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| | | | | | | | | | | | | | | | Share Price: | MYR3.30 | Target Price: | MYR3.75 | Recommendation: | Buy | | |
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| | | Divesting AirAsia Aviation Centre of Excellence (AACE) | | AirAsia is selling its 50% stake in AACE to its partner for USD100m. This will crystallise a gain of MYR188m in the income statement and boost cash balance by MYR386m. This is a positive development to strengthen the balance sheet; NAV will rise by 2.8%. No change to our earnings forecasts and TP of MYR3.75, based on unchanged 10x 2017 PER — which is the peer group average. Maintain BUY. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 6,297.7 | 6,923.9 | 7,058.0 | 7,678.5 | EBITDAR | 2,629.9 | 3,276.6 | 2,900.0 | 2,801.7 | Core net profit | 177.7 | 1,557.6 | 1,238.9 | 1,280.7 | Core EPS (sen) | 6.4 | 56.0 | 37.4 | 38.6 | Core EPS growth (%) | 434.5 | 776.1 | (33.2) | 3.4 | Net DPS (sen) | 3.0 | 4.0 | 45.0 | 9.0 | Core P/E (x) | 51.7 | 5.9 | 8.8 | 8.5 | P/BV (x) | 2.1 | 1.4 | 1.4 | 1.3 | Net dividend yield (%) | 0.9 | 1.2 | 13.6 | 2.7 | ROAE (%) | 12.0 | 36.8 | 17.5 | 15.2 | ROAA (%) | 0.9 | 7.2 | 5.9 | 6.1 | EV/EBITDAR (x) | 5.2 | 4.6 | 4.5 | 5.3 | Net debt/equity (%) | 228.9 | 133.7 | 27.5 | 45.2 |
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| | | | | | | | | | | | | | Share Price: | MYR3.59 | Target Price: | MYR4.90 | Recommendation: | Buy | | |
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| | | Delivering results | | 2Q17 earnings exceeded expectations on better-than-expected CPO ASP and cost. We raise our FY17 EPS by 14% and reiterate our BUY call as the stock trades at just 11x 2017 PER (vs sector's 25x) and EV/planted ha of MYR30,000 is barely above replacement cost. TP is raised to MYR4.90 on 15x 2017 PER pegged to a shorter 3-year historical mean (previously MYR4.70 on 16.5x 2017 PER at -0.5SD 5-year historical mean) to better reflect market's valuation appetite towards small-mid cap planters. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,670.8 | 4,302.5 | 4,834.3 | 4,708.6 | EBITDA | 270.5 | 333.2 | 467.0 | 543.9 | Core net profit | 88.5 | 130.0 | 186.5 | 238.2 | Core EPS (sen) | 20.0 | 29.5 | 32.7 | 41.8 | Core EPS growth (%) | (21.9) | 47.0 | 11.0 | 27.8 | Net DPS (sen) | 5.0 | 5.0 | 6.5 | 8.4 | Core P/E (x) | 17.9 | 12.2 | 11.0 | 8.6 | P/BV (x) | 1.1 | 0.8 | 1.0 | 0.9 | Net dividend yield (%) | 1.4 | 1.4 | 1.8 | 2.3 | ROAE (%) | 6.5 | 7.9 | 9.6 | 11.2 | ROAA (%) | 3.1 | 3.5 | 4.2 | 5.3 | EV/EBITDA (x) | 9.6 | 6.5 | 5.9 | 4.7 | Net debt/equity (%) | 44.1 | 22.9 | 26.6 | 14.9 |
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| | | | | | | | | | | | | | Share Price: | MYR1.69 | Target Price: | MYR2.15 | Recommendation: | Buy | | |
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| | | Below expectations | | On a positive note, 2Q17 core net loss narrowed by 35% QoQ on the back of a 20% QoQ jump in revenue and inventory was reduced to MYR1.4b (-17% QoQ). Nonetheless, cumulative core net loss of MYR54m in 1H17 was a negative surprise; we now expect core net loss to expand to MYR77m/ 24m in FY17/FY18 before returning to a small profit in FY19. We remain BUYers of TCM from a trough valuation angle, now at 0.4x P/NTA. Our TP is reduced to MYR2.15 (-5sen), on unchanged 0.5x 2017 P/NTA (-1SD). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 5,716.7 | 5,460.8 | 4,637.1 | 5,098.0 | EBITDA | 307.2 | 158.9 | 127.5 | 177.2 | Core net profit | 76.5 | (48.4) | (76.9) | (23.6) | Core EPS (sen) | 11.7 | (7.4) | (11.8) | (3.6) | Core EPS growth (%) | 11.5 | nm | nm | nm | Net DPS (sen) | 5.0 | 2.0 | 1.0 | 1.0 | Core P/E (x) | 14.4 | nm | nm | nm | P/BV (x) | 0.4 | 0.4 | 0.4 | 0.4 | Net dividend yield (%) | 3.0 | 1.2 | 0.6 | 0.6 | ROAE (%) | 2.7 | (1.9) | (2.7) | (0.9) | ROAA (%) | 1.5 | (0.9) | (1.4) | (0.4) | EV/EBITDA (x) | 9.1 | 16.8 | 20.3 | 15.0 | Net debt/equity (%) | 37.7 | 51.2 | 51.7 | 55.1 |
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| | | | | | | | | | | | | | Share Price: | MYR3.61 | Target Price: | MYR3.80 | Recommendation: | Hold | | |
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| | | To infinity and beyond? | | We are pleasantly surprised by the Government's Approval-in-Principle for Westports' proposed CT10-19 as this could provide long-term earnings visibility and upside to our DCF valuation. Maintain our earnings forecasts, pending the final determination of the proposed expansion. Share price has fallen 10% in 3 months due to the near-term earnings weakness. Without any strong catalysts in sight yet for near-term earnings, we maintain our HOLD call and DCF-derived TP of MYR3.80. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,578.3 | 1,804.3 | 1,731.5 | 1,836.4 | EBITDA | 869.1 | 963.5 | 885.3 | 989.0 | Core net profit | 504.9 | 623.6 | 549.5 | 536.4 | Core EPS (sen) | 14.8 | 18.3 | 16.1 | 15.7 | Core EPS growth (%) | (1.4) | 23.5 | (11.9) | (2.4) | Net DPS (sen) | 11.1 | 14.0 | 12.1 | 11.8 | Core P/E (x) | 24.4 | 19.7 | 22.4 | 22.9 | P/BV (x) | 6.5 | 5.9 | 5.6 | 5.3 | Net dividend yield (%) | 3.1 | 3.9 | 3.3 | 3.3 | ROAE (%) | 27.6 | 32.1 | 25.7 | 23.6 | ROAA (%) | 12.8 | 14.9 | 12.1 | 11.2 | EV/EBITDA (x) | 17.0 | 16.0 | 15.4 | 13.6 | Net debt/equity (%) | 39.7 | 35.3 | 58.8 | 49.4 |
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| | | | | | | | | | | | | | Share Price: | MYR1.69 | Target Price: | MYR2.02 | Recommendation: | Buy | | |
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| | | More positives than negatives | | Weaker 2Q17 earnings was already expected and imputed into our forecasts. Therefore, our earnings forecasts are unchanged. We expect CSC's earnings to come in better ahead. We continue to like CSC for its dominant position and it has healthiest balance sheet (with net cash of 59sen/share) in the industry. We think this uninspiring 2Q17 results has already been priced in after losing some of its share price fizz recently – current valuation is a good entry point for the positives ahead. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,017.1 | 1,035.2 | 1,142.4 | 1,236.7 | EBITDA | 96.3 | 106.4 | 106.8 | 118.7 | Core net profit | 35.5 | 68.5 | 61.2 | 70.8 | Core EPS (sen) | 9.6 | 18.6 | 16.6 | 19.2 | Core EPS growth (%) | nm | 94.0 | (10.8) | 15.7 | Net DPS (sen) | 8.0 | 14.0 | 8.3 | 9.6 | Core P/E (x) | 17.6 | 9.1 | 10.2 | 8.8 | P/BV (x) | 0.8 | 0.8 | 0.7 | 0.7 | Net dividend yield (%) | 4.7 | 8.3 | 4.9 | 5.7 | ROAE (%) | 6.9 | 8.7 | 7.4 | 8.3 | ROAA (%) | 4.4 | 8.0 | 6.8 | 7.5 | EV/EBITDA (x) | 1.8 | 4.9 | 2.9 | 2.4 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR3.89 | Target Price: | MYR4.50 | Recommendation: | Hold | | |
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| | | 2Q17: Below expectations | | 1H17 core earnings were below ours/consensus full year forecasts due to lower contribution from construction materials, construction and road maintenance divisions. However, property staged a recovery on the back of revenue recognition of its Riverdale semi-detached houses. Keeping our earnings forecasts, HOLD call and MYR4.50 SOP-based TP pending the analyst briefing on 28 Aug. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,788.0 | 1,551.3 | 1,950.8 | 2,197.6 | EBITDA | 394.8 | 418.9 | 388.1 | 420.3 | Core net profit | 244.7 | 212.4 | 221.3 | 258.9 | Core EPS (sen) | 22.8 | 19.8 | 20.6 | 24.1 | Core EPS growth (%) | 7.0 | (13.2) | 4.2 | 17.0 | Net DPS (sen) | 4.5 | 6.3 | 8.2 | 9.6 | Core P/E (x) | 17.1 | 19.7 | 18.9 | 16.1 | P/BV (x) | 2.1 | 1.9 | 1.8 | 1.7 | Net dividend yield (%) | 1.2 | 1.6 | 2.1 | 2.5 | ROAE (%) | 13.0 | 8.0 | 9.7 | 10.7 | ROAA (%) | 8.1 | 6.4 | 6.1 | 6.6 | EV/EBITDA (x) | 14.3 | 10.5 | 10.9 | 10.1 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR4.23 | Target Price: | MYR4.05 | Recommendation: | Hold | | |
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| | | 4QFY17: Above estimates | | 4QFY6/17 results were above expectations. Bottomline growth was driven by strong organic growth and new stores' contributions. Meanwhile, first interim net DPS of 2.5sen (FY17E: 11.5sen) was in-line. We raise our FY18-19 net profit forecasts by 4% p.a. and TP to MYR4.05 (+95sen) as we re-rate Padini and peg its valuation to 15x FY18 PER at +1SD of mean (from 12x FY18 PER at mean). | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,301.2 | 1,570.9 | 1,720.9 | 1,869.6 | EBITDA | 221.7 | 249.0 | 278.3 | 292.8 | Core net profit | 137.9 | 156.1 | 174.6 | 179.2 | Core EPS (sen) | 21.0 | 23.7 | 26.5 | 27.2 | Core EPS growth (%) | 71.9 | 13.2 | 11.8 | 2.7 | Net DPS (sen) | 11.5 | 11.5 | 10.0 | 10.0 | Core P/E (x) | 20.2 | 17.8 | 15.9 | 15.5 | P/BV (x) | 5.9 | 5.0 | 4.2 | 3.6 | Net dividend yield (%) | 2.7 | 2.7 | 2.4 | 2.4 | ROAE (%) | 31.4 | 30.8 | 28.7 | 24.9 | ROAA (%) | 19.7 | 18.6 | 18.5 | 16.7 | EV/EBITDA (x) | 5.8 | 7.8 | 8.4 | 7.7 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR0.75 | Target Price: | MYR0.68 | Recommendation: | Hold | | |
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| | | 1H17: In line | | 2Q17 results were, in our view, substantially skewed by LukOil's one-offs but core results (though weaker QoQ) were in line. That aside, BArmada needs to address four key issues (FPSO Kraken, TGT, Perdana, gearing) to warrant a re-rate. Our forecasts are unchanged. Our TP is SOP-based. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,179.7 | 1,416.6 | 1,810.0 | 2,777.9 | EBITDA | 1,101.7 | 552.6 | 1,070.8 | 1,470.3 | Core net profit | 360.7 | (83.3) | 234.5 | 616.4 | Core EPS (sen) | 6.1 | (1.4) | 4.0 | 10.5 | Core EPS growth (%) | (22.2) | nm | nm | 162.8 | Net DPS (sen) | 0.8 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 12.2 | nm | 18.8 | 7.1 | P/BV (x) | 0.6 | 0.8 | 0.7 | 0.7 | Net dividend yield (%) | 1.1 | 0.0 | 0.0 | 0.0 | ROAE (%) | (3.4) | (29.2) | 4.1 | 9.9 | ROAA (%) | 2.2 | (0.4) | 1.1 | 2.9 | EV/EBITDA (x) | 11.4 | 24.6 | 13.0 | 9.0 | Net debt/equity (%) | 89.1 | 176.3 | 160.6 | 134.7 |
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| | | | | | | | | | | | | | Share Price: | MYR2.76 | Target Price: | MYR2.90 | Recommendation: | Hold | | |
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| | | On track | | OTB shared that its near term focus for F&B remains to be maintaining its value meals to drive sales and on cost efficiencies. For FMCG, both export and local sales should continue their positive momentum. We keep our earnings forecasts, TP of MYR2.90 (18x CY18 PER; +1SD mean). | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 393.4 | 425.2 | 459.4 | 503.5 | EBITDA | 84.7 | 97.1 | 107.9 | 115.7 | Core net profit | 55.3 | 65.6 | 69.8 | 75.8 | Core EPS (sen) | 11.9 | 14.2 | 15.1 | 16.4 | Core EPS growth (%) | 6.1 | 18.6 | 6.5 | 8.5 | Net DPS (sen) | 9.0 | 10.0 | 8.3 | 9.0 | Core P/E (x) | 23.1 | 19.5 | 18.3 | 16.9 | P/BV (x) | 3.5 | 3.4 | 3.2 | 2.9 | Net dividend yield (%) | 3.3 | 3.6 | 3.0 | 3.3 | ROAE (%) | 15.0 | 16.6 | 18.1 | 18.1 | ROAA (%) | 12.5 | 14.5 | 14.8 | 14.9 | EV/EBITDA (x) | 6.4 | 11.5 | 10.2 | 9.3 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | PETRONAS' 2Q17 report card
by Thong Jung Liaw |
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| | | | | | PETRONAS raising its dividend payment commitment to MYR16b (+23%) for FY17 to match its FY16 payout is a positive surprise. Another positive is that it also reported stronger interim core earnings in 1H17 (+13% YoY), which reflects a gradual recovery in motion. We take the view that the oil & gas sector has bottomed. Our key select preferred BUYs are Yinson (TP: MYR4.20), Dialog (TP: MYR2.26) and Wah Seong (TP: MYR1.30). | |
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| | | | NEWS | | | Outside Malaysia:
China: Early data show diverging sentiment, stable growth outlook. The earliest gauges of how China's economy has fared this month show diverging sentiment among businesses, though the outlook is underpinned by expectations that the expansion will remain broadly steady. Manufacturing picked up further in August, according to the China Satellite Manufacturing Index, which climbed to 51.2 from 50.4 in July. The outlook wasn't as strong in gauges of sales managers and steel mills, which show conditions moderated. The readings follow official releases for July that showed an across-the-board cooling in factories, investment and consumption. Standard Chartered Plc's Small and Medium Enterprise Confidence Index rose to a four-month high of 57.4 in August, according to the bank's survey of more than 500 companies. Investment appetite increased, while three key sub-gauges tracking current performance, three-month expectations and credit conditions all posted gains. (Source: Bloomberg)
China: Industrial profits keep pace as factory inflation holds up. Chinese industrial firms maintained a profit surge, underscoring the economy's resilience even amid slowing factory output and investment. Industrial profits increased 16.5% YoY in July, versus the 19.1% YoY pace a month earlier, the nation's statistics bureau said. The robust earnings are giving policy makers room to combat excessive industrial capacity and curb speculative borrowing ahead of the key Party Congress this fall. That picture may not be sustainable though, as slowing producer inflation and rising real interest rates may squeeze factories and mills in the coming months. (Source: Bloomberg)
Indonesia: Central Bank sees 2017 current-account deficit at 1.7% of GDP. Bank Indonesia estimates current account deficit at 1.73% of gross domestic product in third-quarter and at 2.09% in fourth quarter, according to Senior Deputy Governor Mirza Adityaswara. Central bank also sees CPI in 2017 and 2018 below estimates because of falling oil prices and no increase in domestic tariffs of fuel, LPG and electricity. Real interest rate in Indonesia remains attractive; there was room for monetary easing and the cut last week was needed (Source: Bloomberg)
Crude Oil: Gasoline surges in US, oil steady as Harvey shuts Texas refineries. Gasoline surged to the highest in two years and oil was steady as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of U.S. fuel-making capacity. Gasoline futures jumped as much as 6.8% while WTI held gains near USD 48/bbl. Harvey, the strongest storm to hit the U.S. since 2004, made landfall as a Category 4 hurricane, with torrential rain flooding cities from Corpus Christi to Houston and shutting plants able to process some 2.26 million barrels a day of oil. Major terminals and pipelines that move crude and fuel into and out of Houston-area refineries were also shut, potentially stranding some crude in West Texas and starving New York Harbor of gasoline. (Source: Bloomberg) | |
| | | | | Other News:
Westports: On MYR10b expansion. Westports Holdings is expected to invest up to MYR10b to double its container-handling capacity and the company will tap the bond market to partly finance this plan. Westports, the largest port operator in the country, was considering options from the debt market such as sukuk and other forms of borrowings to finance the expansion besides using internally-generated funds. The approval for the capacity expansion is important as Malaysia needs to prepare itself to cater to the growing need for container-handling capacity from shipping lines. (Source: The Star)
Paramount Corp: Rejigs education arm for monetisation. Paramount Corp's plan to monetise its education business, which contributes to about 30% of its revenue and net profit, is still on track. However, it will not be happening anytime soon as the group rejigs the business in preparation for the said monetisation. (Source: The Edge Financial Daily)
Yong Tai: Eyes up to 40% revenue from tourism business. Yong Tai expects its tourism business segment to contribute up to 40% of its revenue starting financial year ending June 30, 2019 (FY19), with the property development business segment taking up the rest. Currently, 100% of its revenue comes from the property development business segment. (Source: The Edge Financial Daily)
Tomei Consolidated: Closing down non-performing stores. Tomei Consolidated is closing down non-performing stores in a bid to stay profitable. The jewellery designer and manufacturer has shut down four outlets so far this year amid a realignment of its business strategy, which includes the continuous assessment of every store. Other than closure of non-performing stores, Tomei will also focus on efficiency, introducing appealing products to customers, and repositioning its brand. (Source: The Edge Financial Daily) | |
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