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Share
Price:
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MYR3.77
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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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Brighter spark
in FY17
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With OMS having completed its restructuring and
refinancing of its loan, it can focus on ramping up its remaining 10
furnaces which it targets for full-production by April 2017.
Construction works for the Pan Borneo Sarawak Highway have also begun
and we do expect an acceleration of works recognition from 2H17
onwards. CMS’ construction materials supply business remains a
beneficiary of the Pan Borneo construction. Maintain BUY with an
unchanged 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
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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
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248.1
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182.4
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233.1
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Core EPS (sen)
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21.3
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23.1
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17.0
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21.7
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Core EPS growth (%)
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23.9
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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
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4.5
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6.8
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8.7
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Core P/E (x)
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17.7
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16.3
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22.2
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17.4
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P/BV (x)
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2.2
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2.0
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1.9
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1.8
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Net dividend yield (%)
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2.3
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1.2
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1.8
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2.3
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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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8.5
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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
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14.2
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13.0
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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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Chew Hann Wong
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Adrian Wong
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Share
Price:
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MYR1.68
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Target
Price:
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MYR2.05
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Recommendation:
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Buy
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DC for down
south
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Bison is acquiring a factory to be used as a
sub-distribution centre in Johor. As per its IPO plans, this will boost
its warehouse and sorting capacity and help support its growing
network. As of 2 Nov 2016, Bison has 20 stores in Johor (of total of
304 stores), while its overall planned store openings are on track. We
keep our earnings forecasts. Bison remains a BUY with an unchanged TP
of MYR2.05 (25x CY17 PER). It currently trades at 21x CY17 vs SEM’s 33x
(SEM MK, SELL, TP: MYR1.40).
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FYE Oct (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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182.4
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217.5
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264.3
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320.1
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EBITDA
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19.1
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21.0
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28.1
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34.9
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Core net profit
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12.3
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13.5
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19.4
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24.5
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Core EPS (sen)
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4.0
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4.4
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6.3
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7.9
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Core EPS growth (%)
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5.5
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9.5
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43.8
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26.2
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Net DPS (sen)
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3.5
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0.2
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1.5
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1.5
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Core P/E (x)
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42.2
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38.5
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26.8
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21.2
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P/BV (x)
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12.3
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9.4
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3.3
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2.9
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Net dividend yield (%)
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2.1
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0.1
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0.9
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0.9
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ROAE (%)
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33.4
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27.6
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18.1
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14.5
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ROAA (%)
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16.7
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14.9
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12.6
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11.0
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EV/EBITDA (x)
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na
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na
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15.8
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12.7
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Net debt/equity (%)
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3.9
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4.6
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net cash
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net cash
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SECTOR RESEARCH
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Finally…an uptick in loan growth
by
Desmond Ch'ng
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The pick-up in Oct 2016’s industry loan growth to 4.5%
YoY is a reprieve from the downtrend since Aug 2015. Annualized loan
growth of 4% in Oct 2016 is still lagging our 2016 forecast of 5.3%
but recent guidance from the larger banks points to a still healthy
corporate loan pipeline and our forecast is maintained. Our industry
loan growth forecast for 2017 is nevertheless trimmed to 4.7% from
5.3%. We maintain our BUY calls on BIMB, AFG and HL Bank.
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MACRO RESEARCH
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To the finish line…
by
Suhaimi Ilias
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Budget deficit of -MYR2.9b (-2.3% of GDP) in Oct 2016
vs –MYR4.1b (-4.1% of GDP) in Sep 2016. Budget deficit in Jan-Oct
2016 was -3.6% of GDP. Full-year target is -3.1% of GDP, followed by
-3.0% of GDP in 2017.
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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: Manufacturing in November expands at best pace in
five months, indicating American producers are finding more relief in
resilient domestic demand. The Institute for Supply Management’s index
increased to 53.2 from 51.9 a month earlier, the Tempe, Arizona-based
group’s report showed. The group’s production gauge climbed to an almost
two-year high, propelling the overall measure higher for a third month as
manufacturers continued to rebound from a late-summer swoon. The figures
also showed factories waited longer for materials to be delivered, a sign
of strengthening demand. (Source: Bloomberg)
E.U: Euro-area industrial output expanded at its strongest
pace in almost three years in November as a decline in the single
currency and improved business conditions helped counter geopolitical
uncertainties. A Purchasing Managers’ Index for manufacturing rose to
53.7 from 53.5 in October, IHS Markit said. That’s the strongest reading
since January 2014, with expansions in the Netherlands, Austria, Spain
and Germany leading the way. (Source: Bloomberg)
E.U: Euro-area unemployment unexpectedly declined in
October to the lowest level in more than seven years, signaling that
companies are confident in the region’s slow but steady recovery. The
joblessness fell to 9.8% from a revised 9.9% in September, the European
Union’s statistics office said. That’s the lowest since July 2009.
(Source: Bloomberg)
U.K: House price resumed their gains in November as demand
strengthened, Nationwide Building Society said. Prices increased 0.1% on
the month and 4.4% from a year earlier, Nationwide said. Tight supply
conditions are likely to support prices even if the economy deteriorates,
it said. The U.K. has performed better than expected since voting to
leave the European Union in June. Mortgage approvals rose to a
seven-month high in October and consumer credit surged, the Bank of
England said earlier this week. (Source: Bloomberg)
China: Official factory gauge matched a post-2012 high as
a credit-fueled recovery of smokestack industries gained momentum and
signaled a pickup in inflation expectations. Manufacturing purchasing
manager’s index rose to 51.7 in November. Non-manufacturing PMI climbed
to 54.7 from 54 in October; numbers above 50 indicate improving
conditions. Steel industry PMI increased to 51.0 from 50.7. (Source:
Bloomberg)
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Other News:
KLK: New offer unprecedented opportunity for shareholders.
The company has appealed directly to the shareholders of MP Evans Group
plc to accept its increased offer of GBP7.40 (MYR41.15) per share “as
soon as reasonably practicable” after the UK company rejected the offer,
in order to take advantage of the certainty of receiving very
substantially more in cash than the price that MP Evans shares have ever
closed before the commencement of the offer period. KLK called MP Evans’
valuation, announced to London’s Alternative Investment Market on Monday,
“unsubstantiated by relevant market data and current operating
conditions.” According to MP Evans, Khong & Jaafar valued the group’s
land assets at USD665mil (MYR2.97b), which together with its other assets
implied an equity value of GBP10.82 per share, 46% higher than KLK’s
sweetened offer of GBP7.40 per share. (Source: The Star)
AirAsia: Subscription agreement with Tune Live turns
unconditional. The company’s MYR1b capital injection from its founders
Datuk Kamarudin Meranun and Tan Sri Tony Fernandes through Tune Live Sdn
Bhd is now unconditional after receiving Bank Negara’s approval. This is
pursuant to Tune Live receiving its approval from the central bank for
its partial offshore funding. According to the company, the funding
relates to the proposed issuance and allotment of 559m new ordinary
shares in AirAsia at MYR1.80 each. To recap, AirAsia entered into a
conditional subscription agreement with Tune Live on April 1 for the
proposed share issuance. (Source: The Edge Financial Daily)
YTL Hospitality REIT: Fixes placement issue price at
MYR1.06. The company has fixed its private placement issue price at
MYR1.06 per placement unit, being a discount of 9.25% to the five-day
volume weighted average market price of the units in YTL Hospitality REIT
up to and including Nov 30, 2016 of MYR 1.168. This will raise MYR402.8m
through the placement of 380m placement units, and the proceeds will be
utilized to repay its borrowings and reduce its gearing level. (Source: The
Edge Financial Daily)
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