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| | | | | | | | | | | | | | | | Share Price: | MYR7.03 | Target Price: | MYR8.10 | Recommendation: | Buy | | |
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| | | Many have underestimated this hero | | 2Q17 core PATAMI of MYR966m (+45% YoY, -26% QoQ) was within our expectation but way above consensus. Operational performance was consistent with management's guidance. Things have been great in 1H17, but will be more challenging in 2H17 due to a number of turnaround activities that will sap production volume and product prices are likely to move sideways. No change to our earnings forecasts. Maintain BUY with an unchanged TP of MYR8.10, based on 8.5x 2017 EV/EBITDA — on par with global peers. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 13,536.0 | 13,860.0 | 14,516.6 | 15,048.2 | EBITDA | 5,036.0 | 5,388.0 | 6,504.8 | 5,844.7 | Core net profit | 2,754.0 | 3,138.0 | 3,985.8 | 3,464.2 | Core EPS (sen) | 34.4 | 39.2 | 49.8 | 43.3 | Core EPS growth (%) | (1.3) | 13.9 | 27.0 | (13.1) | Net DPS (sen) | 18.0 | 19.0 | 25.0 | 22.0 | Core P/E (x) | 20.4 | 17.9 | 14.1 | 16.2 | P/BV (x) | 2.3 | 2.1 | 1.9 | 1.8 | Net dividend yield (%) | 2.6 | 2.7 | 3.6 | 3.1 | ROAE (%) | na | na | na | na | ROAA (%) | 9.3 | 10.0 | 12.1 | 9.9 | EV/EBITDA (x) | 10.2 | 9.2 | 7.4 | 8.1 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR4.44 | Target Price: | MYR5.10 | Recommendation: | Buy | | |
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| | | STMB to restructure | | The restructuring of Syarikat Takaful Malaysia (STMB MK; Not Rated) has long been anticipated and therefore comes as no surprise. We do not expect a material impact to either STMB or BIMB's financials, nor do we expect the need for a cash call. We maintain our BUY call on BIMB with a unchanged SOP-derived TP of MYR5.10. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Operating income | 2,289.7 | 2,440.0 | 2,557.2 | 2,683.2 | Pre-provision profit | 908.3 | 961.0 | 995.0 | 1,039.6 | Core net profit | 547.3 | 559.0 | 575.9 | 596.1 | Core EPS (MYR) | 0.35 | 0.36 | 0.36 | 0.38 | Core EPS growth (%) | (0.4) | 2.1 | 0.0 | 3.5 | Net DPS (MYR) | 0.12 | 0.13 | 0.14 | 0.14 | Core P/E (x) | 12.5 | 12.2 | 12.2 | 11.8 | P/BV (x) | 2.0 | 1.8 | 1.7 | 1.5 | Net dividend yield (%) | 2.7 | 2.9 | 3.1 | 3.2 | Book value (MYR) | 2.21 | 2.44 | 2.67 | 2.90 | ROAE (%) | 17.2 | 15.3 | 14.2 | 13.5 | ROAA (%) | 1.0 | 0.9 | 0.9 | 0.9 |
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| | | | | | | | | | | | | | Share Price: | MYR2.99 | Target Price: | MYR3.20 | Recommendation: | Hold | | |
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| | | Clarity needed | | GMB's results were in line, taking into account seasonality. However, GMB has seemingly under-recovered on gas cost in 1H17, which raises questions as to how the relatively sizable 2H17 tariff rebate would be funded. Maintain HOLD with an unchanged MYR3.20 TP for now. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,619.0 | 4,053.0 | 4,720.0 | 5,549.9 | EBITDA | 191.0 | 264.6 | 266.5 | 274.9 | Core net profit | 106.2 | 165.1 | 170.7 | 178.5 | Core EPS (sen) | 8.3 | 12.9 | 13.3 | 13.9 | Core EPS growth (%) | (36.7) | 55.6 | 3.4 | 4.6 | Net DPS (sen) | 8.3 | 12.9 | 13.3 | 13.9 | Core P/E (x) | 36.2 | 23.2 | 22.5 | 21.5 | P/BV (x) | 4.0 | 3.8 | 3.8 | 3.8 | Net dividend yield (%) | 2.8 | 4.3 | 4.4 | 4.7 | ROAE (%) | 10.7 | 16.6 | 16.7 | 17.5 | ROAA (%) | 5.5 | 7.7 | 7.7 | 7.7 | EV/EBITDA (x) | 14.9 | 10.2 | 12.9 | 12.4 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.73 | Target Price: | MYR1.90 | Recommendation: | Buy | | |
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| | | 4QFY17: No surprises | | 4QFY6/17 results and 4th gross DPU of 2.27sen were in-line (FY17: 9.19sen). 4QFY17's YoY earnings growth was largely supported by Sunway Pyramid and selected hotels' rental income growth. We marginally adjust FY18-19 earnings forecasts by -1% p.a.. Maintain BUY with an unchanged DDM-TP of MYR1.90 (unchanged cost of equity of 7.8%). | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 507.0 | 522.9 | 579.4 | 607.0 | Net property income | 373.9 | 388.8 | 442.5 | 464.2 | Distributable income | 270.6 | 271.1 | 297.8 | 307.0 | DPU (sen) | 8.3 | 8.3 | 9.1 | 9.3 | DPU growth (%) | 5.2 | 0.2 | 9.5 | 2.6 | Price/DPU(x) | 21.0 | 20.9 | 19.1 | 18.6 | P/BV (x) | 1.3 | 1.2 | 1.2 | 1.2 | DPU yield (%) | 4.8 | 4.8 | 5.2 | 5.4 | ROAE (%) | 8.1 | 10.3 | 7.1 | 7.3 | ROAA (%) | 4.0 | 4.0 | 4.2 | 4.2 | Debt/Assets (x) | 0.3 | 0.3 | 0.4 | 0.4 |
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| | | | | | | | | | | | | | Share Price: | MYR1.70 | Target Price: | MYR2.24 | Recommendation: | Buy | | |
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| | | The Taxman will have to wait | | Magnum obtained a stay of proceedings against paying the tax penalty that it was served on 15 May 2017. We gather that it will resume paying quarterly dividends at least until a final verdict has been reached. Our DPS forecasts translate into attractive dividend yields of >8% p.a.. In any case, we opine that downside risk to share price is limited as Magnum's share price has already fallen by more than the tax penalty amount. With 32% upside, we tactically upgrade Magnum to BUY from HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,767.0 | 2,659.3 | 2,526.7 | 2,577.2 | EBITDA | 373.9 | 326.7 | 350.0 | 357.7 | Core net profit | 226.5 | 189.4 | 212.9 | 222.3 | Core EPS (sen) | 15.9 | 13.3 | 15.0 | 15.6 | Core EPS growth (%) | (10.9) | (16.3) | 12.4 | 4.4 | Net DPS (sen) | 16.0 | 13.0 | 13.5 | 14.0 | Core P/E (x) | 10.7 | 12.8 | 11.4 | 10.9 | P/BV (x) | 1.0 | 1.0 | 1.0 | 1.0 | Net dividend yield (%) | 9.4 | 7.6 | 7.9 | 8.2 | ROAE (%) | 9.3 | 7.8 | 8.8 | 9.1 | ROAA (%) | 6.2 | 5.2 | 6.0 | 6.5 | EV/EBITDA (x) | 11.4 | 11.4 | 8.7 | 8.4 | Net debt/equity (%) | 25.7 | 24.1 | 23.4 | 22.2 |
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| | | | | SECTOR RESEARCH | | | | | | | Stockpile hits 15-month high
by Chee Ting Ong |
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| | | | | | The jump in July stockpile (+17% MoM) took the market by surprise as output rebounded sharply while exports were weak. Equally surprising was the rise in CPO price yesterday following the unfavourable data release and the market has also ignored another red flag - the still weak export estimates for 1-10 August. Stay NEUTRAL on the sector as we maintain our view that CPO price will be weaker HoH on seasonally higher output. Our regional BUYs are BPLANT, SOP, BAL, AALI, LSIP, TBLA. | |
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| | | | MACRO RESEARCH | | | | | | | Another quarter of well over 5% real GDP growth
by Suhaimi Ilias |
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| | | | | | Supply-side indicators suggest faster 2Q 2017 real GDP growth as pick ups in manufacturing production index, index of services and value of construction works done outweighed moderation in palm oil output (hence agriculture) and softer mining production index. We estimate 2Q 2017 GDP of +5.8% YoY (1Q 2017: +5.6% YoY). Data will be out on 18 Aug 2017. | |
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| | | | | | | | Status Quo Monetary Policy
by Suhaimi Ilias |
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| | | | | | As expected, BSP kept its policy rates unchanged at its fifth Monetary Board (MB) meeting for the year on 10 Aug 2017. The key policy rate – the overnight borrowing rate – was left unchanged at 3.00%, together with the overnight lending rate and overnight deposit rate which stayed at 3.50% and 2.50% respectively. We now see BSP to keep the benchmark interest rates unchanged this year but expect two rate hikes of +25bps each in 2018. | |
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| | | | | | | | Stabilising trade deficit
by Suhaimi Ilias |
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| | | | | | Exports growth was flattish in June 2017 at +0.8% YoY (May 2017: +14.0% YoY) while imports shrank -2.5% YoY (May 2017: +16.6% YoY). Exports growth remained robust in 2Q 2017 at +11.0% YoY (1Q 2017: +16.3% YoY) while imports decelerated to +4.7% YoY (1Q 2017: +15.1% YoY). Trade deficit eased by -9.4% YoY in June 2017 (May 2017: +22.2% YoY) and -7.7% YoY in 2Q 2017 (1Q 2017: +12.5% YoY). | |
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| | NEWS | | | Outside Malaysia:
U.S: Unexpected drop in wholesale prices shows tame inflation. An unexpected decrease in U.S. wholesale prices in July, the first in nearly a year, signals inflation will remain tame, a Labor Department report showed. Producer-price index fell 0.1%, first drop since August 2016, after a 0.1% increase. PPI rose 1.9% YoY after a 2% YoY gain in the prior 12-month period. Excluding food and energy, PPI also eased 0.1% from previous month and was up 1.8% YoY from July 2016. (Source: Bloomberg)
U.K: Economy ended the second quarter on a disappointing note as manufacturing stagnated and the trade deficit unexpectedly widened, figures published show. The economy grew just 0.3% in the second quarter, half the pace of the euro region. Total industrial production rose 0.5% in June, but the gain was due to higher oil production as summer maintenance shutdowns failed to materialize. Manufacturing was unchanged as production of vehicles plunged by 6.7%, the most since the end of 2013, according to the data from the Office for National Statistics. Separate trade figures showed the value of exports falling 0.7% in June, with shipments of goods alone dropping 2.8%. Total imports rose by 3.3%. The deficit in the second quarter was little changed at GBP 8.9b, suggesting net trade made no contribution to growth in the period. (Source: Bloomberg)
China: Factory inflation holds up on steady demand, capacity cuts. China's producer price gains held steady on surging commodity prices, as demand stayed resilient and the government's drive to reduce industrial capacity takes hold. Producer price index rose 5.5% YoY in July versus estimated 5.6% YoY in Bloomberg survey. The consumer price index increased 1.4% YoY, versus forecast of 1.5% YoY and way below the government ceiling of 3% (Source: Bloomberg)
Singapore: Economy grows faster than previously estimated, as a recovery in global trade helped to buoy manufacturing. Gross domestic product rose a seasonally-adjusted and annualized 2.2% in the second quarter from the previous three months, the Ministry of Trade and Industry said, revising its earlier estimate of 0.4%. Compared to the same period last year, GDP rose 2.9% YoY in the second quarter. Ministry narrowed growth forecast range for 2017 to 2-3 percent from 1-3 percent. (Source: Bloomberg) | |
| | | | | Other News:
Mlabs Systems: In collaboration with Thai company to provide IT tech support. Its wholly-owned subsidiary Multimedia Research Lab S/B (MRL) has entered into a collaboration agreement with Thailand's Onliner Company Ltd to share and exploit IT technologies to develop new markets in Thailand and overseas. Under the collaboration, Onliner will design and set up free wifi and e-commerce services in Chatuchak Market, while MRL will provide multimedia video conferencing and related technology, including technical support, to enhance functionality of the project. (Source: The Edge Financial Daily)
O&C Resources: To develop Kuantan project with MYR166m GDV. Its 90%-owned subsidiary O&C Properties (Kuantan) S/B is teaming up with Yayasan Pahang to undertake a mixed development project known as "PRIYA Scheme" in Kuantan with an estimated gross development value of MYR166m. Sitting on 100 acres of land, the project consists of commercial development and an affordable housing scheme. It is expected to commence in the 1H18. O&C Properties and Yayasan Pahang will have an equal stake in the joint venture company. (Source: The Sun Daily)
Scomi Engineering: Looks abroad, including China. The group is in the final stages of sealing a deal for a monorail job in China and is targeting more monorail projects in other countries. It is also understood that the company has received an extension to its operations and maintenance services for the Mumbai Monorail in India at a revised rate for another three years. The company is currently working on Phase 2 of the Mumbai Monorail spanning over 10.76km, which it expects to complete in the second half of next year. (Source: The Star) | |
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