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Share
Price:
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MYR6.00
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Target
Price:
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MYR5.62
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Recommendation:
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Hold
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Dragged by new
HK hospital but operations remain robust
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1Q17 core earnings fell 15% YoY mainly due to start-up
costs of the new HK hospital. It met our street-low estimates but
missed consensus, at 24%/19% of FY17 forecasts. No change to our
earnings forecasts. Maintain HOLD, but with a reduced SOTP-TP by 3% to
MYR5.62 after adjusting for the disposal of a 6.1% stake in Apollo
Hospital. IHH continues to trade at a premium, at 22x FY17E EV/EBITDA
vs 20x for its regional peers. Our sector top pick is Singapore Medical
Group (SMG SP; BUY; TP SGD0.78).
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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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8,455.5
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10,021.9
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11,639.8
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13,314.9
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EBITDA
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2,218.7
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2,188.9
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2,554.0
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2,986.3
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Core net profit
|
899.2
|
866.0
|
855.5
|
1,102.8
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Core FDEPS (sen)
|
10.9
|
10.5
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10.3
|
13.3
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Core FDEPS growth(%)
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14.5
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(4.3)
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(1.2)
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28.9
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Net DPS (sen)
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3.0
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3.0
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3.0
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3.0
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Core FD P/E (x)
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54.9
|
57.4
|
58.1
|
45.0
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P/BV (x)
|
2.2
|
2.2
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2.2
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2.1
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Net dividend yield (%)
|
0.5
|
0.5
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0.5
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0.5
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ROAE (%)
|
4.5
|
2.8
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3.8
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4.8
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ROAA (%)
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2.8
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2.4
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2.3
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2.8
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EV/EBITDA (x)
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27.4
|
27.0
|
22.4
|
18.8
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Net debt/equity (%)
|
19.3
|
21.1
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23.0
|
16.3
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Share
Price:
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MYR5.40
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Target
Price:
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MYR6.20
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Recommendation:
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Buy
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Acquiring 2
small glove plants
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Top Glove is buying 2 small glove plants for MYR39m cash.
Although it is a related party transaction, the pricing is fair at 2016
PER of c.10x. However, immediate impact to Top Glove’s bottomline is
minimal at around 1% in FY8/18 (full-year). Maintain EPS forecasts, BUY
and TP of MYR6.20 (20x 2018 PER, +1SD to mean); we continue to like Top
Glove for its earnings recovery story.
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FYE Aug (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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2,510.5
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2,888.5
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3,360.6
|
3,657.9
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EBITDA
|
454.3
|
523.3
|
507.8
|
573.7
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Core net profit
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279.8
|
361.1
|
325.9
|
375.7
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Core EPS (sen)
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22.6
|
29.1
|
26.3
|
30.3
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Core EPS growth (%)
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55.0
|
29.0
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(9.7)
|
15.3
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Net DPS (sen)
|
11.5
|
14.5
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13.1
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15.1
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Core P/E (x)
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23.9
|
18.6
|
20.6
|
17.8
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P/BV (x)
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4.2
|
3.7
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3.4
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3.1
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Net dividend yield (%)
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2.1
|
2.7
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2.4
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2.8
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ROAE (%)
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89.9
|
76.9
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51.9
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59.9
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ROAA (%)
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12.1
|
13.5
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11.8
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12.6
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EV/EBITDA (x)
|
10.1
|
9.5
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12.5
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11.0
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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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Share
Price:
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MYR6.26
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Target
Price:
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MYR7.20
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Recommendation:
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Buy
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More ‘V’room for
growth
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We remain upbeat on ViTrox post its 1Q17 results briefing
last Friday; order backlog remains solid especially at its ABI division
whereby order backlog hit MYR50m (as of early May) with more major
orders in the pipeline. Earnings visibility has improved beyond 3Q17
while longer term prospects remain promising with Campus 2.0 coming
into the picture in 3Q17. Our forecasts and MYR7.20 TP (pre 1-for-1
bonus) are unchanged. BUY ViTrox for its multi-year earnings growth
prospects.
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FYE Dec (MYR m)
|
FY15A
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FY16A
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FY17E
|
FY18E
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Revenue
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160.3
|
234.0
|
305.6
|
368.1
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EBITDA
|
59.1
|
65.2
|
95.6
|
119.7
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Core net profit
|
38.9
|
68.9
|
78.9
|
94.4
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Core EPS (sen)
|
16.5
|
29.2
|
33.4
|
40.0
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Core EPS growth (%)
|
(18.8)
|
77.1
|
14.4
|
19.7
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Net DPS (sen)
|
5.0
|
6.5
|
8.4
|
10.0
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Core P/E (x)
|
37.9
|
21.4
|
18.7
|
15.6
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P/BV (x)
|
7.1
|
5.6
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4.6
|
3.8
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Net dividend yield (%)
|
0.8
|
1.0
|
1.3
|
1.6
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ROAE (%)
|
23.1
|
27.5
|
27.1
|
26.5
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ROAA (%)
|
16.1
|
21.8
|
18.1
|
17.3
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EV/EBITDA (x)
|
12.7
|
12.2
|
14.8
|
11.6
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Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
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Share
Price:
|
MYR2.10
|
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Target
Price:
|
MYR2.24
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Recommendation:
|
Hold
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No recovery in
sight yet
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1Q17 earnings disappointed on higher-than-expected prize
payout ratio (PPR) while no dividends were declared. We also note that
1Q17 gaming revenue/draw was also weaker than we expected. Thus, we
trim our earnings estimates by 12% and DCF-based TP by 10% to MYR2.24.
We still expect Magnum to pay dividends once earnings stabilize on
normalized PPRs. On another note, Magnum was served with tax penalties
amounting to MYR476.5m (MYR0.33/shr) that it intends to challenge.
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FYE Dec (MYR m)
|
FY15A
|
FY16A
|
FY17E
|
FY18E
|
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Revenue
|
2,767.0
|
2,659.3
|
2,526.7
|
2,577.2
|
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EBITDA
|
373.9
|
326.7
|
350.0
|
357.7
|
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Core net profit
|
226.5
|
189.4
|
212.9
|
222.3
|
|
Core EPS (sen)
|
15.9
|
13.3
|
15.0
|
15.6
|
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Core EPS growth (%)
|
(10.9)
|
(16.3)
|
12.4
|
4.4
|
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Net DPS (sen)
|
16.0
|
13.0
|
13.5
|
14.0
|
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Core P/E (x)
|
13.2
|
15.8
|
14.0
|
13.4
|
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P/BV (x)
|
1.2
|
1.2
|
1.2
|
1.2
|
|
Net dividend yield (%)
|
7.6
|
6.2
|
6.4
|
6.7
|
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ROAE (%)
|
9.3
|
7.8
|
8.8
|
9.1
|
|
ROAA (%)
|
6.2
|
5.2
|
6.0
|
6.5
|
|
EV/EBITDA (x)
|
11.4
|
11.4
|
10.3
|
10.0
|
|
Net debt/equity (%)
|
25.7
|
24.1
|
23.4
|
22.2
|
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SECTOR RESEARCH
|
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Apr 2017 adex: Still in decline
by
Samuel Yin Shao Yang
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Apr 2017 total gross adex fell 14% YoY and 8% MoM.
Gross adex of all major mediums contracted YoY as consumers remained
cautious in their spending due to inflationary concerns. We also
believe that a portion of ad spend has been shifted from traditional to
digital mediums. Positively, we expect public ad spend to be
steadfast in buffering further downside in adex growth in the lead up
to the 14th General Election. Maintain NEUTRAL on the media sector
with our only BUY call on MCIL.
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Samuel Yin
Shao Yang
|
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Jade Tam
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MACRO RESEARCH
|
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Safety and strength in numbers
by
Suhaimi Ilias
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Real GDP growth gained momentum for the third straight
quarter to a better-than-expected +5.6% YoY in 1Q 2017 (4Q 2016:
+4.5% YoY), underpinned by domestic demand and external trade growth.
Raised our 2017 and 2018 growth forecasts to +5.1% (+4.4% previously)
and +4.9% (+4.5% previously) respectively.
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Suhaimi Ilias
|
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Zamros
Dzulkafli
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Smaller current account surplus
by
Suhaimi Ilias
|
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|
Current account surplus shrank in 1Q 2017 to +MYR5.3b
or +1.6% of GDP (4Q 2016: +MYR12.5b or +3.8% of GDP) on smaller goods
account surplus together with the sustained deficits in services and
income accounts. We expect current account surplus to be sustained
albeit narrower this year at +MYR23.2b or +1.8% of GDP (2016:
+MYR29.0b or +2.4% of GDP).
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|
Suhaimi Ilias
|
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Zamros
Dzulkafli
|
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NEWS
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Outside Malaysia:
Germany: April tax revenue increases 5.8% year to date,
four-month revenue jumps 6.5% from same year-earlier period, Finance
Ministry says in monthly report. German economic expansion is “solid,”
showed “noticeable acceleration” in 1Q 2017. Economic upswing likely to
continue in the course of 2017 amid “favorable macroeconomic conditions”
such as better sales prospects at home and abroad, low interest rates and
still-moderate energy prices. (Source: Bloomberg)
U.K: London house prices rebounded in May, rising to a
record as buyers and sellers defied the usual trend of holding off on
property transactions before an election. The average asking price in the
city rose 2.1% from April to GBP 649,864 (USD 846,000), property website
Rightmove Plc said, even with the upcoming U.K. general election on June
8. The capital’s annual rate of price growth remained subdued at 0.9%
following a 1.5% drop last month. That was the biggest annual decline in
almost eight years. (Source: Bloomberg)
Japan: Exports expanded for a fifth consecutive month in
April, as firming global demand continued to support the nation’s
economic recovery. Exports rose 7.5% from a year and imports jumped
15.1%, according to data released by the Ministry of Finance. The trade
surplus was JPY 481.7 (USD 4.3b). Exports have been driving a recovery in
Japan’s economy, which has notched five consecutive quarters of growth
for the first time in a decade. Imports have also picked up, notching the
biggest gain in more than three years in March. The swell in trade
indicates an increasingly healthy global economy.(Source: Bloomberg)
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Other News:
Cypark Resources: Bags two contracts worth MYR75m to build
two solar PV plants in Negeri Sembilan. Cypark has bagged two contracts
worth a combined MYR75.01m to develop two large-scale solar photovoltaic
(PV) plants in Negeri Sembilan. The first — a MYR53.38m contract from
Selasih Mentari — entails the development of a 10.50MW solar PV plant at
Ladang Tanah Merah from May 23, 2017 to Nov 16, 2018. The second contract
from Revenue Vantage — worth MYR21.63m — involves the development of a
3.95MW plant at Jelebu from May 24, 2017 to Sept 7, 2018. (Source: The
Edge Financial Daily)
Choo Bee Metal: 1Q earnings up 3-fold on higher margins.
Net profit rose over three-fold to MYR11.55m in 1QFY17 from MYR2.85m, on
improved average selling prices, interest income and foreign exchange
gains. Revenue however fell 3.4% to MYR97.32m, from MYR100.74m in 1QFY16,
due to lower contributions from the trading segment. (Source: The Edge
Financial Daily)
Ranhill Holding: 1QFY17 net profit jumped 127%. Net profit
in 1QFY17 jumped 127% to MYR15.69m from MYR6.91m last year, backed by a
one-off Islamic medium-term notes premium redemption worth
MYR13.3m.Revenue for the period, meanwhile, grew a marginal 2% to
RM351.95 million from MYR344.75m a year ago. (Source: The Edge Financial Daily)
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