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Share
Price:
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MYR4.54
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Target
Price:
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MYR3.80
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Recommendation:
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Sell
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A year of
consolidation
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Upcoming 4QFY3/16 results could be weaker sequentially
(-11-18% QoQ) and undershoot street’s estimates on high operating cost
and weak ASPs. While earnings could recover ahead on higher sales and
productivity gains, we cut our FY3/16-18 EPS by 5%/15%/18% on higher
operating cost and lower USD/MYR. Consequently, our TP is reduced to
MYR3.80 (-17%; unchanged 21x 2017 PER). Downgrade to SELL (from HOLD).
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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
|
1,107.2
|
1,146.0
|
1,504.5
|
1,666.2
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EBITDA
|
353.6
|
321.6
|
396.2
|
436.0
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Core net profit
|
233.2
|
209.7
|
260.9
|
278.5
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Core FDEPS (sen)
|
15.7
|
13.4
|
15.7
|
16.8
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Core FDEPS growth(%)
|
(2.0)
|
(15.1)
|
17.8
|
6.8
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Net DPS (sen)
|
7.3
|
6.5
|
9.0
|
8.5
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Core FD P/E (x)
|
28.9
|
34.0
|
28.9
|
27.0
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P/BV (x)
|
7.1
|
5.6
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5.1
|
4.7
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Net dividend yield (%)
|
1.6
|
1.4
|
2.0
|
1.9
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ROAE (%)
|
27.3
|
19.0
|
19.2
|
18.3
|
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ROAA (%)
|
22.9
|
16.4
|
15.9
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14.1
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EV/EBITDA (x)
|
13.9
|
20.7
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19.1
|
17.7
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Net debt/equity (%)
|
net cash
|
net cash
|
6.8
|
15.5
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Share
Price:
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MYR1.25
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Target
Price:
|
MYR0.90
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Recommendation:
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Sell
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Deteriorating
outlook
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Core net earnings in 1Q16 of MYR29m are unlikely to
sustain over the next few quarters, on deteriorating business outlook.
The bulk of MMHE’s MYR1b order backlog will be exhausted by end-2016.
Replenishment of new works will be sluggish. Awards for most of its
MYR2.8b tenders will only be realised from 2017. For this, we cut our
2016-17 profit forecasts by 16%-42%. Valuations are expensive, at a 39%
premium to our revised MYR0.90 TP (-8%), based on a 1x EV/order backlog
peg.
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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
|
2,700.5
|
2,459.0
|
1,598.6
|
1,483.1
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EBITDA
|
248.6
|
157.9
|
97.3
|
124.2
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Core net profit
|
173.1
|
93.3
|
51.4
|
26.9
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Core EPS (sen)
|
10.8
|
5.8
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3.2
|
1.7
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Core EPS growth (%)
|
(26.8)
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(46.1)
|
(45.0)
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(47.5)
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Net DPS (sen)
|
0.0
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0.0
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0.0
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0.0
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Core P/E (x)
|
11.6
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21.4
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38.9
|
74.2
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P/BV (x)
|
0.8
|
0.7
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0.7
|
0.7
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Net dividend yield (%)
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0.0
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0.0
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0.0
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0.0
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ROAE (%)
|
6.6
|
3.5
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1.9
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1.0
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ROAA (%)
|
3.7
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2.1
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1.3
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0.7
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EV/EBITDA (x)
|
10.2
|
4.8
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15.0
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11.1
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Net debt/equity (%)
|
net cash
|
net cash
|
net cash
|
net cash
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Share
Price:
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MYR14.40
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Target
Price:
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MYR16.00
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Recommendation:
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Buy
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Seasonal factors
at play
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Tenaga’s sequential quarterly earnings decline was down to
seasonality. On a cumulative basis, Tenaga’s 1HFY16 results were in
line. Tenaga continues to be our top pick for the sector (and the
market). Its compelling valuation allows for ample leeway for a
possible MYR2b tax charge. Reiterate BUY with an unchanged MYR16.00 TP.
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FYE Aug (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
|
42,792.4
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43,286.8
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45,613.9
|
46,965.0
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EBITDA
|
11,703.5
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13,921.8
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14,690.9
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15,091.9
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Core net profit
|
5,428.1
|
7,050.7
|
7,202.9
|
7,455.6
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Core EPS (sen)
|
96.2
|
124.9
|
127.6
|
132.1
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Core EPS growth (%)
|
33.6
|
29.9
|
2.2
|
3.5
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Net DPS (sen)
|
29.0
|
29.0
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34.2
|
36.5
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Core P/E (x)
|
15.0
|
11.5
|
11.3
|
10.9
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P/BV (x)
|
1.9
|
1.7
|
1.5
|
1.4
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Net dividend yield (%)
|
2.0
|
2.0
|
2.4
|
2.5
|
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ROAE (%)
|
13.9
|
15.6
|
14.5
|
13.5
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ROAA (%)
|
5.2
|
6.2
|
6.0
|
5.9
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EV/EBITDA (x)
|
7.2
|
5.7
|
6.5
|
6.3
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Net debt/equity (%)
|
31.7
|
33.4
|
27.8
|
22.8
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Share
Price:
|
MYR4.38
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Target
Price:
|
MYR5.28
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Recommendation:
|
Buy
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A strong 1Q
results
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SOP is off to a strong start in 1Q16 with outperformance
from its downstream division which benefited from a stronger MYR
(against USD). This more than offset its weak 1Q16 upstream earnings on
low FFB output and CPO ASP. Nonetheless, we expect significant upstream
earnings catch up in 2H16. BUY with an unchanged RNAV-TP of MYR5.28.
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FYE Dec (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
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Revenue
|
2,852.8
|
3,642.4
|
3,774.6
|
3,940.8
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EBITDA
|
290.2
|
274.8
|
322.4
|
412.4
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Core net profit
|
112.8
|
84.9
|
118.5
|
170.9
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Core EPS (sen)
|
25.7
|
19.2
|
26.9
|
38.7
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Core EPS growth (%)
|
19.7
|
(25.0)
|
39.5
|
44.2
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Net DPS (sen)
|
5.0
|
3.8
|
5.4
|
7.7
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Core P/E (x)
|
17.1
|
22.8
|
16.3
|
11.3
|
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P/BV (x)
|
1.5
|
1.4
|
1.3
|
1.2
|
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Net dividend yield (%)
|
1.1
|
0.9
|
1.2
|
1.8
|
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ROAE (%)
|
8.8
|
6.2
|
8.2
|
11.0
|
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ROAA (%)
|
4.3
|
3.0
|
3.9
|
5.4
|
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EV/EBITDA (x)
|
9.7
|
9.8
|
8.2
|
6.3
|
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Net debt/equity (%)
|
33.5
|
46.7
|
41.6
|
32.9
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Share
Price:
|
MYR1.60
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Target
Price:
|
MYR1.50
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Recommendation:
|
Hold
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3QFY16: No
surprises
|
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3QFY6/16 earnings and 3rd interim gross DPU of 2.37sen
were in line. Bottomline growth was mainly driven by key retail assets
and Sunway Resort Hotel & Spa. Our earnings forecasts and DCF-based
TP of MYR1.50 (WACC: 6.6%, terminal yield: 7.0%) are intact.
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FYE Jun (MYR m)
|
FY14A
|
FY15A
|
FY16E
|
FY17E
|
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Revenue
|
427.8
|
453.5
|
504.5
|
522.6
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Net property income
|
321.0
|
340.8
|
388.7
|
403.6
|
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Distributable income
|
231.9
|
242.0
|
257.1
|
266.7
|
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DPU (sen)
|
7.5
|
7.8
|
7.6
|
7.9
|
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DPU growth (%)
|
0.7
|
4.3
|
(2.6)
|
3.7
|
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Price/DPU(x)
|
21.3
|
20.4
|
20.9
|
20.2
|
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P/BV (x)
|
1.3
|
1.2
|
1.1
|
1.1
|
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DPU yield (%)
|
4.7
|
4.9
|
4.8
|
5.0
|
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ROAE (%)
|
6.4
|
6.3
|
6.3
|
6.4
|
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ROAA (%)
|
4.3
|
4.0
|
4.0
|
4.0
|
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Debt/Assets (x)
|
0.3
|
0.3
|
0.4
|
0.4
|
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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The FBMKLCI inched down 0.16 points to close at
1,692.34 yesterday, while the FBMEMAS and FBM100 rose 11.32 and 6.84
points respectively. In terms of market breadth, the gainer-to-loser
ratio was 408-to-378, while 367 counters were unchanged. A total of 1.73b
shares were traded valued at MYR1.87b.
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NEWS
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Outside Malaysia:
U.S: Smaller trade gap a mixed blessing as demand weakens
everywhere. The deficit between the value of exports and imports shrank
to USD 56.9b in March, the smallest since February 2015. It represented a
10.3% improvement from a final reading of USD 63.4b in February. The
value of merchandise bought by Americans from abroad slumped 4.4% to USD
173.6b, the lowest since December 2010. Exports also fell last month,
indicating weak global markets and a relatively strong dollar are still
hindering American factories’ overseas sales. American exports declined
1.2% to USD 116.7b, the second-weakest reading since February 2011.
(Source: Bloomberg)
Brazil: Holds rate steady as new government waits in
wings. Brazil’s central bank kept its key interest rate unchanged in a
widely expected decision amid the unfolding drama of impeachment
proceedings against President Dilma Rousseff and the country’s economic
woes. Policy makers, led by President Alexandre Tombini, held the
so-called Selic rate at a near-decade high of 14.25% for the sixth
straight meeting. The decision was unanimous. In a change of language
from its previous statement, the central bank said that there had been
progress in the fight to contain price pressures but that high inflation
and inflation expectations above its 4.5% target don’t offer “room for
more flexible monetary policy.” (Source: Bloomberg)
Japan: Consumer prices dropped more than expected last
month, adding to evidence that the nation is struggling to break free of
deflation as the central bank board meets to decide whether to expand
monetary stimulus. Prices excluding fresh food slumped 0.3% YoY in March,
the most since April 2013, the statistics bureau announced. Excluding
food and energy costs, inflation was 0.7% YoY. The inflation figures are
some of the most important data for the Bank of Japan to gauge the impact
of its monetary expansion program. (Source: Bloomberg)
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Other News:
Muhammad Ibrahim is New Bank Negara Governor. Datuk
Muhammad Ibrahim, 56, who joined the central bank in 1984 and appointed
Deputy Governor in June 2010, will hold the post for five years,
effective May 1, 2016. In his 32 years at the central bank, he covered
many areas including bank regulations and supervision, strategic
planning, payment systems, insurance, offshore banking and treasury and,
financial markets. (Source: Bernama)
Datasonic: Bags MYR223.4m passport contract. The contract
will be over a five-year period from Dec 1 2016, or 13.416 million units.
The contract is expected to contribute positively towards the future
earnings and net assets per share of the group for the financial year
ending March 31, 2017 and thereafter. (Source: The Sun Daily)
MAHB: Final decision on klia2 LAD issue by June. LAD was
imposed on UEM Construction and Bina Puri due to the delay in works on
klia2. However, the contractors disputed the fine, saying that the delay
was caused by changes made to the original plan. MAHB said the total
amount of the LAD is MYR50m. However, based on an estimated MYR5m charge
per month according to published LAD considerations, it should have
exceeded MYR95m as the delay ran for more than 19 months. (Source: The
Sun Daily)
Kimlun: Gets MYR98.3m housing contract from Mah Sing.
Kimlun, tasked with constructing 492 houses in Mukim Plentong, Johor
Baru. The construction work is expected to be completed by July 2018 and
is expected to contribute positively to its earnings. (Source: The Edge
Financial Daily)
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