Thursday, 21 September, 2017 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Research Team research@bimbsec.com.my PP16795/03/2013(031743) 03-2613 1739 www.bisonline.com Reports Published Economics Malaysia Economy: Inflation picks up in August Corporate News Datasonic to expand smart card business to Indonesia Econpile gets RM18m piling contract for Pavilion Damansara project Lotte Chemical's Johor plant catches fire AHB plans to raise up to RM7.3m to pay creditors, buy tooling equipment PPB Unit To Dispose Of Entire Equity In Tefel For USD2.4m Bursa Malaysia Close Change +/- Change % FBMKLCI 1,773.58-3.08-0.17 FBMEMAS 12,644.12-10.40-0.08 FBM100 12,294.68-19.55-0.16 FBMEMAS Shariah 12,845.33-14.67-0.11 FBM Hijrah Shariah 14,036.03-35.92-0.26 Volume (m) 3,148.35 1,137.32 56.55 Value (MYR m) 2,383.82 462.06 24.04 FBMKLCI YTD performance 8.03 Economic News Inflation rate up 3.7% in August, exceeds forecast Malaysian palm oil price up on overnight soyoil strength, stronger exports Fed conflicted by weak US inflation, global economic rebound Global economic expansion no flash in the pan Taiwan c.bank to keep rates steady as exports stay buoyant Oil set for strongest 3Q since 2004, Iraq hints at OPEC extension KLCI Performance 1820 1770 1720 1670 1620 1570 KLCI Year-End Target: 1,800 points Regional Indices Commodities (Last Close) Close Change +/- Change % YTD Change (%) Close Change +/- Change % DJIA 22,412.59 41.79 0.19 13.41 Brent Crude (USD/bbl) 56.29-0.34-0.61 NASDAQ 6,456.04-5.28-0.08 19.93 WTI Crude (USD/bbl) 50.69 0.79 1.58 S&P 500 2,508.24 1.59 0.06 12.03 CPO (RM/MT) 2,770.00 3.00 0.11 FTSE 100 7,271.95-3.30-0.05 1.81 Gold (USD/ounce) 1,300.63-0.54-0.04 Nikkei 225 20,310.46 11.08 0.05 6.26 Latex (sen/kg) 522.50-3.00-0.57 HSI 28,127.80 76.39 0.27 27.85 Soybean Oil 34.91 0.15 0.43 SHCOMP 3,366.00 9.15 0.27 8.45 KOSPI 2,412.20-0.56-0.02 19.01 Forex TWSE 10,519.17-56.97-0.54 13.68 (per USD) BIMB (YE Forecast) Close Change +/- Change % STI 3,218.07-7.88-0.24 11.71 MYR 4.20 4.188-0.0013-0.03 JCI 5,906.57 5.25 0.09 11.51 JPY 110.0 112.22 0.6300 0.56 SET 1,670.65-1.94-0.12 8.28 EUR 0.93 0.84 0.0071 0.85 PSEi 8,219.32 56.62 0.69 20.15 SGD 1.45 1.35 0.0013 0.10 www.bimbsec.com.my 1 www.bimbsec.com.my
Major Rates Daily Participation Market Insight % Participation Bought Sold Net KLIBOR 3-mth 3.43 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.55 Local Insti 50.4 1308.3 1,093.6 214.7 KLIBOR 12-mth 3.63 Local Retail 24.4 586.3 580.0 6.3 5-yr MGS 3.58 Foreign 25.2 489.2 710.2-221.0 10-yr MGS 3.88 Total 100.0 2,383.8 2,383.8 0.0 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 % Hibiscus Petroleum 0.65 0.19 39.8% Padini 4.29-0.16-3.6% Dagang Nexchange 0.52 0.04 8.4% Econpile 2.97-0.06-2.0% TSH Resources 1.70 0.05 3.0% Sarawak Plantation 1.55-0.02-1.3% Matrix Concepts 2.28 0.03 1.3% Supermax 1.76-0.02-1.1% Prestariang 1.87 0.02 1.1% Hartalega 6.43-0.07-1.1% www.bimbsec.com.my 2
Reports Published Malaysia Economy Economics Inflation picks up in August CPI increased by 3.7% yoy and rebounded to 0.9% mom Core inflation grew marginally lower at 2.4% yoy Global inflation picks up in August Inflation forecast revised higher Malaysia's consumer price index in August rose 3.7% yoy, mainly fuelled by higher petrol prices. Majority of the main groups indices were higher in August with the index of transport group showed a significant increase of 11.7% yoy. The index for food and non-alcoholic beverages which accounted for 30.2% in the CPI weights -- increased 4.3% in August (Jul: 4.2%). On monthly basis, headline inflation increased 0.9% after posted fifth consecutive months of negative growth since March 2017. The growth was underpinned by the transportation index which rallied to 4.6% from -1.1% registered in July. When based on a seasonally adjusted term, the overall CPI for August increased 0.9% mom. CPI for the period January-August 2017 registered an increase of 3.9% compared with the same period last year, mainly due to an increase in the food and non-alcoholic beverages index (+4.2). Table 1: Malaysia Consumer Price Index (CPI, 2010=100) % YoY Jun Jul Jul CPI Core Index CPI Core Index Total 3.6 2.5 3.2 2.6 3.7 2.4 Non-Food 3.2-2.7-3.4 - Food and Non-Alcoholic Beverages 4.3 4.1 4.2 4.4 4.3 4.3 Alcoholic Beverages & Tobacco 0.1-0.1-0.1 - Clothing and Footwear -0.4-0.2-0.4-0.4-0.3-0.3 Housing, Water, Electricity, Gas and Other Fuels Furnishings, Household Equipment, and Routine Household Maintenance CPI Core Index 2.2 2.7 2.2 2.6 2.4 2.9 2.1 2.1 2.6 2.6 2.7 2.7 Health 2.6 2.6 2.9 2.9 2.7 2.7 Transport 10.5 3.3 7.7 3.3 11.7 2.1 Communication -0.3-0.3-0.3-0.3-0.3-0.3 Recreation Services and Culture 3.0 3.0 2.6 2.6 0.4 0.4 Education 1.7 1.7 1.6 1.6 1.6 1.6 Restaurants & Hotels 2.5 2.5 2.6 2.6 2.8 2.8 Miscellaneous Goods & Services 1.2 1.2 1.1 1.1 0.9 0.9 Source: Department of Statistics, BIMB Securities www.bimbsec.com.my 3
CORPORATE NEWS Datasonic to expand smart card business to Indonesia Datasonic is expanding its smart card business to Indonesia. It had set up a subsidiary in Indonesia called PT Datasonic Teknologi Indonesia to facilitate the expansion. The incorporation of the subsidiary is part of the group's plan to expand its international footprint, especially in the personalised smart card industry, which is valued by Ireland-based Research and Markets at US$6.7bn in 2016. In Asia- Pacific, the global smart card industry is expected to grow from US$2.8bn in 2017 to US$4.5bn in 2022 at a 5 year compounded annual growth rate of 9.9% from 2017 through 2022. The new subsidiary will facilitate the expansion of Datasonic internationally, as the potential is huge. (Source: The Edge) Econpile gets RM18m piling contract for Pavilion Damansara project Econpile has secured an RM18m contract for the Pavilion Damansara Heights Phase 2 mixed development project. Its wholly-owned unit Econpile SB was awarded the contract to undertake contiguous bored pile works by Jendela Mayang SB. The contract is for 27 weeks and expected to be completed in April 2018. The contract is expected to contribute positively to its earnings for the financial year ending June 30, 2018.. (Source: The Edge) Lotte Chemical's Johor plant catches fire A fire broke out at Lotte Chemical's plant in Pasir Gudang, Johor, earlier today. The extent of the damage from the fire cannot be confirmed at this juncture. However, Lotte Chemical is slated to issue an announcement on the incident. Lotte Chemical's Pasir Gudang integrated facility houses 9 of its 11 Malaysian chemical manufacturing plants. The integrated facility is connected via dedicated underground pipelines to another integrated site in Tanjung Langsat 12km away, where the two other plants are located. Earlier in April, the company suffered an extended 11-day water supply disruption which dragged its net profit down 72% to RM113.62m or 6.58 sen per share in the 2QFY17, from RM404.03m or 23.38 sen per share a year earlier. (Source: The Edge) AHB plans to raise up to RM7.3m to pay creditors, buy tooling equipment AHB is planning to raise between RM5.04m and RM7.28m via a private placement to raise money for working capital and capital expenditure. AHB is issuing up to 23.17m shares, equivalent to 10% of its share capital, to selected investors at a discount of not more than 10% of the 5 day weighted average price calculated up to the price-fixing date. It will allocate 77% of the cash proceeds for working capital purposes, including paying its creditors, funding overseas import and purchasing raw materials, aluminium, fabrics, furniture hardware and components, and particle boards. Another 20% of the proceeds will be used for capital expenditure, including buying tooling equipment to be used to uniquely design the group's new products such as panel and desking systems. (Source: The Edge) PPB Unit To Dispose Of Entire Equity In Tefel For USD2.4m PPB Group's unit, Tego SB, has proposed to dispose of its entire equity interest in Tefel Packaging Industries Co Ltd for USD2.4m (US$1=RM4.19) to Messrs Natthi Cholsaipant and Tanapat Cholsaipant. The consideration for the proposed disposal was based on the net book value of the fixed assets and goodwill of USD1.80m and USD0.6m respectively as at Dec 31, 2016. On completion of the proposed disposal, Tefel will cease to be an indirect 100 per cent-owned subsidiary of PPB. Tefel, incorporated in Myanmar on Aug 23, is a wholly-owned unit of Tego, which in turn is a 79.9% owned subsidiary of FFM Bhd, an 80% owned subsidiary of PPB. (Source: Bernama) www.bimbsec.com.my 4
ECONOMIC NEWS Inflation rate up 3.7% in August, exceeds forecast Malaysia's inflation rate rose at a faster pace of 3.7% in August 2017 from a year ago, exceeding a forecast of a 3.4% increase, mainly fuelled by higher petrol prices. The average price of one litre of RON95 petrol was RM2.12 in August versus RM1.75 a year ago. As for RON97, the average price increased to RM2.39 from RM2.10. Fuels & lubricants for personal transport equipment accounted for 7.8% of the CPI weights, nudging the CPI higher to 119.9 in August from 115.6 a year ago, When based on a seasonally adjusted term, the overall CPI for August 2017 increased 0.9% compared to July 2017. Core inflation rose 2.4% in August 2017 compared with the same month of the previous year due to higher food and transport prices. (Source: Starbiz) Malaysian palm oil price up on overnight soyoil strength, stronger exports Malaysian palm oil futures rose for the 1 st time in 5 sessions, supported by rising export demand and strength in soyoil on the Chicago Board of Trade. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose 0.1% to 2,770 ringgit a tonne at the end of the trading day. The rise followed 4 straight declines as palm tracked weakness in related edible oils and was also pulled lower by bearish price outlooks at an industry conference. Traded volumes stood at 64,331 lots of 25 tonnes each. Strong export data from cargo surveyors was also supporting the market, but the gains are likely to be short-lived because expectations of stronger exports are already priced in. (Source: Starbiz) Fed conflicted by weak US inflation, global economic rebound Caught between a lull in US inflation and a stronger global economy, the Fed is expected to signal whether it will raise interest rates for a 3 rd time this year or back off until prices rise more briskly. The US central bank's description of inflation in its policy statement as well as fresh economic forecasts from individual policymakers will be the main focus for financial markets amid a recent spate of lukewarm domestic data. The Fed's 2 day policy meeting resumed at 9am EDT (1300 GMT) as planned, with a policy statement and projections due to be released at 2pm EDT (1800 GMT). Bond and stock markets were little changed in early trading and the dollar was largely flat against a basket of currencies. The Fed also is likely to announce a scheduled reduction of its approximately USD 4.2trn in holdings of bonds and mortgage-backed securities. (Source: Reuters) Global economic expansion no flash in the pan Australia s central bank sees a good chance that global growth continues on its current path, though geopolitical and domestic risks could still derail its momentum. The global economy is looking better than it did a year ago. While it doesn t seem to have picked up further recently, neither is this expansion a flash in the pan. Rising political tensions, especially in Asia, and record levels of household debt at home pose risks to the central bank s outlook. The RBA has long warned that too many home owners are over-burdened with debt, this is probably best regarded as a potential exacerbating factor. If some other shock should come along, debt would make it worse. While global wage growth and inflation should pick up as the forces of supply and demand assert themselves. If price pressures remain subdued despite reasonable growth, then policymakers face a challenge. (Source: Bloomberg) Taiwan c.bank to keep rates steady as exports stay buoyant Taiwan's central bank is expected to leave its policy rate steady for a 5 th straight quarter, with the economy bolstered by exports, while inflationary pressures stay subdued. All 17 analysts had forecast the central bank would keep the discount rate at 1.375% at its interest rate review. It had cut the rate 4 times in a row from late 2015 to help lift the trade-reliant economy out of a mild recession. Taiwan's central bank decision comes in the same week the Fed holds its meeting, in which it is expected to start reducing its balance sheet. The US central bank is not expected to raise interest rates this month but chances of a December hike are roughly even. Taiwan's economic momentum has gathered pace in recent months, underpinned particularly by export growth. (Source: Reuters) Oil set for strongest 3Q since 2004, Iraq hints at OPEC extension Oil rose set for its largest 3Q gain in 13 years, OPEC and its partners were considering extending or deepening supply cuts to erode an existing global surplus. Brent crude futures rose 29 cents to USD 55.43/barrel by 0800 GMT, while US WTI crude futures were up 42 cents at USD 49.90/barrel. The oil price is on course for a rise of 15.5% this quarter, which would make this year's performance the strongest for the 3 rd quarter since 2004. An improving macro-economic backdrop should spur oil demand growth over the next couple of quarters and if OPEC increases its adherence to production cuts, higher prices will come. The OPEC and other producers are mulling a range of options, including an extension of cuts, but it is premature to decide on what to do beyond March, when the agreement expires, Iraqi oil minister Jabar al-luaibi told an energy conference. (Source: Reuters) www.bimbsec.com.my 5
ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 09/21/2017 02:00 US FOMC Rate Decision (Upper Bound) Sep-20 1.25% 1.25% 1.25% -- 09/21/2017 02:00 US FOMC Rate Decision (Lower Bound) Sep-20 1.00% 1.00% 1.00% -- 09/21/2017 16:00 LN Industrial Production YoY Aug -- -- 4.10% -- 09/21/2017 PO Current Account Balance Jul -- -- 12.8m -- 09/22/2017 16:00 SP Trade Balance Jul -- -- -1259m -- 09/22/2017 20:00 PD Money Supply M3 MoM Aug 0.30% -- 0.30% -- 09/22/2017 20:00 PD Money Supply M3 YoY Aug 5.20% -- 5.00% -- 09/22/2017 21:45 US Markit US Manufacturing PMI Sep P 53 -- 52.8 -- 09/22/2017 21:45 US Markit US Services PMI Sep P 55.7 -- 56 -- 09/22/2017 21:45 US Markit US Composite PMI Sep P -- -- 55.3 -- 09/25/2017 08:30 JN Nikkei Japan PMI Mfg Sep P -- -- 52.2 -- 09/25/2017 RO Money Supply M3 YoY Aug -- -- 10.40% -- 09/25/2017 09/28 GE Import Price Index MoM Aug -- -- -0.40% -- 09/25/2017 09/28 GE Import Price Index YoY Aug -- -- 1.90% -- 09/26/2017 17:00 BP Gross External Debt Jul -- -- 34.6b -- 09/27/2017 09:30 CH Industrial Profits YoY Aug -- -- 16.50% -- 09/27/2017 15:30 SW Trade Balance Aug -- -- -0.5b -- 09/27/2017 16:00 EC M3 Money Supply YoY Aug -- -- 4.50% -- 09/27/2017 17:00 IT Industrial Orders MoM Jul -- -- 4.30% -- 09/27/2017 17:00 IT Industrial Orders NSA YoY Jul -- -- 13.70% -- 09/27/2017 17:00 IT Industrial Sales MoM Jul -- -- 1.50% -- 09/27/2017 17:00 IT Industrial Sales WDA YoY Jul -- -- 7.60% -- 09/27/2017 19:00 CZ Repurchase Rate Sep-27 0.25% -- 0.25% -- 09/28/2017 09:00 CH Swift Global Payments CNY Aug -- -- 2.00% -- 09/28/2017 20:30 US GDP Annualized QoQ 2Q T 3.10% -- 3.00% -- 09/28/2017 20:30 US Personal Consumption 2Q T -- -- 3.30% -- 09/28/2017 20:30 US GDP Price Index 2Q T 1.00% -- 1.00% -- 09/28/2017 20:30 US Advance Goods Trade Balance Aug -$65.1b -- -$65.1b -$63.9b 09/29/2017 07:50 JN Industrial Production MoM Aug P -- -- -0.80% -- 09/29/2017 07:50 JN Industrial Production YoY Aug P -- -- 4.70% -- 09/29/2017 09:45 CH Caixin China PMI Mfg Sep -- -- 51.6 -- 09/29/2017 13:00 JN Construction Orders YoY Aug -- -- 14.90% -- 09/29/2017 14:00 FI Trade Balance Jul F -- -- -300m -- 09/29/2017 16:00 SP Current Account Balance Jul -- -- 1.4b -- 09/29/2017 16:00 CZ Money Supply M2 YoY Aug -- -- 10.40% -- 09/29/2017 16:30 UK Current Account Balance 2Q -- -- -16.9b -- 09/29/2017 16:30 UK Money Supply M4 MoM Aug -- -- 0.50% -- 09/29/2017 16:30 UK M4 Money Supply YoY Aug -- -- 4.40% -- 09/29/2017 16:30 UK GDP QoQ 2Q F -- -- 0.30% -- 09/29/2017 16:30 UK GDP YoY 2Q F -- -- 1.70% -- 09/29/2017 18:00 PO Industrial Production MoM Aug -- -- 2.00% -- 09/29/2017 18:00 PO Industrial Production YoY Aug -- -- 6.40% -- 09/29/2017 20:30 US PCE Deflator MoM Aug 0.30% -- 0.10% -- 09/29/2017 20:30 US PCE Deflator YoY Aug 1.50% -- 1.40% -- 09/29/2017 20:30 US PCE Core MoM Aug 0.20% -- 0.10% -- 09/29/2017 20:30 US PCE Core YoY Aug 1.40% -- 1.40% -- 09/29/2017 21:45 US Chicago Purchasing Manager Sep 57.5 -- 58.9 -- 09/29/2017 BP Base Interest Rate Oct -- -- 0.00% -- 09/30/2017 09:00 CH Manufacturing PMI Sep -- -- 51.7 -- 09/30/2017 09:00 CH Non-manufacturing PMI Sep -- -- 53.4 -- 10/02/2017 08:30 JN Nikkei Japan PMI Mfg Sep F -- -- -- -- 10/02/2017 15:00 HU Trade Balance Jul F -- -- 322m -- 10/02/2017 16:30 UK Markit UK PMI Manufacturing SA Sep -- -- 56.9 -- www.bimbsec.com.my 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 (290163-X) A Participating Organisation of Bursa Malaysia Securities Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2613 1600 Fax: 03-2613 1799 http://www.bimbsec.com.my Azharuddin Nordin Head of Research www.bimbsec.com.my 7