*Maybank IBG Kopi-O (3 Jan 2022)*
Nikkei 28791.7 -
Kospi 2977.7 -
SSE 3639.8 0.57%
HSI 23397.7 1.24%
TWSE 18218.8 -
SET 1657.6 -
JCI 6581.5 -
STI 3123.7 -0.09%
KLCI 1567.5 1.55%
*Maybank IBG Key Calls*
*Malaysia Oil & Gas - PETRONAS Activity Outlook (PAO) 2022-24*
PETRONAS revealed a mixed performance (plan vs. actual) in 2021. Its latest PAO edition reflects a cautious, optimistic outlook for 2022 but an improving positivity in 2023-24, based on the level of activities planned. In this latest edition, its energy transition outlook is gaining traction, with greater emphasis on hydrogen. We remain POSITIVE on the sector. Velesto, Icon, Wah Seong, MMHE & Dialog are beneficiaries of the PAO play. Yinson remains our key pick for the global FPSO play.
*MY*
o Market could be choppy on the first trading day of 2022 as profit taking activities may accelerate after the late push on the KLCI on 31 Dec 2021. Inflation, Covid-19 pandemic, tightening monetary policy and geopolitical risk will likely continue to dominate headlines. Technically, we expect the KLCI to range between 1,540 and 1,580 today, with supports at 1,500 and 1,480.
o *Tenaga Nasional (TNB MK)*: Electricity tariffs are unchanged into 2022. The unexpected delay to the implementations of both RP3 (2022-2024) and the ICPT (pass-through) mechanism inevitably raises regulatory concerns for TNB. Downgrade to HOLD with a lower MYR9.60 TP (DCF-based) as we price in concerns over elevated regulatory risks. We prefer *Mega First (MFCB MK, BUY, CP: MYR3.50, TP: MYR4.30)* in the utilities space.
o *Lotus KFM (LOTUS MK)*: Proposed to diversify into the business of planting, harvesting and processing of fast-growing plants. In conjunction with the diversification, LOTUS has also proposed to acquire the entire stake in: 1) Ladang Lojing S/B for MYR9.2m cash; and 2) Khas Jadi S/B for MYR12.5m cash. Immediate impact to bottomline could be limited in the near term as both companies were loss making in 2020. In other word, LOTUS’ near-term prospects will continue to hinge on its flour business. Stock trades at 77x FY9/21 trailing EPS.
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