*Maybank Kim Eng Kopi-O (27 Oct 2021)*
Nikkei 29106.0 1.77%
Kospi 3049.1 0.94%
SSE 3597.6 -0.34%
HSI 26038.3 -0.36%
TWSE 17034.3 0.83%
SET 1636.0 0.11%
JCI 6656.9 0.47%
STI 3204.6 0.08%
KLCI 1584.2 -0.24%
*MKE Key Calls*
*Philippines Consumer - Panic at the pump*
The Department of Energy's (DoE) price watch monitor puts the price per liter of gasoline/diesel as of 19-20 Oct at PHP64.43/PHP50.72, up by 31%/39% YTD. Assuming zero price adjustments, our scenario analysis shows that a 15% increase in freight and handling costs translates to a 90/52bps drop in EBITM for URC and CNPF for FY22E. Meanwhile, retailers should be largely unaffected and insulated from rising fuel costs given the pass-through mechanism in their pricing strategy.
*MY*
o The KLCI may stage a rebound today, mirroring gains in overnight Wall Street. O&G stocks to stay in the spotlight after oil price hit a new 52-week high. That said, sentiment will stay cautious ahead of the upcoming Budget 2022 (which will be tabled on 29 Oct) as well as the US GDP data. Technically, we expect the benchmark index to range between 1,570 and 1,600, with supports at 1,577 and 1,555.
o *Malaysia Automotive*: We wish for the policymakers to green-light an EV policy. A forward-looking, well-thought framework, with attractive incentives (taxes, infrastructure & tariff), would spark interest & super-charge the electro-mobility adoption, transition & penetration in the automotive market. This move, if executed well, will transform the land transportation landscape, to meet the nation’s low-carbon economy aspiration & match the progress of its SEA counterparts. Our BUYs are BAuto, Sime, MBM, UMW & TCM. https://bit.ly/3pUWqen
o *Deleum (DLUM MK)*: Awarded two contract extensions by Petronas Carigali S/B to provide: 1) slickline equipment and services; and 2) gas lift valves & insert strings equipment, accessories and services. No value was given as it is based on work orders issued at clients’ discretion. Stock is trading at 8.5x consensus FY22 EPS. Deleum is sitting on a net cash of MYR76.8m at end-Jun 2021 (or MYR0.19/sh which is equivalent to about 34% of share price).
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