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Share
Price:
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MYR7.82
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Target
Price:
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MYR8.10
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Recommendation:
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Hold
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4Q16: Within
expectations; D/G to HOLD
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4Q16 results and fourth interim gross DPU of 9.9sen (FY16:
35.7sen) were in line. FY16 earnings was encouraged by stronger retail
revenue and stable office rental income but offset by weaker
performance at Mandarin Oriental. We marginally tweak our FY17-18
earnings forecasts by <0.5% p.a. and maintain our DDM-based TP of
MYR8.10 (cost of equity: 7.2%). Downgrade to HOLD as there is a limited
near-term upside following its share price outperformance. Total return
is just 8%.
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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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1,340.2
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1,343.5
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1,449.2
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1,522.6
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Net property income
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1,004.2
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1,018.6
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1,125.2
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1,163.9
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Distributable income
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641.3
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674.6
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665.2
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684.7
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DPU (sen)
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32.5
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33.0
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34.3
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35.4
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DPU growth (%)
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2.6
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1.5
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4.2
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3.0
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Price/DPU(x)
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24.1
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23.7
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22.8
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22.1
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P/BV (x)
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1.1
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1.1
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1.1
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1.0
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DPU yield (%)
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4.2
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4.2
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4.4
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4.5
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ROAE (%)
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9.2
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7.0
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5.7
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5.6
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ROAA (%)
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4.2
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4.1
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4.2
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4.3
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Debt/Assets (x)
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0.1
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0.1
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0.1
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0.1
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MACRO RESEARCH
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Down in 1H Jan 2017
by
Suhaimi Ilias
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External reserves fell –USD0.3b to USD94.3b at 15 Jan
2017 from USD94.6b at end-Dec 2016, the lowest since Nov 2015. Latest
tally is equivalent to 8.7 months of retained imports and 1.3 times
of short-term external debt. Falling external reserves since
late-2016 mainly reflect net portfolio capital outflows.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Picked up to +6.8% YoY
by
Suhaimi Ilias
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China’s 4Q 2016 GDP growth picked up slightly to +6.8%
YoY (3Q 2016: +6.7% YoY). Growth stabilization last year was achieved
via re-leveraging, raising concerns about financial stability amid
record-high total debt to GDP ratio. We believe China’s leadership
and regulators are focusing on addressing and managing financial
risk, hence monetary, banking and financial policy tightening, which
will result in slower 2017 growth of +6.5% (2016: +6.7% YoY).
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Suhaimi Ilias
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Zamros
Dzulkafli
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NEWS
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Outside Malaysia:
China: Central Bank says it offered temporary funding
support to big banks. China’s central bank said it provided a
"temporary liquidity facility" to some major commercial banks
for 28 days to help ease a cash crunch before the Lunar New Year holiday.
The operation provides more effective liquidity transmission before the
week-long break, the People’s Bank of China said in a statement. The PBOC
said the new lending facility will have a funding cost for banks that’s
around the same as open-market operations for a similar 28-day period,
which is about 2.55%. That means the tool differs from cutting the ratio
of deposits big banks must hold in reserve and suggests a fresh evolution
of tools policy makers have been overhauling. (Source: Bloomberg)
Japan: Loan demand from companies and local government
rises, BOJ says. Loan demand from companies rose to 7 in January survey
from 6 in previous survey 3 months ago, according to the Bank of Japan’s
survey of senior loan officers at Japanese banks. Demand from local
governments rose to 0 from -4. Demand from households fell to 8 from 10.
BOJ surveyed 50 banks. (Source: Bloomberg)
Crude Oil: OPEC shrugs off threat of Trump’s America
cutting oil imports. OPEC’s two biggest suppliers to the U.S. shrugged
off a vow by President Donald Trump to end dependence on the group’s oil,
saying the world’s biggest economy would continue to need crude from
abroad. The U.S. is “closely integrated in the global energy market,”
Saudi Arabia’s Energy and Industry Minister Khalid Al- Falih said, while
his Venezuelan counterpart Nelson Martinez said he expects his country’s
crude exports to the world’s top consumer to remain stable. (Source:
Bloomberg)
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Other News:
Property: Penang property projects worth MYR11.3b on hold.
The Business Processing Outsourcing Prime (BPO) and Penang International
Technology Park (PITP) projects worth a combined MYR11.3b which involve
the Penang Development Corp (PDC) and Singapore’s Temasek Holdings
Private Ltd, have been deferred due to current property market
conditions. The BPO Prime project with a gross development value of
MYR1.3b in Bayan Baru, Penang was to be completed in 2019. However, it
has been postponed indefinitely, inadvertently pushing back commencement
of the PITP project, slated to begin after BPO prime project. On May 23
2014, PDC signed a memorandum of understanding with Temasek Economic
Development Innovation Singapore Pte Ltd to facilitate the setting up of
joint-venture company with PDC holding 51% stake with the remaining held
by investors, including Temasek. (Source: The Edge Financial Daily)
SYF Resources: Manufacturing Business remains growth
driver. The group which saw property development segment contributes more
than half of the group’s revenue in 1QFY10/17 expects the manufacturing
medium-density-fiber-board (MDF) and rubber wood furniture to remain as
its core business. SYF Resources’ net profit grew 8.1% to MYR11.7m in
1QFY10/17, from MYR10.83m a year ago while revenue rose MYR56.7% to
MYR148.71m form MYR94.92m in 1QFY10/16. Out of the group’s revenue,
property development segment accounted for 51.4% (MYR76.46m) while
manufacturing of furniture and rubber wood contributed the remaining
48.6% (MYR72.23m). (Source: The Edge Financial Daily)
Nakamichi: Ties up with two firms for O&G job.
Nakamichi Corp will team up with Aktau Transit LLP and Aktau’s parent
company Caspian Oil Project LLP (COP) to undertake an oil and gas
(O&G) project in Kazakhstan that will require Nakamichi Corp to
invest up to USD146m (MYR649.2m). Aktau Transit has a 22-year concession
for onshore O&G exploration and production in the republic that ends
in 2038. The board also proposes to reduce the company’s share premium
account, which stood at MYR38.45m as at Dec 31 last year. The credit
arising from it will be used to set off the accumulated losses of the
Nakamichi group of MYR107.78m and MYR109.44m as at Dec 31, 2015, and Sept
30, 2016, respectively. (Source: The Star)
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