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Share
Price:
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MYR19.92
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Target
Price:
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MYR20.00
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Recommendation:
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Hold
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1Q results
within expectations
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Public Bank’s 1QFY17 results were generally within
expectations. We estimate the potential for a 1.4-for-1 bonus issue,
should it decide to distribute its share premium account, which would
be a positive. That aside, with pedestrian earnings growth of about
3-4% in FY17 and FY18, we expect ROAEs to slip to 14% in FY18 from
14.8% in FY17. Correspondingly, our TP is raised to MYR20 from MYR19.70
on rolling forward valuations but on a lower PBV multiple of 1.9x
versus 2x previously.
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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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Operating income
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9,438.8
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9,896.0
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10,307.6
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10,761.5
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Pre-provision profit
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6,523.6
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6,684.6
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6,928.6
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7,237.1
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Core net profit
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4,955.2
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5,146.4
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5,296.9
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5,492.7
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Core EPS (MYR)
|
1.28
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1.33
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1.37
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1.42
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Core EPS growth (%)
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9.7
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3.9
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2.9
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3.7
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Net DPS (MYR)
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0.56
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0.58
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0.59
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0.61
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Core P/E (x)
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15.5
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14.9
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14.5
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14.0
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P/BV (x)
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2.5
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2.2
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2.0
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1.9
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Net dividend yield (%)
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2.8
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2.9
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3.0
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3.1
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Book value (MYR)
|
8.09
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8.86
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9.73
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10.64
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ROAE (%)
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16.7
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15.7
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14.8
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14.0
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ROAA (%)
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1.4
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1.4
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1.4
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1.3
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Share
Price:
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MYR47.06
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Target
Price:
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MYR47.10
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Recommendation:
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Hold
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1Q17: Below
expectations
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1Q17 results fell short. It has yet to be seen if the
illicit market share would normalise lower into the year. We understand
that Customs currently has a target to reduce illicit market share by
50% over the next three years. Much of the legal industry’s volume
recovery will depend on how successful Customs is in addressing the
illicit issue. Any further excise tax hike freeze may also provide some
breather.
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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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4,581.5
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3,756.4
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3,294.8
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3,382.7
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EBITDA
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1,277.3
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929.6
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802.1
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844.1
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Core net profit
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914.5
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675.1
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606.5
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639.1
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Core EPS (sen)
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320.3
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236.4
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212.4
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223.8
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Core EPS growth (%)
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0.5
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(26.2)
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(10.2)
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5.4
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Net DPS (sen)
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312.0
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278.0
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208.2
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219.3
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Core P/E (x)
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14.7
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19.9
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22.2
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21.0
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P/BV (x)
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24.6
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21.9
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21.5
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21.1
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Net dividend yield (%)
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6.6
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5.9
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4.4
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4.7
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ROAE (%)
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170.0
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124.4
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97.9
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101.1
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ROAA (%)
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73.4
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56.2
|
51.7
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55.0
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EV/EBITDA (x)
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12.8
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13.8
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16.8
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16.0
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Net debt/equity (%)
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50.5
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15.8
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12.0
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10.9
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SECTOR RESEARCH
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The good times continues
by
Mohshin Aziz
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We turned more positive on stronger-than-expected
traffic growth which allay fears for yield erosion. Airlines are
maintaining good capacity discipline and pushing load factors to new
heights. Input costs are mixed due to the floundering MYR against the
USD, but jet fuel is lower than forecasted and will help push for
stable margins in 1Q17. We remain positive on MAHB, followed by
AirAsia. We keep our HOLD call on AirAsia X as we think the
risk-reward is fairly reflected in its price.
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MACRO RESEARCH
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Dow Jones Index recovery play
by Tee
Sze Chiah
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FBMKLCI ended 2.66pts higher yesterday amid renewed
interest in selected blue chips. Broader market was equally positive
with gainers outpacing losers by 498 to 368. A total of 2.64b shares
worth MYR2.24b changed hands. Technically, although the benchmark is
hovering above the 1,740 level, we caution that trading could be
choppy in the near-term, as the index tries to establish a base above
the current support level.
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NEWS
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Outside Malaysia:
U.S: Mortgage rates drop to five-month low with 30-year at
3.97%. The average rate for a 30-year fixed mortgage was down from 4.08%
last week and the lowest since November, Freddie Mac said in a statement.
The average 15-year rate decreased to 3.23% from 3.34%, the McLean,
Virginia-based mortgage-finance company said. (Source: Bloomberg)
U.S: Fuel consumption climbs to highest in nine years for
March. Total deliveries of petroleum products, a measure of consumption,
advanced 0.2% YoY to 19.7 million barrels a day last month, the
industry-funded American Petroleum Institute said. Demand increased for
jet fuel and distillate fuel, a category that includes diesel and heating
oil, while consumption of gasoline dropped. (Source: Bloomberg)
Germany: March tax revenue rises 7.5% YoY; Finance
Ministry report. Germany’s Finance Ministry sees a “continuation of the
solid growth dynamic” last quarter, according to monthly report.
Germany’s current-account surplus receded “slightly” in first two months.
Robust employment helped boost gross income tax revenue; intake from
sales tax also increased. Labor market remains “very positive” at start
of year. (Source: Bloomberg)
S. Korea: April first 20 days export rise 28.4% YoY to USD
30.37b. Imports rise 16.4% YoY to USD 25.38b, according to Korea Customs
Service. Trade surplus was at USD 4.99b. (Source: Bloomberg)
Taiwan: Central bank joined its mainland counterpart in
introducing new open market operations to help guide borrowing costs more
precisely ahead of an expected rate increase this year. The monetary
authority announced that it will give banks more flexibility in
short-term fund options with securities called seven-day negotiable
certificates of deposit starting Friday. The securities will be re-issued
regularly, the central bank said. The certificates are intended to help
complete the yield curve and offer more bidding options for the banks,
according to Chen Chiu-tang, deputy director-general of central bank’s
department of banking. (Source: Bloomberg)
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Other News:
Serba Dinamik: Inks MoA with UK firm to collaborate on MRO
services. The group has proposed to team up with UK-based Nicol & Andrew
Group Plc to collaborate on maintenance, repair and overhaul (MRO) and
in-situ or on-site services for the Malaysian oil and gas, petrochemical,
oleochemical, marine, plantation, energy, power production and
distribution, water and waste water as well as general industries.
(Source: The Edge Financial Daily)
MISC: Working on FPSO deals to up offshore biz
contribution. MISC is working on three to four floating, production,
storage and offloading (FPSO) deals that can potentially push its
offshore business contribution to make up a third of its profits, from
20% in 2016. President and group CEO Yee Yang Chien explained that profit
from the offshore business can increase to one third if the three to four
FPSO deals can be secured, and assuming its other segments like LNG
shipping as well as petroleum and product shipping do not grow. (Source:
The Sun Daily)
WZ Satu: Sees 9% growth in 2Q earnings. Net profit grew 9%
in 2QFY17 to MYR5.33m, from MYR4.89m a year ago, thanks for better
performance in its manufacturing and oil and gas (O&G) operations.
Cumulatively, 1HFY17 recorded a net profit of MYR13.83m, which was 48%
higher than MYR9.33m in 1HFY16. Its revenue expanded 23.7% over the same
period to MYR268.16m, from MYR216.86m. (Source: The Edge Financial Daily)
Meda Inc: To sell The Summit Hotel Bukit Mertajam for
MYR20m. The group is disposing of its hotel The Summit Hotel Bukit
Mertajam in Penang for MYR20m to partially fund its working capital
requirements. The price represents a premium of 45.14% over the market
value of the property of MYR13m as ascribed by LaurelCap S/B on Dec 30,
2016. The proposed disposal will result in the group realising a gain of
MYR6.05m. (Source: The Edge Financial Daily)
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