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| | | | | | | | | | | | | | | | Share Price: | MYR1.40 | Target Price: | MYR2.00 | Recommendation: | Buy | | |
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| | | Secures another MYR1.5b new jobs | | SAPE's orderbook replenishment momentum is on the rise. Its latest new contracts have lifted job wins to MYR4.2b FY18-to-date, bringing order backlog to MYR16.6b. Monetising its gas assets is a catalyst not fully priced in yet. We continue to see SAPE as a direct proxy to and beta play on a recovering O&G sector outlook. | | |
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| | FYE Jan (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 10,184.0 | 7,651.3 | 6,410.5 | 6,990.5 | EBITDA | 3,056.4 | 3,913.3 | 2,385.8 | 2,555.7 | Core net profit | 1,009.4 | 447.3 | (38.2) | 171.1 | Core EPS (sen) | 16.9 | 7.5 | (0.6) | 2.9 | Core EPS growth (%) | (16.8) | (55.5) | nm | nm | Net DPS (sen) | 1.4 | 1.0 | 1.0 | 3.0 | Core P/E (x) | 8.3 | 18.6 | nm | 48.7 | P/BV (x) | 0.7 | 0.6 | 0.6 | 0.6 | Net dividend yield (%) | 1.0 | 0.7 | 0.7 | 2.1 | ROAE (%) | (6.5) | 1.6 | (1.2) | 1.3 | ROAA (%) | 2.8 | 1.2 | (0.1) | 0.5 | EV/EBITDA (x) | 9.0 | 6.5 | 9.9 | 9.0 | Net debt/equity (%) | 134.1 | 115.7 | 118.6 | 113.7 |
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| | | | | | | | | | | | | | Share Price: | MYR7.57 | Target Price: | MYR9.10 | Recommendation: | Buy | | |
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| | | New capacity under way | | Upcoming 3Q17 results could be better on lower raw material costs and we expect its new capacity in 4Q17 to support its earnings growth ahead.Given the certainty of the new capacity coming on board to provide the growth and the present tight glove supply situation, we think the stock deserves to re-rate to a higher multiple – we now peg a target of 24x on 2018 EPS (+1SD to mean; 19x previously), deriving a new TP of MYR9.10. Upgrade the stock to BUY. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,635.9 | 1,668.3 | 2,059.7 | 2,281.2 | EBITDA | 343.2 | 291.8 | 343.7 | 401.6 | Core net profit | 203.3 | 170.9 | 198.3 | 242.5 | Core EPS (sen) | 31.8 | 26.7 | 31.0 | 37.9 | Core EPS growth (%) | 41.4 | (15.9) | 16.0 | 22.3 | Net DPS (sen) | 12.0 | 11.0 | 12.4 | 15.2 | Core P/E (x) | 23.8 | 28.3 | 24.4 | 20.0 | P/BV (x) | 4.9 | 4.5 | 4.0 | 3.6 | Net dividend yield (%) | 1.6 | 1.5 | 1.6 | 2.0 | ROAE (%) | 22.7 | 16.6 | 17.4 | 19.1 | ROAA (%) | 14.8 | 11.5 | 12.2 | 13.2 | EV/EBITDA (x) | 17.4 | 14.7 | 14.4 | 12.4 | Net debt/equity (%) | 1.7 | 4.8 | 7.3 | 6.4 |
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| | | | | | | | | | | | Expert in M&E | | Kejuruteraan Asastera will be listed on the ACE Market of Bursa Malaysia Securities Bhd on 17 Nov 2017. With an outstanding order book of MYR216.9m and various expansion plans post-listing, growth is imminent. Its IPO price of MYR0.25 implies a historical FY16 P/E of 12.2x. Based on annualised 5M17 earnings, KA trades at a prospective FY17 P/E of 11.7x. In comparison, the Bursa Malaysia Construction Index trades at a 2017 P/E of 15.0x. | | |
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| | | | | | MACRO RESEARCH | | | | | | | Brent Crude Oil: It's Going to be Cheaper for a while
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI plunged 10.62pts yesterday, led by decline in WPRTS, PETD and HLFG. At day's end, the benchmark index lost 0.6% to 1,722.99. Market breadth was bearish with losers outpacing gainers by 638 to 254. A total of 2.34b shares worth MYR2.28b changed hands. With overnight Wall Street ended broadly lower, market will likely extend its losing streak today. Locally, there is hardly any catalyst to drive the benchmark higher. O&G stocks could come under pressure amid weaker oil prices. | |
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| | NEWS | | | Outside Malaysia:
U.S: Inflation, retail data show economy ready for Fed rate hike. The U.S. economy delivered a double win for the Federal Reserve in October with an encouraging pickup in inflation and an unexpected gain in retail sales, further solidifying expectations that policy makers will raise interest rates next month. The consumer-price index excluding food and fuel accelerated on an annual basis for the first time since January, while the overall cost of living rose in line with forecasts, a Labor Department report showed. Consumer-price index rose 0.1% MoM after 0.5% rise the prior month; increased 2% YoY. Excluding food and energy, so-called core CPI rose 0.2% MoM; climbed 1.8% YoY. Overall retail sales rose 0.2% after a revised 1.9% increase in prior month. The rise in retail sales last month followed a bigger September advance than previously estimated, according to Commerce Department figures. (Source: Bloomberg)
U.K: Productivity rose the most since 2011 in the third quarter, rebounding from two consecutive declines. Output per hour rose 0.9% in the three months through September, estimates from the Office for National Statistics show. It fell 0.5% in the first quarter and 0.1% in the three months through June. While the number looks good at a glance, Philip Wales, head of productivity statistics at the ONS, isn't overwhelmed: "Though the latest quarterly growth rate is the strongest for six years, over the last 12 months productivity has grown by just 0.6%. The medium-term picture continues to be one of productivity growing but at a much slower rate than seen before the financial crisis." (Source: Bloomberg)
U.K: Unemployment held at a 42-year low in the third quarter but there are signs that the labor market is slowing as the number of people in work fell for the first time in almost a year. The jobless rate averaged 4.3% between July and September, the Office for National Statistics said. But employment fell by 14,000, the first decline since October last year and the biggest drop since June 2015. Basic wage growth stayed at just above 2%, well below the rate of inflation, and the number people neither in work nor looking for a job rose by the most in more than seven years. (Source: Bloomberg)
Japan: Economy grew for a seventh straight quarter, its longest expansion since 2001, as a recovery in exports and rising business investment offset a decline in consumer spending. Highlights of GDP report GDP grew at an annualized rate of 1.4% in the three months ended Sept. 30 (estimate +1.5%), compared with a revised 2.6% in the previous quarter.Net exports, or shipments less imports, added 0.5 percentage point to GDP. Business spending rose 0.2% (estimate +0.3%) from the previous quarter. Private consumption fell 0.5% in the third quarter from the previous three months (estimate -0.4%).(Source: Bloomberg) | |
| | | | | Other News:
Amcorp Properties: Q2 earnings boosted by London project. Net profit for the second quarter ended Sept 30, 2017 jumped more than 14-fold to MYR26.11m from MYR1.83m a year ago due to higher share of joint ventures' results. The higher share of joint ventures' results was due to profit recognition from the progressive delivery of sold units of the Burlington Gate project in London. Revenue for the quarter fell 40.10% to MYR31.73m from MYR52.97m a year ago due to the sale of a piece of land in Pajam, Negri Sembilan, as well as lower sales achieved for Malaysian property projects. (Source: The Sun Daily)
Omesti: Plans private placement to raise up toMYR25.7m. The group has proposed a private placement of up to 10%, or 51.4m shares, to independent third party investors at an issue price to be identified later, to raise up to MYR25.7m for bank repayments and working capital. At an indicative issue price of 50 sen apiece, it represents a discount of approximately 2.55% to its volume weighted average market price for the five market days immediately preceding the price fixing dates, (Source: The Edge Financial Daily)
Privasia: Unit awarded MYR2.05m contract for Lumut Port Management Information System. Its subsidiary Privasia S/B has bagged a MYR2.05m contract for the supply, delivery, implementation, testing and commissioning of a port management information system by Lumut Maritime Terminal S/B. The project is targeted to be completed within six to 12 months from the kick-off date. (Source: The Edge Financial Daily) | |
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