[Maybank IB] Today's Research - Malaysia

FEATURE CALLS Malaysia | Genting Malaysia Venturing into tribal casinos? Samuel Yin Shao Yang

COMPANY RESEARCH Maxis Bhd | Healthy operational trends Chi Wei Tan

MACRO RESEARCH Malaysia | A stronger rebound emerges Lee Cheng Hooi

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Company Update Genting Malaysia (GENM MK) by Samuel Yin Shao Yang Share Price: MYR4.52 Target Price: MYR4.75 Recommendation: Buy Venturing into tribal casinos? On 28 Jan 2016, GENM restructured the shareholding of wholly owned, Genting Massachusetts. We gather that GENM may be aiding the Mashpee Wampanoag tribe in building and managing a casino 45 minutes from Boston in return for interest income and management fees. Due to lack of details, we are unable to quantify its impact but gather that this development cannot be negative to GENM. Maintain estimates, MYR4.75 TP and BUY call on GENM pending its 4Q15 results on 23 Feb 2016. FYE Dec (MYR m) FY13A FY14A FY15E FY16E Revenue 8,327.5 8,229.4 8,808.5 9,677.2 EBITDA 2,428.2 2,247.6 2,143.8 2,768.9 Core net profit 1,715.7 1,358.1 1,051.2 1,444.6 Core EPS (sen) 30.2 23.9 18.5 25.5 Core EPS growth (%) 6.8 (20.8) (22.6) 37.4 Net DPS (sen) 7.1 6.5 5.0 6.9 Core P/E (x) 14.9 18.9 24.4 17.7 P/BV (x) 1.7 1.6 1.5 1.4 Net dividend yield (%) 1.6 1.4 1.1 1.5 ROAE (%) 12.0 8.6 6.3 8.2 ROAA (%) 9.3 6.7 4.7 6.0 EV/EBITDA (x) 9.4 9.7 11.8 9.3 Net debt/equity (%) net cash net cash net cash 0.8 Samuel Yin Shao Yang    (603) 2297 8916    samuel.y@maybank-ib.com

Malaysia Results Review Maxis Bhd (MAXIS MK) by Chi Wei Tan Share Price: MYR6.15 Target Price: MYR6.60 Recommendation: Hold Healthy operational trends Maxis’ FY15 results (pre tax) were in line, with the group demonstrating healthy revenue and EBITDA trends. Dividends however fell short possibly due to elevated capex and prudence. With Maxis’ investment thesis revolving more around earnings stability these days, the lack of clarity pertaining to the 900/1800MHz spectrum will continue to dampen sentiment. Maintain HOLD with a lower TP of MYR6.60 as we lower earnings to reflect latest guidance and a higher tax rate. FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 8,389.0 8,601.0 8,629.1 8,853.3 EBITDA 4,220.0 4,304.0 4,314.6 4,426.7 Core net profit 1,718.0 1,739.0 1,692.5 1,757.2 Core EPS (sen) 22.9 23.2 22.5 23.4 Core EPS growth (%) (2.7) 1.2 (2.7) 3.8 Net DPS (sen) 40.0 20.0 20.0 25.0 Core P/E (x) 26.9 26.6 27.3 26.3 P/BV (x) 9.8 11.0 10.5 10.8 Net dividend yield (%) 6.5 3.3 3.3 4.1 ROAE (%) 32.1 39.1 39.5 40.7 ROAA (%) 9.7 9.4 8.9 9.1 EV/EBITDA (x) 14.0 13.9 12.7 12.3 Net debt/equity (%) 158.9 205.5 192.7 196.6 Chi Wei Tan    (603) 2297 8690    chiwei.t@maybank-ib.com

MACRO RESEARCH MY: Technicals Technical Research by Lee Cheng Hooi A stronger rebound emerges The FBMKLCI gained 23.47 points to close at 1,656.77 yesterday, while the FBMEMAS and FBM100 gained 138.25 points and 140.32 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 517-to-336, while 309 counters were unchanged. A total of 2.05b shares were traded valued at MYR2.08b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Productivity falls most since early 2014, labor costs jump. Worker productivity slumped in the fourth quarter by the most in almost two years, leading to a pickup in U.S. labor costs that threaten corporate profits. The measure of employee output per hour of work decreased at a 3% annualized rate in the final three months of last year, the most since the first quarter 2014. (Source: Bloomberg) E.U: Slashes 2016 inflation forecast to 0.5% as growth seen slower. The slowdown in emerging economies is posing a major threat to recovery in the euro area, the European Commission said as it trimmed its 2016 growth forecast for the 19-nation region and warned inflation would be much slower than expected. The commission sees consumer-price growth averaging just 0.5% this year, half the pace forecast in November and far below the European Central Bank’s goal of just under 2%. It cut its prediction for economic expansion in the currency bloc to 1.7% from 1.8% and said the largest economies of Germany, France and Italy will all perform worse than predicted just three months ago. (Source: Bloomberg) E.U: The European Commission cut its forecasts for U.K. economic growth and said the imbalance between domestic and external demand will persist. It sees gross domestic product rising 2.1% this year and next, down from the 2.4% and 2.2% forecast in November. In a report published, it said private consumption will continue to drive growth and net trade will act as a drag. (Source: Bloomberg) China: PBOC raises Yuan fixing most in two months in challenge to bears. China’s central bank raised the yuan’s daily reference rate by the most in two months, helping reinforce policy makers’ pledges that the exchange rate won’t be weakened to boost the economy. The People’s Bank of China strengthened its fixing by 0.16% to a four-week high of 6.5419 a dollar. Local financial markets will be closed next week for the Chinese New Year holiday. (Source: Bloomberg) Other News: IPO: Iskandar Waterfront reviving IPO plans. Tan Sri Lim Kang Hoo is again ruminating to take the shares of Iskandar Waterfront Holdings Bhd (IWH) public after shelving the plan indefinitely, according to The Wall Street Journal, citing sources familiar with the matter. IWH is apparently toying with the idea of a dual listing in Malaysia and Hong Kong and is looking to raise USD300m (MYR1.24b). (Source: The Edge Financial Daily) SapuraKencana: Secures jobs worth MYR1.58b. The first contract is for the provision of comprehensive maintenance of GE -supplied turbomachinery equipment awarded by Murphy Sarawak Oil Company Ltd for a 10-year period. The second contract is for the provision of turbomachinery maintenance services from Petronas Floating LNG1 (L) Ltd Facilities for a period of 10 years with an option to extend for another five years. Lastly, it has also secured an extension to its contract with BP Trinidad & Tobago LLC for the provision of its semi-submersible tender assist drilling right SKD Jaya till April 2016. (Source: The Sun Daily) Dialog: Petronas call of Balai Marginal oilfield development. The jointly controlled entity, BC Petroleum Sdn Bhd (BCP) has ceased its operation and on Feb 3, signed a termination by mutual agreement with Petronas to terminate the risk service contract. Dialog’s total losses amounting to approximately USD10m had been substantially provided for in the group’s financial results as of June 30, 2016. (Source: The Edge Financial Daily) Astro: Wins BPL broadcast rights. The company has extended its deal to be the Malaysian broadcaster of Barclays Premiere League (BPL) for another three years until the 2018/19 season. (Source: The Edge Financial Daily)