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Share
Price:
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MYR1.31
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Target
Price:
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MYR1.67
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Recommendation:
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Buy
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A good start
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The successful launch of 750 units of Karisma apartments
at Eco Majestic with a 85% booking rate marks a good start. ECW remains
confident of its ambitious sales target of MYR4b for FY10/16. Surprises
could come from potential enbloc sales at its BBCC project. We maintain
our earnings forecasts and MYR1.67 RNAV-TP (on an unchanged 40%
discount to RNAV) pending the release of its 1QFY10/16 results on 24
Mar. Reiterate BUY.
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FYE Oct (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
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148.4
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1,712.1
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3,582.7
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4,700.4
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EBITDA
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42.3
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411.9
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562.9
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751.3
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Core net profit
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7.2
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44.0
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98.1
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207.2
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Core EPS (sen)
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2.8
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2.6
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4.2
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8.8
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Core EPS growth (%)
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(70.4)
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(6.9)
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57.3
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111.1
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Net DPS (sen)
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0.0
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0.0
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0.4
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0.9
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Core P/E (x)
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46.2
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49.6
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31.6
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14.9
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P/BV (x)
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1.0
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1.0
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1.0
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1.0
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Net dividend yield (%)
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0.0
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0.0
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0.3
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0.7
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ROAE (%)
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2.2
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2.5
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3.2
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6.6
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ROAA (%)
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1.2
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1.2
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1.2
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2.0
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EV/EBITDA (x)
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15.8
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8.4
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8.6
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6.4
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Net debt/equity (%)
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60.5
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37.5
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56.6
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52.0
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Share
Price:
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MYR1.73
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Target
Price:
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MYR1.50
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Recommendation:
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Hold
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First Pan Borneo
package
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Kimlun’s JV with Zecon has clinched the first Pan Borneo
Highway Sarawak package for 2016 worth MYR1.46b. This lifted its
orderbook by 37% to MYR1.6b. Further job wins could come from other
Klang Valley highways while precast orders could be boosted by MRT
projects. We raise our 2016-18 EPS estimates by 8%-25% after imputing
higher job win forecasts. Our new TP is MYR1.50 (+8%). HOLD; positive
sentiment ahead of major infra work awards in the sector could lift
valuations further.
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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
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1,206.4
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1,053.6
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1,095.3
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1,078.0
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EBITDA
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90.7
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114.5
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92.5
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92.7
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Core net profit
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33.8
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64.4
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49.4
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45.6
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Core EPS (sen)
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11.3
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21.4
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16.4
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15.2
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Core EPS growth (%)
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(5.3)
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90.5
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(23.3)
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(7.7)
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Net DPS (sen)
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3.5
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5.8
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4.4
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4.1
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Core P/E (x)
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15.4
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8.1
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10.5
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11.4
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P/BV (x)
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1.3
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1.1
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1.0
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1.0
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Net dividend yield (%)
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2.0
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3.4
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2.6
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2.4
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ROAE (%)
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9.7
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15.0
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10.3
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8.9
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ROAA (%)
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3.8
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6.8
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5.0
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4.4
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EV/EBITDA (x)
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5.0
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4.2
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6.3
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6.1
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Net debt/equity (%)
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23.2
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14.7
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12.2
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7.7
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SECTOR RESEARCH
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Sector Note
by Chee
Ting Ong
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MPOB’s Feb 2016 stockpile at 2.17m MT (-6% MoM, +25%
YoY) was a third consecutive MoM decline, aided by the lowest monthly
output in 9 years. The weak Feb 2016 output will cap CPO price
downside in the short term while further drawdown in stockpile in the
coming months will push CPO price higher. 1H16 provides good trading
opportunities in anticipation of CPO price staging a mini rally to
above MYR2,700/t sometime in 2Q16. Our BUYs in the region are IOI,
FR, AALI, LSIP, BAL, SOP and TAH.
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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Index may test
1,700 & 1,710
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The FBMKLCI rose 4.56 points to close at 1,690.91
yesterday, while the FBMEMAS and FBM100 gained 35.07 points and 34.24
points, respectively. In terms of market breadth, the gainer-to-loser
ratio was 441-to-355, while 353 counters were unchanged. A total of
1.72b shares were traded valued at MYR1.81b.
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NEWS
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Outside Malaysia:
U.S: Household wealth rose by USD 1.64tr in 4Q 2015, as
stock prices recovered from an earlier slump and home values continued to
improve. Net worth for households and non-profit groups rose by 1.9% from
the previous three months, to USD 86.8tr, the Federal Reserve said in its
financial accounts report, previously known as the flow of funds survey.
Household wealth fell 1.5 % in the third quarter. (Source: Bloomberg)
E.U: The ECB cut all its interest rates and expanded its
monthly bond purchases by a third as President Mario Draghi strives to
fend off the threat of euro-area deflation. The 25-member Governing
Council, meeting in Frankfurt, cut the rate on cash parked overnight by
banks by 10 basis points to minus 0.4%, and its benchmark rate to zero.
Bond purchases were raised to EUR 80b (USD 87b) a month, starting in
April, and corporate bonds will now be eligible. (Source: Bloomberg)
E.U: ECB expanding asset-purchase program to the region’s
EUR 900b (USD 980b) corporate-bond market. The ECB will buy
investment-grade euro-denominated bonds issued by non-bank corporations
established in the euro area, according to a press release. Corporate
bonds are the latest assets to be added to a growing list of securities,
from government debt to mortgage-backed notes, the central bank is
snapping up to combat weak growth and inflation. Buying company
securities may also demonstrate a greater tolerance for risk at the
central bank as the notes are typically unsecured. (Source: Bloomberg)
S. Korea: Mulls easing currency forward curbs, affirms
growth target. As volatility in financial markets shows signs of easing,
South Korea is becoming more comfortable with capital flows and may loosen
restrictions on currency forward positions for banks. The government is
also confident of achieving its 3.1% economic growth target this year and
doesn’t plan to add to existing fiscal stimulus, according to Vice
Finance Minister Choi Sang Mok. His comments came just hours after the
central bank governor said monetary policy was already accommodative and
that any further cuts to borrowing costs might have limited benefit.
(Source: Bloomberg)
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Other News:
Construction: UEM scraps plan to spin off UEM Builders.
UEM Group has dropped its plan to divest its construction unit UEM
Builders after considering the unfavourable response to the proposal from
its existing clients. The Group has received interest to acquire UEM
Builders, but their clients want them to give their undertakings to
ensure that disposal will not affect the delivery of their infrastructure
projects. Following the decision to halt the sale, the group is now
exploring options to establish a new business model, which includes an
expansion into affordable housing and township management. (Source: The
Edge Financial Daily)
MBSB: Proposes to raise MYR2b from two-call rights issue.
Malaysia Building Society (MBSB), which saw its proposed merger with Bank
Muamalat Malaysia to create the country's biggest standalone Islamic bank
fell through last month, has proposed a two-call rights issue to raise
MYR2b. The proposed rights issue is in line with its strategy to
strengthen its core capital as well as enable it to increase its leverage
ratio to at least 12.5% in compliance with Bank Negara Malaysia's
requirement. Pursuant to the proposed rights issue, MBSB will be able to
capitalise on its stronger capital base to grow and expand its business.
(Source: The Sun Daily)
Toll: Plus aims to conclude toll rate deal with Govt by
June. Plus Malaysia hopes to submit a proposal and conclude discussions
with the Government on toll rates by June. Plus, the expressway arm of
UEM Group, has five highway concessions. Under the concession agreement,
Plus would review rates every three years, for the entire duration of the
concession which ends in December 2038. (Source: The Star)
KNM: KNM, Ho Hup set up JV to undertake contract jobs. KNM
Group and Ho Hup Construction Co have set up a JV call KHH
infrastructures Sdn Bhd to bid for selective engineering, procurement and
construction projects in Malaysia and elsewhere. KNM’s wholly-owned
subsidiary KNM Process Systems Sdn Bhd ( KNMPS) has signed a JV agreement
(JVA) with Ho Hup for the collaboration. Under the JVA, both aprties will
invest in KHH Infrastructures on a 50:50 basis. (Source: The Edge
Financial Daily)
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