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FEATURE
CALLS
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Malaysia | RHB Bank
Tokio Marine to
buy RHB Insurance?
Desmond Ch'ng
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Share
Price:
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MYR6.84
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Target
Price:
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MYR6.20
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Recommendation:
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Hold
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Webe’s start-up
pains
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We deem 1H16 results as being in-line with our forecasts,
but below consensus, with the miss mainly attributable to
higher-than-expected depreciation related to P1. TM’s investment case
represents a balance between the convergence concept and the associated
earnings drag. Maintain HOLD with an unchanged TP of MYR6.20.
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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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11,235.1
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11,721.6
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12,635.6
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13,471.9
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EBITDA
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3,728.2
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3,677.0
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3,883.6
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4,100.1
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Core net profit
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941.2
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894.9
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803.2
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808.3
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Core EPS (sen)
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25.9
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23.8
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21.4
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21.5
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Core EPS growth (%)
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(10.8)
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(8.1)
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(10.2)
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0.6
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Net DPS (sen)
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22.9
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21.4
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19.2
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19.4
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Core P/E (x)
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26.4
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28.7
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32.0
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31.8
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P/BV (x)
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3.3
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3.3
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3.3
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3.2
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Net dividend yield (%)
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3.3
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3.1
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2.8
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2.8
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ROAE (%)
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12.8
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11.7
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10.3
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10.2
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ROAA (%)
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4.3
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3.8
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3.3
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3.2
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EV/EBITDA (x)
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7.5
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7.9
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7.7
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7.4
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Net debt/equity (%)
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39.5
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45.7
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52.9
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57.0
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Share
Price:
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MYR8.07
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Target
Price:
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MYR7.10
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Recommendation:
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Hold
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Growth
challenges
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1H16 core net profit was within our expectation, but below
consensus. Nevertheless, a 13.3sen special DPS was declared,
representing c.25% of the Digi share sale proceeds. HOLD rating
maintained, based on a slightly lower MYR7.10 TP as we incorporate the
special 13.3sen DPS into our forecasts.
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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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596.3
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682.4
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757.1
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859.8
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EBITDA
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217.8
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263.9
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272.6
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309.5
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Core net profit
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127.3
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171.2
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160.5
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187.1
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Core EPS (sen)
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22.2
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29.8
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27.9
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32.5
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Core EPS growth (%)
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(51.1)
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34.1
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(6.4)
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16.6
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Net DPS (sen)
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5.6
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80.2
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20.4
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8.1
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Core P/E (x)
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36.3
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27.1
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28.9
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24.8
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P/BV (x)
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2.0
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2.2
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2.3
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2.2
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Net dividend yield (%)
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0.7
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9.9
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2.5
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1.0
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ROAE (%)
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5.8
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7.7
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7.9
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9.1
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ROAA (%)
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5.0
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6.4
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6.2
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7.1
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EV/EBITDA (x)
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12.0
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16.2
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15.8
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13.4
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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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MYR5.00
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Target
Price:
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MYR5.30
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Recommendation:
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Hold
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Tokio Marine to
buy RHB Insurance?
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We would be positive if RHB did dispose off its 94.7%
stake in RHB Insurance. If the deal does transact at the speculated
P/BV of 3-3.5x, we estimate a negligible earnings loss to the RHB group
(<5% p.a.) but a potential 0.5-ppt enhancement in the group’s CET1
ratio from about 13% currently. HOLD maintained on RHB with an
unchanged TP of MYR5.30 (P/BV of 0.9x for a prospective FY17 ROE of
9.8%).
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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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Operating income
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6,234.9
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6,191.2
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6,260.8
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6,497.9
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Pre-provision profit
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2,823.7
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2,398.0
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3,141.7
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3,350.2
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Core net profit
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1,925.6
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1,722.2
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2,117.8
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2,229.6
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Core EPS (MYR)
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0.71
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0.66
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0.53
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0.56
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Core EPS growth (%)
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3.2
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(7.4)
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(20.2)
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5.3
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Net DPS (MYR)
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0.06
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0.12
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0.16
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0.17
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Core P/E (x)
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7.0
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7.6
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9.5
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9.0
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P/BV (x)
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0.7
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1.0
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0.9
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0.9
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Net dividend yield (%)
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1.2
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2.4
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3.2
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3.4
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Book value (MYR)
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7.31
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5.11
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5.58
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5.83
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ROAE (%)
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10.8
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9.4
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10.6
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9.8
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ROAA (%)
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0.9
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0.8
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0.9
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0.9
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Share
Price:
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MYR0.84
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Target
Price:
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MYR1.08
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Recommendation:
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Buy
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1H16 results a
miss
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1H16 net loss was 2x of our FY estimates, resulting in us
revising up core net loss forecast for 2016 by 5.8x (our 2017-18
forecasts are unchanged). That said, the weak 2016 results, alongside
potential asset impairment at year-end are already known. The investment
angle on WSC is instead on the execution of its Nord Stream 2 (NS2)
contract, a game changer. Valuations are inexpensive relative to its
renewed growth prospect. Our MYR1.08 TP is pegged to 10x 2017 PER
(unchanged). 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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2,438.6
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1,839.5
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1,250.0
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2,550.0
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EBITDA
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296.6
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143.3
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88.0
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223.8
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Core net profit
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145.4
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22.7
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(37.4)
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83.5
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Core EPS (sen)
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18.8
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2.9
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(4.8)
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10.8
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Core EPS growth (%)
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215.9
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(84.4)
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nm
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nm
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Net DPS (sen)
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5.7
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3.0
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0.0
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0.0
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Core P/E (x)
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4.5
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28.8
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nm
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7.8
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P/BV (x)
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0.6
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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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6.7
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3.6
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0.0
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0.0
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ROAE (%)
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14.1
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2.1
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(3.4)
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7.4
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ROAA (%)
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5.4
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0.8
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(1.4)
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3.1
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EV/EBITDA (x)
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6.4
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12.2
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16.8
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7.2
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Net debt/equity (%)
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71.7
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80.4
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66.9
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71.9
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Share
Price:
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MYR8.05
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Target
Price:
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MYR6.50
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Recommendation:
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Sell
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Reliving price
war
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Poor 2Q16 results was significantly below expectations on
ASP cuts; the whole sector has posted dismayed 2Q16 results, similar to
the previous price war in 2005. We think earnings may stay subdued in
the near-term due to the capacity overhang and rising coal cost
(Jul-Aug: +20% from 2Q16). Moreover, DPS YTD also fell sharply to just
5sen, indicating an annualised DY of only 1.3%. Maintain our EPS
forecasts, SELL call and MYR6.50 TP (22x 2016 PER; mean), pending a
briefing this Friday.
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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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2,743.1
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2,750.8
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2,615.1
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2,738.2
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EBITDA
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493.5
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509.4
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481.9
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563.0
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Core net profit
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256.0
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251.0
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209.5
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251.3
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Core EPS (sen)
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30.1
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29.5
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24.7
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29.6
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Core EPS growth (%)
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(30.2)
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(1.9)
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(16.5)
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20.0
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Net DPS (sen)
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34.0
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31.0
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25.0
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29.6
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Core P/E (x)
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26.7
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27.3
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32.7
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27.2
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P/BV (x)
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2.2
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2.2
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2.2
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2.2
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Net dividend yield (%)
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4.2
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3.9
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3.1
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3.7
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ROAE (%)
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8.1
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8.1
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6.8
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8.1
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ROAA (%)
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6.4
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6.0
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4.8
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5.8
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EV/EBITDA (x)
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15.9
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14.9
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14.4
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12.2
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Net debt/equity (%)
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net cash
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1.0
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2.3
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net cash
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Share
Price:
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MYR1.08
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Target
Price:
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MYR1.10
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Recommendation:
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Hold
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Below
expectations
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UEMS’ 1H16 results and property sales fell short.
Management has cut its 2016 sales target by 33% to MYR1b due to the
delay in launching the St Kilda project in Melbourne. Also, the
potential strategic land sale in Puteri Harbour seems unlikely to
materialise this year. We adjust our FY16/17/18 earnings forecasts by
-31%/-11%/+31%. Our RNAV-TP is largely intact at MYR1.10 (on 0.4x
P/RNAV). HOLD.
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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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2,661.7
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1,749.9
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1,531.6
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1,547.3
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EBITDA
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527.1
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299.6
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350.2
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383.8
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Core net profit
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479.9
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257.2
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200.6
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217.3
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Core FDEPS (sen)
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10.6
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5.2
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4.0
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4.4
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Core FDEPS growth(%)
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(18.8)
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(51.1)
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(22.0)
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8.3
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Net DPS (sen)
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3.0
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1.6
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1.2
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1.3
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Core FD P/E (x)
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10.2
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20.9
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26.8
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24.7
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P/BV (x)
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0.8
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0.7
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0.7
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0.7
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Net dividend yield (%)
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2.8
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1.5
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1.1
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1.2
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ROAE (%)
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7.8
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3.9
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2.9
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3.1
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ROAA (%)
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4.6
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2.2
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1.7
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1.8
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EV/EBITDA (x)
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16.1
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24.0
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20.0
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18.0
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Net debt/equity (%)
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25.6
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25.6
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24.9
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23.0
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Share
Price:
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MYR5.90
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Target
Price:
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MYR6.10
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Recommendation:
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Hold
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Dividend
shortfall
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1QFY3/17 net profit of MYR61m (+41% YoY, +11% QoQ) was in
line. But, the first interim DPS of 10sen (-33% YoY) disappointment.
Although more dividends could be announced in the subsequent quarters,
we lower our DPS estimates for FY17-FY19 to 30sen p.a. (from 35sen)
pending an update with management. We keep our earnings estimates and
RNAV-TP of MYR6.10. With a narrowed upside to our TP, Litrak is now a
HOLD.
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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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380.7
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416.2
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555.5
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557.5
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EBITDA
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321.6
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353.3
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480.0
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474.4
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Core net profit
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137.5
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171.8
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260.5
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267.9
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Core EPS (sen)
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26.7
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33.0
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49.8
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51.3
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Core EPS growth (%)
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2.2
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23.7
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51.0
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2.8
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Net DPS (sen)
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20.0
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25.0
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30.0
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30.0
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Core P/E (x)
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22.1
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17.9
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11.8
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11.5
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P/BV (x)
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5.7
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5.1
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4.3
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3.8
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Net dividend yield (%)
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3.4
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4.2
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5.1
|
5.1
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ROAE (%)
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26.5
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30.0
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39.5
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34.9
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ROAA (%)
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6.2
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7.7
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11.2
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11.0
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EV/EBITDA (x)
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9.0
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10.0
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8.0
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7.7
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Net debt/equity (%)
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177.5
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143.6
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105.8
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72.0
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Share
Price:
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MYR3.81
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Target
Price:
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MYR4.20
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Recommendation:
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Buy
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2Q16: Below
expectation
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CMS’ core earnings rebounded strongly in 2Q16 but was
insufficient to meet our 12M estimate. Nevertheless, headline net
profit would improve in the subsequent quarters on lower hedging
losses. We maintain our earnings forecasts pending an analyst briefing today.
Maintain BUY and SOP-based TP of MYR4.20
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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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1,673.9
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1,788.0
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1,543.9
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2,022.1
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EBITDA
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372.5
|
398.2
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345.0
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418.4
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Core net profit
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221.3
|
248.1
|
182.4
|
233.1
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Core EPS (sen)
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21.3
|
23.1
|
17.0
|
21.7
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Core EPS growth (%)
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23.9
|
8.5
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(26.5)
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27.8
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Net DPS (sen)
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8.5
|
4.5
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6.8
|
8.7
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Core P/E (x)
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17.9
|
16.5
|
22.4
|
17.6
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P/BV (x)
|
2.2
|
2.0
|
1.9
|
1.8
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Net dividend yield (%)
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2.2
|
1.2
|
1.8
|
2.3
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ROAE (%)
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12.8
|
13.0
|
8.8
|
10.6
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ROAA (%)
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8.5
|
8.2
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5.3
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6.2
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EV/EBITDA (x)
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9.8
|
14.2
|
13.1
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11.0
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Net debt/equity (%)
|
net cash
|
net cash
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4.9
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5.0
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SECTOR RESEARCH
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Sector Note
by Chi
Wei Tan
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The 900/1800MHz spectrum fees likely came in lower
than general expectations. Nevertheless, share prices of mobile
telcos have generally rebounded from their YTD trough, and thus would
appear to have priced in the possibility of “low” fees. We continue to
maintain HOLD ratings on all our telco stocks. On relative basis, our
preference remains for Digi.
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Sector Note
by
Desmond Ch'ng
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Loan growth in July slipped to just 5.1% YoY and
expanded just 2.6% on an annualized basis. Loan applications and
approvals contracted YoY though the fact that July was a festive
month may explain part of the slowdown. Asset quality saw some
deterioration on both MoM and YoY basis in July. On the bright side,
deposits were stable while bond issuances remained robust. We are
still NEUTRAL on the sector and we maintain our BUY calls on BIMB,
AFG and HL Bank.
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Money supply (M3) growth picked up in July 2016 by
+2.3% YoY (June 2016: +1.9% YoY), supported by the increase in
deposits amid slower financing growth. Meanwhile, M1 growth in July
2016 was +2.0% YoY (June 2016: +0.9% YoY) compared with +0.2% YoY in
2Q 2016 (1Q 2016: +2.5% YoY), and being a component of the index of
leading economic indicators, the trend in M1 growth suggests the
slowdown in real GDP growth since 2Q 2015 may be stabilizing this
quarter.
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Suhaimi Ilias
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Zamros
Dzulkafli
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NEWS
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Outside Malaysia:
U.S: Pending sales of existing homes rise in July, led by
demand in west. Contracts to purchase previously owned U.S. homes
increased more than forecast, indicating further strength in the housing
market, according to figures by the National Association of Realtors.
Pending home sales rose 1.3% after a 0.8% decline in June that was
previously reported as a 0.2% advance. Contract signings fell 2.2% YoY on
an unadjusted basis, the biggest year-over-year drop since November 2014.
Pending sales index in West jumped 7.3% to 108.7, the highest level since
June 2013 (Source: Bloomberg)
Brazil: Keeps 14.25% rate amid political turmoil,
recession. The central bank’s board, led for the second time by its new
chief, Ilan Goldfajn, unanimously voted to maintain the so- called Selic
rate at a 10-year high of 14.25%. Traders in the swaps market expect
policy makers to cut rates by year-end for the first time since 2012. On
Wednesday, the Senate voted to permanently remove President Dilma
Rousseff from office, capping an almost nine-month impeachment process
that polarized Congress and the country. A government report showed the
economy shrank for a sixth straight quarter in the three months through
June, as the worst recession in decades shows few signs of easing. (Source:
Bloomberg)
Crude Oil: Trades lower after U.S crude stockpiles gain.
Crude inventories climbed 2.28 million barrels, the Energy Information
Administration said. A 1.3 million-barrel gain was projected by analysts
surveyed by Bloomberg before the report. Imports rose to the highest in
almost four years as output slipped. Oil capped a monthly advance as
OPEC’s planned talks fan speculation it could reach an accord on output.
Brent for October settlement slipped USD 1.33 to USD 47.04/bbl on the
London- based ICE Futures Europe exchange. (Source: Bloomberg)
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Other News:
SAJ Holdings: Eyes MRY900m capex. Exclusive water provider
in Johor, SAJ Holdings Sdn Bhd, is planning to obtain an allocation of
MYR900m in capital expenditure (capex) from Pengurusan Aset Air Bhd
(PAAB) for its fourth operating period (OP4) which commences in January
2018. CEO Abdul Wahab Abdul Hamid said the amount was about the same as
the capex allocation approved for the current operating period (OP3)
which started on Jan 1, 2015 and runs until December 2017. The asset
project would be implemented by PAAB, under the purview of the finance
ministry, and would be handed over to the water operator on lease when it
is completed. (Source: Bernama)
PPB: Expects better days ahead. The diversified
conglomerate is confident of better days ahead after it fell into the red
in the last financial quarter contributed by 18.6%-owned Wilmar
International Ltd to its bottom line. According to PPB managing director
Lim Soon Huat, “The loss suffered by Wilmar is only a one-off setback. It
has an integrated, diversified and well established operation
internationally. We are not deterred by the short-term setback of
Wilmar’s operations”. He added that Wilmar itself is expecting to achieve
a satisfactory performance for the rest of the financial year, barring
unforeseen circumstances. (Source: The Edge financial Daily)
Ireka: Sees MYR200m from Aseana divestment. The group
expects the divestment of the entire assets from its 23.07% London-listed
associate Aseana Properties Limited to give the group a share of MYR200m
in profit in about two to three years. According to the deputy managing
director Monica Lai, Aseana continues to be on track in its divestment
strategy over the next three years, which will benefit Ireka. Aseana has
assets in Vietnam and Malaysia, including luxurious residential
properties, hotels, shopping malls, office buildings and land bank. Its
operating assets include Four Points by Sheraton Sandakan Hotel, Harbour
Mall Sandakan and City International Hotel in Ho Chi Minh City. (Source:
The Sun Daily)
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