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Share
Price:
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MYR2.49
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Target
Price:
|
MYR3.00
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Recommendation:
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Buy
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A healthy
position
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The very healthy 3Q16 earnings did not include any cost
over-recoveries, thus GMB’s base earnings are trending significantly
higher than expected. Future gas cost imbalances will be reversed from
the P&L, so GMB will effectively report base earnings going forward.
We upgrade GMB to BUY (from HOLD) with a higher MYR3.00 TP as we raise
our earnings forecasts to better mirror base earnings.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
|
FY17E
|
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Revenue
|
2,773.5
|
3,619.0
|
4,112.2
|
4,903.2
|
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EBITDA
|
258.1
|
191.0
|
250.2
|
258.2
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Core net profit
|
167.6
|
106.2
|
144.3
|
155.5
|
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Core EPS (sen)
|
13.1
|
8.3
|
11.2
|
12.1
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Core EPS growth (%)
|
(2.2)
|
(36.7)
|
36.0
|
7.7
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Net DPS (sen)
|
13.1
|
8.3
|
11.2
|
12.1
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Core P/E (x)
|
19.1
|
30.1
|
22.1
|
20.6
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P/BV (x)
|
3.2
|
3.3
|
3.3
|
3.3
|
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Net dividend yield (%)
|
5.2
|
3.3
|
4.5
|
4.9
|
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ROAE (%)
|
16.6
|
10.7
|
14.9
|
16.0
|
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ROAA (%)
|
10.2
|
5.5
|
7.0
|
7.5
|
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EV/EBITDA (x)
|
14.6
|
14.9
|
11.9
|
11.4
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Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
|
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Share
Price:
|
MYR4.50
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Target
Price:
|
MYR4.60
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Recommendation:
|
Hold
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Standing on its
own
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The proposed USD600m private placement exercise (both
primary and secondary) signifies edotco’s transition towards greater
independence. Nevertheless, with deal financials yet to be disclosed
(pending deal completion), it is premature to pass judgement on the
deal. Maintain HOLD, with an unchanged MYR4.60 TP.
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FYE Dec (MYR m)
|
FY14A
|
FY15A
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FY16E
|
FY17E
|
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Revenue
|
18,711.8
|
19,883.5
|
20,891.1
|
22,682.4
|
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EBITDA
|
6,998.6
|
7,284.1
|
8,021.2
|
8,799.5
|
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Core net profit
|
2,239.0
|
2,071.0
|
1,666.9
|
1,781.5
|
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Core EPS (sen)
|
26.1
|
23.9
|
18.9
|
20.2
|
|
Core EPS growth (%)
|
(15.8)
|
(8.6)
|
(20.9)
|
6.9
|
|
Net DPS (sen)
|
22.0
|
20.0
|
16.1
|
17.2
|
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Core P/E (x)
|
17.2
|
18.8
|
23.8
|
22.3
|
|
P/BV (x)
|
1.9
|
1.7
|
1.6
|
1.6
|
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Net dividend yield (%)
|
4.9
|
4.4
|
3.6
|
3.8
|
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ROAE (%)
|
11.6
|
11.5
|
6.9
|
7.2
|
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ROAA (%)
|
4.8
|
3.9
|
2.8
|
2.9
|
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EV/EBITDA (x)
|
10.1
|
9.4
|
7.1
|
6.4
|
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Net debt/equity (%)
|
38.9
|
42.3
|
52.5
|
48.3
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Chi Wei Tan
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Syairah Malek
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NEWS
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Outside Malaysia:
Japan: Corporate sentiment rises for first time in six
quarters as the fall in the yen improved prospects for company earnings.
Sentiment among large manufacturers rose to 10 from 6 three months ago,
according to the Tankan survey released by the Bank of Japan. The outlook
among the manufacturers increased to 8 from 6. Sentiment among large
non-manufacturers was unchanged at 18. Large companies across all
industries plan to raise business investment by 5.5% for the year ending
in March. (Source: Bloomberg)
Brazil: October retail sales fall as recession drags on.
Sales fell 0.8% in October, in line with expectations of economists
surveyed by Bloomberg, following a 1% drop the prior month. Compared to
October of 2015, sales sank 8.2% YoY. Brazilian families have been
holding off from making new purchases as borrowing costs remain near
their highest level in a decade and unemployment rises. Consumption, a
key engine of growth in past years, has yet to resume that role even as
inflation slows and the key interest rate falls. Sales of food, beverages
and tobacco products at hypermarkets and supermarkets in October fell
0.6%, after a 1.4% plunge a month earlier. (Source: Bloomberg)
India: Current account gap widens more than expected
before Fed. India’s current account deficit widened, putting pressure on
the local currency before the U.S. Federal Reserve reviews its monetary
policy later this week. The current account recorded a shortfall of USD
3.4b in the July-September quarter, or 0.6% of gross domestic product,
the Reserve Bank of India said in a statement. The gap is higher than the
previous quarter, though narrower than the USD 8.5b deficit recorded in
July-September 2015 as the trade gap shrank. (Source: Bloomberg)
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Other News:
Construction: MRT Phase 2 is almost 95% complete.
Progress-wise, the second and final phase of the MRT project involving
the Semantan-Kajang line is almost 95% complete. MRT Sungai Buloh-Kajang
project director Marcus Karakashian said the progress includes all
station structure works, rail systems and trains. “We expect the MRT test
run for Phase 2 to take place as early as January 2017 before its
operation in July [of] the same year,” he told a media briefing here
yesterday. The 30km Phase 2 involves 19 stations Semantan to Kajang and
part of the MYR23b MRT project which spans 51km with 31 stations.
(Source: Bernama)
Felcra: Keen on taking stake in Kuantan Flour Mill. The
company is considering taking up a stake in the PN17 company via a
reverse takeover. Felcra said its overture will be driven by the
objective of assessing the feasibility and viability to achieve, a
suitable profit-generating assets into KFM through a RTO, turnaround of
KFM’s existing business, regularisation of KFM’s status out of PN17 and
suitable return and/or synergistic value creation to Felcra. Felcra said
its ability to move forward on the initiative is subject to favourable
outcome of its feasibility and viability study, satisfactory outcome of
due diligence and approvals of the company’s board of directors, and
relevant ministries and authorities. The effective date of the letter of
interest is Dec 9, 2016 and it will remain valid for not more than six
months. (Source: The Star)
MQTech: Venturing into Cambodia via JV. The company will
be developing a mixed resort development project, consisting of a theme
park, hotel, casino and apartments, in Cambodia that carries an estimated
GDV of USD51.1m (MYR225.35m) over the next six years. its wholly-owned
subsidiary, Star Acres Sdn Bhd, has signed a MoA with Cambodian Resort
& Entertainment Co Ltd (CRE) for the venture, the group announced
yesterday. CRE owns 5.1 hectares in Bonteay Chakkrei, Prey Veng Province
in Cambodia. According to MQTech’s executive director, Robbie Hari
Krishnan Tatparanandam, CRE and Star Acres would set up a 30:70 JV. Star
Acres will be given the exclusive rights to invest in the other
development to be undertaken at a later stage on the piece of land.
(Source: The Edge Financial Daily)
Kuala Lumpur Kepong: Receives only 12.9% acceptance for MP
Evans offer. As at 9 Dec, the first closing date for the offer, the
company managed to receive only 12.9% acceptances for its 740 pence
(MYR4.12) a share offer for MP Evans Group. The closing date has now been
extended to Dec 21. In a filing to the London Stock Exchange, KLK said in
light of its own comments on MP Evans valuation on Dec 1, MP Evans’
subsequent comments and the proposed sale of MP Evans’ minority interest
in an Indonesian joint venture, KLK considers that MP Evans shareholders
would benefit from further time to consider the increased offer. (Source:
The Star).
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