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| | | | | | | | | | | | | | | | Share Price: | MYR42.60 | Target Price: | MYR45.60 | Recommendation: | Hold | | |
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| | | 3Q17: Some new dynamics | | 3Q17 results fell short. While YTD-Aug 2017 illicit market share has fallen by 2ppt to 56.1%, benefiting some of the industry players, BAT's 3Q17 was partly impacted by a competitor's entry into the economy (Econ) products (eg. JTI's launch of LD in Aug 2017). BAT has since early Oct 2017 launched Rothmans (Econ). Potential catalysts include the potential return of small packs and quicker recovery of the legal industry volumes. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 4,581.5 | 3,756.4 | 3,107.0 | 3,189.9 | EBITDA | 1,277.3 | 929.9 | 747.2 | 833.7 | Core net profit | 914.5 | 675.1 | 564.8 | 630.5 | Core EPS (sen) | 320.3 | 236.4 | 197.8 | 220.8 | Core EPS growth (%) | 0.5 | (26.2) | (16.3) | 11.6 | Net DPS (sen) | 312.0 | 278.0 | 193.8 | 216.4 | Core P/E (x) | 13.3 | 18.0 | 21.5 | 19.3 | P/BV (x) | 22.3 | 19.8 | 19.5 | 19.1 | Net dividend yield (%) | 7.3 | 6.5 | 4.6 | 5.1 | ROAE (%) | 170.0 | 124.4 | 91.2 | 99.9 | ROAA (%) | 73.4 | 56.2 | 48.6 | 55.4 | EV/EBITDA (x) | 12.8 | 13.8 | 16.4 | 14.7 | Net debt/equity (%) | 50.5 | 15.8 | 12.9 | 11.7 |
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| | | | | | | | | | | | | | Share Price: | MYR1.59 | Target Price: | MYR1.70 | Recommendation: | Hold | | |
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| | | 3Q17: Below expectations | | 3Q17 results and third interim gross DPU of 2.0sen missed our estimates as the slower YoY core earnings were largely dragged by some pullback of occupancy rates at selected assets. We lower our FY17-19 earnings forecasts by 4% to 7% and our DDM-TP to MYR1.70 (-5sen; unchanged cost of equity of 7.8%). There would be EPU/DPU dilution post proposed placement of up to 294.6m new units (20% of its approved fund size new units) by 2Q18. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 165.7 | 171.3 | 170.1 | 199.6 | Net property income | 141.9 | 144.3 | 145.4 | 171.3 | Distributable income | 91.5 | 90.2 | 92.3 | 100.9 | DPU (sen) | 7.6 | 7.4 | 7.5 | 8.2 | DPU growth (%) | (14.9) | (1.8) | 1.2 | 9.4 | Price/DPU(x) | 21.0 | 21.4 | 21.2 | 19.3 | P/BV (x) | 1.3 | 1.3 | 1.3 | 1.3 | DPU yield (%) | 4.8 | 4.7 | 4.7 | 5.2 | ROAE (%) | 7.2 | 8.9 | 6.6 | 7.2 | ROAA (%) | 4.3 | 4.1 | 4.1 | 4.1 | Debt/Assets (x) | 0.3 | 0.3 | 0.3 | 0.4 |
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| | | | | | MACRO RESEARCH | | | | | | | FBMKLCI – Struggling to establish new support
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI was little changed yesterday. At day's end, the benchmark rose 0.82pts to 1,741.47, led by gains in PTG, ASTRO and AXIATA. Market breadth was relatively mixed with losers outpacing gainers by 453 to 434. A total of 2.73b shares worth MYR1.95b changed hands. As Wall Street ended broadly lower, with investors await a slew of earnings report, as well as uncertainties surrounding ECB's meeting on Thursday, we expect stock market to remain choppy. | |
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| | NEWS | | | Outside Malaysia:
U.K: May seeks transition deal within all-in-one Brexit package. Prime Minister Theresa May's cabinet will meet as pressure mounts for it to agree the kind of trade pact Britain wants from the European Union -- a day after she damped expectations of a swift Brexit transition deal. Businesses want an urgent agreement that would allow them to trade as usual for two years after leaving the bloc, but May fell into line with the EU by signalling the transition would only be sealed as part of a wider deal. Such an agreement isn't expected to be finalized until shortly before Brexit day in March 2019. (Source: Bloomberg)
China: Home prices rise in fewest cities since January 2016, adding to signs of a property slowdown as curbs on buyers bite. New-home prices, excluding government-subsidized housing, in September rose in 44 of 70 cities tracked by the government, compared with 46 in August, the National Bureau of Statistics said. Prices fell in 18 cities from the previous month and were unchanged in eight. Stabilizing home prices in the nation's largest cities are a welcome sign for Communist Party leaders gathered in Beijing to map policy for the next five years. President Xi Jinping renewed a yearlong call that homes are built "to be inhabited''. (Source: Bloomberg)
China: Exports of diesel and gasoline slipped in September as refiners focused on supplying the domestic market before a week-long holiday. Diesel shipments dropped 26% YoY to about 293,427 barrels a day, the lowest since January, according to Bloomberg calculations based on data posted on the website of the General Administration of Customs. Gasoline exports tumbled 32% YoY, averaging 158,650 barrels a day, the least since November 2015, the calculations show. (Source: Bloomberg)
Vietnam: Forecasts as much as 6.7% economic growth in 2018. Prime Minister Nguyen Xuan Phuc gave these projections in a speech at the National Assembly's opening session in Hanoi. Vietnam is poised to remain among the world's fastest-growing economies, as new factories open and foreign direct investment rises. The government will lower banks' lending rates and ensure fund availability for loans to companies while controlling credit quality, Phuc told lawmakers. Authorities will also tighten control of imports to narrow the trade deficit while boosting domestic sales, he said. The government also "needs to ensure it can control inflation and continue to improve the investment climate for businesses," said Vu Hong Thanh, the head of the National Assembly's Economic Committee. Officials also need to avoid risks such as fuelling a bubble in the stock and property markets and must quicken restructuring of state companies, he said. (Source: Bloomberg) | |
| | | | | Other News:
Top Glove: Said to buy Adventa's surgical glove operations. According to two sources, the company is said to be acquiring the privately held surgical glove operations of Adventa. One source told The Edge Financial Daily, "It is possible that Adventa's surgical glove operations under the Terang Nusa group, which manufactures and distributes surgical and medical gloves, could be a likely target for Top Glove which is said to be looking for surgical glove company". Speculation has been rife on the potential acquisition target for Top Glove after its executive chairman told the pressmen last week that the group is set to announce a major acquisition soon that could cost more than a billion ringgit. (Source: The Edge financial Daily)
Globetronics: Cuts special dividend to conserve cash. The company is seeking to conserve cash for capex, has announced another round of lower special dividend this year. The chip maker told Bursa Malaysia that the special dividend to be distributed along with the second interim ordinary dividend would be 4 sen, lower by 3 sen compared with that in the corresponding period of last year. Globetronics will continue to pay an ordinary dividend of 2 sen. StarBiz last month reported that Globetronics was expected to increase its capex for this year to MYR103m from MYR85m planned in the first quarter in order to meet the rising orders for its sensor products. (Source: The Star Online)
T7 Global: Partnering with 3 firms for ECRL project. The company has entered into a Memorandum of Understanding with three private companies to form a strategic partnership for the construction of the East Coast Rail Line project. The three companies are Eastern Pacific Industrial Corp Bhd, CMC Engineering Sdn Bhd and China State Construction Engineering (M) Sdn Bhd. (Source: The Edge Markets)
Titijaya Land: To receive MYR65m compensation for land use for LRT3. The company said it will receive compensation totalling MYR65.25m over the temporary occupation and usage of its land in Shah Alam for the upcoming third Light Rail Transit (LRT3) project. The property developer said the compensation will be awarded to its wholly-owned subsidiary, Shah Alam City Centre Sdn Bhd, which is the registered owner of the 65,216 sq m piece of land. (Source: The Edge Markets) | |
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