Wednesday, August 2, 2017

Sunway : Acquiring land in Kajang and USJ BUY

Media Prima : Stops the bleeding                                                                             HOLD

We maintain HOLD on Media Prima (MPR) with a higher fair value of RM1.06/share (previously RM1.03/share) based on DCF at a 10% discount rate. We have raised FY18F-FY19F core profit forecasts by 10-15% due to the winding-up of a loss-making associate company. However, we note that MPR will be recognising an impairment loss of RM142.4mil in FY17F, thereby deepening the projected net loss from RM46mil to RM144mil. MPR announced that its 21.4%-owned associate company, Malaysian Newsprint Industries (MNI), would commence creditors’ voluntary winding-up seeing that the entity has been unprofitable over the past 3 years amid difficult market conditions and declining newsprint demand.

In FY16, MPR registered a loss of RM10mil from “share of results of an associate”, all of which originated from MNI. As a result of the exercise, MPR will make an impairment of RM142.4mil, which represents the carrying amount of investment in MNI. Although this will reduce MPR’s FY17F earnings by the impairment amount, this would improve MPR's FY18F-FY19F profitability as we had previously assumed similar losses going forward. All-in, we are mildly positive on the development, as the cessation of MNI’s operations would avoid further losses recognised by MPR. We are keeping our HOLD call on MPR due to: (1) rapid decline in newspaper circulation owing to the availability of digital content; (2) subdued adex outlook against the backdrop of weak consumer sentiment; and (3) uncertainties arising from imminent analogue switch-off.

Other :
Sunway : Acquiring land in Kajang and USJ                                                            BUY

Sime Darby : Sells 40% stake in Seriemas to PNB for RM625mil cash          HOLD

Paramount Corp.,Cocoaland Hldgs,Padini Hldgs,Hua Yang

Malaysia : Manufacturing PMI still weak

Lotte Chem. Titan Hldg : We did not know the full impact of water cut until July- LCT
Paramount Corp. : Paramount sells two assets to Malaysia’s first education REIT
Wah Seong Corp. : Wah Seong bags RM103.6m Kazakhstan job from Siemens

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