星期四, 十月 05, 2017

From Kenanga 全部都是NEUTRAL!!!

Kenanga Today
On Thursday, Asian markets finished mostly higher after major indices on Wall Street rose to fresh highs. Sharing the same optimism, the FBMKLCI added 2.17pts (0.12%) to 1,761.84. Sentiment on the broader market was also positive, with 454 gainers outweighing the 393 losers and 401 counters traded unchanged. Despite the low trading volume, follow-through buying drove the index higher, marking second day of gain from after a bullish reversal “Morning Doji Star” pattern was formed. Despite most key indicators remaining in a negative state, the improved technical landscape looks encouraging for near-term recovery. From here, resistance levels to watch are 1,783 (R1) and 1,796 (R2) beyond.However, weakness, if any, will bring the price towards 1,755 (S1) before buying activities emerge, while a breakdown below the technical picture could trigger a capitulation towards 1,750 (S2) further down. Key technical highlights for today include KRONO (Not Rated) and MEXTER (Not Rated).
·         Our Neutral view on the sector remains with system and industry loan's growth for CY2017 expected to be in line as expected.
·         We don’t see any catalysts or game changers ahead with industry earnings likely to be driven by easing of credit costs and NIM. Thus, our valuation for the stocks in our banking universe remains unchanged
·         Some of the banking stocks’ valuations are looking undemanding due to the recent steep fall in share prices. Our preferred picks for the sector include AFFIN (OP, TP: RM3.00), AFB (OP, TP: RM4.15), AMBANK (OP, TP: RM5.00), CIMB (OP, TP: RM6.90) and RHBBANK (OP, TP: RM5.60).
·         The progressive upticks in sentiment indicator on improved spending habits are a welcomed sign. However, the current low-based commodity prices are likely to be short-lived as the present state of oversupply could contract as adverse weather conditions may affect crop yield going forward.
·         The sector’s short-term prospects may boil down to the coming Budget 2018 delivering exciting market stimulants.
·          Despite 3QCY17 corporate report cards could see margins expansion (from better forex rates and lower average commodity cost), the low base growth expectations may yet to warrant a positive re-rating of the sector.
·          Our Top Pick for the sector is OLDTOWN (OP; TP: RM3.15) as the recent price weakness following the temporary closure of its central kitchen could present a buying opportunity as we believe its fundamentals are basically unaffected.
·         There are no changes in the fundamentals of the gaming sector except for the NFO players showing improved results with the stabilisation of ticket sales while luck factor normalised. The IBR tax claims on MAGNUM (OP, TP: RM2.17) have also put pressure on BJTOTO (OP, TP: RM2.95)while GENM (MP, TP: RM6.00) faced profit taking activities of late, following a strong rally prior to the selling on the GITP expansion story. We believe investors want to see the outcome of the expansion program first before placing more bets.
·         All said, GENTING (OP, TP: RM10.95) will be the clear beneficiary should a meaningful recovery occur at GENS and further improvement is seen in GENM.
·         Most developers under our coverage are banking on a stronger 2H17 (due to timing of launches mainly skewed towards mid-2017) and we believe the odds are better for developers to meet their targets this year vs. the last two years. Meanwhile, the recent increase of more land banking deals indicated that land prices may have stabalised.
·         We take the view that Budget-2018 will be ‘rakyat’-friendly or have muted impact to our listed developers.
·         All in, while we believe the industry’s footing has improved; the lack of strong re-rating catalysts has led us to keep our NEUTRAL view unchanged.  Preferred picks are SPSETIA (OP, TP: RM4.08) and A&M (OP, TP: RM2.50) for deep value plays but investors may have to take a longer-term investment horizon.
·         Maintain at NEUTRAL as strong CPO prices to-date support earnings growth despite a weaker price outlook ahead.
·         We are bearish on 4Q17E CPO outlook (average price at RM2,500/MT) on lower SBO prices and a stronger ringgit but upgraded our FY17E CPO average price to RM2,700/MT given the strong price performance on lingering drought effects throughout the year. We also introduce our FY18E CPO average price of RM2,400/MT (-11% YoY) as we expect the drought effect to fade with a rising stock outlook.
·         Post review, we have lowered our FY17/18E earnings forecasts by an average of +4%/-6%, with lower TP of 3% on average across the board. Our top pick is PPB (OP; TP: RM18.65) on Grains and Film expansions and new Property projects; and Wilmar’s China operations restructuring. Of our MidS coverage, we like SAB (OP; TP: RM5.25)on undemanding valuations, stable plantation earnings, healthcare expansions and strong balance sheet.
·         The recent rally in oil prices (to c. USD60/bbl) might be capped despite slightly better oil fundamentals in 2H17 as it could trigger a resurgence of shale oil production. Having said that, the stabilisation of oil prices (at above USD50/level in 3Q17) could lead to better contract flows in the next 6-12 months. Besides, as the Pengerang Integration Complex (PIC) is currently at 70% completion, the peaking of PVF demand would benefit players such as PANTECH (OP; TP: RM0.75) while services players such as DIALOG (OP; TP: RM2.42) and SERBADK (OP; RM2.75) are eyeing the plant turnaround and maintenance opportunities beyond 2019.
·         Overall, the upstream space could still stay unexciting in view of flattish oil prices outlook in the near future, but we believe the sector is still relevant as far as investment portfolio consideration is concerned. Keep NEUTRAL on the sector withDIALOG and WASEONG (OP; RM1.10) being our preferred picks.
·         While competition appeared to be relatively stable thus far, players need to continue enriching value proposition and being aggressive in defending their market share which may pressure margins. Meanwhile, there are no clear-cut trends in our General Election study, and we do not expect any new initiatives introduced by the Government in the upcoming Budget.
·         All in all, we made no changes to our telecom companies’ FY17-FY18 earnings estimates as well as their respective target prices.
·          We continue to favour fixed-line over the mobile names under the current challenging times given that the latter’s earnings are set to be affected by the heightened competition. Telekom Malaysia (MP, TP: RM6.70) remains as ourfavourite pick for big cap space while OCK (TP: RM1.05) is maintained as ourpreferred choice under the mid-cap telecom space. Meanwhile, we maintain ourMARKET PERFORM call in AXIATA (TP: RM4.80) and DIGI (TP: RM4.85). Our MAXIS rating, on the other hand, is lowered to MARKET PERFORM (as per our rating definition) but with an unchanged target price of RM5.90.
On Our Radar: VS INDUSTRY (NR, TP: RM3.10)
·         VS has continued to see more stack-up orders from its key customers across all segments; thanks to its Vertical Integration capabilities and proven track of record servicing global customers.
·         With the commencement of new box-build assembly lines in Malaysia's operations alongside resilient orders in China and Indonesia markets, we expect a 2-year NP CAGR of 30%. That said, we believe most of the known positives have already been priced in following the 99% YTD share price appreciation. Switch to Non-Rated with a higher FD FV of RM3.10.



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