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Share
Price:
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MYR1.57
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Target
Price:
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MYR1.90
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Recommendation:
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Buy
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Revisiting
heyday
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2Q16 results overshot expectations on both earnings and
dividend. We raise our FY16-18 EPS by 60%/50%/50% to factor in the
strong 2Q16 and lower production cost; we now project AJR’s EPS to
mirror its upcycle earnings in 2006-08. We also raised our DPS forecast
based on a 40% net profit payout (from nil; 2006-11: avg 46%),
indicating DY of 6.3% in 2016. Our TP is raised to MYR1.90 (from
MYR1.00) as we use a higher target P/B of 0.9x (from 0.6x). Upgrade AJR
to BUY (from 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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Revenue
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2,291.9
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1,760.9
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2,012.2
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1,962.5
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EBITDA
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127.0
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12.4
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249.2
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204.4
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Core net profit
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23.3
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(135.5)
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135.8
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102.0
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Core EPS (sen)
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4.5
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(25.9)
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26.0
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19.5
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Core EPS growth (%)
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90.2
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nm
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nm
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(24.8)
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Net DPS (sen)
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1.0
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0.0
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10.4
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7.8
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Core P/E (x)
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35.2
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nm
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6.0
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8.0
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P/BV (x)
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0.8
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0.9
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0.8
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0.8
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Net dividend yield (%)
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0.6
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0.0
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6.6
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5.0
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ROAE (%)
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2.2
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(13.6)
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14.0
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9.8
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ROAA (%)
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0.8
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(5.2)
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5.7
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4.4
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EV/EBITDA (x)
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15.0
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128.1
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6.7
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8.1
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Net debt/equity (%)
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126.2
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133.6
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83.9
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78.5
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Share
Price:
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MYR7.99
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Target
Price:
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MYR7.56
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Recommendation:
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Hold
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R.T.O. of Saizen
REIT?
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As part of Sime's plan to monetise its Australian
properties and deleverage its balance sheet, Sime signed a Framework
Agreement with the manager of Saizen REIT (SZREIT SP; Not Rated) that
will see Sime doing a reverse takeover of the latter. The parties involved
have until 30 Sept 2016 to finalise the details of the agreement.
Hence, we are unable to quantify the financial impact at this juncture.
Maintain HOLD on Sime with an unchanged TP of MYR7.56 on 21x FY17 PER.
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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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Revenue
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43,908.0
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43,729.0
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44,355.0
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47,944.2
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EBITDA
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5,270.9
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4,659.7
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4,034.1
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4,394.3
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Core net profit
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3,352.7
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2,313.8
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1,756.5
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2,235.5
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Core EPS (sen)
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55.3
|
37.3
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28.3
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36.0
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Core EPS growth (%)
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(10.2)
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(32.6)
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(24.1)
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27.3
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Net DPS (sen)
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36.0
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25.0
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18.4
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23.4
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Core P/E (x)
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14.5
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21.4
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28.3
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22.2
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P/BV (x)
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1.7
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1.6
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1.6
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1.6
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Net dividend yield (%)
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4.5
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3.1
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2.3
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2.9
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ROAE (%)
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12.0
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7.8
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5.7
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7.1
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ROAA (%)
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6.8
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4.1
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2.7
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3.3
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EV/EBITDA (x)
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12.5
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14.6
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15.5
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14.6
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Net debt/equity (%)
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22.0
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45.8
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37.9
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41.6
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Share
Price:
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SGD1.63
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Target
Price:
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SGD1.80
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Recommendation:
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Buy
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Expect stronger
2H16 earnings
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FR cuts its 2016 FFB output growth guidance to -10% YoY,
in line with our assumption. Earnings wise, we expect it to play catch
up on seasonal 2H16 production recovery, and as downstream earnings
improve. We are keeping our EPS forecasts. Maintain BUY and SGD1.80 TP
on 17x 2017 PER, pegged at its 5-year historical mean.
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FYE Dec (USD 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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615.5
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453.7
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474.9
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568.5
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EBITDA
|
288.6
|
202.6
|
182.7
|
229.5
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Core net profit
|
172.0
|
109.8
|
88.1
|
120.9
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Core EPS (cts)
|
10.9
|
6.9
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5.6
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7.6
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Core EPS growth (%)
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(20.7)
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(36.1)
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(19.7)
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37.2
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Net DPS (cts)
|
2.6
|
1.8
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1.7
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2.3
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Core P/E (x)
|
11.2
|
17.5
|
21.8
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15.9
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P/BV (x)
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1.8
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2.6
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2.4
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2.2
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Net dividend yield (%)
|
2.1
|
1.5
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1.4
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1.9
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ROAE (%)
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16.7
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12.2
|
11.5
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14.4
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ROAA (%)
|
9.1
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6.2
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5.5
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7.1
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EV/EBITDA (x)
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8.7
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12.2
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11.9
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9.3
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Net debt/equity (%)
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21.8
|
39.3
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26.8
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17.6
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SECTOR RESEARCH
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Sector Note
by Thong
Jung Liaw
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The year of the
barbarians
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Service providers’ ultimate aim is to endure the
cyclical downturn and be lean and resilient. Debt restructuring and
asset divestment are priorities over the next 12 months. An absolute
recovery is still a distance away but the situation has improved. We
are NEUTRAL on the sector but there are pockets of trading opportunities
on cyclical, thematic and valuation plays. Our key BUYs are Yinson,
SAKP and PVGas. Our SELLS are SMM, Keppel and MMHE.
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Thong Jung
Liaw
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Yeak Chee
Keong
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NEWS
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Outside Malaysia:
U.S: Confidence among homebuilders improved in August on
sales as steady job growth and low interest rates boosted prospects for
the residential real-estate market in the second half of the year,
according to data from the National Association of Home Builders/Wells
Fargo. Builder sentiment gauge rose to 60 from revised 58. Readings
greater than 50 indicate more respondents reported good market conditions
and the August figure matched the median forecast. Measure of six-month
sales outlook rose to 67 from 66, while index of current sales climbed 2
points to 65. Gauge of prospective buyer traffic eased to 44 from 45.
(Source: Bloomberg)
Japan: Economic growth slows as business spending slumps.
The economy grew less than forecast in the three months through June 30
as business spending contracted for a second-straight quarter and
exporters struggled with the resurgent yen. GDP expanded by an annualized
0.2% in the second quarter. (Source: Bloomberg)
Singapore: The number of new homes sold rose to the
highest in a year in July, with buyers snapping up new projects after
almost three years of price declines. Developers sold 1,091 units last
month, compared with 536 in June, according to data released by the Urban
Redevelopment Authority. That’s the highest since July 2015, when 1,655
units were sold. Singapore’s government has been steadfast in its
commitment to cool the housing market, maintaining real estate tightening
measures rolled out since 2009 even as the city-state’s home prices dropped
for an 11th quarter. An index tracking private residential prices fell
0.4% in the three months ended June 30 from the previous quarter, capping
the longest series of quarterly losses since 1975 when prices were first
published, according to data from the URA last month. (Source: Bloomberg)
Crude Oil: Trades above USD 45/bbl amid OPEC production
freeze speculation. Russia is open to talks for a joint output freeze “if
necessary,” Energy Minister Alexander Novak told Saudi Arabian newspaper
Asharq Al-Awsat. Prices advanced last week as Saudi Arabia signaled it’s
prepared to discuss stabilizing markets at informal OPEC discussions next
month. Crude output at major U.S. shale plays is forecast to fall 1.9%
month-over-month in September, according to EIA monthly Drilling
Productivity Report. (Source: Bloomberg)
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Other News:
George Kent: Leads MRT2 job race. A consortium led by the
company has emerged the front runner for a MYR1b deal to build new tracks
for the MRT2. The company has teamed up with Chinese partner China
Communications Construction Co Ltd (CCCC) to bid for the work package.
The equity structure of the consortium is not known. The consortium is
said to have submitted the most competitive bid in terms of pricing,
putting it in the lead for the engineering, procurement, construction and
commissioning of the MRT tracks for the long 52.2km-long Sungai
Buloh-Serdang-Putrajaya (SSP) line. According to sources familiar with
the matter, the work package is expected to be awarded by MRT Corp by
next month. (Source: The Edge Financial Daily)
IGB Corp: Sells Renaissance Hotel for MYR765m. According
to Bursa filing yesterday, the company said conditional sale and purchase
agreement was signed between wholly owned subsidiary Great Union
Properties Sdn Bhd (GUP) and buyer of the hotel, Ventura International
Sdn Bhd yesterday. The audited net book value of the asset was MYR667.2m
as at Dec 31, 2015 and according to the company, the divestment will
accord the group with a gain of MYR85m net of tax for the financial year
ending Dec 31, 2017. It will improve the net assets per share and
earnings by six sen. IGB intends to utilise the proceeds for working
capital and to support its continued growth for suitable future
acquisitions or investments. (Source: The Sun Daily)
IOI: Buyers hold off mending ties. Leading global buyers
of palm oil are holding off on mending business ties with the company
despite an industry watchdog’s decision to reinstate the producer’s green
certification. The RSPO in April withdrew IOI’s “sustainability
certification” after allegations the company had illegally chopped down
rainforests in Indonesia and planted palm crops on peatland. But earlier
this month, it said IOI had satisfied conditions for the suspension to be
lifted, a move that has sparked sharp criticism from environmental
groups. Food companies Nestle, Kellogg, Mars Inc and Hersheys, along with
healthcare product makers Johnson & Johnson and Reckitt Benckiser
told Reuters they had no immediate plans to return to business with the
company despite the latest step by RSPO. Procter and Gamble told Reuters
it had ended its relationship with IOI, while Unilever said it was
looking into the watchdog’s decision. IOI remained committed to
“engagement with all its stakeholders” and would be “working hard to
re-engage with them in the coming weeks and months”. (Source: The Edge
Financial Daily)
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