Friday, May 12, 2017

Timber sector : Sarawak timber companies take a hit from higher taxes

MRCB : Favourable outlook as positive news flow continues        BUY

We make no changes to our FY17-19F forecasts, but we increase our fair value to RM1.89 as we lower our discount to its RNAV to 10% (from 20%) as we believe the stock is ripe for further re-rating due to expected positive news flows in the upcoming months. Maintain BUY. MRCB’s stock price has had a good rally in 2017, increasing 27% year to date. We believe this was mainly due to consistent positive events in the company over the last few months which are favourable to its future outlook. We also believe the stock has the potential to further re-rate, due to the anticipated more positive news flows in the next few months.

The termination of the share sale agreement of the 60% stake in Bandar Malaysia to the IWH-CREC consortium recently has put the spotlight on MRCB, as MRCB has in January 2017 signed an MoU with Wondrous Vista Development Sdn Bhd and Bandar Malaysia Sdn Bhd to develop an integrated transportation hub in Bandar Malaysia. However, we understand that even with the share sale termination, MRCB’s MoU remains intact, as Bandar Malaysia Sdn Bhd is still the registered owner of the land. We also would not discount the possibility of MRCB having a bigger role in Bandar Malaysia development moving forward, due to its expertise in transit-oriented developments. We believe the outlook for MRCB in 2017 remains positive.

Others :
Construction : Sarawak a hotbed of building activities                     OVERWEIGHT
Hock Seng Lee : Earnings to be more visible                                         BUY
Plantation Sector : Inventory up 3.0% MoM in April                          NEUTRAL
Digi.Com : Price wars drag on                                                                      HOLD
O&C Resources, Kawan Food, P.I.E. Industrial, Malaysia Smelting Corporation

Malaysia : Manufacturing sector to thrive despite headwinds
Philippines :  40% probability for a rate hike in 2H2017
UK : BOE could be in a limbo

Timber sector : Sarawak timber companies take a hit from higher taxes
SP Setia : SP Setia secures sales of RM801m in Jan-April
Astro : Astro launches NJOI Now

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

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