[Maybank IB] Today's Research - Malaysia

COMPANY RESEARCH Lingkaran Trans Kota | Recovering traffic volumes Li Shin Chai

MACRO RESEARCH Malaysia | Up on surge in capital inflows Suhaimi Ilias Malaysia | Euphoria of inflows Winson Phoon Malaysia | Yet another late index rise Lee Cheng Hooi

NEWS Outside Malaysia Other news

COMPANY RESEARCH

Malaysia Company Update Lingkaran Trans Kota (LTK MK) by Li Shin Chai Share Price: MYR5.15 Target Price: MYR4.90 Recommendation: Hold Recovering traffic volumes Traffic volume at the LDP has partially recovered from its decline after the actual toll rate hike in Oct 2015. We expect LITRAK to deliver strong 4QFY3/16 results on the c.47% increase in the LDP’s scheduled toll rate on 1 Jan 2016. Near term, there could be potential threats to the traffic volume. However, DPS should hold and even surprise positively given its strong FCF and earnings step-up in FY17. Maintain HOLD. FYE Mar (MYR m) FY14A FY15A FY16E FY17E Revenue 373.9 380.7 422.1 555.5 EBITDA 316.7 321.6 355.8 481.1 Core net profit 134.1 137.9 173.3 259.7 Core EPS (sen) 26.1 26.8 33.6 50.4 Core EPS growth (%) 1.6 2.6 25.7 49.9 Net DPS (sen) 17.0 20.0 25.0 25.0 Core P/E (x) 19.7 19.2 15.3 10.2 P/BV (x) 5.3 4.9 4.6 3.7 Net dividend yield (%) 3.3 3.9 4.9 4.9 ROAE (%) 28.5 26.6 31.0 40.1 ROAA (%) 5.9 6.2 7.7 10.9 EV/EBITDA (x) 9.5 9.0 10.0 7.0 Net debt/equity (%) 207.2 177.5 158.1 103.5 Li Shin Chai    (603) 2297 8684    lishin.c@maybank-ib.com

MACRO RESEARCH MY: External Reserves, 31 Mar 2016 Economics Research by Suhaimi Ilias Up on surge in capital inflows External reserves as at 31 Mar 2016 increased to USD97.0b from USD96.1b on 15 Mar 2016 and USD95.6b at end-Feb 2016. But it fell in Ringgit terms to MYR381.6b from MYR412.3b due to quarterly FX revaluation loss as MYR appreciated against USD. The latest tally is equivalent to 8.0 months of retained imports, lowest since Sep 2015 and 1.1 times of short-term external debt. Year-to-date, external reserves increased by +1.8% from USD95.3b at end-2015. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Fixed Income Foreign Flows, Mar 16 Fixed Income Research by Winson Phoon Euphoria of inflows Renewed appetite for EM assets spurred foreign inflows with high-yielding regional bond markets the primarily receiver of flows. Total debt inflows to Malaysia totalled an outsized MYR11.5b in March, the highest since May 2014. Adding the MYR6b net foreign flows to equities, total portfolio inflows amounted to MYR17.5b in March, the highest since Apr 2011. Winson Phoon    (603) 2074 7176    winsonphoon@maybank-ib.com Se Tho Mun Yi    (603) 2074 7606    munyi.st@maybank-ib.com MY: Technicals Technical Research by Lee Cheng Hooi Yet another late index rise The FBMKLCI gained 7.28 points to close at 1,724.29 yesterday on miniscule institutional support, while the FBMEMAS and FBM100 rose 47.94 and 48.13 points respectively. In terms of market breadth, the gainer-to-loser ratio was 424-to-380, while 388 counters were unchanged. A total of 1.52b shares were traded valued at MYR2.16b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: U.S: Household borrowing climbed more than forecast in February from a month earlier, led by financing for automobiles and college education. The USD 17.2b increase followed a USD 14.9b gain in the prior month that was larger than previously estimated, Federal Reserve figures showed. Non-revolving credit, which includes student and automobile loans, rose while revolving credit, which includes credit card spending, also picked up. (Source: Bloomberg) U.S: Fewer Americans filed for unemployment benefits last week, illustrating a healthy labor market that’s allowing workers to feel more secure in their job. Jobless claims dropped by 9,000 to 267,000 in the week ended April 2, a report from the Labor Department showed. Weekly applications have been below 300,000 for longer than a year as steady demand encourages employers to retain those who are qualified and experienced. Dismissals near the lowest level since 1973 have been accompanied by a steady drumbeat of hiring, propping up consumer spending and the economy. (Source: Bloomberg) U.K: House prices jumped 2.6% in March, according to Halifax, which said that pace may not be sustained as weaker economic confidence and uncertainty surrounding Britain’s European Union referendum weigh on the market in the coming months. The average valueof a home surged to GBP 214,811 (USD 302,200), the mortgage lender said. From a year earlier, prices rose 11%. In the first quarter, values increased 2.9% from the previous three months. (Source: Bloomberg) Other news: Power: KeTTHA to award up to 250MW solar power. The ministry of energy, green technology and water (KeTTHA) will be awarding up to 250MW of utility-scale solar capacity by June this year. To note that over 300 companies have put in their proposals. KeTTHA also added that the commercial operation for the plants would start in 2017. (Source: The Edge Financial Daily) Maybank: Still on the lookout for regional M&As. This is to realise the group’s target of deriving 40% of its pre-tax profit from international operations, set in 2010. Maybank said it failed to achieve its target last year as they failed to acquire an asset. There are many opportunities available and we will continue to recommend to the board, said Maybank. (Source: The Sun Daily) TAS Offshore: To sue QMS1 Offshore after another job axed. It plans to initiate legal action against Abu Dhabi based QMS 1 Offshore Services Ltd (QOSL) after the latter terminated another contract, MYR45.7m shipbuilding contract, bringing total value of contracts terminated by QOSL to MYR151.5m. The termination of contract is expected to impact the company’s FY16 results, but the extent would depend on the outcome of the proceedings. (Source: The Edge Financial Daily)