Monday, July 23, 2018

FW: [Maybank IB] Today's Research - Malaysia

 

 

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FEATURED
CALLS

Malaysia | ViTrox Corp
And the race begins…
Ivan Yap

Singapore | Genting Singapore
The last potentially great gaming market opens up
Samuel Yin Shao Yang

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MACRO
RESEARCH

Malaysia | Reserves down slightly in 1H July
Suhaimi Ilias

Regional | FTSE ASEAN 40 Index: Short-Term Rebound
Nik Ihsan Raja Abdullah

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COMPANY RESEARCH

Malaysia

Rating Change

ViTrox Corp (VITRO MK)
by Ivan Yap

Share Price:

MYR5.45

Target Price:

MYR6.50

Recommendation:

Buy

And the race begins…

ViTrox's official move into Campus 2.0 in July 2018 is in time to capture rising demand for equipment, especially in the (i) telecommunication infrastructure and (ii) automotive industries. We raise our FY18-20 earnings forecasts by 7-13% on higher ABI sales volume. We now peg ViTrox at 22x CY19 PER as we ascribe a higher premium of 30% to ViTrox against peer valuations for its superior growth prospects. 22x PER also translates to +1SD historical mean. Our TP is raised to MYR6.50; U/G to BUY.

FYE Dec (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

234.0

327.5

404.2

503.1

EBITDA

65.2

90.7

112.1

155.9

Core net profit

61.2

82.0

97.7

139.9

Core EPS (sen)

13.0

17.3

20.7

29.6

Core EPS growth (%)

19.6

33.6

19.2

43.1

Net DPS (sen)

3.3

4.3

5.2

7.4

Core P/E (x)

14.0

21.4

26.4

18.4

P/BV (x)

3.3

5.3

6.4

5.1

Net dividend yield (%)

1.8

1.2

0.9

1.4

ROAE (%)

27.5

28.0

26.6

30.7

ROAA (%)

19.4

19.0

17.7

20.4

EV/EBITDA (x)

12.2

31.3

22.2

15.7

Net debt/equity (%)

net cash

net cash

net cash

net cash

Singapore

Company Update

Genting Singapore (GENS SP)
by Samuel Yin Shao Yang

Share Price:

SGD1.28

Target Price:

SGD1.46

Recommendation:

Buy

The last potentially great gaming market opens up

Japan has liberalised its casino industry. Many issues have yet to be finalised but we opine that GENS stands a good chance to win a license thanks to its responsible gaming experience and solid net cash position. Pundits estimate that Japanese gross gaming revenue (GGR) could be between USD6b-USD40b p.a. (2017 Singapore: USD4.6b). Our estimates, BUY call and SGD1.46 TP based on 12x FY18 EV/EBITDA, in-line with the 9-year 12M forward EV/EBITDA mean, are unchanged for now.

FYE Dec (SGD m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,228.1

2,392.6

2,456.6

2,559.6

EBITDA

779.0

1,151.2

1,179.2

1,221.9

Core net profit

285.1

648.1

743.5

787.1

Core FDEPS (cts)

2.4

5.4

6.2

6.5

Core FDEPS growth(%)

7.1

127.1

14.7

5.9

Net DPS (cts)

3.0

3.5

3.5

3.5

Core FD P/E (x)

33.2

21.0

20.7

19.6

P/BV (x)

1.3

1.8

2.0

1.9

Net dividend yield (%)

3.8

3.1

2.7

2.7

ROAE (%)

7.3

8.2

9.8

9.9

ROAA (%)

2.4

6.2

7.7

8.1

EV/EBITDA (x)

na

na

na

na

Net debt/equity (%)

net cash

net cash

net cash

net cash

MACRO RESEARCH

MY: Malaysia External Reserves, mid-Jul 2018

Reserves down slightly in 1H July
by Suhaimi Ilias

Economics Research

External reserves fell marginally by –USD0.1b to USD104.6b as at mid-July 2018 from USD104.7b at end-June 2018, amid continued net foreign sells in Malaysian equities and bonds. The latest external reserves figure is equivalent to 7.5 months of retained imports and 1.1 times of short-term external debt.

RN: Regional Traders' Almanac

FTSE ASEAN 40 Index: Short-Term Rebound
by Nik Ihsan Raja Abdullah

Technical Research

FTSE ASEAN 40 Index, as what we anticipated last week, climbed higher, suggesting that Wave 4 down leg may have completed at the previous low of 10,250. At present, we believe the index is riding on the Wave 5 uptrend, and this upward trajectory is supported by the improving technical landscape. On the daily chart, the candles have risen above the Weighted Moving Average as well as the upper Bollinger Band. RSI has also swung past the 50pts mark, above its average line.

NEWS

Outside Malaysia:

Global: Trade tensions threaten global economic growth, G-20 cautions. Global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased, finance ministers and central bankers from the Group of 20 nations said in a statement published at the end of their two-day summit in Buenos Aires. The main risks are "rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth," the statement read. Emerging markets also face threats including market volatility and capital outflows, according to the G-20. The group's March statement didn't mention trade tensions. (Source: Bloomberg)

U.S: Mnuchin sees no chance for currency war despite Trump tweets. U.S. Treasury Secretary Steven Mnuchin says there's no chance of a currency war erupting. When asked whether investors should be concerned about the prospects of one, he said "no," declining to elaborate during a press conference in Buenos Aires. He was in the Argentine capital attending the Group of 20 nations summit. In a series of comments late last week that shook financial markets, President Donald Trump attacked the Federal Reserve for raising interest rates and for undercutting his efforts to slash the U.S. trade deficit. The president also accused China and the euro area of manipulating their currencies, and complained that a rising dollar is blunting America's "competitive edge." Despite swooning in response to Trump's comments, the greenback is about 5% higher than it was when Trump imposed tariffs on steel and aluminium imports on March 23. (Source: Bloomberg)

Philippine: Central Bank vows 'strong' rate action next month. Philippine central bank Governor Nestor Espenilla pledged "strong" action next month to damp inflation and stabilize one of Asia's worst performing currencies. Bangko Sentral ng Pilipinas "is considering a strong follow-through monetary adjustment at the next Monetary Board meeting in August," Espenilla said at a briefing on second-quarter inflation. "The pace and magnitude of policy tightening will be data dependent." Espenilla may be preparing to take more aggressive steps to rein in inflation expectations and counter criticism from some analysts who say policy makers have been too slow to act in raising rates. The peso has lost more than 6% against the dollar this year, while 2018 inflation is set to breach the central bank's 2% to 4% target band. (Source: Bloomberg)

Crude Oil: U.S. crude rigs fall by most since March. U.S. working oil rigs fell by 5 to 858 last week, according to data from Baker Hughes. It was the largest drop since March 30 and only the seventh decline since the end of 2017. Iran's president warned his U.S. counterpart Donald Trump not to threaten the Persian Gulf nation's oil exports and called for improved relations with its neighbors, including arch-rival Saudi Arabia. Brent for September was USD73.19/bbl. (Source: Bloomberg)

Other News:

Cabnet Holdings: Unit bags MYR12.2m contract. Its wholly-owned subsidiary Cabnet Systems (M) S/B has won a MYR12.22m contract, from Country Garden Pacificview S/B, for the provision of extra low voltage works for nine 40-storey blocks of serviced apartments (4,033 units) located in Forest City, Mukim Tanjung Kupang, Johor.The contract, scheduled to be completed by Apr 2019. (Source: The Edge Markets)

Salcon: Bags MYR9.95m sewage treatment plant job. Its indirect 60%-owned subsidiary Envitech S/B has bagged a contract worth MYR9.95m from Seriemas Development S/B to construct a sewage treatment plant in Kuala Langat, Selangor. The project is to be completed within 15 months, on 23 Oct 2019, and has no option for renewal. (Source: The Edge Markets)

WZ Satu: Unit served with MYR619,531 claims. The group has been served with writ of summons together with a statement of claim totaling MYR619,531.96 by Danamin (M) S/B. In a filing with Bursa Malaysia, WZ Satu said it is seeking its legal opinion to defend the writ and statement of claim and will make further announcement on the developments in due course. Besides the MYR619,531.96, Danamin is claiming 1.5% interest per month on the sum of MYR570,104.57 from 1 May 2018 to the date of full settlement. Alternatively, interest at the rate of 5% per annum on the sum of MYR570,104.57 from the date of judgement until full settlement.(Source: The Sun Daily)

 

Our team profiles: Regional, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Philippines, Greater China & India

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