The outlook is still positive but we aren’t that optimistic towards this sector for 2H 2017. From the lack of new models and only the arrival of face-listed ones, we see that this segment still lacks catalyst for the time being.
Unlike Q4 of 2014 where most preferred brands such as Honda, Toyota and Perodua released multiple new models and big cuts to push out old models. It is hard for that period to come back which makes us ponder when should we buy undervalued automotive counters.
Take a look at the latest Outlook & Lookouts for the second half of the year. This is very interesting if you like compiled data analysis on the macro environment.
KLCI target lifted 1,820
Foreign buying is still the biggest percentage for overall market.
Click for full report!
Take a look at Credit Suisse’s projection for Maybank in the coming quarters!
In 2016, Brent rose from $25s in February to $56s in November. In Q1 2017, just a tiny drop of less than 10% already have talks of pessimistic earnings ahead…
Now who’s fooling who?
Click for report!
Maybank came out with a report today on Malaysian aviation sector. The report emphasizes on passenger traffic which at 10.4% YoY in 4Q 2016 and went overweight on stocks under its coverage.
Air Asia, Air Asia X and Malaysian Airports were included with only AAX being rated a HOLD. The respective earnings announcement dates are listed below.
AirAsia: 23 Feb, analyst briefing at 6pm
AirAsia X: 22 Feb, analyst briefing at 6pm
MAHB: 28 Feb (tentative)
What We Think?
We believe that AIRPORT is the biggest winner with the increase in passenger traffic for 4Q 2016. We believe that with those data, it is good to put a bet on AIRPORT at current price. We believe that the recent rise for AIRPORT have yet to factor in the results for 4Q 2016 as most of the movement was caused by the extension of concession extension.
Unlike airlines, airport gets a maximum exposure to any change in passenger traffic since there’s only one operator in Malaysia.
We are targeting revenue to come out slightly above RM 1,100 million which isn’t much growth in terms of QoQ comparison but stable rather than a drop which would likely hit stock prices.
CIMB and Maybank posted their outlook on Malaysian Banks.
CIMB Research touches more on asset quality test which declared passed with flying colours and Maybank previews on the current loan situation for all banks.
I think we missed this issue from HSBC over the holidays…
Top 6 stock picks for Asian markets in 2017
Here is the link
Finally, a complete analysis from Maybank Kim Eng where it covers the Asian markets that they are operating at. Markets include China/HK, India, Indonesia, Malaysia, Philippines, Singapore, Thailand & Vietnam.
Note: Still do not like the recommendation on Gamuda which could leverage on our construction sector. The stock isn’t moving with these contracts and the timing of revenue and earnings create merely moderate earnings which do not portray growth in the business itself.
We feel that Gamuda is so popular in the markets a couple of years ago where many positives had already been factored in. The upcoming housing projects by Gamuda could be the only surprise to earnings but lackluster response from property buyers might backfire their plans too.
According to Maybank, the supply of Malaysian Government Securities (MGS) might accumulate a deepening effect in the longer term since newly issued bonds are pushed further into the 15 years to 30 years category.
Click on pic below for a short write up by Maybank
This quarter’s results is a combination of lower income from interest and non-interest segment and higher impairment provisional charges. This is what we call a double whammy blow and it doesn’t stop there. The net impaired loans ratio rose 0.11% which makes things worse.
The only positive aspect that we are getting is higher CET1 Capital Ratio which meant an increase in strength from a quarter ago.
Although we felt that the valuations are cheap for Maybank, it is still best to adopt the sit and wait strategy on it.