Thursday, March 31, 2016

[Maybank IB] Today's Research - Malaysia






Yinson Holdings | FY16 in line; FPSO Genesis to drive growth
Thong Jung Liaw







Westports Holdings | Still bucking the trend
Yen Ling Lee









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Malaysia | 62% FR is way too strong
Lee Cheng Hooi








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COMPANY RESEARCH





Company Update





Yinson Holdings (YNS MK)
by Thong Jung Liaw





Share Price:
MYR2.75
Target Price:
MYR4.35
Recommendation:
Buy




FY16 in line; FPSO Genesis to drive growth

FY1/16 core net profit (+21% YoY) yielded no surprises, with the O&G business contributing 98% of the core profit. Meanwhile, the projected 15sen special DPS payment, post the divestment of non O&G operations by 2HCY16, is a short-term catalyst. Overall, we remain positive over Yinson’s long-term prospects, for its strong earnings growth and steady cash flow profile. Our MYR4.35 SOP-based TP offers a 58% upside. BUY.



FYE Jan (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,083.4
986.0
996.0
1,286.2
EBITDA
225.4
261.0
288.5
417.8
Core net profit
142.6
173.1
184.2
220.0
Core EPS (sen)
13.8
16.2
17.3
20.6
Core EPS growth (%)
114.7
17.5
6.4
19.4
Net DPS (sen)
2.0
1.9
2.0
2.4
Core P/E (x)
19.9
17.0
15.9
13.3
P/BV (x)
2.0
1.3
1.2
1.1
Net dividend yield (%)
0.7
0.7
0.7
0.9
ROAE (%)
13.9
9.4
7.9
8.7
ROAA (%)
6.1
4.8
3.5
3.5
EV/EBITDA (x)
15.1
15.6
14.8
10.3
Net debt/equity (%)
31.6
51.9
55.2
51.3










Company Update





Westports Holdings (WPRTS MK)
by Yen Ling Lee





Share Price:
MYR4.12
Target Price:
MYR4.30
Recommendation:
Hold




Still bucking the trend

Container volumes in Jan-Feb 2016 bucked the trend with growth of estd. 8% YoY on organic growth and some ad-hoc moves. We continue to think that the volume could slow ahead on softer global trade. We maintain our earnings forecasts, projecting EPS growth of 18% in FY16 on throughput growth of 3% and a lower tax rate. Trading at 2016 PER of 23.6x, we think its share price already reflects its solid fundamentals. Maintain HOLD and DCF-derived TP of MYR4.30 (WACC: 6.7%, beta: 0.6).



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,503.0
1,578.3
1,693.4
1,770.3
EBITDA
800.8
869.1
940.1
1,017.1
Core net profit
512.2
504.9
596.4
628.2
Core EPS (sen)
15.0
14.8
17.5
18.4
Core EPS growth (%)
17.7
(1.4)
18.1
5.3
Net DPS (sen)
11.3
11.1
13.1
13.8
Core P/E (x)
27.4
27.8
23.6
22.4
P/BV (x)
8.0
7.4
6.9
6.4
Net dividend yield (%)
2.7
2.7
3.2
3.4
ROAE (%)
30.4
27.6
30.2
29.6
ROAA (%)
13.8
12.8
14.3
14.4
EV/EBITDA (x)
15.2
17.0
16.2
15.0
Net debt/equity (%)
40.0
39.7
59.9
53.0








MACRO RESEARCH






Technical Research
by Lee Cheng Hooi


62% FR is way too strong





The FBMKLCI gained 2.78 points to close at 1,717.82 yesterday, while the FBMEMAS and FBM100 rose 27.96 points and 25.54 points respectively. In terms of market breadth, the gainer-to-loser ratio was 432-to-352, while 398 counters were unchanged. A total of 1.85b shares were traded valued at MYR2.34b.







NEWS


Outside Malaysia:

Brazil: Budget deficit swells to record as economy shrinks. Brazil recorded the largest-ever primary budget gap in 12 months through February as a two-year economic recession sapped tax collection while expenses grew further. The deficit before interest payments, which includes results of states, municipalities and government-owned companies, reached BRL 125.14b (USD 5b) in the 12- month period, or a record 2.11% of gross domestic product, the central bank said. The result shows a growing mismatch between government revenue and expense over the past year, said Tulio Maciel, head of the central bank’s economic research department. “While revenues are falling sharply due to the economic situation, at a rate of 12% to 13% (a year), expenses continue to grow,” he told reporters in Brasilia. (Source: Bloomberg)

E.U: Euro-area economic confidence fell to the lowest level in more than a year just as the European Central Bank deployed fresh stimulus to spur growth and quash the threat of deflation. An index of executive and consumer confidence slumped for a third month, declining to 103.0 in March from a revised 103.9 the previous month, the European Commission in Brussels said. (Source: Bloomberg)

Germany: Inflation unexpectedly climbed above zero in March in a sign that domestic demand and European Central Bank stimulus may be starting to spur price gains. Consumer prices rose O.1% YoY, data from the Federal Statistics Office showed, based on a European Union-harmonized calculation. Prices rose 0.8% MoM from the previous month. (Source: Bloomberg)

U.K: Consumer confidence stalls as ‘Brexit’ clouds outlook. Fears that Britain might vote to leave the European Union helped keep consumer confidence at the lowest level in more than a year, according to a survey published. GfK’s consumer-confidence index stayed at zero in March. A gauge of expectations for the economic situation over the next 12 months was minus 12, unchanged on the month and down 18 points from a year earlier. “Despite good economic headlines about low inflation, interest rates and prices in the shops, concerns about Brexit and the ongoing euro-zone crisis appear to be hitting home,” said Joe Staton, head of market dynamics at GfK. (Source: Bloomberg)





Other News:

Construction: AlloyMTD withdraws bid for USD2.65b project in Manila. Malaysian infrastructure conglomerate AlloyMTD Group, a merger between MTD Capital and Alloy Consolidated Sdn Bhd, has pulled out of bidding for a USD2.65b (MYR10.41b) contract to build a 47km expresssway, flood control dike, and for 700ha land reclamation works near Taguig in Manila, the Philippines. The group cited unresolved issues affecting the propriety and validity of the procurement process for the Laguna Lakeshore Expressway Dike project for the withdrawal. The bidding process has become risky for the group as the only foreign bidder due to legal questions over the government’s right to turn a portion of a lake into a land, which would then be sold to private sector. (Source: The Edge Financial Daily)

Lay Hong: Partners NH Foods to expand meat-based business abroad. Integrated poultry company Lay Hong plans to set up a plant in Selangor and will have its first Nippon Nutriplus product in Malaysia by mid-year, following its joint venture (JV) with NH Foods Limited. Under the JV agreement, a private limited company named NHF Manufacturing (Malaysia) Sdn Bhd will be established with an initial authorised share capital of MYR30m divided into 30 million shares. NH Foods and Lay Hong will hold 51% and 49% stake respectively. Lay Hong expects to fund its portion for the JV company via internally-generated funds, bank borrowings and/or additional funds to be raised from the capital market. (Source: The Sun Daily)

Perdana Petroleum: Cancels work barge acquisition. Perdana Petroleum has canceled the acquisition of an accommodation work barge identified as Vessel Hull No. SK 316 from Nam Cheong International Ltd. The termination of the memorandum of agreement (MOA) with Nam Cheong was necessary as to date, no potential charter contract has been identified for the vessel SK316. The group has written-off MYR36.1m being the 20% deposit for the vessel SK316 in the financial statement for the year ended Dec 31, 2015. It does not foresee any financial impact in 2016. (Source: The Sun Daily)

Dialog: To build industrial estate in Pengerang. Dialog Group, which has a 46% effective interest in the MYR5b Pengerang Independent Deepwater Petroleum Terminal, plans to develop an industrial estate within its deepwater terminal land. It had incorporated a wholly owned subsidiary, Sungai Rengit Industrial Estate Sdn Bhd, to develop the industrial estate that would support the development of the petroleum and petrochemical industry in Pengerang, Johor. The terminal project would help attract MYR80b to MYR90b in investments to the area as it expanded over the years. (Source: The Star)

Digi: To partner edotco for telecom infrastructure ops. DiGi.Com has appointed edotco Malaysia as its preferred partner in the telecommunications infrastructure services business. With this agreement being signed, edotco would deliver both co-location and build-to-suit sites over five years, giving Digi the advantage of further strengthening its network footprint and service quality nationwide. This agreement will pave the way for Digi to access edotco’s telecoms infrastructure footprint of over 3,600 sites nationwide and new built-to-suit sites. Both companies have been in network collaborations since 2013. (Source: The Star)


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