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| | | | | | | | | | | | | | Share Price: | MYR1.37 | Target Price: | MYR1.45 | Recommendation: | Hold | | |
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| | | Foregoes placement exercise | | We are neutral on PavREIT's decision to abort its proposed placement as the DPU impact is marginal. However, we reduce our FY18-20 earnings forecasts by 1-7% after factoring in higher interest expenses. We also lower our TP by 15sen to MYR1.45 after tweaking our DDM-valuation's parameters. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 459.7 | 490.0 | 540.7 | 577.5 | Net property income | 314.8 | 322.9 | 355.3 | 377.9 | Distributable income | 248.8 | 249.7 | 263.7 | 270.9 | DPU (sen) | 7.4 | 7.4 | 7.8 | 8.0 | DPU growth (%) | 0.5 | 0.0 | 5.3 | 2.4 | Price/DPU(x) | 18.5 | 18.5 | 17.5 | 17.1 | P/BV (x) | 1.1 | 1.1 | 1.1 | 1.0 | DPU yield (%) | 5.4 | 5.4 | 5.7 | 5.8 | ROAE (%) | 8.0 | 6.3 | 6.2 | 6.3 | ROAA (%) | 4.5 | 4.1 | 4.1 | 4.0 | Debt/Assets (x) | 0.3 | 0.3 | 0.3 | 0.3 |
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| | SECTOR RESEARCH | | | | | | Uptrend continues in Feb | NEUTRAL
by Desmond Ch'ng |
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| | | | | | Positive trends continued into Feb 2018 as loan growth gathered pace to 4.5% YoY, with a pick-up in both household (HH) and non-HH loan growth. Bond issuances continued to be robust and overall credit growth was a faster 5.2% YoY. We maintain our Neutral call on the sector, with Alliance Bank, HLFG and BIMB being our BUYs. | |
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| | MACRO RESEARCH | | | | | | Money supply picked up on credit & external reserves
by Suhaimi Ilias |
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| | | | | | Money supply (M3) growth quickened to +4.9% YoY in Feb 2018 (Jan 2018: +4.6% YoY) on faster credit growth and higher external reserves which offset slower deposit growth and despite net outflows of portfolio capital amid net foreign selling in both equities and bonds. | |
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| | | | | | ASEAN Equity: Challenging Critical Resistance
by Nik Ihsan Raja Abdullah |
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| | | | | | We had earlier anticipated that the MXSO Index to be supported at its 100-day EMA line (refers to Regional Traders' Almanac dated 5 March 2018). True enough, the correction from 902.39 high hit a low of 860.90, forming a base near this moving average, which is also near the 61.8% Fibonacci Retracement level. Nevertheless, there is a slight concern here, i.e. the widely expected rebound did not take place, undermining the "Descending Triangle" pattern. | |
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| NEWS | | | Outside Malaysia:
U.S. Consumer spending settles back as inflation picks up. Consumer spending was off to a sluggish start after a late-2017 surge as firmer inflation took a bigger bite out of Americans' paychecks. A backdrop of robust labor conditions and elevated confidence, however, indicates the slowdown in household purchases will be short-lived. Adjusting for changes in prices, spending was little changed last month after a 0.2% January decline, the weakest two-month performance in four years, according to Commerce Department figures released. Other data showed unemployment claims fell last week to a 45-year low, while two measures of consumer confidence were close to the strongest in more than a decade. The moderation in purchases, and a gain in disposable income that drove the saving rate to its highest since August, is consistent with forecasts that real household demand will soften to a more sustainable pace this quarter following the biggest gain in three years. Consumption is nonetheless poised to gather pace in coming months amid some strong tailwinds: a tight job market, soaring confidence and bigger paychecks after the tax cuts. (Source: Bloomberg)
China: March factory gauge rebounds as export demand recovers. A gauge of activity at China's manufacturers posted its first gain since November, as factories recovered from a seasonal dip at the start of the year and export demand shrugged off threats of a trade war. The manufacturing purchasing manager's index rose to 51.5 in March versus 50.3 last month. The non-manufacturing PMI, covering services and construction, stood at 54.6, the statistics bureau said, compared with 54.4 in February. Industrial activity is helping the world's biggest exporter power through the uncertainty from President Donald Trump announcing fresh tariffs on USD50b of Chinese imports and Beijing's own retaliation against levies on metals. Overseas shipments surged in February on strong demand amid a synchronized global expansion. (Source: Bloomberg)
Japan: Industrial production rebounds in February, easing concerns about a slowdown in the nation's economy. Industrial production rose 4.1% in February from January, when it fell 6.8%. Year-on-year output climbed 1.4% YoY. The unemployment rate ticked up to 2.5%. The job-to-applicant ratio fell to 1.58 from 1.59. Prices in Tokyo, stripping out fresh food and energy, rose 0.8% in March. (Source: Bloomberg)
Japan: Business sentiment slips from highest since 2004. Confidence among Japan's large manufacturers slipped a little from the highest level in more than a decade during the first quarter as a strengthening currency clouded the profit outlook. Sentiment among large manufacturers fell to 24 from three months ago, according to the quarterly Tankan survey released by the Bank of Japan. The outlook among large manufacturers fell to 20. Large non-manufacturers' sentiment fell to 23. Large companies across all industries say they plan to raise fixed investment by 2.3% in the year through March 2019. (Source: Bloomberg) | |
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Sumatec: To build condensate extractions plant in Kazakhstan for MYR480m. Sumatec Resources has been given the right by Markmore Energy (Labuan) Ltd (MELL) to construct a condensate extractions plant (CEP) in Kazakhstan for USD120m (MYR480m). It intends to fund the cost through a rights issue to raise a minimum proceeds of USD40m (MYR160m), USD60m (MYR320m) of bank borrowings/internal cashflow and the balance USD20m (MYR80m) via inter-company offset. The plant facilities consist of a gas and liquid separator, contaminant removal unit , methane and ethane separation unit, CEP fractionation unit and propane and butane treater. It will be completed within 18 months from the date of signing of the gas supply agreement. (Source: The Sun Daily)
Minetech Resources: Unit inks 21-year power deal with TNB. Minetech Resources' 70%-owned subsidiary Coral Power S/B has entered into a 21-year power purchase agreement (PPA) with Tenaga Nasional (TNB) in relation to the generation and sale of solar photovoltaic energy to TNB's grib system at the Pantai Remis main distribution sub-station. The solar photovoltaic energy will be generated from its 9.99 MWac solar photovoltaic energy generating facility, which is to be located at Pengkalan Baharu, Manjung, Perak. The project is estimated to cost MYR62m, which will be financed via a combination of borrowings and shareholders' equity. (Source: The Sun Daily)
Felda Global Ventures: Claiming MYR45.2m outstanding payment from Safitex. Felda Global Ventures Holdings (FGV) subsidiary Delima Oil Products S/B (DOP) is seeking USD11.7m (MYR45.2m) from Safitex General Trading LLC in Dubai. DOP is also demanding 12% interest per annum from the date of the filing of the Safitex suit until payment is made in full. DOP has commenced legal proceedings against Safitex by filing a statement of claim in the Dubai Court of First Instance upon the receipt of a preliminary registration number for the purposes of reviewing the claim against Safitex. (Source: The Sun Daily) | |
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