Retail Market Monitor Wednesday , 28 October 2015

MARKET NEWS FBMKLCI CHART The FBMKLCI plunged lower after falling 9.84pt to close at 1,696.95 yesterday, following massive selling pressure across the board amid an apparent weakness in the overnight US market. Meanwhile, Asian stocks fell amid low trading volumes, with the regional benchmark index retreating from its highest level in two months as energy shares led losses and investors awaited policy decisions by the Federal Reserve and the Bank of Japan later in the week. The MSCI Asia Pacific Index lost 0.4% to 135.84. The FBMKLCI’s top losers were Digi.Com (-4.16%), IOI Corporation (-2.47%) and Hong Leong Financial Group (-1.36%) while top gainers were British American Tobacco (+1.74%) SapuraKencana Petroleum (0.943%) and RHB Capital (+0.482%) In the broader market, losers outpaced gainers by 588 to 269 with 296 counters unchanged. Turnover was 1.89b shares valued at RM1.88b. On yesterday’s movement, the FBMKLCI plunged and penetrated the psychological level of 1,700 and closed lower at 1,696.95. Although looking shaky, the support levels Source: BursaStation were maintained as persistent buying interest absorbed selling pressure. Given the KEY INDICES weaker external market, the index may again test the immediate support which could pave way for a further downside to 1,685. We advise investors to approach the market Prev Close Chg (%) YTD (%) cautiously. Support and resistance levels still maintained as follows: DJIA 17,581.43 (0.24) (1.36) Support: 1,685, 1,595 S&P 500 2,065.89 (0.26) 0.34 FTSE 100 6,365.27 (0.81) (3.06) Resistance: 1,732, 1,745 CSI 300 3,592.88 0.10 1.67 FSSTI 3,052.53 (0.99) (9.29) US markets slipped for a second day in a row as investors were cautious ahead of the HSCEI 10,714.79 (0.31) (10.60) Federal Reserve’s policy statement. The S&P 500 fell 0.3% to close at 2,065.89 while HSI 23,142.73 0.11 (1.96) the DJIA dropped 0.2% to 17,581.43. The Fed’s two-day policy meeting began on JCI 4,674.06 (0.38) (10.58) Tuesday with a statement due Wednesday afternoon. Investors are bracing for whether KLCI 1,696.95 (0.58) (3.65) the central bank will hint at a December hike in interest rates. In economic news, KOSPI 2,044.65 (0.17) 6.74 Nikkei 225 18,777.04 (0.90) 7.60 durable-goods orders fell in September, marking a second straight drop amid softness in SET 1,424.05 (0.01) (4.92) manufacturing activity. Apple shed 0.6% to close at $114.55, ahead of its fiscal fourth- TWSE 8,701.32 (0.50) (6.51) quarter earnings after the market’s close. Shares rose in after-hours action after Apple BDI 739.00 (2.64) (5.50) topped forecasts for both profits and revenue. CPO (RM/mt) 2,322.00 1.89 2.47 Nymex Crude WHAT’S IN THE PACK (US$/bbl) 43.40 0.46 (27.00)

British American Tobacco Leon Fuat (LEFU MK) TOP VOLUME (ROTH MK/HOLD/RM64.20/Target: Technical BUY with +24.0% potential return RM64.00) BUY with a target price of RM0.595 and Chg Vol stop-loss at below RM0.42. Share price Stock Price (RM) (%) (‘000) 3Q15: Net profit in line with Rgb International Bhd 0.17 0.00 58,360 expectations, up 6.5% yoy despite a 4% has been consolidating within the Instacom Group Bhd 0.25 (2.00) 29,342 yoy drop in sales due to margin immediate support of RM0.425 before China Automobile Parts 0.10 (9.09) 54,456 expansion from a hike in its ASP and yesterday’s positive closing above the BBI Xox Bhd 0.22 (2.22) 10,985 lower opex. to set a new tone for the short-term Berjaya Corp Bhd 0.44 (2.25) 11,210 outlook. Malaysia Airports Holdings TOP GAINERS (MAHB MK/BUY/RM5.37/Target: Muda Holdings (MUD MK) Price Chg Vol RM7.20) Technical BUY on breakout with 26.2% Stock (RM) (%) (‘000) R&A 0.02 200.00 32,509 3Q15: Strong earnings reversal as potential return BUY on breakout with a target price of Seremban Engineering 0.76 65.22 27,186 MAHB scales back on airline incentives. Nationwide Express 0.84 40.00 754 RM1.59 and stop-loss at below RM1.09. Es Ceramics 0.55 34.15 55,845 Yesterday, the share price formed a higher M3 Technologies Asia 0.14 21.74 100 high towards the breakout level of RM1.26 and managed to close above the BBI line TOP LOSERS to sustain the bullish momentum. Chg Vol Stock Price (RM) (%) (‘000) Press Metal (PRESS MK) D'Nonce Technology 0.22 (25.42) 1,460.6 Technical BUY on breakout with +28.5% Yen Global Bhd 0.21 (25.00) 1.0 potential return Asia Media Group Bhd 0.02 (20.00) 255.0 BUY on breakout with a target price of Abm Fujiya Bhd 0.38 (13.64) 36.5 RM3.11 and stop-loss at below RM2.12. A 1 Utopia Bhd 0.04 (12.50) 356.4 buying signal is given as the stock has Source: Bloomberg

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Retail Market Monitor Wednesday , 28 October 2015

TRADERS’ CORNER Leon Fuat (LEFU MK) Technical BUY with +24.0% potential return Last price : RM0.48 Target price : RM0.525, RM0.595 Support : RM0.425 Stop loss : RM0.42 BUY with a target price of RM0.595 and stop-loss at below RM0.42. Share price has been consolidating within the immediate support of RM0.425 before yesterday’s positive closing above the BBI to set a new tone for the short-term outlook. This is supported by the EMA 7-day which is currently on a crossover above the EMA 21- day that indicates a buying signal. We expect LEFU to continue making a new high towards our target. The bullish bias has been established following an uptick in the DMI and a bullish crossover in the MACD. Expected Timeframe: 2 weeks to 2 months

Muda Holdings (MUD MK) Technical BUY on breakout with 26.2% potential return Last price : RM1.21 Target price : RM1.44, RM1.59 Support : RM1.10 Stop loss : RM1.09 BUY on breakout with a target price of RM1.59 and stop-loss at below RM1.09. Yesterday, share price formed a higher high towards the breakout level of RM1.26 and managed to close above the BBI line to sustain the bullish momentum. This is supported by the DMI’s bullish crossover and is consistent with the uptick in the RSI, which suggests stronger buying momentum ahead. Currently, the MACD is on the verge of making a golden cross to show a positive signal. We peg our targets at RM1.44 and RM1.59 in the short to medium term. Expected Timeframe: 2 weeks to 3 months

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TRADERS’ CORNER Press Metal (PRESS MK) Technical BUY on breakout with +28.5% potential return Last price : RM2.33 Target price : RM2.79, RM3.11 Support : RM2.13 Stop loss : RM2.12 BUY on breakout with a target price of RM3.11 and stop-loss at below RM2.12. A buying signal is given as the stock has been trading above the Ichimoku cloud. This is supported by the Heat Wave indicators - Tenkan-sen line, Kinjun-sen line and the Chikao span line – which are showing a bullish signal. An ascending triangle pattern has been spotted on the chart which indicates a bullish continuation pattern. The uptick in the DMI suggests buying momentum is set to continue in the near term. Currently, the MACD shows a bullish crossover to support the upward momentum. We expect the bullish movement will continue towards our targets once it penetrates the breakout level of

RM2.42. Expected Timeframe: 2 weeks to 3 months

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CORPORATE NEWS

KNM: Clinches RM268.4m Cypark contract. KNM Group Bhd’s wholly-owned subsidiary, KNM Process Systems Sdn Bhd, has signed an agreement with Cypark Sdn Bhd worth RM268.38mil to undertake engineering, procurement, construction and commissioning (EPCC) works. The deal was inked via SHK Consortium, the consortium formed between KNM Process Systems and Japan’s Hitachi Zosen Corp. (Source: )

RHB Bank: To cut 1,812 staff, pay out RM309m. The RHB Banking Group will trim its workforce by 1,812 and will have to fork out an estimated RM309mil under the voluntary separation scheme. The country’s fourth largest financial services group said in a statement that it had approved the applications of 1,812 employees under the Career Transition Scheme (CTS), which was completed on Sept 30. This represents 13.1% of its permanent workforce in Malaysia. “The group expects to achieve an annual personnel costs rationalisation of approximately RM193mil,” it added. (Source: The Star)

Seremban Engineering: Issued UMA. Seremban Engineering Bhd, which saw its share price surge more than 65% to a 52-week high today, has been slapped with an unusual market activity (UMA) by Bursa Malaysia, to explain the reason behind the sharp rise in price and volume. In the UMA query today, Bursa asked SEB if there was any corporate development, business negotiation rumour or report, or any other possible explanation that could account for the sharp rise in its volume. (Source: The Edge Financial Daily) Tenaga Nasional: 8.5m TNB customers to get smart meters. Consumers will soon have access to real-time information on their power usage, pattern and disruptions – thanks to the smart meter. Tenaga Nasional Bhd (TNB) plans to deploy its Advanced Metering Infrastructure (AMI) to 8.5 million customers in the country. Its president/CEO Datuk Seri Azman Mohd said the initiative was part of the company’s goal to achieve energy sustainability and security. He said a pilot project had been carried out to understand the technological, regulatory and customer challenges. (Source: The Star) WCT Holdings: Bags RM267m contracts from PETRONAS. WCT Holdings Bhd has clinched a procurement, construction and commissioning (PCC) of civil and infrastructure works worth RM267 million from PRPC Utilities and Facilities Sdn Bhd, a subsidiary of Petroliam Nasional Bhd (Petronas). The works are for Petchem Interconnecting and 6900 Area, and Petchem Interconnecting South Area, which are expected to be completed in 31 months from the effective date. (Source: The Edge Financial Daily)

SECTOR Telecommunication: MCMC built over 900 telecommunication towers up to September. The Malaysian Communications and Multimedia Commission (MCMC) has built 993 telecommunication towers up to last September to bridge the digital gap and increase access to telecommunications service, especially in areas with limited or no coverage. Deputy Communications and Multimedia Minister Datuk Jailani Johari said for the same period, over 300 km of fibre optic network, 597 1Malaysia Internet Centres and 4,712 WiFi community hotspots were built. "The Government has also introduced several initiatives under the Universal Service Provision of the Communications and Multimedia Act 1998," he said at the sitting on Tuesday. (Source: The Star)

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ECONOMICS Currency: Ringgit falls as Fitch warns deficit target may be out of reach. Malaysia’s ringgit declined the most in a week after Fitch Ratings said the government may miss its 2016 fiscal deficit target as the economy remains under pressure from lower commodity prices. The shortfall could exceed Prime Minister ’s estimate of 3.1% of gross domestic product, the ratings company said in a statement Tuesday. Fitch estimates the slippage is unlikely to increase Malaysia’s debt ratio, which will remain around 52% of GDP until 2017. In Friday’s budget, Najib unveiled plans to raise taxes for high-income earners and accelerate infrastructure development while lowering the deficit from 3.2% in 2015. (Source: The Edge Financial Daily)

Tax: Middle income earners not left out. The goodies in Budget 2016 are aimed at easing the financial burden of low and middle income groups, and complement existing tax reliefs, says a tax consultant. Many middle income earners have been telling the media that they are dissatisfied with the Budget, claiming they will benefit the least from it. Consultant Koong Lin Loong, who is also a Finance Ministry Goods and Services Tax working committee member, disagrees with such views, urging the people not to have a “microscopic” view of Budget 2016. (Source: The Star)

POLITICS General: New PAC line up to have a first meeting on Monday. The new Public Accounts Committee (PAC) will meet on Monday, its chairman Datuk said today, refusing to divulge the agenda for the new committee's first meeting. "We will start next Monday... we have arranged the Parliament order paper, we will update more details later," he told reporters outside Parliament today. Hasan, the Rompin MP, was appointed the new chairman after the previous chairman, Datuk Nur Jazlan Mohamed, took up the post as deputy home minister in a recent Cabinet reshuffle. Four other lawmakers from the previous committee also joined the Cabinet, and were all replaced with new appointments that were finalised yesterday, one of the new member was from PAS. (Source: The Edge Financial Daily) General: No need for Baram dam if locals reject it, says Sarawak Energy provider. Sarawak Energy BERHAD chief executive officer Datuk Torstein Dale Sjotveit said the state power company could scrap the controversial Baram hydroelectric dam if the local community and politicians did not want it. But skipping the Baram dam might just mean that the Sarawak government would move on to building another, the Baleh dam, to feed the Bornean state's energy-intensive industries. “We don't need to build the Baram dam,” Sjotveit said at a press conference in response to questions on the moratorium over the proposed 1,300 megawatt (Mw) dam announced by Chief Minister Tan Sri Adenan Satem last July in response to strong opposition and environmental concerns. (Source: The Edge Financial Daily) General: OngKiLi say no fine imposed on concession holders on Project 3B, Project 4A for delay. There is no fine imposed on the concession holders of Project 3B, Tenaga Nasional Bhd-Mitsui, and Project 4A, SIPP Energy Sdn Bhd, for the delay of the power plant projects, says Datuk Seri Maximus Ongkili. "No fine is imposed on concession holders of Project 3B and Project 4A.”However, the guaranteed bond that amounted to RM30 million for Project 3B has been returned to the concession holder 1MDB and Mitsui Co, Ltd and was replaced by new guaranteed bond by Tenaga Nasional Bhd (TNB) and Mitsui Co, Ltd," Energy, Green Technology and Water minister Ongkili said in a written reply to DAP Serdang MP Ong Kian Ming. (Source: The Edge Financial Daily)

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FROM THE REGIONAL MORNING NOTES... British American Tobacco: 3Q15: GST Impact Lingers On Sales Volume (ROTH MK/HOLD/RM64.20/Target: RM64.00) BAT’s 3Q15 net profit was in line with expectations, representing 75% of our forecast. 3Q15 net profit rose 6.5% yoy despite a 4% yoy drop in sales due to margin expansion from a hike in its ASP and lower opex. The drop in sales came on the back of a 9.9% yoy decrease in sales volume due to the still-soft consumer spending post-GST. Maintain HOLD with a target price of RM64.00. Entry price: RM58.00. Malaysia Airports Holdings: 3Q15: Strong Earnings Reversal As MAHB Scales Back On Airline Incentives (MAHB MK/BUY/RM5.37/Target: RM7.20) MAHB delivered a good set of results, beating our expectations. While 3Q15 results included write-backs and tax credits, we are enthused by the lower airline incentives and strong operating cash flow. While receivables continued to rise, MAHB indicated that only about RM40m in receivables could be impaired. We are also encouraged by the return of Chinese traffic to Malaysia. Maintain BUY. Target price: RM7.20.

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