Monday, February 13, 2017

Sunway: SunCity in MYR2b project opposite Sunway Velocity. Its wholly-owned subsidiary Sunway City S/B (SunCity) has entered into a joint venture (JV) agreement to develop 8.45 acres of leasehold land at Jalan Peel, Cheras, Kuala Lumpur. The property developer has proposed to build a mixed development comprising serviced apartments, retail shops and offices on the land, which is located opposite Sunway Velocity. The project’s estimated gross development value (GDV) is MYR2b and will be developed over 10 years. The targeted launch of the project is in the first half of 2018. (Source: The Sun Daily)






MISC Bhd | Dividend surprise
Yen Ling Lee







Westports Holdings | Transitional year
Yen Ling Lee









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Regional Plantations | January 2017 stockpile on seasonal decline
Chee Ting Ong









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Malaysia | Further pick up in growth
Suhaimi Ilias







Malaysia | PUNCHING THROUGH 1,700?
Tee Sze Chiah








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COMPANY RESEARCH





Results Review





MISC Bhd (MISC MK)
by Yen Ling Lee





Share Price:
MYR7.60
Target Price:
MYR7.60
Recommendation:
Hold




Dividend surprise

While 4Q16 core net profit rebounded strongly, it was still below our expectation. We lower our 2017-18 EPS forecasts by 7%/4% on lower petroleum tanker rates and introduce our 2019 forecasts. MISC surprised with a high dividend payout which indicates a DY of 3.9% in 2016. Given its low net gearing of 16% and the long-term nature of its chartering business, we think the high dividend payout could be sustained. Maintain our HOLD call and SOP-based TP of MYR7.60.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
10,908.4
9,597.2
9,513.9
9,910.5
EBITDA
3,913.2
3,898.8
4,106.8
4,424.4
Core net profit
2,782.0
1,914.0
1,930.0
2,092.1
Core EPS (sen)
62.3
42.9
43.2
46.9
Core EPS growth (%)
43.2
(31.2)
0.8
8.4
Net DPS (sen)
20.0
30.0
30.3
32.8
Core P/E (x)
12.2
17.7
17.6
16.2
P/BV (x)
1.0
0.9
0.9
0.9
Net dividend yield (%)
2.6
3.9
4.0
4.3
ROAE (%)
na
na
na
na
ROAA (%)
6.2
3.7
3.4
3.6
EV/EBITDA (x)
11.2
10.3
10.1
9.6
Net debt/equity (%)
2.3
15.4
15.4
16.9










Results Review





Westports Holdings (WPRTS MK)
by Yen Ling Lee





Share Price:
MYR4.13
Target Price:
MYR4.40
Recommendation:
Hold




Transitional year

Strong 4Q16 net profit was within expectations. Share price is down 4% YTD on uncertainties following CMA CGM’s plan to move 1m TEUs out of Westports in 2017 and that surrounding UASC. That said, volume growth in 1H17 could still be strong given the ad-hoc activities by the two new shipping alliances. We maintain our 2017-18 EPS forecasts and introduce 2019 forecast; also, our DCF-derived TP of MYR4.40 (WACC: 6.7%; 2025-54 growth rate: 2%) and HOLD call.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,578.3
1,804.3
1,820.2
1,945.4
EBITDA
869.1
963.5
998.1
1,127.6
Core net profit
504.9
616.6
646.9
644.8
Core EPS (sen)
14.8
18.1
19.0
18.9
Core EPS growth (%)
(1.4)
22.1
4.9
(0.3)
Net DPS (sen)
11.1
14.0
14.2
14.2
Core P/E (x)
27.9
22.8
21.8
21.8
P/BV (x)
7.4
6.8
6.3
5.9
Net dividend yield (%)
2.7
3.4
3.4
3.4
ROAE (%)
27.6
32.1
30.1
27.9
ROAA (%)
12.8
14.7
14.5
13.9
EV/EBITDA (x)
17.0
16.0
15.4
13.5
Net debt/equity (%)
39.7
35.3
57.2
46.1







SECTOR RESEARCH






January 2017 stockpile on seasonal decline
by Chee Ting Ong


Sector Note





MPOB’s Jan 2017 stockpile was the lowest January levels in 6 years which will continue to be supportive of 1Q17 CPO prices at around MYR3,000/t. While our 12M fundamental view for the sector remains a NEUTRAL, we advocate a trade in 1Q17 as the release of upcoming 4Q16 results, likely to be strong, will lift overall investment sentiment. We prefer Indonesia planters over Malaysia given their cheaper valuations and faster yield recovery. Our BUYs are BPLANT, SOP, BAL, AALI, LSIP, TBLA.









MACRO RESEARCH






Further pick up in growth
by Suhaimi Ilias


Economics Research





In 4Q 2016, industrial production growth quickened (4Q 2016 to +5.0% YoY; 3Q 2016: +3.9% YoY), index of services slowed (4Q 2016: +5.9% YoY; 3Q 2016: +6.2% YoY), the drop in palm oil output eased pointing to smaller contraction in agriculture sector, while growth in the value of construction works moderated. Based on these supply-side indicators, we estimated 4Q 2016 real GDP growth was +4.7% YoY (3Q 2016: +4.3% YoY).












PUNCHING THROUGH 1,700?
by Tee Sze Chiah


Technical Research





FBMKLCI rose 10.44pts last Friday but fell short of the 1,700 psychological levels. Buoyant mood in blue chip stocks were shared across the board after 542 stocks closed in positive territory versus 338 stocks which closed in the red. Total trading volume was at 2.69b, valued at MYR2.40b. Even though we maintain our positive outlook on the benchmark index, there is a tendency for traders to lock in recent gains as the index is now lingering near 1,700. For today, we expect...







NEWS


Outside Malaysia:

U.S: America’s biggest creditors dump treasuries in warning to Trump. In the age of Trump, America’s biggest foreign creditors are suddenly having second thoughts about financing the U.S. government. In Japan, the largest holder of Treasuries, investors culled their stakes in December by the most in almost four years, the Ministry of Finance’s most recent figures show. Across the world, foreigners are pulling back from U.S. debt like never before. From Tokyo to Beijing and London, the consensus is clear: few overseas investors want to step into the USD 13.9t U.S. Treasury market right now. Foreigners currently still hold USD 5.94t, or roughly 43% of the U.S. government debt market, down from 56% in 2008. Homegrown demand has of late been able to absorb the pickup in overseas selling. Since reaching 2.64% in mid-December, yields on benchmark 10-year notes have come back and are essentially flat this year. (Source: Bloomberg)

Japan: Economy continued on a moderate growth path during the final quarter of 2016, driven by rising exports and business investment. GDP expanded 1% on an annualized basis in the three months through December from the previous quarter, according to data released by the Cabinet Office. Measured quarter on quarter, GDP rose 0.2%. Private consumption was unchanged, business spending rose 0.9% and net exports, or shipments less imports, added 0.2 percentage point to GDP. Japan’s economy has now expanded for a fourth consecutive quarter for the first time in more than three years. (Source: Bloomberg)





Other News:

Sunway: SunCity in MYR2b project opposite Sunway Velocity. Its wholly-owned subsidiary Sunway City S/B (SunCity) has entered into a joint venture (JV) agreement to develop 8.45 acres of leasehold land at Jalan Peel, Cheras, Kuala Lumpur. The property developer has proposed to build a mixed development comprising serviced apartments, retail shops and offices on the land, which is located opposite Sunway Velocity. The project’s estimated gross development value (GDV) is MYR2b and will be developed over 10 years. The targeted launch of the project is in the first half of 2018. (Source: The Sun Daily)

WZ Satu: Buys PR1MA construction company for MYR30m.The company is acquiring a PR1MA housing project’s construction company from funeral service provider Nirvana Asia Ltd’s founder-cum-executive chairman Tan Sri Kong Hon Kong and deputy chief executive officer Kong Yew Foong for MYR30m, to be satisfied via issuance of shares. It entered into a conditional share sale agreement with Hon Kong and Yew Foong to acquire 500,000 shares or the entire equity interest in the abovementioned company, called Cekap Semenanjung S/B. Hon Kong owns 499,999 shares in Cekap Semenanjung while the remaining one share is owned by Yew Foong. After the acquisition, Hon Kong is expected to hold 7.8% direct interest in WZ Satu. (Source: The Edge Financial Daily)

MWE Holdings: Sells stake in Integrity Tracking, pocketing close to USD10m.The group sold off its entire stake in US-based medical mobile monitoring company, Integrity Tracking, for approximately USD10.26m (MYR44.83m), which the cash proceeds from the sale will be used to reduce the group’s debt and as future working capital, company filing states. The company’s board “views this disposal as a good opportunity to unlock and maximize its investments in the US.” The company looks to pocket an estimated USD9.87m within 45 days from the date of merger, while the remaining USD389,000 is held by a third party to pay for possible expenses after Integrity Tracking’s merger with MobileHelp. (Source: The Edge Financial Daily)


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