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| | | | | | | | | | | | | | Share Price: | MYR0.94 | Target Price: | MYR1.25 | Recommendation: | Buy | | |
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| | | Buys land in Kepong | | We are positive on UEMS' latest land purchase in Kepong via a 50%-owned JV company for the attractive land cost and strategic location, which will be supported by two interchanges later. More importantly, the new land will help to reduce its dependency on Iskandar Malaysia projects. We estimate a 10sen enhancement to our RNAV/shr. We maintain our earnings forecasts and MYR1.25 TP (0.45x P/RNAV) for now but upgrade our call to a tactical BUY after the recent sell down on property stocks. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,841.5 | 2,903.4 | 1,811.4 | 2,034.0 | EBITDA | 221.9 | 507.4 | 502.1 | 504.3 | Core net profit | 144.8 | 278.2 | 222.2 | 277.9 | Core FDEPS (sen) | 2.8 | 5.4 | 4.3 | 5.4 | Core FDEPS growth(%) | (45.8) | 92.1 | (20.1) | 25.1 | Net DPS (sen) | 0.0 | 1.0 | 1.0 | 1.1 | Core FD P/E (x) | 33.3 | 17.3 | 21.7 | 17.4 | P/BV (x) | 0.6 | 0.6 | 0.6 | 0.6 | Net dividend yield (%) | 0.0 | 1.1 | 1.1 | 1.2 | ROAE (%) | na | na | na | na | ROAA (%) | 1.1 | 2.0 | 1.5 | 1.8 | EV/EBITDA (x) | 36.3 | 16.7 | 18.0 | 18.3 | Net debt/equity (%) | 40.7 | 45.9 | 58.5 | 59.1 |
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| | | | | | | | | | | | Share Price: | MYR4.48 | Target Price: | MYR4.80 | Recommendation: | Hold | | |
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| | | Generally solid | | 1Q18 results were in line with our/consensus expectations, with MFRS 15 resulting in a MYR34m earnings uplift. Management has maintained its seemingly conservative 2018 revenue guidance despite having achieved growth in 1Q18. Maintain HOLD with an unchanged MYR4.80 TP. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 6,597.1 | 6,340.5 | 6,540.6 | 6,734.6 | EBITDA | 2,954.9 | 2,879.7 | 2,943.3 | 3,030.6 | Core net profit | 1,632.7 | 1,476.7 | 1,495.2 | 1,555.6 | Core EPS (sen) | 21.0 | 19.0 | 19.2 | 20.0 | Core EPS growth (%) | (5.2) | (9.6) | 1.3 | 4.0 | Net DPS (sen) | 20.9 | 18.8 | 19.2 | 20.0 | Core P/E (x) | 21.3 | 23.6 | 23.3 | 22.4 | P/BV (x) | 67.1 | 67.2 | 67.2 | 67.2 | Net dividend yield (%) | 4.7 | 4.2 | 4.3 | 4.5 | ROAE (%) | 314.4 | 284.5 | 288.3 | 299.9 | ROAA (%) | 32.1 | 26.1 | 25.5 | 26.2 | EV/EBITDA (x) | 13.4 | 14.5 | 12.6 | 12.2 | Net debt/equity (%) | 366.9 | 410.5 | 423.9 | 411.1 |
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| | SECTOR RESEARCH | | | | | | Expect a slower start in 2018's results season
by Chee Ting Ong |
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| | | | | | With the exception of IOI, 1Q18 earnings, to be released in May, will most likely be weaker YoY for Malaysian planters (especially Sarawak-based) as output recovery fails to compensate for the sharply lower CPO and PK ASPs. Refineries will likely be in the red, but IOI and KLK's oleo segments look promising. And the stronger MYR in 1Q18 is set to benefit IOI yet again given its USD debt exposures. We maintain our NEUTRAL call on the sector with selected BUYs on IOI, GENP, and SOP. | |
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| | MACRO RESEARCH | | | | | | ASEAN Equities: Recovery from Critical Support
by Nik Ihsan Raja Abdullah |
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| | | | | | We had earlier expected MSCI AC ASEAN Index (MXSO Index) to ease towards 848-850 support zone (refers to Regional Traders' Almanac dated 2 April 2018). True enough, the index fell to a low of 848 before bouncing higher. The timing of this down leg, however, was shorter-than-expected. | |
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| NEWS | | | Outside Malaysia:
U.S: Job openings ease from near-record while layoffs decline. U.S. job openings pulled back in February from a near-record in the previous month, as employers had some success in filling vacancies and became more reluctant to dismiss workers, Labor Department data showed. Number of positions waiting to be filled decreased by 176k to 6.052m from a downwardly revised 6.228m in Jan: (Source: Bloomberg)
E.U: ECB looks down exit path as politics threaten to damp growth. The European Central Bank is finding out just how tricky its policy path could be in a year when political spats are overshadowing the economy. The account of the March 7-8 Governing Council meeting listed concerns including that U.S. import tariffs – announced just before the gathering -- would hurt "all countries involved." It also pointed to potentially unforeseen consequences of Britain's withdrawal from the European Union and economic slack that might be greater than previously thought. Policy makers were still confident enough to remove their pledge to ramp up asset purchases should the outlook deteriorate. At least one official suggested the euro area might be close to the self-sustained growth and inflation needed to halt that scheme. (Source: Bloomberg)
U.K: London house prices decline in stark division with rest of U.K. Home prices in London are continuing to fall, prolonging a slump that's seen the average property in the capital lose almost 2 percent its value over the past year, surveys showed. The U.K. market is "starkly divided," according to Acadata, which said that values in London fell for a third month in February but are rising in other regions apart from the southeast. A similar picture emerged in figures from property- website operator Rightmove, with average prices climbing to a new record of GBP 305,732 (USD 436,000) in April, despite a drop in London. (Source: Bloomberg)
Crude Oil: Halts gain as U.S. rig rise counters Mideast clash. Oil halted gains as the U.S. rig count rose to a three-year high, a sign of potentially higher production that may outweigh fears conflict threatens Middle East supply. U.S. explorers pushed the rig count higher for the 10th time in 12 weeks, Baker Hughes data showed. U.S., France and the U.K. launched strikes in Syria in response to a suspected chemical attack on civilians, and the top U.S. diplomat to the United Nations said fresh sanctions may be imposed on Russia for its support of Syrian leader Bashar al-Assad. Brent for June was USD72.11/bbl. (Source: Bloomberg) | |
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Datasonic: Gets MYR270.71m contract from Home Ministry. Its wholly-owned Datasonic Technologies S/B has secured a contract worth MYR270.71m from the Home Affairs Ministry to supply 9.96m polycarbonate biodata pages to the Immigration Department. The contract is for a period of 46 months, from Feb 1, 2018 till Nov 20, 2021. (Source: The Edge Financial Daily)
Vizione: Bags road contract worth MYR137m. Its wholly-owned subsidiary, Wira Syukur (M) S/B had accepted a letter of award from Vertice Construction to upgrade the Federal Road 12 (FR 12) from Gambang, Pahang to Segamat, Johor – Phase 1 for MYR137.1m. The date of completion shall be 13 months commencing from April 16 to April 30, 2019. (Source: The Star)
WZ Satu: Bags MYR68m bridge structure subcontract in Kuala Langat. WZS BinaRaya S/B has secured a MYR68m subcontract from Mujur Minat S/B to construct two carriageway bridge structures in Kuala Langat, Selangor. The contract has two sections, with the first one commencing on April 16 this year and completing on March 31, 2019, while the second one will begin tentatively around January or February 2020 and be completed 12 months later. (Source: The Edge Financial Daily)
Serba Dinamik: Buys 25% of Singapore-based CSE Global. The group has acquired 24.84% of Singapore-listed CSE Global Ltd for SGD57.67m (MYR170.57m). Its wholly-owned Serba Dinamik International Ltd had entered into eight conditional share sale and purchase agreements with shareholders of CSE Global for the proposed acquisition of up to 128.17m ordinary shares of the company. The proposed acquisition is said to allow the group to gain a stake in a profitable target with its own financial capabilities and ready order books without having to inject further capital. (Source: The Edge Financial Daily) | |
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