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| | | | | | | | | | | | | | | | Share Price: | MYR7.33 | Target Price: | MYR7.60 | Recommendation: | Hold | | |
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| | | Storm in tanker market | | 2Q17 results were within our expectation and we think 3Q could be softer given the weaker crude tanker rate. However, earnings in 4Q could improve substantially on seasonal winter demand and contribution from 4 new vessels. We maintain our earnings forecasts, HOLD call and SOP-based TP of MYR7.60. MISC offers decent dividend yield of ~4.1% and it has been paying dividend quarterly since 1Q17. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 10,908.4 | 9,597.2 | 8,784.7 | 9,181.4 | EBITDA | 3,913.2 | 3,898.8 | 4,114.8 | 4,426.5 | Core net profit | 2,782.0 | 1,914.0 | 1,938.3 | 2,095.0 | Core EPS (sen) | 62.3 | 42.9 | 43.4 | 46.9 | Core EPS growth (%) | 43.2 | (31.2) | 1.3 | 8.1 | Net DPS (sen) | 20.0 | 30.0 | 30.4 | 32.8 | Core P/E (x) | 11.8 | 17.1 | 16.9 | 15.6 | P/BV (x) | 0.9 | 0.9 | 0.8 | 0.8 | Net dividend yield (%) | 2.7 | 4.1 | 4.1 | 4.5 | ROAE (%) | na | na | na | na | ROAA (%) | 6.2 | 3.7 | 3.4 | 3.7 | EV/EBITDA (x) | 11.2 | 10.3 | 9.8 | 9.3 | Net debt/equity (%) | 2.3 | 15.4 | 15.2 | 16.9 |
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| | | | | | MACRO RESEARCH | | | | | | | ARCA Steel Index – Bull of Steel
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI declined 3.71pts to 1,777.94 yesterday, reversing gains from a day ago amid heightened geopolitical tensions, led by declines in MISC, ROTH and GENM. Broader market remained negative, with losers outpacing gainers by 462 to 317. A total of 1.42b shares worth MYR1.73b changed hands. The selloff in the global equity markets last night may dampen investor's confidence today. | |
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| | NEWS | | | Outside Malaysia:
U.S. Productivity gains accelerate while pace remains tepid. Worker productivity gains in the U.S. accelerated in the second quarter to a pace that's still tepid by historical standards, a Labor Department report showed. Measure of nonfarm business employee output per hour increased at 0.9% annualized rate after an upwardly revised 0.1% rise in the prior three months. Unit labor costs rose at 0.6% pace after an upwardly revised 5.4% rate. Report reflects annual revisions to economy-wide data from July 28, including upward revision to hourly compensation in 1Q. (Source: Bloomberg)
U.K: BOE's economic assessment offers little reason to lift key rate. The Bank of England presented a fresh downbeat assessment of the U.K. economy, highlighting slower consumer spending and weak wage growth, reinforcing the view that an interest-rate increase is far from imminent. A report by the BOE's regional agents published said that the initial impact of the weaker pound on prices may be almost done, goods-price inflation is nearing its peak, and wage growth remains modest. While it said that manufacturing is benefiting from sterling's decline, uncertainty continues to weigh on companies' investment decisions. (Source: Bloomberg)
U.K: Property prices stagnated in July as a slump in London values spread to neighboring areas, according to the Royal Institution of Chartered Surveyors. After months of decline in the London housing market, largely due to prime properties in the center of the city, prices in England's southeast had their worst performance since 2011, RICS said in a survey published. Nationwide, RICS said its price gauge fell to its lowest level in more than four years, despite increases in Northern Ireland, the West Midlands and the southwest. According to the RICS survey, 68% of homes marketed at more than GBP1m (USD1.3m) have had their asking prices cut in the past two months. For properties below GBP500,000, the proportion was 37%. (Source: Bloomberg)
Brazil: Posts lowest annual inflation rate in over 18 years. Brazil recorded its slowest annual inflation in over 18 years as Latin America's largest economy struggles to leave behind its worst recession on record. The IPCA inflation index rose 0.24% in July, after a 0.23% deflation in June, according to Brazil's national statistics agency. Yet consumer prices rose only 2.71% YoY in the 12 months through July, below the floor of the official target range and the slowest since early 1999. The sharp slowdown in inflation has been one of the few pieces of good news for an economy still reeling from back-to- back years of recession. The data has fueled bets that the central bank will ease monetary policy more aggressively this year, supporting the incipient recovery. Already there are signs, such as production of capital goods that investment may finally be picking up. (Source: Bloomberg) | |
| | | | | Other News:
TA Global: To sell Sydney coastal land for MYR828m. TA Global is seeking to sell the remaining 24.26 acres of undeveloped land at its Little Bay Cove development in Sydney, Australia, for AUD245m (MYR827.8m). TA Global stood to gain about AUD102m (MYR344.9m) before tax from the disposal of the freehold residential land to Karimbla Properties (No 50) Pty Ltd (KPPL), a unit of Meriton Properties Pty Ltd. The landowner, its wholly-owned subsidiary TA Little Bay Pty Ltd, had entered into a put and call option deed with KPPL for the proposed disposal. (Source: The Star)
Reach Energy: Aborts plan for private placement. Reach Energy has decided to scrap a proposed private placement to raise up to MYR180m in view of "the prevailing market conditions." Due to these conditions, it was "challenging for the company to implement the placement at an issue price that is in the best interest of the company and its shareholders. Nevertheless, the company will continue to explore other avenues of fundraising and make the necessary announcements in due course. (Source: The Star)
Bumi Armada: Yet to receive payments from Erin Petroleum. Bumi Armada continues to engage with Erin Petroleum Nigeria Limited (EPNL) to reach an amicable solution for the outstanding payments due to its wholly-owned subsidiaries. Despite numerous discussions with EPNL, payments due to Bumi Armada (Singapore) Pte Ltd (BASPL) and Armada Oyo Limited (AOL) for the provision of services by BASPL and AOL to EPNL under the operational and maintenance (O&M) services contract and bareboat charterparty contract respectively, remain outstanding. However, following meetings with the Department of Petroleum Resources (DPR) of Nigeria and EPNL subsequently, BASPL and AOL have allowed the flow of produced oil into the FPSO cargo tanks. (Source: The Sun Daily)
Iskandar Waterfront City: IWCity gets additional JB land, to increase value of masterplan. IWCity unit Tebrau Bay S/B (TBSB) will end up with an additional 107.2 acres in Plentong, Johor Baru, under a land exchange deal struck with the Johor state government. TBSB will also have to fork out MYR309.12m, to be satisfied partly in cash and partly by absorbing the cost of a construction job to be done for the state government. The Johor government would compulsorily acquire 121.58 acres of freehold agricultural land from TBSB for a total compensation sum of MYR222.8m. In consideration of TBSB's irrevocable agreement to the compulsory acquisition, the state government would alienate 228.78 acres, also in Plentong, to TBSB for MYR531.92m. These alienated lands, which are adjoining TBSB's existing coastal land in Plentong, will require reclamation as they are completely submerged.
ManagePay Systems: To procure MVNO licence from MCMC. ManagePay Systems (MPay) plans to procure mobile virtue network operator (MVNO) licence from the Malaysian Communications and Multimedia Commission (MCMC). Following that, it will launch and promote self-branded MVNO Starter Pack to all Malaysian and foreigners in Malaysia. It had entered into a JV agreement with Contracts Rise S/B (CRSB) for the plan. CRSB will secure a project of 200,000 users for the JV company, while MPay will empower each user with e-Money capabilities via MPay E-Wallet, including but not limited to issuing a MasterCard virtual card number in each MPay Wallet. (Source: The Star) | |
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