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Share
Price:
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MYR1.69
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Target
Price:
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MYR2.20
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Recommendation:
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Buy
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Clearer days;
U/G BUY
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We take comfort in TCM’s slightly better outlook coming
from its cost-cutting measures and positive adjustments to component
purchase cost by Nissan. These should lead to operating margins
improvement amid weak vehicle sales outlook from lack of new models. We
revise forecasts resulting in narrower losses in FY17, higher earnings
recovery in FY18/19. Our P/BV-based TP is raised to MYR2.20 (+25%) as
we now peg to 0.5x FY17 NTA (-0.75 SD of LT mean) vs. 0.4x (-1 SD).
Upgrade to BUY.
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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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5,716.7
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5,510.7
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5,280.6
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5,669.4
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EBITDA
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307.2
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158.9
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192.5
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227.6
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Core net profit
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76.5
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(48.9)
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(12.0)
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23.7
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Core EPS (sen)
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11.7
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(7.5)
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(1.8)
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3.6
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Core EPS growth (%)
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11.5
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nm
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nm
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nm
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Net DPS (sen)
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5.0
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2.0
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1.0
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1.0
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Core P/E (x)
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14.4
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nm
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nm
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46.6
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P/BV (x)
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0.4
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0.4
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0.4
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0.4
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Net dividend yield (%)
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3.0
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1.2
|
0.6
|
0.6
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ROAE (%)
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2.7
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(1.9)
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(0.4)
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0.8
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ROAA (%)
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1.5
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(0.9)
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(0.2)
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0.4
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EV/EBITDA (x)
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9.1
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15.9
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13.0
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11.0
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Net debt/equity (%)
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37.7
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45.9
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47.4
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47.5
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Share
Price:
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MYR0.61
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Target
Price:
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MYR0.72
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Recommendation:
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Buy
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A step closer to
a special div?
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The terms of the proposed disposal of 73%-owned One Media
Group have been finalised. MCIL will receive (MYR264.6m or MYR0.15/shr
in net proceeds and recurring earnings may not be negatively impacted.
We do not discount the possibility of a special DPS. Our estimates are
unchanged pending completion of the disposal but we now upgrade MCIL to
BUY with a higher MYR0.72 TP (MYR0.62 previously) on 13.5x CY17 PER or
+1SD to LT 12M forward PER mean (11.6x CY17 PER previously).
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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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1,589.3
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1,362.3
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1,315.6
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1,337.3
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EBITDA
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268.1
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205.2
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166.5
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177.7
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Core net profit
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144.4
|
111.6
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80.8
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93.3
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Core EPS (sen)
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8.6
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6.6
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4.8
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5.5
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Core EPS growth (%)
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(8.3)
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(22.7)
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(27.7)
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15.6
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Net DPS (sen)
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3.4
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4.3
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3.4
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3.9
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Core P/E (x)
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7.1
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9.2
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12.7
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11.0
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P/BV (x)
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1.3
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1.2
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1.2
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1.1
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Net dividend yield (%)
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5.6
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7.0
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5.5
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6.3
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ROAE (%)
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15.6
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12.9
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9.5
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10.5
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ROAA (%)
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9.4
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7.1
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5.3
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6.3
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EV/EBITDA (x)
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4.5
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5.5
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5.1
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4.4
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Net debt/equity (%)
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5.8
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net cash
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net cash
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net cash
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Jade Tam
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Samuel Yin Shao
Yang
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Share
Price:
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MYR1.95
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Target
Price:
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MYR2.30
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Recommendation:
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Buy
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More wins, more
positives
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SAKP’s MYR434m worth of new contracts lifts its job wins
to MYR1.8b for CY17 to-date. Replenishment is progressively gaining
momentum, a positive. Monetising its gas fields beyond the SK310 B15
field is a re-rating catalyst. We see SAKP as a direct proxy, beta play
for a rising oil price environment. Our SOP-TP offers an 18% upside. It
has proposed to change its name to Sapura Energy Berhad; EGM is on 23
Mar 2017.
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FYE Jan (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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9,943.0
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10,184.0
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7,232.9
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7,633.5
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EBITDA
|
3,120.5
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3,088.6
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2,274.8
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2,262.9
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Core net profit
|
1,216.7
|
1,009.4
|
177.6
|
163.3
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Core EPS (sen)
|
20.3
|
16.9
|
3.0
|
2.7
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Core EPS growth (%)
|
13.6
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(16.8)
|
(82.4)
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(8.0)
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Net DPS (sen)
|
4.3
|
1.4
|
0.0
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0.0
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Core P/E (x)
|
9.6
|
11.5
|
65.6
|
71.3
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P/BV (x)
|
1.0
|
1.0
|
0.9
|
0.9
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Net dividend yield (%)
|
2.2
|
0.7
|
0.0
|
0.0
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ROAE (%)
|
12.9
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(6.5)
|
1.4
|
1.3
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ROAA (%)
|
4.0
|
2.8
|
0.5
|
0.5
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EV/EBITDA (x)
|
10.2
|
8.9
|
12.1
|
11.9
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Net debt/equity (%)
|
130.9
|
134.1
|
128.5
|
121.9
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MACRO RESEARCH
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Growth to resume
by Chew
Hann Wong
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Cumulative core earnings of our research universe was
down 3.6% YoY in 4Q16 which led to 12M 2016 core earnings being
weaker by 2.0% YoY (-1.5% YoY for KLCI core earnings). Headline
earnings included substantial kitchen sinking especially at oil &
gas. After three years of earnings ‘stagnating’, there is visibility
for equities’ core earnings to resume their growth this year.
Bottom-up, we derive +7.1% core earnings growth for the KLCI in 2017,
+7.0% in 2018.
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FBMKLCI: Battle cry
by Tee
Sze Chiah
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FBMKLCI gapped up to close at 1,715.67 yesterday amid
buoyant overnight US markets. At day’s end, the benchmark surged
17.98pts. Broader market was in a jubilant mood as gainers outpaced
losers by 595 to 308. Trading volume of 3.13b worth MYR3.03b was recorded
yesterday. The rally in FBMKLCI was backed by higher trading volume
and this often signifies the beginning of a new uptrend. As such we
expect the resistance of 1,720 to be tested in the near-term. Support
is realigned to 1,700 and 1,690.
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NEWS
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Outside Malaysia:
U.S: Initial jobless claims drop to lowest in almost 44
years, indicating the job market continues to power forward. Jobless
claims fell by 19,000 to 223,000 in the week ended Feb. 25, the fewest
since March 1973, a report from the Labor Department showed. The weekly
decline, which was the largest this year, shows employers are keeping
dismissals at a minimum as demand remains steady and the labor market
stays tight. Federal Reserve policy makers will take persistent job
growth and falling separations into consideration at their monetary
policy meeting later this month. (Source: Bloomberg)
E.U: Euro-area inflation accelerated to the fastest pace
since January 2013, providing fresh arguments to those calling for an
exit from the European Central Bank’s monetary stimulus program. Consumer
prices rose 2% YoY in February, the European Union’s statistics agency
said. The rate was 1.8% YoY in January. Rising oil prices have been
pushing up inflation across the euro area, including in Germany, its
largest economy, Spain and Italy. Meanwhile, the euro area’s core
inflation, which strips out volatile elements such as energy was
unchanged for the third consecutive month in February at 0.9%. (Source:
Bloomberg)
Brazil: Says easing cycle to hinge on reforms and economy.
Brazil’s central bank said it will monitor economic reforms, inflation
and growth to determine the length and intensity of a monetary easing
cycle. Last week, the bank’s monetary policy board, led by President Ilan
Goldfajn, voted unanimously to cut the benchmark Selic by three-quarters
of a point for the second time in a row, to 12.25%. In the minutes to the
Feb. 21-22 meeting, policy makers wrote that the inflation outlook had
improved since its last meeting in January and that its base scenario
called for front-loading rate cuts. (Source: Bloomberg)
S. Korea: North Korea ties at worst point in decades.
North Korea relations have fallen to their worst point in decades and
talks are off the table until Kim Jong Un’s regime is ready to give up
its nuclear weapons, South Korea Unification Minister Hong Yong-pyo said
in an interview. “It’s been over 20 years since North Korea’s nuclear
threats started, and tensions are at their worst,” Hong, who oversees
policy on North Korea, said in Seoul. “For the time being, the South
Korean government’s stance is that the North should show a will to
denuclearize,” he said. “That means any dialogue should be based upon
denuclearization.” The comments show how difficult it will be for China,
North Korea’s biggest benefactor and ally, to restart a dialogue to ease
tensions. South Korea and the U.S. have said they want Kim to commit to
abandoning his nuclear program before heading back to the negotiating
table after talks collapsed in 2009. (Source: Bloomberg)
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Other News:
My EG: Wins Immigration Dept job worth MYR554m. My E.G.
Services (MyEG) has entered into a concession agreement with the
government for the provision of online renewal of foreign worker
temporary employment pass for the Immigration Department of Malaysia. The
tenure of the MYR554m project is five years, from May 23, 2015 to May 22,
2020, and is renewable upon expiry, subject to the government’s approval.
(Source: The Sun Daily)
TNB: Inks two solar power agreements. TNB inked on
Thursday large-scale solar (LSS) photovoltaic power purchase agreements
(PPAs) with two special-purpose companies (SPCs). The SPCs - UITM Solar
Power S/B and its own unit TNB Sepang Solar S/B - were set up by
companies that won in the Energy Commission’s competitive bidding
exercise last year to develop transmission-connected LSS projects. UITM
Solar Power will build its facility in Gambang, Pahang, while TNB Sepang
Solar will build its plant in Sepang. Both facilities are scheduled to
start commercial operations on Nov 1, 2018. No contract value was
disclosed. (Source: The Star)
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