The Star Online: Business

AmResearch "Neutral" on tobacco industry, cautious on outlook
KLCI advances, boost from Petronas stocks, Hong Leong Bank
CIMB Research maintains KLCI end-2013 target of 1,850

AmResearch "Neutral" on tobacco industry, cautious on outlook

Posted: 03 Jun 2013 06:51 PM PDT

Published: Tuesday June 4, 2013 MYT 9:52:00 AM

KUALA LUMPUR: AmResearch is maintaining its "Neutral" call on the tobacco industry with "Hold" recommendations on British American Tobacco Malaysia Bhd (BAT) and JT International Bhd (JTI) with a fair value of RM62 and RM7.20.

It said on Tuesday the government had recently undertaken steps to reduce nicotine and tar levels in cigarettes, pictorial warnings size increase and to expand non-smoking areas to roofed areas.

AmResearch said it was negative on the proposed regulations by the government as it would exert further downward pressure on the "already apathetic legitimate industry volumes". It said no adjustments had been made to the total industry volume (TIV) growth however it had revised downwards the financial year 2013-2015 TIV growth assumption to 0% to 1% following BAT's 3% hike in cigarette prices. "Surprisingly, its peers, JTI and Philip Morris International, have reportedly declined to follow suit. Other threats to legal volumes could come from a probable hike in excise duties as the government's spending is set to rise after the 13th General Election," it said. AmResearch said tobacco manufacturers would face difficulty controlling their costs as additional price hikes could lead to greater downtrading activities, especially for the more price-sensitive value for money segment brands .

"This will only serve to benefit the already high illicit volumes (financial year 2012: 34.5%) and intensify the proliferation of cigarettes sold below the minimum price of RM7 per pack," it said.

KLCI advances, boost from Petronas stocks, Hong Leong Bank

Posted: 03 Jun 2013 06:31 PM PDT

Published: Tuesday June 4, 2013 MYT 9:31:00 AM

KUALA LUMPUR: Malaysia's blue chips advanced in early trade on Tuesday, with some fund nibbling of Petronas-linked stocks and Hong Leong Bank after closing in the red for three consecutive days.

At 9.10am, the FBM KLCI was up 2.37 points to 1,768.70. Turnover was 106.36 million shares valued at RM59.08mil. There were 160 gainers, 86 losers and 124 counters unchanged.

Reuters reported Asian shares recovered from their lowest in about six months on Tuesday as weak new U.S. manufacturing data eased worries about the Federal Reserve's stimulus programme, although investors were cautious before a more important jobs report later in the week.

Hwang DBS Vickers Research (HDBSVR) said the KLCI, after slipping 17.1 points or 1.0% over that past three consecutive days, the index could stage a mild technical rebound.

"Essentially, our Malaysian bourse will probably show resilience as bargain hunters seem eager to step in on any market weaknesses. "This comes as US investors turned net buyers to lift key equity indices on Wall Street by between 0.3% and 0.9% last night, buoyed by expectations that the US Federal Reserve would only tighten its quantitative easing programme when the economy shows further strength," said HDBSVR.

Petronas Dagangan rose the most, up 48 sen to RM25.48 and PetronasGas 28 sen higher at RM21.48 while BAT gained 40 sen to RM64.40.

Hong Leong Bank gained 16 sen to RM13.98 but Public Bank shed six sen to RM16.88.

Among plantations, KL Kepong and Sarawak Oil Palms rose 10 sen each to RM21.30 and RM5.60.

CIMB Research maintains KLCI end-2013 target of 1,850

Posted: 03 Jun 2013 06:07 PM PDT

Published: Tuesday June 4, 2013 MYT 9:08:00 AM

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight position on Malaysia and end-2013 FBM KLCI target of 1,850.

It said on Tuesday the KLCI target was set at a 10% premium to the KLCI's three-year moving average price-to-earnings (or forward P/E target of 15.6 times).

"Market catalysts are expected from funds inflows and improved earnings prospects while our preferred sectors remain potential Economic Transformation Programme (ETP) winners," it said.

CIMB Research said May's results season (for the January-March financial quarter) was encouraging.

Although its earnings revision ratio declined from 0.47 times in February to 0.42 times, a lower 19% of the stocks in its coverage missed expectations versus 35% during the February season.

"Some 8% came in above compared with 16% in February, while a massive 73% met expectations (49% previously). Nine sectors disappointed (14 previously), while four (six previously) beat expectations.

"Importantly, many companies that beat expectations were big-cap heavyweights such as PChem, IOI, MISC, Maxis, Telekom and Tenaga.

"Our core market EPS had been cut by only 1.3 percentage points for 2013 and 1.5 percentage points for 2014. These were much lower than the steep cuts of 3%-10% in the previous three quarters. We forecast core EPS growth of 7% for 2013, before accelerating to 10% in 2014," said CIMB Research.

Kredit: www.thestar.com.my

Isnin, 3 Jun 2013