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| | | | | | | | | | | | | | Share Price: | MYR1.29 | Target Price: | MYR1.25 | Recommendation: | Hold | | |
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| | | Cloudy skies ahead | | 4Q17 and 2017 results outperformed largely due to a positive deferred tax. The outlook for Star remains challenging as adex sentiment remains soft in a higher operating cost environment. Hence, we cut our FY18-FY20 earnings estimates by 1%-13%. Our DPS estimates are also lowered to 12sen (-3sen p.a.). Maintain HOLD with a lower SOP-based TP of MYR1.25 (from MYR1.47). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 932.1 | 674.5 | 508.0 | 506.4 | EBITDA | 162.1 | 90.3 | 96.4 | 98.1 | Core net profit | 69.9 | 60.6 | 47.9 | 52.5 | Core EPS (sen) | 9.5 | 8.2 | 6.5 | 7.1 | Core EPS growth (%) | (47.0) | (13.3) | (21.0) | 9.6 | Net DPS (sen) | 18.0 | 42.0 | 12.0 | 12.0 | Core P/E (x) | 13.6 | 15.7 | 19.9 | 18.1 | P/BV (x) | 0.8 | 1.1 | 1.2 | 1.2 | Net dividend yield (%) | 14.0 | 32.6 | 9.3 | 9.3 | ROAE (%) | 9.7 | 9.1 | 5.6 | 6.5 | ROAA (%) | 4.1 | 4.3 | 4.5 | 5.6 | EV/EBITDA (x) | 9.0 | 9.3 | 6.3 | 6.4 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | Keep rising
by Suhaimi Ilias |
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| | | | | | Both headline and core inflation rates accelerated in Feb 2018 to +4.5% YoY (Jan 2018: +4.0% YoY) and +4.4% YoY (Jan 2018: +3.9% YoY) reflecting the continued upward inflationary pressure from introduction of Package 1 of the tax reform measures. No change to our +4.3% full-year 2018 headline inflation rate for now. | |
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| | | | | | KLTEC Index: A Double Bottom in the Making?
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI rebounded yesterday, rising 5.75pts to 1,848.37, led by gains in NESZ, PMAH and MAXIS. Sentiment was lifted by the rally in Wall Street on Monday. Market breadth turned positive with gainers outpacing losers by 529 to 438. A total of 2.76b shares worth MYR2.78b changed hands. Despite yesterday's rebound, market could be choppy today on concerns over potential backlash from the US' trading partners in relation to Trump's proposed tariffs. | |
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| NEWS | | | Outside Malaysia:
E.U: Raises stakes for Trump by aiming levies at GOP heartland. The European Union is preparing punitive tariffs on iconic U.S. brands produced in key Republican constituencies, raising political pressure on President Donald Trump to ditch his plan for taxing steel imports. Targeting EUR2.8b (USD3.5b) of American goods, the EU aims to apply a 25% tit-for-tat levy on a range of consumer, agricultural and steel products imported from the U.S. if Trump follows through on his tariff threat, according to a list drawn up by the European Commission and obtained by Bloomberg News. The list of targeted U.S. goods -- including motorcycles, jeans and bourbon whiskey -- sends a political message to Washington about the potential domestic economic costs of making good on the president's threat. (Source: Bloomberg)
China: Economy is set to overtake combined Euro Area this year. In another sign that the "Asian century" has arrived, China is on course to overtake the euro area in the size of its economy this year. China's gross domestic product is forecast to reach about USD13.2tr in 2018, beating the USD12.8tr combined total of the 19 countries that use the euro, according to data compiled by Bloomberg. In 2017, the euro cohort edged China by less than USD200b. (Source: Bloomberg)
China: Xi Readies sweeping government overhaul to empower party. Chinese President Xi Jinping is preparing to extend a sweeping government overhaul that would give the Communist Party greater control over everything from financial services to manufacturing to entertainment in the world's second-largest economy, two people familiar with the matter said. The changes are part of a proposed "CPC leadership system" approved by the party on Feb. 28, the people said. Details of that document, which called for merging more than a dozen state agencies, are due to be revealed by March 17 when the National People's Congress -- China's rubber-stamp legislature – votes on the plan. (Source: Bloomberg)
Japan: BOJ may be thinking but not doing exit in 2019, Kuroda says. Governor Haruhiko Kuroda made clear that while the Bank of Japan may find itself thinking about exiting monetary stimulus in the 2019 fiscal year, this doesn't mean it will actually be doing it then. His comments, during a second confirmation hearing in Japan's parliament, follow remarks on March 2 that sent the yen surging and pushed yields on Japanese sovereign debt higher across the curve. "Right now it's too early to debate what tools we should use, and what kind of pace we should take," said Kuroda. Kuroda emphasized that he hadn't meant to imply that the BOJ would immediately make a change in the fiscal year starting in April 2019, when it forecast meeting its 2% inflation target. (Source: Bloomberg)
Russia: Inflation unexpectedly fails to quicken from record low. Russian price growth surprised in February by stalling at the lowest level in the country's modern history as an unprecedented period of disinflation draws to a close. Consumer prices rose 2.2% YoY while the core index, which strips out volatile energy and food items, also unexpectedly stayed at an annual record low of 1.9% YoY. The pieces are falling into place for the Bank of Russia to proceed with interest-rate cuts after saying last month that it may complete its move to looser monetary policy a year earlier than planned. Household inflation expectations for a year ahead, which the central bank calls a "pillar" of its rate decisions, slipped in February to a record low. (Source: Bloomberg) | |
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MMC Corp: MMC's Northport granted 30-year extension to concession for Port Klang. MMC Corp's indirect subsidiary Northport (Malaysia) has been granted a 30-year extension to its concession for Northport and Southpoint in Port Klang, which ended in Dec 1, 2013, following a privatisation agreement signed among the port services provider, the government and Port Kelang Authority (PKA) yesterday. The privatisation agreement signed yesterday, however, stated that Northport Malaysia will hold the concessions for both Northport and Southpoint until Nov 30, 2043, wherein it is authorised to provide as well as operate, maintain, manage and control port operations. (Source: The Sun Daily)
Berjaya Corp: Sells entire stake in DSG Holdings. Berjaya Corp (BCorp) is disposing its entire 85% stake in DSG Holdings Ltd, an investment holding company with water and wastewater treatment businesses in China, for MYR265.99m cash. Shareholders of DSG entered into an agreement with Besino Environment Ltd to dispose 100% stake in DSG for a total cash consideration of about MYR312.93m. The cash proceeds from the proposed disposal will be used for working capital. The proposed disposal would result in a pre-tax gain of about MYR108.29m for the group. The proposed disposal is expected to be completed by end of 2018. (Source: The Sun Daily)
Eita Resources: Bag contracts worth MYR126m for LRT3 project. Eita Resources has bagged three contracts totalling MYR126.19m for the supply of lifts and escalators for the LRT3 project. The contracts were awarded to its unit Eita Elevator (M) S/B by Prasarana Malaysia. One contract is for the supply and installation of escalators worth MYR70.55m, and the other two contracts are for the supply and installation of lifts worth MYR27.76m and MYR27.88m respectively. (Source: The Edge Financial Daily)
Aeon Credit: Appeals for judicial review of MYR97m tax. Aeon Credit Service (M) has filed an appeal to the Court of Appeal over the MYR96.82m in income tax and penalty imposed by the Inland Revenue Board (IRB), after its judicial review was dismissed by the High Court. It has filed a formal application for a stay against the enforcement of the notices of additional assessment to the High Court pending the disposal of its appeal, after an interim stay was granted by the High Court. Aeon Credit had on Jan 5 filed notices of appeal to the Special Commissioners of Income Tax with the director-general of Inland Revenue (DGIR) against the notices of additional assessment. However, it said on March 5, the High Court dismissed its application for judicial review. (Source: The Sun Daily) | |
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