Wednesday, March 30, 2016

[Maybank IB] Today's Research - Malaysia






MRCB-Quill REIT | Next catalyst just around the corner
Kevin Wong







Kimlun Bhd | Wins contract from KVMRT 2
Li Shin Chai









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COMPANY RESEARCH





Company Update





MRCB-Quill REIT (MQREIT MK)
by Kevin Wong





Share Price:
MYR1.15
Target Price:
MYR1.15
Recommendation:
Buy




Next catalyst just around the corner

We believe the expected injection of Menara Shell (MS) in early-2017 could significantly lift earnings while MQREIT’s long-term earnings outlook is supported by its anchor tenants. We think that MS injection will also be value-accretive. We maintain our forecasts pending the confirmation of MS’ funding structure. We maintain our BUY call with an unchanged DCF-TP of MYR1.15 (WACC: 6.6%, terminal yield: 7%); FY16 net yield remains attractive at 6.1%, with valuations upside from MS.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
70.2
115.2
124.4
128.9
Net property income
53.3
90.3
100.3
103.5
Distributable income
34.2
54.0
56.9
60.6
DPU (sen)
7.5
6.9
7.0
7.4
DPU growth (%)
0.0
(8.1)
0.8
6.5
Price/DPU(x)
15.2
16.6
16.5
15.5
P/BV (x)
0.8
0.8
0.8
0.8
DPU yield (%)
6.6
6.0
6.1
6.5
ROAE (%)
6.4
7.5
6.3
6.7
ROAA (%)
4.0
4.3
3.5
3.7
Debt/Assets (x)
0.4
0.4
0.4
0.4










Company Update





Kimlun Bhd (KICB MK)
by Li Shin Chai





Share Price:
MYR1.79
Target Price:
MYR1.70
Recommendation:
Hold




Wins contract from KVMRT 2

Kimlun won a precast contract for KVMRT 2 worth MYR200m, leading its outstanding precast order to MYR280m (+250%). Although the contract value was below expectation, there is further potential precast job win from the other rail projects in Malaysia and Singapore. Our earnings forecasts are unchanged but we lift our TP to MYR1.70 (+13%) based on a higher 11x 2017 PER on its strong job win prospect. Maintain HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,206.4
1,053.6
1,095.3
1,079.8
EBITDA
90.7
114.5
92.5
92.8
Core net profit
33.8
64.4
49.4
45.6
Core EPS (sen)
11.3
21.4
16.4
15.2
Core EPS growth (%)
(5.3)
90.5
(23.3)
(7.7)
Net DPS (sen)
3.5
6.4
4.4
4.1
Core P/E (x)
15.9
8.3
10.9
11.8
P/BV (x)
1.3
1.2
1.1
1.0
Net dividend yield (%)
2.0
3.5
2.5
2.3
ROAE (%)
9.7
15.0
10.3
8.9
ROAA (%)
3.8
6.8
5.0
4.4
EV/EBITDA (x)
5.0
4.2
6.5
6.2
Net debt/equity (%)
23.2
14.7
12.2
7.8








MACRO RESEARCH






Technical Research
by Lee Cheng Hooi


Window dressing test of 1,726?





The FBMKLCI gained 12.63 points to close at 1,715.04 yesterday, while the FBMEMAS and FBM100 rose 80.22 points and 81.14 points respectively. In terms of market breadth, the gainer-to-loser ratio was 417-to-376, while 375 counters were unchanged. A total of 1.65b shares were traded valued at MYR2.16b.







NEWS


Outside Malaysia:

U.S: Yellen says caution in raising rates ‘especially warranted’. Federal Reserve Chair Janet Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising interest rates because the global economy presents heightened risks. The speech to the Economic Club of New York made a strong case for running the economy hot to push away from the zero boundary for the Federal Open Market Committee’s target rate. “I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Yellen said in the text of prepared remarks. “This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric.” (Source: Bloomberg)

U.S: Consumer confidence rose more than forecast in March as American households grew upbeat about prospects for the labor market and economy. The Conference Board’s sentiment index rose to 96.2 this month from a revised 94 reading in February that was higher than previously reported, the New York-based private research group said. The survey reflected responses received through March 17. (Source: Bloomberg)

U.K: Bank of England raises buffer rate as stability risks grow. The Bank of England said banks should begin building up capital earmarked to support lending when the economy turns down, as the outlook for U.K. financial stability worsens. The BOE’s Financial Policy Committee raised the countercyclical capital buffer rate for U.K. exposures to 0.5% of risk-weighted assets from zero, becoming binding from March 29 next year. The buffer applies to U.K. banks and building societies, as well as to branches of other European Union banks that lend into the country. (Source: Bloomberg)

Japan: Industrial output declines as falling exports sap demand. Japan’s industrial production dropped the most since 2011 in February, as falling exports sapped demand and a steel-mill explosion halted domestic car production at Toyota Motor Corp. Output slumped 6.2% after rising 3.7% in January, the trade ministry said. The data adds to signs of a weak recovery from last quarter’s contraction, with overseas shipments dropping for the last five months and domestic demand weak. With pressure building on policy makers to bolster growth, Prime Minister Shinzo Abe said that the government would front load spending after parliament passed a record budget for the 12 months starting April 1. He resisted calls for a supplementary fiscal package. (Source: Bloomberg)





Other News:

Felda Global Ventures: Names Zakaria Arshad as new CEO. Felda Global Ventures Holdings (FGV) has appointed Datuk Zakaria Arshad, a son of a Felda settler, as its new group president and CEO effective April 1, 2016, ending months of speculation over Datuk Mohd Emir Mavani Abdullah’s term. Mohd Emir ends his three-year tenure as head of the plantation giant on March 31, 2016. Zakaria has served Felda group for the past 32 years since 1984. (Source: The Sun Daily)

Sunway: Property arm offers buyers financial help amid softer economy. Sunway’s property arm is providing financial assistance under its guaranteed loan scheme to help buyers own its products. Under the Sunway Property Certainty Campaign, the group offers three packages which include the guaranteed loan, deferred payment and voluntary exit plan. This was to address issues arising from economic uncertainties that were affecting buyers, especially in terms of getting loan approvals. Buyers were given the additional option of applying for loans with Sunway besides with commercial banks, provided they meet the basic criteria. (Source: The Star)


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