STOCK FOCUS OF THE DAY
CB Industrial: First uptick in order book in two years? HOLD
We are keeping our HOLD recommendation on CB Industrial Product Holding (CBIP) with a lower fair value of RM1.85/share (vs. RM2.00/share previously). Our fair value of RM1.85/share for CBIP implies an FY18F PE of about 12x. We have reduced CBIP's FY18F net profit by 12.8% to account for weaker revenue and an EBITDA margin of 15.5% vs. 16.5% previously. CBIP is expected to face a squeeze in operating profit margin due to the stronger MYR. CBIP's overseas contracts are largely denominated in USD. Due to the appreciation of the MYR, revenue is lower upon translation from USD to MYR.
In spite of the drop in turnover, CBIP's FY18F net profit is expected to be marginally higher than FY17E due to a lower effective tax rate. We have assumed an effective tax rate of 17.0% in FY18F vs. 24.0% in FY17E. Looking ahead to FY19F, we believe that CBIP will perform better as the group is poised to win more contracts in FY18F. On the back of renewed capex spending, plantation companies are expected to place more orders for palm oil mills in FY18F.
Others :
Sapura Energy: Order book could still decline with new orders BUY
Bursa Malaysia: Stronger foreign fund inflows in 4QFY17 HOLD
QUICK TAKE
DRB-Hicom: Proton showing signs it's on the right track HOLD
ECONOMIC HIGHLIGHT
Indonesia: Growth supported by domestic demand
NEWS HIGHLIGHTS
Investment: EPF in talks to buy stake in Great Eastern
IPO: More IPOs expected in 2018, says Bursa Malaysia
Construction Sector: YTL, Naza join fray for HSR project
Anzo Holdings: Says developer is reviewing KL@Paragon Northgate project
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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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