PP16795/03/2013(031743)

Transcription

1 Thursday, 4 May, 2017 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Research Team research@bimbsec.com.my PP16795/03/2013(031743) Reports Published News Flash TNB: Enter SIPP Corporate News Economic News TNB to buy 51% of Southern Power Generation for RM51 Westports keen to participate in Sri Lankan port project Daibochi gets Myanmar nod to commence JV packaging operations Serba Dinamik may invest RM3.2bn in plant in Bahrain Stronger Q2 earnings for Fraser & Neave, div 27c IWH CREC disputes TRX City s claims over lapsed Bandar Malaysia stake sale deal EU nations agree new rules on dumping aimed at China Standard Chartered picks Frankfurt for its new EU hub on Brexit JPMorgan to move hundreds of staff to three EU offices on Brexit Short-term economic impact likely modest for China s One Belt, One Road Thai 2Q exports seen up 5% y/y shippers' council Bursa Malaysia KLCI Performance Close Change +/- Change % 1820 FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 14, Volume (m) 3, Value (MYR m) 3, FBMKLCI YTD performance KLCI Year-End Target: 1,800 points Regional Indices Commodities (Last Close) Close Change +/- Change % YTD Change (%) Close Change +/- Change % DJIA 20, 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 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 % 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 3.58 Foreign yr MGS 3.95 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 % Caring Pharmacy % WCT Holdings % Eversendai % Sapura Energy % Bintulu Port % Westports % Hovid % Kimlun Corp % Dayang Enterprise % IOI Corp % 2

3 CORPORATE NEWS TNB to buy 51% of Southern Power Generation for RM51 TNB has entered into agreements with SIPP Energy SB and SIPP s wholly-owned unit Southern Power Generation SB (SPG) to acquire a 51% stake in SPG for RM51. SPG, a special purpose vehicle company for the development of 2x720MW combined cycle gas turbine power plant in Pasir Gudang, Johor will become a subsidiary of TNB upon completion of the acquisition. The project is estimated to cost RM4.7bn, which will be financed through a combination of project finance and equity. The plant is expected to achieve its scheduled commercial operation date on July 1, The project will enhance TNB s generation capacity and will give a positive impact on TNB s earnings and in return it will add long-term value for TNB s shareholders. (Source: The Edge) Westports keen to participate in Sri Lankan port project Westports has confirmed that it is keen to participate in the Hayleys PLC-led consortium bidding to complete the construction of Colombo Port s East Container Terminal in Sri Lanka. The Sri Lankan government called for bids to develop the deep-water terminal on a build, operate and transfer basis last year. The project at Sri Lanka s busiest port has been reported to be worth anything from USD400m (RM1.73bn) up to USD600m (RM2.59bn). Westports had submitted an expression of interest to participate in the consortium bidding for Colombo Port s new terminal as reported and the consortium bidding is an ongoing process. In the master plan of Colombo Port expansion project, the East Container Terminal will have a 1,200m long quay wall, alongside water depth of 18m and a yard capacity of 2.4m TEUs (20ft equivalent units). (Source: StarBiz) Daibochi gets Myanmar nod to commence JV packaging operations Daibochi has received regulatory approval from Myanmar for its JV proposal to set up flexible packaging operations in that country. The group s subsidiary, Daibochi Flexibles Sdn Bhd, signed a MoU with Myanmar Smart Pack Industrial Co Ltd (MSP) last November to form a JV company called Daibochi Packaging (Myanmar) Co Ltd (DPM) to manufacture and market flexible packaging within Myanmar and export the product to other countries. Daibochi is investing USD6.8m (RM29.4m) into DPM for a 60% controlling stake, while MSP is transferring its entire existing business, production assets, as well as workforce into DPM for the remaining 40% stake. DPM will also invest an additional capital expenditure of USD5.5m (RM23.8m) via internally-generated funds over a 3-year period to enhance its production capacity, quality, and efficiency. DPM is set to contribute significantly to its financial performance effective from the 3QFY17. (Source: The Edge) Serba Dinamik may invest RM3.2bn in plant in Bahrain Serba Dinamik will conduct a feasibility study for an integrated solid waste management and water desalination plant in Bahrain. A consortium made up of SDGB and EAG Capital SB had entered into a MoU with the Malaysia-Bahrain Business Council and Bahrain- Malaysia Business Council. The plant would be at the forefront of green energy production in Bahrain. The plant would also increase potable water in Bahrain by using available natural resources. It will also allow for a sustainable solid waste management, covering all sources and all aspects, with emphasis on maximising resource efficiency which will generate 30MW of energy. The capital outlay for the plant to be incurred by SDGB shall be approximately 320m Bahraini dinars (about RM3.20bn), and shall be funded via internal generated funds and/or bank borrowings. (Source: StarBiz) Stronger Q2 earnings for Fraser & Neave, div 27c FNHB's Q2 earnings rose 18% to RM107.08m from RM90.57m a year ago despite its revenue fell 2% to to RM992.74m. EPS were 29.2 sen. The group declared an interim dividend of 27 sen a share, similar to a year ago. Primed to be the group s third pillar, exports of F&NHB s dairy products have enjoyed solid growth fuelled by the customisation of its product offerings and expansion of its branded products versus original equipment manufacturer (OEM). The intensified focus and investment in exports have borne fruits as sales, particularly of its dairies products, were up by more than 30% year to date. Over the last 6 months, the group has extended its footprint to 54 countries. Coupled with exports from Thailand, exports now account for more than 10% of group s total revenue. On current form, exports from Malaysia should surpass our target of RM500m sales ahead of the 2020 deadline. (Source: The Edge) IWH CREC disputes TRX City s claims over lapsed Bandar Malaysia stake sale deal IWH CREC, a 60:40 JV between Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC), has disputed claims by TRX City SB over the sale of a 60% equity interest in Bandar Malaysia SB. IWH CREC is concerned with the content of the termination notice and the subsequent press release issued by TRX City, which, given the factual matrix, does not fully and accurately reflect the circumstances and conduct of the parties in this matter. IWH CREC takes this matter very seriously and is at present reviewing the content of the termination notice and press release with its advisors and legal counsel. (Source: The Edge) 3

4 ECONOMIC NEWS EU nations agree new rules on dumping aimed at China EU countries agreed on new rules to combat dumping on Wednesday, a move that targets cheap imports of products such as steel from Chinese manufacturers. The EU and many of China's other trading partners have debated whether to treat China as a market economy, which Beijing says was its right at the end of 2016, some 15 years after it joined the WTO. For now, China is treated as a special case. Investigators from the EU determine whether Chinese export prices are artificially low by comparing them with those of a third country, such as the United States, rather than with domestic prices in China. The European Commission, now backed up by the EU's 28 member states, believes the rules for China must be changed and has proposed that the normal reference value in dumping cases involving WTO members should be domestic prices. However, if there are significant market distortions, investigators can instead use international benchmark prices. (Source: The Edge) Standard Chartered picks Frankfurt for its new EU hub on Brexit Standard Chartered Plc has chosen Frankfurt for its main base inside the EU as it prepares for the UK to lose easy access to the single market after Britain exits the trading bloc, the bank s chairman said. Standard Chartered is already in discussion with the German regulator BaFin about setting up a subsidiary in the city and getting a license to operate across the EU. Only a small number of Londonbased staff will be affected by the move, Vinals added. As recently as December, Standard Chartered had been edging toward picking Dublin for its new legal base inside the EU, Bloomberg News reported at the time. Frankfurt made more sense as the bank already does its euro clearing there. As banks accept the growing likelihood that they will lose the automatic right to sell services freely around the region from London, they re fleshing out plans to for new hubs to secure continued access to clients. (Source: The Edge) JPMorgan to move hundreds of staff to three EU offices on Brexit JPMorgan Chase & Co plans to move hundreds of London-based bankers to expanded offices in Dublin, Frankfurt and Luxembourg as it prepares for the UK to lose easy access to the European Union s single market after Brexit. The 3 banks that already have in Europe as the anchors for operations, referring to the New York-based firm s local entities. JPmorgan will have to move hundreds of people in the short term to be ready for day one, when negotiations finish, and then we will look at the longer-term numbers. Global banks are preparing to move some London-based operations into new or expanded bases inside the EU after British Prime Minister Theresa May triggered the formal mechanism for quitting the 28-nation bloc. Before the June referendum, JPMorgan stated UK employees that as many as 4,000 could be relocated in the event of Brexit. (Source: Reuters) Short-term economic impact likely modest for China s One Belt, One Road China s ambitious One Belt, One Road (OBOR) initiative is likely to have modest short-term impact on total investment and overall economic growth in the vast region, says Oxford Economics. Launched by President Xi Jinping in 2013, OBOR aims to create an infrastructure network by building roads, ports and railway tracks along ancient trading routes that will span 65 countries and connect some 60% of the global population. While it s hard to quantify the total number of projects and amount of financing, the China Development Bank alone has reserved USD890bn (SD1.24trn) for over 900 projects, highlighting the magnitude of this undertaking. The Asian Development Bank (ADB) estimates that OBOR would need an annual infrastructural investment of USD1.7trn until (Source: Reuters) Thai 2Q exports seen up 5% y/y shippers' council Thailand's exports are expected to grow 5% in April-June from the same period a year earlier, a similar pace to the first quarter, as buyers continue to build up inventory. But the export gains may slow in the second half of the year if Thailand is affected by US trade protectionist measures, Ghanyapad Tantipipatpong. Thailand runs a trade surplus with the US, and US President Donald Trump in March ordered a study of the causes of US trade deficits. Thai exports in the 2H may not be as bright as the first half, adding why the council raised its 2017 export growth forecast only slightly to % from 2-3%.Thailand's commerce ministry is aiming for export growth of 5% this year. In January-March, exports unexpectedly increased 4.9% from a year earlier. They rose 0.45% in the whole of 2016 after three years of contraction. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 05/04/ :00 US FOMC Rate Decision (Upper Bound) 3-May 1.00% 1.00% 1.00% -- 05/04/ :00 US FOMC Rate Decision (Lower Bound) 3-May 0.75% 0.75% 0.75% -- 05/04/ :45 CH Caixin China PMI Composite Apr /04/ :45 CH Caixin China PMI Services Apr /04/ :30 UK Markit/CIPS UK Services PMI Apr /04/ :30 UK Markit/CIPS UK Composite PMI Apr /04/ :30 UK Official Reserves Changes Apr $77m -- 05/04/ :30 UK Money Supply M4 MoM Mar % -- 05/04/ :30 UK M4 Money Supply YoY Mar % -- 05/04/ :00 CZ Repurchase Rate 4-May 0.05% % -- 05/04/ :30 US Trade Balance Mar -$44.5b -- -$43.6b -- 05/05/ :00 DE Industrial Production MoM Mar % -- 05/05/ :00 SP Industrial Output NSA YoY Mar % -- 05/05/ :00 SP Industrial Output SA YoY Mar 2.00% % -- 05/05/ :00 SP Industrial Production MoM Mar 0.30% % -- 05/05/ :00 LN International Reserves Apr m -- 05/05/ :30 SW Industrial Production MoM Mar 0.60% % -- 05/05/ :30 SW Industrial Production NSA YoY Mar 3.40% % -- 05/05/ :30 SW Industrial Orders MoM Mar % -- 05/05/ :30 SW Industrial Orders NSA YoY Mar % -- 05/05/ :00 IR Industrial Production MoM Mar % -- 05/05/ :00 IR Industrial Production YoY Mar % -- 05/05/ :00 PD Official Reserves Apr /05/2017 RO Interest Rate Announcement 5-May 1.75% % -- 05/07/2017 CH Foreign Reserves Apr $3019.0b -- $3009.1b -- 05/08/ :00 GE Factory Orders MoM Mar % -- 05/08/ :00 GE Factory Orders WDA YoY Mar % -- 05/08/ :00 FI Trade Balance Mar P m -- 05/08/2017 CH Trade Balance CNY Apr b b -- 05/08/2017 CH Imports YoY CNY Apr 30.20% % -- 05/08/2017 CH Exports YoY CNY Apr 13.40% % -- 05/08/2017 CH Imports YoY Apr 17.00% % -- 05/08/2017 CH Exports YoY Apr 10.00% % -- 05/08/2017 CH Trade Balance Apr $32.00b -- $23.93b $23.92b 05/09/ :30 NE Manufacturing Production MoM Mar % -- 05/09/ :30 NE Manufacturing Production YoY Mar % -- 05/09/ :30 NE Industrial Sales YoY Mar % -- 05/09/ :00 GE Industrial Production SA MoM Mar % -- 05/09/ :00 GE Industrial Production WDA YoY Mar % -- 05/09/ :00 GE Trade Balance Mar b 20.0b 05/09/ :00 GE Current Account Balance Mar b -- 05/09/ :00 GE Exports SA MoM Mar % 0.90% 05/09/ :00 GE Imports SA MoM Mar % -- 05/09/ :00 SO Trade Balance Mar m -- 05/09/ :00 CZ Trade Balance National Concept Mar 18.9b b -- 05/09/ :00 HU Trade Balance Mar P m -- 05/10/ :50 JN Official Reserve Assets Apr $1230.3b -- 05/10/ :00 FI Industrial Production MoM Mar % -- 05/10/ :00 FI Industrial Production WDA YoY Mar %

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