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| | | | | | | | | | | | | | | | Share Price: | MYR2.97 | Target Price: | MYR3.80 | Recommendation: | Buy | | |
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| | | Job wins building up | | IJM's latest construction job win positively lifts its outstanding orderbook to another record high of MYR9.5b, further enhancing medium-term earnings visibility. We make no change to our earnings forecasts having imputed job win potentials. Maintain BUY with an unchanged SOP-based TP. IJM is slated to announce its 2QFY3/18 results on 28th Nov 2017. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,128.2 | 6,065.3 | 7,192.5 | 7,375.2 | EBITDA | 1,166.7 | 1,125.8 | 1,203.6 | 1,355.3 | Core net profit | 509.3 | 505.1 | 589.6 | 667.4 | Core EPS (sen) | 14.3 | 14.0 | 16.3 | 18.5 | Core EPS growth (%) | (12.5) | (2.0) | 16.7 | 13.2 | Net DPS (sen) | 10.0 | 7.5 | 7.0 | 7.0 | Core P/E (x) | 20.8 | 21.2 | 18.2 | 16.1 | P/BV (x) | 1.2 | 1.1 | 1.1 | 1.0 | Net dividend yield (%) | 3.4 | 2.5 | 2.4 | 2.4 | ROAE (%) | 9.1 | 7.1 | 6.1 | 6.6 | ROAA (%) | 2.6 | 2.5 | 2.8 | 3.1 | EV/EBITDA (x) | 15.4 | 15.5 | 13.4 | 11.7 | Net debt/equity (%) | 40.4 | 35.3 | 34.9 | 29.7 |
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| | | | | | | | | | | | | | Share Price: | MYR7.77 | Target Price: | MYR7.95 | Recommendation: | Hold | | |
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| | | 3Q17: Earnings in-line | | 3Q17 results and 3rd interim gross DPU of 8.6sen (YTD: 25.8sen) were within estimates. The flattish 3Q17 earnings were supported by key segments but offset by the management services segment and higher taxes. We tweak FY17-19 earnings by -2% to -3% and nudge down our DDM-TP to MYR7.95 (-15sen; unchanged cost of equity of 7.2%). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,340.2 | 1,343.5 | 1,422.7 | 1,494.6 | Net property income | 1,004.2 | 1,019.7 | 1,067.9 | 1,106.8 | Distributable income | 641.3 | 674.6 | 658.2 | 677.4 | DPU (sen) | 32.5 | 33.4 | 33.2 | 34.2 | DPU growth (%) | 2.6 | 2.7 | (0.5) | 3.0 | Price/DPU(x) | 23.9 | 23.3 | 23.4 | 22.7 | P/BV (x) | 1.1 | 1.1 | 1.1 | 1.0 | DPU yield (%) | 4.2 | 4.3 | 4.3 | 4.4 | ROAE (%) | 9.2 | 7.0 | 5.5 | 5.4 | ROAA (%) | 4.2 | 4.1 | 4.0 | 4.1 | Debt/Assets (x) | 0.1 | 0.1 | 0.1 | 0.1 |
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| | | | | | MACRO RESEARCH | | | | | | | FBMKLCI Index - Standing on Shaky Ground
by Nik Ihsan Raja Abdullah |
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| | | | | | Late selldown dragged the FBMKLCI 4.79pts lower yesterday. At day's end, the benchmark fell 0.3% to 1,737.49, led by decline in IJM, PTG and IOI. Broader market remained subdued with losers outpacing gainers by 594 to 319. A total of 2.89b shares worth MYR2.24b changed hands. Stronger ringgit and firm oil price failed to boost investors' appetite for equities amid uncertainties over US' tax reform. Locally, news flow will likely focus on corporate earnings over the next two weeks. | |
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| | NEWS | | | Outside Malaysia:
U.S: Wider budget deficit in October underscores tax cut anxiety. The monthly U.S. budget deficit increased by more than a third in October, highlighting concerns about proposed tax cuts that could further expand the fiscal gap. The deficit climbed to USD 63.2b last month from USD 45.8b a year earlier, according to a Treasury Department statement released. Receipts increased 6.2% to USD 235.3b, while spending climbed 11.6% to USD 298.6b. Part of the increase in spending was attributed to disaster-relief assistance after a disastrous hurricane season. The Senate has approved a budget resolution that would allow a tax bill to raise the deficit by as much as USD1.5tr over 10 years. Treasury Secretary Steven Mnuchin estimates the administration's tax-cut plan will accelerate economic growth, which will increase revenue and reduce the budget deficit by USD1tr. (Source: Bloomberg)
E.U: IMF says Europe's recovery is spilling over to rest of world. Forecasting 2.4% expansion in the region this year, up from 1.7% in 2016, the Washington-based lender said the brighter prospects accounted for the bulk of an upward revision to its global outlook published in October. It also said the difference in growth rates within the 19-nation euro area is the lowest in nearly two decades. "This recovery in many countries of Europe is now increasingly solidifying and strengthening," Jorg Decressin, deputy director of the IMF's European Department, said. The region has benefited from years of unprecedented monetary stimulus that has helped reduce unemployment and bolster private consumption. But the IMF said that the "sustainability of the rebound remains in question" in the long term amid adverse demographic trends and subdued productivity. (Source: Bloomberg)
U.K: Consumer in torrid state as high street spending sags. Visa's U.K. consumer spending index fell 2% last month, a decline that was the quickest since September 2013 and "driven by a sustained reduction in high street expenditure." A separate report from the British Retail Consortium showed shoppers' footfall decreased 2% on an annual basis in the month, the biggest slide since the Brexit vote in June 2016. The findings published are the latest to show the perilous position of U.K. consumers as faster inflation and sluggish wage growth in the wake of the decision to leave the European Union crimp budgets. (Source: Bloomberg)
Crude Oil: OPEC boosts 2018 crude demand forecasts. Brent traded near USD 63/bbl as OPEC boosted demand forecasts for its crude in 2018, signalling market re-balancing could gather pace. OPEC increased estimates for the amount it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report from the group. (Source: Bloomberg) | |
| | | | | Other News:
Rohas Tecnic: Secures MYR54m Bangladesh power transmission works contract. The group's 75%-subsidiary, HG Power Transmission S/B, was awarded a turnkey contract to install new power transmission lines and reinforce existing ones in Bangladesh for about MYR54m. It involves the design, supply, installation, testing and commissioning of 34.5km of new transmission lines and reinforcement on 125km of the existing 132 kilovolt (KV) transmission lines. (Source: The Edge Financial Daily)
Trive Property: Trive, China co plan solar energy JV. The group has signed a joint venture agreement (JVA) with Jiangxi Fujing New Energy Technology Co Ltd for a planned collaboration in the manufacturing and sale of solar energy products, including solar cells and Panels. The company and Jiangxi Fujing will form JV company Daima Fujing New Energy Technology S/B under the JVA. The JV provides an opportunity for the company to develop its solar business, which is expected to provide an additional source of earnings and improve its financial performance. (Source: The Edge Financial Daily)
Tadmax: To jointly develop Pulau Indah power plant with South Korea's public utility company. Tadmax has announced that its combined cycle gas turbine (CCGT) power plant project in Pulau Indah will be jointly developed with South Korea's state-owned utility company, Korea Electric Power Corporation. (Source: The Edge Financial Daily) | |
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