goods Trade Balance Jul -$64.5b -- -$63.9b -$64.0b 08/30/ :30 UK Money Supply M4 MoM Jul % -- 08/30/ :30 UK M4 Money Supply YoY Jul % -- 08/30/ :00 PO Industrial Production MoM Jul % -- 08/30/ :00 PO Industrial Production YoY Jul % -- 08/30/ :30 US GDP Annualized QoQ 2Q S 2.70% % -- 08/30/ :30 US Personal Consumption 2Q S 3.00% % -- 08/30/ :30 US GDP Price Index 2Q S 1.00% % -- 08/31/ :50 JN Industrial Production MoM Jul P -0.30% % -- 08/31/ :50 JN Industrial Production YoY Jul P 5.10% % -- 08/31/ :00 CH Manufacturing PMI Aug /31/ :00 CH Non-manufacturing PMI Aug /31/ :00 CH Swift Global Payments CNY Jul % -- 08/31/ :00 JN Construction Orders YoY Jul % -- 08/31/ :00 FI Trade Balance Jun F m -- 08/31/ :00 SP Current Account Balance Jun b -- 08/31/ :00 CZ Money Supply M2 YoY Jul % -- 08/31/ :30 US PCE Deflator MoM Jul 0.10% % -- 08/31/ :30 US PCE Deflator YoY Jul 1.40% % -- 08/31/ :30 US PCE Core MoM Jul 0.10% % -- 08/31/ :30 US PCE Core YoY Jul 1.40% % -- 08/31/ :45 US Chicago Purchasing Manager Aug /31/2017 BP Base Interest Rate Sep % -- 09/01/ :30 JN Nikkei Japan PMI Mfg Aug F /01/ :45 CH Caixin China PMI Mfg Aug /01/ :00 HU Trade Balance Jun F m -- 09/01/ :30 SW Current Account Balance 2Q b -- 09/01/ :30 UK Markit UK PMI Manufacturing SA Aug /01/ :45 US Markit US Manufacturing PMI Aug F /01/ :00 US ISM Manufacturing Aug /01/ :00 US ISM Prices Paid Aug /01/ :00 US ISM New Orders Aug /01/ :00 US ISM Employment Aug /01/ /07 JN Official Reserve Assets Aug $1260.0b -- 09/04/ :30 UK Markit/CIPS UK Construction PMI Aug /04/ :00 DE Foreign Reserves Aug /04/ :00 DE Change in Currency Reserves Aug b -- 09/05/ :30 JN Nikkei Japan PMI Services Aug /05/ :30 JN Nikkei Japan PMI Composite Aug /05/ :45 CH Caixin China PMI Composite Aug /05/ :45 CH Caixin China PMI Services Aug /05/ :30 UK Markit/CIPS UK Services PMI Aug /05/ :30 UK Markit/CIPS UK Composite PMI Aug /05/ :30 UK Official Reserves Changes Aug $1273m -- 09/05/ :00 IR Industrial Production MoM Jul % -- 09/05/ :00 IR Industrial Production YoY Jul % -- 09/05/ :45 US Markit US Composite PMI Aug F /06/ :00 GE Factory Orders MoM Jul % -- 09/06/ :00 GE Factory Orders WDA YoY Jul % -- 09/06/ :00 CZ Construction Output YoY Jul % -- 09/06/ :00 CZ Industrial Output YoY Jul 5.90% % -- 09/06/ :00 CZ Trade Balance National Concept Jul -1.7b b

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. 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 6