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Share
Price:
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MYR7.79
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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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Monetising value
via land swap
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Sime entered into two RPT with major shareholder. The
deals effectively swaps Sime’s 326ha of oil palm estates in Selangor
for PNB’s bigger estates (769ha) in Johor, and yet Sime stands to
pocket a net disposal gain of MYR296m and net cash inflow of MYR322m on
completion. We are positive on the deal as it unlocks value through
monetisation and opportunistic divestments. We are keeping our earnings
and HOLD call for now. TP is unchanged at MYR7.56 on 21x FY17 PER.
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FYE Jun (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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43,729.0
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43,962.8
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46,528.4
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49,642.8
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EBITDA
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4,801.4
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4,328.2
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4,421.3
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4,899.5
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Core net profit
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2,430.0
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2,408.8
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2,280.3
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2,543.5
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Core EPS (sen)
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39.1
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38.1
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36.0
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40.2
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Core EPS growth (%)
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(29.2)
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(2.7)
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(5.3)
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11.5
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Net DPS (sen)
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25.0
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27.0
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23.4
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26.1
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Core P/E (x)
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19.9
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20.5
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21.6
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19.4
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P/BV (x)
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1.6
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1.5
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1.5
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1.4
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Net dividend yield (%)
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3.2
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3.5
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3.0
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3.4
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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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4.3
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3.8
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3.5
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3.8
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EV/EBITDA (x)
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14.1
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14.2
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14.3
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13.0
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Net debt/equity (%)
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44.4
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34.9
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35.0
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34.9
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Share
Price:
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MYR2.75
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Target
Price:
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MYR2.75
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Recommendation:
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Hold
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Operationally
stable
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Post our recent meeting with management, we remain
positive on Padini’s near-term earnings growth outlook which is backed
by sustained organic growth and new store openings. Our new TP is
MYR2.75 (+25sen) as we peg Padini to a higher 12x FY17 PER which is at
its mean (re-rated from 11x). Nonetheless, the stock remains a HOLD as
we think that current valuation of 12.6x CY17 PER is fair (at +0.5SD
1-year forward PER mean) and its favourable earnings growth has been
largely priced in.
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FYE Jun (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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977.9
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1,301.2
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1,484.6
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1,598.3
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EBITDA
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145.3
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221.7
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239.9
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258.2
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Core net profit
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80.2
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137.4
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149.7
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158.0
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Core EPS (sen)
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12.2
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20.9
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22.8
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24.0
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Core EPS growth (%)
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(11.8)
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71.3
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9.0
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5.5
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Net DPS (sen)
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10.0
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11.5
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10.0
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10.0
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Core P/E (x)
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22.6
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13.2
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12.1
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11.5
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P/BV (x)
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4.5
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3.9
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3.3
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2.8
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Net dividend yield (%)
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3.6
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4.2
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3.6
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3.6
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ROAE (%)
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20.2
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31.4
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29.3
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26.4
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ROAA (%)
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13.7
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19.6
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17.4
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16.2
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EV/EBITDA (x)
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4.6
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5.8
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6.2
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5.5
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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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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Budget 2017, titled “Accelerating Growth, Ensuring
Fiscal Prudence, Enhancing Wellbeing of People” will be tabled on 21
Oct 2016. While we expect continued fiscal discipline and
consolidation, the poor, low and mid-income groups, as well as
sectors like affordable housing and infrastructure should be the main
beneficiaries.
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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: Jobless claims near four-decade low ahead of payrolls
data. Filings for U.S. unemployment benefits fell last week to the
second-lowest level since 1973, as employers show scant willingness to
fire workers amid a tightening labor market. Jobless claims dropped by
5,000 to 249,000 in the week ended Oct. 1, a Labor Department report
showed. Continuing claims declined to the lowest level since 2000.
(Source: Bloomberg)
U.S: Matthew set to be the strongest storm to hit since
2005. Hurricane Matthew is set to be the strongest storm -- and one of
the costliest -- to hit the U.S. since 2005 as it bears down on Florida’s
East Coast, forcing nuclear reactors shut, creating fuel shortages and
threatening to knock out electricity to millions while wiping out half the
state’s grapefruit production. The Category 4 storm, with winds of 140
miles (225 kilometers) is expected to make landfall near West Palm Beach
and Melbourne overnight and then track north along the Atlantic coast,
racking up as much as USD 50b in economic losses. At least 2 million
people have been ordered to flee its path, with evacuations under way in
Georgia and South Carolina as forecasts call for the storm to continue
north into the weekend. (Source: Bloomberg)
U.K: Confidence among businesses has returned close to its
level before the decision to leave the European Union, with companies
feeling more optimistic about the economy. An index by YouGov and the
Centre for Economics and Business Research increased to 112.4 in
September from 109.7 a month earlier. The gauge was at 112.6 in June and
112.5 in May. The percentage of businesses in the survey feeling upbeat
about the economy over the coming year rose to 44% from 35% in August.
(Source: Bloomberg)
U.S: Pound plunges 6.1% in biggest drop since Brexit
result, to a fresh 31- year low. Sterling touched USD 1.1841, the lowest
since March 1985. It dropped as much as 6.5% versus the euro at 90.23
pence per euro. (Source: Bloomberg)
Saudi Arabia: Post-oil plan off to rough start in year
one. The first year of Saudi Arabia’s drive to reduce its oil dependence
may end with the opposite result. A flurry of cost-cutting measures will
likely push the non-oil economy into recession, analysts say. That means
that any overall growth in 2016 will be largely due to record crude
output. Efforts to manage the fallout from cheap oil gathered steam over
the past two weeks. Policy makers have suspended bonuses and trimmed
allowances for government employees. Ministers’ salaries were cut by 20%.
The central bank also said it’s injecting about SAR 20b (USD 5.3b) into
the banking system to ease a cash crunch. (Source: Bloomberg)
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Other News:
Westports: MYR1.05b CT8 expansion on track to completion.
Work on MYR1.05b Container Terminal 8 (CT8) is on track, with
construction of Phase 1 of the terminal having been completed. Work on
Phase 2 has also started with the piling for the second 300-metre wharf.
The completion of CT8 expansion would also extend Westports contiguous
linear berth to 5.2 km, which would also allow Westports to accommodate
more effectively the growing requirements of new and larger container
shipping alliances in 2017. (Source: The Edge Financial Daily).
Nestle: Targets MYR500m from e-commerce. The company which
has joined hands with online retailers Lazada and 11 street launch its
wellness electronic stores on both their online shopping platforms, is
targeting to reap MYR500m in sales from its maiden venture into the
e-commerce business. Nestle managing director Alois Hofbauer said, the
group will be investing about MYR2m to MYR3m into hardware. But the
bigger investment will be channeled into the infrastructure, new resources
and working with professional e-retailers. (Source: The Edge Financial
Daily)
Mesiniaga: Secures MYR10.4m contract. The contract worth
MYR10.4m is from Malaysian Investment Development Authority (Mida) for
ICT hardware and software maintenance services. The contract was for a
period of three years commencing from Oct 1, 2016. (Source: The Star)
Perak Transit: Debuts at 40% premium. The company debuted
at a 40% premium on the ACE Market of Bursa Malaysia yesterday, from its
reference price of 15 sen.The Perak Transit Group’s initial public
offering (IPO) saw 58m new shares applied by the Malaysian public by way
of balloting, registering an overall oversubscription rate of 19.83
times. The group raised total gross proceeds of MYR36.75m based on its
public issue of 245m new shares. (Source: The Sun Daily)
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