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Share
Price:
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MYR3.30
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Target
Price:
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MYR4.10
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Recommendation:
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Buy
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Enabler of
future applications
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We recently hosted Inari’s CEO, Mr Lau Kean Cheong, on a
1-day NDR in Singapore to meet 12 fund managers. While feedbacks on its
existing operations were positive, there were some concerns on Inari’s
venture into the iris recognition segment whereby adoption is still at
infancy stage. Nonetheless, we are confident that Inari is on a growth
path, riding on necessary demand for its key client’s products to power
data-intensive applications of the future. Reiterate BUY with an
unchanged MYR4.10 TP.
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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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933.1
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1,040.9
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1,405.8
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1,589.5
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EBITDA
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187.3
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203.0
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284.7
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343.8
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Core net profit
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147.7
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155.8
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213.7
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250.3
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Core EPS (sen)
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15.9
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16.0
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21.8
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25.6
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Core EPS growth (%)
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37.1
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0.5
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36.9
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17.1
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Net DPS (sen)
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7.1
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8.4
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9.8
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11.5
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Core P/E (x)
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20.8
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20.7
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15.1
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12.9
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P/BV (x)
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5.7
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4.7
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4.0
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3.4
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Net dividend yield (%)
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2.2
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2.5
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3.0
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3.5
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ROAE (%)
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38.4
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24.3
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28.8
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28.8
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ROAA (%)
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22.1
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18.2
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22.4
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22.6
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EV/EBITDA (x)
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11.9
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13.4
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10.8
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8.8
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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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NEWS
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Outside Malaysia:
U.S: Trade gap widened to a four-month high in October as
overseas sales weakened and American companies imported more equipment
and consumer goods. The gap grew to USD 42.6b from the prior month’s
revised USD 36.2b, Commerce Department figures showed. The 17.8% increase
from September was the largest since March 2015. Stronger demand for
imported merchandise indicates trade will weigh on U.S. growth after net
exports in the third quarter contributed the most since the end of 2013.
What’s more, the latest rally in the dollar could squelch prospects for a
pickup in exports as American-made goods become more expensive overseas.
(Source: Bloomberg)
E.U: Pushes U.K. to strike Brexit deal before transition
talk. The European Union signaled Prime Minister Theresa May must first
strike a deal for the U.K.’s post-Brexit trade ties with the bloc or lose
out on a transitional phase that banks and businesses want. As both sides
prepare to face off in the new year, Michel Barnier, the EU’s chief
negotiator, told reporters that there might be “some point” to granting
British industries a period to adjust to the new arrangements after
Brexit, but that would depend on a permanent trade plan being agreed.
(Source: Bloomberg)
Germany: Factory orders surged in October, suggesting
growth in Europe’s largest economy will accelerate at the end of the
year. Orders, adjusted for seasonal swings and inflation, jumped 4.9%
from September, when they fell a revised 0.3%, data from the Economy
Ministry showed. Orders gained 6.3% YoY. The report adds to signs that
Germany’s economy is gathering pace after a slowdown in the third
quarter. (Source: Bloomberg)
Australia: Central bank kept interest rates unchanged as a
global commodity upswing eases the impact of slower growth at home. Governor
Philip Lowe left the cash rate at 1.5% as forecast by economists and
money markets heeding his concern that further easing could destabilize
an economy where households are already saddled with record debt. Traders
have written off policy moves next year, while the median estimate of
economists is for a cut in the third quarter. (Source: Bloomberg)
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Other News:
Telco: U Mobile to ramp up strategic partnerships in FY17.
The company will the ramping up strategic partnerships next year.
According to a statement released yesterday, the company expects industry
competition to intensify in 2017, although it continues to enjoy growth.
“It is still early days for us to ascertain the impact that new entrants
like webe will have on the market, but one can only imagine that next
year will definitely get more interesting”, said U Mobile CEO Wong Heang
Tuck. The company was awarded additional spectrum allocation (of 2X5MHz
of 900MHz and 2X15MHz of 1800MHz) in Feb 2016 by the Malaysian
government, for which it will pay a total of MYR1.5b. The spectrum will
take effect in July 2017. (Source: The Edge Financial Daily)
Sarawak Oil Palms: Rights issue near 18% oversubscribed.
The company’s renounceable rights issue saw an oversubscription of 17.6%
at the close of acceptance and payment of the rights issue on Nov 30.
According to a filing with Bursa yesterday, SOP received a total of
148.9m acceptances and excess applications, of which 22.3m were
oversubscribed. The company announced a rights issuance of up to 127.7m
shares in July to finance its acquisition of Shin Yang Oil Palm (Sarawak)
Sdn Bhd for MYR873m. The shares are expected to be listed and quoted on
the main market of Bursa Securities on Dec 15. (Source: The Edge
Financial Daily)
MKH: Expects FY17 profit to double with stronger CPO
price. The property developer is aiming to double its profit in FY17 as
it expects its plantation segment to perform better in view of the strong
CPO price. With the higher CPO price, the company foresees its annual
palm oil yield to grow from an average of 25t/ha to 28t/ha, according to
its CFO Kok Siew Yin. On plans to acquire more plantation lands, the
group is “seriously looking into the idea” and is very serious about the
plantation segment. The group entered the plantation business in 2008 and
operates 18,000ha of plantation land in East Kalimantan, Indonesia.
(Source: The Edge Financial Daily)
Hibiscus Petroleum: Focus on managing cost, enhancing
production. The company will be on managing its costs and stepping up
production in the Anasuria Cluster, the oil and gas group’s main asset in
the UK’s North Sea. According to the managing director, Kenneth Pereira,
with the oil prices slowing down, the company did not want to rely on
anything and just to focus on costs and things that matter. Opex per
barrel of oil equivalent (boe) for Anasuria Cluster was about USD20, and
the company would be comfortable when the oil price stays above USD40.
The company, which acquired 50% interest in Shell’s Anasuria Cluster on
March 10, saw its net profit for 1Q17 (quarter ended Sept 30 2016) at
MYR80.28, from MYR4.75m a year earlier. This was primarily due to the
sale of O&G products from Anasuria, which generated revenue and gross
profit of MYR53.7m and MYR28.5m respectively. (Source: The Star)
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