Monday, May 29, 2017

Econpile: Posts record net profit in 3Q, pays 3 sen dividend. The group has declared a second interim dividend of 3 sen per share for its third quarter ended March 31, 2017 following record net profit of MYR22.1m, up 23.46% from MYR17.9m last year following its ventures into higher-value projects. Its net profit for the first three quarters of FY17 rose 22.24% to MYR59.9m


FEATURE
CALLS

Malaysia | RCE Capital Bhd
FY17 reported earnings double
Desmond Ch'ng







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Mah Sing Group | Buys land in Sentul
Wei Sum Wong







KPJ Healthcare | A fresh start to the year
Adrian Wong







Oldtown | Spreading the aroma in China
Liew Wei Han









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COMPANY RESEARCH





Results Review





RCE Capital Bhd (RCE MK)
by Desmond Ch'ng





Share Price:
MYR1.83
Target Price:
MYR2.10
Recommendation:
Buy




FY17 reported earnings double

Reported FY3/17 net profit doubled YoY and we have raised our FY18-FY19 earnings forecasts by 17-20%. Valuations are still undemanding with the stock trading at an attractive CY18 PER of just 7.8x and a P/BV of 1.2x, despite a high ROE of 17%. Post earnings upgrade, our new TP is MYR2.10 (previously MYR1.95), on pegging on a lower CY18 P/BV of 1.4x (previously 1.5x), to reflect slower loan demand ahead. At MYR2.10, the stock would trade at a still undemanding CY18 PER of 8.8x. BUY.



FYE Mar (MYR m)
FY16A
FY17A
FY18E
FY19E
Operating income
120.9
171.7
192.4
213.7
Pre-provision profit
79.6
101.5
143.9
160.4
Core net profit
39.6
73.7
84.1
92.0
Core EPS (MYR)
0.12
0.24
0.22
0.24
Core EPS growth (%)
35.9
94.0
(7.7)
9.5
Net DPS (MYR)
0.46
0.03
0.04
0.04
Core P/E (x)
14.8
7.7
8.3
7.6
P/BV (x)
1.4
0.4
1.4
1.2
Net dividend yield (%)
24.9
1.6
1.9
2.2
Book value (MYR)
1.34
4.64
1.34
1.55
ROAE (%)
7.7
16.4
17.6
16.7
ROAA (%)
2.8
4.5
4.7
4.7










Company Update





Mah Sing Group (MSGB MK)
by Wei Sum Wong





Share Price:
MYR1.52
Target Price:
MYR1.45
Recommendation:
Hold




Buys land in Sentul

We are neutral on MSGB’s latest land acquisition in Sentul. The land, which will be developed into affordable housing with selling prices from MYR326k/unit, has an estimated GDV of MYR1.3b. We maintain our earnings forecasts and RNAV-TP of MYR1.45 (0.6x P/RNAV; MYR2.42 RNAV/sh) pending the completion of the land purchase. The new land could add +5sen/sh to our RNAV estimate. Maintain HOLD.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
3,108.5
2,957.6
2,980.0
3,119.6
EBITDA
527.9
508.8
585.2
657.8
Core net profit
338.8
319.5
300.7
343.3
Core FDEPS (sen)
14.1
13.3
12.5
14.2
Core FDEPS growth(%)
(23.5)
(5.7)
(5.9)
14.1
Net DPS (sen)
6.5
6.5
5.0
5.7
Core FD P/E (x)
10.8
11.5
12.2
10.7
P/BV (x)
1.2
1.1
1.1
1.0
Net dividend yield (%)
4.3
4.3
3.3
3.7
ROAE (%)
na
na
na
na
ROAA (%)
5.7
5.0
4.3
4.3
EV/EBITDA (x)
6.9
6.9
4.1
3.5
Net debt/equity (%)
3.7
2.0
net cash
net cash










Results Review





KPJ Healthcare (KPJ MK)
by Adrian Wong





Share Price:
MYR4.17
Target Price:
MYR4.25
Recommendation:
Hold




A fresh start to the year

1Q17 results were above our street-low forecast. Stable earnings from the Malaysian hospitals and higher contributions from its KPJ Dhaka and KPJ Healthcare University College supported the YoY growth. However, we do note the volatility of patient figures at KPJ as tracked over the previous quarters which has led to lumpy earnings. No change to our earnings forecasts and SOP-based TP of MYR4.25.



FYE Dec (MYR m)
FY15A
FY16A
FY17E
FY18E
Revenue
2,818.5
3,021.1
3,246.1
3,495.6
EBITDA
350.9
351.6
383.4
409.0
Core net profit
144.6
125.4
129.4
136.9
Core EPS (sen)
13.9
11.5
12.2
12.9
Core EPS growth (%)
13.3
(17.4)
5.7
5.8
Net DPS (sen)
7.0
4.8
6.1
6.4
Core P/E (x)
29.9
36.2
34.3
32.4
P/BV (x)
3.0
2.8
2.7
2.6
Net dividend yield (%)
1.7
1.2
1.5
1.5
ROAE (%)
9.8
9.8
8.0
8.1
ROAA (%)
4.0
3.2
3.2
3.2
EV/EBITDA (x)
16.0
16.7
15.2
14.4
Net debt/equity (%)
72.5
72.2
72.9
74.6










Company Update





Oldtown (OTB MK)
by Liew Wei Han





Share Price:
MYR2.78
Target Price:
MYR2.90
Recommendation:
Hold




Spreading the aroma in China

Management clarified that 4QFY3/17 F&B provisions were largely related to its Singapore operations. Due to closure of some stores, it has provided for some inventories and fees. Near-term focus for F&B will continue to be cost efficiencies and on maintaining its value meals to drive sales. As for FMCG, we expect its export sales to Greater China to be the main growth driver. Our earnings forecasts and TP of MYR2.90 (18x CY18 PER; +1SD mean) are unchanged.



FYE Mar (MYR m)
FY16A
FY17A
FY18E
FY19E
Revenue
393.4
425.2
459.4
503.5
EBITDA
84.7
97.1
107.9
115.7
Core net profit
55.3
60.8
69.8
75.8
Core EPS (sen)
11.9
13.1
15.1
16.4
Core EPS growth (%)
6.1
9.9
14.9
8.5
Net DPS (sen)
9.0
10.0
8.3
9.0
Core P/E (x)
23.3
21.2
18.4
17.0
P/BV (x)
3.6
3.5
3.2
3.0
Net dividend yield (%)
3.2
3.6
3.0
3.2
ROAE (%)
15.0
16.6
18.1
18.1
ROAA (%)
12.5
13.4
14.8
14.9
EV/EBITDA (x)
6.4
11.5
10.3
9.4
Net debt/equity (%)
net cash
net cash
net cash
net cash








MACRO RESEARCH






Shanghai Composite Index potential reversal
by Nik Ihsan Raja Abdullah


Technical Research





FBMKLCI eased 1.66pts last Friday to close at 1,772.30. Broader market was relatively weak, with selling pressure seen across all sectors. Losers outpaced gainers by 771 to 208. A total of 2.86b shares worth MYR2.60b changed hands. As the index failed to retest its previous high, further decline can be expected. However, we believe downside would be capped amid stronger ringgit and crude oil price performance.







NEWS


Outside Malaysia:

E.U: Merkel signals new era as Trump smashes consensus. German Chancellor Angela Merkel gave her strongest indication yet that Europe and the U.S. under President Donald Trump are drifting apart, saying reliable relationships forged since the end of World War II “are to some extent over.” Speaking at a campaign rally, Merkel offered a glimpse of her world view after Trump’s nine-day trip, during which he hectored NATO allies for not spending enough on defense, called Germany’s trade surplus “very bad,” and brought the U.S. to the brink of exiting the global Paris climate accord. “The times when we could fully rely on others are to some extent over -- I experienced that in the last few days,” Merkel told supporters in the Bavarian capital a day after the G-7 meeting ended. “We Europeans must really take our destiny into our own hands.” (Source: Bloomberg)

China: Early data shows slowdown biting amid credit tightening. The first hints of China’s economic performance this month suggest that a slowdown in growth is taking hold, as policy makers beef up efforts to clamp down on financial risks. Standard Chartered Plc’s Small and Medium Enterprise Confidence Index headed for a second consecutive month of decline in May, falling slightly to 56.9 from 58 in April. Global financial market experts veered toward pessimism on the outlook for the economy, according to a survey of the China Economic Panel, a joint project of the Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai. The reading for expectations slumped to minus 0.1 in May, down from 17.7 last month -- the highest since at least late 2015. The assessment of the current economic situation has also dampened, falling to 12.2 in May from 17.6 in April. The S&P Global Platts China Steel Sentiment Index slumped to 33.1 this month from 45.1 in April, weighed down by the outlook for domestic steel orders. The gauge is based on a survey of between 75 and 90 China-based market participants including traders and steel- mill executives. (Source: Bloomberg)

S. Korea: May announce steps to stabilize property market. South Korean government to prepare measures to deal with risk factors including household debt, corporate restructuring, and unstable property markets, Seoul Economic Daily says, citing presidential office spokesman Park Su-hyun. There is speculation the government measures could include regulations on borrowing and tax increases, after home prices in some areas rose. (Source: Bloomberg)





Other News:

Econpile: Posts record net profit in 3Q, pays 3 sen dividend. The group has declared a second interim dividend of 3 sen per share for its third quarter ended March 31, 2017 following record net profit of MYR22.1m, up 23.46% from MYR17.9m last year following its ventures into higher-value projects. Its net profit for the first three quarters of FY17 rose 22.24% to MYR59.9m, from MYR49m in the previous corresponding period, due to larger valued contracts bring awarded. Revenue grew 27.12% to MYR424.2m from MYR333.71m. (Source: The Edge Financial Daily)

Tropicana: 1Q net profit more than doubles on strong sales. Tropicana more than doubled its net profit to MYR32.52m in the first quarter ended March 31, 2017 from MYR15.17m a year ago, mainly contributed by its core property development operations. Meanwhile, quarterly revenue jumped 33.1% to MYR381.87m from MYR286.93m. (Source: The Edge Financial Daily)

Pestech: 4Q net profit up 92.8% on higher projects revenue. Net profit rose 92.8% to MYR24.14m in its fourth financial quarter ended March 31, 2017 (4QFY17) from MYR12.52m a year ago, on higher project revenue. Revenue rose 38.4% to MYR170.83m in 4QFY17 from MYR123.4m. For the full year, net profit dipped 2.2% to MYR49.24m from MYR50.37m the previous year, while revenue grew 23.8% to MYR393.6m from MYR318.02m in FY16. (Source: The Edge Financial Daily)


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