STOCK FOCUS OF THE DAY
Malakoff Corporation: Teething issues arise yet again HOLD
We maintain HOLD and a lower SOP-based fair value of RM0.89/share (vs. RM1.09/share previously) (WACC: 7.4%) as we roll over our valuations and trim our earnings on Malakoff Corp (Malakoff). Malakoff continues to see teething operational issues while a lack of substantive replenished assets further weighs on its outlook. A more aggressive dividend policy may prove supportive of valuations.
Malakoff 4QFY17 core profit of RM43.7mil (YoY: -51.5%) brought FY17 earnings to RM215.2mil (YoY: -25.2%). Earnings disappointed, missing our forecast and consensus estimates by 27% and 31% respectively.
A final dividend of 3.7 sen/share was declared (FY17: 6.2 sen/share). Going forward, management indicated the greater of 7 sen/share or 100% payout deviating from our earlier assumption of a 70% payout. It implies a yield of 7.7%.
Others:
MSM Malaysia: Still not benefiting from drop in raw sugar price HOLD
STOCKS ON RADAR
Yong Tai, Wah Seong Corp., Formosa Prosonic Industries, Mieco Chipboard
ECONOMIC HIGHLIGHT
UK: Jobless rate rose from a 42-year low
NEWS HIGHLIGHTS
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Merge Energy: Wins RM105.55mil contract
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