MONEY MASTER

KUALA LUMPUR (Dec 30): The FBM KLCI inched up at the eleventh hour to finish the last trading day of the year higher on window dressing in selected counters. The benchmark index closed at 1,641.73 points, up 3.8 points or 0.23% when compared to Thursday's close. Top gainers, which advanced in late trading, included British American Tobacco (Malaysia) Bhd (BAT), Nestle (Malaysia) Bhd, Petronas Dagangan Bhd and KLCC Stapled Group. Earlier, Malacca Securities Sdn Bhd analyst Kenneth Leong told theedgemarkets.com that the market was down on profit-taking by some investors following three days of gains by the KLCI. "The performance of the index [is] also in tandem with the weak performance from the overnight Wall Street," he added. Going forward, he expects the key index to trade between 1,610 and 1,650 points as there was no catalyst in sight yet. "Further, there was also uncertainty surrounding the policy of the Donald Trump presidency," ...

KUALA LUMPUR (Dec 29): The FBM KLCI rose for the third consecutive day today, rising 0.47% or 7.63 points to close at 1,637.93. The broader market, however, was mixed with trading remaining subdued as most investors were staying away during this year-end holiday season. Mercury Securities Sdn Bhd research head Edmund Tham said the local stock market is still performing below expectations. "The sentiment is not that great as we speak and the market today is still not very sound," he said when contacted over the phone. "Trade volumes have yet to fully recover and we might only see some recovery once traders are back from the year-end break." "However, the ringgit is stabilising, with oil prices hovering between US$53 (RM237.68) and US$54 per barrel. For starters, this is an advantage to us as we are an oil-exporting country," he added. Going forward, he said investors are expected to pay close attention to the construction industry...

KUALA LUMPUR (Dec 28): The FBM KLCI rose for the second consecutive day today after the Christmas holiday break, buoyed by positive regional indices. Trading, however, remained thin. The KLCI's rise was helped by gains in select blue chips such as British American Tobacco (Malaysia) Bhd, Genting Bhd and Malayan Banking Bhd. The indicator closed at the day's high of 1,630.30 points, a gain of 10.62 points or 0.66% compared with yesterday's close of 1,619.68 points. The ringgit depreciated 0.1% against the US dollar to 4.4835 as at 4.41pm. In commodities, international traded Brent Crude Index rose 0.37% to US$56.30 (RM252.34) per barrel while US Crude also increased 0.37% to US$54.10 as at 4.34pm. Mercury Securities Sdn Bhd research head Edmund Tham said the local stock market's trend is likely to depend on external factors such as the performance of the US and Chinese markets. "Trading volume is likely to remain thin as many traders a...

KUALA LUMPUR (Dec 27): Malaysian stocks closed higher on the first trading day after the long Christmas break, lifted by selected blue chips. At closing bell, the key FBM KLCI gained 2.53 points or 0.16% to end the day at 1,619.68 points versus last Friday's closing of 1,617.15 points. The rise in the index could be partially attributed to the increase in share price of British American Tobacco (Malaysia) Bhd (BAT), PPB Group Bhd and Kuala Lumpur Kepong Bhd (KLK), which were among the top gainers today. "This is the final week of the year and I am expecting some late window dressing," TA Securities Holdings Bhd senior technical analyst Stephen Soo told theedgemarkets.com over the phone. Technically, he said the index fell to a low of near to 1,616 points, signalling that the downside of the key index was mostly cushioned. "Hence, I am looking for some potential window dressing by the local funds towards the end of the year," he added....

Not Rated stock with a fair value of RM1.54 INVESTMENT MERIT We are closing our position on TASCO. (Previous call:  Trading Buy ). While it may be poised for a recovery over the longer term, arising from its expansion plans, the current poor share price performance coupled with a stagnating earnings outlook in the short-to-medium term render limited upside to the stock. It is now a NOT RATED stock with a  fair value of  RM1.54. Poor share price performance.  We last highlighted TASCO in On Our Radar report series in May last year, with a Trading Buy call. However, its share price has plunged 27%, from RM2.06 (pre-adjustment: RM4.12) to close at RM1.50 last Friday, bogged down by a disappointing set of FY16 results, coming in at only 64% of our previous earnings projection on the core level (actual CNP of RM25.2m vs. previous projection of RM39.4m), arrived after stripping off RM5.4m gains on disposal of PPE. The poor results were mainly due ...

Maintain OUTPERFORM  with unchanged target price (TP) of R17.76 9M17 CNP came in within expectations. Absence of dividend was expected. No changes made to our earnings estimate. It remains as our most preferred name in the NBFI space given its: (i) resilient earnings prospects on healthy gross financing receivables growth of 8-9%, (ii) decent asset quality with NPL at low 2-3%, (iii) healthy CAR of c.19%, (iv) high ROE of >20% as well as (v) decent yields of 4.5-4.8%. Moreover, valuation is still undemanding at 8.0x FY18E PER. Maintain OP with an unchanged TP of RM17.76. Within expectations.  The group reported 3Q17 core net profit (CNP) of RM63.4m (+22% QoQ; +27% YoY), widening its 9M17 CNP to RM174.5m (+17% YoY) which made up 72% of both our and consensus full-year forecasts. Note that the group’s 4Q is the seasonally strongest quarter. As expected, no dividend was declared. We are expecting the group to declare a total net DPS of 64.0 sen for FY17. ...

Retain HOLD  with unchanged target price (TP) of RM6.32 News/ Comments IHH Healthcare’s indirect wholly-owned subsidiary, M&P Investments Pte Ltd recently received the “Business License” from Chengdu Administration of Industry & Commerce for the establishment of a 70% owned Sino-foreign Equity Company named ParkwayHealth Chengdu Hospital Limited. The remaining 30% equity stake is owned by their local partner, Shanghai Broad Ocean Investments Co. Ltd. The license is valid for 20 years commencing 12 December 2016. ParkwayHealth Chengdu was established with a registered capital of RMB300m (RM192m) of which IHH’s investment via M&P is a cash subscription of RMB210m (RM134.6m). The principal activities of ParkwayHealth Chengdu are provision of specialized care and services such as obstetrics & gynecology, pediatrics, orthopedics, ophthalmology, respiratory, gastroenterology, oncology, cardiology and geriatrics. Last year M&P along with Broad Oc...

KUALA LUMPUR (Dec 22): Malaysian stocks closed lower today following modest losses on Wall Street. The FBM KLCI closed down 6.39 points or 0.4 % to 1,623.20 at 5pm. Yesterday, the Dow Jones Industrial Average closed down 0.16% and the S&P500 ended lower 0.25%, while the Nasdaq composite fell 0.23%. Prior to this, the US markets had been on an upward trajectory since US President-elect Donald Trump’s win in the November presidential elections. JF Apex Securities Bhd senior analyst Lee Cherng Wee said the drop in the US markets had led to the KLCI’s decline today. “I believe the index’s performance today is in line with the weaker US markets, as well as European markets, there are no local [growth] catalysts for the market at the moment,” he told theedgemarkets.com. Regionally, markets were also in trend with the US’s lacklustre performance as Japan’s Nikkei 225 closed down 0.09%, Hong Kong’s Hang Seng index closed down 0.8% and South Korea’s KOSPI close...

Maintain BUY with unchanged target price (TP) of RM1.08 MBSB has received approval from Bank Negara Malaysia (BNM) to commence negotiations on a proposed merger We are positive on the ongoing development towards becoming a full-fledged Islamic bank We maintain our earnings forecast at this juncture Hence we reaffirm our BUY recommendation with an unchanged TP of RM1.08 NEWS MBSB gets nod for negotiations on a proposed merger.  MBSB yesterday has received a letter from BNM dated 21 December 2016 which states that BNM has no objection in principle for MBSB to commence negotiations with the existing shareholders of Asian Finance Bank Berhad (AFB) namely Qatar Islamic Bank, RUSB Investment Bank Inc, Tadhamon International Islamic Bank and Financial Assets Bahrain WLL for a proposed merger of MBSB and AFB. BNM requires that the negotiations be completed within six months from the date of BNM’s letter. OUR VIEW Positive on the proposed merger. ...

Maintain perform with higher target price (TP) of RM4.03 1H17 net profit of RM25.7m (+67% YoY) came above our expectation (62% of forecast). DPS of 5.0 sen was declared, as expected. Strong and sustained performance in MLM surprised us positively, which also reduced the risk of other operating divisions. Hence, FY17E-FY18E earnings forecasts are raised by 12%-13%. TP lifted to RM4.03 but MP call maintained as valuation is not compelling enough to warrant an upgrade. Above expectation.  1H17 net profit of RM25.7m (+66.6% YoY) was above our expectation by matching 61.9% of our full-year forecast. Consensus comparison is not available as the stock is not widely tracked. The positive deviation can be attributed to the stronger- than-expected performance in MLM division. As expected, the Group declared DPS of 5.0 sen (vs. 1H16: 4.0 sen). YoY,  1H17 revenue surged 38.4% to RM178.4m mainly driven by impressive growth in MLM division (+62.7%) thanks to the ...

Maintain BUY with target price (TP) of RM1.95 News Wins contract at Iskandar.  Mitrajaya announced that it has been awarded a RM159.4m contract for superstructure works for an office tower development at Medini, Iskandar. The job was awarded by Medini Development with a contract duration of 2 years, to be completed by Jan 2019. Comments Good end to the year.  With this job in the bag, Mitrajaya’s YTD job wins currently stands at RM736m, which has surpassed last year’s sum of RM469m. We estimate its orderbook balance to stand at RM1.5bn now, translating to a cover ratio of 2x on FY15 construction revenue. In the running for another job.  It was recently reported in  The Edge  that Mitrajaya is in the running for a RM400m condo job in Ara Damansara. Mitrajaya is said to have submitted the most competitive bid for the job. Should this materialise, the contract would boost Mitrajaya’s orderbook by +27% to RM1.9bn. Compulsory land acquisi...

KUALA LUMPUR (Dec 21): The FBM KLCI fell 4.93 points or 0.3% mainly on late selling of Petronas Dagangan Bhd and Kuala Lumpur Kepong Bhd (KLK) shares. The KLCI fell amid lower Bursa Malaysia share-trade volume possibly due to the year-end holiday season. At 5pm, the KLCI closed at 1,629.59 points. Petronas Dagangan fell 22 sen to RM23.52 while KLK dropped 14 sen to RM23.66. Petronas Dagangan and KLK were Bursa Malaysia's third and fifth-largest decliners respectively as investors took profit following both stock's recent gains. Bursa Malaysia saw 1.16 billion shares valued at RM1.56 billion traded. There were 353 gainers and 369 decliners. Yesterday, the bourse saw 1.29 billion shares transacted. Today, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew said: "A lot of fund managers and investors are probably on vacation right now, which is apparent, looking at the thin trading volume of shares." "Nonetheless, with careful ...

KUALA LUMPUR (Dec 20): The FBM KLCI rose 0.22 point after volatile trade while the ringgit weakened against the US dollar as investors evaluated the attacks in Germany, Switzerland and Turkey. At Bursa Malaysia, the KLCI closed at 1,634.52 points at 5pm. The ringgit weakened to 4.4797 against the US dollar at 5:17pm. The ringgit had earlier today weakened to a new one-year level at 4.4823 against a stronger US dollar in anticipation of further US interest rate hikes in 2017. The 4.4823 exchange rate was last seen during the 1998 Asian financial crisis. During that year, the ringgit depreciated to its all-time weakest point at 4.8850 against the greenback. Today, JF Apex Securities Bhd senior analyst Lee Cherng Wee said the KLCI lacked fresh catalysts. "The weak ringgit is already expected by investors, and I believe it's already factored in. Therefore, we do not see any major movement in the index today," he told theedgemarkets.com. Bursa Malay...

KUALA LUMPUR (Dec 19): The FBM KLCI fell 3.49 points or 0.2% as the ringgit weakened against the US dollar to levels seen during the 1998 Asian financial crisis. At 5pm today, the KLCI closed at 1,634.30 points. The ringgit depreciated to its weakest level against the US dollar so far today at 4.4805. Bloomberg reported that the exchange rate was the weakest since January 1998. Today, JF Apex Securities Bhd research head Lee Chung Cheng told theedgemarkets.com: "Basically the market's performance today is in line with US markets (which were also down) and weak ringgit. We believe there is a lack of catalysts to excite the local market at this point." The ringgit weakened after the US Federal Reserve raised interest rates last week and indicated further hikes in 2017. Such sentiment was in anticipation of higher US inflation due to US President-elect Donald Trump's planned expansionary fiscal policies. At Bursa Malaysia today, the exchange saw...

Retain neutral with  target price (TP) of RM2.50 AirAsia announced that the Board of Directors of AirAsia has considered and approved the subscription of up to IDR3,042bn (c.RM1.0bn) of perpetual capital securities to be issued by its 49%-associate in Indonesia AirAsia (IAA). The subscription would be done via conversion of existing amount due by IAA to the Group. This is the second equity injection in IAA to address the issue of the negative equity balance. We has adjusted the conversion of the debt by reducing the amount due and increased its investment in IAA. Our earnings estimate are however unchanged. We maintain our  Neutral  call and PE-based target price on AirAsia of  RM2.50 , based on enlarged share capital that includes the proposed share placement to Tune Live Sdn Bhd which is expected to complete by 1QFY17. To recap.  Airlines operators in Indonesia were expected to maintain a positive equity position, as the new regulation was establishe...

Upgrade to outperform with new target price (TP) of RM5.50 Gamuda’s 1QFY17 net profit came in at RM162.1m (+6.6% QoQ, +0.6% YoY), which was within our and consensus expectations. The 1Q net profit constituted 23% and 22% of our and consensus full year estimates which we deem in line as we expect subsequent quarters to be stronger. Q1FY17’s performance indicates that earnings decline appears to be bottoming out, with construction and concessions divisions registered earnings growth while properties division continued to decline. Outstanding orderbook is now at RM8.9bn, with RM8.7bn secured in FY16. Near term, the Group is eyeing projects worth RM3-4bn from jobs such as LRT3, Gemas-JB double tracking and Pan Borneo Sabah. As for the long-drawn negotiations on the SPLASH disposal, we understand that a deal is expected to finalise in Q2 next year. All told, we adjusted our FY17F-18F earnings estimates by -1%/-6% after changing our billing assumptions for construction and pr...

KUALA LUMPUR (Dec 16): The FBM KLCI gained 0.8 point in the final trading minutes to close at 1,637.79 points on late buying of Axiata Group Bhd and Public Bank Bhd shares. At 5pm, Axiata rose 18 sen to RM4.68 while Public Bank added 14 sen to RM19.80. KLCI-linked Axiata and Public Bank were Bursa Malaysia's fourth and seventh-largest gainers respectively. The KLCI, which ended at its intraday high, had earlier fallen to its intraday low at 1,632.46 points. The KLCI had fallen as the ringgit weakened to a fresh one-year level against the US dollar today at 4.4785. The ringgit fell after the US Federal Reserve (Fed) raised interest rates last Wednesday and indicated further hikes in 2017. Reuters reported that the Fed raised interest rates by 25 basis points to between 0.5% and 0.75% on Wednesday as widely expected. The real mover came from the Fed signalling three hikes in 2017, up from around two flagged at its September policy meeting. In Malaysia tod...

Maintain outperform with unchanged target price (TP) of RM16.16 Tenaga Nasional (TNB) made an announcement that the government has agreed to an electricity tariff rebate of 1.52sen/kWh for the period effective 1 January to 30 June 2017 under the Imbalance Cost Pass-Through (ICPT) mechanism, amounting to RM766.3m. There is no impact to TNB's earnings however as the rebates given to consumers for the first half of 2017 will be absorbed by the ICPT savings. Hence, we maintain our earnings forecast while our Outperform call on TNB is reaffirmed with an unchanged TP of RM16.16. ICPT rebates continue..  for now. The government has approved an ICPT rebate of 1.52sen/kWh for the period effective 1 January to 30 June 2017, applicable to all consumers except ones with monthly consumption of 300 kWh and below. Favourable generation cost through better performance of coal-fired power plants, lower liquefied natural gas (LNG) prices and lower usage of gas contributed to the RM76...

KUALA LUMPUR (Dec 14): The FBM KLCI fell 1.99 points or 0.1% on profit-taking as investors eyed the US Federal Reserve's interest rate decision at the conclusion of its two-day meeting today. Analysts said the KLCI's decline was driven by profit taking amid uncertainty over whether the US would hike interest rates. Higher US rates do not bode well for Asian markets in anticipation that investors will shift their money into US dollar-denominated assets. "The KLCI is down amid the looming decision by the Fed on the US interest rate. The consensus is that there will be a hike, which could drive outflows in emerging markets like Malaysia," an analyst who requested anonymity told theedgemarkets.com. At 5pm, the KLCI pared losses at 1,643.29 points. Earlier, the index declined to its intraday low at 1,639.93 points. Bursa Malaysia saw 1.44 billion shares worth RM1.64 billion exchanged. Decliners outnumbered gainers at 362 against 314 respectively. Earlier today, Hong Le...

Retain outperform with unchanged target price (TP) of RM4.00 We came away from SCGM?s analyst briefing with some encouraging highlights. As expected, its biodegradable lunch boxes are receiving strong response in anticipation of the regulatory ban on polystyrene in several states effective next year. With the newly installed capacity at its new premise, the group?s extrusion capacity will expand by 33% to 33m kg/year and reach 36m kg/year by end-FY17 when the dual-colour extrusion is ready. In addition, it will also increase its selling prices across all its products by 10% to offset the recent hike in resin prices. Maintain  Outperform  call with an unchanged TP of  RM4 . Strong pick-up in lunch boxes.  In view of the regulatory bans on polystyrene foam packaging in several states effective next year, there is increasingly strong demand for the biodegradable lunch boxes. It registered RM2m sales for the lunch boxes in the recent quarter compare...

Retain HOLD with unchanged target price (TP) of RM3.16 News Berjaya Sports Toto Berhad (BToto), through its 88.26%- owned subsidiary Berjaya Philippines Inc. (BPI) has proposed to acquire 6,589,934 shares (26.31% of the total outstanding shares) of H.R. Owen Plc (HR Owen) from Bentley Motors Limited (Bentley) for a total purchase price of �14.83m (~RM 83.82m) or �2.25 (~RM12.72) per share. Completion of the share purchase is to take place within six months, or no later than 8 June 2017. Following the completion of the acquisition of the shares, BPI will own 98.34% of the total outstanding shares of HR Owen. Recall that back in 2013, in H.R. Owen was acquired by BPI with a total stake of 72.03% after a mandatory takeover offer. Bentley remained as the second largest shareholders with 26.31% stake and the remaining 1.66% shares were with minority shareholders. H.R. Owen was then de-listed on the London Stock Exchange on 15 April 2014. Comments We are neutral ...

Maintain buy with target price (TP) of RM5.00 Axiata and its wholly-owned subsidiary, edotco Group (edotco) announced a USD600m primary and secondary equity private placement deal with Innovation Network Corporation of Japan (INCJ) and Khazanah Nasional (Khazanah). The maiden equity fund raising exercise for edotco sets a new benchmark as the largest global tower sector private placement in 2016. Currently managing 25,200 towers across five countries, edotco is the world's 11th largest tower company. With this fund raising exercise, we expect edotco to be more aggressive in M&A activities before pursuing its planned IPO in 2017. Meanwhile, we estimate that the secondary share placement by Axiata of USD200m would help to pare down FY17F gross debt/EBITDA from 2.2x to 2.0x. Overall, we are positive on this deal as it allows Axiata to unlock value of edotco in the future as well as reduce its gearing, albeit marginally. We maintain our Trading  Buy  call and...