Friday, February 24, 2017

Pos Malaysia: 3Q pre-tax profit doubled. The company saw its net profit soar 55% y-o-y to MYR34.8m in its third financial quarter ended Dec 31, 2016 (3QFY17), from MYR22.5m, thanks to the courier segment's higher contribution to the postal group's bottomline. Quarterly revenue climbed 28.5% to MYR635.7m as it received a contribution of MYR169.3m from its logistics business pursuant to the acquisition of Pos Aviation Sdn Bhd. For the cumulative nine


FEATURE
CALLS

Malaysia | Inari Amertron
Beats street’s expectations
Ivan Yap







break





Genting Bhd | Still has upside potential; maintain BUY
Samuel Yin Shao Yang







Genting Malaysia | Counting our winnings first; D/G to HOLD
Samuel Yin Shao Yang







AirAsia Bhd | FY16 results in-line
Mohshin Aziz







Sunway Construction Group | Earnings recovery in FY17
Chew Hann Wong







PECCA Group | No surprises in 2QFY6/17
Ivan Yap







Oldtown | FMCG to lead growth
Liew Wei Han







Lafarge Malaysia | Seeing some light
Yen Ling Lee







Axiata Group | A difficult year
Chi Wei Tan







IJM Corporation | 9MFY17: Slight shortfall
Chew Hann Wong














SP Setia | FY17 earnings beat expectations
Wei Sum Wong







Petronas Gas | A tame finish
Chi Wei Tan







Media Prima | 4Q16: Below expectations
Samuel Yin Shao Yang







Globetronics Technology | 2016 results within expectations
Ivan Yap







Tambun Indah Land | Lower sales target for 2017
Wei Sum Wong







YTL Power | On course
Chi Wei Tan







Kossan Rubber Industries | Clouded by higher input prices
Yen Ling Lee







TH Plantations | Lifted by disposal gains
Chee Ting Ong









break

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COMPANY RESEARCH





TP Revision





Genting Bhd (GENT MK)
by Samuel Yin Shao Yang





Share Price:
MYR9.08
Target Price:
MYR10.55
Recommendation:
Buy




Still has upside potential; maintain BUY

Earnings were in-line but dividends outperformed with a special DPS of 6.5sen. We lift FY17-19 DPS estimates by 50%. Utilising our higher TPs for GENS and GENP moderated by our a tad lower TP for GENM while ascribing an unchanged 22.5% discount, our new SOP-based TP for GENT is MYR10.55 (vs MYR9.75). We opine that GENT is ‘cheap’ as it currently trades at -33% to its SOP/sh valuation or -1SD to its long term mean (post-1997 average: -21%).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
18,100.4
18,365.8
19,634.9
21,822.2
EBITDA
5,393.8
6,028.3
7,245.2
8,307.3
Core net profit
1,257.6
1,536.3
2,310.8
2,838.2
Core FDEPS (sen)
34.2
39.8
55.1
66.9
Core FDEPS growth(%)
(25.6)
16.3
38.3
21.5
Net DPS (sen)
3.5
12.5
8.0
9.8
Core FD P/E (x)
26.5
22.8
16.5
13.6
P/BV (x)
1.0
1.0
0.9
0.9
Net dividend yield (%)
0.4
1.4
0.9
1.1
ROAE (%)
4.7
6.4
6.8
7.4
ROAA (%)
1.5
1.7
2.5
3.0
EV/EBITDA (x)
8.3
7.6
6.5
5.5
Net debt/equity (%)
net cash
net cash
net cash
net cash


Samuel Yin Shao Yang








Rating Change





Genting Malaysia (GENM MK)
by Samuel Yin Shao Yang





Share Price:
MYR5.47
Target Price:
MYR5.30
Recommendation:
Hold




Counting our winnings first; D/G to HOLD

Earnings were in-line but dividends outperformed with a special DPS of 7.3sen. While we welcome the special DPS and remain bullish on the Genting Integrated Tourism Plan (GITP), we opine that the risk-reward profile for GENM is balanced after its share price rallied 19% YTD. We leave our FY17/FY18 estimates largely unchanged but trim our SOP-based valuation by 5sen to MYR5.30 to account for the special DPS. We downgrade GENM to HOLD only because upside potential has narrowed.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
8,395.9
8,931.6
9,978.2
11,572.5
EBITDA
2,013.1
2,394.9
2,810.7
3,311.6
Core net profit
1,157.9
1,549.0
1,726.6
2,114.2
Core FDEPS (sen)
20.4
27.3
30.4
37.2
Core FDEPS growth(%)
(14.8)
33.6
11.5
22.4
Net DPS (sen)
7.1
16.5
10.2
11.3
Core FD P/E (x)
26.8
20.1
18.0
14.7
P/BV (x)
1.6
1.6
1.5
1.4
Net dividend yield (%)
1.3
3.0
1.9
2.1
ROAE (%)
7.1
14.8
8.4
9.7
ROAA (%)
4.8
5.6
6.2
7.3
EV/EBITDA (x)
12.3
10.6
10.8
9.0
Net debt/equity (%)
0.1
net cash
net cash
net cash


Samuel Yin Shao Yang








Company Update





AirAsia Bhd (AIRA MK)
by Mohshin Aziz





Share Price:
MYR2.76
Target Price:
MYR3.22
Recommendation:
Buy




FY16 results in-line

2016 core net profit of MYR1,558m (7.8x YoY) is in-line. We believe higher industry capacity output will reduce load factor and yields, which equates to lower profits in 2017. However, we estimate there is prospect for a 30sen special dividend which works to 11% yield. We adjust our FY17-18 earnings by +1.8% and +4.8% on latest guidance on growth and cost parameters. TP has been raised to MYR3.22 (+5 sen) based on an unchanged 10x 2017 PER, on par with global peers.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
6,297.7
6,923.9
6,818.8
7,419.2
EBITDAR
2,629.9
3,276.6
2,739.0
2,698.9
Core net profit
177.7
1,557.6
1,072.2
1,163.6
Core EPS (sen)
6.4
56.0
32.4
35.1
Core EPS growth (%)
434.5
776.1
(42.2)
8.5
Net DPS (sen)
3.0
4.0
38.0
8.0
Core P/E (x)
43.2
4.9
8.5
7.9
P/BV (x)
1.7
1.2
1.2
1.1
Net dividend yield (%)
1.1
1.4
13.8
2.9
ROAE (%)
12.0
36.8
15.2
13.9
ROAA (%)
0.9
7.2
5.1
5.6
EV/EBITDAR (x)
5.2
4.6
4.2
4.8
Net debt/equity (%)
228.9
133.7
29.8
45.5










TP Revision





Sunway Construction Group (SCGB MK)
by Chew Hann Wong





Share Price:
MYR1.80
Target Price:
MYR1.90
Recommendation:
Buy




Earnings recovery in FY17

Robust outstanding orderbook of MYR4.8b as of end-2016 will provide for medium-term earnings visibility. MYR2b job win target for this year is not a tall order, as it has already secured MYR449m in Jan 2017. Our earnings are trimmed by 11%/6% after updating for FY16 results. SCG remains a BUY with a higher TP of MYR1.90 on 15x FY18 PER (+1SD) as we roll forward valuations. Restoration of its Shariah status is another catalyst.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,916.9
1,788.8
2,347.4
2,208.5
EBITDA
178.2
188.6
209.0
226.4
Core net profit
127.7
123.5
145.7
160.7
Core EPS (sen)
9.9
9.6
11.3
12.4
Core EPS growth (%)
11.9
(3.3)
18.0
10.3
Net DPS (sen)
4.0
5.0
3.9
4.3
Core P/E (x)
18.2
18.8
16.0
14.5
P/BV (x)
5.2
4.7
4.0
3.4
Net dividend yield (%)
2.2
2.8
2.2
2.4
ROAE (%)
32.6
26.2
27.0
25.1
ROAA (%)
9.2
8.0
8.9
9.3
EV/EBITDA (x)
8.7
9.9
8.6
7.7
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





PECCA Group (PECCA MK)
by Ivan Yap





Share Price:
MYR1.54
Target Price:
MYR1.95
Recommendation:
Buy




No surprises in 2QFY6/17

2QFY6/17 revenue and earnings were lifted by higher overall car production by its key customers (i.e. Perodua, Toyota & Nissan) - within expectations. Nonetheless, we cut FY18/19 net profit forecast by 15% each as we raise our USD/MYR forex assumption to 4.20 (from 4.05). Rolling forward our valuations to CY18 on an unchanged 14.5x PER, our MYR1.95 TP is unchanged. Ex-cash (end-Dec 2016 net cash: MYR93m), valuations remain undemanding at 9x CY17 PER; BUY.



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
129.5
126.3
166.4
185.0
EBITDA
27.7
22.6
29.6
35.6
Core net profit
17.9
16.5
20.7
24.7
Core EPS (sen)
9.5
8.8
11.0
13.1
Core EPS growth (%)
23.8
(8.0)
25.4
19.4
Net DPS (sen)
4.4
4.0
5.5
6.6
Core P/E (x)
16.2
17.6
14.0
11.7
P/BV (x)
4.1
1.8
1.7
1.6
Net dividend yield (%)
2.9
2.6
3.6
4.3
ROAE (%)
27.6
12.7
12.7
14.2
ROAA (%)
17.5
11.3
11.0
12.2
EV/EBITDA (x)
na
9.4
7.2
5.9
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





Inari Amertron (INRI MK)
by Ivan Yap





Share Price:
MYR1.91
Target Price:
MYR2.18
Recommendation:
Buy




Beats street’s expectations

Inari’s 1HFY6/17 core earnings came in marginally ahead at 51% of our street-high core net profit forecast for FY17; 57% of street’s. Pending an analyst briefing today, we keep our FY17 net profit forecast unchanged by lift our FY18/19 net profit forecast by 5%/9% to account for higher USD/MYR forex of 4.20 (from 4.05). Rolling forward our valuations to CY18 on a lower PER peg of 16.5x (from 17.5x; +1SD) on fully-diluted EPS of 13.1sen, we derive a TP of MYR2.18 (+8 sen). Maintain BUY on Inari.



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
933.1
1,040.9
1,405.8
1,730.5
EBITDA
187.3
203.0
284.7
357.7
Core net profit
147.7
155.8
213.7
263.7
Core EPS (sen)
7.6
7.8
10.1
12.5
Core EPS growth (%)
18.5
1.7
30.9
23.4
Net DPS (sen)
3.6
4.2
4.6
5.6
Core P/E (x)
25.0
24.6
18.8
15.3
P/BV (x)
6.9
5.6
5.0
4.2
Net dividend yield (%)
1.9
2.2
2.4
3.0
ROAE (%)
38.4
24.3
28.8
30.2
ROAA (%)
22.1
18.2
22.4
23.6
EV/EBITDA (x)
12.4
13.8
13.6
10.7
Net debt/equity (%)
net cash
net cash
net cash
net cash










Rating Change





Oldtown (OTB MK)
by Liew Wei Han





Share Price:
MYR2.21
Target Price:
MYR2.70
Recommendation:
Buy




FMCG to lead growth

Moving forward, FMCG is expected to spearhead growth, riding on its expansion of export sales to China, which is still largely a tea drinking nation. F&B is expected to post muted growth in the near term on still stiff competition. We maintain our earnings forecasts and BUY call but raise our TP to MYR2.70 (+45sen) on a 17.8x PER (+1 std dev above mean) on the improved earnings outlook (14.8x mean FY18 PER previously). To note that the Malaysian consumer sector trades at 21-22x PER CY17.



FYE Mar (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
397.7
393.4
438.7
480.3
EBITDA
82.9
84.7
102.1
107.9
Core net profit
51.0
55.3
65.7
70.4
Core EPS (sen)
11.2
11.9
14.2
15.2
Core EPS growth (%)
4.2
6.1
18.8
7.2
Net DPS (sen)
6.0
9.0
7.8
8.4
Core P/E (x)
19.7
18.5
15.6
14.5
P/BV (x)
3.0
2.8
2.6
2.4
Net dividend yield (%)
2.7
4.1
3.5
3.8
ROAE (%)
14.2
15.0
17.4
17.3
ROAA (%)
11.8
12.5
14.0
14.0
EV/EBITDA (x)
8.2
6.4
8.4
7.7
Net debt/equity (%)
net cash
net cash
net cash
net cash










Rating Change





Lafarge Malaysia (LMC MK)
by Yen Ling Lee





Share Price:
MYR6.70
Target Price:
MYR6.90
Recommendation:
Hold




Seeing some light

While the competition has stabilised, ASP may only improve meaningfully from 2H17 onwards as mega projects accelerate. We keep our 2017 EPS forecasts unchanged but raise our 2018-19 EPS by 11%/12% as we raise our ASP assumption. Rolling forward our valuation to 2018, our TP is raised to MYR6.90 (from MYR4.00) based on an unchanged 26x PER (mean). We also expect LMC to resume its quarterly dividend payout upon the improvement in 2017 earnings. Upgrade to HOLD (from SELL).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
2,750.8
2,552.2
2,811.7
3,137.5
EBITDA
509.4
302.1
433.3
545.9
Core net profit
251.0
84.9
148.1
226.1
Core EPS (sen)
29.5
10.0
17.4
26.6
Core EPS growth (%)
(1.9)
(66.2)
74.3
52.7
Net DPS (sen)
31.0
5.0
16.6
25.3
Core P/E (x)
22.7
67.0
38.4
25.2
P/BV (x)
1.8
1.9
1.9
1.8
Net dividend yield (%)
4.6
0.7
2.5
3.8
ROAE (%)
8.1
2.5
4.8
7.4
ROAA (%)
6.0
2.0
3.4
5.1
EV/EBITDA (x)
14.9
20.7
13.3
10.4
Net debt/equity (%)
1.0
4.6
2.7
net cash










TP Revision





Axiata Group (AXIATA MK)
by Chi Wei Tan





Share Price:
MYR4.53
Target Price:
MYR5.00
Recommendation:
Hold




A difficult year

FY16 results were below expectations as depreciation again surprised on the upside. Dividends for both 2016 and 2017 were unexpectedly lowered on prudent grounds. Celcom is exhibiting signs of improved operational momentum, although it remains to be seen if this is sustainable. Maintain HOLD with a higher MYR5.00 TP (+9%).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
19,883.5
21,565.4
24,348.1
25,771.5
EBITDA
7,284.1
8,012.6
9,090.5
9,780.9
Core net profit
2,071.0
1,418.0
1,009.1
1,308.2
Core EPS (sen)
23.9
16.0
11.2
14.6
Core EPS growth (%)
(8.6)
(33.1)
(29.6)
29.6
Net DPS (sen)
20.0
8.0
5.6
12.4
Core P/E (x)
19.0
28.4
40.3
31.1
P/BV (x)
1.7
1.7
1.7
1.7
Net dividend yield (%)
4.4
1.8
1.2
2.7
ROAE (%)
11.5
2.1
4.2
5.4
ROAA (%)
3.9
2.2
1.4
1.8
EV/EBITDA (x)
9.4
8.0
6.9
6.3
Net debt/equity (%)
42.3
59.1
43.2
39.8










Results Review





IJM Corporation (IJM MK)
by Chew Hann Wong





Share Price:
MYR3.42
Target Price:
MYR3.60
Recommendation:
Buy




9MFY17: Slight shortfall

3QFY3/17 core earnings came in below our estimates largely due to weaker earnings from the property division and Kuantan Port as a result of the moratorium on bauxite ban. We lower earnings forecasts for FY17-19 by 3-6% after adjusting for i) lower margins for property and ii) lower cargo throughput assumptions for Kuantan Port. No change to our SOP-TP of MYR3.60. Maintain BUY.



FYE Mar (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
5,448.3
5,128.2
6,634.8
7,562.7
EBITDA
1,434.8
1,166.7
1,152.9
1,377.2
Core net profit
530.2
509.3
551.3
680.1
Core EPS (sen)
16.3
14.3
15.4
19.0
Core EPS growth (%)
(15.0)
(12.5)
7.9
23.3
Net DPS (sen)
7.5
10.0
7.0
7.0
Core P/E (x)
21.0
24.0
22.2
18.0
P/BV (x)
1.3
1.4
1.3
1.2
Net dividend yield (%)
2.2
2.9
2.0
2.0
ROAE (%)
6.3
9.1
6.0
7.1
ROAA (%)
2.8
2.6
2.7
3.3
EV/EBITDA (x)
12.0
15.4
15.6
13.0
Net debt/equity (%)
45.2
40.4
41.9
37.9










TP Revision





IHH Healthcare (IHH MK)
by John Cheong





Share Price:
MYR6.15
Target Price:
MYR5.80
Recommendation:
Hold




Healthy topline growth, but start-up costs hit core earnings

We cut our EPS by 6-16% to account for higher start-up costs for new hospitals. Maintain HOLD, reduce SOTP-based TP by 11% to MYR6.52. IHH is not cheap, trading at 60x FY17E PE. FY16 core earnings met 101% of our FY16E, but just 91% of the consensus. Core earnings in FY16 fell 4% YoY due to start-up costs for the upcoming Hong Kong Hospital and higher net financing costs after several acquisitions. We expect the costs to be a drag on earnings with FY17E core earnings flat.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
8,455.5
10,021.9
11,608.1
13,501.7
EBITDA
2,218.7
2,188.9
2,553.6
2,990.3
Core net profit
899.2
866.0
855.2
1,105.9
Core FDEPS (sen)
10.9
10.5
10.3
13.4
Core FDEPS growth(%)
14.5
(4.3)
(1.2)
29.3
Net DPS (sen)
3.0
3.0
3.0
3.0
Core FD P/E (x)
56.3
58.8
59.5
46.1
P/BV (x)
2.3
2.3
2.2
2.2
Net dividend yield (%)
0.5
0.5
0.5
0.5
ROAE (%)
4.5
2.8
3.8
4.8
ROAA (%)
2.8
2.4
2.3
2.9
EV/EBITDA (x)
27.4
27.0
22.9
19.2
Net debt/equity (%)
19.3
21.1
23.0
16.2










Results Review





SP Setia (SPSB MK)
by Wei Sum Wong





Share Price:
MYR3.39
Target Price:
MYR3.54
Recommendation:
Hold




FY17 earnings beat expectations

SPSB’s 2016 net profit of MYR808m was above expectations due to stronger earnings recognition from Battersea Power Station (BPS) phase 1. SPSB has locked in MYR3.8b in property sales in 2016 - above expectations. We lower our earnings forecasts by 3-6%. Our RNAV-TP is largely unchanged at MYR 3.54 (-5 sen; on unchanged 0.7x P/RNAV). We maintain HOLD.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
6,746.3
4,957.2
5,994.9
3,950.1
EBITDA
2,063.3
1,441.4
1,318.9
869.0
Core net profit
918.3
808.0
857.1
450.8
Core EPS (sen)
35.7
28.5
27.0
14.2
Core EPS growth (%)
140.1
(20.0)
(5.4)
(47.4)
Net DPS (sen)
23.0
20.0
14.9
7.2
Core P/E (x)
9.5
11.9
12.6
23.9
P/BV (x)
0.9
0.8
0.8
0.7
Net dividend yield (%)
6.8
5.9
4.4
2.1
ROAE (%)
13.9
9.7
9.1
4.7
ROAA (%)
6.2
4.6
4.2
2.0
EV/EBITDA (x)
4.9
7.6
10.9
18.0
Net debt/equity (%)
17.2
16.0
29.8
40.4










TP Revision





Petronas Gas (PTG MK)
by Chi Wei Tan





Share Price:
MYR20.58
Target Price:
MYR23.00
Recommendation:
Hold




A tame finish

PTG’s FY16 net profit was in-line, albeit aided by lower-than-expected taxes. A results call will be held this afternoon, whereby investors’ attention would likely centre on 1) the directional trend for maintenance activities in 2017, and 2) updates relating to TPA negotiations. Maintain HOLD with a lower TP or MYR23.00 (-4%).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
4,456.0
4,561.3
4,540.4
5,146.0
EBITDA
2,967.2
2,968.1
3,038.7
3,403.5
Core net profit
1,749.6
1,747.2
1,681.7
1,951.1
Core EPS (sen)
88.4
88.3
85.0
98.6
Core EPS growth (%)
(2.0)
(0.1)
(3.8)
16.0
Net DPS (sen)
60.0
62.0
59.5
69.0
Core P/E (x)
23.3
23.3
24.2
20.9
P/BV (x)
3.6
3.4
3.3
3.1
Net dividend yield (%)
2.9
3.0
2.9
3.4
ROAE (%)
18.1
14.9
13.8
15.3
ROAA (%)
12.7
11.3
10.0
11.2
EV/EBITDA (x)
15.1
14.4
13.6
12.0
Net debt/equity (%)
net cash
4.0
4.0
net cash










Results Review





Media Prima (MPR MK)
by Samuel Yin Shao Yang





Share Price:
MYR1.05
Target Price:
MYR1.10
Recommendation:
Hold




4Q16: Below expectations

4Q16 and 2016 core net profit was below expectations but 2016 DPS of 8sen positively surprised. We also believe MPR’s cost savings will be able to offset weaker earnings moving into 2017. We still expect +5% adex growth for both FTA TV and print adex. We maintain our HOLD call, earnings and DPS estimates for now. Our TP is unchanged at MYR1.10 based on 15x FY17 P/E (mean). Dividend yields of ~6% should buoy further downside in share price.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,427.7
1,289.0
1,401.2
1,479.6
EBITDA
327.0
163.6
187.9
199.4
Core net profit
138.7
38.7
81.9
92.9
Core EPS (sen)
12.5
3.5
7.4
8.4
Core EPS growth (%)
(2.4)
(72.1)
111.5
13.4
Net DPS (sen)
10.0
8.0
6.0
7.0
Core P/E (x)
8.4
30.1
14.2
12.5
P/BV (x)
0.7
0.8
0.8
0.8
Net dividend yield (%)
9.5
7.6
5.7
6.7
ROAE (%)
8.6
(3.8)
5.6
6.3
ROAA (%)
5.8
1.7
4.0
4.8
EV/EBITDA (x)
4.0
7.5
5.7
5.4
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





Globetronics Technology (GTB MK)
by Ivan Yap





Share Price:
MYR4.40
Target Price:
MYR4.05
Recommendation:
Hold




2016 results within expectations

FY16 net profit closed at a 5-year low following a plunge in demand across all geographical segments. We expect suppressed 2Q/3Q17 earnings on weak volumes for the existing sensors and high depreciation from capex for the new sensors (mass production from mid-2Q17), but with a strong rebound in 2H as orders from its sensor client come through. No changes to our earnings forecasts; valuations are fair (15x CY18 EPS) for now. Maintain HOLD on unchanged TP of MYR4.05 (14x CY18 EPS).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
343.7
215.3
341.2
426.9
EBITDA
96.3
51.2
87.6
124.9
Core net profit
71.3
25.7
48.5
81.7
Core FDEPS (sen)
25.3
9.1
17.1
28.8
Core FDEPS growth(%)
10.4
(64.1)
88.7
68.3
Net DPS (sen)
20.0
20.0
12.0
20.2
Core FD P/E (x)
17.4
48.5
25.7
15.3
P/BV (x)
4.1
4.7
4.5
4.1
Net dividend yield (%)
4.5
4.5
2.7
4.6
ROAE (%)
24.4
9.1
17.9
28.1
ROAA (%)
19.9
7.7
15.1
23.6
EV/EBITDA (x)
17.3
16.0
12.8
8.8
Net debt/equity (%)
net cash
net cash
net cash
net cash










Results Review





Tambun Indah Land (TILB MK)
by Wei Sum Wong





Share Price:
MYR1.41
Target Price:
MYR1.53
Recommendation:
Hold




Lower sales target for 2017

Tambun Indah (TI)’s FY16 net profit of MYR107m (+13% YoY) was slightly above our expectations. FY16 actual sales of MYR229m (-13%) was however below expectations. We lower our FY17/18 earnings forecasts by 11%/18% to factor in a lower sales assumption for 2017. We also introduce our 2019 forecast. Our RNAV-TP is largely unchanged at MYR1.54 (+1sen) based on an unchanged 50% discount to RNAV. HOLD.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
466.8
367.7
408.7
329.0
EBITDA
139.4
129.0
132.6
105.0
Core net profit
102.1
94.4
100.6
80.5
Core FDEPS (sen)
24.3
22.3
23.3
18.6
Core FDEPS growth(%)
47.3
(8.3)
4.7
(20.0)
Net DPS (sen)
9.7
9.0
9.4
7.5
Core FD P/E (x)
5.8
6.3
6.1
7.6
P/BV (x)
1.5
1.3
1.2
1.1
Net dividend yield (%)
6.9
6.4
6.7
5.3
ROAE (%)
na
na
na
na
ROAA (%)
17.6
13.2
12.4
9.4
EV/EBITDA (x)
5.2
4.7
4.1
5.0
Net debt/equity (%)
9.4
1.9
net cash
net cash










Results Review





YTL Power (YTLP MK)
by Chi Wei Tan





Share Price:
MYR1.51
Target Price:
MYR1.50
Recommendation:
Hold




On course

1HFY17 results were in line with ours, but slightly below consensus. The idle Malaysia IPP continues to post losses while PowerSeraya’s profitability appears to have recovered back to 1HFY16 levels. We continue to expect a 10sen DPS in FY17 despite a relatively challenging earnings outlook and upcoming capex commitments. Maintain HOLD with an unchanged TP of MYR1.50.



FYE Jun (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
11,858.1
10,240.5
9,359.9
9,840.3
EBITDA
3,112.9
2,717.8
2,599.7
2,835.9
Core net profit
894.9
872.0
697.9
857.9
Core FDEPS (sen)
12.3
11.2
9.0
11.1
Core FDEPS growth(%)
(35.2)
(8.5)
(20.0)
22.9
Net DPS (sen)
10.0
10.0
10.0
10.0
Core FD P/E (x)
12.3
13.4
16.8
13.6
P/BV (x)
0.9
0.9
0.9
0.9
Net dividend yield (%)
6.6
6.6
6.6
6.6
ROAE (%)
8.4
8.8
5.6
6.9
ROAA (%)
2.1
2.0
1.6
2.0
EV/EBITDA (x)
8.7
9.3
10.3
9.6
Net debt/equity (%)
138.5
115.6
122.7
124.7










Results Review





Kossan Rubber Industries (KRI MK)
by Yen Ling Lee





Share Price:
MYR6.48
Target Price:
MYR6.35
Recommendation:
Hold




Clouded by higher input prices

4Q16 earnings improved QoQ but were still below expectations. While we understand that the industry players have raised their ASPs to pass on the higher rubber input prices, we think Kossan’s near-term earnings could still be subdued due to the time lag effect. We maintain our 2017-18 EPS forecasts and introduce our 2019 numbers. Maintain our HOLD call and TP of MYR6.35 (18x 2017 PER; mean).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,635.9
1,668.3
2,072.7
2,333.7
EBITDA
343.2
291.8
384.2
425.6
Core net profit
203.3
170.9
224.9
254.9
Core EPS (sen)
31.8
26.7
35.2
39.9
Core EPS growth (%)
41.4
(15.9)
31.6
13.4
Net DPS (sen)
12.0
13.4
17.6
19.9
Core P/E (x)
20.4
24.2
18.4
16.3
P/BV (x)
4.2
3.8
3.5
3.1
Net dividend yield (%)
1.9
2.1
2.7
3.1
ROAE (%)
nm
nm
nm
nm
ROAA (%)
14.8
11.5
13.9
14.0
EV/EBITDA (x)
17.4
14.7
11.1
10.1
Net debt/equity (%)
1.7
4.8
8.1
9.1










TP Revision





TH Plantations (THP MK)
by Chee Ting Ong





Share Price:
MYR1.20
Target Price:
MYR1.22
Recommendation:
Hold




Lifted by disposal gains

2016 headline profit was lifted by land disposal gain which led to a 6sen final DPS surprise. Otherwise, core net profit was within our expectation but above consensus. Looking forward, we expect a 3% earnings growth in 2017 underpinned by output recovery. But as THP trades at 22x FY17 PER, it remains a HOLD with a revised TP of MYR1.22 (previously MYR1.20) on 0.8x trailing P/NTA (-1SD of 3-year mean).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
455.3
562.3
532.0
569.1
EBITDA
110.2
172.7
195.8
203.5
Core net profit
13.3
46.1
47.4
49.4
Core EPS (sen)
1.5
5.2
5.4
5.6
Core EPS growth (%)
(61.4)
247.3
2.7
4.2
Net DPS (sen)
0.0
6.0
1.6
1.7
Core P/E (x)
79.8
23.0
22.4
21.5
P/BV (x)
0.8
0.7
0.7
0.7
Net dividend yield (%)
0.0
5.0
1.3
1.4
ROAE (%)
5.0
11.0
3.3
3.4
ROAA (%)
0.4
1.3
1.3
1.4
EV/EBITDA (x)
23.0
14.2
13.0
12.2
Net debt/equity (%)
71.4
63.6
63.4
59.3








MACRO RESEARCH






Hang Seng Index Trend Assessment
by Tee Sze Chiah


Technical Research





FBMKLCI fell 3.60pts to close at 1,704.48 yesterday. Sentiment in the broader market was rather bearish with losers outpacing gainers by 555 to 328. Trading volume of 2.79b worth MYR2.65b was recorded. As expected, FBMKLCI was unable to sustain its previous day’s rebound given the amount of selling pressure that resurfaced. We continue to believe that the benchmark index may head lower, possibly to test the 1,700 psychological level. Downside supports are pegged at 1,700 and 1,693.







NEWS


Outside Malaysia:

U.S: Claims for jobless benefits point to firm job market. The number of Americans filing for unemployment benefits increased last week, while staying within a range that shows subdued firings. Jobless claims rose by 6,000 to 244,000 in the week ended Feb. 18, a report from the Labor Department showed. The four-week average declined to the lowest level since July 1973. A tight labor market and growing economy are prompting companies to hold on to employees, setting the stage for larger wage gains. (Source: Bloomberg)

Germany: Domestic demand drove growth in 4Q 2016 as trade damped Europe’s largest economy. Private and government spending contributed 0.2 percentage point each to growth, the Federal Statistics Office said. Net trade subtracted 0.4 percentage point from output, with a 3.1% increase in imports outpacing a 1.8% gain in exports. Gross domestic product rose a seasonally-adjusted 0.4% in the three months through December. Germany’s performance in the fourth quarter suggests the economy is sturdy enough to cope with challenges that may arise from national elections, Brexit, and a more protectionist U.S. administration. Unemployment is at a record low and business confidence is rising, and the Bundesbank has cited a “very dynamic” order intake as a factor driving future momentum. (Source: Bloomberg)

U.K: Net migration fell to its lowest in more than two years, providing a boost for Prime Minister Theresa May as she seeks to reduce the number of foreigners coming to Britain. Those arriving to live or study for a minimum of one year outnumbered those leaving by 273,000 in the year through September, the Office for National Statistics in London said. That’s down from a near-record 335,000 in the year prior the June vote to leave the European Union. Net migration from other European Union nations fell to 165,000. May has promised tighter controls on immigration as she prepares to trigger the start of Brexit negotiations in the next five weeks. (Source: Bloomberg)

S. Korea: Feb 2017 consumer confidence rises to 94.4 from 93.3. Households’ inflation expectation for next 12 months fell to 2.7%, Bank of Korea says in a statement. Survey based on responses from 2,039 households across the nation, conducted between Feb. 10-17. A reading below 100 indicates that pessimists outnumber optimists. (Source: Bloomberg)





Other News:

Pos Malaysia: 3Q pre-tax profit doubled. The company saw its net profit soar 55% y-o-y to MYR34.8m in its third financial quarter ended Dec 31, 2016 (3QFY17), from MYR22.5m, thanks to the courier segment's higher contribution to the postal group's bottomline. Quarterly revenue climbed 28.5% to MYR635.7m as it received a contribution of MYR169.3m from its logistics business pursuant to the acquisition of Pos Aviation Sdn Bhd. For the cumulative nine months period ended Dec 31, 2016 (9MFY17), net profit surged 50.6% to MYR73.4m or 11.56 sen per share, from MYR 48.7m or 9.08 sen per share in the previous corresponding period. Revenue expanded 12.7% to MYR 1.4b from MYR 1.3b a year ago. (Source: The Edge Financial Daily)

Unisem : Proposed 4 sen dividend. saw its fourth quarter net profit fall 15% to MYR 51.3m due to higher tax expense arising from reversal of deferred tax assets. The semiconductor device maker’s quarterly revenue grew 2.9% to MYR 362.1m, with full-year revenue rising 5% to MYR 1.32b due to an improvement in all segments. The company proposed a final dividend of four sen after it recorded a 4.3% increase in its net profit of MYR 162.3m in FY16 from MYR 155.5m a year earlier. (Source: The Edge Financial Daily)

IGB: Goldis offers to buy rest of shares for MYR3/share. Private equity investment house Goldis Bhd yesterday offered to pay IGB Corp Bhd shareholders MYR3 a share, in either cash or a combination of cash and shares in Goldis, in a bid to delist IGB and make it a wholly owned subsidiary. The offer is a 19% premium to IGB’s share price which last traded at MYR2.52 yesterday, while Goldis’ illiquid shares closed unchanged at MYR2.50 apiece. Goldis said the move is to eliminate its holding company discount on IGB. IGB is currently a 73.43%-owned subsidiary of Goldis. Goldis explained the strategic initiative will provide it with greater liberty to plan and decide on the strategic and business directions of IGB, and therefore increase its investments in a profitable group. (Source: The Sun Daily)


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