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Share
Price:
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MYR7.60
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Target
Price:
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MYR7.60
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Recommendation:
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Hold
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Dividend
surprise
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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.
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FYE Dec (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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10,908.4
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9,597.2
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9,513.9
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9,910.5
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EBITDA
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3,913.2
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3,898.8
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4,106.8
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4,424.4
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Core net profit
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2,782.0
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1,914.0
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1,930.0
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2,092.1
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Core EPS (sen)
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62.3
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42.9
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43.2
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46.9
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Core EPS growth (%)
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43.2
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(31.2)
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0.8
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8.4
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Net DPS (sen)
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20.0
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30.0
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30.3
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32.8
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Core P/E (x)
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12.2
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17.7
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17.6
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16.2
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P/BV (x)
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1.0
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0.9
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0.9
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0.9
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Net dividend yield (%)
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2.6
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3.9
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4.0
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4.3
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
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6.2
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3.7
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3.4
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3.6
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EV/EBITDA (x)
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11.2
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10.3
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10.1
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9.6
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Net debt/equity (%)
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2.3
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15.4
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15.4
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16.9
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Share
Price:
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MYR4.13
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Target
Price:
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MYR4.40
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Recommendation:
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Hold
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Transitional
year
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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.
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FYE Dec (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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1,578.3
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1,804.3
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1,820.2
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1,945.4
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EBITDA
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869.1
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963.5
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998.1
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1,127.6
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Core net profit
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504.9
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616.6
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646.9
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644.8
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Core EPS (sen)
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14.8
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18.1
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19.0
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18.9
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Core EPS growth (%)
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(1.4)
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22.1
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4.9
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(0.3)
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Net DPS (sen)
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11.1
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14.0
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14.2
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14.2
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Core P/E (x)
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27.9
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22.8
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21.8
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21.8
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P/BV (x)
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7.4
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6.8
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6.3
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5.9
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Net dividend yield (%)
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2.7
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3.4
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3.4
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3.4
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ROAE (%)
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27.6
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32.1
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30.1
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27.9
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ROAA (%)
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12.8
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14.7
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14.5
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13.9
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EV/EBITDA (x)
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17.0
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16.0
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15.4
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13.5
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Net debt/equity (%)
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39.7
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35.3
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57.2
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46.1
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SECTOR RESEARCH
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January 2017 stockpile on seasonal decline
by Chee
Ting Ong
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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.
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MACRO RESEARCH
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Further pick up in growth
by
Suhaimi Ilias
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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).
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Suhaimi Ilias
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Zamros
Dzulkafli
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PUNCHING THROUGH 1,700?
by Tee
Sze Chiah
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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...
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NEWS
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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)
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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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