[Maybank Kim Eng] Today's Research - Malaysia

23 Sep 2015, Wednesday

g Company Research - MISC Bhd: Building war chest for growth | Yen Ling Lee - IJM Corporation : Construction to lead growth | Li Shin Chai - Eco World Development: Growing bigger | Wei Sum Wong g Sector Research - Malaysia Construction: The infrastructure mania | Li Shin Chai g Macro Research - Malaysia: External Reserves, 15 September 2015 - Signs of improvement | Suhaimi Ilias - Malaysia: Technicals - Index to fall below 1,628 | Lee Cheng Hooi - Malaysia: Other News - | Malaysia Research Team

MY: MISC Bhd (MISC MK) Share Price: MYR8.50 Target Price: MYR9.60 Recommendation: Buy Yen Ling Lee (603) 2297 8691 lee.yl@maybank-ib.com Company Update: Building war chest for growth FYE Dec (MYR m) FY13A FY14A FY15E FY16E Revenue 8,971.8 9,296.3 10,199.2 9,788.6 EBITDA 2,746.9 3,024.0 3,768.8 3,771.1 Core net profit 1,417.4 1,942.5 2,458.1 2,392.5 Core EPS (sen) 31.8 43.5 55.1 53.6 Core EPS growth (%) 8.0 37.0 26.5 (2.7) Net DPS (sen) 5.0 10.0 20.0 20.0 Core P/E (x) 26.8 19.5 15.4 15.9 P/BV (x) 1.5 1.4 1.3 1.2 Net dividend yield (%) 0.6 1.2 2.4 2.4 ROAE (%) 6.2 7.4 8.6 8.0 ROAA (%) 3.7 4.7 5.8 5.4 EV/EBITDA (x) 11.6 12.3 11.4 11.5 Net debt/equity (%) 22.1 14.1 13.4 13.8 §  To be flushed with cash and aims to expand core businesses. §  Earnings could weaken seasonally in 3Q and pick up in 4Q. §  TP tweaked higher to MYR9.60 (+5%) to impute for the potential disposal value of VTTI B.V.. Maintain BUY. MY: IJM Corporation (IJM MK) Share Price: MYR3.37 Target Price: MYR3.70 Recommendation: Buy Li Shin Chai (603) 2297 8684 lishin.c@maybank-ib.com Company Update: Construction to lead growth FYE Mar (MYR m) FY14A FY15A FY16E FY17E Revenue 6,006.5 5,448.3 6,391.0 7,251.7 EBITDA 1,540.4 1,440.9 1,328.8 1,431.1 Core net profit 539.0 536.3 641.7 697.3 Core EPS (sen) 19.2 18.2 18.0 19.5 Core EPS growth (%) 23.7 (5.2) (1.3) 8.7 Net DPS (sen) 25.0 7.5 7.5 7.5 Core P/E (x) 17.6 18.5 18.8 17.3 P/BV (x) 1.4 1.2 1.4 1.3 Net dividend yield (%) 7.4 2.2 2.2 2.2 ROAE (%) 8.7 7.1 7.4 7.6 ROAA (%) 3.2 2.8 3.2 3.3 EV/EBITDA (x) 9.4 11.2 12.8 11.8 Net debt/equity (%) 53.4 51.4 42.6 37.6 §  Potential construction job wins could exceed our FY3/16 and FY3/17 job win forecasts. §  Solid construction orderbook to support earnings growth. §  Adjusted our earnings forecasts. Reiterate BUY at a lower RNAV-based TP of MYR3.70 (-5%). MY: Eco World Development (ECW MK) Share Price: MYR1.50 Target Price: MYR1.69 Recommendation: Buy Wei Sum Wong (603) 2297 8679 weisum@maybank-ib.com Company Update: Growing bigger FYE Oct (MYR m) FY13A FY14A FY15E FY16E Revenue 156.3 148.4 1,354.3 2,196.2 EBITDA 48.3 42.3 215.6 351.9 Core net profit 24.3 7.2 39.3 76.4 Core EPS (sen) 9.6 2.8 1.9 3.6 Core EPS growth (%) 237.0 (70.4) (34.4) 94.7 Net DPS (sen) 0.6 0.0 0.0 0.4 Core P/E (x) 15.7 52.9 80.6 41.4 P/BV (x) 1.2 1.2 1.0 1.0 Net dividend yield (%) 0.4 0.0 0.0 0.2 ROAE (%) 7.9 2.2 2.3 2.4 ROAA (%) 5.0 1.2 1.3 1.3 EV/EBITDA (x) 5.2 15.8 22.0 15.1 Net debt/equity (%) 8.4 60.5 49.6 66.5 §  Positive on the latest sizeable land acquisition in Mukim Ijok. §  The new land could enhance our RNAV estimate by 6 sen/shr. §  Maintain earnings forecasts and MYR1.69 RNAV-TP pending finalisation of the SPV structure. BUY. MY: Malaysia Construction Recommendation: Overweight Li Shin Chai (603) 2297 8684 lishin.c@maybank-ib.com Sector Note: The infrastructure mania §  The record awards of PDPs for 4 major infrastructure projects and active ongoing tenders for TODs, highways and RAPID manifest stronger visibility of the potential job flows. §  The potential MYR76b infrastructure job awards in 4Q15 and 2016 would sustain the robust construction activities. §  Sector valuation has turned attractive after recent sell-down. Reiterate OVERWEIGHT with Gamuda as Top Pick. MY: External Reserves, 15 September 2015 Suhaimi Ilias (603) 2297 8682 suhaimi_ilias@maybank-ib.com Zamros Dzulkafli (603) 2082 6818 zamros.d@maybank-ib.com Economics Research: Signs of improvement §  External reserves rose slightly to USD95.3b as at 15 Sep. §  Reserves likely to stabilize in view of the government’s recent announcement on policy measures. §  MYR has improved slightly against the USD. MY: Technicals Lee Cheng Hooi (603) 2297 8694 chenghooi.lee@maybank-ib.com Technical Research: Index to fall below 1,628 §  RHBCAP - On a very strong downward Wave 3 and 5 move. §  FBMKLCI – Index to fall below 1,628. §  Supports of 1,586 and 1,628 may be weaker. §  Resistances of 1,635 and 1,684 will cap rebounds. MY: Other News Malaysia Research Team Economics Research: Outside Malaysia —    U.S: Home prices rose more than estimated in July —    U.K: Britain had the highest August budget deficit for three years —    China: Effect seen as ADB cuts Asian growth forecasts again Malaysia —   Banking: HSBC’s Rafe expected to helm CIMB Islamic —   Jaks Resources: Secures USD1.4b funding for Vietnam power plant —   Westports Holdings: Container Hike delayed again to Nov 1