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FEATURE
CALLS
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Singapore | Bumitama Agri
Upside limited;
D/G to HOLD
Chee Ting Ong
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Share
Price:
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SGD0.84
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Target
Price:
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SGD0.85
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Recommendation:
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Hold
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Upside limited;
D/G to HOLD
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Given the limited upside to our unchanged TP, we downgrade
the shares to HOLD (from BUY). Also, similar to other Singapore listed
planters, we expect 1Q16 to come in below our and street estimates due
to low 1Q16 FFB output, low spot CPO ASP, and new annual depreciation
charges following the revised FRS 16 and 41 accounting standards
(effective 1 Jan 2016).
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FYE Dec (IDR b)
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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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5,757.3
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5,542.1
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6,880.7
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7,882.9
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EBITDA
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2,118.5
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1,587.0
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2,048.5
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2,638.4
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Core net profit
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1,243.1
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964.2
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1,123.6
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1,468.1
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Core EPS (IDR)
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707
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549
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639
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836
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Core EPS growth (%)
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44.6
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(22.4)
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16.5
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30.7
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Net DPS (IDR)
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148
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110
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128
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167
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Core P/E (x)
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11.6
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14.9
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12.8
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9.8
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P/BV (x)
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2.2
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2.7
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2.3
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2.0
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Net dividend yield (%)
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1.8
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1.3
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1.6
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2.0
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ROAE (%)
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20.5
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16.4
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19.5
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21.6
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ROAA (%)
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9.7
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6.8
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7.5
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9.1
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EV/EBITDA (x)
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10.3
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11.1
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9.4
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7.1
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Net debt/equity (%)
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61.2
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92.9
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65.6
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42.9
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Share
Price:
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MYR8.73
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Target
Price:
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MYR9.05
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Recommendation:
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Hold
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Results Preview
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Equities/derivatives trading value/volume during 1Q16 were
sustained at 4Q15 levels, leading us to expect Bursa’s 1Q16 results, to
be released today, to be within range, vis-a-vis expectations. We
estimate MYR49m net profit for 1Q16 (+4% YoY, -3% QoQ). We make no
change to our earnings forecasts but lift our TP to MYR9.05 (+80sen)
after revising our target PER to 23x (from 21x) to be in line with
peers. Maintain HOLD.
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FYE Dec (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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503.8
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518.5
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540.6
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568.8
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EBITDA
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297.0
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302.5
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315.0
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333.2
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Core net profit
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198.2
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198.6
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210.1
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222.9
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Core EPS (sen)
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37.2
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37.2
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39.3
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41.7
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Core EPS growth (%)
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14.4
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(0.0)
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5.7
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6.1
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Net DPS (sen)
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54.0
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34.5
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36.5
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39.0
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Core P/E (x)
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23.5
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23.5
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22.2
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20.9
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P/BV (x)
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6.2
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5.8
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5.7
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5.6
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Net dividend yield (%)
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6.2
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4.0
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4.2
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4.5
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ROAE (%)
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25.4
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25.6
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25.9
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27.0
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ROAA (%)
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11.7
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10.6
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9.9
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10.2
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EV/EBITDA (x)
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13.7
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13.8
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14.0
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13.3
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Net debt/equity (%)
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net cash
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net cash
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net cash
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net cash
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Share
Price:
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MYR8.86
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Target
Price:
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MYR8.60
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Recommendation:
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Hold
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Raising its oil
tanker exposure
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MISC is buying the remaining 50% equity interest in PTC,
which houses six relatively young Aframax tankers for USD56m (or
MYR218m). While we are less sanguine on the petroleum tanker market, we
are neutral on this latest development as the acquisition cost is
insignificant to MISC (<1% of market capitalisation) and this
exercise will have minimal impact to its earnings/gearing. Maintain
HOLD and SOP-based TP of MYR8.60.
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FYE Dec (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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9,296.3
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10,908.4
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10,595.1
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10,394.2
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EBITDA
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3,024.0
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3,913.2
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3,894.4
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3,949.1
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Core net profit
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1,942.5
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2,782.0
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2,436.4
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2,406.3
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Core EPS (sen)
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43.5
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62.3
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54.6
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53.9
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Core EPS growth (%)
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37.0
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43.2
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(12.4)
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(1.2)
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Net DPS (sen)
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10.0
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20.0
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13.6
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13.5
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Core P/E (x)
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20.4
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14.2
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16.2
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16.4
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P/BV (x)
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1.4
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1.1
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1.1
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1.0
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Net dividend yield (%)
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1.1
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2.3
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1.5
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1.5
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ROAE (%)
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7.4
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8.8
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6.7
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6.3
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ROAA (%)
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4.7
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6.2
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5.0
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4.8
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EV/EBITDA (x)
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12.3
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11.2
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10.6
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10.2
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Net debt/equity (%)
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14.1
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2.4
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1.4
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net cash
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Share
Price:
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MYR4.68
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Target
Price:
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MYR5.00
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Recommendation:
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Hold
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Mixed trends
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1Q16 results were overall in line, as healthy postpaid
momentum was offset by prepaid ARPU contraction. Interestingly,
management alluded to a renewed emphasis on effective monetisation
going forward. The still unknown spectrum fee remains the main overhang
for the stock. Maintain HOLD with an unchanged TP of MYR5.00.
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FYE Dec (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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7,018.5
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6,914.0
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7,015.4
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7,188.7
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EBITDA
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3,163.5
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2,982.3
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2,995.6
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3,105.5
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Core net profit
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2,031.1
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1,722.6
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1,688.0
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1,726.0
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Core EPS (sen)
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26.1
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22.2
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21.7
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22.2
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Core EPS growth (%)
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19.1
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(15.2)
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(2.0)
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2.3
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Net DPS (sen)
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26.0
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22.0
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21.7
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22.2
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Core P/E (x)
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17.9
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21.1
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21.6
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21.1
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P/BV (x)
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53.0
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70.1
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70.1
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70.1
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Net dividend yield (%)
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5.6
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4.7
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4.6
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4.7
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ROAE (%)
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301.5
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285.8
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325.0
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332.3
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ROAA (%)
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50.4
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38.4
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35.7
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36.0
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EV/EBITDA (x)
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15.3
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14.4
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12.5
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12.1
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Net debt/equity (%)
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77.0
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204.2
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229.2
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250.7
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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External reserves as at 15 April 2016 rose to USD97.2b
(MYR382.1b) from USD97.0b (MYR381.6b) on 31 Mar 2016, driven mainly
by portfolio capital inflows. The latest tally is equivalent to 8.1
months of retained imports and 1.1 times of short-term external debt.
Year-to-date, external reserves increased by +2.0% from USD95.3b at
end-2015 (2015: -17.8%) and 4.2% from the low of USD93.3b at end-Sep
2015.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Economics Research
by
Suhaimi Ilias
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Index of leading economic indicators in Feb 2016 fell
YoY for the fourth month in a row by -1.2% (Jan 2016: -0.9% YoY). It
also fell MoM by -1.5% (Jan 2015: +0.2% MoM). Data points to further
slowing of real GDP growth in 1Q 2016.
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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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Market uptrends
may be stalling
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The FBM KLCI inched down 10.03 points WoW to close at
1,717.96, as blue chip profit taking suppressed the local index. The
weekly volume rose from 1.49b to 1.99b shares.
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NEWS
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Outside Malaysia:
Brazil: Sheds jobs for 12th straight month as recession
deepens. Brazil shed more than 100,000 formal jobs in March as a second
year of recession pummels a labor market that’s not expected to improve
in 2016 regardless of how President Dilma Rousseff’s impeachment process
plays out. The March result of 118,776 jobs lost marked the 12th straight
month of employment decline, the longest run of negative prints since the
government began tracking formal job creation in 2003. Since Rousseff
began her second term in 2014, almost 2 million formal jobs have been
cut. Over the same period, the national unemployment rate has risen to
10.2% from 6.5%. (Source: Bloomberg)
Saudi Arabia: Saudi key rate climbs to 2009 high as
funding squeeze tightens. A key interest rate in Saudi Arabia climbed to
the highest level in seven years as oil’s slump and increased government
borrowing put further strain on bank funding in the biggest Arab economy.
The three-month Saudi Interbank Offered Rate, a benchmark used to price
loans, advanced 1.5 basis points to 2.004%, surpassing 2% for the first
time since January 2009, according to data compiled by Bloomberg. The
rate has risen 46 basis points this year, the biggest increase for the
period since 2005, the data show. (Source: Bloomberg)
Vietnam: IMF seeks lower fiscal deficit, predicts slower
growth. IMF mission which just completed its 2016 Article IV consultation
with Vietnam, is recommending measures to cut the fiscal deficit to
around 3% of GDP by 2020 from about 6.5%, the team led by John Nelmes
said in a statement. Steps include broadening revenue base; safeguarding
spending on education, health and infrastructure; resolving bad loans and
strengthening capital in state-owned banks. GDP growth for 2016 is seen
easing to around 6% due to weak global demand and drought. Monetary
policy should remain on hold while underlying inflation remains muted.
(Source: Bloomberg)
Crude Oil: Oil bulls plunge into market as U.S. gasoline
demand hits record. Money managers shrugged off the failure of the
world’s biggest oil producers to agree on an output freeze as U.S.
gasoline demand surged. West Texas Intermediate crude surged 8.3% the
week after talks in Doha collapsed. Investors focused on falling U.S.
output and higher fuel use as the peak summer driving season approaches.
American gasoline consumption rose to 9.25 million barrels a day in
March, an all-time high for the month, the American Petroleum Institute
said April 21. (Source: Bloomberg)
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Other News:
Financials: Wan Mohd Fazlullah resigns as CEO of Hong
Leong MSIG Takaful (HLMT). It is slated to see a fifth leadership change
since it started operations in 2006. According to an industry source, Wan
Mohd Fadzlullah decided to step down due to differing opinions with its
management. HLMT is a joint venture between Hong Leong Financial Group
Malaysia (HLFG) and Japan's Mitsui Sumitomo Insurance Co Ltd (MSI).
(Source: The Sun Daily)
Retail: First LuLu store said to open in Malaysia soon.
According to sources, after several delays, Middle Eastern retailer LuLu
Group is expected to commence operations of its first store in Malaysia
in May or early June, before Ramadan. First store is expected to occupy
250,000 sq ft. As a recap, in mid-2014, LuLu had planned to build 10
hypermarkets with an estimated investment of USD200m for first five
stores. However, the first store now will be a hypermarket cum department
store. (Source: The Edge Financial Daily)
CI Holdings: Says focus is on expanding edible oil
business. Its edible oil venture helped the group achieved a fivefold
increase in first half net profit. However, share price has since weaken
due to concerns about lower forex gain on stronger MYR against USD and
higher raw material prices as the El Nino effect may prop up olein
prices. Contribution of forex gains may be less but the operational
profit remains favourable, said CI Holdings. Plants are currently
operating at close to full capacity, management is looking to increase
capacity by 10% in the next financial year. (Source: The Edge Financial
Daily)
The Malaysian Institute of Economic Research (MIER)
Consumer Sentiment Index (CSI) improved in 1Q 2016 by 9.1 points to 72.9.
However, it is still below the threshold 100 mark as current financial
condition is flat and job outlook clouds expected income, although
apprehension over rising prices is moderating (Source: MIER)
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