Friday, 29 December, 2017 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Research Team research@bimbsec.com.my PP16795/03/2013(031743) 03-2613 1739 www.bisonline.com Corporate News MyEG loses MyCC anti-competition fine appeal Suria Capital accepts offer from Sabah govt to acquire Kota Kinabalu port land Pos Malaysia awards RM8m contract to PST Ventures Apollo Food sees boardroom changes, 2QFY18 net profit down 11% Acoustech to develop luxury hotel, affordable apartments in Melaka with GDV of RM80.5m Karyon buys factory in Johor for RM6.7m Digistar clarifies usage of bond proceeds Bursa Malaysia Close Chg +/- Chg % YTD Chg (%) FBMKLCI 1,779.10 7.34 0.41 8.37 FBMEMAS 12,791.41 47.31 0.37 11.55 FBM100 12,460.30 49.22 0.40 11.36 FBMEMAS Shariah 13,155.85 39.14 0.30 9.50 FBM Hijrah Shariah 14,357.37 56.70 0.40 6.92 Volume (m) 2,642.40 329.58 14.25 Value (MYR m) 2,101.94 110.61 5.55 Economic News New York mulling own tax changes after US tax overhaul governor China to stop production of 553 vehicle models over fuel use China to 'standardise' market access for foreign lenders regulator China's new tax may hit hedge funds more than investment rivals China pledges support for Cambodia election after EU, US withdraw Japan's factories, retailers rev up, central bankers flag stimulus reduction Indonesia CB aims to further relax a reserve requirement rule KLCI Performance 1820 1770 1720 1670 1620 1570 KLCI Year-End Target: 1,790 points Regional Indices Commodities (Last Close) Close Chg +/- Chg % YTD Chg (%) Close Chg +/- Chg % DJIA 24,837.51 63.21 0.26 25.68 Brent Crude (USD/bbl) 66.16 0.17 0.26 NASDAQ 6,950.16 10.83 0.16 29.11 WTI Crude (USD/bbl) 59.84 0.03 0.05 S&P 500 2,687.54 4.92 0.18 20.04 CPO (RM/MT) 2,521.00-17.00-0.67 FTSE 100 7,622.88 2.20 0.03 6.72 Gold (USD/ounce) 1,294.22-0.72-0.06 Nikkei 225 22,783.98-127.23-0.56 19.20 Latex (sen/kg) 466.50 0.00 0.00 HSI 29,863.71 266.05 0.90 35.74 Soybean Oil 32.71-0.56-1.68 SHCOMP 3,296.39 20.60 0.63 6.21 KOSPI 2,467.49 30.82 1.26 21.76 Forex TWSE 10,567.64 80.97 0.77 14.20 (per USD) BIMB (YE Forecast) Close Chg +/- Chg % STI 3,399.10 7.43 0.22 17.99 MYR 4.08 4.067-0.0173-0.42 JCI 6,314.05 36.88 0.59 19.21 JPY 110.0 112.870-0.4800-0.42 SET 1,743.29-9.60-0.55 12.98 EUR 0.93 0.837-0.0039-0.46 PSEi 8,535.09 44.18 0.52 24.77 SGD 1.45 1.338-0.0018-0.13 www.bimbsec.com.my 1 www.bimbsec.com.my
Major Rates Daily Participation % Participation Bought Sold Net KLIBOR 3-mth 3.44 (%) (MYR m) (MYR m) (MYR m) KLIBOR 6-mth 3.56 Local Insti 56.7 1,161.8 1,221.3-59.5 KLIBOR 12-mth 3.64 Local Retail 28.3 598.9 593.0 5.9 5-yr MGS 3.54 Foreign 15.0 341.3 287.7 53.6 10-yr MGS 3.94 Total 100.0 2,102.0 2,102.0 0.0 Performance of BIMB Stock Coverage Top Gainers Source: Bank Negara Malaysia Top Losers Source: The Sun, BIMB Securities Close Chg +/- Chg % Close Chg +/- Chg % FGV 1.74 0.05 3.0 Westports 3.65-0.08-2.1 Nestle 102.00 2.10 2.1 IJM Plantations 2.74-0.06-2.1 TNB 15.42 0.30 2.0 Econpile 1.22-0.02-1.6 Petronas Gas 17.38 0.20 1.2 KLK 24.66-0.32-1.3 Supermax Corp 2.00 0.02 1.0 Genting Plantations 10.44-0.12-1.1 www.bimbsec.com.my 2
CORPORATE NEWS MyEG loses MyCC anti-competition fine appeal MY E.G. Services (MyEG) has lost an appeal against a decision by the Malaysia Competition Commission (MyCC) imposed on Oct 6, 2015 that it had infringed the Competition Act. The Competition Appeal Tribunal has dismissed the company s appeal against the decision by the MyCC. The tribunal has upheld MyCC s decision with a consequential amendment, a financial penalty amounting to RM2.27m (from the original RM307,200) and an additional daily penalty amounting to RM7,500 computed from June 25, 2016 to Dec 28, 2017. MyEG is also required to halt immediately from imposing different conditions to equivalent transactions in the processing of mandatory insurances for the online renewal of temporary employment permits for foreign workers (PLKS) applications. (Source: The Edge) Suria Capital accepts offer from Sabah govt to acquire Kota Kinabalu port land Suria Capital will acquire 11.7ha of land located within the Kota Kinabalu (KK) port in Sabah from the Sabah state government. Suria has received an offer letter from Sabah s Lands and Surveys Department dated Dec 22 to alienate the KK land located within Tanjung Lipat to Suria. The board is of the view that the terms of the offer letter are acceptable to the company. The company will now proceed to comply with the terms of the offer letter and will make the necessary announcement in due course. The Sabah government is seeking a land premium amounting to RM48.48m from Suria, with a lease period from Jan 1, 2018 to Dec 31, 2116. (Source: The Edge) Pos Malaysia awards RM8m contract to PST Ventures Pos Malaysia has awarded an RM8.05m contract to PST Ventures, a private limited information technology company, for the latter to provide security and information and communications technology (ICT) services for the redevelopment and refurbishment of the former low-cost carrier terminal (LCCT) in Sepang. Pos Malaysia s wholly-owned subsidiary Pos Aviation has awarded the contract to PST Ventures, which has accepted the award. Under the letter of award (LoA), the development services will be completed within 6 months from the commencement date and PST Ventures will provide warranty services for up to five years from date of delivery of the equipment. (Source: The Edge) Apollo Food sees boardroom changes, 2QFY18 net profit down 11% Apollo Food s managing director Liang Chiang Heng has been redesignated as executive chairman of the company. Apollo s executive director Liang Kim Poh, 56, will take over as managing director. Apollo also posted an 11.09% decline in net profit to RM3.82m in the 2QFY18 from RM4.29m a year ago due to lower foreign exchange gain compared with the preceding year s corresponding quarter. Earnings per share fell to 4.77 sen from 5.37 sen. Quarterly revenue, however, rose 8.23% to RM52.09m in 2QFY18 from RM48.13m in 2QFY17, mainly due to increase in sales orders by local markets. (Source: The Edge) Acoustech to develop luxury hotel, affordable apartments in Melaka with GDV of RM80.5m Acoustech plans to develop a 5-storey luxury hotel and a block of affordable serviced apartment worth a combined gross development value (GDV) of RM80.5 million on two pieces of land in Melaka. Acoustech s wholly-owned subsidiary Teras Eco Resources SB (TERSB) has executed two MoUs for the proposed projects. One is with Innocashz (M) to form a JV to jointly develop the hotel with an expected GDV of RM40m on 1.2 acres of the Customs Immigration and Quarantine (CIQ) land, which is located by the riverbank of Sungai Melaka and within 15 minutes from Jonker Walk. Innocashz owns the CIQ land, which is presently charged to Public Bank. (Source: The Edge) Karyon buys factory in Johor for RM6.7m Karyon Industries is spending RM6.7m to acquire a 3,842-square metre land in Plentong, Johor, along with buildings erected on it to set up additional manufacturing line in future and increase storage capacity. The group s wholly-owned subsidiary Hsing Lung has entered into a sale and purchase agreement with Easa Trading for the acquisition. Karyon said the freehold property consists of a single storey factory together with double storey office with a net lettable area of about 2,858.4 square metres. Easa Trading, a tyres and batteries wholesaler, used the property for warehousing and manufacturing purposes. (Source: The Edge) Digistar clarifies usage of bond proceeds Digistar has earmarked RM38m from its proposed bond sale proceeds for the group's hotel operations under 100%-owned subsidiary Seni Pujaan. Digistar plans to issue the bonds valued at up to RM80m via wholly-owned subsidiary Jaya Persada. The hotel allocation comprises RM30m to finance the expansion and refurbishment of the Imperial Heritage Hotel, while another RM8m will be used to redeem Seni Pujaan's existing loan secured over the master title to the hotel. The hotel's expansion and refurbishment include but not limited to refurbishment of hotel suites, design and construction of a banquet hall and other enhancements for the hotel and other hospitality/related assets managed by Seni Pujaan as part of the hotel's overall operations. (Source: The Edge) www.bimbsec.com.my 3
ECONOMIC NEWS New York mulling own tax changes after US tax overhaul governor New York was considering restructuring its tax code in response to a federal tax overhaul bill that recently became law. Republicans in Congress passed the largest overhaul to the nation's tax code in 3 decades, a bill that US President Donald Trump signed into law. Among the changes to the tax code is a cap on a deduction for state and local taxes. Critics to that provision say it penalizes states like New York that have high taxes, many of which did not vote for Trump or have Republican senators. They are going to propose a restructuring of their tax code. (Source: Reuters) China to stop production of 553 vehicle models over fuel use China will end the production of 553 passenger-car models that don t meet fuel-consumption limits amid efforts by the nation to curb pollution. The halt in production will begin Jan. 1. China has been cracking down on chronic pollution in the past year through measures including curbs to steel supply, restricting coal usage, and a plan to phase out vehicles powered by fossil fuels. The latest announcement marks the 1 st time China has come up with an official list of offending vehicles and there will be more to come. To emphasize a cut back on energy consumption, such documents will surface frequently in the future. It s an essential move to ensure the healthy development of the industry in the long run. (Source: Bloomberg) China to 'standardise' market access for foreign lenders regulator China's banking regulator has issued draft measures for amending its licensing and oversight of some foreign-funded bank activities, a move it says is aimed at promoting investment in the country's fast-growing financial sector. The China Banking Regulatory Commission (CBRC) is preparing to implement amended administrative measures to "standardise market access" for foreign lenders, and cut red tape to create a level playing field for such activities as branch openings, debt fundraising and examination of senior executives. The amended measures will also put in place procedures to provide a clear legal basis for foreign-funded banks to make equity investments in Chinese financial institutions. (Source: Reuters) China's new tax may hit hedge funds more than investment rivals Hedge funds may be the biggest losers from a new 3% tax on some investment returns in China. The new value-added levy, which will take effect on Jan. 1, is part of a broader shift in how companies pay tax in the world s 2 nd biggest economy. While there are still uncertainties around how the tariff will be implemented, what is known about the type of activities to be taxed suggests that hedge funds may be the asset managers hit the hardest. The whole industry will be affected, but hedge funds may face a bigger impact. The strategies that hedge funds use mean it s likely more of their returns will be taxable under the new rules compared to other assetmanagement vehicles. (Bloomberg) China pledges support for Cambodia election after EU, US withdraw China will provide equipment for Cambodia's 2018 election, including ballot boxes and booths, the first such pledge from abroad since the EU and the US withdrew their support. China is Cambodia's biggest foreign donor. The 2 countries have become increasingly close amid an ongoing crackdown by Cambodia's government on critics, civil society groups and independent media that rights group say amounts to the destruction of democracy. The EU and the US withdrew their backing for the election after a court dissolved the opposition Cambodia National Rescue Party (CNRP) in November at the government's request. In 2016 China, which has contributed to Cambodian elections since the reinstatement of national polls in 1993, donated vehicles and other supplies worth some USD11m. (Source: Reuters) Japan's factories, retailers rev up, central bankers flag stimulus reduction Japan's factories and retailers posted better-than-expected growth in activity in November, while minutes from the CB's last policy meeting showed board members raising the prospect of reducing stimulus. The firm data and suggestions of a shift away from the BoJ's crisis-era policies come as the outlook for the world's 3 rd largest economy goes from strength to strength. Japanese companies forecast a further increase in industrial production in December as robust overseas demand continues to support factory activity and broader economic growth. Some BOJ board members are encouraging debate about raising rates or lowering purchases of exchange-traded funds in response to the improving outlook. (Source: Reuters) Indonesia CB aims to further relax a reserve requirement rule Indonesia's CB plans to further relax a rule on reserve requirements in 2018 to give banks more flexibility in managing their cash. This would be the 2 nd loosening to a rule on how reserve requirements are calculated. In April, Bank Indonesia (BI) announced a change, which took effect in July, to existing rules that banks always keep 6.5% of their total deposits at the CB. Since July, banks have only had to keep a minimum 5% of deposits at BI on any day, but they need maintain at least a 6.5% average over a period of 2 weeks. The change gave banks 1.5 pp of flexibility in managing daily reserves and was aimed at stabilising the money market. Looking ahead, the 1.5 pp will be enlarged, but of course they have to see the readiness of the money market and banks. (Source: Reuters) www.bimbsec.com.my 4
ECONOMIC CALENDAR Date Time Country Event Period Survey Actual Prior Revised 12/29/2017 15:00 FI Trade Balance Oct F -- -- -120m -- 12/29/2017 17:00 EC M3 Money Supply YoY Nov 4.90% -- 5.00% -- 12/29/2017 17:00 SP Current Account Balance Oct -- -- 2.4b 2.1b 12/29/2017 17:00 CZ Money Supply M2 YoY Nov -- -- 9.10% -- 12/29/2017 19:00 PO Industrial Production MoM Nov -- -- -2.20% -- 12/29/2017 19:00 PO Industrial Production YoY Nov -- -- 3.50% -- 12/29/2017 BP Base Interest Rate Jan -- -- 0.00% -- 12/31/2017 09:00 CH Manufacturing PMI Dec 51.6 -- 51.8 -- 12/31/2017 09:00 CH Non-manufacturing PMI Dec 54.7 -- 54.8 -- 01/02/2018 09:45 CH Caixin China PMI Mfg Dec 50.7 -- 50.8 -- 01/02/2018 17:30 UK Markit UK PMI Manufacturing SA Dec 57.9 -- 58.2 -- 01/02/2018 22:45 US Markit US Manufacturing PMI Dec F 55 -- 55 -- 01/03/2018 17:30 UK Markit/CIPS UK Construction PMI Dec 53.1 -- 53.1 -- 01/03/2018 23:00 DE Change in Currency Reserves Dec -- -- -0.1b -- 01/03/2018 23:00 DE Foreign Reserves Dec 464.2 -- 464.2 -- 01/03/2018 23:00 US ISM Manufacturing Dec 58.2 -- 58.2 -- 01/03/2018 23:00 US ISM Prices Paid Dec 64.5 -- 65.5 -- 01/03/2018 23:00 US ISM New Orders Dec -- -- 64 -- 01/03/2018 23:00 US ISM Employment Dec -- -- 59.7 -- 01/04/2018 03:00 US FOMC Meeting Minutes Dec-13 -- -- -- -- 01/04/2018 08:30 JN Nikkei Japan PMI Mfg Dec F -- -- 54.2 -- 01/04/2018 09:45 CH Caixin China PMI Composite Dec -- -- 51.6 -- 01/04/2018 09:45 CH Caixin China PMI Services Dec 51.8 -- 51.9 -- 01/04/2018 17:30 UK Official Reserves Changes Dec -- -- $865m -- 01/04/2018 17:30 UK Money Supply M4 MoM Nov -- -- 0.60% -- 01/04/2018 17:30 UK M4 Money Supply YoY Nov -- -- 4.10% -- 01/04/2018 17:30 UK Markit/CIPS UK Services PMI Dec 54.1 -- 53.8 -- 01/04/2018 17:30 UK Markit/CIPS UK Composite PMI Dec -- -- 54.9 -- 01/04/2018 22:45 US Markit US Services PMI Dec F 52.4 -- 52.4 -- 01/04/2018 22:45 US Markit US Composite PMI Dec F -- -- 53 -- 01/04/2018 01/11 JN Official Reserve Assets Dec -- -- $1261.2b -- 01/05/2018 08:30 JN Nikkei Japan PMI Services Dec -- -- 51.2 -- 01/05/2018 08:30 JN Nikkei Japan PMI Composite Dec -- -- 52.2 -- 01/05/2018 16:00 LN International Reserves Dec -- -- 2998.3m -- 01/05/2018 21:00 PD Official Reserves Dec -- -- 113377 -- 01/05/2018 21:30 US Trade Balance Nov -$48.1b -- -$48.7b -- 01/05/2018 23:00 US ISM Non-Manf. Composite Dec 57.6 -- 57.4 -- 01/07/2018 CH Foreign Reserves Dec -- -- $3119.3b -- 01/07/2018 01/11 NE Manufacturing Production MoM Nov -- -- -0.70% -- 01/07/2018 01/11 NE Manufacturing Production YoY Nov -- -- 4.00% -- 01/07/2018 01/11 NE Industrial Sales YoY Nov -- -- 6.60% -- 01/08/2018 15:00 GE Factory Orders MoM Nov -- -- 0.50% -- 01/08/2018 15:00 GE Factory Orders WDA YoY Nov -- -- 6.90% -- 01/08/2018 15:00 FI Trade Balance Nov P -- -- -- -- 01/08/2018 16:00 CZ Construction Output YoY Nov -- -- 5.90% -- 01/08/2018 16:00 CZ Industrial Output YoY Nov -- -- 10.50% -- 01/08/2018 16:00 CZ Trade Balance National Concept Nov -- -- 9.7b -- 01/08/2018 RO Interest Rate Announcement Jan-08 -- -- 1.75% -- 01/09/2018 15:00 GE Industrial Production SA MoM Nov -- -- -1.40% -- 01/09/2018 15:00 GE Industrial Production WDA YoY Nov -- -- 2.70% -- 01/09/2018 15:00 DE Current Account (Seasonally Adjusted) Nov -- -- 14.8b -- www.bimbsec.com.my 5
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 6