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Share
Price:
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MYR2.65
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Target
Price:
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MYR2.50
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Recommendation:
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Hold
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Still holdings
its ground
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Results were in-line. While Pay-TV subscribers churn hit a
record, TV adex and radio adex growth compensated. Curiously, this adex
resilience was not evident at the adex-based media groups during the
recent results season. Furthermore, 70-75% of Astro’s FY18 content cost
has been hedged at USDMYR exchange rates which are less than the spot
one. We leave our EBITDA estimates unchanged but lift EPS forecasts by
4-6% due to depreciation. Our DCF-based TP is unchanged at MYR2.50.
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FYE Jan (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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5,231.4
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5,475.4
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5,671.9
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5,607.1
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EBITDA
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1,808.3
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1,940.6
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1,895.8
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2,019.7
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Core net profit
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519.4
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662.0
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713.0
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830.0
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Core FDEPS (sen)
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10.0
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12.7
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13.6
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15.8
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Core FDEPS growth(%)
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15.9
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27.3
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7.2
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16.4
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Net DPS (sen)
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11.0
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12.0
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12.0
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13.0
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Core FD P/E (x)
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26.6
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20.9
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19.5
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16.7
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P/BV (x)
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19.9
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23.0
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20.0
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16.4
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Net dividend yield (%)
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4.2
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4.5
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4.5
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4.9
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ROAE (%)
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79.5
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95.1
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110.6
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108.4
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ROAA (%)
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7.5
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9.7
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10.2
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11.8
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EV/EBITDA (x)
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9.6
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9.1
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8.9
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8.4
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Net debt/equity (%)
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301.0
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516.4
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436.1
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384.0
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NEWS
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Outside Malaysia:
U.K: Manufacturing output unexpectedly fell the most in
eight months in October as pharmaceuticals slumped. The 0.9% drop marked
the biggest decline since February. Industrial production fell 1.3%,
driven by a slide in oil and gas extraction. That was due to a shutdown
of Buzzard, one of the U.K.’s biggest fields, the Office for National
Statistics said. From a year earlier, manufacturing fell 0.4% YoY and
total production declined 1.1% YoY. The annual drop in overall output was
the biggest since August 2013. (Source: Bloomberg)
U.K: House prices accelerated in November as the market
overcame a stamp-duty surcharge and mortgage-approval rates picked up,
though confidence slid to a three-year low. Values rose 6.6% YoY in
November, according to data published by mortgage lender Halifax. Prices
were up 0.2% on the month, the third consecutive increase, pushing the
average cost of a home to GBP 218,002 (USD 275,000). Meanwhile, the
supply of new homes remained historically “very low,” Halifax said.
(Source: Bloomberg)
China: Foreign currency reserves fell the most since
January after the yuan declined to an eight-year low. Reserves decreased
USD 69.1b to USD 3.05t in November, the People’s Bank of China said in a
statement. The fifth-straight monthly decline brings the reduction in the
stockpile to almost USD 1t from a record USD 4t in June 2014. While
authorities have begun tightening capital controls, a USD 50,000 limit
that Chinese citizens are allowed to convert from yuan annually will
reset at the start of the New Year, potentially adding depreciation
pressure on the currency. (Source: Bloomberg)
Japan: Unexpectedly cuts 3Q 2016 GDP growth figure to
1.3%. Japan revised third-quarter economic growth to an annualized 1.3%,
compared with a preliminary reading that showed 2.2% expansion. The
revision was driven by drops in capital spending and in private
inventories, which both dragged down growth. The official size of Japan’s
economy expanded as the nation revamped how it calculates gross domestic
product, classifying research and development differently. (Source:
Bloomberg)
India: Unexpectedly kept interest rates unchanged before a
possible increase in U.S. borrowing costs this month, as Governor Urjit
Patel awaits clarity on the impact of the cash clampdown. The benchmark
repurchase rate will stay at a six-year low of 6.25%, the Reserve Bank of
India said. (Source: Bloomberg)
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Other News:
Tenaga Nasional: Won MYR160m Petronas Gas maintenance job.
The company’s unit TNB Repair and Maintenance Sdn Bhd (TNB Ramaco) has
bagged a MYR160m contract for the maintenance of gas turbine and related
equipment of Petronas Gas’s facilities in Kerteh, Kemaman, Terengganu and
Gebeng, Kuantan, Pahang. According to TNB, the agreement includes
maintenance of auxiliary, control and instrumentation systems, adding the
scope will be for the supply of turbine spare parts, manpower supply
during the inspections and refurbishment of the components. The contract
is a six-year long-term service agreement contract, expiring in 2022.
(Source: The Sun Daily)
Tanjung Offshore: Diversifies into aerospeace. The company
is planning to venture into the aerospace industry, via its unit T7 Aero
Sdn Bhd. T7 Aero Sdn Bhd signed a MOU with Kilgour Metal Treatments Ltd,
a UK-based aerospace components manufacturer. Under the MOU, Tanjung
Offshore and Kilgour will carry out metal surface treatment, chemical
processing, non-destructive testing (NDT) activities and coating
applications for components, which will be exported to Southeast Asia.
Also, both companies will jointly develop a metal treatment plant.
Tanjung Offshore stated that it is negotiating with UMW Holdings to build
its plant within the UMW’s UMW Aerospace Sdn Bhd facility space in
Serendah, Selangor. The company said it expects top-line contribution to
be crystallised in one or two years, subject to the completion of its
plant and the development of new business opportunities. (Source: The
Edge Financial Daily)
KLK: MP Evans enters sale agreement ahead of closing date
of KLK’s offer. MP Evans Group PLC announced that it is selling its
36.84% share in PT Agro Muko for USD100m (MYR441.8m) in cash, just three
days before KLK’s offer closes. In a press statement, the London-listed
MP Evans said the company has entered into a conditional agreement to
sell its stake with Belgian Sipef, its long-standing partner who holds
47.29% of PT Agro Muko’s issued share capital. The total sale
consideration, which amounts to USD13,000 (MYR57,440) per planted
hectare, supported the independent valuation made by Khong & Jaafar
of USD13,100 (MYR57,882) per planted hectare, it contended. (The total
sale consideration actually amounted to USD13,860 per planted hectare,
but this includes PT Agro Muko’s other assets.). Based on the independent
valuer’s report, MP Evans commands a value of GBP10.82 per share, while
KLK’s offer was GBP7.40 per share. (Source: The Star)
MRCB Quill: No plans to go into property developments yet.
MRCB Quill Management Sdn Bhd, the manager of MRCB-Quill REIT, says it
has no plans to embark on property development activities just yet,
despite the proposed liberalization of the REIT guidelines by the SC back
in July. According to the chairman, Tan Sri Saw Choo Boon said they will
be sticking to its core competency of managing properties in its
portfolio. At the group’s EGM yesterday, its unitholders approved the
REIT’s proposed acquisition of its 11th property, Menara Shell in KL, for
MYR640m, as well as its placements to fund the acquisition. The addition
of Menara Shell will bring the company’s total asset value from MYR1.6b
to MYR2.27b by the end of the year. (Source: The Edge Financial Daily)
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