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| | | | | | | | | | | | | | Share Price: | MYR1.60 | Target Price: | MYR1.44 | Recommendation: | Hold | | |
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| | | 1QFY18: Higher expenses | | 1QFY10/18 results were below expectations due mainly to higher-than-expected expenses related to its F&B project. Elsewhere, we understand that the construction of its new food processing and distribution facility remains on course and should be completed by end CY18. Imputing the results, we have lowered our earnings by 5% for FY18 but left FY19/20 unchanged. We maintain HOLD but with a lower TP of MYR1.44 (-6sen; based on 27.6x CY19; peer average). | | |
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| | FYE Oct (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 264.0 | 326.5 | 394.9 | 460.5 | EBITDA | 27.1 | 35.0 | 37.0 | 55.9 | Core net profit | 19.3 | 24.0 | 28.8 | 34.4 | Core EPS (sen) | 2.8 | 3.5 | 4.2 | 5.0 | Core EPS growth (%) | 42.6 | 24.6 | 19.6 | 19.6 | Net DPS (sen) | 0.7 | 0.9 | 1.1 | 1.3 | Core P/E (x) | 56.6 | 45.4 | 38.0 | 31.7 | P/BV (x) | 7.2 | 4.5 | 4.2 | 3.8 | Net dividend yield (%) | 0.4 | 0.6 | 0.7 | 0.8 | ROAE (%) | 17.4 | 12.2 | 11.4 | 12.5 | ROAA (%) | 12.7 | 9.8 | 9.6 | 10.5 | EV/EBITDA (x) | 19.2 | 20.1 | 28.5 | 18.8 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | SECTOR RESEARCH | | | | | | What is brewing? | NEUTRAL
by Liew Wei Han |
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| | | | | | 2018 looks to be a relatively better year for the brewers, taking cue from the recent uptick in consumer sentiment (MIER CSI), a major football event to support volumes, and the potential claw back of volumes on follow through of better enforcement effects since late CY17. Moreover, the brewers continue to focus their efforts on cost efficiencies. With the recent appreciation in share price, valuations are fair for now, in our view. We maintain NEUTRAL on the brewers. Our preference is for CAB. | |
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| | MACRO RESEARCH | | | | | | FBMKLCI Index: In a Consolidation Mode
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI fell 5.31pts to 1,859.91 yesterday, led by declines in ASTRO, YTL and PMETAL. Market breadth was negative with losers outpacing gainers by 589 to 334. A total of 1.98b shares worth MYR1.79b changed hands. As trade tensions eased and US markets rallied overnight, with major indices rising >2%, local stock market could snap a two-day decline. Bargain hunting activities will pick up and blue chips will likely take the center stage. | |
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| NEWS | | | Outside Malaysia:
U.S: Said to push China on cars and finance in tariff talks. The Trump administration is urging China to lower tariffs on cars and open its market to U.S. financial services as part of talks to resolve a rise in trade tensions that has shaken global markets, according to a person familiar with the matter. One of President Donald Trump's senior trade advisers says the president is seeking a nearly one-third narrowing of the U.S. trade deficit with China. Trump wants to see a USD100b reduction in America's trade deficit with China this year, as well as action on intellectual property. The U.S. had a USD337b trade shortfall in goods and services with China last year. (Source: Bloomberg)
U.K: London's housing market shows more signs of being in doldrums. -- A Hometrack report provided further signs that London's long housing boom is coming to an end. Prices across the capital will start falling by mid-year, the research company predicted, just two weeks after broker Savills Plc said values are already dropping at the fastest pace since the depths of the recession. Hometrack said that Brexit and tax changes aimed at slowing the rampant real estate market in London and the southeast are finally forcing vendors to cut asking prices. "This is a result of tax changes impacting overseas and domestic investors and stretched affordability for owner- occupiers that have been compounded by Brexit uncertainty," said Richard Donnell, insight director at Hometrack. "Prices are next to follow." (Source: Bloomberg)
Crude Oil: U.A.E. completes first of four Korean-built nuclear power plants. The United Arab Emirates, with help from Korea Electric Power Corp., finished building the Arab world's first commercial nuclear reactor, a milestone in the oil-rich U.A.E.'s effort to curb its reliance on fossil fuels and develop cleaner sources of energy. Unit 1 of the Barakah complex plans to begin loading fuel in May, South Korea's energy ministry said in an emailed statement. Saudi Arabia, the largest oil exporter, plans to build at least 16 nuclear reactors over the next 25 years at a cost of more than USD80b. The Saudis too see atomic energy as a way to ease their reliance on finite fossil fuels, but they're also driven by competition with their regional rival Iran. Opposition to a possible deal for the U.S. to provide nuclear power technology to Saudi Arabia is growing after Crown Prince Mohammed Bin Salman said the kingdom would develop a nuclear weapon if Iran did. (Source: Bloomberg) | |
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MRCB: Bags MYR11b related-party job for mixed project in Bukit Jalil. MRCB has bagged an MYR11b contract to undertake project management services for a proposed mixed development in Bukit Jalil. The proposed development, spanning 20 years, is expected to be a residential and commercial hub, with a plot ratio of 1:6.5. It will feature four development plots, which consist of office towers, hotels, retail shops and mall, small office/virtual office, small office/home office, serviced apartments and residential towers. MRCB's wholly owned subsidiary MRCB Land Sdn Bhd entered into the management contract with Bukit Jalil Sentral Property Sdn Bhd (BJSP), a related party, for the appointment of MRCB Land as the management contract for the design and construction of the mixed development to be carried out on three parcels of leasehold land. BJSP is a wholly-owned unit of Rukun Juang Sdn Bhd, which in turn is an 85%-owned subsidiary of MRCB Land. (Source: The Edge Financial Daily)
Sapura Energy: Announces new deals; share price rebounds. Sapura Energy yesterday announced additional new deals after bagging six contracts worth some MYR3b since early 2018. The group said it has cemented its foray into New Zealand with a series of farm-in agreements to five offshore exploration permits in the oil and gas region of the Taranaki Basin. All five offshore exploration permits are located in shallow waters within the prolific oil and gas region of the Taranaki Basin, where discovered volumes to date total more than 2.5b barrels of oil equivalent. The agreement provides access to a large acreage footprint of more than 8,900 square km. The value of yesterday's announced deals were not provided. (The Edge Financial Daily) | |
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