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| | | | | | | | | | | | | | Share Price: | MYR1.52 | Target Price: | MYR1.76 | Recommendation: | Buy | | |
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| | | Still room to grow | | With the stock trading at a FYE3/19E PER of just 6x and a PBV of 0.9x (ROE: 16.8%), valuations are undemanding for RCE, especially since dividend yields are also a decent 4.5%. There is still room for growth since RCE commands a market share of just about 1.5% of the civil servant financing market. We maintain our BUY call with an unchanged TP of MYR1.76, pegged to a CY19 P/BV of 1x. | | |
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| | FYE Mar (MYR m) | FY17A | FY18A | FY19E | FY20E | Operating income | 166.7 | 188.3 | 201.9 | 213.8 | Pre-provision profit | 123.6 | 147.0 | 156.9 | 166.7 | Core net profit | 73.7 | 88.7 | 92.1 | 95.0 | Core EPS (MYR) | 0.24 | 0.26 | 0.26 | 0.27 | Core EPS growth (%) | 94.0 | 8.8 | (0.6) | 3.2 | Net DPS (MYR) | 0.03 | 0.07 | 0.07 | 0.07 | Core P/E (x) | 4.8 | 6.2 | 5.9 | 5.7 | P/BV (x) | 1.0 | 1.1 | 0.9 | 0.8 | Net dividend yield (%) | 2.6 | 4.4 | 4.6 | 4.6 | Book value (MYR) | 1.16 | 1.46 | 1.62 | 1.82 | ROAE (%) | 16.4 | 18.5 | 16.8 | 15.5 | ROAA (%) | 4.5 | 5.0 | 4.8 | 4.6 |
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| | SECTOR RESEARCH | | | | | | More land to be released? | NEUTRAL
by Wei Sum Wong |
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| | | | | | We are unable to comment on yesterday's news on MoT's intention to develop affordable housing projects on 9,192 acres of land along the railway lines, in absence of further details.We see potential downside risks for developers in the form of stiffer competition arising from higher supply. We are of the view that coordinated planning and control is paramount to avoid oversupply in the affordable housing segment.Remain NEUTRAL,pending further details and continue to be defensive in stock picking. | |
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| | MACRO RESEARCH | | | | | | Signals slower GDP growth in 2Q18
by Suhaimi Ilias |
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| | | | | | Index of leading economic indicators picked up to +1.4% YoY in Apr 2018 (Mar 2018: +0.3% YoY), but our calculation of the quarterly index forwarded by one quarter slowed to +1.2% YoY in 2Q 2018 (1Q 2018: +2.7% YoY), signaling slower 2Q 2018 real GDP growth after the moderation in 1Q 2018 to +5.4% YoY from +5.9% YoY in 4Q 2017. | |
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| | | | | | FBMKLCI Index: PNF Chart Showcases a Bearish Tone
by Nik Ihsan Raja Abdullah |
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| | | | | | Dark cloud loomed over local bourses amid worries over intensified trade tensions. At day's end, the benchmark index tumbled 16.05pts to 1,678.10, in line with regional selloff. Decliners were led by CIMB, AXIATA and TM. Broader market was negative with losers outpacing gainers by 520 to 298. A total of 2.04b shares worth MYR1.97b changed hands. | |
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| NEWS | | | Outside Malaysia:
Global: China, Europe warn trade war could trigger global recession. China and the European Union vowed to oppose trade protectionism in an apparent rebuke to the U.S., saying unilateral actions risked pushing the world into a recession. Vice Premier Liu He -- President Xi Jinping's top economic adviser -- said China and the EU had agreed to defend the multilateral trading system, following talks in Beijing. The comments, made at a press briefing with European Commission Vice President Jyrki Katainen, come as both sides prepare to face off against President Donald Trump's tariff threats. "Unilateralism is on the rise and trade tensions have appeared in major economies," Liu said. "China and the EU firmly oppose trade unilateralism and protectionism and think these actions may bring recession and turbulence to the global economy." (Source: Bloomberg)
U.S: Navarro seeks to calm investor concern on Trump trade policy. White House trade adviser Peter Navarro sought to ease investor concerns about U.S. trade policy, indicating that a Treasury Department report later this week on American restrictions on foreign investment won't be as sweeping as markets are anticipating. "There's no plans to impose investment restrictions on any countries that are interfering in any way with our country. This is not the plan," he said in an interview on CNBC with the Dow Jones Industrial Average down more than 400 points. "The whole idea that we're putting investment restrictions on the world -- please discount that." (Source: Bloomberg)
U.S: Trump's auto tariff threat against Europe puts Asia on notice. Donald Trump's latest threat to impose tariffs on auto imports from the European Union almost certainly jangled nerves again in Japan and South Korea as well as in Europe. The two Asia-Pacific neighbours are vulnerable to U.S. tariffs. About 37% of Japanese exports to the U.S. last year were autos or auto parts. For South Korea, the figure was about 30%, with a total value of about USD20b. The knock-on effects in both countries would be big. "The problem with the auto and component industries is they are linked to lots of jobs in Korea, and can have a big domestic impact," said Je Hyun-jung, a deputy general manager at the Korea International Trade Association. (Source: Bloomberg)
U.S: New-Home sales rise to six-month high on surge in South. U.S. purchases of new homes advanced in May to a six-month high as sales in the South increased to the fastest pace since 2007, according to government data released. Single-family home sales rose 6.7% MoM to 689k annualized pace after 646k rate (revised from 662k). Median sales price decreased 3.3% YoY to USD313,000. Supply of homes at current sales rate fell to 5.2 months from 5.5 months. (Source: Bloomberg) | |
| | | | | Other News:
Serba Dinamik: Secures MYR465m worth of contracts. The group has secured about MYR465.1m worth of new contracts involving operations and maintenance (O&M) besides engineering, procurement, construction and commissioning (EPCC) projects via wholly-owned subsidiaries Serba Dinamik S/B and PT Serba Dinamik Indonesia. (Source: The Edge Markets)
Kelington: Bags MYR104m new jobs, YTD order book hits RM181m. The group has secured new orders worth MYR104m, bringing the group's accumulated value of new orders secured year-to-date to MYR181m. It said the new orders were primarily from the Ultra High Purity (UHP) segment for Kelington to provide specialised engineering services for the semiconductor and electronics companies. Most of the new contract wins were from Malaysia followed by Singapore, China and Taiwan. (Source: The Edge Markets)
MB World: To develop MYR176m apartment project in Johor Bahru. The group plans to develop a 6.26-acre land in Johor, a project that comprises 406 units of apartments worth MYR176m in gross development value, after securing the developmental rights to the land from its owner. According to MB World, its wholly-owned MB Max S/B has inked a development rights agreement with Shiya S/B, which owns the freehold land that is made up of 76 plots in Sierra Perdana, Johor Bahru. (Source: The Edge Markets)
MBSB: Earmarks MYR250m for IT infrastructure. Malaysia Building Society Bhd (MBSB) will spend MYR250m over the next 18 months on its IT infrastructure. President and CEO Datuk Seri Ahmad Zaini Othman said this will be for the upgrading of its systems and digitalisation programme for MBSB Bank Bhd. MBSB Bank will be working on a three-year business plan that comprises 22 key initiatives being implemented up till April 2019. (Source: The Sun Daily) | |
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