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Share
Price:
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MYR5.05
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Target
Price:
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MYR4.60
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Recommendation:
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Hold
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Deferment in
catalysts; D/G to HOLD
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CMS’ core businesses prospect remains positive bolstered
by the growing construction activities in Sarawak. While CMS would be
the key beneficiary of Pan Borneo, its other catalysts expected to
provide the step up to earnings would not materialise so soon. We tweak
earnings forecasts by -4%/-2%/+2% and SOP-TP to MYR4.60 (-14%). The
stock is now a HOLD (from BUY).
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
|
1,673.9
|
1,788.0
|
1,878.0
|
2,133.5
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EBITDA
|
372.5
|
394.2
|
478.6
|
484.5
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Core net profit
|
221.3
|
241.6
|
277.4
|
296.2
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Core EPS (sen)
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21.3
|
22.5
|
25.8
|
27.6
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Core EPS growth (%)
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23.9
|
5.6
|
14.8
|
6.8
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Net DPS (sen)
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8.5
|
4.5
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10.3
|
11.0
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Core P/E (x)
|
23.7
|
22.5
|
19.6
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18.3
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P/BV (x)
|
2.9
|
2.7
|
2.5
|
2.3
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Net dividend yield (%)
|
1.7
|
0.9
|
2.0
|
2.2
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ROAE (%)
|
12.8
|
12.6
|
13.2
|
13.0
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ROAA (%)
|
8.5
|
8.0
|
7.9
|
7.6
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EV/EBITDA (x)
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9.8
|
14.3
|
12.2
|
12.1
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Net debt/equity (%)
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net cash
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net cash
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3.3
|
2.0
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Share
Price:
|
MYR0.36
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Target
Price:
|
MYR0.42
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Recommendation:
|
Buy
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Hopes for
sunnier days ahead
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We raise FY16-18 earnings forecasts by up to 33% to impute
depreciation savings from its recent impairment exercise. The OSV
market will continue to be challenging but Icon’s push for higher OSV
utilisation is commendable and realistic. Its M&A prospect is a key
standout, a re-rating catalyst once crystalised. Valuations are
attractive even without the M&A angle. Our MYR0.42 TP is based on
1x EV/replacement value.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
|
318.9
|
266.6
|
296.1
|
350.1
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EBITDA
|
190.3
|
122.8
|
124.6
|
143.3
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Core net profit
|
74.9
|
18.2
|
40.4
|
50.4
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Core EPS (sen)
|
6.4
|
1.5
|
3.4
|
4.3
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Core EPS growth (%)
|
(34.1)
|
(75.6)
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121.7
|
24.7
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Net DPS (sen)
|
0.0
|
0.0
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0.0
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0.0
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Core P/E (x)
|
5.7
|
23.6
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10.6
|
8.5
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P/BV (x)
|
0.4
|
0.6
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0.6
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0.5
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Net dividend yield (%)
|
0.0
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0.0
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0.0
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0.0
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ROAE (%)
|
10.3
|
2.0
|
5.4
|
6.4
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ROAA (%)
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4.5
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1.1
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2.7
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3.3
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EV/EBITDA (x)
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7.7
|
9.2
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8.5
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6.4
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Net debt/equity (%)
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54.9
|
84.9
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82.3
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58.7
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Share
Price:
|
MYR3.68
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Target
Price:
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MYR3.90
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Recommendation:
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Hold
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Watching its
O&G exposure
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BIMB’s 2016 targets are robust which provide room for
upside surprises to our earnings forecasts if achieved. In the
meantime, however, we remain cautious of its O&G exposure (10% of
total financing) amid prevailing challenges in the sector. We maintain
our earnings forecasts, HOLD call and SOP-based TP of MYR3.90.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Operating income
|
2,122.5
|
2,289.7
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2,403.7
|
2,474.7
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Pre-provision profit
|
871.7
|
908.3
|
938.0
|
957.4
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Core net profit
|
532.3
|
547.3
|
535.2
|
552.6
|
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Core EPS (MYR)
|
0.36
|
0.35
|
0.35
|
0.36
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Core EPS growth (%)
|
37.9
|
(0.4)
|
(2.1)
|
3.2
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Net DPS (MYR)
|
0.15
|
0.12
|
0.12
|
0.13
|
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Core P/E (x)
|
10.3
|
10.4
|
10.6
|
10.3
|
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P/BV (x)
|
1.9
|
1.7
|
1.5
|
1.4
|
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Net dividend yield (%)
|
4.0
|
3.3
|
3.3
|
3.4
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Book value (MYR)
|
1.97
|
2.21
|
2.44
|
2.67
|
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ROAE (%)
|
18.5
|
17.2
|
14.9
|
14.0
|
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ROAA (%)
|
1.0
|
1.0
|
0.9
|
0.9
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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A firmer tone
towards 1,700
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The FBMKLCI gained 20.21 points to close at 1,691.03
yesterday, while the FBMEMAS and FBM100 rose 120.57 points and 120.85
points, respectively. In terms of market breadth, the gainer-to-loser
ratio was 480-to-373, while 343 counters were unchanged. A total of
1.66b shares were traded valued at MYR2.28b.
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NEWS
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Outside Malaysia:
U.S: Manufacturing begins to steady as new orders expand.
Factory activity in February shrank less than forecast as gains in new
orders and production provided signs that the beleaguered industry could
soon stabilize. The Institute for Supply Management’s index climbed to
49.5, the highest since September, from 48.2 in January, a report from
the Tempe, Arizona-based group showed. While the reading was just shy of
50, the dividing line between contraction and expansion, last month’s
improvement corroborates other industry reports that suggest the
manufacturing slump may be easing. Gains in orders and production just
about made up for sustained cutbacks in inventories (Source: Bloomberg)
E.U: Unemployment decreased to lowest in more than four
years in January, giving European Central Bank policy makers some
positive news a week before their monetary policy meeting. The region’s
jobless rate declined to 10.3%, the European Union’s statistics office
said. That’s the lowest since August 2011. (Source: Bloomberg)
U.K: Manufacturing grew the least in almost three years in
February and new orders barely rose, highlighting the fragility of the
economy as it heads into an uncertain year. Markit Economics said its
factory index dropped to 50.8 from 52.9, marking the weakest reading
since April 2013. A gauge of new orders was just above the key 50 line
that divides expansion from contraction while employment shrank for a
second month. (Source: Bloomberg)
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Other News:
Genting: Buys 3 German shipyards for MYR1.04b. Genting
Hong Kong Ltd, operator of the Crystal Cruises, Dream Cruises and Star
Cruises cruise lines has acquired three shipyards in Germany from German
shipbuilder Nordic Yards Group for a combined EUR230.6m (MYR1.04b). The
three shipyards are located in Wismar, Warnemunde and Stralsund. Along
with the Lloyd Werft shipyard in Bremerhaven, the acquisition was a
strategic decision to ensure that the required number of cruise ships are
built for their global fleet expansion in a timely and cost-effective
manner. (Source: The Edge Financial Daily)
Petronas Chemicals: Says oil slump won’t derail its
spending plan. Petronas Chemicals Group (PetChem) will spend USD4b over
the next five years to mostly invest in a refinery and petrochemical
complex spearheaded by its parent in Johor. PetChem’s strong cash
position will enable it to fund existing projects even though the
industry is experiencing volatility in the oil market and slower Chinese
demand. Petroliam Nasional (Petronas), the parent company, will proceed
with the USD27b integrated refinery and petrochemical complex even as it
defers other projects. (Source: The Edge Financial Daily)
GD Express Carrier: Signs deal with Pos Indonesia to boost
cross-border trade. GD Express Carrier (GDex) and PT Pos Indonesia signed
a business collaboration yesterday to enhance cross-border trade between
the two entities and explore other synergies. (Source: The Edge Financial
Daily)
Signature International: Sells land to Selangor government
for highway construction. Kitchen and wardrobe designer and retailer
Signature International (SIB) has accepted an award of MYR79.95m from the
Selangor government for its compulsory land acquisition to build a
highway. According to SIB, its wholly-owned unit Signature Cabinet Sdn
Bhd’s warehouse facilities, catering to glass and aluminium fabrication
work, would be affected by the acquisition, which is targeted to commence
in the final quarter of 2016. (Source: The Edge Financial Daily)
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