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| | | | | | | | | | | | | | | | Share Price: | MYR5.95 | Target Price: | MYR6.90 | Recommendation: | Buy | | |
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| | | Small players raised bulk ASP | | Two small players have raised net bulk ASP by c.MYR20/t (or c.+10%) and the bigger players may follow suit given their poor profitability but positive demand outlook. We lower our FY17-19 EPS forecasts as we raise our cost assumptions. Our model has already assumed for blended ASP hikes (2H17: +5%, 2018: +15%) and volume growth of 6% in 2018. Maintain BUY 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 | 216.8 | 392.2 | Core net profit | 252.3 | 84.9 | (22.2) | 111.5 | Core EPS (sen) | 29.7 | 10.0 | (2.6) | 13.1 | Core EPS growth (%) | (1.4) | (66.3) | nm | nm | Net DPS (sen) | 31.0 | 5.0 | 0.0 | 11.8 | Core P/E (x) | 20.0 | 59.5 | nm | 45.4 | P/BV (x) | 1.6 | 1.7 | 1.7 | 1.7 | Net dividend yield (%) | 5.2 | 0.8 | 0.0 | 2.0 | ROAE (%) | 8.1 | 2.5 | (0.7) | 3.7 | ROAA (%) | 6.0 | 2.0 | (0.5) | 2.6 | EV/EBITDA (x) | 14.8 | 20.7 | 23.8 | 13.0 | Net debt/equity (%) | 1.0 | 4.6 | 3.5 | 1.1 |
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| | | | | SECTOR RESEARCH | | | | | | | Forum takeaways
by Chee Ting Ong |
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| | | | | | Once touted the new frontier for oil palm expansion, land rights issue, NGO activism and Ebola outbreak have hampered new developments in Africa in recent years. However, the projected robust population growth in Africa over the next 2-3 decades offers huge demand potential for palm oil, being the cheapest oil and native to Africa, which may only be met via imports. In the immediate term, we remain Neutral on the sector with selective BUYs on SOP, BAL, AALI, LSIP, TBLA. | |
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| | | | NEWS | | | Outside Malaysia:
U.K: Consumer spending rises for first time since April as it gained by +0.3% in August, first gain in four months, according to a report by HIS Markit and Visa. Average growth of 0.2% each month since January means consumer spending on track for weakest calendar year of growth since 2013. August increase driven by higher e-commerce expenditure which was up +6.5% YoY. Face-to-face spending was down 2.6% YoY. Consumers spending was more on small treats. Recreation and culture, hotels, restaurants and bars categories register higher spending. Transport and communication weakest. (Source: Bloomberg)
China: Factory prices give an unexpected lift to global inflation. Inflationary pressure emanating from the factory to the world is proving more resilient than economists have anticipated. China's producer-price inflation accelerated to 6.3% YoY in August following the 5.5% YoY readings in the prior three months. The surprise strength gives support for global inflation spanning from metals to fuel and shows the effects of resilient domestic demand and reduced supplies of some commodities. China's authorities have been closing mills and smelters to cut excessive industrial capacity and help curb pollution, in turn straining production of metals such as aluminium and steel. (Source: Bloomberg)
Crude Oil: WTI gains as Hurricane Irma lowered to category 2. Oil gained as Hurricane Irma was lowered to a Category 2, easing concerns two weeks after Harvey hit energy production in Texas. Irma knocked out power to almost 2.4 million U.S. customers, paralyzed tanker traffic and shut about 6,000 gasoline stations. Storm made landfall with Category 4 winds hitting 130 mph before starting to weaken. (Source: Bloomberg) | |
| | | | | Other News:
Perak Transit: Buys 9-storey office building in Ipoh for MYR10m. The group is purchasing a parcel of leasehold land together with a nine-storey office building in Ipoh's SOHO Ipoh Commercial Centre (Phase II), for MYR10m. The purchase — at an 11.27% discount to the building's market value of MYR11.27m — will be satisfied via internal fundings and borrowings at a 30:70 ratio. (Source: The Edge Financial Daily)
MMC: MMC's Northport forms strategic alliance with Sarawak-based shipping lines. MMC Corp Bhd's outfit Northport will be forming a strategic alliance with Sarawak-based shipping lines Shin Yang Shipping S/B and Harbour-Link Group Bhd, which will see the three parties working together to improve economies of scale. The MoU is expected to increase shipping service frequency through schedule alignment between Shin Yang and Harbour-Link. With the consolidation of vessel capacity between the two lines, the pact will create greater economies of scale with the optimised deployment of vessels and a wider port coverage. (Source: The Sun Daily)
MyEG: To offer life insurance products. The group said it will offer life insurance products by Hong Leong Assurance (HLA) via its website and digital platform.The partnership will allow MyEG to increase the number of products offered via the platform, it said. For HLA, the move is part of its strategy to move away from conventional platforms and venture deeper into the wider digital market. (Source: The Edge Financial Daily) | |
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