Monday, February 20, 2017

Protasco: Bags MYR90m road maintenance job from Perak government. The group has bagged a contract worth MYR90.1m for the routine and periodic maintenance of agricultural roads in Perak. The two-year contract, which will end on Feb 19, 2019, was awarded by the Perak government to Protasco's subsidiary Empaya Indera S/B. The contract is expected to contribute positively to the net assets and earnings of the group for the financial year ending Dec 31






Globetronics Technology | Looking better
Ivan Yap







Ann Joo Resources | Positive near-term outlook
Yen Ling Lee









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COMPANY RESEARCH





Rating Change





Globetronics Technology (GTB MK)
by Ivan Yap





Share Price:
MYR4.43
Target Price:
MYR4.05
Recommendation:
Hold




Looking better

Globetronics’ share price has rebounded 61% from its low, on positive sentiment for its sensor division - strong revenue growth from potential supply of new sensors. Nonetheless, sequential earnings up to 2Q/3Q17 should stay suppressed on weak volumes for the existing sensors and high depreciation from capex for the new sensors. Valuations are fair post our earnings adjustments (-9%/+33% for FY17/18). Our new TP is MYR4.05 as we roll forward valuations to CY18 on unchanged 14x PER peg.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
355.0
343.7
229.4
345.6
EBITDA
108.6
96.3
48.6
91.7
Core net profit
64.4
71.3
27.0
48.3
Core FDEPS (sen)
22.9
25.3
9.5
17.0
Core FDEPS growth(%)
20.5
10.4
(62.4)
79.1
Net DPS (sen)
23.0
20.0
20.0
12.0
Core FD P/E (x)
19.3
17.5
46.5
26.0
P/BV (x)
4.4
4.2
4.6
4.4
Net dividend yield (%)
5.2
4.5
4.5
2.7
ROAE (%)
23.0
24.4
9.5
17.4
ROAA (%)
18.5
19.9
7.9
14.4
EV/EBITDA (x)
9.7
17.3
22.5
12.4
Net debt/equity (%)
net cash
net cash
net cash
net cash










Company Update





Ann Joo Resources (AJR MK)
by Yen Ling Lee





Share Price:
MYR2.44
Target Price:
MYR2.65
Recommendation:
Buy




Positive near-term outlook

Upcoming 4Q16 results could see better earnings on higher sales volume and margin expansion. The near-term demand outlook is bright as we expect tight supply of bars/rods in 2017. Coupled with higher margin expectations, we have raised our 2017-18 EPS forecasts by 13%/12%. Our new TP of MYR2.65 (+6%) is based on 10x PER (mean) on a diluted 2017 EPS, shifting from asset-based valuation on improved earnings outlook.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,291.9
1,760.9
2,159.3
2,259.9
EBITDA
127.0
12.4
239.7
268.8
Core net profit
23.3
(135.5)
127.0
148.1
Core EPS (sen)
4.5
(25.9)
24.3
26.4
Core EPS growth (%)
90.2
nm
nm
8.8
Net DPS (sen)
1.0
0.0
9.7
8.5
Core P/E (x)
54.7
nm
10.0
9.2
P/BV (x)
1.2
1.4
1.3
1.1
Net dividend yield (%)
0.4
0.0
4.0
3.5
ROAE (%)
2.2
(13.6)
13.2
13.8
ROAA (%)
0.8
(5.2)
5.3
6.2
EV/EBITDA (x)
15.0
128.1
9.1
8.0
Net debt/equity (%)
126.2
133.6
90.4
76.5








MACRO RESEARCH






Potential pullback lurking
by Tee Sze Chiah


Technical Research





FBMKLCI closed barely unchanged last Friday, ended merely 0.09pts higher to close at 1,707.68. Broader market also showcased a similar trend with losers outpaced gainers by 431 to 427. Trading volume of 2.22b worth MYR2.4b was recorded. This week, market could be in a consolidation mode as selling pressure has built up for a while. The benchmark index could test its 61.8% and 72% Fibonacci Zones, between 1,680 and 1,690 this week. Immediate downside supports are 1,700 and 1,680.







NEWS


Outside Malaysia:

Germany: Merkel resists Trump, says euro's value is out of her hands. German Chancellor Angela Merkel said the euro has a “valuation problem” that’s beyond her control and questioned President Donald Trump’s suggestion that the German luxury cars in his New York neighborhood reflect an unfair trade advantage. Merkel said the euro’s exchange rate does contribute to Germany’s trade surplus, though that’s because European Central Bank’s needs to set monetary policy that responds to disparate economic performances across 19 nations. The euro reached a 14- year low of $1.0388 in December. “If we still had the deutsche mark, it would be valued differently than the euro is now,” Merkel said in response to a question about Germany’s current-account surplus at the Munich Security Conference. “But that’s an independent monetary policy over which I as chancellor have zero influence.” (Source: Bloomberg)

U.K: Blair urges Brexit opponents to rise up and fight to stay in EU. Tony Blair urged opponents of Brexit to “rise up” and fight to change the British people’s minds about leaving the European Union, in a speech that aimed to show U.K. Prime Minister Theresa May that she won’t get everything her own way. “People voted without knowledge of the true terms of Brexit,” the former Labour prime minister said in a speech in London. “As these terms become clear, it is their right to change their mind. Our mission is to persuade them to do so.” (Source: Bloomberg)

China: Record global buying spree wanes amid capital flow curbs. China’s record outbound investment slumped last month as authorities stepped up scrutiny of acquisitions overseas and other deals to keep money from flowing out of the country. The world’s biggest trading nation saw outward investment decline 35.7% YoY in yuan terms in January, the Ministry of Commerce said. Foreign direct investment to the nation also dropped by 9.2%. Overseas purchases surged to a record last year. Last month, the foreign exchange regulator rolled out measures to further examine such deals. The government has announced new rules aimed at keeping money in the country as officials seek to stem capital outflows and bolster the weakening yuan. (Source: Bloomberg)

Crude Oil: Holds gains as U.S. producers boost drilling amid OPEC cuts. Oil held gains above USD 53/bbl as investors weighed rising U.S. drilling activity against OPEC production cuts which have kept prices in a narrow trading range. In the U.S., drillers increased the rig count to the highest since October 2015, according to Baker Hughes Inc. Russia may trim output by more than 100,000 barrels a day this month, more than initially planned under the deal with OPEC, Interfax reported, citing Energy Minister Alexander Novak. (Source: Bloomberg)





Other News:

Protasco: Bags MYR90m road maintenance job from Perak government. The group has bagged a contract worth MYR90.1m for the routine and periodic maintenance of agricultural roads in Perak. The two-year contract, which will end on Feb 19, 2019, was awarded by the Perak government to Protasco's subsidiary Empaya Indera S/B. The contract is expected to contribute positively to the net assets and earnings of the group for the financial year ending Dec 31, 2017. (Source: The Edge Financial Daily)

CB Industrial: Wins two contracts worth MYR67m. Its wholly-owned subsidiary PalmitEco Engineering S/B has been awarded two contracts worth a total of MYR67.01m by PT Lifere Agro Kapuas, a subsidiary of United Malacca. The contracts are for imports of materials and equipment, and civil, structural, mechanical and electrical works for a new palm oil mill in Kalimantan, Indonesia. The first contract (import portion) is worth about MYR17.2m while the second contract (local portion) is worth IDR149.22b (about MYR49.8m). (Source: The Sun Daily)

Sumatec: To raise MYR400m to fund Kazakh projects, ventures into LPG production. The Oil and gas services provider announced to Bursa today a slew of corporate proposals related to its Kazakhstan projects, with plans to raise some MYR400m via private placement, share issuance and rights issues with warrants. The company has also inked an agreement with Ken Makmur Holdings S/B and Markmore Energy Labuan Ltd to produce liquefied petroleum gas and condensate, as it seeks a new source of income. The LPG production will only start after the group has completed its cash call exercise. (Source: The Edge Financial Daily)

Pintaras Jaya: 2Q net profit jumps three-folds. The company net profit jumped by three folds to MYR11.31m for its second quarterly results in the financial period ended Dec 31, 2016 (2QFY17), from MYR2.53m in the previous year, due largely to a significant improvement in contribution by its construction division and higher investment income. Revenue increased by 92% to MYR59.77m, from MYR31.21m a year ago. Pintaras said the construction division achieved a high revenue of MYR52m in the recent quarter, compared with its earnings of MYR23m in the same quarter last year. (Source: The Edge Financial Daily)


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