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| | | | | | | | | | | | | | | | Share Price: | MYR1.12 | Target Price: | MYR1.32 | Recommendation: | Buy | | |
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| | | Sells land in Iskandar Malaysia | | We are positive on UEMS' latest land sale. UEMS is re-aligning its strategy in that: 1) it will con't to divest non-core assets or reduce exposure in Iskandar M'sia (IM), 2) proceeds from asset divestments will be used to expand landbank in Klang Valley (KV) & 3) upcoming launches in IM will be more towards mid-range products. We adjust our FY17 net profit forecasts by +7%, unchanged for FY18-19. Our TP is raised to MYR1.32 (+4sen; 0.45x P/RNAV). Upgrade to BUY. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,749.9 | 1,841.5 | 1,933.6 | 1,578.6 | EBITDA | 299.6 | 224.4 | 509.5 | 382.5 | Core net profit | 257.2 | 147.3 | 270.8 | 155.4 | Core FDEPS (sen) | 5.2 | 2.9 | 5.2 | 3.0 | Core FDEPS growth(%) | (51.1) | (44.8) | 83.9 | (42.6) | Net DPS (sen) | 1.6 | 0.0 | 0.0 | 0.0 | Core FD P/E (x) | 21.6 | 39.2 | 21.3 | 37.2 | P/BV (x) | 0.7 | 0.7 | 0.7 | 0.7 | Net dividend yield (%) | 1.4 | 0.0 | 0.0 | 0.0 | ROAE (%) | 3.9 | 2.2 | 3.9 | 2.2 | ROAA (%) | 2.2 | 1.2 | 2.0 | 1.1 | EV/EBITDA (x) | 24.0 | 35.9 | 16.7 | 24.9 | Net debt/equity (%) | 24.3 | 40.7 | 41.3 | 53.7 |
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| | | | | | | | | | | | | | Share Price: | MYR1.63 | Target Price: | MYR1.78 | Recommendation: | Hold | | |
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| | | A tough decision | | At MYR75,012/ha, the purchase price is lofty and unlikely to be profitable (after leverage) in the initial 2-3 years. The need to replenish the estates sold earlier is understandable given the disposals to unlock value. Post-acquisition, its landbank will increase by +14% to 93,417ha. Near term, BPLANT will need to monetise more Peninsular Malaysia estates to supplement income and sustain dividend payouts. HOLD for its high yield prospects, with an unchanged RNAV-TP of MYR1.78. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 615.2 | 707.9 | 746.5 | 761.2 | EBITDA | 112.9 | 188.4 | 193.6 | 197.9 | Core net profit | 31.6 | 81.5 | 99.9 | 102.1 | Core EPS (sen) | 2.0 | 5.1 | 6.2 | 6.4 | Core EPS growth (%) | (49.6) | 157.7 | 22.6 | 2.3 | Net DPS (sen) | 13.0 | 14.5 | 13.0 | 6.2 | Core P/E (x) | 82.5 | 32.0 | 26.1 | 25.5 | P/BV (x) | 1.2 | 1.2 | 1.0 | 1.0 | Net dividend yield (%) | 8.0 | 8.9 | 8.0 | 3.8 | ROAE (%) | 3.5 | 10.4 | 26.2 | 3.9 | ROAA (%) | 1.0 | 2.5 | 2.9 | 2.8 | EV/EBITDA (x) | 26.4 | 17.0 | 13.8 | 13.5 | Net debt/equity (%) | 21.9 | 21.5 | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | Sep 2017 adex: No adex-friendly events to boost ads
by Samuel Yin Shao Yang |
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| | | | | | Sep 2017 total gross adex fell 16% YoY and 5% MoM mainly due to ongoing soft adex sentiment and ad transition to digital platforms. 4Q17 adex growth may be seasonally better but doubt it will be large enough to push overall full-year adex back to positive growth. Our 2017 total gross adex forecast is unchanged at -10% YoY (9M17: -13% YoY). Note, potential downside risk to earnings could stem from a sustained uptrend in newsprint prices. We have HOLD calls on ASTRO, MPR, MCIL and a SELL on STAR. | |
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| | | | | | | | Some progress on a long-awaited ELV policy?
by Ivan Yap |
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| | | | | | In a recent news article, the Transport Minister said that a study of vehicles lifespan in the country is now in final stage. This could eventually bring forth the ELV policy which could include incentives for owners to change road-unworthy old cars for new ones. While full-implementation of the ELV policy is unlikely for now, we laud this proposal for it will enhance road safety as well as sustainability of the auto sector. We remain POSITIVE on the sector with BUYs on BAuto, MBM and TCM. | |
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| | | | MACRO RESEARCH | | | | | | | FBMKLCI Gradual Road to Recovery
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI had a good start this week, ending Monday's session 2.22pts higher at 1,748.35, led by gains in GENM, PCHEM and SIME. Market breadth was also in jovial mood, with gainers outpacing losers by 518 to 402. A total of 2.87b shares worth MYR2.15b changed hands. While underlying sentiment has improved, the setback in overnight US markets will likely weigh on the local bourses. O&G stocks, however, will continue to attract interest on firmer oil price. | |
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| | NEWS | | | Outside Malaysia:
U.S: Economy weathers storms to post solid third-quarter growth. The U.S. economy stood tall last quarter against one of the most active Atlantic hurricane seasons in history. Inflation-adjusted gross domestic product advanced at a 3% annualized rate from July through September, amid steady consumption and continued strong business-equipment spending, Commerce Department showed. Combined with the 3.1% pace in the prior quarter, the economy put in its best six-month performance since 2014. The deleterious effects of hurricanes Harvey and Irma on so-called final demand were indicated in figures showing weaker outlays for structures such as oil and gas well drilling equipment and less home construction. At the same time, household spending was firmer than forecast as Americans in storm-affected areas of the country went car shopping to replace damaged vehicles. (Source: Bloomberg)
E.U: Euro-Area economic confidence surges to highest in 17 years. Euro-area economic confidence surged to its highest in almost 17 years, reflecting an improved outlook for a region that not long ago was blighted by record joblessness and a double-dip recession. The index of industry and consumer sentiment rose to 114 in October from a revised 113.1 the previous month, the European Commission in Brussels said. That's the gauge's fifth consecutive monthly increase and the strongest reading since January 2001. (Source: Bloomberg)
U.K: Consumer-credit growth stays near 10% as rate hike nears. U.K. consumer credit continued to grow at a robust pace in September, indicating households have yet to be deterred by the Bank of England's warnings about debt. Unsecured lending jumped 9.9% YoY, little changed from the 10% YoY pace the previous month, the BOE said. Net credit rose GBP 1.6b from August, above the GBP 1.5b average in the previous six months. Credit-card borrowing accelerated to the fastest since April. Rampant household borrowing on personal loans, credit cards and car deals has raised concern among regulators, who've said that banks could be exposed to bigger-than-expected losses in a downturn. (Source: Bloomberg)
China: Industrial profits surge most since 2011 on price rebound, underscoring resilience in the economy as authorities intensify their efforts to cut excess capacity and reduce pollution. Industrial profits increased 27.7% YoY in September, compared with a 24% YoY pace a month earlier, the statistics bureau said. September profit was CNY 662.2b (USD 99b). January to September profits increased 22.8% YoY to CNY 5.58tr. Robust factory inflation, industrial output and consumer spending have been keeping the expansion on track this year. Steady growth and sustained profits give policy makers room to attack pervasive pollution, excess capacity and speculative borrowing after President Xi Jinping and top leaders this week signalled they'll push harder to transition from a rapid growth model to one more focused on high-quality development. (Source: Bloomberg) | |
| | | | | Other News:
AirAsia: Formalised a ground handling partnership with SATS Ltd. The low-cost carrier formalised a JV partnership with Singapore's aviation gateway services and food solutions provider SATS Ltd on ground handling businesses. The partnership resulted a 50:50 ownership between the two parties in Ground Team Red Holdings Sdn Bhd (GTRH), which will become the holding company of two ground handling companies originally wholly-owned by the low cost carrier and SATS. AirAsia said a series of share swap deals between both groups' subsidiaries will be undertaken and a cash consideration amounting SGD119.3m (MYR372.2m) will be paid to AirAsia as GTRH was also originally wholly-owned by the group. (Source: the Edge Markets)
Vizione Holdings: Bagged MYR401m contract to build office. The company as bagged an MYR401m contract to build four blocks of office suites on Jalan Sunway, Semenyih, Ulu Langat, Selangor. Vizione said its wholly-owned subsidiary, Wira Syukur (M) Sdn Bhd has accepted a letter of award from Paragon Hemisphere Sdn Bhd for the proposed project. (Source: The Edge Markets)
United Malacca: Eyes drones, clones, other crops to overcome challenges. The company is looking into to overcome challenges from labour shortages and price volatility. "We started mitigating that risk two years ago – we went all out for mechanization," said CEO Peter Benjamin. "That has helped us cushion a lot of these labour issues. It also helped us a lot as far as the recovery of the crop is concerned." Palm oil companies in Malaysia have been grappling with a tepid rebound on production from the 2015 to 2016 El Nino, as well as an industry-wide shortage of skilled plantation workers. (Source: The Edge Financial Daily) | |
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