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Share
Price:
|
MYR7.50
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Target
Price:
|
MYR7.90
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Recommendation:
|
Buy
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2Q16 earnings on
track
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2Q16 results were within expectations as earnings were
mainly supported by the office and retail segments amid weakness at
Mandarin Oriental. A 2nd interim gross DPU of 8.6sen was also in line.
Maintain BUY with a DCF-TP of MYR7.90 (WACC: 7.1%, terminal yield: 7%).
KLCCP remains as our top sector pick with a 1-year forward gross DPU
yield of 5.3%.
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FYE Dec (MYR m)
|
FY14A
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FY15A
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FY16E
|
FY17E
|
|
Revenue
|
1,353.5
|
1,340.2
|
1,457.0
|
1,490.4
|
|
Net property income
|
1,011.9
|
1,004.2
|
1,184.8
|
1,207.9
|
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Distributable income
|
702.0
|
724.5
|
732.6
|
744.7
|
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DPU (sen)
|
33.6
|
34.6
|
37.5
|
38.1
|
|
DPU growth (%)
|
21.4
|
3.0
|
8.2
|
1.7
|
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Price/DPU(x)
|
22.3
|
21.6
|
20.0
|
19.7
|
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P/BV (x)
|
1.1
|
1.1
|
1.0
|
1.0
|
|
DPU yield (%)
|
4.5
|
4.6
|
5.0
|
5.1
|
|
ROAE (%)
|
5.9
|
5.9
|
5.7
|
5.5
|
|
ROAA (%)
|
4.2
|
4.2
|
4.1
|
4.1
|
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Debt/Assets (x)
|
0.1
|
0.1
|
0.2
|
0.2
|
|
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Share
Price:
|
MYR4.24
|
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Target
Price:
|
MYR3.80
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Recommendation:
|
Sell
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Weakening
financials
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|
1QFY3/17 results was weaker QoQ/YoY but still within
expectations. We expect earnings to improve sequentially on the easing
of competition, as reflected in our EPS forecasts. Given that the once
niche nitrile market of Hartalega can now be easily disrupted by the
other players, Hartalega’s premium valuation of 24x 2017 PER (above its
mean and peers’) is unwarranted. Maintain EPS forecasts, SELL call and
TP of MYR3.80 (21x 2017 PER; mean valuation).
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FYE Mar (MYR m)
|
FY15A
|
FY16A
|
FY17E
|
FY18E
|
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Revenue
|
1,146.0
|
1,489.3
|
1,666.2
|
1,809.7
|
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EBITDA
|
321.6
|
387.1
|
431.8
|
472.8
|
|
Core net profit
|
209.7
|
258.0
|
277.4
|
301.4
|
|
Core FDEPS (sen)
|
13.4
|
15.6
|
16.7
|
18.2
|
|
Core FDEPS growth(%)
|
(15.1)
|
16.5
|
7.5
|
8.6
|
|
Net DPS (sen)
|
6.5
|
9.0
|
8.5
|
9.2
|
|
Core FD P/E (x)
|
31.7
|
27.2
|
25.3
|
23.3
|
|
P/BV (x)
|
5.2
|
4.6
|
4.3
|
3.9
|
|
Net dividend yield (%)
|
1.5
|
2.1
|
2.0
|
2.2
|
|
ROAE (%)
|
19.0
|
18.6
|
17.7
|
17.7
|
|
ROAA (%)
|
16.4
|
15.1
|
13.2
|
12.8
|
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EV/EBITDA (x)
|
20.7
|
21.0
|
16.8
|
15.5
|
|
Net debt/equity (%)
|
net cash
|
10.9
|
19.4
|
21.4
|
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Share
Price:
|
MYR3.02
|
|
Target
Price:
|
MYR3.63
|
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Recommendation:
|
Buy
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Venturing into
Indonesia
|
|
We are unable to quantify SPSB’s latest JV in Indonesia
given the lack of details at this juncture. While the JV project offers
a new geographical diversification, margins could be thin as the
products to be offered are affordable housing. We maintain our earnings
forecasts, MYR3.63 TP (on an unchanged 0.7x P/RNAV) and BUY rating on
SPSB for now.
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|
FYE Dec (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
|
Revenue
|
3,810.1
|
6,746.3
|
5,493.6
|
6,244.1
|
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EBITDA
|
1,107.6
|
2,063.3
|
1,208.6
|
1,373.7
|
|
Core net profit
|
376.0
|
918.3
|
705.5
|
908.8
|
|
Core EPS (sen)
|
14.9
|
35.7
|
26.6
|
34.3
|
|
Core EPS growth (%)
|
(17.2)
|
140.1
|
(25.4)
|
28.8
|
|
Net DPS (sen)
|
9.7
|
23.0
|
15.6
|
19.0
|
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Core P/E (x)
|
20.3
|
8.5
|
11.3
|
8.8
|
|
P/BV (x)
|
1.0
|
0.8
|
0.7
|
0.6
|
|
Net dividend yield (%)
|
3.2
|
7.6
|
5.2
|
6.3
|
|
ROAE (%)
|
6.6
|
13.9
|
8.7
|
10.1
|
|
ROAA (%)
|
2.9
|
6.2
|
4.0
|
4.6
|
|
EV/EBITDA (x)
|
10.1
|
4.9
|
9.1
|
8.1
|
|
Net debt/equity (%)
|
32.5
|
19.5
|
17.0
|
18.0
|
|
|
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|
Share
Price:
|
MYR7.60
|
|
Target
Price:
|
MYR7.56
|
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Recommendation:
|
Hold
|
|
|
|
|
|
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Small property
JV in Indonesia
|
|
We are unable to quantify Sime’s latest property
development JV into greater Jakarta given the lack of details at this
juncture where Sime plans to own a 20%-equity stake. Margins could be
thin as the products to be offered are affordable housing. Investment
cost outlay and returns are likely to be immaterial to Sime given the
project’s relatively small GDV of MYR3.5b. Maintain HOLD and MYR7.56 TP
on 21x FY17 PER.
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|
|
|
|
|
|
FYE Jun (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
|
Revenue
|
43,908.0
|
43,729.0
|
44,355.0
|
47,944.2
|
|
EBITDA
|
5,270.9
|
4,659.7
|
4,034.1
|
4,394.3
|
|
Core net profit
|
3,352.7
|
2,313.8
|
1,756.5
|
2,235.5
|
|
Core EPS (sen)
|
55.3
|
37.3
|
28.3
|
36.0
|
|
Core EPS growth (%)
|
(10.2)
|
(32.6)
|
(24.1)
|
27.3
|
|
Net DPS (sen)
|
36.0
|
25.0
|
18.4
|
23.4
|
|
Core P/E (x)
|
13.7
|
20.4
|
26.9
|
21.1
|
|
P/BV (x)
|
1.6
|
1.5
|
1.5
|
1.5
|
|
Net dividend yield (%)
|
4.7
|
3.3
|
2.4
|
3.1
|
|
ROAE (%)
|
12.0
|
7.8
|
5.7
|
7.1
|
|
ROAA (%)
|
6.8
|
4.1
|
2.7
|
3.3
|
|
EV/EBITDA (x)
|
12.5
|
14.6
|
14.9
|
14.1
|
|
Net debt/equity (%)
|
22.0
|
45.8
|
37.9
|
41.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Price:
|
MYR0.30
|
|
Target
Price:
|
MYR0.11
|
|
Recommendation:
|
Sell
|
|
|
|
|
|
|
|
|
Assessing the
Swiber effect
|
|
Swiber’s plan to restructure and operate under judicial
management could see Alam buying out its stake in their JVs or a new
partner(s) taking over from Swiber. The JVs are working well. Alam has
the financial clout to leverage on any fire-sale of the JVs. Overall,
these JVs are small relative to Alam’s entire operations. Optimising
costs and OSV utilisation and preserving cash flows remain key.
Surviving through this down cycle is paramount. Our TP is on 10x 2017
PER (unchanged).
|
|
|
|
|
|
|
FYE Dec (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
|
Revenue
|
391.6
|
350.2
|
226.7
|
256.0
|
|
EBITDA
|
81.5
|
71.9
|
47.4
|
54.4
|
|
Core net profit
|
56.2
|
63.1
|
1.2
|
9.9
|
|
Core EPS (sen)
|
6.4
|
6.8
|
0.1
|
1.1
|
|
Core EPS growth (%)
|
(24.7)
|
5.9
|
(98.1)
|
721.5
|
|
Net DPS (sen)
|
0.0
|
0.0
|
0.0
|
0.0
|
|
Core P/E (x)
|
4.7
|
4.4
|
231.3
|
28.2
|
|
P/BV (x)
|
0.3
|
0.3
|
0.3
|
0.3
|
|
Net dividend yield (%)
|
0.0
|
0.0
|
0.0
|
0.0
|
|
ROAE (%)
|
7.8
|
7.4
|
0.1
|
1.1
|
|
ROAA (%)
|
3.9
|
4.9
|
0.1
|
0.8
|
|
EV/EBITDA (x)
|
7.7
|
6.5
|
6.1
|
4.8
|
|
Net debt/equity (%)
|
9.1
|
8.2
|
1.2
|
net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Price:
|
MYR4.31
|
|
Target
Price:
|
MYR4.60
|
|
Recommendation:
|
Hold
|
|
|
|
|
|
|
|
|
Possible foray
into Oncology
|
|
We are neutral on KPJ’s MoU with Sojitz and Capital Medica
to operate and develop an Oncology centre at KPJ’s Bumi Serpong Damai
Hospital given an investment cost of just USD12m for the entire
venture. We currently do not see a material impact to KPJ’s FY17 net
gearing level as well. Maintain HOLD with an unchanged TP of MYR4.60.
|
|
|
|
|
|
|
FYE Dec (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
|
Revenue
|
2,639.1
|
2,818.5
|
3,119.6
|
3,499.5
|
|
EBITDA
|
297.9
|
350.9
|
381.4
|
428.9
|
|
Core net profit
|
125.1
|
144.6
|
149.1
|
167.4
|
|
Core EPS (sen)
|
12.3
|
13.9
|
14.4
|
16.1
|
|
Core EPS growth (%)
|
20.5
|
13.3
|
3.1
|
12.2
|
|
Net DPS (sen)
|
7.5
|
5.3
|
7.2
|
8.1
|
|
Core P/E (x)
|
35.0
|
30.9
|
30.0
|
26.7
|
|
P/BV (x)
|
3.5
|
3.1
|
2.9
|
2.8
|
|
Net dividend yield (%)
|
1.7
|
1.2
|
1.7
|
1.9
|
|
ROAE (%)
|
10.7
|
10.7
|
10.0
|
10.7
|
|
ROAA (%)
|
4.1
|
4.0
|
3.7
|
4.0
|
|
EV/EBITDA (x)
|
16.1
|
16.0
|
15.1
|
13.6
|
|
Net debt/equity (%)
|
75.1
|
77.5
|
77.4
|
76.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEWS
|
|
|
Outside Malaysia:
U.S: Consumer spending rose for second month in June,
exceeding a gain in incomes that prompted American households to tap into
savings. The 0.4% advance in spending followed a similar gain in the
previous month, a Commerce Department report showed. Incomes rose a
less-than- projected 0.2%, while the saving rate declined to a more than
one-year low. (Source: Bloomberg)
Brazil: Industry expands for fourth month in June as
confidence grows. Production rose 1.1% in June from the previous month.
Four of the five previous months’ figures were revised upward, including
the result for May which marked a 0.4% expansion from a previously
reported zero growth. From a year earlier, industrial production fell 6%
YoY, the national statistics agency said. (Source: Bloomberg)
U.K: Construction shrank the most since the financial
crisis in July, with companies citing uncertainty related to Brexit for
the continued weakness. Markit Economics said it’s Purchasing Managers
Index for construction activity slipped to 45.9 from 46 in June. That’s
the lowest since June 2009, when the economy was last in a recession. All
three sectors -- housing, commercial and civil engineering -- recorded
sub-50 readings, indicating contraction. The survey comes as Bank of
England policy makers meet to discuss the outlook and consider the
stimulus they may need to prop up the economy. (Source: Bloomberg)
Japan: Government announced JPY 4.6t (USD 45b) in extra
spending for the current fiscal year, as Prime Minister Shinzo Abe seeks
to bolster the economy without abandoning targets for improving fiscal
health. The spending, approved by the cabinet, is part of what Abe
flagged in a speech last week as a JPY 28t stimulus package, saying more
investment was needed to expand the world’s third-largest economy. He
said funds would be used to provide better port facilities for cruise
ships and accelerate the construction of a high-speed maglev train line.
The plan incorporates JPY 13.5t of fiscal measures - including JPY 7.5t
in new spending starting this year, and JPY 6t in low-cost loans.
(Source: Bloomberg)
Crude Oil: Trades near USD 40/bbl as global economic
concern mounts amid glut. Brent crude entered a bear market, joining the
U.S. benchmark, as investors turned risk averse, sending U.S. stocks to their
biggest drop in four weeks. The industry-funded American Petroleum
Institute was said to report U.S. crude supplies fell 1.34 million
barrels last week. Oil has tumbled more than 20% from its peak in June,
meeting the common definition of a bear market and halting a recovery
that saw prices almost double from a 12-year low in February. The supply
glut is upsetting industry expectations, with BP Plc, Royal Dutch Shell
Plc and Exxon Mobil Corp. reporting second-quarter earnings last week
that were worse than estimated. (Source: Bloomberg)
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|
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|
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|
|
Other News:
REIT: Plan to further liberalise REIT market supported.
The SC’s proposals to further liberalise the Malaysian real estate
investment trusts (M-REITs) market, pending clarification with SC on
certain proposals as well as collating final feedback from its members is
fully supported by the Malaysian REIT Managers Association (MRMA).
According to MRMA Chairman Datuk Jeffrey Ng, the 16 proposals by the SC
will expand the scope of permissible activities, significantly enhance
corporate governance on M-REITs’ disclosure and streamline the efficiency
in post-listing requirements. He also mentioned that the related
perceived risks associated with SC’s proposal to allow M-REIT to acquire
vacant land (subject to 15% of the enlarged total asset value of the REIT
cap) should not be a major concern. Based on the current REIT guidelines,
REIT managers are exposed to construction risk when they embark on
refurbishment exercises or acquire property under construction. This is
further mitigated by prescriptive requirements in managing construction
risk. (Source: The Sun Daily)
Oil and Gas: Petronas may delay Canadian LNG project.
According to The Wall Street Journal (WSJ), the company is considering to
delay a Canadian LNG project due to concerns on the oversupply and cheap
competing fuels. To date, Petronas had put up about a third of the
estimated USD27.5b (MYR11.37b) cost for the Pacific North West LNG
project in British Columbia. According to plan, the commercial operations
is to begin in 2019. As written in WSJ, the following move would be for
Petronas and its partners-Brunei National Petroleum Co, China Petroleum
& Chemical Corp, Indian Oil Corp and Japan Petroleum Exploration Co,
to confirm the final investment decision. The Canadian government is
weighing approval for the project. (Source: The Edge Financial Daily)
O&C Resources: Bags PR1MA job in Malacca. The company
has clinched a contract worth MYR101.1m from Prima and Mampan ESA
(Melaka) Sdn Bhd to build and develop a 1Malaysia People’s Housing
Programme (PR1MA) housing project, called PR1MA@Sri Gading, in Alor
Gajah, Malacca. The company’s 70%-owned subsidiary Kita Mampu Mampan Sdn
Bhd had, through its associate company AES Builders Sdn Bhd had inked a
mater en bloc purchase agreement to build and develop 554 residential
units, with five apartments blocks of 11 storeys each and one apartment
block of 12 storeys. The contract is for a period of three years.
(Source: The Sun Daily)
TSR Capital: Aims to secure 10% of jobs tendered. The
company, who currently has an order book of MYR800m, is tendering MYR5b
worth of construction projects. The projects includes Damansara-Shah Alam
Elevated Expressway, Sungai Besi-Ulu Klang Elevated Expressway and mass
rapid transit and light rail transit 3 projects. Apart from that, the company
has property development projects to be launched. RITZ Business Center in
Bandar Enstek, Sepang, a mixed development project which carries an
estimated GDV of MYR600m will be launched. The development is expected to
complete within 6 years. Also in the pipeline, the company will launch
its service apartment in PD Waterfront, Port Dickson by year end.
(Source: The Edge Financial Daily)
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