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Share
Price:
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MYR8.60
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Target
Price:
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MYR8.90
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Recommendation:
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Hold
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Extending its
Thailand reach
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The Symphony investment would be TDC’s third in recent
years, and signifies further progress in its ASEAN expansion plans. The
combined assets of Symphony and KIRZ (TDC’s other Thai associate) would
roughly mirror that of TDC in Malaysia, albeit operations on a much
smaller scale. Our earnings and TP are unchanged pending deal
completion. Maintain HOLD on valuation grounds.
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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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682.4
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766.9
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880.3
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991.2
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EBITDA
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263.9
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292.6
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334.5
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376.6
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Core net profit
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171.2
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246.6
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235.2
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258.2
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Core EPS (sen)
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29.8
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42.8
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40.7
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44.6
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Core EPS growth (%)
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34.0
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43.5
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(4.9)
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9.8
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Net DPS (sen)
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80.2
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30.6
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10.2
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11.2
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Core P/E (x)
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28.9
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20.1
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21.1
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19.3
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P/BV (x)
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2.4
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2.3
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2.2
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2.0
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Net dividend yield (%)
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9.3
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3.6
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1.2
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1.3
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ROAE (%)
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21.0
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19.1
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10.6
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11.1
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ROAA (%)
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6.4
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9.2
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8.4
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8.7
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EV/EBITDA (x)
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16.2
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14.2
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14.1
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12.0
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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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Chi Wei Tan
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Syairah Malek
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MACRO RESEARCH
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Tourism: 2016 ended with a positive note
by Chew
Hann Wong
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Dec 2016 visitor arrivals grew 2% YoY, bringing 2016
arrivals growth to +4.0%. China tourist arrivals grew a strong 27%
YoY in 2016 vs. +4% in 2015. More importantly, 2016 tourism receipts
grew 19% YoY to MYR82.1b. We are bullish going into 2017 given the weaker
MYR coupled with ongoing promotional efforts by the government and
airlines. Direct beneficiaries to the positive growth in tourist
arrivals which we have existing BUYs are MAHB, AirAsia, GENT,
Al-Salam REIT, Sunway REIT and IGB REIT.
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Chew Hann Wong
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Samuel Yin
Shao Yang
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Steady at USD95b
by
Suhaimi Ilias
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External reserves at end-Feb 2017 totaled USD95b,
unchanged vs end-Jan 2017 as repatriation of export earnings and net
foreign buying of equities offset continued net foreign selling of
bonds. At USD95b, the external reserves are equivalent to 8.5 months
of retained imports and 1.1 times of short-term external debt.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Continued to accelerate
by
Suhaimi Ilias
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Headline inflation rate accelerated to +3.3% YoY in
Feb 2017 (Jan 2017: +2.7% YoY) while core inflation rate picked up to
+2.7% YoY (Jan 2017: +2.5% YoY). Raised our 2017 headline inflation
rate forecast to +3.5% from +3.0%.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Outflows, likely maturity driven
by
Winson Phoon
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Fund flows to emerging market debts rose to a net gain
of +USD17.1b in February from +USD14.1b in January, the IIF
estimates. On Malaysia, foreign outflows widened to MYR7.3b but it
was mostly maturity-driven. Majority of the outflows since Nov 2016
was due to selloff by foreign banks, but the risks is whether bond
index provider arbitrarily reduces Malaysia’s weight in GBI-EM GD
which has been on the decline in the past few months.
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Winson Phoon
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Se Tho Mun Yi
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Timely pullback
by Tee
Sze Chiah
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FBMKLCI pared early gains to end the day 1.3pts higher
at 1,728.66. Market breadth was also positive with gainers outpacing
losers by 586 to 320. A total of 3.38b shares worth MYR2.90b changed
hands yesterday. Having said so, we expect FBMKLCI to stage a minor
pullback today as selling pressure is expected to accelerate after
the benchmark failed to close above the resistance at 1,730.
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NEWS
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Outside Malaysia:
OECD: Sees a lot to worry about economic outlook. The
global economy may not be strong enough to withstand risks from increased
trade barriers, overblown stock markets or potential currency volatility,
according to the Organisation for Economic Cooperation and Development.
While forecasting a pickup in growth this year and next, it said the pace
is still too slow and warned there’s much that could derail it. The OECD
expects global expansion to reach 3.3% this year, up from 3% in 2016, and
pick up again in 2018. But the pace will remain short of its average in
the two decades before the financial crisis because of weak investment
and productivity gains. (Source: Bloomberg)
U.S: Trade deficit widens to largest in almost five years
as a jump in merchandise imports in January exceeded a smaller gain in
shipments overseas. The gap in goods and services trade increased by
9.6%, to USD 48.5b. The deterioration in January from the previous month
reflected a 2.3% gain in imports, the most since March 2015, and a 0.6%
pickup in exports. (Source: Bloomberg)
U.S: Consumer borrowing posts smallest gain since July
2012 as American households reduced their credit-card balances. The USD
8.8b advance last month followed a revised USD 14.8b gain in the prior
month, Federal Reserve figures showed. Revolving debt, which includes
credit cards, declined by the most since December 2012 as households got
to work reducing balances that had built up over the holiday-shopping
season. The figures also help explain a moderation in consumer spending
so far in the first quarter. (Source: Bloomberg)
E.U: Domestic spending drove euro-area growth in the
fourth quarter of 2016, with trade damping output. GDP rose 0.4%,
matching earlier estimates and the rate of expansion in the previous quarter.
Household consumption added 0.2% point to growth, while government
spending and investment contributed 0.1 point each, the European Union’s
statistics office said. Recent economic data have highlighted the
strength of the euro-area recovery, with a gauge of investor confidence
jumping to the highest level since before the global financial crisis.
Together with an inflation rate that has quadrupled to 2% in just four
months, that’s put pressure on European Central Bank policy makers to map
out an exit from unconventional stimulus. (Source: Bloomberg)
China: Foreign-currency reserves unexpectedly halted a
seven-month losing streak, rising in February amid tighter controls on
capital outflows and a rally in the yuan. The stockpile increased by USD
6.9b to USD 3.005t last month, the People’s Bank of China said. (Source:
Bloomberg)
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Other News:
Tenaga Nasional: TNB signs 30MWac solar PPA with Gading
Kencana. TNB has signed a largescale solar (LSS) power purchase agreement
(PPA) with Gading Kencana Development S/B for a 30MWac plant in Bidor,
Perak. Gading Kencana will design, construct, own, operate and maintain
the solar photovoltaic energy generating facility. The PPA, which has an
expected commercial operation date of 28 June 2018, governs the
obligations of the parties to sell and purchase the energy generated by
the facility for a period of 21 years from the commercial operation date.
(Source: The Edge Financial Daily)
Hap Seng: Sells logistics firm for MYR750m. Hap Seng
Consolidated is disposing of the entire stake in its logistics firm for
MYR750m. It had entered into a conditional share sale agreement with LSH
Logistics Ltd for the disposal exercise. The disposal is an opportunity
for the group to realise an expected gain of close to MYR500m, which will
be utilised for the repayment of borrowings and working capital purposes.
(Source: The Sun Daily)
IHH Healthcare: To venture into Macedonia. IHH
Healthcare’s 30% owned associate Clinical Hospital Acibadem Sistina
Skopje (Sistina) plans to provide outpatient medical services in
Macedonia. Siatina had thus set up two wholly-owned subsisiaries in the
Balkan nation - Ordinacija po Interna Medicina Acibadem Sistina Bitola 24
and Poliklinika Acibadem Sistina Bitola 27 - last month. Both Medicina
Sistina and Poliklinika Sistina have no issued and paid-up share capital
as the governing Macedonian laws allow a health institution to be
registered without share capital. (Source: The Star)
DRB-Hicom: DRB-Hicom sells stake in subsidiary for
MYR1.54m. DRB-Hicom’s wholly-owned subsidiary Hicom Holdings has sold its
entire 70% stake in Scott & English Electronics Holdings S/B (SEEH)
for MYR1.54m cash. Hicom Holdings had entered into a share sale agreement
with Ng Kong Chin for the sale of 1.4m SEEH shares for MYR1.10 per share.
The divestment was completed yesterday and SEEH has ceased to be a
subsidiary in the DRB-Hicom. The MYR1.54m cash consideration takes into
account the net assets of MYR2.22m based on the unaudited financial
statements of SEEH as at 30 Sept 2016 and Hicom Holdings having fully
recovered its entire cost of investment in SEEH via receipts of dividends
from SEEH. (Source: The Sun Daily)
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