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| | | | | | | | | | | | | | | | Share Price: | MYR7.11 | Target Price: | MYR7.60 | Recommendation: | Hold | | |
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| | | Sustainable dividend payout | | 3Q17 core net profit (-10% QoQ) was commendable considering the plunge in petroleum charter rates; results were above our expectation but inline with street's. We expect better 4Q17 as the winter heating demand would lift petroleum tanker rates. We raise FY17 EPS by 3% and maintain FY18-19 EPS forecasts. Maintain our HOLD call and SOP-based TP of MYR7.60. MISC offers decent dividend yield of ~4.2%. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 10,908.4 | 9,597.2 | 8,885.7 | 9,282.4 | EBITDA | 3,913.2 | 3,898.8 | 4,095.2 | 4,399.9 | Core net profit | 2,782.0 | 1,914.0 | 2,070.6 | 2,120.2 | Core EPS (sen) | 62.3 | 42.9 | 46.4 | 47.5 | Core EPS growth (%) | 43.2 | (31.2) | 8.2 | 2.4 | Net DPS (sen) | 20.0 | 30.0 | 30.2 | 30.9 | Core P/E (x) | 11.4 | 16.6 | 15.3 | 15.0 | P/BV (x) | 0.9 | 0.8 | 0.8 | 0.8 | Net dividend yield (%) | 2.8 | 4.2 | 4.2 | 4.3 | ROAE (%) | na | na | na | na | ROAA (%) | 6.2 | 3.7 | 3.7 | 3.7 | EV/EBITDA (x) | 11.2 | 10.3 | 9.6 | 9.1 | Net debt/equity (%) | 2.3 | 15.4 | 15.3 | 16.7 |
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| | | | | | | | | | | | | | Share Price: | MYR7.00 | Target Price: | MYR6.90 | Recommendation: | Hold | | |
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| | | Fire at Rawang plant | | A diesel storage tank at LMC's Rawang plant caught fire last Friday. LMC is unable to provide the potential impact to its financials/production at this juncture. However, we believe the production line at Rawang is not affected and production could resume in a matter of few weeks. Additionally, LMC may also utilise the extra capacity at Kanthan to meet demand. Maintain our EPS forecasts, HOLD call and TP of MYR6.90 (1.9x P/B, -1SD to mean). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,750.8 | 2,552.2 | 2,318.1 | 2,654.6 | EBITDA | 511.6 | 302.1 | 216.8 | 392.2 | Core net profit | 252.3 | 84.9 | (22.2) | 111.5 | Core EPS (sen) | 29.7 | 10.0 | (2.6) | 13.1 | Core EPS growth (%) | (1.4) | (66.3) | nm | nm | Net DPS (sen) | 31.0 | 5.0 | 0.0 | 11.8 | Core P/E (x) | 23.6 | 70.0 | nm | 53.4 | P/BV (x) | 1.9 | 1.9 | 2.0 | 2.0 | Net dividend yield (%) | 4.4 | 0.7 | 0.0 | 1.7 | ROAE (%) | 8.1 | 2.5 | (0.7) | 3.7 | ROAA (%) | 6.0 | 2.0 | (0.5) | 2.6 | EV/EBITDA (x) | 14.8 | 20.7 | 27.9 | 15.3 | Net debt/equity (%) | 1.0 | 4.6 | 3.5 | 1.1 |
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| | | | | | MACRO RESEARCH | | | | | | | GDP-accretive external trade in 3Q 2017
by Suhaimi Ilias |
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| | | | | | Trade growth slowed in Sep 2017 as exports and imports eased to +14.8% YoY (Aug 2017: +21.5% YoY) and +15.2% YoY (Aug 2017: +22.6% YoY) respectively leading to narrower trade surplus of +MYR8.6b (Aug 2017: +MYR10b). However, trade values and volumes as well as trade surplus strengthened YoY in 3Q 2017 vs 2Q 2017, pointing to GDP-accretive net external demand last quarter. | |
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| | | | | | | | ASEAN Equities in November, Blessing in Disguise
by Nik Ihsan Raja Abdullah |
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| | | | | | MSCI AC ASEAN PR (USD) Index (MXSO INDEX) hit our initial target of 808, in line with our earlier expectation (refer to Regional Traders' Almanac dated 18 Sep 2017). But with the negative divergence seen on its price and MACD, along with the bearish reading in Stochastic indicator, we opine that the index could head for a correction in the near-term. Based on seasonality study, historical trend also suggests that November favours the bear. | |
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| | NEWS | | | Outside Malaysia:
U.K: Carney says Brexit may limit BOE's ability to cut interest rates. The Bank of England may be unable to cut interest rates if the U.K.'s exit from the European Union turns out to be worse than policymakers currently expect, Governor Mark Carney said. Because the decision to leave the EU is already crimping supply and trimming the pace of economic growth without fanning prices, the central bank might not be able to provide extra impetus if inflation spins out of control, Carney said. When asked if Brexit might prevent the BOE from cutting rates even when growth is slowing, Carney said, "That's an extreme possibility but it is a possibility," though "we will supply as much support as we can during this course of adjustment." The remarks reinforce Carney's position that the bank has limited tolerance for faster inflation even though growth is sluggish compared with the past. The BOE raised borrowing costs for the first time in a decade to counter inflation that's already a percentage point above the bank's 2% target. Carney has said the pace may pick up further. (Source: Bloomberg)
China: Central bank chief renews warnings about financial risk. China's financial system is getting significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who also flagged the need for deeper reforms in the world's second-biggest economy. Latent risks are accumulating, including some that are "hidden, complex, sudden, contagious and hazardous," even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People's Bank of China's website. The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up financial markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote. (Source: Bloomberg)
Philippines: Customs bureau says October collections hit record. The Philippine's Bureau of Customs' cash collection reached PHP42.01b (USD819m) in October, a monthly record, as a higher exchange rate boosted the value of imports, the agency said in an emailed statement, citing Commissioner Isidro Lapena. Higher oil prices and improved valuation and classification of goods also drove collections higher, Lapena said. The agency's collection target for October was PHP42.54b, he said. (Source: Bloomberg) | |
| | | | | Other News:
Tasco: Buys land owner in Port Klang for MYR15.71m. Tasco is acquiring the entire equity interest in Meriah Selalu S/B (MSSB) for an indicative cash consideration of MYR15.71m, subject to a maximum purchase consideration of MYR16m. MSSB is principally engaged in operating a container depot and providing services of storing, handling, cleaning and repairing of containers. It also owns a 2.41ha leasehold land with a single-story site building in Port Klang, which is being used as a container depot. The land's market value is MYR16m as appraised by CCO & Associates based on a valuation report dated Oct 3, 2017. The property fetches an annual rent of MYR24,792. (Source: The Sun Daily)
Pintaras Jaya: Confident jobs will pile up for FY18. The group is confident of securing an order book of MYR250m for the financial year ending June 30, 2018 (FY18) and retaining a healthy margin in its tender prices despite having to lower rates in the face of competition. Chairman and managing director Dr Chiu Hong Keong said it has secured an order book of MYR80m so far, with only MYR170m left in the remaining nine months to meet its order book target. It has tendered for MYR1.3b worth of jobs, mainly residential and infrastructure projects in the Klang Valley as it wants to rebuild its order book for FY18. (Source: The Sun Daily)
Jaycorp: Proposes to diversify into construction and property development. Jaycorp has proposed to diversify into construction and property development. The group said the move could open up new opportunities and fetch additional streams of income, thereby reducing its reliance on its current core businesses, which also include packaging, processing of wood and renewable energy. Jaycorp anticipates its new business segments to contribute at least 25% to its bottom line in the future, and result in a diversion of more than 25% of the group's net assets. (Source: The Edge Financial Daily) | |
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