R e t a i l M a r k e t M o n i t o r Wednesday, 2 March 2016...R e t a i l M a r k e t M o n i t o r Wednesday, 2 March 2016 w w w . u t r a d e . c o m . m y 1 M A L A Y S I A MARKET

R e t a i l M a r k e t M o n i t o r Wedn esd ay , 2 Ma rch 20 16

w w w . u t r a d e . c o m . m y 1

M A L A Y S I A

MARKET NEWS

The FBMKLCI rose 16.07pt (+1.0%) to close at 1,670.82 yesterday. Meanwhile, Asian

stocks gained with Tokyo markets erasing a loss and Shanghai shares rallying as China’s

stimulus efforts and a rebound in oil boosted equities. The MSCI Asia Pacific Index

climbed 0.8% to 120.10 after dropping 0.1% earlier. The FBMKLCI’s top gainers were

Genting Malaysia (+4.4%), Genting Bhd (+4.3%) and SapuraKencana Petroleum (+3.7%)

while the top losers were YTL Corporation (-1.3%), Westports Holdings (-0.7%) and UMW

Holdings (-0.4%). In the broader market, gainers outpaced losers 476 to 405 with 311

counters unchanged. Turnover was 1.67b shares valued at RM1.65b.

Based on the daily chart, the index’s positive close above the BBI line and the positive

readings of the MACD reaffirm its positive near-term outlook. Meanwhile, we expect

buying momentum to continue, with the RSI sustaining above the 50pt threshold. While

the index should maintain a positive bias in the near term, the narrowing divergence

between the +DI and -DI (together with the easing ADX) suggests lower volatility and thus

implies lower opportunities for short-term swing trading ahead. We maintain our support

and resistance levels as follows:

Support: 1,626, 1,600

Resistance: 1,687, 1,705

US stocks rallied on Tuesday with the Nasdaq Composite posting its biggest one-day gain

in six months as oil prices continued their advance. The S&P 500 climbed 46 pts, or 2.4%,

to close at 1,978 while the Dow Jones Industrial Average added 348 pts, or 2.1%, to finish

at 16,865. Both the S&P 500 and the Dow recorded their biggest percentage jump since

29 January. The Nasdaq closed up 131 pts, or 2.9%, at 4,689, its best percentage gain

since 26 August. Bolstering investor sentiment were strong monthly auto sales and a key

report from the Institute for Supply Management that showed American manufacturers

shrank their business at a slower pace in February.

WHAT’S IN THE PACK

4Q15 Results Wrap-up As hoped, the 4Q15 reporting season

provided the first breakaway from nasty

surprises, although we continue to trim

our earnings growth expectation. Stay

defensive, especially with the uptick in

political uncertainties.

O&G Petronas will cut another RM15b-20b

from its 2016 capex/opex. It has a long

way to go to readjust its cost structure

given our estimates of its current net

profit breakeven of US$44/bbl, and it

appears to be behind its opex reduction

targets. This is negative for the sector.

Maintain UNDERWEIGHT.

LCTH Corporation (LCTH) Technical BUY on breakout with 21.4%

potential return

BUY on breakout with a target price of

RM0.795 and stop-loss below RM0.575.

Having sustained at above the BBI line

over the past few days, LCTH surged on

renewed buying interest to retest the

breakout level of RM0.655…

UEM Sunrise (UEMS MK) Technical BUY with +29.5% potential return

BUY with a target price of RM1.36 and

stop-loss below RM0.945. Yesterday’s

spike in share price has seen UEMS’ share

price break out and stage a convincing

move above the 7- and 21-day EMA,

effectively reversing its downtrend.

Pantech Group Holdings

(PGHB MK) Technical BUY on breakout with 21.6%

potential return


RM0.685 and stop-loss at below RM0.46.

Yesterday’s movement had triggered a

BUY on the back of a positive closing

above the BBI line, a growing bullish

divergence in MACD and a golden

crossover between the DMI.

FBMKLC I CHART

Source: BursaStation

KEY IND ICES

Prev Close Chg (%)

YTD (%)

DJIA 16,865.08 2.11 (3.21) S&P 500 1,978.35 2.39 (3.21) FTSE 100 6,152.88 0.92 (1.43) CSI 300 2,930.69 1.85 (21.45) FSSTI 2,682.39 0.60 (6.95) HSCEI 8,068.29 1.92 (16.49) HSI 19,407.46 1.55 (11.44) JCI 4,779.99 0.19 4.07 KLCI 1,670.82 0.97 (1.28) KOSPI 1,944.06 1.43 (0.88) Nikkei 225 16,085.51 0.37 (15.49) SET 1,346.95 1.09 4.58 TWSE 8,485.69 0.89 1.77 BDI 332.00 0.91 (30.54) CPO (RM/mt) 2,535.00 (0.51) 2.01 Nymex Crude (US$/bbl) 33.86 (1.57) (13.47)

TOP VOLUME

Stock Price (RM)

Chg (%)

Vol (‘000)

Airasia X Bhd 0.27 6.00 100,823 Hubline Bhd 0.01 0.00 97,636

Borneo Oil Bhd 0.15 0.00 66,447

Airasia Bhd 1.57 6.80 62,697 Vivocom International Holdings

0.26 2.00 41,167

TOP GA INERS

Stock Price (RM)

Chg (%)

Vol (‘000)

LEN Cheong Holding 0.23 28.57

802 Lion Industries Corp Bhd

0.26 15.91

2,042 M3 Technologies Asia Bhd

0.12 14.29

3 Skh Consortium Bhd 0.09 13.3

3 12,904

Bertam Alliance Bhd 0.53 11.58

33

TOP LOSERS

Stock Price (RM)

Chg (%)

Vol (‘000)

Asia Knight Bhd 0.18 (28.00) 2

K-Star Sports Ltd 0.06 (15.38) 15 Sunzen Biotech Bhd 0.28 (14.06) 4,111 Mclean Technologies Bhd

0.19 (13.64) 1,529 Minetech Resources Bhd

0.07 (13.33) 3,263 Source: Bloomberg



M A L A Y S I A

TRADERS’ CORNER

LCTH Corporation (LCTH) Technical BUY on breakout with 21.4%

potential return

Last price : RM0.635

Target price : RM0.745, RM0.795

Support : RM0.58

Stop loss : RM0.575


RM0.795 and stop-loss below RM0.575.

Having sustained at above the BBI line over

the past few days, LCTH surged on renewed

buying interest to retest the breakout level of

RM0.655 but ended the day marginally lower

at RM0.635 yesterday. Growing bullish

divergence in the MACD suggests that the

bullish trend will continue in the near term

while the steep upward movement of the RSI

suggests that buying momentum would

continue to pick up going forward. We peg our

targets at RM0.745 and RM0.795 once it

manages to penetrate above the breakout

level of RM0.655.

Expected Timeframe: 2 weeks to 2

months

UEM Sunrise (UEMS MK) Technical BUY with +29.5% potential return

Last price : RM1.05


Support : RM0.95

Stop loss : RM0.945

BUY with a target price of RM1.36 and

stop-loss below RM0.945. Yesterdays’ spike

in share price has seen UEMS share price

break out and stage a convincing move above

the 7- and 21-day EMA, effectively reversing

its downtrend. Yesterday’s gain was also

accompanied by high trading volume as well

as the rising MACD and RSI indicators, which

indicate that the positive momentum would

strengthen further in the near term. We

expect the share price will continue the

upward movement towards our targets at

RM1.26 and RM1.36 in the near term.


months



M A L A Y S I A

TRADERS’ CORNER

Pantech Group Holdings

(PGHB MK) Technical BUY on breakout with 21.6%

potential return

Last price : RM0.595


Support : RM0.555

Stop loss : RM0.545


RM0.685 and stop-loss at below RM0.46.

Yesterday’s movement had triggered a BUY

on the back of a positive closing above the

BBI line, a growing bullish divergence in

MACD and a golden crossover between the

DMI. This, along with consistent climbing

along the trend line, is likely to increase

PGHB’s probability of moving higher in the

near term. As such, we peg our targets at

RM0.73 and RM0.76 once it manages to

penetrate the breakout level of RM0.625.


months



M A L A Y S I A

CORPORATE NEWS

1MDB: Refutes WSJ claim of US$1b payment to Najib. State investment fund

1Malaysia Development Berhad (1MDB) has once again denied that it had paid any funds

into the personal accounts of Prime Minister Datuk Seri Najib Tun Razak. The Wall Street

Journal (WSJ) on Monday reported that deposits into the personal accounts of Najib

totalled more than US$1b (RM4.16b), with global investigators believing that much of it

originated from 1MDB. “It has been reiterated by multiple lawful authorities including the

Malaysian Anti-Corruption Commission, the Malaysian Attorney-General, and various

reputable international publications, who have confirmed that these funds came from

Saudi Arabia,” 1MDB said in a statement Tuesday. (Source: The Star)

CIMB Group: Kong Sooi Lin appointed CEO of CIMB Investment Bank. CIMB Group has appointed Datuk Kong Sooi Lin as the chief executive officer of CIMB

Investment Bank Bhd, with immediate effect. Kong, who has been with CIMB Investment

Bank for 22 years, was the deputy CEO of CIMB Investment Bank since 2011. CIMB’s

investment banking division has achieved many major milestones during her term as

group head of investment bank. I am confident that under her leadership, we will continue

to build our investment banking franchise and solidify our position as the leading

investment bank in Asean,” Chief Executive of CIMB Group Tengku Datuk Seri Zafrul Aziz

said. (Source: Star Biz)

Digi: Sets aside RM904m for this year to roll out voice-over LTE. Digi

Telecommunications Sdn Bhd's capital expenditure allocation of RM904m for 2016, about

the same as last year, says chief marketing officer Christian Thrane. The

telecommunication company has many plans for this year, including the roll-out of voice-

over long-term evolution (LTE) and voice-over WiFi. "Currently, these features are in the

testing stage and we are confident of launching them this year," he said at the launch of

Digi's new postpaid plans. Thrane said the voice-over LTE would enhance voice quality

with a much faster set-up and allow subscribers to browse at the same time. The voice-

over WiFi would enable operators to deliver telephony and messaging over any WiFi

network seamlessly. Digi's 4G LTE network covers 72% of populated areas in Malaysia

and is available in 150 major cities and towns, globally. (Source: Star Biz)

Econpile: Bags RM76.9m bored piling contract for EKVE. Econpile Holdings

Bhd has secured a RM76.9m contract to undertake bored piling works for packages one

and two of the proposed East Klang Valley Expressway (EKVE). The piling and

foundation specialist said on Tuesday its unit Econpile (M) Sdn Bhd had received the

letter of award from Ahmad Zaki Sdn Bhd on Feb 26, 2016. The contract comprised bored

piling works for the two packages under the EKVE interchanges and spur roads project.

“The duration of the contract is approximately 24 months and is expected to complete in

February 2018. The contract is the mainstream business of EMSB and is expected to

contribute positively to the revenue and earnings of Econpile for FY ending June 30,

2016,” it said. (Source: Star Biz)

Ewein: Sees further upside in Penang property market. Ewein Bhd, which is

undertaking two property ventures in Penang, foresees further upside in the property

market given its land scarcity and various ongoing infrastructure developments in in the

state. “We are honoured to have gained strong buying interest for our first property project

in Penang, Thus far, we have received 1,200 applications for the 572 units available from

this project which carries a gross development value of RM800m,” it said. Additionally,

last December, Ewein through its subsidiary Ewein Zenith II Sdn Bhd inked a sale and

purchase agreement with Consortium Zenith BUCG Sdn Bhd to acquire a piece of

freehold land measuring approximately 4.42 acres in Bandar Tanjong Pinang, Penang for

a sum of RM162m. (Source: Star Biz)



M A L A Y S I A

Fajarbaru: RM12m airport job. Fajarbaru Builder Group Bhd has secured a

RM11.68m contract from Malaysia Airports (Sepang) Sdn Bhd for the proposed

redevelopment of air cargo handling facility at the low-cost carrier terminal in Sepang.

Fajarbaru said in a filing with Bursa Malaysia that the contract period was from March 14

to Nov 13, 2016. The construction firm said the contract would contribute positively to the

group’s earnings and net assets for the financial years ending June 30, 2016 and 2017.

(Source: Star Biz)

Halex: Seals rice supply deal. Halex Holdings Bhd will be supplying imported rice to

Koperasi Majlis Belia Felda Malaysia Bhd (KMBFMB) under a collaboration agreement. In

a filing with Bursa Malaysia yesterday, Halex said its wholly–owned subsidiary Halex (M)

Sdn Bhd had accepted the offer from KMVFMB to procure and package rice under the

food bank project launched by the Government. According to announcement made on

Nov 19, 2015, the contract worth RM184m to supply and package 160,000 tonnes of rice

for two years, could be extended for another year. (Source: Star Biz)

Hap Seng Consolidated: Sells commercial vehicle business for RM750m. Hap Seng Consolidated Bhd has proposed two corporate exercises involving the disposal

of the company’s commercial-vehicle business for RM750m and the acquisition of tile

maker Malaysian Mosaics Sdn Bhd (MMSB) for RM380m. In filings with Bursa Malaysia,

the company said it planned to sell a 51% stake in Hap Seng Commercial Vehicle Sdn

Bhd (HSCV) to Lei Shing Hong Commercial Vehicles Ltd (LSHCV) for RM382.5m cash, or

RM3 per share. HSCV distributes Mercedes-Benz commercial vehicles and vans as well

as Mitsubishi Fuso trucks in Malaysia. LSHCV is an indirect unit of Hong Kong-based Lei

Shing Hong Ltd (LSH), a distributor of premium automobile brands such as Mercedes-

Benz in China, South Korea, Vietnam, Cambodia, Taiwan, Australia and Germany.

(Source: Star Biz)

Heveaboard: To spend RM20m on capex. Heveaboard Bhd plans to spend

RM20m on capital expenditure (capex) to upgrade facilities in order to increase capacity

by 10% to 15% in the financial year ending Dec 31 (FY16). From the RM20m, RM8m will

go into upgrading works for its existing particleboard arm while RM12m will be allocated

to its ready-to-assemble (RTA) furniture line. (Source: Star Biz)

Hibiscus: No winding-up procedures against Hibiscus associate company

Lime, says Rex. No winding-up procedures have been initiated against Hibiscus

Petroleum Bhd’s associate company Lime Petroleum Plc (Lime Plc), according to Rex

International Holding Ltd. The Singapore-listed oil and gas company, which is also a

shareholder in Lime, said in a statement that winding-up, however, remained a possibility

should Lime Plc be unable to raise additional funding in “the very short term” to alleviate

its current financial distress. A board meeting of Lime Plc had been convened on Feb 4 in

order to discuss and try to agree a way forward to resolve the financial distress situation.

Hibiscus bought a 35% equity stake in Lime Plc for US$55mil (RM227.9m) in 2012, and

the stake is held by its unit Gulf Hibiscus Ltd (GHL). Rex said a GHL-nominated director

was invited to the Feb 4 meeting but chose not to attend. Hibiscus, in an announcement

to Bursa Malaysia on Feb 4, said LK (Fiduciaries) Ltd (LKFL), a company wholly-owned

by one of Lime Plc directors Laurence Keenan, had in a letter requested “an urgent

response” from GHL and the other shareholders of Lime because Lime Plc was running

out of funds and was facing financial distress. The board meeting was called for this

purpose. (Source: Star Biz)

KWAP: Said to sell London office to Shaw family for RM1.56b. A company

controlled by the Shaw Foundation, the philanthropic arm of the late Hong Kong movie

mogul Run Run Shaw’s empire, agreed to acquire an office building in London’s main

financial district from Malaysia’s second largest pension fund, according to three people

familiar with the matter. The foundation, which is being advised by Knight Frank, will pay

Retirement Fund Inc (KWAP) £270m (RM1.56b) for 88 Wood Street, according to two of

the people, who declined to be named because the deal isn’t completed. Spokesmen for

KWAP and Knight Frank declined to comment on the purchase of the property. The Shaw

family and foundation did not reply to requests for comment. (Source: Star Biz)



M A L A Y S I A

MISC: Provides details on purchase of Gumusut-Kakap stake from

Petronas for US$445m. In a reply to a query by Bursa Malaysia Securities, MISC

explained on Tuesday the basis of determining its purchase price for the 50% equity

interest in Gumusut-Kakap Semi-Floating Production System Ltd (GKL) from E&P

Venture Solutions Co Sdn Bhd (EPV), a unit of Petronas Carigali. “As the proposed

acquisition now entails less risk to MISC, the purchase consideration is higher than EPV's

original cost of investment of US$305.7m in 2012. The consideration of US$445m was

determined based on negotiations between MISC and EPV on a willing-buyer willing-

seller basis,” it said. It added that the lease agreement secured by GKL contains

confidentiality provisions which prohibit the disclosure of its terms to third parties. (Source:

Star Biz )

PPB Group: Weighs options on cash. PPB Group Bhd, which is sitting on a huge

cash pile of RM1.2b, does not rule out increasing its stakes in associate Singapore SGX-

listed company Wilmar International Ltd. PPB, which owns an 18.55% stake in Wilmar,

may do so if valuations compress or prices go down, however, its managing director Lim

Soon Huat said it was not a priority for the time being yet. “We are already the single

largest shareholder at 18.55%, our (effective) stakes have actually increased because

Wilmar has been buying back its shares,” Lim said at a press conference yesterday.

(Source: Star Biz)

Sime Darby: Moody downgrades rating with negative outlook. Moody's

Investor Service has downgraded the issuer rating of Sime Darby Berhad and the senior

unsecured debt rating on the sukuk issued by its wholly owned subsidiary Sime Darby

Global Berhad to Baa1 from A3 previously. In a statement today, the ratings firm cited the

extended period of weakness evident in Sime Darby's financial profile after it delayed

plans to reduce its debt as one of the main reasons. “While cash generation is

deteriorating across its key business segments of plantation, industrial and motors

because of a tougher operating environment," it said. (Source: Star Biz)

SECTOR

Oil & Gas: Petronas expects 1,000 redundancies under group-wide revamp. Petroliam Nasional Bhd (Petronas) expects its group-wide transformation to result in

redundancies of under 1,000 positions. The national oil corporation said exhaustive efforts

are on-going to re-deploy affected employees. “Petronas will further embark on a

separation exercise for these employees as needed, which is expected to be completed

over the next six months,” it said in a statement. Petronas also announced its new

leadership team, following a strategic review of its business operating model for better

business efficiency, resilience and sustainability amidst a challenging time for the oil and

gas industry. (Source: Star Biz)

POLITICS

General: I won’t join the Opposition, says Dr Mahatir. Tun Dr Mahathir

Mohamad will not be joining the Opposition, as he does not agree with its views. “No, I

won’t join the Opposition. I don’t agree with them,” the former prime minister said, adding

that he may re-join Umno once party president Datuk Seri Najib Tun Razak has left. On

Monday, Dr Mahathir announced that he was quitting Umno. When asked about his future

plans, he said that he would continue to expose “the wrongdoings of the Government”.

Speaking at the Proton Centre of Excellence here, Dr Mahathir added that suspended

Umno deputy president Tan Sri Muhyiddin Yassin could run in the next party elections.

“He is still a member. If he wants to challenge … he can,” he said. (Source: The Star)



M A L A Y S I A

FROM THE REGIONAL MORNING NOTES...

4Q15 Results Wrap-up As hoped, 4Q15 results provided the first breakaway from past quarters’ nasty surprises.

However, we still continue to trim our growth forecasts. While Malaysian equities have

behaved as projected ytd (eg regaining regional resilience), we reckon that an uptick in

political uncertainties following the former prime minister’s resignation from Umno could

dampen the ringgit’s positive momentum. Stay defensive and focus on dividend yield plays.

O&G ‒ Malaysia: Petronas May Cut/Defer Everything

Else But Not Production Targets We believe Petronas upstream’s core loss in 4Q15 implies a net profit breakeven price of

US$44/bbl, and that it is behind its opex cut target. Therefore, Petronas will have to

continue to defer and renegotiate contracts in a US$30/bbl environment. However, it is “not

cutting” production targets. This is a consistent pattern with stubbornly high production

targets from global oil majors. Oil prices and contract visibility of local players will remain

uncertain. Maintain UNDERWEIGHT.

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M A L A Y S I A

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