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Share
Price:
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MYR2.64
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Target
Price:
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MYR3.20
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Recommendation:
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Buy
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Safeguard duties
for another 3 years
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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).
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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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1,760.9
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1,870.1
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2,157.6
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2,251.0
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EBITDA
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12.4
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296.1
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308.5
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320.2
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Core net profit
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(74.9)
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166.8
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180.6
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192.8
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Core EPS (sen)
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(14.3)
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31.9
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32.2
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34.4
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Core EPS growth (%)
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nm
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nm
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1.0
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6.8
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Net DPS (sen)
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0.0
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15.0
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13.8
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14.8
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Core P/E (x)
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nm
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8.3
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8.2
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7.7
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P/BV (x)
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1.5
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1.3
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1.1
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1.0
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Net dividend yield (%)
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0.0
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5.7
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5.2
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5.6
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ROAE (%)
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(13.6)
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16.7
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15.8
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15.1
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ROAA (%)
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(2.9)
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7.0
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7.5
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7.7
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EV/EBITDA (x)
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128.1
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6.9
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6.9
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6.4
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Net debt/equity (%)
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133.6
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84.6
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62.2
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50.0
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Share
Price:
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MYR2.11
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Target
Price:
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MYR2.05
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Recommendation:
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Hold
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Keeping up with
times
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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.
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FYE Apr (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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1,830.4
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2,095.4
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1,778.4
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2,094.3
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EBITDA
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290.4
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267.2
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185.7
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234.0
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Core net profit
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221.8
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201.4
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129.7
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164.2
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Core EPS (sen)
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19.4
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17.6
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11.2
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14.2
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Core EPS growth (%)
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57.2
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(9.7)
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(36.2)
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26.5
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Net DPS (sen)
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12.1
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16.9
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11.5
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11.3
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Core P/E (x)
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10.9
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12.0
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18.8
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14.9
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P/BV (x)
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5.1
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4.6
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4.6
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4.4
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Net dividend yield (%)
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5.8
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8.0
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5.5
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5.4
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ROAE (%)
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52.0
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39.3
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24.5
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30.2
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ROAA (%)
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32.8
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23.9
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13.5
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16.4
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EV/EBITDA (x)
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10.5
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8.2
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11.4
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9.2
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Net debt/equity (%)
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net cash
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net cash
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net cash
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net cash
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MACRO RESEARCH
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Consumer spending eased in early-2017
by
Suhaimi Ilias
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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%).
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Suhaimi Ilias
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Zamros
Dzulkafli
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Short-term pain, long-term gain
by Tee
Sze Chiah
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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.
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NEWS
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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)
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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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