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| | | | | | | | | | | | | | | | Share Price: | MYR6.78 | Target Price: | MYR7.50 | Recommendation: | Buy | | |
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| | | Earnings on track | | We maintain a BUY call on CIMB group, on the back of robust earnings growth of 27%/16% in FY17/18E and the expected ROAE expansion to 10.6% in FY18 from 7.9% in FY16. FY17 dividend yield of 3.9% provides support. Our TP of MYR7.50 is unchanged, pegging on a 2018 PBV of 1.3x. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Operating income | 15,395.8 | 16,065.3 | 17,022.2 | 18,119.9 | Pre-provision profit | 6,146.8 | 7,413.6 | 8,155.8 | 8,984.3 | Core net profit | 3,411.2 | 3,414.4 | 4,440.2 | 5,151.8 | Core EPS (MYR) | 0.40 | 0.39 | 0.50 | 0.58 | Core EPS growth (%) | 5.6 | (2.4) | 27.4 | 16.0 | Net DPS (MYR) | 0.14 | 0.20 | 0.26 | 0.30 | Core P/E (x) | 16.8 | 17.3 | 13.5 | 11.7 | P/BV (x) | 1.4 | 1.3 | 1.3 | 1.2 | Net dividend yield (%) | 2.1 | 2.9 | 3.8 | 4.4 | Book value (MYR) | 4.87 | 5.24 | 5.37 | 5.65 | ROAE (%) | 8.7 | 7.9 | 9.6 | 10.6 | ROAA (%) | 0.8 | 0.7 | 0.9 | 1.0 |
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| | | | | | | | | | | | | | Share Price: | MYR4.39 | Target Price: | MYR5.10 | Recommendation: | Buy | | |
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| | | 2Q17 within expectations | | BIMB's 1H17 results were in line and our earnings forecasts are maintained. What the group provides exposure to is a stable Islamic bank with strong fundamentals, and one of the largest takaful operators in the country with decent growth prospects. We maintain our BUY call and our SOP-derived TP of MYR5.10. The stock trades at a prospective FY18 PBV of just 1.5x for an estimated ROE of 13.5%. | | |
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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) | 12.4 | 12.1 | 12.1 | 11.7 | P/BV (x) | 2.0 | 1.8 | 1.6 | 1.5 | Net dividend yield (%) | 2.8 | 3.0 | 3.1 | 3.3 | 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: | MYR4.53 | Target Price: | MYR4.30 | Recommendation: | Hold | | |
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| | | Downstream disappointed | | 4QFY6/17 results disappointed as downstream continues to drag earnings. Updating for FY17 results, we lower our FY18-19 EPS by 3-4%. Given the lack of short term catalyst, we keep our HOLD call but with a lower TP of MYR4.30 (-3%) on unchanged 25x FY18 PER, its 5-year mean. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 11,739.3 | 14,127.3 | 13,066.8 | 13,705.5 | EBITDA | 1,494.6 | 1,603.8 | 1,959.2 | 2,138.0 | Core net profit | 951.5 | 1,022.8 | 1,084.4 | 1,226.6 | Core EPS (sen) | 14.7 | 16.3 | 17.2 | 19.5 | Core EPS growth (%) | 27.8 | 10.5 | 6.0 | 13.1 | Net DPS (sen) | 8.0 | 9.5 | 8.6 | 9.8 | Core P/E (x) | 30.8 | 27.8 | 26.3 | 23.2 | P/BV (x) | 4.1 | 3.8 | 3.6 | 3.3 | Net dividend yield (%) | 1.8 | 2.1 | 1.9 | 2.2 | ROAE (%) | 8.9 | 10.0 | 14.0 | 14.8 | ROAA (%) | 5.6 | 5.7 | 6.0 | 6.6 | EV/EBITDA (x) | 22.6 | 21.2 | 17.2 | 15.5 | Net debt/equity (%) | 73.4 | 75.4 | 59.9 | 48.8 |
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| | | | | | | | | | | | | | Share Price: | MYR3.96 | Target Price: | MYR4.50 | Recommendation: | Buy | | |
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| | | Sound fundamentals | | Excluding a MYR17m unrealized forex loss from OMS in 1H17, CMS' core net profit of MYR104m (+32% YoY) met 47% of our FY17 forecast. We make no changes to our earnings forecasts post results briefing, expecting a seasonally stronger 2H17. Earnings wildcard could come from OMS and/or Sacofa. We believe CMS' share price weakness post the 1Q17 results and succession planning at CMS represents an opportunity to buy. We upgrade CMS to a BUY with an unchanged SOP-based TP of MYR4.50. | | |
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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) | 17.4 | 20.0 | 19.2 | 16.4 | P/BV (x) | 2.1 | 1.9 | 1.8 | 1.7 | Net dividend yield (%) | 1.1 | 1.6 | 2.1 | 2.4 | 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 | 11.1 | 10.2 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR9.66 | Target Price: | MYR8.90 | Recommendation: | Hold | | |
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| | | IRU sales taper | | 2Q17 results were below expectations due to a drop in IRU sales, and the presence of forex losses as USD weakened. Nevertheless, IRU sales are volatile on a quarterly basis. Maintain HOLD with an unchanged MYR8.90 TP. Risk-reward remains balanced for now, with TDC's current growth prospects having been largely priced-in, in our view. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 682.4 | 766.9 | 880.3 | 991.2 | EBITDA | 263.9 | 292.6 | 334.5 | 376.6 | Core net profit | 171.2 | 246.6 | 235.2 | 258.2 | Core EPS (sen) | 29.8 | 42.8 | 40.7 | 44.6 | Core EPS growth (%) | 34.0 | 43.5 | (4.9) | 9.8 | Net DPS (sen) | 80.2 | 30.6 | 10.2 | 11.2 | Core P/E (x) | 32.4 | 22.6 | 23.7 | 21.6 | P/BV (x) | 2.7 | 2.6 | 2.5 | 2.3 | Net dividend yield (%) | 8.3 | 3.2 | 1.1 | 1.2 | ROAE (%) | 21.0 | 19.1 | 10.6 | 11.1 | ROAA (%) | 6.4 | 9.2 | 8.4 | 8.7 | EV/EBITDA (x) | 16.2 | 14.2 | 15.9 | 13.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.58 | Target Price: | MYR1.44 | Recommendation: | Hold | | |
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| | | Earnings on track | | MSGB's 1H17 earnings are within expectations. Its 6-month locked-in sales of MYR819.3m is also on track to meet its minimum sales target of MYR1.8b for 2017. Short-term focus remains on affordable housing. We fine-tune our net profit forecasts by -2% to -6%. Our RNAV-TP is unchanged at MYR1.44 (on 0.6x P/RNAV). We maintain HOLD on MSGB. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,108.5 | 2,957.6 | 2,980.0 | 3,117.4 | EBITDA | 527.9 | 508.8 | 585.2 | 657.4 | Core net profit | 338.8 | 319.5 | 291.4 | 333.5 | Core FDEPS (sen) | 14.1 | 13.3 | 12.1 | 13.8 | Core FDEPS growth(%) | (23.5) | (5.7) | (8.8) | 14.5 | Net DPS (sen) | 6.5 | 6.5 | 4.8 | 5.5 | Core FD P/E (x) | 11.2 | 11.9 | 13.1 | 11.4 | P/BV (x) | 1.2 | 1.2 | 1.1 | 1.0 | Net dividend yield (%) | 4.1 | 4.1 | 3.1 | 3.5 | ROAE (%) | na | na | na | na | ROAA (%) | 5.7 | 5.0 | 4.3 | 4.6 | EV/EBITDA (x) | 6.9 | 6.9 | 6.5 | 5.6 | Net debt/equity (%) | 3.7 | 2.0 | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.13 | Target Price: | MYR1.14 | Recommendation: | Hold | | |
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| | | 2Q17: Within expectations | | 2Q17 core earnings were in line with ours/consensus expectations. QoQ improvement was on the back of higher contribution from India and a small profit reported from its oil & gas division. EVSD's outstanding orderbook remains robust at MYR2.7b after MYR1.38b of job wins YTD as of end-June 2017. With earnings stabilized, we changed our valuation method from P/B to PE. We peg EVSD to 12x FY18E PER (-0.5 SD) and derive our new TP of MYR1.14 (+12 sen). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,788.8 | 1,574.6 | 1,872.8 | 1,745.2 | EBITDA | 124.3 | (182.1) | 167.3 | 175.8 | Core net profit | 47.5 | (80.6) | 65.7 | 73.5 | Core EPS (sen) | 6.1 | (10.4) | 8.5 | 9.5 | Core EPS growth (%) | 100.0 | nm | nm | 11.8 | Net DPS (sen) | 0.5 | 0.0 | 0.7 | 0.8 | Core P/E (x) | 18.4 | nm | 13.3 | 11.9 | P/BV (x) | 0.8 | 1.0 | 0.9 | 0.9 | Net dividend yield (%) | 0.4 | 0.0 | 0.6 | 0.7 | ROAE (%) | 5.5 | (25.6) | 7.1 | 7.4 | ROAA (%) | 2.0 | (2.8) | 2.1 | 2.2 | EV/EBITDA (x) | 10.2 | nm | 10.2 | 9.3 | Net debt/equity (%) | 58.9 | 87.0 | 81.3 | 68.5 |
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| | | | | | | | | | | | | | Share Price: | MYR1.03 | Target Price: | MYR1.30 | Recommendation: | Buy | | |
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| | | 1H17: On track | | Results are tracking to our expectation, on a stronger 2H17 outlook. Our earnings forecasts are unchanged, expecting stronger quarters ahead as the Nord Stream 2 (NS2) operations progressively kick in up to 2019. Valuations are inexpensive vis-à-vis growth prospects. Our MYR1.30 TP is pegged to 12x 2018 PER (unchanged). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,839.5 | 1,276.6 | 2,150.0 | 2,198.4 | EBITDA | 143.3 | 53.6 | 233.8 | 241.3 | Core net profit | 22.7 | (23.3) | 77.2 | 83.5 | Core EPS (sen) | 2.9 | (3.0) | 10.0 | 10.8 | Core EPS growth (%) | (84.4) | nm | nm | 8.2 | Net DPS (sen) | 3.0 | 0.5 | 0.0 | 0.0 | Core P/E (x) | 35.1 | nm | 10.3 | 9.5 | P/BV (x) | 0.7 | 1.0 | 0.8 | 0.8 | Net dividend yield (%) | 2.9 | 0.5 | 0.0 | 0.0 | ROAE (%) | 0.9 | (23.2) | 20.1 | 8.4 | ROAA (%) | 0.8 | (0.8) | 2.7 | 2.6 | EV/EBITDA (x) | 12.2 | 30.4 | 7.2 | 6.6 | Net debt/equity (%) | 73.6 | 104.7 | 74.0 | 57.8 |
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| | | | | | | | | | | | | | Share Price: | MYR0.71 | Target Price: | MYR0.76 | Recommendation: | Hold | | |
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| | | Fairly valued | | Sequentially stronger 4QFY6/17 was within our expectation, driven by growth across all segments. We maintain our FY18-19 EPS forecasts and introduce FY20. Our SOP-based TP is adjusted a tad lower to MYR0.76 (from MYR0.77) as we update our model and the stock is now a HOLD (from SELL) given the moderate upside. Share price has fallen 13% YTD and the stock is trading at 8x CY18 PER (mean). | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 592.7 | 521.5 | 567.6 | 590.7 | EBITDA | 133.3 | 63.2 | 78.8 | 85.7 | Core net profit | 59.0 | 22.0 | 30.9 | 34.8 | Core EPS (sen) | 14.7 | 5.5 | 7.7 | 8.7 | Core EPS growth (%) | 22.5 | (62.8) | 40.7 | 12.5 | Net DPS (sen) | 2.0 | 1.5 | 2.1 | 2.4 | Core P/E (x) | 4.8 | 13.0 | 9.2 | 8.2 | P/BV (x) | 0.9 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 2.8 | 2.1 | 3.0 | 3.3 | ROAE (%) | na | na | na | na | ROAA (%) | 10.0 | 3.7 | 5.0 | 5.3 | EV/EBITDA (x) | 3.1 | 5.3 | 4.1 | 3.5 | Net debt/equity (%) | 0.4 | 2.2 | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR0.19 | Target Price: | MYR0.08 | Recommendation: | Sell | | |
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| | | 2Q17: Still sees red | | 1H17 results were generally in line, in our view. Alam remained in the red in 2Q17 but on narrowing losses. Earnings aside, Alam needs to address its debt repayment issue and come out with an amicable restructuring solution. Until then, the stock could remain sidelined. Our TP pegs Alam at 0.1x BV, similar to valuations of peers (i.e. Perisai & Swiber) that went through a similar predicament. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 350.2 | 229.5 | 246.0 | 282.1 | EBITDA | 79.9 | (27.8) | 44.2 | 54.9 | Core net profit | 68.1 | (133.0) | 0.5 | 9.7 | Core EPS (sen) | 7.4 | (14.4) | 0.1 | 1.1 | Core EPS growth (%) | 14.4 | nm | nm | 1,904.8 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 2.6 | nm | 361.2 | 18.0 | P/BV (x) | 0.2 | 0.2 | 0.2 | 0.2 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 5.8 | (22.3) | 0.1 | 1.3 | ROAA (%) | 5.2 | (12.4) | 0.1 | 1.0 | EV/EBITDA (x) | 5.8 | nm | 5.8 | 4.0 | Net debt/equity (%) | 7.8 | 14.9 | 11.1 | 6.3 |
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| | | | | SECTOR RESEARCH | | | | | | | Jul 2017 adex: Not too rosy post-Hari Raya Aidilfitri
by Samuel Yin Shao Yang |
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| | | | | | Jul 2017 total gross adex fell 18% YoY and 24% MoM. Notably, YTD decline has stabilized at -14% YoY since May 2017 and we are hopeful that the adex decline has bottomed. We anticipate a slight uptick in adex sentiment given various upcoming national events taking place for the remainder of 2017 but we do not expect them to drive a significant adex recovery. Hence, our 2017 total gross adex growth forecast of -10% YoY is unchanged. Maintain NEUTRAL with our sole BUY call on MCIL. | |
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| | | | MACRO RESEARCH | | | | | | | FBMKLCI – Ongoing Consolidation
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI eked out a marginal gain of 0.32pts yesterday thanks to gains in banking stocks like CIMB and Maybank. At day's end, the benchmark index rose 0.02% to 1,769.49. Market breadth, however, was negative with losers outpacing gainers by 579 to 298. A total of 1.77b shares worth MYR1.65b changed hands. With US markets ended subdued overnight and renewed concerns over rising tensions between the US and North Korea, we believe sentiment will remain lacklustre in this holiday-shortened week. | |
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| | NEWS | | | Outside Malaysia:
U.S. Merchandise trade gap widens for first time in three months. The U.S. merchandise trade deficit widened a bit in July, while inventories at wholesalers increased, according to preliminary figures from the Commerce Department in Washington. Goods trade gap grew to USD 65.1b from USD 64b the prior month. Exports of goods fell 1.3% MoM in July from the previous month; imports eased 0.3% MoM. Wholesale inventories rose 0.4% MoM. Retail stockpiles declined 0.2% MoM, first drop in three months. (Source: Bloomberg)
China: Central Bank is embracing a supercharged CNY. With the dollar languid in the absence of supportive rate-hike rhetoric from Jackson Hole, the People's Bank of China set the strongest yuan fixing in a year. The signal that Chinese policy makers are comfortable with yuan strength saw the currency trade below 6.65 per dollar onshore, a level the yuan seemed to have stalled at following a hefty advance. The currency is the best performer in Asia this month, and shows no signs of slowing down. (Source: Bloomberg)
Singapore: Home sales surge even as foreign demand stays subdued. After years of declines, Singapore's home sales are on a roll, even as purchases by foreign buyers have remained muted. Stringent stamp duties levied by the government have had the intended effect of damping speculative foreign demand, with foreign buyers accounting for just 6% of purchases in the first half, data from Cushman & Wakefield show. That compares with 9% as recently as 2013, when mortgage rules were tightened. Developers sold 7,147 private homes in the first seven months of the year, 50% YoY higher than in the same period a year earlier. (Source: Bloomberg)
Thailand: Export growth target raised to 7%. Thailand should be able to achieve export growth of 7% this year as global economic situation looks good, Commerce Minister Apiradi Tantaporn said. Apiradi said that Deputy Prime Minister Somkid Jatusripitak has set 2017 export growth target at 7% with targeted export destinations such as India, Africa, Latin and Central America. (Source: Bloomberg) | |
| | | | | Other News:
Prolexus: Prolexus' plan to build Vietnam plant delayed. Prolexus' plan to build an apparel factory in Vietnam as part of its expansion drive has been delayed. It was stated in Prolexus' circular dated May 20, 2016 relating to its rights issue that the plant would be completed and fully commissioned by the third quarter of this year, with an initial production capacity of about 4.5m pieces a year. The delay is due to some changes in the architecture design, which hindered the group from obtaining a construction permit. Prolexus did not respond to queries as at press time, citing the group's disclosure policy. (Source: The Sun Daily)
Felda Global Ventures: Result of FGV domestic enquiry could be out today. The result of the domestic inquiry into four senior executives of Felda Global Ventures Holdings (FGV), namely its president and chief executive officer (CEO) Datuk Zakaria Arshad, chief financial officer Ahmad Tifli Mohd Talha, FGV Trading S/B CEO Ahmad Salman Omar and Delima Oil Products S/B senior general manager Kamarzaman Abd Karim, could be out by today at the earliest. A previous deadline of Aug 25, set by FGV chairman Tan Sri Sulaiman Mahbob, had been extended with the result slated to be released today. (Source: The Edge Financial Daily)
Scomi Group: To strengthen its merged entity. Scomi Group will focus on strengthening its merged entity with Scomi Energy Services and Scomi Engineering's financial fundamentals with the implementation of cash realisation initiatives. Cash realisation initiatives would help it raise at least USD50m (MYR213.6m) by disposing of and/or streamlining the merged entity's existing assets within 12 months from the completion of the exercise. (Source: The Star) | |
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