PP16795/03/2013(031743) Jul-16

Transcription

1 Monday, 24 July, 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 PP16795/03/2013(031743) Corporate News Economic News Cycle & Carriage's 2Q profit more than halves, says demand shifts to lower margin models TRC Synergy s unit sells Australian plot for RM32.16m Sapura s aviation unit to establish MRO company with Lufthansa Encorp calls off preliminary deal with Kean Leng to develop Bukit Katil landbank Isaac and Goh to lead Cahya Mata Sarawak Ipmuda to be master dealer of Methven's sanitary ware US Fed now faces prospect of global monetary policy tightening Britain needs transitional deal with EU, to end before next election Australia's CB in no hurry to raise rates deputy gov South Korea parliament OKs extra 11trn won budget as Moon eyes more jobs Hong Kong may raise growth target Singapore's CPI seen rising 0.7% yoy in June 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) 1, 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 26, 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 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 3.55 Local Insti , , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.66 Foreign yr MGS 3.91 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) FGV % Local Insti , , Econpile % Local Retail , , Westports % Foreign , , IOI Properties % Total , , Amway % Top Losers Close Change +/- Change % Gas Malaysia % Padini Holdings % GHL Systems % Matrix Concepts % Supermax % Source: The Sun, BIMB Securities Research 2

3 CORPORATE NEWS Cycle & Carriage's 2Q profit more than halves, says demand shifts to lower margin models Cycle & Carriage Bintang saw its net profit for the 2QFY17 more than halved to RM8.96m from RM19.67m a year earlier, due to lower revenue and higher finance cost-interest expense on borrowings. EPS fell to 8.89 sen from sen, its bourse filing today showed. The quarterly revenue fell 15.9% to RM355.44m from RM422.75m in 2QFY16. For the 1HFY17 the group's net profit shrank by 68.2% to RM9.27m from RM29.18m a year ago, after accounting for dividend income of RM11.2m from its investment in Mercedes-Benz Malaysia. EPS during the period under review deteriorated to 9.2 sen from sen. (Source: The Edge) TRC Synergy s unit sells Australian plot for RM32.16m TRC Synergy s wholly-owned subsidiary TRC (Aust) Pty Ltd (TRCA) is selling a freehold land measuring 3,621 square metres in Melbourne, Australia, for AU$9.66m (about RM32.16m). The proposed sale is expected to give it a net gain on disposal of about RM4.4m or 1sen/share. TRCA inked an agreement with Forza 588 Swan Street Pty Ltd for the proposed land sale on July 14. The plot, known as S88, forms part of the land described as lot S9, measuring 6,830 square metres, which was acquired by TRCA on Dec 9, 2011 for AU$11.5m (about RM36.89m.) Lot S88 now houses three single- and double-storey buildings. The proceeds from the disposal are expected to be utilised for impending development activities by TRCA and/or to finance payment of bank borrowings, working capital, as well as landrelated expenses of TRCA. (Source: The Edge) Sapura s aviation unit to establish MRO company with Lufthansa Sapura Resources Bhd s wholly-owned subsidiary Sapura Aero Sdn Bhd (SASB) and Lufthansa Technik AG are setting up a maintenance, repair and overhaul (MRO) service provider, specialising in narrow- and wide-body aircraft base maintenance. Both parties signed a MoU today to establish the company, which will primarily serve the Malaysian, South Asian and Southeast Asian markets. Under the MoU, SASB and Lufthansa Technik will explore feasible business models and structures, whereby the proposed company may be operated and governed as a base maintenance facility within the latter s existing base maintenance network, according to its existing standards and processes. Lufthansa Technik is the leading provider of MRO and modification services for civil aircraft, and has 8 product divisions: Line Maintenance; Base Maintenance; Component Services; Engine Services; VIP Services; Landing Gear Services; Original Equipment Innovation; and Digital Services for the entire Lufthansa fleet and third party customers.. (Source: The Edge) Encorp calls off preliminary deal with Kean Leng to develop Bukit Katil landbank Encorp which inked preliminary agreements with several companies last year to develop its huge 641-acre land bank in Melaka, has called off one of them. It said it has mutually agreed with Kean Leng Construction SB not to further extend the MoU they inked, which will lapse on July 31. The MoU was to form a strategic alliance for the development of its Bukit Katil Land to allow Encorp to kick-start the development without incurring massive capital outlay, according to Encorp's announcement when the MoU was first inked last October. Upon the MoU expiry, neither party shall have any claim against the other, save and except for any antecedent claim. It added that the expiry of the MoU will not have any material financial impact on the Encorp Group. (Source: The Edge) Isaac and Goh to lead Cahya Mata Sarawak CMS has appointed Datuk Isaac Lugun and Goh Chii Bing as its Group Chief Corporate Officer and Group Chief Operating Officer respectively while Datuk Richard Curtis will retire from his role as Group Managing Director on Dec 31, Curtis will remain as Non- Independent Non-Executive Director until the end of Both appointments will take effect from Aug 1. Isaac is currently the Head of Samalaju Development Division and CEO of Samalaju Industries SB, while Goh is currently the Head of the Cement Division and CEO/Executive Director of CMS Cement SB. Prior to joining CMS in 1996, Isaac worked at Petronas and Exxon-Mobil in various senior management roles. (Source: The Edge) Ipmuda to be master dealer of Methven's sanitary ware Ipmuda has inked a preliminary agreement to partner New Zealand sanitary ware company Methven Ltd to sell Methven's products in Malaysia. The MoU was entered into between its wholly-owned subsidiary, Ipmuda Tiles & Sanitarywares SB (ITS), and Methven. The MoU, valid for 6 months from July 1 till year end, serves as a framework for cooperation for both parties and marks the beginning of a business partnership between the 2 companies. Under the MoU, Methven authorises ITS to be its master dealer in Malaysia and designates its subsidiary Heshan Methven Bathroom Fittings Co Ltd for daily operations. (Source: The Edge) 3

4 ECONOMIC NEWS US Fed now faces prospect of global monetary policy tightening Prospects for tighter monetary policy in Europe and other countries could pose a fresh problem for the Fed when it meets next week to ponder its plan to reduce its USD4.2trn bond portfolio purchased after the 2008 financial crisis. The Fed bought US Treasuries and mortgage-backed securities (MBS) for about 6 years in a program known as "quantitative easing" which kept interest rates at record lows to spur borrowing and economic recovery. But at its June meeting this year, as well as raising interest rates for the 3 rd time in 6 months, the Fed also announced a plan to begin by letting USD6bn a month in Treasuries mature without reinvestment and to increase that amount at 3 month intervals up to USD30bn. (Source: Reuters) Britain needs transitional deal with EU, to end before next election British trade minister Liam Fox said on Sunday that he backed a transition agreement to smooth Britain's departure from the EU, but it would have to come to an end before the next election due in A transition deal of 2 years, or slightly more or less, was necessary to make sure business can make investment decisions with certainty of Britain's future relationship with the EU. Planning for a transitional period of 24 months is not a huge deal after waiting more than 40 years to leave the EU, but it had to be limited in scope and Britain must know its terms. (Source: Reuters) Australia's CB in no hurry to raise rates deputy gov A top Australian central banker gave a clear signal that interest rates in the country were set to remain at record lows for a while yet, wrong-footing hawks and sending the local currency sliding from a 2-year peak. Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle quashed talk of domestic interest rate hikes which had gathered momentum, after the Bank of Canada increased its policy rate to 0.75% last week. Just as the policy rate in Australia did not need to decline to the very low levels seen in other parts of the world, the fact that other CBs increase their policy rates does not automatically mean that the policy rate there needs to increase. (Source: Reuters) South Korea parliament OKs extra 11trn won budget as Moon eyes more jobs South Korea's parliament approved the government's supplementary budget, giving President Moon Jae-in an early victory in his push to create jobs and boost economic growth since he came to power in May. Lawmakers from the ruling Democratic and opposition parties agreed to approved the bill at a revised 11trn won (USD9.84bn), bringing the government's total spending to 410.1trn won for this year. The stimulus package will focus on creating social service jobs and will provide subsidies for maternity leave and for elderly people needing medical care. South Korea's economy, Asia's 4 th largest, has been picking up momentum this year thanks to a revival in exports growth as global demand has steadily improved. (Source: Reuters) Hong Kong may raise growth target Hong Kong s government is likely to raise its growth target as the city s economy expands faster than expected this year. The government is likely to raise its FY growth estimate by 0.5% points from the 2% to 3% forecast in its annual budget in February after reviewing data in August. Hong Kong s economy is rebounding after growing 1.9% in 2016, compared with average annual expansion of 2.9% over the past 10 years. The city s growth rate beat analyst expectations in the 1Q as retail sales recovered and property prices reached records. There are still downside risks remaining for the city, including uncertainty surrounding US trade policies and capital flows amid rising Fed interest rates. (Source: Bloomberg) Singapore's CPI seen rising 0.7% yoy in June Singapore's CPI is expected to have risen 0.7% in June from a year earlier, slowing significantly from 1.4% in the previous month. The headline inflation rate in May was boosted by a base-effect resulting from a fall in the rate in May The number was partly driven by some base effects and some changes in the timing of the housing conservancy rebates. Fees for car ownership also fell in June, which would take some pressure of headline inflation. The poll of 10 economists also showed that the Monetary Authority of Singapore's (MAS) core CPI is expected to have increased 1.6% from a year earlier in June, unchanged from May. There are not any real upward pressures on core inflation but new electricity tariffs implemented this month would put upward pressure on core inflation in July. (Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 07/24/ :30 JN Nikkei Japan PMI Mfg Jul P /24/ :45 US Markit US Manufacturing PMI Jul P /24/ :45 US Markit US Services PMI Jul P /24/ :45 US Markit US Composite PMI Jul P /25/ :00 GE Import Price Index MoM Jun -0.70% % -- 07/25/ :00 GE Import Price Index YoY Jun 2.90% % -- 07/25/ :00 IT Industrial Orders MoM May % -- 07/25/ :00 IT Industrial Orders NSA YoY May % -- 07/25/ :00 IT Industrial Sales MoM May % -- 07/25/ :00 IT Industrial Sales WDA YoY May % -- 07/25/2017 RO Money Supply M3 YoY Jun % -- 07/26/ :30 SW Trade Balance Jun b -- 07/26/ :30 UK GDP QoQ 2Q A 0.30% % -- 07/26/ :30 UK GDP YoY 2Q A 1.70% % -- 07/27/ :00 US FOMC Rate Decision (Upper Bound) 26-Jul 1.25% % -- 07/27/ :00 US FOMC Rate Decision (Lower Bound) 26-Jul 1.00% % -- 07/27/ :00 CH Swift Global Payments CNY Jun % -- 07/27/ :30 CH Industrial Profits YoY Jun % -- 07/27/ :00 EC M3 Money Supply YoY Jun 5.00% % -- 07/27/ :30 US Advance Goods Trade Balance Jun -$65.0b -- -$65.9b -$66.3b 07/28/ :00 BP Gross External Debt May b -- 07/28/ :00 PO Industrial Production MoM Jun % -- 07/28/ :00 PO Industrial Production YoY Jun % -- 07/28/ :30 US GDP Annualized QoQ 2Q A 2.50% % -- 07/28/ :30 US Personal Consumption 2Q A 2.80% % -- 07/28/ :30 US GDP Price Index 2Q A 1.30% % -- 07/31/ :50 JN Industrial Production MoM Jun P % -- 07/31/ :50 JN Industrial Production YoY Jun P % -- 07/31/ :00 CH Manufacturing PMI Jul /31/ :00 CH Non-manufacturing PMI Jul /31/ :00 JN Construction Orders YoY Jun % -- 07/31/ :00 FI Trade Balance May F m -- 07/31/ :00 SP Current Account Balance May b -- 07/31/ :00 CZ Money Supply M2 YoY Jun % -- 07/31/ :30 UK Money Supply M4 MoM Jun % -- 07/31/ :30 UK M4 Money Supply YoY Jun % -- 07/31/ :45 US Chicago Purchasing Manager Jul /31/2017 BP Base Interest Rate Aug % -- 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 % -- 08/01/ :30 US PCE Core MoM Jun 0.10% % -- 08/01/ :30 US PCE Core YoY Jun % -- 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

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