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Share
Price:
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MYR3.31
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Target
Price:
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MYR4.35
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Recommendation:
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Buy
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Post briefing
key takeaways
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We expect Yinson to formally sign the FPSO CRD contract in
Apr 2017 (LOI now), which would lead to a higher earnings/ TP (our
forecasts are unchanged for now). FPSO JAK is on budget and on track
for first oil by Aug 2017. We expect Yinson to be Shariah compliant
come the May 2017 review, a positive.
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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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1,038.6
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764.2
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812.7
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1,139.7
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EBITDA
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261.0
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283.8
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470.4
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681.7
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Core net profit
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173.1
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219.5
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244.9
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316.0
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Core EPS (sen)
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16.2
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20.6
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23.0
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29.6
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Core EPS growth (%)
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17.5
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26.8
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11.6
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29.0
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Net DPS (sen)
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1.5
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14.8
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1.8
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1.9
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Core P/E (x)
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20.4
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16.1
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14.4
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11.2
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P/BV (x)
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1.6
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1.5
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1.4
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1.3
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Net dividend yield (%)
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0.4
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4.5
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0.6
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0.6
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ROAE (%)
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12.0
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8.5
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10.0
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12.0
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ROAA (%)
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4.8
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3.9
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3.8
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4.9
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EV/EBITDA (x)
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15.6
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21.4
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13.7
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8.9
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Net debt/equity (%)
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51.9
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114.7
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117.2
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89.7
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Share
Price:
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MYR1.82
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Target
Price:
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MYR2.30
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Recommendation:
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Buy
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FY17: Above
expectations
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FY17 core earnings came in above ours/ consensus, on a
stronger-than-expected 4Q17, fuelled by better results from drilling
and associates. SapE declared a 1sen DPS, another positive
surprise.Raised FY18 earnings by 2.1x, mainly to account for lower drilling
opex & higher associate profits. Despite the earnings upgrade, we
still expect FY18 earnings to be lower YoY. Overall,sentiment has
improved and the sector is at its trough. We see SapE as a direct
proxy, beta play for a recovering O&G play.
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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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10,184.0
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7,651.3
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6,180.1
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7,268.5
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EBITDA
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3,056.4
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3,913.3
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2,510.4
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2,980.1
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Core net profit
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1,009.4
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447.3
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346.1
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871.9
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Core EPS (sen)
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16.9
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7.5
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5.8
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14.7
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Core EPS growth (%)
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(16.8)
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(55.5)
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(22.6)
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151.9
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Net DPS (sen)
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1.4
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1.0
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1.0
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3.0
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Core P/E (x)
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10.8
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24.2
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31.3
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12.4
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P/BV (x)
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0.9
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0.8
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0.8
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0.8
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Net dividend yield (%)
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0.7
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0.5
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0.5
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1.6
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ROAE (%)
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(6.5)
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1.6
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2.6
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6.3
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ROAA (%)
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2.8
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1.2
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0.9
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2.4
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EV/EBITDA (x)
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9.0
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6.5
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10.2
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8.2
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Net debt/equity (%)
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134.1
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115.7
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110.9
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96.9
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SECTOR RESEARCH
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Loan applications, approvals turn in positive
growth
by
Desmond Ch'ng
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While overall loan growth slipped slightly to 5.3% YoY
in Feb 2017 from 5.6% YoY in Jan 2017, the key positive during the
month is that loan applications and loan approvals turned positive
YoY in Feb 2017, which if sustained, bodes well for loan growth into
2H17. NEUTRAL maintained with BUYs on AFG, BIMB and HLBK.
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Record US soybean planting intended in 2017
by Chee
Ting Ong
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South America’s soybean harvest is underway and
experts are looking to raise estimates there on good yield. Up north,
USDA’s recently published Prospective Plantings suggests US farmers
will likely plant record soybean this spring, much of this has been largely
priced in by the market in our view. Barring any unfavourable weather
over the next six months, we expect further CPO price pressure in
2H17. Stay Neutral on the sector. Our BUYs in the region are BPLANT,
SOP, BAL, AALI, LSIP, and TBLA.
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MACRO RESEARCH
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Higher year-to-date money supply growth
by
Suhaimi Ilias
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Money supply (M3) growth moderated to +3.6% YoY in Feb
2017 vs +4.4% YoY in Jan 2017, but averaged +4.0% in Jan-Feb 2017 vs
+2.5% in Jan-Feb 2016, indicating improved liquidity condition
despite foreign net sell in bonds, thanks to foreign net buying in equities
and repatriation of net export earnings.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Sector in Momentum – ASEAN Materials &
Constructions
by Tee
Sze Chiah
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The rally of MSCI Asia Pacific Material Index started
from February 2016 low. From a low of 164.42, the index formed a
series of high highs and higher lows, and this has sustained for 14
months, suggesting that the trend still favours the bull. The rally was
also consistently trading above the 'Ichimoku Cloud'. Recent pullback
could end sooner-than-expected, with the formation of “hidden bullish
divergence” between price and momentum indicator. We expect an upward
continuation towards 259.00.
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NEWS
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Outside Malaysia:
Japan: Corporate sentiment improves as profits rise on
weak Yen. Confidence among Japan’s large manufacturers improved for a
second consecutive quarter in the first three months of the year as a
weaker yen helped profits rise to a record. Sentiment among large
manufacturers rose to 12 from 10 three months ago (forecast 14),
according to the Tankan survey released by the Bank of Japan. The outlook
among the manufacturers increased to 11 from 8 in December (forecast 13).
Large companies across all industries plan to raise fixed investment by
0.6% for the year starting this month, the survey found. (Source:
Bloomberg)
Australia: Home prices rise most in 7 years amid bubble
concern. Australian house prices rose the most in almost seven years in
March as the country’s housing boom accelerated. Average home values in
Australia’s eight state and territory capitals rose 12.9% YoY in the 12
months through March, the fastest pace since May 2010, according to data
from CoreLogic Inc. released. The boom is being led by Sydney, where
average house values surged 18.9% YoY in the past 12 months, the most
since November 2002. Sydney home values climbed 5% in the first three
months of the year. (Source: Bloomberg)
Crude Oil: OPEC deal pushes Russian oil output down 1.6%
from peak. Russia cut its crude production in March, moving closer to
fulfilling its agreement with OPEC as the deadline approaches. Production
of crude and condensate fell to 11.05 million barrels a day, down 1.6%
from Russia’s post-Soviet high of 11.23 million barrels in October,
according to data from the Energy Ministry’s CDU-TEK statistics unit.
Russia has committed to reducing supply by as much as 300,000 barrels a
day by the end of this month. Russia is the largest of the 11 non-OPEC
producers cooperating with the Organization of Petroleum Exporting
Countries to reduce oil supplies by a combined 1.8 million barrels a day
to neutralize a global glut. (Source: Bloomberg)
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Other News:
Kerjaya Prospek: Gets MYR31.6m housing development
contract in Penang. Its subsidiary Kerjaya Prospek S/B was awarded a
MYR31.6m contract to develop 32 three-storey terrace houses in Penang.
The group said works will commence on March 22, and is due for completion
by Sept 21 next year. The project will contribute to the company's books
for its financial year ending 2017 (FY17) and FY18. (Source: the Edge
Financial Daily)
AZRB: To raise MYR40m through private placement. The group
aims to undertake a private placement of up to 10% of its issued shares
to raise money for working capital purposes. As of March 17, AZRB’s share
capital stood at MYR120.9m with 483.5m shares, including 1.5m treasury
shares. The issue price as well as the identity of the institutional
investors will be announced at a later date, said AZRB, adding that the
placement is expected to be completed by 2QFY17. (Source: the Edge
Financial Daily)
AirAsia: Forms JV to establish low-cost carrier in
Vietnam. Its wholly-owned unit AirAsia Investment Ltd (AAIL )is forming a
MYR194m (VND1t) joint venture low-cost airline in Vietnam, which is
expected to commence operations by early 2018. AAIL will subscribe for
30% stake or 30m shares in the JV company for MYR58.2m via internal
funding. (Source: the Edge Financial Daily)
Vizione: Enters HOA for proposed acquisition of Wira
Syukur. It entered into a head of agreement to explore and further
negotiate on the proposed acquisition of Wira Syukur S/B for MYR280m.
Vizione is acquiring only the existing construction business and
undertakings and order book of Wira Syukur, after taking into the account
the current order status in respect of its existing projects; track
record, experience and technical expertise; and the profit guarantee of
MYR82.59m to be provided by the vendors. (Source: The Sun Daily)
Eversafe Rubber: To raise MYR17m in IPO. The group which
is en route to a listing on the ACE Market of Bursa Malaysia Securities
,intends to raise MYR17.28m in its initial public offering. Eversafe is
involved in the development, manufacturing and distribution of tyre
retreading materials and tyre retreading operations. Based on the issue
price of 36 sen per share and the enlarged issued and paid-up share
capital of Eversafe, the company will have a market capitalisation of
MYR86.61m.(Source: The Sun Daily)
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