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Market Insight
Monday, 21 November, 2016
16795/03/2013(031743) www.bisonline.com.my
www.bimbsec.com.my BIMB Securities| 1
Major Highlights Local & Global Economic News
IOI Corp posts 1Q net profit of RM105m, revenue up at
RM3.29bn
Tabung Haji sells 2.2% stake in BIMB for RM150m
IHH realises investments to build up capital
Mah Sing and Tropicana offer tailored financing schemes
Prestariang wins RM3.5bn job
Pintaras Jaya 1Q net profit nearly doubles on higher
construction activities
Bank Negara intervenes to support weak ringgit
Too premature to make final decision on TPP
Bank Negara won’t tolerate ringgit transactions in NDF
market
China ready to slow yuan descent
ECB chief Draghi hints at more stimulus to come
Opec moves closer to oil output deal as Iran gets new offer
Bursa Malaysia
Bursa Malaysia Close Change +/- Change % FBMKLCI 1,623.80 -2.97 -0.18
Airasia X 0.40 0.02 3.90 Trive Property 0.10 0.01 11.76
Top Gainers
Close Change+/- (+/- %) British American Tobacco Bhd
44.22 0.62 1.42
Petronas Dagangan 23.78 0.34 1.45 Carlsberg Brewery Malaysia B
14.20 0.30 2.16
Iq Group 2.46 0.20 8.85
Airasia 2.72 0.19 7.51
Top Losers
Close Change+/- (+/- %)
United Plantations 27.00 -1.44 -5.06
Dutch Lady 56.82 -1.18 -2.03
Nestle 78.00 -0.50 -0.64
Petronas Gas 21.00 -0.36 -1.69
Ajinomoto 13.18 -0.28 -2.08
Daily Participation
Participation
(%) Bought (RMm)
Sold (RMm)
Net (RMm)
Local Inst 53.0 895.1 708.6 186.5
Local Retail 16.0 234.0 249.2 -15.2
Foreign 31.0 385.0 556.3 -171.3
Total 100.0 1,514.1 1,514.1 0.0
Weekly Participation
Participation
(%) Bought (RMm)
Sold (RMm)
Net (RMm)
Local Inst 55.2 5,392.0 4,292.4 1,099.6
Local Retail 14.4 1,265.5 1,227.2 38.3
Foreign 30.4 2,089.6 3,227.5 -1,137.9
Total 100.00 8,747.1 8,747.1 0.0
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Market Insight
LOCAL CORPORATE NEWS IOI Corp posts 1Q net profit of RM105m, revenue up at RM3.29bn IOI Corp posted a 1Q net profit of RM104.8m from a net loss of RM744.4m a year earlier on higher income from its upstream and downstream oil palm operations. Significantly lower forex loss on its foreign currency-based borrowings also supported profit in the 1QFY17. 1QFY17 revenue rose to RM3.29bn from RM3.09bn. IOI Corp's income statement showed net forex loss on foreign currency-denominated borrowings stood at RM172m against RM853.9m a year earlier. For 1QFY17, the group reported a PBT of RM189.2m as compared to the loss before taxation of RM690.6m reported for 1QFY16. The higher PBT is due mainly to higher contribution from all segments and lower net foreign currency translation loss on foreign currency denominated borrowings. (Source: The Edge) Tabung Haji sells 2.2% stake in BIMB for RM150m Lembaga Tabung Haji has trimmed its stake in BIMB Holdings by 2.2% for around RM150m. Tabung Haji divested 35.65m shares on Nov 14 at an undisclosed price. Currently, the pilgrimage fund board still owns 812m shares or a 51.1% direct stake in BIMB, whose main subsidiaries include Bank Islam, Syarikat Takaful Malaysia and BIMB Securities. The transactions crossed in 4 blocks of shares, for a price of between RM4.20 and RM4.207 apiece. A block of 7.1m shares were traded at RM29.86m, while another block of 9.55m shares were transacted at RM40.17m. Meanwhile, a block of 9.5m shares were done at RM39.9 m, and another block of 9.5m shares changed hands for RM39.96m. (Source: The Edge) IHH realises investments to build up capital IHH’s move to pare down some of its stakes in PCH Holding (formerly known as Parkway China Holding Co Pte Ltd) will free up necessary working capital for its expansion plans in China. The move, which is deemed strategic, will give the company the necessary additional ‘firepower’ to compete in the North Asian country. It also allows IHH to gain a valuable and established partner through China-based Taikang Insurance Group to help it manoeuvre and move the business forward in a country that often comes with a steep learning curve for foreign businesses. (Source: StarBiz) Mah Sing and Tropicana offer tailored financing schemes Following the footsteps of several developers, Mah Sing and Tropicana are stepping up their marketing strategies by offering tailored financing schemes to boost sales. Mah Sing has launched a deferred financing plan under its “easy home ownership” campaign, known as Lock and Roll involving about 10 completed projects located in different parts of the country. The scheme will allow buyers to remain liquid for a generous amount of time as buyers need only serve the interest of their loan for the first 24 months. Full instalment starts from the 25th month. The mechanics of the scheme involves a buyer “locking” into a unit with a RM10,000 booking fee. (Source: StarBiz) Prestariang wins RM3.5bn job Prestariang has bagged a job to implement a government-led border transformation programme potentially worth RM3.5bn. The company had received a letter dated Nov 15, 2016, from the Home Affairs Ministry to confirm that the Cabinet has approved for the company to implement “Sistem Kawalan & Imigresen Nasional” (SKIN). The concession shall be for a period of 15 years and will consist of 3 years of build and deployment phase and 12 years of maintenance and technical operation phase. The payment to Prestariang is inclusive of all costs incurred during the build and deployment phase, maintenance and technical operation phase. The payment shall only commence upon full commissioning of the system, after 3 years, with an average annual payment of RM294.7m from year 4 to year 15 during the maintenance and technical operation phase. (Source: StarBiz) Pintaras Jaya 1Q net profit nearly doubles on higher construction activities Pintaras Jaya saw its net profit for the 1QFY17 nearly doubled to RM13.2m or 8.1 sen per share from RM6.72m or 4.1 sen a year ago. The group attributed the higher profitability to increased construction activities and higher progress profits recognised from ongoing projects, which have advanced beyond the initial stages of implementation. Pintaras Jaya's revenue for 1QFY17 also grew by 67.03% to RM59.73m from RM35.76m in previous corresponding quarter. Moving forward, the group expects its construction business to perform well for the rest of FY17 based on current order book and "satisfactory" tender book value. Despite the slowdown in the property market, the local construction industry outlook remains bright for the coming year as the government continues to focus on major infrastructure projects under Budget 2017. (Source: The Edge)
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Market Insight
LOCAL AND GLOBAL ECONOMIC NEWS Bank Negara intervenes to support weak ringgit Bank Negara is intervening in markets to support the beleaguered ringgit, as regional authorities grapple with a surging dollar. The ringgit has weakened by around 5% since last 2 week’s surprise presidential election victory by US billionaire Donald Trump. Trump’s promises to ramp up spending on infrastructure and cut taxes has led to warnings of a surge in inflation. That could force the policy-setting US Fed to hike interest rates to cap prices, which has led to a rush back into the dollar. Speculation of capital controls to shield the ringgit rose after the bank issued a statement earlier last week that was widely interpreted as seeking to curb trading of ringgit futures. (Source: AFP) Too premature to make final decision on TPP Malaysia and other countries participating in the TPP agreement say that it is too premature to make a final decision on the fate of the trade pact. No decision could be made until foreign and trade policies, and the appointment of key personalities are in place in President-elect Donald Trump’s new administration. They slogged over this pact for a very long time, 5 years of intensive negotiations (to conclude the TPP). It is made up of Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the US, and Vietnam. Malaysia participated in the TPP as it had no FTA with the US, Mexico, Canada and Peru. (Source: Bernama) Bank Negara won’t tolerate ringgit transactions in NDF market BNM will no longer tolerate ringgit transactions in the non-deliverable forward (NDF) market and its damaging influence over the onshore pricing of the local currency. The activities in the offshore market, in particular the ringgit NDF market, had brought on observable adverse impacts on the onshore market. The impact of the NDF market volatility has been clearly pervasive in the onshore market and several forex traders in the domestic market were observed to be looking towards the NDF market to provide cues in determining the opening market price for the ringgit. The sum effect of these behaviours is that we inadvertently imported the NDF volatility into the onshore market. The offshore market, which is driven by speculative interest, lacks the onshore market’s diverse spectrum of market participants and information. (Source: StarBiz) China ready to slow yuan descent Chinese policymakers have been unfazed by the yuan’s recent slide, but are ready to slow its descent for fear of fanning capital flight if the currency falls too quickly through the psychologically important 7-per-dollar level. Chinese policymakers believe the decline in the yuan since October reflects market trends, especially of late when most currencies have fallen in the face of a resurgent USD. But the yuan’s outlook is clouded by the election of Donald Trump as US president because he promised during campaigning to label China a currency manipulator on Jan 20, his 1
st day in office, and to impose tariffs on
Chinese imports. The CB is following the trend as the dollar is rising. It’s not necessary for it to resist market forces. (Source: Reuters) ECB chief Draghi hints at more stimulus to come The eurozone’s tentative recovery remained heavily reliant on the bank’s ultra-loose monetary policy, fuelling expectations of more stimulus to come. Among the factors clouding the euro area’s growth prospects were geopolitical risks, anaemic inflation and an over-reliance on the ECB’s easy money policies. The recovery remains highly reliant on a constellation of financing conditions that, in turn, depend on continued monetary support, adding that the bank was committed to preserving the very substantial degree of monetary accommodation. The remarks appeared to confirm observer expectations that the ECB will announce an extension of its 80bn-euro (RM372.8bn) a month bond-buying programme when the governing council next meets on Dec 8. (Source: Reuters) Opec moves closer to oil output deal as Iran gets new offer Opec is moving closer towards finalising this month its 1
st deal since 2008 to limit oil output, with most members prepared
to offer Iran significant flexibility on production volumes. Iran has been the main stumbling block for such a deal because Tehran wants exemptions as it tries to regain oil market share after the easing of Western sanctions in January. Iran’s rival Saudi Arabia, the biggest producer in the OPEC, has argued Iran’s output has peaked and it should not be granted major concessions. On Friday, several Opec oil ministers including Saudi Arabia’s Khalid al-Falih met in Doha on the sidelines of a gas forum. At the meeting, OPEC member countries proposed Iran cap its oil output at 3.92m bpd. (Source: Reuters)
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Market Insight
ECONOMIC CALENDAR
Date Time Country Event Survey Actual Prior Revised
11/21/2016 07:00 HU Economic Sentiment Nov -- -2.2 -4.5 --
11/21/2016 07:00 HU Business Confidence Nov -- 2.8 1 --
11/21/2016 07:00 HU Consumer Confidence Index Nov -- -16.5 -20.3 --
11/21/2016 07:50 JN Trade Balance Oct ¥610.0b -- ¥498.3b ¥497.6b
DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. HOLD Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analyst’s coverage universe, is expected to outperform the relevant primary market
index over the next 12 months NEUTRAL The Industry as defined by the analyst’s coverage universe, is expected to perform in line with the relevant primary
market index over the next 12 months UNDERWEIGHT The Industry as defined by the analyst’s coverage universe, is expected to underperform the relevant primary
market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this date and are subject to change without notice. BIMB Securities Sdn accepts no liability for any direct, indirect or consequential loss arising from use of this report.
Published by
BIMB SECURITIES SB (290163-X) A Participating Organisation of Bursa Malaysia Securities Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2613 1600 Fax: 03-2613 1799 Azharuddin Nordin http://www.bimbsec.com.my Head of Research
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opin-ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opin-ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..
The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opin-ions and estimates included in this report constitute our judgement as of this date and are subject to change without notice..