Tuesday, August 30, 2016

UMWH Holdings (UMWH MK; SELL; TP: MYR4.65) - Swung to core net loss in 2Q16


UMWH Holdings (UMWH MK; SELL; TP: MYR4.65) - Swung to core net loss in 2Q16
  • Negatively surprised by higher taxes. UMWH’s 1H16 pre-tax profit (70% of our FY16 forecast) is in-line as we expect 2H16 pre-tax profit to weaken mainly from higher auto A&P expenses and lower O&G activities. Nonetheless, 1H16 core earnings surprised negatively on higher-than-expected taxes; further clarification needed from management. No dividend was declared in 2Q16. We cut FY16 net profit forecast by 48% to reflect high taxes in 1H16; FY17/18 estimates are unchanged. Valuations are expensive. Maintain SELL; MYR4.65 SOP-based TP unchanged.
  • Cut FY16 earnings by 48% on higher 1H16 taxes. On the back of stiff competition, UMW Toyota has offered substantial discounts in its recent Merdeka sales campaign (MYR1.5-8.0k per unit depending on models).  Along with year-end sales campaign, we believe that auto margins will be impacted by higher A&P expenses, leading to weaker 2H16 auto earnings – no changes in our estimates. Nonetheless, we impute higher taxes, due to certain expenses not allowable for tax purpose, into FY16 forecast; further clarity needed from management. For now, we expect taxes to normalise in 2H16 (24% corporate tax).

· US dollar held firm post Jackson Hole. Oil prices retreated as doubts emerged.


Highlights of today’s AmBank FX Daily Outlook as follow:-

·         US dollar held firm post Jackson Hole. Oil prices retreated as doubts emerged.
·         MYR to hover in the range of 4.02-4.05 against US dollar. 
·         Key watch:- (i) US consumer confidence, (ii) US Fed’s Fischer speaking, (iii) UK mortgage approvals and (iv) BoK’s policy minutes.

IOI Properties: Secures Xiamen land for MYR1.4b in competitive bidding. IOI Properties Group (IOI Prop) has






Hong Leong Financial Group | Waiting for the sale of HLA
Desmond Ch'ng







Hong Leong Bank | FY16 results within expectations
Desmond Ch'ng







CIMB Group Holdings | 2Q16 results in line
Desmond Ch'ng







Ta Ann | Cut in logs export quota
Li Shin Chai







UMW Holdings | 2Q16: Swung to core net loss
Ivan Yap














Felda Global Ventures | Core losses narrowed in 2Q16
Chee Ting Ong







Nestle Malaysia | A dancing giant
Liew Wei Han







Sunway | Earnings on track
Wei Sum Wong







KPJ Healthcare | 2Q16: Below expectations
Adrian Wong







TSH Resources | Temporary weakness
Li Shin Chai







7-Eleven Malaysia Holdings | Fairly valued for now
Liew Wei Han







Sarawak Oil Palms | Results above expectations
Chee Ting Ong







Kimlun Bhd | 2Q16: Above expectation
Li Shin Chai







Harbour-Link Group | Unexciting for now
Yen Ling Lee







Eversendai Corp | Lumpy earnings
Li Shin Chai








break


COMPANY RESEARCH





Rating Change





Hong Leong Financial Group (HLFG MK)
by Desmond Ch'ng





Share Price:
MYR16.10
Target Price:
MYR17.10
Recommendation:
Hold




Waiting for the sale of HLA

While we do not rule out the possibility of a higher price to be paid for HLA if the deal goes through, HLFG’s share price has risen 10% since the deal was announced and with an upside of just 6% to our revised SOP-TP of 17.10 (+10sen upon updating recent valuation parameters), we are downgrading HLFG to a HOLD as we await the outcome of negotiations.



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Operating income
4,490.9
4,543.3
4,783.5
5,045.1
Pre-provision profit
2,490.7
2,258.9
2,557.0
2,732.6
Core net profit
1,543.6
1,489.5
1,540.9
1,618.4
Core FDEPS (MYR)
1.48
1.43
1.48
1.55
Core FDEPS growth(%)
(9.6)
(3.5)
3.5
5.0
Net DPS (MYR)
0.38
0.38
0.39
0.41
Core FD P/E (x)
10.9
11.3
10.9
10.4
P/BV (x)
1.3
1.2
1.1
1.1
Net dividend yield (%)
2.4
2.4
2.4
2.5
Book value (MYR)
12.45
13.37
14.31
15.31
ROAE (%)
12.6
10.5
9.7
9.5
ROAA (%)
0.8
0.7
0.7
0.7










Results Review





Hong Leong Bank (HLBK MK)
by Desmond Ch'ng





Share Price:
MYR13.12
Target Price:
MYR15.00
Recommendation:
Buy




FY16 results within expectations

HL Bank’s FY6/16 results were within expectations. Fundamentals remain solid with superior asset quality and comfortable capital positions. Positively as well is that Bank of Chengdu’s asset quality appears to have stabilized. Management’s FY17 ROE target of 10-11% is within reach, in our view, and we maintain a BUY call on HL Bank with an unchanged TP of MYR15.00 (1.4x CY17 PBV, 10% ROE).



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Operating income
4,066.9
4,177.9
4,403.5
4,651.5
Pre-provision profit
2,253.1
2,263.1
2,414.1
2,584.0
Core net profit
2,233.2
2,075.4
2,141.3
2,242.8
Core EPS (MYR)
1.31
1.09
1.03
1.07
Core EPS growth (%)
5.9
(16.7)
(5.7)
4.7
Net DPS (MYR)
0.41
0.41
0.42
0.44
Core P/E (x)
10.0
12.1
12.8
12.2
P/BV (x)
1.5
1.3
1.3
1.3
Net dividend yield (%)
3.1
3.1
3.2
3.4
Book value (MYR)
8.93
9.74
10.09
10.47
ROAE (%)
14.3
11.0
10.0
10.1
ROAA (%)
1.3
1.1
1.1
1.1










Results Review





CIMB Group Holdings (CIMB MK)
by Desmond Ch'ng





Share Price:
MYR4.80
Target Price:
MYR4.70
Recommendation:
Hold




2Q16 results in line

Against an earlier ROE target of 10%, management now expects to settle the year about in line with consensus, i.e. at a 9% ROE. Our earnings forecasts are unchanged and we forecast an ROE of 8.6% for FY16. HOLD maintained but with a more stable operating outlook, our TP is raised to MYR4.70 from MYR4.10, on the back of a higher FY17 P/BV peg of 0.9x versus 0.8x previously.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Operating income
14,145.9
15,395.8
15,806.4
16,600.6
Pre-provision profit
5,854.0
6,146.8
6,650.1
7,126.7
Core net profit
3,159.0
3,411.2
3,647.5
3,875.6
Core EPS (MYR)
0.38
0.40
0.42
0.44
Core EPS growth (%)
(31.1)
5.6
3.8
6.3
Net DPS (MYR)
0.15
0.14
0.18
0.19
Core P/E (x)
12.6
11.9
11.5
10.8
P/BV (x)
1.1
1.0
0.9
0.9
Net dividend yield (%)
3.1
2.9
3.8
4.0
Book value (MYR)
4.53
4.87
5.06
5.31
ROAE (%)
9.3
8.7
8.6
8.6
ROAA (%)
0.8
0.8
0.8
0.8










Rating Change





Ta Ann (TAH MK)
by Li Shin Chai





Share Price:
MYR3.64
Target Price:
MYR3.75
Recommendation:
Hold




Cut in logs export quota

The strong QoQ rebound in Ta Ann’s 2Q16 results were in line. We expect stronger earnings in 2H16 on seasonally stronger FFB output. However, Sarawak’s reduced log export quota to 30% from 40% disclosed yesterday was a negative surprise. Positively, Ta Ann’s oil palm plantation division would provide buffer to earnings. We revise our log export and plywood production forecasts for this structural change resulting in lower 2016-18 EPS by 7-11%. Our new TP is MYR3.75 (-6%). Ta Ann is now a HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,020.7
1,046.8
1,009.5
1,081.0
EBITDA
243.2
323.9
249.8
265.7
Core net profit
110.6
185.9
111.0
120.7
Core EPS (sen)
24.9
41.8
25.0
27.1
Core EPS growth (%)
82.6
68.1
(40.3)
8.7
Net DPS (sen)
16.7
16.7
11.2
12.2
Core P/E (x)
14.6
8.7
14.6
13.4
P/BV (x)
1.5
1.4
1.3
1.2
Net dividend yield (%)
4.6
4.6
3.1
3.4
ROAE (%)
10.7
16.6
9.2
9.5
ROAA (%)
6.0
9.6
5.6
6.2
EV/EBITDA (x)
6.9
6.3
7.1
6.6
Net debt/equity (%)
18.7
12.3
9.1
7.7










Results Review





UMW Holdings (UMWH MK)
by Ivan Yap





Share Price:
MYR5.85
Target Price:
MYR4.65
Recommendation:
Sell




2Q16: Swung to core net loss

UMWH’s 1H16 pre-tax profit (70% of our FY16 forecast) is in-line as we expect 2H16 pre-tax profit to weaken mainly from higher auto A&P expenses and lower O&G activities. Nonetheless, 1H16 core earnings surprised negatively on higher-than-expected taxes; further clarification needed from management. No dividend was declared in 2Q16. We cut FY16 net profit forecast by 48% to reflect high taxes in 1H16; FY17/18 estimates are unchanged. Maintain SELL; MYR4.65 SOP-based TP unchanged.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
14,932.5
14,441.6
9,993.4
11,298.5
EBITDA
1,811.7
646.3
570.3
762.4
Core net profit
850.3
424.8
51.5
194.3
Core EPS (sen)
72.8
36.4
4.4
16.6
Core EPS growth (%)
13.0
(50.0)
(87.9)
277.2
Net DPS (sen)
41.0
25.0
2.2
8.3
Core P/E (x)
8.0
16.1
132.7
35.2
P/BV (x)
1.0
1.0
1.0
1.0
Net dividend yield (%)
7.0
4.3
0.4
1.4
ROAE (%)
13.2
6.5
0.8
2.9
ROAA (%)
5.5
2.4
0.3
1.1
EV/EBITDA (x)
9.1
23.6
24.0
18.7
Net debt/equity (%)
12.4
49.8
61.6
69.5










Results Review





AirAsia Bhd (AIRA MK)
by Mohshin Aziz





Share Price:
MYR2.99
Target Price:
MYR3.04
Recommendation:
Hold




Splendid 1H16, onwards to a more challenging 2H16

2Q16 core earning was MYR225m (+6.7x YoY, -51% QoQ) after adjusting for FX-translation, derivative MTM and other non-cash items. This was in line and accounted for 56% of our full-year forecast. The outlook in 2H16 will be more challenging on rising competitive pressures that will impact on yields. Our earnings forecasts, HOLD call and TP of MYR3.04 are unchanged, the latter pegged to 8x 2016 PER, which represents the lower end of airline cycle as we think earnings will peak in 2016.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
5,415.7
6,299.1
6,575.8
6,654.7
EBITDAR
1,732.3
2,617.4
2,897.9
2,471.4
Core net profit
33.2
178.8
1,262.5
1,049.5
Core EPS (sen)
1.2
6.4
37.8
31.4
Core EPS growth (%)
(91.1)
437.6
488.1
(16.9)
Net DPS (sen)
0.0
0.0
13.0
7.0
Core P/E (x)
250.2
46.5
7.9
9.5
P/BV (x)
1.8
1.9
1.5
1.3
Net dividend yield (%)
0.0
0.0
4.3
2.3
ROAE (%)
0.7
4.0
22.5
14.7
ROAA (%)
0.2
0.9
5.8
4.6
EV/EBITDAR (x)
10.9
5.3
6.1
6.9
Net debt/equity (%)
249.9
228.8
113.0
93.5










TP Revision





Felda Global Ventures (FGV MK)
by Chee Ting Ong





Share Price:
MYR2.10
Target Price:
MYR1.80
Recommendation:
Hold




Core losses narrowed in 2Q16

2Q16 core results disappointed again but the new CEO’s deliverables to stop M&As, cut costs and boost earnings should see stronger 2H16 earnings. Share price rose 40% since Dato’ Zak was appointed as CEO on 1 Apr. But market will now await actual earnings delivery as FGV trades at 30x 2017 PER. Maintain HOLD but with a higher TP of MYR1.80 pegged at 1x PBV (previously MYR1.33 TP on 1x PNTA) to reflect reform initiatives.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
16,434.3
15,669.7
16,130.9
16,354.4
EBITDA
1,293.9
957.4
978.3
1,180.3
Core net profit
95.7
(171.8)
140.3
251.6
Core EPS (sen)
2.6
(4.7)
3.8
6.9
Core EPS growth (%)
545.6
nm
nm
79.4
Net DPS (sen)
10.0
4.0
2.3
4.1
Core P/E (x)
80.0
nm
54.6
30.4
P/BV (x)
1.2
1.2
1.2
1.2
Net dividend yield (%)
4.8
1.9
1.1
2.0
ROAE (%)
1.5
(2.7)
2.2
3.8
ROAA (%)
0.5
(0.8)
0.7
1.2
EV/EBITDA (x)
9.0
12.4
13.9
11.8
Net debt/equity (%)
18.8
47.8
51.4
53.5










Company Update





Nestle Malaysia (NESZ MK)
by Liew Wei Han





Share Price:
MYR78.50
Target Price:
MYR78.00
Recommendation:
Hold




A dancing giant

Into 2H16, domestic sales should continue to pick up on gradual normalisation of consumer demand. Export sales should also post healthy growth on new product launches to neighbouring countries, partly supported by its halal status which is one the drivers of growth. Valuation wise, NESZ is trading fair now, about in line with its 5-year mean. We have tweaked our earnings forecasts by +2% p.a. for FY16-18, on lower raw material costs and tax rates, resulting in a higher TP by 1%.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
4,808.9
4,838.0
5,152.4
5,554.3
EBITDA
837.2
886.0
1,025.6
1,080.6
Core net profit
550.4
590.7
670.1
694.2
Core EPS (sen)
234.7
251.9
285.8
296.1
Core EPS growth (%)
(2.0)
7.3
13.4
3.6
Net DPS (sen)
235.0
260.0
282.9
293.1
Core P/E (x)
33.4
31.2
27.5
26.5
P/BV (x)
23.7
26.0
25.7
25.5
Net dividend yield (%)
3.0
3.3
3.6
3.7
ROAE (%)
69.1
79.5
94.1
96.6
ROAA (%)
25.1
24.7
26.3
26.1
EV/EBITDA (x)
19.4
19.8
18.2
17.3
Net debt/equity (%)
20.4
47.4
42.6
37.9










Results Review





Sunway (SWB MK)
by Wei Sum Wong





Share Price:
MYR3.01
Target Price:
MYR3.37
Recommendation:
Hold




Earnings on track

Sunway’s 1H16 core net profit came in as expected. 1H16 effective locked-in property sales were also within expectations. Elsewhere, Sunway’s construction unit, SCG’s job wins is close to its MYR2.5b target for 2016; SCG’s orderbook replenishment outlook remains positive. We fine-tune our earnings forecasts for Sunway by up to +2.5% but maintain our MYR3.37 RNAV-TP (on unchanged 40% discount to RNAV). HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
4,841.9
4,451.3
5,187.5
5,393.1
EBITDA
504.2
427.8
777.6
862.6
Core net profit
591.7
590.7
530.9
604.6
Core FDEPS (sen)
32.5
31.6
26.4
30.0
Core FDEPS growth(%)
20.7
(2.8)
(16.5)
13.9
Net DPS (sen)
11.0
37.0
8.7
9.0
Core FD P/E (x)
9.3
9.5
11.4
10.0
P/BV (x)
0.9
0.8
0.7
0.8
Net dividend yield (%)
3.7
12.3
2.9
3.0
ROAE (%)
10.5
9.5
7.5
7.7
ROAA (%)
4.9
4.1
3.2
3.5
EV/EBITDA (x)
15.6
21.8
12.6
13.0
Net debt/equity (%)
30.4
49.8
46.8
56.1










Results Review





KPJ Healthcare (KPJ MK)
by Adrian Wong





Share Price:
MYR4.30
Target Price:
MYR4.40
Recommendation:
Hold




2Q16: Below expectations

2Q16 results came in below our expectations largely on the back of higher expenses (material cost and ESOS charge). Inpatient numbers for the Malaysia operations also declined within the quarter (-3% YoY, -7 QoQ). We lower our earnings for FY16/FY17/FY18 by 6%/9%/9% to reflect the lower inpatient contribution and weaker earnings from its Thailand associate. Maintain HOLD with a lower SOP-based TP of MYR4.40 (-4%).



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,639.1
2,818.5
3,053.6
3,382.9
EBITDA
297.9
350.9
371.0
410.7
Core net profit
125.1
144.6
139.6
152.4
Core EPS (sen)
12.3
13.9
13.2
14.5
Core EPS growth (%)
20.5
13.3
(5.0)
9.2
Net DPS (sen)
7.5
5.3
6.6
7.2
Core P/E (x)
35.0
30.8
32.5
29.8
P/BV (x)
3.5
3.1
3.0
2.8
Net dividend yield (%)
1.7
1.2
1.5
1.7
ROAE (%)
10.7
10.7
9.4
9.8
ROAA (%)
4.1
4.0
3.5
3.7
EV/EBITDA (x)
16.1
16.0
15.7
14.4
Net debt/equity (%)
75.1
77.5
77.9
78.0










TP Revision





TSH Resources (TSH MK)
by Li Shin Chai





Share Price:
MYR1.91
Target Price:
MYR1.95
Recommendation:
Hold




Temporary weakness

TSH’s 2Q16 results disappointed due to shortfall in FFB output. We cut 2016-18 EPS forecasts by 6-18%. As EL Nino’s impact is temporary, TSH’s production yield is expected to normalise in 2017. TSH’s positive long term prospect remains intact with its vast unplanted landbank and 8% 3yr forward FFB output CAGR. Our revised TP of MYR1.95 (+11%) is based on 19x 2017 PER (previously 19x 2016 PER). TSH remains a HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,079.9
798.9
1,232.7
1,294.4
EBITDA
229.4
159.0
178.8
226.1
Core net profit
132.8
82.0
100.5
136.6
Core EPS (sen)
9.8
6.1
7.5
10.2
Core EPS growth (%)
19.5
(38.0)
22.6
35.8
Net DPS (sen)
2.5
2.0
2.2
3.0
Core P/E (x)
19.4
31.3
25.6
18.8
P/BV (x)
2.2
1.9
1.8
1.7
Net dividend yield (%)
1.3
1.0
1.2
1.6
ROAE (%)
11.8
6.4
7.2
9.2
ROAA (%)
5.3
2.8
3.1
4.0
EV/EBITDA (x)
18.4
25.8
23.2
18.4
Net debt/equity (%)
81.5
97.2
99.6
93.6










Company Update





7-Eleven Malaysia Holdings (SEM MK)
by Liew Wei Han





Share Price:
MYR1.51
Target Price:
MYR1.38
Recommendation:
Hold




Fairly valued for now

SSSG continues to see a gradual improvement since 2Q15 (a post GST implementation quarter). On store openings, it should play catch up in 2H16 to meet SEM’s target of 200 new stores for CY16. We keep our earnings forecasts, HOLD call, MYR1.38 TP (25x PER FY17; peer average).



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,893.1
2,006.3
2,179.2
2,497.3
EBITDA
130.9
126.5
141.9
162.8
Core net profit
58.1
55.8
60.2
68.2
Core EPS (sen)
4.7
4.6
4.9
5.6
Core EPS growth (%)
15.9
(3.3)
8.0
13.1
Net DPS (sen)
5.1
4.7
2.5
2.8
Core P/E (x)
32.1
33.2
30.7
27.1
P/BV (x)
7.9
10.9
9.2
7.9
Net dividend yield (%)
3.4
3.1
1.6
1.8
ROAE (%)
38.4
27.5
32.5
31.4
ROAA (%)
8.5
7.5
7.7
7.7
EV/EBITDA (x)
12.3
13.9
12.1
10.3
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





Sarawak Oil Palms (SOP MK)
by Chee Ting Ong





Share Price:
MYR3.66
Target Price:
MYR4.00
Recommendation:
Hold




Results above expectations

1H16 results were above expectations. While 2H16 upstream earnings could be stronger HoH, some of the downstream FV gains recorded in 1H16 could reverse in 2H. Thus, our EPS forecasts are unchanged. We have yet to factor in SOP’s recent proposed acquisition to be funded via rights issue (in part) which could result in EPS dilution by ~22% in FY17, capping SOP’s near term share price upside. HOLD with a revised TP of MYR4.00 on 16.5x 2016 PER, pegged at -1SD of of its historical mean.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,852.8
3,642.4
3,838.7
3,940.8
EBITDA
290.2
274.8
306.5
378.3
Core net profit
112.8
84.9
107.2
147.9
Core EPS (sen)
25.7
19.2
24.3
33.5
Core EPS growth (%)
19.7
(25.0)
26.2
38.0
Net DPS (sen)
5.0
3.8
4.9
6.7
Core P/E (x)
14.3
19.0
15.1
10.9
P/BV (x)
1.2
1.2
1.1
1.0
Net dividend yield (%)
1.4
1.1
1.3
1.8
ROAE (%)
8.8
6.2
7.5
9.6
ROAA (%)
4.3
3.0
3.6
4.7
EV/EBITDA (x)
9.7
9.8
7.7
6.1
Net debt/equity (%)
33.5
46.7
43.1
35.4










Results Review





Kimlun Bhd (KICB MK)
by Li Shin Chai





Share Price:
MYR1.82
Target Price:
MYR1.70
Recommendation:
Hold




2Q16: Above expectation

2Q16 results surprised positively on higher-than-expected construction and precast margins. We raise 2016 EPS forecast by 10% to reflect the 1H16 high margins, but maintain our 2017-18 forecasts. Trading at 12x 2017 PER, we believe Kimlun’s further job win prospect has been fairly priced in. Maintain HOLD at an 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
116.7
92.8
Core net profit
33.8
64.4
67.8
45.6
Core EPS (sen)
11.3
21.4
22.6
15.2
Core EPS growth (%)
(5.3)
90.5
5.3
(32.8)
Net DPS (sen)
3.5
6.4
6.1
4.1
Core P/E (x)
16.2
8.5
8.1
12.0
P/BV (x)
1.4
1.2
1.1
1.0
Net dividend yield (%)
1.9
3.5
3.3
2.3
ROAE (%)
9.7
15.0
14.0
8.7
ROAA (%)
3.8
6.8
6.8
4.3
EV/EBITDA (x)
5.0
4.2
5.1
6.2
Net debt/equity (%)
23.2
14.7
9.3
5.1










Company Update





Harbour-Link Group (HALG MK)
by Yen Ling Lee





Share Price:
MYR1.03
Target Price:
MYR1.07
Recommendation:
Hold




Unexciting for now

4QFY6/16 earnings were above our expectations due to the higher-than-expected property earnings. We expect HLG’s earnings to be weaker in FY6/17 on slower property earnings. Thus far, the infrastructure projects (especially Baleh hydro dam) have been slow and job awards to HLG may still take some time to materialise. We maintain our earnings forecasts, HOLD call and SOP-based TP of MYR1.07. HLG presently trades at 2017 PER of 8x, in-line with its historical mean PER.



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
507.0
592.7
603.2
614.6
EBITDA
97.4
133.3
115.3
114.7
Core net profit
48.2
59.0
51.2
54.0
Core EPS (sen)
12.0
14.7
12.8
13.5
Core EPS growth (%)
44.2
22.5
(13.3)
5.6
Net DPS (sen)
2.5
2.0
2.6
2.7
Core P/E (x)
8.6
7.0
8.1
7.6
P/BV (x)
1.5
1.3
1.1
1.0
Net dividend yield (%)
2.4
1.9
2.5
2.6
ROAE (%)
18.9
19.4
14.6
13.8
ROAA (%)
9.0
10.0
8.3
8.2
EV/EBITDA (x)
5.1
3.1
3.6
3.2
Net debt/equity (%)
net cash
0.5
net cash
net cash










Results Review





Eversendai Corp (EVSD MK)
by Li Shin Chai





Share Price:
MYR0.44
Target Price:
MYR0.64
Recommendation:
Hold




Lumpy earnings

1H16 core earnings were above expectations potentially due to lumpy earnings recognition. Nevertheless, its balance sheet remains a concern given its high gearing and receivables. Our earnings forecasts are unchanged pending an update with management. Our TP, also unchanged for now, pegs the stock to 0.5x P/B. Maintain HOLD.



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)
14.3
7.2
5.7
5.8
P/BV (x)
0.4
0.3
0.3
0.3
Net dividend yield (%)
2.8
1.1
1.4
1.4
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
5.8
5.4
Net debt/equity (%)
32.3
59.3
48.1
40.7








NEWS


Outside Malaysia:

U.S: Consumer spending advances for fourth consecutive month in July, bolstered by stronger income gains, sending the biggest part of the U.S. economy to a solid third- quarter start. Purchases climbed 0.3% (matching median estimate) after 0.5% rise that was revised up. Incomes grew 0.4% following 0.3% advance that was also revised up. Saving rate increased to 5.7% from 5.5%. (Source: Bloomberg)

Japan: Household spending and unemployment fall in July underscoring the weakness in domestic demand. The jobless rate was the lowest since 1995. Household spending fell 0.5% YoY in July, the statistics bureau said. Retail sales fell 0.2% YoY according to a trade ministry report. Compared with a month earlier, they rose 1.4% MoM. The unemployment rate was 3% in July. (Source: Bloomberg)

Crude Oil: U.S crude stockpiles seen expanding glut. Crude inventories probably increased by 1.5 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration. Market volatility will endure as rebalancing between supply and demand continues, according to oil-company executives gathering for one of the industry’s biggest conferences in Norway. Brent for October settlement fell 66 cents to USD 49.26/bbl on the London-based ICE Futures Europe exchange. (Source: Bloomberg)





Other News:

IOI Properties: Secures Xiamen land for MYR1.4b in competitive bidding. IOI Properties Group (IOI Prop) has successfully tendered for a 6.2-acre leasehold land in Xiang An central business district, Xiamen, for RMB22.324b (MYR1.4b) from the Xiamen Bureau of Land Resources and Real Estate Management. The group said that its 99.8% owned subsidiary IOI (Xiamen) Properties Co Ltd would undertake residential (57,200 sq m) and commercial development (3,000 sq m) as well as building a community service center on the land, located within an area proposed to be turned into an integrated eco city. (Source: The Star)

Melati Ehsan: Gets MYR99m Central Spine Road job. Melati Ehsan Holdings clinched a Central Spine Road Package 3 project worth MYR99m from the Public Works Department. The contract relates to the stretch from Gua Musang, Kelantan, to Kampung Relong, Pahang and is for a period of 39 months with expected date of completion on Sept 15, 2019. (Source: The Edge Financial Daily)

Barakah Offshore Petroleum: Bags another contract from Petronas. A consortium comprising Barakah Offshore’s unit PBJV Group Sdn Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and HQC Engineering Malaysia Sdn Bhd was awarded a job at Petroliam Nasional’s (Petronas) Refinery and Petrochemical Integrated Development project in Pengerang, Johor. The value of the contract for the consortium is estimated at MYR196m, of which the value to PBJV is estimated at around MYR39m. The contract is for the construction and commissioning of steel structure, piping, mechanical equipment, electrical and instrumentation erection, insulation and painting works at the petrochemical common utilities, interconnecting and offsite facilities. (Source: The Edge Financial Daily)


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