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| | | | | | | | | | | | | | | | Share Price: | MYR4.55 | Target Price: | MYR5.00 | Recommendation: | Buy | | |
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| | | Looking sexy again; U/G to BUY | | We are positive on IOI's disposal of Loders for MYR3,941m cash, valued at an EV/EBITDA of ~13x (on FY16) and historical average PER of 55x. Save for one-off disposal gain of MYR2,506m (~40sen/sh), the disposal is likely to be (core) EPS neutral to slightly dilutive. We maintain earnings forecasts but raise our call on IOI to a trading BUY as we believe the stock should re-rate on a revitalised balance sheet (FY17's proforma net gearing of 28% from 75%) and a 12.5sen special DPS post-completion. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 11,739.3 | 14,127.3 | 13,066.8 | 13,705.5 | EBITDA | 1,494.6 | 1,603.8 | 1,959.2 | 2,138.0 | Core net profit | 951.5 | 1,022.8 | 1,084.4 | 1,226.6 | Core EPS (sen) | 14.7 | 16.3 | 17.2 | 19.5 | Core EPS growth (%) | 27.8 | 10.5 | 6.0 | 13.1 | Net DPS (sen) | 8.0 | 9.5 | 8.6 | 9.8 | Core P/E (x) | 30.9 | 28.0 | 26.4 | 23.3 | P/BV (x) | 4.1 | 3.8 | 3.6 | 3.3 | Net dividend yield (%) | 1.8 | 2.1 | 1.9 | 2.1 | ROAE (%) | 8.9 | 10.0 | 14.0 | 14.8 | ROAA (%) | 5.6 | 5.7 | 6.0 | 6.6 | EV/EBITDA (x) | 22.6 | 21.2 | 17.3 | 15.6 | Net debt/equity (%) | 73.4 | 75.4 | 59.9 | 48.8 |
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| | | | | | | | | | | | | | Share Price: | MYR44.00 | Target Price: | MYR47.10 | Recommendation: | Hold | | |
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| | | Small packs? | | There are talks about reintroducing small pack cigarettes which were banned in 2010. We believe that this could be a positive development to the tobacco industry. We maintain our earnings forecasts and DCF-TP (WACC: 7.1%, LT growth: 1.5%) for BAT for now pending further updates and developments. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 4,581.5 | 3,756.4 | 3,107.0 | 3,189.9 | EBITDA | 1,277.3 | 929.9 | 802.0 | 850.3 | Core net profit | 914.5 | 675.1 | 606.4 | 644.0 | Core EPS (sen) | 320.3 | 236.4 | 212.4 | 225.6 | Core EPS growth (%) | 0.5 | (26.2) | (10.2) | 6.2 | Net DPS (sen) | 312.0 | 278.0 | 208.1 | 221.1 | Core P/E (x) | 13.7 | 18.6 | 20.7 | 19.5 | P/BV (x) | 23.0 | 20.5 | 20.1 | 19.7 | Net dividend yield (%) | 7.1 | 6.3 | 4.7 | 5.0 | ROAE (%) | 170.0 | 124.4 | 97.9 | 101.9 | ROAA (%) | 73.4 | 56.2 | 52.2 | 56.5 | EV/EBITDA (x) | 12.8 | 13.8 | 15.7 | 14.8 | Net debt/equity (%) | 50.5 | 15.8 | 10.8 | 9.7 |
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| | | | | | MACRO RESEARCH | | | | | | | BM Finance Index: New Up Leg Spotted
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI soared 7.12pts to 1,789.86 yesterday, led by gains in selective index linked stocks like PETGAS, IHH and MISC. Market sentiment was positive with gainers outpacing losers by 489 to 395. A total of 3.66b shares worth MYR2.25b changed hands. Renewed optimism, boosted by record closing in US markets overnight, could extend FBMKLCI's gain to its third consecutive day. Technology stocks could attract interest after Apple unveiled the iPhone X. | |
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| | | | | | | | Exports up, imports down, trade deficit narrows
by Suhaimi Ilias |
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| | | | | | Exports growth strengthened (July 2017: +10.4% YoY; June 2017: +5.8% YoY) while imports fell for the second month (July 2017: -3.2% YoY; June 2017: -1.3% YoY), resulting in further narrowing of the trade deficit (July 2017: -30.6% YoY & -17.4% MoM; June 2017: -16.0% YoY & -27.2% MoM) to 17-month low (July 2017: –USD1.64b; June 2017: -USD1.99b). | |
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| | NEWS | | | Outside Malaysia:
U.S: Household incomes rose to record in 2016 as poverty fell. Median, inflation-adjusted household income increased 3.2% to USD 59,039 last year, from USD 57,230 in 2015. Median incomes for black and Hispanic households rose at more than double the rate of white households; female householders outpaced males. Poverty rate declined to 12.7% from 13.5%; represented 40.6 million Americans. The economy added 2.2 million jobs last year and the unemployment rate had declined to 4.7% by year end. It's fallen further in recent months to a 16-year low. (Source: Bloomberg)
U.K: Inflation accelerated more than forecast in August, pushing close to 3% again after the biggest surge in clothes prices in almost three decades. The jump to 2.9% from 2.6% in July puts the spotlight squarely back on one of the most prominent economic repercussions of the Brexit vote in 2016. The pound has fallen 11% against the dollar since the referendum, boosting import costs and feeding through to prices for everyday household items. The inflation rate has never been higher since 2012. (Source: Bloomberg)
China: Sentiment among consumers and households is the strongest in more than two decades. The consumer confidence index climbed to 114.6 in July. That's up from last May, when it dipped below 100, the line separating optimism and pessimism. Meanwhile, a private consumer confidence index, compiled by Nielsen Holdings Plc, climbed to 112 in the second quarter, the best reading since at least 2009. A component tracking willingness to spend also climbed to a fresh high, while readings for job prospects and personal finances also increased. (Source: Bloomberg)
Thailand: Cabinet approves change in public debt management bill to allow Finance Ministry to borrow short term for Treasury reserve management, Kobsak Pootrakool, vice minister in prime minister's office, says in briefing in Bangkok. Ministry will be able to borrow via treasury bills. Currently borrows via long-term instruments. Ministry can borrow maximum THB140b per year via short-term instruments. This should help save about THB1b per month in financing costs. (Source: Bloomberg)
Crude Oil: Hold gains as OPEC considers prolonging output cuts. Oil held gains as OPEC was said to discuss prolonging output cuts further into next year and as U.S. energy markets continued their slow recovery after disruptions from two hurricanes. A six-month extension to supply curbs from the end of March is one of the options being considered by OPEC and its allies, according to a person familiar with the matter. U.S. shale production is recovering and Gulf Coast refiners are resuming operations after Hurricane Harvey hit more than two weeks ago and shut almost a quarter of the nation's refining capacity. (Source: Bloomberg) | |
| | | | | Other News:
Infrastructure: KL-Singapore HSR 'wide open' to all. The Kuala Lumpur-Singapore High-Speed Rail (HSR) project is "wide open" to all and both countries will choose the builder based on merit from a tender expected to be opened in December, according to myHSR Corp CEO Mohd Nur Ismal Mohamed Kamal. He added that it is also not true when some countries claimed the project is already in the bag. Both Malaysia and Singapore will hold a second industry briefing in London on Sept 26 to share more information on the HSR project. The briefing is aimed at sharing updates and is scheduled in response to the industry's queries following the first such briefing in July. Meanwhile, the project is expected to contribute MYR21b in GDP growth to Malaysia and Singapore and create 111,000 jobs by 2060. Land Public Transport Commission (SPAD) CEO Mohd Azharuddin Mat Sah, said through a comprehensively inclusive plan, the HSR was expected to deliver significant socio-economic benefits to both Malaysia and Singapore. (source: The Edge Financial Daily)
Sunway: To buy more land. The company is looking to acquire more land with good connectivity to new public infrastructure for transit-oriented development (TOD), according to Serena Cheah, the managing director of its property division for Malaysia and Singapore. TOD refers to a type of urban development that maximizes the amount of residential, business and leisure space within walking distance of public transport. The group recently had acquired five different plots of land in the Klang Valley. "It is important as we want to diversify our locations which are very well-served by roads and public infrastructure such as the MRT and LRT. "So, we are looking for more land for TOD development, as when the MRT and LRT projects are completed, it will add value,"she told reported after the announcement of the opening of the Sunway Velocity Hotel. (Source: Bernama)
Eco World International: To launch second Aussie project worth MYR825.7m. The company expects to launch Yarra Once, its second residential development project in Australia with a GDV of MYR825.7m, towards the end of this month, said president and CEO Datuk Teow Leong Seng. Including Yarra One, the company now has five developments, with two projects in Australia and three projects in the UK. The project is expected to push up the total portfolio value of EWI projects to around MYR14b in GDV from MYR12.96b currently. Yarra One, which comprises of a 26-storey tower with 256 residential units is expected to be completed in first half of year 2020. (Source: The Edge Financial Daily)
Titijaya Land: Sees sales to double. The company is "confident" of achieving up to MYR600m worth of new property sales in the current financial year, as the property developer prepares to launch MYR1.8b worth of projects. Edmund Tan, the group's CEO, said the group has set its sales target at MYR500m to MYR600m for financial year ending June 30, 2018 (FY18), after breaching the MYR300m mark in FY17. "Our launches have been held back for the past year or more, but we are gearing up this year", Tan told reporters after the group's extraordinary general meeting yesterday. He said the group's two high-rise mixed development in Kuala Lumpur, namely 3rdNvenue along Jalan Ampang and Riveria City at Kuala Sentral, will bring "significant contribution" to Titijaya's FY18 performance. (Source: The Edge Financial Daily) | |
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