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Share
Price:
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MYR48.78
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Target
Price:
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MYR49.80
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Recommendation:
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Hold
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FY16: In line
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4Q16 results were in line. While in the near term industry
volumes may remain weak on still weak consumer sentiment, we believe
that BAT’s restructuring plans may provide some support to earnings.
Also, into 2017, we may see illicit market share gradually normalise
lower on increased efforts and new strategies from the Customs
Department. FY17E dividend yield of 4.9% should provide support to its
share price.
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FYE Dec (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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4,581.5
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3,756.4
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3,650.1
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3,619.3
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EBITDA
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1,277.3
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929.6
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911.1
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927.6
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Core net profit
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914.5
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675.1
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689.3
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701.9
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Core EPS (sen)
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320.3
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236.4
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241.4
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245.8
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Core EPS growth (%)
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0.5
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(26.2)
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2.1
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1.8
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Net DPS (sen)
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312.0
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278.0
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236.6
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240.9
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Core P/E (x)
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15.2
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20.6
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20.2
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19.8
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P/BV (x)
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25.5
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22.7
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22.2
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21.7
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Net dividend yield (%)
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6.4
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5.7
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4.9
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4.9
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ROAE (%)
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170.0
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124.4
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111.1
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110.7
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ROAA (%)
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73.4
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56.2
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57.9
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58.9
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EV/EBITDA (x)
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12.8
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13.8
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15.4
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15.1
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Net debt/equity (%)
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50.5
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15.8
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14.4
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12.4
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SECTOR RESEARCH
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Game changer in CGHA amendments?
by
Samuel Yin Shao Yang
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An amendment to the Common Gaming Houses Act 1953
(CGHA) will be tabled in Parliament in Mar 2017 to combat online
gambling. This may be positive for the legal NFO sector which has
been losing market share to illegal NFOs who operate online. We are
hopeful that this will help to rejuvenate the legal NFO market which
has been contracting at 2% CAGR since 2010. That said, we maintain
our earnings estimates for BST and MAG which have imputed CY2017
gross NFO sales growth of +2% and +0% respectively
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MACRO RESEARCH
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Real GDP growth picked up for the second consecutive
quarter to +4.5% YoY in 4Q 2016 (3Q 2016: +4.3% YoY) on expansions in
both domestic demand and net external demand. No change in our 2017
growth forecasts of +4.4% after the +4.2% growth in 2016.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Wider current account surplus
by
Suhaimi Ilias
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Current account surplus widened in 4Q 2016 to
+MYR12.3b or +3.7% of GDP (3Q 2016: +MYR6.0b or +1.9% of GDP) on
significant improvement in goods account surplus which offset the
deficits in services and income accounts. For full-year 2016, current
account surplus was +MYR25.2b or 2.0% of GDP. We expect 2017 current
account surplus to be +MYR24.7b or +1.9% of GDP.
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Suhaimi Ilias
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Zamros
Dzulkafli
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MSCI Emerging Market playing catch up
by Tee
Sze Chiah
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FBMKLCI ended a tad lower yesterday after losing
2.20pts to settle at 1,707.59. Market breath was negative with losers
outpacing gainers by 501 to 368 while 379 stocks remained unchanged.
Trading volume of 2.1b worth MYR2.2b was recorded. The benchmark index
remained above 1,700 despite recent consolidation, suggesting that
selling pressure was well-absorbed. Therefore, we expect the FBMKLCI
to resume its uptrend in the near-term.
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NEWS
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Outside Malaysia:
U.S. Housing starts exceed estimates after a stronger
December. Builders started work on more U.S. homes than forecast in
January after an upward revision to starts in the prior month, a sign
construction was on a steady path entering 2017. Residential starts
totaled an annualized 1.25 million, easing from a 1.28 million pace in
the prior month, a Commerce Department report showed. Permits, a proxy
for future construction, increased at the fastest pace since November
2015 on a pickup in applications for apartment building. (Source:
Bloomberg)
Indonesia: Holds rates while it braces for further Fed
hikes. Indonesia’s central bank kept its benchmark interest rate
unchanged to help shore up the economy in the face of tighter U.S.
monetary policy and the threat of capital outflows. Governor Agus
Martowardojo and his board held the seven-day reverse repurchase rate at
4.75% on Thursday. Six rate cuts in 2016 and rising inflation pressures
are giving policy makers in Indonesia reason to pause, with Martowardojo
earlier this month saying they are turning more cautious because of
growing global risks. Fed Chair Janet Yellen said this week every central
bank meeting is “live” for a possible rate hike. (Source: Bloomberg)
U.S: Crude exports rise to record high as shale surges.
The U.S., which leads the world in oil demand, is moving up the list of
top exporters. Last week the country shipped out 1.03 million barrels a
day of crude, the most in more than 23 years of data compiled by the
Energy Information Administration. Exports have averaged 695,000 for the
first six weeks of 2017, up from 450,000 a year earlier, shortly after
the U.S. overturned a longtime ban of most exports to countries other
than Canada. (Source: Bloomberg)
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Other News:
YFG: Bags MYR245m PR1MA project. The group has bagged a
MYR245m contract for sub-contract works involving construction of
1Malaysia People's Housing Programme (PR1MA) houses in Pedas, Rembau,
Negeri Sembilan. YFG said it has received a letter of award from
Wearegold S/B for the project. The project involves the building and
infrastructure works of the proposed development of 1,572 units of PR1MA
homes. YFG said the project is expected to commence on a date to be
notified in writing by Wearegold and to be completed within 24 months.
(Source: The Edge Financial Daily)
Destini: Buys stake in defence equipment firm. The company
has bought a military helicopter supply company today, enabling it to get
a share of a MYR321.9m contract between the company and Malaysian
Ministry of Defence (MinDef).Destini said its wholly-owned subsidiary
Destini Prima S/B acquired a 70% stake in defence equipment manufacturer,
Halaman Optima S/B for MYR5.5m.In November 2016, Halaman Optima inked a
supply contract with the Malaysian government for the procurement of six
Multipurpose Armed Reconnaissance Model MD530G worth MYR321.9m for the
Armed Forces.(Source:The Edge Financial Daily)
Yong Tai: Eyes Bukit Bintang property devt via Iconic
Paragon. The tourism and cultural property developer is venturing into
the vibrant Bukit Bintang property sector via its proposed investment in
Iconic Paragon S/B which is buying 1.08 acres of leasehold land in that
area. The group is planning to take up a 70% stake in Iconic Paragon,
which is a private developer. Both companies inked an MoU on Thursday
which would see Yong Tai emerging as a strategic shareholder in Iconic
Paragon. (Source: The Sun Daily)
Uzma: Wins MYR50m Petronas job. Uzma has bagged a MYR50m
contract from Petronas Carigali S/B to provide through tubing downhole
tools and services. The two-year contract is effective from Jan 1, 2015
to Dec 31, 2016 with an extension option of one year from Jan 1, 2017 to
Dec 31, 2017. The oil and gas services company added the value of the
contact was estimated at MYR50m over the primary contract period.
(Source: The Star)
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