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| | | | | | | | | | | | | | Share Price: | MYR2.10 | Target Price: | MYR2.80 | Recommendation: | Buy | | |
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| | | Took a short breather | | 3QFY4/18 and 9MFY4/18 core earnings disappointed. That said, 9MFY4/18 EBITDA was in-line. 3QFY4/18 Sports Toto Malaysia gross NFO revenue/draw eased -1% YoY (9MFY4/18: +1% YoY) but this was due more to Chinese New Year timing. We trim our EPS estimates by 6-7% and our DPS estimates by 5-6%. Yet, BST still offers attractive dividend yields of >7.6% p.a.. Rolling forward our valuation base year to end-FY4/19 from FY4/18, our SOP-based TP is trimmed -3% to MYR2.80. Maintain BUY. | | |
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| | FYE Apr (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,563.2 | 5,731.4 | 5,465.8 | 5,528.7 | EBITDA | 496.4 | 436.5 | 494.6 | 502.9 | Core net profit | 308.6 | 252.0 | 275.7 | 283.2 | Core EPS (sen) | 22.9 | 18.7 | 20.5 | 21.0 | Core EPS growth (%) | (10.3) | (18.3) | 9.4 | 2.7 | Net DPS (sen) | 19.0 | 14.0 | 16.0 | 16.4 | Core P/E (x) | 9.2 | 11.2 | 10.3 | 10.0 | P/BV (x) | 3.7 | 3.7 | 3.4 | 3.2 | Net dividend yield (%) | 9.0 | 6.7 | 7.6 | 7.8 | ROAE (%) | 42.5 | 30.9 | 34.6 | 33.0 | ROAA (%) | 12.6 | 9.6 | 10.5 | 11.1 | EV/EBITDA (x) | 9.7 | 10.5 | 7.2 | 6.9 | Net debt/equity (%) | 73.5 | 93.1 | 76.1 | 62.6 |
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| | SECTOR RESEARCH | | | | | | Mildly positive on revised Guidelines | NEUTRAL
by Kevin Wong |
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| | | | | | We are mildly positive on the revised REITs Guidelines which allow property development for M-REITs, amongst other changes/additions. This new property development ruling is within our expectations and it could benefit selected M-REITs. We remain NEUTRAL on the sector and our selective BUYs are IGBREIT, SunREIT, CMMT, YTLREIT and MQREIT. | |
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| | MACRO RESEARCH | | | | | | S&P 500 Index vs. VIX Index: Risk of a Big Correction is Low
by Nik Ihsan Raja Abdullah |
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| | | | | | Despite recent correction, we believe the long-term uptrend for S&P 500 Index is intact. Swift rebound from the 2,533 low was followed by a series of higher highs and higher lows formation. The recovery from 1SD below the linear regression channel suggests that selling pressure has normalized. Note that VIX Index has also peaked near 40pts, indicating easing volatility. As RSI is now trading above its average, we expect buying momentum to pick up. | |
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| NEWS | | | Outside Malaysia:
U.S: China holdings of treasuries drop to six-month low as investors soured on U.S. fixed-income securities and the dollar at the start of the year. China's portfolio of U.S. bonds, notes and bills sank to USD1.17tr in January from USD1.18tr a month earlier, according to Treasury Department data released. China remains the largest foreign creditor to the U.S., followed by Japan, whose holdings rose for the first month since July, to USD1.07tr from USD1.06tr. Overall, foreign ownership of Treasuries receded in January for a third straight month, falling to USD6.26tr, after reaching a record-high USD6.32tr in October. (Source: Bloomberg)
E.U: ECB pleased investor views on stimulus exit aligned with their own view. European Central Bank officials told investors from around the world that they're right to bet on a gradual reduction of monetary stimulus in the euro area. On the eve of a Group of 20 meeting of finance chiefs in Buenos Aires, Governing Council members Klaas Knot and Francois Villeroy de Galhau expressed confidence that inflation in the 19-nation region is making progress in reaching the institution's goal amid robust and broad-based economic growth. (Source: Bloomberg)
E.U: ECB's Knot says Euro-Area outlook 'almost as good as it gets'. European Central Bank Governing Council member Klaas Knot says "the outlook is almost as good as it gets" for the euro-area economy. Region is "projected to continue this firm path of growth" over forecast period. He however sees some clouds on the horizon in the medium term. We believe the output gap has closed at the end of last year" and we're now in expansionary territory. He went on the further caution against relying too much on central-bank stimulus. (Source: Bloomberg)
Crude Oil: Holds as Russia commits to seeing OPEC pact through. Russia committed to seeing its pact with OPEC through to completion, whether that means starting discussions about a phase-out at the next meeting in June or prolonging output cuts into 2019, Energy Minister Alexander Novak says. Iraq's Basra oil output to reach 3.5m b/d by year-end from 3.15m b/d currently Ihsan Abdul Jabbar, director-general of Basra Oil, says. U.S. oil explorers resumed their drilling binge amid rising expectations that worldwide supplies will fall shy of demand later this year. Brent for May delivery was to USD66.09/bbl on ICE Futures Europe exchange. (Source: Bloomberg) | |
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MWE Holdings: To take MWE Holdings private. MWE Holdings' substantial shareholder Pinjaya S/B has proposed to take the company private via a capital reduction and repayment exercise. The company said in a Bursa Malaysia filing, that the offerors and the parties acting in concert collectively hold 32.62% equity interest in the company. Under the proposal, a total of MYR276.73m will be paid to entitled shareholders holding the 158.13m shares in MWE at an offer price of MYR1.75 per share. The cut off period for the acceptance of the offer had been set for 5.00 pm on April 16. (Source: The Sun Daily)
PRG Holdings: Manufacturing arm reports 29% rise in FY17 net profit. Hong Kong-listed manufacturing arm, Furniweb Holdings Ltd, reported a 28.6% YoY rise in net profit for the year ended Dec 31, 2017 (FY17) to MYR8.57m from MYR6.67m, mainly due to a gain on the disposal of a subsidiary. Revenue grew 12.1% YoY to MYR109.75m from MYR97.94m, as sales volume grew at both its elastic yarn and webbing segments. PRG booked in a gain on disposal of part of the group's interest in Furnitech Components (Vietnam) Co Ltd of MYR6.8m during the year, besides listing expenses of MYR7.2m. (Source: The Edge Financial Daily)
Golden Land: Buys another plot in East Kalimantan. The group plans to acquire a third piece of land — measuring 1,625ha — in the Sandaran district in Indonesia's East Kalimantan province, via a 95%-indirectly owned unit. Golden Land said the unit has inked an agreement with an Indonesian company to assist in obtaining the required documents — including the land use rights — and to help in resolving issues, claims, disputes, and clearing of the land, within 36 months from the signing date. (Source: The Edge Financial Daily) | |
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