MERCURY SECURITIES
SDN BHD
MARKET FLASH
THURSDAY, 9 OCT 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
E
NEWS HIGHLIGHTS
DOMESTIC
LOCAL
Close
Day Chg
FTSE KLCI
1,824.32
-9.22
Volume (mil)
2,579.66
391.527
Value (RM’mil)
2,497.69
418.651
 CIMB, RHB Cap and MBSB to be suspended today
pending announcement
Up
Down
935
 Ireka gets RM276.8mil job from KL Eco City
Unchanged
175
 Protasco lodges police report against Tey and Ooi
over aborted Indonesia O&G deal
FOREIGN
93
Dow Jones
16,994.22
274.83
Nasdaq CI
4,468.59
83.39
FOREIGN
S&P 500
1,968.89
33.79
 GSK probes claims of graft in UAE
FTSE 100
6,482.24
-13.34
Nikkei 225
15,595.98
-187.85
2,382.79
18.92
HSI
23,263.33
-159.19
STI
3,226.71
-17.28
3.272
0.013
Brent (USD/barrel)
91.4
-0.73
Gold (USD/troy oz)
1,222.18
1.06
Top Volume
(RM)
Chg
SUMATEC
0.375
-0.020
MUIIND
0.255
-0.020
PDZ
0.260
-0.010
DGB
0.145
-1.000
BJORP
0.515
-0.030
67.200
0.400
PLS
0.123
0.090
SMPC
1.030
0.090
KOTRA
1.500
0.080
GOLDIS
2.300
0.070
BAT
66.160
-0.860
UTDPLT
25.600
-0.460
KLK
20.540
-0.360
KOSSAN
4.240
-0.360
ASIAFLE
6.820
-0.330
 Mahindra to buy stake in Peugeot unit
 Yum slashes profit forecast on food scare
Shanghai CI
ECONOMY / COMMODITY / CURRENCY
Other Stats
 Ringgit ends lower against US$
USD/MYR
 Gold futures end higher
 Rubber mart extends losses
 CPO stays firm on positive demand
 Brent slips below US$100
Top Gainers
NESTLE
Top Losers
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Consensus Target Price
Userguide: To complement the top down approach, Mercury Securities will be compiling the top three
underpriced equities of the respective sectors based on the consensus target price premium over the current
price on a weekly basis.
Methodology: These consensus target prices are sourced from Bloomberg and the equities are covered by at
least 4 research houses, excluding Mercury Securities. The purpose is to ensure the credibility, conformity and
objectivity of the consensus target prices are is maintained for the reader.
Sector
Finance
Property
Plantation
Consumer
Ind Prod
Construction
Trad&Serv
Ticker
Company
Closing Price Target Price
Premium
BURSA MK Equity BURSA MALAYSIA BHD
7.91
8.90
12.5%
MAY MK Equity
MALAYAN BANKING BHD
9.96
11.17
12.2%
HLFG MK Equity
HONG LEONG FINANCIAL GROUP
17.50
19.46
11.2%
NHB MK Equity
NAIM HOLDINGS BERHAD
3.32
4.84
44.6%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
4.60
6.49
42.5%
TRCB MK Equity
TROPICANA CORP BHD
1.26
1.71
37.9%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.70
6.85
19.5%
KUL MK Equity
KULIM MALAYSIA BHD
3.25
3.70
14.9%
FGV MK Equity
FELDA GLOBAL VENTURES
3.48
3.85
11.0%
BON MK Equity
BONIA CORP BHD
1.08
1.73
57.3%
ZHCB MK Equity
ZHULIAN CORP BHD
2.40
2.70
13.4%
PAD MK Equity
PADINI HOLDINGS BERHAD
1.87
2.05
8.8%
LLB MK Equity
LION INDUSTRIES CORP BHD
0.64
0.90
36.9%
DRB MK Equity
DRB-HICOM BHD
2.24
3.04
35.2%
PRESS MK Equity PRESS METAL BERHAD
6.02
7.72
28.3%
BHB MK Equity
BENALEC HOLDINGS BHD
0.90
1.28
43.0%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.63
2.07
27.0%
MDJ MK Equity
MUDAJAYA GROUP BHD
1.96
2.41
21.7%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
2.35
3.32
42.5%
MMC MK Equity
MMC CORP BHD
4.06
5.50
37.3%
SAKP MK Equity
SAPURAKENCANA PETROLEUM BHD
0.83
1.12
35.4%
Source: Bloomberg as of 7th October 2014
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HEADLINES
Commodity, Currency and Economic News
Ringgit closed lower against the US dollar yesterday on the back of low demand for the domestic
currency. The ringgit was quoted at 3.1730/1750 vis-a-vis a greenback from 3.1510/1530 traded on
Friday. The ringgit moved in a tight range of between 3.1690 and 3.1730 to the US dollar yesterday
due to lack of market leads. Despite Friday’s disappointing US jobs report that slowed to an eightmonth low in August, the greenback remained firmer. Meanwhile, the local unit was traded mostly
higher against other major currencies. It rose against the yen to 3.0167/0201 from Friday’s
3.0324/0349, strengthened against the British pound to 5.1200/1238 from 5.2300/2337 and
appreciated against the euro to 4.1068/1100 from 4.1583/1622 previously. However, the ringgit
depreciated versus the Singapore dollar to 2.5295/5319 from last Friday’s 2.5256/5277. (Bernama)
Gold futures contracts on Bursa Malaysia Derivatives closed higher as the dollar retraced from
recent highs. Phillip Futures Sdn Bhd dealer Low Cheng Yang said the stock markets had lost
traction and investors would be focusing on the minutes of the Federal Reserve's last policy meeting.
Spot month October 2014, November 2014, December 2014 and January 2015, all rose 32 ticks, to
settle at RM128.35 a gramme, RM128.75 a gramme, RM128.95 a gramme and RM129.15 a gramme,
respectively. Open interests rose to 3,012 contracts from yesterday's 2,859 contracts. Turnover went
up to 234 lots valued at RM3.006 million from 92 lots worth RM1.17 million previously. The gold
physical price stood at RM123.96 per gramme, up RM1.40 from RM122.56 per gramme yesterday.
(Bernama)
Malaysian rubber market extended its losses yesterday, tracking the weak performance on the Tokyo
Commodity Exchange and Shanghai Futures Exchange, amid further decline in crude oil prices. At
the close, the Malaysian Rubber Board’s official physical price for tyre-grade SMR 20 eased one sen
to 507.50 sen a kg while latex-in-bulk dipped 2.5 sen to 405 sen a kg. The unofficial closing price of
tyre-grade SMR 20 fell 1.5 sen to 505.5 sen a kg and latex-in-bulk decreased 2.0 sen to 404 sen a kg.
(Bernama)
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives remained higher for the second
consecutive day yesterday on the back of positive market sentiment, a dealer said. Phillip Futures Sdn
Bhd derivative products specialist David Ng said expectations of a production decline in Malaysian
palm oil in September coupled with lower inventories amid a 16 per cent jump in exports for the
month helped boost demand. October 2014 and November 2014 increased RM18 each to RM2,220
and RM2,213 per tonne respectively, December 2014 rose RM15 to RM2,195 per tonne, and January
2015 gained RM13 to RM2,207 per tonne. Volume surged to 45,039 lots from 28,625 lots on
Tuesday while open interest improved to 311,158 contracts against 294,606 contracts previously. On
the physical market, October South was up RM20 at RM2,230 a tonne. (Bernama)
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Brent Crude slid below US$100 a barrel yesterday for the first time in more than a year as Chinese
and US data pointed to slower-than-expected growth in the world’s top oil consumers. Weak
economic growth combined with ample supply has pushed oil prices down from a high for the year of
above US$115 in June, complicating efforts by central banks to ward off deflation and putting
pressure on the budgets of major oil producers. Brent fell to a low of US$99.36 a barrel, down
US$1.46 and its lowest since May 1 2013, before recovering slightly to around US$95.50 by
1335GMT. US crude tumbled US$1.40 to US$91.89 a barrel, after settling at US$93.29 on Friday for
its sixth weekly drop in seven after disappointing US non-farm payrolls data cast doubt on the pace
of growth in the world's biggest oil-consuming economy. Yesterday’s price fall followed data
showing China’s import growth fell unexpectedly for the second consecutive month in August,
posting its worst performance in over a year as domestic demand faltered. (Reuters)
Global and Local Headlines
CIMB, RHB Cap and MBSB said in separate filings with Bursa Malaysia yesterday that their
stocks would be suspended from 9am to 5pm today, pending a material announcement. Three
months ago, CIMB, RHB Cap and MBSB had entered into proposed merger talks. Bank Negara
consented to the negotiations being exclusive to the three parties for 90 days, and would remain so
only if there was a formal submission on the merger to the central bank. The proposed merger
between CIMB, RHB Cap and MBSB will create a group with a combined asset estimated at
RM613.7bil and generate profits of close to RM7bil. This is slightly larger than Malayan Banking
Bhd which has an asset size of RM578bil and profit of RM6.5bil. It has also been reported that
Bursa’s listing committee will be meeting today to decide if the Employees Provident Fund (EPF),
which is a major shareholder in all three parties, should be given the right to vote on the merger plan.
The EPF owns 14.6%, 41.5% and 64.6% in CIMB, RHB Cap and MBSB, respectively. (Star)
Ireka Corporation Bhd's unit has bagged a RM276.79mil contract by KL Eco City Sdn Bhd for the
construction of the main building works for the Retail Podium, Office Block A and the remaining
works for the basement levels. In a statement on Wednesday, Ireka said the contract, awarded via
Ireka Engineering & Construction Sdn Bhd will commence on Oct 15, 2014 and it is expected to
complete in 29 months’ time. The group said this is KL Eco City’s second contract awarded to Ireka
Engineering. Ireka said the contract has brought the group's order book to about RM1.44bil, of which
RM1.08 still remained outstanding. It said the contract is expected to contribute positively to the
earnings of Ireka Group for the financial years ending March 31, 2015 onwards. (Star)
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Protasco Bhd had lodged a police report against Tey and Ooi Kock Aun – both directors at oil and
gas firm PT Anglo Slavic Utama (ASU) following its recent filing of a civil claim against both
individuals. Protasco’s claim against Tey and Ooi is premised on its allegations that the duo have
breached their fiduciary and statutory duties, including the duty to disclose their interest in the
transaction, conspiracy to defraud Protasco and the making of secret profits. Protasco has said the
legal proceedings it had initiated had no significant immediate adverse impact on the current
financial position of Protasco. It also said the company would make an impairment on the purchase
price if necessary, on consultation with its auditors. (Star)
GlaxoSmithKline (GSK) which was slapped with a record US$489 million (RM1.6 billion) fine for
corruption in China last month said on Tuesday it was looking into allegations of corruption in the
United Arab Emirates. Britain’s biggest pharmaceuticals group confirmed the investigation following
allegations of improper payments set out in a whistle-blower’s email sent to its top management on
Monday. GSK is already investigating alleged bribery in a number of countries, including Lebanon,
Jordan, Syria and Iraq as well as Poland.
Mahindra announced on Tuesday plans to buy a majority stake in France’s struggling Peugeot
Motorcycles as it seeks new technology to drive sales. Mahindra Two Wheelers said its “binding
offer” for the 51 per cent stake would involve a €15 million (RM62.18 million) injection into Peugeot
Motorcycles, a subsidiary of Paris-based PSA Group, which has been seeking to engineer a
turnaround. In a statement, Mahindra gave no details of the purchase price but called the deal a “winwin” for both companies. (AFP)
Yum Brands cut its profit outlook for the year yesterday, citing the latest food scare in China that
pummelled sales at its flagship KFC chain. The company, based in Louisville, Kentucky, said it
expects earnings per share to rise between six and 10 per cent from a year ago, instead of the growth
of at least 20 per cent it previously forecast. Yum, which also owns Pizza Hut and Taco Bell, is
trying to recover from a TV report that showed one of its suppliers using expired meat. During the
quarter, KFC’s sales fell 14 per cent at established locations in China, while Pizza Hut’s sales
dropped 11 per cent. China is a critical division for Yum, which gets 35 per cent of its operating
profit from the country. (BTimes)
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
SECTORIAL RETURN
The chart below depicts the performance of the respective KLCI sectors over a five year period including the
current and forward PE. The sector’s performance is ranked against each other based on absolute returns for
that particular year. The user can track the progressive performance of a sector based on the sector’s unique
colour. One could observe that the finance sector is the best performing sector over a five year period between
2009 and 2013 with a compound annual growth rate of 16.1%. The user will also be able to identify sector
value based on the current PE and the corresponding 5 year high, low and average PE. For example, finance
sector PE is currently at 12.88 times, which is marginally above the 5 year PE of 12.78 times, suggesting
financials price are slightly expensive at the moment. For a significant impact to reduce market noise,
overview of sectorial performance will be updated on a weekly basis.
5 year average
P/E
Current
P/E
Forward 1
year P/E
Finance
High: 16.78
Average: 12.18
Low: 9.54
High: 17.15
Average: 12.78
Low: 9.54
12.88
12.88
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
32.51
16.85
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
13.82
13.56
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
8.15
10.34
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
16.73
16.77
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
15.16
19.10
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
60.72
61.67
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
13.82
13.56
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
10.6%
5.3%
16.1%
Finance
Construction
Plantation
Finance
Ind Prod
Consumer
product
Property
Ind Prod
35.9%
27.1%
1.6%
12.0%
15.9%
2.3%
4.8%
16.1%
Plantation
Plantation
KLCI
KLCI
Construction
Finance
Finance
Consumer
product
26.3%
26.3%
0.8%
10.6%
14.6%
4.3%
3.3%
14.1%
KLCI
Finance
Trade &
services
Ind Prod
Trade &
services
Property
Plantation
Property
24.0%
25.4%
0.8%
9.3%
14.3%
4.0%
3.0%
13.6%
Consumer
products
Consumer
product
Ind Prod
Trade &
services
Finance
Ind Prod
KLCI
KLCI
21.8%
21.0%
0.4%
7.9%
11.8%
4.0%
1.8%
12.3%
Trade &
services
KLCI
Finance
Property
Consumer
product
KLCI
Consumer
product
Plantation
17.0%
19.4%
-1.1%
6.1%
8.8%
1.1%
1.5%
11.9%
Property
Trade &
services
Property
Plantation
KLCI
Trade &
services
Ind Prod
Trade &
services
14.3%
18.8%
-2.1%
1.1%
8.4%
0.6%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-4.6%
1.0%
6.7%
-13.5%
*CAGR: Compound annual growth rate
-2.5%
2Q2014
3 year average
P/E
2010
Construction Construction
YTD
5 yr CAGR*
(2009 - 2013)
2009
Construction Construction
Source: Bloomberg as of 7th October 2014
MERCURY SECURITIES
SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Disclaimer
All information, views and advice are given in good faith but without legal responsibility. Mercury Securities Sdn. Bhd. (113193-W)
or companies or individuals connected with it may have used research material before publication and may have positions in or may
be materially interested in any stocks in the markets mentioned. Strictly for internal circulation only.
For any enquiries, please contact us at:
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Solaris Mont Kiara
50480, Kuala Lumpur
Tel: 603-6203 7227
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