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| | | | | | | | | | | | | | Share Price: | MYR121.50 | Target Price: | MYR105.20 | Recommendation: | Sell | | |
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| | | 4Q17: In line | | 4Q17 results were in line. We expect positive revenue momentum to continue. Softening of certain raw material costs coupled with stronger MYR may help lift margins moving forward, in our view. While prospects remain positive, valuations are demanding following its share price gain (+18% YTD). We now rate NESZ a SELL but with a higher DCF-TP of MYR105.20 (+MYR18.50) mainly on adjusting our DCF parameters. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,063.5 | 5,260.5 | 5,576.1 | 5,854.9 | EBITDA | 932.0 | 979.2 | 1,053.4 | 1,113.3 | Core net profit | 598.4 | 634.6 | 683.7 | 731.7 | Core EPS (sen) | 255.2 | 270.6 | 291.6 | 312.0 | Core EPS growth (%) | 1.7 | 6.0 | 7.7 | 7.0 | Net DPS (sen) | 270.0 | 275.0 | 291.1 | 311.6 | Core P/E (x) | 47.6 | 44.9 | 41.7 | 38.9 | P/BV (x) | 44.0 | 44.5 | 44.5 | 44.4 | Net dividend yield (%) | 2.2 | 2.3 | 2.4 | 2.6 | ROAE (%) | 94.0 | 100.3 | 106.8 | 114.1 | ROAA (%) | 24.0 | 25.1 | 25.4 | 25.5 | EV/EBITDA (x) | 19.9 | 25.1 | 27.2 | 25.8 | Net debt/equity (%) | 39.1 | 59.0 | 31.5 | 30.8 |
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| | | | | | | | | | | | Share Price: | MYR8.10 | Target Price: | MYR8.65 | Recommendation: | Hold | | |
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| | | Record 2017 | | 2017 core PATAMI of MYR4,192m (+32% YoY) was on par with our forecast and consensus. Factory utilisation declined by 4.7ppt YoY to 91% due to scheduled factory turnarounds but this was more than offset by 13.6% higher YoY in ASP. We raise FY18-19E earnings by 0.9% and 1.1% on post results housekeeping and introduce FY20 forecast. TP has been raised to MYR8.65 (+15 sen) pegged to 9x 2018 EV/EBITDA, 10% premium to peers (unchanged). The upside to our TP is limited; hence PCHEM is a HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 13,860.0 | 17,407.0 | 17,602.6 | 17,879.1 | EBITDA | 5,291.0 | 6,618.0 | 6,672.5 | 7,200.1 | Core net profit | 3,183.0 | 4,192.0 | 4,243.6 | 4,708.6 | Core EPS (sen) | 39.8 | 52.4 | 53.0 | 58.9 | Core EPS growth (%) | 14.5 | 31.7 | 1.2 | 11.0 | Net DPS (sen) | 19.0 | 19.0 | 27.0 | 30.0 | Core P/E (x) | 20.4 | 15.5 | 15.3 | 13.8 | P/BV (x) | 2.4 | 2.3 | 2.2 | 2.0 | Net dividend yield (%) | 2.3 | 2.3 | 3.3 | 3.7 | ROAE (%) | 11.3 | 15.3 | 14.7 | 15.0 | ROAA (%) | 10.1 | 12.9 | 12.5 | 13.2 | EV/EBITDA (x) | 9.4 | 8.5 | 8.5 | 7.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | COMEX Gold- One Step Back, Two Steps Forward
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI fell 1.33pts yesterday on the back of profit-taking activity in big caps. The benchmark index closed at 1,855.99 led by declines in PETGAS, TM, GENTING and RHBBANK. Broader market has turned negative yesterday- losers outpaced gainers by 556 to 409 with a total of 2.27b shares worth MYR2.10b changed hands. As overnight US market closed lower after a long weekend, we expect spillover impact in domestic market with profit-taking activity likely to be extended today. | |
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| NEWS | | | Outside Malaysia:
U.K: May under pressure after 62 Tory hardliners demand clean Brexit. Prime Minister Theresa May is facing a potentially dangerous outcry from 62 members of her own party who are demanding a quick, clean break from the European Union, just as she tries to finalize her Brexit plans. The group of Conservative lawmakers challenged May to take a harder approach on two key issues: how far British rules should move away from those of the EU after Brexit, and the nature of the transition period that businesses desperately want. (Source: Bloomberg)
India: Is said to tighten approvals for offshore borrowing. India's central bank is reviewing its process for allowing companies to raise money overseas due to concern that any increase in rupee volatility may hurt borrowers' ability to repay debt, a person familiar with the matter said. The Reserve Bank of India is spending more time scrutinizing companies' hedging practices, vetting borrowers more closely to prepare for any financial-market fallout from an increase in U.S. interest rates, the person said, asking not to be named as the matter is private. (Source: Bloomberg)
S. Korea: Bank of Korea need not follow every Fed hike: BOK Governor Lee. Bank of Korea does not need to follow every rate hike by the Federal Reserve with a policy change, but will need to react depending on Fed policy's impact on South Korea's economy and inflation, central bank governor Lee Ju-yeol tells reporters in Switzerland. Lee said BOK has plans for faster-than-expected Fed rate hike. Most "economy participants" expect 3 Fed hikes this year. Lee said BOK may have to consider rate hike if economy grows at around 3% and global yields rise, but hard to gauge when that will be. (Source: Bloomberg)
Singapore: Says it's open for business even as taxes to rise. Singapore remains a competitive destination for businesses even though it's raising taxes and maintaining some restrictions on foreign workers, Minister for Trade and Industry S. Iswaran said. "When you take into account the whole scheme of taxes, including corporate tax regimes, personal tax regimes, I think Singapore still remains a competitive destination in relative terms," Iswaran said in an interview. "We never compete on the basis of tax or cost alone" but on value, he said. (Source: Bloomberg) | |
| | | | | Other News:
RHB Bank: Wants to wind up MP Corp. Malaysia Pacific Corp (MP Corp), a Practice Note 17 (PN17) company, has been served with a winding-up petition by RHB Bank, demanding repayment of debt totalling MYR118.16m. MP Corp will be seeking legal advice and will make further announcement in due course. The debt-laden company's balance sheet shows its main assets were land held for development that was worth MYR211.8m and current assets held for sales that were worth MYR256m as at Sept 30, 2017. (Source: The Edge Financial Daily)
CIMB: CIMB EVA enhanced with new features. CIMB Bank has added new features to its mobile application, the CIMB Enhanced Virtual Assistant (EVA) launched in December 2016, to include Spend Analyser and natural language conversational capabilities. With Spend Analyser, customers can manage their accounts better via single-tap spending insights for, among others, utilities, petrol, entertainment, dining and travel made on their CIMB debit, credit and prepaid cards. (Source: The Sun Daily)
JAKS Resources: JAKS, Star Media at loggerheads over project delay. A more than two-year delay in completing Pacific Star Business Hub by JAKS Resources has been cited as the reason for Star Media Group to call on a MYR50m bank guarantee for the project. Both parties appear to be pointing fingers at each other for causing the delay. The project was expected to be completed in 2016. JAKS has accused Star of preventing the completion of Tower A under the project by the agreed Feb 15 deadline, and said its 51%-owned subsidiary JAKS Island Circle S/B (JIC) should have been given a time extension to complete the project. (Source: The Edge Financial Daily)
Oldtown: Offer for Oldtown at MYR3.18 a piece open till March 13. Dutch coffee company Jacobs Douwe Egberts' (JDE) offer for Oldtown at MYR3.18 a share in cash, will be open for acceptance until March 13, 2018. JDE has secured irrevocable undertaking from shareholders holding 51.45% and is looking to procure the remaining shares with an eye to delist and privatise Oldtown. JDE has agreed to pay a good faith fee being an amount of USD3.48m or one percent of the total offer price to Oldtown. (Source: The Sun Daily) | |
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