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Share
Price:
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MYR7.51
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Target
Price:
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MYR7.90
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Recommendation:
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Buy
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Progressing well
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Post the 1H16 analyst briefing, we remain positive on
KLCCP’s near-term outlook as earnings are backed by the office, retail
and management services segments. Our BUY rating, MYR7.90 DCF-TP and
earnings forecasts are intact. KLCCP remains as our sector top pick
with a 1-year forward net DPU yield of 5.1%.
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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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1,353.5
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1,340.2
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1,457.0
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1,490.4
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Net property income
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1,011.9
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1,004.2
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1,184.8
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1,207.9
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Distributable income
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702.0
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724.5
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732.6
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744.7
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DPU (sen)
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33.6
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34.6
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37.5
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38.1
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DPU growth (%)
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21.4
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3.0
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8.2
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1.7
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Price/DPU(x)
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22.3
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21.7
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20.0
|
19.7
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P/BV (x)
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1.1
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1.1
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1.0
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1.0
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DPU yield (%)
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4.5
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4.6
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5.0
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5.1
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ROAE (%)
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5.9
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5.9
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5.7
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5.5
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ROAA (%)
|
4.2
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4.2
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4.1
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4.1
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Debt/Assets (x)
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0.1
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0.1
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0.2
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0.2
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Share
Price:
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MYR1.24
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Target
Price:
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MYR1.23
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Recommendation:
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Buy
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Positive 2Q16
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2Q16 results was a positive surprise whereby the higher
net profit margin was lifted by higher revenue, lower opex and lower
net financing costs. The 1st interim gross DPU of 4.23sen was also
better than expected. We adjust FY16-18 net profit forecasts by +4-6%
and raise our DCF-TP by 13sen to MYR1.23 after revising our valuation
parameters. Long-term lease agreements provide for resilient earnings
while dividend yields at ~6.4% are attractive, these being the premise
of our revised BUY call.
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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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70.2
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115.2
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125.8
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187.6
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Net property income
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53.3
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90.3
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103.7
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149.2
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Distributable income
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34.2
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54.0
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60.0
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91.5
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DPU (sen)
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7.5
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6.9
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7.7
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7.7
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DPU growth (%)
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0.0
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(8.1)
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10.8
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0.5
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Price/DPU(x)
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16.4
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17.9
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16.2
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16.1
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P/BV (x)
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0.9
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0.9
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0.9
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1.0
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DPU yield (%)
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6.1
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5.6
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6.2
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6.2
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ROAE (%)
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6.4
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7.5
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6.6
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8.1
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ROAA (%)
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4.0
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4.3
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3.7
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4.6
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Debt/Assets (x)
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0.4
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0.4
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0.4
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0.4
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Share
Price:
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MYR2.93
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Target
Price:
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MYR3.04
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Recommendation:
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Hold
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Near the peak,
D/G to HOLD
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AirAsia’s 2Q16 looks to be promising as jet fuel price had
plunged 27% YoY during that quarter, while load factor hit a record of
86.8%. We estimate a 2Q16 core net profit of MYR356m. We also raise our
FY16-18 earnings forecasts by 4% each year to factor in the better
operating statistics and accordingly raise our TP 5% to MYR3.04 (from
MYR2.90), pegged to an unchanged 8x FY16 PER. Cut to HOLD as the upside
potential to our revised TP is limited.
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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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5,415.7
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6,299.1
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6,575.8
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6,654.7
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EBITDAR
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1,732.3
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2,617.4
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2,897.9
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2,471.4
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Core net profit
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33.2
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178.8
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1,262.5
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1,049.5
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Core EPS (sen)
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1.2
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6.4
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37.8
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31.4
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Core EPS growth (%)
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(91.1)
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437.6
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488.1
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(16.9)
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Net DPS (sen)
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0.0
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0.0
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13.0
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7.0
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Core P/E (x)
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245.2
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45.6
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7.8
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9.3
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P/BV (x)
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1.8
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1.8
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1.4
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1.3
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Net dividend yield (%)
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0.0
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0.0
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4.4
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2.4
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ROAE (%)
|
0.7
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4.0
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22.5
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14.7
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ROAA (%)
|
0.2
|
0.9
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5.8
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4.6
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EV/EBITDAR (x)
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10.9
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5.3
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6.0
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6.8
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Net debt/equity (%)
|
249.9
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228.8
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113.0
|
93.5
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SECTOR RESEARCH
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Sector Note
by
Desmond Ch'ng
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Sector
liberalization under ABIF
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BNM’s bilateral agreement with OJK paves the way for
greater financial integration within ASEAN but it remains to be seen
if Indonesian banks can be sufficiently enticed to set up base in
Malaysia, given the disparity in equity returns. With two Malaysian banking
groups in Indonesia already, this agreement could perhaps benefit the
likes of RHB that had tried to establish a foothold in Indonesia
before. NEUTRAL on the sector with a HOLD on both CIMB and RHB. BUY
AFG, HLBK and HLFG.
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NEWS
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Outside Malaysia:
E.U: Output unexpectedly accelerated to the highest in six
months, signaling that manufacturers and services providers are shrugging
off concerns that the U.K.’s vote to leave the European Union will harm
business. A Purchasing Managers’ Index for both industries rose to 53.2
in July from 53.1 in June, Markit Economics said. A July 22 estimate was
for a drop to 52.9. A reading above 50 indicates expansion. (Source:
Bloomberg)
U.K: Services sector shrinks at the fastest pace in seven
years, adding weight to arguments for the Bank of England to loosen
policy this week. Markit said its Purchasing Managers Index plunged to
47.4 in July from 52.3 in June, below the 50 level that signals
contraction. The gauge hasn’t been this weak since March 2009, when the BOE
cut its benchmark interest rate to a record low and launched quantitative
easing to aid the economy. (Source: Bloomberg)
India: Passes landmark tax reform in Modi’s biggest win
yet. India’s upper house of parliament unanimously approved the creation
of a national sales tax a decade after the move was first proposed. The
constitutional amendment, one of India’s most significant reforms since
the 1990s, now has to be endorsed by the Modi-controlled lower house and
then ratified by at least half of all states, a process projected to be
concluded before the year ends. The goods-and-services tax, known as GST,
will replace more than a dozen levies, creating a single market with more
than a billion increasingly wealthy citizens. (Source: Bloomberg)
Thailand: Keeps its key interest rate unchanged, opting to
hold fire before an upcoming referendum and allow fiscal policies to take
the lead in spurring the economy. The Bank of Thailand held its one-day
bond repurchase rate at 1.5%. (Source: Bloomberg)
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Other News:
IPO: BCM Alliance gets green light from Bursa. The company
has received Bursa Securities’ nod for IPO and to be listed on the ACE
Market of Bursa Malaysia by October. The laundry equipment and medical
device distributor, will issue 84.25m of new shares, representing 20% of
its enlarged share capital. Proceeds from the IPO listing will be used to
set up a chain of 11 new Speed Queen self-serviced launderette outlets as
concept stores throughout Malaysia, purchase of new commercial laundry
equipment and medical devices, defray listing expenses for the IPO and
for working capital. Alliance Laundry Systems LLC had given its
authorization to BCM Group to use its Speed Queen store design, floor
plan and layout for its self-service launderettes in Malaysia. The
company is also the exclusive distributor in Malaysia for Steirs, Albert
Browne, Hitachi, Medifa and Ziehm brands of medical devices. (Source: The
Edge Financial Daily)
Aviation: Firefly defers aircraft deliveries. The company
has postponed its aircraft deliveries for this year as part of its
consolidation plans. Out of the 20 aircraft that it purchased three years
ago, I has taken delivery of eight aircraft and was supposed to take
delivery of another one or two aircraft this year. On whether it will
resume aircraft deliveries next year, Ong, the company’s CEO said it will
assess the market and decide in the fourth quarter of this year. The
airline began its consolidation exercise early this year, due to the soft
market that started in mid-2015 and continued into the first half of
2016. Ong expects passenger growth to be flat this year against the 2.3
million passengers it carried last year. (Source: The Sun Daily)
Berjaya Auto: Will soon change name to Bermaz Auto. The
company has proposed to change its name to Bermaz Auto, subject to
shareholders’ approval to be obtained at its forthcoming AGM. The
proposed name has been approved and reserved by the Companies Commission
of Malaysia (CCM) on July 15, 2016. Once approved by the shareholders,
the proposed name change will take effect from the date of the
Certificate of Incorporation on Change of Name to be issued by the CCM.
(Source: The Sun Daily)
TRC Synergy: Bags MYR1.31b Pan Borneo Highway contract.
The company’s subsidiary and JV partners have won MYR1.31b contract from
Lebuhraya Borneo Utara Sdn Bhd. The contract is for the development and
upgrading of the stretch of highway between Batang Skrang and the Sungai
Awik Bridge. The joint venture comprises of the company’s subsidiary, Trans
Resources Corp Sdn Bhd (TRC), Endaya Construction Sdn Bhd and Pembinaan
Kuantiti Sdn Bhd. TRC will own a 30% equity stake in the JV company.
(Source: The Sun Daily)
Comintel Corp: Partners with Guinea’s government for ICT
project. The company has signed a MoU to implement innovative
telecommunications and ICT solutions in Republic of Guinea for an
estimated USD42.85m (MYR173.2m) project. The tripartite MoU comprises of
Comintel, the Guinea government and Export-Import Bank of Malaysia Bhd
(Exim Bank) and was signed in Jakarta yesterday. It will focus on
supplying, installing and commissioning telecommunications and ICT
equipment based on needs and feasibility studies in areas defined by
Guinea. The project is expected to commence early next year and be completed
in two years. (Source: The Edge Financial Daily)
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