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| | | | | | | | | | | | | | | | Share Price: | MYR1.71 | Target Price: | MYR1.47 | Recommendation: | Sell | | |
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| | | MSS & 10sen cover price hike | | Star has offered a MSS to 250-300 employees, mostly in its print division, in hopes of weathering through its challenging operating environment. Additionally, Star also announced a 10sen hike (+8%) to its weekday newspaper cover price to MYR1.30. In light of this, our FY17-19 earnings estimates are cut by 1%-31%.We maintain our SELL call as we see no growth catalyst in the near-term and expect earnings to continue to lag dividends. Share price has gone ex-dividend (36sen) on 27 Sep. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,019.0 | 932.1 | 800.2 | 743.7 | EBITDA | 206.2 | 162.1 | 94.4 | 110.6 | Core net profit | 131.9 | 69.9 | 32.9 | 48.0 | Core EPS (sen) | 17.9 | 9.5 | 4.5 | 6.5 | Core EPS growth (%) | (12.9) | (47.0) | (53.0) | 45.7 | Net DPS (sen) | 18.0 | 18.0 | 45.0 | 15.0 | Core P/E (x) | 9.6 | 18.0 | 38.4 | 26.3 | P/BV (x) | 1.1 | 1.1 | 1.2 | 1.3 | Net dividend yield (%) | 10.5 | 10.5 | 26.3 | 8.8 | ROAE (%) | 11.6 | 9.7 | 21.1 | 4.8 | ROAA (%) | 7.8 | 4.1 | 2.1 | 3.4 | EV/EBITDA (x) | 6.9 | 9.0 | 10.6 | 9.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | A glimmer of hope
by Desmond Ch'ng |
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| | | | | | Some positive trends in August 2017, with a pick-up in both household (HH) and non-HH loan growth, while loan applications and approvals expanded YoY during the month. Also positive is the fact that deposit growth picked up pace while asset quality was stable. We maintain our industry loan growth forecasts of 4.7% for 2017, and our NEUTRAL stance on the sector with BUYs on CIMB and BIMB. | |
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| | | | MACRO RESEARCH | | | | | | | Fastest M3 growth in over two years
by Suhaimi Ilias |
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| | | | | | Money supply (M3) growth picked up in Aug 2017 to +5.3% YoY (Jul 2016: +4.8% YoY), highest growth since June 2015. Growth was supported by faster deposit growth and rising external reserves amid sustained credit growth. Meanwhile, BNM net short FX positions dropped for the fourth consecutive month as unwinding process continues. | |
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| | | | | | | | Dollar Rebound Play: Long-Short" Strategy
by Nik Ihsan Raja Abdullah |
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| | | | | | The MSCI AC ASEAN PR (USD) INDEX (MXSO Index) found its support at 786.60, producing a "Bullish Harami" pattern, which is a bullish reversal pattern. An uptick in RSI shows that momentum has improved and that the longer-term uptrend may resume, potentially revisiting its upper resistance at 802.60. | |
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| | NEWS | | | Outside Malaysia:
China: Signals robust growth as factory gauge hits five-year high. China's official factory gauge rose to a five-year high in September, signalling that efforts to clean up the financial sector and the environment aren't damping economic growth yet. The manufacturing purchasing manager's index rose to 52.4 in September, compared with to 51.7 in August. The non-manufacturing PMI stood at 55.4 compared with 53.4 a month earlier. A private-sector gauge, the Caixin manufacturing PMI, slipped to 51.0 from 51.6. For both, numbers higher than 50 indicate improving conditions. (Source: Bloomberg)
China: Steers credit to small business with targeted reserve cut. China took action to ensure credit reaches small business, rural borrowers and start-ups, a move tailored to shore up the economy as a vital political transition approaches. The People's Bank of China announced that it would reduce the amount of cash that banks must hold as reserves from next year, with the size of the cut linked to the flow of funding to parts of the economy where credit has traditionally been scarce. That distinction was underlined by manufacturing sector indicators which showed that while large firms are feeling bullish, smaller producers are less so. (Source: Bloomberg)
Japan: Confidence among manufacturers touches a decade high. Confidence among Japan's big manufacturers has improved to the highest level in a decade; underscoring Prime Minister Shinzo Abe's run of success on the economy as he heads into an election later this month. Sentiment among large manufacturers rose to 22 from 17 three months ago, the highest level since 2007, according to the quarterly Tankan survey released by the Bank of Japan. The outlook among large manufacturers rose to 19 from 15 in June. (Source: Bloomberg)
S. Korea: Exports surge to record on steel, semiconductors in the latest sign that stronger global trade is helping to underpin growing momentum for the global economy. The nation's shipments abroad rose for an 11th month in September, driven by overseas demand for steel, semiconductors and petrochemical products. Exports jumped 35% YoY, the trade ministry said, while imports gained 21.7% YoY. The trade surplus was USD 13.8b, also a record. Month-on-month growth in exports was the most since January 2011. (Source: Bloomberg) | |
| | | | | Other News:
Property: Empire City Damansara 2 land up for sale. Mammoth Empire Holdings Sdn Bhd – whose flagship development is Empire City Damansara in Petaling Jaya, Selangor has put the land embarked for its Empire City Damansara 2 project up for sale. According to sources, the property developer and asset manager hopes to get MYR800m for the 64-acre site opposite the existing 23-acre Empire City along the LDP highway. It isn't clear as to why the company is planning to divest the land which it purchased 7 years ago, and what the company plans to do with the proceeds of the sale. The sale comes just eight months following the sale of Empire Shopping Gallery in Subang Jaya, Selangor, to Pelaburan Hartanah for MYR530m. (Source: The Edge Financial Daily)
United Malacca: Confident of finalizing Sulawasi land buy. According to the company's executive chairman, Datin Paduka Tan Siok Choo, the company is confident of completing the establishment of a JV to develop nearly 60,000ha of land in Central Sulawasi, Indonesian by the Oct 28 deadline, and start planting cash crops such as early as 2Q18. MoU was signed last July 29, 2016 between the company and two Indonesian partners - Adhi Indrawan and Dr Kartika Dianningsih Antono – to establish a 60:40 JV with PT Bintang Gemilang Permai. If successful, the deal marks United Malacca's maiden foray into Central Sulawasi, which is the group's second venture in Indonesian, after Kalimantan. (Source: The Edge Financial Daily)
EcoWorld: Newly launched projects sees strong early response. The company launched five new projects over the weekend in Klang Valley and Penang under its DNA campaign. The projects will carry the group's DNA – design, nature and art, which embodies life-style driven and eco-friendly developments with an artistic twist, to redefine living, business and leisure. More than 2,000 visitors flocked to Eco World's sales galleries on Saturday, where sales and purchase agreements of units were signed. According to the president and CEO, Datuk Chang Khim Wah, "We are very confident that the five new projects launched represent the best of everything we have introduced to the market to date. We are very optimistic about achieving our MYR4b sales target for the year ending Oct 31, 2017". (Source: The Edge financial Daily) | |
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