REGIONAL DAILY December 26, 2012 MALAYSIA Malaysia Daybreak | 19 August 2013 Key Metrics ▌What’s on the Table… —————————————————————————————————————————————————————————————————————— FBMKLCI Index AMMB Holdings - Banking on writebacks and insurance income 1,850 At 25% of our full-year forecast (26% of consensus), 1QFY3/14 net profit was in 1,800 line with our expectations. We expect similar average earnings in 2Q-4Q as the 1,750 continuous topline expansion could be offset by the upturn in credit costs. 1,700 Our DDM-based target price (11.2% COE, 5% LT growth) is intact. We are 1,650 downgrading AMMB from a Neutral rating to Underperform due to the 1,600 de-rating catalysts of: 1) below-industry loan growth, 2) margin compression, 1,550 and 3) the expected upturn in credit costs. Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Puncak Niaga Holdings - Closer to the end game? ——————————————————————————— FBMKLCI We are upgrading Puncak from neutral to Trading Buy given the prospect of 1788.24 -3.97pts -0.22% favourable newsflow, including a better price tag for its water assets in Selangor. AUG Futures SEP Futures 1789 - (-0.50%) 1786 - (1.00%) The federal and state governments are reportedly making headway in resolving ——————————————————————————— the deadlock in the takeover. We believe there is a possibility of a top-up of Gainers Losers Unchanged the initial RM2.77/share offer for Puncak. Theoretically, the price should be 379 422 303 ——————————————————————————— close to RM3.67, which is the book value of its water assets and an offer that Turnover would be acceptable to minority shareholders. We raise our target price as we 2132.22m shares / RM1617.585m reduce our SOP discount from 50% to 30% to reflect the prospect of positive 3m avg volume traded 1756.84m shares 3m avg value traded RM2167.89m newsflow. ——————————————————————————— Regional Indices Kossan Rubber Industries - P/E not InTouch with growth FBMKLCI FSSTI JCI SET HSI 1,788 3,198 4,569 1,446 22,518 During our recent meeting, we gathered that Kossan should enjoy higher ———————————————————————————————— margins as it expands its new manufacturing model and nitrile production. Also, Market Indices Close % chg YTD % chg special purpose gloves (SPV) and potential technical rubber product (TRP) FBMKLCI 1,788.24 (0.2) 5.9 acquisitions would buffer competitive pressure. Kossan remains an FBM100 12,200.97 (0.2) 8.0 FBMSC 15,738.74 (0.3) 37.1 Outperform and our top pick, with the catalysts being strong demand, widening FBMMES 5,483.79 1.3 30.1 margins and diversification efforts. We raise our FY13-15 EPS forecasts by Dow Jones 15,081.47 (0.2) 15.1 NASDAQ 3,602.78 (0.1) 19.3 7-11% for a better product mix, higher plant efficiency and an assumed 5bn FSSTI 3,197.53 (0.7) 1.0 piece rise in capacity in FY14. We also apply a higher CY14 target P/E of 14x FTSE-100 6,499.99 0.3 10.2 Hang Seng 22,517.81 (0.1) (0.6) (20% discount to Hartalega's target instead of 30%) to reflect its higher JCI 4,568.65 (2.5) 5.8 margins and diversification moves. KOSPI 1,920.11 (0.2) (3.9) Nikkei 225 13,650.11 (0.7) 31.3 DRB-Hicom - Selling UniAsia Life Insurance for RM518m PCOMP 6,525.95 (0.8) 12.3 SET 1,445.76 (0.5) 3.9 Shanghai 2,068.45 (0.6) (8.8) JT International - Results likely unsurprising Taiwan 7,925.00 0.5 2.9 MISC Bhd - Shrinking with the downturn Top Actives Close % chg Vol. (m) MEDIA SHOPPE 0.105 0.0 132.8 ASTRAL SUPREME 0.255 (13.6) 83.6 ▌News of the Day… FLONIC HI-TEC 0.195 11.4 80.2 —————————————————————————————————————————————————————————————————————— INSTACOM GROUP 0.420 7.7 59.3 • 1MD wins RM6.2bn bridge-loan extension MALAYSIAN AIRLINE 0.330 0.0 52.5 CHINA STATIONERY 0.260 2.0 50.5 • CMS expects joint pact on phophate project soon RGB INTERNATIONAL 0.145 20.8 34.1 • Ekuinas steps up outsourcing programme SUMATEC RESOURCES 0.705 11.0 34.0 • AirAsia X emerges as Australia's fourth largest foreign airline Economic Statistics • Privatise MAS for profit, says Tun Mahathir Close % chg US$/Euro 1.3334 (0.10) • Kulim not raising offer for NBPOL RM/US$ (Spot) 3.2770 0.00 • Malaysia keeps palm oil export tax unchanged RM/US$ (12-mth NDF) 3.3459 0.12 OPR (% ) 3.00 0.00 BLR (% , CIMB Bank) 6.60 0.00 GOLD ( US$/oz) 1,360 (0.45) WTI crude oil US spot (US$/barrel) 107.33 0.45 CPO spot price (RM/tonne) 0.64 2,355 ———————————————————————————————————————— 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 August 19, 2013 Global Economic News… US housing starts rose 5.9% mom to 896,000 in Jul from a revised 846,000 in Jun, underperforming consensus of 900,000. (Bloomberg) US nonfarm productivity rose a seasonally adjusted annualised rate (SAAR) of 0.9% qoq in 2Q13 from a revised -1.7% in 1Q13, outperforming consensus of 0.6%, whilst unit labour costs gained 1.4% qoq SAAR (-4.2% in 1Q13), again exceeding consensus of 1.0%. (Bloomberg) The US Thomson Reuters/University of Michigan’s consumer sentiment index fell to 80.0 in Aug from 85.1 in Jul, underperforming consensus of 85.5. (Bloomberg) Eurozone inflation registered at 1.6% yoy in Jul, matching an initial estimate on 31 Jul. It is the sixth straight month that the rate has been less than the ECB's 2% ceiling. (Bloomberg) The eurozone current account surplus narrowed to €16.9bn in Jun from €19.5bn in May. Over the 12 months to Jun, the current account showed a surplus of €196.1bn, compared with a surplus of €66.1bn a year earlier. (Bangkok Post) New home prices in China climbed in 69 of the 70 cities the government tracked last month from a year earlier. Prices rose an average 6.7% yoy in July, up from 6.1% in Jun. (Bloomberg, WSJ) South Korea’s producer prices slipped 0.9% yoy in Jul (-1.4% in Jun). (Bloomberg) Taiwan’s GDP grew 2.5% yoy in 2Q13 accelerating from 2.3% in 1Q13. (Bloomberg) Indonesia’s consumer confidence index dropped to 108.4 in Jul from 117.1 in Jun. (Bloomberg) Indonesia's current account deficit widened to 4.4% of GDP in the second quarter of the year, from 2.4% of GDP the previous quarter. (Business Times) Singapore’s non-oil domestic exports fell 0.7% yoy in Jul (-8.9% in Jun). Electronic exports fell 7.6% (-12.4% in Jun). (Bloomberg) Malaysian Economic News… Doctors in private clinics and hospitals are asking for a 30% increase in consultation fees, saying it is impossible for them to survive with rising operating costs. Malaysian Medical Association (MMA) president Datuk Dr N.K.S. Tharmaseelan said the proposed hike was more than a decade overdue. He claimed that doctors were now paid less than plumbers, electricians, hairstylists and food outlet operators. 2 Daybreak Malaysia August 19, 2013 Currently, general practitioners get between RM30 and RM50 per consultation while specialists charge between RM50 and RM80. MMA proposed general practitioners’ consultation fees to be raised to between RM39 and RM65 while that of specialists to between RM65 and RM104. There are over 7,600 private clinics and hospitals nationwide. The association represents over 3,000 members. He said the MMA could not agree to the Government’s 14.4% fee increase proposal (general practitioners’ consultation fees at between RM34 and RM57; specialists’ consultation fees at between RM57 and RM91) made last year as it would result in a bleak future for its members. (The Star) A 14.4% rise in private doctors’ consultation fees is “more appropriate” than the rate proposed by the Malaysian Medical Association, said Health director-general Datuk Dr Noor Hisham Abdullah. The quantum was based on the consumer price index of healthcare for the period 2002 to 2010 and decided after consulting various ministries and stakeholders, he said. He added that the ministry would add new clauses to the present regulations to reduce any attempt by medical and dental practitioners to manipulate the cost of procedures. “However, medical costs in the country are still lower than in Thailand and Singapore,” he said, adding that patients have a right to request for an estimation of charges based on initial diagnosis and other anticipated fees. (The Star) Malaysia is facing a shortage of specialist doctors despite an increasing number of medical graduates from local and foreign institutions every year. Health Minister Datuk Seri Dr. S Subramaniam said the current lack of specialists needed to be addressed immediately to prevent a crisis later on. "We're still lacking in terms of specialists as we only manage to train about 500 to 600 doctors into experts in a year. So we are looking at ways to increase the number of specialists and at the same time upgrade the quality of care," he said. At present, there were 36,607 doctors, including specialists, with a doctor to population ratio of 1:791 and by the year 2020 based on the estimated population of 34m, 85,000 doctors would be needed to attain the standard ratio of 1:400. He added that the ministry had no intention of increasing the consultation fees of doctors by 30% as rumoured.