[Maybank Kim Eng] Today's Research - Malaysia

07 Sep 2015, Monday

g Company Research - MRCB-Quill REIT: Turning attractive; U/G to BUY | Kevin Wong - 7-Eleven Malaysia Holdings: Facing the music of GST | Liew Wei Han g Sector Research - Malaysia REITs: Switching on defensive mode | U/G to OVERWEIGHT | Kevin Wong - Malaysia Media: Value and high yields emerging | Samuel Yin Shao Yang g Macro Research - Malaysia: External Reserves, end-August 2015 - Surprisingly stable… | Suhaimi Ilias - Malaysia: External Trade, July 2015 - The two sides of weak MYR | Suhaimi Ilias - Malaysia: Technicals - Volatile & downward autumn markets | Lee Cheng Hooi - Malaysia: Other News - | Malaysia Research Team

MY: MRCB-Quill REIT (MQREIT MK) Share Price: MYR1.06 Target Price: MYR1.17 Recommendation: Buy Kevin Wong (603) 2082 6824 kevin.wong@maybank-ib.com Wei Sum Wong (603) 2297 8679 weisum@maybank-ib.com Rating Change: Turning attractive; U/G to BUY FYE Dec (MYR m) FY13A FY14A FY15E FY16E Revenue 68.9 70.2 113.9 124.4 Net property income 53.2 53.3 91.9 103.0 Distributable income 34.5 34.2 57.9 59.9 DPU (sen) 7.5 7.5 7.5 7.7 DPU growth (%) 0.0 0.0 (0.8) 3.5 Price/DPU(x) 14.1 14.1 14.2 13.7 P/BV (x) 0.8 0.8 0.8 0.8 DPU yield (%) 7.1 7.1 7.1 7.3 ROAE (%) 6.9 7.5 8.0 6.6 ROAA (%) 4.3 4.7 4.7 3.7 Debt/Assets (x) 0.4 0.4 0.4 0.4 §  Recent unit price decline reveals value; 7.3% net yield (306bps >MGS) provides buffer against volatile bond yields. §  A well-managed office REIT with a weighted average lease expiry (WALE) of 7.6 years. §  Maintain earnings forecasts but upgrade the call to BUY (from HOLD) with an unchanged MYR1.17 DCF-based TP. MY: 7-Eleven Malaysia Holdings (SEM MK) Share Price: MYR1.49 Target Price: MYR1.50 Recommendation: Hold Liew Wei Han (603) 2297 8676 weihan.l@maybank-ib.com Company Update: Facing the music of GST FYE Dec (MYR m) FY13A FY14A FY15E FY16E Revenue 1,672.5 1,893.1 2,147.1 2,472.9 EBITDA 90.7 123.1 119.5 146.4 Core net profit 50.1 58.1 59.3 73.1 Core EPS (sen) 4.1 4.7 4.8 5.9 Core EPS growth (%) 23.8 15.9 2.1 23.4 Net DPS (sen) 0.0 5.1 2.4 3.0 Core P/E (x) 36.7 31.6 31.0 25.1 P/BV (x) 27.7 7.8 6.9 6.1 Net dividend yield (%) 0.0 3.4 1.6 2.0 ROAE (%) 48.7 38.4 23.6 25.7 ROAA (%) 7.8 8.5 7.6 8.3 EV/EBITDA (x) na 13.1 13.3 10.7 Net debt/equity (%) 117.4 net cash net cash net cash §  1H15 SSSG into negative territory, -2.5% YoY. §  Expansion plans still intact; 109 new stores, 102 refurbished stores in 1H15. §  Maintain HOLD with an unchanged TP of MYR1.50. MY: Malaysia REITs Recommendation: Overweight Kevin Wong (603) 2082 6824 kevin.wong@maybank-ib.com Wei Sum Wong (603) 2297 8679 weisum@maybank-ib.com Sector Note: Switching on defensive mode | U/G to OVERWEIGHT §  M-REITs’ 2QCY15 earnings largely in-line, except for IGB REIT (above) and Axis REIT (below). §  Sector risks remain on the weak ringgit and a surge in bond yields but strong domestic liquidity should cushion. §  Lift to OVERWEIGHT. Top pick is KLCCP. MY: Malaysia Media Recommendation: Neutral Samuel Yin Shao Yang (603) 2297 8916 samuel.y@maybank-ib.com Jade Tam (603) 2297 8687 jade.tam@maybank-ib.com Sector Note: Value and high yields emerging §  Adex outlook unclear but major cost savers such as lower commission rates and newsprint prices under-appreciated. §  Cut our 2015 total gross adex forecast by 4ppts to -12% YoY. Cut MPR/STAR/MCIL forward EPS estimates by up to 12%. §  Maintain BUY on MPR and MCIL on rock bottom valuations. Get high dividend yields while waiting for adex to recover. MY: External Reserves, end-August 2015 Suhaimi Ilias (603) 2297 8682 suhaimi_ilias@maybank-ib.com Zamros Dzulkafli (603) 2082 6818 zamros.d@maybank-ib.com Economics Research: Surprisingly stable… §  External reserves came in better than expected as it stabilized at end-Aug 2015 after falling sharply in the preceding two months. §  This was despite weak MYR and indications of continued net portfolio investment outflows from foreign selloffs in the equity and bond markets. §  Suggest offset from sustained current account surplus and net inflows of FDI and other investments. MY: External Trade, July 2015 Suhaimi Ilias (603) 2297 8682 suhaimi_ilias@maybank-ib.com Zamros Dzulkafli (603) 2082 6818 zamros.d@maybank-ib.com Economics Research: The two sides of weak MYR §  First back-to-back YoY export growth this year implies benefit of weaker MYR on manufacturing-based exports as commodity-based exports remained weak. §  Rebound in imports reflects weak MYR impact i.e. higher costs and importers front-loading their purchases to hedge against risk of weaker MYR. §  But besides MYR impact, trade outlook will be influenced mainly by commodity prices and China. MY: Technicals Lee Cheng Hooi (603) 2297 8694 chenghooi.lee@maybank-ib.com Technical Research: Volatile & downward autumn markets §  FBM KLCI – Rebound from 1,503.68 stalled at 1,660.22. §  CPO Futures – Low sighted at MYR1,863. Nibble on dips. §  DJIA – Further autumn downward selling pressure. §  AMBANK – A very strong triple time frame downtrend stock. MY: Other News Malaysia Research Team Economics Research: Outside Malaysia —   U.S: Jobless rate drops to seven-year low —   Germany: Factory orders fell in July —   China: Freezes outbound investment quotas as outflows hurt Yuan Malaysia —   Automotive: ‘Automotive industry still recruiting workers’ —   FGV: Taps India’s oil palm potential —   Westports: Keeps 5% to 10% container growth forecast for 2015