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FEATURE
CALLS
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Malaysia | SP Setia
Sales may fall
short
Wei Sum Wong
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Share
Price:
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MYR3.05
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Target
Price:
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MYR3.63
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Recommendation:
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Buy
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Sales may fall
short
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Based on launches in the pipeline and weak buying
sentiment in both Malaysia and UK, the latter post-Brexit, SPSB’s
internal sales target of MYR4b for FY16 seems challenging. We adjust
our FY16/17/18 earnings forecasts by -1% to +7% and our TP to MYR3.63 (-6%;
on unchanged 30% discount to RNAV). Despite a lower TP, the implied
capital upside is >10%. The stock also offers a 12M forward net
yield of 6.3%. Maintain BUY.
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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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3,810.1
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6,746.3
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5,493.6
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6,244.1
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EBITDA
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1,107.6
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2,063.3
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1,208.6
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1,373.7
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Core net profit
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376.0
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918.3
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705.5
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908.8
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Core EPS (sen)
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14.9
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35.7
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26.6
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34.3
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Core EPS growth (%)
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(17.2)
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140.1
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(25.4)
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28.8
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Net DPS (sen)
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9.7
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23.0
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15.6
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19.0
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Core P/E (x)
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20.5
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8.6
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11.5
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8.9
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P/BV (x)
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1.0
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0.8
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0.7
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0.7
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Net dividend yield (%)
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3.2
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7.5
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5.1
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6.2
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ROAE (%)
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6.6
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13.9
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8.7
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10.1
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ROAA (%)
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2.9
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6.2
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4.0
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4.6
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EV/EBITDA (x)
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10.1
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4.9
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9.1
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8.1
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Net debt/equity (%)
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32.5
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19.5
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17.0
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18.0
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Share
Price:
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MYR4.28
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Target
Price:
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MYR3.80
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Recommendation:
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Sell
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Need to regain
its supremacy
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1QFY3/17 earnings could be softer on the intense nitrile
competition. Sequentially, earnings could improve as the glove makers
pushed through higher ASPs on slower industry capacity expansion in
2H16. Nevertheless, we see valuation mismatch for Hartalega; not only
is Hartalega’s 24x 2016 PER a premium to its peers, it is also higher
than its historical mean vis-a-vis its financial prospects. Maintain
EPS forecasts, MYR3.80 TP (21x 2017 PER; mean valuation) and SELL
recommendation.
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FYE Mar (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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1,146.0
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1,489.3
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1,666.2
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1,809.7
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EBITDA
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321.6
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387.1
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431.8
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472.8
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Core net profit
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209.7
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258.0
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277.4
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301.4
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Core FDEPS (sen)
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13.4
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15.6
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16.7
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18.2
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Core FDEPS growth(%)
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(15.1)
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16.5
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7.5
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8.6
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Net DPS (sen)
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6.5
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9.0
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8.5
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9.2
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Core FD P/E (x)
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32.0
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27.5
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25.6
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23.5
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P/BV (x)
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5.2
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4.7
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4.3
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4.0
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Net dividend yield (%)
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1.5
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2.1
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2.0
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2.1
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ROAE (%)
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19.0
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18.6
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17.7
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17.7
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ROAA (%)
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16.4
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15.1
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13.2
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12.8
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EV/EBITDA (x)
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20.7
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21.0
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17.0
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15.7
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Net debt/equity (%)
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net cash
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10.9
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19.4
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21.4
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Share
Price:
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MYR1.08
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Target
Price:
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MYR0.90
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Recommendation:
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Sell
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Challenging
outlook
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1H16 results are in line, with a weaker QoQ earnings
trend. Orderbook replenishment is a challenge in a capex deprived
environment. Earnings visibility is poor while cash is depleting. An
asset impairment exercise is not discounted given the low yard utilisation.
MMHE is not a privatisation candidate, in our view. Our MYR0.90 TP is
pegged to 1x EV/order backlog. MMHE needs a significant order win to
warrant a re-rating, in our view. Valuations meanwhile are expensive.
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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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2,700.5
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2,459.0
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1,298.6
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1,003.1
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EBITDA
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248.2
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157.9
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88.4
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84.0
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Core net profit
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173.1
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93.3
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41.8
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36.8
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Core EPS (sen)
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10.8
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5.8
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2.6
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2.3
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Core EPS growth (%)
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(26.8)
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(46.1)
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(55.2)
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(12.1)
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Net DPS (sen)
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0.0
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0.0
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0.0
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0.0
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Core P/E (x)
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10.0
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18.5
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41.3
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47.0
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P/BV (x)
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0.7
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0.6
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0.6
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0.6
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Net dividend yield (%)
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0.0
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0.0
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0.0
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0.0
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ROAE (%)
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6.6
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3.5
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1.6
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1.3
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ROAA (%)
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3.6
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2.1
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1.1
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1.0
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EV/EBITDA (x)
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10.2
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4.8
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10.4
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10.9
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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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Share
Price:
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MYR6.01
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Target
Price:
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MYR6.25
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Recommendation:
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Hold
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Stuck in limbo
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We believe the domestic issue at Turkey will reduce
international tourist arrivals for a minimum of two years. We cut our
FY16-18 earnings forecasts for MAHB by -60%, -44% and -47%,
respectively, factoring in slower growth and a lower international
passenger mix profile at ISG. We trim our DCF-based TP for MAHB by 2%
after having cut by 10% earlier on 18 Jul. No change to our HOLD call,
with a revised TP of MYR6.25 (from MYR6.40) based on a 10-yr DCF (WACC:
9.6%; terminal growth: 2%).
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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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3,343.7
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3,871.0
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4,204.4
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4,506.7
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EBITDA
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815.4
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1,342.0
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1,505.0
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1,623.8
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Core net profit
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146.5
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(118.0)
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39.4
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136.7
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Core EPS (sen)
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10.9
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(7.4)
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2.4
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8.2
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Core EPS growth (%)
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(62.9)
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nm
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nm
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247.0
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Net DPS (sen)
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10.4
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0.9
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3.4
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8.3
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Core P/E (x)
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55.2
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nm
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253.1
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72.9
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P/BV (x)
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1.1
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1.1
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1.2
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1.2
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Net dividend yield (%)
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1.7
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0.1
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0.6
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1.4
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ROAE (%)
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2.2
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(1.5)
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0.5
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1.6
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ROAA (%)
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0.9
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(0.5)
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0.2
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0.7
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EV/EBITDA (x)
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15.8
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10.1
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9.6
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8.5
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Net debt/equity (%)
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58.6
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52.2
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51.3
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44.8
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Share
Price:
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MYR0.76
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Target
Price:
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MYR0.73
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Recommendation:
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Hold
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Many CPs to OMG
sale
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MCIL has proposed to dispose its entire 73% shareholding
in One Media Group (OMG). That said, many conditions precedent have to
be satisfied including acquiring all of OMG’s businesses except Ming
Pao Weekly. At this point, we are unable to quantify the net sales
proceeds attributable to MCIL that may be returned to investors. Also,
our previous estimate of a 4-5% EPS accretion may not materialize.
Maintain estimates, HOLD call and MYR0.73 TP on 10.5x CY16 PER for now.
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FYE Mar (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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1,589.3
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1,362.3
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1,378.7
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1,402.8
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EBITDA
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268.1
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206.6
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210.6
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223.1
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Core net profit
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144.4
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111.6
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118.4
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129.8
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Core EPS (sen)
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8.6
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6.6
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7.0
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7.7
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Core EPS growth (%)
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(8.3)
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(22.7)
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6.1
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9.6
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Net DPS (sen)
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3.4
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4.3
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4.9
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5.4
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Core P/E (x)
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8.9
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11.5
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10.8
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9.9
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P/BV (x)
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1.7
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1.5
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1.4
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1.4
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Net dividend yield (%)
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4.5
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5.6
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6.5
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7.1
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ROAE (%)
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19.4
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13.9
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13.8
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14.3
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ROAA (%)
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9.4
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7.1
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7.8
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8.8
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EV/EBITDA (x)
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4.5
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5.5
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5.6
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5.0
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Net debt/equity (%)
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5.9
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net cash
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net cash
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net cash
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Samuel Yin Shao
Yang
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Jade Tam
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Share
Price:
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MYR1.77
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Target
Price:
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MYR1.70
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Recommendation:
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Hold
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Acquires an
industrial asset
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We are positive on AXRB’s proposed purchase of an
industrial property in Rawang, Selangor. The deal is yield accretive
based on an estimated FY17 net property yield of 7.2%. We nudge up
FY17-18 earnings forecasts by +1%. Despite having just marginal earnings
impact from the deal, we raise our DCF-TP to MYR1.70 (+15sen) as we
roll forward our valuation.
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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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140.0
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165.7
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173.4
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188.0
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Net property income
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118.5
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141.9
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147.4
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160.5
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Distributable income
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81.3
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91.5
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97.1
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108.3
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DPU (sen)
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8.9
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7.6
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7.9
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8.9
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DPU growth (%)
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6.8
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(14.9)
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5.1
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11.6
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Price/DPU(x)
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19.9
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23.4
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22.3
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20.0
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P/BV (x)
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1.5
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1.4
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1.4
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1.4
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DPU yield (%)
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5.0
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4.3
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4.5
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5.0
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ROAE (%)
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6.9
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6.8
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7.2
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8.0
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ROAA (%)
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4.4
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4.3
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4.5
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5.0
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Debt/Assets (x)
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0.3
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0.3
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0.3
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0.3
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NEWS
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Outside Malaysia:
U.S. Manufacturing growth cooled in July from one-year
high, though at a slower pace, indicating gradual improvement that could
help the economy emerge from a weak first half of the year. The Institute
for Supply Management’s index cooled to 52.6 from a one-year high of 53.2
a month. (Source: Bloomberg)
E.U: Euro-area manufacturing slowed in July as uncertainty
following the U.K.’s vote to leave the European Union damped new orders.
A Purchasing Managers’ Index dropped to 52 in July from 52.8, slightly
less than a July 22 estimate of 51.9, Markit Economics said. In Germany,
the currency bloc’s largest economy, output expanded at the fastest pace
in more than two years, while momentum faded in Italy and Spain and
production declined in France and Greece. A reading above 50 indicates
expansion. (Source: Bloomberg)
U.K: Brexit hit factories harder than initially estimated,
suffering its biggest drop in more than three years. A Purchasing
Managers’ Index slumped to 48.2, below the one-off flash reading of 49.1,
Markit Economics said. The index has only fallen below the 50 mark -
which separates expansion from contraction - one other time since early
2013. The index was at 52.4 in June. The report suggests that Britain’s
decision to leave the European Union may have a harsher impact on the
economy than initially expected. (Source: Bloomberg)
Japan: Set to give details of JPY 28tr (USD 273b) stimulus
package, as it seeks to bolster an economy threatened by a strengthening
yen and weak consumer spending. Prime Minister Shinzo Abe flagged the
size of the stimulus package in a speech last week, saying more
investment was needed to expand the world’s third-largest economy. He
said it would be used to provide better port facilities for cruise ships
and accelerate the construction of a high-speed maglev train line. About
JPY 7tr of the total will consist of actual spending, according to a
person familiar with the matter, with the rest being made up of loans and
other financing – probably spread over several years. (Source: Bloomberg)
S. Korea: Exports fell more than expected in July,
underscoring the difficulties policy makers face, even as they look to
use monetary and fiscal policies to boost growth. The government is
hoping to see exports rebound in the second half of 2016. Exports fell
10.2% YoY (estimate -6.7%), the trade ministry reported, which fell for
19th straight monthly. Imports fell 14% YoY (estimate -10.5%). Trade
surplus was USD 7.8b, down from record USD 11.5b in June. (Source:
Bloomberg)
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Other News:
Bina Puri: Clinches MYR80m job. The company’s wholly owned
subsidiary, Bina Puri Sdn Bhd has bagged a MYR80m contract from Arus
Sutera Sdn Bhd to provide project management consultancy services for a
440-unit walk-up flats in Sabah under the People’s Housing Project. The
works for the project will be completed within 42 months. (Source: The
Edge Financial Daily)
Coastal Contracts: Enters Indonesian LNG market. The
company has entered into a MoU with PT Jaya Samudra Karunia International
(JSK Internasional) and Yudha Kurniawan Tanos to acquire 215 shares or a
49% equity stake in JSK Gas, a unit of JSK Internasional for USD6.55m.
Upon completion of the deal, Coastal will hold 1715 shares stake in JSK
Gas and be recognized as a jointly controlled entity of the group. JSK
Gas was recently awarded the LNG regasification and LNG storage contracts
to support a 200MWh gas-fired power plant in Bali, Indonesia by an
Indonesian state-owned company. The JV will focus on floating LNG
regasification facilities. (Source: The Edge Financial Daily)
UMW Holdings: Partners with Spark Labs. The company’s
wholly-owned subsidiary, UTech Americas Inc, has partnered with Spark
Labs International Inc of the US to participate in the technology
co-working business in North America. The initial contribution to capital
of the JV will be USD2m, on a 50:50 basis. The JV, as specified in the
agreement, is entered to cooperate for the mutual benefit of both parties
in the engagement of the business to provide co-working spaces and/or
offices for leases and various professional services. (Source: The Edge
Financial Daily) ________________________________________
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