[Maybank IB] Today's Research - Malaysia

COMPANY RESEARCH Bumi Armada | Oversold attraction Thong Jung Liaw Eco World Development | Rising sun at BBCC Wei Sum Wong Sunway Construction Group | Wins 2nd KVMRT 2 package Li Shin Chai

MACRO RESEARCH Malaysia | Sell on rallies may persist Lee Cheng Hooi

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Company Update Bumi Armada (BAB MK) by Thong Jung Liaw Share Price: MYR0.78 Target Price: MYR1.05 Recommendation: Buy Oversold attraction Share price has fallen by 22% since 7 Mar 2016 as market confidence has taken a beating from the fallout of the FPSO Claire issue. We see this as an opportunity to accumulate, from a growth and valuation perspective. While the market has fully discounted the loss on FPSO Claire’s contract, it ignores any reimbursement potential. Also, the concern over the Kraken operations is overplayed. Reiterate BUY with a lower SOP-TP of MYR1.05 (MYR1.45 previously). FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 2,397.3 2,179.7 1,898.4 2,904.6 EBITDA 1,029.4 1,101.7 1,185.1 1,598.7 Core net profit 399.6 360.7 305.6 625.8 Core EPS (sen) 7.9 6.1 5.2 10.7 Core EPS growth (%) (48.4) (22.2) (15.3) 104.8 Net DPS (sen) 1.6 0.8 0.0 0.0 Core P/E (x) 9.9 12.7 15.0 7.3 P/BV (x) 0.6 0.6 0.6 0.6 Net dividend yield (%) 2.1 1.1 0.0 0.0 ROAE (%) 7.2 5.2 4.1 8.0 ROAA (%) 3.4 2.2 1.6 3.2 EV/EBITDA (x) 8.2 11.4 9.8 6.8 Net debt/equity (%) 43.2 89.6 93.3 77.4 Thong Jung Liaw    (603) 2297 8688    tjliaw@maybank-ib.com

Malaysia Company Update Eco World Development (ECW MK) by Wei Sum Wong Share Price: MYR1.48 Target Price: MYR1.67 Recommendation: Buy Rising sun at BBCC We are positive on the latest heads of terms agreements (HOTA) and MOU signed between BBCCD (40%-owned by ECW) and its foreign partners. The involvement of foreign partners should help to enhance the BBCC development’s marketability. Also, it would help to lower the project’s overall sales risk. No change to our earnings forecasts, MYR1.67 TP and BUY rating pending the finalisation of JV agreements (JVA). FYE Oct (MYR m) FY14A FY15A FY16E FY17E Revenue 148.4 1,712.1 3,582.7 4,700.4 EBITDA 42.3 411.9 562.9 751.3 Core net profit 7.2 44.0 98.1 207.2 Core EPS (sen) 2.8 2.6 4.2 8.8 Core EPS growth (%) (70.4) (6.9) 57.3 111.1 Net DPS (sen) 0.0 0.0 0.4 0.9 Core P/E (x) 52.2 56.1 35.7 16.9 P/BV (x) 1.2 1.1 1.1 1.1 Net dividend yield (%) 0.0 0.0 0.3 0.6 ROAE (%) 2.2 2.5 3.2 6.6 ROAA (%) 1.2 1.2 1.2 2.0 EV/EBITDA (x) 15.8 8.4 9.3 6.9 Net debt/equity (%) 60.5 37.5 56.6 52.0 Wei Sum Wong    (603) 2297 8679    weisum@maybank-ib.com

Malaysia Company Update Sunway Construction Group (SCGB MK) by Li Shin Chai Share Price: MYR1.67 Target Price: MYR1.80 Recommendation: Buy Wins 2nd KVMRT 2 package SCG won a KVMRT 2 elevated viaduct package worth MYR1.2b, lifting its outstanding orderbook by 46% to MYR3.8b. Given the higher-than-expected contract value and further positive job win prospect, we raise our 2016 job win forecast, resulting in higher 2016/17/18 EPS forecasts by 2%-10%. There is still upside to our revised 2016 job win forecast and DPS. Reiterate BUY with a higher TP of MYR1.80 (+9%). FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 1,880.7 1,916.9 2,559.5 2,622.3 EBITDA 151.2 178.2 231.3 261.8 Core net profit 114.2 127.7 155.7 180.0 Core EPS (sen) 8.8 9.9 12.0 13.9 Core EPS growth (%) 20.9 11.9 21.9 15.6 Net DPS (sen) 30.5 4.0 4.2 4.9 Core P/E (x) 18.9 16.9 13.9 12.0 P/BV (x) 6.5 4.8 3.9 3.2 Net dividend yield (%) 18.3 2.4 2.5 2.9 ROAE (%) 24.1 32.6 31.0 29.5 ROAA (%) 8.4 9.2 9.5 9.8 EV/EBITDA (x) na 8.7 7.6 6.3 Net debt/equity (%) net cash net cash net cash net cash Li Shin Chai    (603) 2297 8684    lishin.c@maybank-ib.com

MACRO RESEARCH MY: Technicals Technical Research by Lee Cheng Hooi Sell on rallies may persist The FBMKLCI inched down 1.38 points to close at 1,702.41 yesterday, while the FBMEMAS and FBM100 gained 0.43 points and lost 0.95 points respectively. In terms of market breadth, the gainer-to-loser ratio was 321-to-447, while 369 counters were unchanged. A total of 1.54b shares were traded valued at MYR1.30b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Consumer spending barely increased in February and the prior month’s advance was revised down as Americans saved more of their incomes. Spending on goods and services climbed 0.1% for a third month in February, Commerce Department figures showed. January outlays were revised from a previously reported 0.5% gain. Incomes rose 0.2%, pushing the saving rate to a one-year high. The steady and slow advances in purchases over the past three months show consumers are being cautious about over-extending themselves. (Source: Bloomberg) U.S: Pending sales of existing homes increase by most in a year. Contracts to purchase previously owned homes rebounded more than forecast in February as sales picked up in most of the U.S., a good sign as the spring-selling season approaches. The pending home sales index climbed 3.5%, the biggest gain in a year, after a 3% decrease a month earlier that was larger than initially reported, the Washington- based National Association of Realtors said. (Source: Bloomberg) Japan: Unemployment rate increased in February to 3.3% compared to 3.2% in January. Labor force participation rate at 59.3% vs 59.7% in Jan. Number employed decreases 580K. Number unemployed increases 40,000 while job-to-applicant ratio at 1.28, unchanged from Jan 2016. (Source: Bloomberg) Other News: Property: Mitsui Fudosan to come in as possible equity partner for Bukit Bintang City Centre MYR1.6b mall. BBCC Development Sdn Bhd today signed a head of terms agreement with Mitsui Fudosan (Asia) Pte Ltd, that proposes Mitsui Fudosan to take up a 50% stake in the 1.4 million square feet MYR1.6b development cost lifestyle retail mall in the Bukit Bintang City Centre project. It also signed a similar agreement with Zepp Hall Network Inc for the set up of a live concert hall which can hold more than 2,000 audience. The mall construction is anticipated to begin early next year. (Source: The Sun Daily) TRC Synergy: Wins MRT construction contracts. TRC Synergy has been awarded two Mass Rapid Transit (MRT) related construction contracts with a total value of MYR178.2m. Its wholly-owned subsidiary Trans Resources Corp Sdn Bhd had on March 24 and 28 accepted the awards from MRT Corp Sdn Bhd. The first MYR103.8m contract is for the construction works for the link between the existing Pasar Seni LRT station and Kuala Lumpur KTM station for the MRT line 1 (Sungai Buloh-Kajang). (Source: The Sun Daily) Ikhmas Jaya: Clinches MYR173.5m construction contract. Ikhmas Jaya Group has been appointed the main contractor to carry out main building works for a 49-storey serviced apartment block in Kuala Lumpur with a contract value of MYR173.5m. Its unit Ikhmas Jaya Sdn Bhd had accepted the letter of award from Gallimont Development Sdn Bhd for the 364-unit building at Persiaran Stonor. The 40-month sub-contract work would start on April 15, 2016 and be completed by Aug 15, 2019. (Source: The Star) Public Bank: Sees further drop in NIM. Public Bank expects a further dip in net interest margin (NIM) for 2016 following a 8 basis-point contraction last year due to higher market deposit rates. This is in anticipation of continued higher deposit rate in view of intense competition for deposit and tight funding conditions. The group will proactively balance between the growth and cost of deposit. Apart from that, the group is also looking to increase contribution from fee-based income, including expanding unit trust, bancassurance, card and foreign exchange businesses. (Source: The Sun Daily) Gas Malaysia: To allocate MYR120m for gas pipeline network project. Gas Malaysia will allocate MYR120m to implement the gas pipeline network project in Perak. Gas Malaysia had agreed to pay two-thirds of the project’s overall cost of MYR180m. The cost will be split evenly among the Perak state government, Gas Malaysia and the industrial sector. Perak Menteri Besar Datuk Seri Dr Zambry Abd Kadir wanted Gas Malaysia’s proposed 140km gas pipeline network project to support the industrial sector in Perak. (Source: The Edge Financial Daily)