Monday, September 18, 2017

FW: [Maybank IB] Today's Research - Malaysia

 

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COMPANY
RESEARCH

Kimlun Bhd | Awarded MYR215m contract
Adrian Wong

Berjaya Food | 1QFY18: A decent start
Kevin Wong

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COMPANY RESEARCH

Malaysia

Company Update

Kimlun Bhd (KICB MK)
by Adrian Wong

Share Price:

MYR2.16

Target Price:

MYR2.30

Recommendation:

Hold

Awarded MYR215m contract

Kimlun's wholly-owned subsidiary has won a MYR215m contract to construct two blocks of condominiums and ancillary buildings at Mukim Petaling, Selangor. We estimate this would lift its outstanding orderbook to MYR2.2b. We expect Kimlun to vie for more jobs from KVLRT 3, KL-SG HSR and the affordable housing segment. Maintain HOLD with an unchanged TP of MYR2.30 pegged to unchanged 10x FY18 PER (+0.5SD).

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

1,053.6

940.7

1,198.3

1,046.8

EBITDA

112.7

130.9

102.4

113.6

Core net profit

64.4

80.7

61.9

70.5

Core EPS (sen)

21.4

26.4

20.2

23.0

Core EPS growth (%)

90.5

23.0

(23.4)

14.0

Net DPS (sen)

5.8

6.5

5.5

6.2

Core P/E (x)

10.1

8.2

10.7

9.4

P/BV (x)

1.4

1.2

1.1

1.0

Net dividend yield (%)

2.7

3.0

2.5

2.9

ROAE (%)

na

na

na

na

ROAA (%)

6.8

8.2

5.9

6.3

EV/EBITDA (x)

4.3

5.1

6.6

5.8

Net debt/equity (%)

14.3

6.7

3.1

net cash

Malaysia

Results Review

Berjaya Food (BFD MK)
by Kevin Wong

Share Price:

MYR1.53

Target Price:

MYR1.80

Recommendation:

Buy

1QFY18: A decent start

1QFY4/18 results and first interim net DPS of 1.0sen were in-line. Earnings growth was mainly driven by Berjaya Starbucks (BStarbucks) and Kenny Rogers Roasters (KRR) Malaysia's existing and new stores' contributions. We maintain our earnings forecasts and MYR1.80 TP which is based on an unchanged 27x CY18 PER at -0.5SD.

FYE Apr (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

554.4

605.4

637.7

692.3

EBITDA

79.5

74.8

91.5

93.8

Core net profit

22.3

18.5

23.3

26.3

Core FDEPS (sen)

5.9

4.8

6.1

6.9

Core FDEPS growth(%)

(13.7)

(17.2)

26.0

13.6

Net DPS (sen)

4.3

3.5

3.3

3.7

Core FD P/E (x)

26.1

31.5

25.0

22.0

P/BV (x)

1.4

1.5

1.5

1.4

Net dividend yield (%)

2.8

2.3

2.1

2.4

ROAE (%)

5.4

2.8

5.9

6.5

ROAA (%)

3.1

2.4

3.0

3.3

EV/EBITDA (x)

11.2

11.7

8.5

8.2

Net debt/equity (%)

49.3

62.3

55.5

52.7

SECTOR RESEARCH

MY: Malaysia REITs

Minor changes to taxation rulings
by Kevin Wong

Sector Note

Revisions in the Inland Revenue Board of Malaysia's (IRB) Taxation of Real Estate Investment Trust or Property Trust Fund, we believe, would mainly impact the unlisted M-REITs. We remain POSITIVE on the sector which currently offers 5.1% CY17 net yield. Our top BUY pick is IGBREIT, followed by SunREIT, MQREIT and ALSREIT.

MACRO RESEARCH

PH: OFW Remittances, July 2017

Boost to remittances on translation gains from weaker PHP
by Suhaimi Ilias

Economics Research

Overseas Filipino workers' remittances (OFWR) picked up to +7.1% YoY in July 2017 or +USD2.28b (June 2016: +5.7% YoY or +USD2.47b). OFWR growth was stronger in local currency at +15.3% YoY (June 2017: +13.4% YoY) on translation gains from weaker PHP, which is positive for consumer spending.

RN: Regional Traders' Almanac

Technical: A Look at ASEAN Various "Delicacies"
by Nik Ihsan Raja Abdullah

Technical Research

The uptrend channel from 659.00 low is still intact, with the candles holding well above the "Ichimoku Cloud". The index took out the 791.50 high recently, and there is a good chance that this upward trajectory will be extended. Our optimism is also premised on the still-positive technical reading. RSI has hooked upward while MACD is above the zero line.

NEWS

Outside Malaysia:

U.S: Harvey clouds economy as retail sales, factories take hits. Hurricane Harvey is taking a swipe at the U.S. economy this quarter, though not all of the slowdown can be blamed on the storm. Three reports put the impact of the Texas flooding into focus: Retail sales fell last month, according to the Commerce Department; Harvey pushed down factory production in August, the Federal Reserve said; and concern about the economic and inflationary effects of Harvey and Hurricane Irma led consumer sentiment to fall in September, a University of Michigan survey showed. Factory output fell 0.3% MoM, as Harvey reduced rate of change by about 0.75 percentage point. Retail sales fell 0.2% MoM, with control-group sales -- used to calculate GDP -- dropping 0.2%. Preliminary consumer-sentiment index eased to 95.3 from 96.8 in August. (Source: Bloomberg)

E.U: ECB is said to see bond reinvestments as key to easing QE blow. The European Central Bank expects to reinvest an average of EUR 15b (USD 18b) a month from maturing debt holdings next year, according to euro-area central-bank officials familiar with the matter -- spending that could soften the blow when its bond-buying program is wound down. The ECB's Monetary Policy Committee presented its estimate to the Governing Council last week, the officials said, asking not to be named as the deliberations are confidential. While reinvestments have long been a part of policy, governors are concerned that investors are underplaying the impact, three people said. (Source: Bloomberg)

U.K: House price growth at slowest since 2012 as London slumps. U.K. house prices grew at the slowest annual pace in more than five years this month as a slump in London weighed on the market. Asking prices rose 1.1% YoY, Rightmove Plc said. While the autumn traditionally sees prices pick up after a summer lull, this year had the first month-on-month decline in September in four years as values in London slumped. As house price growth slows in response to sluggish economic growth and a squeeze on consumers in the wake of the Brexit vote, the capital's property market has been the hardest hit. The outlook for house prices further dimmed last week when the Bank of England suggested it may soon raise interest rates for the first time in a decade. (Source: Bloomberg)

Indonesia: Central Bank looks for more rate cuts, Indrawati says. Indonesia's central bank is looking at the potential for further interest-rate cuts without hurting inflation stability, Finance Minister Sri Mulyani Indrawati said. "They are seeing if there is room for them to cut rates because they see that opportunity will not jeopardize their objective of stabilizing the inflation," Indrawati told Bloomberg News on the sidelines of a summit in Singapore. "I think that is the right policy that they have taken." (Source: Bloomberg)

Other News:

Berjaya Corp: To sell entire stake in BGREE for MYR50.87m. The group is disposing its entire 100% equity interest in Berjaya Green Resources Environmental Engineering (Foshan) Co Ltd (BGREE) to Foshan Water & Environmental Investment Co Ltd for RMBB78.50m (about MYR50.87m). Foshan Water & Environmental Investment is engaged in raw water development and supply, sewage treatment and other water and environmental protection related services. The proposed disposal is expected to result in a pre-tax gain of about MYR42.29m. (Source: The Sun Daily)

Accsoft Tech: Plans JV to develop e-commerce last mile delivery services. The group is looking to work together with a local firm that assembles and trades motorcycles to exploit market potential in relation to last mile delivery in the e-commerce industry. It said it has inked a Memorandum of Understanding with Malaysian Formula Bikes S/B (MFB) for the proposed collaboration. MFB is the sole importer and assembler of Sanyang Motorcycle's brand of motorbikes in Malaysia. (Source: The Edge Financial Daily)

Daya Materials: In early pact with MIMOS unit on crowd management system. The group has entered into an early agreement with MIMOS Semiconductor S/B to work together to provide a crowd management and passenger system for rail as well as non-rail systems. The system comprises, among others, information technology data transfer, security information capabilities, monitoring, management and recording of mass people and materials movement. It can be applied in rail or non-rail systems such as port entry and stadiums. (Source: The Edge Financial Daily)

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