Malaysia Strategy

Transcription

Malaysia Strategy

Malaysia│Equity research│January 28, 2016
Strategy Note
▎Malaysia
Malaysia Strategy
2016 Revised Budget
Highlighted companies
Gamuda
ADD, TP RM5.43, RM4.45 close
Gamuda potentially provides the biggest
exposure to MRT 2. Budget revision continues
to focus on public transport, which is positive,
and could bump up its order book by more
than 7x by mid 2016.
MY E.G. Services
The biggest winner, government announced
that illegal foreign workers are now able to
secure proper working permits. The company
was appointed by the government in 2015 to
register illegal foreign workers.
RHB Capital Bhd
RHB Capital is our top pick for Malaysian
banks given (1) the benefits from the IGNITE
17 transformation programme, (2) cost
savings from its Career Transition Scheme in
2016 onwards, (3) the aspiration for regional
expansion in the longer term, and (4)
attractive valuation.
■
The biggest surprise to us was the 3% cut in employee contributions to the EPF.
This is positive as it would boost private consumption by RM8bn annually.
■
Biggest winner is MyEG, the government is giving illegal foreign workers the chance
to get proper working permits. In 2015, MyEG was appointed to register the illegals.
■
■
Other winners are the consumer, media, gaming and aviation sectors.
■
Keep end-2016 KLCI target of 1,900. Bullish on banks, construction & small caps.
Biggest loser is the telco sector as the government is looking to raise revenue
through a spectrum auction.
Neutral impact on the stock market
We are neutral about the impact of the Revised Budget on the stock market. Potential
winners in the consumer, media, gaming and aviation sectors may be offset by one
major loser, the telco sector. The big three telco players stand to lose the most as they
may have to pay substantial amounts of cash in a spectrum auction.
Reducing employee EPF contribution by 3%
We are positive with the government’s move to reduce the employees’ contribution to
the Employees Provident Fund (EPF) by 3% effective in Mar 16 to Dec 17. This should
boost private consumption expenditure by RM8bn annually, says the government.
Biggest winner is MyEG
MyEG is the biggest winner. The government has agreed to implement the rehiring
programmes, which would give illegal foreign workers the opportunity to secure working
permits to remain in the country legally. There are 2.5m legal workers and 4m-5m illegal
workers in Malaysia now. Registration of illegal workers would enable the government to
keep track of the number of foreign workers needed in the country. MyEG is responsible
for the registration of the illegal workers.
Sector and stock top picks unchanged
We think that the 2016 Revised Budget will be neutral on the stock market. We maintain
our end-2016 KLCI target of 1,900pts, based on an unchanged 2017 P/E of 16.5x. Our
top sectors remain banking, construction and small caps. The construction sector should
remain positive in 2016 as the work on major infrastructure projects should continue as
planned. Selected small-cap stocks still offer superior earnings growth.
[X]
Figure 1: Budget impact on the sectors
Analyst(s)
Nigel FOO
T (60) 3 2261 9069
E [email protected]
Sector
Impact
Comments
Autos
Neutral
Nothing specific on the sector
Aviation
Positive
Chinese tourists allowed to travel into Malaysia without visas until end-2016
Banking
Positive
Benefiting from 3% reduction in EPF contributions
Brewery
Neutral
Construction
Positive
Consumer
Positive
Education
Neutral
Pump priming theme intact. Major jobs in original list are intact
Reduction in employees' contribution to EPF by 3% and tax relief of RM2k for
taxpayers with monthly income below RM8k in 2015
PTPTN's RM5bn allocation is unchanged
Gaming
Positive
VISA free travel for Chinese tourists should boost visitation to Genting highlands
Healthcare
Neutral
No measures on the private healthcare sector
Media
Positive
Boost in adex and recovery in consumer sentiment from higher disposable income
Oil& gas
Neutral
Plantations
Neutral
Property
Neutral
REITs
Neutral
Most listed developers price their units above RM300,000, except for the
government-mandated low-cost housing projects
Rubber Gloves
Neutral
Technology
Positive
Tobacco
MyEG biggest winner as govt. allows illegals to get proper working permit
Spectrum auction could see telcos forking out substantial cash to retain/acquire
Negative
the 900MHz/1800MHz spectrum
Neutral
Utilities
Neutral
Telcos
No mention of changes in electricity and gas tariff
SOURCES: CIMB RESEARCH
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.
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Figure 2: CIMB top picks
Company
AirAsia Bhd
Gamuda
Genting Malaysia
Genting Plantations
IJM Corp Bhd
Malayan Banking Bhd
MISC Bhd
RHB Capital Bhd
Tenaga Nasional
YTL Corporation
Average
Bloomberg Ticker
Recom.
AIRA MK
GAM MK
GENM MK
GENP MK
IJM MK
MAY MK
MISC MK
RHBC MK
TNB MK
YTL MK
Add
Add
Add
Add
Add
Add
Add
Add
Add
Add
Price
Target Price
(local curr)
1.34
4.45
4.24
10.34
3.36
8.34
8.82
5.03
13.00
1.55
(local curr)
1.80
5.43
5.93
11.90
3.90
11.20
10.03
8.50
15.70
1.85
Market Cap (US$ m)
877
2,518
5,653
1,903
2,827
19,145
9,258
3,637
17,253
3,798
Core P/E (x)
CY2015
na
16.5
17.4
41.6
19.2
11.7
13.1
8.5
10.7
14.3
17.0
CY2016
6.5
16.6
16.4
29.3
17.3
10.7
12.8
6.9
10.3
12.8
14.0
3-year EPS CAGR
(%)
na
1.7%
15.1%
-8.5%
5.2%
-1.3%
4.5%
-2.3%
-3.8%
2.4%
1.4%
P/BV (x)
CY2015
0.97
1.69
1.44
2.03
1.63
0.51
0.51
1.04
1.49
1.21
1.25
Recurring ROE
(%)
CY2015
-1.0%
10.6%
8.5%
5.3%
8.7%
13.8%
8.7%
9.2%
16.3%
7.8%
8.8%
Dividend Yield
(%)
CY2015
0.0%
2.6%
2.3%
1.5%
2.5%
6.0%
1.7%
3.3%
2.3%
6.4%
2.9%
SOURCES: CIMB, COMPANY REPORTS
Figure 3: CIMB small-cap picks
Company
Berjaya Auto
Berjaya Food Berhad
Evergreen Fibreboard
GHL Systems Bhd
IFCA MSC
Instacom Group
Kawan Food
MY E.G. Services
Only World Group Holdings
Prestariang
Average
Bloomberg Ticker
Recom.
BAUTO MK
BFD MK
EVF MK
GHLS MK
IFCA MK
INST MK
KFB MK
MYEG MK
OWG MK
PRES MK
Add
Add
Add
Add
Add
Add
Add
Add
Add
Add
Price
Target Price
(local curr)
1.94
2.05
1.48
0.76
0.74
0.28
3.68
2.19
2.28
2.70
(local curr)
3.04
3.27
2.06
1.40
1.80
0.67
4.48
2.83
4.11
2.82
Market Cap (US$ m)
522
181
295
115
102
163
183
1,238
119
307
Core P/E (x)
CY2015
9.5
21.0
12.6
39.8
15.3
54.9
27.6
40.0
28.7
62.8
38.4
CY2016
8.7
14.8
9.6
21.3
11.6
15.9
19.9
23.5
17.7
18.4
18.3
3-year EPS CAGR
(%)
3.6%
26.3%
789.5%
44.5%
21.8%
272.8%
29.4%
63.0%
30.0%
47.5%
72.7%
P/BV (x)
CY2016
4.16
1.87
1.40
2.03
4.68
1.94
4.97
17.97
3.33
7.37
6.04
Recurring ROE Dividend Yield
(%)
(%)
CY2015
CY2015
49.6%
4.9%
10.8%
3.1%
12.2%
0.7%
5.8%
0.0%
38.4%
1.8%
3.1%
0.0%
22.2%
0.8%
57.7%
0.6%
14.3%
0.5%
13.2%
3.4%
22.1%
1.0%
2
2016 Revised Budget highlights
Sector comments
Telecommunications
The government announced that it will optimise revenue from the
telecommunications spectrum through redistribution and the bidding
process will be implemented soon. This is a negative surprise for the
sector, as our recent conversation with the Malaysian Communications
And Multimedia Commission (MCMC) suggested that the regulator was
quite happy and did not intend to disrupt the good progress made by the
existing mobile operators in building out their mobile data networks. A
spectrum auction could result in the incumbent mobile operators forking
out substantial cash to retain or acquire more 900MHz and 1800MHz
spectrum.
The initial 900MHz/1800MHz spectrum licence terms expired several years
ago and are now renewed on an annual basis. Currently, the 900MHz
spectrum is concentrated in the hands of Maxis and Celcom, while the
1800MHz spectrum is evenly distributed among the Big 3 mobile
operators.
There has never been a spectrum auction in Malaysia, as all spectrum were
allocated on a “beauty contest” (3G-2.1GHz) or assignment (4G-2.6GHz) basis,
with minimal upfront payment charged for the spectrum. Based on the recent
spectrum auctions in Thailand, the reserve price for the 900MHz spectrum was
set at THB12.9bn for 2 x 10MHz (each licence), or RM2.2m per MHz (paired)
per million population. For the 1800MHz spectrum, the reserve price was
THB15.9bn for 2 x 15MHz (each licence), or RM1.8m per MHz (paired) per
million population.
Figure 4: Spectrum holdings of Malaysian telcos
Spectrum (MHz)
900
1800
2100
2600
Total
Maxis
850
16.0
25.0
15.0
10.0
66.0
Celcom
17.0
25.0
15.0
10.0
67.0
DiGi
2.0
25.0
15.0
10.0
52.0
15.0
10.0
25.0
U Mobile
2300
Asiaspace
15.0*
YTL
15.0*
10.0
25.0
15.0*
10.0
35.0
12.5*
10.0
22.5
20.0
20.0
P1/TM
10.0
REDTone
Altel
15.0
* WIMAX/Broadband Wireless Access spectrum. Divided by 2 to reflect FDD equivalent
Assuming that the MCMC uses the Thailand reserve prices as the benchmark,
the reserve price for the total 2 x 35MHz of 900MHz spectrum would be
RM2.3bn and for the total 2 x 75MHz of 1800MHz spectrum would be RM4.0bn.
Based on these estimated reserve prices, the minimum that Maxis, Celcom and
DiGi would have to pay to retain their 900/1800MHz spectrum are RM2.37bn,
RM2.43bn and RM1.46bn, respectively. This would shave 4.7% off our target
prices for Maxis, 4.2% for Axiata and 3.8% for DiGi.
The final prices for the spectrum would depend on the terms of the auction (e.g.
spectrum caps, size of spectrum blocks, auction method) and the ferocity of the
bidding during the auction. During the recent Thai spectrum auctions, the final
spectrum prices were 2.5x (1800MHz) to nearly 6x (900MHz) higher than the
reserve prices due to intense bidding. If we assume that the Malaysian
3
spectrum auctions have the same disastrous outcome, we estimate that Maxis,
Celcom and DiGi would have to fork out RM9.55bn, RM9.94bn and RM4.11bn,
respectively, to retain their existing 900MHz/1800MHz spectrum holdings. In
this case, our target prices for Maxis, Axiata and DiGi would have to be cut by
19.0%, 17.0% and 10.6%, respectively. While we admit that it is very difficult to
predict the final auction outcome, we believe that the bidding would not be as
intense as those of the Thai auctions as: (1) the existing Malaysian players
have been relatively rational in their past market actions, and 2) a new entrant
is unlikely, as the market is less attractive than Thailand’s and overcrowded,
with five active players (including TM-P1).
An alternative scenario is that the mobile incumbents could lose spectrum to
smaller existing operators (TM-P1, U Mobile, YES) that outbid them. In this
scenario, the mobile incumbents would have to spend more capex to re-tune
and build network capacity to make up for any loss of spectrum. The smaller
operators could also become increasingly aggressive as their opex/capex
efficiency improves with the additional spectrum.
In conclusion, among the Big 3 operators, we believe that Maxis and Celcom
stand to lose the most as they may have to pay substantial amounts of cash to
retain their large spectrum holdings. They may also risk losing some 900MHz
spectrum, which would cause degradation in network coverage (especially inbuilding). Although DiGi could secure more 900MHz spectrum through the
auction (which would be beneficial for its network coverage), we believe that it
would have to fork out a lot of cash to outbid Maxis and Celco, in order to
wrestle some spectrum from them.
Foong Choong Chen +60 (3) 2261-9081 – [email protected]
Aviation
The airline sector could benefit from the government's move to facilitate
the entry of foreign tourists by way of the eVisa scheme, which will be
extended to "several countries which have been identified". Also, tourists
from China will no longer require a visa to visit Malaysia from 1 March to
31 December 2016 for a period of stay not exceeding 15 days, "subject to
specific conditions". The Prime Minister's (PM) speech did not identify
the specific conditions relating to visa-free Chinese travel, but this
measure will certainly help boost Chinese tourist inflows into Malaysia.
Chinese tourist flows into Malaysia dipped into negative yoy territory in April
2014, after the MH370 crash on 8 March 2014. It only recovered to positive yoy
territory in May 2015, due to the low-base effect. In fact, Chinese tourist arrivals
into Malaysia remained disappointing in 2015. In 3Q15, 501,122 Chinese
visitors entered Malaysia, up 20.2% yoy against 3Q14’s 416,887, but this was
still 1% lower compared to the 505,721 Chinese visitors in 3Q13. So, the hard
reality is that Chinese tourism into Malaysia has not yet fully recovered from the
effects of MH370.
4
Figure 5: Chinese tourist arrivals into Malaysia
Change (yoy %)
Chinese Tourist Arrivals into Malaysia
70.0%
200,000
60.0%
180,000
50.0%
160,000
40.0%
140,000
30.0%
120,000
20.0%
100,000
10.0%
80,000
0.0%
60,000
-10.0%
-20.0%
40,000
-30.0%
20,000
0
-40.0%
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
SOURCES: CIMB, CEIC
The biggest beneficiaries will be the airlines that have the largest capacity to
China, i.e. AirAsia (38% share of seat capacity), AirAsia X (22% share),
Malaysia Airlines (15% share), followed by the Chinese airlines like China
Southern. In January 2016, AirAsia started flights from Kota Kinabalu to Wuhan
(7x weekly) and from Penang to Guangzhou (4x weekly). AirAsia also launched
flights from KL to Changsha (4x weekly) in October 2015 and took over flights
from KL to Chongqing (7x weekly) from AirAsia X beginning July 2015.
China is AirAsia's single largest international exposure, comprising 87.6m
available seat kilometres (ASKs) in the week of 25-31 January 2016, or 19.4%
of its international ASK capacity. With two-thirds of AirAsia's ASK capacity now
deployed on international routes, China therefore, accounts for 13% of
AirAsia's system-wide ASK capacity.
Malaysia Airports (MAHB) will also be a beneficiary of potential growth in
Chinese tourist traffic. MAHB disclosed that China accounted for 7.9% of
MAHB’s total passenger traffic in 2014, and this proportion would have
increased in 2015. Any increase in MAHB’s traffic will be very helpful, as its
operating costs are largely fixed.
Figure 6: Malaysia to China (seats per week, one way, 25-31 Jan 2016)
Airline
25-31 Jan 2016 seat capacity
Share
AirAsia
17,280
37.6%
5,282
11.5%
10,179
22.2%
Shanghai Airlines
1,640
3.6%
Xiamen Airlines
2,380
5.2%
Malaysia Airlines
6,914
15.1%
720
1.6%
1,204
2.6%
China Southern Airlines
AirAsia X
Spring Airlines
Air China
Malindo Air
Total
324
0.7%
45,923
100.0%
SOURCES: CIMB, CAPA
5
Figure 7: AirAsia's international ASK breakdown (for the week of 25-31 January
2016)
SOURCES: CIMB, CAPA
Raymond YAP +60 (3) 2261-9056 – [email protected]
Technology
The government streamlines the management of foreign workers, with
levies divided into only two categories. In addition, the authorities have
agreed to implement the rehiring programmes, which would give illegal
foreign workers the opportunity to secure legal working permits.
The rehiring programmes are positive for MyEG, as the company was
appointed to register illegal foreign workers in 2015. There are 2.5m legal
foreign workers and 4m-5m illegal foreign workers in Malaysia now, based on
our estimates. Our earnings forecasts for MyEG assume that 1m illegal foreign
workers will be registered in 2016. There is potential for upward revision in our
FY16-18 EPS forecasts if the company registers more than 1m illegal workers
over the next few months.
Nigel Foo +60(3)2261-9069 – [email protected]
Banking & Finance
The government has reduced the employee contribution to the
Employees Provident Fund (EPF) by 3% in Mar-16 to Dec-17. However, the
contribution by employers will remain the same. This measure is
expected to increase private consumption expenditure by RM8bn a year,
according to the PM.
The potential increase in private consumption resulting from the reduction in
employee contribution to the EPF would help to support the banks’ fee income
growth. Even if the additional disposal income is not “spent”, it would be kept in
the banks as deposits. This would help to ease the tight liquidity in the banking
system.
The government/Bank Negara Malaysia (BNM) will ensure that there is
sufficient liquidity in the financial system. Recently, BNM announced a
reduction in statutory reserve requirement (SRR) from 4% to 3.5%.
We are encouraged that the government specifically addressed the issue of
tight liquidity in the banking system and will take steps to ease banks’ liquidity
problems. This could involve further reduction in SRR. We estimate that a 50bp
6
reduction in SRR would inject additional liquidity of about RM6bn into the
banking industry.
Winson Ng, CFA +60(3) 22619071- [email protected]
Construction
Major projects with high multiplier effects and pro-growth that are
earmarked under Budget 2016 will be sustained, in spite of the depressed
oil price environment. This is in line with our expectations and ties in with
our earlier checks on the ground.

The PM said that development expenditure (DE) will continue to
be focused on affordable housing, schools, roads, security and
most importantly, public transport, including projects under the
private sector.

He also said that projects that are still under study, which have
not passed the approval and tender stage will be rescheduled
(meaning deferred or delayed, given the relatively-low priority).
We reiterate that c.90% of the jobs in the original Budget 2016 list
are of high priority.

The PM did not list the specific projects that will be deferred but
we suspect that they will be projects that cost less than RM1bn
each. Major highway projects like SUKE and DASH should
continue, as these are led by Prolintas (private sector).

No change to the implementation of key projects such as MRT 2
dan LRT 3. Pan-Borneo Highway is also still on the cards.
Petronas's RAPID project will continue and the KL-Singapore
high-speed rail (HSR) project will proceed, after completing the
request for information (RFI) in late 2015. The HSR's original
target for international tender is 4Q16 - this timeline is still a
moving target.

There was no mention of how the Chinese infra contractors will
aid the funding of other major jobs. This was within our
expectations.
Good news for Gamuda, and other contractors that are set to win MRT 2
packages starting in 2Q16. Gamuda is our top pick among the big caps. This is
also positive news for Muhibbah Engineering, which is vying for jobs in Rapid.
Muhibbah is our top pick among the small-to-mid caps in the sector. We expect
more good news, given the expectation of strong momentum in sector awards
newsflow in 2Q16 onwards. General share price weakness from earlier
concerns of delays and deferment is good for selective buying opportunities.
Sharizan ROSELY +60(3) 2261-9077 – [email protected]
Consumer
Liberalising import quotas or approved permits (APs) on eight
agricultural products for a temporary period to ensure consistent supply,
establishing markets or MyFarm Outlets that will sell agricultural
products at 5-20% below market prices for the ‘rakyat’ (population),
reducing the employee contribution to the Employees Provident Fund
(EPF) by 3% in Mar 16 to Dec 17; and special tax relief of RM2,000 to
individual taxpayers with monthly income of RM8,000 and below for 2015.
The reduction in the employee contribution to EPF and special tax relief are
positive for the consumer sector. Given the current softer consumer sentiment
environment, following the Goods and Services Tax (GST) implementation and
higher living costs, we believe that these measures and initiatives will increase
the lower-to-middle income households' disposable income, as well as
stimulate overall consumer spending. This, we believe, will lead to gradual
recovery in domestic consumption in 2016.
7
Education
Scholarships under four Public Service Department (JPA) for 2016 will
continue: (1) National Scholarship Programme, (2) Engineering Special
Programme, (3) Bursary Programme, and (4) scholarships for 8,000
students to pursue undergraduate degrees locally. The National Higher
Education Fund Loan (PTPTN) allocation of RM5bn to undergraduates
will remain. Offers to enroll in MyMaster programmes will be raised by
15,000, MyPhd by 5,000 and IPTA (public universities) Academic Training
Scheme by 300. The government will boost the education allocation by
RM300m in 2016. MyBrain1 and the Bumiputera Academic Training
Scheme will be continued.
The continuation of PTPTN’s RM5bn allocation is positive for private colleges
and universities. However, the government did not give any indication on
Prestariang’s potential PISA teachers and students training project.
Nonetheless, we believe that the government will continue to focus on the PISA
teachers training project in 2016, as it wants to inculcate higher-order thinking
skills (HOTS) in teachers and students. We expect more developments on the
PISA training project in 2Q16.
Nigel Foo +60(3)2261-9069 – [email protected]
Gaming sector
The visa waiver for Chinese tourists is marginally positive for Genting
Malaysia. Although 70% of visitors to Genting Highlands were day
trippers, Chinese tourists have been coming back gradually since the
MH370 incident and more than half of the Chinese tourists that enter
Malaysia end up visiting Genting Highlands.
The 3% drop in EPF contribution by employees will benefit Only World Group
(OWG) as it will encourage more domestic tourism spending. Other
beneficiaries are the number forecast operators (NFOs) like Magnum and
Berjaya Sports Toto, as the discretionary spending power of Malaysian
consumers will rise.
Marcus Chan, CFA +60(3) 2261-9070 – [email protected]
Property
For all new housing projects, the government mandates that all houses
priced up to RM300,000 be limited to first-time house buyers only, with
immediate effect.
This measure, in our opinion, will have limited impact on the property
developers. For one thing, houses launched by most listed developers are
priced above RM300,000 per unit. In the Klang Valley, even studio or SOHO
units are sold at prices close or above RM400,000 per unit. For another, the
developers may be able to circumvent this ruling by pricing their units above
RM300,000 per unit but offer big discounts to lower the net selling price below
the threshold. We believe that this measure will benefit first-time homebuyers in
the suburbs, as certain houses in these areas are still sold at RM300,000 per
unit or lower.
SAW Xiao Jun, CFA +60(3)2261-9089 – [email protected]
8
#03
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10
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11
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AAV, ADVANC, AMATA, ANAN, AOT, AP, BA, BANPU, BBL, BCP, BDMS, BEAUTY, BEC, BEM, BH, BJCHI, BLA, BLAND, BTS, CBG, CENTEL,
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ROBINS, RS, S, SAMART, SAMTEL, SAWAD, SCB, SCC, SCCC, SCN, SGP, SIRI, SPALI, SPCG, STEC, STPI, SVI, TASCO, TCAP, THAI,
THCOM, TICON, TISCO, TMB, TOP, TPIPL, TRUE, TTA, TTCL, TTW, TU, UNIQ, UV, VGI, VNG, WHA, WORK.
Corporate Governance Report:
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be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result.
Score Range:
Description:
90 - 100
Excellent
80 - 89
Very Good
70 - 79
Good
Below 70 or
N/A
No Survey Result
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12
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Distribution of stock ratings and investment banking clients for quarter ended on 31 December 2015
1536 companies under coverage for quarter ended on 31 December 2015
Rating Distribution (%)
Investment Banking clients (%)
Add
58.8%
9.3%
Hold
31.5%
4.0%
Reduce
8.5%
0.7%
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in
2015, Anti-Corruption Progress Indicator 2015.
AAV – Very Good, 3B, ADVANC – Excellent, 3A, AEONTS – Good, 1, AMATA – Very Good, 2, ANAN – Very Good, 3A, AOT – Very Good, 2, AP Good, 3A, ASK – Very Good, 3B, ASP – Very Good, 4, BANPU – Very Good, 4, BAY – Very Good, 4, BBL – Very Good, 4, BCH – not available,
no progress, BCP - Excellent, 5, BDMS – Very Good, 3B, BEAUTY – Good, 2, BEC - Good, 3B, BECL – Very Good, 3B, BH - Good, 2, BIGC Excellent, 3A, BJC – Good, 1, BLA – Very Good, 4, BMCL - Very Good, 1, BTS - Excellent, 3A, CBG – Good, 1, CCET – not available, 1,
CENTEL – Very Good, 3A, CHG – Good, 3B, CK – Excellent, 3B, COL – Very Good, 3A, CPALL – Good, 3A, CPF – Very Good, 3A, CPN Excellent, 5, DELTA - Very Good, 3A, DEMCO – Very Good, 3A, DTAC – Excellent, 3A, EA – not available, 3A, ECL – Good, 4, EGCO Excellent, 4, EPG – not available, 3B, GFPT - Very Good, 3A, GLOBAL – Very Good, 2, GLOW - Good, 3A, GRAMMY - Excellent, 3B, GUNKUL
– Very Good, 1, HANA - Excellent, 4, HEMRAJ – Very Good, 2, HMPRO - Excellent, 3A, ICHI – Very Good, 3A, INTUCH - Excellent, 4, ITD –
Good, 1, IVL - Excellent, 4, JAS – not available, 3A, JASIF – not available, no progress, JUBILE – Good, 3A, KAMART – not available, no
progress, KBANK - Excellent, 4, KCE - Excellent, 4, KGI – Good, 4, KKP – Excellent, 4, KSL – Very Good, 2, KTB - Excellent, 4, KTC – Very
Good, 3A, LH - Very Good, 3B, LPN – Excellent, 3A, M - Good, 2, MAJOR - Good, 1, MAKRO – Good, 3A, MBKET – Good, 2, MC – Very Good,
3A, MCOT – Excellent, 3A, MEGA – Very Good, 2, MINT - Excellent, 3A, MTLS – Good, 2, NYT – Good, no progress, OISHI – Very Good, 3B,
PLANB – Good, 3B, PS – Excellent, 3A, PSL - Excellent, 4, PTT - Excellent, 5, PTTEP - Excellent, 4, PTTGC - Excellent, 5, QH – Very Good, 2,
RATCH – Excellent, 3A, ROBINS – Excellent, 3A, RS – Very Good, 1, SAMART - Excellent, 3B, SAPPE - Good, 3B, SAT – Excellent, 5, SAWAD
– Good, 1, SC – Excellent, 3B, SCB - Excellent, 4, SCBLIF – not available, no progress, SCC – Excellent, 5, SCCC - Good, 3A, SIM - Excellent,
3B, SIRI - Good, 1, SPALI - Excellent, 3A, STA – Very Good, 1, STEC – Very Good, 3B, SVI – Very Good, 3A, TASCO – Very Good, 3A, TCAP –
Very Good, 4, THAI – Very Good, 3A, THANI – Very Good, 5, THCOM – Excellent, 4, THRE – Very Good, 3A, THREL – Very Good, 3A, TICON –
Very Good, 3A, TISCO - Excellent, 4, TK – Very Good, 3B, TMB - Excellent, 4, TPCH – Good, 3B, TOP - Excellent, 5, TRUE – Very Good, 2,
TTW – Very Good, 2, TU – Very Good, 3A, VGI – Excellent, 3A, WORK – not available, no progress.
Comprises level 1 to 5 as follows:
Level 1: Committed
Level 2: Declared
Level 3: Established (3A: Established by Declaration of Intent, 3B: Established by Internal Commitment and Policy)
Level 4: Certified
Level 5: Extended.
13
CIMB Recommendation Framework
Stock Ratings
Definition:
Add
The stock’s total return is expected to exceed 10% over the next 12 months.
Hold
The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
Reduce
The stock’s total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward
net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.
Sector Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.
A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.
An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.
Country Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark.
A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.
An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.
*Prior to December 2013 CIMB recommendation framework for stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand,
Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange were
based on a stock’s total return relative to the relevant benchmarks total return. Outperform: expected to exceed by 5% or more over the next 12 months.
Neutral: expected to be within +/-5% over the next 12 months. Underperform: expected to be below by 5% or more over the next 12 months. Trading Buy:
expected to exceed by 3% or more over the next 3 months. Trading Sell: expected to be below by 3% or more over the next 3 months. For stocks listed on
Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Outperform: Expected positive total returns of 10% or
more over the next 12 months. Neutral: Expected total returns of between -10% and +10% over the next 12 months. Underperform: Expected negative total
returns of 10% or more over the next 12 months. Trading Buy: Expected positive total returns of 10% or more over the next 3 months. Trading Sell: Expected
negative total returns of 10% or more over the next 3 months.
14
Travel and Leisure│Hong Kong│Equity research
Sector Flash Note
▎Hong Kong
February 1, 2016 - 1:56 PM
Gaming
Looking forward to Feb
Neutral (no change)
Highlighted companies
Galaxy Entertainment
ADD, TP HK$33.61, HK$24.10 close
We expect Phase 2 to continue to ramp up,
with margin stability due to cost cutting.
MGM China Holdings
Given MGM China’s low fixed costs on an
absolute basis, the operator is likely to be the
first to see positive operating leverage when
industry revenues recover.
■
Jan gross gaming revenue (GGR) reached MOP18.7bn (-21% yoy, +2% mom),
higher than our expectation of -27% yoy.
■
We forecast Feb GGR of MOP20.5bn (+5% yoy, +10% mom), the first positive yoy
growth after 20 consecutive months of declines.
■
Maintain Neutral on the sector. Stick to defensive names like Sands.
Jan above our estimates
● Jan GGR of MOP18.7bn (-21% yoy, +2% mom) exceeded our expectations.
● For Feb, we forecast GGR of MOP20.5bn (+5% yoy, +10% mom) which is similar with
the monthly GGR totals from recent major holiday months in China, i.e. May and Oct
2015. Feb will likely be the first month of positive yoy GGR growth since May 2014.
Sands China
Sands China’s dividends are the most stable
among all gaming operators, making the stock
relatively more defensive.
● Macau gaming stocks are likely to stay volatile as the stocks tend to react to shortterm news flow which can be unpredictable. Overall, we remain sector Neutral.
Recently, sector valuations have rebounded 13% off their lows in mid-Jan and are
now trading at 10x Bloomberg consensus EV/EBITDA, i.e. 1 s.d. below the sector’s 4year average.
Summary valuation metrics
● We favour defensive names such as Sands whose YTD share price has outperformed
the sector average by 6%. Our other two ADD calls in the sector, MGM and Galaxy
have outperformed the sector average by 1% and 4% respectively.
P/E (x)
Dec-15F Dec-16F Dec-17F
18.79
20.36
19.92
MGM China Holdings
11.26
17.21
12.24
Sands China
19.43
22.04
21.79
P/BV (x)
2.77
2.60
2.41
MGM China Holdings
3.46
3.41
2.93
Sands China
3.74
4.46
5.52
Dividend Yield
2.66%
1.96%
2.01%
MGM China Holdings
5.33%
3.49%
4.90%
Sands China
8.21%
9.04%
9.94%
Positive outlook for Lunar New Year visitation
● We spoke with Macau hotel staff and travel agencies in China to get their views on the
Lunar New Year visitation outlook. The general expectation is for this year’s visitation
to be maintained at least at a similar level as last year with stronger visitation weighted
towards the first half of the holiday period.
● From our channel checks, we did not hear of any discounting for hotels or tour
packages for the upcoming holidays with room rates at least twice as much as during
off-season periods, which indicate good demand.
● The Lunar New Year holidays in China are from 7 Feb to 13 Feb. But some higher
spending players typically travel to Macau post the actual holidays to avoid the
crowds. Hence, the Lunar New Year gaming impact can last for multiple weeks.
Figure 1: Macau monthly GGR
40,000
50%
40%
35,000
30%
30,000
20%
25,000
10%
0%
20,000
-10%
15,000
-20%
10,000
-30%
-40%
5,000
Analysts
Michael TING
T (852) 2532 1121
E [email protected]
Jensen POON
T (852) 2868 0350
E [email protected]
-50%
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
-
GGR (MOPm)
-60%
yoy growth %
SOURCES: CIMB, DICJ
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES (USA), INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH.
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(“CIMB UK”). CIMB UK is authorized and regulated by the Financial Conduct Authority and its registered office is at 27 Knightsbridge, London,
SW1X7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are eligible
counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (c) fall within Article 49(2)(a) to (d)
(“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom, or (e) are persons to whom an
invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in
connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such
persons together being referred to as “relevant persons”). This report is directed only at relevant persons and must not be acted on or relied on
by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons
and will be engaged in only with relevant persons.
Where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not
constitute independent “investment research” under the applicable rules of the Financial Conduct Authority in the UK. Consequently, any such
non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment
research and will not subject to any prohibition on dealing ahead of the dissemination of investment research. Any such non-independent report
must be considered as a marketing communication.
United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S. registered broker-dealer
and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand)
Co. Ltd, CIMB Securities Limited, CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as “U.S. Institutional
Investors” as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose
ordinary business activities involve investing in shares, bonds, and associated securities and/or derivative securities and who have professional
experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this
communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any
transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC
member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned
securities please contact a registered representative of CIMB Securities (USA) Inc.
CIMB Securities (USA) Inc does not make a market on the securities mentioned in the report.
Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
Distribution of stock ratings and investment banking clients for quarter ended on 31 December 2015
1536 companies under coverage for quarter ended on 31 December 2015
Rating Distribution (%)
Investment Banking clients (%)
Add
58.8%
9.3%
Hold
31.5%
4.0%
Reduce
8.5%
0.7%
6
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in
2015, Anti-Corruption Progress Indicator 2015.
AAV – Very Good, 3B, ADVANC – Excellent, 3A, AEONTS – Good, 1, AMATA – Very Good, 2, ANAN – Very Good, 3A, AOT – Very Good, 2, AP Good, 3A, ASK – Very Good, 3B, ASP – Very Good, 4, BANPU – Very Good, 4, BAY – Very Good, 4, BBL – Very Good, 4, BCH – not available,
no progress, BCP - Excellent, 5, BDMS – Very Good, 3B, BEAUTY – Good, 2, BEC - Good, 3B, BECL – Very Good, 3B, BH - Good, 2, BIGC Excellent, 3A, BJC – Good, 1, BLA – Very Good, 4, BMCL - Very Good, 1, BTS - Excellent, 3A, CBG – Good, 1, CCET – not available, 1,
CENTEL – Very Good, 3A, CHG – Good, 3B, CK – Excellent, 3B, COL – Very Good, 3A, CPALL – Good, 3A, CPF – Very Good, 3A, CPN Excellent, 5, DELTA - Very Good, 3A, DEMCO – Very Good, 3A, DTAC – Excellent, 3A, EA – not available, 3A, ECL – Good, 4, EGCO Excellent, 4, EPG – not available, 3B, GFPT - Very Good, 3A, GLOBAL – Very Good, 2, GLOW - Good, 3A, GRAMMY - Excellent, 3B, GUNKUL
– Very Good, 1, HANA - Excellent, 4, HEMRAJ – Very Good, 2, HMPRO - Excellent, 3A, ICHI – Very Good, 3A, INTUCH - Excellent, 4, ITD –
Good, 1, IVL - Excellent, 4, JAS – not available, 3A, JASIF – not available, no progress, JUBILE – Good, 3A, KAMART – not available, no
progress, KBANK - Excellent, 4, KCE - Excellent, 4, KGI – Good, 4, KKP – Excellent, 4, KSL – Very Good, 2, KTB - Excellent, 4, KTC – Very
Good, 3A, LH - Very Good, 3B, LPN – Excellent, 3A, M - Good, 2, MAJOR - Good, 1, MAKRO – Good, 3A, MBKET – Good, 2, MC – Very Good,
3A, MCOT – Excellent, 3A, MEGA – Very Good, 2, MINT - Excellent, 3A, MTLS – Good, 2, NYT – Good, no progress, OISHI – Very Good, 3B,
PLANB – Good, 3B, PS – Excellent, 3A, PSL - Excellent, 4, PTT - Excellent, 5, PTTEP - Excellent, 4, PTTGC - Excellent, 5, QH – Very Good, 2,
RATCH – Excellent, 3A, ROBINS – Excellent, 3A, RS – Very Good, 1, SAMART - Excellent, 3B, SAPPE - Good, 3B, SAT – Excellent, 5, SAWAD
– Good, 1, SC – Excellent, 3B, SCB - Excellent, 4, SCBLIF – not available, no progress, SCC – Excellent, 5, SCCC - Good, 3A, SIM - Excellent,
3B, SIRI - Good, 1, SPALI - Excellent, 3A, STA – Very Good, 1, STEC – Very Good, 3B, SVI – Very Good, 3A, TASCO – Very Good, 3A, TCAP –
Very Good, 4, THAI – Very Good, 3A, THANI – Very Good, 5, THCOM – Excellent, 4, THRE – Very Good, 3A, THREL – Very Good, 3A, TICON –
Very Good, 3A, TISCO - Excellent, 4, TK – Very Good, 3B, TMB - Excellent, 4, TPCH – Good, 3B, TOP - Excellent, 5, TRUE – Very Good, 2,
TTW – Very Good, 2, TU – Very Good, 3A, VGI – Excellent, 3A, WORK – not available, no progress.
Comprises level 1 to 5 as follows:
Level 1: Committed
Level 2: Declared
Level 3: Established (3A: Established by Declaration of Intent, 3B: Established by Internal Commitment and Policy)
Level 4: Certified
Level 5: Extended.
CIMB Recommendation Framework
Stock Ratings
Definition:
Add
The stock’s total return is expected to exceed 10% over the next 12 months.
Hold
The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
Reduce
The stock’s total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward
net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.
Sector Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.
A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.
An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.
Country Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark.
A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.
An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.
*Prior to December 2013 CIMB recommendation framework for stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand,
Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange were
based on a stock’s total return relative to the relevant benchmarks total return. Outperform: expected to exceed by 5% or more over the next 12 months.
Neutral: expected to be within +/-5% over the next 12 months. Underperform: expected to be below by 5% or more over the next 12 months. Trading Buy:
expected to exceed by 3% or more over the next 3 months. Trading Sell: expected to be below by 3% or more over the next 3 months. For stocks listed on
Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Outperform: Expected positive total returns of 10% or
more over the next 12 months. Neutral: Expected total returns of between -10% and +10% over the next 12 months. Underperform: Expected negative total
returns of 10% or more over the next 12 months. Trading Buy: Expected positive total returns of 10% or more over the next 3 months. Trading Sell: Expected
negative total returns of 10% or more over the next 3 months.
7
31 December 2015
CIMB-Principal Global Titans Fund
A S S E T
MA N A GE ME N T
FUND OBJECTIVE
To grow the value of Unit holders’ investments over the medium to long -term in an equity
fund that invests in the global titans market of the US, Europe and Japan with an exposure to
the Malaysian equities market to balance any short term volatilities.
FUND PERFORMANCE in MYR
100%
90%
INVESTMENT VOLATILITY
80%
70%
3-year
Fund Volatlity
60%
8.43
50%
40%
High
Fund
Benchmark
Lipper Analytcs
30%
15 Dec 2015
20%
Fund Currency
MYR 759.40 million
Fund Unit
896.13 million units
Fund Launch
18 July 2005
Fund Inception (MYR)
18 July 2005
42% S&P500 + 36% MSCI Europe + 12% MSCI
Benchmark
Management Fee
Daily (as per Bursa Malaysia trading day)
Up to 5.50% of the NAV per unit
Up to 1.80% p.a. of the NAV
Jun-2015
Dec-2015
Jun-2014
Dec-2014
Jun-2013
Dec-2013
Jun-2012
Dec-2012
Jun-2011
Dec-2011
Jun-2010
Dec-2010
Jun-2009
Dec-2009
YTD 1 Month
Fund
Benchmark
24.25
20.78
3 Months
6 Months
3.85
2.62
9.97
9.05
-0.59
-0.98
1 Year 3 Years 5 Years
24.25
20.78
84.59
75.10
Since
Inception
92.02
88.49
89.27
86.43
Calendar Year Performance (%)
Rate
Application Fee
Jun-2008
- 40%
Cumulative Performance (%)
Japan + 10% CIMB Bank 1-Month Fixed Deposit
Dealing
Dec-2008
- 30%
Fund Size (MYR)
Jun-2007
- 20%
Dec-2007
Malaysia
Ringgit Malaysia
Domicile
Jun-2006
Kuala Lumpur, Malaysia
Location
Dec-2006
0%
- 10%
Dec-2005
10%
FUND INFORMATION
Fund
Benchmark
2014
2013
2012
2011
2010
2009
10.72
8.66
34.18
33.42
9.31
9.22
-4.84
-2.68
-1.35
1.70
11.54
18.83
Most Recent Fund Distributions
2015
Oct
0.07% p.a. of the NAV
Trustee Fee
MYR 0.8474
Unit NAV (MYR)
Gross (Sen/Unit)
5.00
Note: July 2005 to December 2015.
Performance data represents the combined income & capital return as a result of holding units in the fund for the
specified length of time, based on bid to bid prices. Earnings are assumed to be reinvested.
Source: Lipper
CIMB-PRINCIPAL AWARDS AND ACCOLADES
Currency
MYR
ISIN Code
Bloomberg Ticker
MYU1000AD001
CIMTTAN MK
CIMB-Principal Asset Management Berhad
10th Floor, Bangunan CIMB, Jalan Semantan
Damansara Heights, 50490 Kuala Lumpur.
Tel: (603) 2084 8888
Fax: (603) 2084 8899
Website: www.cimb-principal.com.my
^Based on the fund's portfolio returns as at 15 December 2015, the Volatility Factor (VF) for this fund is 8.43 and is
classified as "High" (source: Lipper). "High" includes funds with VF that are above 7.975 but not more than 9.575. The VF
means there is a possibility for the fund in generating an upside return or downside return around this VF. The Volatility
Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC
will be revised every six months. The fund's portfolio may have changed since this date and there is no guarantee that the
fund will continue to have the same VF or VC in the future. Presently, only funds launched in the market for at least 36
months will display the VF and its VC.
We recommend that you read and understand the contents of the Master Prospectus Issue No. 19 dated 30 June 2015,
which has been duly registered with the Securities Commission Malaysia, before investing and that you keep the said
Master Prospectus for your records. Any issue of units to which the Master Prospectus relates will only be made upon
receipt of the completed application form referred to in and accompanying the Master Prospectus, subject to the terms and
conditions therein. Investments in the Fund are exposed to counterparty risk, country risk, currency risk, fund manager’s risk,
legal and taxation risk and stock specific risk. You can obtain a copy of the Master Prospectus from the head office of
CIMB-Principal Asset Management Berhad or from any of our approved distributors. Product Highlight Sheet ("PHS") is
available and that investors have the right to request for a PHS; and the PHS and any other product disclosure document
should be read and understood before making any investment decision. There are fees and charges involved in investing in
the funds. We suggest that you consider these fees and charges carefully prior to making an investment. Unit prices and
income distributions, if any, may fall or rise. Past performance is not reflective of future performance and income
distributions are not guaranteed. You are also advised to read and understand the contents of the Financing for Investment
in Unit Trust Risk Disclosure Statement/Unit Trust Loan Financing Risk Disclosure Statement before deciding to borrow to
purchase units. Where a unit split/distribution is declared, you are advised that following the issue of additional
units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split
NAV/ex-distribution NAV; and where a unit split is declared, the value of your investment in Malaysian ringgit will remain
unchanged after the distribution of the additional units.
Page 1 of 2
31 December 2015
CIMB-Principal Global Titans Fund
A S S E T
MA N A GE ME N T
FUND MANAGER'S REPORT
PORTFOLIO ANALYSIS
The Fund fell 0.59% during the month of December
2015, outperforming the benchmark by 0.39%. The
out-performance was mostly driven by favourable
fund selection in Europe. On a year-to-date basis, the
fund gained 24.25%, outperforming the benchmark by
3.47%.
ASSET ALLOCATION
Mutual Fund
92.76%
Cash
7.24%
100.00%
Total
Most global equities slid amid disappointed European
Central
Bank
(ECB)’s
easing
actions,
sharpening
worries about the stability of the global junk -bond
market and tumbling oil prices. Meanwhile, the much
debated U.S. Federal Reserve ("Fed") lift-off finally
happened on December 16. Janet Yellen managed
market expectations perfectly.
Indeed, risk assets
rallied on the positive message from Yallen, albeit
temporarily. The broad retreat comes a day after
markets rallied to the Fed’s rate hike decision. Investors
shifted their focus back to some of the factors that
pressured
stocks,
such
as
the
effects
of
the
strengthening dollar on commodity prices, like oil. The
markets ended lower in late-December given a lack of
new catalysts.
Within the context of developed market equities, we
have a preference for the Europe and Japan equity
markets. We remain neutral on US equities in light of the
slowdown in manufacturing, deteriorated earning cycle
and the tighter monetary environment. We expect ECB
and Bank of Japan ("BoJ") to extend or expand their
stimulus programmes. We expect these policy actions
to result in abundant liquidity, lowered volatility and risk ,
and translate to a bottoming of Purchasing Managers
Index ("PMI") in both regions.
SECTOR BREAKDOWN
Principal GLB - US EQ-INST ACC
19.80%
Principal GLB - EUR EQ-INS ACC
16.16%
Principal GLB - JAP EQ-INS ACC
22.23%
Schroder - ISF Euro Equity USD -A
21.15%
Schroder -ISF Japanese Opps USD A Acc
10.56%
Cash
7.24%
100.00%
Total
RISK STATISTICS
TOP HOLDINGS*
Beta
1.01
Information Ratio
0.65
Sharpe Ratio
2.86%
Schroder -ISF US Large Cap A Acc
2.06
3 years monthly data
Apple Inc.
Alphabet
JP Morgan Chase
Amazon.com
Wells Fargo & Company
4.56%
4.24%
1.75%
1.75%
1.74%
SAP
Sanofi
Svenska Cellulosa
Galp Energia
Fresenius Medical Care
2.50%
2.44%
2.00%
1.83%
1.72%
Sumitomo Mitsui Financial Group
Itochu
Century Tokyo Leasing
Aisin Seiki
Sompo Japan Nipponkoa Holdings
3.37%
2.47%
2.25%
2.10%
2.02%
*Of the target fund.
Page 2 of 2
31 December 2015
CIMB-Principal Global Multi Asset
Income Fund
A S S E T
MA N A GE ME N T
FUND INFORMATION
FUND OBJECTIVE
Location
Kuala Lumpur, Malaysia
Domicile
Malaysia
Ringgit Malaysia
Fund Currency
Fund Size (MYR)
MYR 288.74 million
Fund Unit
285.41 million units
The Fund aims to provide income and potential capital growth to investors through
investments in one collective investment scheme, which invests in a diversified portfolio of
global assets.
FUND PERFORMANCE in MYR
Fund Launch
20 March 2014
14%
Fund Inception (MYR)
20 March 2014
13%
12%
Benchmark
The Fund is benchmark unconstrained as
11%
the Target Fund is benchmark
10%
unconstrained, i.e it will be actively
9%
managed without reference to any specific
8%
benchmark.
7%
Dealing
Daily (as per Bursa Malaysia trading day)
6%
Application Fee
IUTAs : Up to 5.50% of the NAV per unit
5%
CWA : Up to 6.50% of the NAV per unit
Management Fee
Up to 1.80% per annum of the NAV of the
Fund
Trustee Fee
0.04% per annum of the NAV of the Fund
MYR 1.0116
Unit NAV (MYR)
Fund
4%
3%
2%
1%
0%
- 1%
Jun-2014
Sep-2014
Dec-2014
Mar-2015
Jun-2015
Sep-2015
Dec-2015
- 2%
Cumulative Performance (%)
YTD 1 Month
Fund
7.08
Yield (%)
6 Months
-1.77
2.62
-1.07
Most Recent Fund Distributions
Gross (Sen/Unit)
3 Months
1 Year 3 Years 5 Years
7.08
N/A
Since
Inception
N/A
8.56
2015
Dec
2015
Nov
2015
Oct
2015
Sep
2015
Aug
2015
Jul
0.85
0.85
0.34
0.34
0.34
0.34
0.34
0.34
0.34
0.34
0.32
0.32
Note: March 2014 to December 2015.
Performance data represents the combined income & capital return as a result of holding units in the fund for the
specified length of time, based on bid to bid prices. Earnings are assumed to be reinvested.
Source: Lipper
Currency
MYR
ISIN Code
Bloomberg Ticker
MYU1000FC002
CPGMAIN MK
CIMB-Principal Asset Management Berhad
10th Floor, Bangunan CIMB, Jalan Semantan
Damansara Heights, 50490 Kuala Lumpur.
Tel: (603) 2084 8888
Fax: (603) 2084 8899
Website: www.cimb-principal.com.my
CIMB-PRINCIPAL AWARDS AND ACCOLADES
We recommend that you read and understand the contents of the CIMB-Principal Global Multi Asset Income Fund
Information Memorandum dated 20 March 2014 and First Supplemental Information Memorandum dated 19 March
2015, which have been deposited with Securities Commission Malaysia before investing and that you keep the said
Information Memorandum for your record. Any issue of units to which the Information Memorandum relates will only be
made upon receipt of the completed application form referred to in and accompanying the Information Memorandum,
subject to the terms and conditions therein. The principal risks are Fund manager’s risk, legal and taxation risk,
currency risk, default risk and country risk. The specific risks of the Target Fund are investment objective risk,
regulatory risk, liquidity risk, interest rate risk, financial derivative instrument risk, credit risk, currency risk, lower rated
and higher yielding debt securities risk, counterparty risk, credit default swap risk, futures, options and forward
transaction risk, property and real estate companies securities risk, mortgage related and other asset backed
securities risk and risk of investing in emerging markets. You can obtain a copy of the Information Memorandum from
the head office of CIMB-Principal Asset Management Berhad or from any of our approved distributors. We suggest
that you consider these fees and charges carefully prior to making an investment. Unit prices and income distributions,
if any, may fall or rise. Past performance is not reflective of future performance and income distributions are not
guaranteed. Product Highlight Sheet ("PHS") is available and that investors have the right to request for a PHS; and
the PHS and any other product disclosure document should be read and understood before making any investment
decision. There are fees and charges involved in investing in the funds. We suggest that you consider these fees and
charges carefully prior to making an investment. Unit prices and income distributions, if any, may fall or rise. Past
performance is not reflective of future performance and income distributions are not guaranteed. You are also advised
to read and understand the contents of the Financing for Investment in Unit Trust Risk Disclosure Statement/Unit Trust
Loan Financing Risk Disclosure Statement before deciding to borrow to purchase units. All performance figures have
been extracted from Lipper. Where a unit split/distribution is declared, investors are advised that following the issue of
additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit
split NAV/ex-distribution NAV; and where a unit split is declared, the value of your investment in Malaysian ringgit will
remain unchanged after the distribution of the additional units.
The Fund is only available to qualified investors, be it individuals or corporations as prescribed by the Guidelines on
Unlisted Capital Market Products under the Lodge and Launch Framework issued by the Securities Commission
Malaysia on 9 March 2015.
Page 1 of 2
31 December 2015
CIMB-Principal Global Multi Asset
Income Fund
A S S E T
MA N A GE ME N T
FUND MANAGER'S REPORT
PORTFOLIO ANALYSIS
For the month of December 2015, the Fund declined
by
1.07%.
Year-to-date
("YTD"),
the
Fund
gained
7.08%. The Fund does not have a benchmark for
comparison.
ASSET ALLOCATION
European
equities
were
amongst
the
biggest
losers
due
to
European
Central
Bank
(ECB)
policy
disappointment.
High
yield
bonds
also
detracted
as
further
declines
in
energy
prices
and
fears
of
contagion risk stemming from the liquidation of a US
mutual
fund,
which
was
focused
towards
the
distressed end of the high yield market, caused a
sharp sell-off in the asset class mid-month. However,
US
high
yield
prices
recovered
towards
month-end,
returning -2.6% through December.
Schroder -ISF-Global Multi Asset Inc
99.22%
Cash
0.78%
100.00%
Total
SECTOR BREAKDOWN*
The
outlook
for
growth
remains
modest
as
the
industrial
and
manufacturing
sectors,
particularly
in
the
US,
have
continued
to
weaken.
Central
bank
policy
announcements
through
December
also
indicated that further volatility in asset prices may lie
ahead,
with
the
ECB
failing
to
meet
investor
expectations
for
further
easing
while
the
Fed
embarked on its hiking cycle, implying that liquidity will
be withdrawn further in the coming quarters. China’s
currency
reserves
are
also
contracting,
indicating
capital outflows and tighter liquidity conditions within
the economy. This is placing downward pressure on
the Chinese Yuan.
Diversified Financials
COUNTRY ALLOCATION*
North America
50.40%
Government
9.80%
Europe
21.10%
Consumer Discretionary
8.30%
UK
14.00%
Telecommunication Services
6.80%
Emerging Markets
9.00%
Health Care
6.60%
Asia Pacific ex-Japan
3.50%
Industrials
6.60%
Japan
1.40%
Consumer Staples
6.40%
Other
0.60%
Energy
5.10%
Information Technology
4.30%
Materials
4.00%
Utilities
3.50%
Other
3.10%
Transportation
Cash
Total
19.20%
0.10%
16.20%
100.00%
100.00%
Total
TOP HOLDINGS*
1 Telecom Italia Spa 144A 5.303% 30/05/2024
Italy
0.60%
2 GCP Infrastructure Investments
United Kingdom
0.50%
3 Schroder Real Estate Investment Trust
United Kingdom
0.50%
4 Bway Holding Co 144A 9.125% 15/08/2021
United States
0.40%
5 International Public Partnerships Limited Ordinary 1P
United Kingdom
0.40%
6 Ishares Mortgage Real Estate Capped
United States
0.40%
7 Schroder European Real Estate Investment Trust
Europe
0.40%
8 Starwood European Real Estate Finance
Guernsey
0.40%
9 US Treasury Note .875% 31/01/2017
United States
0.40%
United States
0.40%
10 US Treasury Note 1% 15/09/2017
Total
4.40%
*Of the target fund.
Page 2 of 2

Malaysia Strategy

Transcription

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