Thursday, August 27, 2015

[Maybank Kim Eng] Today's Research - Malaysia

27 Aug 2015, Thursday

g Company Research
- Hong Leong Bank: 4QFY15 above expectations
| Desmond Ch'ng
- Hong Leong Financial Group: Cheaper entry into HL Bank
| Desmond Ch'ng
- Sime Darby: A strong finish in the final quarter
| Chee Ting Ong
- Genting Malaysia: Hit by GENUK but RWG ops strong
| Samuel Yin Shao Yang
- Genting Bhd: Poor 2Q15 but too cheap to ignore
| Samuel Yin Shao Yang
- IHH Healthcare: Solid quarter, but priced in
| John Cheong
- UMW Holdings: Negative surprise; weak outlook
| Ivan Yap
- Cahya Mata Sarawak: 2Q15: Normalised quarter
| Li Shin Chai
- Media Chinese International: U/G to BUY on cheap valuations
| Samuel Yin Shao Yang
- Hock Seng Lee: 2Q15: Weighed down by margins
| Li Shin Chai
- Mah Sing Group: On defensive mode
| Wei Sum Wong
- NCB Holdings: Tariff hikes to drive growth
| Yen Ling Lee
- MSM Malaysia : Investing USD259m in new refinery
| Liew Wei Han



MY: Hong Leong Bank (HLBK MK)
Share Price: MYR12.92
Target Price: MYR15.20
Recommendation: Buy


Desmond Ch'ng
(603) 2297 8680
desmond.chng@maybank-ib.com


Results Review: 4QFY15 above expectations

FYE Jun (MYR m)
FY14A
FY15A
FY16E
FY17E
Operating income
4,039.1
4,066.9
4,333.2
4,527.8
Pre-provision profit
2,246.8
2,253.1
2,466.6
2,600.2
Core net profit
2,102.3
2,233.2
2,291.0
2,370.8
Core EPS (MYR)
1.19
1.26
1.27
1.32
Core EPS growth (%)
12.8
5.9
0.8
3.5
Net DPS (MYR)
0.41
0.41
0.42
0.43
Core P/E (x)
10.8
10.2
10.1
9.8
P/BV (x)
1.7
1.4
1.4
1.3
Net dividend yield (%)
3.2
3.2
3.3
3.4
Book value (MYR)
7.73
8.93
9.48
10.06
ROAE (%)
15.3
14.3
13.2
12.9
ROAA (%)
1.3
1.3
1.2
1.2
§  4QFY15 surprises positively, mainly on lower tax rate.
§  We expect the upcoming rights issue to dilute FY16 ROE to 11.7% from 13.2%, but have factored this in.
§  Maintain BUY with an unchanged TP of MYR15.20, pegged to 1.5x proforma CY15 post-rights BVPS.

MY: Hong Leong Financial Group (HLFG MK)
Share Price: MYR13.22
Target Price: MYR16.90
Recommendation: Buy


Desmond Ch'ng
(603) 2297 8680
desmond.chng@maybank-ib.com

Results Review: Cheaper entry into HL Bank

FYE Jun (MYR m)
FY14A
FY15A
FY16E
FY17E
Operating income
4,549.2
4,490.9
4,757.5
4,969.6
Pre-provision profit
2,583.1
2,490.7
2,676.5
2,795.5
Core net profit
1,706.9
1,620.7
1,696.0
1,730.2
Core FDEPS (MYR)
1.63
1.55
1.62
1.66
Core FDEPS growth(%)
14.7
(5.0)
4.6
2.0
Net DPS (MYR)
0.38
0.38
0.37
0.38
Core FD P/E (x)
8.1
8.5
8.1
8.0
P/BV (x)
1.2
1.1
1.0
0.9
Net dividend yield (%)
2.9
2.9
2.8
2.9
Book value (MYR)
10.90
12.45
12.82
14.08
ROAE (%)
15.8
13.2
12.7
12.2
ROAA (%)
0.9
0.8
0.8
0.8
§  4QFY15 results above expectations mainly due to better-than-expected results from HL Bank.
§  HLFG’s current market cap of MYR13.9b compares against MYR15b for its 64% stake in HL Bank – investors get insurance division for free.
§  BUY with a lower RNAV-TP of MYR16.90 (MYR17.60 before).

MY: Sime Darby (SIME MK)
Share Price: MYR7.45
Target Price: MYR8.87
Recommendation: Hold


Chee Ting Ong
(603) 2297 8678
ct.ong@maybank-ib.com

Results Review: A strong finish in the final quarter

FYE Jun (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
46,109.0
43,908.0
43,729.0
47,599.3
EBITDA
5,783.1
5,376.6
4,658.5
5,461.3
Core net profit
3,230.1
3,089.3
2,313.8
2,665.7
Core EPS (sen)
53.8
50.9
37.3
42.9
Core EPS growth (%)
(23.0)
(5.2)
(26.9)
15.2
Net DPS (sen)
34.0
36.0
25.0
28.8
Core P/E (x)
13.9
14.6
20.0
17.4
P/BV (x)
1.7
1.6
1.5
1.5
Net dividend yield (%)
4.6
4.8
3.4
3.9
ROAE (%)
12.2
11.1
7.9
8.7
ROAA (%)
6.7
6.2
4.1
4.2
EV/EBITDA (x)
11.1
12.2
13.2
11.1
Net debt/equity (%)
20.6
22.0
46.1
41.3
§  FY6/15 net profit was above expectations.
§  FY6/16 outlook challenging. Keeping our 2016-17 EPS forecasts unchanged for now pending finalisation of our industry wide CPO price review.
§  Our EPS forecasts, TP and HOLD call under review.

MY: Genting Malaysia (GENM MK)
Share Price: MYR3.91
Target Price: MYR4.55
Recommendation: Buy


Samuel Yin Shao Yang
(603) 2297 8916
samuel.y@maybank-ib.com

Results Review: Hit by GENUK but RWG ops strong

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
8,327.5
8,229.4
8,945.4
9,912.6
EBITDA
2,428.2
2,247.6
2,477.2
2,713.7
Core net profit
1,715.7
1,358.1
1,329.1
1,413.3
Core EPS (sen)
30.2
23.9
23.4
24.9
Core EPS growth (%)
6.8
(20.8)
(2.1)
6.3
Net DPS (sen)
7.1
6.5
6.4
6.8
Core P/E (x)
12.9
16.3
16.7
15.7
P/BV (x)
1.4
1.4
1.3
1.2
Net dividend yield (%)
1.8
1.7
1.6
1.7
ROAE (%)
12.0
8.6
7.9
7.9
ROAA (%)
9.3
6.7
5.9
5.8
EV/EBITDA (x)
9.4
9.7
8.7
8.1
Net debt/equity (%)
net cash
net cash
net cash
net cash
§  2Q15 results missed by a tad on bad debts at GENUK. Otherwise, RWG operations stay strong despite the 6% GST.
§  Trim EPS estimates by 5-9% only due to the MYR2.4b MTNs. That said, EBITDA estimates are little changed.
§  Maintain BUY but trim TP from MYR4.60 to MYR4.55. A lot of runway for growth left.

MY: Genting Bhd (GENT MK)
Share Price: MYR6.64
Target Price: MYR9.35
Recommendation: Buy


Samuel Yin Shao Yang
(603) 2297 8916
samuel.y@maybank-ib.com

Results Review: Poor 2Q15 but too cheap to ignore

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
17,111.7
18,216.5
18,753.6
20,496.4
EBITDA
6,116.4
6,627.5
6,531.3
7,207.0
Core net profit
1,681.4
1,777.4
1,811.7
2,097.1
Core FDEPS (sen)
45.5
46.2
43.9
50.3
Core FDEPS growth(%)
(27.2)
1.5
(4.9)
14.6
Net DPS (sen)
37.5
4.0
3.8
4.4
Core FD P/E (x)
14.6
14.4
15.1
13.2
P/BV (x)
1.0
0.9
0.9
0.8
Net dividend yield (%)
5.6
0.6
0.6
0.7
ROAE (%)
7.2
6.8
6.6
7.2
ROAA (%)
2.5
2.5
2.4
2.7
EV/EBITDA (x)
8.5
7.3
6.3
5.9
Net debt/equity (%)
net cash
net cash
net cash
net cash
§  Core earnings missed. No interim DPS declared. That said, 2H15 should be better on normalised GENS VIP win rates.
§  Trim EPS estimates by 2-6%. Tweak TP from MYR9.30 to MYR9.35. Upgrade GENT from HOLD to BUY.
§  Trading at a huge ~40% discount to SOP/sh and <1x P/BV. Normalised earnings going forward to narrow discount.

MY: IHH Healthcare (IHH MK)
Share Price: MYR5.71
Target Price: MYR5.35
Recommendation: Hold


John Cheong
(65) 6231 5845
johncheong@maybank-ke.com.sg

Results Review: Solid quarter, but priced in

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
6,756.5
7,344.0
8,739.3
10,050.9
EBITDA
1,749.8
1,943.0
2,294.1
2,638.8
Core net profit
610.6
754.7
964.7
1,176.1
Core FDEPS (sen)
7.4
9.2
11.7
14.2
Core FDEPS growth(%)
48.5
23.5
27.2
21.9
Net DPS (sen)
2.0
3.0
3.1
3.6
Core FD P/E (x)
76.9
62.2
48.9
40.1
P/BV (x)
2.6
2.4
2.3
2.2
Net dividend yield (%)
0.4
0.5
0.5
0.6
ROAE (%)
3.5
4.0
4.9
5.7
ROAA (%)
2.3
2.7
3.3
3.9
EV/EBITDA (x)
20.3
22.1
22.1
18.9
Net debt/equity (%)
12.8
9.3
9.0
3.3
§  2Q15 in line, 6M15 core earnings met 48% of our FY15E.
§  Growth was boosted by the ramp up of new hospital, robust Singapore operations, and a spike in revenue per inpatient in Malaysia and Turkey.
§  We look for more expansion to sustain growth. Maintain HOLD and TP as positives may have been priced in.

MY: UMW Holdings (UMWH MK)
Share Price: MYR8.49
Target Price: MYR7.80
Recommendation: Hold


Ivan Yap
(603) 2297 8612
ivan.yap@maybank-ib.com

Results Review: Negative surprise; weak outlook

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
13,951.5
14,932.5
12,760.6
14,418.3
EBITDA
1,622.1
1,811.7
1,270.1
1,724.3
Core net profit
752.8
757.3
406.3
590.8
Core EPS (sen)
64.4
64.8
34.8
50.6
Core EPS growth (%)
(19.0)
0.6
(46.3)
45.4
Net DPS (sen)
44.0
41.0
26.1
37.9
Core P/E (x)
13.2
13.1
24.4
16.8
P/BV (x)
1.6
1.5
1.5
1.5
Net dividend yield (%)
5.2
4.8
3.1
4.5
ROAE (%)
13.5
11.8
6.1
8.7
ROAA (%)
5.8
4.9
2.4
3.5
EV/EBITDA (x)
10.6
9.1
11.6
8.3
Net debt/equity (%)
6.8
12.4
25.2
15.6
§  1H15 earnings below our and consensus forecasts.
§  Further weakness ahead, (i) hit from USD-denominated auto COGS and (ii) underutilisation of O&G rigs and weak DCRs.
§  Cut FY15-17 earnings by 20%-34%. Maintain HOLD; SOP-TP lowered to MYR7.80 (-18%).

MY: Cahya Mata Sarawak (CMS MK)
Share Price: MYR4.91
Target Price: MYR5.95
Recommendation: Buy


Li Shin Chai
(603) 2297 8684
lishin.c@maybank-ib.com

Results Review: 2Q15: Normalised quarter

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
1,416.8
1,673.9
1,368.8
1,481.2
EBITDA
376.1
372.5
399.6
432.3
Core net profit
175.1
221.3
264.0
328.8
Core EPS (sen)
17.2
21.7
25.9
32.3
Core EPS growth (%)
26.2
26.4
19.3
24.5
Net DPS (sen)
15.8
8.5
10.4
12.9
Core P/E (x)
28.6
22.6
19.0
15.2
P/BV (x)
3.0
2.8
2.5
2.3
Net dividend yield (%)
3.2
1.7
2.1
2.6
ROAE (%)
11.2
12.8
14.0
15.9
ROAA (%)
7.7
8.5
9.3
10.9
EV/EBITDA (x)
5.5
9.6
11.7
10.9
Net debt/equity (%)
net cash
net cash
net cash
net cash
§  2Q15 results were below expectation.
§  Downside to earnings forecasts from higher USD costs and delay in OMS plant full commission.
§  Forecasts unchanged pending analyst briefing. Maintain BUY.

MY: Media Chinese International (MCIL MK)
Share Price: MYR0.51
Target Price: MYR0.65
Recommendation: Hold


Samuel Yin Shao Yang
(603) 2297 8916
samuel.y@maybank-ib.com
Jade Tam
(603) 2297 8687
jade.tam@maybank-ib.com
Results Review: U/G to BUY on cheap valuations

FYE Mar (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,530.6
1,589.3
1,450.2
1,476.7
EBITDA
287.2
268.1
219.7
244.4
Core net profit
157.5
144.4
112.1
133.4
Core EPS (sen)
9.3
8.6
6.6
7.9
Core EPS growth (%)
(8.2)
(8.3)
(22.4)
19.0
Net DPS (sen)
4.7
3.4
2.7
3.2
Core P/E (x)
5.4
5.9
7.6
6.4
P/BV (x)
1.2
1.1
1.0
0.9
Net dividend yield (%)
9.2
6.7
5.3
6.3
ROAE (%)
23.3
19.4
14.0
15.5
ROAA (%)
10.5
9.4
7.2
9.0
EV/EBITDA (x)
6.0
4.5
3.9
3.2
Net debt/equity (%)
21.9
5.9
net cash
net cash
§  1QFY3/16 was above expectations on cost management efforts and better performance in the travel segment.
§  FY3/16 is expected to be another challenging year but we are sanguine on MCIL’s cost management abilities.
§  Upgrade to BUY. Trading at only 1x P/BV and offering >5% yields. TP maintained at MYR0.65 TP on 1.3x end-CY15 P/BV.

MY: Hock Seng Lee (HSL MK)
Share Price: MYR1.72
Target Price: MYR2.15
Recommendation: Buy


Li Shin Chai
(603) 2297 8684
lishin.c@maybank-ib.com

Results Review: 2Q15: Weighed down by margins

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
548.4
604.7
650.4
804.6
EBITDA
118.6
109.4
110.7
133.6
Core net profit
85.2
76.9
77.2
93.6
Core EPS (sen)
15.4
14.0
14.0
17.0
Core EPS growth (%)
(5.9)
(9.3)
0.4
21.2
Net DPS (sen)
2.4
2.0
3.3
3.3
Core P/E (x)
11.2
12.3
12.3
10.1
P/BV (x)
1.8
1.6
1.5
1.3
Net dividend yield (%)
1.4
1.2
1.9
1.9
ROAE (%)
16.8
13.6
12.4
13.7
ROAA (%)
11.1
9.7
8.6
8.7
EV/EBITDA (x)
7.2
7.2
5.3
3.9
Net debt/equity (%)
net cash
net cash
net cash
net cash
§  Results fell short due to weaker-than-expected margins.
§  Cut earnings but TP unchanged at MYR2.15 after rolling forward valuations.
§  Maintain BUY; beneficiary of SCORE and Pan Borneo Highway.

MY: Mah Sing Group (MSGB MK)
Share Price: MYR1.44
Target Price: MYR1.39
Recommendation: Hold


Wei Sum Wong
(603) 2297 8679
weisum@maybank-ib.com

Results Review: On defensive mode

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
2,005.6
2,904.7
2,459.7
2,647.1
EBITDA
391.1
552.0
608.8
663.8
Core net profit
280.6
339.2
376.3
401.1
Core EPS (sen)
16.2
18.4
19.2
20.5
Core EPS growth (%)
(25.7)
13.8
4.5
6.6
Net DPS (sen)
8.0
6.5
7.7
8.2
Core P/E (x)
8.9
7.8
7.5
7.0
P/BV (x)
1.3
1.2
0.9
0.8
Net dividend yield (%)
5.6
4.5
5.3
5.7
ROAE (%)
17.6
16.1
14.0
12.4
ROAA (%)
6.9
6.9
6.4
5.8
EV/EBITDA (x)
8.1
7.0
4.6
4.3
Net debt/equity (%)
15.5
35.8
net cash
0.5
§  1H15 net profit of MYR189m (+11% YoY) is in line.
§  Management cuts sales target by 33%. It has also rescinded the land deal in Puchong.
§  We cut earnings forecasts by 7-19%. Our RNAV-TP is lowered to MYR1.39. Reiterate HOLD.

MY: NCB Holdings (NCB MK)
Share Price: MYR4.23
Target Price: MYR5.50
Recommendation: Buy


Yen Ling Lee
(603) 2297 8691
lee.yl@maybank-ib.com

Company Update: Tariff hikes to drive growth

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
919.4
831.0
835.0
894.2
EBITDA
199.2
125.1
179.9
229.5
Core net profit
51.7
27.9
40.9
83.4
Core EPS (sen)
11.0
5.9
8.7
17.7
Core EPS growth (%)
(58.9)
(46.1)
47.0
103.7
Net DPS (sen)
8.0
7.0
7.0
8.0
Core P/E (x)
38.5
71.4
48.6
23.9
P/BV (x)
1.4
1.4
1.4
1.4
Net dividend yield (%)
1.9
1.7
1.7
1.9
ROAE (%)
3.7
2.0
2.9
5.8
ROAA (%)
2.8
1.3
1.8
3.6
EV/EBITDA (x)
8.6
9.6
11.1
8.9
Net debt/equity (%)
3.7
8.8
0.8
4.1
§  Earnings could soften in 3Q and pick up in 4Q on tariff hike.
§  Reduce FY15-17 EPS by 16%/5%/5% on lower throughput expectation and 1 month delay in tariff implementation.
§  A privatisation candidate; maintain BUY with a lower TP of MYR5.50 (-4%).

MY: MSM Malaysia (MSM MK)
Share Price: MYR4.92
Target Price: MYR5.50
Recommendation: Hold


Liew Wei Han
(603) 2297 8676
weihan.l@maybank-ib.com

Company Update: Investing USD259m in new refinery

FYE Dec (MYR m)
FY13A
FY14A
FY15E
FY16E
Revenue
2,202.5
2,281.5
2,325.6
2,371.0
EBITDA
386.3
383.4
425.3
442.2
Core net profit
253.2
257.0
275.3
276.6
Core EPS (sen)
36.0
36.6
39.2
39.3
Core EPS growth (%)
27.6
1.5
7.1
0.5
Net DPS (sen)
24.0
24.0
25.7
25.8
Core P/E (x)
13.7
13.5
12.6
12.5
P/BV (x)
1.9
1.8
1.7
1.6
Net dividend yield (%)
4.9
4.9
5.2
5.2
ROAE (%)
14.0
13.5
13.8
13.3
ROAA (%)
11.2
11.0
10.7
10.4
EV/EBITDA (x)
9.1
9.6
8.7
8.3
Net debt/equity (%)
0.2
10.4
12.8
10.9
§  Construction is expected to be completed in 22 months or third quarter of 2017.
§  Provides new capacity to support future growth, mainly exports, in our view.
§  Maintain HOLD with an unchanged TP of MYR5.50.

SG: Industrial Production, Jul ‘15

Suhaimi Ilias
(603) 2297 8682
suhaimi_ilias@maybank-ib.com
Zamros Dzulkafli
(603) 2082 6818
zamros.d@maybank-ib.com
Economics Research: Weak start to 2H 2015


§  Sixth consecutive month of fall (July: -6.1% YoY; June 2015: -4.0% YoY)
§  Manufacturing PMI slipped back to sub-50 in July 2015
§  But Business Expectations Survey suggests a slightly better 2H 2015

MY: Technicals

Lee Cheng Hooi
(603) 2297 8694
chenghooi.lee@maybank-ib.com

Technical Research: Some price stability finally seen


§  AMBANK - On a very strong downward Wave 3 and 5 move.
§  FBMKLCI – Some price stability finally seen.
§  Supports of 1,555 and 1,580 may be areas to nibble.
§  Resistances of 1,583 and 1,652 will cap rebounds.

MY: Other News

Malaysia Research Team

Economics Research:


Outside Malaysia
   U.S: Orders for capital goods rose in July by most in a year
   U.S: Fed’s Dudley cools September prospects while leaving room to act
   U.K: Bonuses rise to near-record level; Bank payouts decline
Other News
   PM announced a Special Economic Committee
    Property: Naza TTDI bags Kwasa Damansara Project R2-1
   Tenaga Nasional: Inks supplement power purchase deal with Jimah East
    Selangor Dredging: On lookout for land
   Tambun Indah Land: To launch MYR300m worth of projects in 2H

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