Malaysia Daily, Maybank KE (2014-05-14)

Daily 14 May 2014 ECONOMICS Industrial Production (IP), May 2014 Slower monthly, but faster quarterly Industrial output growth slowed in Mar 2014 by +4.3% YoY (Feb 2014: +6.7% YoY). But growth in 1Q 2014 picked up to +4.8% YoY (4Q 2013: +2.8% YoY), which should translate into firmer GDP growth. Globally, the positive industrial output growth momentum last quarter turning "choppy" this quarter. Click here for full report » ETP, GTP, SRI Report Cards Quantitatively on the right track "Quantitatively" on the right track to become a High-Income economy. Issues and challenges are more "qualitative" in nature. These include closing the performance vs perception gap in the areas of corruption, crime, cost of living and education, as well as addressing the issues of productivity and the widening income gap. Click here for full report » MARKET STRATEGY MY Strategy Tracking the vision Malaysia is on track to meet its 2020 aspirations. Construction, oil & gas will remain long-term beneficiaries on continuous job/project flows. No change to our market view, sector and stock calls. Click here for full report » SECTOR UPDATE MY Oil & Gas Key takeaways from Conference The O&G market is expected to remain robust over the next 3 years with opportunities abound across the value chain. Companies with sound financials will ride on the prospect but many will likely fall out on Shariah compliance aspect. We remain Overweight on the sector. Click here for full report » Technicals Selling pressure diminishes The FBMKLCI declined 0.64 points to 1,866.08 on Monday, while the FBMEMAS and FBM100 gained 3.00 points and 0.99 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Take Profit call on MAYBULK with downside target areas at MYR1.76 & MYR1.49. Click here for full report » Other Local News Encorp: Redeveloping old Felda HQ. ENCORP Bhd, which was bought over by Felda Investment Corp Sdn Bhd (FIC) last week, plans to tear down the old Felda headquarters in Jalan Semarak, here, and rebuild the area as a mixed residential and commercial development. Sources said Encorp's maiden project under FIC is to demolish Anjung Felda, Balai Felda and Wisma Felda, which sit on 16ha of prime land, and redevelop them into medium-cost apartments, luxury condominiums, affordable homes and a private college. (Source: Business Times) JTI: Takeover likely to drag on. The takeover of JT International Bhd (JTI) could likely be a prolonged affair after its first offer that expired last Friday received meek acceptance. JTI has extended the acceptance date for the conditional takeover exercise by its offeror JT International Holding BV to May 26, as it had only received an acceptance level of 8.55%, or 22.38m shares, as of its initial deadline of May 12. (Source: Bursa Malaysia) BCorp: Winds bid for lottery system in Vietnam. Berjaya Corp Bhd (BCorp) has won a bid to undertake the investment, procurement, installation of equipment and operation of a computerised lottery system for Vietnam in cooperation with Vietnam Lottery Company (Vietlott) under a business cooperation contract to be entered into. (Source: Bursa Malaysia) Oriental Holdings: Kah Motor to invest MYR150m in 2014. Kah Motor Co. Sdn Bhd, wholly-owned subsidiary of the diversified conglomerate Oriental Holdings Bhd, plans to invest MYR150m in 2014, mainly for expanding as well as upgrading of its showroom and service centres. (Source: The Sun) Glomac: Lines up property lanches worth MYR1b. Glomac Bhd which aims to achieve unbilled sales of RM800 million this financial year ending April 30, 2015 (FY15), has planned MYR1b worth of property launches this year, said its group MD and CEO Datuk Seri FD Iskandar Mansor. The property developer plans to launch townhouses and townships towards end of this year and early next year namely its Saujana KLIA, Lakeside Residences, Glomac Centro, the extension of its Saujana Utama township and ongoing townships Saujana Rawang and Sri Saujana. (Source: The Sun) Outside Malaysia U.S: Retail sales in April signal second-quarter growth bounce. Purchases increased 0.1% MoM to USD 434.6b following a revised 1.5% MoM jump in March that marked the biggest gain in four years, Commerce Department figures showed. (Source: Bloomberg) Germany: Investor confidence in May declines a fifth month on risks. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 33.1 from 43.2 in April. The gauge is at the lowest level since January 2013. The index has dropped every month since reaching a seven-year high of 62 in December. (Source: Bloomberg) China: Slowdown deepens with factory-output deceleration. China's economic slowdown deepened with unexpected decelerations in industrial-output and investment growth and a decline in home sales, testing policy makers' reluctance to step up monetary stimulus. Factory production rose 8.7% YoY in April, the National Bureau of Statistics said in Beijing. Fixed-asset investment increase 17.3% YoY in the first four months of the year, the slowest for the period since 2001, and home sales fell 9.9% YoY. (Source: Bloomberg) China: Broadest measure of new credit exceeded analysts' estimates, as authorities seek to put a floor under an economic slowdown without resorting to strategies that risk exacerbating debt dangers. Aggregate financing was CNY 1.55tr (USD 249b) in April, the People's Bank of China said. M2, the broadest gauge of money supply, rose 13.2% YoY, after record-low growth of 12.1% YoY in March. (Source: Bloomberg) Japan: Current-account surplus shrank last fiscal year to the smallest on record, highlighting challenges for Prime Minister Shinzo Abe in driving a recovery in the world's third-largest economy. The surplus of JPY 789.9b (USD 7.74b) in the year ended March was the smallest in data back to 1985, the Ministry of Finance said. A 14% surge in primary income from overseas investments helped make up for a shortfall in the balance of trade and services that suffered from weak exports and a higher import bill. (Source: Bloomberg) Australia: Abbott plots path to surplus with spending cuts. Australia will cut spending on foreign aid, welfare and the public service and impose a tax on the highest paid as Prime Minister Tony Abbott uses his first budget to downsize government and set a path to surplus. Treasury forecast a AUD 29.8b (USD 27.9b) deficit for the 12 months through June 2015, down from AUD 49.9b this fiscal year, with shortfalls narrowing in the following three years, budget papers released in Canberra show. It announced an AUD 11.6b infrastructure package to help a shift from mining-led growth, and will start a AUD 20b medical research fund. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,866.1 (0.0) 0.0 JCI 4,921.4 15.1 0.2 STI 3,222.4 1.7 0.0 SET 1,375.1 5.9 0.0 HSI 22,352.4 (4.1) 0.4 KOSPI 1,982.9 (1.4) 0.9 TWSE 8,817.9 2.4 0.1 DJIA 16,715.4 0.8 0.1 S&P 1,897.5 2.7 0.0 FTSE 6,873.1 1.8 0.3 MYR/USD 3.2 (1.3) (0.0) CPO (1mth) 2,650.0 0.8 0.0 Crude Oil (1mth) 101.7 3.3 1.1 Gold 1,292.6 7.6 (0.2) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 11.98 14.00 Genting Msia 4.22 4.74 HLBK 14.04 16.40 AMMB Holdings 7.15 8.50 Bumi Armada 3.90 5.00 IJM Corp 6.28 6.75 MPHB Capital 1.92 2.42