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| | | | | | | | | | | | | | Share Price: | MYR6.07 | Target Price: | MYR5.90 | Recommendation: | Hold | | |
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| | | Likely FY18 earnings decline | | FY17 results and dividends were within expectations. However, weak prepaid trends along with tepid FY18 guidance have led to us revising earnings downwards. Maintain HOLD with a lower TP of MYR5.90 (-5%). Balance sheet and dividend are no longer pressing concerns for Maxis. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 8,612.0 | 8,696.0 | 8,481.3 | 8,632.1 | EBITDA | 4,469.0 | 4,607.0 | 4,410.3 | 4,488.7 | Core net profit | 1,927.5 | 2,103.1 | 1,890.2 | 1,928.8 | Core EPS (sen) | 25.7 | 27.5 | 24.7 | 25.2 | Core EPS growth (%) | 6.5 | 6.9 | (10.1) | 2.0 | Net DPS (sen) | 20.0 | 20.0 | 20.0 | 20.0 | Core P/E (x) | 23.6 | 22.1 | 24.6 | 24.1 | P/BV (x) | 9.7 | 6.6 | 6.3 | 6.0 | Net dividend yield (%) | 3.3 | 3.3 | 3.3 | 3.3 | ROAE (%) | 45.2 | 37.3 | 26.2 | 25.4 | ROAA (%) | 10.0 | 10.8 | 9.8 | 9.8 | EV/EBITDA (x) | 12.1 | 11.5 | 12.1 | 11.8 | Net debt/equity (%) | 194.5 | 100.0 | 93.2 | 83.4 |
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| | | | | | | | | | | | Share Price: | MYR3.54 | Target Price: | MYR3.70 | Recommendation: | Hold | | |
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| | | FY17 results boosted by tax credit | | Strong 4Q17 net profit was above expectations due to a substantial tax credit. However, FY18E earnings and DPS will be lower YoY given the normalisation of the tax rate. We have lowered our FY18 EPS forecast by 5% but maintain FY19 and introduce FY20. Consequently, our DCF-TP (WACC: 7.2%, 2025-2054 growth rate: 2%) is trimmed to MYR3.70 (-3%). Maintain HOLD, for the stock is trading at its one-year forward PER of 21x (mean) and its FY18E dividend yield of 3.4% is decent. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,804.3 | 1,715.9 | 1,811.2 | 1,956.8 | EBITDA | 963.5 | 929.7 | 987.2 | 1,086.3 | Core net profit | 616.6 | 675.5 | 543.5 | 619.2 | Core EPS (sen) | 18.1 | 19.8 | 15.9 | 18.2 | Core EPS growth (%) | 22.1 | 9.6 | (19.5) | 13.9 | Net DPS (sen) | 14.0 | 14.3 | 12.0 | 13.6 | Core P/E (x) | 19.6 | 17.9 | 22.2 | 19.5 | P/BV (x) | 5.8 | 5.3 | 5.0 | 4.7 | Net dividend yield (%) | 4.0 | 4.0 | 3.4 | 3.8 | ROAE (%) | 32.1 | 30.0 | 23.2 | 24.9 | ROAA (%) | 14.7 | 14.3 | 10.5 | 11.6 | EV/EBITDA (x) | 16.0 | 14.6 | 13.0 | 11.7 | Net debt/equity (%) | 35.3 | 41.3 | 33.6 | 25.9 |
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| | | | | | | | | | | | Share Price: | MYR1.47 | Target Price: | MYR1.95 | Recommendation: | Buy | | |
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| | | Faster loan growth in 3QFY18 | | 3QFY3/18 results were above expectations and our FY18-20 earnings forecasts are raised by 3-4%. Rolling forward valuations, we maintain our MYR1.95 TP on a lower PBV peg of 1.1x (1.3x previously) on a lower CY19E ROE of 15.9% (16.6% for CY18E before). BUY maintained – at our TP of MYR1.95, RCE would trade at an undemanding CY19 PER of just 7.5x while FY18E dividend yield of 4.1% provides support. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 120.9 | 166.7 | 187.6 | 204.1 | Pre-provision profit | 79.6 | 123.6 | 141.0 | 154.4 | Core net profit | 39.6 | 73.7 | 87.2 | 92.2 | Core EPS (MYR) | 0.12 | 0.24 | 0.23 | 0.24 | Core EPS growth (%) | 35.9 | 94.0 | (4.2) | 5.8 | Net DPS (MYR) | 0.46 | 0.03 | 0.06 | 0.07 | Core P/E (x) | 11.9 | 6.1 | 6.4 | 6.1 | P/BV (x) | 1.1 | 1.3 | 1.1 | 0.9 | Net dividend yield (%) | 31.0 | 2.0 | 4.1 | 4.4 | Book value (MYR) | 1.34 | 1.16 | 1.36 | 1.57 | ROAE (%) | 7.7 | 16.4 | 18.2 | 16.6 | ROAA (%) | 2.8 | 4.5 | 4.9 | 4.8 |
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| | MACRO RESEARCH | | | | | | Still on hold
by Suhaimi Ilias |
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| | | | | | At the first Monetary Board meeting for 2018, BSP kept the overnight borrowing rate at 3.00%, together with the overnight lending rate and overnight deposit rate which remained at 3.50% and 2.50% respectively. We maintained the outlook of two +25bps hikes in 2018. | |
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| | | | | | Dow Jones Index: Still Vulnerable to Downside Risk
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI rose 2.76pts to 1,839.44 yesterday, led by gains in HLFG, PTG and MISC. Market breadth remained positive with gainers outpacing losers by 577 to 365. A total of 2.05b shares worth MYR2.08b changed hands. Expect another round of selloff after Wall Street tanked on concerns over potential rate hike. Easing oil price could also weigh on sentiment. Trading could be choppy over the next 1-2 weeks as investors turn risk-off ahead of CNY. | |
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| NEWS | | | Outside Malaysia:
U.S: Jobless claims decline, approach an almost 45-year low. U.S. filings for unemployment benefits unexpectedly declined last week, hovering close to an almost 45- year low and signalling a tight job market, Labor Department figures showed. Jobless claims decreased by 9k to 221k. Four-week average, a less volatile measure than the weekly figure, fell to 224,500 -- lowest since 1973. Continuing claims declined by 33k to 1.92m in week ended Jan. 27. (Source: Bloomberg)
U.S: Easing mortgage standards are resulting in more late payments. Mortgage delinquencies for first-time buyers have climbed to a four-year high as tight credit standards imposed after the U.S. housing crash start to loosen. The share of borrowers who are late on their Federal Housing Administration loans, which primarily go to first-time homebuyers, rose to 10.4% YoY in the fourth quarter from 9% YoY, according to data from the Mortgage Bankers Association. While hurricanes in Florida and Texas near the end of last year played a part, delinquencies rose in most states, according to Marina Walsh, the group's vice president of industry analysis. Delinquencies are still historically low, yet the jump is surprising given that employment is strong and home prices are steadily increasing. (Source: Bloomberg)
E.U: ECB officials outline policy visions and shrug off volatility. European Central Bank officials toned down the alarm over recent market volatility while outlining their visions for a gradual end of ultra-accommodative monetary policy. "If the expansion progresses as currently expected, substantial net purchases beyond the announced amount do not seem to be required," Bundesbank President Jens Weidmann said on in a speech in Frankfurt. His colleague Peter Praet -- the ECB's chief economist -- cautioned against too much activism, saying policy normalization will be a "long, complex" process. Both officials signalled that the latest fluctuations observed in financial markets are not yet reason for concern. (Source: Bloomberg)
China: Exports hold up as commodities, base effects boost imports. China's overseas shipments held up despite trade tensions with the U.S., while import growth surged reflecting calendar effects and higher commodity prices. Exports rose 11.1% YoY in January in dollar terms while imports increased 36.9% YoY, leaving a USD 20.34b trade surplus, the customs administration said. (Source: Bloomberg)
Japan: Recorded another current-account surplus in December, closing out 2017 with the largest annual surplus since the global financial crisis. The current-account surplus was JPY797.2b (USD7.3b). Japan had a JPY21.87t surplus for the full year, the biggest since a JPY25t surplus in 2007.The primary income surplus in December was JPY614.8b. The surplus in goods trade was JPY538.9b. (Source: Bloomberg) | |
| | | | | Other News:
Building Materials: Malaysia to impose final affirmative anti-dumping duties for five years. The government has concluded the anti-dumping investigation concerning imports of cold-rolled stainless steel (CRSS) and decided to impose the final affirmative anti-dumping duties, effective for five years, from yesterday to Feb 7, 2023. The international trade and industry ministry (Miti) said the Royal Malaysian Customs Department would enforce the collection of anti-dumping duties from imports from China, South Korea, Taiwan and Thailand. (Source: The Edge Financial Daily)
Astro: Plans to invest MYR110m in JV with GMK. Astro's unit has proposed to invest MYR110m in a JV with Grup Majalah Karangkraf S/B (GMK) to provide content in Malaysia and Indonesia. Its wholly owned subsidiary Astro Digital S/B (ADSB) had entered into a conditional JV agreement with GMK and GMK's wholly owned unit KK360 for the creation and monetisation of content verticals in Malaysia and the Nusantara region. Under the JV agreement, ADSB would acquire a 51% interest in KK360 for MYR100m to be paid in tranches. (Source: The Star)
Daya Materials: Inks MoU with PNG Kumul Petroleum. Daya Materials has entered into a MoU with Kumul Petroleum Holdings Ltd (KPHL) for the provision of services and products to KPHL for oil and gas projects in Papua New Guinea (PNG). The MoU intends to reflect the intentions of both parties to participate in oil and gas project(s) in Papua New Guinea as a joint venture. The MoU is valid for a period of 12 months period from Feb 8, 2018, unless terminated by mutual consent. (Source: The Sun Daily)
Ge-Shen: Buys land, factory in Johor. Ge-Shen Corp is acquiring a piece of land measuring 0.383ha together with one unit of detached factory erected on it in Johor Baru for MYR6.3m. Its wholly owned subsidiary Ge-Shen Plastic (M) S/B had on Feb 8 entered into a sale and purchase agreement with Thunderflash Enterprise S/B for the acquisition. Ge-Shen has occupied the land on a lease basis for a cumulative duration of about 15 years and it has maintained its manufacturing facilities and production on the land. The proposed acquisition is pertinent to avoid the risk of the company's production getting halted and relocation cost for the factory upon the failure of renewal of lease. (Source: The Sun Daily) | |
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