Affin Daily Insight (LV) - 8 May 2014 - MMHE / MAXIS / ECONOMY - TRADE / DMR

Top Calls

Results Note � MMHE (ADD, maintain) - Weak results but bright prospects remain intact MMHE�s 1Q14 pretax profit fell by 40% yoy to RM34.1m due to lower revenue (-27% yoy) and lower EBIT margin (-0.5 ppt yoy to 5.5%). The results are below consensus and our expectations - the group�s 1Q14 pretax profit only accounted for 12-13% of consensus and our full year pretax profit forecast. The key variance from our forecast is lower-than-expected EBIT margin due to timing difference of the offshore projects and the low number of projects undertaken by marine division. We cut our 2014E EPS forecast by 19% to account for the weaker-than-expected 1Q results, timing difference for Malikai and SK316 project billings as well as slower-than-expected intake of new contracts. No changes to our 2015-16E earnings forecast as we expect the Malikai and SK316 projects to pick up pace in 2H14. Maintain ADD rating and TP of RM4.20 based on 21x CY15 EPS.

Other Calls

Results Note � Maxis (ADD, maintain) - Lower FY15 DPS as debt ratio hits its limit

Economy � Trade - Steady export growth of 8.4% yoy in March

Debt Market Research - Bullish flattening with high volume, 10y MGS below 4.00%

Morning News & Market Summary

For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports.

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