Maybank Research Highlights - 21 July 2014

Author: kltrader   |   Publish date: Mon, 21 Jul 09:05

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Technicals

Selling on rallies may be wise The FBM KLCI fell 10.18 points WoW to close at 1,872.97, as some heavy liquidation activities led the index down after MAS flight MH17 was shot down over Ukraine. With the selling that emerged from 1,896.23, we advise clients to sell at the resistance areas of 1,872 to 1,896. The support levels of 1,860 and 1,870 will see very weak nibbling activities. Trading idea is a Take profit call on PPB with downside target areas at MYR13.79 & MYR12.85.

Other Local News

Axiata: Rajawali unit plans to buy XL Axiata towers. Nusantara Infrastructure, a unit of Indonesian conglomerate Rajawali Corpora, has announced plans to bid for XL Axiata’s telecommunication towers. Jakarta-based XL Axiata, which is partly controlled by Malaysia’s Axiata Group, announced this month that it will sell some of its telecommunication towers to pay off its debt. It is said that XL Axiata is offering up to 2,000 towers in a bid to raise around USD500m (MYR1.5b). Nusantara Infrastructure will join the ranks of other telco firms that are also planning to bid for the towers, such as Tower Bersama Infrastructure, Sarana Menara Nusantara, Solusi Tunas Pratama, and Inti Bangun Sejahtera. (Source: Business Times) Aeon: Eyes MYR100m revenue from Bukit Mertajam mall. Aeon Co (M) Bhd aims to rake in MYR100m revenue from its new mall, Aeon Bukit Mertajam, by July 2015. Managing director Nur Qamarina Chew said the target was achievable as there was a housing density in that area and Bukit Mertajam was a growing town. Bukit Mertajam has the second highest income level in Malaysia based on research. The mall has created over 1,000 jobs and Aeon has set up a career development programme to ensure that its staff were well-trained and would stay long with the company. (Source: The Star) TAS: To sell 3 tug boats to Indonesia. TAS Offshore Bhd is set to secure more sales orders for its offshore supply vessels (OSVs) to Indonesia, which it had penetrated last year. TAS would likely ink the contracts soon for the supply of three anchor-handling tug supply (AHTS) vessels to an existing Indonesian client. TAS had delivered one AHTS vessel each to two Indonesian clients, who had placed the orders in March and October last year. The two vessels were the first to be sold to Indonesia, which is TAS’ traditional key market for the supply of tugboats for the mining and timber industries. TAS is currently constructing six more OSVs in an established contract shipyard in China and some of these build-to-stock vessels would be ready for sale by late this year and next year. AHTS vessels built by TAS were priced between USD12mil and USD15mil each. (Source: The Star) Titijaya: Exciting times in 2H15. With two projects worth up to MYR4b in GDV and a potential confirmation of a MYR2.5b development award to come, Titijaya Land Bhd have much to look forward to in 2H15. Its MYR1.4b project in Brickfields, a 70:30 joint venture with Bina Puri Holdings Bhd, is targeted for launch around the same time as it plans to kick off its MYR2.2-2.6b Batu Maung project in Penang. Both projects are scheduled for launch in 2H15. (Source: The Edge Financial Daily) GuacoLand: Has upcoming projects worth MYR2.5b in GDV. GuacoLand (Malaysia) Bhd, the property arm of Hong Leong Group Malaysia, has in its pipeline several projects with total GDV of MYR2.5m, which will last for three years. GuacoLand’s upcoming projects are the Emerald, a township project in Rawang; Pantai Sepang Putra in Sepang; Alam Damai, a 50-acre residential development in Cheras; and PJ City in Petaling Jaya. GuacoLand has a current land bank of 10,000 acres located within the central region of Klang Valley and in Jasin, Melaka. (Source: The Edge Financial Daily) KUB: A&W PJ to make way for MYR263m office towers. KUB Malaysia Bhd, which holds the A&W franchise in Malaysia & Thailand, plans to transform its landmark A&W restaurant in Section 52, Petaling Jaya (PJ) into two office towers with a gross development value (GDV) of MYR263m next year. To be known as KUB Tower, the project will feature two towers with 10 floors and 15 floors respectively, joined by a five-storey podium on a once-acre (0.4ha) piece of land. (Source: The Edge Financial Daily) Sona: To ink SEBG deal end-July. SONA Petroleum Bhd expects to sign the sale and purchase agreement to acquire a 66.7 per cent stake in Salamander Energy (Bualuang) Ltd (SEBG) for USD280m (MYR893m) by the end of the month. SEBG, a subsidiary of Salamander Energy, owns and operates the Bualuang oil field, which has five wells, in the Gulf of Thailand. The acquisition of shares in SEBG will result in Sona, a special purpose acquisition company (SPAC), owning an effective working interest of 40 per cent in two O&G blocks close to the Bualuang field. (Source: Business Times) Shipping: Score opens up new opportunities for Syscorp. The Sarawak Corridor of Renewable Energy (Score), one of the nation’s five economic corridors, has opened up new opportunities for transportation and logistics companies like Sarawak-based shipping company, Shin Yang Shipping Corp Bhd (Syscorp). The presence of companies such as Press Metal Bhd and OM Materials (Sarawak) Sdn Bhd, which have manufacturing plants in Samalaju Industrial Park, opens up opportunities for Syscorp to provide services. (Source: The Edge Financial Daily)

Outside Malaysia

U.S: Consumers less upbeat even as purchase plans firm. Consumer confidence unexpectedly declined in July to a four-month low as Americans grew increasingly frustrated with the slow pace of wage gains. The Thomson Reuters/University of Michigan preliminary index of sentiment dropped to 81.3 this month from 82.5 in June. Just over half, 51%, of households surveyed this month said their earnings would probably not keep up with inflation over the next year, underscoring Federal Reserve Chair Janet Yellen's concern that pay isn't growing fast enough to sustain the recovery. Nonetheless, more Americans said they were thinking about buying a house, car or durable good, a sign spending will be sustained. (Source: Bloomberg) U.S: Payrolls rose in 33 states in June, led by Florida adding to signs the labor market was making progress in the world's largest economy. Florida led the nation with a 37,400 increase in payrolls, followed by California with 24,200 more jobs, figures from the Labor Department showed. South Carolina posted the biggest 12-month decline in the jobless rate - to 5.3% from 7.8%. (Source: Bloomberg) China: Home prices fall in record cities signals more easing. Prices fell in 55 of the 70 cities last month from May, the National Bureau of Statistics said in a statement, the most since January 2011 when the government changed the way it compiles the statistics. Prices in Shanghai and the southern city of Guangzhou fell 0.6% each from May, the biggest drop since January 2011, while they declined 0.4% in Shenzhen. Prices fell 1.7% in the eastern city of Hangzhou, the largest monthly decline among all the cities. (Source: Bloomberg)