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Share
Price:
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MYR4.37
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Target
Price:
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MYR4.20
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Recommendation:
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Hold
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Slow start to
the year
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IOI is off to a slow start as 1QFY6/17 headline profits
was suppressed by the weaker MYR. But core earnings were within
expectations. However, near term sentiment on IOI may continue to be
affected if MYR continues to weaken against USD. A 10% depreciation in
MYR will result in ~MYR630m in unrealised FX translation losses. HOLD
with TP of MYR4.20 on unchanged 25x FY17 PER, its 5-year historical
mean.
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FYE Jun (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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11,621.0
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11,739.3
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11,930.7
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12,781.4
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EBITDA
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641.8
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1,494.6
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1,928.8
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1,961.9
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Core net profit
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744.2
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948.2
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1,081.7
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1,130.7
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Core FDEPS (sen)
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11.5
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14.7
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16.7
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17.5
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Core FDEPS growth(%)
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(52.0)
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27.4
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14.1
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4.5
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Net DPS (sen)
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9.0
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8.0
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8.4
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8.7
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Core FD P/E (x)
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37.9
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29.8
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26.1
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25.0
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P/BV (x)
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5.6
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4.0
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3.7
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3.4
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Net dividend yield (%)
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2.1
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1.8
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1.9
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2.0
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ROAE (%)
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0.9
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10.3
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14.6
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14.2
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ROAA (%)
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5.2
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6.1
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6.1
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6.2
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EV/EBITDA (x)
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48.7
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22.6
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17.3
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16.8
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Net debt/equity (%)
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92.6
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73.4
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61.1
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51.4
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Gamuda (GAM MK)
by Chew
Hann Wong
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Share
Price:
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MYR4.80
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Target
Price:
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MYR5.55
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Recommendation:
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Buy
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SPLASH-ing a
higher price
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At a potential MYR2.72b price tag for SPLASH, Gamuda’s
portion of cash will be MYR1.09b based on its 40% stake. It was
reported that the federal government has seek independent consultants
to value SPLASH, which it believes should be at a 15% discount to the
book value of MYR3.2b. We expect a resolution only in 2017 at best to
iron out the issues. Maintain our Gamuda earnings forecasts and
unchanged RNAV-TP of MYR5.55.
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FYE Jul (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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2,399.9
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2,121.9
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3,357.0
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3,889.8
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EBITDA
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638.0
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548.5
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764.4
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824.3
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Core net profit
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682.1
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626.1
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720.0
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761.0
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Core EPS (sen)
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28.9
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26.0
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29.8
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31.5
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Core EPS growth (%)
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(6.6)
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(10.2)
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14.5
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5.7
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Net DPS (sen)
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12.0
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12.0
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12.0
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12.0
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Core P/E (x)
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16.6
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18.5
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16.1
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15.3
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P/BV (x)
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1.8
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1.7
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1.6
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1.5
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Net dividend yield (%)
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2.5
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2.5
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2.5
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2.5
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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 (%)
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5.8
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4.6
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4.9
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4.8
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EV/EBITDA (x)
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23.4
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29.0
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21.7
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19.7
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Net debt/equity (%)
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47.9
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55.2
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58.9
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50.0
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Chew Hann Wong
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Adrian Wong
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SECTOR RESEARCH
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Still on low gear
by Ivan
Yap
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Oct TIV sales continued to be suppressed at 47.9k
units despite contribution from new mass market launches over the
last two months. Weaker-than-expected sales were due in part to a
wait-and-see approach adopted by consumers in anticipation of goodies
for first-time car buyers in the National Budget. While car sales are
expected to recover in the next two month, we see downside risk to
our 2016 TIV forecast. As such, we have lowered our 2016 TIV forecast
by 3% ti 575k units.
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NEWS
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Outside Malaysia:
Germany: Merkel confronts ‘uncertain times’ to run as
chancellor. Angela Merkel positioned herself as a force for stability in
what she called “exceptionally difficult” and uncertain times as she
ended months of speculation and announced that she’ll run for a fourth
term as German chancellor. Saying that she had weighed her decision
“endlessly,” Merkel broke her silence on her political future by saying
that she will seek re-election as chairwoman of her party and will then
contest next year’s federal election. Merkel said that she intends to
serve a full, four-year term, “as long as my health allows it.” (Source:
Bloomberg)
Japan: Imports continue decline, exports fall more than
forecast. Japan posted a trade surplus for a second straight month in
October, according to data released by the Ministry of Finance. The
surplus was driven by a continued decline in the value of imports, which
have fallen faster than exports. Exports fell 10.3% YoY in October as
shipments dropped in every month for more than a year. Imports decreased
16.5% YoY during the same period, leaving a trade surplus or deficit of
JPY 496.2b (USD 4.5b). (Source: Bloomberg)
Crude Oil: Advances as OPEC deal hopes strengthen among
members, Russia. Oil extended gains above USD 46/bbl as Russia and Iran
signaled optimism OPEC will agree to a supply deal later this month to
support prices and help re-balance global markets. There are no major
obstacles left within the Organization of Petroleum Exporting Countries
to reaching a deal, Russian President Vladimir Putin told reporters in
Lima. Iranian Oil Minister Bijan Namdar Zanganeh said its “highly
probable” members will reach a consensus, according to comments published
by the country’s Shana news service. (Source: Bloomberg)
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Other News:
Prestariang: Wins MYR3.5b job. The group has bagged a job
to implement a government-led border transformation programme potentially
worth MYR3.5b. The company said it had received a letter dated Nov 15,
2016, from the Home Affairs Ministry to confirm that the Cabinet has
approved for the company to implement “Sistem Kawalan & Imigresen
Nasional” .The concession shall be for a period of 15 years and will
consist of three years of build and deployment phase and 12 years of
maintenance and technical operation phase. The company said payment shall
only commence upon full commissioning of the system, after three years,
with an average annual payment of MYR294.7m from year four to year 15
during the maintenance and technical operation phase. (Source: The Star)
Kanger: In MoU to explore Bangladesh bamboo venture.
Bamboo flooring manufacturer Kanger International has inked a memorandum
of understanding (MoU) with AK Khan Plywood Co Ltd to explore the
possibility of doing business in relation to the manufacturing and
production of bamboo products and furniture in Bangladesh. The parties
will form a joint venture company, to be named AK Kanger Pte Ltd that
will focus on the development, production, management and operations of
laminated and strand woven bamboo products and/or any other new
innovations of bamboo-based products. (Source: The Sun Daily)
Priceworth: New timber concession a game changer.
Sandakan-based Priceworth sees its new logging concession, dubbed forest
management unit No 5 (FMU 5), which will start logging from January next
year, as a game changer for the integrated timber operator. According to
the group managing director Andrew Lim Nyuk Foh, the FMU 5, a timber
concession of 101, 161ha in Trus Madi Forest Reserve, Sabah is going to be
a transformative game changer for Priceworth which made a net profit of
merely MYR1.3m out of MYR165.8m in revenue in FY16. (Source: The Edge
Financial Daily)
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