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Share
Price:
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MYR7.94
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Target
Price:
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MYR6.15
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Recommendation:
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Sell
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Tough operating
environment
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While the industry’s capacity overhang may prolong into
2017, LMC’s sequential earnings may improve on lower cost and
normalised tax rate. Additionally, downside to ASP could be limited as
cement players’ profitability is already at risk. However, we cut FY16-18
EPS by 33%/10%/ 5% and DPS to 16sen in FY16 (95% net profit payout),
indicating 12M fwd DY of just 3%. Our new TP is MYR6.15 (-5%) as we
roll forward valuation to 2017, attaching the latest mean PER of 23x
(vs. 22x). Maintain SELL.
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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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2,743.1
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2,750.8
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2,422.9
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2,642.2
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EBITDA
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493.5
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509.4
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400.6
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531.4
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Core net profit
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256.0
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251.0
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139.5
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227.3
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Core EPS (sen)
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30.1
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29.5
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16.4
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26.8
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Core EPS growth (%)
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(30.2)
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(1.9)
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(44.4)
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63.0
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Net DPS (sen)
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34.0
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31.0
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15.6
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25.4
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Core P/E (x)
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26.4
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26.9
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48.4
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29.7
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P/BV (x)
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2.2
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2.2
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2.2
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2.2
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Net dividend yield (%)
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4.3
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3.9
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2.0
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3.2
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
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6.4
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6.0
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3.2
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5.2
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EV/EBITDA (x)
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15.9
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14.9
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17.2
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12.7
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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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NEWS
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Outside Malaysia:
U.S: Payrolls rise by 151,000 in August; jobless rate
steady. Companies kept adding to payrolls in August while measures of
slack in the labor market were little changed, signaling steady hiring in
the face of lackluster global growth. Payrolls climbed by 151,000 last
month following a 275,000 gain in July that was larger than previously
estimated, a Labor Department report showed. The jobless rate and labor
participation rate held steady, while wage gains moderated. (Source:
Bloomberg)
Germany: Merkel party suffers first defeat by
anti-immigration populists. Chancellor Angela Merkel’s party was beaten
by the populist Alternative for Germany for the first time in a state
election, showing the persistence of the backlash against her open-border
refugee policy. Merkel’s Christian Democrats took 19% in the Baltic coast
state of Mecklenburg-Western Pomerania on Sunday, while Alternative for
Germany, or AfD, had about 22%, according to ARD projections based on
partial returns. The Social Democrats, who have governed the eastern
state since 1998, won the election with an estimated 30.3%, dropping
Merkel’s party to third place in her political homeland.(Source:
Bloomberg)
U.K: May sees difficult times ahead for economy
post-Brexit. Prime Minister Theresa May warned there were “difficult
times ahead” for the U.K. economy in the wake of the country’s vote to
leave the European Union. May was speaking as she traveled to the Group
of 20 summit in Hangzhou, China, where she’ll make the case that Britain
can be a champion of free trade, while warning of the risk of anti-
globalization sentiment from those who see themselves hurt by the
lowering of barriers. “I won’t pretend it’s all going to be plain
sailing,” she told reporters on board her plane, when asked about the economy.
“There will be some difficult times ahead.” (Source: Bloomberg)
Crude Oil: Holds above USD 44/bbl as Saudi Arabia, Russia
agree to stability. Crude rose the most in two weeks when President
Vladimir Putin said he’d like OPEC and Russia to agree to freeze crude
supply to steady the market. Oil-market stability is impossible without
Saudi-Russian cooperation, the kingdom’s influential Deputy Crown Prince
Mohammed bin Salman said after meeting with Putin in Hangzhou, China. The
two biggest crude producers stopped short of offering detailed proposals.
Brent for November settlement climbed USD 1.38 to end the session at USD
46.83/bbl on the London-based ICE Futures Europe exchange. (Source:
Bloomberg)
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Other News:
Aviation: Mavcom urged to resolve disparity in KLIA, klia2
PSC. The Malaysian Aviation Commission (Mavcom) has been urged to quickly
resolve the glaring disparity in the passenger service charge (PSC)
between the KLIA and klia2 in line with international practice. The
earlier PSC or more commonly known as airport tax, is standardised the
better because if it remains unresolved, it would pose a threat to the
Malaysian aviation sector. The PSC is fixed at MYR32 and MYR6 for
international and domestic passengers respectively flying from klia2
while KLIA’s outbound passengers pay much more at MYR65 and MYR9 for
international and domestic flights respectively. (Source: The Edge
Financial Daily)
Axiata: Banks on IoT to drive growth. Axiata Group is
banking on Internet of Things (IoT) as a growth driver, as it embarks on
a collaboration agreement with Atilze Digital Sdn Bhd to explore, develop
and pursue IoT opportunities across South-East Asia. The collaboration
agreement between Axiata and Atilze is targeting five sectors for IoT,
namely transportation, utility management, healthcare, connected home,
and smart cities. The term of the collaboration agreement is for a period
of 12 months, where Altize together with Axiata will jointly implement
Proof-of-Concept pilots for connected cars and LoRa IoT network in
Malaysia, Indonesia, and Thailand. (Source: The Star)
Bintai Kinden: Subsidiary gets MYR169m, Singapore hospital
job. Bintai Kinden Corp’s subsidiary Bintai Kindenko Pte Ltd has clinched
a SGD56.1m (MYR168.7m) subcontract to supply and install air-conditioning
and mechanical ventilation system at the proposed 19-storey Outram
Community Hospital, which will be linked to Singapore General Hospital,
as well as at its Campus Logistics Centre. The 69.82%-owned subsidiary
had on Friday accepted the letter of award from Penta Ocean Construction
Co Ltd. Bintai Kinden expected the project to be completed by February
2019. (Source: The Star)
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