Top Story: Banking – History suggests potential sector derating ahead Neutral (down from OW)
Sector Update
Maybank:
Fair value and call downgraded to RM8.85
Market Perform (down from OP)
CIMB: Fair value at RM7.49 (from RM8.80) Market Perform
Public Bank: Fair value and call downgraded to RM14.10 Market Perform (down from OP)
HL Bank: Fair value at RM11.89 (from RM12.50) Market Perform
AMMB: Fair value and call downgraded to RM6.15 Underperform (down from OP)
AFG: Fair value at RM3.38 (from RM3.60) Market Perform
Affin: Fair value and call downgraded to RM2.77 Underperform (down from MP)
Macro View
Money Supply: Broad monetary aggregate and loan growth eased in July
Economic Highlights (published 26 Aug 2011)
¨The broader money supply, M3, eased to 11.6% yoy in July, off the 30-month high of +12.4% in Jun but higher than +11.5% in May, indicating that economic activities are cooling but remained resilient.
Sector Call
Banking: Jul ‘11 system data – Loan growth and leading indicators softened Neutral
Sector update
¨Jul ’11 system-wide loan growth eased further to 12.9% yoy, as compared to +13.5% yoy in Jun ’11 following lower disbursements during the month (vs. Jun).
Oil & Gas: Petronas 1QFY12/11 results Overweight
Sector Update
Dialog: Fair value at RM3.90 Outperform
P Gas: Fair value at RM14.47 Outperform
RH Petrogas: Fair value at $1.36 Outperform
Dayang: Fair value at RM2.33 Outperform
Petra Perdana: Fair value at RM1.15 Outperform
Wah Seong: Fair value at RM2.66 Outperform
Petronas Chemicals: Fair value and call downgraded to RM6.37 Market Perform (down from OP)
Maybank’s acquisition of Kim Eng gave it stock-broking and investment banking operations in Singapore, Thailand, Indonesia, the Philippines and Vietnam. Kim Eng’s income of RM152.6 million contributed to a 51-per-cent increase in noninterest earnings to RM1.2 billion, it said.
As a whole, fourth-quarter revenue increased 21 per cent to RM5.72 billion as lending grew, the company said. Net interest income advanced 2 per cent to RM1.83 billion in the quarter through June. Noninterest income climbed 45 per cent to RM1.2 billion, profit from insurance jumped 71 per cent to RM425.3 million, and earnings from Islamic finance gained 33 per cent to RM468.8 million, the company said.
Provisions for bad debts fell to RM47.7 million from RM320.5 million a year earlier, it said.
The group’s full-year net profit was RM4.45 billion, up 16.6 per cent on-year.
Maybank shares closed up 0.12 per cent to RM8.64 in Kuala Lumpur yesterday.
— Malayan Banking, the country’s largest lender, said yesterday fourthquarter profit rose 27 per cent to a record RM1.15 billion (S$467.5 million), boosted by maiden contributions from Singapore brokerage Kim Eng Holdings, which it took over in May.
1QFY12 core net profit of RM29m (+24% YoY) made up 29% of our full-year forecast.
The slight out-performance came from lower doubtful debt allowances and higher interest income from the early settlement of receivables. We maintain our forecasts pending an update with the management on recent developments relating to KOWAJA which implies the resumption in RCE's core activities. With share price closing in to our target price (pegged to 0.8x historical P/B also under review), we upgrade the stock from Sell. Click here for full report »
Top Story: MBSB – Set to soar to greater heights Outperform
Briefing Note
¨Management expects personal financing to continue to be the main driver for loan growth this year and targets to achieve around RM6-7bn in disbursements. Apart from that, loan growth would be further supported by rising contribution from new products introduced in 1H11 such as contract financing and SME cash express where to date, approvals have reached close to RM1bn.
Local palm oil downstream players in the refining, oleochemicals and biodiesel sectors will likely see their operations rendered as uncompetitive with stagnating profit margins following Indonesia's latest proposal to restructure its palm oil export duty on refined palm-oil products.
The proposed duty structure will be 10 basis point lower, based on the average crude palm oil (CPO) spot prices at the Rotterdam market.
Banking: Maybank open to RHB deal if the price is right.
Malayan Banking Bhd (Maybank), which called off merger talks with RHB Capital Bhd in June, is still keeping its options open for a possible acquisition, if the price is right. President-cum-chief executive officer Datuk Seri Abdul Wahid Omar said RHB was a very good bank and the combination between Maybank and RHB could create a significant amount of synergy, resulting in a significant shareholder value creation.
Top Story: Malaysian Banks – Jun ‘11 system data – Loan growth eased slightly but still robust Overweight
Sector Update
¨Jun ’11 system-wide loan growth eased to 13.5% yoy (May ’11: +13.8% yoy) with the slight slowdown mainly due to large repayments as loans were refinanced with funds from the debt capital market.
¨Consequently, loans to businesses expanded by a slower pace of 14.3% yoy (May ’11: +14.7% yoy). The expansion in household loans outstanding also eased to 12.8% as compared to +13% in May ’11.
Top Story: Indonesia Banks – Soaring higher Overweight
Sector Initiation (Indonesia)
Bank Rakyat Indonesia: The top pick - Fair value IDR8,500 Outperform
Bank Mandiri: Primed for growth - Fair value IDR9,500 Outperform
Bank Danamon: Regulatory and rights issue headwinds - Fair value IDR6,600 Market Perform
Bank Central Asia: Priced for perfection - Fair value IDR7,350 Underperform
¨Indonesia’s banking industry continues to leverage on a supportive economic environment that is driven by domestic demand. GDP growth of 6-7% pa.. is forecast for 2011-2012 that will sustain loan growth of over 20% pa (2010: +23.3%).
Bank Rakyat: The top pick Outperform(Initiation of Coverage)
New Coverage (Indonesia)
¨We like Rakyat for its entrenched leadership of the micro lending and consumer segments that will be the key driver of loan growth of over 20%. During 1Q11, micro and consumer loans each grew 39.6% and 21.9% yoy respectively, leveraging on Indonesia’s strong economic growth and a growing middle class. The micro lending segment also enables Rakyat to generate high NIMs concurrent with low NPLs thus helping to generate superior ROEs (1Q11: 33.4%).
Bank Mandiri: Primed for growth Outperform (Initiation of Coverage)
New Coverage (Indonesia)
¨Mandiri is attractive for its strong growth capacity. Leveraging on Indonesia’s solid macroeconomic fundamentals, Mandiri recorded strong loan growth of 24.7% yoy during 1Q11 and is poised to outstrip its 20-22% growth target in 2011. Mandiri’s traditional strength in corporate banking also puts it in a strong position to capture infrastructure-led loan demand from Indonesia’s new investment cycle.
Malaysia's Minister in The Prime Minister's Department Nor Mohamed Yakcop (R) and Singapore's Minister for Foreign Affairs K Shanmugam (AFPPHOTO/ Saeed Khan)
SINGAPORE: The Singapore and Malaysian governments plan to open a rapid transit link between the city—state and the neighbouring city of Johor Bahru in Malaysia’s south by 2018, both governments said in a joint statement on Monday.
" The terminating stations of the (rapid transit system) link will be in the vicinity of JB Sentral, Johor Bahru and in the vicinity of Republic Polytechnic, Singapore," the statement said.
" It is targeted that the RTS link will be operational by 2018. The RTS link will have a co—located (customs, immigration and quarantine) facility in Singapore and another co—located CIQ facility in Johor Bahru so that commuters need to clear immigration only once for each way of travel."
The announcement comes as Malaysia and Singapore officially sealed the Points of Agreement (POA) on Malayan railway land in Singapore.
The signing ceremony took place in Putrajaya, Malaysia on Monday.
Foreign Minister K Shanmugam signed on behalf of Singapore while Malaysia’s side was represented by the Minister in the Prime Minister’s Department, Nor Mohamed Yakcop.
The signing officially marks an end to year—long negotiations on implementation details that kickstarted following the landmark announcement of the POA breakthrough by the prime ministers of both countries in May 2010.
The joint statement by the prime ministers of Singapore and Malaysia said that preparations for the relocation of Keretapi Tanah Melayu (KTM) from Tanjong Pagar to the Woodlands Train Checkpoint on July 1 are on track.
A joint venture company, called M+S Pte Ltd, and Iskandar JV Company will be established by Thursday.
M+S will develop the four land parcels in Marina South as an integrated development and the two land parcels in Ophir—Rochor, also as an integrated development.
Iskandar JV will undertake two wellness developments in Iskandar Malaysia.
In addition, Khazanah and Temasek will jointly consider other potential developments which are commercially viable in Iskandar Malaysia of up to 500 acres of land, inclusive of the said 215 acres.
Also on schedule is the implementation of the work plan to hand over the waterworks under the 1961 Water Agreement by Singapore free of charge and as a matter of goodwill after the expiry of the agreement on 31 August 2011.
Malaysian Prime Minister Najib Razak and Singapore Prime Minister Lee Hsien Loong expressed appreciation and satisfaction on the work done by the ministers and officials in achieving the historic breakthrough in the POA.
Both prime ministers also reiterated their commitments towards further strengthening bilateral relations.
They noted that the resolution of the POA would pave the way for the two countries to explore new areas of cooperation.
14 Jun 2011 ... Hishammuddin must conduct immediate investigation on despicable nude squat incident involving two Singaporean women ... teresakok.com/.../hishammuddin-investigate-nude-squat-incident-involving- singaporean-women/ - Cached
18 Jul 2006 ... KUALA LUMPUR: " Please destroy the video clip of me doing ear squats in the nude. " This is the plea of Hemy Hamisa Abu Hassan Saari, ... www.youtube.com/watch?v=5UsTiWUqwM8 - Cached - Similar- Block all www.youtube.com results
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Home Minister Hishammuddin Hussein said yesterday that an inquiry will be held, adding that it will also include the police.
“It is not just an internal inquiry, it will also involve the police.
The inquiry is to be done immediately,” he told reporters.
“This is the first time I’ve seen this this is not common practice,” Mr Hishammuddin explained when asked whether nude squats were standard procedure adopted by the Immigration department.
“It is wrong to say that immigration (department) frontline did this ... this involved the detention centre,” said the minister.
Reports said the incident occurred at about 1.30am last Thursday.
The two women had driven to Johor Baru for supper but failed to get their passports stamped when they drove through an unnamed immigration lane.
They made a U-turn after realising their mistake but were allegedly detained for several hours by Malaysian immigration officials and were taken to the Pekan Nenas detention centre.
Defending the immigration officers at the Causeway, Mr Hishammuddin said the incident had taken place under the purview of a separate unit. “It is wrong to say that the immigration (department) frontline did this ... this involved the detention centre,” said the minister.
Meanwhile, Malaysia’s immigration director-general Mr Alias Ahmad said on Tuesday that the arrest of the two Singaporean women was done according to law, reported
Responding to claims that the detention of the two women was unlawful, Mr Alias said in a statement:
“They were detained by immigration officers on duty at the check-out counter for not having any visit pass or valid entry stamp on their passports.”
Mr Alias also refuted the two women’s claim that there were no supervising officers at the check-in counter they had driven through.
— Malaysia’s Home Ministry will conduct an investigation into reports that the Johor immigration department forced two Singaporean women to strip naked and perform squats last Thursday.Bernama.
RHB Investment Bank (RHB) is the first investment bank in Malaysia to be certified by Bursa Malaysia to offer Direct Market Access Equity (DMA Equity) services to clients. RHB utilize the system that was provided by US-based software maker, SunGuard.
Direct Market Access (DMA) infrastructure for the equity market was put up by the Bursa Malaysia last year. With the DMA platform, clients would be able to react quickly to information flows and to self-manage limit orders in the market. The system will allows large transaction to be executed cheaper and faster.
Previously, investors from hedge fund managers to retail investors will have to contact a stockbroker who will then place the order through the computer system. However, with DMA that no longer necessary as they are connected directly to the Stock Exchange.
DMA also allows the use of complex trading strategies, which is only possible with the high speed of sending an order to the exchange in a matter of miliseconds – the duration of an eye blink.
The facility is currently available to only institutional investors and RHB will roll it out to retail investors later this year.
Bursa Malaysia has confirmed that at least three to four more stockbrokers may switch to DMA for equity this year.
DMA is already the norm in advanced markets in the US and Europe, driven by the needs of the large hedge funds.
Maybank ‘likely to offer merger with RHB by month-end’
KUALA LUMPUR
Maybank expects to make a proposal to
merge with smaller rival RHB Capital by the end of this month, top officials of the bank said yesterday.
Maybank and Malaysia’s No 2 bank CIMB are both in talks to take over RHB, Malaysia’s fifth-largest lender with a market value of about RM21.6 billion (S$8.8 billion).
“We expect that we would have to make a proposal before the end of the month,” Maybank chairman Megat Zaharuddin Megat Mohammad Nor told reporters.
Maybank chief executive Wahid Omar added: “Our basic proposition is a merger of the two entities and therefore it will involve share swaps.”
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