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Share
Price:
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MYR0.30
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Target
Price:
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MYR0.42
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Recommendation:
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Buy
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Post briefing
key takeaways
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The OSV market generally remains soft. DCR is softening
but utilisation is strengthening. Icon will take delivery of a new AWB
ahead of its 1Q17 schedule, driving expectation of securing a charter.
It also managed to defer some principal debt repayments by 3 years, a
positive to its cash flow. There is no firm M&A for now although
Icon is expected to be at the forefront of the OSV consolidation
activity in Malaysia. Our earnings forecasts and TP remain, based on 1x
EV/replacement value.
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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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318.9
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266.6
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254.6
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327.1
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EBITDA
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190.3
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122.8
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99.1
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130.3
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Core net profit
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74.9
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18.2
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6.0
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27.4
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Core EPS (sen)
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6.4
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1.5
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0.5
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2.3
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Core EPS growth (%)
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(34.1)
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(75.6)
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(66.9)
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354.7
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Net DPS (sen)
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0.0
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0.0
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0.0
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0.0
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Core P/E (x)
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4.8
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19.7
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59.5
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13.1
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P/BV (x)
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0.3
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0.5
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0.5
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0.5
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Net dividend yield (%)
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0.0
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0.0
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0.0
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0.0
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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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4.5
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1.1
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0.4
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1.9
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EV/EBITDA (x)
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7.7
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9.2
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10.3
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6.9
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Net debt/equity (%)
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54.9
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84.9
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89.8
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71.0
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Sunway (SWB MK)
by Wei Sum
Wong
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Share
Price:
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MYR3.10
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Target
Price:
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MYR3.37
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Recommendation:
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Hold
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Landbanking in
Singapore
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We are neutral on Sunway’s latest acquisition in Sengkang,
Singapore. While land cost seems reasonable at 46% of total GDV, we are
concern on the relatively high competition there. Total units
completing between 2016-2017 in the Central-North area of Districts 19
and 20 (including Sengkang) are estimated at 8,199 units or 18% of
existing stocks (source: Savills Singapore, URA). We maintain our
earnings forecasts and RNAV-TP of MYR3.37 (on an unchanged 40% discount
to RNAV). Maintain 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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4,841.9
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4,451.3
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5,187.5
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5,393.1
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EBITDA
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504.2
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427.8
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777.6
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862.6
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Core net profit
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591.7
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590.7
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530.9
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604.6
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Core FDEPS (sen)
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32.5
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31.6
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26.4
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30.0
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Core FDEPS growth(%)
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20.7
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(2.8)
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(16.5)
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13.9
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Net DPS (sen)
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11.0
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37.0
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8.7
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9.0
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Core FD P/E (x)
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9.5
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9.8
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11.8
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10.3
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P/BV (x)
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0.9
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0.9
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0.7
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0.8
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Net dividend yield (%)
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3.5
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11.9
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2.8
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2.9
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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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4.9
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4.1
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3.2
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3.5
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EV/EBITDA (x)
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15.6
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21.8
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12.8
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13.2
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Net debt/equity (%)
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28.5
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45.3
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43.1
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51.9
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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External reserves at end-Aug 2016 were the same as at
mid-Aug 2016 i.e. USD 97.5 (MYR391.9b), which is slightly higher than
USD97.3b (MYR391.1b) at end-July 2016. The current level is the
highest since July 2015, and equals 8.1 months of retained imports and
1.2 times of short-term external debt.
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Suhaimi Ilias
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Zamros
Dzulkafli
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NEWS
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Outside Malaysia:
U.S: Services industries in August expand at weakest pace
in six years, joining manufacturers in an abrupt slowdown that may signal
waning optimism about the economy. The Institute for Supply Management’s
non-manufacturing index slumped to 51.4, the lowest since February 2010,
from 55.5 in July, the Tempe, Arizona-based group’s report showed. While
a reading above 50 indicates the industries that make up almost 90% of
the economy are expanding, the figure is lower than the most pessimistic
projection in a Bloomberg survey. (Source: Bloomberg)
Germany: Factory orders increased less than forecast in
July as domestic weakness damped a surge in investment-goods demand from
the euro area. Orders, adjusted for seasonal swings and inflation, rose
0.2% from June, when they fell a revised 0.3%, data from the Economy
Ministry showed. Orders were down 0.7% YoY. The report follows a series
of data signaling that economic momentum in Europe’s largest economy has
cooled. Business confidence slumped the most since 2012 in August and a
gauge for private-sector activity fell to the lowest level in 15 months.
(Source: Bloomberg)
Japan: Signals BOJ won’t adopt foreign-bond purchases.
While Bank of Japan Governor Haruhiko Kuroda has indicated an openness to
new ideas, at least one measure - buying foreign bonds - appears to be
off the table as the central bank explores its options for monetary
stimulus. Prime Minister Shinzo Abe told reporters at the close of a
Group of 20 meeting in Hangzhou, China that such purchases are illegal
under the Bank of Japan Law if they are meant as a form of currency
intervention. (Source: Bloomberg)
Australia: Central bank stood pat on interest rates as it
awaits further inflation data and weighs the impact of two cuts in the
last four months. In his final meeting, Reserve Bank of Australia
Governor Glenn Stevens and his board left the cash rate at 1.5%. Traders
see little chance of further easing until after the release of
third-quarter consumer-prices data late October, as the outgoing chief reiterated
that inflation was expected to remain low for “some time.” Stevens hands
the leadership baton to his deputy Philip Lowe in just under two weeks.
(Source: Bloomberg)
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Other News:
O&G: Petronas expects Pengerang complex to start ops
early 2019. Petroliam Nasional (Petronas) is on track to get its USD27b
refining and petrochemical complex in Johor up and running in 2019. The
company shared that 50% of the complex has been completed and they are on
track to start operations in the first quarter of 2019. The project will
consist of a 300,000 barrel per day refinery and petrochemical complex
with combined annual chemical output capacity of 7.7m tonnes. Other
facilities include a liquefied natural gas regasification terminal. (The
Edge Financial Daily)
Tenaga: TNB, SIPP unit sign 21-year PPA for Project 4A.
Tenaga Nasional (TNB) has announced it had signed a 21-year power
purchase agreement (PPA) with Southern Power Generation Sdn Bhd for a
planned 1,440MW power plant in Pasir Gudang, Johor, which is also known
as Project 4A. It is unknown whether SIPP Energy Sdn Bhd – the sole owner
of Southern Power – will bring in a partner to provide the technical
expertise needed for the project. After all, SIPP has no prior experience
in building power plants. Under the PPA, Southern Power will construct,
own, operate and maintain the gas-fired, combined-cycle power plant.
(Source: The Edge Financial Daily)
CIMB: CIMB Bank plans to set up operations in Hanoi,
Vietnam by year-end after clinching an operating license from the State
Bank of Vietnam on Tuesday to operate a 100%-owned subsidiary in the
country. The company shared that Vietnam was one of the bright spots in
Asean and the bank was building a business there for the long term.
(Source: The Star)
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