Professional Documents
Culture Documents
PP11072/4/2008
4 15
Food
3 10
CPI
Transport
2 (RHS) 5
1 0
Utilities, Housing & Other Fuels
0 (5)
Jan-02
May-02
Jan-03
May-03
Jan-04
May-04
Jan-05
May-05
Jan-06
May-06
Jan-07
May-07
Jan-08
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Source: Department of Statistics
The Consumer Price Index (CPI, 2005=100) was up 2.3% YoY in January,
little changed from the 10-month high of 2.4% YoY in December, and slightly
below our and consensus expectations of 2.4% YoY. Overall, monthly inflation
rate has been inching up from the recent low of 1.4% YoY in May-June 2007.
Slower increases in food prices of 3.9% YoY (Dec: +4.3% YoY) helped
keep the inflation rate relatively stable last month, offsetting faster
increases in other prices of good and services, namely “alcoholic
beverages and tobacco” (9.0% YoY vs Dec: 8.8% YoY) ), “restaurants and
hotels” (6.7% YoY vs Dec: +6.1% YoY), “miscellaneous goods & services”
(2.9% YoY vs Dec: +1.9% YoY), “health” (1.8% YoY vs Dec: 1.6% YoY),
“education” (1.5% YoY vs Dec: +1.1% YoY) and “housing, water, electricity,
gas and other fuels” (1.2% YoY vs Dec: 1.1% YoY). Prices at “restaurants and
hotels” accelerated last month for the ninth consecutive month, reflecting a
combination of higher costs of food, beverages and fuel/energy (especially
cooking gas which has doubled over two years) as well as higher room rates,
which were passed through to final consumers amid strong demand thanks to
the robust growth in domestic consumer spending plus the strong increase in
tourist arrivals as “Visit Malaysia Year” was extended to 31st August 2008.
This year, we expect the inflation rate to quicken to 3.4% from 2% last
year, mainly due to the expectation that the Government is going to
resume cutting fuel/energy subsidies given the steady uptrend in crude oil
prices since the last fuel price hike in February 2006. We expect the
Government to resume cutting fuel subsidies by the middle of this year. We
estimate that fuel subsidies account for as much as 70% of the Government’s
total annual spending on subsidies, which is budgeted to drop to RM10.2b this
year from the estimated RM12.2b last year (2006: RM10.1b). We are
assuming a 20% increase in fuel prices by mid-2008, which will have
knock-on effect of prices of goods and services, especially on the costs
of public and private transportation costs (taxis, buses, lorries, ferries), on
top of the 7.7%-60% increases in toll rates for some highways that came into
effect on 1 January 2008. Furthermore, there is also a strong likelihood of a
review in Petronas’ gas price, currently fixed at RM6.40 per mmbtu since 1997,
with impact on Tenaga’s power tariff and energy costs of many industries.
In addition, high commodity prices are keeping the pressure on food
prices, as reflected by the string of major food price increases last year and
recent statements by fast food chain operators KFC and Pizza Hut that they
will raise prices this year in response to escalating raw material costs, including
crude oil, corn and soyabean.
Malaysians' Credit Card Spending Growth (%) 19.4 17.1 14.9 19.9
Total Motor Vehicle Sales Growth (%) 20.2 13.3 (11.1) (0.7)
Passenger Car Sales Growth (%) 19.0 5.5 (8.7) 3.5
Motorcycle Sales Growth (%) 2/ 43.2 11.3 4.0 7.0
1/ Jan-Sep 2007 2/ Jan-Nov 2007
Source: BNM, Dept. of Statistics
Definition of Ratings
Aseambankers uses the following rating system:
STRONG BUY Total return is expected to exceed 20% in the next 12 months; high conviction call
BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between above 0% to 10% in the next 12 months
FULLY VALUED Total return is expected to be between -10% and 0% in the next 12 months
SELL Total return is expected to be below -10% in the next 12 months
TRADING BUY Total return is expected to be between 10-20% in the next 6 months arising from positive newsflow e.g. mergers
and acquisition, corporate restructuring, and potential of obtaining new projects. However, the upside may or
may not be sustainable
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only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not
carry investment ratings as we do not actively follow developments in these companies.
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