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Share
Price:
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MYR2.08
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Target
Price:
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MYR2.50
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Recommendation:
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Buy
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Shrewd in
managing volatility
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The sequentially weaker 3Q16 (but stronger YoY) was within
expectations and we think earnings in 4Q could be stronger on the
recent rally in ASPs and potential margin expansion as AJR locked in
its input/fuel requirements just before the sharp run-up in prices. We
continue to like AJR for its competitive cost structure, industry’s
healthiest financials and timely inventory management. Maintain our
earnings forecasts, BUY call and TP of MYR2.50 (1.3x P/B; +1SD to
mean).
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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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2,291.9
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1,760.9
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2,159.3
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2,211.5
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EBITDA
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127.0
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12.4
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239.7
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243.3
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Core net profit
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23.3
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(135.5)
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127.0
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130.7
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Core EPS (sen)
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4.5
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(25.9)
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24.3
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25.0
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Core EPS growth (%)
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90.2
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nm
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nm
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2.9
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Net DPS (sen)
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1.0
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0.0
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9.7
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10.0
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Core P/E (x)
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46.6
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nm
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8.6
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8.3
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P/BV (x)
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1.0
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1.2
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1.1
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1.0
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Net dividend yield (%)
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0.5
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0.0
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4.7
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4.8
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
|
0.8
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(5.2)
|
5.3
|
5.5
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EV/EBITDA (x)
|
15.0
|
128.1
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8.3
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8.3
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Net debt/equity (%)
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126.2
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133.6
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90.4
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86.5
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Share
Price:
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MYR2.57
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Target
Price:
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MYR2.75
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Recommendation:
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Hold
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Clarity required
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GMB’s results were again ahead of expectations as it
over-recovers on gas cost. Encouragingly, GMB disclosed its outstanding
GCPT balance this time. However, the read-through seems to be that base
earnings are trending below our forecast. Our forecasts, HOLD rating
and MYR2.75 TP are unchanged for now as we seek clarification from the
company.
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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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2,773.5
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3,619.0
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4,047.6
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4,792.3
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EBITDA
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258.1
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191.0
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212.5
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217.0
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Core net profit
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167.6
|
106.2
|
119.3
|
135.9
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Core EPS (sen)
|
13.1
|
8.3
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9.3
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10.6
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Core EPS growth (%)
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(2.2)
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(36.7)
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12.4
|
13.9
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Net DPS (sen)
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13.1
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8.3
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9.3
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10.6
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Core P/E (x)
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19.7
|
31.1
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27.7
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24.3
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P/BV (x)
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3.3
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3.4
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3.4
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3.4
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Net dividend yield (%)
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5.1
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3.2
|
3.6
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4.1
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ROAE (%)
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16.6
|
10.7
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12.3
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14.0
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ROAA (%)
|
10.2
|
5.5
|
5.8
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6.6
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EV/EBITDA (x)
|
14.6
|
14.9
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14.5
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14.1
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Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
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Share
Price:
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MYR3.57
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Target
Price:
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MYR3.80
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Recommendation:
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Hold
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3Q16 below
expectations
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While 9M16 topline was well in-line (75% of our FY16
revenue forecast), earnings fell short with a core net profit of
MYR40m, at just 65% of our FY16 forecasts. Key variance was in other
operating income whereby grant income was lower than expected. We lower
our other operating income and tweak our 2017 USD/MYR assumption to
4.15 (3.90 previously). As a result, our FY16-17 earnings forecasts are
lowered by 3-7%. Maintain HOLD with a lower TP of MYR3.80 (-3%), pegged
to an unchanged 14x CY17 EPS.
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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
|
169.9
|
160.3
|
226.0
|
254.9
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EBITDA
|
53.5
|
59.1
|
65.1
|
76.3
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Core net profit
|
50.3
|
51.3
|
58.3
|
63.9
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Core EPS (sen)
|
21.4
|
21.8
|
24.8
|
27.1
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Core EPS growth (%)
|
134.4
|
1.9
|
13.7
|
9.6
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Net DPS (sen)
|
6.0
|
5.0
|
6.2
|
6.8
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Core P/E (x)
|
16.7
|
16.4
|
14.4
|
13.2
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P/BV (x)
|
4.8
|
4.0
|
3.3
|
2.8
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Net dividend yield (%)
|
1.7
|
1.4
|
1.7
|
1.9
|
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ROAE (%)
|
32.1
|
23.2
|
25.3
|
23.1
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ROAA (%)
|
25.5
|
21.2
|
19.6
|
16.3
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EV/EBITDA (x)
|
8.9
|
12.7
|
12.3
|
11.0
|
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Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
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Share
Price:
|
MYR1.50
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Target
Price:
|
MYR1.50
|
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Recommendation:
|
Hold
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Still
challenging
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1QFY17 results were below expectation, as its idle
Malaysia IPP continues to post losses. While earnings outlook remains
challenging in the near term, we believe YTLP should be able to sustain
a 10sen DPS going forward. Maintain HOLD with an unchanged TP of
MYR1.50.
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FYE Jun (MYR m)
|
FY15A
|
FY16A
|
FY17E
|
FY18E
|
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Revenue
|
11,858.1
|
10,240.5
|
9,359.9
|
9,840.3
|
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EBITDA
|
3,112.9
|
2,717.8
|
2,599.7
|
2,835.9
|
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Core net profit
|
894.9
|
872.0
|
697.9
|
857.9
|
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Core FDEPS (sen)
|
12.3
|
11.2
|
9.0
|
11.1
|
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Core FDEPS growth(%)
|
(35.2)
|
(8.5)
|
(20.0)
|
22.9
|
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Net DPS (sen)
|
10.0
|
10.0
|
10.0
|
10.0
|
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Core FD P/E (x)
|
12.2
|
13.3
|
16.7
|
13.6
|
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P/BV (x)
|
0.9
|
0.9
|
0.9
|
0.9
|
|
Net dividend yield (%)
|
6.7
|
6.7
|
6.7
|
6.7
|
|
ROAE (%)
|
8.4
|
8.8
|
5.6
|
6.9
|
|
ROAA (%)
|
2.1
|
2.0
|
1.6
|
2.0
|
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EV/EBITDA (x)
|
8.7
|
9.3
|
10.3
|
9.6
|
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Net debt/equity (%)
|
138.5
|
115.6
|
122.7
|
124.7
|
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SECTOR RESEARCH
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PETRONAS 9M16 report card
by Thong
Jung Liaw
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PETRONAS’ 9M16 results, action and outlook are in sync
with that of oil companies worldwide – lower earnings, tighter cost
and opex controls, capex and dividends management drive. With this,
PETRONAS is on a firmer footing to ride through the cyclical downturn.
The potential entry of Saudi Aramco as a strategic partner in RAPID
is a major positive, as it would lift the Malaysia O&G space. Our
key BUYs are Yinson (YNS MK; TP: MYR4.35), Icon (ICON MK; TP:
MYR0.42) and KNM (KNMG MK; TP: MYR0.80).
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MACRO RESEARCH
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Poor start to 4Q 2016
by
Suhaimi Ilias
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Exports trend remained weak last month as it slumped
by –9.2% YoY (Sep 2016: -1.3% YoY) while imports contracted by –6.0%
YoY (Sep 2016: -6.2% YoY). The trade surplus narrowed to +SGD 5.64b
(Sep 2016: +SGD 7.06b). Global PMI points to improving demand in the
near term but rising anti-globalization sentiment especially from the
US is a key risk to trade and growth outlook.
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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: Mortgage rates soar to 10-month high after Trump bond
rout. U.S. mortgage rates skyrocketed to a 10- month high as investors
reacted to Donald Trump’s presidential election win by pulling money out
of the bond market, driving up yields that guide home loans. The average
rate for a 30-year fixed mortgage was 3.94%, up from 3.57% last week and
the highest since January, Freddie Mac said in a statement. The average
15-year rate rose to 3.14% from 2.88%, the McLean, Virginia-based
mortgage-finance company said. (Source: Bloomberg)
U.S: Housing starts surged to a nine-year high in October
as an outsized advance in the number of apartment projects accompanied a
strong pickup for single-family housing. Residential starts surged 25.5%
to a 1.32 million annualized rate, the fastest since August 2007 and
exceeding the highest projection in a Bloomberg survey, a Commerce
Department report showed. The increase from September was the biggest
since July 1982. Multifamily-home building was up a whopping 68.8%. (Source:
Bloomberg)
U.K: Retail sales surged far more than expected in October
as cooler weather boosted spending on winter fashions, sending clothing
and footwear sales to the biggest increase in more than 2 1/2 years. The
volume of goods sold in stores and online jumped 1.9% from September, the
most since July, the Office for National Statistics said. From a year
earlier, sales surged 7.4% YoY, the strongest performance since April
2002. (Source: Bloomberg)
France: Unemployment rate increased in 3Q 2016 underlining
President Francois Hollande’s failure to make good on a promise to
generate jobs and dealing a blow to his prospects of winning a second
mandate. Ten percent of the workforce was seeking employment at the end
of September, up from 9.9% in the quarter, national statistics office
Insee said. (Source: Bloomberg)
Saudi Arabia: Crude exports jump to 8-month high as
refinery usage falls. Saudi Arabia, the world’s biggest crude exporter,
boosted shipments to an eight-month high in September as domestic demand
from refineries declined. Exports rose to 7.81 million barrels a day, the
highest since January, from 7.31 million barrels in August, according to
data published on the Joint Organisations Data Initiative website. Intake
by domestic refineries declined to 2.43 million barrels from 2.6 million.
(Source: Bloomberg)
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Other News:
MTD ACPI: Awarded MYR678.8m MRT job. Its wholly-owned
subsidiary MTD Construction S/B has been awarded a contract worth
MYR678.68m by Mass Rapid Transit Corp S/B (MRT Corp) for works related to
the Mass Rapid Transit 2 (MRT 2) project. The group will undertake and
complete Package V208, which comprises the construction and completion of
viaduct guideway as well as other associated works, from Taman Pinggiran
Putra to Persiaran Alpinia. The works, which will take 66 months to
complete, will commence upon issuance of the notice to proceed to MTDC.
(Source: The Edge Financial Daily)
Eastern & Oriental: To launch MYR205m properties in
Penang soon. The property developer plans to launch an estimated MYR205m
worth of properties in the next three months at its seafront
masterplanned development of Seri Tanjung Pinang, Penang. Nearly MYR152m
of the developer’s properties were sold in the first six months of the
group’s fiscal year ending March 31, 2017 (FY17). Meanwhile, the group’s
unbilled sales as at Sept 30 stood at close to MYR1b which would support
the company’s performance for next 18 to 24 months. (Source: The Star)
MRCB: Sells MYR180m plot of land to MRT Corp. The group is
disposing a one acre plot of land to Mass Rapid Transit Corp S/B for
MYR180m due to concerns over its proximity to the construction of the MRT
Line 2. The proposed disposal will allow the MRCB group to avoid any
potential risk and unlock value from the early monetisation of the land.
MRCB had originally invested MYR34.3m in the leasehold plot in October
2012. The plot’s net book value is MYR65.7m, according to the group’s
audited accounts for the year ended Dec 31, 2015 (FY15). The disposal is
expected to bring an estimated after-tax gain of MYR38.1m to the group,
which is expected to improve its earnings for FY16. (Source: The Edge
Financial Daily)
Bintai Kinden: To acquire Optimal for MYR15m. The
mechanical and electrical engineering services provider is acquiring the
entire equity in Optimal Property Management S/B from Nusankota Development
S/B and two individuals for MYR15m. Optimal is a special-purpose vehicle
company principally involves in property management, which on Dec 3,
2015, was awarded a 25-year concession to design, construct, complete,
operate and maintain the entire Kolej Teknologi Islam Melaka in-campus
accommodation. (Source: The Sun Daily)
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