Tuesday, May 31, 2016

Lafarge Malaysia | Competition stiffens






Lafarge Malaysia | Competition stiffens
Yen Ling Lee







QL Resources | 4QFY16: Below expectations
Liew Wei Han







Star Media Group Bhd | Challenging adex outlook
Samuel Yin Shao Yang







Media Chinese International | Higher DPR of 63% despite lower earnings!
Samuel Yin Shao Yang







Wah Seong | 1Q16 results a big miss
Thong Jung Liaw







Kimlun Bhd | 1Q16: Boosted by margins
Li Shin Chai







Eversendai Corp | 1Q16 above but HOLD for now
Li Shin Chai







Icon Offshore | Aims to tough it out and be ahead as cycle turns
Thong Jung Liaw








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COMPANY RESEARCH





TP Revision





Lafarge Malaysia (LMC MK)
by Yen Ling Lee





Share Price:
MYR8.03
Target Price:
MYR6.50
Recommendation:
Sell




Competition stiffens

We think the present price competition may persist for another 6-9 months. While sequential earnings may improve on lower costs, it will still be far from its peaked quarterly earnings. Post our EPS cut, LMC trades at expensive 27x 2017 PER and offers dividend yield of only 3.1% for the current year. Maintain SELL with a lower TP of MYR6.50 (-7%) on an unchanged 22x mean PER valuation, but rolled forward to 2017.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,743.1
2,750.8
2,615.1
2,738.2
EBITDA
493.5
509.4
481.9
563.0
Core net profit
256.0
251.0
209.5
251.3
Core EPS (sen)
30.1
29.5
24.7
29.6
Core EPS growth (%)
(30.2)
(1.9)
(16.5)
20.0
Net DPS (sen)
34.0
31.0
25.0
29.6
Core P/E (x)
26.7
27.2
32.6
27.1
P/BV (x)
2.2
2.2
2.2
2.2
Net dividend yield (%)
4.2
3.9
3.1
3.7
ROAE (%)
8.1
8.1
6.8
8.1
ROAA (%)
6.4
6.0
4.8
5.8
EV/EBITDA (x)
15.9
14.9
14.3
12.1
Net debt/equity (%)
net cash
1.0
2.3
net cash










Results Review





QL Resources (QLG MK)
by Liew Wei Han





Share Price:
MYR4.43
Target Price:
MYR4.15
Recommendation:
Hold




4QFY16: Below expectations

Results fell short mainly due to the weaker-than-expected performance of the livestock division. Moving forward, we expect growth to be mainly supported by the marine division (new capacity expansion and positive impact of weaker MYR on export sales). As for its livestock division, operations could gradually improve on the rebound of egg prices. We trim FY17/18 earnings forecasts and introduce FY19 forecasts.



FYE Mar (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
2,707.8
2,852.6
3,031.0
3,201.3
EBITDA
340.9
371.6
408.4
452.7
Core net profit
183.1
192.0
211.1
235.4
Core EPS (sen)
14.7
15.4
16.9
18.9
Core EPS growth (%)
14.5
4.9
9.9
11.5
Net DPS (sen)
4.3
5.0
6.0
6.0
Core P/E (x)
30.2
28.8
26.2
23.5
P/BV (x)
3.9
3.5
3.2
2.9
Net dividend yield (%)
1.0
1.1
1.4
1.4
ROAE (%)
13.5
12.7
12.7
13.0
ROAA (%)
7.6
7.1
7.1
7.4
EV/EBITDA (x)
16.4
16.4
15.6
14.2
Net debt/equity (%)
39.0
33.4
39.8
38.8










Company Update





Star Media Group Bhd (STAR MK)
by Samuel Yin Shao Yang





Share Price:
MYR2.34
Target Price:
MYR2.54
Recommendation:
Hold




Challenging adex outlook

1Q16 earnings disappointed largely due to lower print adex from Star’s core adex categories. We cut FY16-FY18 net profit estimates to account for weaker print adex growth. However, we ascribe a higher market value to Star’s 53%-owned Cityneon Holdings (CITN SP; Not Rated). As a result, our SOP-TP is raised to MYR2.54 (MYR2.38 previously); HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,013.7
1,019.0
1,034.8
1,076.6
EBITDA
242.3
211.2
185.3
196.7
Core net profit
151.5
131.9
112.4
124.6
Core EPS (sen)
20.5
17.9
15.2
16.9
Core EPS growth (%)
4.8
(12.9)
(14.8)
10.9
Net DPS (sen)
18.0
18.0
18.0
18.0
Core P/E (x)
11.4
13.1
15.4
13.9
P/BV (x)
1.5
1.5
1.5
1.5
Net dividend yield (%)
7.7
7.7
7.7
7.7
ROAE (%)
13.1
11.5
9.9
11.1
ROAA (%)
9.0
7.8
6.7
7.9
EV/EBITDA (x)
5.7
6.8
7.8
7.4
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





Media Chinese International (MCIL MK)
by Samuel Yin Shao Yang





Share Price:
MYR0.73
Target Price:
MYR0.80
Recommendation:
Buy




Higher DPR of 63% despite lower earnings!

4QFY3/16 core net profit fell short. Higher-than-expected operating expenses in Greater China are believed to have contributed to the earnings shortfall. But, full year DPS of 4.3 MYRsen (63% DPR) was above expectations reflecting ~6% yield. We maintain our earnings forecasts, BUY call and TP of MYR0.80 (10x CY2016 PER) pending a briefing today.



FYE Mar (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,589.3
1,362.3
1,511.0
1,537.6
EBITDA
268.1
206.6
249.1
262.0
Core net profit
144.4
114.1
136.9
151.9
Core EPS (sen)
8.6
6.8
8.1
9.0
Core EPS growth (%)
(8.3)
(21.0)
20.0
10.9
Net DPS (sen)
3.4
4.3
4.9
5.4
Core P/E (x)
8.6
10.9
9.1
8.2
P/BV (x)
1.6
1.5
1.3
1.2
Net dividend yield (%)
4.7
5.8
6.6
7.3
ROAE (%)
19.4
14.2
15.3
15.3
ROAA (%)
9.4
7.3
8.7
9.5
EV/EBITDA (x)
4.5
5.5
4.5
4.0
Net debt/equity (%)
5.9
net cash
net cash
net cash










Results Review





Wah Seong (WSC MK)
by Thong Jung Liaw





Share Price:
MYR0.69
Target Price:
MYR0.13
Recommendation:
Sell




1Q16 results a big miss

1Q16 results came in below our expectation, with a core net loss of MYR2m (vs. net earnings of MYR27m in 1Q15). This prompted a 78%-133% in FY16-17 earnings and resulted in a lower TP of MYR0.13 (-77%). Depleting orders, erosion is margins and replenishment risks are key concerns, reflecting the challenging operating outlook. Despite a 42% fall in share price over a 52-week period, risks still overweighs rewards with minimal catalyst to re-rate. Valuations are expensive. Maintain SELL.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,438.6
1,839.5
1,505.0
1,750.0
EBITDA
296.6
143.3
99.0
130.5
Core net profit
145.4
22.7
(6.6)
10.1
Core EPS (sen)
18.8
2.9
(0.9)
1.3
Core EPS growth (%)
215.9
(84.4)
nm
nm
Net DPS (sen)
5.7
3.0
0.0
0.0
Core P/E (x)
3.6
23.3
(79.9)
52.7
P/BV (x)
0.5
0.5
0.5
0.5
Net dividend yield (%)
8.3
4.4
0.0
0.0
ROAE (%)
14.1
2.1
(0.6)
0.9
ROAA (%)
5.4
0.8
(0.2)
0.4
EV/EBITDA (x)
6.4
12.2
14.1
10.7
Net debt/equity (%)
71.7
80.4
68.5
66.7


Thong Jung Liaw








Results Review





Kimlun Bhd (KICB MK)
by Li Shin Chai





Share Price:
MYR1.78
Target Price:
MYR1.70
Recommendation:
Hold




1Q16: Boosted by margins

1Q16 results positively surprised on higher-than-expected construction and precast margins. Kimlun’s total outstanding orderbook remains solid at MYR2.1b. However, its further job win prospect has been priced in. Our earnings forecasts are unchanged as we expect margins to normalize in 2H16. Maintain HOLD at unchanged MYR1.70 TP (11x 2017 PER).



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)
15.8
8.3
10.8
11.7
P/BV (x)
1.3
1.2
1.1
1.0
Net dividend yield (%)
2.0
3.6
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
6.4
6.2
Net debt/equity (%)
23.2
14.7
12.2
7.8










TP Revision





Eversendai Corp (EVSD MK)
by Li Shin Chai





Share Price:
MYR0.60
Target Price:
MYR0.64
Recommendation:
Hold




1Q16 above but HOLD for now

1Q16 headline loss included massive exceptionals/one-offs. But, 1Q16 core earnings were above expectation potentially due to lumpy earnings recognition. Nevertheless, its balance sheet remains as a concern given its high gearing and receivables. Our earnings forecasts are unchanged but we lower our TP to MYR0.64 (-29%) after we switch our valuation basis to 0.5x P/B as near-term share price would take cue from its balance sheet. The stock is a HOLD now.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,002.8
1,788.8
1,583.3
1,485.5
EBITDA
87.2
124.3
160.8
161.0
Core net profit
23.7
47.5
59.4
58.7
Core EPS (sen)
3.1
6.1
7.7
7.6
Core EPS growth (%)
(55.8)
100.0
25.1
(1.2)
Net DPS (sen)
1.3
0.5
0.6
0.6
Core P/E (x)
19.7
9.9
7.9
8.0
P/BV (x)
0.5
0.4
0.4
0.4
Net dividend yield (%)
2.1
0.8
1.0
1.0
ROAE (%)
2.7
4.7
5.2
4.9
ROAA (%)
1.3
2.0
2.2
2.1
EV/EBITDA (x)
10.3
10.2
6.6
6.2
Net debt/equity (%)
32.3
59.3
48.1
40.7










Company Update





Icon Offshore (ICON MK)
by Thong Jung Liaw





Share Price:
MYR0.38
Target Price:
MYR0.42
Recommendation:
Buy




Aims to tough it out and be ahead as cycle turns

We expect an improved 2Q16 earnings, on higher asset utilisation. The OSV market remains challenging but is at its trough. Icon aims to be resilient in such times and targets to be ahead in the M&A activity, when opportunity arises. Its M&A prospect is a key standout; a re-rating catalyst once crystalised. Valuations are attractive now even without the M&A angle.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
318.9
266.6
254.6
327.1
EBITDA
190.3
122.8
99.1
130.3
Core net profit
74.9
18.2
6.0
27.4
Core EPS (sen)
6.4
1.5
0.5
2.3
Core EPS growth (%)
(34.1)
(75.6)
(66.9)
354.7
Net DPS (sen)
0.0
0.0
0.0
0.0
Core P/E (x)
5.9
24.2
73.1
16.1
P/BV (x)
0.4
0.6
0.6
0.6
Net dividend yield (%)
0.0
0.0
0.0
0.0
ROAE (%)
10.3
2.0
0.8
3.7
ROAA (%)
4.5
1.1
0.4
1.9
EV/EBITDA (x)
7.7
9.2
11.1
7.5
Net debt/equity (%)
54.9
84.9
89.8
71.0


Thong Jung Liaw






NEWS


Outside Malaysia:

E.U: Economic confidence rose for a second month in May as the European Central Bank prepares to present updated economic projections that could provide further clues about the impact of its stimulus program. An index of executive and consumer sentiment increased to 104.7 from a revised 104.0 in April, the European Commission said. (Source: Bloomberg)

Germany: Consumer prices in May unexpectedly halt slide before ECB meets, offering some good news to policy makers struggling to revive price growth in the 19-nation euro area. The inflation rate rose to zero compared with -0.3% YoY in April, data from the Federal Statistics Office in Wiesbaden showed. Prices increased 0.4% MoM. (Source: Bloomberg)

France: Economy grew faster than originally estimated in the first quarter, lifted by improving corporate investment. Growth accelerated to 0.6%, instead of the 0.5% estimated April 29, France’s statistics office Insee said. That compares with a 0.4% increase in GDP in the previous quarter. The economy expanded 1.4% YoY. French GDP report showed that business investment jumped 2.4% in the quarter instead of the 1.6% originally estimated, helped by EUR 40b (USD 46b) in tax cuts over the course of four years and a short-term tax break that allowed companies accelerated amortization in the current fiscal year. Consumer spending increased 1%, compared with the 1.2% initially reported. (Source: Bloomberg)





Other News:

AirAsia: Offered MYR4.1b for its aircraft leasing company Asia Aviation Capital Ltd (ACC). ACC is less than 2 years old and has made its first lease outside the group to Pakistan International Airlines recently. It is also expected to recruit a CEO in a month’s time. ACC is headquartered in Labuan and owns and oversees aircraft leasing arrangements for its affiliate airlines such as Indonesia AirAsia and Thai AirAsia. The company had 43, A320s as of March 2016. The company did not reveal the party that made the offer but adds that it is the group’s intention to eventually dispose of its strategic investments and non-core businesses. (Source: The Star)

Atlan Holdings: Get shareholders’ approval to dispose up to 25% of stake in duty free business to Heinemann. Atlan Holdings’ 79.09% unit, Duty Free International Limited (DFI), has received shareholders’ approval to dispose up to 25% stake plus one share in its wholly owned subsidiary DFZ Capital to Heinemann Asia Pacific. The company said that the sale will enable DFI to leverage on Heinemann resources and expertise. Heinemann is also one of the leading multi-category duty free retailers at KLIA2 operating under the brand “be Duty Free”. The sale is targeted to be completed by next month. Under the terms, Heinemann are also entitled to purchase a second tranche of shares in DFZ via a call option in an 18-month period. An option of a third tranche of shares in a 12 month period will also begin on the date of expiry of the second tranche call option. (Source: The Sun Daily)

Bintulu Port: Awards MYR57.9m contract to build two tugs. Bintulu Port Holdings has awarded a MYR57.91m contract to Bunga Tenaga to build two units of 45-tonne bollard pull ship handling tugs compete with crew. The construction work on the first hull is for 16 months, while the second hull is for 18 months. A sum of MYR4000 per tug per day shall be imposed as liquidated and ascertained damages for any delay in delivery of the tugs. The hire of the two tugs will be 120 months with an option to renew for a period of 60 months. (Source: The Edge)


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