Friday, June 23, 2017

SP Setia : SP Setia acquires I&P Group for RM3.65bil

STOCK FOCUS OF THE DAY
MKH : Expands solid growth story beyond Kajang             HOLD

We initiate our coverage on MKH Bhd (MKH) with a BUY recommendation and a fair value of RM3.00 per share, based on a sum-of parts (SOP) valuation. While property development and oil palm plantation are MKH’s core businesses, it has diverse business interests, spanning a wide range of sectors that includes investment property, property management, construction, trading and furniture manufacturing.

Since its founding, MKH has thrived, transforming Kajang into one of the fastest-growing townships in Malaysia, becoming part of Greater Kuala Lumpur. MKH is planning a total RM948mil of new launches in FY17, focusing on affordable residential projects. Beyond FY17, it has several developments with potential GDV of RM9.0bil. MKH has been able to sustain its new property sales level at around the RM800mil mark for the last 3 years amidst the slowdown in the domestic property market. We believe this is due to the group staying true to its core competency, focusing on the affordable segment market.MKH recorded outstanding revenue growth, with its FY11-FY16 5-year revenue compounded annual growth rate (CAGR) standing at 32.8%.

We expect this strong track record to be sustained moving forward, anchored by its property development and plantation divisions. Its earnings growth has been more impressive than its revenue growth. It registered FY11-FY16 5-year operating profit CAGR of 52.3%, while its 5-year net profit CAGR stood at 40.1% for the same period. With a strong management team in place, we believe the group will maintain this commendable track record in the foreseeable future.


Other :
MISC : Expanding offshore division          HOLD
                                                                           
STOCKS ON RADAR
Leader Steel Holdings, HSS Engineers, Aeon Credit Service, Malaysian Pacific Industries

ECONOMIC HIGHLIGHT
The Philippines : Room for rate hike remains


NEWS HIGHLIGHTS
SP Setia : SP Setia acquires I&P Group for RM3.65bil
IHH Healthcare  : IHH dismisses report it’s close to buying India’s Fortis
George Kent  : George Kent tendering for RM4b worth of jobs
JAKS Resources : Property unit turnaround takes time — JAKS Resources


DISCLAIMER:
The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.



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