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Share
Price:
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MYR7.09
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Target
Price:
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MYR8.10
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Recommendation:
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Buy
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Expect a
windfall in 2Q17
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2Q17 results will be a windfall underpinned by strong ASP
and higher volumes on the full operations of SAMUR plant. 2017 is
shaping up to be a record year with stronger-than-expected product
margin and sturdy global demand. Earnings and dividends could potentially
surprise positively. Maintain BUY with an unchanged TP of MYR8.10,
based on 8.5x 2017 EV/EBITDA — on par with global peers.
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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
|
13,536.0
|
13,860.0
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14,516.6
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15,048.2
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EBITDA
|
5,036.0
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5,388.0
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6,504.8
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5,844.7
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Core net profit
|
2,754.0
|
3,138.0
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3,985.8
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3,464.2
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Core EPS (sen)
|
34.4
|
39.2
|
49.8
|
43.3
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Core EPS growth (%)
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(1.3)
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13.9
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27.0
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(13.1)
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Net DPS (sen)
|
18.0
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19.0
|
25.0
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22.0
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Core P/E (x)
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20.6
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18.1
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14.2
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16.4
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P/BV (x)
|
2.3
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2.1
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1.9
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1.8
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Net dividend yield (%)
|
2.5
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2.7
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3.5
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3.1
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
|
9.3
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10.0
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12.1
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9.9
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EV/EBITDA (x)
|
10.2
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9.2
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7.5
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8.2
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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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MYR1.71
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Target
Price:
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MYR1.75
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Recommendation:
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Hold
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Proposes private
placement
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We are neutral on TSH’s proposed private placement which
is equivalent to 1.84% of its existing share base. By our estimate, the
placement will have marginal impact on net gearing and EPS. Our
forecasts remain unchanged. TSH remains a HOLD with an unchanged TP of
MYR1.75 on 19x 2017 PER (5-year mean).
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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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799.5
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872.5
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1,094.6
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1,137.6
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EBITDA
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173.6
|
180.8
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186.6
|
225.7
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Core net profit
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75.5
|
72.4
|
123.5
|
157.3
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Core EPS (sen)
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5.6
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5.4
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9.2
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11.7
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Core EPS growth (%)
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(43.0)
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(4.1)
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70.6
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27.4
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Net DPS (sen)
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2.0
|
2.0
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2.8
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3.5
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Core P/E (x)
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30.5
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31.8
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18.6
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14.6
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P/BV (x)
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1.7
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1.5
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1.4
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1.4
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Net dividend yield (%)
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1.2
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1.2
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1.6
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2.1
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ROAE (%)
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(8.1)
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4.0
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8.0
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9.6
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ROAA (%)
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2.6
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2.2
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3.5
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4.3
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EV/EBITDA (x)
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23.7
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22.4
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20.5
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17.0
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Net debt/equity (%)
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88.4
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84.3
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77.9
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72.6
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MACRO RESEARCH
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Reflation in motion, proceed with caution
by
Suhaimi Ilias
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We see global real GDP expanding at +3.4% p.a. in
2017-2018 (2016: +3.1%) on synchronized expansions in advanced and
emerging economies. Malaysia’s macroeconomic pressure meanwhile
continues to ease. We project real GDP growth to average +5.0% in
2017-2018 after the downtrend in 2014-2016. We remain constructive on
Malaysia equities into 2H 2017, but with a slightly Neutral bias
after 1H’s gains. Our end-2017 KLCI target is unchanged at 1,820.
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Suhaimi Ilias
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Chew Hann Wong
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Benefits of a diversified economy
by
Suhaimi Ilias
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Exports growth in May 2017 was the fastest in seven
years at +32.5% YoY (Apr 2017: +20.4% YoY), imports surged by +30.4%
YoY (Apr 2017: +24.7% YoY), while trade surplus narrowed to +MYR5.5b
(Apr 2017: +MYR8.7b). Latest external trade data point to continued
global economic expansion and firm domestic demand in mid-2Q 2017.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Fresh high for the year
by
Suhaimi Ilias
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Total gross external reserves rose to this year’s new
high of USD98.9b in end-June 2017 (mid-June 2017: USD98.7b; end-May
2017: USD98.0b). Foreign funds flows were muted as the +MYR0.3b net
foreign buys in equities were offset by net foreign sell in bonds of
–MYR0.3b, indicating the sustained rise in external reserves last
month was driven by net inflows from trade and foreign direct investment
(FDI).
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Suhaimi Ilias
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Zamros
Dzulkafli
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Property Stocks Strike Back - Recovery Play
by Nik
Ihsan Raja Abdullah
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Bloomberg Asia Pacific Real Estate Index’s (BPRREAL
INDEX) long-term uptrend remains intact. Based on wave count, BPRREAL
INDEX has completed its Wave 2 (at 215.00 low in Dec 2016) and Wave 3
(at 255.93 high in June 2017). Wave 4 is currently unfolding but we
reckon that this correction will likely end soon. Indicators like
Stochastic continues to point south while ADX is also below the 20pts
mark, a characteristic of a sideways market.
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Nik Ihsan Raja
Abdullah
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Tee Sze Chiah
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NEWS
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Outside Malaysia:
E.U: ECB officials disagree on how much is too much for
stimulus plan. European Central Bank policy makers continued to air their
differences over when to rein in stimulus, sending conflicting signals on
whether pumping cash into the economy for much longer will help the euro
area or hurt it. “Underlying inflationary pressure remains subdued” and
“we still need a long period of accommodative policy,” Executive Board
member Peter Praet, the ECB’s chief economist, told Belgian newspaper De
Standaard in an interview published. Governing Council member Klaas Knot,
speaking on Dutch television, warned that the central bank is “very close
to the point” of keeping quantitative easing for too long. The remarks
reflect the dissonance since the start of the year in the Governing
Council over when officials should discuss winding down their EUR 2.3b
(USD 2.6b) asset- purchase program. Praet has consistently called for
patience, while colleagues such as Knot and Germany’s Jens Weidmann have
warned against leaving it too late, and Executive Board member Benoit
Coeure has said a failure to be transparent can increase market
volatility. (Source: Bloomberg)
U.K BOE policy hawks face new signs of weakening economy.
Unexpectedly weak manufacturing, construction and trade data all darkened
the economic outlook, casting doubt over the U.K.’s performance in the
second quarter and reining back expectations of tighter policy. The data
follows weeks of speculation that the BOE may raise rates as soon as
their August meeting, sparked by dissenting calls for a hike by three of
eight voters at their June meeting and a fourth subsequently suggesting
he might follow suit. Even Governor Mark Carney last week shifted his
emphasis, saying that policy makers may need to begin raising and will debate
it in the coming months. (Source: Bloomberg)
Vietnam: Surprise rate cut may spur growth amid credit
worries. Vietnam’s surprise lowering of interest rates for the first time
in three years may help to support economic growth, but raises credit risks
in a nation still grappling with a hangover of bad debt. The central bank
reduced the refinance rate by 25 basis points to 6.25% and also lowered
the discount rate to 4.25% from 4.5%. The changes come into effect on
Monday, the State Bank of Vietnam said on its website. (Source:
Bloomberg)
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Other News:
Genting Malaysia: Says it's working to recover MYR1.49b
from halted US casino project. The group is working to recover its
investment of USD347.4m (MYR1.49b) in an integrated gaming resort in
Taunton, Massachusetts, US, which has been put on hold pending the
resolution of a legal case. GenM said it will work with the tribe to
review all options available for its investment in the promissory notes,
and assess its recoverability and impact to its consolidated earnings and
net assets for the financial year ending Dec 31, 2017. (Source: The Edge
Financial Daily)
Only World: MYR37m from share placement plan. OWG, which
manages and operates resorts, restaurants, and amusement parks, announced
on Friday based on an illustrative issue price of MYR1.52, the corporate
exercise would enable it to MYR36.92m. Of the MYR36.92m, OWG said that
MYR25m would be to expand the business which included setting up at least
three new food service outlets and four new family attractions in Resort
World Genting, Genting Highlands. (Source: The Star)
Sunzen: To diversify into Chinese medicines manufacturing
biz. Sunzen Biotech has proposed to acquire a 70% stake in Ecolite
Biotech Manufacturing S/B for MYR12.05m, in line with its plans to
diversify into manufacturing and trading of Chinese medicines
business.The purchase is to be satisfied through an issuance of more than
37.65m shares priced at 32 sen per share. Sunzen said the acquisition
provides the group with an opportunity to diversify its earnings base and
to reduce its reliance on its existing core business. (Source: The Sun
Daily)
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