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| | | | | | | | | | | | | | Share Price: | MYR0.91 | Target Price: | MYR1.15 | Recommendation: | Buy | | |
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| | | Dividend commitment | | FY17 net profit was below our expectation, owing to slight capacity payment shortfall at TBE in 4Q17. Dividend meanwhile surprised positively, and management's commitment towards maintaining 100% DPR going forward would see Malakoff become an attractive yield stock. Reiterate BUY, with a lower TP of MYR1.15 (-8%). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 6,098.4 | 7,130.4 | 6,722.4 | 6,660.7 | EBITDA | 2,835.6 | 2,631.5 | 2,352.7 | 2,345.7 | Core net profit | 355.5 | 310.0 | 296.2 | 338.2 | Core EPS (sen) | 7.1 | 6.2 | 5.9 | 6.8 | Core EPS growth (%) | (21.6) | (12.8) | (4.4) | 14.2 | Net DPS (sen) | 7.0 | 6.2 | 5.9 | 6.8 | Core P/E (x) | 12.8 | 14.7 | 15.4 | 13.4 | P/BV (x) | 0.8 | 0.7 | 0.7 | 0.7 | Net dividend yield (%) | 7.7 | 6.8 | 6.5 | 7.4 | ROAE (%) | 6.1 | 4.9 | 4.4 | 5.1 | ROAA (%) | 1.2 | 1.0 | 1.0 | 1.2 | EV/EBITDA (x) | 7.1 | 6.1 | 6.0 | 5.5 | Net debt/equity (%) | 214.1 | 156.6 | 136.3 | 117.0 |
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| | | | | | | | | | | | Share Price: | MYR8.89 | Target Price: | MYR8.11 | Recommendation: | Sell | | |
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| | | Cost pressure is rising | | FY17 results disappointed on soaring cost items namely maintenance, staff and administration. Cashflow also failed to meet with expectation and the highly anticipated operational leverage didn't materialise. There are still many unanswered questions on MAVCOM's drive to move the industry towards an incentive-based regulation (IBR). We keep our FY18-19 earnings forecasts and DCF-TP of MYR8.11 pending a company visit. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,172.8 | 4,652.3 | 5,266.0 | 5,294.1 | EBITDA | 1,488.9 | 1,679.9 | 2,106.3 | 1,916.9 | Core net profit | 48.2 | 153.6 | 436.2 | 508.4 | Core EPS (sen) | 2.9 | 9.3 | 26.3 | 30.6 | Core EPS growth (%) | nm | 218.6 | 184.1 | 16.5 | Net DPS (sen) | 0.0 | 9.8 | 9.0 | 12.0 | Core P/E (x) | 306.0 | 96.1 | 33.8 | 29.0 | P/BV (x) | 1.7 | 1.6 | 1.6 | 1.6 | Net dividend yield (%) | 0.0 | 1.1 | 1.0 | 1.3 | ROAE (%) | 0.8 | 2.7 | 8.2 | 6.1 | ROAA (%) | 0.2 | 0.7 | 2.0 | 2.4 | EV/EBITDA (x) | 9.4 | 10.5 | 8.3 | 8.8 | Net debt/equity (%) | 46.1 | 34.3 | 29.4 | 22.0 |
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| | | | | | | | | | | | Share Price: | MYR0.41 | Target Price: | MYR0.39 | Recommendation: | Hold | | |
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| | | Parameters stabilising but valuations are fair | | FY17 core net profit was MYR85.5m (-58.4% YoY) after adjusting for one-off items, FX-translation and AAX's share of losses in associates. This was ahead of our expectation but below consensus. We raise our FY18-19 earnings forecasts by +10.4% and +5.5% on latest cost parameters. Our TP is raised by 3% to MYR0.385 based on an unchanged 8x 2019 PER, which is the lower-end of the typical airline cycle of 8-15x. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,006.5 | 4,562.0 | 4,765.5 | 5,328.2 | EBITDAR | 1,235.6 | 1,196.9 | 1,302.6 | 1,465.7 | Core net profit | 205.5 | 85.5 | 133.6 | 200.4 | Core EPS (sen) | 5.0 | 2.1 | 3.2 | 4.8 | Core EPS growth (%) | nm | (58.4) | 56.3 | 50.0 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 8.2 | 19.7 | 12.6 | 8.4 | P/BV (x) | 1.6 | 1.7 | 1.5 | 1.3 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 29.3 | 10.2 | 14.1 | 17.4 | ROAA (%) | 4.8 | 1.9 | 2.9 | 3.4 | EV/EBITDAR (x) | 1.8 | 1.5 | 2.2 | 3.1 | Net debt/equity (%) | 68.5 | 39.4 | 107.3 | 211.3 |
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| | | | | | | | | | | | Share Price: | MYR0.94 | Target Price: | MYR1.00 | Recommendation: | Hold | | |
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| | | 4Q17 earnings in-line | | 4Q17 results were within estimates. The softer YoY earnings was due to lower turnover rental income and increased opex. We reduce our FY18-19 earnings forecasts by 6% p.a. and our DDM-TP by 10sen to MYR1.00. ALSREIT is now a HOLD due to limited upside to our revised TP. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 76.1 | 80.0 | 82.6 | 84.1 | Net property income | 56.9 | 56.9 | 59.1 | 59.6 | Distributable income | 36.0 | 35.5 | 36.1 | 36.6 | DPU (sen) | 5.4 | 5.4 | 5.3 | 5.4 | DPU growth (%) | 400.0 | 0.0 | (1.3) | 1.1 | Price/DPU(x) | 17.4 | 17.4 | 17.6 | 17.4 | P/BV (x) | 0.9 | 0.9 | 0.9 | 0.9 | DPU yield (%) | 5.7 | 5.7 | 5.7 | 5.7 | ROAE (%) | 7.8 | 5.8 | 5.8 | 5.9 | ROAA (%) | 3.7 | 3.6 | 3.6 | 3.7 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | MACRO RESEARCH | | | | | | KL Finance Index: Challenging Upper Resistance
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI was choppy throughout the day, but late buying support on selected blue chips like RHBBANK, YTL and DIGI helped shore up the market. At day's end, the benchmark rose 2.18pts to 1,858.17. Market breadth was positive with gainers outpacing losers by 605 to 330. A total of 2.28b shares worth MYR2.53b changed hands. Volatility will continue to stay high today as investors look to corporate earnings for guide. | |
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| NEWS | | | Outside Malaysia:
U.S: Brighter growth outlook emboldens Fed on rate-hike course. U.S. central bankers sent a strong message that an expansion with "substantial underlying economic momentum" could sustain additional increases in interest rates this year. Federal Reserve officials "anticipated that the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run pace and that labor market conditions would strengthen further," the minutes of their Jan. 30-31 meeting released in Washington showed. A number of participants "indicated that they had marked up their forecasts for economic growth in the near term relative to those made for the December meeting." Their collective position on inflation, meanwhile, remained one of cautious optimism that it will move toward their 2% target in the medium term. (Source: Bloomberg)
U.S: Companies growing increasingly upbeat about world economy. American business confidence in the world economy has surged, adding to an uptick in overall optimism as U.S. tax cuts and looser regulation improve the outlook for domestic growth, according to a new study. Some 69 percent of leaders from mid-size companies across the U.S. said they were optimistic about the global economy this year, more than double the 30 percent in 2017, according to the JPMorgan Chase & Co. survey released. The latest results marked the highest share of confidence in the eight-year history of the report, which indicated small businesses are similarly upbeat. The survey also showed 89 percent were confident in the U.S. economy's prospects this year, up from 80 percent in 2017 and 39 percent in 2016. Some 70 percent said the reduction in tax rates would benefit their companies "somewhat" or "to a great extent." The survey showed that of those expecting to benefit, they will use the savings to pay down debt, invest in their businesses and increase worker pay. (Source: Bloomberg)
E.U: Euro area hits speed bump on road to faster economic growth. A composite Purchasing Managers' Index indicates that the 19-nation economy is expanding at a quarterly pace of 0.9%, the fastest in eight years, IHS Markit said. That's even though the gauge fell to 57.5 from 58.8 in January, according to the London-based company. An improvement in business optimism "bodes well, suggesting that companies are expecting the slowdown to be short-lived," said Chris Williamson, chief business economist at IHS Markit. "The rate of expansion remains impressive." (Source: Bloomberg)
U.K: Pay for workers in Britain picked up in the fourth quarter and productivity gained as fewer jobs were filled by foreign nationals in the last year. Average weekly earnings excluding bonuses rose 2.5% YoY, the most since December 2016, the Office for National Statistics said. The overall employment rate rose to 75.2%, close to a record. (Source: Bloomberg)
Australia: Wages rose 2.1% YoY in 4Q after a 2% YoY rise in 3Q, marking a second consecutive month of acceleration. A decrease in the underutilization rate combined with a prolonged period of strong hiring momentum has started to nudge wage growth higher. Underutilization fell to 13.7% in 4Q, the lowest since 2014. Employment rose by 403,100 in 2017, nearly as much as the number of jobs added in 2015 and 2016 combined. (Source: Bloomberg) | |
| | | | | Other News:
Hap Seng Plantations: To acquire 55% of Kretam for MYR1.18b. Hap Seng Plantations Holdings proposes to acquire a 55% stake in Kretam Holdings for MYR1.18b or 92 sen per share, triggering the 33% mandatory takeover offer threshold. It had on Feb 21 entered into conditional share sale agreements with Kretam CEO Datuk Lim Nyuk Sang @ Freddie Lim and Santraprise S/B for the acquisition of 33.5% and 21.5% equity interest in Kretam for MYR716.99m and MYR460.79m, respectively. The 92 sen offer represents a premium of 11.1% to Hap Seng's five-day weighted average market price of 83 sen. With the acquisition, Hap Seng's total plantation landbank and planted area is expected to increase by 23,865ha or 59.2% and 19,623ha or 54.3% respectively. (Source: The Sun Daily)
Merge Energy: Bags MYR106m job to build water treatment plant in Johor. Merge Energy has bagged MYR105.55m contract to build a water treatment plant and water pipes under Package 1 in Pagoh, Johor. Its wholly-owned subsidiary Mewah Kota S/B had accepted a letter of acceptance from Pengurusan Aset Air for the proposed project. The contract is for 18 months, with completion on Aug 25, 2019. (Source: The Edge Financial Daily)
Eden: Inland Revenue Board slaps winding-up petition on Eden. Eden Inc has been slapped with a winding-up petition by the Inland Revenue Board (IRB) for about MYR3.19m income tax debt for years of assessment 2013 and 2014. The petition was presented to the High Court of Malaya on Feb 6 and was served on the company on Feb 13. The tax liabilities mainly resulted from the advance rental for the period of 10 years from 2013 until 2023 amounting to MYR9.8m received and recognised as a deferred income in 2013. (Source: The Sun Daily)
Kinsteel: Appoints liquidator after court notice. Debt-laden Kinsteel, whose shares have been suspended from trading on Bursa Malaysia, has appointed Messrs Ernst & Young as its liquidator after being served a notice to do so last Tuesday. The liquidator who was appointed on Jan 22 would take into custody or under his control all the property belonging to Kinsteel including cash at its bank or registered trademarks, intellectual property or patents. (Source: The Edge Financial Daily)
Brahim: To raise MYR9.9m via placement. Brahim Holdings has proposed a private placement of up to 23.63m new shares, representing 10% of its share capital to raise cash for working capital purposes and to repay borrowings. Assuming an indicative price of 42 sen per placement share, the exercise could potentially raise up to MYR9.92m, of which MYR9.19m has been earmarked for repayment of bank borrowings and MYR485,000 for working capital. If it raises proceeds of MYR9.92m, its net current assets will improve to MYR56.4m, compared with MYR41.01m as at Dec 31, 2016. (Source: The Edge Financial Daily) | |
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