Daily Bread Daily Bread | 11 October 2013 (Member of Alliance Bank group) PP7766/03/2013 (032116) FBMKLCI: 1,775.92 11 October 2013 +6.80 (+0.38 %) Market indices and statistics Focus of the day Daily YTD Indices Last chg % chg % Strategy: Budget 2014 is not all bad news Malaysia Budget 2014 is not expected to bring much cheer to the equity market as fiscal restrain, FBM KLCI 1,775.9 0.4 5.1 subsidy cut and property cooling measures are dampeners. While project sequencing FBM Emas 12,370.7 0.4 8.2 FBM Syariah 12,461.2 0.4 8.2 seems to be the order of the day, certain key projects are still expected to be FBM Small Cap 15,387.6 0.8 34.0 implemented. Furthermore, we expect Visit Malaysia Year 2014 will lead to additional FBM ACE 5,457.8 1.3 29.5 allocation for tourism promotion which will benefit the aviation, hospitality and Dow Jones 15,126.1 2.2 15.4 consumer sectors. Against such backdrop, investors would need to be selective in equity S&P 500 1,692.6 2.2 18.7 Nasdaq 3,760.7 2.3 24.5 exposure. (refer to report for details) FTSE 6,430.5 1.5 9.0 Nikkei 14,194.7 1.1 36.6 Economic: IPI slows down on shorter working month Hang Seng 22,951.3 -0.4 1.3 Strait Times 3,169.9 0.5 0.1 Malaysia’s Industrial Production Index growth slowed down to 2.3% y-o-y in August PSEi Exchange 6,436.0 0.9 10.7 despite strong export data which suggests inventory draw-down ahead of long festive Bangkok SET 1,451.9 1.2 4.3 holidays during the Ramadan month. This came below expectation (Bloomberg poll: JSX Composite 4,486.7 0.7 3.9 +7.5%), but not a cause for concern. We see continued growth in the manufacturing sector (+4.6% vs +5.5% in July), reflecting the continued rebound in the PMI data. As Market Turnover Vol (m shrs) 1,860.2 such, we estimate 3Q GDP to rebound 4.8%, after a disappointing growth of 4.3% in Value (RM m) 1,566.2 2Q13. Full-year, we forecast growths of 4.5% and 5% in 2013 and 2014 respectively. (refer to report for details) Daily Value Top 5 value Last chg % (RM m) Maybank 9.90 0.5 92.9 Other reports Axiata 6.92 0.3 83.4 Plantation: Sept MPOB stats: Inventories surged 7% m-o-m (Neutral) CIMB 7.42 0.3 77.3 Petronas Dagangan 29.30 0.8 71.8 Malaysian news highlights Tenaga Nasional 9.02 -0.1 53.2 Public Bank: May have found candidate to be its future MD and CEO Tenaga Nasional: Scraps bid for Ireland’s Bord Gais unit Malaysian Airline System: Co-pilot, passenger perish in Kudat crash Currencies MMC Corporation, Mudajaya Group: To clinch road job? Daily Daily Last chg chg % Ho Hup Construction: Shareholders approve revamp plan to exit PN17 RM/USD 3.1805 -0.0120 -0.4 Malaysia Building Society: Makes cash call RM/£ 5.0882 -0.0234 -0.5 Iris Corporation: Gets RM40m Felda contract RM/100 Yen 3.2524 -0.0349 -1.1 Aviation: KKR pays USD200m for stake in Weststar RM/€ 4.3184 -0.0094 -0.2 RM/SGD 2.5578 -0.0023 -0.1 RM/CNY 0.5220 -0.0009 -0.2 Global news highlights US: Retailers' September sales rise modestly, shoppers wary US: Jobless claims at six-month high but trend improving Commodities and futures US: Republicans offer plan to postpone any default Daily Daily Last chg chg % EU: Draghi says ECB guidance allows rate cuts on volatility st KLCI (1 month) 1,783.5 10.0 0.6 UK: BOE sticks to guidance plan with key rate kept at 0.5% rd CPO (3 month) 2,391.0 22.0 0.9 Japan: Kuroda says BOJ prepared to do what’s necessary on deflation WTI (1st month) 103.0 1.4 1.4 Gold (spot) 1,287.6 -18.2 -1.4 FBMKLCI Chart All required disclosure and analyst certification appear on the last two pages of this report. Additional information is available upon request. Redistribution or reproduction is prohibited without written permission Daily Bread | 11 October 2013 MALAYSIAN NEWS Public Bank: May have found candidate to be its future MD and CEO Public Bank has recently appointed Quah Poh Keat as deputy CEO II; suggesting that he could be a leading candidate to succeed MD and CEO Tan Sri Tay Ah Lek. Quah, a qualified accountant with more than 30 years of experience, was a partner and senior partner of KPMG in Malaysia for 25 years. (StarBiz) Tenaga Nasional: Scraps bid for Ireland’s Bord Gais unit TNB has scrapped a bid for a unit of Ireland’s state-owned gas company Bord Gais Eirann as it focuses on building power plants at home. TNB submitted a non-binding offer for Bord Gais’s energy division, seeking to expand earning and reduce its reliance on regulated business in Malaysia, CFO Fazlue Rahman Zainuddin said in an interview in KL. (StarBiz) Malaysian Airline System: Co-pilot, passenger perish in Kudat crash MAS said the co-pilot of a MASwings Twin Otter and a passenger were killed when the plane crash landed into a vacant house beside the Kudat airport yesterday afternoon. MAS group CEO, Ahmad Jauhari Yahya, who is also MASwings chairman, said two other people on board were injured, Bernama reports. (The Sun Daily, Bernama) MMC Corporation, Mudajaya Group: To clinch road job? MMC Corporation and its JV partner Mudajaya Group are believed to be the front runner for the central spine road project that stretches from Kota Baru in Kelantan to Simpang Pelangi in Bentong, Pahang. The project is estimated to cost RM8bn based on earlier reports, which quoted former Works Minister Datuk Seri Shaziman Abu Mansor. (Financial Daily) Ho Hup Construction: Shareholders approve revamp plan to exit PN17 Shareholders of Ho Hup Construction Company have approved the company's regularisation plan to uplift it from Practice Note 17 status. "In the coming months we will, of course, focus on completing the restructuring exercise to further strengthen our balance sheet," its executive director Derek Wong Kit Leong said after the company's EGM on Thursday. He said the company was on the lookout for suitable land bank in Klang Valley and Johor where demand for property remains strong. (StarBiz) Malaysia Building Society: Makes cash call Malaysia Building Society is making a cash call to strengthen its core capital. The non-banking financial institution announced that it had proposed a renounceable rights issue that could fetch up to RM1.47bn and a dividend reimbursement plan. It said its biggest shareholder, the EPF, which holds a 69.87% equity stake, has agreed to subscribe to the rights shares. (Financial Daily) Iris Corporation: Gets RM40m Felda contract Iris Corporation announced that it has clinched a RM39.99m contract from the Federal Land Development Authority (Felda). In a filing to the stock exchange, Iris said it will build an integrated community centre in Negeri Sembilan for Felda. The project comes under Iris’ Sentuhan Kaseh modern-rural project which is located in Felda Palong 21, Wilayah Raja Alias, Negeri Sembilan. Iris said the project which had commenced since Oct 1 this year, is due for completion by January 28 next year. (Financial Daily) 2 Daily Bread | 11 October 2013 Aviation: KKR pays USD200m for stake in Weststar Weststar Group has received USD200m from selling a stake in its aviation arm to United States private equity firm KKR and Co. The group, controlled by Tan Sri Syed Azman Syed Ibrahim, stands to make more from its planned listing of the aviation unit, Weststar Aviation Services Sdn Bhd. Weststar yesterday sealed a deal with New York-based KKR to sell a "substantial minority" Weststar Aviation stake for USD200m (RM636m). Syed Azman, who is the group's managing director, said Weststar Aviation should be listed on Bursa Malaysia by end-2014 or early 2015. (Business Times) 3 Daily Bread | 11 October 2013 GLOBAL NEWS US: Retailers' September sales rise modestly, shoppers wary US shoppers remained cautious in September, gravitating toward bargains as their confidence took a hit from political strife in Washington and slow job growth, just weeks ahead of the start of the holiday season. A group of 9 US retailers, excluding drugstores, reported a 0.4% rise in September same-store sales, lower than the 3.1% growth analysts had expected, the Thomson Reuters same-store sales index showed. Several apparel stores posted disappointing numbers. (Reuters) US: Jobless claims at six-month high but trend improving The number of Americans filing new claims for jobless aid touched a six-month high last week as a computer-related backlog of claims was processed and a partial US government shutdown began to hit some non-federal workers. But stripping out these two factors, which economists viewed as temporary, Thursday's report from the Labor Department suggested the labor market continued to improve moderately. Initial claims for state unemployment benefits increased 66,000 to a seasonally adjusted 374,000, the highest level since the end of March, the Labor Department said. (Reuters) US: Republicans offer plan to postpone any default Republicans in the House of Representatives offered a plan on Thursday that would postpone a possible US default, signalling new willingness to end a standoff that has shuttered large parts of the government and thrown America's future creditworthiness into question.