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Share
Price:
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MYR0.91
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Target
Price:
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MYR1.30
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Recommendation:
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Buy
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Coating its way
to growth
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We expect 2017 to be a turnaround year for WSC.
Operationally, its Nord Stream 2 (NS20) operations are progressing well
with activities ramping up in 2Q17-3Q17. With this, we expect stronger
earnings ahead, as factored into our forecasts. Financially, WSC is
working on several options to strengthen its balance sheet. Asset
monetisation is one of the considerations to reduce gearing and improve
working capital. Our unchanged TP, pegged to 12x 2018 PER, offers a 43%
upside.
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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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1,839.5
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1,276.6
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2,150.0
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2,198.4
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EBITDA
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143.3
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53.6
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233.8
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241.3
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Core net profit
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22.7
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(23.3)
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77.2
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83.5
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Core EPS (sen)
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2.9
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(3.0)
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10.0
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10.8
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Core EPS growth (%)
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(84.4)
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nm
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nm
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8.1
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Net DPS (sen)
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3.0
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0.5
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0.0
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0.0
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Core P/E (x)
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31.0
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nm
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9.1
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8.4
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P/BV (x)
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0.6
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0.9
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0.8
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0.7
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Net dividend yield (%)
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3.3
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0.5
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0.0
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0.0
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ROAE (%)
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0.9
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(23.2)
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9.4
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9.3
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ROAA (%)
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0.8
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(0.8)
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2.7
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2.6
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EV/EBITDA (x)
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12.2
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30.4
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7.2
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6.6
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Net debt/equity (%)
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73.6
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104.7
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91.7
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72.6
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Reserves closing in to USD100b mark
by
Suhaimi Ilias
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Total gross external reserves rose to USD99.1b at
mid-July 2017 (end-June 2017: USD98.9b), equal to 7.9 months of
retained imports and 1.1 times the short-term external debt. Year to
date, external reserves rose +4.8% from USD94.6b at end-Dec 2016.
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Suhaimi Ilias
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Zamros
Dzulkafli
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ASEAN Energy & Utilities Sector Playing Catch
Up with Emerging Market
by Nik
Ihsan Raja Abdullah
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BI ASEAN Electric Utilities Index (BIASPGCP Index) has
completed a major corrective wave (a-b-c). From a high of 125.00 in
Feb 2015, the index plunged to a low of 86.60 in Feb 2016.
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Nik Ihsan Raja
Abdullah
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Tee Sze Chiah
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Outside Malaysia:
U.S-U.K: Finance, farming are focus of U.K.-U.S. trade
talks, Fox Says. Removing commercial barriers with the U.S could generate
an additional GBP40b (USD52b) in trade with the U.K. by 2030, Trade
Secretary Liam Fox said as he warned that reaching a deal won’t be easy.
Fox, in Washington for preliminary talks on a post-Brexit U.S. trade
agreement, said the projected economic gain is based on recent government
calculations. The U.K. can’t sign trade deals with other countries until
it leaves the European Union in March 2019, but can prepare the
groundwork for accords to be ratified soon after. (Source: Bloomberg)
China: PBOC monetary policy tools have CNY678.5b maturing
this week. The calculation includes repurchase notes, reverse repurchase
notes and medium-term lending facility (MLF). (Source: Bloomberg)
China: Labor market remains tight and unemployment low.
And yet -- just like in the U.S., Europe and elsewhere - wages growth
isn’t reflecting that strength. Official and private gauges show demand
for hiring remained healthy in the second quarter, with even the weakest
regions and sectors recovering. Yet white-collar pay edged down from the
first quarter and pay raises for the nation’s 281 million migrant workers
also narrowed. While conditions like those may be good for companies’
payroll costs, they also give less spending power to consumers who play
an increasingly crucial role in generating economic growth. Technology is
seeing the most demand for talent and professional services pay the best
-- positive signs for industries that the government is relying on to
rebalance the economy away from smokestack sectors. (Source: Bloomberg)
Saudi Arabia: Economy will stall this year with growth
“close to zero” due to lower oil revenue, the International Monetary Fund
said. The fund lowered its 2017 growth forecast to 0.1% from 0.4%, citing
OPEC production cuts, uncertainty over oil prices and the structural
reforms the country is undertaking to reduce its reliance on crude, it
said in a statement concluding its Article IV consultation. The IMF also
lowered its non-oil growth projection to 1.7% from 2.1% - compared with
actual growth of 0.2% in 2016. Lower oil prices and austerity measures
are weighing on Saudi Arabia’s economy, which contracted in the first
quarter for the first time since 2009 - illustrating the scale of the
challenge facing the country’s new heir, Crown Prince Mohammed bin
Salman, as he implements his blueprint for a transition away from oil
dependency. (Source: Bloomberg)
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Other News:
Boustead Heavy Industries: Gets 3-year, RM215m extension
to maintain Air Force choppers. Its 51%-owned unit has secured a
three-year-and-eight-day extension to an original contract bagged in 2014
from the government to maintain helicopters for the Royal Malaysian Air
Force for MYR215m. It said the extension was given by the Ministry of
Defence to BHIC AeroServices S/B — a joint-venture unit with Prestige
Pillar S/B (30%) and Airbus Helicopters Malaysia S/B (19%). (Source: The
Edge Financial Daily)
TRC Synergy: Australian unit sells asset for AUD9.66m. Its
wholly-owned subsidiary TRC (Aust) Pty Ltd (TRCA) is disposing of a
property in Melbourne for AUD9.66m (MYR32.16m) cash. The disposal will
allow TRCA to capitalise the potential value of its landbank. The
disposal of the said land is at its current value of AUD9.66m will
generate income and give financial support to TRCA for its imminent
development activities in Australia. (Source: The Sun Daily)
Landmarks: Divests stake in MSL Properties for MYR87.4m.
The group selling its 20% stake in MSL Properties S/B to Singapore's MCL
Land Ltd, for MYR87.38m. Landmarks said the net proceeds from the
proposed disposal of MYR82.9m will be used for the group's capital
expenditure and working capital, and it is expecting full utilisation
within 24 months from the receipt of the proceeds. (Source: The Edge
Financial Daily)
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