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Share
Price:
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MYR13.88
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Target
Price:
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MYR16.40
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Recommendation:
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Buy
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Steady delivery
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1QFY17 results were in line, with Tenaga still
over-recovering on fuel costs. Tenaga remains one of our top picks for
the market, given its compelling valuation (c.10x PER) and stable
earnings profile. Domestic regulatory developments are unlikely to adversely
impact Tenaga’s profitability in our view. Reiterate BUY with an
unchanged MYR16.40 TP.
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FYE Aug (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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43,286.8
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44,531.5
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48,470.6
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49,809.9
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EBITDA
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13,921.8
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14,794.2
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15,566.9
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15,927.0
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Core net profit
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7,050.7
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7,725.8
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7,549.6
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7,665.7
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Core EPS (sen)
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124.9
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136.9
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133.8
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135.8
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Core EPS growth (%)
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29.9
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9.6
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(2.3)
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1.5
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Net DPS (sen)
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29.0
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32.0
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40.1
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40.7
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Core P/E (x)
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11.1
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10.1
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10.4
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10.2
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P/BV (x)
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1.7
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1.5
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1.4
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1.2
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Net dividend yield (%)
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2.1
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2.3
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2.9
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2.9
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ROAE (%)
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13.5
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14.8
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13.7
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12.7
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ROAA (%)
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6.2
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6.2
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5.6
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5.5
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EV/EBITDA (x)
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5.7
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6.8
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6.3
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6.0
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Net debt/equity (%)
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33.3
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32.6
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33.7
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27.8
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Share
Price:
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MYR1.66
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Target
Price:
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MYR1.55
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Recommendation:
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Hold
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4Q16: Earnings
on track
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4Q16 results and second interim gross DPU of 4.23sen
(FY16: 8.4sen) were in line. In 4Q16, positive rental reversions across
key malls and sustained occupancy rates have negated weaker rental
income from Sungei Wang Plaza due to negative rental reversions. We
tweak FY17-18 earnings forecasts by <1% p.a. but maintain our DDM-TP
of MYR1.55 (cost of equity: 8.2%).
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FYE Dec (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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344.8
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372.6
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380.5
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394.2
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Net property income
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226.4
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248.2
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261.3
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271.0
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Distributable income
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162.8
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171.1
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184.0
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193.8
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DPU (sen)
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7.7
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7.6
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8.1
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8.5
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DPU growth (%)
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(3.5)
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(2.0)
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7.0
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4.5
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Price/DPU(x)
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21.4
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21.9
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20.4
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19.6
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P/BV (x)
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1.3
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1.3
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1.3
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1.3
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DPU yield (%)
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4.7
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4.6
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4.9
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5.1
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ROAE (%)
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6.3
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6.1
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6.4
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6.8
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ROAA (%)
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4.1
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4.0
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4.2
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4.4
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Debt/Assets (x)
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0.3
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0.3
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0.3
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0.3
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NEWS
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Outside Malaysia:
E.U: Euro-area economy expanded at a robust pace at the
start of the year as inflation pressures increased, according to IHS
Markit. A Purchasing Managers’ Index signaled quarterly growth of 0.4%,
with broad-based expansion in both manufacturing and services, the
London-based company said in a statement. Although the gauge slipped to
54.3 in January from 54.4 in December, economic momentum remained robust,
it said. (Source: Bloomberg)
U.K: Budget deficit narrowed in December as tax revenue
jumped, putting Chancellor of the Exchequer Philip Hammond on course to
meet his new fiscal forecasts. Net borrowing was GBP 6.9b compared with
GBP 7.2b a year earlier, the Office for National Statistics said. It left
the shortfall in the first nine months of 2016-17 at GBP 63.8b, down 14%.
The improvement reflected higher tax receipts, which rose 5.6%. Income
tax, corporation tax and stamp duty on property purchases showed the
strongest gains. Government spending was little changed. (Source:
Bloomberg)
China: Central bank increased the interest rates on
medium-term loans that it uses to manage liquidity, a move analysts say
signals its intent to keep a tight rein on leverage in the financial
system. The one year Medium-term Lending Facility rate was raised to 3.1%
from 3% and the six-month rate to 2.95% from 2.85%, the People’s Bank of
China said in a statement. The monetary authority said the operations
injected CNY 245.5b (USD 36b) into the financial system. (Source:
Bloomberg)
Japan: Exports turn positive after 14-month slump, thanks
to a global pickup in demand and a surge in shipments to China. Exports
rose 5.4% YoY in December 2016 as imports fell 2.6% YoY while the trade
surplus was JPY 641.4b (USD 5.6b). (Source: Bloomberg)
Korea: Growth slowed in 4Q 2016 amid political turmoil.
South Korea’s economy expanded at the slowest pace in more than a year in
the fourth quarter as a political scandal engulfing impeached President
Park Geun-hye and conglomerates including Samsung Group hurt consumer
confidence and spending. Construction investment fell as the government
took steps to curb household debt and property market overheating in some
areas. Growth during Oct.-Dec. was 2.3% YoY while annual growth in 2016
was 2.7%. (Source: Bloomberg)
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Other News:
Tasco: Buys Pulau Indah land, cold storage firm. The
logistic firm is buying six leasehold tracts of land with a combined area
of approximately 16 hectares (39.52 acres) in Selangor's Pulau Indah for
MYR113.83m and the stake in Mils Gold Chain for MYR29.93m from Swift
Integrated Logistics S/B. Tasco said it had signed the sale and purchase
agreement with Swift Integrated for the land purchase. Both companies
have also signed the share sale agreement for the Mils Gold Chain
acquisition.(Source: The Edge Financial Daily)
CAB Cakaran: Subsidiary buys farms and land for MYR58.5m.
Its 53.04%-owned subsidiary of CAB Cakaran Corp , has entered into
conditional sale and purchase agreements to acquire nine properties
belonging to Farm’s Best for some MYR58.53m in cash. These properties
consist of 43 parcels of land with 26 broiler poultry farms. The proposed
acquisition would be funded by a mixture of internally generated funds
and bank borrowings. (Source: The Star)
Nationwide Express: To buy biggest air cargo co-loader. In
a turnaround effort, Nationwide Express Holdings proposes to take over
the biggest courier and air-cargo co-loader consolidator in Malaysia for
MYR40 m in cash. The price tag of the acquisition is equivalent to about
77% of the company’s market capitalisation of MYR51.7m. The acquisitions
are expected to be completed by June 2017 upon approval by shareholders
and related parties. The proposed acquisitions will be funded through
internally-generated funds and bank borrowings. (Source: The Edge Financial
Daily)
Cypark: Wins MYR15m Nilai landfill project. The group has
won a job from the National Solid Waste Management Department to close
and restore the Pajam Landfill in Nilai, Negri Sembilan for a contract
value of MYR15.1m. The work includes designing, building and completing
the closure of the landfill and is scheduled to go on for 60 weeks. The
project will start on Feb 7 upon the company’s possession of the site and
is slated for completion on April 3, 2018 (Source: The Sun Daily)
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