1. business and industrial
2. company
3. joint venture

MERCURY SECURITIES
SDN BHD (113193-W)
MARKET FLASH
FRIDAY, 17 OCT 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HIGHLIGHTS
DOMESTIC
 BAT Q3 net profit rises to RM241mil
 Eco World to subscribe for 30% stake in SPAC for
RM562.5mil
 Ireka unit wins RM276.79mil contract from KL Eco
City
LOCAL
Close
Day Chg
FTSE KLCI
1,767.77
(19.07)
Volume (mil)
2,557.45
513.23
Value (RM’mil)
2,679.08
513.12
Up
Down
Unchanged
64
1,001
141
FOREIGN
Dow Jones
16,117.24
(24.50)
Nasdaq CI
4,217.39
2.07
S&P 500
1,862.76
0.27
FOREIGN
FTSE 100
6,195.91
(15.73)
 BHP Billiton to spin-off ops worth US$16bil
Nikkei 225
14,738.38
(335.14)
2,356.50
(17.17)
HSI
22,900.94
(239.11)
STI
3,154.21
(44.51)
3.2835
0.006
83.1
1.70
1,238.51
(0.35)
 Protasco duo to file defence by Oct 30
 Google profit misses estimates on slower advertising
growth
Shanghai CI
Other Stats
ECONOMY / COMMODITY / CURRENCY
USD/MYR
 Ringgit eases against US$ at close
WTI (USD/barrel)
 Gold futures rebound
Gold (USD/troy oz)
 Rubber mart declines
Top Volume
(RM)
Chg
 CPO slips on weak sentiment
SUMATEC
0.300
(0.015)
PDZ
0.235
(0.020)
BJCORP
0.470
(0.005)
HUBLINE
0.040
0.000
SKPETRO
3.160
(0.250)
TASEK-PA
15.700
1.880
BAT
66.720
1.220
HLFG
16.980
0.240
REX
1.120
0.100
LITRAK
3.800
0.090
F&N
15.680
(0.760)
TASEK
15.720
(0.480)
4.220
(0.470)
ALLIANZ
10.840
(0.460)
TAKAFUL
11.380
(0.420)
 Oil slips to 4-year low
Top Gainers
Top Losers
MPI
MERCURY SECURITIES
SDN BHD (113193-W)
(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
Ticker
Company
MAY MK Equity
MALAYAN BANKING BHD
HLFG MK Equity
HONG LEONG FINANCIAL GROUP
11.14
16.3%
16.74
19.42
16.0%
BURSA MK Equity BURSA MALAYSIA BHD
7.94
8.94
12.6%
NHB MK Equity
NAIM HOLDINGS BERHAD
2.98
4.84
62.5%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
4.15
6.49
56.3%
TRCB MK Equity
TROPICANA CORP BHD
1.23
1.71
39.0%
FGV MK Equity
FELDA GLOBAL VENTURES
3.03
3.82
26.2%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.55
6.85
23.4%
KUL MK Equity
KULIM MALAYSIA BHD
3.32
3.70
11.4%
BON MK Equity
BONIA CORP BHD
1.02
1.73
69.6%
PAD MK Equity
PADINI HOLDINGS BERHAD
1.76
2.05
16.2%
11.42
12.83
12.4%
3.78
5.92
56.7%
PRESS MK Equity PRESS METAL BERHAD
5.00
7.72
54.5%
LLB MK Equity
LION INDUSTRIES CORP BHD
0.59
0.90
52.0%
BHB MK Equity
BENALEC HOLDINGS BHD
0.80
1.28
60.0%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.50
2.07
38.0%
EVSD MK Equity
EVERSENDAI CORP BHD
0.85
1.11
30.9%
BAB MK Equity
BUMI ARMADA BERHAD
1.11
1.87
68.6%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
3.41
5.47
60.4%
SAKP MK Equity
SAPURAKENCANA PETROLEUM BHD
0.70
1.12
59.5%
COCO MK Equity
Construction
Trad&Serv
Premium
9.58
UMWH MK Equity UMW HOLDINGS BHD
Ind Prod
Closing Price Target Price
COASTAL CONTRACTS BHD
Source: Bloomberg as of 17th October 2014
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HEADLINES
Commodity, Currency and Economic News
Ringgit eased against the US dollar at close yesterday amid worries about sluggish European
economy as well as awaiting domestic consumer index, dealers said. At 5pm, the ringgit was quoted
at 3.2765/2785 against the greenback compared with 3.2650/2680 on Tuesday. Dealers said
investors were also remaining on the sideline awaiting September consumer inflation data due later
in the day. In August, the local consumer price index rose marginally above market expectations at
3.3 per cent from a year earlier. The local unit was also mostly lower against other major currencies.
It ended higher against the Singapore dollar to 2.5626/5661 from Tuesday’s 2.5634/5662 but
weakened against the yen to 3.0567/0594 from 3.0517/0556. The ringgit was lower against the
British pound to 5.2142/2184 from 5.2119/2177 and depreciated against the euro to 4.1458/1486
from 4.1403/1451 previously. (Bernama)
Gold futures contracts on Bursa Malaysia Derivatives rebounded from Wednesday’s losses to close
higher yesterday as investors shifted to safe-haven assets. Phillip Futures Sdn Bhd dealer Lim Eng
Wee said the weakening dollar and European shares, amid worries over the strength of the global
economy, boosted demand for the precious metal. “We expect gold futures to continue their bullish
trend on weakness in the global equities market and worries over global economic growth,” he said.
October 2014 jumped 48 ticks to RM131.65 a gramme, November 2014 and December 2014 soared
52 ticks each to RM132 a gramme and RM132.20 a gramme respectively, April 2015 improved 44
ticks to RM133.35 a gramme and August 2015 advanced 51 ticks to RM133.85 a gramme. Open
interest grew to 2,778 contracts from 2,680 contracts on Wednesday while turnover was higher at
158 lots worth RM2.08 million from 78 lots worth RM1.006 million previously. The physical price
of gold was RM1.72 higher at RM126.50 a gramme from RM124.73 a gramme on Wednesday.
(Bernama)
Malaysian rubber market recorded a decline yesterday, tracking the lower performance of the
Tokyo Commodity Exchange (Tocom) and Shanghai Futures Exchange (SHFE). He said companies
in China are set to cut capital spending by around seven per cent this year, the biggest annual
reduction since the global financial crisis. “This will likely impact the local rubber market,” he said.
The noon benchmark Malaysian Rubber Board’s official physical price for tyre-grade SMR 20 was
3.5 sen lower at 472.5 sen a kg, while latex-in-bulk slid 0.5 sen to 372 sen a kg. The 5pm unofficial
closing price for tyre-grade SMR 20 eased three sen to 474 sen a kg, and latex-in-bulk was down by
one sen to 372 sen a kg. (Bernama)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed lower yesterday
dampened by weak market sentiment and lacklustre export performance. For the first 15 days in
October, Malaysia’s palm oil exports fell 16.5 per cent from the same period last month to 626,482
tonnes. November 2014 fell RM18 to RM2,135 a tonne, December 2014 eased RM12 to RM2,121 a
tonne, January 2015 lost RM18 to RM2,119 a tonne while February 2015 was RM17 lower at
RM2,125 a tonne. Volume decreased to 50,959 lots against 59,068 lots on Wednesday while open
interest fell to 309,076 contracts from 332,370 contracts previously. On the physical market,
October South was RM10 lower at RM2,150 a tonne. (Bernama)
Oil fell more than US$1 a barrel yesterday to a four-year low below US$83 a barrel as growing
concerns over the global economy stretched a four-month rout. Global benchmark Brent has lost
more than 28 per cent since June on slow demand and abundant supply. Losses have accelerated in
October on signals that the Organisation of the Petroleum Exporting Countries has no plan to cut
output. Brent crude for November delivery had dropped to US$82.60 a barrel, the lowest since
November 2010 and was down 93 cents at US$82.85 a barrel by 1245GMT. US crude was down
US$1.45 at US$80.33 a barrel, after falling below US$80 for the first time since June 2012 to a low
of US$79.78. “The market still seems very bearish,” said Eugen Weinberg, analyst at Commerbank
in Frankfurt. (Reuters)
Global and Local Headlines
7-Eleven Malaysia Holdings Bhd has received a consent judgment from the Kuala Lumpur High
Court allowing its convenience stores to continue to stay in 34 Shell stations across the country until
June 2016. 7-Eleven has been in a tenancy dispute with Shell Malaysia Trading Sdn Bhd since
March 2012. The convenience store operator said the consent judgment was filed in the High Court
on Wednesday. The two parties have achieved “a full and final global settlement of the claim and
counter claim” on a “without admission of liability basis”, 7-Eleven said in a filing to Bursa
Malaysia yesterday. (BTimes)
British American Tobacco (M) Bhd’s (BAT) net profit increased 9.9 per cent in the third quarter
ended September 30 to RM241.1 million, or 84.4 sen a share. Group revenue increased marginally
to RM1.2 billion from RM1.17 billion previously, BAT said in a filing to Bursa Malaysia yesterday.
For the nine months ended September 30, its net profit increased 12.6 per cent to RM714.6 million
while revenue rose 5.9 per cent to RM3.6 billion. The company declared a tax-exempt dividend of
78 sen per share, 10 sen more than previously, amounting to a payout of RM222.7million. (BTimes)
Eco World Development Bhd has proposed to acquire a 30% stake in a real-estate special purpose
acquisition company (SPAC) for RM562.5mil. Eco World said on Thursday it would subscribe for
the stake, comprising of 1.125 billion shares of one sen each with 1.125 billion free warrants in Eco
World International Bhd (EWI). Eco World said the proposed subscription would enable Eco World
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
to venture overseas via investing in a property SPAC with a management team that has a proven
track record in identifying, acquiring and implementing overseas projects successfully. (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. (Star)
Protasco Bhd directors Tey Por Yee and Ooi Kock Aun have finally broken their silence on the
multi-million ringgit suit filed by the company on September 22, accusing them of conspiracy to
defraud and making secret profits. Tey and Ooi, in a statement yesterday, denied all of Protasco’s
allegations and said they would be filing their defence by October 30. The two have retained the law
firm Gideon Tan Razali Zaini to enter a defence and entered an appearance at the Kuala Lumpur
High Court on Wednesday.
BHP Billiton said yesterday it would list a proposed spin-off company comprised of unwanted
businesses on the London Stock Exchange as well as in Australia, responding to pressure from some
investors. BHP announced in August plans to spin off operations worth roughly US$16 billion
(RM52.5 billion), most of them acquired in its 2001 merger with South Africa’s Billiton, to focus on
its most profitable activities. BHP said at the time the business would be listed on the Australian
Stock Exchange, with a secondary listing on the Johannesburg Stock Exchange. (Reuters)
Google Inc. (GOOGL) missed profit and revenue estimates for the third quarter as the search
provider stepped up spending to reignite slowing advertising sales. Profit, excluding some items,
was $6.35 a share, the company said in a statement today, falling short of analysts’ average
projection for $6.53. Revenue, excluding sales passed on to partners, was $13.2 billion, just below
analysts’ prediction, according to estimates compiled by Bloomberg. Chief Executive Officer Larry
Page, looking for new opportunities beyond desktop-based search ads, is ramping up investments in
everything from business software to mobile services. Revenue at Google’s own websites grew 20
percent, compared with 23 percent in the prior period. At the same time, the company ramped up
hiring and boosted research and development spending by almost 50 percent. (Bloomberg)
MERCURY SECURITIES
SDN BHD (113193-W)
(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 12.23 times, which is marginally below 5 year PE of 12.78 times, suggesting
financials valuation are not overvalued 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
12.23
12.29
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
30.15
15.84
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
12.76
13.00
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
8.76
11.91
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
16.07
16.19
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
14.37
18.43
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
18.81
18.54
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
12.76
13.00
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
5.3%
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%
-3.4%
4.8%
16.1%
Plantation
Plantation
KLCI
KLCI
Construction
Finance
Finance
Consumer
product
26.3%
26.3%
0.8%
10.6%
14.6%
-0.9%
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%
-3.1%
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%
-3.1%
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%
-2.9%
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%
-3.4%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-9.5%
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 17th October 2014
MERCURY SECURITIES
SDN BHD (113193-W)
(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
or E-mail: [email protected]
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