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Share
Price:
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MYR8.90
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Target
Price:
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MYR11.10
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Recommendation:
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Buy
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Mixed bag of
results from TRx-237-015
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21%-owned TauRX released results for its mild to moderate
Alzheimer’s study yesterday. It was unsuccessful overall as the drug,
LMTX, did not work well with other drugs. That said, patients who
treated with LMTX alone reported positive results. We believe LMTX will
be commercialised eventually. Our TP employs 0% discount to SOP/sh to
reflect potential monetization of LMTX. Also, downside risk appears
limited as GENT is trading at 20% discount to SOP/sh or in-line with
its historical mean.
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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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18,216.5
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18,100.4
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19,368.0
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21,874.1
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EBITDA
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6,627.5
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5,685.4
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6,793.8
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8,524.9
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Core net profit
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1,777.4
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1,524.2
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1,785.4
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2,670.6
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Core FDEPS (sen)
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46.2
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40.9
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43.4
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63.2
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Core FDEPS growth(%)
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1.5
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(11.5)
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6.1
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45.8
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Net DPS (sen)
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4.0
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3.5
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3.7
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5.4
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Core FD P/E (x)
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19.3
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21.8
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20.5
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14.1
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P/BV (x)
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1.2
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1.0
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1.0
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0.9
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Net dividend yield (%)
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0.4
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0.4
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0.4
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0.6
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ROAE (%)
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6.8
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5.1
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5.3
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7.5
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ROAA (%)
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2.5
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1.9
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2.0
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2.9
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EV/EBITDA (x)
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7.3
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7.9
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7.8
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6.2
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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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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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The FBMKLCI rose 2.14 points to close at 1,663.56
yesterday and the FBMEMAS and the FBM100 gained 22.43 points and
19.38 points respectively. In terms of market breadth, the
gainer-to-loser ratio was 431-to-343, while 371 counters were
unchanged. A total of 1.75b shares were traded valued at MYR1.71b.
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NEWS
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Outside Malaysia:
U.S: Fed begins crawl toward rate hike as near-term risks
diminish. Federal Reserve policy makers took a step toward raising
interest rates later this year but stopped short of signaling that the
move could come as soon as September. Federal Open Market Committee
members upgraded their assessment of the economy in their monetary policy
statement. They declared that near-term risks to the outlook have
diminished and said labor utilization has shown “some increase,” though
inflation remains too low. (Source: Bloomberg)
U.S: Pending sales existing homes rise less than forecast
in June as a lack of supply and rising prices offset the benefits from
historically low mortgage rates. Pending home sales gauge rose 0.2% after
falling 3.7% the prior period. Index saw a 0.3% YoY rise compared to June
2015 on an unadjusted basis. Pending sales climbed 3.2% in the Northeast
and 0.8% in the Midwest. (Source: Bloomberg)
U.K: Retail sales fell at the fastest pace in more than
four years in July, signaling caution among consumers after the Brexit
vote last month. The Confederation of British Industry said its monthly
retail sales index dropped to minus 14, the lowest since January 2012 -
from 4 in June. A gauge of the outlook showed stores anticipate a similar
decline next month. (Source: Bloomberg)
U.K: Consumer confidence plummeted this month to its
lowest level in three years and more households believe they will be
worse off as a result of the Brexit referendum result. Two surveys
suggest Britons have become more concerned since the vote to leave the
European Union in June, with a sentiment index by YouGov and the Centre
for Economics and Business Research falling to 106.6, the lowest since
July 2013, from 111.3. (Source: Bloomberg)
Crude Oil: Trades near USD42/bbl after unexpected increase
in crude supply. Oil traded near the lowest close in three months after
government data showed U.S. crude stockpiles unexpectedly climbed last
week, adding to a global glut of supply. Crude inventories rose 1.67
million barrels last week, ending 9 weeks of declines, according to an
Energy Information Administration report released. Gasoline stockpiles
rose for the third week as refineries reduced operating rates, which had
been at the highest level of the year. (Source: Bloomberg)
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Other News:
Aviation: Malaysia Airlines announces MYR22.4b aircraft
deal. Malaysia Airlines has announced an order for 50 Boeing 737 MAX
aircraft valued at USD5.5B (MYR22.4b) at current list prices. The deal
consists of 25 firm orders and 25 purchase rights. Deliveries of a mix of
Boeing 737 MAX 9 and Boeing 737 MAX 8 aircraft will commence in 2019. CEO
Peter Bellew said the deal is a game-changer for Malaysia Airlines with
much lower costs and greater efficiency, which will be passed on to
customers with lower fares. (Source: The Sun Daily)
Kerjaya Prospek: Bags MYR338.8m construction job in Mont
Kiara. Kerjaya Prospek has been awarded a construction contract for
MYR338.8m for the main building works for a mixed development project
known as “Arte Mont Kiara” in Kuala Lumpur- via a joint venture between
Nusmetro Property Sdn Bhd and Naza TTDI Sdn Bhd (Nusmetro-Naza TTDI JV).
Kerjaya Prospek said construction works are scheduled to commence in
September, with completion in October 2019. The company has secured
MYR1.43b YTD, surpassing its internal orderbook replenishment target of
MYR600m for 2016. (Source: The Edge Financial Daily)
Barakah Offshore: Awarded job worth MYR38.2m. The company
wholly-owned subsidiary, PBJV Group Sdn Bhd, has been awarded the 2016
work scope in SKO Field, Sarawak, valued at MYR38.2m. The company said
the work scope involved the transportation and installation of 10 riser
guards to seven platforms in SKO Field over four months. It aslo said
risk factors affecting the work scope include, but not limited to,
execution risks such as availability of skilled manpower and materials
and changes in prices of materials. (Source: The Star)
Datasonic: Aims to reduce dependency on government
contracts. Datasonic intends to re-balance the revenue contribution from
its government and non-government clientele in the next five to 10 years.
Its deputy managing director Chew Ben Ben said the group will focus on
the financial industry, leveraging on the migration of the credit card
and debit card from CVV (card verification value) to password to achieve
this target. According to Chew, 87% of Datasonic revenue derived from
government sector, while 13% from the private sector. Datasonic’s order
book currently stands at MYR1b. The group is also targeting to clinch another
MYR800m worth of contracts. (Source: The Edge Financial Daily)
Genting: Wants to move forward with Miami project. Genting
Malaysia subsidiary Resorts World Miami's consultant's letter to the
Miami-Dade County, reported that Genting Malaysia had floated an
"unusual proposal" to the regulator. It asks the county's
Department of Regulatory and Economic Resources to allow the company to
transfer existing boat-slip permits from properties on the Miami River
owned by a scion of the Matheson family to the casino operator’s
waterfront site. The casino giant originally announced plans for a
massive gambling resort on the property, including a big marina, but
those foundered when the Florida Legislature failed to legalise casino
gambling. (Source: The Edge Financial Daily)
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