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Share
Price:
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MYR4.78
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Target
Price:
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MYR3.80
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Recommendation:
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Sell
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Stronger results
priced-in
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Stronger 2QFY3/17 earnings was largely due to a lower
forex-related loss and relatively more stable operating environment
QoQ. However, the results was within expectations. We reiterate our
SELL call and TP of MYR3.80 (21x CY17 PER; mean valuation): (i) share
price rose 26% in 6 months as the intense ASP competition subsided;
(ii) CY17 PER of 25x is demanding, considering that it has lost its
niche in nitrile glove production as its competitors caught up.
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FYE Mar (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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1,146.0
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1,498.3
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1,627.7
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1,860.1
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EBITDA
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321.6
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386.8
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426.6
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495.5
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Core net profit
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209.7
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257.6
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277.2
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315.1
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Core FDEPS (sen)
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13.4
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15.5
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16.7
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19.0
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Core FDEPS growth(%)
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(15.1)
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16.3
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7.6
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13.7
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Net DPS (sen)
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6.5
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8.0
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8.4
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9.6
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Core FD P/E (x)
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35.8
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30.8
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28.6
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25.2
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P/BV (x)
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5.9
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5.2
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4.8
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4.4
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Net dividend yield (%)
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1.4
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1.7
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1.8
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2.0
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ROAE (%)
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19.0
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18.6
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17.6
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18.3
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ROAA (%)
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16.4
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15.1
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13.0
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12.8
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EV/EBITDA (x)
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20.7
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21.0
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19.2
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16.8
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Net debt/equity (%)
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net cash
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10.9
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21.5
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26.1
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NEWS
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Outside Malaysia:
Germany: Industrial production declined the most in more
than two years in September as Europe’s biggest economy ran into summer
weakness. Production, adjusted for seasonal swings, fell 1.8% from the
previous month, when it rose a revised 3%, data from the Economy Ministry
showed. Output was up 1.2% YoY. (Source: Bloomberg)
U.K: Manufacturing surged the most in five months in
September, led by repair and maintenance of transport equipment including
ships and machinery. The advance of 0.6%, exceeding forecasts for a 0.4%
increase, indicates some strength in factories at the end of the third
quarter. Still, weakness at the start of the period meant that
manufacturing dropped 0.9% over the three months. (Source: Bloomberg)
U.K: Banks win two-year crisis debt-rule deadline
extension. The Bank of England pushed back the deadline for lenders to
amass the equity and debt they’ll need to comply with new rules intended
to keep taxpayers off the hook in a crisis. U.K. banks have until Jan. 1,
2022, to issue the estimated GBP 20b (USD 24.8b) of additional debt
needed to satisfy the requirement, two years later than initially
proposed by the BOE. The rule is the centerpiece of regulators’ efforts
to protect against a repeat of the 2008 financial crisis, when British taxpayers
had to bail out firms including Lloyds Banking Group Plc and Royal Bank
of Scotland Group Plc. (Source: Bloomberg)
China: Exports fell for a seventh month, leaving policy
makers reliant on domestic growth engines to hit their economic expansion
goals. Overseas shipments dropped 7.3% YoY in October in dollar terms.
Imports slipped 1.4% YoY. Trade surplus widened to USD 49.1b. (Source:
Bloomberg)
China: PBOC says interest rates in line with economic
fundamentals. China’s central bank, which has held the benchmark interest
rate at a record low for more than a year, said that the current level is
in line with economic fundamentals. The People’s Bank of China said
monetary policy should not provide “too much” liquidity and should
prevent pushing up debt and leverage levels, according to the
third-quarter monetary policy implementation report published. “In
general, current total money supply and interest rate levels match
changes in economic fundamentals,” the central bank said in the report.
“Monetary policy should remain prudent to not only support effective fund
demand to avoid a radical decline in overall demand, but also to avoid
providing too much liquidity, pushing up debt and leverage levels.”
(Source: Bloomberg)
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Other News:
Titijaya: Partners China firm for MYR2.1b project at
Embassy Row, KL. Titijaya Land will partner China’s CREC Development (M)
S/B (CRECD) for a mixed development project at Embassy Row, Jalan Ampang,
Kuala Lumpur, with a gross development value (GDV) of MYR2.1b. To
facilitate the collaboration, Titijaya and CRECD entered into a share
sale agreement yesterday to acquire the entire stake in Ampang Avenue
Development S/B from Chan Peng Kooh and Rafidah Menan for MYR80m. Ampang
Avenue’s subsidiary Nipah Valley S/B is the registered proprietor of the
6.06ha Jalan Ampang leasehold land, which is valued at MYR403m currently.
(Source: The Sun Daily)
Ekovest: Bags MYR157m contract from DBKL. It's unit
EkoRiver Construction S/B, has secured an improvement and beautification
works contract, worth MYR157.25m, from the Kuala Lumpur City Hall (DBKL).
In a filing with Bursa Malaysia, Ekovest said the contract consisted of
two packages, one that involved Dataran Merdeka and Jalan Tun Perak to
Jalan Tun Tan Cheng Lock and the second one was Masjid India. (Source:
The Star)
HeiTech Padu: Wins MYR48m deal to combine Fomema’s,
Immigration’s systems. The group has been awarded a MYR48.23m contract to
integrate Fomema’s Foreign Worker Medical Examination System with the
Malaysian Immigration System used for biometric verification of foreign
workers.In September last year, HeiTech Padu clinched a three-year,
MYR38.35m contract to maintain the equipment and software computer system
for the Immigration Department; and in April this year it was awarded an
18-month extension of the contract and additional ceiling for application
system maintenahce services at the department worth MYR21.47m. (Source:
The Star)
Petronas Dagangan: 3Q net profit up 13.7%, pays 14 sen
dividend. Petronas Dagangan, a 69.86%-owned subsidiary of Petroliam
Nasional , saw its net profit rise 13.7% to MYR248.76m or 25 sen a share
in the third quarter ended Sept 30, 2016 (3QFY16), from MYR218.88m or 22
sen a share a year ago, mainly contributed by its retail business.
Revenue, however, fell 14.9% to MYR5.54b in 3QFY16 from MYR6.51b in
3QFY15, mainly due to a decrease in average selling price by 13% coupled
with lower sales volume of 2%. It also declared an interim dividend of 14
sen per share amounting to MYR139.08m for the financial year ending Dec
31, 2016 (FY16), payable on Dec 8. (Source: The Edge Financial Daily)
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