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| | | | | | | | | | | | | | | | Share Price: | MYR2.38 | Target Price: | MYR2.63 | Recommendation: | Buy | | |
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| | | Another MYR70m job win | | SCG's latest construction job win positively lifts its outstanding orderbook to another record high of MYR6.8b, further enhancing its medium-term earnings visibility. Its partnership with TAISEI in this project could lead the way for future working opportunities together. No change to our earnings forecasts having imputed job win potentials. Maintain BUY with an unchanged TP of MYR2.63 (16x/+1SD FY18 PER). SCG is slated to announce its 3Q17 results on 20th Nov 2017. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,916.9 | 1,788.8 | 2,347.4 | 2,814.4 | EBITDA | 178.2 | 188.3 | 211.2 | 293.3 | Core net profit | 127.2 | 123.5 | 146.2 | 212.6 | Core EPS (sen) | 9.8 | 9.6 | 11.3 | 16.4 | Core EPS growth (%) | 11.4 | (2.9) | 18.4 | 45.4 | Net DPS (sen) | 4.0 | 5.0 | 4.0 | 5.8 | Core P/E (x) | 24.2 | 24.9 | 21.0 | 14.5 | P/BV (x) | 6.8 | 6.2 | 5.2 | 4.2 | Net dividend yield (%) | 1.7 | 2.1 | 1.7 | 2.4 | ROAE (%) | 32.4 | 26.2 | 27.0 | 32.4 | ROAA (%) | 9.5 | 8.2 | 8.0 | 9.4 | EV/EBITDA (x) | 8.7 | 9.9 | 11.8 | 7.9 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.55 | Target Price: | MYR1.44 | Recommendation: | Hold | | |
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| | | New launches receive good responses | | We met MSGB management recently. Management remains confident on achieving its MYR1.8b sales target for 2017 (2016: MYR1.78b) in view of the decent responses to its recent previews on M Centura, M Vista and Fern in Meridin East – 94-100% of the preview units were selected. Another two projects totalling MYR523m in GDV will be launched in end 4Q 2017. We maintain our earnings forecasts and MYR1.44 RNAV-TP. | | |
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| | 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) | 11.0 | 11.7 | 12.8 | 11.2 | P/BV (x) | 1.2 | 1.1 | 1.1 | 1.0 | Net dividend yield (%) | 4.2 | 4.2 | 3.1 | 3.6 | ROAE (%) | na | na | na | na | ROAA (%) | 5.7 | 5.0 | 4.3 | 4.6 | EV/EBITDA (x) | 6.9 | 6.9 | 6.4 | 5.5 | Net debt/equity (%) | 3.7 | 2.0 | net cash | net cash |
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| | | | | | MACRO RESEARCH | | | | | | | MSCI World Index: Mild Pullback Phase
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI succumbed to another round of selling yesterday, led by decline in GENT, PTG and WPRTS. At day's end, the benchmark index fell 3.88pts to 1,733.61. Market breadth remained negative with losers outpacing gainers by 588 to 300. A total of 2.78b shares worth MYR2.60b changed hands. Local stock market looks set to follow losses in Wall Street. Disappointing economic data from China (retail sales and industrial output) missed expectations, and could weigh on sentiment. | |
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| | NEWS | | | Outside Malaysia:
U.S: Wider budget deficit in October underscores tax cut anxiety. The monthly U.S. budget deficit increased by more than a third in October, highlighting concerns about proposed tax cuts that could further expand the fiscal gap. The deficit climbed to USD 63.2b last month from USD 45.8b a year earlier, according to a Treasury Department statement released. Receipts increased 6.2% to USD 235.3b, while spending climbed 11.6% to USD 298.6b. Part of the increase in spending was attributed to disaster-relief assistance after a disastrous hurricane season. The Senate has approved a budget resolution that would allow a tax bill to raise the deficit by as much as USD1.5tr over 10 years. Treasury Secretary Steven Mnuchin estimates the administration's tax-cut plan will accelerate economic growth, which will increase revenue and reduce the budget deficit by USD1tr. (Source: Bloomberg)
E.U: IMF says Europe's recovery is spilling over to rest of world. Forecasting 2.4% expansion in the region this year, up from 1.7% in 2016, the Washington-based lender said the brighter prospects accounted for the bulk of an upward revision to its global outlook published in October. It also said the difference in growth rates within the 19-nation euro area is the lowest in nearly two decades. "This recovery in many countries of Europe is now increasingly solidifying and strengthening," Jorg Decressin, deputy director of the IMF's European Department, said. The region has benefited from years of unprecedented monetary stimulus that has helped reduce unemployment and bolster private consumption. But the IMF said that the "sustainability of the rebound remains in question" in the long term amid adverse demographic trends and subdued productivity. (Source: Bloomberg)
U.K: Consumer in torrid state as high street spending sags. Visa's U.K. consumer spending index fell 2% last month, a decline that was the quickest since September 2013 and "driven by a sustained reduction in high street expenditure." A separate report from the British Retail Consortium showed shoppers' footfall decreased 2% on an annual basis in the month, the biggest slide since the Brexit vote in June 2016. The findings published are the latest to show the perilous position of U.K. consumers as faster inflation and sluggish wage growth in the wake of the decision to leave the European Union crimp budgets. (Source: Bloomberg)
Crude Oil: OPEC boosts 2018 crude demand forecasts. Brent traded near USD 63/bbl as OPEC boosted demand forecasts for its crude in 2018, signalling market re-balancing could gather pace. OPEC increased estimates for the amount it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report from the group. (Source: Bloomberg) | |
| | | | | Other News:
Rohas Tecnic: Secures MYR54m Bangladesh power transmission works contract. The group's 75%-subsidiary, HG Power Transmission S/B, was awarded a turnkey contract to install new power transmission lines and reinforce existing ones in Bangladesh for about MYR54m. It involves the design, supply, installation, testing and commissioning of 34.5km of new transmission lines and reinforcement on 125km of the existing 132 kilovolt (KV) transmission lines. (Source: The Edge Financial Daily)
Trive Property: Trive, China co plan solar energy JV. The group has signed a joint venture agreement (JVA) with Jiangxi Fujing New Energy Technology Co Ltd for a planned collaboration in the manufacturing and sale of solar energy products, including solar cells and Panels. The company and Jiangxi Fujing will form JV company Daima Fujing New Energy Technology S/B under the JVA. The JV provides an opportunity for the company to develop its solar business, which is expected to provide an additional source of earnings and improve its financial performance. (Source: The Edge Financial Daily)
Tadmax: To jointly develop Pulau Indah power plant with South Korea's public utility company. Tadmax has announced that its combined cycle gas turbine (CCGT) power plant project in Pulau Indah will be jointly developed with South Korea's state-owned utility company, Korea Electric Power Corporation. (Source: The Edge Financial Daily) | |
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