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Share
Price:
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MYR3.85
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Target
Price:
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MYR3.80
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Recommendation:
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Hold
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Resetting its
base in 2017
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Westports’ volume weakness came earlier than our
expectation with Apr-May 2017 volume falling by 9% YoY, a result of
lower ad hoc calls, volume outflow from CMA CGM and the time lag effect
from the just-commenced Ocean Alliance. We bring forward our volume
drop expectation to FY17 (from FY18) and revise our FY17-19 EPS
forecasts by -12%/+2%/+2%. Our DCF-derived TP remains unchanged at
MYR3.80 (WACC: 6.7%, 2025-2054 growth rate: 2%).
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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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1,578.3
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1,804.3
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1,731.5
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1,836.4
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EBITDA
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869.1
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963.5
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885.3
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989.0
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Core net profit
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504.9
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623.6
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549.5
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536.4
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Core EPS (sen)
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14.8
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18.3
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16.1
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15.7
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Core EPS growth (%)
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(1.4)
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23.5
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(11.9)
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(2.4)
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Net DPS (sen)
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11.1
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14.0
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12.1
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11.8
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Core P/E (x)
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26.0
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21.1
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23.9
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24.5
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P/BV (x)
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6.9
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6.3
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6.0
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5.6
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Net dividend yield (%)
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2.9
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3.6
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3.1
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3.1
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ROAE (%)
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27.6
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32.1
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25.7
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23.6
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ROAA (%)
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12.8
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14.9
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12.1
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11.2
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EV/EBITDA (x)
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17.0
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16.0
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16.3
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14.4
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Net debt/equity (%)
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39.7
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35.3
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58.8
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49.4
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SECTOR RESEARCH
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A potential RHB-AMMB merger
by
Desmond Ch'ng
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We are neutral to slightly positive on the potential
RHB-AMMB merger. Merger valuations are decent and the impact on
financials is expected to be marginal. The success of this merger
will nevertheless very much depend on driving revenue/cost synergies
as quickly as possible. We maintain our HOLD call on RHB and AMMB,
with TPs of MYR5.45 (CY18E PBV 0.9x; ROE: 9.7%) and MYR5.25 (CY18E
PBV 0.9x; ROE: 8.4%) respectively.
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Positive momentum in Apr 2017
by
Desmond Ch'ng
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While YoY loan growth continues to sustain positive
momentum, annualized loan growth continues to be fairly sedate and
needs to gather pace for growth to hold up for the year. Annualized
loan growth of 2.9% compares against our current industry loan growth
forecast of 4.8% for 2017. We maintain our NEUTRAL call on the
sector. Having downgraded AFG to HOLD from BUY, our BUY picks are now
CIMB, HL Bank and BIMB.
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MACRO RESEARCH
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Growth looking up
by Chew
Hann Wong
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Cumulative core net profit of our research universe
expanded 7.8% YoY in 1Q17, a positive relief after a long streak of
earnings contraction. Our 2017/2018 KLCI core earnings forecasts are
raised by +0.9%/+0.9%, and we now expect KLCI core earnings to grow a
quicker +8.4% in 2017 (vs. +7.1% previously) and +7.0% in 2018 (vs.
+7.0% previously). We continue to peg a 16.5x PER (+0.5SD) to derive
our new end-2017 KLCI target.
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Brent Crude Oil Buffer Zones Emerge
by Nik
Ihsan Raja Abdullah
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FBMKLCI failed to sustain earlier gains after
succumbing to selling pressure as the benchmark index fell 2.76pts to
close the day at 1,763.11. Market breadth remained negative with
losers outpacing gainers 505 to 414. A total of 2.22b shares worth
MYR2.24b changed hands yesterday.
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Nik Ihsan Raja
Abdullah
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Tee Sze Chiah
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NEWS
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Outside Malaysia:
U.S. Manufacturing settles in at solid pace of expansion.
American factories are settling back into a solid pace of expansion after
a post-election run-up that saw the Institute for Supply Management’s
manufacturing gauge hit an almost three-year high, figures released.
Factory index little changed at 54.9 (est. 54.8) from 54.8 in April;
readings above 50 indicate growth. ISM’s gauge of new orders increased to
59.5 from 57.5. Measure of production eased, while employment index
picked up. Also 15 of 18 the manufacturing industries reported growth.
Stronger orders growth represents resilient sales that will keep
manufacturing driving forward. Factory managers have registered more
optimism about conditions so far in 2017 amid steady domestic demand and
global growth that looks more promising. (Source: Bloomberg)
U.S: Jobless claims remain low even with biggest rise in a
month. U.S. jobless-benefit claims remain low despite an increase last
week, with the labor market otherwise exhibiting signs of continued tightening,
Labor Department data showed. Initial filings increased by 13k to 248k
(est. 238k). Continuing claims decreased by 9k to 1.915m in week ended
May 20 (data reported with one-week lag). Four-week average of initial
claims, a less-volatile measure than the weekly figure, rose to 238k from
235.5k in the prior week. (Source: Bloomberg)
Crude Oil: OPEC crude production rises led by countries
exempt from cuts. OPEC crude production rose in May led by gains from
Libya and Nigeria, countries that are exempt from the deal to cut output
in a bid to revive oil prices. The Organization of Petroleum Exporting
Countries’ output in May jumped 315,000 barrels a day from a month
earlier to 32.21 million, according to a Bloomberg News survey of
analysts, oil companies and ship-tracking data. Libya’s output soared
210,000 barrels a day to 760,000 while Nigeria’s gained 100,000 to 1.7
million after fields in both countries resumed output as internal strife
eased. (Source: Bloomberg)
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Other News:
Wah Seong: Becomes distributor for South Korean Doosan
Group. Its indirect subsidiary WDG Resources S/B has inked an agreement
with Doosan Infracore Co Ltd, which results in the appointment of WDG as
the exclusive distributor of Doosan Infracore’s products, which it will
also jointly promote. Wah Seong said the distributorship agreement will
remain effective until end-2018. (Source: The Edge Financial Daily)
AppAsia: Partners China Mobile to expand digital video
content abroad. Its wholly-owned subsidiary AppAsia Studio S/B has
entered into a memorandum of understanding with China Mobile
International Ltd to expand its digital video content business in China
and other overseas markets. (Source: The Edge Financial Daily)
Perisai Petroleum: Further defers delivery of jack-up
rigs. The group has obtained the agreement of PPL Shipyard Pte Ltd to
defer the delivery of two jack-up rigs, Perisai Pacific 102 and Perisai
Pacific 103. PPL had agreed to extend the delivery date for both rigs to
Aug 31, 2017, in view of the slump in the upstream oil and gas sector.
(Source: The Edge Financial Daily)
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