PP16795/03/2013(031743)

Transcription

1 Tuesday, 9 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) Corporate News Texchem 1Q net loss narrows as revenue grows Tien Wah 1Q earnings down 26.27% on lower gross profit margin Cost efficiency to be part of Petronas DNA Kimlun wins RM263m job to build MBJB office complex Malaysia re-issues Hovid's pharmaceutical manufacturing licence MK Land sells nine Perak land plots for RM72m Bursa Malaysia Close Change +/- Change % FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 14, Volume (m) 4, Value (MYR m) 2, FBMKLCI YTD performance 7.70 Economic News High speed rail terminal project intact China's April trade growth slows as commodities, electronics demand cools China s crackdown on shadow banking could seriously upset global markets Chinese bank payment networks surge as Western lenders cut ties In US, French vote a relief to some Fed officials G7 finmins won't discuss trade at Italy meeting KLCI 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 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 Market Insight % 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 3.59 Foreign yr MGS 3.94 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 % Padini % WCT % Sunway Construction % UMW Holdings % My Eg Services % Scomi Energy Services % Sapura Energy % Tan Chong Motor % Supermax % Freight Management % 2

3 CORPORATE NEWS Texchem 1Q net loss narrows as revenue grows Texchem Resources narrowed its net loss in the first 1QFY17, compared with the same period a year ago, as revenue improved while finance costs declined. The diversified food and chemical company's 1QFY17 posted a net loss of RM575,000 or 0.47 sen/share, from RM2.21m or 1.81 sen/share a year ago. Revenue gained 5.5% yoy to RM270.98m from RM256.84m, while finance costs were trimmed to RM2.19m from RM2.44m. Its 1QFY17 losses were due to an unfavourable sales mix of lower margin products, though this was partly mitigated by better sales across multiple divisions. Specifically, it saw higher sales in its industrial, polymer engineering and restaurant divisions. Its food division, however, was dragged by low landing of marine products. (Source: The Edge) Tien Wah 1Q earnings down 26.27% on lower gross profit margin Tien Wah registered a 26.27% decline in net profit for the first quarter ended March 31, 2017 (1QFY17) to RM4.13m or 2.85 sen/share from RM5.6m or 5.81 sen/share a year ago. The company attributed the decrease in earnings to the lower gross profit margin following the newly acquired subsidiary s smaller gross profit margin. Its quarterly revenue, however, was up 34% to RM110.39m against RM82.39m in the previous year due to the increase in sales under a major customer s contract and the revenue consolidation of a newly acquired foreign subsidiary. Going forward, the outlook for 2017 continues to be challenging as the economy continues to remain volatile. Challenges in the tobacco industry remain as illicit trade continues to have an impact in Asia. The group would continue to focus on growth opportunities in Indonesia and Dubai where their new operations are located as well as review their current production footprints and identify any further opportunities for growth in other geographical segments. (Source: The Edge) Cost efficiency to be part of Petronas DNA Cost efficiency will remain as the standard practice for national oil and gas company, Petronas, regardless of global oil prices. Since the inception of Cost Reduction Alliance 2.0 (CORAL 2.0) since 2015, the company has been able to save around RM5bn. The company are trying hard to make this part of our DNA in Malaysia and even for the oil and gas industry. CORAL 2.0, a continuation of CORAL 1.0 (implemented from 1994 to 2005), is a long-term industry wide programme, driven by Petronas with the aim to inculcate cost-conscious mindset across Upstream Malaysia. It supports sustainability in the oil and gas industry in the country and prepares for future industry challenges by optimising cost, increasing efficiency and driving industry innovation across all operators. CORAL 2.0 is a 5-year programme from 2015 until The company would not allow inefficiency to creep back into the system even when the oil price starts to recover. (Source: The Edge) Kimlun wins RM263m job to build MBJB office complex Kimlun Corp Bhd's 40%-owned joint venture company JBB Kimlun SB has bagged a RM263m contract to construct an office complex block for MBJB in Plentong, Johor. JBB Kimlun has accepted the LoA for the job from property developer Astaka Padu SB. The project's duration is 30 months from the date of site possession, and is expected to be completed in October The project is expected to contribute positively to the earnings and net assets of Kimlun Group for the financial years during the contract period. Kimlun closed 0.9% lower at RM2.30, valuing the group at RM713.62m. (Source: The Edge) Malaysia re-issues Hovid's pharmaceutical manufacturing licence Hovid has received the manufacturing licence for its pharmaceutical facility in Ipoh, Perak, from Malaysia's Health Ministry after Hovid complied with the ministry's regulations. The ministry revoked the licence for the facility along Jalan Tunku Abdul Rahman in January this year. The re-issued licence is valid from May 5, 2017, to be renewed 3 months prior to the expiry date on Dec 31, On Jan 9 this year, the ministry revoked the manufacturing licences of Hovid's 2 facilities in Perak due to non-compliance with the regulator's good manufacturing practice. Besides the Ipoh facility, the ministry also revoked the licence for the facility along Jalan Ipoh/Chemor in Chemor. (Source: The Edge) MK Land sells nine Perak land plots for RM72m MK Land is selling off 9 parcels of leasehold land in Kamunting, Perak for RM72m, to improve its financial position. The group expects to record a net gain of about RM32.14m from the disposal after deducting disposal expenses, taxes and related costs. MK Land whollyowned subsidiary Dominant Star SB has inked 2 SPAs with KL Teh Land and Development SB for the disposals. The first batch comprises 6 vacant land parcels, measuring approximately acres hectares), which will be sold off for RM9m. In the remainder 3 land plots which measure a collective acres or ha, on which a clubhouse, a golf course and a driving range are located, they will be disposed of for RM63m. (Source: The Edge) 3

4 ECONOMIC NEWS High speed rail terminal project intact The construction of the station for the HSR project in Bandar Malaysia will not be affected by the changes in the status of the master developer of the project. A consortium led by MRCB is still in negotiations with Bandar Malaysia wholly owned by the MoF to build an integrated transportation terminal to cater to the HSR project. The consortium signed an agreement directly with Bandar Malaysia, which is wholly owned by the MoF. Negotiations are ongoing on the design and details of the project and it depends on the alignment of the HSR. The agreement to build the terminal is directly between the MRCB-led consortium and MoF and not affected by the developments with regard to the rest of Bandar Malaysia. The size of the land and the project requirements to build an integrated transport terminal allowed MRCB to replicate the KL Sentral project in Bandar Malaysia. They can build KL Sentral 2 in Bandar Malaysia. (Source: StarBiz) China's April trade growth slows as commodities, electronics demand cools China's import growth slowed faster than expected in April, as inbound shipments of commodities such as iron ore and copper weakened, while export growth more than halved, in line with a general cooling in demand for electronic gadgets. China's April imports rose 11.9%, cooling from March's 20.3% rise. Exports rose 8.0% from a year earlier, slowing from a 16.4% rise in the previous month and short of expectations of 10.4%.While the data show trade remained robust at the beginning of the 2Q, the spurt in China's economic growth seen in the first 3 months of the year may be as good as it gets as policymakers seek to tighten speculative investment, especially in the property sector. Looking ahead, export growth expected to hold up well given the relatively bright outlook for the global economy this year. (Source: Reuters) China s crackdown on shadow banking could seriously upset global markets Amid all the talk of remarkably subdued levels of volatility, signs of potentially severe stress are emerging from one of the most if not the most vulnerable areas in global financial markets: China s unruly shadow banking sector. The Beijing government s efforts to discipline its financial system and rein in a huge credit bubble have already led to a deterioration in sentiment in the country s equity and debt markets. Since the drive to curb financial leverage intensified in early April, China s banks have started withdrawing money from so-called entrusted investments asset or wealth management products that banks outsource to third-party asset managers which has forced non-bank financial institutions to sell their bond and equity holdings. (Source: StarBiz) Chinese bank payment networks surge as Western lenders cut ties Chinese banks have dramatically expanded their overseas payment and trade networks since the global financial crisis, exploiting a growing vacuum created by Western lenders which are retreating from higher-risk jurisdictions. The number of so-called correspondent or bank-to-bank relationships operated by Chinese banks surged more than 3,300% from 65 in 2009 to 2,246 in This contrasts with a 25% drop in the number of correspondent banking relationships globally during the same period, largely caused by US and European banks cutting ties with smaller bank clients in regions such as Asia and Africa. Correspondent banking describes bank-to-bank relationships that allow individuals and companies to move money around the world, facilitating global trade. Although Chinese correspondent banking relationships have grown from a low base and still account for a small proportion of such relationships globally, the huge jump underscores how Chinese lenders - such as ICBC and Bank of China are fast-globalising to support Chinese companies as they push overseas. (Source: Bernama) In US, French vote a relief to some Fed officials France's election result alleviates concern about economic and market turmoil in Europe spilling over into the US, 2 Federal Reserve policymakers said a day after pro-eu candidate Emmanuel Macron was elected French president. Macron's decisive win on Sunday over Marine Le Pen, who threatened to remove France from the common European market, eased concerns about European integration and was met with relief in financial markets. It alleviates some concern in terms of will you see developments in Europe that will then feed through back to the US, noting a sharp market reaction to the vote could have hit the US economy in the short-term. There is also a longer run issue about what does it mean for the integration of Europe will it stay together and I think that's more positive that it will sort of not be breaking apart. (Source: Reuters) G7 finmins won't discuss trade at Italy meeting Trade will not be on the agenda of a meeting of finance ministers and central bankers from the Group of 7 rich nations in Italy this week. At a briefing ahead of the May meeting in the southern city of Bari that trade would instead be discussed by G7 leaders at a meeting in Taormina, Sicily at the end of this month. The decision to leave it off the agenda in Bari follows a meeting of the larger Group of 20 financial leaders in Baden Baden, Germany, in March, when ministers dropped their traditional pledge to keep global free trade open, acquiescing to an increasingly protectionist United States. The Bari G7 will focus on issues including international taxation, cyber security, better coordination of global financial institutions and ways to fight inequality. (Source: Reuters) 4

5 ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 05/11/ :00 UK BOE Asset Purchase Target May 435b b -- 05/11/ :00 UK BOE Corporate Bond Target May 10b -- 10b -- 05/11/ :00 UK Bank of England Bank Rate 11-May 0.25% % -- 05/11/ :50 JN BoP Current Account Adjusted Mar b b -- 05/11/ :50 JN BoP Current Account Balance Mar b b -- 05/12/ :30 US CPI Core Index SA Apr /12/ :30 US CPI Ex Food and Energy MoM Apr 0.20% % -- 05/12/ :30 US CPI Ex Food and Energy YoY Apr 2.00% % -- 05/12/ :30 US CPI Index NSA Apr /12/ :30 US CPI MoM Apr 0.20% % -- 05/12/ :30 US CPI YoY Apr 2.30% % -- 05/12/ :00 SO Construction Constant YoY Mar % -- 05/10/ :00 CZ Construction Output YoY Mar % -- 05/09/ :00 DE Current Account (Seasonally Adjusted) Mar 13.0b b -- 05/09/ :00 GE Current Account Balance Mar 26.5b b -- 05/15/ :00 FI Current Account Balance Mar b -- 05/15/ :00 LN Current Account Balance Mar m -- 05/15/ :00 PD Current Account Balance Mar -100m m -- 05/10/ :45 FR Current Account Balance Mar b -- 05/15/ :00 CZ Current Account Monthly CZK Mar 20.00b b -- 05/10/ :30 US Export Price Index MoM Apr 0.20% % -- 05/10/ :30 US Export Price Index YoY Apr % -- 05/09/ :00 GE Exports SA MoM Mar 0.20% % 0.90% 05/11/ :00 SP House transactions YoY Mar % -- 05/10/ :30 US Import Price Index MoM Apr 0.10% % -- 05/10/ :30 US Import Price Index YoY Apr 3.60% % -- 05/10/ :30 US Import Price Index ex Petroleum MoM Apr 0.10% % -- 05/09/ :00 GE Imports SA MoM Mar 1.60% % -- 05/10/ :00 CZ Industrial Output YoY Mar 9.50% % -- 05/10/ :45 FR Industrial Production MoM Mar 1.00% % -- 05/10/ :30 SV Industrial Production MoM Mar % -- 05/10/ :00 IT Industrial Production MoM Mar 0.30% % -- 05/11/ :30 UK Industrial Production MoM Mar -0.40% % -- 05/10/ :00 FI Industrial Production MoM Mar % -- 05/10/ :00 IT Industrial Production NSA YoY Mar % -- 05/12/ :00 EC Industrial Production SA MoM Mar 0.30% % -- 05/09/ :00 GE Industrial Production SA MoM Mar -0.70% % -- 05/12/ :00 EC Industrial Production WDA YoY Mar 2.30% % -- 05/10/ :00 IT Industrial Production WDA YoY Mar 2.50% % -- 05/09/ :00 GE Industrial Production WDA YoY Mar 2.50% % -- 05/10/ :00 FI Industrial Production WDA YoY Mar % -- 05/15/ :00 CH Industrial Production YTD YoY Apr 6.90% % -- 05/11/ :30 UK Industrial Production YoY Mar 2.00% % -- 05/10/ :00 GR Industrial Production YoY Mar % -- 05/10/ :30 SV Industrial Production YoY Mar % -- 05/15/ :00 CH Industrial Production YoY Apr 7.00% % -- 05/10/ :45 FR Industrial Production YoY Mar 0.60% % -- 05/09/ :30 NE Industrial Sales YoY Mar % -- 05/15/ :30 SW Industry Capacity 1Q %

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