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FEATURE
CALLS
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Malaysia | Genting Bhd
Save the date:
27 Jul
Samuel Yin Shao
Yang
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Share
Price:
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MYR8.90
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Target
Price:
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MYR11.10
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Recommendation:
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Buy
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Save the date:
27 Jul
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21%-owned TauRX will reveal results of two out of its
three Phase III trial studies very soon. We understand that there has
been some success, notably with frontotemporal dementia. We leave our
earnings estimates unchanged but remove the 20% discount to our GENT
SOP/sh valuation to lift our TP to MYR11.10 from MYR8.90 to reflect the
potential monetisation of TauRX. Consequently, we upgrade GENT to BUY
from HOLD. Downside risk also appears limited at current valuations.
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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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18,216.5
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18,100.4
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19,368.0
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21,874.1
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EBITDA
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6,627.5
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5,685.4
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6,793.8
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8,524.9
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Core net profit
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1,777.4
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1,524.2
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1,785.4
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2,670.6
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Core FDEPS (sen)
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46.2
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40.9
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43.4
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63.2
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Core FDEPS growth(%)
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1.5
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(11.5)
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6.1
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45.8
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Net DPS (sen)
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4.0
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3.5
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3.7
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5.4
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Core FD P/E (x)
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19.3
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21.8
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20.5
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14.1
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P/BV (x)
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1.2
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1.0
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1.0
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0.9
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Net dividend yield (%)
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0.4
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0.4
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0.4
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0.6
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ROAE (%)
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6.8
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5.1
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5.3
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7.5
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ROAA (%)
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2.5
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1.9
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2.0
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2.9
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EV/EBITDA (x)
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7.3
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7.9
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7.8
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6.2
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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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MYR4.28
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Target
Price:
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MYR4.10
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Recommendation:
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Hold
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Expecting a
better 2H
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Having met with management, there is little development
that is new at this stage, but there are no major negatives either. Our
forecasts already reflect a stabilization in 2H16 credit costs at Niaga
and unless group earnings surprise positively, we still expect ROEs to
trail at just under 9% into 2017, which is the premise for our FY17
P/BV target of 0.8x and TP of MYR4.10. Nevertheless with a downside of
just 4%, we upgrade our call to 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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Operating income
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14,145.9
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15,395.8
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15,869.0
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16,764.9
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Pre-provision profit
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5,854.0
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6,146.8
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6,669.3
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7,193.7
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Core net profit
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3,159.0
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3,411.2
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3,647.7
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3,885.5
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Core EPS (MYR)
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0.38
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0.40
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0.43
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0.46
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Core EPS growth (%)
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(31.1)
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5.6
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6.3
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6.5
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Net DPS (MYR)
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0.15
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0.14
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0.18
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0.19
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Core P/E (x)
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11.2
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10.6
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10.0
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9.4
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P/BV (x)
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0.9
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0.9
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0.9
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0.8
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Net dividend yield (%)
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3.5
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3.3
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4.2
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4.4
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Book value (MYR)
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4.53
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4.87
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4.98
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5.25
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ROAE (%)
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9.3
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8.7
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8.8
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8.9
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ROAA (%)
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0.8
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0.8
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0.8
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0.8
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Share
Price:
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MYR1.60
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Target
Price:
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MYR1.50
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Recommendation:
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Hold
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2Q16 earnings on
track
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2Q16 results were in line whereby earnings were driven by
Tropicana City Property, Gurney Plaza and East Coast Mall but partly
offset by Sungei Wang Plaza’s negative rental reversions. A first gross
DPU of 4.2sen was declared – also within expectations. Our earnings
forecasts are unchanged but we nudge up our DCF-based TP by +5sen to
MYR1.50.
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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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315.4
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344.8
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365.5
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380.5
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Net property income
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208.9
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226.4
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250.9
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260.4
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Distributable income
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158.4
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162.8
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177.4
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185.1
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DPU (sen)
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8.0
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7.7
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7.9
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8.1
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DPU growth (%)
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0.7
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(3.5)
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1.5
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3.6
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Price/DPU(x)
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20.0
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20.7
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20.4
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19.7
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P/BV (x)
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1.2
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1.2
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1.2
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1.2
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DPU yield (%)
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5.0
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4.8
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4.9
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5.1
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ROAE (%)
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6.7
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6.3
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6.2
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6.5
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ROAA (%)
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4.5
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4.1
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4.0
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4.1
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Debt/Assets (x)
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0.3
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0.3
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0.3
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0.3
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SECTOR RESEARCH
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Sector Note
by Chew
Hann Wong
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The KL-SG HSR MoU signifies commitment, and is
positive newsflow for the construction sector. Expected to commence
operations in 2026, the construction duration could take eight years,
starting from 2018. Overall, we view the HSR project positively in providing
long-term sustainable job flows to the construction sector, and it
should also help in enhancing land values with
residential/commercial/industrial developments along much of its
alignment. Reiterate POSITIVE on the construction sector.
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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Index to remain
lack lustre
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The FBMKLCI inched down by 0.29 points to close at
1,670.55 yesterday, but the FBMEMAS and the FBM100 gained 12.46
points and 12.76 points respectively. In terms of market breadth, the
gainer-to-loser ratio was 425-to-376, while 368 counters were unchanged.
A total of 1.88b shares were traded valued at MYR2.01b.
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NEWS
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Outside Malaysia:
Global: IMF scraps forecast for growth pickup on Brexit
fallout. The International Monetary Fund scrapped its forecast for a
pickup in global growth this year, citing Britain’s vote to leave the
European Union, and warned the damage could worsen if confidence falters
among investors and companies. The IMF sees global gross domestic product
rising 3.1% this year, down from April’s 3.2% projection and equal to
growth in 2015, according to the fund’s quarterly World Economic Outlook,
released in Washington. The 2017 forecast was cut to 3.4% from 3.5%.
(Source: Bloomberg)
U.S: Housing starts increased more than forecast in June,
providing some momentum for residential real estate near the end of its
busy selling season. Residential starts increased 4.8% to a 1.19 million
annualized rate, the most since February, from 1.14% in May that was
lower than previously estimated, Commerce Department data showed.
Permits, a proxy for future construction, also climbed. The residential
construction industry has remained in a steady but tepid recovery,
struggling to make further progress as homebuilders run up against scarce
land supply and credit standards stay tight in the eighth year after the
last recession. At the same time, stable job gains and prospects for
faster wage growth should buoy real-estate demand in the months ahead. (Source:
Bloomberg)
Germany: ZEW investor confidence deteriorated in July on
concern that Britain’s decision to leave the European Union could weaken
the region’s fragile economic recovery. The ZEW Center for European
Economic Research in Mannheim said its index of investor and analyst
expectations, which aims to predict economic developments six months
ahead, fell to minus 6.8 from 19.2 in June. That’s the lowest level since
November 2012. (Source: Bloomberg)
U.K: Faces slowest growth since 2012 after Brexit vote,
IMF says. The IMF said in its World Economic Outlook that Britain’s gross
domestic product will rise 1.7% this year before expansion cools to 1.3%
in 2017, the slowest for a calendar year since the height of the
euro-area sovereign debt crisis in 2012. The latest projections compare
with forecasts for 1.9% and 2.2% published in June, just before the EU
referendum. (Source: Bloomberg)
U.K: Inflation accelerated more than forecast in June,
boosted by airfares on trips to continental Europe. The rate rose to 0.5%
from 0.3% in May, the Office for National Statistics said. Core
inflation, which excludes volatile food and energy prices, strengthened
to 1.4%. Airfares jumped 11% in June from May, partly due to the Euro
2016 football championship in France, which saw England progress to the
second round of the tournament before losing to Iceland. The ONS said the
rising cost of oil also helped to “nudge up” the index. While the reading
is still well below the Bank of England’s 2% target. (Source: Bloomberg)
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Other News:
Kerjaya Prospek: Wins MYR214m construction job for Malacca
project. Kerjaya Prospek Sdn Bhd (KPSB) has accepted a letter of award
from Apple 99 Development Sdn Bhd to undertake work for The Apple and
Courtyard by Marriott development project in Malacca for MYR213.75m. The
contract was for the project’s main building works involving, among
others, a 16-storey hotel building with 284 rooms known as Courtyard by
Marriott, a 32-storey service suite building with 361 units of service
apartments, and an eight-storey podium of car parks. The group has also
declared a single-tier interim dividend of four sen per share for FY16
ending Dec 31. The construction work is expected to start on Aug 1, 2016
and is slated for completion on Oct 31, 2018. (Source: The Star)
PRG : JV for high-quality affordable housing project. PRG
Holdings entered into a JV with Baycity Park Sdn Bhd to develop
high-quality affordable apartment project, consisting 650 units priced
from MYR250,000 to MYR450,000 each in Subang Bestari Seksyen U5, Selangor.
Under the agreement, PRG's unit Premier Gesture Sdn Bhd has a 51% stake
and Baycity Park 49% in the JV company called Premier Baycity Sdn Bhd,
which will carry out and manage the development and sale of units on
behalf of Baycity Park. The project will be funded via internal sales
cash flow and bridging loans, but its gross development value is yet to
be announced. (Source: The Sun Daily)
AFG: To take earnings hit from OPR cut. Alliance Financial
Group (AFG) expects the profitability of its banks to be negatively
impacted by the Overnight Policy Rate (OPR) cut by Bank Negara Malaysia
but is confident that it will be able to steer through the challenge. CEO
Joel Kornreich said, it expects to register a high single-digit loan
growth in the current financial year ending March 31, 2016 (FY17), from
4.9% in FY16, driven by the SME as well as consumer and commercial
segments. The company aims to outpace the industry's loan growth of
6%-7%.Its loan growth stood at 4.9% last year. (Source: The Sun Daily)
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