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Share
Price:
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MYR1.91
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Target
Price:
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MYR2.00
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Recommendation:
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Buy
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FY16 in line
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Stripping out the impact of a massive kitchen sinking
exercise in 4QFY1/16, FY16 core results were in line. Earnings will be
weaker this year as it weathers the severe cyclical headwinds but
long-term prospects remain intact. SAKP will continue to be prudent in
its E&P assets investment. Monetising and unlocking the value of
its gas reserves is a key agenda for FY17-18. There is no change to our
FY17-18 earnings forecasts, we introduce FY19 forecast. Maintain BUY,
MYR2.00 SOP-TP.
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FYE Jan (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
|
9,943.0
|
10,184.0
|
9,756.8
|
10,367.9
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EBITDA
|
3,120.5
|
3,088.6
|
3,017.0
|
3,071.5
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Core net profit
|
1,216.7
|
1,009.4
|
840.7
|
942.7
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Core EPS (sen)
|
20.3
|
16.9
|
14.1
|
15.8
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Core EPS growth (%)
|
13.6
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(16.8)
|
(16.7)
|
12.1
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Net DPS (sen)
|
4.3
|
1.4
|
0.0
|
0.0
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Core P/E (x)
|
9.4
|
11.3
|
13.6
|
12.1
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P/BV (x)
|
1.0
|
0.9
|
0.9
|
0.8
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Net dividend yield (%)
|
2.3
|
0.7
|
0.0
|
0.0
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ROAE (%)
|
11.0
|
8.3
|
6.7
|
7.0
|
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ROAA (%)
|
4.0
|
2.8
|
2.3
|
2.6
|
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EV/EBITDA (x)
|
10.2
|
8.9
|
8.8
|
8.2
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Net debt/equity (%)
|
131.0
|
134.2
|
117.5
|
99.6
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Share
Price:
|
MYR4.65
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Target
Price:
|
MYR4.97
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Recommendation:
|
Hold
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RSPO suspension
confirmed
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RSPO suspended IOI’s RSPO certification. What is uncertain
is how IOI’s EU customers and MNCs will react to this suspension.
Assuming a 6-month suspension, the recent stock price decline (-6%
since our downgrade ahead of the suspension) has reflected foregone
CSPO premium and a 20% drop in downstream sales. Pending clarity, our
earnings forecasts are unchanged. HOLD with a TP of MYR4.97 on 30x FY17
PER.
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FYE Jun (MYR m)
|
FY14A
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FY15A
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FY16E
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FY17E
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Revenue
|
12,664.1
|
11,621.0
|
11,577.3
|
12,211.1
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EBITDA
|
2,376.3
|
847.4
|
1,579.3
|
1,762.0
|
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Core net profit
|
1,549.4
|
860.1
|
927.6
|
1,069.3
|
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Core FDEPS (sen)
|
24.0
|
13.3
|
14.4
|
16.6
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Core FDEPS growth(%)
|
(6.9)
|
(44.6)
|
7.8
|
15.3
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Net DPS (sen)
|
20.0
|
9.0
|
7.2
|
8.3
|
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Core FD P/E (x)
|
19.4
|
34.9
|
32.4
|
28.1
|
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P/BV (x)
|
5.0
|
5.9
|
5.4
|
5.0
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Net dividend yield (%)
|
4.3
|
1.9
|
1.5
|
1.8
|
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ROAE (%)
|
15.7
|
15.5
|
17.5
|
18.5
|
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ROAA (%)
|
7.9
|
6.0
|
6.9
|
7.7
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EV/EBITDA (x)
|
15.8
|
36.9
|
22.0
|
19.6
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Net debt/equity (%)
|
58.6
|
96.1
|
82.5
|
70.9
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Share
Price:
|
MYR1.81
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Target
Price:
|
MYR1.80
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Recommendation:
|
Hold
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Whispers of
privatisation
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The Edge Weekly reported that Tune Air (AirAsia founder)
in partnership with China Everbright are planning to privatise AirAsia,
citing sources familiar with the matter. Company official states they
have not received any formal offer and will not comment. We are neutral
on this event pending details. We now rate AirAsia as a HOLD
(previously BUY) as the current share price, which has outperformed,
offers limited upside to our unchanged TP of MYR1.80, which is pegged
to 1x 2016 P/BV.
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FYE Dec (MYR m)
|
FY14A
|
FY15A
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FY16E
|
FY17E
|
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Revenue
|
5,415.7
|
6,299.1
|
6,088.7
|
6,515.1
|
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EBITDAR
|
1,769.1
|
2,617.4
|
2,591.7
|
2,574.8
|
|
Core net profit
|
432.9
|
278.7
|
757.7
|
788.0
|
|
Core EPS (sen)
|
15.6
|
10.0
|
27.2
|
28.3
|
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Core EPS growth (%)
|
(22.2)
|
(35.7)
|
171.9
|
4.0
|
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Net DPS (sen)
|
0.0
|
0.0
|
7.0
|
7.0
|
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Core P/E (x)
|
11.6
|
18.1
|
6.6
|
6.4
|
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P/BV (x)
|
1.1
|
1.1
|
1.0
|
0.9
|
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Net dividend yield (%)
|
0.0
|
0.0
|
3.9
|
3.9
|
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ROAE (%)
|
9.1
|
6.2
|
16.0
|
14.8
|
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ROAA (%)
|
2.3
|
1.3
|
3.5
|
3.6
|
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EV/EBITDAR (x)
|
10.7
|
5.3
|
5.7
|
5.5
|
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Net debt/equity (%)
|
249.9
|
228.9
|
196.6
|
165.0
|
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Share
Price:
|
MYR2.43
|
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Target
Price:
|
MYR2.50
|
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Recommendation:
|
Hold
|
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Re-emergence of
risks; D/G HOLD
|
|
GMB’s briefing last Friday alluded to 1) uncertainties on
the regulatory front, and 2) a possible tapering of volume growth. With
share price having already rebounded from the trough, GMB’s risk-reward
is no longer compelling in lieu of these new risks. Downgrade to HOLD
on a lower TP of MYR2.50 (from MYR2.70).
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FYE Dec (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
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Revenue
|
2,773.5
|
3,619.0
|
4,047.6
|
4,792.3
|
|
EBITDA
|
258.1
|
191.0
|
212.5
|
217.0
|
|
Core net profit
|
167.6
|
106.2
|
118.8
|
119.1
|
|
Core EPS (sen)
|
13.1
|
8.3
|
9.2
|
9.3
|
|
Core EPS growth (%)
|
(2.2)
|
(36.7)
|
11.9
|
0.3
|
|
Net DPS (sen)
|
13.1
|
8.3
|
9.3
|
9.3
|
|
Core P/E (x)
|
18.6
|
29.4
|
26.3
|
26.2
|
|
P/BV (x)
|
3.1
|
3.2
|
3.2
|
3.2
|
|
Net dividend yield (%)
|
5.4
|
3.4
|
3.8
|
3.8
|
|
ROAE (%)
|
16.6
|
10.7
|
12.2
|
12.3
|
|
ROAA (%)
|
10.2
|
5.5
|
5.8
|
5.7
|
|
EV/EBITDA (x)
|
14.6
|
14.9
|
13.5
|
13.1
|
|
Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
|
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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|
|
We attended a technical briefing by the Department of
Statistics Malaysia (DOSM) recently on several quantitative and
qualitative changes and improvements in CPI statistics i.e. updated
CPI basket of goods & services and revised weights of the components;
the adoption of “chain-weighted index” for CPI vs “fixed-weighted
index” previously; and the publication of official core CPI data.
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Suhaimi Ilias
|
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Zamros
Dzulkafli
|
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Economics Research
by
Suhaimi Ilias
|
|
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|
Headline inflation rose further to +4.2% YoY in Feb
2016 (Jan 2016: +3.5% YoY) while core inflation remained elevated at
+3.6% YoY 2016 (Jan 2016: +3.6% YoY). Maintain our 2016 inflation
rate forecast of +3.0% to +3.5%.
|
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Suhaimi Ilias
|
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|
Zamros
Dzulkafli
|
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Economics Research
by
Suhaimi Ilias
|
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|
Stable - but
elevated - jobless rate
|
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|
|
Unemployment rate was steady but remain elevated at
3.4% in Jan 2016 as the number for Dec 2015 was revised upwards to
3.4% from 3.2% reported previously. Latest jobless rate is the
highest since Nov 2013. In view of the revised labour force
statistics to reflect the latest current population estimates, we now
expect average unemployment rate in 2016 to be 3.5% versus 3.3%-3.4%
previously (2015: 3.2%).
|
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|
Suhaimi Ilias
|
|
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Zamros
Dzulkafli
|
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Technical Research
by Lee
Cheng Hooi
|
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|
|
Market rebounds
may be stalling
|
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|
|
The FBM KLCI fell 12.55 points WoW to close at
1,703.79, as global markets reversed direction and ended softer ahead
of Easter. The weekly volume fell from 2.42b to 1.43b shares.
|
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NEWS
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OTHER NEWS:
Consumer: Tobacco firms say industry in major crisis, call
for excise freeze. Tobacco manufacturers are appealing to the Government
to suspend any further excise duty increase to allow the market to
stabilise. The industry was facing a major crisis following the “drastic”
excise increase of about 40% in November last year to 40 sen per stick.
Legal industry volumes have been severely impacted, registering a
significant decline by approximately 30% post the unprecedented excise
increase. (Source: The Star)
Sona Petroleum: Proposes MYR80m capital repayment. Sona
Petroleum, which is in the midst of acquiring Stag Oilfield in offshore
Western Australia, has proposed a capital repayment of up to MYR80m to
reward its shareholders. The proposed capital repayment will involve a
capital repayment of up to MYR80m, less such amounts to be paid for the
repurchase of Sona Petroleum shares from the dissenting shareholders who
vote against the proposed acquisition. The actual distribution amount
will vary in accordance with the number of dissenting shareholders and
the amount that the company has to pay under the share repurchase.
(Source: The Sun Daily)
Globetronics: To see higher contribution from sensor
segment. Despite a flat to low single-digit growth projection for the
current year due to the global challenges and an inventory adjustment
problem, Globetronics Technology is optimistic about the company’s
prospects as its new sensor products are set to see mass production by
the second half of the year. The sensor sector contributed 40% to its
total performance in the financial year ended Dec 31, 2015 and is soon
expected to account for more than 50%. In the meantime, Globetronics has
also allocated MYR30m to MYR35m for the expansion of a new project this
year, allowing it to penetrate the Internet of Things (IoT) market with a
double-digit growth projection in five years. (Source: The Edge Financial
Daily)
Sunway: To double portfolio of malls. The Sunway Group
aims to double its portfolio of shopping malls from five malls with a
total net lettable area (NLA) of 4.5m sq ft this year to 10 malls with 10
million sq ft NLA by 2020. The Group inventory of space is about 4.5
million sq ft. Sunway Pyramid today, with the completion of our extension
of Sunway Pyramid Part 3, are now closer to two million sq ft NLA. At
Sunway Velocity, which is opening at end of this year, we have another
one million sq ft while Sunway Putra Mall is another half million sq ft.
(Source: The Sun Daily)
EG Industries: To list Thai unit in 2018. Electronic
manufacturing services (EMS) company EG Industries proposes to list its
Thailand unit SMT Industries Co Ltd on the Market for Alternative
Investment of The Stock Exchange of Thailand. The proposed initial public
offering (IPO) would not only unlock a certain portion of value for
shareholders, but more importantly raise the working capital necessary to
propel SMT Industries into realizing its true potential in the regional
EMS sector. There is much potential to be tapped in light of Thailand's
position as a key manufacturing hub especially for the high-tech
electronics and automatic sector. (Source: The Sun Daily)
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OUTSIDE MALAYSIA:
U.S: Payrolls climbed in 36 states in February led by
California, a sign labor market slack is gradually diminishing in the
economy. California led the nation with an almost 40,000 increase in
employment, followed by a 25,100 advance in New York, figures from the
Labor Department showed. Jobless rates in New Hampshire and South Dakota
were the lowest in the nation at 2.7%. (Source: Bloomberg)
China: Money-market operations inject most cash in seven
weeks. The People’s Bank of China injected a net CNY 180b (USD 27.6b),
the most since the period ended Feb. 5, data compiled by Bloomberg show.
A March 18 bond sale by Jiangsu Jiangnan Water Co. locked up an estimated
CNY 200b, according to Huachuang Securities Co. Commercial lenders need
deposits at the end of each quarter to meet regulatory checks, while
interbank borrowing costs tend to rise in the March-April period as banks
lodge tax payments with the PBOC. The benchmark seven-day money rate
climbed to a six-week high on March 23 before retreating. (Source: Bloomberg)
China: China industrial profits rise 4.8%, ending 7-month
losing streak. Chinese industrial profits snapped a seven- month losing
streak in the first weeks of this year, while the data also showed
companies fell deeper in debt while inventories grew. Industrial
companies’ profits climbed 4.8% YoY to CNY 780.7b (USD 120b) in January-
February, the National Bureau of Statistics said in a statement. Oil
processing, electrical machinery and food companies led gains as 28 of 41
industry groups posted profits, NBS said. Profits fell 2.3% in 2015.
(Source: Bloomberg)
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