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Share
Price:
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MYR5.61
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Target
Price:
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MYR6.60
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Recommendation:
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Buy
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XL’s revamp
progressing well
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XL’s results were in line; the positive EBITDA momentum
vindicates management’s strategy shift. The proposed rights issue was
unexpected, but from Axiata’s perspective, mainly serves to convert its
shareholder’s loan into equity. Our forecasts, TP and rating for Axiata
are unchanged, pending Axiata’s results release. For now, investors’
focus would likely centre on Malaysia’s regulatory changes pertaining
to spectrum.
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FYE Dec (MYR m)
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FY13A
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FY14A
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FY15E
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FY16E
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Revenue
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18,370.8
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18,711.8
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20,082.2
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21,747.9
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EBITDA
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7,271.1
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6,998.6
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7,363.0
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8,073.1
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Core net profit
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2,648.0
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2,239.0
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2,446.1
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2,637.5
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Core EPS (sen)
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31.1
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26.1
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28.5
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30.7
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Core EPS growth (%)
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(5.3)
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(15.8)
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9.0
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7.8
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Net DPS (sen)
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22.0
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22.0
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24.2
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26.1
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Core P/E (x)
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18.1
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21.5
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19.7
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18.3
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P/BV (x)
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2.4
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2.3
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2.3
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2.2
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Net dividend yield (%)
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3.9
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3.9
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4.3
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4.7
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ROAE (%)
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13.3
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11.1
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11.7
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12.4
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ROAA (%)
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6.1
|
4.8
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4.9
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5.1
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EV/EBITDA (x)
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9.3
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10.1
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8.0
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7.3
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Net debt/equity (%)
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35.7
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42.3
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42.7
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42.1
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Share
Price:
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MYR4.06
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Target
Price:
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MYR4.20
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Recommendation:
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Hold
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Slower growth
ahead
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CMA CGM Malaysia reaffirms its long-term commitment at
Westports given Westports’ cost competitiveness. However, in view of
the waning global trade, we lower our FY16-17 EPS forecasts for
Westports by 6-9% as we trim our throughput growth assumption to 3-5%.
Downgrade the stock to HOLD (from BUY) with a lower DCF-derived TP of
MYR4.20 (-13%; WACC: 6.7%, beta: 0.6) as valuation is fair and the
uncertainty surrounding its key customers will probably only be cleared
in 2017.
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FYE Dec (MYR m)
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FY13A
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FY14A
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FY15E
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FY16E
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Revenue
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1,348.5
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1,503.0
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1,605.4
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1,713.7
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EBITDA
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709.7
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800.8
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897.2
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973.1
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Core net profit
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435.3
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512.2
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511.2
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562.5
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Core EPS (sen)
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12.8
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15.0
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15.0
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16.5
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Core EPS growth (%)
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7.9
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17.7
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(0.2)
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10.0
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Net DPS (sen)
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9.6
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11.3
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11.2
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12.4
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Core P/E (x)
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31.8
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27.0
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27.1
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24.6
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P/BV (x)
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8.6
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7.8
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7.3
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6.8
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Net dividend yield (%)
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2.4
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2.8
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2.8
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3.0
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ROAE (%)
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28.1
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30.4
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28.0
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28.7
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ROAA (%)
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12.8
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13.8
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13.1
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14.0
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EV/EBITDA (x)
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12.9
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15.2
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16.1
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14.7
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Net debt/equity (%)
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34.8
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40.0
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32.8
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23.1
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Share
Price:
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MYR3.49
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Target
Price:
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MYR3.80
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Recommendation:
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Hold
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A more cautious
view, D/G to HOLD
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As consumer sentiment continues to weaken, we are taking a
more conservative view towards Bank Islam’s personal financing
portfolio and have factored in higher credit costs. We lower our
FY16/17 earnings forecasts for BIMB by 6%/7% and our SOP-derived TP to
MYR3.80 from MYR4.50. We downgrade the stock to HOLD from BUY.
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FYE Dec (MYR m)
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FY13A
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FY14A
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FY15E
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FY16E
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Operating income
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2,036.6
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2,122.5
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2,265.7
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2,303.1
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Pre-provision profit
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808.4
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871.7
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930.6
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918.4
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Core net profit
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279.3
|
532.3
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522.7
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505.2
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Core EPS (MYR)
|
0.26
|
0.36
|
0.34
|
0.32
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Core EPS growth (%)
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9.3
|
37.9
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(3.4)
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(7.7)
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Net DPS (MYR)
|
0.12
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0.15
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0.10
|
0.09
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Core P/E (x)
|
13.5
|
9.8
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10.1
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11.0
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P/BV (x)
|
1.9
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1.8
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1.6
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1.4
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Net dividend yield (%)
|
3.4
|
4.2
|
3.0
|
2.6
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Book value (MYR)
|
1.88
|
1.97
|
2.25
|
2.44
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ROAE (%)
|
11.4
|
18.5
|
16.3
|
13.7
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ROAA (%)
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0.6
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1.0
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0.9
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0.8
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SECTOR RESEARCH
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Sector Note
by
Desmond Ch'ng
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2015 industry loan growth of 7.9% was about in line
our year-end forecast of 7.8%. We maintain our 2016 loan growth
forecast of 6.5%, which is premised on a slowdown in household (HH)
loan growth to 6.1% from 7.7% in 2015 and a moderation in non-HH loan
growth to 7% from 8%. NEUTRAL still on the sector, but amid concerns
over personal financing, we downgrade BIMB to a HOLD (from BUY) with
a lower TP of MYR3.80 (-70sen). BUYs maintained on AFG, HL Bank and
HLFG.
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Sector Note
by
Mohshin Aziz
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Asian airlines’ share prices have moved against their
traditional driver, i.e. low fuel prices since Aug-2015. Instead, the
shares have moved in tandem with the decline in Asian currencies
against the USD. We believe this is temporary as the share price to
fuel price correlation has held for over a decade and withstood two
oil price peak-trough cycles. The current correlation mismatch is a
good opportunity to pick up cheap airline stocks, we opine.
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Mohshin Aziz
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Sittichai
Duangrattanachaya
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Tightening
liquidity condition
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Money supply growth slowed for the third consecutive
month in Dec 2015 amid the fourth straight month of deceleration in
the banking system’s total deposit growth. BNM lowered SRR by 50bps
to 3.50% at its Monetary Policy Committee meeting on 20-21 Jan 2016
to boost liquidity.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Technical Research
by Lee
Cheng Hooi
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The FBM KLCI surged 42.59 points WoW to close at
1,667.80, as funds bought stocks after Malaysia re-calibrated its
budget and oil rebounded. The weekly volume rose from 1.56b to 2.50b
shares.
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NEWS
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Outside Malaysia:
U.S: Spending cooled in December as consumer’s added
savings. Consumer purchases were little changed after a 0.5% advance in
November that was bigger than previously estimated, Commerce Department
figures showed. Household purchases moderated in the fourth quarter,
contributing to a slowdown in the economy as businesses slashed
investment and worked to pare down inventories. A spending rebound,
powered by sustained job gains and low inflation, will be needed to
reinvigorate growth in the coming quarters. (Source: Bloomberg)
U.S: Manufacturing shrank in January for a fourth month as
businesses cut staffing plans. Growth resumed in new orders and
production, indicating some stabilization in the industry. The 48.2
reading for the Institute for Supply Management’s index followed
December’s 48 level that was the weakest since June 2009, data from the
Tempe, Arizona-based group showed. (Source: Bloomberg)
U.S: Raises borrowing estimate for this quarter by 52%.
The Treasury Department will issue an estimated USD 250b in net
marketable debt in the January-March quarter, compared with USD 165b
estimated three months ago, according to a statement released. It plans
an end- of-March cash balance of USD 320b, USD 60b more than projected in
November. (Source: Bloomberg)
China: Record factory gauge slump adds to a policy
dilemma. China’s official factory gauge signaled a record sixth straight
month of deterioration, raising the stakes for policy makers struggling
to prop up the economy amid a second bear market in stocks since June and
a currency at a five-year low. The purchasing manager’s index dropped to
a three-year low of 49.4 in January, the National Bureau of Statistics
said. The official services index also fell; while a private PMI survey
signaled the industry shrank an 11th month. (Source: Bloomberg)
Brazil: Said to see rate cut option on table later this
year as the recession takes pressure off consumer prices, according to a
member of President Dilma Rousseff’s economic team. It would be the first
cut since 2012. The central bank in 2015 raised benchmark borrowing costs
to battle accelerating inflation. Even as traders call for renewed hiking
in order to cool inflation, policy makers have kept the key rate
unchanged at 14.25% for the past four meetings. (Source: Bloomberg)
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Other News:
IPO: Bluetooth device maker Salutica eyes ACE Market. The
Original Design Manufacturer of electronic components is looking to list
on the ACE Market of Bursa Malaysia with an initial public offering of
101 million shares. Its subsidiary, Salutica Allied Solutions Sdn Bhd
markets its own products including Fobo Tire, a tyre pressure monitoring
system that uses Bluetooth technology. The gross proceeds are expected to
be utilised for repayment of bank borrowing (26.9%), capital expenditure
(27.5%), research & development (15%), working capital (23.6%) and
estimated listing expenses (7%). (Source: The Sun Daily)
IPO: PKNS mulls listing waste management assets in three
years. The Selangor State Development Corp (PKNS) is planning to list the
waste management assets parked under its subsidiary, Worldwide Holdings
Bhd in the next three years. Worldwide Holdings currently enjoys the
monopoly of managing solid waste in Selangor with a long-term concession
to operate nine sanitary landfills, which can dispose nearly 5000 tonnes
of waste daily. To recall, Worldwide Holdings was privatised in 2007 at
MYR3.90 per share. (Source: The Edge Financial Daily)
Telecoms: Spectrum reallocation goes to Celcom, Digi,
Maxis, U Mobile. The 900MHz and 1800Mhz spectrum bands will be reallocated
among the 4 telecoms operator by August this year for full implementation
by July 1, 2017 according to the Malaysian Communications and Multimedia
Commission (MCMC). The two bands of spectrum will be assigned for a fee
to the four telecommunication players for a period of 15 years. The fee
of spectrums is still currently being determined. MCMC will also address
the optimal usage of other relevant spectrum bands such as the 700MHz,
2300MHz, 2600MHz bands etc by end of 2016. (Source: The Edge Financial
Daily)
Shell Refining Co (Federation of Malaya): Shell to sell
51% stake in refinery. Shell Overseas Holdings Ltd has agreed to sell its
51% stake in Shell Refining Co (Federation of Malaya) to Malaysia
Hengyuan International Ltd (MHIL) – the local unit of a private Chinese
refiner for USD66.3m (MYR275.81m). The transaction is expected to be
completed sometime this year, subject to regulatory approval. (Source:
The Edge Financial Daily)
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