MERCURY SECURITIES
SDN BHD (113193-W)
MARKET FLASH
WEDNESDAY, 17 DEC 2014
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HIGHLIGHTS
DOMESTIC
LOCAL
Close
Day Chg
FTSE KLCI
1,673.94
(23.37)
Volume (mil)
1,638.11
(426.70)
Value (RM’mil)
2,104.15
(214.33)
 Aeon Credit posts higher earnings on bad debt
recovery, processing fees
Up
296
Down
572
 Gamuda Q1 profit rises to RM185.84mil
Unchanged
275
 LFE Corp bags RM350mil contract for Shapadu
City Village in Putrajaya
FOREIGN
Dow Jones
17,180.84
(111.97)
 Masterskill aborts asset sale proposal
Nasdaq CI
4,605.16
(57.32)
 WZ Satu unit wins RM33.7mil Laksana job
S&P 500
1,989.63
(16.89)
 Top Glove’s Q1 net drops slightly to RM48.68mil
FTSE 100
6,158.66
149.11
Nikkei 225
16,755.32
(344.08)
3,021.52
68.10
Shanghai CI
FOREIGN
HSI
22,670.50
(357.35)
 City Developments to raise US$1.1bil
STI
3,215.64
(79.05)
3.49
(0.008)
54.32
(0.490)
1,197.31
0.050
Other Stats
ECONOMY / COMMODITY / CURRENCY
USD/MYR
 Russian ruble suffers steepest drop in 16 years
WTI (USD/barrel)
 Ringgit advances against US$
Gold (USD/troy oz)
 Rubber market closes higher
Top Volume
(RM)
Chg
 Gold futures continue downtrend
SUMATEC
0.180
0.010
HUBLINE
0.035
(0.005)
 CPO prices fall on weak demand
TIGER
0.125
(0.010)
 Oil slips below US$59
HSI-CJ
0.610
(0.095)
SKPETRO
2.080
(0.020)
11.900
0.400
CMSB
3.530
0.180
HUMEIND
3.200
0.180
KLCC
6.660
0.160
PUNCAK-WB
1.450
0.150
BAT
64.760
(1.960)
DLADY
43.100
(1.300)
UTDPLT
23.000
(0.800)
SHANG
6.450
(0.450)
FAREAST
8.000
(0.400)
Top Gainer
CARLSBG
Top Loser
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
CIMB MK Equity
CIMB GROUP HOLDINGS BHD
5.50
6.79
23.5%
RHBC MK Equity
RHB CAPITAL BHD
7.59
9.17
20.8%
MAY MK Equity
MALAYAN BANKING BHD
8.87
10.58
19.3%
IGB MK Equity
IGB CORPORATION BHD
2.69
4.80
78.4%
TRCB MK Equity
TROPICANA CORP BHD
1.07
1.63
52.6%
ECW MK Equity
ECO WORLD DEVELOPMENT GROUP
3.98
5.93
49.0%
SOP MK Equity
SARAWAK OIL PALMS BERHAD
5.42
6.75
24.5%
FGV MK Equity
FELDA GLOBAL VENTURES
2.75
3.37
22.5%
KUL MK Equity
KULIM MALAYSIA BHD
3.24
3.83
18.1%
BON MK Equity
BONIA CORP BHD
0.85
1.22
43.1%
PAD MK Equity
PADINI HOLDINGS BERHAD
1.61
1.88
17.0%
QLG MK Equity
QL RESOURCES BHD
3.27
3.79
15.8%
KNMG MK Equity KNM GROUP BHD
0.42
1.06
152.4%
PRESS MK Equity PRESS METAL BERHAD
2.54
4.82
89.8%
DRB MK Equity
DRB-HICOM BHD
1.51
2.85
88.7%
BHB MK Equity
BENALEC HOLDINGS BHD
0.61
1.23
101.0%
MUHI MK Equity
MUHIBBAH ENGINEERING (M) BHD
1.75
3.22
83.7%
MRC MK Equity
MALAYSIAN RESOURCES CORP BHD
1.25
2.01
60.6%
PPT MK Equity
PERISAI PETROLEUM TEKNOLOGI
0.45
1.11
147.3%
UZMA MK Equity UZMA BHD
1.55
2.98
92.0%
PETR MK Equity
1.12
1.97
72.4%
PERDANA PETROLEUM BHD
Closing Price Target Price
Premium
Source: Bloomberg as of 15th Dec 2014
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
NEWS HEADLINES
Commodity, Currency and Economic News
Ruble plunged more than 11 percent against the US dollar on Tuesday in its steepest intraday fall
since the Russian financial crisis in 1998 as confidence in the central bank evaporated after an
ineffectual rate hike. It has now fallen close to 20 percent this week, taking its losses this year
against the dollar to more than 50 percent and stirring memories of the 1998 crisis when the
currency collapsed within a matter of days, forcing Russia to default on its debt. The ruble has been
hammered by the slump in oil prices and Western sanctions imposed over Russia's involvement in
Ukraine, but its sharp decline over the past two days also reflects declining confidence in the central
bank. The central bank has spent more than $80 billion defending the ruble this year, including more
than $8 billion since it floated the currency in November. Russia still has ample reserves of around
$416 billion but analysts say the currency is in dangerous territory as it is increasingly being driven
down by sheer panic. (Reuters)
Ringgit closed higher against the US dollar yesterday and mostly lowers against other major
currencies. At 5pm, the ringgit was quoted at 3.4870/4900 against the greenback from 3.4950/4980
on Monday. Investors were cautious on the outcome on the two-day Federal Open Market
Committee meeting which ends today. The ringgit advanced against the British pound to
5.4592/4646 from 5.4952/4006 on Monday but fell against the Singapore dollar to 2.6743/6786 from
Monday’s 2.6635/6676. It weakened against the euro to 4.3521/3562 from 4.3485/3529, and
depreciated against the yen to 2.9880/9911 from 2.9484/9516 previously. (Bernama)
Rubber market closed higher for the second consecutive day yesterday, despite a stronger ringgit,
lower crude oil prices and weaker performance of the regional futures. The Tokyo Commodity
Exchange futures ended lower due to the stronger yen and a slowdown in China’s factory sector
activities. At the close, the Malaysian Rubber Board’s official physical price for tyre-grade SMR 20
increased six sen to 513.50 sen a kg, while latex-in-bulk rose three sen to 355 sen a kg. The
unofficial closing price for tyre-grade SMR 20 gained one sen to 513 sen a kg, while latex-in-bulk
earned one sen to 355 sen a kg. (Bernama)
Gold futures contracts on Bursa Malaysia Derivatives continued downtrend for the second
consecutive day, tracking overnight losses on the US Commodity Exchange’s (Comex) gold futures.
The downtrend was also due to the stronger US dollar and worries over an earlier than expected rate
hike by the US Federal Reserve. Gold is expected to continue its bearish trend on an improved US
economy and the strengthening greenback. December 2014, January 2015, February 2015 and
March 2015 fell 43 ticks each to RM134.80, RM135.05, RM135.35 and RM135.75 a gramme
respectively. Open interest decreased to 1,819 contracts from 1,843 contracts on Monday, while
turnover advanced to 127 lots valued at RM1.72 million from 103 lots worth RM1.41 million
previously. The physical price of gold at 5pm was RM2.04 lower at RM130.08 a gramme from
RM132.12 a gramme on Monday. (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 ended lower yesterday
following subdued demand and in anticipation of higher production for next year. The weakening
crude oil prices pressured the market. The support level is at RM2,100 a tonne and immediate
resistance at RM2,250 a tonne. New spot month January 2014 declined RM39 to RM2,113 a tonne,
February 2015 decreased RM48 to RM2,120 a tonne, March 2015 plunged RM50 to RM2,121 a
tonne and April 2015 dipped RM44 to RM2,121 a tonne. Volume increased to 52,441 lots from
41,447 lots on Monday while open interest declined to 199,824 contracts from 220,214 contracts.
On the physical market, December South eased RM20 to RM2,150 per tonne. (Bernama)
Brent Crude Oil fell below US$59 a barrel for the first time since May 2009 yesterday, extending a
six-month selloff as slowing Chinese factory activity and weakening emerging-market currencies
added to concerns about demand. Brent crude fell as low as US$58.50, its weakest since May 2009.
As of 1221GMT it was down US$2.12 at US$58.94 while US crude was down US$1.73 at
US$54.18 a barrel. International benchmark Brent crude has almost halved since reaching a 2014
high of US$115 a barrel in June on ample supply and slowing demand, and a switch in strategy by
exporter group Opec to defending market share rather than prices. A report showing Chinese
industrial activity shrank for the first time in seven months in December added to concern about oil
demand. China is the second-largest oil consumer after the United States. “The trend remains
down,” said Robin Bieber, technical analyst and director at London-based oil broker PVM Oil
Associates. “It is not advised to be long.” (Reuters)
Global and Local Headlines
Aeon Credit Service (M) Bhd’s earnings rose 12.1% to RM48.29mil in the third quarter ended Nov
20, 2014 from RM43.05mil a year ago, boosted by an increase in the bad debts recovered and
AEON Big loyalty programme processing fee. Its revenue increased by 21.4% to RM216.21mil
from RM178.03mil a year ago. Earnings per share were 32.50 sen compared with 29.9 sen. (Star)
Gamuda Bhd posted a net profit of RM185.84 million in its first quarter ended October 31 2014, up
12.3 per cent from RM165.48 million a year ago. Revenue rose to RM569.64 million from
RM486.12 million previously. Gamuda attributed the rise to higher contributions from its property,
water and expressway concession divisions. The higher revenue was due to stronger contributions
from its expressways. (BTimes)
LFE Corporation Bhd has secured a RM350mil contract to build the Shapadu City Village in
Putrajaya. The engineering-based LFE said on Tuesday its unit LFE Engineering Sdn Bhd had
received a letter of award from Shapadu Boulevard Sdn Bhd to undertake the engineering,
procurement and construction aspects of the project. News reports said Shapadu City Village would
have a Grade A office tower which will house Shapadu’s new headquarters, a luxury hotel, lifestyle
retail outlets and 150 high-end condominium units. (Star)
MERCURY SECURITIES
SDN BHD (113193-W)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
Masterskill Education Group Bhd (MEGB) has decided to abort the proposal to dispose of some
of its assets as the indicative market value is considered higher than the sale consideration offered by
the buyer. In a move to become an asset-light company, MEGB executive chairman and single
largest shareholder Siva Kumar Jeyapalan had offered to buy four properties for RM75mil which
would be leased back to Masterskill (M) Sdn Bhd. The properties are its campuses in Cheras, Kota
Kinabalu, Kuching and Pasir Gudang. (Star)
Top Glove Corp Bhd’s net profit fell three per cent to RM48.68 million in the first quarter ended
November 30 from RM50.27 million in the same period a year ago due to costlier fuel and knock-on
inflationary impact. In its filing to the stock exchange yesterday, Top Glove, the world’s largest
glove maker, said revenue declined one per cent to RM567.63 million from RM573.98 million a
year ago. Earnings per share slipped to 7.85 sen from 8.11 sen previously while net cash remains
positive at RM186.7 million. Top Glove enjoyed savings in the first quarter under review when
natural latex price fell 12 per cent to RM3.90 per kg and nitrile latex price settled five per cent to
US$1.04 per kg. (BTimes)
WZ Satu Bhd says its unit, WZS KenKeong Sdn Bhd, has won a RM33.7 million contract from
Laksana Amanbina Sdn Bhd for the construction and completion of earthworks and infrastructure
works connected to existing Package 1 in Kuantan. The company said the project was expected to be
completed within 58 weeks. (BTimes)
City Developments Ltd (CDL) said yesterday it plans to raise about US$1.1 billion (RM3.84
billion) from a group of investors and banks, including Blackstone Group LP, to fund global
expansion. The company will raise S$750 million (RM2 billion) from three investors, including
Blackstone, and another S$750 million in loans from Singapore’s top two lenders, DBS Group
Holdings Ltd and Oversea-Chinese Banking Corp. CDL plans to use part of the funds to finance
overseas expansion, including in Japan, the United States and China. (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 11.83 times, which is 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
11.83
11.98
High: Average: Low: -
High: 25.57
Average: 16.27
Low: 13.21
28.65
16.01
High: 19.97
Average: 17.04
Low: 12.50
High: 19.97
Average: 15.92
Low: 11.98
14.03
13.20
High: 14.32
Average: 7.95
Low: 3.81
High: 17.76
Average: 10.15
Low: 3.81
8.65
10.94
High: 18.01
Average: 16.09
Low: 14.34
High: 23.70
Average: 17.05
Low: 14.34
15.58
16.31
High: 42.70
Average: 20.65
Low: 10.76
High: 42.70
Average: 18.87
Low: 10.72
14.49
19.72
High: 69.72
Average: 27.11
Low: 5.04
High: 69.72
Average: 24.44
Low: 5.04
18.46
19.12
High: 20.90
Average: 14.06
Low: 5.01
High: 34.34
Average: 18.26
Low: 5.01
14.03
13.20
2011
2012
2013
Ind Prod
Property
Consumer
product
Consumer
product
Property
39.5%
30.6%
7.6%
12.0%
22.1%
1.7%
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%
-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%
-5.3%
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%
-9.4%
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%
-9.4%
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%
-4.3%
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%
-3.6%
1.3%
11.5%
Construction
Ind Prod
Plantation
Plantation
Trade &
services
Construction
12.4%
17.2%
6.9%
-10.7%
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 15th Dec 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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