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Share
Price:
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MYR0.96
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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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Strengthening
its balance sheet
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WSC’s sale & leaseback of two properties with Axis
REIT (AXRB MK; HOLD; TP: MYR1.70) for MYR155m is decent. WSC gets to
monetise its assets, gaining a one-off MYR98m and lower its gearing
level from this transaction. We expect WSC to further strengthen its
balance sheet, for it still has a number of assets in its book for such
exercises (i.e. disposal/ sales & leaseback). Our TP is pegged to
12x 2018 PER.
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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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8.2
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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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32.7
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nm
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9.6
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8.9
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P/BV (x)
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0.7
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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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3.1
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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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20.1
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8.4
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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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7.0
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6.3
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Net debt/equity (%)
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73.6
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104.7
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74.0
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57.8
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Share
Price:
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MYR1.64
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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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Results in-line;
Buys industrial assets in Kuantan
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Axis’ 2Q17 results and second gross DPU of 2.17sen (YTD:
4.32sen) were in line whereby earnings growth was driven by lower opex.
Elsewhere, we are positive on Axis’ proposed acquisition of industrial
assets in Pahang which is earnings accretive. We nudge up FY18-19
earnings forecasts by 3% p.a., DDM-TP by 5sen to MYR1.75 (cost of
equity: 7.8%).
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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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165.7
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171.3
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178.7
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205.5
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Net property income
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141.9
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144.3
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152.4
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176.0
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Distributable income
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91.5
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90.2
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99.2
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105.6
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DPU (sen)
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7.6
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7.4
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8.1
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8.6
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DPU growth (%)
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(14.9)
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(1.8)
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8.8
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6.4
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Price/DPU(x)
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21.7
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22.1
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20.3
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19.1
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P/BV (x)
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1.3
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1.3
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1.3
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1.3
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DPU yield (%)
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4.6
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4.5
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4.9
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5.2
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ROAE (%)
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7.2
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8.9
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7.1
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7.6
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ROAA (%)
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4.3
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4.1
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4.4
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4.3
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Debt/Assets (x)
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0.3
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0.3
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0.3
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0.4
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SECTOR RESEARCH
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A decent 1H17
by Ivan
Yap
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June 2017 TIV remained healthy at 50.3k units (-1%
MoM, -12% YoY), bringing 1H17 TIV to 284.5k units (+3% YoY). This is
within our 2017 TIV forecast of 610k (+5% YoY), expecting a stronger
2H17 from year-end sales campaigns and mass-market launches. We expect
July TIV to slow down following stronger sales post pre-Hari Raya
sales campaigns in May-June. We remain POSITIVE from a bottom-up
stock pick with BUYs on MBM and Pecca for Perodua exposure, and TCM
on trough valuations.
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MACRO RESEARCH
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Above-5% GDP growth momentum intact
by
Suhaimi Ilias
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Index of leading economic indicators rose +1.9% YoY in
May 2017 (Apr 2017: +1.3% YoY), implying the real GDP growth momentum
is sustained in 2Q 2017 and into 3Q 2017 after the +5.6% YoY
expansion in 1Q 2017. Our full-year 2017 real GDP growth forecast is
+5.1% currently and we expect the official growth forecast of
4.3%-4.8% to be raised soon.
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Suhaimi Ilias
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Zamros
Dzulkafli
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FBMKLCI – Breaking out from Slumber
by Nik
Ihsan Raja Abdullah
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FBMKLCI rose 2.83pts to close at 1,761.99 yesterday as
dollar weakened. Market breadth, however, was relatively weak, with
losers outpacing gainers by 516 to 314. A total of 1.66b shares worth
MYR1.67b changed hands. Expect local bourses to trade in a tight
range in view of the lackluster US markets. All eyes will also be on
the Bursa Malaysia’s Leading Entrepreneur Accelerator Platform, or
the LEAP Market. We expect FBMKLCI to range between 1,755 and 1,770
today.
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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:
Global: The IMF left its forecast for growth unchanged in
the latest quarterly update to its World Economic Outlook. The world
economy will expand 3.5% this year, up from 3.2% in 2016, and by 3.6%
next year, the IMF said. The forecasts for this year and next are
unchanged from the fund’s projections in April. Beneath the headline
figures, though, the drivers of the recovery are shifting, with the world
relying less than expected on the U.S. and U.K. and more on China, Japan,
the euro zone and Canada, according to IMF. (Source: Bloomberg)
U.S. Home re-sales ease as lean inventory drives prices
higher. A slowdown in sales of previously owned U.S. homes shows how lean
inventories are keeping prices elevated and limiting purchasing options,
National Association of Realtors data showed. Contract closings fell 1.8%
MoM to a 5.52m annual rate while median sales price rose 6.5% YoY to a
record USD 263,800. Inventory of available properties fell 7.1% YoY to
1.96m, marking the 25th consecutive year-on-year decline. (Source:
Bloomberg)
E.U: Growth in the euro-region economy started the third
quarter at the weakest pace in six months as manufacturing cooled. A
composite Purchasing Managers’ Index fell to 55.8 in July from 56.3 in
June, IHS Markit said. The figures indicate that GDP is expanding at a
0.6% quarterly pace, compared with 0.7% in the second three months of the
year. European Central Bank President Mario Draghi said last week that
that the region isn’t yet ready for a reduction in the unprecedented
stimulus. While growth appears to be firming, prices aren’t picking up
fast enough to get to the ECB’s target without help from record low
interest rates and continued bond buying. (Source: Bloomberg)
U.K: IMF revised down its 2017 growth forecast, citing
slower-than-expected expansion at the start of the year. The pace will
slow to 1.7% from 1.8% in 2016, after predicting a pickup to 2% in April.
The cut comes after growth in the first three months of the year dipped
to 0.2%, and data this week are likely to show barely any recovery in the
second quarter. While the U.K. initially performed better than many
expected after the Brexit vote in June 2016, accelerating inflation is
starting to crimp consumer spending, the biggest driver of the economy.
(Source: Bloomberg)
Crude Oil: Holds advance as Saudis pledge deep export
cuts. Saudi Arabia will cap shipments at 6.6 million barrels a day in
August, 1 million lower than a year earlier, Energy and Industry Minister
Khalid Al-Falih said in St. Petersburg. U.S. crude stockpiles probably
fell for a fourth week through July 21, according to a Bloomberg survey
before government data. Brent for September settlement was USD 48.60/bbl.
(Source: Bloomberg)
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Other News:
Rohas Technic: To buy 75% in EPCC player HG Power for
MYR91.66m. Loss making Rohas Technic plans to buy a 75% stake in HG Power
Transmission S/B for MYR91.66m in cash and shares, to expand its existing
business in the power and telecommunication industries. It plans to issue
new shares in the group at 95 sen a piece. The MYR22.5m cash portion will
be funded internally. Rohas Technic's share price closed unchanged at
MYR1.15, with some 209,200 shares changing hands. (Source: The Sun Daily)
Wah Seong: Selling Gebeng property to Axis REIT for
MYR155m.Wah Seong is selling its Gebeng property in Pahang to Axis Real
Estate Investment Trust (REIT) for MYR155m cash consideration, which will
see it recording a one-off net gain of nearly MYR98m. The disposal will result
in a one-off net gain of approximately MYR97.70m, it said. Of the MYR155m
proceeds received from the sale, Wah Seong said MYR105m would be used to
repay debts and MYR50m as working capital.(Source: The Star)
CIMB Group: CIMB subsidiary Touch 'n Go teams up with
Alipay to launch e-wallet. Its subsidiary Touch 'n Go has entered into an
equity joint venture (JV) with Alipay, a subsidiary of Ant Financial
Services Group to launch a new e-wallet platform in Malaysia. The JV
company, in which Touch ’n Go will hold a majority stake, will develop an
e-wallet for use via mobile phones by individuals and small and medium
enterprises (SMEs) here, before bringing in banks and merchants to link
their services with the platform. (Source: The Edge Financial Daily)
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