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Share
Price:
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MYR4.44
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Target
Price:
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MYR4.20
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Recommendation:
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Hold
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More
“convenience” for Malaysians?
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QL’s venture into the convenience store space is short
term neutral, given the gestation period of new stores and since the
first store will only open end-2016. Over the longer term, earnings
accretion will very much depend on FamilyMart’s ability to differentiate
itself from its peers. We keep our earnings forecasts and HOLD call
with an unchanged DCF-TP of MYR4.20 (7.5% WACC & 2% LT growth).
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FYE Mar (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
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2,457.2
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2,707.8
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2,753.8
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3,014.3
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EBITDA
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300.0
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340.9
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384.9
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423.1
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Core net profit
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159.9
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183.1
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204.8
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226.2
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Core EPS (sen)
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12.8
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14.7
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16.4
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18.1
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Core EPS growth (%)
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21.4
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14.5
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11.9
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10.5
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Net DPS (sen)
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3.5
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4.3
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5.0
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6.0
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Core P/E (x)
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34.6
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30.3
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27.1
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24.5
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P/BV (x)
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4.3
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3.9
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3.5
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3.2
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Net dividend yield (%)
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0.8
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1.0
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1.1
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1.4
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ROAE (%)
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14.7
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13.5
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13.6
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13.6
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ROAA (%)
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7.5
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7.6
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7.5
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7.6
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EV/EBITDA (x)
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15.2
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16.4
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16.3
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15.1
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Net debt/equity (%)
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31.2
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39.0
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38.3
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40.3
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SECTOR RESEARCH
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Sector Note
by Chee
Ting Ong
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Lowest stockpile
in 12 months
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Mar 2016 stockpile at 1.89m MT was a fourth
consecutive MoM decline. The expected weak 2Q16 output will cushion
CPO price downside in the short term while further drawdown in
stockpile will push CPO price higher. While 2Q16 still provides good
trading opportunities, upcoming generally weak 1Q16 results may lead
to short-term profit taking. Our BUYs in the region are FR, AALI,
LSIP, BAL, SOP and TAH.
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MACRO RESEARCH
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Corporate Day
by Chew
Hann Wong
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Invest Malaysia KL 2016 (12-13 April) brings together
56 Malaysia listed companies which have a combined market value of
MYR940b, making up 55% of the total Malaysia market capitalisation.
With “Sustainable At The Core” as the theme for this year’s Invest Malaysia
conference, the conversations will focus on thriving in a connected
world, in particular, the Trans-Pacific Partnership, Belt and Road
initiative, and Sustainable Development Goals.
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Economics Research
by
Suhaimi Ilias
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No letup but
caution ahead
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Industrial production (IP) growth for Feb 2016
marginally picked up the pace to +3.9% YoY (Jan 2016: +3.3% YoY)
marking 36 months of consecutive gains as all three major divisions
registered positive numbers. This follows the rebound in exports data
for the same month (Feb 2016: +6.7% YoY; Jan 2016: -2.8% YoY). The
exports-oriented industries expanded by +4.7% YoY (Jan 2016: +3.8%
YoY) while domestic-oriented clusters maintained its output pace at
+4.0% YoY (Jan 2016: +4.1% YoY).
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Suhaimi Ilias
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Zamros
Dzulkafli
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Technical Research
by Lee
Cheng Hooi
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Index is still
treading water
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The FBMKLCI lost 3.12 points to close at 1,715.28
yesterday, while the FBMEMAS and FBM100 dropped 31.93 and 29.89
points respectively. In terms of market breadth, the gainer-to-loser
ratio was 294-to-481, while 380 counters were unchanged. A total of
1.50b shares were traded valued at MYR1.48b.
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NEWS
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Outside Malaysia:
Canada: Employment surge in March takes rate cut off
table. Canadian employment rose faster than forecast in March on
full-time work and a revival in oil- producing Alberta, a big step in
erasing the chance the central bank will cut interest rates. Employment
increased by 40,600 after falling 2,300 in February, Statistics Canada
said. The jobless rate declined to 7.1% from 7.3%, the highest since March
2013. The job gain is another sign of stability before the Bank of
Canada’s April 13 interest-rate decision, following heavy damage from low
crude oil prices last year. (Source: Bloomberg)
Brazil: Consumer inflation slows more than forecast in
March as the impact of government-regulated price increases faded and a
prolonged recession crippled Latin America’s largest economy. The
benchmark IPCA consumer price index rose 0.43% from the previous month,
following a 0.9% jump in February. Twelve-month inflation slowed to
single-digits, reaching 9.39% YoY. (Source: Bloomberg)
Crude Oil: Extends gains as U.S. rigs idled before Doha
freeze talks. Oil extended gains after its biggest jump in almost two
months on Friday as U.S. drillers idled more rigs ahead of talks between
the world’s biggest suppliers about freezing output. Futures rose as much
as 1.9% in New York after increasing 6.6% Friday, the biggest rise since
Feb. 12. The number of active oil rigs in the U.S. dropped for the 15th
time in 16 weeks to the lowest level since 2009, Baker Hughes Inc. said
on its website. Venezuela said the first step in the April 17 meeting in
Doha between producers including Saudi Arabia and Russia should be to
freeze output levels. (Source: Bloomberg)
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Other news:
Sona Petroleum: Going all out to get shareholders’ nod for
QA buy. The QA it is trying to get shareholders to approve is the Stag
oilfield assets in Western Australia. It proposes to acquire a 100% stake
in Stag from Quadrant Northwest Pty Ldt and Santons Offshore Pty Ltd for
USD25m (MYR98m). As a recap, Sona has until July 30 this year to complete
its QA. It was lited on July 30, 2013. (Source: The Edge Financial Daily)
Engtex: Resilient demand from infra jobs heralds better
FY16. Steel and ductile iron piping supplier cum distributor, which has
seen its earnings sliding for past two financial years, expects to see
better results in FY16, as it expects resilient demand from the
infrastructure market to lift its earnings. Engtex said new orders come
in every month and it has managed to replenish its order book monthly,
and maintain its tally at around MYR95m. (Source: The Edge Financial
Daily)
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