Monday, May 22, 2017

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)













Top Glove | Acquiring 2 small glove plants
Yen Ling Lee







ViTrox Corp | More ‘V’room for growth
Ivan Yap







Magnum Berhad | No recovery in sight yet
Samuel Yin Shao Yang









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Malaysia Media | Apr 2017 adex: Still in decline
Samuel Yin Shao Yang









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Malaysia | Safety and strength in numbers
Suhaimi Ilias







Malaysia | Smaller current account surplus
Suhaimi Ilias








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COMPANY RESEARCH





TP Revision





IHH Healthcare (IHH MK)
by John Cheong





Share Price:
MYR6.00
Target Price:
MYR5.62
Recommendation:
Hold




Dragged by new HK hospital but operations remain robust

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).



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
8,455.5
10,021.9
11,639.8
13,314.9
EBITDA
2,218.7
2,188.9
2,554.0
2,986.3
Core net profit
899.2
866.0
855.5
1,102.8
Core FDEPS (sen)
10.9
10.5
10.3
13.3
Core FDEPS growth(%)
14.5
(4.3)
(1.2)
28.9
Net DPS (sen)
3.0
3.0
3.0
3.0
Core FD P/E (x)
54.9
57.4
58.1
45.0
P/BV (x)
2.2
2.2
2.2
2.1
Net dividend yield (%)
0.5
0.5
0.5
0.5
ROAE (%)
4.5
2.8
3.8
4.8
ROAA (%)
2.8
2.4
2.3
2.8
EV/EBITDA (x)
27.4
27.0
22.4
18.8
Net debt/equity (%)
19.3
21.1
23.0
16.3










Company Update





Top Glove (TOPG MK)
by Yen Ling Lee





Share Price:
MYR5.40
Target Price:
MYR6.20
Recommendation:
Buy




Acquiring 2 small glove plants

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.



FYE Aug (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
2,510.5
2,888.5
3,360.6
3,657.9
EBITDA
454.3
523.3
507.8
573.7
Core net profit
279.8
361.1
325.9
375.7
Core EPS (sen)
22.6
29.1
26.3
30.3
Core EPS growth (%)
55.0
29.0
(9.7)
15.3
Net DPS (sen)
11.5
14.5
13.1
15.1
Core P/E (x)
23.9
18.6
20.6
17.8
P/BV (x)
4.2
3.7
3.4
3.1
Net dividend yield (%)
2.1
2.7
2.4
2.8
ROAE (%)
89.9
76.9
51.9
59.9
ROAA (%)
12.1
13.5
11.8
12.6
EV/EBITDA (x)
10.1
9.5
12.5
11.0
Net debt/equity (%)
net cash
net cash
net cash
net cash










Company Update





ViTrox Corp (VITRO MK)
by Ivan Yap





Share Price:
MYR6.26
Target Price:
MYR7.20
Recommendation:
Buy




More ‘V’room for growth

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.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
160.3
234.0
305.6
368.1
EBITDA
59.1
65.2
95.6
119.7
Core net profit
38.9
68.9
78.9
94.4
Core EPS (sen)
16.5
29.2
33.4
40.0
Core EPS growth (%)
(18.8)
77.1
14.4
19.7
Net DPS (sen)
5.0
6.5
8.4
10.0
Core P/E (x)
37.9
21.4
18.7
15.6
P/BV (x)
7.1
5.6
4.6
3.8
Net dividend yield (%)
0.8
1.0
1.3
1.6
ROAE (%)
23.1
27.5
27.1
26.5
ROAA (%)
16.1
21.8
18.1
17.3
EV/EBITDA (x)
12.7
12.2
14.8
11.6
Net debt/equity (%)
net cash
net cash
net cash
net cash










TP Revision





Magnum Berhad (MAG MK)
by Samuel Yin Shao Yang





Share Price:
MYR2.10
Target Price:
MYR2.24
Recommendation:
Hold




No recovery in sight yet

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.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
2,767.0
2,659.3
2,526.7
2,577.2
EBITDA
373.9
326.7
350.0
357.7
Core net profit
226.5
189.4
212.9
222.3
Core EPS (sen)
15.9
13.3
15.0
15.6
Core EPS growth (%)
(10.9)
(16.3)
12.4
4.4
Net DPS (sen)
16.0
13.0
13.5
14.0
Core P/E (x)
13.2
15.8
14.0
13.4
P/BV (x)
1.2
1.2
1.2
1.2
Net dividend yield (%)
7.6
6.2
6.4
6.7
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


Samuel Yin Shao Yang





SECTOR RESEARCH






Apr 2017 adex: Still in decline
by Samuel Yin Shao Yang


Sector Note





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.









MACRO RESEARCH






Safety and strength in numbers
by Suhaimi Ilias


Economics Research





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.












Smaller current account surplus
by Suhaimi Ilias


Economics Research





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).







NEWS


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)





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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