FW: AmBank Research - Power Root: Fundamentals are firmly rooted BUY, 27 Apr 2018

 

 

STOCK FOCUS OF THE DAY

Power Root: Fundamentals are firmly rooted                                                                                     BUY

 

We initiate coverage on Power Root with a BUY recommendation and a RM2.20 FV – based on 15x CY19F P/E, representing a 57% upside. It is pegged to its historical average P/E. An estimated dividend yield of 6.4%-8.7% is attractive as well. FY18 appears to be a blip year with externalities impacting earnings compounded by a corporate reshuffle, which has been unfairly perceived, in our opinion.

 

The fundamentals for Power Root are firmly intact, if not improving. Amongst the catalysts ahead are: 1) MENA region, which now accounts for 40% of revenue, with penetration levels remain unsaturated amidst a large captive market. It has consistently grown at an estimated CAGR of 25% over the past 3 years (FY15-FY18F); and ii) Realising past sacrifices. The previous commercial strategy was focused on market share accretion, which Power Root has successfully achieved over the years by ploughing into A&P. Management envisions Power Root to transition into realising past commercial investment sacrifices, which we think will benefit the bottom line.

 

Others :

Bumi Armada: Front-runner for massive Zabazaba FPSO charter                                                BUY

Ikhmas Jaya: FY17 headline net profit restated, down by 52%                                                     BUY

LPI Capital: Higher claims and commission ratio                                                                                  HOLD

Malayan Banking: NIM expansion but loan growth likely to be softer for 1QFY18                HOLD

Telecommunication: Minimal impact from new Celcom wireless broadband                         NEUTRAL

 

 

RETAIL RESEARCH

Stocks On Radar: IJM Corporation, T7 Global, Sino Hua-An International, Ancom

       

 

ECONOMIC HIGHLIGHT

EU: ECB keeps interest rates unchanged

 

 

 

NEWS HIGHLIGHTS

Unisem: Short selling not to be blamed

Digital economy: Tencent to set up data centre in Cyberjaya

PPB Group: To buy LTAT’s 16.8% stake in Hillcrest for RM59.06m

Property Sector: Bukit Damansara properties sold at fair value

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

****************************************************************************************************************************************************************************************************************************************************************************************************************

DISCLAIMER:

This message may contain confidential and privileged information for its intended recipient(s) only. If you are not an intended recipient, you are hereby notified that any review, dissemination, and distribution, printing or copying of this message or any part thereof is strictly prohibited. Please delete the entire message and inform the sender of the error. Any opinions, conclusions and other information in this message that are unrelated to official business of AmBank Group are those of the individual sender and shall be understood as neither explicitly given nor endorsed by AmBank Group.

****************************************************************************************************************************************************************************************************************************************************************************************************************