STOCK FOCUS OF THE DAY
Axiata Group : Flat earnings underpin M&A prospects BUY
We maintain our BUY call on Axiata Group (Axiata) with an unchanged sum-of-parts-based fair value of 6.30/share, on expectations of a value-enhancing re-merger with TM which could reduce the valuation differential with its peers and re-energise its earnings prospects.
Axiata’s FY17F-FY19F earnings are maintained as its 9MFY17 normalised net profit of RM996mil generally came in line with expectations, accounting for 83% of our FY17F net profit and 77% of consensus. As a comparison, 9M accounted for a higher proportion of 79%-95% of FY14-FY16 normalised earnings. The group did not declare any interim dividend, as expected. Looking forward, prospects are clouded by Indonesia’s prepaid SIM card registration campaign, Bangladeshi VAT, imposition of Sri Lankan tax on transmission towers, intense price rivalry in India amid stiff price competition in the whole region. However, Axiata currently trades at a bargain FY18F EV/EBITDA of 7x, way below its 2-year average of 8.1x vs. SingTel’s 14x.
Others :
Eonmetall Group : On a growth path BUY
Prestariang : Near the end of a dark tunnel BUY
Enra Group : A soft patch in 1HFY18 HOLD
Felda Global: Earnings recover in 3QFY17 HOLD
Genting Bhd: Dragged by GenM HOLD
Kian Joo: Hurt by rising material costs HOLD
Salutica: New cableless product to underpin earnings momentum HOLD
Genting Malaysia : Bad luck again SELL
Oil & Gas : Higher Petronas earnings with higher E&D spending NEUTRAL
ECONOMIC HIGHLIGHTS
Singapore : Strong growth but tame inflation
NEWS HIGHLIGHTS
Property Sector : About RM35.5b in unsold, unutilised properties in Malaysia
Construction Sector : RM2b KL-Klang busway shelved
Property Sector : Maybank initiates rent-to-own scheme
Logistics & Transportation Sector : DHL to invest RM1.5b more in Cyberjaya IT services data centre
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.
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