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Share
Price:
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MYR0.88
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Target
Price:
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MYR1.08
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Recommendation:
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Buy
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NS2: Slight
delay in announcement not a concern
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WSC’s Nord stream 2 (NS2) contract will be signed soon
once the NS2 stakeholders finalize several terms. Schedule-wise, the
project is moving to plan. WSC will need to raise funds to finance this
job. Our forecasts are unchanged, though we do not rule out a potential
asset impairment exercise pertaining to its underperforming 49%-owned
plantation outfit in Congo by end-2016. Our TP is pegged to 10x 2017
PER.
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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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2,438.6
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1,839.5
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1,605.0
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2,550.0
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EBITDA
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296.6
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143.3
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87.5
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223.8
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Core net profit
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145.4
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22.7
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(6.6)
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83.5
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Core EPS (sen)
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18.8
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2.9
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(0.9)
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10.8
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Core EPS growth (%)
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215.9
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(84.4)
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nm
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nm
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Net DPS (sen)
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5.7
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3.0
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0.0
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0.0
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Core P/E (x)
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4.6
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29.8
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nm
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8.1
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P/BV (x)
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0.6
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0.6
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0.6
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0.6
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Net dividend yield (%)
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6.5
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3.4
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0.0
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0.0
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ROAE (%)
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14.1
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2.1
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(0.6)
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7.3
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ROAA (%)
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5.4
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0.8
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(0.2)
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3.0
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EV/EBITDA (x)
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6.4
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12.2
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18.0
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7.3
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Net debt/equity (%)
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71.7
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80.4
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71.2
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70.3
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NEWS
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Outside Malaysia:
Germany: Industrial production increased in June,
signaling that Europe’s largest economy gained momentum ahead of the
U.K.’s Brexit vote. Production, adjusted for seasonal swings, rose 0.8%
from the previous month, when it dropped a revised 0.9%, data from the
Economy Ministry showed. Output was up 0.5% YoY. (Source: Bloomberg)
China: Exports remained sluggish last month, signaling
tepid global demand, while deteriorating imports raise concern domestic
conditions may be weakening anew. Overseas shipments fell 4.4% YoY in
USD, rose 2.9% YoY in yuan terms in July. Imports dropped 12.5% YoY in
dollar terms, slipped 5.7% YoY in local currency. Trade surplus widened
to USD 52.3b. (Source: Bloomberg)
Japan: Bank of Japan limits foreign profits on
negative-yielding bonds. The Bank of Japan’s decision to boost swap lines
shrank the premium foreign investors enjoy when they buy
negative-yielding Japanese debt, helping put a ceiling on the yields they
can earn by purchasing bonds in Japan and swapping the funds back into
dollars. While foreign investors can still earn about a 1.7% rate in
dollars if they buy two- year Japanese bonds that yield minus 0.17%, the
BOJ’s decision to boost swap lines for domestic investors is likely to
put a ceiling on the profits they can earn. (Source: Bloomberg)
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Other News:
Aviation: Malaysia Airlines sees another senior exec
depart. The company has appointed Arved von zur Muehlen as its COO
effective Sept 5, replacing Paul Simmons who will be leaving in
mid-September. According to the Peter Bellew, CEO of Malaysia Airlines, Muehlen
will focus on developing a comprehensive and sustainable plan to improve
Malaysia Airlines’ marketing, sales, products and customer service.
Simmon’s departure makes him third senior executive to announce their
departure after Christoph Mueller and Charles McKee left the airline.
Muehlen brings with him 20 years of experience in the aviation industry.
Prior to his appointment, Muehlen was the senior vice-president of Qatar
Airways. (Source: The Edge Financial Daily)
DRB-Hicom: Rules out total sale of Proton. The company is
currently undertaking a Request For Proposal (RFP) exercise seeking a
partner for Proton Holdings is expected to be completed in the 1Q 17 and
precludes a total disposal of its stake in the group. This is in response
to news articles which alluded to a potential disposal of its entire
stake in Proton to another party. “It must be highlighted that as part of
the requirement of the MYR1.5b loan granted by the government, Proton is
currently undertaking an RFP exercise seeking a partner to Proton who can
provide a strategic, operational and cultural fit on a permanent basis
with the intention to grow its automotive business.” The company added
that the RFP implementation is being overseen by the Task Force Committee
formed by the government last April to monitor the turnaround of Proton.
They are expecting up to seven bids to purchase part or all of Proton.
(Source: The Sun Daily)
MMC Corp: Plans of spinning-off gains momentum. Talks of
the company spinning off its port assets business have emerged since
December last year after the group completed its purchase of all the
remaining shares in NCB Holdings, which operates Northport in Port Klang
and Kontena Nasional. The spin-off plan seems to be gaining momentum
again after the company announced last Friday that it is proposing to
acquire 49% stake in Penang Port. According to Datuk Seri Che Khalid, the
group’s managing director, the port business will be one of the company’s
biggest profit and revenue contributors going forward. The deal could be
Malaysia’s biggest since April 2015, when Malakoff raised USD754m through
an IPO. Part of the proceeds from the potential IPO will be used to
reduce the company’s debt. (Source: The Edge Financial Daily)
Mah Sing: Newly launch The Greenway 85% booked over
weekend. The company’s The Greenway, located at Meridin East township at
Kong Kong, Pasir Gudang, Johor sees 85% of units booked during its
Meridin East sales gallery and show village launch over last weekend. The
sales gallery will be converted into the township’s community clubhouse
over the next three to five years. According to the company, Meridin East
is the largest township under the group’s project and represents a
milestone for the company. The company is already upgrading Jalan Kong Kong
and the next phase will involve developing a proposed slip-in and
slip-out from Senai-Desaru Expressway (SDE) spur road. (Source: The Edge
Financial Daily)
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