Malaysia Daybreak | 5 May 2021 FBMKLCI Index
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Malaysia | May 5, 2021 Key Metrics Malaysia Daybreak | 5 May 2021 FBMKLCI Index 1,700 ▌What’s on the Table… 1,650 ———————————————————————————————————————————————————————————————————————————————————————— 1,600 1,550 Strategy Note – It's a wrap for April; what's next? 1,500 1,450 The KLCI gained 1.8% mom in Apr 21, driven mainly by gains in the healthcare 1,400 and transport sectors. May has historically been a mixed month, with the KLCI 1,350 posting -0.3%/+1.2% mom returns over the past 10/43 years. There could be a May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 shift to laggard/recovery plays if new Covid-19 cases are contained and the ——————————————————————————— vaccine rollout is successful. We expect the market to be supported at current FBMKLCI level by its attractive valuations, as it trades at 12M P/E of 14.1x, or 2 s.d. below 1,588.25 -2.48pts -0.16% its 3-year average. Key events to watch in May: 1Q21 results season in May, MAY Future JUN Future 1590.5 - (0.00%) 1587.5 - (0.06%) Bank Negara’s MPC meeting on 6 May, and the release of the 1Q21 GDP on 11 ——————————————————————————— May. Gainers Losers Unchanged 528 527 438 Media - Overall – A Plus for Astro and Media Prima ——————————————————————————— Turnover Disney+ Hotstar will be launched in Malaysia on 1 Jun 2021. Astro Malaysia has 7482.67m shares / RM4128.871m been appointed the service's official distributor in this market. This popular 3m avg volume traded 8479.64m shares service should provide a new revenue source for Astro, in our view. Media Prima 3m avg value traded RM4718.96m ——————————————————————————— gains from selling its content to Disney+ Hotstar. Both Astro and Media Prima are Regional Indices our top picks for Malaysia's media sector. A new earnings upcycle is within sight FBMKLCI FSSTI JCI SET HSI for the two, we reckon. 1,588 3,179 5,964 1,583 28,557 ———————————————————————————————— Hartalega Holdings – 4QFY21: Affected by lower sales volume Market Indices Close % chg YTD % chg FY3/21 final net profit of RM2.9bn (+563% yoy) came in 15% below expectations, FBMKLCI 1,588.25 (0.2) (2.4) due to weaker-than-expected sales volume in 4QFY21. Hartalega expects FBM100 11,348.56 (0.1) (1.3) 1QFY3/22F ASPs to be higher qoq, before trending lower from 2QFY22 onwards, FBMSC 17,190.58 0.6 10.4 FBMMES 8,627.40 (1.0) (19.6) which is in line with our view. TP is lowered to RM11.80 (26x CY23F P/E), in Dow Jones 34,133.03 0.1 11.5 tandem with our EPS cuts and as we roll over our valuation year to CY23. NASDAQ 13,633.50 (1.9) 5.8 FSSTI 3,179.13 (0.2) 11.8 FTSE-100 6,923.17 (0.7) 7.2 Fraser & Neave Holdings – Expecting a weaker 2HFY21F SENSEX 48,253.51 (1.0) 1.1 Hang Seng 28,557.14 0.7 4.9 We deem 1HFY9/21 core net profit of RM243m (+2.2% yoy) to be in line, at 58% JCI 5,963.82 0.2 (0.3) of our and 56% of Bloomberg consensus’ FY21F estimates. Despite the recent KOSPI 3,147.37 0.6 9.5 Nikkei 225 28,812.63 (0.8) 5.0 spike in raw material prices, we believe that the short-term impact will be PCOMP 6,359.15 (0.2) (10.9) mitigated by active hedging policies and efficiency gains. Retain our Hold call, SET 1,583.13 (0.5) 9.2 Shanghai 3,446.86 (0.8) (0.8) with unchanged DCF-based TP of RM31.60. Taiwan 16,933.78 (1.7) 14.9 ———————————————————————————————— Aemulus Holdings Bhd – Robust order visibility in 2HFY9/21F Top Actives Close % chg Vol. (m) 1HFY9/21 results were in line, at 47% of our full-year net profit forecast. We see FOCUS DYNAMICS 0.105 (8.7) 708.0 stronger earnings delivery in the coming quarters, driven by healthy order book VELESTO ENERGY 0.160 0.0 335.1 VORTEX 0.130 (7.1) 203.6 replenishment and better traction from its associate in China We raise our TDM 0.330 8.2 194.2 FY21-22F EPS on higher-than-expected RF and CIS tester sales volume. BERJAYA CORP 0.365 14.1 193.9 LKL INTERNATIONAL 0.375 (2.6) 148.3 Reiterate Add, with a higher TP, based on 35x CY22F P/E. LION INDUSTRIES 0.930 10.7 134.1 TANCO HLDGS 0.090 5.9 109.1 KLCCP Stapled Group – Wider losses for MOKL in 1Q21 ———————————————————————————————— Economic Statistics Mah Sing Group – Second land deal of the year Close % chg US$/Euro 1.2014 (0.02) Nestle (Malaysia) – New innovations to drive sales growth RM/US$ (Spot) 4.1213 (0.03) RM/US$ (12-mth NDF) 4.1694 0.23 Velesto Energy Berhad – Naga 7’s loss may be a blessing in disguise OPR (%) 1.71 (2.29) GOLD ( US$/oz) 1,778.93 (0.01) WTI crude oil US spot (US$/barrel) 65.69 1.86 CPO spot price (RM/tonne) 4,505.00 0.11 ▌News of the Day… ———————————————————————————————————————— ———————————————————————————————————————————————————————————————————————————————————————— Ivy NG Lee Fang, CFA • MCO 3.0 in six Selangor districts, but economic activities allowed T (60) 3 2261 9073 E [email protected] • Disney+ Hotstar to be launched on 1 Jun, Astro is official distributor in Malaysia • Mah Sing plans RM618m M Astra mixed-devt in Setapak Show Style "View Doc Map" • S P Setia to establish sukuk programme worth up to RM3bn • Velesto Energy investigating Naga 7 rig incident, assessing options • YTL Corp's unit divests cement business in China • MAG says no Malaysia Airlines, AirAsia merger plan IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN Powered by the THE UNITED STATES IT IS DISTRIBUTED BY CGS-CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH. EFA Platform Sources: CIMB. COMPANY REPORTS Sources: CIMB. COMPANY REPORTS Malaysia Daybreak | May 5, 2021 Global Economic News US Treasury Secretary Janet Yellen said she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden’s spending plans boost growth. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Yellen said in taped remarks to a virtual event put on by The Atlantic. Yellen told a Wall Street Journal CEO Council event that she does not anticipate that inflation would be a problem for the US economy and that any price increases would be transitory because of supply chain shortages and the rebound in oil prices to pre-pandemic levels. Asked directly about her remarks on rates, Yellen said she was neither predicting nor recommending a rate rise. (Reuters) The Group of Seven nations is considering a US proposal to counter what the White House sees as China’s economic coercion. A paper was circulated ahead of a two-day meeting of G-7 foreign ministers in London, according to officials who declined to be identified as the talks are private. A discussion about China on Tuesday was led by US Secretary of State Antony Blinken, who was also expected to raise allegations of forced labor in the Xinjiang region. (Bloomberg) The US trade deficit widened to a new record in Mar, as the value of imports surged to a fresh high. The gap in trade of goods and services expanded to US$74.4bn in Mar from a revised US$70.5bn in Feb, according to Commerce Department data released Tuesday. That matched a median estimate in a Bloomberg survey of economists. (Bloomberg) Treasury Secretary Janet Yellen said she is neither predicting nor recommending that the Federal Reserve raise US interest rates as a result of President Biden's spending plans, walking back her comments earlier in the day that rates might need to rise to keep the economy from overheating. She stated that she not anticipate that inflation would be a problem and that any price increases would be transitory because of supply chain shortages and the rebound in oil prices to pre-pandemic levels. (WSJ, Reuters) Australia's central bank left its key rates at near zero for a fifth straight meeting and pledged to keep policy super loose for a prolonged period even as the economy recovers at a rapid pace from the Covid-19-led downturn. The Reserve Bank of Australia (RBA) reiterated its commitment to keep the cash rate at the record-low of 0.1% for as long as is needed to pull down unemployment and push inflation higher. (Reuters) Malaysia Economic News A total of 589,951 individuals have completed both doses of the vaccine under the National Covid-19 Immunisation Programme as of 3 May, said Health Minister Datuk Seri Dr Adham Baba. He said 930,059 individuals had received the first dose of their vaccine, bringing the total number of vaccine shots administered in the country so far to 1.52m. (Bernama) Malaysians cannot host any open house events at all for the Hari Raya Aidilfitri celebrations this year, the government announced. Senior Minister Datuk Seri Ismail Sabri Yaakob however said that house visits and grave visits are allowed with conditions, depending on the type of movement control orders imposed on the locations — movement control order (MCO), conditional 2 Malaysia Daybreak | May 5, 2021 movement control order (CMCO), recovery movement control order (RMCO), enhanced movement control order (EMCO).