Friday, April 14, 2017

Anzo: Gets letter of intent for MYR1.2b construction job. Its unit Harvest Court Construction S/B has received a letter of intent for a mixed development contract worth up to MYR1.2b from KL Northgate S/B. The scope of work involves, among others, piling works and main buildings works for a sho






Ann Joo Resources | Safeguard duties for another 3 years
Yen Ling Lee







Bermaz Auto Berhad | Keeping up with times
Ivan Yap









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COMPANY RESEARCH





Company Update





Ann Joo Resources (AJR MK)
by Yen Ling Lee





Share Price:
MYR2.64
Target Price:
MYR3.20
Recommendation:
Buy




Safeguard duties for another 3 years

The definitive safeguard duties for bars/rods have been determined at 11-14% on a declining rate over the next 3 years. Although, there is limited dumping risk presently given the improved demand in China, the safeguard duties will protect the local steel industry from any massive import over the next 3 years. We remain positive on AJR given the higher ASPs and improved demand-supply dynamics globally. Maintain EPS forecasts, BUY, TP of MYR3.20 (10x on partially diluted 2017 EPS, mean).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,760.9
1,870.1
2,157.6
2,251.0
EBITDA
12.4
296.1
308.5
320.2
Core net profit
(74.9)
166.8
180.6
192.8
Core EPS (sen)
(14.3)
31.9
32.2
34.4
Core EPS growth (%)
nm
nm
1.0
6.8
Net DPS (sen)
0.0
15.0
13.8
14.8
Core P/E (x)
nm
8.3
8.2
7.7
P/BV (x)
1.5
1.3
1.1
1.0
Net dividend yield (%)
0.0
5.7
5.2
5.6
ROAE (%)
(13.6)
16.7
15.8
15.1
ROAA (%)
(2.9)
7.0
7.5
7.7
EV/EBITDA (x)
128.1
6.9
6.9
6.4
Net debt/equity (%)
133.6
84.6
62.2
50.0










Company Update





Bermaz Auto Berhad (BAUTO MK)
by Ivan Yap





Share Price:
MYR2.11
Target Price:
MYR2.05
Recommendation:
Hold




Keeping up with times

Contributions from 29%-owned MMSB and 30%-owned Inokom are set to double over the next two years with Malaysia earmarked as Mazda’s export hub to the ASEAN region given Mazda Motor Corporation’s global capacity constraints. Taking this and impact of a higher JPY/MYR into account, our FY18/19 earnings forecasts are lifted by 4%/6%. Correspondingly, our new TP is MYR2.05 (+5%), pegged on unchanged 12.5x CY18 EPS (-0.5SD). Maintain HOLD for 5+% yields.



FYE Apr (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
1,830.4
2,095.4
1,778.4
2,094.3
EBITDA
290.4
267.2
185.7
234.0
Core net profit
221.8
201.4
129.7
164.2
Core EPS (sen)
19.4
17.6
11.2
14.2
Core EPS growth (%)
57.2
(9.7)
(36.2)
26.5
Net DPS (sen)
12.1
16.9
11.5
11.3
Core P/E (x)
10.9
12.0
18.8
14.9
P/BV (x)
5.1
4.6
4.6
4.4
Net dividend yield (%)
5.8
8.0
5.5
5.4
ROAE (%)
52.0
39.3
24.5
30.2
ROAA (%)
32.8
23.9
13.5
16.4
EV/EBITDA (x)
10.5
8.2
11.4
9.2
Net debt/equity (%)
net cash
net cash
net cash
net cash








MACRO RESEARCH






Consumer spending eased in early-2017
by Suhaimi Ilias


Economics Research





Distributive trade index growth eased in Feb 2017 to +5.0% YoY (Jan 2017: +5.6% YoY; Dec 2016: +6.5% YoY). Growth of the retail trade component – a proxy of real private consumption growth - moderated to +6.0% YoY (Jan 2017: +6.9% YoY; Dec 2016: +8.4% YoY) amid the jump in inflation rate (Feb 2017: +4.5% YoY; Jan 2017: +3.2%; Dec 2016: +1.8%).












Short-term pain, long-term gain
by Tee Sze Chiah


Technical Research





FBMKLCI sank 5.90pts to 1,738.18 yesterday amid regional sell-down. Broader market took a hit with losers outpaced gainers by 765 to 220. A total of 3.86b shares worth MYR2.58b changed hands. FBMKLI resumed its downward move as selling pressure intensified. The benchmark is likely to retest its immediate support at 1,735 in the near-term. A violation of the aforementioned level could drag the benchmark towards its previous low. We expect FBMKLCI to trade within 1,725 to 1,745 range today.







NEWS


Outside Malaysia:

U.S: Consumer sentiment climbs on upbeat assessment of economy. Consumer sentiment advanced to a three-month high in April as Americans’ optimism about their current financial situation and the economy reached the strongest point since 2000, University of Michigan survey data showed. Preliminary sentiment index rose to 98 (forecast was 96.5) from 96.9 in March. Current conditions gauge, which measures Americans’ perceptions of their personal finances, increased to 115.2, the highest since November 2000, from 113.2 the prior month. Expectations measure improved in April to 86.9 from 86.5 (Source: Bloomberg)

U.S: Producer prices decline for first time since August 2016. Wholesale prices in the U.S. declined in March for the first time since August 2016, a sign broader inflation will accelerate only gradually, a Labor Department report showed. The producer-price index decreased 0.1% (forecast was for no change) following a 0.3% advance the prior month. From a year earlier, wholesale prices were up 2.3% YoY, the most in five years, after a 2.2% YoY gain. Excluding food and energy, the PPI was unchanged from the prior month and was up 1.6% YoY from March 2016. Three-fourths of the decrease in the March PPI was due to a drop in final demand services. (Source: Bloomberg)

U.S: Fewer Americans than forecast file for unemployment benefits last week, with applications hovering just above a four-decade low, a Labor Department report showed. Jobless claims decreased by 1,000 to 234,000 (forecast was 245,000) in the week ended April 8. The prior week’s reading was revised to 235,000 from 234,000. The number of people continuing to receive jobless benefits dropped by 7,000 to 2.03 million in the week ended April 1 (data reported with one-week lag). (Source: Bloomberg)





Other News:

Anzo: Gets letter of intent for MYR1.2b construction job. Its unit Harvest Court Construction S/B has received a letter of intent for a mixed development contract worth up to MYR1.2b from KL Northgate S/B. The scope of work involves, among others, piling works and main buildings works for a shopping centre and shop offices as well as hotel, residential and serviced suite towers in Selayang. As part of the conditions, Anzo will work with MCC Oversea S/B to jointly undertake the project. (Source: The Star)

Sunway: Expands in healthcare sector; six new hospitals planned. Sunway is expanding its Sunway Medical Centre by adding another 245 beds to about 375 beds currently. The company is awaiting the Health Ministry's approval for the expansion, which includes a further increase in the number of beds later. Sunway also plans to set up six more hospitals, the first of which is already under construction in Sunway Velocity in Cheras and is expected to open in 2019. There will be another (hospital) at Sunway Damansara, two in Penang, one in Sunway Iskandar, Johor, and one in Ipoh. The investments amount to MYR1b. (Source: The Edge Financial Daily)

Handal Resources: Unit bags three-year ExxonMobil contract. Its subsidiary, Handal Offshore Services S/B, has secured a three-year contract for crane maintenance services from ExxonMobil Exploration and Production Malaysia Inc. The contract works would begin this month and end on April 2020, with an option for a one-year extension. Last month, Handal secured a MYR2.3m contract to provide similar crane maintenance services to SapuraKencana Energy’s production operations. (Source: The Star)


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