Market Insight Monday, 15 January, 2018

Transcription

1 Monday, 15 January, 2018 Jan-17 Feb-17 Mar- 17 Apr-17 May- 17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Research Team PP16795/03/2013(031743) Corporate News Economic News Axiata appoints Khazanah deputy MD as director Top Glove finalises acquisition of Aspion for RM1.37b Hovid takeover bid reaches 79% shareholder acceptance Mubadala is said to mull options for US$920m RHB stake T7 Global partners China's largest construction firm to win M'sian rail projects G Neptune aborts private placement after becoming GN3 company Rents boost US core CPI; retail sales rise solidly China's new loans halve in Dec, but hit record in 2017 China's Dec imports growth weakest in a year, exports beat f'cast Thai c.bank says it has acted on rapid rise in baht OPEC need not rush into changing oil pact UAE Canada welcomes Trump suggestion of NAFTA deadline extension Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1, FBMEMAS 13, FBM100 12, FBMEMAS Shariah 13, FBM Hijrah Shariah 14, Volume (m) 3, Value (MYR m) 3, KLCI Performance KLCI Year-End Target: 1,900 points Regional Indices Commodities (Last Close) Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 25, Brent Crude (USD/bbl) NASDAQ 7, WTI Crude (USD/bbl) S&P 500 2, CPO (RM/MT) 2, FTSE 100 7, Gold (USD/ounce) 1, Nikkei , Latex (sen/kg) HSI 31, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 10, (per USD) BIMB (YE Forecast) Close Chg +/- Chg % STI 3, MYR JCI 6, JPY SET 1, EUR PSEi 8, SGD

2 Major Rates Daily Participation % Participation Bought Sold Net KLIBOR 3-mth 3.44 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.56 Local Insti , , KLIBOR 12-mth 3.64 Local Retail yr MGS 3.84 Foreign yr MGS 3.86 Total , , Performance of BIMB Stock Coverage Source: Bank Negara Malaysia Source: The Sun, BIMB Securities Research Top Gainers Weekly Participation Close Chg +/- Chg % Participation (%) Bought (MYR m) Sold (MYR m) Net (MYR m) Hibiscus Petroleum Local Insti , , FGV Local Retail , , Top Glove Foreign , , DNeX Total , , Hartalega Top Losers Close Chg +/- Chg % IJM Plantations Padini Matrix Concepts QL Resources Malakoff Source: The Sun, BIMB Securities Research 2

3 CORPORATE NEWS Axiata appoints Khazanah deputy MD as director Axiata has appointed Khazanah Nasional deputy MD Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz as non-independent nonexecutive director of the group. He replaces Kenneth Shen, who served on the board as Khazanah nominee, since Azmil joined Khazanah in 2011 as executive director of investments, managing investments in areas including innovation and technology as well as oversight for the fund s offices in San Francisco and Khazanah Koridor Utara in Penang. Prior to that, he was the MD and CEO of Malaysia Airlines, after serving as the airline s ED and CFO in 2005, and was a non-ed of the airline in He was also with PricewaterhouseCoopers in their London and Hong Kong offices, in the Audit and Business Advisory Services division, specialising in financial services. (Source: The Edge) Top Glove finalises acquisition of Aspion for RM1.37b Top Glove signed a conditional SPA with Adventa Capital to acquire the entire equity interest in glove manufacturer Aspion SB for RM1.37 bn. Top Glove said RM1.23bn of the purchase consideration will be satisfied with cash, funded entirely from a combination of conventional term loan and Islamic term financing. The remainder RM137m would be via the issuance of some 20.51m new Top Glove shares at about RM6.68 apiece. The issue price of the consideration shares is equal to the five-day VWAP of the shares as traded on Bursa Securities up to Nov 24, 2017, being the date of the term sheet. (Source: The Edge) Hovid takeover bid reaches 79% shareholder acceptance Hovid s MD David Ho Sue San and private equity group TAEL Partners Ltd have managed to accumulate m shares or a 78.61% stake in the company at the closing date of acceptance. Hovid said m shares or 44.89% of its total share capital have been received by the joint offerors, bringing their shareholding to 78.61%, from m shares or a 33.72% stake on Oct 9 last year when the offer document was despatched. Hovid said the joint offerors received additional acceptances of 7.74m shares or 0.94% stake after 5pm last Friday. These acceptances are subject to verification. (Source: The Edge) Mubadala is said to mull options for US$920m RHB stake Abu Dhabi sovereign fund Mubadala Investment Co is exploring options for its stake in RHB Bank, Malaysia s fourth-biggest lender, including a possible sale. Mubadala has held informal discussions with potential advisers to seek suggestions on its 17.8% holding in RHB Bank. The fund sees its RHB Bank holding as non-core and is considering options for the stake as part of a broader review of its portfolio. Mubadala s stake is worth about RM3.66bn (US$920m) based on Thursday s closing price. The Abu Dhabi fund s Aabar Investments PJS unit is the second-biggest shareholder in RHB Bank. It trails only EPF, Malaysia s biggest pension fund, which owns 40.7%. Deliberations are at an early stage, and there s no certainty they will lead to a transaction, the people said. (Source: Bloomberg) T7 Global partners China's largest construction firm to win M'sian rail projects T7 Global Bhd has formed a JV with a unit of China's largest construction and real estate conglomerate to bid for rail-related projects in Malaysia. The JV named T7 China Construction Third Engineering SB (T7CCTE) will also take up other infrastructure and construction projects in the country. The JV is 51%-owned by T7's subsidiary T7 Kemuncak SB and 49% by China Construction Third Engineering (M) SB a unit of China Construction Third Engineering (M) SB, which is in turn a subsidiary of China State Construction Engineering. The tieup is a follow up to an MoU to bid for the ECRL project which was inked in October last year between T7 and another of CSCEC's Malaysian unit China State Construction Engineering, alongside Malaysia's Eastern Pacific Industrial and CMC Engineering. Projects to be bid by T7CCTE include ECRL, MRT, LRT projects and other construction business in Malaysia. (Source: The Edge) G Neptune aborts private placement after becoming GN3 company ACE Market-listed GN3 company G Neptune has cancelled its plan for a private placement exercise to raise some RM3m to support its working capital. G Neptune said it will not proceed with the exercise announced 3 years ago, and is looking into formulating a plan to regularise its financial condition. G Neptune said this came after the company slipped into GN3 status, after it triggered ACE Market Listing Requirement GN3 Paragraph 2.1(a) and (b). Paragraph 2.1(a) will be triggered when shareholders' equity is 25% or less than issued and paid-up capital. Paragraph 2.1(b) meanwhile will be triggered when a company incurred loss in any one full financial year after its listing, which is more than the amount of its shareholders' equity at the end of that financial year and the shareholders' equity is equal to or less than 50% of the issued and paid-up capital of the listed firm at the end of the financial year. (Source: The Edge) 3

4 ECONOMIC NEWS Rents boost US core CPI; retail sales rise solidly Underlying US consumer prices recorded their largest increase in 11 months in December amid strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will accelerate this year. The strengthening domestic demand was also underscored by other data on Friday showing retail sales increasing at a solid clip in December. The reports likely keep the Federal Reserve on course to raise interest rates at least 3 times this year. The US central bank hiked borrowing costs three times in The Labor Department said its CPI excluding the volatile food and energy components rose 0.3% last month also as prices for new motor vehicles, used cars and trucks and motor vehicle insurance increased. (Source: Reuters) China's new loans halve in Dec, but hit record in 2017 China's bank lending halved in December as the government kept up its campaign to curb financial system risks, but banks still managed to dole out a record amount for the year, amid the tighter scrutiny. Chinese authorities are trying to walk a fine line by containing riskier types of financing and slowing an explosive build-up in debt without stunting economic growth. Banks extended 584.4bn yuan (US$90.46bn) in December well below expectations of 1 tn yuan and November's 1.12 tn yuan. But banks lent a record tn yuan of new loans in (Source: Reuters) China's Dec imports growth weakest in a year, exports beat forecast China's exports and imports growth slowed in December after unexpectedly surging in the previous month, adding to signs of ebbing economic growth as the government extends a crackdown on financial risks and factory pollution. December exports rose 10.9% from a year earlier, beating analysts' forecast of a 9.1% increase, but cooling from a robust 12.3% gain in November. Imports grew an even slower pace of 4.5% year-on-year in December which was the weakest since they rose 3.1% in December Imports missed analysts' forecast of 13.0% growth and were a sharp decrease, from the 17.7% rise in the previous month. That left the country with a trade surplus of US$54bn for the month, the highest since January (Source: Reuters) Thai c.bank says it has acted on rapid rise in baht Thailand's central bank said on Friday it has taken action when the baht was rising rapidly to ease the impact on businesses from the currency hovering near a 3½-year high against the US dollar. However, moves by the baht are still in line with regional currencies and have been driven by a weaker dollar and Thailand's current account surplus, Assistant Governor Chantavarn Sucharitakul said in a statement. "In certain periods, when the baht was too strong and not in line with the country's economic fundamentals, the central bank stepped in to soften an impact on businesses... to help the private sector adjust," she said, adding the action was not aimed at having an advantage in trade. The strong baht should provide a good opportunity for Thai businesses to import machinery and equipments to increase productivity, Chantavarn said after a meeting between the central bank and a shippers' group. (Source: Reuters) OPEC need not rush into changing oil pact UAE OPEC need not respond to a rise in oil prices by rushing to change a global supply-cutting pact, UAE Energy Minister Suhail al-mazroui said on Friday. This year's rapid rise in oil prices, which hit US$70 this week, is backed by strong demand growth and a fall in oversupply on the back of the OPEC and non-opec pact, not only by political tensions, Mazroui said. "We don't look at the price in a day and say we are in a point where we need to do changes. We need to give the market time," Mazroui, who holds the OPEC presidency, added. "I don't think any fundamentals have changed for us to consider (a change in the output agreement) or panic... There is no need to rush and put assumptions (about) what are we going to do," Mazroui told an industry conference. (Source: Reuters) Canada welcomes Trump suggestion of NAFTA deadline extension Canada welcomes the suggestion by US President Donald Trump that the deadline for concluding talks to modernize NAFTA could be extended beyond the end of March, Foreign Minister Chrystia Freeland told reporters on Friday. Trump told the Wall Street Journal on Thursday that "a lot of things are hard to negotiate" ahead of a Mexican presidential election in July. "I thought that was a sensible suggestion from the President. I think all of us are mindful of the Mexican elections," Freeland told reporters on the sidelines of a Cabinet retreat. Talks to update the NAFTA which are due to wrap up by end-march to avoid clashing with the Mexican vote, have bogged down amid major disagreements. In his remarks on Thursday, Trump reiterated his threat to announce a US withdrawal from the treaty unless major changes are made but said he was "leaving it a little bit flexible" until after the election. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 01/15/ :50 JN Money Stock M2 YoY Dec 4.00% 3.60% 4.00% -- 01/15/ :50 JN Money Stock M3 YoY Dec 3.40% 3.10% 3.40% -- 01/15/ :30 NE Trade Balance Nov b -- 01/15/ :00 FI Current Account Balance Nov b -- 01/15/ :00 CZ Current Account Monthly CZK Nov 1.00b b -- 01/15/ :00 EC Trade Balance SA Nov 22.3b b -- 01/15/ :00 EC Trade Balance NSA Nov b -- 01/15/ :00 IR Trade Balance Nov m -- 01/15/ :00 PD Current Account Balance Nov 693m m -- 01/15/ :00 PD Trade Balance Nov 554m m -- 01/15/ :00 PD Exports Nov 17884m m -- 01/15/ :00 PD Imports Nov 17289m m -- 01/15/ :00 BE Trade Balance Nov m -- 01/16/ :00 CZ Export Price Index YoY Nov % -- 01/16/ :00 CZ Import Price Index YoY Nov % -- 01/16/ :00 IT Trade Balance Total Nov m -- 01/16/ :00 IT Trade Balance EU Nov m -- 01/17/ :50 JN Core Machine Orders MoM Nov -1.40% % -- 01/17/ :50 JN Core Machine Orders YoY Nov -1.00% % -- 01/18/ :30 JN Industrial Production MoM Nov F % -- 01/18/ :30 JN Industrial Production YoY Nov F % -- 01/18/ :30 JN Capacity Utilization MoM Nov % -- 01/18/ :00 CH GDP YoY 4Q 6.70% % -- 01/18/ :00 CH GDP YTD YoY 4Q 6.80% % -- 01/18/ :00 CH Industrial Production YoY Dec 6.10% % -- 01/18/ :00 CH Industrial Production YTD YoY Dec 6.60% % -- 01/18/2018 GR Current Account Balance Nov m -- 01/19/ :00 EC ECB Current Account SA Nov b -- 01/19/ :00 EC Current Account NSA Nov b -- 01/19/ :00 SP Trade Balance Nov m -- 01/19/ :30 IT Current Account Balance Nov m -- 01/19/ :00 PD Sold Industrial Output MoM Dec -9.50% % -- 01/19/ :00 PD Sold Industrial Output YoY Dec 2.80% % -- 01/19/ :00 PD Construction Output YoY Dec 10.10% % -- 01/23/ :00 LN Industrial Production YoY Dec % -- 01/23/ :00 PD Money Supply M3 MoM Dec 1.90% % -- 01/23/ :00 PD Money Supply M3 YoY Dec 4.40% % -- 01/23/2018 RO Money Supply M3 YoY Dec % -- 01/24/ :50 JN Trade Balance Dec b 112.2b 01/24/ :50 JN Trade Balance Adjusted Dec b -- 01/24/ :50 JN Exports YoY Dec % -- 01/24/ :50 JN Imports YoY Dec % -- 01/24/ :30 JN Nikkei Japan PMI Mfg Jan P /24/ :45 US Markit US Composite PMI Jan P /24/ :45 US Markit US Services PMI Jan P /24/ :45 US Markit US Manufacturing PMI Jan P /24/ /28 GE Import Price Index MoM Dec % -- 01/24/ /28 GE Import Price Index YoY Dec % -- 01/25/ :00 IT Industrial Sales WDA YoY Nov % -- 01/25/ :00 IT Industrial Sales MoM Nov %

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 chg 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