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| | | | | | | | | | | | | | Share Price: | MYR10.84 | Target Price: | MYR9.10 | Recommendation: | Sell | | |
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| | | All positives priced in | | Sequentially flattish 3QFY18 was within expectations and we keep our EPS forecasts unchanged. Separately, Hartalega has proposed a 1-for-1 bonus issuance which may help boost its trading liquidity. However, trading at 1-year rolling forward PER of 38x (+3SD to mean), we think all positives have been priced in. Hence, we reiterate our SELL call and TP of MYR9.10 (unchanged 2019 PER of 29x; +1SD to mean). | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,498.3 | 1,822.1 | 2,487.9 | 2,858.5 | EBITDA | 386.8 | 419.4 | 610.2 | 679.1 | Core net profit | 257.6 | 283.0 | 442.3 | 483.5 | Core FDEPS (sen) | 15.5 | 17.1 | 26.5 | 28.9 | Core FDEPS growth(%) | 16.3 | 9.8 | 55.1 | 9.3 | Net DPS (sen) | 8.0 | 8.5 | 13.4 | 14.6 | Core FD P/E (x) | 69.8 | 63.5 | 41.0 | 37.5 | P/BV (x) | 11.8 | 10.6 | 9.4 | 8.4 | Net dividend yield (%) | 0.7 | 0.8 | 1.2 | 1.3 | ROAE (%) | na | na | na | na | ROAA (%) | 15.1 | 13.3 | 17.8 | 17.1 | EV/EBITDA (x) | 21.0 | 19.9 | 29.9 | 26.9 | Net debt/equity (%) | 10.9 | 11.3 | 16.3 | 15.5 |
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| | | | | | | | | | | | Share Price: | MYR1.72 | Target Price: | MYR1.85 | Recommendation: | Buy | | |
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| | | 2QFY18: Within expectations | | 2QFY6/18 results and 2nd interim gross DPU of 2.38sen (YTD: 5.05sen) were in-line. Earnings were mainly driven by Sunway Pyramid, Sunway Resort Hotel & Spa, Sunway Pyramid Hotel and a new asset. We adjust our FY18-20 earnings forecasts by -2% p.a. and lower our DDM-TP by 5sen to MYR1.85. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 507.0 | 522.9 | 579.4 | 607.0 | Net property income | 373.9 | 388.8 | 442.5 | 464.2 | Distributable income | 270.6 | 271.1 | 291.5 | 300.3 | DPU (sen) | 8.3 | 8.3 | 8.9 | 9.1 | DPU growth (%) | 5.2 | 0.2 | 7.2 | 2.5 | Price/DPU(x) | 20.8 | 20.8 | 19.4 | 18.9 | P/BV (x) | 1.2 | 1.2 | 1.2 | 1.2 | DPU yield (%) | 4.8 | 4.8 | 5.2 | 5.3 | ROAE (%) | 8.1 | 10.3 | 6.9 | 7.2 | ROAA (%) | 4.0 | 4.0 | 4.1 | 4.1 | Debt/Assets (x) | 0.3 | 0.3 | 0.4 | 0.4 |
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| | MACRO RESEARCH | | | | | | Reserves rise further…
by Suhaimi Ilias |
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| | | | | | External reserves rose by USD0.7b to USD103.7b at end-Jan 2018 (mid-Jan 2018: USD103.0b), supported by positive portfolio capital flows in Malaysian equities and trade flows. The latest tally is equivalent to 7.2 months of retained imports and 1.1 times of short-term external debt. | |
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| | | | | | Surge in headline & core CPI
by Suhaimi Ilias |
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| | | | | | Both headline and core inflation rates jumped in Jan 2018 to +4.0% YoY (Dec 2017: +3.3% YoY) and +3.9% YoY (Dec 2017: +3.0% YoY) reflecting impact of Package 1 of the tax reform measures. Our +3.6% full-year 2018 headline inflation rate is under review as further tax reform measures are expected in coming months that include potential inflationary measures such as removal of VAT exemptions on coal and casino and increases in alcohol & tobacco tax. | |
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| | | | | | FBMKLCI: Selling Pressure Overdone, Rebound Likely
by Nik Ihsan Raja Abdullah |
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| | | | | | Bloodbath continued on stock market as FBMKLCI plunged 40.62pt or 2.19% to 1,812.45 yesterday. This marked the biggest one-day decline since 4 Jan 2016. Losers were led by HP, YTL and HLFG. Market breadth was bearish with losers outpacing gainers by 1,215 to 121. A total of 5.20b shares worth MYR5.32b changed hands. | |
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| NEWS | | | Outside Malaysia:
U.S: Trade deficit is wider than any month or year since 2008. The U.S. trade deficit widened to the biggest monthly and annual levels since the last recession, underscoring the inherent friction in President Donald Trump's goal of narrowing the gap while enjoying faster economic growth. The deficit increased 5.3% in December to a larger- than- expected USD 53.1b, the widest since October 2008, as imports outpaced exports, Commerce Department data showed. For all of 2017, the goods-and-services gap grew 12% to USD 566b, the biggest since 2008. (Source: Bloomberg)
E.U: Draghi says ECB can't yet declare victory in inflation fight. Mario Draghi said that the European Central Bank still can't claim success in its struggle to restore inflation, and defended its policies from complaints that they widen inequalities. "While our confidence that inflation will converge toward our aim of below, but close to, 2% has strengthened, we cannot yet declare victory on this front," the ECB president said at European Parliament hearing in Strasbourg. "Monetary policy will evolve in a fully data-dependent and time- consistent manner." (Source: Bloomberg)
Germany: Factory orders surged in the last month of 2017, with the economy's solid performance helping workers score a landmark labor deal. Orders, adjusted for seasonal swings and inflation, increased 3.8% after dropping a revised 0.1% in November, the Economy Ministry said. Demand was up 7.2% YoY. Germany's economy is in the midst of an upturn – supported by strong domestic spending and booming global trade – and manufacturing has been at the pinnacle of the expansion. The sector's strength helped the country's largest union -- representing some 3.9 million metalworkers and engineers – win a 4.3% pay increase over 27 months in a key state, plus additional one-time payments, and options to temporarily reduce working hours. (Source: Bloomberg)
U.K: Consumer spending rises as cost of essential items climbs. U.K. shoppers boosted spending in January as they paid more for essential purchases. Consumer spending climbed 3.9% YoY, Barclaycard said, an increase driven by higher prices and supermarket purchases. In a separate survey, the British Retail Consortium also cited higher food prices as it reported a 0.6% increase in like-for-like retail sales last month. Spending flagged in the latter half of 2017 as the pound's drop since the Brexit vote pushed up the inflation rate. (Source: Bloomberg)
Australia: The central bank governor kept interest rates unchanged at 1.5%, as expected, saying in a statement: "notwithstanding the improving labor market, wage growth remains low. Rapid population growth and a jump in workforce participation has prevented the hiring boom from cutting deeply into the jobless rate and sparking wage gains and inflation. The Reserve Bank of Australia has opted to be a steadying influence on the economy, keeping rates at a record-low for 18 months to encourage firms to expand and take on new employees, a strategy that's paying some dividends. (Source: Bloomberg) | |
| | | | | Other News:
Gadang: To buy Johor land from tycoon Danny Tan's private firm for MYR149m. Its indirect wholly-owned subsidiary Splendid Pavilion S/B is acquiring two parcels of freehold land totalling 78 acres in Pontian, Johor from GP Views Development S/B — a private company owned by Tropicana Corp Bhd founder Tan Sri Danny Tan Chee Sing and his family — for MYR149m cash. The group will fund the proposed deal via a combination of internal funds and/or bank borrowings, it said. (Source: The Edge Financial Daily)
Eita Resources: Bags MYR24.77m worth of contracts from TNB. The group has bagged six contracts for the replacement of primary and ancillary equipment across the country worth an accumulated MYR24.77m from Tenaga Nasional Bhd (TNB).The contracts were awarded to its 60%-owned unit Transsystem Continental S/B, which received the letters of acceptance from TNB. (Source: The Edge Financial Daily)
Talam Transform: Drops plan to sell stake in Chinese unit. The group has scrapped its plan to sell its 85% stake in its Chinese unit that is involved in hotel operations and management in Jilin Province, China. The termination was due to the failure of the purchaser to obtain approval from Jilin's Trade and Industry Bureau on the proposed deal. If the deal had gone through, Malim Enterprise would have sold its its 85% stake in Jilin Province Maxcourt Hotel Ltd (JPMH), which is principally involved in the operation and management of the now defunct Maxcourt Hotel, for RMB84.66m. (Source: The Edge Financial Daily) | |
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