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| | | | | | | | | | | | | | | | Share Price: | MYR5.75 | Target Price: | MYR6.90 | Recommendation: | Buy | | |
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| | | The rail boost | | We see higher visibility for local cement demand given the progress of construction awards for rail projects (KVMRT2, KVLRT3 and ECRL) and believe that it would support a higher cement ASP in 2018-19. While LMC's upcoming 2Q17 results could remain weak, we expect LMC to turn profitable from 3Q17 onwards, underpinned by the recent bag cement ASP hike and various cost savings. Maintain earnings forecasts, BUY call and TP of MYR6.90 (1.9x P/B, -1SD to mean). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,750.8 | 2,552.2 | 2,318.1 | 2,654.6 | EBITDA | 511.6 | 302.1 | 248.4 | 419.0 | Core net profit | 252.3 | 84.9 | 3.9 | 132.4 | Core EPS (sen) | 29.7 | 10.0 | 0.5 | 15.6 | Core EPS growth (%) | (1.4) | (66.3) | (95.4) | 3,321.8 | Net DPS (sen) | 31.0 | 5.0 | 0.2 | 14.0 | Core P/E (x) | 19.4 | 57.5 | 1,262.3 | 36.9 | P/BV (x) | 1.6 | 1.6 | 1.6 | 1.6 | Net dividend yield (%) | 5.4 | 0.9 | 0.0 | 2.4 | ROAE (%) | 8.1 | 2.5 | 0.1 | 4.3 | ROAA (%) | 6.0 | 2.0 | 0.1 | 3.1 | EV/EBITDA (x) | 14.8 | 20.7 | 20.0 | 11.7 | Net debt/equity (%) | 1.0 | 4.6 | 2.6 | 0.3 |
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| | | | | | | | | | | | | | Share Price: | MYR2.51 | Target Price: | MYR2.70 | Recommendation: | Buy | | |
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| | | A MY sector powerhouse | | We expect another record year in earnings delivery by Inari in FY6/17. This momentum should spill over into FY18, backed by resilient RF demand, in line with progressive adoption of LTE-A/5G and surge in IR LED to power the iris scanner application in new smartphones. As such, we up Inari's TP to MYR2.70 (+10%), pegging it to 20x CY18 EPS (from 18x), representing a 10% premium to our target PER peg for Malaysian listed technology companies within our coverage for its superior visibility. BUY. | | |
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| | FYE Jun (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 933.1 | 1,040.9 | 1,223.3 | 1,789.2 | EBITDA | 187.3 | 203.0 | 287.1 | 350.0 | Core net profit | 147.7 | 155.8 | 214.1 | 268.3 | Core EPS (sen) | 7.6 | 7.8 | 10.2 | 12.7 | Core EPS growth (%) | 18.5 | 1.7 | 31.2 | 25.3 | Net DPS (sen) | 3.6 | 4.2 | 7.6 | 9.6 | Core P/E (x) | 32.9 | 32.4 | 24.7 | 19.7 | P/BV (x) | 9.1 | 7.4 | 7.2 | 6.6 | Net dividend yield (%) | 1.4 | 1.7 | 3.0 | 3.8 | ROAE (%) | 38.4 | 24.3 | 30.1 | 34.8 | ROAA (%) | 22.1 | 18.2 | 23.2 | 25.9 | EV/EBITDA (x) | 12.4 | 13.8 | 17.7 | 14.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | MACRO RESEARCH | | | | | | | Fresh year-high
by Suhaimi Ilias |
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| | | | | | Total gross external reserves rose +USD0.3b to USD99.4b at end-July 2017 vs USD99.1b at mid-July 2017, equals to 7.9 months of retained imports and 1.1 times the short-term external debt. Year to date, external reserves rose +5.1% from USD94.6b at end-Dec 2016. | |
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| | | | | | | | FBMSCAP – Selling Pressure Accelerates
by Nik Ihsan Raja Abdullah |
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| | | | | | Buying support on selected blue chips like CIMB, Maybank and Axiata lifted FMBKLCI higher. At day's end, the benchmark rose 3.38pts to 1,777.91. Market breadth, however, remained negative, with losers outpacing gainers by 516 to 363. A total of 1.95b shares worth MYR1.67b changed hands. With Dow Jones Industrial Average rising to another record high, the benchmark is set to post its sixth consecutive day of gains. | |
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| | NEWS | | | Outside Malaysia:
U.S. Consumer credit slows on weakness in non-revolving debt. U.S. consumer debt outstanding in June rose less than forecast on the slowest pace of non-revolving credit in a year, Federal Reserve data showed. Total credit rose USD 12.4b, or at 3.9% annualized rate. Revolving credit outstanding increased USD 4.1b. Non-revolving borrowing climbed USD 8.3b, or at a 3.5% annualized rate. (Source: Bloomberg)
Germany: Industrial production unexpectedly slipped in June as manufacturing and construction caused a temporary blip in the growth spurt of Europe's largest economy. Output, adjusted for seasonal swings and inflation, fell 1.1% in June after rising 1.2% in May, the Economy Ministry said. That's the first drop in six months in the typically volatile measure, which compares forecasts for a 0.2% gain. Production was up 2.4% YoY. With strong orders pointing to a likely pickup in manufacturing, the report is unlikely to mark a turning point for the German economy. (Source: Bloomberg)
China: Foreign reserves posted a sixth straight monthly increase as the yuan strengthened and economic growth remained robust. The foreign currency stockpile climbed USD23.9b to USD3.08t in July, the People's Bank of China said. Solid economic data and the presence of curbs on moving money abroad have helped restore confidence in the currency and ease outflow pressure. (Source: Bloomberg)
Crude Oil: Talks continue on output cut compliance. Officials from Russia and Kuwait conducted meetings with producers to examine why some are shirking their commitment to reduce output. Talks are being held separately with representatives from Iraq, United Arab Emirates, Kazakhstan and Malaysia through Tuesday, according to people familiar with the situation. Brent for October settlement was USD 52.37/bbl. (Source: Bloomberg) | |
| | | | | Other News:
CIMB: Launches Biz123 to give SMEs a one-stop solutions support. CIMB Bank (M) has launched a financial services platform together with a dedicated call centre equipped with relationship managers to help SMEs get all their financial service needs from one source. The platform, called Biz123, is aimed at providing the right support to businesses, from making the best use of capital and abiding by regulations, to managing a workforce and delivering the best customer experience. The platform could be useful for all businesses, no matter what stage of growth the companies may be in. (Source: The Star)
Eastern & Oriental: E&O shareholders approve STP2 land sale. Eastern & Oriental (E&O) shareholders have approved the disposal of a 1.445m-sq ft plot in the Seri Tanjung Pinang phase 2 (STP2) project for MYR766m. The land, sold by its subsidiary Tanjung Pinang Development S/B (TPD) to Kumpulan Wang Persaraan (Diperbadankan) (KWAP) – covers 20% of the net development land in phase 2A (STP2A) of the reclamation project on the northeast coast of Penang island where TPD has been granted the concession rights to develop and do reclamation works. STP2A, the 760-acre (307.56ha) project's first phase, has a total gross area of about 250 acres. The proceeds from the land disposal will be used to meet the funding requirements for STP2A reclamation and infrastructure works. (Source: The Edge Financial Daily)
Ire-Tex: Appoints Saharun Nizam as CEO. Packaging material maker Ire-Tex Corp, which is embroiled in a boardroom tussle, has appointed Saharun Nizam Saharan as its CEO effective Monday. Saharun Nizam, 47, joined Ire-Tex in 1999 but resigned in October last year. He was reappointed as vice president in April this year. (Source: The Star) | |
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