PP16795/03/2013(031743)

Transcription

1 Friday, 6 January, 2017 Jan-16 Jan-16 Feb-16 Mar-16 Mar-16 Apr-16 May-16 May-16 Jun-16 Jul-16 Aug-16 Aug-16 Sep-16 Oct-16 Oct-16 Nov-16 Dec-16 Dec-16 Research Team bimbresearch@bimbsec.com.my PP16795/03/2013(031743) Corporate News Top Glove sets aside RM220m for capex LBS lines up affordable housing in Klang Valley MyEG secures another big job Amway expects sales to remain resilient Perisai Petroleum gets extension to convene AGM by December Dancomech ventures into pump manufacturing Talam to gain RM48m from selling China hotel operator Enra in JV with Australia's Icon to provide low cost upstream O&G services Bursa Malaysia Close Change +/- Change % FBMKLCI 1, FBMEMAS 11, FBM100 11, FBMEMAS Shariah 12, FBM Hijrah Shariah 13, Volume (m) 2, Value (MYR m) 1, FBMKLCI YTD performance 1.10 Economic News Ringgit seen rebounding to 4.1 vs US dollar in Q3 US jobless claims fall to near 43-year low Fed policymakers agree Trump fiscal boost poses inflation risk UK economy keeps momentum but inflation pressures mount China home prices, property investment likely to rise in 2017 Thai consumer index rose in December Asian currencies rise broadly vs dollar as offshore yuan surges KLCI Performance Regional Indices Commodities (Last Close) Close Change +/- Change % YTD Change (%) Close Change +/- Change % DJIA 19, Brent Crude (USD/bbl) NASDAQ 5, WTI Crude (USD/bbl) S&P 500 2, CPO (RM/MT) 3, FTSE 100 7, SMR 20 (sen/kg) Nikkei , Latex (sen/kg) HSI 22, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 9, (per USD) BIMB (YE Forecast) Close Change +/- Change % STI 2, MYR JCI 5, JPY SET 1, EUR PSEi 7, SGD

2 Major Rates Daily Participation % Participation Bought Sold Net KLIBOR 3-mth 3.42 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.53 Local Insti , , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.73 Foreign yr MGS 4.22 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 % Scomi Energy % Bermaz Auto % Umw Holdings % Barakah Offshore % MISC % Hovid % Axiata Group % Benalec % FGV % Xin Hwa % 2

3 CORPORATE NEWS Top Glove sets aside RM220m for capex Top Glove will set aside RM220m for capital expenditure for the FY2017. Two-thirds of the amount would be used for building new capacity while the balance would be used for automation and refurbishment of existing capacity. The group currently has 25 glove factories with 512 production lines. Work is in progress to bring on stream 2 more factories operating 600 production lines by May The group is expanding rapidly as the demand for gloves, globally, is still very good and consistently increasing. (Source: The Edge) LBS lines up affordable housing in Klang Valley LBS is targeting a 15% yoy growth in sales to RM1.5bn this year, as it plans to launch a slew of affordable housing projects with total gross development value amounting to RM2.3bn. The company is planning 12 launches comprising 5,543 units, of which 4,284 units would consist of affordable homes priced below RM500,000 this year. Of the RM1.5bn sales target, about 77% is below RM500,000. Most of the projects to be launched will be in the Klang Valley. The company will also be launching projects in Pahang and Johor. (Source: StarBiz) MyEG secures another big job MyEG landed another contract related to the foreign workers permit. The company, which already has the mandate for the online renewal of foreign workers permit, was given the job to handle the renewal of temporary employment pass for foreign workers. The Immigration Department awarded the company the mandate to provide online renewal of pass for foreign workers documents for a period of 5 years starting May 23, The estimated total value of the project is RM553.85m and is expected to contribute positively to the company s earnings for the financial year ended June 30, 2017 onwards. (Source: StarBiz) Amway expects sales to remain resilient The weak ringgit against the USD would continue to be the main challenge for Amway this year, especially since 80% of its products are imported from the US. The company s sales would remain robust despite the weak economic environment. In 2015 and 2016, Amway saw softening consumer demand and economic growth and expects the trend to continue in But Amway expects its sales to remain strong on the back of new products and our business owner. (Source: The Edge) Perisai Petroleum gets extension to convene AGM by December Perisai Petroleum has received an extension from the CCM to hold its AGM. The company announced that it had received an approval letter dated Dec 28, 2016 from CCM approving an extension for the company to hold its 2017 AGM, and to table its audited financial statements for the 18-month period ending June 30, 2017 latest by Dec 29, The group had announced on Nov 29 last year that it was changing its financial year end from Dec 31, 2016 to June 30, (Source: StarBiz) Dancomech ventures into pump manufacturing Dancomech is venturing into pump manufacturing business after proposing to acquire a leasehold land measuring 11,838 square meters along with a single-storey industrial building erected on it in Perak for RM4.25m cash. Dancomech Properties has inked a sale and purchase agreement with Chun Khong Engineering Works. The property has a 99-year leasehold, expiring on May 23, The property is presently charged to a local financial institution. Save for this, the property is free from all encumbrances as at the date of the SPA. (Source: StarBiz) Talam to gain RM48m from selling China hotel operator Talam is expected to make a net gain of RM47.78m by disposing its entire 85% equity in the operator of a 263-room Maxcourt Hotel in Changchun, China. Talam s indirect wholly-owned subsidiary, Malim Enterprise (HK) Ltd, had signed an agreement to sell the shares in Jilin Province Maxcourt Hotel Ltd to Jilin Province Zhuo Yue Investment Co Ltd for RM55.1m. In the event the available funds are not sufficient to fully resolve all the debts of Jilin Province Maxcourt Hotel, Malim Enterprise will continue to be responsible for repaying such unresolved debts. The proposed share disposal would enable it to reduce its losses, improve its liquidity position and reduce the group s borrowings. (Source: The Edge) Enra in JV with Australia's Icon to provide low cost upstream O&G services Enra via an indirect subsidiary has formed a JV with a unit of Australia's Icon Engineering Pty Ltd to provide low cost solutions to the upstream oil and gas industry within and outside Malaysia. Enra s indirect wholly-owned subsidiary Enra Oil & Gas Services and Icon Oilfield have entered into a shareholders agreement to jointly establish a JV company, to be known as Enra Icon Sdn Bhd. Enra Oil & Gas Services will have a 70% stake in the JV, while Icon Oilfield will hold the remaining 30%. (Source: The Edge) 3

4 ECONOMIC NEWS Ringgit seen rebounding to 4.1 vs US dollar in Q3 Deputy Finance Minister I Datuk Othman Aziz agrees with bankers forecast that the ringgit will rebound to a fair value of 4.1 against the USD in the 3Q of the year. Bankers had forecast the rebound based on improving commodity prices such as rubber and palm oil, as well as steady economic fundamentals. At 4.00pm, the ringgit stood higher at /4870 against the greenback, after opening at /4900 at 9am, following improved oil prices which was expected to rake in higher revenue for the Government. Brent crude futures, the international benchmark for oil prices, is still hovering above US$55 per barrel. (Source: Bernama) US jobless claims fall to near 43-year low The number of Americans filing for unemployment benefits fell to near a 43 year-low last week, pointing to further tightening in the labor market. Initial claims for state unemployment benefits dropped 28,000 to a seasonally adjusted 235,000 for the week ended Dec 31. That was close to the 233,000 touched in mid-november, which was the lowest level since November Claims for the prior week were revised to show 2,000 fewer applications received than previously reported. But with claims data for 6 states and one territory estimated because of the New Year's holiday, last week's drop likely exaggerates the labor market's strength. The 4 week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 5,750 to 256,750 last week. (Source: Reuters) Fed policymakers agree Trump fiscal boost poses inflation risk Almost all Fed policymakers thought the economy could grow more quickly because of fiscal stimulus under the Trump administration and many were eyeing faster interest rate increases, minutes from the central bank's December meeting showed. How broadly views within the Fed are shifting in response to President-elect Donald Trump's promises of tax cuts, infrastructure spending and deregulation. Policymakers were clear that the outlook for those policies remained uncertain, but they could, if implemented, stoke higher inflation which would lead the central bank to raise borrowing costs more aggressively. About half of the participants incorporated an assumption of more expansionary fiscal policy in their forecasts (Source: Reuters) UK economy keeps momentum but inflation pressures mount Britain's economy retained its momentum through the final months of 2016, but inflation pressures mounted at the fastest pace since records began almost 20 years ago. Sales and hiring improved modestly in the 4Q, adding to signs that Britain likely outpaced most advanced economies in But its quarterly survey also pointed to complications stemming from last June's vote to leave the EU. A record number of manufacturers expect to raise prices in the next 3 months a direct consequence of the weak pound, still down almost 12% on a trade weighted basis since June 23. (Source: Reuters) China home prices, property investment likely to rise in 2017 China's average home prices are forecast to rise 4.1% in 2017 from the previous year, while growth in property investment would rise 5.4. Wild spurts in China's property prices fuelled worries of asset bubbles this year, particularly in the biggest cities, spurring policymakers to enforce curbs in more than 24 cities. Provided current policies don't change, people will still expect home prices to rise in 2017, due to expectations of further yuan depreciation and more US rate hikes. Average home prices across China will rise to 7,435 yuan (US$1,079.6) per square metre, while property investment would total 10.6trn yuan (US$1.54trn) in (Source: Reuters) Thai consumer index rose in December Thailand's consumer confidence rose in December for the first time in 3 months, helped by government stimulus measures to boost consumption. The University of the Thai Chamber of Commerce's index rose to 73.7 last month from 72.3 in November. The first rise in 3 months is due to the government's year-end stimulus measures, an improvement in exports and better commodity prices, including rubber, as well as year-end spending. The military government last month allowed Thais a tax deduction of up to 15,000 baht (US$420) on goods bought between Dec to spur spending. (Source: Reuters) Asian currencies rise broadly vs dollar as offshore yuan surges Asian currencies surged on Thursday, with the offshore Chinese yuan jumping to its strongest level in nearly 2 months, as a spike in funding costs prompted yuan short sellers to square positions. The offshore yuan climbed to as high as per USD, as of 0640 GMT, its strongest level since Nov. 9. China has stepped into both its onshore and offshore yuan markets to shore up the faltering yuan this week, sparking speculation that it wants a firm grip on the currency ahead of US President-elect Donald Trump's inauguration on Jan. 20. The surge in the offshore yuan helped spur some scaling back of long USD positions and short-covering in Asian currencies. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 01/05/ :30 AU AiG Perf of Services Index Dec /05/ :50 JN Monetary Base YoY Dec % -- 01/05/ :50 JN Monetary Base End of period Dec t -- 01/05/ :50 JN Loans & Discounts Corp YoY Nov % -- 01/05/ :30 TA CPI YoY Dec 2.10% % -- 01/05/ :30 TA WPI YoY Dec % -- 01/05/ :30 SI Nikkei Singapore PMI Dec /05/ :30 JN Nikkei Japan PMI Services Dec /05/ :30 JN Nikkei Japan PMI Composite Dec /05/ :30 HK Nikkei Hong Kong PMI Dec /05/ :00 PH CPI YoY Dec 2.60% % -- 01/05/ :00 PH CPI NSA MoM Dec % -- 01/05/ :00 PH CPI Core YoY Dec 2.50% % -- 01/05/ :45 CH Caixin China PMI Composite Dec /05/ :45 CH Caixin China PMI Services Dec /05/ :30 TH Consumer Confidence Dec /05/ :30 TH Consumer Confidence Economic Dec /05/ :35 JN 3M Discount Bill Amount Sold 5-Jan b -- 01/05/ :35 JN 3M Discount Bill Average Yield 5-Jan % -- 01/05/ :35 JN 3M Discount Bill Bid/Cover Ratio 5-Jan /05/ :45 JN 10Y Bond Amount Sold 5-Jan b -- 01/05/ :45 JN 10Y Bond Average Yield 5-Jan % -- 01/05/ :45 JN 10Y Bond Bid/Cover Ratio 5-Jan /05/ :45 JN 10Y Bond Tail Yield 5-Jan % -- 01/05/ :00 JN Vehicle Sales YoY Dec % -- 01/05/ :30 NE CPI MoM Dec % -- 01/05/ :30 NE CPI YoY Dec % -- 01/05/ :30 NE CPI EU Harmonized MoM Dec % -- 01/05/ :30 NE CPI EU Harmonized YoY Dec % -- 01/05/ :00 IR Investec Composite PMI Ireland Dec /05/ :00 IR Investec Services PMI Ireland Dec /05/ :00 RO PPI MoM Nov % -- 01/05/ :00 RO PPI YoY Nov % -- 01/05/ :00 DE Unemployment Rate SA Nov % -- 01/05/ :00 DE Unemployment Rate Gross Rate Nov 4.20% % -- 01/05/ :00 SI Total Weekly Fuel Stockpiles Bbl 4-Jan m -- 01/05/ :00 SI Light Distillates Fuel Stockpiles Bbl 4-Jan m -- 01/05/ :00 SI Middle Distillates Fuel Stockpiles Bbl 4-Jan m -- 01/05/ :00 SI Residue Fuel Stockpiles Bbl 4-Jan m -- 01/05/ :00 AS Wholesale Price Index MoM Dec % -- 01/05/ :00 AS Wholesale Price Index YoY Dec % -- 01/05/ :00 HU Unemployment Rate Nov 4.70% % -- 01/05/ :00 SI Automobile COE Open Bid Cat B 5-Jan /05/ :00 SI Automobile COE Open Bid Cat A 5-Jan /05/ :00 SI Automobile COE Open Bid Cat E 5-Jan /05/ :20 TA Foreign Reserves Dec $434.35b -- 01/05/ :30 GE Markit Germany Construction PMI Dec /05/ :00 UK New Car Registrations YoY Dec % -- 01/05/ :00 IT Deficit to GDP YTD 3Q % -- 01/05/ :00 UK LME Aluminum Alloy Stocks 5-Jan

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. 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