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Share
Price:
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MYR1.84
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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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MY Corporate
Day: Key takeaways
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SapE expects FY1/18 to remain challenging but is
increasingly positive for FY19. Optimising assets utilisation and
sustaining order book replenishment remains key. Monetising its gas
assets is a catalyst not fully priced in yet. All in, we see SapE as a direct
proxy, beta play for a recovering O&G sector outlook.
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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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10.9
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24.5
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31.6
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12.6
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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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10.3
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8.3
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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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Share
Price:
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MYR2.35
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Target
Price:
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MYR2.20
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Recommendation:
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Hold
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Disposing 53%
stake in CITN?
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We are neutral on the potential disposal of CITN. The cash
proceeds would boost STAR’s already healthy net cash pile and investors
can be more assured that recurring dividends can sustain at FY16’s
levels. We keep our earnings estimates, call and TP pending more
details. If CITN is disposed at its last share price of SGD0.96, this
will lift our TP by just 5sen as our current TP considers a slightly
lower SGD0.92. We view this development as a potential monetisation of
STAR’s investment in CITN.
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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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1,019.0
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932.1
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1,045.9
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1,047.7
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EBITDA
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206.2
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151.7
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161.5
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163.3
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Core net profit
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131.9
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69.9
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82.2
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86.6
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Core EPS (sen)
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17.9
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9.5
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11.1
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11.7
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Core EPS growth (%)
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(12.9)
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(47.0)
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17.6
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5.3
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Net DPS (sen)
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18.0
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18.0
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15.0
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15.0
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Core P/E (x)
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13.1
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24.8
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21.1
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20.0
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P/BV (x)
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1.5
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1.5
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1.6
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1.6
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Net dividend yield (%)
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7.7
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7.7
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6.4
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6.4
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ROAE (%)
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11.6
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9.7
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7.4
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8.0
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ROAA (%)
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7.8
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4.1
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5.2
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5.8
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EV/EBITDA (x)
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6.9
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9.7
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9.1
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9.0
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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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Jade Tam
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Samuel Yin Shao
Yang
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MACRO RESEARCH
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Rise to year-to-date high
by
Suhaimi Ilias
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Total gross external reserves rose further at end-Apr
2017 to this year’s and a five-month high of USD96.1b (end-Mar 2017:
USD95.4b), on the back of the increase in foreign currency reserves
component to USD89.5b in Apr 2017 (End-Mar 2017: USD88.7b).
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Suhaimi Ilias
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Zamros
Dzulkafli
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Surge in growth, but lower surplus
by
Suhaimi Ilias
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Exports and imports surged in Mar 2017 to +24.1% YoY
(Feb 2017: +26.6% YoY) and +39.4% YoY (Feb 2017: +27.7% YoY) but
trade surplus slumped -51.7% YoY to +MYR5.4b (Feb 2017: +MYR8.7b).
Similarly, exports and imports jumped in 1Q 2017 +21.4% YoY (4Q 2016:
+2.8% YoY) and +27.7% YoY (4Q 2016: +5.0% YoY) but trade surplus
shrank -21.1% YoY to +MYR18.8b (4Q 2016: +MYR27.5b or -10.2% YoY)
implying net exports was not GDP growth accretive last quarter
despite impressive trade growth.
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Suhaimi Ilias
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Zamros
Dzulkafli
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NASDAQ bull still roaring
by Tee
Sze Chiah
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FBMKLCI rose 4.07pts to 1,762.74 on Friday thanks to
bargain hunting in banking and telco stocks. Market breadth has
improved compared to a day earlier with gainers outpacing losers by
617 to 327. A total of 3.57b shares worth MYR2.49b changed hands. Friday’s
rebound indicates that momentum has picked up. With US markets also
ended firmer, coupled with a rebound in commodity prices, the
benchmark index is likely to trade higher today, between 1,756 and
1,772.
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NEWS
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Outside Malaysia:
U.K: Consumer spending weakens with sharp slowdown in
April, according to a report from Visa. Its index showed spending rose an
annual 0.5% in April, down from 1% in March and marking one of the
slowest rates of growth in the past three years. Weaker household demand
is also taking a toll on retailers. A separate report from the Institute
for Chartered Accountants in England and Wales showed while there was a
jump in business confidence this quarter, retailing was the laggard among
nine sectors covered. (Source: Bloomberg)
China: Reserves rise a third month amid tighter capital
controls. China’s foreign-exchange reserves rose for a third month in
April, exceeding estimates, as tighter capital controls kept money from
flowing out of the country and the yuan held stable. Reserves climbed USD
20.4b to USD 3.03tr, the People’s Bank of China said. (Source: Bloomberg)
Crude Oil: Iran will go along with whatever OPEC decides
on crude cutbacks. Iran will go along with whatever decision OPEC makes
at its meeting later this month on whether to extend oil production cuts
beyond June, Oil Minister Bijan Namdar Zanganeh said. “All indications
are that the members want a renewal of the deal and we will go along with
what they agree upon,” Zanganeh said on the sidelines of an energy trade
show in Tehran. Producers outside OPEC that joined the oil pact will
probably agree to keep the cuts for longer, he said. Brent crude, the
global benchmark, slumped to a five-month low of USD 46.64/bbl. (Source:
Bloomberg)
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Other News:
Hua Yang: Acquires Ipoh land to develop MYR295.1m mixed
project. The group is acquiring a 3.8-acre parcel of land in Bandar Meru
Raya, Perak, which will be developed into a mixed project with a gross
development value (GDV) of MYR295.1m. Hua Yang plans to develop 720 units
of serviced apartments and 72 units of commercial shop lots on the site.
(Source: The Edge Financial Daily)
SLP Resources : Seeks to raise up to MYR40m via private
placement, proposes 1-for-5 bonus issue. The group has proposed a private
placement in a bid to raise up to about MYR40m, paired with a
one-for-five bonus issue. SLP said the bulk of the proceeds would be used
to fund the construction of a new warehouse, as well as to acquire two
high-performance blown film lines. This will enable the company to expand
its existing production capacity from 24,000 metric tonnes per year to
32,000 metric tonnes per year. (Source: The Edge Financial Daily)
Petronas: First floating LNG facility to start operating
next month. The group is ramping up its liquefied natural gas (LNG)
capacity with its first floating liquefied natural gas (LNG) facility,
PFLNG Satu, expected to go into commercial operation next month. The
facility, which marked the world first innovation in the LNG industry, is
expected to boost Malaysia’s total LNG production capacity to 32m tonnes
per annum (mtpa). (Source: The Star)
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