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| | | | | | | | | | | | | | Share Price: | MYR5.12 | Target Price: | MYR5.80 | Recommendation: | Buy | | |
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| | | 2QFY18: Above expectations | | 1HFY18 net earnings were above ours/consensus expectations. YoY growth was supported by i) acceleration in KVMRT 2 works and ii) strong property sales. We raise FY18E-FY20E earnings by 8%-9% after adjusting for higher works recognition and margins for the KVMRT 2 and Pan Borneo Sarawak Highway. Our RNAV-based TP is raised to MYR5.80 (+4%) after rolling forward our valuation base year for LDP, KESAS and SPRINT. Valuations are undemanding at 14x FY19 PER (-1.5 SD). | | |
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| | FYE Jul (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,121.9 | 3,211.4 | 4,164.5 | 4,320.6 | EBITDA | 548.5 | 831.2 | 883.9 | 990.4 | Core net profit | 626.1 | 700.6 | 832.1 | 887.6 | Core EPS (sen) | 26.0 | 28.8 | 34.3 | 36.5 | Core EPS growth (%) | (10.2) | 11.0 | 18.8 | 6.7 | Net DPS (sen) | 12.0 | 12.0 | 12.0 | 12.0 | Core P/E (x) | 19.7 | 17.8 | 14.9 | 14.0 | P/BV (x) | 1.8 | 1.7 | 1.6 | 1.5 | Net dividend yield (%) | 2.3 | 2.3 | 2.3 | 2.3 | ROAE (%) | 9.5 | 8.4 | 10.8 | 10.7 | ROAA (%) | 4.6 | 4.7 | 5.1 | 5.2 | EV/EBITDA (x) | 29.0 | 21.5 | 20.3 | 17.5 | Net debt/equity (%) | 55.2 | 59.8 | 60.7 | 48.2 |
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| | | | | | | | | | | | Share Price: | MYR3.74 | Target Price: | MYR4.45 | Recommendation: | Buy | | |
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| | | FPSO CRD off the card? | | There is a possibility that PetroVietnam may instruct Repsol to call off the USD1b 10+5-year CRD FPSO charter, awarded to Yinson-PTSC last year. Should this happen, Yinson will incur: (i) the loss of income from FY21 and (ii) a 24 sen/shr impact to TP but it is entitled to a full recovery of cost for the FPSO currently under refurbishment. Last Friday's fall in share price, in our view, has priced in this CRD effect. | | |
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| | FYE Jan (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,038.6 | 764.2 | 1,000.5 | 1,139.7 | EBITDA | 261.0 | 283.8 | 560.9 | 697.6 | Core net profit | 173.1 | 219.5 | 375.3 | 340.5 | Core EPS (sen) | 16.2 | 20.6 | 35.2 | 31.9 | Core EPS growth (%) | 17.5 | 26.8 | 71.0 | (9.3) | Net DPS (sen) | 1.5 | 16.8 | 10.4 | 10.0 | Core P/E (x) | 23.1 | 18.2 | 10.6 | 11.7 | P/BV (x) | 1.8 | 1.7 | 1.3 | 1.2 | Net dividend yield (%) | 0.4 | 4.5 | 2.8 | 2.7 | ROAE (%) | 12.0 | 8.5 | 13.7 | 10.7 | ROAA (%) | 4.8 | 3.9 | 5.6 | 4.8 | EV/EBITDA (x) | 15.6 | 21.4 | 11.2 | 8.5 | Net debt/equity (%) | 51.9 | 114.7 | 72.9 | 54.9 |
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| | MACRO RESEARCH | | | | | | Asian Equities: Into Defensive Mode
by Nik Ihsan Raja Abdullah |
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| | | | | | MSCI Asia Ex. Japan Index (MXASJ Index) continued to head south amid trade war concerns. As sentiment turns bearish, at least in the near-term, investors may want to go defensive. Utility seems to be the best bet, we reckon. The MSCI Asia ex. Japan Utilities Index (MXASJUT Index) has underperformed the benchmark since 2016. In term of relative strength, the utility index is also trading at the "cheapest" level over the past ten years. | |
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| NEWS | | | Outside Malaysia:
U.S: Reach agreement with South Korea on trade, steel tariffs. The U.S. and South Korea reached an agreement on revising the allies's six-year-old bilateral trade deal and President Donald Trump's plan to impose tariffs on imported steel, Treasury Secretary Steven Mnuchin said. Mnuchin said U.S. Trade Representative Robert Lighthizer reached "a very productive understanding" with South Korea on the tariffs to reduce imports and the existing trade deal known as Korus. Mnuchin called the agreement "an absolute win-win." Trade Minister Kim Hyun-chong, arriving back in South Korea from a meeting with counterparts in the U.S. Treasury, also said trade negotiators from the two countries agreed "in principle" on both issues. (Source: Bloomberg)
China: Talks tough on trade war, warns U.S. of countermeasures. Chinese officials and state media said the country will defend itself in a trade war, warning that President Donald Trump's tariff plans could backfire on the United States. Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin in a phone call that Washington's investigation into alleged Chinese infringement of U.S. intellectual property violates international rules and will harm the interests of both countries, the official Xinhua News reported. "China is prepared and has the ability to defend its national interests," Liu was cited as saying. Liu, top economic counselor to President Xi Jinping, urged both countries to work together and ensure the overall stability of China-U.S. trade and economic ties, according to Xinhua. (Source: Bloomberg)
Crude Oil: Extends rally as Saudis intercept missiles fired from Yemen. Oil extended gains as Saudi Arabia said it intercepted ballistic missiles fired by Houthi forces in Yemen, marking an escalation from previous rocket launches at the kingdom. The missiles were intercepted over Riyadh and other cities, according to the Saudi Press Agency and state television El-Ekhbariya. Concern over a conflict with the world's largest crude exporter overshadowed a pickup in drilling in the U.S., where rigs targeting oil expanded by four to 804, according to Baker Hughes data released. Oil jumped 5.7% last week after President Donald Trump appointed John Bolton as national security adviser, signaling the U.S. may be turning to a harder line on Iran, one of the Organization Petroleum Exporting Countries' biggest producers. Brent for May settlement was USD71.05/bbl. (Source: Bloomberg) | |
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Pesona Metro: Bags MYR216.38m affordable housing job. Pesona Metro Holdings has clinched a MYR216.38m contract from Gaya Kuasa S/B to provide mechanical and electrical services, external works, landscape and ancillary works for an affordable housing project in Bukit Jalil, Kuala Lumpur. The project comprises two building blocks involving 1,260 apartment units and a block of eight-storey parking lot. It is slated to go on for a period of 32 months from July 1 onwards. (Source: The Sun Daily)
Melati Ehsan: Awarded two-year money lending license. Melati Ehsan Holdings' wholly owned subsidiary Melati Ehsan Capital S/B (MECSB) has obtained a two-year money lending license from the Urban Wellbeing, Housing and Local Government Ministry. The license, which is governed by the Moneylenders Act 1951, is valid from March 15, 2018 to March 14, 2020. It is renewable for every two years. (Source: The Sun Daily)
Lay Hong: To invest MYR16.6m in liquid egg processing facility in Pasir Gudang. Lay Hong will invest MYR16.6m for a new pasteurised liquid eggs processing facility in Iskandar Halal Park, Pasir Gudang, Johor to cater the needs of the southern region and Singapore market as well as addressing logistics costs. The investment will include the purchase of a semi detached factory from Tentu Teguh S/B for MYR5.2m. The project is expected to be completed within six to seven months upon delivery of certificates of fitness from the developer. (Source: The Sun Daily) | |
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