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Share
Price:
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MYR1.74
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Target
Price:
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MYR1.88
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Recommendation:
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Buy
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Within
expectations
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Despite meeting just 45%/46% of our/consensus full-year
estimates, we deem VSI’s 1HFY7/17 core net profit of MYR72m (-18% YoY)
within expectations as we look forward to a much stronger 2HFY17,
driven by a high volume of vacuum cleaner box-builds to a key client.
Pending an analyst briefing next week, our earnings forecasts are
unchanged. Our MYR1.88 TP is unchanged, pegging VSI at 14x CY18 PER
(based on 30% premium to peers). BUY.
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FYE Jul (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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1,936.9
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2,175.6
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2,797.1
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3,193.9
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EBITDA
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239.2
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226.4
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303.0
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356.1
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Core net profit
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135.7
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135.1
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159.3
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197.5
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Core FDEPS (sen)
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10.4
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8.5
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10.1
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12.5
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Core FDEPS growth(%)
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111.8
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(18.2)
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17.9
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24.0
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Net DPS (sen)
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4.8
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4.7
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4.6
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5.3
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Core FD P/E (x)
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16.7
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20.4
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17.3
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13.9
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P/BV (x)
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2.9
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2.6
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2.1
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1.8
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Net dividend yield (%)
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2.8
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2.7
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2.6
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3.1
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ROAE (%)
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20.4
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14.2
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15.5
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15.1
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ROAA (%)
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8.0
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7.0
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7.6
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8.5
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EV/EBITDA (x)
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8.5
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9.2
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9.1
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7.7
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Net debt/equity (%)
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17.2
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18.4
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10.3
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net cash
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Share
Price:
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MYR2.87
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Target
Price:
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MYR2.55
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Recommendation:
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Hold
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Nascent
operational turn-around
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4QFY1/17 and FY1/17 earnings were marginally below
expectations but dividends were within expectations. Positively, we
noted that Pay-TV subscribers are returning and yielding more ARPU.
That said, the weak MYR will weigh on margins via higher content cost.
For now, we trim our FY1/18 EPS estimate by 3% but leave our FY1/19 EPS
estimate relatively unchanged on housekeeping changes. In a similar
vein, we tweak our DCF-based TP upward by 2% to MYR2.55. Maintain HOLD.
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FYE Jan (MYR m)
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FY16A
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FY17A
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FY18E
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FY19E
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Revenue
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5,475.4
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5,612.6
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5,701.3
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5,749.0
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EBITDA
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1,940.6
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1,816.5
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1,953.2
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2,015.3
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Core net profit
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662.0
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663.4
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802.4
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884.5
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Core FDEPS (sen)
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12.7
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12.7
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15.3
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16.9
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Core FDEPS growth(%)
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27.3
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0.2
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20.4
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10.2
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Net DPS (sen)
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12.0
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12.5
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12.5
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13.5
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Core FD P/E (x)
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22.6
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22.6
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18.7
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17.0
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P/BV (x)
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24.9
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24.0
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19.3
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15.6
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Net dividend yield (%)
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4.2
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4.4
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4.4
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4.7
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ROAE (%)
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95.1
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101.9
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114.7
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102.1
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ROAA (%)
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9.7
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10.1
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12.5
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13.9
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EV/EBITDA (x)
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9.1
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9.5
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9.2
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8.8
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Net debt/equity (%)
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516.4
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481.0
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385.9
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298.0
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MACRO RESEARCH
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COMEX GOLD Recovery play
by Tee
Sze Chiah
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FBMKLCI surged 9.47pts to close at 1,754.42 yesterday.
Market breadth was equally positive with gainers outpaced losers by
513 to 366. A total of 3.07b shares worth MYR2.42b changed hands.
Yesterday’s gap-up could signal that recovery is underway. We expect
FBMKLCI to trade between 1,750 and 1,765 today. Downside support is
at 1,738 and 1,713.
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NEWS
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Outside Malaysia:
U.S. Consumer confidence unexpectedly surges to a 16-year
high in March, as Americans grew increasingly upbeat about both present
and future conditions, according to a report from the New York-based
Conference Board. Confidence index rose to 125.6, highest since December
2000, from 116.1 in February. Present conditions gauge increased to
143.1, strongest since August 2001, from 134.4. Measure of consumer
expectations for the next six months rose to 113.8, highest since
September 2000, from 103.9. Share of those who said more jobs will be
available in the coming months increased to 24.8%, the highest since
November 1983, from 20.9%. (Source: Bloomberg.)
U.S: January home prices in 20 cities rise at fastest pace
since 2014, while nationwide the increase in property values also
accelerated, according to S&P CoreLogic Case-Shiller. The 20-city
property values index rose 5.7% YoY after increasing 5.5% YoY in the year
through December. National home-price gauge increased 5.9% YoY in the 12
months through January. Seasonally adjusted 20-city index advanced 0.9%
MoM. (Source: Bloomberg)
E.U: The ECB currently sees its deposit rate as its key
policy rate so it must be very cautious in any signals it sends over the
measure, Executive Board member Peter Praet said. “Any communication on
the deposit facility rate is a signal on the monetary policy stance, and
there should be no ambiguity on this,” Praet said. The chief economist’s
comments are a pushback against a debate that has started to form over
whether the ECB might consider raising the deposit rate - currently -0.4%
- before the main refinancing rate, previously its main policy lever, or
before its bond-buying program is complete. The negative deposit rate
amounts to a charge on excess liquidity held by banks, who have expressed
concern over the squeeze on their profitability. (Source: Bloomberg)
China: Seeks to boost lending to manufacturers in stimulus
push. China has asked banks and financial institutions to increase their
lending to the manufacturing sector as policy makers seek to bolster
stimulus in the wider economy. Banks should provide more medium-term
credit to enhance manufacturers’ technology, especially for smaller
enterprises, according to a guideline jointly issued by the People’s Bank
of China, Ministry of Industry and Information Technology and three
financial regulators. Officials encouraged lenders to set up specific
departments for manufacturers and to apply different lending criteria to
companies that use advanced technologies. (Source: Bloomberg)
Japan: February retail sales rise less than forecast,
signaling that consumer spending is struggling to gain traction. Retail
sales increased 0.1% YoY in February, after rising 1% YoY in the previous
month. Japan’s recent growth has been mostly supported by exports, with
tepid gains in wages limiting any recovery in domestic private
consumption. Workers will receive a smaller increase in base pay this
year, according to preliminary results from the annual spring wage talks.
(Source: Bloomberg)
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Other News:
UEM Edgenta: To raise MYR1b for expansion, capital
rebalancing. UEM Edgenta has signed an agreement for the issuance of
MYR1b sukuk programme financing to rebalance its capital and general
corporate expansion. The Islamic Commercial Papers (ICP Programme) and
Islamic Medium Term Notes (IMTN Programme) have been assigned preliminary
ratings of MARC-1IS/AA-IS by Malaysian Rating Corp Bhd with a stable
outlook. (Source: The Sun Daily)
Econpile: Secures MYR92.5m contract. Econpile Holdings has
been awarded a MYR92.5m contract to build the diaphragm wall for the
Kampung Baru North Underground Station, Klang Valley Mass Rapid Transit 2
(KVMRT2) Sungai Buloh-Serdang-Putrajaya line. The construction and
completion of the diaphragm wall is part of works for the underground
works package, encompassing the design, construction and completion of
tunnels, stations and associated structures from Jalan Ipoh North Escape
Shaft to Desa Waterpark South Portal, under KVMRT2. The project is
expected to take about 450 days from date of commencement, which will be
determined in due course. The contract boosts the group’s total order
book to a new high of MYR1.5b for the next two years. (Source: The Sun
Daily)
Prestariang: Partners Thales on border security project.
Prestariang has entered into heads of agreement (HoA) with France’s
Thales Group to implement an integrated technology platform to transform
the core applications and infrastructure of the national immigration
system. The HoA will cease upon coming into force of a memorandum of
agreement (MoA). The contract value of this collaboration will be subject
to the MoA’s finalisation as may be mutually agreed between the parties.
TAHPS Group: To launch MYR100m GDV project in Q4. TAHPS
Group via property arm Bukit Hitam Development S/B is looking to launch a
landed property project with a gross development value (GDV) of more than
MYR100m. This is part of the planned MYR10b township in Bukit Puchong
announced in 2015. The project, comprising 140 units of gated landed
houses on 20.23ha, is expected to be launched by the fourth quarter of
this year. (Source: The Star)
Cypark: Clinches MYR28.5m jobs from Government. Cypark
Resources has clinched three contracts worth MYR28.48m from the National
Solid Waste Management Department to operate of the leachate treatment
plants (LTPs) for landfills in Negri Sembilan and Pahang. The LTP
operations for the Pajam (Nilai) and Bukit Palong (Port Dickson)
landfills would be for five years starting April 2, 2017. The contract
involving the Jabor-Jerangau (Kuantan) landfill will be for two years
beginning April 3.
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