Outlook for Malaysia in the 2nd Half of 2013 01 July 2013

*Please be aware that there is a typo where QL Resources had wrongly type as QR Resources. 

P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision. 

Outlook for Singapore 28 June 2013

P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision. 

Hong Kong's Economy 27 June 2013

 P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision. 

Rebound of a down trend? 26 June 2013

Dear readers, I'm so sorry for posting today's material so late as I was bz with my job. Will try to avoid this in future. Thanks and have a nice day!

The Master of Technical Analysis in Maybank, where you can find his article on The Edge by every Thursday. 
As a result, all his calls are based on his technical analysis point of view.

 

 P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision.

US & Asian Economy 25 June 2013

QE to go longer? 

P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision. 

Aviation Industry 24 June 2013

P/s: Pls click on the photo to enlarge. Thanks and have a nice day!

Eversendai 21/06/2013

Lee Yen Ling
Research Analyst,
Maybank Investment Bank, Malaysia

Key Takeaways
~ Eversendai’s success rate is typically 20% of the tender book.
~Eversendai has secured maiden contracts in Azerbaijan and it is very well positioned to secure the complex
jobs that are coming up.
~ Expect earnings in the following quarters to pick up. This is due to the recognition of some variation orders
and many of its key projects are at a respective advanced stage.



Q1. Eversendai has openly declared that it is tendering for RM8 billion worth of projects, and has an order book of RM1.5 billion. Any details on what could be the potential wins, what jobs, where, how much?

• Eversendai’s success rate is typically 20% of the tender book. Construction billing a year is about RM1 billion.
• Domestically, we are looking at job wins from the construction of high rise commercial buildings where Eversendai can
use its valuable composite structure skill due to such good margins.
• Looking at the petrol chemical plant projects and Rapid Pengerang, Johor.
• Expect companies to secure jobs in the oil field countries due to a lot of infrastructure requirements for example, iconic stadiums and rail requirements in Qatar, in light of the Qatar FIFA 2022.
• Azerbaijan is also undergoing a construction boom due to its oil money and a lot of infrastructure and iconic buildings are in the pipeline. Eversendai has secured maiden contracts in Azerbaijan and it is very well positioned to secure the complex jobs that are coming up. Azerbaijan is looking to build the world’s tallest building.

Q2. 1QFY13 margins were somewhat low, which Eversendai attributed to timing issues, as several substantial variation orders were still pending then. Fair to expect brighter prospects for Q2, or pick up only later?


• Expect earnings in the following quarters to pick up. This is due to the recognition of some variation orders and because many of its key projects are at a respective advanced stage.


Q3. Some of the big headlines that we’ve seen includes QE tapering, fund flows, emerging markets, as well as China’s economy slowing down. Which risk weighs the heaviest on Eversendai?

• The biggest risk would be the delay in construction awards.


Q4. Update on JV with Technics Oil & Gas Ltd (since March), how is Eversendai benefiting from it?

• Since the formation of the JV, the JV has secured waterfront yards in the Middle East which is expected to
commercialize by the end of this year. The JV has also tendered for 3 oil & gas projects worth a total of RM500 million to RM800 million - expects the award to materialize by next year.
• This new oil & gas division will be Eversendai’s new business and new earnings growth.


Q5. You have a buy call on Eversendai at RM1.70, tell us about your valuation method.

• Based on the current outstanding order book around RM1.5 billion, about 70% of our earnings forecast for 2013 is already in hand. They just need to secure another RM500 million for this year, just to meet our expectations. We and the other brokers are estimating 1.3 billion new jobs for this year and next year. This is still below management’s expectations of 1.5 billion.
• In total, we are looking at 2% earnings growth and 12% next year.
• Based on our earnings forecast, we’ve attached a 10x forward PE to derive our target price of RM1.70 which is still undemanding considering the bigger cap players of 15x.

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision. 

Asian Economy 20/06/2013

Ong Seng Yeow
Research Director,
Maybank Kim Eng, SG

Key Takeaways
Asis ex-Japan Fund out flows: USD1.8bn
Risk to emerging market growth should be contained with US recovery

Q1. Equity fund flows are exiting emerging markets, to the tune of USD6.2bn in week ended 5th Jne. Where are they going to?

•Global fund flows continue to exit the equities market: outflows nearly doubled of what we saw end May
•Asia ex-Japan: fund outflows spiked to about USD1.8bn
•Main outflow contributors: China and Hong Kong –USD1.2bn, just under 70% of total outflows within Asia ex-Japan itself
•Clearly not going to bond markets, but outflow is going to cash –cash ratio has been rising indicating investors are taking risks off the table

Q2. With China growth somewhat suspect, which other growth drivers are we depending on to power this region ahead?

•Emerging markets in general are suffering from the outflow
•With US recovery: risk to emerging markets growth should be contained
•Fed’s statement also removed ambiguity
•Forecast for US GDP growth 2.5%-2.8% and unemployment targets of 7.3%-7.5%: clearly achievable
•Beneficial to economies like Taiwan and South Korea, whose core electronic industries are directly leveraged to US economy

Q3. In April -institutional investors raised allocation on Singapore and Malaysia against under-allocation from Korea and Hong Kong. Would that be a continuing trend this month?

•Singapore market yield spreads against 10 year SGD bond rate is still below historical average
•Still some downside risk for Singapore market in general
•More optimistic for Malaysia: 2013 year end KLCI target based on 15.5 times forward earnings, slightly above KLCI’s mean average of 14.8 times
•Economy in general is supported by solid domestic fundamentals
•Stable macroeconomic conditions, strong banking systems, healthy corporate balance sheets, and continuous corporate earnings growth
•Despite market gaining 4.2% in just 1 month

Q4.  What would you suggest risk-adverse investors do?

•Avoid some Asian markets that have outperformed the region
•Indonesia, Philippines, Thailand: economic fundamentals have been strong
•Hot money flows were large contributing factor for the supernormal gains in the stock markets for these countries
•Only wise as funds rebalance portfolio and take risk off the table: put less weightageto these countries

Disclaimer: No information should be concluded as buy or sell, please consult your personal remisier for your personal investment decision.