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Share
Price:
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MYR1.42
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Target
Price:
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MYR1.60
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Recommendation:
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Buy
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Risk-reward
tilting to the positive
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1QFY1/17 results were in line. The 13% fall in share price
post our recent downgrade to HOLD and earnings revision has rendered
SAKP attractive again in terms of valuations and prospects. The
expectation of weak earnings in FY17-18 has been priced in. The recent
signing of the GSA is a catalyst. Oil price is now at a higher
USD48/bbl (vs sub-USD30 in Jan’16).
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FYE Jan (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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9,943.0
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10,184.0
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7,232.9
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7,633.5
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EBITDA
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3,120.5
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3,088.6
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2,254.8
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2,242.9
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Core net profit
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1,216.7
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1,009.4
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107.6
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143.3
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Core EPS (sen)
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20.3
|
16.9
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1.8
|
2.4
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Core EPS growth (%)
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13.6
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(16.8)
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(89.3)
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33.2
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Net DPS (sen)
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4.3
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1.4
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0.0
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0.0
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Core P/E (x)
|
7.0
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8.4
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78.8
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59.2
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P/BV (x)
|
0.7
|
0.7
|
0.7
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0.7
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Net dividend yield (%)
|
3.1
|
1.0
|
0.0
|
0.0
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ROAE (%)
|
11.0
|
8.3
|
0.9
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1.2
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ROAA (%)
|
4.0
|
2.8
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0.3
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0.4
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EV/EBITDA (x)
|
10.2
|
8.9
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10.8
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10.6
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Net debt/equity (%)
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131.0
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134.2
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129.5
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123.1
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Share
Price:
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MYR1.27
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Target
Price:
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MYR1.46
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Recommendation:
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Buy
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Results above;
new land deals
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ECW’s 2QFY10/16 net profit was slightly ahead of our
forecasts. Positively too, 7MFY16 actual sales remain on track to meet
its FY16 sales target. Separately, its proposal to buy two parcels of
land totalling 374.6 acres in Batu Kawan for MYR875m cash, and with an
expected total GDV of MYR7.76b, would enhance our RNAV/sh estimate by
+8sen. A new ‘Business Model’ unveiled addresses concerns on its
balance sheet. We maintain our earnings forecasts and MYR1.46 RNAV-TP
for now.
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FYE Oct (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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148.4
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1,712.1
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3,582.7
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4,700.4
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EBITDA
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42.3
|
411.9
|
562.9
|
751.3
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Core net profit
|
7.2
|
44.0
|
98.1
|
210.6
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Core FDEPS (sen)
|
2.8
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2.6
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3.3
|
7.1
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Core FDEPS growth(%)
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(70.4)
|
(6.9)
|
25.8
|
114.6
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Net DPS (sen)
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0.0
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0.0
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0.4
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0.7
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Core FD P/E (x)
|
44.8
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48.1
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38.2
|
17.8
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P/BV (x)
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1.0
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1.0
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0.8
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0.9
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Net dividend yield (%)
|
0.0
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0.0
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0.3
|
0.6
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ROAE (%)
|
2.2
|
2.5
|
2.8
|
5.4
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ROAA (%)
|
1.2
|
1.2
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1.1
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1.9
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EV/EBITDA (x)
|
15.8
|
8.4
|
8.8
|
6.8
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Net debt/equity (%)
|
60.5
|
37.5
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41.3
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34.1
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Wei Sum Wong
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Chew Hann Wong
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Share
Price:
|
MYR1.05
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Target
Price:
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MYR1.00
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Recommendation:
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Hold
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Expect
supernormal 2Q16
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We expect supernormal earnings in 2Q16 on the jump in
sales volume and ASPs, a result of the temporary supply shortage and
speculative activity in China. We think AJR’s long-term profitability
hinges on the safeguard measures for bars/rods (to be determined by
end-Sep). We raised our FY16-18 EPS forecasts substantially but our TP
is unchanged at MYR1.00 as we continue to value the stock based on book
(at 0.6x P/B - mean valuation), and not PER given the volatility in its
earnings.
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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
|
2,291.9
|
1,760.9
|
1,962.4
|
1,894.1
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EBITDA
|
127.0
|
12.4
|
194.7
|
171.1
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Core net profit
|
23.3
|
(135.5)
|
85.8
|
69.6
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Core EPS (sen)
|
4.5
|
(25.9)
|
16.4
|
13.3
|
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Core EPS growth (%)
|
90.2
|
nm
|
nm
|
(18.9)
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Net DPS (sen)
|
1.0
|
0.0
|
0.0
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0.0
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Core P/E (x)
|
23.5
|
(4.1)
|
6.4
|
7.9
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P/BV (x)
|
0.5
|
0.6
|
0.5
|
0.5
|
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Net dividend yield (%)
|
1.0
|
0.0
|
0.0
|
0.0
|
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ROAE (%)
|
2.2
|
(13.6)
|
8.8
|
6.6
|
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ROAA (%)
|
0.8
|
(5.2)
|
3.4
|
2.7
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EV/EBITDA (x)
|
15.0
|
128.1
|
7.8
|
8.7
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Net debt/equity (%)
|
126.2
|
133.6
|
96.5
|
87.0
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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The FBMKLCI rose by 4.52 points to close at 1,634.04
yesterday, while the FBMEMAS and the FBM100 gained 48.24 points and
42.86 points respectively. In terms of market breadth, the
gainer-to-loser ratio was 529-to-268, while 322 counters were
unchanged. A total of 1.47b shares were traded valued at MYR1.61b.
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NEWS
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Outside Malaysia:
U.S: First quarter economic growth exceeds previous
estimate as improved performance in trade and business investment more
than made up for weaker consumer spending. GDP, the value of all goods
and services produced, rose at a 1.1% annualized rate, compared with a
previously estimated gain of 0.8%, a Commerce Department report showed.
Corporate profits at the start of the year were also revised up, giving a
brighter picture to gross domestic income. (Source: Bloomberg)
U.S: Home prices in 20 U.S. cities rose at a steady pace
in April from a year earlier; a sign demand for residential real estate
remains solid enough to support both buyers and sellers, data from New
York-based S&P/Case-Shiller showed. Twenty-city property values index
increased 5.4% from April 2015 after climbing 5.5% in the year through
March. National home-price gauge rose 5% from 12 months earlier after
5.1% in the year ended in March. (Source: Bloomberg)
S.Korea: Plans a fiscal stimulus package of more than KRW
20t (USD 17b) to cushion risks from corporate restructuring as external
uncertainties grow with the U.K. ’s vote to leave the European Union. The
package will include an extra budget of about KRW 10t that mainly would
be used to create jobs and support regional economies that would be hurt
by corporate restructuring, according to government statements on policy
outlook for the second half. The growth outlook for 2016 was reduced to
2.8% from 3.1%, while the government’s inflation projection was cut to
1.1% from 1.5%. (Source: Bloomberg)
Indonesia: Parliament approved a tax amnesty that the
government says will draw in billions of dollars needed to finance a
widening budget as it steps up infrastructure spending to spur economic
growth. Lawmakers voted in favor of the bill during a plenary session in
Jakarta, among the final steps before it becomes law. Individuals who
repatriate undeclared assets held abroad will face a penalty of 2% to 5%,
according to the bill. (Source: Bloomberg)
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Other News:
RHB Bank: Assumes listing of RHB Capital. The company
expects costs savings of MYR340m per year with the completion of the
group’s restructuring exercise. The group’s savings on interest alone
would be MYR169m a year, while the career transition scheme done last
year, will save the group MYR180m annually. The listing of RHB on the
Bursa Malaysia yesterday, following the delisting of RHB Capital, marked
the completion of the group’s restructuring efforts. (Source: The Edge
Financial Markets)
YTL Power International: Not expected to be materially
affected by Brexit. The company said it is unable to quantify the effects
of Brexit on the company for now, although it does not expect its water
services unit in the country to be materially affected. YTL Power is monitoring
events and conducting ongoing assessments of any operational and
financial impacts and will make further announcements in due course.
(Source: The Edge Financial Markets)
Suria Capital Holdings: Government to expand funding
allocations for Sepangar Bay Container Port. The government has boosted
the funding allocation to expand the Sapangar Bay Container Port, Sabah’s
main container port, by 42% to MYR1.134b. The additional sum of
MYR333.51m is for the expansion programme following the recommendation of
the Value Management Lab for Sabah Development Corridor project. Under
the 11th Malaysia Plan, MYR800m had been originally allocated for the
port expansion, whereby funding under the first rolling plan was to be
staggered over two years (2016-2017). The port is operated by Suria
Capital Holding’s unit, Sabah Ports Sdn Bhd. (Source: The Star)
Tropicana Corp: Award MYR168m contract to Panasonic. The
company has appointed Panasonic Group’s subsidiary Panasonic Home
Malaysia Sdn Bhd as its turnkey contractor to build smart homes for the
third phase of the developer’s MYR12.4b Tropicana township in Selangor.
The third phase of the township near Kota Kemuning has a GDV of MYR358m
is expected to be launched next month and the project is scheduled to be
completed by 2019. (Source: The Edge Financial Markets)
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