Tuesday, February 23, 2016

[Maybank IB] Today's Research - Malaysia


FEATURE
CALLS

Malaysia | Alliance Financial Group
3QFY16 results within expectations
Desmond Ch'ng








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Ta Ann | Record annual profit
Li Shin Chai







Genting Plantations | Results disappointed
Chee Ting Ong







MPHB Capital | Nothing much happening
Desmond Ch'ng









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Malaysia | Holding up at over USD95b
Suhaimi Ilias








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COMPANY RESEARCH





Results Review





Alliance Financial Group (AFG MK)
by Desmond Ch'ng





Share Price:
MYR3.56
Target Price:
MYR4.20
Recommendation:
Buy




3QFY16 results within expectations

We continue to like AFG for its niche SME focus and its risk adjusted returns strategy, which is having a positive impact on yields. Moreover, its CET1 ratio of >11% is one of the highest in the industry. As one of our top picks in the sector, AFG is a BUY with an unchanged TP of MYR4.20, pegged to a CY16 P/BV of 1.3x (CY16E ROE: 11.1%)



FYE Mar (MYR m)
FY14A
FY15A
FY16E
FY17E
Operating income
1,349.0
1,383.0
1,453.3
1,513.7
Pre-provision profit
720.8
736.1
770.0
806.0
Core net profit
557.8
530.8
533.3
544.8
Core FDEPS (MYR)
0.37
0.35
0.35
0.36
Core FDEPS growth(%)
4.1
(5.3)
0.5
2.1
Net DPS (MYR)
0.29
0.15
0.17
0.17
Core FD P/E (x)
9.7
10.2
10.2
10.0
P/BV (x)
1.3
1.2
1.1
1.1
Net dividend yield (%)
8.3
4.3
4.6
4.7
Book value (MYR)
2.74
2.95
3.14
3.33
ROAE (%)
13.6
12.3
11.5
11.0
ROAA (%)
1.2
1.0
1.0
1.0










Results Review





Ta Ann (TAH MK)
by Li Shin Chai





Share Price:
MYR5.64
Target Price:
MYR6.90
Recommendation:
Buy




Record annual profit

Ta Ann’s 4Q15 headline PATMI of MYR58m (+168% YoY, -14% QoQ) brings 2015 PATMI to MYR186m (+66% YoY), meeting 113% of our/consensus full year forecasts. The outperformance was due to reversal in impairments. Core PATMI was however in line. Going forward, potential earnings upside would emanate from higher CPO price and further weakening of MYR, offsetting downside to log price. BUY at unchanged MYR6.90 TP.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,020.7
1,046.8
1,084.8
1,149.9
EBITDA
243.2
323.9
328.6
357.1
Core net profit
110.6
185.9
167.6
183.4
Core EPS (sen)
29.8
50.2
45.2
49.5
Core EPS growth (%)
82.6
68.1
(9.9)
9.4
Net DPS (sen)
20.0
20.0
20.3
22.3
Core P/E (x)
18.9
11.2
12.5
11.4
P/BV (x)
2.0
1.8
1.6
1.5
Net dividend yield (%)
3.5
3.5
3.6
3.9
ROAE (%)
10.7
16.6
13.6
13.8
ROAA (%)
6.0
9.6
8.3
8.7
EV/EBITDA (x)
6.9
6.3
6.8
6.1
Net debt/equity (%)
18.7
12.3
7.6
3.0










Results Review





Genting Plantations (GENP MK)
by Chee Ting Ong





Share Price:
MYR11.00
Target Price:
MYR10.00
Recommendation:
Hold




Results disappointed

Core PATMI was below expectations as FFB output disappointed towards 4Q15, hurt by earlier dry weather. Both plantation (lower CPO ASP) and property (absence of lumpy land sales) divisions recorded poorer full year results. While we look forward to a better 2016 earnings outlook, the stock lacks fresh catalyst. Trading at 27x 2016 PER, GENP is a HOLD with an unchanged RNAV-based TP of MYR10.00.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,642.9
1,374.9
1,601.5
1,778.8
EBITDA
562.6
358.7
512.0
638.3
Core net profit
380.0
205.7
322.5
414.0
Core EPS (sen)
49.3
26.3
41.2
52.9
Core EPS growth (%)
22.7
(46.7)
56.8
28.4
Net DPS (sen)
10.0
5.5
8.2
10.6
Core P/E (x)
22.3
41.9
26.7
20.8
P/BV (x)
2.2
2.0
1.9
1.8
Net dividend yield (%)
0.9
0.5
0.7
1.0
ROAE (%)
10.4
5.1
7.4
8.9
ROAA (%)
7.3
3.2
4.3
5.3
EV/EBITDA (x)
14.1
26.3
19.3
15.5
Net debt/equity (%)
net cash
20.5
23.7
22.3










Results Review





MPHB Capital (MPHB MK)
by Desmond Ch'ng





Share Price:
MYR1.52
Target Price:
MYR1.63
Recommendation:
Hold




Nothing much happening

MPHB’s FY15 core results were within expectations but for the third consecutive year, no dividend has been declared. As for corporate developments, there is none that is new at this stage. Our forecasts, HOLD call and RNAV-derived TP of MYR1.63 are maintained.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
370.1
380.8
388.4
396.2
EBITDA
264.8
117.2
101.0
106.2
Core net profit
54.1
43.4
40.2
43.5
Core EPS (sen)
7.6
6.1
5.6
6.1
Core EPS growth (%)
12.2
(19.9)
(7.2)
8.1
Net DPS (sen)
0.0
0.0
0.0
0.0
Core P/E (x)
20.1
25.1
27.0
25.0
P/BV (x)
0.8
0.7
0.7
0.7
Net dividend yield (%)
0.0
0.0
0.0
0.0
ROAE (%)
4.5
3.0
2.5
2.6
ROAA (%)
2.2
1.5
1.3
1.4
EV/EBITDA (x)
3.5
3.6
3.4
2.9
Net debt/equity (%)
net cash
net cash
net cash
net cash








MACRO RESEARCH






Corporate Day
by Suhaimi Ilias


Holding up at over USD95b





External reserves increased USD0.1b to USD95.6b (MYR410.2b) at 15 Feb 2016 from USD95.5b (MYR410.1b) at 29 Jan 2016, and have stayed above-USD95b since Dec 2015. Latest tally is equivalent to 8.2 months of retained imports and 1.2x of short term external debt. Portfolio flows are less of a pressure point amid sustained current account surplus and indication of repatriations, especially by the Government-linked investment funds.







NEWS


Outside Malaysia:

Mexico: Retail sales rose at slowest pace in a year in December, rising less than forecast and fueling concern that domestic demand, one of the economy’s strengths in recent months, may be eroding. Retail sales climbed 3.4% YoY, Mexico’s statistics institute reported, less than estimated 6.1% YoY increase. The 1.6% MoM drop from the previous month was the biggest since 2013. (Source: Bloomberg)

E.U: The Euro Area is showing signs of strain from the global slowdown. Weaker growth and deeper price cuts by companies, as captured in a monthly report by Markit Economics published, will raise concerns about the health of the economy. They may also increase pressure on European Central Bank policy makers to add to stimulus at their next meeting in March. Markit said that it’s composite Purchasing Managers Index for the euro zone fell to 52.7 in February, the lowest in more than a year, from 53.6. (Source: Bloomberg)

S. Korea: Exports are set to post another disappointing month, with shipments during Feb. 1-20 falling 17% YoY, figures from the customs office show. This undercuts projections from the government and central bank that exports will break free from last year’s slump and rise in 2016. (Source: Bloomberg)





Other News:

Ekovest: Construction of Duke 2 within MYR1.18b cost. The construction of Phase 2 of the Duta-Ulu Klang Expressway (Duke 2) remains within the cost of MYR1.18b despite a weakened ringgit that has pushed up raw material costs. According to Managing Director Datuk Seri Lim Keng Cheng, majority of raw materials are sourced locally, with lower steel prices and oil prices to help keep construction costs down. The project is now 72% complete with full completion by year end. The group had also submitted a proposal to the Kuala Lumpur City Hall (DBKL) to build Duke 2A, which will provide public access to Kampung Baru. Duke 2 currently ends at Hospital Kuala Lumpur. (Source: The Edge Financial Daily)

Ahmad Zaki Resources: Inks deal with Kwasa Land. It has entered into a development rights agreement with master developer Kwasa Land Sdn Bhd for the construction of the 162 units of high-rise twin tower condominiums and 26 units of garden villas on the 3.91 acres of land within the new Kwasa Damansara Township. The project has an estimated GDV of MYR257m. (Source: The Sun Daily)

DBE Gurney Resources: To see Taiwanese partners take up 20% stake. Its Managing Director Alex Ding Seng Huat said his Taiwan counterparts have expressed interest in investing in the integrated poultry company, with the parties expected to be collaborating on secondary processing of chickens and marketing of its value-added chicken products via franchising. DBE Gurney expects the venture into downstream poultry business to be able to earn an 18% gross margin, compared with the 5% to 10% margin the group is earning from its existing businesses. (Source: The Edge Financial Daily)

Kim Teck Cheong Consolidated: Enters distribution agreements with SCGM. Its subsidiaries Kim Teck Cheong Distribution Sdn Bhd and Kim Teck Cheong (Sarawak) Sdn Bhd will undertake the distribution and sale of finished products manufactured and sold by SCGM in Sabah and Sarawak following a memorandum of understanding entered into by both parties on Jan 21. No contract value was revealed. (Source: The Edge Financial Daily)


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