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Share
Price:
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MYR2.24
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Target
Price:
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MYR2.60
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Recommendation:
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Buy
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Strike your own
lottery
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MAG’s share price has performed poorly YTD, falling below
our TP. While the 1Q16 net profit fell 24% YoY, it was within our
expectations as it reflected normalized prize payout ratios. Our
observations also indicate that gaming sales are beginning to stabilise
after six years of contractions. We trim our EPS estimates by 5-6% and
our DCF-based TP by 4% to MYR2.60. With 16% upside potential coupled
with 7.1% net dividend yield, we upgrade MAG to BUY from 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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2,886.5
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2,767.0
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2,765.0
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2,758.4
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EBITDA
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416.1
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373.9
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387.2
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391.6
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Core net profit
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254.8
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226.5
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249.5
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258.5
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Core EPS (sen)
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17.9
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15.9
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17.5
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18.2
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Core EPS growth (%)
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(21.9)
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(10.9)
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10.2
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3.6
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Net DPS (sen)
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20.0
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16.0
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16.0
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16.0
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Core P/E (x)
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12.5
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14.1
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12.8
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12.3
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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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Net dividend yield (%)
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8.9
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7.1
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7.1
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7.1
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ROAE (%)
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10.4
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9.3
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10.3
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10.5
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ROAA (%)
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6.9
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6.2
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6.9
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7.4
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EV/EBITDA (x)
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10.7
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11.4
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9.9
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9.7
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Net debt/equity (%)
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21.6
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26.1
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25.0
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23.4
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Share
Price:
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MYR2.32
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Target
Price:
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MYR2.50
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Recommendation:
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Buy
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The best ride
you can have
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BAuto’s 4QFY4/16 core earnings beat expectations on better
sales mix. Nonetheless, we trim FY17-18 earnings forecasts by 3%-6% on
lower volume sales and unfavourable JPY/MYR forex. Our new TP is
MYR2.50 (-4%), on unchanged 13x CY17 EPS (+0.5SD). With the current
management taking over as the single largest shareholder under a SPV,
we see upside in dividends; thus raise our DPR assumption to 70% from
50% resulting in ~5% yield for FY17. Maintain BUY.
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FYE Apr (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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1,830.4
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2,112.2
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2,471.0
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2,578.7
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EBITDA
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290.1
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267.7
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262.3
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331.8
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Core net profit
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222.9
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201.8
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186.9
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236.9
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Core EPS (sen)
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19.5
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17.6
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16.3
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20.7
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Core EPS growth (%)
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58.0
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(10.0)
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(7.4)
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26.8
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Net DPS (sen)
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12.1
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16.9
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11.4
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14.5
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Core P/E (x)
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11.9
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13.2
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14.2
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11.2
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P/BV (x)
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5.6
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5.0
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4.5
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4.0
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Net dividend yield (%)
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5.2
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7.3
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4.9
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6.2
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ROAE (%)
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54.5
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40.1
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33.4
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38.0
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ROAA (%)
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32.9
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23.9
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19.3
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23.0
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EV/EBITDA (x)
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10.4
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8.2
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9.1
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7.1
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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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MACRO RESEARCH
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Corporate Day
by Chew
Hann Wong
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Brexit:
Assessing the impact on Malaysian PLCs
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Global markets are increasingly jittery ahead of the
Brexit referendum on 23 Jun after recent polls suggest that the odds
are tilting towards a ‘leave’, rather than a ‘remain’ outcome.
Malaysian PLCs’ exposure to the UK is largely via investments in property
developments, regulated assets and casino operations. A potentially
slower UK economy (or even a recession) and a weaker GBP resulting
from a Brexit will be negative. Nonetheless, the impact on Malaysian
PLCs is limited to just a few.
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Technical Research
by Lee
Cheng Hooi
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Sentiment
remains fragile
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The FBMKLCI fell by 3.66 points to close at 1,626.11
yesterday, while the FBMEMAS and FBM100 declined 17.00 and 15.40
points respectively. In terms of market breadth, the gainer-to-loser
ratio was 278-to-486 while 367 counters were unchanged. A total of 1.47b
shares were traded valued at MYR1.62b.
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NEWS
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Outside Malaysia:
U.S: Retail sales in May rise more than forecast as
consumers spend. The 0.5% increase in purchases followed a 1.3% jump the
previous month that was the biggest gain in a year, Commerce Department
figures showed. Excluding purchases of autos and gasoline, sales climbed
0.3%. (Source: Bloomberg)
Brazil: Retail sales climb in April as consumer confidence
rises and economists forecast Latin America’s largest economy may emerge
from recession quicker than initially thought. Sales rose 0.5% in April
after a 0.9% drop the prior month, the national statistics agency said.
Sales plunged 6.7% YoY in April versus the same month in 2015. (Source:
Bloomberg)
U.K: BOE loans banks USD 3.5b in EU referendum liquidity
push. Banks took GBP 2.46b (USD 3.5b) in the first of three extra
liquidity operations the Bank of England is holding this month as it
looks to shore up funding as the U.K. considers its future in the
European Union. Governor Mark Carney is offering the cash -- in exchange
for collateral -- as a precaution to help ensure the smooth functioning
of sterling markets. The take up didn’t show a rush for liquidity in the
week before the vote, with the total less than the average of GBP 2.95b
allocated at the previous six regular indexed long-term repo operations. (Source:
Bloomberg)
China: Yuan declines to five-year low as concern over
outflows deepens. China’s yuan weakened to a five-year low, weighed down
by signs of a slowing economy and concern that capital outflows may
accelerate. The currency fell 0.19% to 6.5966 per dollar by the close on
Tuesday in Shanghai, according to quotes from China Foreign Exchange
Trading System. That’s the lowest for the yuan since February 2011 and
extending its drop over the past month to 1%. The decline came before
MSCI Inc. decided against including mainland shares in benchmark indexes.
The offshore yuan weakened to as low as 6.6155 after the announcement,
the lowest since February, before paring declines. (Source: Bloomberg)
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Other News:
Construction: Consortium Zenith BUCG Sdn Bhd faces delay
in Penang. The company, which is facing a delay in its MYR6.3b major
roads and undersea tunnel project in Penang, served a legal notice on
Monday against Parti Cinta Malaysia’s vice-president Datuk Huan Cheng
Guan for defamation. Construction work for the three major roads has been
delayed while the feasibility study for the undersea tunnel has been
halted. The state government is to decide whether the undersea tunnel
will be cancelled or replaced by a third bridge. To date, the consortium
has spent close to MYR100m on the feasibility study and detailed design,
for which it has not been paid yet. (Source: The Edge Financial Daily)
Felda Global Ventures: Calls off plan for biodegradable
plastics production. The company will not proceed with its proposed plan
to produce biodegradable plastics from palm oil biomass waste in
Malaysia. The reason for the termination of the MoU announced last
December is because the company were unable to reach acceptable agreement
terms with other parties to the MoU, Newlight Technologies LLC and
Innogas Technologies Sdn Bhd. (Source: The Star)
RHB Bank: Demands payment from MPCorp. The bank is
demanding MYR118.16m from Malaysia Pacific Corp(MPCorp) in debt payment,
along with interests and costs granted by the High Court on Apr 11.
Persuant to Section 218(2)(a) of the Companies Act 1965, MPCorp shall be
deemed unable to pay its debts if MPCorp fails to comply with the terms
within 21 days and winding-up proceedings may thereafter be commenced
against MPCorp. (Source: The Star)
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