MERCURY SECURITIES
SDN BHD (113193-W)
MARKET FLASH
THURSDAY, 16 OCT 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HIGHLIGHTS
DOMESTIC
LOCAL
Close
Day Chg
FTSE KLCI
1,786.84
(9.54)
Volume (mil)
2,044.22
(171.97)
Value (RM’mil)
2,165.96
(287.67)
 OSK Hldgs offers to buy OSK Property, PJD for
RM585mil
Up
155
Down
757
 Prestariang in education tie-up with Tekla
Unchanged
237
 Rev Asia obtain green light to sell stake in icar Asia
FOREIGN
 Tomypak shares sold at RM1.17
Dow Jones
16,315.19
(173.45)
 Zhulian’s Q3 net profit plunges 74pc
Nasdaq CI
4,227.17
(11.85)
S&P 500
1,877.70
(15.21)
FTSE 100
6,319.88
(181.04)
Nikkei 225
15,073.52
137.01
2,373.67
14.20
FOREIGN
 Lockhead claims fusion energy breakthrough
Shanghai CI
 Netflix’s U.S. growth slows, shares plunge 25pc
HSI
23,140.05
92.08
STI
3,198.72
4.32
3.2775
(0.011)
80.8
(0.44)
1,223.55
(1.17)
Top Volume
(RM)
Chg
SUMATEC
0.315
(0.025)
 Rubber prices higher for third consecutive day
THHEAVY
0.535
(0.070)
 CPO hits a more than 3-week low
MUIND
0.230
(0.005)
 Brent bounces off a 4-year low to above US$85
ASIABIO
0.170
-
CENSOF-WB
0.280
0.155
100.100
0.600
46.520
0.420
KLUANG
3.680
0.200
GENP
9.920
0.170
CENSOF-WB
0.280
0.155
65.500
(2.100)
LYSAGHT
3.280
(0.420)
HLIND
4.110
(0.400)
HLFG
16.740
(0.360)
1.800
(0.330)
 Qualcomm to buy U.K. Chipmaker CSR for
US$2.5bil
Other Stats
USD/MYR
WTI (USD/barrel)
ECONOMY / COMMODITY / CURRENCY
 Ringgit eases against US$ at close
 Gold futures ended lower
Gold (USD/troy oz)
Top Gainers
DIN042300721
DLADY
Top Losers
BAT
TGUAN-LA
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
BURSA MK Equity BURSA MALAYSIA BHD
Closing Price Target Price
Premium
9.85
11.14
13.1%
7.98
8.94
12.0%
17.66
19.42
10.0%
HLFG MK Equity
HONG LEONG FINANCIAL GROUP
NHB MK Equity
NAIM HOLDINGS BERHAD
3.32
4.84
49.5%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
4.60
6.49
48.4%
TRCB MK Equity
TROPICANA CORP BHD
1.26
1.71
37.9%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.70
6.85
24.5%
KUL MK Equity
KULIM MALAYSIA BHD
3.25
3.70
13.8%
FGV MK Equity
FELDA GLOBAL VENTURES
3.48
3.85
10.3%
BON MK Equity
BONIA CORP BHD
1.08
1.73
63.2%
ZHCB MK Equity
ZHULIAN CORP BHD
2.40
2.70
14.9%
PAD MK Equity
PADINI HOLDINGS BERHAD
1.87
2.05
13.0%
LLB MK Equity
LION INDUSTRIES CORP BHD
0.64
0.90
42.3%
DRB MK Equity
DRB-HICOM BHD
2.24
3.04
39.5%
COCO MK Equity
COASTAL CONTRACTS BHD
4.69
5.92
37.4%
BHB MK Equity
BENALEC HOLDINGS BHD
0.90
1.28
48.0%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.63
2.07
31.0%
EVSD MK Equity
EVERSENDAI CORP BHD
0.92
1.11
23.0%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
0.83
1.12
48.9%
SES MK Equity
SCOMI ENERGY SERVICES BHD
1.23
1.59
46.9%
4.06
5.51
45.1%
AMRB MK Equity ALAM MARITIM RESOURCES BHD
Source: Bloomberg as of 13th 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 erased yesterday’s gains to close lower today as the US dollar strengthened
to a one-week high while oil prices continued to slide. October 2014 decreased 12 ticks to
RM129.25 a gramme while November 2014, December 2014 and January 2015 each fell 13 ticks to
RM129.60, RM129.60, RM129.80 and RM130.00 a gramme, respectively. Open interest eased to
2,680 contracts from 2,792 contracts on Tuesday while turnover was lower at 78 lots worth
RM1.006 million from Tuesday’s 135 lots worth RM1.75 million. The physical price of gold was 55
sen lower at RM124.77 a gramme from RM125.32 a gramme on Tuesday. (Bernama)
Malaysian rubber market extended its gains yesterday, for the third consecutive day, a dealer said.
He said the rubber market was capped by the downtrend in regional futures markets on profit-taking
activities as crude oil prices slumped. The noon benchmark Malaysian Rubber Board’s official
physical price for tyre-grade SMR 20 was 2.5 sen higher at 476 sen a kg while latex-in-bulk rose
two sen to 372.5 sen a kg. The 5pm unofficial closing price for tyre-grade SMR 20 gained one sen to
477 sen a kg and latex-in-bulk also improved one sen to 373 sen a kg. (Bernama)
Crude palm oil (CPO) futures prices ended at a more than three-week low yesterday, a dealer said.
He said the downtrend was influenced by the massive weakness in the crude oil market coupled with
weak export performance as indicated by cargo surveyors. “Moving forward, prices are anticipated
to be downward biased with support at the RM2,150 level and immediate resistance at the RM2,200
level,” the dealer added. November 2014 fell RM27 to RM2,153 a tonne, December 2014 eased
RM30 to RM2,133, January 2015 lost RM37 to RM2,137, while February 2015 was RM38 lower at
RM2,142 a tonne. Volume increased to 59,068 lots against 51,725 lots on Tuesday while open
interest rose to 332,370 contracts against 327,179 previously. On the physical market, October
South was RM60 lower at RM2,160 a tonne. (Bernama)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Brent crude bounced off a four-year low yesterday to above US$85 a barrel, a level that was still
down 25 percent since June, as a drop in the value of the dollar attracted some cautious buying in the
oil market. On Tuesday, the Brent benchmark lost almost US$4, its biggest daily fall in more than
three years, after the West's energy watchdog slashed its forecasts for world oil demand. Brent for
November delivery was up 31 cents at US$85.35 by 1410GMT after initially sliding to another fresh
post-2010 low of US$83.37. US crude gained 40 cents a barrel to US$82.24, rebounding by more
than US$2 after hitting a 27-month low of US$80.01 earlier in the session. On Tuesday, the contract
posted its largest fall in a single session in nearly two years. Traders said prices had rebounded
slightly after US crude held above US$80 a barrel, a symbolically important level in a market that
has crashed through most lines of major support. The dollar index fell almost 1 percent against a
basket of currencies, reversing part of a near 10 per cent rally since May that has weighed on
commodities priced in the U.S. currency. (Reuters)
Global and Local Headlines
OSK Holdings Bhd has offered to buy OSK Property Holdings Bhd and PJ Development Holdings
Bhd (PJD) for a combined RM584.65 million. OSK Holdings yesterday signed a conditional share
sale agreement with its managing director and chief executive officer Tan Sri Ong Leong Huat and
the parties acting in concert to buy a 73.6 per cent stake in OSK Property for RM355.28 million, or
RM2 per share. The company is also buying from the same vendors a 31.7 per cent stake in PJD for
RM229.37 million or RM1.60 per share. The acquisitions will be paid in new OSK Holdings shares,
the company said in a filing to Bursa Malaysia. OSK Holdings will make a mandatory takeover
offer to acquire the remaining 26.4 per cent stake in OSK Property, and similar voluntary offer for
the balance of 68.3 per cent stake in PJD, from the public shareholders. (BTimes)
Prestariang Bhd yesterday inked a memorandum of agreement (MoA) with Tekla (SEA) Pte Ltd,
making it the latter’s official corporate education partner for Malaysia. Tekla is one of the leading
global providers of Building Information Modeling (BIM) software to the engineering and
construction markets. Under the MoA, Prestariang will be the exclusive education partner to all
institutions of higher learning, including universities, polytechnics and community colleges in
Malaysia. The MoA also identified Prestariang as Tekla’s authorised local training centre. (BTimes)
Rev Asia Bhd, formerly known as Catcha Media Bhd, has received shareholders’ approval to sell its
27.2 per cent stake in car website operator icar Asia. “We will try to dispose of all of the 27 per cent
or parts of it. It is all driven by what we can get out there and who the investors are. When there are
very strategic interested parties, we would like to continue and we would not sell the entire stake,”
Chairman Datuk Larry Gan said after Rev Asia’s extraordinary general meeting, here, yesterday.
Since its listing, iCar Asia has been making losses due to expenses incurred in executing its growth
plan. (BTimes)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Lockheed Martin Corp said on Wednesday it had made a technological breakthrough in
developing a power source based on nuclear fusion, and the first reactors, small enough to fit on the
back of a truck, could be ready for use in a decade. Tom McGuire, who heads the project, said he
and a small team had been working on fusion energy at Lockheed's secretive Skunk Works for about
four years, but were now going public to find potential partners in industry and government for their
work. Initial work demonstrated the feasibility of building a 100-megawatt reactor measuring seven
feet by 10 feet, which could fit on the back of a large truck, and is about 10 times smaller than
current reactors, McGuire told reporters. (Reuters)
Tomypak Holdings Bhd’s substantial shareholders may have sold their combined 25.4 per cent
stake below the earlier agreed RM1.30 a share. Bursa Malaysia data showed the stake, comprising
27.88 million shares, was done at RM1.17, which was below Tuesday’s closing price of RM1.29.
Tomypak, a flexible packaging company, yesterday closed five sen lower at RM1.24 in normal
trade. (BTimes)
Zhulian Corp Bhd’s net profit in the third quarter ended August 31 plunged 74 per cent to
RM10.37 million from RM39.6 million a year earlier. Group revenue fell 54 per cent to RM57.2
million, from RM124 million previously, mainly due to a fall in both local and overseas market
demands, Zhulian said. Zhulian has declared a two-sen dividend for the quarter, amounting to a
payout of RM9.2 million. (BTimes)
Netflix Inc signed up fewer video streaming subscribers than forecast for the quarter that ended in
September as its U.S. growth slowed markedly, sending its shares plunging as much as 27 percent.
The company, which operates in nearly 50 countries, blamed a $1 price hike, to $8.99 a month, for
discouraging new sign-ups. It lured 3.02 million new streaming customers globally, versus the 3.69
million it projected in July. Netflix attracted about 980,000 new customers in the United States, its
largest market, down from 1.29 million in the same period a year earlier. Shares of Netflix fell 25
percent to $333.53 in after-hours trading, from its close of $448.59 on Nasdaq. Netflix, the world's
largest video-streaming service, has invested in original series such as "House of Cards" and
"Orange is the New Black" to compete with rivals such as HBO, Amazon.com Inc and on-demand
offerings from pay TV providers. (Reuters)
Qualcomm Inc has agreed to buy chip maker CSR Plc for US$2.5 billion (RM8.19 billion), pushing
out its rival Microchip Technology to win the British Bluetooth specialist which is growing in areas
like automotive and wearable devices. Qualcomm has agreed to pay 900 pence a share in cash for
CSR, representing a 56.5 per cent premium on the share price before the start of the offer period, the
British company said on Wednesday. (Reuters)
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 12.61 times, which is in line with the 5 year PE of 12.78 times, suggesting financials
valuation are rich 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
12.61
12.66
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
31.50
16.38
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
13.11
13.34
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
7.88
10.03
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
16.44
16.55
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
14.92
19.14
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
59.38
60.38
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
13.11
13.34
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
8.1%
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%
0.2%
4.8%
16.1%
Plantation
Plantation
KLCI
KLCI
Construction
Finance
Finance
Consumer
product
26.3%
26.3%
0.8%
10.6%
14.6%
2.1%
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%
0.8%
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%
0.8%
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%
-0.6%
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%
-1.6%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-6.1%
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 13th 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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Tel: 603-6203 7227
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