[Maybank IB] Today's Research - Malaysia

FEATURE CALLS Singapore | Genting Singapore Cleaning up its VIP operations Samuel Yin Shao Yang

COMPANY RESEARCH Inari Amertron | Getting ready for next sprint Ivan Yap

MACRO RESEARCH Malaysia | Slowing slowly… Suhaimi Ilias Malaysia | A quarter of surpluses Suhaimi Ilias Malaysia | Firmer and positive sentiment Lee Cheng Hooi

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Company Update Inari Amertron (INRI MK) by Ivan Yap Share Price: MYR3.27 Target Price: MYR4.15 Recommendation: Buy Getting ready for next sprint Inari’s latest plant acquisition signals an imminent job win, possibly from its biggest client, Broadcom Ltd (previously Avago Technologies). Our forecasts are unchanged pending results announcement next week. Our TP (based on 17x CY17 PER) is adjusted to MYR4.15 (from MYR5.35) to reflect the recently concluded 1-for-4 bonus issue exercise (including warrants dilution). Reiterate BUY; Inari is our Top Pick in the sector. FYE Jun (MYR m) FY14A FY15A FY16E FY17E Revenue 793.7 933.1 1,344.6 1,397.8 EBITDA 134.8 187.3 259.0 291.1 Core net profit 102.8 151.5 206.5 221.1 Core EPS (sen) 14.1 20.3 27.7 29.6 Core EPS growth (%) 137.7 44.1 36.3 7.0 Net DPS (sen) 6.8 8.9 11.1 11.8 Core P/E (x) 23.2 16.1 11.8 11.0 P/BV (x) 9.2 4.5 3.7 3.1 Net dividend yield (%) 2.1 2.7 3.4 3.6 ROAE (%) 49.4 38.1 34.5 30.4 ROAA (%) 23.6 22.7 22.3 20.3 EV/EBITDA (x) 12.6 9.3 8.9 7.6 Net debt/equity (%) 6.7 net cash net cash net cash Ivan Yap    (603) 2297 8612    ivan.yap@maybank-ib.com

Singapore Results Review Genting Singapore (GENS SP) by Samuel Yin Shao Yang Share Price: SGD0.70 Target Price: SGD0.78 Recommendation: Hold Cleaning up its VIP operations 4Q15 results were within our expectations. While the final DPS of 1.5 cents was 50% higher than our estimate, the dividend yield remains lukewarm at 2.1%. 4Q15 VIP volumes continue to ease, but to be fair, we note that the 4Q15 provision for doubtful debts was an intra-year low. More importantly, the high margin mass market remains resilient. GENS also disposed substantially all of its portfolio investments that generated exceptional losses in the past. Maintain HOLD and SGD0.78 TP. FYE Dec (SGD m) FY14A FY15A FY16E FY17E Revenue 2,862.5 2,400.9 2,386.7 2,505.9 EBITDA 1,158.2 812.5 913.4 1,023.1 Core net profit 470.2 267.6 386.3 480.2 Core FDEPS (cts) 3.8 2.2 3.2 3.9 Core FDEPS growth(%) 1.3 (42.6) 44.3 24.3 Net DPS (cts) 1.0 1.5 1.5 1.5 Core FD P/E (x) 18.4 32.0 22.2 17.9 P/BV (x) 1.2 1.2 1.1 1.1 Net dividend yield (%) 1.4 2.1 2.1 2.1 ROAE (%) 6.4 3.6 5.2 6.3 ROAA (%) 3.7 2.2 3.2 4.0 EV/EBITDA (x) 9.6 7.2 5.5 4.8 Net debt/equity (%) net cash net cash net cash net cash Samuel Yin Shao Yang    (603) 2297 8916    samuel.y@maybank-ib.com

MACRO RESEARCH MY: 4Q 2015 Real GDP Economics Research by Suhaimi Ilias Slowing slowly… 4Q 2015 real GDP growth slowed for the third consecutive quarter to +4.5% YoY (3Q 2015: +4.7% YoY). Full-year 2015 growth moderated to +5.0% (2014: +6.0%). 2016 growth forecast adjusted to +4.3% from +4.5%. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Balance of Payments 4Q 2015 Economics Research by Suhaimi Ilias A quarter of surpluses Current account surplus widened in 4Q 2015 to +MYR11.4b or +3.8% of GDP (3Q 2015: +MYR5.1b or +1.7% of GDP) on higher trade surplus and smaller deficit in income account. Financial account was also in surplus thanks to the net inflows of portfolio and direct investments. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Technicals Technical Research by Lee Cheng Hooi Firmer and positive sentiment The FBMKLCI gained 15.70 points to close at 1,680.02 yesterday, while the FBMEMAS and FBM100 surged 103.93 points and 102.73 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 547-to-300, while 346 counters were unchanged. A total of 1.67b shares were traded valued at MYR2.10b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Leading indicators fell for a second month in January, reflecting a slump in stock prices as well as a pickup in jobless claims that has since reversed. The Conference Board’s measure of the economic outlook for the next three to six months fell 0.2% in January after sliding a revised 0.3% the month before, the New York- based group said. Four of the 10 indicators of the composite measure decreased, led by the rout in stocks and more applications for jobless benefits. A drop in factory orders and fewer building permits also weighed on the index. (Source: Bloomberg) U.S: Jobless claims decline to lowest level since November, signaling durability in the labor market. Initial jobless claims dropped by 7,000 to 262,000 in the week ended Feb. 13, the lowest since Nov. 21, a report from the Labor Department showed. Last week coincided with the period that the government surveys businesses and households to calculate payrolls and the jobless rate for February. The labor market has exhibited persistent strength despite softer foreign sales; a sign domestic demand is helping the U.S. weather a global slowdown. More hiring and fewer firings that lead to enhanced feelings of job security have the potential to encourage an acceleration in consumer spending. (Source: Bloomberg) U.S: Jobless claims decline to lowest level since November, signaling durability in the labor market. Initial jobless claims dropped by 7,000 to 262,000 in the week ended Feb. 13, the lowest since Nov. 21, a report from the Labor Department showed. Last week coincided with the period that the government surveys businesses and households to calculate payrolls and the jobless rate for February. The labor market has exhibited persistent strength despite softer foreign sales; a sign domestic demand is helping the U.S. weather a global slowdown. More hiring and fewer firings that lead to enhanced feelings of job security have the potential to encourage an acceleration in consumer spending. (Source: Bloomberg) Brazil: OECD sees recession deepening to 4% drop. That makes it more bearish than the International Monetary Fund and most analysts surveyed by Bloomberg. Brazil’s economy will contract 4% this year after a 3.8% recession in 2015, the Organization for Economic Cooperation and Development said in a report. The 2016 forecast was revised down from a prior 1.2% decline. (Source: Bloomberg) Hong Kong: Developers under pressure to cut prices amid slowdown. Hong Kong’s developers, who are throwing in enticements from iPhones to wine coupons in response to the slowest home sales in 25 years, might be running out of gimmicks to stoke demand. Most buyers aren’t biting as property analysts predict prices will fall as much as 25% this year after declining 11% since September. At upscale The Avenue project in Hong Kong’s Wanchai district, developer Sino Land Co. and the Urban Renewal Authority have sold only one of 36 remaining apartments this year despite inducements including a HKD1.5m (USD 193,000) voucher to buy new furniture. The next step may be the outright price cuts that developers have long resisted because of fears that they’ll fuel expectations of steeper declines. (Source: Bloomberg) Other News: Infrastructure: 10 Pan Borneo Highway packages to be tendered this year. Ten work packages for the Pan Borneo Highway project from Sematan to Miri (746km) will be tendered this year according to Works Minister Datuk Seri Fadilah Yusof, adding that all the packages are scheduled to start this year and complete by 2022. He also added that works on two packages, namely the Nyabau Road Junction to Bakun Road Junction (43km) and the one from Telok Melano to Sematan (33km) have started works. (Source: The Edge Financial Daily) IJM Corp: Converts Scomi Group’s bonds at a loss. IJM Corp has become the largest shareholder with a 24.41% equity interest in its enlarged share capital after converting redeemable secured bonds by Scomi Group with an aggregate nominal value of MYR110m. The conversion price was 143.3% higher than Scomi’s yesterday’s closing price of 15 sen. (Source: The Edge Financial Daily) AirAsia: Ready to revive expansion, eyes Vietnam and Philippines. CEO Tan Sri Tony Fernandes said the budget carrier was ready to start expanding again in Southeast Asia amidst lower fuel costs. He added that he is eyeing Vietnam and Philippines, but securing route approvals was a problem and lack of available take-off and landing capacity at Manila’s Ninoy Aquino International Airport needed to be resolved. He also hopes to win approval for flights to Hawaii this year, but no firm timeline has been mentioned. (Source: The Sun Daily) UMW Holdings: To build facility for Rolls-Royce aero parts. The company has earmarked 12ha of land in Serendah, Selangor for a proposed plant to produce fan cases for Rolls-Royce Holdings plc’s jet engines. The plant is expected to receive its first order in October 2017. (Source: The Edge Financial Daily)