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| | | | | | | | | | | | | | Share Price: | MYR22.28 | Target Price: | MYR21.00 | Recommendation: | Hold | | |
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| | | FY17 results within expectations | | Into 2018, management guides for slightly faster loan growth and NIM expansion. Our earnings forecasts are raised 5% for FY18/19 on higher NIM assumptions but our FY18 ROE estimate of 14% is at the lower end of management's 14-15% target. While its operational performance is decent, there is little catalyst at this stage, in our view. We maintain our HOLD call with a higher target price of MYR21 (+MYR1) on rolling forward valuations on an unchanged FY18 PBV peg of 2x. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 9,956.5 | 10,746.8 | 11,346.3 | 11,887.9 | Pre-provision profit | 6,745.0 | 7,318.6 | 7,737.8 | 8,114.1 | Core net profit | 5,146.4 | 5,470.0 | 5,745.6 | 6,034.1 | Core EPS (MYR) | 1.33 | 1.42 | 1.49 | 1.56 | Core EPS growth (%) | 3.9 | 6.3 | 5.0 | 5.0 | Net DPS (MYR) | 0.58 | 0.61 | 0.67 | 0.70 | Core P/E (x) | 16.7 | 15.7 | 15.0 | 14.3 | P/BV (x) | 2.5 | 2.3 | 2.1 | 2.0 | Net dividend yield (%) | 2.6 | 2.7 | 3.0 | 3.1 | Book value (MYR) | 8.86 | 9.68 | 10.52 | 11.39 | ROAE (%) | 15.7 | 15.3 | 14.7 | 14.3 | ROAA (%) | 1.4 | 1.4 | 1.4 | 1.4 |
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| | | | | | | | | | | | Share Price: | MYR2.75 | Target Price: | MYR2.25 | Recommendation: | Sell | | |
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| | | Fully priced-in | | 1HFY6/18 core earnings was ahead of our expectations as the Industrial division surprised on the upside.We lift our FY18/19/20 earnings forecasts by 10%/3%/3%, having adjusted our Industrial margin assumptions upwards. We now value the Industrial division at a higher multiple peg of 15x CY19 to reflect its improving earnings outlook backed by strong order backlog. Our TP is raised to MYR2.25. We believe that SDB's near-term earnings potential has been fully priced in; D/G to SELL. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 29,452.0 | 31,087.0 | 32,452.1 | 34,042.5 | EBITDA | 1,471.0 | 1,319.0 | 1,713.8 | 1,805.2 | Core net profit | 807.7 | 933.0 | 785.1 | 816.2 | Core EPS (sen) | 12.8 | 13.7 | 11.5 | 12.0 | Core EPS growth (%) | (66.8) | 7.5 | (15.9) | 4.0 | Net DPS (sen) | 27.0 | 23.0 | 7.5 | 7.8 | Core P/E (x) | 21.5 | 20.0 | 23.8 | 22.9 | P/BV (x) | 0.5 | 0.5 | 1.5 | 1.4 | Net dividend yield (%) | 9.8 | 8.4 | 2.7 | 2.8 | ROAE (%) | 2.5 | 1.8 | 3.1 | 6.3 | ROAA (%) | 1.3 | 1.4 | 1.7 | 3.4 | EV/EBITDA (x) | 16.9 | 12.8 | 12.6 | 11.8 | Net debt/equity (%) | 36.3 | 2.8 | 13.1 | 10.1 |
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| | | | | | | | | | | | Share Price: | MYR5.50 | Target Price: | MYR5.63 | Recommendation: | Hold | | |
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| | | 1HFY18 results inline | | 2QFY18 core net profit caught up as 1HFY18 core net profit now meets 53% of our/consensus full-year estimates - within expectations. Upstream earnings outshined downstream this quarter. We maintain our core earnings forecasts. SDPL remains a HOLD with an unchanged TP of MYR5.63 pegged at 30x FY18 PER, implying a P/RNAV of 0.6x. A first interim DPS of 3.5sen (ex-date: 18 Apr) was declared. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 11,946.5 | 14,779.4 | 16,357.1 | 17,456.2 | EBITDA | 2,176.9 | 3,423.8 | 3,385.5 | 3,499.8 | Core net profit | 772.8 | 1,128.7 | 1,275.7 | 1,302.5 | Core EPS (sen) | 11.4 | 16.6 | 18.8 | 19.2 | Core EPS growth (%) | 14.4 | 46.1 | 13.0 | 2.1 | Net DPS (sen) | 10.3 | 13.2 | 9.4 | 9.6 | Core P/E (x) | 48.4 | 33.1 | 29.3 | 28.7 | P/BV (x) | 3.9 | 3.0 | 2.6 | 2.5 | Net dividend yield (%) | 1.9 | 2.4 | 1.7 | 1.7 | ROAE (%) | 10.5 | 31.8 | 15.3 | 8.9 | ROAA (%) | 2.8 | 3.9 | 4.3 | 4.3 | EV/EBITDA (x) | na | na | 13.3 | 12.8 | Net debt/equity (%) | 132.4 | 57.3 | 42.6 | 39.8 |
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| | | | | | | | | | | | Share Price: | MYR5.67 | Target Price: | MYR5.50 | Recommendation: | Hold | | |
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| | | Headwinds ahead | | Axiata's FY17 results were below expectations due to higher-than-expected depreciation and taxes. We view currency headwinds as a concern for Axiata in 2018, although the absence of Idea's losses (post-merger) should help alleviate the P&L impact. Maintain HOLD with an unchanged MYR5.50 TP. We see risk-reward as being merely balanced. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 21,565.4 | 24,402.4 | 24,378.3 | 25,461.7 | EBITDA | 8,012.6 | 9,230.1 | 9,338.8 | 9,945.3 | Core net profit | 1,418.0 | 1,205.0 | 1,396.9 | 1,696.2 | Core EPS (sen) | 16.0 | 13.4 | 15.4 | 18.7 | Core EPS growth (%) | (33.1) | (16.1) | 15.2 | 21.4 | Net DPS (sen) | 8.0 | 8.5 | 13.1 | 15.9 | Core P/E (x) | 35.5 | 42.3 | 36.7 | 30.2 | P/BV (x) | 2.2 | 2.1 | 2.1 | 2.0 | Net dividend yield (%) | 1.4 | 1.5 | 2.3 | 2.8 | ROAE (%) | 2.1 | 3.8 | 5.6 | 6.8 | ROAA (%) | 2.2 | 1.7 | 2.0 | 2.4 | EV/EBITDA (x) | 8.0 | 7.3 | 7.5 | 7.1 | Net debt/equity (%) | 59.1 | 40.6 | 40.8 | 40.2 |
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| | | | | | | | | | | | Share Price: | MYR121.50 | Target Price: | MYR105.20 | Recommendation: | Sell | | |
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| | | In a better position into FY18? | | While still below the neutral region, taking cue from the latest 4Q17 improvement in consumer sentiment, NESZ should be able to sustain its positive revenue momentum into FY18. Additional tailwinds include stronger MYRUSD and softer raw material prices, in our view. We keep our earnings forecasts, DCF-TP and SELL call on lofty valuations. | | |
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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: | MYR8.70 | Target Price: | MYR9.00 | Recommendation: | Hold | | |
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| | | Yearning for growth (KRI MK, CP MYR8.70, HOLD, TP MYR9.00, Industrials) | | 4Q17 earnings was flattish QoQ as the new Plant 16 did not contribute at all. We lower our FY18-19E EPS slightly by 4%/3% and introduce FY20E, projecting 3-year (FY17-20) net profit CAGR of 13%. Consequently, our TP is trimmed to MYR9.00 (-3%), based on an unchanged FY19 PER of 24x (+1SD to mean). Kossan has also proposed a share split exercise which may help with its liquidity but would have no impact to the company's fundamentals/financials. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,668.0 | 1,957.4 | 2,192.5 | 2,541.5 | EBITDA | 291.8 | 311.9 | 361.0 | 413.2 | Core net profit | 170.9 | 183.9 | 209.1 | 239.3 | Core EPS (sen) | 26.7 | 28.8 | 32.7 | 37.4 | Core EPS growth (%) | (15.9) | 7.6 | 13.7 | 14.4 | Net DPS (sen) | 11.0 | 11.5 | 13.1 | 15.0 | Core P/E (x) | 32.5 | 30.2 | 26.6 | 23.2 | P/BV (x) | 5.2 | 4.8 | 4.3 | 3.9 | Net dividend yield (%) | 1.3 | 1.3 | 1.5 | 1.7 | ROAE (%) | 16.6 | 16.5 | 17.2 | 17.7 | ROAA (%) | 11.5 | 10.9 | 10.8 | 11.2 | EV/EBITDA (x) | 14.7 | 17.3 | 16.1 | 14.1 | Net debt/equity (%) | 4.8 | 15.7 | 16.9 | 17.1 |
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| | | | | | | | | | | | Share Price: | MYR13.10 | Target Price: | MYR16.30 | Recommendation: | Buy | | |
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| | | 4Q17 results above expectations | | While FY17 results were above our expectations, our forecasts for FY18/19 are maintained amid a still difficult operating environment for the general insurance division. Positively, however, Allianz Life continues to generate robust growth to support overall group earnings and valuations. Our SOP-derived TP of MYR16.30 is unchanged and we maintain our BUY call on Allianz. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Net earned premiums | 3,690.5 | 3,928.3 | 3,900.5 | 3,959.2 | Core profit (MYR m) | 312.1 | 288.0 | 316.7 | 346.8 | BVPS (MYR) | 8.3 | 4.1 | 3.9 | 4.2 | P/B (x) | 1.6 | 3.2 | 3.4 | 3.1 | EVPS (MYR) | na | na | na | na | PEV (x) | na | na | na | na | VNB (MYR) | na | na | na | na | VNB multiple (x) | na | na | na | na | ROE (%) | na | na | na | na | ROA (%) | 2.1 | 1.7 | 2.0 | 2.0 |
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| | | | | | | | | | | | Share Price: | MYR6.33 | Target Price: | MYR5.00 | Recommendation: | Sell | | |
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| | | 'X' marks the spot | | FY17 core earnings were right on target at 100% of our and consensus expectations. Revisions to sales volume and USD/MYR resulted in -7%/+7% revisions in our FY18/19E earnings; we also introduce FY20 forecast. We now peg ViTrox to 19x CY19 PER, guided by an unchanged 20% premium over regional peers' valuation, deriving a higher TP of MYR5.00. Slower earnings growth ahead, partially impacted by a lower USD/MYR, supports our lower PER peg. With a 21% downside potential, the stock remains a SELL. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 234.0 | 327.5 | 361.5 | 447.0 | EBITDA | 65.2 | 90.7 | 109.1 | 146.3 | Core net profit | 61.2 | 82.0 | 91.8 | 124.3 | Core EPS (sen) | 13.0 | 17.4 | 19.4 | 26.3 | Core EPS growth (%) | 19.6 | 33.7 | 11.9 | 35.5 | Net DPS (sen) | 3.3 | 4.3 | 4.9 | 6.6 | Core P/E (x) | 48.8 | 36.5 | 32.6 | 24.1 | P/BV (x) | 11.4 | 9.1 | 7.5 | 6.1 | Net dividend yield (%) | 0.5 | 0.7 | 0.8 | 1.0 | ROAE (%) | 27.5 | 28.1 | 25.2 | 27.9 | ROAA (%) | 19.4 | 19.0 | 16.9 | 18.7 | EV/EBITDA (x) | 12.2 | 31.3 | 26.5 | 19.5 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | Share Price: | MYR2.29 | Target Price: | MYR2.96 | Recommendation: | Buy | | |
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| | | Kitchen sinking | | Excluding net negative one-offs totalling MYR245m, FY17 core earnings of MYR96m came in above expectations on higher associates' contribution. We expect sequential earnings to be even stronger with contributions from Perodua's all-new Myvi model. Our earnings forecasts, BUY rating and MYR2.96 TP (on 10x CY19 PER) are unchanged pending an analyst briefing today. MBM still offers the best exposure to Perodua as a (i) 22.6% shareholder, (ii) car dealer and (iii) auto parts supplier. Reiterate BUY. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,670.2 | 1,732.6 | 1,784.6 | 1,843.4 | EBITDA | (24.8) | (234.8) | 24.7 | 32.0 | Core net profit | 102.1 | 96.1 | 106.8 | 115.8 | Core EPS (sen) | 26.1 | 24.6 | 27.3 | 29.6 | Core EPS growth (%) | 16.5 | (5.8) | 11.1 | 8.4 | Net DPS (sen) | 6.0 | 3.0 | 6.0 | 6.0 | Core P/E (x) | 8.8 | 9.3 | 8.4 | 7.7 | P/BV (x) | 0.6 | 0.6 | 0.6 | 0.6 | Net dividend yield (%) | 2.6 | 1.3 | 2.6 | 2.6 | ROAE (%) | 4.1 | (9.8) | 7.2 | 7.4 | ROAA (%) | 4.3 | 4.3 | 5.1 | 5.2 | EV/EBITDA (x) | nm | nm | 49.0 | 36.1 | Net debt/equity (%) | 10.5 | 5.0 | 2.8 | net cash |
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| | | | | | | | | | | | Share Price: | MYR0.62 | Target Price: | MYR0.54 | Recommendation: | Sell | | |
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| | | Another kitchen sinking year | | 4Q17/FY17 earnings disappointed on large exceptional items and higher-than-expected taxes. While the exceptional items will lead to forward cost savings, the deterioration in MPR's balance sheet position is substantial and any earnings generation going forward will not be significant enough to enable MPR to pay dividends again in the near-term. We cut our TP to MYR0.54 (1.0x end-FY18E P/BV ex-goodwill) from MYR0.59. Risk-reward profile still unfavourable, in our view. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,289.0 | 1,195.7 | 1,251.7 | 1,311.8 | EBITDA | 163.6 | 19.4 | 90.7 | 116.2 | Core net profit | 38.7 | (153.2) | (15.6) | 10.2 | Core EPS (sen) | 3.5 | (13.8) | (1.4) | 0.9 | Core EPS growth (%) | (72.1) | nm | nm | nm | Net DPS (sen) | 8.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 17.8 | nm | nm | 67.2 | P/BV (x) | 0.5 | 0.9 | 0.9 | 0.9 | Net dividend yield (%) | 12.9 | 0.0 | 0.0 | 0.0 | ROAE (%) | (3.8) | (58.4) | (2.1) | 1.4 | ROAA (%) | 1.7 | (8.2) | (1.0) | 0.7 | EV/EBITDA (x) | 7.5 | 49.2 | 9.6 | 7.3 | Net debt/equity (%) | net cash | 14.0 | 24.6 | 22.8 |
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| | MACRO RESEARCH | | | | | | "Flattish" reserves in 1H Feb 2018
by Suhaimi Ilias |
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| | | | | | External reserves slipped -USD0.1b to USD103.6b at mid-Feb 2018 (end-Jan 2018: USD103.7b), first fortnightly drop since 1H Mar 2017. The slight drop in reserves came amid net foreign sell in Malaysian equities so far in Feb 2018. The latest reserves figure is equivalent to 7.1 months of retained imports and 1.1 times of short-term external debt. | |
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| | | | | | Dow Jones Industrial Average: Still in a Pullback Mode
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI fell 3.10pts to 1,855.07 yesterday, in line with the weaker regional markets. Losers were led by HLBK, YTL and KLCCSS. Market breadth was negative with losers outpacing gainers by 453 to 442. A total of 2.34b shares worth MYR2.06b changed hands. With Dow making a comeback after two days of decline, local stock market would likely end this week stronger. | |
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| NEWS | | | Outside Malaysia:
E.U: ECB accuses Trump of 'currency war' as surging EUR exposes Europe's fragility. The European Central Bank has expressed alarm over the surging euro, accusing the Trump administration of driving down the dollar to gain trade advantage in breach of global accords. Minutes from the ECB's policy meeting in January flagged concerns that the overly-strong exchange rate had become unhealthy and "required monitoring", with doves on the Governing Council clearly worried that the Eurozone is still caught in a low inflation trap with no safety buffer against fresh deflation shocks. (Source: Bloomberg)
Germany: Business confidence eased in February, suggesting that companies see little scope for a further pickup in momentum after Europe's largest economy recorded its fastest annual growth in seven years. The Ifo Institute's gauge of business sentiment fell to 115.4 from a record 117.6 in January. After an impressive run for the German economy in 2017, the Bundesbank has warned that companies are increasingly facing bottlenecks that could become an obstacle for an even stronger expansion. (Source: Bloomberg)
U.K: Economy expanded less than previously estimated in 4Q 2017 as consumers and businesses absorbed faster price increases. GDP rose 0.4%, compared with an initial estimate of 0.5%, the Office for National Statistics said. Offsetting that, the three months to September was revised up to 0.5%. In 2017, growth was 1.7%, the slowest since 2012. Part of the economy's weakness reflects the fallout from the pound's drop since the vote to leave the EU in 2016. Household-spending growth slowed in the fourth quarter, leaving its full-year increase at 1.8%, the weakest in five years. (Source: Bloomberg)
China: New Year spend boosts movies, meals, and robot cleaners. China's traditional Spring Festival splurge continued into the Year of the Dog, with high-tech consumer goods playing a stronger role alongside festive favourites such as movie-going and eating out. Sales at restaurants and shopping malls jumped 10.2% YoY to about CNY926b (USD146b) during the Chinese New Year holiday from Feb. 15 to 21, compared with last year's Spring Festival week, according to the Ministry of Commerce. Consumer durables such as floor-sweeping robots were particularly popular shopping items. Revenue from domestic tourism rose 12.6% YoY to CNY475b, with Southeast Asian nations the top outbound destination, the National Tourism Administration said. (Source: Bloomberg)
S. Korea: Household debt rose to a new record in 2017, even as the government tightened lending terms to cool the property market. Household debt including credit purchases rose to KRW1,450t (USD1.3t) at the end of December, up 8.1% YoY, according to a statement from the Bank of Korea. While the pace of increase remained fast, it was the slowest in three years. (Source: Bloomberg) | |
| | | | | Other News:
Oil & Gas: Petronas signs first term LNG supply deal in India. Petronas has signed a sale and purchase agreement to supply LNG to H-Energy Mideast DMCC (HEMD). Dubai-based HEMD is part of the LNG arm of Indian real estate group Hiranandani Group. Earlier this month, an Indian government official said India's push to more than double the share of natural gas in its energy mix to 15% by 2022 will require a huge increase in imports and the construction of more LNG terminals. (Source: The Edge Financial Daily)
Muhibbah Engineering: Clinches MYR149m Qatar job. Muhibbah Engineering (M's 49%-owned Muhibbah Engineering Middle East LLC has been awarded a contract worth QAR143m (MYR149m) by Economic Zones Co of Qatar. The contract is for the design, construction and erection of syncrolift and travel lift with ancillaries and all associated works in Marsa Um Alhoul at the Um Alhoul Special Economic Zone. Construction work is to begin immediately and is expected to be completed by the first quarter of next year. (Source: The Sun Daily)
Gas Malaysia: Plans MYR180m Perak pipeline. Gas Malaysia will build a MYR180m gas infrastructure in Kinta Valley, Perak under a pipeline development agreement (PDA) with the Perak state government. Under the PDA, Gas Malaysia will develop, operate and own the natural gas distribution system pipeline with the capacity of 50,000 standard cubic metre per hour measuring 140km in length, from the take-off point located at Ayer Tawar, Perak to supply natural gas to the areas identified. The state government has agreed to contribute MYR10m towards the development cost, in the form of capital contribution, in line with its cause to promote clean energy. (Source: The Sun Daily)
AirAsia: Former Pos Malaysia CEO joins AirAsia's logistics arm. Datuk Mohd Shukrie Salle, a former group CEO of Pos Malaysia, is joining AirAsia new logistics arm, Redbox Logistics. This was announced by AirAsia group CEO Tan Sri Tony Fernandes in a Twitter post yesterday. This announcement came as a surprise to many and resulted in some selling pressure on the postal group's shares. (Source: The Edge Financial Daily)
Vivocom: Vivocom International is proposing a two-for-three rights issue to raise up to MYR75.27m. The cash call will be sweetened by free detachable on the basis of one-for-two warrants E for every two rights shares subscribed. The MYR75.27m to be raised from the exercise will be used for working capital, while MYR25m will be for its future viable investments, including mergers and acquisitions of businesses or investments. The remaining sum will be for the estimated expenses in relation to the exercise. (Source: The Edge Financial Daily) | |
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