STOCK FOCUS OF THE DAY
Genting Plantations : Warrants’ conversion to boost cash in FY19F Buy
Maintain BUY on Genting Plantations (GenP) with an unchanged fair value of RM11.50/share, which implies an FY18F fully diluted PE of 27x. We continue to like GenP for its cost efficiency, strong FFB production growth and stable recurring income from the premium outlets.
GenP's valuations are on par with the large-cap plantation companies like IOI Corporation and Kuala Lumpur Kepong. We believe that this is justified due to the young age profile of the group's oil palm trees and large reserves of plantable landbank in Indonesia. Also, GenP's FFB production growth is consistently one of the highest in our stock universe. GenP is expected to receive proceeds of RM806mil when its 104mil warrants are converted by 17 June 2019. This would boost the group's cash reserves to more than RM2.3bil. The warrants are in-the-money as the exercise price of RM7.75/share is below GenP's share price of RM9.90.
QUICK TAKES
RHB Bank : RHB Investment Bank acquiring another 51% stake in Vietnam Securities Corporation Buy
Plantation Sector : News flow for week 5 – 9 February Neutral
STOCKS ON RADAR
Berjaya Food, Ideal Jacobs Corporation, Thong Guan Industries, Hap Seng Consolidated
ECONOMIC HIGHLIGHTS
Malaysia: Economic momentum stays favourable
Malaysia: Optimism remains on wholesale & retail trade
Malaysia: Labour market could tighten
China: Cooling PPI constrains CPI pricing power
NEWS HIGHLIGHTS
Malaysian stocks are not cheap just yet — experts
Foreign buying of Malaysian bonds to continue
Good times set to roll at MB World
Elsoft to ship more test equipment in first half-year
DISCLAIMER:
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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