Thursday, November 30, 2017

FW: RHB FIC Credit Markets Update - 30/11/17

 

 

 

30 November 2017

 

Credit Markets Update

                                               

MYR Surge Past 4.10/USD; MYR Corporate Primaries Total MYR4.53bn

MYR Credit Market:

¨      MYR surge past 4.10/USD, MGS closed mixed. The 3y-10y MGS ended mixed as the 3y MGS weakened +1.7bps to 3.41% while the 10y MGS remained unchanged at 3.95%. The MYR surged higher versus the USD closing at 4.0817/USD, gaining +0.51% overnight. Focus on OPEC meeting to be held later today as OPEC and Russia planning to extend oil supply cuts until the end of 2018 with the option to review the agreement in June 2018.  Brent crude oil prices continued to be pressured by the rising uncertainty over the outcome of today's OPEC meeting given the supply level of domestic crude in the US which have been declining for the past week.

¨      Govvies trading activities picked up strongly as trades recorded at a healthy MYR2.7bn. Benchmark 7y MGS 09/24 saw trading interest pick up significantly with total transactions of MYR318m to close -0.7bps lower at 3.92%. The recently reopened benchmark 5y GII 04/22 remained attractive among investors which saw MYR196m change hands with yields holding firm at 3.872%. Longer-dated benchmark 10y GII 07/27 was also well demanded with total trades of MYR151m dealt at 4.28%, +1.3bps higher from previously traded. Benchmark securities 5y MGS 03/22, 10y 11/27 and 15y 04/33 were actively traded as well which saw MYR136m, MYR121m and MYR106m change hands respectively with yields falling -1.3bps for the 5y to close at 3.63%, -0.3bps for the 10y to close at 3.95% and -1.3bps for the 15y to close at 4.47%.

¨      Active secondary flows in the corporate bond space with trade volume rose to MYR440m. Top trades were the AA-rated MEX 04/30 and 04/32 which recorded combined transactions of MYR77m, settling higher at 5.28% (+13.2bps) and 5.46% (+6.1bps) respectively. DANAINFRA 05/37 and 11/47 were also well demanded with combined trades of MYR60m dealt at 5.04% (+9.9bps) and 5.36% (-0.4bps) respectively. Bank Islam subdebt callable 11/22 traded relatively well at MYR50m which saw yields rose to 5.04% (+0.9bps). Other notable trades include BPMB 09/21 and YTL 06/19 saw MYR30m change hands each to close at 4.07% and 4.32% respectively while the AAA-rated SARAWAKHIDRO 08/22 and 08/25 recorded combined trades of MYR30m to settle at 4.40% (+10.2bps) and 4.55% (+2.8bps) respectively.

¨      The primaries was strong as nine (9) issuances were printed. Financial names led the issuances as CIMB Group Holdings Berhad and CIMB Bank Berhad issued MYR1.5bn each of AA rated 10nc5 T2-subdebt and AA2/AA+ rated subdebt. Tapping their A1 rated MYR10bn AT1 Secuity Programme, A1 rated MYR25bn AT1 Security Programme, and A1 rated MYR2bn AT1 Sub Sukuk Programme, Hong Long Bank Berhad, Hong Leong Financial Group Berhad, and Hong Leong Islamic Bank Bhd drew down MYR400m respectively at 5.13%, 5.23% and 5.13% respectively. Perbadanan Kemajuan Negeri Selangor (PKNS) issued MYR100m in two tranches of 1y and 3y sukuks at 4.50% and 4.80%. This brings a total drawdown of MYR1.1bn from its MYR1.7bn MTN Programme. Southkey Megamall issued MYR100m 4y FRNs at 5.06% while Projek Lintasan Sungai Besi-Ulu Klang Sdn Berhad (PLSUKE) printed an additional MYR130m, this time from its AAA rated, Danajamin guaranteed, MYR500m Sukuk Murabahah Programme issued at 5.10%.

 

APAC USD Credit Market:

¨      Tax reform bill progress and GDP data push USTs weaker. The Senate version of the Tax Reform Bill passed through the Senate Budget Committee and is now on the Senate floor with expectations strong that it will be voted through within the week raising expectations of a finalized version after reconciliation within the year.  The economic news flow also remained positive as the 3Q GDP reported at 3.3% QoQ annualized (3.0% prior) with assumptions it could have reached 3.9% if not for the two hurricanes which occurred in the quarter. Core PCE on the other hand saw a pick up to 1.4% QoQ 3Q17 (1.3% 2Q17). The USTs yield curve steepened as the 2y and 10y USTs weakened to 1.76% (+1.6bps) and 2.39% (+6.0bps) respectively. The 30y USTs saw a stronger fall as yields +6.7bps to 2.83%. The DXY Index on the other hand saw a pause, as it fell -0.11% to 93.16. Markets will be monitoring the outcomes of the Senate tax reform bill and the OPEC meeting later today.

¨      IG credit outperformed HY credit. The Asia ex Japan IG credit spreads rallied -1.0bps to 161.6 whereas the Asia ex Japan HY bond yields widened +2bps to 6.75%. The IG iTraxx AxJ continued to rally to end the day at 72.91bps (-0.91bps).  The CDS levels of Indian and South Korean FIs saw a rally as the CDS levels of State Bank of India, Bank of India, Woori Bank, Kookmin Bank, ICICI Bank Ltd and Industrial Bank of Korea edged down between -1.8 to -3.4bps. The CDS levels of the Indonesian sovereign tightened close to -1.5bps. The CDS of Export-Import Bank of China on the other hand saw CDS levels widen nearly +1.9bps.

¨      Moody's upgrades GPT Group to A2/Sta from A3/Sta. The upgrade reflects its demonstrated commitment to a conservative financial profile over time, and its ownership of a large portfolio of assets across the office and retail sectors, with further diversification into the industrial sector. The assets are well-diversified, expected to benefit from consistently strong occupancy rates and comparable net operating income growth while expected to exhibit greater resilience in a downturn. Annualised net debt/EBITDA was at 5.0x Jun-17, while EBITDA/interest expense was at 4.9x. Debt/assets remained at 24.1% Jun-17. Though financial leverage is expected to increase, Moody's opines the conservative financial profile and predictable earnings generated should enable the group to remain within the rating category.

¨      Following removing it from rating watch negative. Fitch reaffirms AquaSure Finance Pty Ltd at A-/Sta. This follows the completion of repairs on the electrical equipment and the subsequent strong operating performance of AquaSure's water desalination plant in Victoria, with a subsequent review reporting an outage is unlikely to reoccur. The concession ending 2039 provides stable cash flow from the state of Victoria, its financially strong counterparty with contracts allowing it to pass through operating and lifecycle costs and revenue abatement to contractors. The rating case forecasts an average DSCR of 1.33x and minimum projected DSCR of 1.28x.  Fitch also removed the rating watch negative on Baidu Inc affirming it at A/Sta. This reflects the continued strong cash generation from core search services and its commitment to manage exposures to its riskier Financial Services Group (FSG). Baidu still continues to enjoy 80% of search engine revenue market share of 80% in 2Q17, according to Analysys International. Baidu is committed to limit exposures to its riskier FSG business to current levels of 16% of total assets as at 3Q17, which is expected to contain business and financial risks.

 

 

 

This message is intended only for the use of the person(s) to whom it is 
addressed and may contain information that is privileged or otherwise protected
from disclosure. If you are not the intended recipient you are hereby notified that
any use, review, disclosure or copying of this message and the information it
contains is prohibited. If you receive the message in error, please notify the
sender by reply e-mail and discard all its contents.
 
Thank You.

 

FW: Country Risk Monitor: KUWAIT

 

 

Dear Sir/ Madam,

 

We are pleased to inform you that we have published a report entitled “Country Risk Monitor: KUWAITon our website which can be accessed via the link below:

 

 

We trust you will find this report informative.

 

 

Warm regards,

 

Business Development Department

 

Malaysian Rating Corporation Berhad (364803-V)

19-07, Level 19, Q Sentral, 2A Jalan Stesen Sentral 2

Kuala Lumpur Sentral, 50470 Kuala Lumpur

Tel :  +603 2717 2900 | Fax :  +603 2717 2910

Email :  marc@marc.com.my   Website : www.marc.com.my

 

 

 

IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad (“MARC”) accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.

 

FW: [Maybank] BoK Hikes

 

 

header

GBL: BoK Hikes

Global Markets Daily
by Saktiandi Supaat

FX Research

BoK hiked rates for the first time since 2011. Reaction on FX market was muted as this move was largely priced in. Onshore spot was last seen at 1084 levels. We do not rule out profit-taking plays. On markets overnight, USD held ground amid solid 3Q GDP data (revised higher to 3.3% from 3%). This is slightly above the maximum sustainable level as estimated by the Congressional Budget Office. GBP rose above 1.34-handle on talks of potential payment of EUR50bn to EU ...

Disclaimer

This message is intended only for the use of the person to whom it is expressly addressed and may contain information that is confidential and legally privileged. If you are not the intended recipient, you are hereby notified that any use, reliance on, reference to, review, disclosure or copying of the message and the information it contains for any purpose is prohibited. If you have received this message in error, please notify the sender by return e-mail immediately and delete all its contents. If you wish to read Disclaimer in details, please click HERE.

To unsubscribe or change preference settings, please click here to contact your representative.

FW: RHB FIC Rates & FX Market Update - 30/11/17

 

 

 

30 November 2017

 

 

Rates & FX Market Update

 

 

Rebound in Chinese PMI Prints Offer Comfort to Investors

 

Highlights

 

¨   Global Markets: A quiet US trading session on the currency markets as the Dollar was little changed overall (DXY: +0.02% d-o-d). Treasury sold-off with 10y UST yield climbing 6bps over the day. Yellen's comments on US growth "increasingly broad based" combined with an upward revision for 3Q17 GDP growth, developments on the tax reform with a vote in Senate due today and IG corporates issuing debt weighed on Treasuries. We remain neutral UST ahead of the likely and largely priced-in December hike and debt ceiling negotiations. The Sterling Pound was the best performing G10 currency (GBPUSD: +0.44% d-o-d) as market participants remained optimistic on a possible agreement on Brexit divorce although PM May reaffirmed that negotiations are ongoing which could curb the GBP momentum; remain neutral GBP.

¨   AxJ Markets: The official Chinese manufacturing PMI rebounded to 51.8 in November (consensus: 51.4), after a mild dip in October, as both local and foreign demand held up; services PMI jumped to 54.8 as well. The prints are likely to re-assure Asian investors over the near horizon, with trading sentiment likely to hold into the December FOMC meeting, where the Fed is widely expected to deliver another 25bps hike to the FFR. We remain neutral to mildly bullish towards Asian currencies, with the stable, positive performance likely to hold up into early-2018.

¨   MYR broke below 4.10 and strengthened towards the 4.08 handle (+0.5% overnight) ahead of OPEC's decision, with consensus leaning towards a continued commitment to reduce output along with Russia's support. Any perceived softness by key OPEC members or Russia will likely be oil-negative, although unlikely to permanently dent the Ringgit over the coming weeks, given improving investors' sentiment ahead of a possible BNM tightening in early-mid 2018. We continue to eye a marginally higher MYR over the coming months.

 

This message is intended only for the use of the person(s) to whom it is 
addressed and may contain information that is privileged or otherwise protected
from disclosure. If you are not the intended recipient you are hereby notified that
any use, review, disclosure or copying of this message and the information it
contains is prohibited. If you receive the message in error, please notify the
sender by reply e-mail and discard all its contents.
 
Thank You.

 

FW: RHB | Economic Research | Tracking Global News

 

 

 

 

 

Economic Research

30 November 2017

Global News

 

Economic Update

 

 

 

Tracking Global News

 

 

US Fed Beige Book Points To Steady Economic Growth With Rising Price Pressures

 

US Economic Growth Revised Higher in 3Q17

 

Fed Chair Yellen Says US Expansion Widening as Financial Risks Muted

 

Japan Industrial Production Picks Up In October

 

 

Economist: 

Peck Boon Soon  | +603 9280 2163

Vincent Loo Yeong Hong  | +603 9280 2172

Ng Kee Chou  | +603 9280 2179

Rizki Fajar  | +6221 2970 7065

Aris Nazman Maslan | +603 9280 2184

 

 

 

To access our recent reports please click on the links below:

 

29 November 2017

28 November 2017

23 November 2017

22 November 2017

21 November 2017

 

Economics Team

 

 

 

 

Peck Boon Soon

Chief ASEAN Economist

bspeck@rhbgroup.com

+603 9280 2163

Vincent Loo Yeong Hong

Malaysia, Vietnam

vincent.loo@rhgroup.com

+603 9280 2172

Ng Kee Chou

Singapore, Thailand

ng.kee.chou@rhbgroup.com

+603 9280 2179

Rizki Fajar

Indonesia, Philippines

rizki.fajar@rhbgroup.com

+6221 2970 7065

Aris Nazman Maslan

Malaysia, Vietnam

mohd.aris.nazman@rhbgroup.com

+603 9280 2184

 

 

This message is intended only for the use of the person(s) to whom it is 
addressed and may contain information that is privileged or otherwise protected
from disclosure. If you are not the intended recipient you are hereby notified that
any use, review, disclosure or copying of this message and the information it
contains is prohibited. If you receive the message in error, please notify the
sender by reply e-mail and discard all its contents.
 
Thank You.

 

FW: AmBank Research - OldTown : Resurgent FMCG draws 2QFY18 earnings in line BUY, 30 Nov 2017

 

 

STOCK FOCUS OF THE DAY         

OldTown : Resurgent FMCG draws 2QFY18 earnings in line                           BUY

 

OldTown’s 2QFY18 results were in line as remarkable China-led FMCG revenue off the back of robust margins offset a sluggish F&B segment. We maintain our BUY recommendation and FV of RM3.20. Our FV is based on 17.0x CY18F P/E, which is a 20% discount to the simple PE of its FMCG peers of 23x. An interim dividend of 3.0 sen/share was declared. OldTown registered a 2QFY18 profit of RM15.2mil (QoQ: -9%, YoY: +20%), bringing 1HFY18 to RM32mil (YoY: +21%). It came in line with our and consensus forecasts, at 44% and 46% of our earnings estimates respectively

 

Cumulative FMCG revenue grew 22% YoY, beating our estimates of 17%. Sales across all geographies with the exception of Hong Kong grew impressively. Most notably, China expanded at a breakneck 78% YoY for the quarter. Cumulatively, China grew c:50% by our estimates, surpassing management’s guidance of 20-30% growth. We maintain our forecasts with earnings falling in line.

 

Others :

Bonia Corp : Robust outlook ahead despite soft quarter                                BUY

Cahya Mata Sarawak : 9MFY17 core net profit grows 9% YoY                        BUY

Ikhmas Jaya : 3QFY17 core net profit surges sequentially                               BUY

Kimlun Corp : 9MFY17 net profit declines 23% YoY                                            BUY

Protasco : A soft patch in 9MFY17, but stronger prospects ahead               BUY

Magnum : Ticket sales still weak                                                                                HOLD

Padini : Valuations run ahead of regional prospects                                          HOLD

Media Prima : Another round of kitchen-sinking                                                SELL

Plantation Sector : 3Q2017 Earnings Review: A mixed quarter                      NEUTRAL

 

 

 

QUICK TAKE

MSM Malaysia : Marginal impact from gas tariff hike                                       HOLD

 

 

STOCKS ON RADAR

Cuscapi, George Kent, Uzma, Malaysian Resources Corporation

 

 

ECONOMIC HIGHLIGHT

US : US – Fastest 3Q GDP growth since 3Q2014

 

 

NEWS HIGHLIGHTS

Investment : EPF 3Q investment income up 5.13%

Barakah Offshore Petroleum : Ties up with Samling Group for jobs in Sarawak

AirAsia : Group earnings up 42.9% to RM505.32m

Dolomite : Shuts down loss-making power business for now

 

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

****************************************************************************************************************************************************************************************************************************************************************************************************************

DISCLAIMER:

This message may contain confidential and privileged information for its intended recipient(s) only. If you are not an intended recipient, you are hereby notified that any review, dissemination, and distribution, printing or copying of this message or any part thereof is strictly prohibited. Please delete the entire message and inform the sender of the error. Any opinions, conclusions and other information in this message that are unrelated to official business of AmBank Group are those of the individual sender and shall be understood as neither explicitly given nor endorsed by AmBank Group.

****************************************************************************************************************************************************************************************************************************************************************************************************************

 

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

 

 

header

FEATURED
CALLS

Malaysia | Oldtown
2QFY18: FMCG, solid showing
Liew Wei Han

break

COMPANY
RESEARCH

Yinson Holdings | To take over THHE's Layang job
Thong Jung Liaw

Gas Malaysia | A first official surcharge
Chi Wei Tan

AirAsia Bhd | 2017 to be a new record
Mohshin Aziz

Cahya Mata Sarawak | 3Q17: Supported by OMS
Adrian Wong

Magnum Berhad | Nice dividend surprise
Samuel Yin Shao Yang

Sarawak Oil Palms | Time for further recognition
Chee Ting Ong

Wah Seong | 9M17: Above expectation
Thong Jung Liaw

Kimlun Bhd | 3Q17: Above expectations
Adrian Wong

Mah Sing Group | Earnings and sales on track
Wei Sum Wong

Padini | 1QFY18: A decent start
Kevin Wong

Lingkaran Trans Kota | 2QFY18: Met expectations
Adrian Wong

Media Prima | Operating environment just too challenging
Samuel Yin Shao Yang

7-Eleven Malaysia Holdings | 3Q17: Higher other income, lower taxes
Liew Wei Han

Barakah Offshore Petroleum | 9M17: Results a miss
Thong Jung Liaw

break

SECTOR
RESEARCH

Malaysia Gloves Sector | Gas tariff hike
Yen Ling Lee

break

break

COMPANY RESEARCH

Malaysia

Company Update

Yinson Holdings (YNS MK)
by Thong Jung Liaw

Share Price:

MYR3.86

Target Price:

MYR4.45

Recommendation:

Buy

To take over THHE's Layang job

THHE has proposed to novate the Layang FPSO project to Yinson. That aside, no other details were forthcoming at press time. Should this project go to Yinson, it will be its first FPSO foray into the Malaysia O&G market. Yinson has a proven track record in executing FPSO projects worldwide and we see this development in a positive light. Maintain earnings forecasts for now, BUY and MYR4.45 SOP-based TP.

FYE Jan (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

1,038.6

764.2

1,000.5

1,139.7

EBITDA

261.0

283.8

560.9

697.6

Core net profit

173.1

219.5

375.3

340.5

Core EPS (sen)

16.2

20.6

35.2

31.9

Core EPS growth (%)

17.5

26.8

71.0

(9.3)

Net DPS (sen)

1.5

16.8

10.4

10.0

Core P/E (x)

23.8

18.8

11.0

12.1

P/BV (x)

1.8

1.7

1.3

1.2

Net dividend yield (%)

0.4

4.3

2.7

2.6

ROAE (%)

12.0

8.5

13.7

10.7

ROAA (%)

4.8

3.9

5.6

4.8

EV/EBITDA (x)

15.6

21.4

11.4

8.6

Net debt/equity (%)

51.9

114.7

72.9

54.9

Malaysia

Company Update

Gas Malaysia (GMB MK)
by Chi Wei Tan

Share Price:

MYR2.69

Target Price:

MYR3.00

Recommendation:

Hold

A first official surcharge

Having under-recovered on gas cost in 2017, it was a relief to see a tariff surcharge being imposed in 1H18. Net gas tariff is set to increase by 23% in 1H18, in line with our expectation. We view both the quantum and timing of the hike is an affirmation of the pass-through mechanism under IBR. There is no change to our earnings forecasts. Maintain HOLD with an unchanged MYR3.20 TP.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

3,619.0

4,053.0

4,928.0

5,848.8

EBITDA

191.0

264.6

253.8

264.7

Core net profit

106.2

165.1

161.1

170.0

Core EPS (sen)

8.3

12.9

12.5

13.2

Core EPS growth (%)

(36.7)

55.6

(2.5)

5.5

Net DPS (sen)

8.3

12.9

12.5

13.2

Core P/E (x)

32.5

20.9

21.4

20.3

P/BV (x)

3.6

3.4

3.4

3.4

Net dividend yield (%)

3.1

4.8

4.7

4.9

ROAE (%)

10.7

16.6

15.8

16.7

ROAA (%)

5.5

7.7

7.2

7.2

EV/EBITDA (x)

14.9

10.2

12.1

11.5

Net debt/equity (%)

net cash

net cash

net cash

net cash

Malaysia

TP Revision

AirAsia Bhd (AIRA MK)
by Mohshin Aziz

Share Price:

MYR3.17

Target Price:

MYR3.90

Recommendation:

Buy

2017 to be a new record

3Q17 core earnings was MYR371m (-1% YoY, -13% QoQ) after adjusting for FX-translation and MRM derivative movement. 9M17 earnings accounted for 86% of our full-year forecast. We raise FY17-19E earnings by +23%, +2% and +24% taking account current market conditions and imputing latest house estimates for crude oil prices and USDMYR. TP is raised to MYR3.90 as we rollover to 2018 with an unchanged 10x peg to PER. Maintain BUY.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

6,297.7

8,600.5

9,717.8

9,928.9

EBITDAR

2,629.9

3,233.4

3,567.7

3,405.0

Core net profit

177.7

1,518.0

1,521.2

1,303.0

Core EPS (sen)

6.4

54.5

45.5

39.0

Core EPS growth (%)

434.5

753.9

(16.6)

(14.3)

Net DPS (sen)

3.0

4.0

45.0

8.0

Core P/E (x)

49.6

5.8

7.0

8.1

P/BV (x)

2.0

1.3

1.7

1.5

Net dividend yield (%)

0.9

1.3

14.2

2.5

ROAE (%)

12.0

31.9

25.1

18.4

ROAA (%)

0.9

7.0

7.1

5.9

EV/EBITDAR (x)

5.2

4.7

5.1

5.9

Net debt/equity (%)

228.9

133.6

122.7

132.9

Malaysia

Results Review

Cahya Mata Sarawak (CMS MK)
by Adrian Wong

Share Price:

MYR3.55

Target Price:

MYR4.50

Recommendation:

Buy

3Q17: Supported by OMS

9M17 core earnings were in line with ours but below consensus full year forecasts. Improved contribution from its associate, OMS, which reported profits in 3Q17, more than offset the weaker construction materials earnings. Positively, we also see QoQ improvements at its core divisions amidst flattish YoY performance. Keeping our earnings forecasts, BUY call and MYR4.50 SOP-based TP. There will be an analyst briefing on 30 Nov.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

1,788.0

1,551.3

1,950.8

2,197.6

EBITDA

394.8

418.9

388.1

420.3

Core net profit

244.7

212.4

221.3

258.9

Core EPS (sen)

22.8

19.8

20.6

24.1

Core EPS growth (%)

7.0

(13.2)

4.2

17.0

Net DPS (sen)

4.5

6.3

8.2

9.6

Core P/E (x)

15.6

18.0

17.2

14.7

P/BV (x)

1.9

1.7

1.6

1.5

Net dividend yield (%)

1.3

1.8

2.3

2.7

ROAE (%)

13.0

8.0

9.7

10.7

ROAA (%)

8.1

6.4

6.1

6.6

EV/EBITDA (x)

14.3

10.5

10.0

9.2

Net debt/equity (%)

net cash

net cash

net cash

net cash

Malaysia

Results Review

Magnum Berhad (MAG MK)
by Samuel Yin Shao Yang

Share Price:

MYR1.71

Target Price:

MYR2.00

Recommendation:

Buy

Nice dividend surprise

3Q17/9M17 earnings were in-line but dividends positively surprised. Our earnings estimates are unchanged but dividend estimates are raised 11%. DCF-based TP is also unchanged at MYR2.00. MAG remains a tactical BUY with current valuation having largely priced in the tax penalty of MYR476.5m (MYR0.33/shr). If the final tax penalty is nil or markedly less, eventual upside ought to be closer to our estimated 17%. Meanwhile, it offers attractive net dividend yields of >5.8% p.a. going forward.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

2,767.0

2,659.3

2,546.3

2,597.3

EBITDA

373.9

326.7

346.1

353.9

Core net profit

226.5

189.4

210.2

219.6

Core EPS (sen)

15.9

13.3

14.8

15.4

Core EPS growth (%)

(10.9)

(16.3)

11.0

4.5

Net DPS (sen)

16.0

13.0

10.0

10.5

Core P/E (x)

10.7

12.8

11.6

11.1

P/BV (x)

1.0

1.0

1.0

1.0

Net dividend yield (%)

9.4

7.6

5.8

6.1

ROAE (%)

9.3

7.8

8.6

8.7

ROAA (%)

6.2

5.2

5.9

6.3

EV/EBITDA (x)

11.4

11.4

8.7

8.3

Net debt/equity (%)

25.7

24.1

21.1

17.7

Malaysia

TP Revision

Sarawak Oil Palms (SOP MK)
by Chee Ting Ong

Share Price:

MYR4.16

Target Price:

MYR5.85

Recommendation:

Buy

Time for further recognition

3Q17 outperformed on better-than-expected CPO ASP and lower-than-expected cost. Following our FY17 EPS revision (+11%), we raise SOP's TP TP to MYR5.85 (+11%) on unchanged 15x 2017 PER (3-year mean). This under-appreciated stock trades at just 11x 2017 PER (vs sector's 25x) and its EV/planted ha of MYR32,000 is barely above replacement cost. Reiterate BUY.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

3,670.8

4,302.5

4,976.3

4,790.6

EBITDA

270.5

333.2

520.1

539.1

Core net profit

88.5

130.0

222.2

235.0

Core EPS (sen)

20.0

29.5

39.0

41.2

Core EPS growth (%)

(21.9)

47.0

32.3

5.7

Net DPS (sen)

5.0

5.0

7.8

8.2

Core P/E (x)

20.8

14.1

10.7

10.1

P/BV (x)

1.3

1.0

1.2

1.1

Net dividend yield (%)

1.2

1.2

1.9

2.0

ROAE (%)

6.5

7.9

11.3

11.0

ROAA (%)

3.1

3.5

5.0

5.2

EV/EBITDA (x)

9.6

6.5

5.8

5.3

Net debt/equity (%)

44.1

22.9

25.1

13.5

Malaysia

Rating Change

Oldtown (OTB MK)
by Liew Wei Han

Share Price:

MYR2.43

Target Price:

MYR2.90

Recommendation:

Buy

2QFY18: FMCG, solid showing

2QFY3/18 results were in line. Moving forward, FMCG should continue to be the growth driver on growing exports to Greater China. We expect a seasonally stronger 2H, supported by festivities. Our earnings forecasts are intact but we upgrade OTB to a BUY with an unchanged TP of MYR2.90 (18x CY18 PER, +1SD mean) due to favourable risk-reward. FY18E dividend yield of 3.3% adds to its merits.

FYE Mar (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

393.4

425.2

459.4

503.5

EBITDA

84.7

97.1

107.9

115.7

Core net profit

55.3

65.6

69.8

75.8

Core EPS (sen)

11.9

14.2

15.1

16.4

Core EPS growth (%)

6.1

18.6

6.5

8.5

Net DPS (sen)

9.0

10.0

8.3

9.0

Core P/E (x)

20.4

17.2

16.1

14.9

P/BV (x)

3.1

3.0

2.8

2.6

Net dividend yield (%)

3.7

4.1

3.4

3.7

ROAE (%)

15.0

16.6

18.1

18.1

ROAA (%)

12.5

14.5

14.8

14.9

EV/EBITDA (x)

6.4

11.5

8.8

8.0

Net debt/equity (%)

net cash

net cash

net cash

net cash

Malaysia

TP Revision

Wah Seong (WSC MK)
by Thong Jung Liaw

Share Price:

MYR1.20

Target Price:

MYR1.80

Recommendation:

Buy

9M17: Above expectation

3Q17 core earnings was 3.8x QoQ at MYR34m, driven mainly by its O&G Nord Stream 2 (NS2) operations, prompting a 9%-35% upgrade in our FY17-19E earnings. Consequently, we raise our TP by 38% to MYR1.80, as we roll over our valuation to FY19, on an unchanged 12x PER.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

1,839.5

1,276.6

2,192.4

2,503.3

EBITDA

143.3

53.6

222.7

273.4

Core net profit

22.7

(23.3)

84.3

113.3

Core EPS (sen)

2.9

(3.0)

10.9

14.7

Core EPS growth (%)

(84.4)

nm

nm

34.5

Net DPS (sen)

3.0

0.5

0.0

0.0

Core P/E (x)

40.9

nm

11.0

8.2

P/BV (x)

0.8

1.2

1.0

0.9

Net dividend yield (%)

2.5

0.4

0.0

0.0

ROAE (%)

0.9

(23.2)

20.4

11.2

ROAA (%)

0.8

(0.8)

2.9

3.5

EV/EBITDA (x)

12.2

30.4

8.1

6.2

Net debt/equity (%)

73.6

104.7

75.7

59.2

Malaysia

TP Revision

Kimlun Bhd (KICB MK)
by Adrian Wong

Share Price:

MYR2.32

Target Price:

MYR2.61

Recommendation:

Buy

3Q17: Above expectations

9M17 core earnings were above ours but below consensus expectations on stronger-than-expected contribution from the construction segment. Our FY17E-FY19E earnings are revised up by 4%-6% after adjusting for construction margins. Consequently, we derive a new higher TP of MYR2.61 (+12sen), pegged to unchanged 10x FY18 PER (+0.5 SD).

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

1,053.6

940.7

1,238.3

1,215.8

EBITDA

112.7

130.9

109.5

126.1

Core net profit

64.4

80.7

67.2

79.9

Core EPS (sen)

21.4

26.4

22.0

26.1

Core EPS growth (%)

90.5

23.0

(16.8)

18.9

Net DPS (sen)

5.8

6.5

5.9

7.1

Core P/E (x)

10.8

8.8

10.6

8.9

P/BV (x)

1.5

1.3

1.2

1.1

Net dividend yield (%)

2.5

2.8

2.6

3.0

ROAE (%)

na

na

na

na

ROAA (%)

6.8

8.2

6.3

6.9

EV/EBITDA (x)

4.3

5.1

6.7

5.9

Net debt/equity (%)

14.3

6.7

4.2

6.1

Malaysia

Results Review

Mah Sing Group (MSGB MK)
by Wei Sum Wong

Share Price:

MYR1.52

Target Price:

MYR1.44

Recommendation:

Hold

Earnings and sales on track

MSGB's 9M17 core earnings are within our expectation but below consensus. Sales are also on track to meet management's target of MYR1.8b. 4Q17 sales should pick up strongly given the good responses on its recently-launched projects. We maintain our net profit forecasts and MYR1.44 RNAV-TP (on an unchanged 0.6x P/RNAV). Reiterate HOLD.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

3,108.5

2,957.6

2,980.0

3,117.4

EBITDA

527.9

508.8

585.2

657.4

Core net profit

338.8

319.5

291.4

333.5

Core FDEPS (sen)

14.1

13.3

12.1

13.8

Core FDEPS growth(%)

(23.5)

(5.7)

(8.8)

14.5

Net DPS (sen)

6.5

6.5

4.8

5.5

Core FD P/E (x)

10.8

11.5

12.6

11.0

P/BV (x)

1.2

1.1

1.1

1.0

Net dividend yield (%)

4.3

4.3

3.2

3.6

ROAE (%)

na

na

na

na

ROAA (%)

5.7

5.0

4.3

4.6

EV/EBITDA (x)

6.9

6.9

5.2

4.4

Net debt/equity (%)

3.7

2.0

net cash

net cash

Malaysia

TP Revision

Padini (PAD MK)
by Kevin Wong

Share Price:

MYR5.09

Target Price:

MYR4.75

Recommendation:

Hold

1QFY18: A decent start

1QFY18 results and 2nd interim net DPS of 2.5sen were in-line. Earnings were mainly encouraged by improvement in revenue, gross profit margin and other income. We maintain our earnings forecasts but increase our TP by 55sen to MYR4.75, pegged to 17x CY18 PER post re-rating of Padini's valuation.

FYE Jun (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

1,301.2

1,570.9

1,794.2

2,019.4

EBITDA

221.7

249.0

282.6

305.9

Core net profit

137.9

156.1

177.7

188.3

Core EPS (sen)

21.0

23.7

27.0

28.6

Core EPS growth (%)

71.9

13.2

13.9

6.0

Net DPS (sen)

11.5

11.5

10.0

10.0

Core P/E (x)

24.3

21.5

18.8

17.8

P/BV (x)

7.1

6.1

5.0

4.2

Net dividend yield (%)

2.3

2.3

2.0

2.0

ROAE (%)

31.4

30.8

29.2

25.9

ROAA (%)

19.7

18.6

18.7

17.1

EV/EBITDA (x)

5.8

7.8

10.2

9.2

Net debt/equity (%)

net cash

net cash

net cash

net cash

Malaysia

Results Review

Lingkaran Trans Kota (LTK MK)
by Adrian Wong

Share Price:

MYR5.85

Target Price:

MYR6.10

Recommendation:

Hold

2QFY18: Met expectations

1HFY18 net profit of MYR115m (-4% YoY) was in-line with our full year forecast. No interim dividend was declared within the quarter, as expected. No change to our earnings forecasts, DPS estimates of 25sen p.a for FY18E-FY20E, and RNAV-TP of MYR6.10.

FYE Mar (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

416.2

534.2

540.6

546.0

EBITDA

353.3

460.6

459.6

456.9

Core net profit

174.1

221.0

226.8

241.3

Core EPS (sen)

33.4

42.1

43.2

46.0

Core EPS growth (%)

25.0

25.9

2.6

6.4

Net DPS (sen)

25.0

25.0

25.0

25.0

Core P/E (x)

17.5

13.9

13.5

12.7

P/BV (x)

5.0

4.3

3.8

3.3

Net dividend yield (%)

4.3

4.3

4.3

4.3

ROAE (%)

na

na

na

na

ROAA (%)

7.9

9.8

9.8

10.3

EV/EBITDA (x)

10.0

8.3

7.8

7.5

Net debt/equity (%)

143.6

95.4

65.3

37.0

Malaysia

Rating Change

Media Prima (MPR MK)
by Samuel Yin Shao Yang

Share Price:

MYR0.69

Target Price:

MYR0.59

Recommendation:

Sell

Operating environment just too challenging

3Q17/9M17 results disappointed. We cut core estimates by MYR26.0m-MYR73.4m at the net level, not expecting profits in the medium term. Higher newsprint prices also pose a risk. MPR may also have to incur more staff separation schemes to cut costs. Rolling forward our valuation base year to end-FY18E from FY17E and ascribing 0.9x P/NTA (0.8x previously), our new TP is MYR0.59. Risk-reward is unfavourable.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

1,427.7

1,289.0

1,159.2

1,222.0

EBITDA

325.8

163.6

32.1

85.4

Core net profit

138.7

38.7

(80.2)

(25.8)

Core EPS (sen)

12.5

3.5

(7.2)

(2.3)

Core EPS growth (%)

(2.4)

(72.1)

nm

nm

Net DPS (sen)

10.0

8.0

0.0

0.0

Core P/E (x)

5.6

19.9

nm

nm

P/BV (x)

0.5

0.5

0.6

0.7

Net dividend yield (%)

14.4

11.5

0.0

0.0

ROAE (%)

8.6

(3.8)

(20.8)

(2.2)

ROAA (%)

5.8

1.7

(3.9)

(1.3)

EV/EBITDA (x)

4.0

7.5

27.6

10.5

Net debt/equity (%)

net cash

net cash

8.2

10.9

Malaysia

TP Revision

7-Eleven Malaysia Holdings (SEM MK)
by Liew Wei Han

Share Price:

MYR1.51

Target Price:

MYR1.24

Recommendation:

Sell

3Q17: Higher other income, lower taxes

While 3Q17 revenue was in-line, core net profit was above our expectation largely on higher other income (eg. marketing income) and lower taxes. Imputing the results, we have raised our earnings forecasts by 8-13% for FY17-19E. Its 18-month 'Back to Basics' exercise which was unveiled end-July 2017 is on-going. We await further delivery of results. Maintain SELL but with a higher TP of MYR1.24 (+14sen, unchanged 26x CY18 PER, about in line with peer average).

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

2,006.3

2,103.4

2,170.7

2,434.1

EBITDA

127.4

126.5

122.3

140.0

Core net profit

55.8

54.0

46.4

58.2

Core EPS (sen)

4.6

4.4

3.8

4.8

Core EPS growth (%)

(3.3)

(3.3)

(14.1)

25.6

Net DPS (sen)

4.7

4.7

1.9

2.4

Core P/E (x)

33.2

34.3

39.9

31.8

P/BV (x)

10.9

52.6

31.7

21.1

Net dividend yield (%)

3.1

3.1

1.3

1.6

ROAE (%)

27.5

52.5

99.1

79.8

ROAA (%)

7.5

7.1

5.8

6.7

EV/EBITDA (x)

13.8

14.3

15.5

13.2

Net debt/equity (%)

net cash

188.2

79.8

0.7

Malaysia

Results Review

Barakah Offshore Petroleum (BARAKAH MK)
by Thong Jung Liaw

Share Price:

MYR0.40

Target Price:

MYR0.13

Recommendation:

Sell

9M17: Results a miss

Results came in below our expectation. 9M17 core net loss made up 123% of our FY loss estimates, prompting a substantial cut in our FY17-18 forecasts. Eroding order replenishment and cash balances remain key concerns. The operating outlook over the next 12 months remains a challenge. Valuations are demanding vis-à-vis peers. Reiterate SELL with an unchanged MYR0.13 TP, based on 1x EV/replacement value.

FYE Dec (MYR m)

FY15A

FY16A

FY17E

FY18E

Revenue

592.6

622.6

301.3

323.0

EBITDA

38.6

58.9

(92.3)

(15.5)

Core net profit

12.8

10.0

(171.6)

(90.4)

Core EPS (sen)

1.5

1.2

(19.9)

(10.5)

Core EPS growth (%)

(82.8)

(21.8)

nm

nm

Net DPS (sen)

0.0

0.0

0.0

0.0

Core P/E (x)

27.0

34.5

nm

nm

P/BV (x)

0.8

0.7

1.2

1.9

Net dividend yield (%)

0.0

0.0

0.0

0.0

ROAE (%)

5.0

3.5

(50.8)

(43.7)

ROAA (%)

1.7

1.3

(23.5)

(15.2)

EV/EBITDA (x)

21.8

12.4

nm

nm

Net debt/equity (%)

18.6

35.9

73.5

115.4

SECTOR RESEARCH

MY: Malaysia Gloves Sector

Gas tariff hike
by Yen Ling Lee

Sector Note

Effective gas tariff for 1H18 is raised by 23%, and the impact to glove players' cost is an increment of 2%. Given the tight supply, we believe glove players would be able to raise ASPs to keep their margins intact. We made no change to our earnings forecasts, ratings and TPs for stocks under our coverage. Our BUY pick is Kossan for its high earnings growth (3-year net profit CAGR: 17%) and undemanding 2018 PER of 21x (Hartalega: 34x, Top Glove: 22x).

MACRO RESEARCH

MY: Traders' Almanac

FBMS Index: Reversal at Critical Support
by Nik Ihsan Raja Abdullah

Technical Research

Buoyed by gains in selected blue chips in particular TNB, the FBMKLCI ended the day 5.96pts higher at 1,720.38 yesterday. Market breadth, however, remained negative with losers outpacing gainers by 477 to 400. A total of 1.96b shares worth MYR2.79b changed hands. Amid mixed performances in overnight US markets, the FBMKLCI will be choppy today.

NEWS

Outside Malaysia:

U.S: Third-quarter growth revised to three-year high of 3.3% on stronger investment from businesses and government agencies than previously estimated. Gross domestic product grew at a 3.3% annualized rate, revised from 3%; fastest since 3Q 2014. Consumer spending, biggest part of the economy, grew 2.3%; revised from 2.4%; down from 3.3% in 2Q. Business-equipment spending rose at a 10.4% pace, a three-year high, revised from 8.6%; reflects transportation gear. (Source: Bloomberg)

E.U: ECB says low interest rates aid debt resilience but risks remain. The euro area's strengthening recovery and monetary stimulus are making national debt burdens more sustainable, though the risk remains that political uncertainty could cause yields to spike abruptly, the European Central Bank said. The Frankfurt-based institution said in its twice-yearly Financial Stability Review that stress in euro-area sovereign- bond markets has declined to levels seen before the financial crisis. The favourable developments were likely underpinned by reduced economic policy concerns in Europe following national elections in major countries, and a continuation of the ECB's monetary support. (Source: Bloomberg)

U.K: Consumer credit rose by GBP1.5b (USD2b), the BOE said. The annual pace of credit growth slowed only marginally to 9.6% from 9.8% in September. The figures suggest the prospect of higher borrowing costs -- the BOE raised its benchmark rate for the first time in more than a decade this month -- did little to dent demand for unsecured debt. The BOE told banks to add another GBP6b (USD8b) to their capital buffers and said it may increase their requirements again next year. Officials fear a sharp Brexit-induced downturn among other factors could saddle lenders with loan losses that curtail the flow of credit to the economy. Separate BOE figures showed the number of mortgage approvals fell to 64,575 in October, their lowest since September last year. The value of loans advanced, minus repayments, declined to GBP3.4b from GBP3.8b. (Source: Bloomberg)

Japan: Strong exports bolster October industrial production, the 12th consecutive month of gains. Industrial production rose 0.5% in October from September. Year-on-year production climbed 5.9% YoY. Japan's exports are performing at their best since the global financial crisis, which provides support for production. Domestic demand remains weak, however, with consumption dropping in the third quarter, and October retail sales coming in weaker than expected. (Source: Bloomberg)

Japan: Recovery seen in best company credit ratings in a decade. Japanese companies have gotten back into good shape despite a string of scandals, and the debt scores that credit-rating firms are giving them is one clear indication of that. The number of upgrades and shifts to positive outlooks of local firms came to 181 so far this year, the most since 2007, according to the combined total of all cases by Moody's Investors Service, S&P Global Ratings, Rating & Investment Information and Japan Credit Rating Agency. Upgrades and positive outlooks exceeded downgrades and negative outlooks by 68, also the most in 10 years. (Source: Bloomberg)

Other News:

Serba Dinamik: Bags MYR496m worth of jobs. The group has been awarded four engineering, procurement, construction and commissioning (EPCC) contracts and four operation and maintenance (O&M) contracts worth a combined MYR496m. Its wholly-owned subsidiary Serba Dinamik S/B has entered three EPCC contracts and one O&M contract with Greenearth Landmark S/B, which are altogether worth MYR385m. Additionally, the company secured an EPCC contract from Malaysia LNG S/B and three separate O&M contracts from JX Nippon Oil & Gas Exploration (Malaysia) Ltd, Malaysia LNG and Petronas Dagangan, which are worth a combined MYR111m. (Source: The Edge Financial Daily)

Vertice: Bags MYR22m apartment job. Its unit Million Twilight S/B has clinched a MYR22 million sub-contract for the construction of one block of affordable apartments in Penang. For the third quarter ended Sept 30, 2017, the group's net loss widened to MYR310,000, against MYR33,000 in the previous corresponding quarter, mainly due to expenses incurred for the proposed corporate exercise held during the year. For the nine months period, it registered a net loss of MYR1.9m, from a net profit of MYR32,000 previously. (Source: The Sun Daily)

MyEG: 1Q net profit up 30% on higher volume of foreign worker permit renewals. Posted a growth of 30% in net profit for its first financial quarter ended Sept 30, 2017 to MYR52.78m from MYR40.51m a year ago, on higher online foreign worker permit (FWP) renewals. The rise in profitability was also boosted by foreign workers rehiring programme services (FWR) and foreign workers' insurance from both the FWP and FWR, as well as stronger revenue contribution from its motor vehicle trading-related services. (Source: The Edge Financial Daily)

Disclaimer

This email and its attachment(s) are confidential and are intended solely for the use of the individual to whom it is addressed. Any views or opinions expressed are solely those of the author and do not necessarily represent those of Maybank Kim Eng or any of its affiliates. Intended recipients of this email are prohibited from disseminating, forwarding, printing and/or copying its contents. If you are not the intended recipient of this email, you are strictly prohibited to take any action based upon them, which also includes dissemination, forwarding, printing and copying of its contents. Maybank Kim Eng Research sent this e-mail to you because your Notification Preferences indicate that you want to receive information about our daily research reports. If you wish to read Disclaimer in details, please click HERE.

To unsubscribe or change preference settings, please click here to contact your representative.

Related Posts with Thumbnails