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Share
Price:
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MYR25.10
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Target
Price:
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MYR26.20
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Recommendation:
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Hold
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Off to a
seasonally good start
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1QFY9/17 earnings are off to a seasonally good start as
KLK benefited from high palm oil prices despite flattish YoY output. 1Q
core PATMI met 35%/30% of our/consensus full-year earnings forecasts –
above ours but within market estimates. We raise FY17 core PATMI
forecast by 7.5% to incorporate higher CPO ASP (+4%) assumption.
Following our earnings revision, our new TP is a higher MYR26.20
(previously MYR24.40) based on unchanged 26x FY17 PER (5-year mean).
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FYE Sep (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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13,650.0
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16,505.8
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18,377.6
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19,003.3
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EBITDA
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1,578.0
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1,805.8
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1,982.5
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2,010.2
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Core net profit
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818.7
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824.5
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1,075.2
|
1,084.6
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Core EPS (sen)
|
76.7
|
77.2
|
100.7
|
101.6
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Core EPS growth (%)
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(16.9)
|
0.7
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30.4
|
0.9
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Net DPS (sen)
|
45.0
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50.0
|
60.4
|
61.0
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Core P/E (x)
|
32.7
|
32.5
|
24.9
|
24.7
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P/BV (x)
|
2.8
|
2.6
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2.5
|
2.4
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Net dividend yield (%)
|
1.8
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2.0
|
2.4
|
2.4
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ROAE (%)
|
10.0
|
15.8
|
10.1
|
9.8
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ROAA (%)
|
5.4
|
4.6
|
5.8
|
5.7
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EV/EBITDA (x)
|
16.6
|
16.0
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15.1
|
14.7
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Net debt/equity (%)
|
24.8
|
22.5
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20.2
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16.1
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Share
Price:
|
MYR1.77
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Target
Price:
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MYR1.85
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Recommendation:
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Buy
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2QFY17: In line
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2QFY6/17 results and second gross DPU of 2.28sen (1HFY17:
4.55sen) were within expectations. Earnings were mainly supported by
Sunway Pyramid’s sustained occupancy and positive rental reversions but
mitigated by the weaker hotel segment. Our net profit forecasts are
intact but we increase our TP by 5sen to MYR1.85 after rolling forward
our DDM valuation base year to FY18 (unchanged 7.8% cost of equity).
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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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453.5
|
507.0
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522.6
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568.3
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Net property income
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340.8
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373.9
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395.8
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433.7
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Distributable income
|
256.6
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270.6
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268.6
|
299.0
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DPU (sen)
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7.8
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8.3
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8.2
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9.1
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DPU growth (%)
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4.3
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5.2
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(1.0)
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10.9
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Price/DPU(x)
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22.6
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21.4
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21.6
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19.5
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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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4.4
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4.7
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4.6
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5.1
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ROAE (%)
|
14.1
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8.1
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6.7
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7.5
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ROAA (%)
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4.0
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4.0
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4.1
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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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0.4
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Share
Price:
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MYR1.55
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Target
Price:
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MYR1.93
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Recommendation:
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Buy
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1HFY17 results
in line
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1HFY6/17 core earnings accounted for 54% of our FY
estimates. Dialog is a direct proxy to PETRONAS’ RAPID and Pengerang
play (tank terminals and regasification projects). It offers steady,
long-term, sustainable growth prospects with strong cash flows and dividends
to boot. It is net cash, which is atypical of the industry, is a
testament to its lean management and largely cash flow driven tank
terminal businesses.
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FYE Jun (MYR m)
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FY15A
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FY16A
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FY17E
|
FY18E
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Revenue
|
2,358.2
|
2,534.5
|
2,640.0
|
2,690.0
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EBITDA
|
292.0
|
367.5
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352.4
|
352.7
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Core net profit
|
253.0
|
261.0
|
272.3
|
296.8
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Core EPS (sen)
|
5.1
|
5.0
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5.3
|
5.7
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Core EPS growth (%)
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18.2
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(0.9)
|
4.3
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9.0
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Net DPS (sen)
|
2.2
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2.2
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2.2
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2.3
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Core P/E (x)
|
30.4
|
30.7
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29.4
|
27.0
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P/BV (x)
|
3.9
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3.3
|
3.1
|
2.9
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Net dividend yield (%)
|
1.4
|
1.4
|
1.4
|
1.5
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ROAE (%)
|
15.5
|
13.4
|
10.9
|
11.1
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ROAA (%)
|
7.4
|
6.7
|
6.9
|
7.8
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EV/EBITDA (x)
|
27.3
|
21.7
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24.0
|
24.2
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Net debt/equity (%)
|
net cash
|
net cash
|
13.7
|
15.0
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Share
Price:
|
MYR4.75
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Target
Price:
|
MYR3.80
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Recommendation:
|
Sell
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Juggling cost
increase
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Better 3QFY3/17 operational earnings was within
expectations. While NBR cost is spiking up, its impact on near-term
earnings could be offset by higher ASPs, sales volume growth and
internal cost control. Though EBITDA margin has rebounded to 28% in
3QFY17, it is still lower than its peak of >30% in FY10-14 (when
nitrile space was less crowded) and we expect the competition in
nitrile space to elevate in 2HCY17. Maintain our EPS forecasts, SELL
call, MYR3.80 TP (21x 2017 PER; mean).
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FYE Mar (MYR m)
|
FY15A
|
FY16A
|
FY17E
|
FY18E
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Revenue
|
1,146.0
|
1,498.3
|
1,627.7
|
1,860.1
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EBITDA
|
321.6
|
386.8
|
426.6
|
495.5
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Core net profit
|
209.7
|
257.6
|
277.2
|
315.1
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Core FDEPS (sen)
|
13.4
|
15.5
|
16.7
|
19.0
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Core FDEPS growth(%)
|
(15.1)
|
16.3
|
7.6
|
13.7
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Net DPS (sen)
|
6.5
|
8.0
|
8.4
|
9.6
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Core FD P/E (x)
|
35.6
|
30.6
|
28.4
|
25.0
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P/BV (x)
|
5.8
|
5.2
|
4.8
|
4.3
|
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Net dividend yield (%)
|
1.4
|
1.7
|
1.8
|
2.0
|
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ROAE (%)
|
19.0
|
18.6
|
17.6
|
18.3
|
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ROAA (%)
|
16.4
|
15.1
|
13.0
|
12.8
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EV/EBITDA (x)
|
20.7
|
21.0
|
19.1
|
16.7
|
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Net debt/equity (%)
|
net cash
|
10.9
|
21.5
|
26.1
|
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MACRO RESEARCH
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SELL US MARKET & BUY ASIA?
by Tee
Sze Chiah
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FBMKLCI ended a tad lower yesterday on the back of
profit-taking activities. At day’s end, the benchmark fell 1.34pts to
close at 1,708.90. Overall market breath was slightly negative.
Losers outpaced gainers by 470 to 387 while 387 counters remained unchanged.
Trading volume of 2.18b worth MYR2.47b was recorded yesterday. After
another stellar movement in overnight US markets, expect FBMKLCI to
trade slightly higher, likely between 1,705 and 1,715.
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NEWS
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Outside Malaysia:
U.S: Wholesale prices climb by most since September 2012.
U.S. wholesale prices jumped in January, led by higher costs of gasoline
and indicating inflation is beginning to stir. The 0.6% gain in the
producer-price index followed a 0.2% advance the prior month. The measure
was up 1.6% YoY. The pickup in prices, which also reflected higher
retailer and wholesaler margins, is the latest signal that broader
inflation continues to move toward the goal of Federal Reserve policy
makers. While rising demand and higher commodity costs are reviving price
pressures in the production pipeline, renewed strength in the dollar may
pose a headwind. (Source: Bloomberg)
E.U: Euro-area economy expanded less than initially
reported in 4Q 2016 as growth in three of its largest economies fell
short of expectations. GDP rose 0.4% in the three months through
December, the European Union’s statistics office said. (Source:
Bloomberg)
U.K: Inflation picked up less than forecast in January as
clothing-store discounts kept the rate from reaching the Bank of
England’s target. The rate increased to 1.8% from 1.6% in December. The
pound weakened and traders pared bets on a Bank of England interest-rate
hike by the end of 2017. While less than anticipated, inflation is still
running at the fastest pace in more than two years. Rising fuel costs
coupled with a weaker pound are set to push it above the BOE’s 2% goal
soon. (Source: Bloomberg)
China: Jan 2017 new loans at CNY 2.03t, PBOC says on
website. Jan 2017 aggregate financing was CNY 3.74t following CNY1.63t
reported in Dec 2016. M2 growth last month was +11.3% YoY matching
estimates (range +10.8% YoY to +12% YoY, 36 economists) following the
+11.3% YoY reported in Dec 2016. (Source: Bloomberg)
China: Producer prices increased the most since 2011, with
the world’s biggest exporter further lifting the outlook for global
inflation. Producer price index rose 6.9% YoY in January, compared with a
5.5% YoY December gain. Producer prices for mining products surged 31%
YoY while those for raw materials climbed 12.9%, the National Bureau of
Statistics said. (Source: Bloomberg)
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Other News:
MISC: Granted USD254.45m adjudication. The group has been
awarded USD254.45m (MYR1.13b) for the variation works undertaken by its
wholly-owned subsidiary Gumusut-Kakap Semi-Floating Production System (L)
Ltd (GKL) for Sabah Shell Petroleum Co Ltd. Last September, MISC
commenced arbitration proceedings against Sabah Shell to seek resolution
on contractual disputes covering claims for outstanding additional lease
rates, payment for completed variation works and other associated costs
for the Gumusut-Kakap semi-floating production system (Source: The Sun
Daily)
Digi: To raise MYR5b via sukuk. Digi is establishing two
Murabahah sukuk programmes with a combined limit of MYR5b in nominal
value, to raise funds for capital expenditure and working capital. he
debt papers will be issued via 15-year Islamic medium term notes (IMTN),
which will have up to MYR5bi in nominal value, and seven-year Islamic
commercial papers (ICP), with up to MYR1b in nominal value. The IMTN has
been rated AAA/Stable by rating agency RAM Rating Services, with the ICP
being rated P1, said DiGi. (Source: The Edge Financial Daily)
Hektar REIT: Declares 2.7 sen DPU. The group net property
income slipped 4.1% to MYR18.73m for 4QFY16, from MYR19.53m a year
earlier, due to higher service and maintenance charges. The REIT
announced a distribution per unit of 2.7 sen for the quarter, unchanged
from the 4QFY15 payout and representing a dividend yield of 6.7%.
Amounting to MYR10.82m, it will be paid on March 16. For the full
financial year (FY16), Hektar posted a 7% drop in realised net income to
MYR41.5m, while revenue was down to MYR124.57m from MYR125.51m in FY16.
(Source: The Edge Financial Daily)
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