MERCURY SECURITIES
SDN BHD (113193-W)
MARKET FLASH
MONDAY, 20 OCT 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HIGHLIGHTS
DOMESTIC
LOCAL
Close
Day Chg
FTSE KLCI
1,788.31
20.54
Volume (mil)
2,256.73
(261.12)
Value (RM’mil)
2,436.38
(197.43)
 Carimin Petroleum IPO on track
Up
884
 CBIP: good order flow for Modipalm mills
Down
128
 Glomac plans Kulaijaya township next year
Unchanged
161
 Harvest CEO trims stake in firm to 4.97pc
FOREIGN
 Winn Worldwide plans IPO
Dow Jones
16,117.24
263.17
Nasdaq CI
4,217.39
41.05
S&P 500
1,862.76
24.00
FTSE 100
6,265.43
114.38
 Saudi bank in US$6bil IPO
Nikkei 225
14,532.51
(205.87)
 SIA to take control of Tiger Air
Shanghai CI
2,341.18
(15.32)
HSI
23,023.21
122.27
STI
3,167.71
13.52
3.274
(0.010)
83.2
0.27
1,238.66
(3.13)
FOREIGN
ECONOMY / COMMODITY / CURRENCY
Other Stats
 Ringgit rises against US$
USD/MYR
 Gold futures end easier
WTI (USD/barrel)
 Rubber rebound
Gold (USD/troy oz)
 CPO futures close firmer
Top Volume
(RM)
Chg
 Brent rises above US$86
SUMATEC
0.330
0.030
SANICHI
0.095
0.015
PDZ
0.250
0.015
HUBLINE
0.045
0.005
CENSOF
0.515
0.040
HLFG
17.720
0.740
NESTLE
66.800
0.560
INARI-WA
2.180
0.480
TAKAFUL
11.840
0.460
3.980
0.440
ALLIANZ-PA
11.100
(0.600)
FBMKLCI-CJ
0.415
(0.185)
PERDANA-WA
0.870
(0.130)
CARLSBG
10.580
(0.120)
MANULFE
3.210
(0.110)
Top Gainers
NARRA
Top Losers
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
Ind Prod
Construction
Trad&Serv
Ticker
Company
MAY MK Equity
MALAYAN BANKING BHD
HLFG MK Equity
HONG LEONG FINANCIAL GROUP
Closing Price Target Price
Premium
9.45
10.99
16.3%
16.98
19.42
14.4%
BURSA MK Equity BURSA MALAYSIA BHD
7.90
8.89
12.6%
NHB MK Equity
NAIM HOLDINGS BERHAD
2.84
4.84
70.5%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
3.84
6.28
63.5%
TRCB MK Equity
TROPICANA CORP BHD
1.19
1.71
43.7%
FGV MK Equity
FELDA GLOBAL VENTURES
3.00
3.82
27.5%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.55
6.85
23.4%
KUL MK Equity
KULIM MALAYSIA BHD
3.25
3.70
13.8%
BON MK Equity
BONIA CORP BHD
1.01
1.73
71.3%
QLG MK Equity
QL RESOURCES BHD
3.17
3.67
15.7%
PAD MK Equity
PADINI HOLDINGS BERHAD
1.77
2.05
15.5%
COCO MK Equity
COASTAL CONTRACTS BHD
3.50
5.92
69.2%
LLB MK Equity
LION INDUSTRIES CORP BHD
0.57
0.90
58.7%
PRESS MK Equity PRESS METAL BERHAD
4.90
7.72
57.6%
BHB MK Equity
BENALEC HOLDINGS BHD
0.79
1.28
63.1%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.43
2.07
44.8%
EVSD MK Equity
EVERSENDAI CORP BHD
0.78
1.11
43.6%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
1.37
2.39
74.3%
BAB MK Equity
BUMI ARMADA BERHAD
3.16
5.47
73.1%
SAKP MK Equity
SAPURAKENCANA PETROLEUM BHD
0.70
1.12
60.7%
Source: Bloomberg as of 20th October 2014
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HEADLINES
Commodity, Currency and Economic News
Ringgit closed higher against the US dollar on short-covering in line with the stronger regional
currencies. At 5pm, the ringgit was quoted at 3.2730/2750 against the greenback compared with
3.2820/2840 on Thursday. A dealer said most other emerging Asian currencies rebounded yesterday
as investors covered short positions ahead of US Federal Reserve chair Janet Yellen’s speech. The
local unit was mixed against other major currencies. It ended firmer against the Singapore dollar at
2.5721/5743 from Thursday's 2.5769/5803 and strengthened against the yen to 3.0724/0751 from
3.0980/4002. The ringgit, however, was lower against the British pound to 5.2712/2760 from
5.2525/2564 and depreciated against the euro to 4.2006/2038 from 4.1996/2035. (Bernama)
Gold futures contracts on Bursa Malaysia Derivatives ended easier last Friday with three contract
months traded lower as European equities rebound. Phillip Futures Sdn Bhd dealer Lim Eng Wee
said gold prices were weighed down by rebound in global equities which reduced the demand for
safe-haven assets. October 2014 fell 27 ticks to RM130.30 a gramme, November 2014 eased 26
ticks to RM130.70 a gramme and December 2014 erased 18 ticks to RM131.30 a gramme. Open
interest fell to 2,657 contracts from 2,778 contracts on Thursday while turnover was lower at 77 lots
worth RM1 million from 158 lots worth RM2.08 million. The physical price of gold was 30 sen
lower at RM126.20 a gramme from RM126.50 a gramme previously. (Bernama)
Malaysian rubber market rebounded at close last Friday on the announcement by the Thai
government that it would help planters of the commodity. A dealer said among the measures to be
taken, includes, purchasing rubber to build stockpiles in a bid to bolster prices. “The measures will
also have an impact on the Malaysian rubber market, by helping boost prices,” he added. The noon
benchmark Malaysian Rubber Board’s official physical price for tyre-grade SMR 20 was 12.5 sen
higher at 485 sen a kg, while latex-in-bulk rose 4.5 sen to 376.5 sen a kg. The 5pm unofficial closing
price for tyre-grade SMR 20 soared 13.5 sen to 487.5 sen a kg, and latex-in-bulk was up by eight sen
to 380 sen a kg. (Bernama)
Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed higher last Friday
boosted by the improved crude oil market. A dealer said the market was also helped by some
bargain buying. “However, traders remain cautious as the lacklustre demand will continue to plague
the market,” he said. November 2014 rose RM30 to RM2,165 a tonne, December 2014 gained
RM26 to RM2,147 a tonne, January 2015 increased RM23 to RM2,142 a tonne while February 2015
was RM23 higher at RM2,148 a tonne. Volume decreased to 39,881 lots against 50,959 lots on
Thursday while open interest fell to 296,253 contracts from 309,076 contracts previously. On the
physical market, October South was RM20 higher at RM2,170 a tonne. (Bernama)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Brent Crude Oil rose above US$86 a barrel last Friday, bouncing from near four-year lows as
investors bought back into a market they said was oversold, and as fighting in Iraq increased
political risk. Oil has lost more than a fifth of its value since June on heavy oversupply, signs of
weak demand growth and indications that key oil producers, particularly Saudi Arabia, have a
limited appetite to intervene on prices. Brent for December rose US$1.52 to a high of US$87.34,
before slipping back to around US$86.25 a barrel by 1330 GMT, but was still on track for its fourth
weekly loss in a row. The November Brent contract expired on Thursday. US November crude,
heading for its third weekly decline, was up 55 cents at US$83.25. “Prices have likely overshot to
the downside,” said Jeffrey Currie, head of oil analysis at Goldman Sachs. “This leaves us near-term
constructive despite being bearish as we look further out.” “The oil sell-off had been driven by
expected fundamental shifts as opposed to currently observable shifts,” Currie and his colleagues
said in a note to clients. (Reuters)
Global and Local Headlines
Oil and gas (O&G) services provider Carimin Petroleum Bhd is sticking to its plan to list on Bursa
Malaysia next month despite weakening sentiment for the sector as crude oil prices plunged to a
four-year low. In mid-2013, Petroliam Nasional Bhd and its production sharing contract partners had
awarded RM10bil worth of HUCC jobs, of which, Dayang Enterprise Holdings Bhd clinched some
RM4bil and Petra Energy Bhd another RM2.5bil. Carimin’s portion of the pie was about RM900mil.
“We have locked in our revenue for the next five years. Although Carimin has not officially priced
its IPO yet, industry sources say that the company is looking at a valuation of around a price
earnings (PE) multiple of 13 times historical earnings. Carimin’s closest peer on the stock market is
Dayang Enterprise Holdings Bhd, which trades at a trailing PE multiple of 16.31 times while its
forward PE stands at 11.63 times. Dayang was one of the oil and gas stocks to have suffered in the
recent market rout, having seen some RM540mil wiped out of its market capitalisation in the last
one month. (Star)
CB Industrial Product Holding Bhd (CBIP), which holds the patent for constructing Modipalm
mills, said its current order book of some RM500 million will keep it busy for another 18 months.
CBIP managing director Lim Chai Beng said while low palm oil prices were slowing oil palm estate
owners’ investments, orders were still coming in for mill upgrades. “We’re getting orders, although
there may be slight delays here and there. Out of the RM500 million orders to put up new mills and
upgrade old ones, 70 per cent are from outside Malaysia. “Old mills in Malaysia need to be
upgraded and our Modipalm technology has been proven to minimise oil loss. (BTimes)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Glomac Bhd is planning to build a new township in its recently-acquired landbank in Kulaijaya,
Johor, which has an expected gross development value (GDV) of RM750 million. Its group
managing director and chief executive officer Datuk Seri FD Iskandar Mansor said the project, to be
launched in March next year and will comprise affordable landed properties, is now at the final stage
of approval. (BTimes)
Harvest Court Industries Bhd chief executive officer and managing director Datuk Raymond
Chan Boon Siew has ceased to be a substantial shareholder of the company after he sold 3.7 million
shares in the open market, reducing his shareholding to 4.97 per cent, or 13.96 million shares, a
filing with Bursa Malaysia showed yesterday. He had previously sold 1.05 million shares on July 31
to reduce his stake to 6.29 per cent, or 17.669 million shares. (BTimes)
Winn Worldwide Sdn Bhd, which owns the House of Leather retail chain, plans to raise capital on
Bursa Malaysia to grow the business and expand overseas. According to the company’s five-year
business plan, an initial public offering (IPO) is on the cards. Winn Worldwide chairman Datuk
Kenny Yee told Business Times that the IPO could take place within the next three to five years,
depending on its capital requirement and the market condition. Yee said the money would be used
to expand regionally and establish its own brand in the near future. Winn Worldwide is the principal
and sole distributor for several international brands, including Kaufmann, Country Hide, Bruno,
Manfred, Bugatti, Lapagao and Carlton. These brands offer more than 1,000 types of leather goods
ranging from wallets, handbags and belts to luggage bags, priced from RM100 to more than
RM1,500 each. The company currently operates 23 outlets nationwide and is planning to open as
many as seven more by May 31 next year, Yee said. (Star)
SAUDI Arabia’s National Commercial Bank (NCB) is going ahead with an initial public offering
(IPO) worth US$6 billion (RM19.66 billion) despite opposition from ulamas. The IPO from Sunday,
making NCB the last Saudi bank to go public, is expected to be one of the largest in the world this
year. An NCB prospectus says the bank will offer 300 million shares to the public at 45 riyals
(RM39.30) each, for a value of US$3.6 billion, while another 200 million shares will be allocated to
the state pension agency bringing the total to US$6 billion. (BTimes)
Singapore Airlines Ltd (SIA) is injecting up to US$110 million (RM360 million) to take control of
Tiger Airways, shoring up the budget carrier while scrapping its regional ambition as competition
rages. Announcing a record quarterly loss that sent its shares tumbling as much as 10 per cent, Tiger
said yesterday that SIA will raise its stake to about 55 per cent from 40 per cent by converting
existing securities into shares. Tiger then plans an up to S$234 million (RM602.85 million) rights
issue, with SIA buying up to S$140 million new shares and possibly raising its stake to as much as
71 per cent. The airline also agreed to sell its Australian unit to Virgin Australia Holdings for just
A$1(RM2.88).Tiger plunged into a net loss of S$182.4 million for the three months ending
September, largely due to a charge for the sub-lease of surplus aircraft, from a profit of S$23.8
million a year ago. (BTimes)
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 12.45 times, which is marginally lower than 5 year PE of 12.78 times, suggesting
financials valuation is not undervalued 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
12.45
12.50
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
30.58
16.05
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
12.97
13.23
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
8.95
12.13
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
16.25
16.38
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
14.48
18.57
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
19.12
18.84
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
12.97
13.23
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
7.2%
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%
-2.0%
4.8%
16.1%
Plantation
Plantation
KLCI
KLCI
Construction
Finance
Finance
Consumer
product
26.3%
26.3%
0.8%
10.6%
14.6%
0.8%
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%
-1.7%
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%
-1.7%
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%
-1.8%
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%
-1.7%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-8.9%
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 20th 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
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