Friday, February 3, 2017

Vizione: Raises MYR58.92m, eyes more construction job. The group has raised gross proceeds of MYR58.92m, following the completion of its two-for-one rights issue with free detachable warrants. Given the funding, Vizione is set to secure more construction projects to enhance its future earnings. Vizione said it managed to secure a final subscription level of 99






Public Bank | A more subdued outlook
Desmond Ch'ng







Malaysia Marine & Heavy Engineering | Take profit; D/G to SELL
Thong Jung Liaw








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COMPANY RESEARCH





Results Review





Public Bank (PBK MK)
by Desmond Ch'ng





Share Price:
MYR20.14
Target Price:
MYR19.70
Recommendation:
Hold




A more subdued outlook

Into 2017, management guides for slower loan growth, NIM compression and higher overheads. These, nevertheless, are factors that we have already taken into account and thus our forecasts are maintained. On the back of an FY17E ROE of 14.8%, we peg on a P/BV of 2x to derive our unchanged TP of MYR19.70. The group’s strong fundamentals are reflected in current pricing, in our view.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Operating income
9,438.8
9,896.0
10,307.6
10,761.5
Pre-provision profit
6,523.6
6,684.6
6,928.6
7,237.1
Core net profit
4,955.2
5,146.4
5,296.9
5,492.7
Core EPS (MYR)
1.28
1.33
1.37
1.42
Core EPS growth (%)
9.7
3.9
2.9
3.7
Net DPS (MYR)
0.56
0.58
0.59
0.61
Core P/E (x)
15.7
15.1
14.7
14.2
P/BV (x)
2.5
2.3
2.1
1.9
Net dividend yield (%)
2.8
2.9
2.9
3.0
Book value (MYR)
8.09
8.86
9.73
10.64
ROAE (%)
16.7
15.7
14.8
14.0
ROAA (%)
1.4
1.4
1.4
1.3










Company Update





Malaysia Marine & Heavy Engineering (MMHE MK)
by Thong Jung Liaw





Share Price:
MYR1.02
Target Price:
MYR0.90
Recommendation:
Sell




Take profit; D/G to SELL

MMHE’s share price has appreciated by 15% post our upgrade to HOLD in 19 Dec 2016 and is now 12% ahead of our MYR0.90 TP, pegged to 1x EV/ order backlog (unchanged). We advocate investors to lock-in gains ahead of headwinds in its upcoming 4Q16 results due next week. MMHE needs a significant order win to warrant a re-rating, in our view. In addition, we maintain our view - we do not see MMHE as a privatisation candidate. Our earnings forecasts are unchanged.



FYE Dec (MYR m)
FY14A
FY15A
FY16E
FY17E
Revenue
2,700.5
2,459.0
1,298.6
1,003.1
EBITDA
248.2
157.9
88.4
84.0
Core net profit
173.1
93.3
41.8
36.8
Core EPS (sen)
10.8
5.8
2.6
2.3
Core EPS growth (%)
(26.8)
(46.1)
(55.2)
(12.1)
Net DPS (sen)
0.0
0.0
0.0
0.0
Core P/E (x)
9.4
17.5
39.0
44.4
P/BV (x)
0.6
0.6
0.6
0.6
Net dividend yield (%)
0.0
0.0
0.0
0.0
ROAE (%)
5.0
1.7
1.6
1.3
ROAA (%)
3.6
2.1
1.1
1.0
EV/EBITDA (x)
10.2
4.8
9.3
9.7
Net debt/equity (%)
net cash
net cash
net cash
net cash


Thong Jung Liaw






NEWS


Outside Malaysia:

U.S: Productivity gains cooled last quarter; labor costs rose. The measure of employee output per hour increased at a 1.3% annualized rate, after a revised 3.5% rise in the prior three months, Labor Department figures showed. Expenses per worker rose at a 1.7% pace. (Source: Bloomberg)

U.S: Filings for jobless benefits fell to 246,000 last week, marking 100 straight weeks of claims below 300,000. That’s the longest streak since 1970 and indicates a healthy job market. Jobless claims declined by 14,000 to 246,000 in the week ended Jan. 28, a Labor Department report showed. The sustained trend of historically low jobless claims shows businesses are retaining existing employees as they face a shortage of skilled workers amid a tight labor market. (Source: Bloomberg)

Singapore: Sees little growth in fixed-asset investments this year after commitments fell to the lowest level since at least 2007, the Economic Development Board said. Capital investment in facilities and equipment planned over the next five years stood at SGD 9.4b (USD 6.7b) last year and should stabilize at around SGD 8b to SGD 10b in coming years, Beh Swan Gin, chairman of the EDB, told reporters. (Source: Bloomberg)

Australia: Posted a record trade surplus as iron ore and coal exports surged on the back of demand from China and Japan. Exports climbed 5% from month earlier, while imports rose 1% and trade surplus was at AUD 3.51b for December. Largest value of coal exports since November 2008; highest value of iron ore exports since March 2014. Australia’s trade performance closely correlates with demand from China’s old growth drivers like infrastructure and apartment construction. The government in Beijing’s stimulus program, together with cutbacks in coal output, has helped underpin a surge in coal and iron ore prices that’s now reflected in Australia’s sharply improved trade balance. However, the impact of a fall in coal prices since November remains to be seen. (Source: Bloomberg)





Other News:

Vizione: Raises MYR58.92m, eyes more construction job. The group has raised gross proceeds of MYR58.92m, following the completion of its two-for-one rights issue with free detachable warrants. Given the funding, Vizione is set to secure more construction projects to enhance its future earnings. Vizione said it managed to secure a final subscription level of 99.84%, equivalent to 582.92 million rights shares. (Source: The Edge Financial Daily)

Daya Materials: Subsidiary to provide crowd/passenger systems solution. Its 67% owned subsidiary Daya OCI S/B will work with an agency under the purview of the Finance Ministry to set up a crowd/passenger systems solution for the transportation industry in Malaysia. The group had signed a memorandum of understanding with Technology Depository Agency S/B to establish “a close cooperative relationship between the parties” for the project. (Source: The Star)

Uzma: Takes part in joint study with Petronas, academia. The group has announced its participation in a joint industry project agreement (JIP) which looks to better equip oil and gas industry players with improved methods for carbon dioxide (CO2) injection modelling for future Enhanced Recovery Oil (EOR) projects. Uzma will join Petronas first ever JIP with Heriot-Watt University, Petronas Research S/B and Institute of Technology Petronas S/B. The joint study will span the next three years, whereby the project will focus on minimising uncertainties affecting the predictions of hydrocarbon recovery as well as supporting the simulation studies through the acquisition of key physical data. (Source: The Sun Daily)

MMC: MMC-Gamuda JV to pay firm MYR109m to settle SMART dispute. MMCEG-Gamuda Joint Venture, which is 50:50 owned by Gamuda and MMC Corp, said yesterday it has agreed to pay Wayss & Freytag (Malaysia) S/B MYR109.14m as a final settlement on a contract dispute involving the SMART (Stormwater Management and Road Tunnel) project. Following the amicable settlement, the parties have taken steps to terminate the arbitration proceedings. Gamuda and MMC said the settlement would save further costs and time as opposed to continuing with the protracted legal process that has been ongoing since 2008. (Source: The Sun Daily)


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