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Share
Price:
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MYR8.63
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Target
Price:
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MYR9.05
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Recommendation:
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Hold
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Results Review
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Bursa’s 1Q16 results were in line, supported by stable
equities/derivaties trading value/volume. There was no interim dividend
declared. We make no change to our earnings forecasts and MYR9.05 TP
which is pegged to 23x 2016 PER, in line with peers’ average. Maintain
HOLD.
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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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503.8
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518.5
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540.6
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568.8
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EBITDA
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297.0
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302.5
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315.0
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333.2
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Core net profit
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198.2
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198.6
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210.1
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222.9
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Core EPS (sen)
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37.2
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37.2
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39.3
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41.7
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Core EPS growth (%)
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14.4
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(0.0)
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5.7
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6.1
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Net DPS (sen)
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54.0
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34.5
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36.5
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39.0
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Core P/E (x)
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23.2
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23.2
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22.0
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20.7
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P/BV (x)
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6.1
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5.7
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5.6
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5.5
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Net dividend yield (%)
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6.3
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4.0
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4.2
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4.5
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ROAE (%)
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25.4
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25.6
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25.9
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27.0
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ROAA (%)
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11.7
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10.6
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9.9
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10.2
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EV/EBITDA (x)
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13.7
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13.8
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13.9
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13.2
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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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Share
Price:
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MYR1.60
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Target
Price:
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MYR1.55
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Recommendation:
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Hold
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1Q16 results in
line
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1Q16 earnings and first interim gross DPU of 2.05sen were
within our and consensus’ estimates. Higher income contributions from
new assets were partly offset by lower occupancy rates of selected
assets. We trim our FY16-18F earnings by 1-3% premised on a temporary
drag in occupancy rates. We maintain our DCF-based TP of MYR1.55 (WACC:
6.2%, terminal yield: 7.0%).
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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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140.0
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165.7
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172.7
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181.9
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Net property income
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118.5
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141.9
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146.8
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155.0
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Distributable income
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81.3
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91.5
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96.5
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104.8
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DPU (sen)
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8.9
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7.6
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7.9
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8.6
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DPU growth (%)
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6.8
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(14.9)
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4.4
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8.6
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Price/DPU(x)
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18.0
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21.2
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20.3
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18.7
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P/BV (x)
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1.3
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1.3
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1.3
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1.3
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DPU yield (%)
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5.6
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4.7
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4.9
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5.4
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ROAE (%)
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6.9
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6.8
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7.1
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7.7
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ROAA (%)
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4.4
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4.3
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4.5
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4.8
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Debt/Assets (x)
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0.3
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0.3
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0.3
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0.3
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Jobless rate
stable at 3.4%
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Unemployment rate was steady at 3.4% for the third
consecutive month in Feb 2016, but remains the highest since Nov
2013. Seasonally-adjusted rate was also stable at 3.2% (Jan 2016:
3.2%). We expect unemployment rate to average 3.5% in 2016 (2015:
3.2%).
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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 down to
-1.0% YoY
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Headline inflation rate continued to decline in Mar
2016 by -1.0% YoY (Feb 2016: -0.8% YoY) while core inflation edged up
+0.6% YoY (Feb 2016: +0.5% YoY). MAS maintain their headline
inflation forecast for 2016 at -1.0%-0.0% and core inflation forecast
at +0.5-1.5%. No change to our 2016 headline inflation rate forecast
at -0.4% and expect core inflation rate to be up by +0.5%.
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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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Imminent plunge
below 1,700
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The FBMKLCI fell 3.45 points to close at 1,714.51
yesterday, while the FBMEMAS and FBM100 lost 35.60 and 30.67 points
respectively. In terms of market breadth, the gainer-to-loser ratio
was 274-to-511, while 369 counters were unchanged. A total of 1.85b shares
were traded valued at MYR1.64b.
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NEWS
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Outside Malaysia:
U.S: Sales of new homes in March fell for a third month on
slump in west. Total sales decreased 1.5% to a 511,000 annualized pace, a
Commerce Department report showed. In western states, demand slumped
23.6%. Purchases rose in two regions last month, indicating uneven demand
at the start of the busiest time of the year for builders and real-estate
agents. While new construction has been showing limited upside, cheap
borrowing costs and solid hiring will help ensure residential real estate
continues to expand. (Source: Bloomberg)
Canada: Oil rebound elusive as rig count drops to record
low. Rig activity in Canada’s oil fields has reached a record low, weekly
industry data show, a sign that rebounding prices have yet to put an end
to the industry’s woes. The number of active rigs drilling in Canada fell
to 37 this week, the lowest count ever according to historical data
provided by the Canadian Association of Oilwell Drilling Contractors,
which dates back to 1984. Only 6% of the country’s 671 oil rigs are currently
in use. The figures underscore the barriers to a turnaround in Canada’s
oil patch, the one-time economic engine whose slump has lowered growth
projections in the country. (Source: Bloomberg)
Germany: Business confidence unexpectedly deteriorated in the
latest sign that Europe’s largest economy is losing some of its pace. The
Munich-based Ifo institute’s business climate index fell to 106.6 in
April from 106.7 the previous month. The Bundesbank said last week that
it sees slowing momentum in the economy this quarter after a strong
expansion in the first three months of the year. Global headwinds remain
a concern even though the economy in China. (Source: Bloomberg)
China: Interest-rate swaps rose to a 12-month high on bets
a pick-up in economic growth and signs of speculative trading in
commodities and property will prevent the central bank from adding to
stimulus. The cost of one-year swaps, the fixed payment to receive the
floating seven-day repurchase rate, increased six basis points to 2.64%,
heading for its highest close since April 2015. (Source: Bloomberg)
S. Korea: Economy slowed in the first quarter as
sluggishness in exports weighed on corporate investment and consumers cut
back on spending. GDP rose 0.4% from the previous quarter, the Bank of
Korea said. The economy expanded by 2.7% YoY. The pace of economic growth
slowed in the quarter even as the government front-loaded fiscal spending
and resumed consumption tax discounts on cars through the first half of
this year. The central bank cut its GDP forecast for 2016 to 2.8% from
3%, citing weakness in the first three months of the year. (Source:
Bloomberg)
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Other News:
SP Setia: Secures MYR315m banking facility from AmBank.
The banking facility is for its Setia Eco Templer township project which
has a GDV of MYR2b. The bank has also approved a MYR200m working capital
term loan for SP Setia. The township, 194-acre site will feature
residential and commercial properties and will take about seven years to
complete. Construction for phase one is expected in June 2016. (Source:
The Edge Financial Daily)
MAHB: Targets 155 million passengers by 2020. Targeted
passenger volume of 115 million passengers per annum (mppa) will be
domestic, while 40 mppa will be international. It is targeting revenue of
MYR7.5b and EBITDA of MYR3b for FY20. MAHB’s two priorities include
establishment of Kuala Lumpur as a hub, and providing an innovative
airport experience to passengers, airlines and retailers. (Source: The
Edge Financial Daily)
BAT Malaysia: Calls for 3-year moratorium on tobacco
excise duty hikes. To allow the market to stabilize, BAT Malaysia said
the industry needs at least a 3-year moratorium. It said that if there is
a further excise duty increase, it will be a lose-lose (situation) for
the industry and government. It noted that post the 40% excise tax hike
in November last year, the excise income of the government has gone down.
(Source: The Sun Daily)
Tanah Makmur: Pahang royalty looking to take Tanah Makmur
private. As a major shareholder, it has proposed to privatise the
Pahang-based plantation player at MYR1.80 per share or MYR285.1m. Tanah
Makmur said yesterday the board had received a letter from Tengku
Abdullah, which owns 12.77%, to undertake a selective capital reduction
(SCR) and repayment exercise under the privatisation exercise. The
company said the SCR was an opportunity for shareholders to realize their
investments in Tanah Makmur at a premium of between 22.45% and 30%.
(Source: The Sun Daily)
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