Monthly Archives: October 2016

: MALAYSIA INSIGHT: Bank Negara Malaysia Has Scope to Ease Again

By Tamara Henderson

(Bloomberg Intelligence) –
Bank Negara Malaysia’s new leadership under Governor Muhammad Ibrahim has brought a more accommodative stance. The central bank cut its policy rate in July — the first reduction in nearly eight years – on concerns about increased downside risks to an already-challenged global economy. Since then, the external landscape has remained highly uncertain. Malaysia’s 4% expansion in 2Q was the slowest since 2002, and indicators for 3Q suggest an even weaker performance for exports and lending. Possible elections in 2017 further increase investor uncertainty, which could temper investment. This means the hurdle is low for more easing this year.

Growth May Have Slowed Further in 3Q

Exports remain an obstacle for Malaysia’s economy. BNM expects exports to remain weak because of subdued demand from top trading partners, which include China, the U.S., Singapore, the European Union and Japan. The central bank is also wary of heightened external risks stoking market volatility and disrupting capital inflows. Since the central bank’s last meeting in September, the odds of a Trump victory in U.S. elections have decreased, while the likelihood of a “hard” Brexit has increased. China’s economy showed further signs of stabilization, but with greater financial risks.

Asian Weakness Offsets Stronger Exports to U.S.

Steady growth in China, Malaysia’s largest export market, has yet to stabilize Malaysian export growth, which softened further in July and August. In the year through August, a decline in exports to China and Japan was barely offset by stronger growth in shipments to the U.S. and Singapore. China’s rebalancing from investment and manufacturing toward consumption and services means Malaysian machinery and commodity exporters benefit less from China’s recovery.

Meanwhile, private consumption rebounded in 1H, growing 6.3% year on year in 2Q. Spending was supported by higher wages and employment as well as government measures that increased disposable income. BNM expects these factors to continue to underpin spending in 2H, though positive distortions from the implementation of a goods and services tax in 2015 will fade. The government’s budget for 2017 may support household spending momentum next year.

Lending Has Yet to Respond to Easing

Still, private investment may need further assistance from the central bank. The slowdown in lending has yet to bottom after BNM’s rate cut in July. Growth in outstanding loans to businesses was 2.1% year on year in August, about half the pace in May and well below 7.2% a year earlier. Loan growth to households also continues to slow. At the same time, risk appetite remains vulnerable to a host of issues, both foreign and domestic. Possible early elections in 2017 add to uncertainty. Elections increase the risk of unanticipated policy shifts.

Inflation is well-behaved, falling to 1.5% year on year in September compared with 3.4% in 1Q. The impact of the GST implementation in April 2015 has now unwound. A steadier ringgit has also eased upward price pressure on tradable goods, following an 18.5% loss against the U.S. dollar in 2015. BNM expects inflation in the lower end of the 2-3% range for 2016, which is in line with the 2.2% average for the first nine months of the year. The central bank predicts a similar inflation performance in 2017 due to low commodity prices and subdued global demand.

Oil May Nudge CPI Toward 2% by Year-End

Inflation is benign and growth prospects remain weak. This provides scope for BNM to ease again at its next meeting on Nov. 23. This could come in the form of a cut in the overnight policy rate or the statutory reserve requirement. The central bank cut the overnight policy rate by 25 bps to 3% in July and cut the statutory reserve requirement by 50 bps to 3.5% in February.

To contact the economist on this story:
Tamara Henderson in Singapore at thenderson14@bloomberg.net
To contact the editor responsible for this story:
Arran Scott at ascott101@bloomberg.net

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Reuters-US. stocks slipped from two-week highs on Tuesday as results and forecasts from companies in sectors including housing and consumer products failed to live up to expectations.

Apple (AAPL.O), the largest U.S. company by market capitalization, posted after the bell better-than-expected iPhone sales that however continued a declining trend and shares fell about 2 percent, briefly dragging S&P 500 futures ESc1 to session lows.

During the regular session, Whirlpool (WHR.N), down 10.8 percent to $152.09, cited soft demand as it posted lower-than-expected earnings and gave an underwhelming forecast. Sherwin Williams’ (SHW.N) outlook also disappointed Wall Street and shares fell 10.9 percent to $247.61.

Both were an indication to some analysts that the housing sector may be cooling.

“Lackluster results from Whirlpool and Sherwin Williams may indicate a slowing in the housing cycle,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

She said those results could be weighing on Home Depot (HD.N), which was down 3.5 percent at $123.34 as the largest points decliner on the S&P 500. Lowes Cos (LOW.N) fell 3.5 percent to $68.47.

Consumer products company Procter & Gamble (PG.N) rose 3.4 percent to $86.97 after reporting a better-than-expected quarterly profit, while sportswear maker Under Armour (UA.N) fell 13.2 percent to $32.89 after it reported its slowest quarterly sales growth in six years.

“We had a rally (Monday) and haven’t been able to sustain it, due to weaker-than-expected numbers from some names,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois, calling the day’s earnings a “mixed bag.”

Overall, annualized third-quarter earnings from S&P 500 companies are expected to have risen 1.7 percent, effectively putting an end to an earnings recession, according to Thomson Reuters I/B/E/S.

Of the 150 companies that have reported so far, 75.3 percent have beaten analyst expectations, above the long-term average of 63.5 percent.

The Dow Jones industrial average .DJI fell 53.76 points, or 0.3 percent, to 18,169.27, the S&P 500 .SPX lost 8.17 points, or 0.38 percent, to 2,143.16 and the Nasdaq Composite .IXIC dropped 26.43 points, or 0.5 percent, to 5,283.40.

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Logic Trading Analysis Channel:
BURSA MALAYSIA MARKET IDEAS WEDNESDAY (26/10/2016):

FBMKLCI GETTING STEADY AND READY GO HIGHER

Dear All,

The FBMKLCI closed lower at -0.33 point or -0.02% to close at 1677.43.

FBMKLCI sideways a bit after push up, still looking great so far, uptrend remain intake. Possible trend higher.

DJIA at the moment remain positive, so far still at big sideways range, remain cautious and mostly pending US President election for direction.

Yesterday, many our stock like COCOLND, OWG, IQGROUP Meletup kuat, and we expect more for these counter.

As for today, we remain our focus on AIRASIA, AAX and TUNEPRO.

Lets ready for some more goreng at our live channel:
https://telegram.me/ltachannel !

Don’t fear the enemy who attacks you, they worth nothing at all this Wednesday!

“Goreng Tetap Goreng” !

Yours Sincerely,
Logic Trading Analysis

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The Trusted Bursa Analyst:
Wednesday 26 October:

There was a panic sell in palm oil counters due to the amended industry data which cause the palm oil price to fall a little. In the short term wise there was some profit take. In the bigger picture, palm oil counters are likely to be bullish and post good results due to higher palm oil price in the recent two-three months.

Despite having hiccups, the Oil price are still on the rise. This is a good sign for us Malaysia as Crude Oil are one of our strong GDP contributors.

The ringgit is seen to be strengthening against the USD at 4.14.

MARKET HIGHLIGHTS:

Today we see GTRONIC faced a heavy selldown due to poor results. This is because of the over goring due to some bullish news previously.

A total number of 22million shares of PERISAI was transacted at 6.5 sens. (0.5 sens above its closing price)

Stocks to watch today are:

OCNCASH: A swing of 0.42 as entry and 0.4 as support. Might swing to 0.46. Risk reward ratio of 1:3.

Pesona: any pull back is a good timing to reenter. Revised target price to 0.5 (short term) mid term to 0.62.

EG: entry point of 0.86-0.87 TP1: 0.895, TP2 0.91 (this is for trading only.)

Follow Your Trusted Bursa Analyst Channel for stockpicks and daily update.

https://telegram.me/TTrustedBA

Views – 192

Reuters-Britain could slash corporation tax to 10 percent if the European Union refuses to agree a post-Brexit free trade deal or blocks UK-based banks from accessing its market, the Sunday Times reported, citing an unidentified source.

The newspaper said the idea of halving the headline rate from 20 percent had been put forward by Prime Minister Theresa May’s advisers amid growing fears other EU member states will take a hard line in Brexit negotiations.

The tax cut would be used to try and persuade the EU to grant “passporting” rights for financial services firms to continue operating across the EU, the newspaper said, in a sign of the likely animosity of the upcoming divorce talks.

At a Brussels summit last week EU leaders were clear they would not allow Britain to “cherry pick” things such as free access to the market for certain sectors without taking on the full responsibilities of EU membership.

“People say we have not got any cards,” the newspaper quoted an unidentified source familiar with the British government’s thinking as saying.

“We have some quite good cards we can play if they start getting difficult with us. If they’re saying no passporting and high trade tariffs we can cut corporation tax to 10 percent,” the newspaper quoted an anonymous source as saying,” the source was quoted as saying.

Cutting corporation tax could attract companies away from the EU to Britain, boosting its economy and challenging Ireland’s preeminence as Europe’s low tax home for large international companies.

EU leaders have warned that if Britain places limits on the free movement people it will lose its preferential access to the single market, leaving London-based international banks worried they could lose their right to sell services across Europe.

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Logic Trading Analysis Channel:
BURSA MALAYSIA MARKET IDEAS MONDAY (23/10/2016):

FBMKLCI NO SURPRISE FROM MY BUDGET 2017

Dear All,

The FBMKLCI closed higher at +2.8 point or +0.17% to close at 1669.98.

FBMKLCI for the past whole week pending My Budget Announcement, slow down, only a few counter able to move.

DJIA movement getting more and more nerve breaking, last week showing very uncertain and changes become super flat, this kind of moment not a normal one. Do extra careful if a breakdown of 18000 close low, if closing up high then good.

Well, personally see nothing special about current year’s Budget, which mean, market continue goreng tetap goreng, selective counter continue to move. However if overall market fall, we will also follow.

I only want to highlight PESONA (8311), this company have manage to seal a contract worth RM 400 Million, which add up to existing order RM 1.2 BILLION, will become a total of RM 1.6 BILLION.

PESONA already improving in profit, healthy balance sheet, adding more contract will immediately boost up their future earning, and valuation, whereby I am expecting this stock to trade above:

RM 0.55 Easily

We have shared view for PESONA on Thursday, follow us on
https://telegram.me/ltachannel !

It’s always better to feed one cat than many mice this Monday!

“Goreng Tetap Goreng” !

Yours Sincerely,
Logic Trading Analysis

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The Trusted Bursa Analyst:
Monday 24 October 2016,

Dear all,

With the Not-So-Amazing Budget 2017 last Friday, sectors which benefitted from the budget are construction focusing more on infrastructure, Led lightings, small-mid cap companies.

Also with the Saudi stating that many countries backing the OPEC deal, we should see oil and gas counters to continue rally. Once again I would like to inform all to take whatever that is left in PERISAI (or else there will be nothing left) despite there are news circulating that big companies are ready to buy PERISAI’s assets.

Another highlight which is PESONA, which managed to obtain a 402m contract with about 1Billion in their order book. This construction counter will be on a uptrend for mid and long term players. As for tomorrow, if it gap-up too much, short term plays: best is don’t chase or chase with own risk appetite if you wanna FIFO.

Stocks to watch this week (24-29 october) are:

KIMLUN (construction): support 2.12, TP 2.26

PRESBHD (education) budget mentioned about PPP and ESCBLA which are projects of PRESBHD, and on Friday we see some interesting movement as well. Support 2.20 Tp 2.38

ECONBHD (construction): Support 1.79, TP 2.0

MMSV (LED and semicon in automotive inds): Support 0.64, Tp 0.705

AWC (IFM) : 0.81 support, TP 0.845

AZRB (construction):support 0.635, TP 0.685

SILKBHD (hiway): support 0.37, TP 0.45

EG (EMS) :support 0.87, TP 0.91

REXIT (insurance): support 0.635, TP 0.745

ILB(logistics): support 0.85, TP 0.91

MIECO: (export) support 0.99. TP:1.12

Follow Your Trusted Bursa Analyst Channel for stockpicks and daily update.

https://telegram.me/TTrustedBA

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Views – 191

Reuters

-Oil prices settled down more than 2 percent on Thursday, as a resurgent dollar encouraged players to take profit on the previous day’s rally that sent U.S. crude to 15-month highs.

The dollar hit seven-month highs against a basket of currencies .DXY and a three-month peak versus the euro EUR= after the European Central Bank kept interest rates unchanged and U.S. data showed home resales surged in September.

Benchmark Brent crude for December delivery LCOc1 settled down $1.29, or 2.5 percent, at $51.38 per barrel.

U.S. West Texas Intermediate (WTI) crude’s November contract CLc1, which expired as the front-month, fell $1.17, or 2.3 percent, to finish at $50.43. WTI’s December contract CLc2, which will be front-month from Friday, slid $1.19 to settle at $50.63.

On Wednesday, oil rallied after the U.S. government reported an unexpected drawdown of more than 5 million barrels in weekly crude stockpiles that drove WTI’s November contract to a 15-month high of $51.93. [EIA/S]

“This is predominately being driven by the dollar’s strength,” Matt Smith, director of commodity research New York’s ClipperData said, referring to Thursday’s retreat.

“It’s also to do with the dust settling on yesterday’s report and the realization that it wasn’t quite as bullish.”

Some market participants noted that despite the crude drawdown, the EIA also reported an unexpected build of 2.5 million barrels in gasoline stockpiles instead of the drop that was forecast.

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KLSE StockAlliance:
JERASIA

JERASIA has first caught my attention with the significant volume of 11.5mil shares traded to on 19 October 2016, first since last year October 2015. Approximately one year later, this stock has refuelled and ready to go higher again.

Below are my facts and findings on JERASIA:

- The Group is engaged primarily in garment manufacturing and retail operations in Malaysia and Internationally and listed in Bursa Malaysia on 2nd June 2000.
 The Group manufactures fashion apparel and accessories for export.
 The Group grows its retail shops (the MNG Mango, Mango Man, Mango TOUCH, Mango Kids, Violeta by Mango, Nike, Terranova, Ladylike, Charlie, Milani, Ureka, Trio Sports, and Trio Kids brands) in East and West Malaysia.

- Interestingly the Group has incurred a total of RM34mil (RM14mil in last quarter) in acquiring property, plant and equipment in FYE2016 through combination of cash and bank financing to expand its production line to accommodate the demand.
Why a company exist in the apparel industry for more than 20 years will invest in acquiring assets to expand production line?? I don’t think they are silly and I don’t think the bank who finance them is silly. They projected something in which we will link below.

- In year 2016, the Group has aggressively embarked on expanding its network in starting new retail shops:
(1) TRIO in Sunway Pyramid
(2) TRIO in Time Square Bintulu
(3) TRIO in Batu Pahat Mall
(4) TRIO in IOI City Mall Putrajaya
As of now the Group has a total of 30 shops (11 boutiques located in Damansara Jaya, Mitsui KLIA Outlet Park, Palm Mall at Seremban, Sunway Pyramid, IOI City Mall Putrajaya, etc,), all these place are situated in crowded urban area. The upcoming boutiques will be opened in AEON Ipoh, IOI City Mall Putrajaya and Imperial City Mall Miri under brand Mango.

- All the garments/ apparels manufactured will be categorised sold either on local retail shop as stated above or export sales. Many do not know JERASIA is actually an export oriented counter and halve of the sales are generated oversea (As of FYE2015 ended 31 March, the Group has a total of unrealised foreign gain amount to RM4.5mil).
Any weakening of ringgit over USD Dollar is beneficial to the company’s bottom line. Have anyone noticed the strong profit recorded in Group’s Q3 FYE2016 (Financial Quarter ended 31 December 2015), if yes you will know what I meant.

- The Group’s NTA is valued at RM1.73, which is 60% discounted from the current closing price at 20 October 2016.

- Awaiting the latest financial quarter ended at 30 September 2016, if you aware of the trend, the coming quarter tends to improve a lot (YoY) due to festive season arrived. Garments/ Apparels are always necessities to the public and we will see high GDP recorded in September from private sector.

- The utmost facts I am going to highlight to JERASIA is TRIO. Why TRIO? Let’s put it this way, many do not know what actually catalyse PADINI to be so profitable in the past quarters. It is not Padini, it is not Vincci but it is Brands Outlet.

What’s so cool about Brands Outlet?
(1) It is price competitive.
(2) It targets wider market segment
(3) It has higher profit margin
“At pre-tax level, the company’s profit margin is at the mid-teen level, ranging from 13% to 15%. Specifically, for Brands Outlet, its margin has been higher around 17% to 20% over the years.” Quoted by Chan, Executive Director of Padini Holding. Attached herewith the link: http://www.thesundaily.my/news/1260915

TRIO is similar with Brands Outlet in term of business model.

- With the above facts, the Group is forecasted to achieve a EPS of 9cents, with PE of 12 to 15, the share price should be valued at RM1.08 to RM1.35.
** PE is derived from similar competitors i.e. PADINI (PE:14), CHEETAH (PE:25), VOIR (PE:81), etc engineering background.
Conclusion:
Ok I am getting very long winded. Long story short, JERASIA caught my eyes due to:
(1) Weakening of Ringgit over USD Dollar beneficial to the Group
(2) Aggressive expansion on retail segment to boost sales (TRIO)
(3) Significant investment in acquiring plant and machinery to accommodate demand
(4) High NTA
(5) Low PE
(6) Interesting results in coming two quarters (festive season – Hari Raya and YEAR END SALES!!)

Stock Alliance
The information contained in this channel is for general information purposes only. Any reliance you place on such information is therefore strictly at your own risk.
We hope to bring profit to everyone as we did in today.

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Logic Trading Analysis Channel:
BURSA MALAYSIA MARKET IDEAS FRIDAY (21/10/2016):

FBMKLCI WELCOME BUDGET DAY

Dear All,

The FBMKLCI closed lower at -1.09 point or -0.07% to close at 1667.18.

FBMKLCI today will decide whether MALAYSIA BUDGET 2017 is a good one or not, we will see from the movement.

DJIA move getting bored which we might need to be extra more careful because when the movement getting more and more uncertain, we might see some surprise. Lets just watch whether good one or terrible one.

Lets listen to NAJIB see what tipsy he going to give today !

Follow us closely !
https://telegram.me/ltachannel !

Any useless trick become useful when one claim it work this Friday!

“Goreng Tetap Goreng” !

Yours Sincerely,
Logic Trading Analysis

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The Trusted Bursa Analyst:
Friday 21/10/2016

Today will be a stagnant day for our market until the Budge 2017 is out. Our Stocks to watch are related to budget, but take at your own risk.

Oil prices heading south might be due to early profit taking. Those trade oil counters I believe you all cant sleep well, but wont worry oil will continue go up, take profit if you feel uncomfortable.

Stocks to watch 21 October :

Pesona: Support 0.42, TP 0.50. Volume start to come in and seems like something is going on. Budget 2017 might mention this? Who knows.

Yeelee : Support 2.28, Tp:2.36

WCT: Cut loss 1.68, TP 1.75

Tenkiu Gawd Its Fwiday

Follow Your Trusted Bursa Analyst Channel for stockpicks and daily update.

https://telegram.me/TTrustedBA

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[21/10 10:11] Rosdi maybank: *♦RHBIB

Dear My Value Client,
Potential stock to buy today:
Date/日期 : 21/10/2016

*YONGTAI (7066)*
Price/现价 : 1.21
Target price/目标价: 1.36
Cut loss/止损价 : 1.05
**syariah
Sector/领域: Trading
Operates in retailing and trading of textile and garment products.
Operations in Malaysia , HongKong and Europe
*REXIT (0106)*
Price/现价 : 0.635
Taret price/目标价: 0.695/0.75
Cut loss/止损价 : 0.575
** syariah
Sector/领域: Technology
Offers Web-based insurance solution which cater for the front-end marketing and sales functions

*XINHWA (5267)*
Price/现价 : 1.28
Target price/目标价: 1.46
Cut loss/止损价 : 1.15
** syariah
A logistics service provider involved in land transport operation, warehousing and distribution operations
[21/10 10:12] Rosdi maybank: Good morning. The FBMKLCI was marginally up by 1.09pts or 0.07% yesterday thanks to the overnight gains in US equities as well as firmer oil prices. Today, all domestic focus will be on the Budget 2017. We may expect the local benchmark barometer to be rangebound ahead of the Budget announcement later today at 4pm. Resistance: 1,675 & 1,692. Support: 1,645 & 1,620.

*Trading Stocks today:*

Malaysia:
*Evergreen Fibreboard (5101)* (RM1.10): Buy on a close above RM1.10
Target: RM1.43
Cut loss: RM1.05

*Maxis (6012)* (RM5.99): Sell
Target: RM5.57
Stop loss: RM6.24

Singapore:
*CapitaLand Retail China Trust* (S$1.595): Buy
Target: S$1.89
Cut loss: S$1.54

*Courts Asia* (S$0.435): Buy
Target: S$0.50
Cut loss: S$0.41

Hong Kong:
*Sky Forever Supply Chain* (HK$0.179): Buy
Target: HK$0.196
Cut loss: HK$0.176

*Mongolia Energy Corp* (HK$0.50): Buy
Target: HK$0.65-0.68
Cut loss: HK$0.465
*Fundamental Report(s):*

*Public Bank Bhd* – Weaker 3Q16 net profit growth due to lower non-interest income (Maintained Hold with a higher tp of RM19.50)

*Heineken Malaysia Bhd* – Cheers! All is good (Maintained Add with a tp of RM19.20)

*Autos* – Contraction in Sep TIV (Maintained Underweight)

*21st Oct 2016*

Views – 303