Tuesday, September 27, 2016

UEM Edgenta: To buy top healthcare facilities manager for MYR565m. UEM Edgenta is set to become the country’s biggest facilities management provider servicing the private healthcare and hospital






Sunway Construction Group |
Chew Hann Wong







Bison Consolidated | 3QFY16: Above expectations
Liew Wei Han







Yinson Holdings | 1HFY17 results preview
Thong Jung Liaw









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COMPANY RESEARCH





Company Update





Sunway Construction Group (SCGB MK)
by Chew Hann Wong





Share Price:
MYR1.61
Target Price:
MYR1.80
Recommendation:
Buy






SCG has won an additional advance work package for KVMRT 2 from MMC-Gamuda worth MYR53m. It also accepted a Letter of Intent from Sunway Iskandar Sdn Bhd to take on 1) construction of 88 units of office shop lots utilizing precast (MYR57m) & 2) design and build of a proposed commercial retail complex (MYR100m) in the Medini area. YTD job wins of MYR2.6b has lifted its outstanding orderbook to MYR5b. Our earnings having imputed MYR3.0b job wins for 2016. Reiterate BUY with unchanged TP of MYR1.80



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
1,880.7
1,916.9
2,359.0
2,511.2
EBITDA
151.2
178.2
204.0
241.8
Core net profit
114.2
127.7
135.0
164.9
Core EPS (sen)
8.8
9.9
10.4
12.8
Core EPS growth (%)
20.9
11.9
5.7
22.1
Net DPS (sen)
30.5
4.0
3.7
4.5
Core P/E (x)
18.2
16.3
15.4
12.6
P/BV (x)
6.2
4.6
3.9
3.2
Net dividend yield (%)
19.0
2.5
2.3
2.8
ROAE (%)
na
na
na
na
ROAA (%)
8.4
9.2
8.5
9.4
EV/EBITDA (x)
na
8.7
8.4
6.6
Net debt/equity (%)
net cash
net cash
net cash
net cash










TP Revision





Bison Consolidated (BISON MK)
by Liew Wei Han





Share Price:
MYR1.88
Target Price:
MYR2.05
Recommendation:
Buy




3QFY16: Above expectations

3QFY10/16 results came in above expectations on better-than-expected product mix and A&P income. As of end-Jul, Bison has opened 48 stores, on track to meet its 70 new store openings p.a. from FY16-18. Imputing the better set of results, we raised our earnings forecasts by 9%-13% for FY16-18. We maintain BUY, with a higher TP of MYR2.05 (+23sen).



FYE Oct (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
182.4
217.5
264.3
320.1
EBITDA
19.1
21.0
28.1
34.9
Core net profit
12.3
13.5
19.4
24.5
Core EPS (sen)
4.0
4.4
6.3
7.9
Core EPS growth (%)
5.5
9.5
43.8
26.2
Net DPS (sen)
3.5
0.2
1.5
1.5
Core P/E (x)
47.2
43.1
30.0
23.8
P/BV (x)
13.7
10.5
3.7
3.3
Net dividend yield (%)
1.9
0.1
0.8
0.8
ROAE (%)
33.4
27.6
18.1
14.5
ROAA (%)
16.7
14.9
12.6
11.0
EV/EBITDA (x)
na
na
18.0
14.5
Net debt/equity (%)
3.9
4.6
net cash
net cash










Company Update





Yinson Holdings (YNS MK)
by Thong Jung Liaw





Share Price:
MYR3.26
Target Price:
MYR4.35
Recommendation:
Buy




1HFY17 results preview

1HFY1/17 earnings are expected to track expectations, with a stronger sequential 2Q. A 15sen special DPS is a short-term positive. Securing a FPSO job win over the next 6 months would be a major re-rating catalyst, a prospect that cannot be discounted, based on its prudent financial and sound technical profile. Our TP is SOP-based.



FYE Jan (MYR m)
FY16A
FY17A
FY18E
FY19E
Revenue
1,083.4
986.0
996.0
1,286.2
EBITDA
225.4
261.0
288.5
417.8
Core net profit
142.6
173.1
184.2
220.0
Core EPS (sen)
13.8
16.2
17.3
20.6
Core EPS growth (%)
114.7
17.5
6.4
19.4
Net DPS (sen)
2.0
1.9
2.0
2.4
Core P/E (x)
23.6
20.1
18.9
15.8
P/BV (x)
2.3
1.5
1.4
1.3
Net dividend yield (%)
0.6
0.6
0.6
0.7
ROAE (%)
na
na
na
na
ROAA (%)
6.1
4.8
3.5
3.5
EV/EBITDA (x)
14.6
17.8
16.7
11.6
Net debt/equity (%)
31.4
51.9
55.2
51.2


Thong Jung Liaw






MACRO RESEARCH






Economics Research
by Suhaimi Ilias


Jobless rate hovers around 3.4%-3.5%





Unemployment rates increased to 3.5% in Jul 2016 from 3.4% in June 2016, but to note, it has been hovering in the 3.4%-3.5% range since Dec 2015. Year-to-date unemployment rate is 3.4%. No change in our full-year average jobless rate forecast of 3.5% (2015: 3.2%).












Economics Research
by Suhaimi Ilias


Flat amid mixed industries’ performance





Industrial Production (IP) rose marginally by +0.1% YoY in Aug 2016 (revised July 2016: -3.5% YoY) as higher output of electronics and precision engineering industries cancelled the declines in transport engineering and biomedical production. IP dropped -1.3% YoY in July-Aug 2016 (2Q 2016: +1.4% YoY), suggesting downward pressure on GDP growth in 3Q 2016.







NEWS


Outside Malaysia:

U.S: Sales of new homes retreated in August from nine-year high, representing a pause in momentum within residential real estate. Sales fell 7.6% to a 609,000 annualized pace, from a revised 659,000 rate in the prior month that was the strongest since October 2007, figures from the Commerce Department showed. Prices fell from a year earlier to the lowest level in almost two years. (Source: Bloomberg)

Germany: Business sentiment in September surged to the highest level in more than two years in a sign that corporate concerns are easing over the economic outlook and the consequences of Britain’s decision to leave the European Union, a report from the Munich-based Ifo institute showed. Business climate index rose to 109.5 from a revised 106.3. (Source: Bloomberg)

France: Joblessness jumps to 2016-high as attacks hurt hotels. French jobless claims jumped in August to the highest this year in an increase that the government blamed on a lack of summer hiring among hoteliers and restaurateurs. The number of people actively looking for work rose by 50,200, or 1.4%, to 3.56 million in August, the Labor Ministry said in a statement. Since the beginning of 2015, more than 200 people have been killed by terrorists in France with the latest attack coming in Nice on July 14. The repeated assaults have kept some foreigners away and had a knock-on effect on an industry that generates as much as 7% of French economic output. (Source: Bloomberg)

Japan: Households and companies continue to hold onto cash rather than spending or investing, highlighting the ongoing challenge to revitalize the economy. Households held JPY 920t (USD 9.1t) of their assets in cash or deposits at the end of the quarter through June, the second-highest level on record, a report by the Bank of Japan showed. Corporate cash and deposits stood at JPY 242t, an all-time high after a revision of data for previous periods, according to the report. The figures indicate that the central bank’s unprecedented monetary stimulus has yet to bring much fundamental change to the behavior of households and companies. (Source: Bloomberg)

Thailand: Exports rose for the first time in five months in August following a surge in vehicle shipments, according to data from the Ministry of Commerce. Exports gained 6.5% YoY in August. Automobiles, which make up 12% of total exports, climbed 40.4% YoY in August. Industrial exports rose 9% YoY, led by auto, steel and semiconductor sectors. Thailand posted a trade surplus of USD 2.13b in August, compared with USD 1.2b in the previous month. (Source: Bloomberg)





Other News:

UEM Edgenta: To buy top healthcare facilities manager for MYR565m. UEM Edgenta is set to become the country’s biggest facilities management provider servicing the private healthcare and hospital segments through its proposed acquisition of Asia Integrated Facility Solutions Pte Ltd for SGD185.9m (MYR565.2m) in cash. Asia Integrated Facility Solutions owned indirectly UEMS Pte Ltd, the number one facilities management firm catering to those segments in the country. The proposed purchase was expected to be completed in the fourth quarter of 2016, subject to its shareholders’ approval at an EGM to be convened. (Source: The Star)

Damansara Realty: Partners L.C. Catering in MYR124m Rapid job. Damansara Realty’s wholly-owned subsidiary TMR Urusharta (M) Sdn Bhd has formed a JV with L.C. Catering Sdn Bhd to provide facilities management and catering services to Petronas Refinery and Petrochemical Corporation Sdn Bhd worth MYR124m. TMR LC Services Sdn Bhd, the JV 70% owned by TMR and 30% by L.C. Catering, will operate and maintain the temporary executive village as well as management office of Petronas’ Refinery and Petrochemical Integrated Development (Rapid) in Pengerang, Johor. The JV will provide general cleaning, pest control, landscaping and other services to Petronas’ temporary executive village and management office from Nov 1, 2016. The contract, to be completed over 38 months. (Source: The Sun Daily)

KNM: To issue Thai bonds worth up to USD80m for bioethanol plants. KNM Group plans to issue up to USD80m (MYR329.9m) Thai bonds to raise funds for the construction of bioethanol plants in Thailand. The plants are to be constructed by Impress Ethanol Co Ltd (IEL), a 72%-owned subsidiary of recently acquired Asia Bio-Fuels Ltd and Asia Bio-Fuels II Ltd. The proposed bond issue is expected to be fully issued by December this year. The total costs related to the proposed issuance to be incurred in the fourth quarter of 2016 is estimated at MYR1.1m. (Source: The Sun Daily)

DRB-Hicom: The Verge’s buyer will assume outstanding loan. DRB-Hicom has denied selling its Singapore property, The Verge, to Columba Holdings Pte Ltd at 40% below the price of an earlier aborted deal, saying that the indicative price of the cancelled transaction had not been adjusted to factor in an outstanding loan facility. The indicative price of SGD317m (MYR961.7m) under the aborted sale to Evolutyon Real Estate Investment Holding Pte Ltd was prior to the “agreed adjustments”, which substantially comprised the redemption of Corwin Holding Pte Ltd’s outstanding loan facility totalling SGD85.52mil (SGD259.5m). (Source: The Star)


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