Malaysia Daybreak | 3 October 2013
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REGIONAL DAILY December 26, 2012 MALAYSIA Malaysia Daybreak | 3 October 2013 Key Metrics ▌What’s on the Table… —————————————————————————————————————————————————————————————————————— FBMKLCI Index IOI Corporation - IOI launches takeover offer for Unico-Desa Plantations 1,850 While we like the cost savings and yield enhancement potential for 1,800 Unico-Desa’s estates, we are neutral on IOI Corp’s acquisition and MGO for 1,750 Unico-Desa as it will not be earnings accretive in the near term due to the 1,700 current low CPO price. We keep our earnings forecasts pending the outcome 1,650 of the conditional MGO that IOI is making at RM1.17 per share, after buying a 1,600 39.6% stake. Also intact are our SOP-derived target price and Trading Buy call, 1,550 which is underpinned by its property demerger exercise in 4Q13. Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Mudajaya Group - Coal comfort for India IPP ——————————————————————————— FBMKLCI Worries about securing coal supply for the group's 26%-owned IPP in India can 1770.35 1.32pts 0.07% finally be put to rest. Yesterday's announcement wraps up the long-overdue OCT Futures NOV Futures 1768.5 - (-0.11%) 1768.5 - (1.00%) coal supply agreement for the entire 1,440MW facility. Execution now focuses ——————————————————————————— on commissioning the plant in 1Q14. Our target price is intact, pegged to an Gainers Losers Unchanged unchanged 40% RNAV discount. The Indian IPP constitutes 17% of RNAV. We 380 368 323 ——————————————————————————— anticipate a strong re-rating as past delays in the signing of coal supply have Turnover been an overhang on the stock. The short-term outlook now shifts to a potential 1899.31m shares / RM1587.282m domestic power plant job award. This news, potential new regional IPP 3m avg volume traded 1680.92m shares 3m avg value traded RM1999.70m ventures and job wins are catalysts in 2H. Maintain Outperform. ——————————————————————————— Regional Indices Alpha Edge - Keep an eye on Korea’s KOSPI FBMKLCI FSSTI JCI SET HSI 1,770 3,153 4,388 1,409 22,984 South Korea’s KOSPI chart looks very interesting. The index has been trading ———————————————————————————————— sideways for the past two years and a breakout above 2,057pts would be very Market Indices Close % chg YTD % chg bullish. We have been looking for a major peak in the MAxJ last month but we FBMKLCI 1,770.35 0.1 4.8 are not so sure now. The weekly MACD and RSI technical indicators look FBM100 12,053.60 0.1 6.6 FBMSC 15,268.50 (0.1) 33.0 bullish with the recent resistance trendline breakout. The S&P500 looks like a FBMMES 5,485.80 (0.7) 30.2 rising bearish wedge formation and both its weekly and daily technical Dow Jones 15,133.14 (0.4) 15.5 NASDAQ 3,815.02 (0.1) 26.3 indicators remain negative. FSSTI 3,152.58 (0.9) (0.5) FTSE-100 6,437.50 (0.3) 9.2 Hang Seng 22,984.48 0.5 1.4 JCI 4,387.60 1.0 1.6 ▌News of the Day… KOSPI 1,999.47 0.0 0.1 —————————————————————————————————————————————————————————————————————— Nikkei 225 14,170.49 (2.2) 36.3 • IOI Corp launched takeover of Unico-Desa Plantations at RM1.17/share PCOMP 6,362.26 2.7 9.5 SET 1,408.99 0.1 1.2 • Automotive industry set to achieve the 640,000 industry sales in 2013, says MAA Shanghai 2,174.67 0.7 (4.2) • IJM Land chalked up RM787m in sales for its London Royal Mint Gardens project Taiwan 8,216.52 0.4 6.7 • Felda Malaysia is now substantial shareholder of Brahim's Holdings with 5.2% stake Top Actives • Westports Holdings has fixed the IPO price for its shares at RM2.50 per share Close % chg Vol. (m) MEDIA SHOPPE 0.170 (5.6) 217.6 • ECB voted to keep the bank's key "refi" refinancing rate steady at 0.50% GREEN PACKET 0.620 6.9 46.8 • US ADP payrolls said 166,000 net new jobs generated in the private sector last month MALAYSIAN AIRLINE 0.340 (1.4) 45.3 INS BIOSCIENCE 0.030 (40.0) 33.3 KARAMBUNAI CORP 0.105 0.0 28.9 AT SYSTEMATIZATION 0.185 8.8 28.0 ASTRAL SUPREME 0.225 0.0 27.0 TIGER SYNERGY 0.230 (2.1) 25.1 Economic Statistics Close % chg US$/Euro 1.3580 0.01 RM/US$ (Spot) 3.2280 (0.23) RM/US$ (12-mth NDF) 3.2771 0.16 OPR (% ) 2.99 0.34 BLR (% , CIMB Bank) 6.60 0.00 GOLD ( US$/oz) 1,316 0.01 WTI crude oil US spot (US$/barrel) 104.10 2.02 CPO spot price (RM/tonne) 0.39 2,303 ———————————————————————————————————————— Terence WONG CFA T (60) 3 20849689 E [email protected] Sources: CIMB. COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Sources: CIMB. COMPANY REPORTS Daybreak Malaysia October 3, 2013 Global Economic News… ADB tipped Asia’s GDP to grow 6% this year, compared with its earlier forecast of 6.6%. Growth in 2012 was 6.1%, as slower growth in China and India, and uncertainty over the US Federal Reserve's stimulus programme are hurting Asia's economic momentum. It also raised its inflation forecast for the region to 3.6% from 3.5% earlier. (AFP, Reuters) The US Treasury said that the government shutdown did not affect its position and it would still run out of funds on 17 Oct without a debt ceiling hike. (AFP) The US ADP payrolls firm said that 166,000 net new jobs were generated in the private sector last month (159,000 in Aug), below what analysts had expected and too low to meaningfully lower the jobless rate. Australia posted a trade deficit of A$815m (US$762m) in Aug, almost half the A$1.4 billion shortfall recorded in Jul. The narrowing deficit was supported by a 3% gain in the value of exports, which offset a 1% rise in imports driven by higher demand for food, drink and clothes from overseas. (WSJ) The Singapore PMI held at 50.5 for a second month in Sep, driven by new orders and new export orders along with a higher production output. The key electronics sector dipped 1 point from the previous month to 50.3 in Sep and was lower than analysts’ expectations of 51. (CNA) The ECB voted to keep the bank's key "refi" refinancing rate steady at an all-time low of 0.50%. (AFP) Malaysian Economic News… Asia-Pacific's most high-tech 10,000 kilometre underwater fibre-optic cable project in Cherating here which will link Malaysia and Japan is expected to be fully completed by June 2014. Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek said the estimated RM1.9bn (USD600m) project would not only benefit internet users nationwide but also draw foreign investors. "The cable system will provide a speed of up to 3.4 tbps (terabit per second) using the Dense Wavelength Division Multiplexing technology to upgrade transmission facilities in a flexible and borderless manner. (Bernama) The halal industry is great market to explore with two billion Muslim consumers globally and potential sales of US$2.1trn, said Rural and Regional Development Minister Datuk Seri Shafie Apdal. Malaysia had the advantage and capabilities to drive the halal sector as the country has the experience, infrastructure and institutions to develop and nurture the industry to a higher level, he said. (Bernama) A total of 3,200 units of houses under the People's Housing Programme (PPR) and 3,500 units of affordable houses have been planned to be built in Melaka over the next five years. State executive councillor (Exco) for Housing, Local Government and Environment Datuk Ismail Othman said the PPR scheme involved 2,800 units of terrace houses and the Sungai Putat 2 flats project which will offer 400 units. The affordable housing scheme which would privatised would offer units with sizes between 850 and 1,200 2 Daybreak Malaysia October 3, 2013 square feet with the ceiling price at RM150,00, he said during the state assembly sitting. (Bernama) Petronas has contributed RM732bn to the government since its inception in 1974 until the financial year ended Dec 31, 2012, the Dewan Rakyat was told Wednesday. Of the total, accumulated dividend was RM278bn, proceeds from petroleum (RM124bn), income tax (RM310bn) and export duty (RM20bn), Prime Minister Datuk Seri Najib Tun Razak said. (Bernama) Internet and mobile banking in the country is showing potential to grow further in tandem with the increasing sophistication of the financial services sector. Deputy Finance Minister Datuk Ahmad Maslan said the financial services sector, notably banking, requires technological advancement to facilitate transactions. As of June 2013, there are a total of 14.6m subscribers of internet banking in the country, comprising 14.3m individuals and 300,000 corporate subscribers. "This gives 49.1% of penetration of our population," Ahmad said. The number of subscribers to mobile banking has reached 3.25m, with the penetration rate of 10.9% of population and 7.6% of all mobile subscribers, he said. (Bernama) Malaysia achieved 'full employment' when the unemployment rate in the country dropped to 3% in the second quarter of this year, said Human Resources minister Datuk Richard Riot Jaem. He said based on International Labour Organisation standards, any country with an unemployment rate of less than four percent would be regarded as having attained full employment.