Friday, March 30, 2018

FW: [Maybank IB] Today's Research - Malaysia

 

 

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COMPANY
RESEARCH

Top Glove | Miniscule acquisition
Yen Ling Lee

Yinson Holdings | Results, DPS & FPSO Lam Son
Thong Jung Liaw

Eco World Development | Expect stronger 2HFY18
Wei Sum Wong

Eco World International | Results in line; higher sales target
Wei Sum Wong

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COMPANY RESEARCH

Malaysia

Company Update

Top Glove (TOPG MK)
by Yen Ling Lee

Share Price:

MYR9.75

Target Price:

MYR9.85

Recommendation:

Hold

Miniscule acquisition

Top Glove is buying a small medical supplies manufacturer for MYR3m cash (0.02% of Top Glove's market cap). We are neutral on the deal as the acquisition multiple is low at historical 5x PER, but will have insignificant impact to Top Glove's earnings (<0.1% to our projected FY8/19 net profit). Maintain our earnings forecasts, HOLD call and TP of MYR9.85 (25x PER; +2SD to mean).

FYE Aug (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,888.5

3,409.2

4,188.5

5,084.2

EBITDA

523.3

485.0

662.5

825.4

Core net profit

361.1

332.7

442.9

511.3

Core EPS (sen)

28.9

26.5

35.1

40.1

Core EPS growth (%)

27.9

(8.0)

32.3

14.1

Net DPS (sen)

14.5

14.5

17.6

20.0

Core P/E (x)

33.8

36.7

27.8

24.3

P/BV (x)

6.7

6.1

5.5

5.0

Net dividend yield (%)

1.5

1.5

1.8

2.1

ROAE (%)

21.1

17.4

20.9

21.7

ROAA (%)

13.5

11.9

11.5

10.6

EV/EBITDA (x)

9.6

14.4

20.8

16.7

Net debt/equity (%)

net cash

net cash

64.4

53.8

Malaysia

TP Revision

Yinson Holdings (YNS MK)
by Thong Jung Liaw

Share Price:

MYR3.76

Target Price:

MYR4.30

Recommendation:

Buy

Results, DPS & FPSO Lam Son

FY1/18 core earnings came in below our estimate, on lower-than-expected 4Q18 but in line with consensus. Yinson declared 6 sen DPS in 4Q18 (FY18: 10sen) and announced the FPSO Lam Son interim contract value, which adds 9sen to SOP-based TP. In the near term, we see further upside to earnings/ NPV as details on FPSO Layang are to be announced. Tender prospects are strong in 2018, a mid-term positive surprise. BUY.

FYE Jan (MYR m)

FY17A

FY18A

FY19E

FY20E

Revenue

764.2

910.2

1,113.4

1,114.1

EBITDA

283.8

645.0

771.4

771.7

Core net profit

219.5

341.6

294.0

279.2

Core EPS (sen)

20.6

31.4

26.9

25.5

Core EPS growth (%)

26.8

52.6

(14.3)

(5.1)

Net DPS (sen)

16.8

10.0

10.0

10.0

Core P/E (x)

18.3

12.0

14.0

14.7

P/BV (x)

1.7

1.6

1.5

1.4

Net dividend yield (%)

4.5

2.7

2.7

2.7

ROAE (%)

8.5

11.6

10.8

9.6

ROAA (%)

3.9

5.3

4.4

4.0

EV/EBITDA (x)

21.4

10.8

8.0

7.7

Net debt/equity (%)

114.7

90.1

72.9

57.3

Malaysia

TP Revision

Eco World Development (ECW MK)
by Wei Sum Wong

Share Price:

MYR1.00

Target Price:

MYR1.57

Recommendation:

Buy

Expect stronger 2HFY18

ECW's 1QFY10/18 net profit (+13% YoY) was within expectations and we expect earnings to pick up strongly in 2HFY18 with maiden profits from its 27% associate, ECWI (ECWI MK, HOLD). 4MFY18 locked-in sales of MYR602m were however below expectations due to seasonal factors and the lack of new launches. We maintain our earnings forecasts but lower our RNAV-TP to MYR1.57 (-14sen) on a lower P/RNAV peg of 0.55x (0.60 previously) as the sector enters another challenging year. Maintain BUY.

FYE Oct (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,546.4

2,924.7

3,862.2

4,821.5

EBITDA

595.1

605.6

687.3

883.8

Core net profit

129.3

113.1

169.8

325.3

Core EPS (sen)

5.4

3.9

5.8

11.0

Core EPS growth (%)

105.9

(28.1)

47.5

91.6

Net DPS (sen)

0.0

0.0

0.0

1.1

Core P/E (x)

18.4

25.6

17.3

9.1

P/BV (x)

0.6

0.7

0.7

0.6

Net dividend yield (%)

0.0

0.0

0.0

1.1

ROAE (%)

na

na

na

na

ROAA (%)

1.6

1.2

1.6

2.8

EV/EBITDA (x)

9.3

12.4

8.9

6.9

Net debt/equity (%)

60.4

71.4

71.7

67.0

Malaysia

Results Review

Eco World International (ECWI MK)
by Wei Sum Wong

Share Price:

MYR1.03

Target Price:

MYR1.10

Recommendation:

Hold

Results in line; higher sales target

EWI's 1QFY10/18 core net loss of MYR21m (-50% YoY) was in line but sales were below expectations due to the lack of new launches. Management has raised its sales target from MYR2.5b to MYR3b post- Wilmott Dixon (WD)'s Stage 1 acquisition. 2018 will be the tipping point for EWI with the handover of Blocks A & M at London City Island as well as Block A04 at Embassy Garden from April 2018 onwards. We maintain our earnings forecasts, RNAV-TP of MYR1.10 (0.75x P/RNAV) and HOLD rating for now.

FYE Oct (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

0.7

0.5

0.6

0.6

EBITDA

(37.6)

(53.3)

(89.1)

(91.1)

Core net profit

(220.1)

(87.6)

173.7

383.2

Core EPS (sen)

(89.3)

(5.8)

7.2

16.0

Core EPS growth (%)

nm

nm

nm

120.6

Net DPS (sen)

0.0

0.0

0.0

4.0

Core P/E (x)

nm

nm

14.2

6.5

P/BV (x)

2.4

0.6

0.9

0.8

Net dividend yield (%)

0.0

0.0

0.0

3.9

ROAE (%)

(408.0)

(6.6)

6.6

13.5

ROAA (%)

(35.9)

(4.5)

6.2

12.8

EV/EBITDA (x)

na

nm

nm

nm

Net debt/equity (%)

803.5

net cash

net cash

net cash

MACRO RESEARCH

MY: Traders' Almanac

NASDAQ – Formed a Reversal "Morning Star" Pattern
by Nik Ihsan Raja Abdullah

Technical Research

FBMKLCI slipped 1.52pts to 1,856.35 yesterday, led by declines in PMETAL, TM and GENT. Broader market remained negative with losers outpacing gainers by 546 to 330. A total of 1.88b shares worth MYR2.09b changed hands. After falling for two consecutive days, FBMKLCI is poised for a rebound today. The rally in overnight US markets should lend support to the local bourses.

NEWS

Outside Malaysia:

U.S: Consumer sentiment surges to highest since 2004. Consumer sentiment in March reached the highest level since 2004 as a solid labor market and growth expectations offset concerns about tariffs and stock-market volatility, a University of Michigan survey showed. Highlights of Michigan Sentiment (March, final) Sentiment index rose to 101.4 from 99.7 in Feb.; preliminary March reading was 102. Current conditions gauge, which measures Americans' perceptions of their finances, advanced to a record 121.2 (prelim. 122.8), from 114.9 in Feb. Expectations measure decreased to 88.8 (prelim. 88.6), from 90 in Feb. (Source: Bloomberg)

U.S: Trump may delay Seoul's trade pact until North Korea resolved. President Donald Trump said he may delay a revamped trade deal the U.S. reached with South Korea this week until after the nuclear confrontation with North Korea is resolved. "I may hold it up until after a deal is made with North Korea," Trump said during a speech in Richfield, Ohio. "You know why? Because it's a very strong card and I want to make sure everyone is treated fairly and we're moving along very nicely with North Korea." The new agreement was reached as Trump has been planning to meet with Kim Jong Un, the North Korean leader, later this spring. The president will need the support of the Seoul government in negotiations to get Kim to abandon his nuclear ambitions. (Source: Bloomberg)

Germany: Unemployment extended its decline in March as companies in Europe's largest economy boosted their labor force to keep up with bulging order books. The jobless rate dropped to a record low of 5.3% in March, the Federal Labor Agency in Nuremberg said. The number of people out of work plunged a seasonally adjusted 19,000 to 2.373 million. Germany has been a key beneficiary of buoyant global trade and domestic spending, and the Bundesbank says the economy's strong upturn probably continued in the first quarter of this year. While sentiment indicators have recently taken a hit amid mounting fears over U.S. protectionism, the high volume of orders accumulated in the second half of last year is likely to support manufacturing activity for now, according to the central bank. (Source: Bloomberg)

U.K: The strain on consumers from faster inflation, sluggish wage growth and Brexit uncertainty continues to take its toll on the economy, with house prices falling and spending weak. Nationwide Building Society said home values fell for a second straight month in March, and the Bank of England reported a bigger-than-forecast decline in mortgage approvals. Detailed statistics for the end of 2017 spelled out why households are under pressure, with real disposable incomes falling for the first time in almost a year. (Source: Bloomberg)

Japan: February factory output rebounded from a slump in the previous month, alleviating concern over a slowdown in the nation's economic growth. Industrial production rose 4.1% in February from January, when it fell 6.8%.Year-on-year output climbed 1.4% YoY. While industrial production has supported Japan's recent run of economic expansion, a slump in January stoked concern that growth may be hitting a speed bump. The tightest labor market in decades and record corporate profits have caused wages to rise somewhat, but it has yet to spur consumer spending and inflation significantly, leaving the economy dependent on exports. These slowed in February, partly due to a drop in sales to China because of the Lunar New Year holidays there. (Source: Bloomberg)

:

Metronic: Bags MRT contract. Metronic Global's wholly owned subsidiary Metronic Engineering S/B (MESB) bagged a MYR50m contract from Mass Rapid Transit Corp (MRT Corp) to serve as the primary contractor for the Building Management System For Underground Works of the Sungai Buloh – Serdang-Putrajaya MRT line. The contract alone is more than 125% of the company's latest annual published consolidated revenue. The job scope entails designing, supplying, installing, testing and commissioning of the Building Management System. The contract started in March 2018 and will be completed by July 2021. The group will fund the contract via internally generated funds and or existing working capital lines. (Source: The Sun Daily)

Sapura Energy: Sapura Energy and partners win hard-fought block in Mexico. A consortium in which Sapura Energy has a 30% stake has outbid six other bidders for an offshore oil block in Mexico. The consortium has been awarded Block 30 in Sureste Basin, a proven and prolific hydrocarbon province in the Gulf of Mexico. The basin is located about 70m, directly southwest of Premier Oil's world-class Zama discovery and to the north of the Amoca oil field. Its wholly-owned Sapura Exploration and Production S/B partners in the consortium are DEA Deutsche Erdoel Mexico (40%) and Premier Oil Plc (30%). (Source: The Edge Financial Daily)

Ekovest: Shareholders say no to take over offer for Iskandar Waterfront City. Ekovest shareholders have rejected the proposed take over offer for Iskandar Waterfront City Bhd for MYR1.50 per share. Independent adviser BDO Capital Consultants S/B has advised that the cash option for the take over offer is "not fair but reasonable" while the share exchange option is "fair and reasonable". (Source: The Sun Daily)

Farlim: Proposes 1-for-5 bonus issue. Farlim Group (Malaysia) has proposed a bonus issue of 28.07 million bonus shares on the basis of one bonus share for every five existing Farlim shares. The exercise will allow the company to utilise the amount standing to the credit of its share premium account as provided for under Section 618(3) of the Act, following the implementation of the no par value regime. The exercise is expected to be completed by the third quarter of 2018. (Source: The Sun Daily)

Prestariang: Bags MYR38m contract to supply software licences to IRB. The contract is under extended master licensing agreement (MLA) – a centralised procurement contract that allows all government agencies to purchase Microsoft products and services through Prestariang. The MLA will last for three years. Its wholly-owned subsidiary, Prestarian Systems S/B, received the letter of award on Wednesday. (Source: The Edge Financial Daily)

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