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| | | | | | | | | | | | | | | | Share Price: | MYR2.55 | Target Price: | MYR2.98 | Recommendation: | Buy | | |
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| | | Is Not Another Ridiculous Idea | | Years of strong working relationship with its key clients now qualifies Inari as a trusted insourced partner. Inari remains committal in capex alongside the required ramp up by its clients. As such, Inari's business model has been refined, focusing on higher production value add which has significantly improved its margins. Post briefing, we raise our FY18-20 net profit forecasts by 5%-15% on margin expansion to FY17's level. Our TP is lifted to MYR2.98 (+10%), pegged on unchanged 20x CY18 EPS. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,043.1 | 1,176.3 | 1,560.5 | 1,902.0 | EBITDA | 203.7 | 303.8 | 377.9 | 454.8 | Core net profit | 155.8 | 206.4 | 282.1 | 344.8 | Core EPS (sen) | 7.8 | 9.8 | 13.4 | 16.4 | Core EPS growth (%) | 1.7 | 26.5 | 36.7 | 22.2 | Net DPS (sen) | 4.2 | 8.3 | 10.0 | 12.3 | Core P/E (x) | 32.9 | 26.0 | 19.0 | 15.6 | P/BV (x) | 7.5 | 6.1 | 5.6 | 5.0 | Net dividend yield (%) | 1.6 | 3.3 | 3.9 | 4.8 | ROAE (%) | 24.3 | 29.2 | 30.7 | 34.0 | ROAA (%) | 18.2 | 19.9 | 22.9 | 25.9 | EV/EBITDA (x) | 13.8 | 13.3 | 13.1 | 10.8 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.71 | Target Price: | MYR2.15 | Recommendation: | Buy | | |
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| | | Dividend makes a comeback | | Dividend was once again declared after obtaining a stay against paying the tax penalty. That said, we trim our DPS estimates by 1.5sen p.a. on lower DPRs. Our new DCF-based TP is MYR2.15 vs. MYR2.24 previously (WACC: 8.4% vs. 8.2% previously). MAG remains a tactical BUY with valuation having fully priced in the tax penalty (share price has fallen by 39sen or more than the tax penalty). If the final tax penalty is nil or markedly less, eventual upside ought to be closer to our estimated 26%. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,767.0 | 2,659.3 | 2,546.3 | 2,597.3 | EBITDA | 373.9 | 326.7 | 346.1 | 353.9 | Core net profit | 226.5 | 189.4 | 210.2 | 219.6 | Core EPS (sen) | 15.9 | 13.3 | 14.8 | 15.4 | Core EPS growth (%) | (10.9) | (16.3) | 11.0 | 4.5 | Net DPS (sen) | 16.0 | 13.0 | 12.0 | 12.5 | Core P/E (x) | 10.7 | 12.8 | 11.6 | 11.1 | P/BV (x) | 1.0 | 1.0 | 1.0 | 1.0 | Net dividend yield (%) | 9.4 | 7.6 | 7.0 | 7.3 | ROAE (%) | 9.3 | 7.8 | 8.6 | 8.9 | ROAA (%) | 6.2 | 5.2 | 5.9 | 6.3 | EV/EBITDA (x) | 11.4 | 11.4 | 8.8 | 8.5 | Net debt/equity (%) | 25.7 | 24.1 | 22.4 | 20.3 |
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| | | | | | | | | | | | | | Share Price: | MYR10.58 | Target Price: | MYR10.54 | Recommendation: | Hold | | |
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| | | Hurt by higher depreciation charges | | Results disappointed as GENP unexpectedly early adopted MFRS 116 accounting standard which raised its depreciation charges. We lower our earnings forecasts to factor this, but mitigated by maiden contribution from Genting Premium Outlet (GPO). GENP remains a HOLD with a lower TP of MYR10.54 (-6%) on unchanged 26x 2017 PER, its 5-year mean. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,374.9 | 1,480.1 | 1,662.2 | 1,901.8 | EBITDA | 358.7 | 536.3 | 566.8 | 735.3 | Core net profit | 205.7 | 295.3 | 322.0 | 439.5 | Core EPS (sen) | 26.3 | 37.2 | 40.6 | 55.4 | Core EPS growth (%) | (46.7) | 41.5 | 9.0 | 36.5 | Net DPS (sen) | 5.5 | 21.0 | 8.1 | 11.1 | Core P/E (x) | 40.3 | 28.4 | 26.1 | 19.1 | P/BV (x) | 2.0 | 2.0 | 1.9 | 1.7 | Net dividend yield (%) | 0.5 | 2.0 | 0.8 | 1.0 | ROAE (%) | 4.7 | 8.6 | 7.3 | 9.4 | ROAA (%) | 3.2 | 4.0 | 4.2 | 5.6 | EV/EBITDA (x) | 24.9 | 17.6 | 15.9 | 12.0 | Net debt/equity (%) | 8.1 | 12.9 | 8.4 | 4.3 |
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| | | | | | | | | | | | | | Share Price: | MYR3.36 | Target Price: | MYR3.80 | Recommendation: | Buy | | |
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| | | A slow start to FY18 | | 1QFY3/18 core earnings came in below our estimates due to weaker-than-expected contributions from plantations, industries and property. We lower our net profit forecasts for FY18-20 by 4%-8% after adjusting for lower margins for the three divisions. Our SOP-based TP is lowered to MYR3.80 (-10sen). We remain positive on IJM for its long-term growth prospects especially its investments in MCKIP and Kuantan Port. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,128.2 | 6,065.3 | 7,192.5 | 7,375.2 | EBITDA | 1,166.7 | 1,125.8 | 1,203.6 | 1,355.3 | Core net profit | 509.3 | 505.1 | 589.6 | 667.4 | Core EPS (sen) | 14.3 | 14.0 | 16.3 | 18.5 | Core EPS growth (%) | (12.5) | (2.0) | 16.7 | 13.2 | Net DPS (sen) | 10.0 | 7.5 | 7.0 | 7.0 | Core P/E (x) | 23.6 | 24.0 | 20.6 | 18.2 | P/BV (x) | 1.3 | 1.3 | 1.2 | 1.2 | Net dividend yield (%) | 3.0 | 2.2 | 2.1 | 2.1 | ROAE (%) | 9.1 | 7.1 | 6.1 | 6.6 | ROAA (%) | 2.6 | 2.5 | 2.8 | 3.1 | EV/EBITDA (x) | 15.4 | 15.5 | 14.5 | 12.7 | Net debt/equity (%) | 40.4 | 35.3 | 34.9 | 29.7 |
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| | | | | | | | | | | | | | Share Price: | MYR1.19 | Target Price: | MYR1.28 | Recommendation: | Hold | | |
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| | | Boosted by asset sales | | UEMS' 1H17 net profit of MYR156m (+>100% YoY) was in line but property sales fell short at MYR392m (just 33% of its 2017 sales target of MYR1.2b [-14% YoY]) due to the lack of new launches in 1H17. Sales should however pick up in the 2H with new pipeline launches. We lower our FY17-19 net profit forecasts by -1% to -20% but raise TP to MYR1.28 (+15%) on a revised 0.45x P/RNAV (from 0.4x). Reiterate HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,749.9 | 1,841.5 | 1,873.6 | 1,578.6 | EBITDA | 299.6 | 224.4 | 485.5 | 382.5 | Core net profit | 257.2 | 147.3 | 252.2 | 155.1 | Core FDEPS (sen) | 5.2 | 2.9 | 4.9 | 3.0 | Core FDEPS growth(%) | (51.1) | (44.8) | 71.2 | (38.5) | Net DPS (sen) | 1.6 | 0.0 | 0.0 | 0.0 | Core FD P/E (x) | 23.0 | 41.7 | 24.3 | 39.6 | P/BV (x) | 0.8 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 1.3 | 0.0 | 0.0 | 0.0 | ROAE (%) | na | na | na | na | ROAA (%) | 2.2 | 1.2 | 1.8 | 1.1 | EV/EBITDA (x) | 24.0 | 35.9 | 18.3 | 25.8 | Net debt/equity (%) | 24.3 | 40.7 | 41.8 | 54.1 |
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| | | | | | | | | | | | | | Share Price: | MYR2.18 | Target Price: | MYR2.75 | Recommendation: | Buy | | |
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| | | Below expectations | | 1H17 results disappointed yet again mainly on (i) weaker-than-expected associates' and JV income, the former mainly from weakness at Perodua, and (ii) continuous losses at the auto manufacturing division. We cut our FY17/18/19 net profit forecasts by 21%/7%/3% and our TP to MYR2.75 (-7%), pegged on unchanged 10x CY18 PER. The stock still offers deep value, trading at just 8x FY18E PER and 0.5x FY17E P/BV. Maintain BUY. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,815.1 | 1,670.2 | 1,727.0 | 1,832.9 | EBITDA | 49.7 | (24.3) | 22.1 | 31.0 | Core net profit | 87.6 | 102.6 | 82.2 | 107.3 | Core EPS (sen) | 22.4 | 26.2 | 21.0 | 27.5 | Core EPS growth (%) | (21.9) | 17.1 | (19.8) | 30.5 | Net DPS (sen) | 10.0 | 6.0 | 4.5 | 6.0 | Core P/E (x) | 9.7 | 8.3 | 10.4 | 7.9 | P/BV (x) | 0.5 | 0.5 | 0.5 | 0.5 | Net dividend yield (%) | 4.6 | 2.8 | 2.1 | 2.8 | ROAE (%) | 5.4 | 4.2 | 5.0 | 6.3 | ROAA (%) | 3.7 | 4.3 | 3.4 | 4.3 | EV/EBITDA (x) | 28.2 | nm | 60.5 | 42.4 | Net debt/equity (%) | 8.8 | 10.5 | 8.7 | 6.7 |
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| | | | | | | | | | | | | | Share Price: | MYR1.22 | Target Price: | MYR1.40 | Recommendation: | Hold | | |
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| | | Above expectation | | Tambun Indah (TI)'s 1H17 net profit of MYR44.1m (-16% YoY) beat our forecast but in line with consensus. 1H17 locked-in sales of MYR84m were on track. Management is keeping its 2017 sales target of MYR180m and has been focusing on clearing the unsold stocks under construction. We raise our FY17-19 net profit forecasts by 2-9% and RNAV-TP to MYR1.40 (+1sen) on an unchanged 0.45x P/RNAV. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 367.7 | 360.8 | 350.4 | 217.5 | EBITDA | 129.0 | 145.8 | 111.0 | 58.3 | Core net profit | 94.4 | 107.0 | 83.8 | 44.4 | Core EPS (sen) | 22.3 | 25.1 | 19.4 | 10.3 | Core EPS growth (%) | (8.3) | 12.6 | (22.5) | (47.0) | Net DPS (sen) | 9.7 | 9.0 | 7.8 | 4.1 | Core P/E (x) | 5.5 | 4.9 | 6.3 | 11.9 | P/BV (x) | 1.1 | 1.0 | 0.9 | 0.9 | Net dividend yield (%) | 8.0 | 7.4 | 6.4 | 3.4 | ROAE (%) | na | na | na | na | ROAA (%) | 13.2 | 14.1 | 10.5 | 5.3 | EV/EBITDA (x) | 4.7 | 4.5 | 4.9 | 9.3 | Net debt/equity (%) | 1.9 | 10.2 | 2.7 | 2.2 |
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| | | | | | | | | | | | | | Share Price: | MYR6.00 | Target Price: | MYR6.08 | Recommendation: | Hold | | |
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| | | Drag from new hospitals | | Core earnings in 2Q17 fell 54% YoY due to start-up costs from the opening of two new hospitals in Mar 2017, particularly the Gleneagles HK. 1H17 missed our and consensus estimates, at 33% of our FY17E and 30% of consensus. Accordingly, we cut our FY17-19E EPS by 18-31% to account for higher start-up costs, mainly from higher depreciation. Our SOTP TP is reduced 1% to MYR6.08. Growth from new hospitals in HK and Turkey now ramping up, and 3 new China hospitals over the next 2 yrs. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 8,455.5 | 10,021.9 | 11,639.8 | 13,314.9 | EBITDA | 2,218.7 | 2,188.9 | 2,290.4 | 2,656.7 | Core net profit | 899.2 | 866.0 | 600.0 | 849.8 | Core FDEPS (sen) | 10.9 | 10.5 | 7.3 | 10.3 | Core FDEPS growth(%) | 14.5 | (4.0) | (30.8) | 41.6 | Net DPS (sen) | 3.0 | 3.0 | 3.0 | 3.0 | Core FD P/E (x) | 54.9 | 57.2 | 82.6 | 58.3 | P/BV (x) | 2.2 | 2.2 | 2.2 | 2.2 | Net dividend yield (%) | 0.5 | 0.5 | 0.5 | 0.5 | ROAE (%) | 4.5 | 2.8 | 2.7 | 3.8 | ROAA (%) | 2.8 | 2.4 | 1.6 | 2.2 | EV/EBITDA (x) | 27.4 | 27.0 | 24.8 | 21.4 | Net debt/equity (%) | 19.3 | 21.1 | 22.0 | 20.1 |
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| | | | | | MACRO RESEARCH | | | | | | | Signals slower growth post-1H2017
by Suhaimi Ilias |
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| | | | | | Index of leading economic indicators moderated to +0.6% YoY in June 2017 (May 2017: +1.9% YoY), pointing to potentially slower real GDP growth in 3Q 2017 after the +5.7% expansion in 1H 2017. Our full-year 2017 real GDP growth forecast of +5.5% priced in moderation in 2H 2017. | |
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| | | | | | | | Continued easing in inflation
by Suhaimi Ilias |
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| | | | | | Headline inflation rate in Jul 2017 slowed further to +3.2% YoY (June 2017: +3.6% YoY), while core inflation continued to hover around 2.5%-2.6% since Feb 2016 (Jul 2017: +2.6% YoY; June 2017: +2.5% YoY). For Jan-Jul 2017, headline inflation rate was +4.0% YoY (Jan-Jul 2016: +2.5% YoY) and core inflation rate was +2.5% YoY (Jan-Jul 2016: +2.7% YoY). Maintain our full-year 2017 inflation rate forecast at 3.5%-4.0% (2016: +2.1%) and view that there will be no change in OPR this year. | |
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| | | | | | | | Reserves hit "century"…
by Suhaimi Ilias |
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| | | | | | External reserves reached USD100b mark for the first time since 15 Jul 2015 as it rose to USD100.4b as at 15 Aug 2017 (end-Jul 2017: USD99.4b) amid a more subdued portfolio capital flows trend in recent months, indicating positive contributions from trade flows via repatriation of exports earnings, and other capital flows, namely FDI. | |
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| | | | | | | | Dow Jones Index, Lacking Firepower
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI eased 1.28pts to 1,772.94 yesterday. Banking stocks stole the limelight after RHB Bank and AMMB called off merger. Market breadth was negative with losers outpacing gainers by 454 to 415. Trading volume was at 2.00b shares valued at MYR1.97b. With US markets ended lower overnight following President Donald Trump's threat to shut down the US government, FBMKLCI may extend its losses for a second consecutive day. | |
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| | NEWS | | | Outside Malaysia:
U.S. New-home sales dropped in July after solid first-half run. A decline in U.S. purchases of new homes in July may be a sign the industry took a breather following an even stronger run of sales than previously reported, according to government data. Single-family home sales fell 9.4% MoM to 571k annualized pace, lowest in 2017, after 630k rate. Combined upward revisions to April-June figures were 46,000. Median sales price increased 6.3% YoY to USD 313,700. The slowdown as the second half got under way may reflect lack of affordability and low inventory, which have been constraints, especially for younger, first-time buyers who find it harder to get housing-related credit. (Source: Bloomberg)
E.U: Euro-area factories feed best growth spell for economy in years. Surging demand for 'Made in the Euro Area' goods is feeding an economy that is creating jobs and finally seeing price growth accelerate. A Purchasing Managers' Index for manufacturing rose to 57.4 in August from 56.6 in July, according to IHS Markit. That's the highest reading in two months and compares with a median estimate for a slowdown in activity. Manufacturers recorded an "impressive" performance, with export orders surging at the fastest pace in more than six years. (Source: Bloomberg)
Japan: Wage hikes in China bring some jobs and factories back to Japan. Signs are emerging that surging wages in China are encouraging at least some Japanese companies to bring jobs, factories and businesses back home. According to an annual survey of about 3,000 firms by the Japan External Trade Organization (Jetro), among those that had recently moved or planned to move operations across national borders, 8.5% came back to Japan from China. In the first reversal since Jetro began asking the question in 2006, there were fewer cases -- just 6.8% -- going to China from Japan, according to poll released in March. On top of the narrowing pay gap, the depreciation in the yen due to record monetary easing by the Bank of Japan is encouraging more companies to make things at home and export. (Source: Bloomberg)
India: Record reserves turn costly cash pile for India Central Bank. As India's foreign-exchange reserves march toward the unprecedented USD400b mark, its central bank faces a costly conundrum. Banks are flush with money following the demonetization program last year, leaving them already struggling to pay interest on the deposits in an environment where loans aren't picking up. Costs to mop up these inflows have eroded the RBI's earnings, halving its annual dividend to the government. The surge in liquidity has pushed the RBI to resume open-market bond sales as well as auctions of longer duration repos besides imposing costs on the government for special instruments. (Source: Bloomberg) | |
| | | | | Other News:
Oil & Gas: Petronas studying options to monetise gas assets in Canada. Petronas is weighing the options to develop and monetise its gas resources in Canada after shelving the plan for a multi-billion dollar liquefied natural gas (LNG) project in British Columbia. Among the possibilities under consideration would be investing in a pipeline to connect and market its gas resources from an area which has 22.3 trillion cubic feet (TCF) of proven unconventional gas to the rest of Canada and North America. Petronas is now looking at the possibility of working together with partners or parties to look at a pipeline that could be built to connect that area to the rest of Canadian market. (Source: The Sun Daily)
DRB-Hicom: DRB-Hicom's proposed luxury property project in Langkawi hits snag. DRB-Hicom's plan to develop high-end boutique luxury mixed development project in Langkawi's Rebak Island has hit a snag. The conglomerate, which owns the Rebak Marina Resort on the island, failed to get the Kedah government's approval to change the status of 134.76ha there to non-Malay Reserve (non-MR). Hence DRB-Hicom's wholly owned subsidiary Rebak Island Marina and Northern Gateway Free Zone S/B (NGFZ) mutually decided to terminate their land status swap agreement inked in December 2011. (Source: The Star)
Hua Yang: To launch property project with GDV of MYR322m. Hua Yang plans to roll out new property launches with an estimated total GDV of MYR322m, for the financial year ending March 31, 2018. Within the Klang Valley, the group will be introducing serviced apartments at Puchong West, which has an estimated GDV of MYR238m. Meanwhile, in Johor, Hua Yang shall be launching double-storey cluster homes with an estimated GDV of MYR43m in Kota Masai, Johor. (Source: The Star)
Felda Global Ventures: Seeks to increase exports of palm kernel shell to Japan. Felda Global Ventures Holdings (FGV) is looking to raise its palm kernel shell (PKS) exports to Japan to 60,000 tonnes by the end of this year. FGV, via its subsidiary Felda-Johore Bulkers S/B (FJB), has been exporting PKS to Japan since December 2016 to be used as biomass fuel to generate electricity. The company has so far shipped 40,000 tonnes of the product to Japan. FGV is looking to increase shipment to Japan from once in two months, to once a month by year end. (Source: The Edge Financial Daily) | |
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