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| | | | | | | | | | | | | | | | Share Price: | MYR5.57 | Target Price: | MYR4.68 | Recommendation: | Sell | | |
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| | | Marginally below | | 9M17 core earnings were marginally below our expectation due to higher component costs. Coupled with a revision to our USD/MYR forecasts (4.15 for FY17/18 avg), we trim FY17-19 core net profit forecasts by 2-3%. That aside, re-rating of peers prompt us to raise our PER peg for ViTrox to 22.5x FY18 PER, on an unchanged 20% premium over regional peers for its leading position in the inspection equipment space. With a 16% downside potential to our revised TP of MYR4.68, the stock remains a SELL. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 160.3 | 234.0 | 311.9 | 370.0 | EBITDA | 59.1 | 65.2 | 97.9 | 121.7 | Core net profit | 51.1 | 61.2 | 82.2 | 98.2 | Core EPS (sen) | 10.9 | 13.0 | 17.4 | 20.8 | Core EPS growth (%) | 2.1 | 19.6 | 34.0 | 19.5 | Net DPS (sen) | 2.5 | 3.3 | 4.3 | 5.2 | Core P/E (x) | 51.3 | 42.9 | 32.0 | 26.8 | P/BV (x) | 12.6 | 10.0 | 8.1 | 6.6 | Net dividend yield (%) | 0.4 | 0.6 | 0.8 | 0.9 | ROAE (%) | 23.1 | 27.5 | 28.1 | 27.3 | ROAA (%) | 21.2 | 19.4 | 18.8 | 17.9 | EV/EBITDA (x) | 12.7 | 12.2 | 26.3 | 20.9 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | The people's car is back!
by Ivan Yap |
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| | | | | | The partial unveiling of Perodua's third-generation Myvi model in the Malaysia Autoshow 2017 last weekend saw dealers racking up 5k units of pre-orders prior to yesterday's official launch in Putrajaya. For a purer and longer-term exposure to Perodua, we like MBM (BUY; TP: MYR2.75). We upgrade Pecca to BUY (TP: MYR1.60) for an immediate impact from the new Myvi being the sole supplier of leather car seat covers to Perodua. | |
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| | | | MACRO RESEARCH | | | | | | | Higher than expected
by Suhaimi Ilias |
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| | | | | | Growth picked up to +6.9% YoY in 3Q 2017 (2Q 2016: +6.7% YoY - revised from +6.5% YoY) as easing domestic demand being countered by improved net external demand. Upgrade our full-year 2017 and 2018 growth forecast to +6.8% (from +6.4%) and +7.0% (from +6.5%). Official growth forecasts are 6.5%-7.5% this year and 7.0%-8.0% next year. | |
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| | | | | | | | Dow Jones Industrial Average: Back in Business
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI extended its losing streak for the fifth consecutive day. At day's end, the benchmark index fell 4.88pts to 1,718.11 yesterday, led by decline in AXIATA, YTL and GENM. Market sentiment remained bearish with losers outpacing gainers by 693 to 254. A total of 2.44b shares worth MYR2.47b changed hands. With Wall Street ended higher overnight and expectation of a resilient 3Q GDP growth for Malaysia, we believe there could be some bargain hunting on selected blue chips. | |
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| | NEWS | | | Outside Malaysia:
U.S. Factory output surged in October on hurricane rebound. A surge in U.S. factory production last month matched the largest gain since 2010 as output at oil refineries and petrochemical plants returned to normal operations following Hurricane Harvey, Federal Reserve data showed. Factory output rose 1.3%, matching April's advance that was the largest since May 2010. Manufacturing production in September was revised up to a 0.4% advance from 0.1%. Total industrial production, which also includes mines and utilities, increased 0.9%, the most since April, after a revised 0.4% gain. Capacity utilization, measuring the amount of a plant that is in use, climbed to 77%, the highest since April 2015, from 76.4%. (Source: Bloomberg)
U.S: Homebuilder optimism at eight-month high amid steady demand. Homebuilders' confidence increased in November to an eight-month high, helped by a surge in sentiment in the north-eastern U.S., according to data from the National Association of Home Builders/Wells Fargo. Housing Market Index rose to 70 from an unrevised 68 in Oct. Current sales index increased to 77 from 75; measure of six-month sales outlook fell 1 point to 77. Regional index for Northeast surged 14 points to 63, highest since 2005. (Source: Bloomberg)
U.K: Retail sales go cold as Christmas shopping season nears. U.K. retail sales barely rose in October as food stores saw declines for a second month and clothing dropped the most this year. Once fuel is stripped out, overall sales increased just 0.1% from September, when they plunged 0.6%, the Office for National Statistics said. From a year earlier, they fell 0.3% YoY, the first decline in more than four years. On a less-volatile three-month basis, there was a 1.4% annual gain in sales, though that was weakest since June 2013. (Source: Bloomberg)
Philippines: Economy grew at a faster pace than predicted last quarter, but not fast enough to trigger concerns about overheating from central bank Governor Nestor Espenilla. GDP rose 6.9% YoY in the third quarter. The biggest drivers of growth were government spending, up 8.3% YoY, and investment, which gained 6.6% YoY. Consumer spending, which makes up about 70% of GDP, grew at the slowest pace since 2010 at 4.5% YoY. Compared with the previous quarter, GDP rose a seasonally adjusted 1.3%. (Source: Bloomberg) | |
| | | | | Other News:
Econpile: Bags MYR208.7m LRT3 piling, infra job from Gabungan AQRS. The group has secured its first light rail transit contract to undertake piling and infrastructure works for the LRT Bandar Utama-Klang line (LRT3) worth MYR208.7m. Econpile said it will undertake the bored piling and general infrastructure works from Bandar Utama, Petaling Jaya, to Johan Setia, Klang, under the "GS04 Guideway, Stations Park and Ride, Ancillary Buildings and Other Associated Works" package. (Source: The Edge Financial Daily)
Voir: Construction unit bags MYR80m sub-contract works. The group has bagged a MYR80.42m sub-contract to build two blocks of office suites, a podium, two-storey shops, a recreational centre and a carpark in Sunway Semenyih, Selangor. Construction period will be 35 months commencing Nov 20, 2017 to Oct 19, 2020. (Source: The Edge Financial Daily)
Salcon: Bags MYR17m pipe replacement contract. Salcon has secured a pipe replacement contract worth MYR17.16m from Pengurusan Air Selangor S/B. Salcon said its wholly-owned subsidiary Salcon Engineering accepted the letter of award on Nov 13 from Air Selangor. The 15-month job is due for completion in February 2019. (Source: The Edge Financial Daily)
Ancom: Sells stake in unit for MYR13m to make way for strategic investor. Ancom is disposing of a 25% stake in one of its media and advertising subsidiaries for MYR13.15m to make way for a strategic investor, which is expected to bring in additional expertise and technologies that will strengthen operational capabilities. (Source: The Edge Financial Daily) | |
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