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| | | | | | | | | | | | | | | | Share Price: | MYR4.44 | Target Price: | MYR5.03 | Recommendation: | Buy | | |
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| | | Headline profits lifted by FX translation gains | | 1Q core earning met expectations as better resource-based performance offset slightly weaker upstream earnings. We are keeping our earnings forecasts. Our TP of MYR5.03 is unchanged on 29x FY18 PER (+0.5SD to 5-year mean). IOI remains a trading BUY for effective capital re-deployment post disposal of its specialty fats division for MYR3.9b cash (expected completion in 2HCY18). A 12.5sen special DPS awaits investor. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 11,739.3 | 14,127.3 | 13,210.4 | 13,573.6 | EBITDA | 1,494.6 | 1,603.8 | 1,970.2 | 2,132.7 | Core net profit | 951.5 | 1,022.8 | 1,090.7 | 1,222.1 | Core EPS (sen) | 14.7 | 16.3 | 17.3 | 19.4 | Core EPS growth (%) | 27.8 | 10.5 | 6.6 | 12.0 | Net DPS (sen) | 8.0 | 9.5 | 8.7 | 9.7 | Core P/E (x) | 30.2 | 27.3 | 25.6 | 22.8 | P/BV (x) | 4.0 | 3.7 | 3.5 | 3.2 | Net dividend yield (%) | 1.8 | 2.1 | 2.0 | 2.2 | ROAE (%) | 8.9 | 10.0 | 14.1 | 14.7 | ROAA (%) | 5.6 | 5.7 | 6.0 | 6.6 | EV/EBITDA (x) | 22.6 | 21.2 | 16.8 | 15.3 | Net debt/equity (%) | 73.4 | 75.4 | 60.1 | 48.4 |
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| | | | | | | | | | | | | | Share Price: | MYR1.27 | Target Price: | MYR1.35 | Recommendation: | Buy | | |
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| | | 3Q17: Within estimates | | 3Q17 results were in-line. The stronger YoY earnings were driven by the addition of Menara Shell's contributions, positive rental reversions and sustained portfolio occupancy rate. We tweak our FY17 earnings forecast by -2% but maintain our MYR1.35 TP (cost of equity: 7.5%) due to marginal impact to our DDM valuation. Among the M-REITs within our coverage, MQREIT continues to offer the highest CY18 net DPU yield of 6.0%, vs. the sector average's 5.4%. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 115.2 | 131.8 | 185.1 | 187.5 | Net property income | 90.3 | 102.3 | 137.3 | 141.3 | Distributable income | 54.0 | 59.2 | 90.4 | 94.5 | DPU (sen) | 6.9 | 7.5 | 7.4 | 7.6 | DPU growth (%) | (8.1) | 8.8 | (2.0) | 3.4 | Price/DPU(x) | 18.3 | 16.8 | 17.2 | 16.6 | P/BV (x) | 0.9 | 0.6 | 1.0 | 1.0 | DPU yield (%) | 5.5 | 5.9 | 5.8 | 6.0 | ROAE (%) | 8.4 | 5.6 | 6.6 | 6.9 | ROAA (%) | 4.3 | 3.0 | 3.9 | 4.1 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | | | | SECTOR RESEARCH | | | | | | | India's surprise import duty hike
by Chee Ting Ong |
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| | | | | | The Indian gov't is on the aggressive mode with the latest steep hike in import duty after the last hike in Aug 2017 did not slow imports in Aug-Oct period (vs. a year ago). But this steep hike may only temporarily slow imports given the relatively high stockpile in India at present, which in turn, should pressure CPO price on the downside in the short term. O ver the long run, India will continue to rely on imports to meet its growing domestic demand. | |
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| | | | | | | | Baby steps of progress
by Ivan Yap |
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| | | | | | Oct 2017 TIV rebounded 15% MoM (from a year low in Sep) to 47k units and took 10M17 TIV to 473k units (+1% YoY). This is in line, as we expect much stronger volumes in Nov-Dec, led by Perodua's all-new Myvi. The strong Perodua sales is likely to continue into 2018 to help achieve our TIV growth forecast of +3% YoY to 610k units. We are still POSITIVE in anticipation of a gradual earnings recovery from improving fundamentals. BAuto is our Top BUY | |
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| | | | MACRO RESEARCH | | | | | | | Continued quarterly growth uptrend
by Suhaimi Ilias |
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| | | | | | In line with our estimate of +6.0% YoY, 3Q 2017 real GDP growth gained pace for the fifth straight quarter to +6.2% YoY growth in 3Q 2017 (2Q 2017: +5.8% YoY). 2017YTD growth was +5.9% YoY (Jan-Sep 2016: +% YoY). Raised our 2017 and 2018 real GDP growth forecasts to +5.8% (+5.5% previously) and +5.3% (+5.1% previously) respectively. | |
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| | | | | | | | Wider current account surplus
by Suhaimi Ilias |
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| | | | | | Current account surplus widened in 3Q 2017 to +MYR12.5b or +3.7% of GDP (2Q 2017: +MYR9.6b or +2.9% of GDP) and to +MYR27.4b or +2.8% of GDP in Jan-Sep 2017 (Jan-Sep 2016: +MYR16.6b of +1.8% of GDP). Revised our current account surplus forecasts to +MYR38.4b or +2.8% of GDP in 2017 (+MYR31.3b or +2.3% of GDP previously) and +MYR40.9b or +2.9% of GDP in 2018 (+MYR31.2b or 2.2% of GDP previously). | |
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| | | | | | | | ASEAN Sector Index Performance & Technical Review
by Nik Ihsan Raja Abdullah |
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| | | | | | We analyse the MSCI Asia Pacific ex. Japan Index (MXAPJ Index) to determine the bigger picture. The objective is to help us formulate our strategy over the medium term. Key finding here is that the MXAPJ Index is still on an uptrend. The recovery from 525 low in September is intact, as the candles continue to hold on steady above its "Ichimoku Cloud". Last week's rebound from its 30-day EMA (green line) also shows that the bull has an upper hand here. | |
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| | NEWS | | | Outside Malaysia:
Japan: Best export performance since 2008 crisis rolls on. Japan's exports grew by double digits for a fourth straight month in October, continuing the best year-to- date performance since the global financial crisis. The value of exports rose 14% YoY while imports increase 18.9% YoY. The trade surplus was JPY 285.4b (USD 2.6b). Improving global demand has fuelled strong growth in Japan's exports throughout the year, with new smartphones creating demand for parts and machinery in recent months. In the nine months through September, Japan exported JPY 57tr worth of goods, the most over that period in any year since 2008. This has helped drive Japan's economy to seven straight quarterly expansions, while investors expecting growing earnings have pushed stock prices to multi-year highs. (Source: Bloomberg)
India: Moody's upgrade seen boosting Modi amid growth slowdown. India's longer-term financial health received a vote of confidence at a time when the government's economic policies are facing criticism and growth has slipped to levels last seen in 2014. In a development that could help Prime Minister Narendra Modi consolidate his popularity, Moody's Investors Service raised India's sovereign rating for the first time in 14 years, offering a political victory to Modi and his at times-controversial reform agenda. The praise for India's new goods and services tax and efforts to reduce the size of the informal economy gives the prime minister's Bharatiya Janata Party a boost ahead of a crucial election in his home state of Gujarat next month and their re-election bid in 2019. (Source: Bloomberg)
Crude Oil: Holds gains after surge on Saudi cut extension plea. Oil held gains after surging the most in almost two weeks as Saudi Arabia's energy minister said OPEC should announce an extension to supply cuts when they meet at the end of the month. Oil inventories are unlikely to drain to average levels by the time the agreement expires at the end of March, Saudi Arabia's Khalid Al-Falih said. The U.S. drill rig count was unchanged at 738 at the end of last week, data from Baker Hughes showed. Brent for January settlement was USD 62.54/bbl. (Source: Bloomberg) | |
| | | | | Other News:
GuocoLand Malaysia: Sells PD Resort & JB Parade to Singaporean counterpart. Its 70%-owned Guoman Hotel & Resort Holdings S/B is disposing of equity interests in PD Resort S/B and JB Parade S/B to its Singaporean counterpart, for MYR223.89m cash. GuocoLand Malaysia signed the two conditional share sale agreements with GuocoLand Hotels Pte Ltd (GLH), to dispose of the entire issued share capital of PD Resort, and a 70% stake in JB Parade. (Source: The Edge Financial Daily)
TNB: To build 4MW mini hydropower station in Terengganu. Its wholly-owned subsidiary TNB Energy Services S/B (TNBES) has signed a shareholders' agreement with Metrosphere S/B to jointly develop and build a 4 megawatt (MW) mini hydropower station in Kuala Berang, Terengganu. TNB will hold 49% stake in the joint venture company named Syarikat Metrosphere Hydro Tersat S/B, while Metrosphere will own the remaining 51% stake. Expected to be completed by end 2019, the 4MW small hydropower station will raise TNB's small hydropower installed capacity from 17.96MW to 21.96MW. (Source: The Sun Daily)
Axiata: Incorporates Indonesia subsidiary. Its wholly-owned subsidiary Axiata Digital Services S/B (ADSSB) has incorporated PT Axiata Digital Services Indonesia (PTADSI) to provide digital financial services in Indonesia. The intended principal activity of the company (PTADSI) is to carry out the business of digital financial services of ADSSB in Indonesia. (Source: The Edge Financial Daily) | |
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