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Malaysia Banking
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Desmond Ch'ng
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Share
Price:
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MYR14.68
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Target
Price:
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MYR17.00
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Recommendation:
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Buy
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Looking to sell
HLA, HLMT
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We estimate the potential sale of HLA and HLMT is a
positive in that it would unlock the valuations of Malaysia’s fourth
largest life insurer. The disposals could raise about MYR3.2b, which
translates to MYR2.79/share, which we think could potentially be distributed
back to shareholders. We are positive on the stock and maintain our BUY
and SOP of MYR17.00.
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FYE Jun (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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Operating income
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4,549.2
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4,490.9
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4,461.5
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4,732.6
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Pre-provision profit
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2,583.1
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2,490.7
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2,170.1
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2,615.8
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Core net profit
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1,706.9
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1,576.2
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1,466.1
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1,449.9
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Core FDEPS (MYR)
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1.63
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1.51
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1.40
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1.39
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Core FDEPS growth(%)
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14.7
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(7.7)
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(7.0)
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(1.1)
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Net DPS (MYR)
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0.38
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0.38
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0.29
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0.29
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Core FD P/E (x)
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9.0
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9.7
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10.5
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10.6
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P/BV (x)
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1.3
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1.2
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1.1
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1.0
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Net dividend yield (%)
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2.6
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2.6
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2.0
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2.0
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Book value (MYR)
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10.90
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12.45
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13.64
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14.61
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ROAE (%)
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15.8
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12.8
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10.2
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8.9
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ROAA (%)
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0.9
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0.8
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0.7
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0.7
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Share
Price:
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MYR2.93
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Target
Price:
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MYR2.75
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Recommendation:
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Hold
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Sports Pack
price hiked by MYR8/month
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The Sports Pack price will be raised by MYR8/month
effective 1 Aug 2016. All else being equal, this price hike will raise
FY1/17 ARPU by MYR1.60. That said, we fear that subscribers will
downgrade or disconnect their packages in response, due to the current
weak consumer sentiment. Maintain our earnings estimates which reflect
nil net Pay-TV additions and MYR99.4 ARPU in FY1/17. Still prefer ASTRO
relative to its adex-based peers (i.e. MPR, STAR and MCIL).
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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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5,231.4
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5,475.4
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5,681.6
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5,814.2
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EBITDA
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1,808.3
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1,940.6
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1,842.8
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2,030.1
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Core net profit
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519.4
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662.0
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644.8
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798.1
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Core FDEPS (sen)
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10.0
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12.7
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12.3
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15.2
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Core FDEPS growth(%)
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15.9
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27.3
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(3.0)
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23.8
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Net DPS (sen)
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11.0
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12.0
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12.0
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12.0
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Core FD P/E (x)
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29.4
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23.1
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23.8
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19.2
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P/BV (x)
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22.0
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25.4
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24.6
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19.2
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Net dividend yield (%)
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3.8
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4.1
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4.1
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4.1
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ROAE (%)
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79.5
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102.3
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105.6
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112.8
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ROAA (%)
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7.5
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9.7
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9.2
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11.3
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EV/EBITDA (x)
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9.6
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9.1
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9.9
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9.1
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Net debt/equity (%)
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309.9
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nm
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489.5
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396.1
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Share
Price:
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MYR1.16
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Target
Price:
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MYR1.10
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Recommendation:
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Hold
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Menara Shell:
Long-term positive
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MQREIT’s proposed funding for the Menara Shell acquisition
via new unit placement is EPU and DPU dilutive, based on our initial
assumptions. We raise FY17-18 net profit forecasts by 45% each but
lower DPU by 4-5%. Downgrade to HOLD with a lower DCF-based TP of
MYR1.10 (-5sen; WACC: 6.6%, terminal yield: 7.0%) as total return is
<10%.
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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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70.2
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115.2
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124.4
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186.1
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Net property income
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53.3
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90.3
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100.3
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145.3
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Distributable income
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34.2
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54.0
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56.9
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87.9
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DPU (sen)
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7.5
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6.9
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7.0
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7.1
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DPU growth (%)
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0.0
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(8.1)
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0.8
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1.8
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Price/DPU(x)
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15.4
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16.7
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16.6
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16.3
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P/BV (x)
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0.8
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0.8
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0.8
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0.9
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DPU yield (%)
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6.5
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6.0
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6.0
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6.1
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ROAE (%)
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6.4
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7.5
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6.3
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7.8
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ROAA (%)
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4.0
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4.3
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3.5
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4.4
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Debt/Assets (x)
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0.4
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0.4
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0.4
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0.4
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Share
Price:
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MYR2.73
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Target
Price:
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MYR4.35
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Recommendation:
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Buy
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1QFY1/17 results
in line
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1QFY1/17 results were expectedly in line. Our forecasts
(22% 3-year NP CAGR) are unchanged. A potential 15sen special DPS,
estimated in three months post divestment of its non-O&G operations
in Jul 2016 is an immediate catalyst. Securing new FPSO job wins is a
long term earnings accelerator, which will propel growth beyond FY19.
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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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1,083.4
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986.0
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996.0
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1,286.2
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EBITDA
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225.4
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261.0
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288.5
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417.8
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Core net profit
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142.6
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173.1
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184.2
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220.0
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Core EPS (sen)
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13.8
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16.2
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17.3
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20.6
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Core EPS growth (%)
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114.7
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17.5
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6.4
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19.4
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Net DPS (sen)
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2.0
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1.9
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2.0
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2.4
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Core P/E (x)
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19.8
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16.8
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15.8
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13.2
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P/BV (x)
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1.9
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1.3
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1.2
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1.1
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Net dividend yield (%)
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0.7
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0.7
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0.7
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0.9
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ROAE (%)
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13.9
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9.4
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7.9
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8.7
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ROAA (%)
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6.1
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4.8
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3.5
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3.5
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EV/EBITDA (x)
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15.1
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15.6
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14.7
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10.2
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Net debt/equity (%)
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31.6
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51.9
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55.2
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51.3
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SECTOR RESEARCH
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Sector Note
by
Desmond Ch'ng
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The operating environment continues to be challenging
for the industry, what with loan growth tapering off and asset
quality issues emerging. Positively, deposits, while still
contracting YoY, have expanded substantially MoM. We remain vigilant
and NEUTRAL on the sector. BUY AFG, HL Bank and HLFG, SELL CIMB..
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Money supply (M3) growth picked up for the second
month in a row albeit sluggishly (May 2016: +2.2% YoY; Apr 2016:
+1.4% YoY). Being a component of the index of leading economic
indicators, the trend in somewhat encouraging in signaling about GDP
growth heading into 3Q 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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Gap-up window
dressing rally
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The FBMKLCI rose by 11.87 points to close at 1,654.08
yesterday, while the FBMEMAS and the FBM100 gained 62.67 points and
64.57 points respectively. In terms of market breadth, the
gainer-to-loser ratio was 390-to-382, while 352 counters were
unchanged. A total of 1.46b shares were traded valued at MYR2.00b.
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NEWS
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Outside Malaysia:
U.S: Jobless claims increased by 10,000 to 268,000 in the
week ended June 25, a report from the Labor Department showed. The number
of Americans who applied last week for unemployment benefits rose to a
level that’s still consistent with steady improvement in the labor
market. Companies are reluctant to fire workers as skilled and
experienced employees become difficult to attract in a tighter labor
market. (Source: Bloomberg)
E.U: European Union had its debt downgraded by S&P
Global Ratings as the aftershocks of the U.K. vote to abandon the
28-nation bloc reverberated across global markets. S&P lowered the
rating to AA from AA+, citing fiscal concerns for the EU once it loses
one of its wealthiest contributors. “Going forward, revenue forecasting,
long-term capital planning, and adjustments to key financial buffers of
the EU will be subject to greater uncertainty,” S&P said in a
statement. (Source: Bloomberg)
E.U: The European Commission approved EUR 150b (USD 167b)
in government liquidity guarantees that Italy can provide to its banks
until the end of the year, an EU official said. The scheme covers
liquidity support measures for banks that are solvent as a precautionary
measure, the Commission said. Such plans are currently in place in
several member states and there is no expectation that the need to use
this scheme should arise, according to the Commission. (Source:
Bloomberg)
Germany: Unemployment extended its decline in June,
signaling economic growth remained robust before Britons unexpectedly
voted to exit the European Union. The number of people out of work fell
by a seasonally adjusted 6,000 to 2.69 million, data from the Federal
Labor Agency showed. The jobless rate remained unchanged at a record low
of 6.1%. German companies shrugged off the risk of the U.K. quitting the
EU before a June 23 referendum, with business confidence rising to the
highest level since November and private-sector growth accelerating to
the fastest pace this year. (Source: Bloomberg)
Japan: Consumer prices continued to slide in May, putting
more pressure on the Bank of Japan to expand monetary stimulus at its
meeting later this month. Consumer prices excluding fresh food fell 0.4%
in May from a year earlier, after dropping 0.3% in April and March,
according to a statistics bureau report. (Source: Bloomberg)
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Other News:
Building Materials: Looking at partnership in Megasteel.
Lion Group is looking at a 50:50 partnership with Megasteel. Currently,
agreement with a strategic partner in China is still ongoing, but is at
the final stages, which is as part of an ongoing group-wide restructuring
at Megasteel Sdn Bhd that still requires creditors buy-in. The company
declined to name the partner as talks were still going on and an
agreement has yet to be sealed. The intended partner is able to
contribute some MYR2b worth of equipment to the partnership. Tan Sri
William Cheng said the partnership is hopefully to be finalized in two to
three months. (Source: The Edge Financial Daily)
Aviation: COO to replace Mueller as Malaysia Airline’s
CEO. Following the departure of Christoph Mueller later in September,
Khazanah Nasional has picked Peter Bellew to lead troubled Malaysia
Airlines and its holding company Malaysia Aviation Group (MAG). Bellew is
currently MAS’s COO and former Ryanair Holdings executive, will become
MAS and MAG’s group managing director and CEO today. Mueller began his
leave and stepped down from the airline board yesterday. (Source: The
Edge Financial Market)
Berjaya Corp: Four Seasons Kyoto handed over. Four Seasons
Hotel and Hotel Residences Kyoto (Four Seasons Kyoto) in Japan has been
officially handed over to Berjaya Corp’s unit Kyoto Higashiyama
Hospitality Assets TMK by the main contractor, Taisei Corp of Japan.
Kyoto Higashiyama is a subsidiary of Berjaya Kyoto Development (S) Pte
Ltd, a JV between BCorp and Berjaya Land. The investment cost for the
Four Seasons Kyoto was approx. USD380m. The hotel is scheduled to have
its soft opening in mid-October 2016 and will be managed by Four Seasons
Hotels and Resorts. (Source: The Sun Daily)
Salcon: Acquires freehold commercial plot in Australia.
The company purchased a plot of freehold land together with a car park
and a two-storey office building erected on it for AUD37.88m (MYR112.55m)
in cash. It is to be redeveloped with an estimated GDV of AUD230m
(MYR683.38m). Salcon’s subsidiary, Salcon Development (Australia) Pty Ltd
entered into a contract of sale with K & E Rogers Pty Ltd to acquire
all the 2125 sq m plot of land. The company may seek external funding to
fund the proposed acquisition as well as property’s future development
cost. The proposed acquisition is to be completed by the last quarter of
2016. (Source: The Edge Financial Markets)
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