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| | | | | | | | | | | | | | | | Share Price: | MYR2.96 | Target Price: | MYR3.00 | Recommendation: | Hold | | |
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| | | Briefing highlights | | While YTD volume has been ahead of guidance, GMB's spreads appear to have been trending below our expectation. It is still unclear to us as to how the relatively sizable 2H17 tariff rebate would be funded. Maintain HOLD on a lower MYR3.00 TP (-6%) as we lower earnings to reflect a lower spread assumption. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,619.0 | 4,053.0 | 4,928.0 | 5,848.8 | EBITDA | 191.0 | 264.6 | 253.8 | 264.7 | Core net profit | 106.2 | 165.1 | 161.1 | 170.0 | Core EPS (sen) | 8.3 | 12.9 | 12.5 | 13.2 | Core EPS growth (%) | (36.7) | 55.6 | (2.5) | 5.5 | Net DPS (sen) | 8.3 | 12.9 | 12.5 | 13.2 | Core P/E (x) | 35.8 | 23.0 | 23.6 | 22.4 | P/BV (x) | 3.9 | 3.7 | 3.7 | 3.7 | Net dividend yield (%) | 2.8 | 4.3 | 4.2 | 4.5 | ROAE (%) | 10.7 | 16.6 | 15.8 | 16.7 | ROAA (%) | 5.5 | 7.7 | 7.2 | 7.2 | EV/EBITDA (x) | 14.9 | 10.2 | 13.4 | 12.8 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.32 | Target Price: | MYR1.35 | Recommendation: | Buy | | |
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| | | 2Q17: Earnings on track | | 2Q17 results and first gross DPU of 4.23sen were within our estimates. 2Q17's YoY earnings growth was largely contributed by the addition of Menara Shell, sustained occupancy rate and higher rental rates. Our earnings forecasts and DDM-TP (cost of equity: 7.5%) are intact. MQREIT offers a favourable CY17 net yield of 5.8%, above the sector's 5.0% | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 115.2 | 131.8 | 185.1 | 187.5 | Net property income | 90.3 | 102.3 | 139.5 | 141.3 | Distributable income | 54.0 | 59.2 | 92.6 | 94.4 | DPU (sen) | 6.9 | 7.5 | 7.6 | 7.6 | DPU growth (%) | (8.1) | 8.8 | 0.4 | 0.9 | Price/DPU(x) | 19.1 | 17.5 | 17.4 | 17.3 | P/BV (x) | 1.0 | 0.6 | 1.0 | 1.0 | DPU yield (%) | 5.2 | 5.7 | 5.7 | 5.8 | ROAE (%) | 8.4 | 5.6 | 6.8 | 6.9 | ROAA (%) | 4.3 | 3.0 | 4.0 | 4.1 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | | | | SECTOR RESEARCH | | | | | | | India raises import duties
by Chee Ting Ong |
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| | | | | | India's latest import duty hike of +7.5-10% on palm products may be negative for palm oil demand as India is the largest consumer of palm oil in 2016 at ~9m MT (~15% of global share). Demand from India may slow in the coming weeks as importers are said to have bought ahead of this official hike. This further supports our view for CPO price to be weaker in 2H17 on seasonally higher output. On a 12M view, we are still NEUTRAL on the sector with selective BUYs on BPLANT, SOP, BAL, AALI, LSIP, TBLA. | |
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| | | | NEWS | | | Outside Malaysia:
Japan: Economy expands more than forecast on domestic demand. Japan's economy grew for a sixth straight quarter, extending the longest expansion in more than a decade, as a pick-up in domestic demand compensated for a slowdown in exports. Gross domestic product increased by an annualized 4.0% in the three months ended June, compared with a revised 1.5% in the previous quarter. Private consumption rose 0.9% in the second quarter from the previous three months. Business spending advanced 2.4%. Net exports, or shipments less imports, subtracted 0.3 percentage point from GDP. (Source: Bloomberg)
Philippines: Central Bank head seeks calm as Peso hits 11-year low. Bangko Sentral ng Pilipinas Governor Nestor Espenilla called for calm after the peso fell to an almost 11-year low against the dollar last week, saying the currency isn't expected to free fall given the nation's strong economic fundamentals. "The peso is market-determined. It's natural for it to show volatility as it adjusts to market conditions and all the short- term uncertainties such as increased tension in North Korea," Espenilla said in a message to reporters. "We don't expect it to do a free fall because our economic fundamentals now, unlike before, are solid and very strong." (Source: Bloomberg)
Crude Oil: Holds gains as Libyan output falls, terminal shuts. Libyan output and exports declined amid security threats and tension among port workers. Libya's biggest oil field cut output by more than 30%, a person familiar with the matter said over the weekend, while the head of a union said loadings at Zueitina port ceased after employees demanded better working conditions. U.S. drillers added three crude rigs last week, according to Baker Hughes Inc. Brent for October settlement was USD 52.06/bbl. (Source: Bloomberg) | |
| | | | | Other News:
Thong Guan Industries: Eyes to list unit on HK's GEM. Thong Guan Industries is considering various strategies to close the gap with peers, including a scenario it floated last year: spinning off and listing its food and beverage (F&B) and other consumable products business. The plastic packaging firm is preparing to spin off its portfolio of popular tea and coffee products under the 888 brand name, organic noodle products, polyvinyl chloride (PVC) cling food wrap business and the newly introduced Marche Movenpick franchise into a new company with an eye on an eventual stock market listing on Hong Kong's Growth Enterprise Market (GEM). (Source: The Edge Financial Daily)
Sasbadi: To 'unleash' non-academic segments potential. Sasbadi Holdings will be putting more focus on creating non-academic content for its biggest group of customers: Students. The group's plan to create more non-academic content for students is in line with its philosophy of promoting life-long learning. Last Wednesday, the group inked a memorandum of understanding with Animasia Studio S/B, the creator of the award-winning animated TV show Chuck Chicken, which will allow Sasbadi to adapt the animation into books it intends to sell worldwide. (Source: The Edge Financial Daily)
Reach Energy: Reaching out for financing. Reach Energy has decided to call off its private placement exercise and is likely to gear up as it explores funding avenues to raise some MYR180m. For now, Reach Energy still has zero gearing and does not require any external funding for its operational expenditure for its oil field in Kazakhstan. The funding of MYR180m is largely to pay the dissenting shareholders who did not approve of it acquiring the Kazakhstan oil field. A source says Reach is exploring bank borrowings, and is in the midst of speaking with some banks. A direct funding from banks is viewed as an alternative from the potentially dilutive effect of a placement exercise, not to mention the fact that it would have to be done at a discount to market. (Source: The Star) | |
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