MERCURY SECURITIES
SDN BHD (113193-W)
MARKET FLASH
FRIDAY, 14 NOV 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HIGHLIGHTS
DOMESTIC
LOCAL
Close
Day Chg
FTSE KLCI
1,815.81
(0.43)
Volume (mil)
1,695.31
3.71
Value (RM’mil)
1,727.69
(88.19)
 Econpile bags RM30mil job from CRCC
Up
245
 GDEX plans bonus, warrant issue
Down
553
 I-Berhad net profit jumps
Unchanged
306
 SolarTech Energy injecting RM13.1mil into Tech
Seng
FOREIGN
Dow Jones
17,612.20
40.59
Nasdaq CI
4,675.14
5.01
FOREIGN
S&P 500
2,038.25
1.08
 Berkshire to buy Duracell
FTSE 100
6,628.02
24.41
Nikkei 225
17,392.79
+66.41
2,485.61
(8.87)
 DP World to buy Dubai Industrial parks operator
Shanghai CI
 Olam’s earnings down 2.9% on fair-value losses
HSI
24,019.94
81.76
 Thai Airways returns to profit on forex gain
STI
3,306.00
21.22
3.339
0.005
76.8
(3.63)
1,160.61
(3.38)
Other Stats
ECONOMY / COMMODITY / CURRENCY
USD/MYR
 Ringgit slightly lower against US$
WTI (USD/barrel)
 Rubber market closes mixed
Gold (USD/troy oz)
 Gold futures close lower
Top Volume
(RM)
Chg
 CPO futures close lower
JASKITA
0.260
0.060
 Oil at 4-year low
MINETEC
0.165
0.005
EFFICEN
0.360
(0.015)
DNEX
0.340
(0.015)
MINETEC-OR
0.015
0.005
BAT
68.500
1.600
DLADY
47.300
0.580
0.605
0.300
DIN045801028
97.200
0.180
KLK
23.180
0.180
12.000
(0.500)
100.500
(0.300)
10.240
(0.260)
4.000
(0.250)
14.800
(0.240)
Top Gainer
CBIP-WA
Top Loser
ALLIANZ
DIN042300721
GENP
HUMEIND
PPB
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
Closing Price Target Price
Premium
CIMB MK Equity
CIMB GROUP HOLDINGS BHD
6.18
7.12
15.2%
MAY MK Equity
MALAYAN BANKING BHD
9.61
11.03
14.8%
AMM MK Equity
AMMB HOLDINGS BHD
6.52
7.37
13.1%
NHB MK Equity
NAIM HOLDINGS BERHAD
3.25
4.84
49.0%
IGB MK Equity
IGB CORPORATION BHD
2.87
4.10
42.9%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
4.39
6.10
38.9%
KUL MK Equity
KULIM MALAYSIA BHD
3.45
4.00
15.9%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.87
6.75
15.0%
THP MK Equity
TH PLANTATIONS BHD
1.62
1.80
11.4%
BON MK Equity
BONIA CORP BHD
1.03
1.73
68.0%
FNH MK Equity
FRASER & NEAVE HOLDINGS BHD
16.04
19.15
19.4%
CAB MK Equity
CARLSBERG BREWERY MALAYSIA B
10.44
12.27
17.5%
COCO MK Equity
COASTAL CONTRACTS BHD
3.63
5.81
60.1%
LLB MK Equity
LION INDUSTRIES CORP BHD
0.58
0.90
55.9%
DRB MK Equity
DRB-HICOM BHD
1.98
3.04
53.6%
BHB MK Equity
BENALEC HOLDINGS BHD
0.81
1.28
59.0%
EVSD MK Equity
EVERSENDAI CORP BHD
0.77
1.10
42.7%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.46
2.07
41.8%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
0.73
1.27
73.8%
SAKP MK Equity
SAPURAKENCANA PETROLEUM BHD
3.10
5.02
61.9%
PETR MK Equity
PERDANA PETROLEUM BHD
1.37
2.21
61.0%
Source: Bloomberg as of 14th November 2014
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HEADLINES
Commodity, Currency and Economic News
Ringgit closed slightly lower against the US dollar yesterday, ahead of the third-quarter growth
data, which would be announced by Bank Negara today, dealers said. At 5pm, the ringgit was
quoted at 3.3380/3400 vis-a-vis the greenback compared with 3.3350/3370 on Wednesday. It
hovered between 3.3345 and 3.3380 throughout the day. The ringgit was traded mostly higher
against other major currencies. It rose against the Singapore dollar to 2.5840/5873 from 2.5841/5864
on Wednesday, appreciated against the yen to 2.8890/8913 from 2.8930/8954 yesterday and
strengthened against the British pound to 5.2644/2682 from 5.3097/3142 previously. The ringgit fell
against the euro to 4.1608/1636 from 4.1587/1619 on Wednesday. (Bernama)
Rubber market closed mixed yesterday due to stronger ringgit and profit-taking on the Tokyo
Commodity Exchange, a dealer said. He said it was also reported that market operators were looking
forward to the release of China’s economic data. At the close, the Malaysian Rubber Board’s official
physical price for tyre-grade SMR 20 rose 1.5 sen to 512.00 sen a kg at noon while latex-in-bulk
moved up by half a sen to 408.50 sen a kg. The unofficial closing price for tyre-grade SMR 20 and
latex-in-bulk declined half a sen to 512.50 sen a kg and 408.50 sen a kg, respectively. (Bernama)
Gold futures contracts on Bursa Malaysia Derivatives closed lower yesterday as the strong US
dollar reduced bullion’s appeal as a hedge. Phillip Futures Sdn Bhd dealer Lim Eng Wee said
market sentiment was bearish, taking the cue from the drop in global gold demand. According to
World Gold Council, global bullion demand slipped 2.5 per cent from last year to 929.3 million
tonnes in the third quarter of this year. November 2014 fell five ticks to RM124.80 a gramme while
December 2014, January 2015 and February 2015 were all unchanged at RM125.05, RM125.35 and
RM125.65 a gramme, respectively. Open interest rose to 2,068 contracts from 1,986 contracts on
Wednesday, while turnover increased to 213 lots worth RM2.66 million from the 176 lots worth
RM2.20 million previously. At 5pm, the physical price of gold was 27 sen lower at RM120.61 a
gramme from RM120.88 a gramme on Wednesday. (Bernama)
Crude palm oil (CPO) futures contracts on Bursa Malaysia Derivatives closed lower yesterday,
tracking weakness in the crude oil market and lower palm oil exports to India, a major palm oil
destination. According to the Solvent Extractors’ Association, palm oil shipments declined 4.1 per
cent to 7.96 million tonne for the year ended October 31, the first drop since 2009-2010. November
and December 2014 slipped RM23 to RM2,191 and RM2,221 a tonne respectively, January 2015
slumped RM28 to RM2,231 a tonne and February down RM27 to RM2,239 a tonne. Volume fell to
39,596 lots from Wednesday’s 41,671 lots while open interest eased to 257,144 contracts from
260,193 contacts, previously. On the physical market, November South went down RM20 from
Wednesday’s RM2,240 a tonne. (Bernama)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Brent crude oil fell to a four-year low, below US$80 a barrel, yesterday after Chinese data showed
a slowdown in activity last month in the world’s top energy consumer and Saudi Arabia was silent
about a possible cut in production. China’s economy lost momentum in October, with factory
growth dipping and investment growth hitting a near 13-year low, reinforcing expectations of a
slower increase in fuel demand. Brent crude for December, which expired yesterday, was down by
US1.51 at US$78.87 a barrel by 1314GMT after falling to an intraday low of US$78.71, its lowest
since September 2010. US light crude was down 40 cents at US$76.78 a barrel. “There are not many
bullish factors,” said Avtar Sandu, a senior manager for commodities at Phillip Futures. Demand for
oil from members of the Organisation of the Petroleum Exporting Countries will drop to 29.2
million barrels per day (bpd) next year, almost one million bpd less than current output, the cartel
forecast this week. (Reuters)
Global and Local Headlines
Econpile Holdings Bhd has secured a RM30 million contract for the substructure of a
condominium along Persiaran Stonor here. The company received the contract from CRCC
Malaysia Bhd to undertake bored piling, earthworks and basement sub-structure works for the
project. “The duration of the contract is 14 months and is expected to be completed in January
2016,” it said it said in a filing to Bursa Malaysia yesterday. (BTimes)
GD Express Carrier Bhd (GDEX), which posted a 35.3% jump in net profit to RM4.98mil in the
first quarter ended Sept 30, has proposed bonus and warrants issue to reward its shareholders. In a
filing with Bursa Malayisa, GDEX proposed to issue up to 310.85 million a bonus shares, on the
basis of one bonus share for every three existing shares held. The company will also issue up to
186.51 million warrants, on the basis of one warrant for every five shares not including bonus shares
held. (Star)
I-Berhad’s net profit jumped more than fourfold to RM14.23 million for the third quarter ended
September 30 2014 from RM2.67 million a year ago. Revenue increased to RM77.38 million from
RM35.53 million previously. In a filing to Bursa Malaysia yesterday, the company said the
performance was due to the contributions from its property development division. For year-to-date,
revenue hit RM192.95 million, rising almost 100 per cent compared with RM96.48 million for the
financial period ended September 30, 2013. (Star)
Maxis Bhd posted a higher normalised profit after tax of RM494 million in the third quarter ended
September 30, up by 2.9 per cent from RM480 million registered in the second quarter 2014. In a
statement, the company said its service revenue remained steady at RM2.5 billion, while earnings
before interest, tax, depreciation and amortisation (EBITDA) stood at RM1.1 billion, with an
EBITDA margin on service revenue at a solid 52.7 per cent. (BTimes)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
SolarTech Energy Corp (SEC) (Taiwan) is injecting RM13.10mil into solar business of Penangbased Teck Seng Holdings Bhd in return for a stake in its subsidiary. The share sale would provide
TS Solartech an opportunity to include a strategic partner to develop its solar business and improve
its long-term growth process. (Star)
Berkshire Hathaway Inc agreed to buy the Duracell battery business from Procter & Gamble Co
(P&G) in chairman Warren Buffett’s latest stock swap. Berkshire will turn over US$4.7 billion
(RM15.2 billion) of P&G shares held by Buffett’s Omaha, Nebraska-based company. Duracell will
have about US$1.7 billion in cash when the deal is completed, which is expected in the second half
of next year. The exchange may help Berkshire cut its holding in P&G without incurring the tax
costs of selling shares in the open market. Buffett became one of P&G’s biggest shareholders
through an investment in Gillette Co. (Bloomberg)
DP World Ltd, which operates ports from China to Peru, agreed to buy Dubai’s industrial parks
operator Economic Zones World FZE for US$2.6 billion (RM8.4 billion). The company also plans
to delist its shares from the London Stock Exchange. The purchase, which includes the acquisition
of the Jebel Ali Free Zone logistics park, is expected to be completed in the second quarter, Dubaibased DP World said in an e-mailed statement yesterday. The agreement includes the assumption of
net debt of US$859 million, and is at about 10 times EZW’s earnings before interest, tax
depreciation and amortisation for last year, it said. (Bloomberg)
Olam International's bottom line took a toll from fair-value losses on its biological assets in the
September quarter. Earnings declined 2.9% y-o-y to $44.3 million as the commodity trader booked a
$15.9-million loss on these assets, it said in a statement this morning. The company had a $3.3million fair value gain in the same period last year. Revenue was flat at $4.3 billion during the
quarter (1QFY2015), which is traditionally its weakest period due to seasonal factors. Sales volumes
for its food division, its main revenue driver, were lower as Olam reduced its focus on lower-margin
businesses, resulting in EBITDA for the division falling to $200.5 million from $240.4 million. The
group's non-food segment did better, with EBITDA rising to $18.8 million from $8.5 million as its
commodity financial services business returned to the black. (Edge)
Thai Airways International PCL said yesterday it returned to a net profit in the third quarter,
helped by a huge foreign exchange gain. The state-controlled airline posted a net profit of 1.09
billion baht (RM111 million). It reported a foreign exchange gain of 7.4 billion baht in the quarter,
the airline said in a statement. Excluding the foreign exchange gain, tax and impairment expenses,
and the airline posted a loss of 5.24 billion baht versus a 3.2 billion baht loss a year earlier. The flag
carrier recorded losses in the past five quarters after the tourism industry was hit by domestic
political unrest. (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 P/E. 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 P/E and the corresponding 5 year high, low and average P/E. For example, finance
sector PE is currently at 12.43 times, which is marginally lower than 5 year average P/E of 12.78 times,
suggesting financials valuation is in line with the historical average P/E. 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
12.43
12.56
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
31.19
17.03
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
13.77
14.07
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
9.34
11.84
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
16.17
16.76
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
15.37
20.08
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
19.10
19.38
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
13.77
14.07
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
13.7%
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%
1.8%
4.8%
16.1%
Plantation
Plantation
KLCI
KLCI
Construction
Finance
Finance
Consumer
product
26.3%
26.3%
0.8%
10.6%
14.6%
1.3%
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%
0.2%
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%
0.2%
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%
0.4%
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%
1.4%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-2.6%
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 10th November 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:
L-7-2, No.2, Jalan Solaris
Solaris Mont Kiara
50480, Kuala Lumpur
Tel: 603-6203 7227
or E-mail: [email protected]
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