PP16795/03/2013(031743) Oct-16

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1 ket Insight Friday, 13 October, 2017 Oct Dec-16 Jan-17 Feb Apr Jun Aug Oct-17 Research Team PP16795/03/2013(031743) Reports Published Economics Malaysia economy: IPI powers ahead in August; manufacturing sales expand further Corporate News Economic News TNB joins PetDag, GreenTech Malaysia to install 100 ChargEV stations by 2018 Gamuda Land raises Jade Hills sales target by almost 30% in FY18 Kumpulan Jetson's unit bags RM76.35m serviced apartment job in Bukit Jalil Chin Hin invests RM3m for ultra-high performance concrete production plant Sunway Construction bags RM140m worth of jobs Bitcoin breaches new milestone by smashing past US$5,000 mark Dollar recovers as Fed worries about low inflation Global oil market seen balanced in 2018, even with rising output International Energy Agency India palm imports seen rising for 8 month on festivals Japan's wholesale prices rise at fastest in 9 yrs, bank lending up Bursa Malaysia KLCI Performance Close Chg +/- Chg % YTD Chg (%) 1820 FBMKLCI 1, FBMEMAS 12, FBM100 12, FBMEMAS Shariah 12, FBM Hijrah Shariah 14, Volume (m) 4, , Value (MYR m) 2, KLCI Year-End Target: 1,800 points Regional Indices Commodities (Last Close) Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 22, 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 28, Soybean Oil SHCOMP 3, KOSPI 2, Forex TWSE 10, (per USD) BIMB (YE Forecast) Close Chg +/- Chg % STI 3, MYR JCI 5, JPY SET 1, EUR PSEi 8, SGD

2 Major Rates Daily Participation ket Insight % Participation Bought Sold Net KLIBOR 3-mth 3.43 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.56 Local Insti , , KLIBOR 12-mth 3.63 Local Retail yr MGS 3.60 Foreign yr MGS 3.89 Total , , 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 % Hartalega % IHH Healthcare % Top Glove % Westports % Sarawak Plantation % KPJ Healthcare % Prestariang % FGV % Kossan Rubber % MY EG % 2

3 Jan'11 Jan'12 Jan'13 Jan'14 Jan'15 Jan'16 Jan'17 ket Insight REPORTS PUBLISHED Malaysia Economy Economics IPI powers ahead in August; manufacturing sales expand further y IPI increased by 6.8% yoy IPI growth was mainly driven by manufacturing and mining production Manufacturing sales expanded in August Productivity grew 13.6% yoy Vibrant manufacturing activities to maintain its momentum Industrial production higher in August Malaysia s industrial production increased 6.8% yoy in August following 6.1% rise in the prior month and marking the strongest growth since ch 2015 (7.0%). Output jumped for mining production to 5.3% from 0.2% in y. The mining index growth was at the highest level since December 2016 (5.8%). In addition, output increased further for both manufacturing (Aug: 7.6%; : 8.0%) and electricity (Aug: 3.0%; : 7.9%). Nevertheless, on seasonally adjusted monthly basis, the IPI dropped -0.2% in August. The monthly growth decelerated for four months in row (: 4.1%, Jun: 1.8%, : -0.3%). The negative growth was driven by a decrease in production of mining sector (Aug: -2.6%; : - 1.3%) and slower growth in electricity production (Aug: 1.1%; : 5.3%) respectively. On the other hand, manufacturing index improved to 0.5% from -0.4% posted in y. Industrial production index for the period of January to August 2017 grew by 4.8% as compared to the same period of the previous year. The growth was contributed by mainly the manufacturing sector which grew by 6.4%, followed by electricity sector +2.0% and mining sector +0.9%. Chart 1: Industrial Production (YoY%) IPI (All) Manufacturing Mining Electricity Source: Department of Statistics, BIMB Securities 3

4 ket Insight CORPORATE NEWS TNB joins PetDag, GreenTech Malaysia to install 100 ChargEV stations by 2018 PetDag entered into a tripartite partnership with Malaysian Green Technology Corporation (GreenTech Malaysia) and TNB Energy Services SB (TNBES), a wholly-owned subsidiary of TNB, to install 100 electric vehicle (EV) charging stations, ChargEV, by The tripartite partnership is to collectively increase respective commitments towards achieving Malaysia's overall emission reduction target while catalysing green economy initiative. PetDag will also explore strategic partnership to increase the number of ChargEV gradually, in tandem with market demand. PetDag will also look into installing solar photovoltaic (PV) panels at 100 selected stations. With this, the energy used to power the ChargEV will be fully renewable and completely carbon-free, making it truly green. (Source: The Edge) Gamuda Land raises Jade Hills sales target by almost 30% in FY18 Gamuda is targeting RM210m sales for its 10-year-old township Jade Hills here in its FY18. Gamuda concurred that the target is achievable, given the uniqueness of the township. Jade Hills is more developed today, so buyers are more confident in the established township. Hana Gardens is the latest launch of Jade Hills. The 1 st phase of Hana Gardens, which features 32 units of 2-storey link villas, is fully sold. The next launch of Jade Hills will offer link bungalows, which are targeted for launch in January Jade Hills is a 338-acre freehold township project with a GDV of RM2.2bn. (Source: The Edge). Kumpulan Jetson's unit bags RM76.35m serviced apartment job in Bukit Jalil Kumpulan Jetson s 51%-owned unit has bagged a subcontract worth RM76.35m to build 2 blocks of serviced apartments in Bukit Jalil. Jetson ARDC Sdn Bhd has accepted the letter of award from China State Construction Engineering (M) SB to undertake the project, comprising 709 apartment units in all, with carparks and office units. The project is expected to contribute positively to the earnings of the group for the financial years ending 2017 to (Source: The Edge) Chin Hin invests RM3m for ultra-high performance concrete production plant Chin Hin s unit Diva Victory SB (DVSB) plans to spend RM3m to buy equipment to set up a high and ultra-high performance concrete manufacturing plant. DVSB intends to engage into the business of R&D of products using high and ultra-high performance concrete. This enables DVSB to acquire the necessary tools and equipment for the developing and manufacturing of architectural high and ultra-high performance products to the market. The move, is part of the group's vertical integration strategy and represents a gateway for the group to further increase its product portfolio, which creates a synergy effect. It also represents investment by the group into new concrete technology and the possible addition of new markets. DVSB inked an assets purchase agreement today with FRUHPC Concept SB (FRUHPC), which is principally involved in the manufacturing and sales of ultra-high performance concrete, for the acquisition. (Source: The Edge) Sunway Construction bags RM140m worth of jobs Sunway Construction (SunCon) has bagged 2 contracts worth a combined RM140m, bringing its outstanding order book to RM6.7bn. SunCon said its 2 subsidiaries Sunway Geotechnics (M) SB (SunGeo) and Sunway Concrete Products (S) PL (SCPS) have accepted a letter of award by Ahmad Zaki SB and a letter of intent by Chiu Teng Construction Co Pte Ltd respectively. SunGeo will undertake substructure works for a proposed mixed development on Jalan Hang Tuah/Jalan Pudu here for Messrs BBCC Development SB for RM74.7m. The project is for a period of 10 months. At the same time, SCPS will supply and deliver precast components for the building works at Clementi Neighbourhood 2 Contract 3 involving 1,179 dwelling units for S$20.88m (RM65.08m). The contract is for a period of 21 months. The works are expected to contribute positively to the earnings of SunCon Group from the FY17 onwards. (Source: The Edge). 4

5 ket Insight ECONOMIC NEWS Bitcoin breaches new milestone by smashing past US$5,000 mark The global economic recovery has strengthened financial stability but easy monetary and financial conditions against a backdrop of Bitcoin surged to a fresh record Thursday as the enthusiasm for cryptocurrencies showed little signs of abating. The world s largest cryptocurrency rose as much as 7.4% and was trading 5.8% higher at US$5,105 as of 9:59 a.m. in London, resuming gains after a one-day break. As recently as December, bitcoin was trading at less than US$1,000. Bitcoin tumbled below US$4,000 last month after China s central bank stepped up regulations on digital currencies, banning initial coin offerings, a popular means of fundraising for startups. Recent reports that the Chinese government will ease regulations and that Goldman Sachs Group Inc. is exploring how it could help its clients trade cryptocurrencies are now helping sentiment. (Source: Bloomberg) Dollar recovers as Fed worries about low inflation The dollar recovered on Thursday, having hit its lowest in more than two weeks, as US central bankers showed they were taking a more guarded view of inflation, helped by a steep fall in the British GBP. Asian stocks climbed to their highest in a decade, powering global shares to another record high and keeping them on course for their longest winning streak ever. Wall Street was set to open down from Wednesday's record high. The dollar's dip came after minutes of the Federal Reserve's tember meeting on Wednesday showed policymakers had a prolonged debate about whether inflation would pick up and the path of future interest rate rises if it did not. But it slowly regained ground on Thursday and the pound tumbled, after the European Union's chief negotiator said talks over Britain's exit from the EU were at an impasse. (Source: Reuters) Global oil market seen balanced in 2018, even with rising output International Energy Agency Global supply and demand for crude oil will be largely balanced next year, as growth in consumption helps erode a 3-year-old overhang of unused fuel and should mostly offset a steep rise in output, the International Energy Agency (IEA) said on Thursday. In its monthly oil market report, the Paris-based IEA said it continues to see global demand for crude growing by 1.6m bpd in 2017, before moderating to 1.4m bpd in Looking into 2018, 3 quarters out of four will be roughly balanced again using an assumption of unchanged OPEC production, and based on normal weather conditions. Taking 2018 as a whole, oil demand and non-opec production will grow by roughly the same volume and it is this current outlook that might act as the ceiling for aspirations of higher oil prices. Commercial oil stocks likely fell in the 3 rd quarter of this year, only the 2 nd draw since the crude price crashed in 2014, thanks to a drop in the amount of oil held in floating storage or in transit. (Source: Bloomberg) India palm imports seen rising for 8 month on festivals India s palm oil purchases probably climbed for an 8 th straight month in tember as lower international prices prompted traders and refiners to buy more to meet festival demand. Imports rose 20% to 925,000 metric tons from a year earlier. Total vegetable oil purchases increased 6.4% to 1.49m tons. The Solvent Extractors Association of India is likely to release trade data this week. Palm oil demand generally spikes during the festive period in India, the world s biggest importer, as Hindus celebrate major festivals such as Dussehra and Diwali between tember and ember. Vegetable oils are an important part of the festivities as consumption of sweets to fried foods increases. Palm oil prices were down so people bought considering the festival demand. Total vegetable oil imports probably climbed to the highest level so far in the year that began in ember. (Source: Bloomberg) Japan's wholesale prices rise at fastest in 9 yrs, bank lending up Japanese wholesale prices rose in tember at the fastest annual pace in almost 9 years due to rising prices for gasoline, metals, and agricultural products, but the gains won't necessarily boost the country's notoriously weak inflation. Economists expect consumer prices to rise only gradually because many Japanese companies prefer to absorb higher input costs rather than increasing prices, making it difficult for the Bank of Japan (BOJ) to reach its 2% inflation target. Prices are rising upstream, but companies are very reluctant to raise retail prices. If anything, I am worried about corporate profit margins. It is difficult for consumer prices to accelerate when companies do not pass on higher costs. Wholesale prices rose 3.0% in tember from a year earlier, increasing for the ninth straight month, BOJ data showed on Thursday. tember's gains marked the fastest wholesale price growth since October 2008, excluding the effect of a nationwide sales tax hike in (Source: Reuters) 5

6 ket Insight ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 10/13/ :50 JN Money Stock M2 YoY 4.00% 4.10% 4.00% -- 10/13/ :50 JN Money Stock M3 YoY 3.40% 3.40% 3.40% -- 10/13/ :00 FI Current Account Balance Aug b -- 10/13/ :30 US CPI MoM 0.60% % -- 10/13/ :30 US CPI Ex Food and Energy MoM 0.20% % -- 10/13/ :30 US CPI YoY 2.30% % -- 10/13/ :30 US CPI Ex Food and Energy YoY 1.80% % -- 10/13/ :30 US CPI Core Index SA /13/ :30 US CPI Index NSA /13/ :30 US Real Avg Weekly Earnings YoY % 1.00% 10/13/ :30 US Real Avg Hourly Earning YoY % 0.70% 10/13/2017 CH Trade Balance CNY b b -- 10/13/2017 CH Imports YoY CNY 16.50% % -- 10/13/2017 CH Exports YoY CNY 10.90% % -- 10/13/2017 CH Imports YoY 14.70% % 13.50% 10/13/2017 CH Exports YoY 10.00% % 5.60% 10/13/2017 CH Trade Balance $38.00b -- $41.99b $41.92b 10/12/ /18 CH Money Supply M2 YoY 8.90% % -- 10/12/ /18 CH Money Supply M1 YoY 13.60% % -- 10/12/ /18 CH Money Supply M0 YoY 6.60% % -- 10/16/ :30 JN Industrial Production MoM Aug F % -- 10/16/ :30 JN Industrial Production YoY Aug F % -- 10/16/ :30 JN Capacity Utilization MoM Aug % -- 10/16/ :00 CZ Export Price Index YoY Aug % -- 10/16/ :00 CZ Import Price Index YoY Aug % -- 10/16/ :00 LN Current Account Balance Aug m -- 10/16/ :00 SW Riksbank's Ohlsson Gives Speech 10/16/ :00 CZ Current Account Monthly CZK Aug -5.20b b -- 10/16/ :00 EC Trade Balance SA Aug b -- 10/16/ :00 EC Trade Balance NSA Aug 23.3b b -- 10/16/ :00 IR Trade Balance Aug m -- 10/16/ :00 PD Current Account Balance Aug -651m m -- 10/16/ :00 PD Trade Balance Aug -441m m -- 10/16/ :00 PD Exports Aug 15512m m -- 10/16/ :00 PD Imports Aug 15920m m -- 10/16/ :00 BE Trade Balance Aug m -- 10/17/ :00 IT Trade Balance EU Aug m -- 10/17/ :00 IT Trade Balance Total Aug m -- 10/17/ :30 US Import Price Index MoM 0.50% % -- 10/17/ :30 US Import Price Index ex Petroleum MoM 0.10% % -- 10/17/ :30 US Import Price Index YoY % -- 10/17/ :30 US Export Price Index MoM 0.30% % -- 10/17/ :30 US Export Price Index YoY % -- 10/18/ :00 PD Sold Industrial Output MoM 6.70% % -- 10/18/ :00 PD Sold Industrial Output YoY 5.10% % -- 10/18/ :00 PD Construction Output YoY 18.10% % -- 10/19/ :50 JN Trade Balance 556.8b b 112.6b 10/19/ :50 JN Trade Balance Adjusted 309.3b b -- 10/19/ :50 JN Exports YoY 14.80% % -- 10/19/ :50 JN Imports YoY 14.70% %

7 ket Insight 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 7