Monday, February 6, 2017

Plantation: Malaysian palm oil price edges down tracking Dalian. Malaysian palm oil edged down on Friday after a rebound in the previous session, tracking vegetable oil futures on the Dalian Commodity Exchange, which reopened after the Lunar New Year holidays. Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange fell 0.2 percent to 3,065 ringgit (USD69






Malaysia Airports | 35 years operating period extension till 2069
Mohshin Aziz







Bursa Malaysia | 4Q16: Topline falls short
Chew Hann Wong








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COMPANY RESEARCH





Company Update





Malaysia Airports (MAHB MK)
by Mohshin Aziz





Share Price:
MYR6.34
Target Price:
MYR7.46
Recommendation:
Buy




35 years operating period extension till 2069

MAHB has received Cabinet’s approval for a 35-year extension on the Operating Agreement (OA) for the 39 airports that it manages in Malaysia, bringing the total operating period to 60 years ending in Feb 2069. This is beneficial for MAHB’s Aeropolis project and we expect new ventures to be announced soon. This reinforces our BUY rating but this development has no cashflow impact in the medium-term and hence we keep our earnings forecasts and TP of MYR7.46.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
3,343.7
3,871.0
4,214.0
4,528.2
EBITDA
815.4
1,342.0
1,499.9
1,605.1
Core net profit
146.5
(118.0)
36.7
139.1
Core EPS (sen)
10.9
(7.4)
2.2
8.4
Core EPS growth (%)
(62.9)
nm
nm
279.4
Net DPS (sen)
10.4
0.9
3.4
8.3
Core P/E (x)
58.2
nm
286.9
75.6
P/BV (x)
1.2
1.1
1.2
1.2
Net dividend yield (%)
1.6
0.1
0.5
1.3
ROAE (%)
9.8
0.5
1.1
2.3
ROAA (%)
0.9
(0.5)
0.2
0.7
EV/EBITDA (x)
15.8
10.1
9.8
8.7
Net debt/equity (%)
58.6
52.2
48.6
41.1










Results Review





Bursa Malaysia (BURSA MK)
by Chew Hann Wong





Share Price:
MYR8.86
Target Price:
MYR8.90
Recommendation:
Hold




4Q16: Topline falls short

Bursa’s FY16 net profit was 3% below our expectation, due to a shortfall at the topline (operating revenue made up just 95% of our 12M forecast). We lower FY17/18 net profit estimates by 4%/5%, and introduce FY19 forecast. Management expects still a challenging year in 2017 for equity, while commodity prices and KLCI volatility are areas of growth for derivative. Our TP is unchanged at MYR8.90; Bursa remains a HOLD.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
518.5
506.8
520.2
541.7
EBITDA
302.5
294.8
302.3
315.0
Core net profit
198.6
193.6
198.6
207.4
Core EPS (sen)
37.2
36.2
37.0
38.7
Core EPS growth (%)
0.0
(2.8)
2.4
4.4
Net DPS (sen)
34.5
34.0
35.0
36.5
Core P/E (x)
23.8
24.5
23.9
22.9
P/BV (x)
5.9
5.5
5.4
5.3
Net dividend yield (%)
3.9
3.8
4.0
4.1
ROAE (%)
25.6
23.2
22.7
23.4
ROAA (%)
10.6
8.6
8.1
8.2
EV/EBITDA (x)
13.8
15.1
14.7
14.1
Net debt/equity (%)
net cash
net cash
net cash
net cash








NEWS


Outside Malaysia:

U.S: Payrolls increase by 227,000 while wage growth weakens. U.S. employers added the most workers in four months while wage growth slowed more than projected, suggesting some slack remains in the labor market. January’s 227,000 increase in payrolls followed a 157,000 rise in December, a Labor Department report showed. The jobless rate rose to 4.8%, and average hourly earnings grew 2.5% from January 2016, the weakest since August. (Source: Bloomberg)

U.S: Fed’s Williams sees some arguments to raise rates in March. The president of the San Francisco Fed said in an interview that he was not worried about economy stalling and that three hikes was a “reasonable guess” for Fed rates this year. His assessment of balance of risks is not only neutral but also to the “upside”. Williams is a non-voting member this year of the policy-setting Federal Open Market Committee (Source: Bloomberg)

Japan: Wages rise 0.5% in 2016 in biggest increase since 2010. Real wages, which adjust for inflation, increased 0.7% while total pay of regular workers rose 0.8%. Pay in December was up by 0.1% YoY while real wages drop 0.4% YoY. (Source: Bloomberg)

S. Korea: See China’s ire over missile shield in export hurdles. South Korea is increasingly concerned that China may be stepping up economic retaliation over its decision to deploy a U.S. missile shield, and it sees worrying signs in everything from blocked imports of high-tech bidets to the cancellation of music concerts. Korea’s Finance Minister Yoo Il-ho has said he thinks China may be taking unfair and indirect action in some cases. China opposes the deployment, with a foreign ministry spokesman last month saying it hoped South Korea will "take China’s concern seriously and create better conditions for the normal friendly exchanges between our people." (Source: Bloomberg)

Crude Oil: Iraq’s south oil exports said to fall from record on OPEC cuts. Iraq’s southern crude oil exports dropped in January from a record high a month before as the country implements output cuts agreed by OPEC and other major producers to curb the global glut. The nation’s exports decreased 187,000 barrels a day to 3.323 million barrels a day in January from the previous month, according to a person familiar with the matter, who didn’t want to be identified because the data isn’t public. (Source: Bloomberg)





Other News:

Plantation: Malaysian palm oil price edges down tracking Dalian. Malaysian palm oil edged down on Friday after a rebound in the previous session, tracking vegetable oil futures on the Dalian Commodity Exchange, which reopened after the Lunar New Year holidays. Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange fell 0.2 percent to 3,065 ringgit (USD692.89) per tonne in the first-half session. The contract gained 1.4 percent on Thursday, helped by data showing improved exports and a drop in production, snapping four straight sessions of losses. Traded volumes were thin with 20,369 lots of 25 tonnes each changing hands. (Source: The Star)

CIMB: Eyes MYR300m sales from new preferred securities fund. CIMB-Principal Asset Management expects to raise MYR300m in sales from its newly-launched CIMB-Principal Preferred Securities Fund (PSF) this year. Chief Executive Officer Munirah Khairuddin said the preferred securities potentially offered attractive yields, especially in an environment with low interest rates and heightened volatility. The CIMB-Principal PSF invests in a portfolio of diversified preferred securities for potential income returns and long-term capital preservation. To-date, CIMB-Principal has a total of 63 unit trust funds (out of which 19 are Shariah-compliant), 19 wholesale funds, 10 Private Retirement Scheme funds and two exchange-traded funds. (Source: The Edge Financial Daily)

Borneo Aqua Harvest: Joint venture pact off. The group has terminated a joint venture agreement with City Harvest Aquaculture S/B after the expiry of a six months’ notice dated Aug 4, 2016 served on the latter. The company said City Harvest failed to deliver the requested books, records, accounts, documents and vouchers relating to the business and affairs of City Harvest despite repeated requests. (Source: The Sun Daily)


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