PP16795/03/2013(031743) Mar-17

Transcription

1 Thursday, 8 March, 2018 Mar-17 Apr-17 May- 17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Research Team research@bimbsec.com.my PP16795/03/2013(031743) Reports Published Economics Malaysia economy: Foreign holdings declines in February Economics Malaysia economy: BNM keeps OPR at 3.25% Corporate News Suria Capital introduces RAPS as shareholder in Sabah power plant project SPV Hibiscus Petroleum's Australia JV gets 5-year exploration renewal term OldTown public shareholding spread dips under 25% JAKS agrees to complete Tower A by June 30 SCH to buy fertiliser firm in further diversification move Omesti sells 6.64% stake in Diversified Gateway for RM10.8m Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 13, FBM Hijrah Shariah 14, Volume (m) 3, Value (MYR m) 3, Economic News Bank Negara keeps OPR unchanged at 3.25% Malaysia says to consider raising BR1M for urban poor US trade deficit hits more than 9-year high as exports falter US Considers Broad Curbs on Chinese Imports, Takeovers EU offers Britain trade deal with limited access for banks UK house prices rise at slowest pace in nearly 5 years KLCI Performance Regional Indices Commodities (Last Close) KLCI Year-End Target: 1,900 points Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 24, 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 30, 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 3.69 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.80 Local Insti , , KLIBOR 12-mth 3.90 Local Retail yr MGS 3.39 Foreign yr MGS 3.58 Total , , yr MGS 3.98 Performance of BIMB Stock Coverage Top Gainers Source: Bank Negara Malaysia Top Losers Source: The Sun, BIMB Securities Research Close Chg +/- Chg % Close Chg +/- Chg % KPJ Econpile Pintaras Jaya Kossan Rubber Axiata GHL Systems Nestle Ikhmas Jaya QL Resources FGV

3 Reports Published Malaysia Economy Economics Foreign holdings declines in February Foreign holdings of MYR debts securities decreased to RM207.2bn Foreigners sold RM3.6bn of MGS and GII in February Total portfolio outflow of RM5.0bn for equities and debt securities combined Global volatility spike took a toll on the MYR and MGS Foreign flows momentum reversed in February after the OPR increase in January. Foreign holdings of MYR debt securities declined by RM3.9bn to RM207.2bn in February 2018, equivalent to 15.7%. Foreign holdings of MGS in February decreased by RM3.1bn to RM165.5bn from RM168.6bn. Foreign ownership of GII also dipped lower as foreigners sold RM0.5bn to RM18.4bn from RM18.9bn. In percentage wise, foreign ownership of MGS dropped to 45.4% (Jan 18: 45.7%; Dec: 45.1%; Nov: 44.3%; Oct: 42.7%) while holdings of GII was also lower at 6.7% (Jan 18: 6.9%; Dec: 6.9%; Nov: 6.7%; Oct: 7.4%). Given the outflow of RM3.6bn to RM183.9bn in foreign ownership of government debt (MGS + GII), total foreign holding in government debt declined to 28.7% from 29.2% in January. Meanwhile, foreign holdings of discount instruments decreased by RM1.0bn to RM7.0bn while foreign holdings of PDS increased by RM0.7bn to RM16.3bn. In combined amounts (inclusive of short-term bills/notes and corporate bonds/sukuk), foreign holding levels in February 2018 were lower by RM3.9bn, bringing total foreign ownership of MYR bonds to RM207.2bn or 15.7%. As at end-february, there were RM3.9bn outflows (Jan 18: +4.4bn; Dec: +RM2.7bn) from total debt securities while foreigners sold RM1.1bn of equities (Jan 18: +3.4bn; Dec: +RM1.0bn), this means a total portfolio outflow of RM5.0bn for equities and debt securities combined (Jan 18: +7.8bn; Dec: +RM3.7bn). The foreign inflows declined in February amid the weaker global bond sentiment and an exodus of foreign funds from stocks listed on Bursa due to steep selloff in the global stock market in early February. Table 1: Foreign Holdings of Malaysia Total Debt Securities Foreign Holdings (RM bn) Monthly Flows (RM bn) Foreign Holdings (%) Feb 18 Jan 18 Feb 18 Jan 18 Feb 18 Jan 18 MGS GII PDS^ Others* Total Source: Bank Negara Malaysia, BIMB Securities ^ Private sector conventional and sukuk *Includes BNM notes and treasury bills (conventional and Islamic) 3

4 Economics Malaysia Economy BNM keeps OPR at 3.25% BNM holds OPR at 3.25% Growth to remain strong in 2018 Inflation to average lower in 2018 OPR to remain at 3.25% in 2018 The Monetary Policy Committee (MPC) of Bank Negara Malaysia has decided to maintain the Overnight Policy Rate (OPR) at 3.25% on March 7th BNM said the decision is in line with the policy stance to ensure that domestic economy continues on a steady growth path amid lower inflation. Previously on 25th January this year, BNM raised its key rate by 25bps to 3.25% from 3.0%. It was the first rate hike in 3-1/2 years. Chart 1: Overnight Policy Rate (OPR) Source: Bank Negara Malaysia, BIMB Securities Schedule of Monetary Policy Committee Meetings for 2018 Meeting No Dates Result 1st 24 and 25 January 2018 (Wednesday and Thursday) 25bps increased to 3.25% 2nd 6 and 7 March 2018 (Tuesday and Wednesday) Maintain at 3.25% 3rd 9 and 10 May 2018 (Wednesday and Thursday) - 4th 10 and 11 July 2018 (Tuesday and Wednesday) - 5th 4 and 5 September 2018 (Tuesday and Wednesday) - 6th 7 and 8 November 2018 (Wednesday and Thursday) - Source: Bank Negara Malaysia, BIMB Securities 4

5 CORPORATE NEWS Suria Capital introduces RAPS as shareholder in Sabah power plant project SPV Suria Capital has introduced RAPS Solutions SB as a shareholder in a subsidiary tasked to develop a 2MW solar photovoltaic power plant in Papar, Sabah. Suria Capital's wholly-owned unit SCHB Engineering Services SB acquired Borderless Unity SB that now renamed Suria RE SB, for it to serve as a special purpose vehicle for the solar plant project SCHB Engineering now holds a 35% stake in Suria RE, with the balance 60% held by Suria Capital. All the parties will be signing a JV agreement in due course. (Source: The Edge) Hibiscus Petroleum's Australia JV gets 5-year exploration renewal term Hibiscus Petroleum JV in Australia has been granted a 5-year renewal term for the VIC/P57 exploration at the Gippsland Basin there. The JV is made-up of its indirect wholly-owned subsidiaries Carnarvon Hibiscus and Gippsland Hibiscus, as well as 3D Oil Ltd in which Hibiscus also owns a 13% stake. In total, Hibiscus has 78.3% effective interest in VIC/P57. Prospective review conducted on-site found 7 leads and prospects comprising both oil and gas reserves. (Source: The Edge) OldTown public shareholding spread dips under 25% OldTown s public shareholding spread dipped below the minimum 25% requirement. JDE Asia, which has made a take-over offer for shares in OldTown, has collected 77.36% stake in the group to-date. OldTown does not comply with the required public shareholding spread pursuant to Section 8.02(1) of the listing requirements. JDE Asia, which offered to acquire OldTown shares at RM3.18 apiece, does not intend to maintain OldTown s listing status. JDE Asia may procure the homegrown F&B group to take the requisite step to withdraw the listing status via any processes permitted by law. (Source: The Edge) JAKS agrees to complete Tower A by June 30 JAKS Resources has agreed to complete Tower A of the Pacific Star project in Petaling Jaya by June 30 as demanded by Star Media. Tower A is one of two office towers in the Pacific Star project, which also features 3 residential blocks and related developments with a gross development value of RM1.1bn. JAKS's 51% owned subsidiary JAKS Island Circle SB was supposed to deliver Tower A to Star, alongside RM135m as payment from JAKS to acquire from Star the land where Pacific Star is planned. (Source: The Edge) SCH to buy fertiliser firm in further diversification move Quarry machinery and equipment supplier SCH announced its entry into the fertiliser business, a month after diversifying into the event equipment supply and rental activity. The ACE Market-listed group acquired an 83.33% equity interest in PKF Sarawak for RM19.05m, from PK Fertilizers SB. SCH will pay RM11.45m in cash and issue 40m new shares in the group at 19 sen per share. SCH proposes to seek shareholders' approval for the group to diversify into the fertiliser business segment, as PKF Sarawak will become a subsidiary of SCH. (Source: The Edge) Omesti sells 6.64% stake in Diversified Gateway for RM10.8m Software and application developer Omesti has disposed of a 6.64% stake in Diversified Gateway Solutions for RM10m. The company comprising 90m shares, was sold in the open market at an average price of 10 sen to 14 sen per share. Omesti held a m shares in Diversified Gateway as at End-October last year. The expected cumulative profit from the disposals is RM4.17m. Omesti bought the stake in a series of acquisitions in 2010, 2013 and 2016 at an average cost of RM6.60m. Net proceeds from the disposals will be channelled to pare down the group s borrowings and for working capital purposes. (Source: The Edge) 5

6 ECONOMIC NEWS Bank Negara keeps OPR unchanged at 3.25% Bank Negara Malaysia has maintained the OPR at 3.25% at the Monetary Policy Committee meeting, as it expects the domestic economy to continue to see strong growth this year with domestic demand remaining the key growth driver amid a positive global growth outlook. The degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid lower inflation. For Malaysia, the strong growth performance in the 4Q17 continued to be anchored by private sector spending. Looking ahead, growth prospects will be sustained by the positive global growth outlook and spillovers from the external sector to the domestic economy. (Source: The Edge) Malaysia says to consider raising BR1M for urban poor The government is prepared to consider increasing the quantum of the 1Malaysia People s Aid (BR1M) for the urban poor. The government was aware that the cost of living in the town was higher than in the rural areas. This in response to a supplementary question from Datuk Dr Abdul Latiff Ahmad who wanted to know if the BR1M payment, which included RM900 for those with household income of RM3,001 to RM4,000, should be increased for those residing in the towns. RM25.62bn had been allocated for BR1M between 2012 and This year, the government allocates RM6.8bn for BR1M which will benefit more than 7.2m recipients and with that amount, it brings to RM32.42bn since (Source: Bernama) US trade deficit hits more than 9-year high as exports falter The US trade deficit increased to a more than 9 year high in January, with the shortfall with China widening sharply, suggesting that President Donald Trump trade policies are unlikely to have a material impact on the deficit. The trade deficit continues to widen a year into the Trump presidency. Trump, who claims that the US is being taken advantage of by its trading partners, has imposed tariffs on imports of some goods to shield domestic industries. The protectionist measures have sparked fears of a trade war. The trade gap jumped 5.0% to USD56.6bn. That was the highest level since October 2008 and exceeded economists' expectations of an increase to USD55.1bn. Part of the rise in the trade deficit in January reflected commodity price increases. (Source: Reuters) US Considers Broad Curbs on Chinese Imports, Takeovers The Trump administration is considering clamping down on Chinese investments in the US and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property. An announcement following an investigation by the US Trade Representative s office into China s IP practices is expected in the coming weeks, potentially handing President Donald Trump further cause to impose trade restrictions. His announcement last week of tariffs on steel and aluminum imports has already ratcheted up global trade tensions. (Source: Reuters) EU offers Britain trade deal with limited access for banks The EU offered Britain a free trade agreement for their post-brexit relationship, a draft text showed, outlining a much more limited cooperation than London had called for. A draft joint position from the remaining 27 EU members, seen by Reuters ahead of its official publication. The bloc was determined to foster a close partnership with Britain. The Customs Union and the Single Market will inevitably lead to frictions and this will have negative economic consequences. (Source: Reuters) UK house prices rise at slowest pace in nearly 5 years British house prices rose at their slowest annual pace in nearly 5 years last month. The latest sign of weakening in the housing market as Britain approaches its departure from the EU. The average house prices increased by 1.8% in the 3 months to February compared with the same period of 2017, slowing from 2.2% in January and the weakest increase since March However, the rise was a bit faster than a forecast in a Reuters poll of economists for growth of 1.6%. (Source: Reuters) 6

7 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 03/08/ :50 JN BoP Current Account Balance Jan 437.4b b -- 03/08/ :50 JN BoP Current Account Adjusted Jan b b -- 03/08/ :50 JN Trade Balance BoP Basis Jan b b -- 03/08/ :50 JN GDP SA QoQ 4Q F 0.20% % -- 03/08/ :50 JN GDP Annualized SA QoQ 4Q F 1.00% % -- 03/08/ :50 JN GDP Nominal SA QoQ 4Q F 0.10% % -- 03/08/ :50 JN GDP Deflator YoY 4Q F 0.00% % -- 03/08/ :50 JN GDP Private Consumption QoQ 4Q F 0.50% % -- 03/08/ :50 JN GDP Business Spending QoQ 4Q F 1.30% % -- 03/08/ :00 GE Factory Orders MoM Jan -1.80% % -- 03/08/ :00 GE Factory Orders WDA YoY Jan 11.50% % -- 03/08/ :45 EC ECB Main Refinancing Rate Mar % % -- 03/08/ :45 EC ECB Marginal Lending Facility Mar % % -- 03/08/ :45 EC ECB Deposit Facility Rate Mar % % -- 03/08/2018 CH Trade Balance Feb -$5.70b -- $20.34b $20.35b 03/08/2018 CH Exports YoY Feb 11.00% % -- 03/08/2018 CH Imports YoY Feb 8.00% % 36.80% 03/08/2018 CH Trade Balance CNY Feb b b -- 03/08/2018 CH Exports YoY CNY Feb 7.40% % -- 03/08/2018 CH Imports YoY CNY Feb 1.20% % -- 03/09/ :50 JN Money Stock M2 YoY Feb 3.30% % -- 03/09/ :50 JN Money Stock M3 YoY Feb 2.80% % -- 03/09/ :00 GE Trade Balance Jan 18.1b b 18.1b 03/09/ :00 GE Exports SA MoM Jan 0.30% % 0.00% 03/09/ :00 GE Imports SA MoM Jan -0.10% % 1.10% 03/09/ :00 GE Industrial Production SA MoM Jan 0.70% % -- 03/09/ :00 GE Industrial Production WDA YoY Jan 6.00% % -- 03/09/ :00 FI Industrial Production MoM Jan % -- 03/09/ :00 FI Industrial Production WDA YoY Jan % -- 03/09/ :00 FI Trade Balance Jan P m -- 03/09/ :45 FR Industrial Production MoM Jan -0.30% % -- 03/09/ :45 FR Industrial Production YoY Jan 3.80% % -- 03/09/ :45 FR Manufacturing Production MoM Jan 0.30% % -- 03/09/ :45 FR Manufacturing Production YoY Jan 4.80% % -- 03/09/ :00 SO Trade Balance Jan m -- 03/09/ :00 CZ Trade Balance National Concept Jan 20.3b b -- 03/09/ :00 HU Trade Balance Jan P 501m m -- 03/09/ :00 SP Industrial Output NSA YoY Jan % -- 03/09/ :00 SP Industrial Output SA YoY Jan 5.10% % -- 03/09/ :00 SP Industrial Production MoM Jan 0.00% % -- 03/09/ :00 LN Trade Balance Jan b -- 03/09/ :30 UK Trade Balance Jan /09/ :30 UK Industrial Production MoM Jan 1.50% % -- 03/09/ :30 UK Industrial Production YoY Jan 1.90% % -- 03/09/ :30 UK Manufacturing Production MoM Jan 0.20% % -- 03/09/ :30 UK Manufacturing Production YoY Jan 2.80% % -- 03/10/ /15 CH Money Supply M2 YoY Feb 8.70% % -- 03/10/ /15 CH Money Supply M0 YoY Feb 7.60% % -- 03/10/ /15 CH Money Supply M1 YoY Feb 11.00% % -- 03/12/ :30 NE Manufacturing Production MoM Jan %

8 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 8