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Share
Price:
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MYR1.00
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Target
Price:
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MYR1.45
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Recommendation:
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Buy
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Disputing
Balnaves FPSO contract termination
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This abrupt cancellation will bring a negative knee-jerk
reaction on the stock, and the matter is unlikely to be resolved
anytime soon. Our earnings forecasts and TP are placed under review
pending further clarity on this dispute. Assuming BArmada loses, it
will negatively impact our 2016-18 net profit forecasts by 11-28% and
SOP-based TP by 15%.
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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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2,397.3
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2,179.7
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2,224.6
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3,687.2
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EBITDA
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1,029.4
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1,101.7
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1,277.0
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1,887.1
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Core net profit
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399.6
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360.7
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371.4
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885.1
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Core EPS (sen)
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7.9
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6.1
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6.3
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15.1
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Core EPS growth (%)
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(48.4)
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(22.2)
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3.0
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138.3
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Net DPS (sen)
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1.6
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0.8
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0.0
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0.0
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Core P/E (x)
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12.7
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16.3
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15.8
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6.6
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P/BV (x)
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0.8
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0.8
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0.8
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0.7
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Net dividend yield (%)
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1.6
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0.8
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0.0
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0.0
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ROAE (%)
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7.2
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5.2
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5.0
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11.0
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ROAA (%)
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3.4
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2.2
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2.0
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4.4
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EV/EBITDA (x)
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8.2
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11.4
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10.1
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6.3
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Net debt/equity (%)
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43.2
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89.6
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91.4
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70.3
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Share
Price:
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MYR2.45
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Target
Price:
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MYR2.38
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Recommendation:
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Hold
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Still staying on
the side-lines
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4Q15 and 2015 results outperformed largely due to
exceptional items. Star concedes that its ad revenue outlook is still
challenging. Yet, cost savings of MYR5m-MYR6m p.a. if it disposes or
shut Reds FM and Capital FM will provide earnings relief. Dividend yields
are also likely to remain high at >7% p.a.. Maintain HOLD with
marginally lower SOP-based TP of MYR2.38 (-1%) as we raise our DPS
estimates. Still prefer Media Prima (MPR MK; TP: MYR1.48) and Media
Chinese Int’l (MCIL MK; TP: MYR0.73).
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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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1,013.7
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1,019.0
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995.3
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1,037.0
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EBITDA
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242.3
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206.2
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205.7
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212.0
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Core net profit
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151.5
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131.9
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126.3
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134.0
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Core EPS (sen)
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20.5
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17.9
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17.1
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18.2
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Core EPS growth (%)
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4.8
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(12.9)
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(4.3)
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6.1
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Net DPS (sen)
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18.0
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18.0
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18.0
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18.0
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Core P/E (x)
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11.9
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13.7
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14.3
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13.5
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P/BV (x)
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1.6
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1.6
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1.6
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1.6
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Net dividend yield (%)
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7.3
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7.3
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7.3
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7.3
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ROAE (%)
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13.1
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11.5
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11.0
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11.7
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ROAA (%)
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9.0
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7.8
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7.6
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8.5
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EV/EBITDA (x)
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5.7
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6.9
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7.5
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7.2
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Net debt/equity (%)
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net cash
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net cash
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net cash
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net cash
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Samuel Yin Shao
Yang
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Jade Tam
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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O&G-related
dip in exports
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Exports dropped for the first time in eight month in
Jan 2016 by -2.8% (Dec 2015: +1.4% YoY) while imports gained +3.3%
YoY (Dec 2015: +2.7% YoY), resulting in narrower trade surplus of
+MYR5.39b (Dec 2015: +MYR8.2b). This year, we expect moderate growth
in exports (2016: +3.4%; 2015: +1.9%) and imports (2016: +3.9%; 2015:
+0.4%) as well as narrower trade surplus (2016: +MYR93.8b; 2015:
+MYR94.3b).
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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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The FBM KLCI rose 29.05 points WoW to close at
1,692.49, as global markets and crude oil rebounded well in tandem
with each other. The weekly volume fell from 1.87b to 1.67b shares.
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NEWS
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Outside Malaysia:
U.S: Trade gap widens more than forecast as exports slump
to the lowest level in more than four years. The gap grew 2.2% to USD
45.7b, the largest in five months, from a revised USD 44.7b in December
that was bigger than previously estimated. Soft growth plaguing U.S.
trading partners is also reducing the amount of goods and services the
world’s biggest economy can ship out, pinching manufacturers. Demand from
American consumers will be needed to pick up the slack, putting even more
importance on an improving labor market that translates into real wage
growth. (Source: Bloomberg)
China: Eases fiscal stance to meet slower 2016 growth
target. China unveiled a record fiscal deficit and pledged to accelerate
the restructuring of its bloated state- owned industries while still
setting a weaker growth target for this year. Premier Li Keqiang
announced a 6.5% to 7% expansion goal, down from an objective of about 7%
last year and the first range the government has offered since 1995. The
government also abandoned its trade target, underscoring the degree of
uncertainty about prospects for global growth. The details were given in
Li’s work report at the annual meeting of the ceremonial legislature in
Beijing. The plan reflected the government’s determination to maintain
growth and put off confronting its debt -- now nearly 250% of gross
domestic product. The report also cited downward pressure on the economy
against a backdrop of weaker global growth. (Source: Bloomberg)
China: BIS says USD 175b outflow wasn’t investor flight.
Persistent capital outflows from China since mid-2014 were probably
driven more by local companies paying down their dollar-denominated debt
-- in anticipation of a stronger U.S. currency -- than investors ditching
Chinese assets, according to the Bank for International Settlements. The
outpouring of China’s currency “led to two different narratives,”
researchers for the Switzerland-based institution said in a report. “One
tells a story of investors selling mainland assets en masse; the other of
Chinese firms paying down their dollar debt. Our analysis favors the
second view, but also points to what both narratives miss – the shrinkage
of offshore renminbi deposits.” (Source: Bloomberg)
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Other News:
Eversendai: Looking to secure MYR500m jobs soon. Steel
structure player Eversendai Corp, which aims to clinch a record MYR2b new
job wins this year, is likely to bag MYR500m worth of jobs in the next
month or so. The new jobs is likely comprise structural steel for
Malaysia tallest buiding, the KL118 project (MYR300m) and other smaller
jobs such as a power plant in Thailand, Jimah 3B and the Dubai Eye, the
tallest ferris wheel in the world. This would be a Herculean task
considering its heavy reliance on the Middle East for jobs in this low
oil price environment. (Source: The Sun Daily)
Harrisons: Looks to M&A to return to glory. Harrisons
Holdings, whose earnings have been badly hit by shrinking profit margins
over the past four years, has mapped out plans to bring the company back
to its glory days. The include embarking on an acquisitions strategy and
boosting retail business exposures. The company is quite prudent now and
had decided to scale down its duty-free business, which had affected its
bottom line in recent years. The group is in the final stages of
negotiation with local party holding multinational brands. (Source: The
Edge Financial Daily)
Felda Global Ventures: Says no human trafficking at its
estate. There were no human trafficking cases found at its plantations in
Jempol, Negeri Sembilan following an assessment by Wild Asia, an
independent verifier dedicated to promoting sustainability in Asia. The
group was responding to a Wall Street Journal (WSJ) news report in July
2015, which claimed that illegal migrants from Bangladesh and Rohingya
employed at FGV plantations were denied wages and suffered other forms of
abuse. (Source: The Sun Daily)
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