Thursday, October 26, 2017

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

 

 

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COMPANY
RESEARCH

Maxis Bhd | Commendable showing
Chi Wei Tan

Bursa Malaysia | 3Q17 results in-line
Chew Hann Wong

CapitaLand Malaysia Mall Trust | 3Q17: Below estimates
Kevin Wong

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COMPANY RESEARCH

Malaysia

TP Revision

Maxis Bhd (MAXIS MK)
by Chi Wei Tan

Share Price:

MYR5.78

Target Price:

MYR6.20

Recommendation:

Hold

Commendable showing

9M17 results were ahead of expectations as depreciation and interest expense surprised on the downside. Maxis continues to demonstrate impressive monetisation and cost optimisation. Maintain HOLD with a higher TP of MYR6.20 (+4%). On a relative basis, Maxis remains our preferred pick among the big-cap telcos.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

8,601.0

8,612.0

8,795.0

8,973.7

EBITDA

4,398.0

4,469.0

4,573.4

4,666.3

Core net profit

1,809.5

1,927.5

2,060.5

2,006.1

Core EPS (sen)

24.1

25.7

26.4

25.7

Core EPS growth (%)

4.3

6.5

2.8

(2.6)

Net DPS (sen)

20.0

20.0

20.0

20.0

Core P/E (x)

24.0

22.5

21.9

22.5

P/BV (x)

10.4

9.2

6.5

6.1

Net dividend yield (%)

3.5

3.5

3.5

3.5

ROAE (%)

39.1

45.2

35.3

28.0

ROAA (%)

9.8

10.0

10.1

9.4

EV/EBITDA (x)

13.6

12.1

11.4

11.1

Net debt/equity (%)

205.5

194.5

102.3

88.6

Malaysia

Results Review

Bursa Malaysia (BURSA MK)
by Chew Hann Wong

Share Price:

MYR10.02

Target Price:

MYR10.30

Recommendation:

Hold

3Q17 results in-line

Bursa's 3Q17 results were in-line, with the QoQ weakness due to normalisation of equities ADV. We make no change to our earnings forecasts. Post 15sen special DPS paid on 23 Aug, we expect just normalised DPS in the near-term. Our unchanged TP of MYR10.30 is based on 25x 2017 PER, in-line with the average of peers.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

518.5

506.8

551.8

571.1

EBITDA

302.5

294.8

333.9

344.5

Core net profit

198.6

193.6

221.2

228.5

Core EPS (sen)

37.2

36.2

41.3

42.6

Core EPS growth (%)

0.0

(2.8)

14.1

3.3

Net DPS (sen)

34.5

34.0

53.5

40.5

Core P/E (x)

26.9

27.7

24.3

23.5

P/BV (x)

6.7

6.2

6.7

6.6

Net dividend yield (%)

3.4

3.4

5.3

4.0

ROAE (%)

25.6

23.2

26.5

28.2

ROAA (%)

10.6

8.6

9.1

9.3

EV/EBITDA (x)

13.8

15.1

15.7

15.2

Net debt/equity (%)

net cash

net cash

net cash

net cash

Malaysia

TP Revision

CapitaLand Malaysia Mall Trust (CMMT MK)
by Kevin Wong

Share Price:

MYR1.46

Target Price:

MYR1.50

Recommendation:

Hold

3Q17: Below estimates

3Q17 results fell short of our expectations as earnings were largely impacted by negative rental reversions at Sungei Wang Plaza and higher opex at several assets. We lower our FY17-19 earnings forecasts by 4-8% and DDM-TP by 5sen to MYR1.50 (cost of equity: 8.2%).

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

344.8

372.6

365.9

373.1

Net property income

226.4

248.2

253.3

260.6

Distributable income

162.8

171.1

173.3

179.5

DPU (sen)

7.7

7.6

7.6

7.9

DPU growth (%)

(3.5)

(2.0)

0.8

2.8

Price/DPU(x)

18.9

19.2

19.1

18.6

P/BV (x)

1.1

1.1

1.1

1.1

DPU yield (%)

5.3

5.2

5.2

5.4

ROAE (%)

6.3

6.1

6.0

6.3

ROAA (%)

4.1

4.0

3.9

3.9

Debt/Assets (x)

0.3

0.3

0.3

0.3

MACRO RESEARCH

MY: Traders' Almanac

Brent Crude Oil - Testing Critical Resistance
by Nik Ihsan Raja Abdullah

Technical Research

FBMKLCI rose 2.91pts to close at 1,739.05 yesterday, led by bargain hunting on selected blue chips like GENM, RHBBANK and ASTRO. Market breadth, however, remained negative with losers outpacing gainers by 467 to 362. A total of 2.46b shares worth MYR1.89b changed hands. Expect another volatile session today as investors may stay risk-off ahead of ECB meeting and 2018 Budget. The setback in overnight US markets will also weighed on sentiment.

NEWS

Outside Malaysia:

U.S. New-Home sales in September unexpectedly jump to highest since 2007 as activity accelerated in the South after hurricanes Harvey and Irma, according to government data. Single-family home sales rose 18.9% MoM to 667k annualized pace, the strongest since October 2007. Purchases in U.S. South surged 25.8% MoM to 405k rate, fastest since July 2007; sales in other regions also advanced. Median sales price increased 1.6% YoY to USD 319,700. (Source: Bloomberg)

E.U: ECB's follow-the-Fed strategy set to change on QE exit road. The European Central Bank followed the Federal Reserve's map when it began buying bonds, but it is set to pursue a different route out of emergency stimulus. Almost four years since the Fed began slowing its quantitative-easing program, ECB President Mario Draghi is preparing to unveil on how his institution will pull back after purchasing more than EUR 2tr (USD 2.4tr) of debt. The path it chooses is critical for the economy and for markets that have been bolstered by that support. Unlike the Fed, the ECB will begin withdrawing even with inflation projected to remain below its target, and amid a looming shortage of eligible debt. (Source: Bloomberg)

Brazil: Cuts key rate to 7.5% as inflation bottoms out. Brazil lowered borrowing costs by 75 basis points, slowing the pace of monetary easing as inflation bottoms out and the economy nears its fastest growth in five years. The bank's board, led by President Ilan Goldfajn, cut the benchmark Selic rate to 7.5% following four straight full-percentage point reductions. Policy makers have lowered borrowing costs by 675 basis points in the past year. (Source: Bloomberg)

China: New Silk Road runs mostly through junk-rated territory. Chinese President Xi Jinping's new Silk Road to Europe traverses territory where most bond investors fear to tread. Of the 68 nations China lists as partners in its Belt and Road Initiative, the sovereign debt of 27 are rated as junk, or below investment grade, by the top three international rating firms. Another 14, including Afghanistan, Iran and Syria, are either not rated or have withdrawn their requests for ratings. President Xi's vision, first proposed in 2013 and this week elevated to an official policy enshrined in the Communist Party's constitution, involves spending as much as USD1.2t on railways, roads, ports and power grids over the next decade, according to Morgan Stanley. The intent is to open new business opportunities for domestic companies and extend China's reach --even though the route cuts through multiple conflict zones and some of the world's most corrupt countries. (Source: Bloomberg)

S. Korea: Economy grew at the fastest pace since 2010 in the third quarter, buoyed by exports and the government's supplementary budget. GDP expanded 1.4% in the three months through September from the previous quarter, when it grew 0.6%, the Bank of Korea said. From a year earlier, the economy expanded 3.6% YoY. South Korea's economy is benefiting from a double-digit expansion in exports, fuelled by overseas demand for semiconductors, steel and petrochemical products. The central bank has forecast the economy will expand 3% this year, exceeding the potential growth rate. While positive economic signs have strengthened views that the central bank is on track for a rate hike in the near term, Governor Lee Ju-yeol has said he wants time to see if the trend continues, citing uncertainties that include North Korean risks. (Source: Bloomberg)

Other News:

Infrastructure: Soil testing starts for ECRL – MRL. Malaysia Rail Link Sdn Bhd (MRL), the project owner of the MYR55b ECRL project, has commenced soil investigation, as well as set up base camps on multiple sites in Kelantan, Terengganu and Pahang. Its CEO Darwis Abdul Razak said in a statement yesterday that the company is now actively involved in the land acquisition processes in the east coast states of Peninsular Malaysia. He added that the main contractor-China Communications Construction Co Ltd, will shortlist the qualified subcontractors from the pre-qualification exercise to tender for the infrastructure work packages in the ECRL project. (Source: The Edge Financial Daily)

Power and utilities: Solar power projects to be awarded to 18 firms. The energy, green technology and water ministry is looking to award large-scale solar photovoltaic plants to 18 companies with a total capacity of 402MW in the next two years, according to minister Datuk Seri Dr Maximus Ongkili. The projects are being pursued in view of the country's potential for green financing, with 111 renewable energy projects worth a total MYR1.9b and 19 energy efficiency projects valued at MYR248m in the works, Ongkili said. "With 130 potential projects for green financing, Malaysia is definitely moving towards the right path to be the world leader in green investment," Ongkili said in a statement. (Source: The Edge Financial Daily)

Malaysia Airports: Aims to double cargo volume in 10 years. The company aims to double its cargo volume to 1.5 million tonnes annually in 10 years or less from 750,000 tonnes currently, focusing on e-commerce and the Digital Free Trade Zone (DFTZ) initiative, said its managing director, Datuk Badlisham Ghazali. He said this short-term plan is a another step to achieve the momentum to reach the target of 3.5 million tonnes per annum by 2050. (The Star Online)

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