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| | | | | | | | | | | | | | | | Share Price: | MYR5.10 | Target Price: | MYR5.25 | Recommendation: | Hold | | |
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| | | Unlucky strike | | 3Q17 results missed our expectation not only on low Resorts World Genting (RWG) VIP win rate again but on lower-than-expected EBITDA margin as well due to higher cost at RWG. With even more aggressive hiring before the opening of 20th Century Fox World, we trim our EPS estimates by 6-9% and SOP-based TP by 5%. If the Mashpee Wampanoag investment eventually sours, our SOP-TP will be lower at MYR5.05. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 8,395.9 | 8,931.6 | 9,316.9 | 10,738.6 | EBITDA | 2,013.1 | 2,394.9 | 2,336.6 | 2,972.2 | Core net profit | 1,154.7 | 1,547.4 | 1,321.1 | 1,893.5 | Core FDEPS (sen) | 20.4 | 27.3 | 23.2 | 33.3 | Core FDEPS growth(%) | (15.0) | 34.0 | (15.0) | 43.3 | Net DPS (sen) | 7.1 | 16.5 | 7.8 | 11.2 | Core FD P/E (x) | 25.1 | 18.7 | 22.0 | 15.3 | P/BV (x) | 1.5 | 1.5 | 1.4 | 1.3 | Net dividend yield (%) | 1.4 | 3.2 | 1.5 | 2.2 | ROAE (%) | 7.1 | 14.8 | 5.5 | 8.9 | ROAA (%) | 4.8 | 5.6 | 4.5 | 6.1 | EV/EBITDA (x) | 12.3 | 10.5 | 12.3 | 9.8 | Net debt/equity (%) | 0.1 | net cash | 0.4 | 1.6 |
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| | | | | | | | | | | | | | Share Price: | MYR8.13 | Target Price: | MYR9.10 | Recommendation: | Buy | | |
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| | | Stronger growth from 4Q17 | | 3Q17 PBT was better (+4% QoQ) but bottomline was flattish (+0.4% QoQ) due to a higher tax rate. Results were within our expectation but below street's. We maintain our earnings forecasts, expecting a stronger 4Q17 given its new capacity. Maintain BUY and TP of MYR9.10 (24x 2018 PER; +1SD to mean). Kossan trades at 21x 2018 PER (3-year earnings CAGR: 17%), a steep discount to Hartalega's 34x (3-year earnings CAGR: 23%). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,635.9 | 1,668.3 | 2,059.7 | 2,281.2 | EBITDA | 343.2 | 291.8 | 343.7 | 401.6 | Core net profit | 203.3 | 170.9 | 198.3 | 242.5 | Core EPS (sen) | 31.8 | 26.7 | 31.0 | 37.9 | Core EPS growth (%) | 41.4 | (15.9) | 16.0 | 22.3 | Net DPS (sen) | 12.0 | 11.0 | 12.4 | 15.2 | Core P/E (x) | 25.6 | 30.4 | 26.2 | 21.4 | P/BV (x) | 5.3 | 4.8 | 4.3 | 3.9 | Net dividend yield (%) | 1.5 | 1.4 | 1.5 | 1.9 | ROAE (%) | 22.7 | 16.6 | 17.4 | 19.1 | ROAA (%) | 14.8 | 11.5 | 12.2 | 13.2 | EV/EBITDA (x) | 17.4 | 14.7 | 15.5 | 13.3 | Net debt/equity (%) | 1.7 | 4.8 | 7.3 | 6.4 |
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| | | | | | | | | | | | | | Share Price: | MYR1.91 | Target Price: | MYR2.20 | Recommendation: | Buy | | |
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| | | 3Q17 in line | | 3Q17 results were within estimates as earnings were mainly supported by improved property management services' profits. Our earnings forecasts are intact. AEON offers potential capital return of 15% to our unchanged MYR2.20 TP, pegged to 28x FY18 PER (at +0.5SD of mean). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,834.6 | 4,038.7 | 4,159.9 | 4,352.6 | EBITDA | 443.9 | 448.8 | 500.9 | 530.9 | Core net profit | 133.4 | 79.7 | 93.2 | 110.2 | Core EPS (sen) | 9.5 | 5.7 | 6.6 | 7.9 | Core EPS growth (%) | (32.5) | (40.2) | 16.9 | 18.3 | Net DPS (sen) | 4.0 | 3.0 | 3.3 | 3.9 | Core P/E (x) | 20.1 | 33.6 | 28.8 | 24.3 | P/BV (x) | 1.5 | 1.4 | 1.4 | 1.4 | Net dividend yield (%) | 2.1 | 1.6 | 1.7 | 2.1 | ROAE (%) | 7.4 | 4.3 | 4.9 | 5.7 | ROAA (%) | 3.6 | 1.9 | 2.1 | 2.4 | EV/EBITDA (x) | 9.9 | 10.0 | 7.2 | 6.8 | Net debt/equity (%) | 30.1 | 46.3 | 46.1 | 44.5 |
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| | | | | | | | | | | | | | Share Price: | MYR1.00 | Target Price: | MYR1.10 | Recommendation: | Buy | | |
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| | | 3Q17 earnings fall short | | 3Q17 results missed our estimates, mainly attributed to higher property and non-property opex, and lower rental income. Hence, we lower our FY17-19E earnings by 6-7% and nudge down our DDM-TP by 5sen to MYR1.10 (unchanged cost of equity of 8.2%). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 20.7 | 76.1 | 82.9 | 84.6 | Net property income | 15.7 | 56.9 | 58.5 | 59.8 | Distributable income | 7.1 | 36.0 | 37.1 | 38.2 | DPU (sen) | 1.1 | 5.4 | 5.5 | 5.6 | DPU growth (%) | na | 400.0 | 1.2 | 3.2 | Price/DPU(x) | 92.6 | 18.5 | 18.3 | 17.7 | P/BV (x) | 1.0 | 0.9 | 0.9 | 0.9 | DPU yield (%) | 1.1 | 5.4 | 5.5 | 5.6 | ROAE (%) | na | 7.8 | 6.0 | 6.2 | ROAA (%) | na | 3.7 | 3.8 | 3.9 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | | | | | | | | | | | | | Share Price: | MYR5.30 | Target Price: | MYR5.50 | Recommendation: | Hold | | |
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| | | Recovering well | | Axiata's 9M17 results were ahead of our expectation, but in line with consensus. The beat, relative to our forecast, was due to lower depreciation and higher-than-expected contribution from Smart and other segments (including edotco). Maintain HOLD with a higher MYR5.50 (+10%) TP. Axiata's share price is up 12% YTD; its earnings recovery has already been priced-in to a certain extent, in our view. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 19,883.5 | 21,565.4 | 24,373.0 | 25,786.5 | EBITDA | 7,284.1 | 8,012.6 | 9,377.5 | 10,088.8 | Core net profit | 2,071.0 | 1,418.0 | 1,300.6 | 1,461.6 | Core EPS (sen) | 23.9 | 16.0 | 14.5 | 16.3 | Core EPS growth (%) | (8.6) | (33.1) | (9.2) | 12.4 | Net DPS (sen) | 20.0 | 8.0 | 7.2 | 13.8 | Core P/E (x) | 22.2 | 33.2 | 36.6 | 32.5 | P/BV (x) | 2.0 | 2.0 | 2.0 | 1.9 | Net dividend yield (%) | 3.8 | 1.5 | 1.4 | 2.6 | ROAE (%) | 11.5 | 2.1 | 5.4 | 6.0 | ROAA (%) | 3.9 | 2.2 | 1.8 | 2.0 | EV/EBITDA (x) | 9.4 | 8.0 | 7.3 | 6.8 | Net debt/equity (%) | 42.3 | 59.1 | 38.6 | 36.9 |
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| | | | | | | | | | | | | | Share Price: | MYR91.98 | Target Price: | MYR86.70 | Recommendation: | Hold | | |
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| | | Consistently delivering | | 9M17 topline growth (+4% YoY) has been driven largely by volume. Moving forward, the recent softening in raw material prices such as Milk, Sugar and Robusta and the strengthening MYR against the USD could help ease pressure on margins with 50% of raw materials imported. We keep our earnings forecasts but raised our DCF-TP to MYR86.70 (+11%) on rolling forward valuations. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 4,838.0 | 5,063.5 | 5,342.0 | 5,715.9 | EBITDA | 886.0 | 932.0 | 944.2 | 1,012.8 | Core net profit | 588.5 | 598.4 | 638.5 | 673.5 | Core EPS (sen) | 251.0 | 255.2 | 272.3 | 287.2 | Core EPS growth (%) | 6.9 | 1.7 | 6.7 | 5.5 | Net DPS (sen) | 260.0 | 270.0 | 270.6 | 285.4 | Core P/E (x) | 36.6 | 36.0 | 33.8 | 32.0 | P/BV (x) | 30.4 | 33.3 | 33.1 | 32.9 | Net dividend yield (%) | 2.8 | 2.9 | 2.9 | 3.1 | ROAE (%) | 79.5 | 94.0 | 98.3 | 103.1 | ROAA (%) | 24.6 | 24.0 | 24.7 | 24.6 | EV/EBITDA (x) | 19.8 | 19.9 | 23.1 | 21.5 | Net debt/equity (%) | 47.4 | 39.1 | 37.0 | 35.1 |
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| | | | | | | | | | | | | | Share Price: | MYR7.84 | Target Price: | MYR7.95 | Recommendation: | Hold | | |
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| | | Suria KLCC still a solid asset | | Post management meeting and site visit at Suria KLCC, we remain positive on the mall in sustaining occupancy rental income growth and high occupancy rate in the long-term. We maintain our earnings forecasts and DDM-TP of MYR7.80 (cost of equity: 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) | 24.1 | 23.5 | 23.6 | 22.9 | P/BV (x) | 1.1 | 1.1 | 1.1 | 1.0 | DPU yield (%) | 4.1 | 4.3 | 4.2 | 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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| | | | | | | | | | | | | | Share Price: | MYR1.02 | Target Price: | MYR1.05 | Recommendation: | Hold | | |
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| | | 3Q17: Below expectations | | 3Q17 results were below ours/consensus forecasts. The shortfall in earnings was due to a higher tax expense incurred within the quarter and weaker contribution from the Indonesia hospitals. Our earnings are lowered by 1%-4% for FY17E-FY19E. Consequently, we derive a lower SOP-based TP of MYR1.05 (from MYR1.10; it now reflects a 1-for-4 share split). With no major catalyst in sight, the stock remains a HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,818.5 | 3,021.1 | 3,382.1 | 3,618.1 | EBITDA | 350.9 | 351.6 | 405.8 | 429.5 | Core net profit | 144.6 | 125.4 | 140.2 | 150.2 | Core EPS (sen) | 3.5 | 2.9 | 3.3 | 3.5 | Core EPS growth (%) | 13.3 | (17.4) | 14.5 | 7.1 | Net DPS (sen) | 1.8 | 1.2 | 1.6 | 1.8 | Core P/E (x) | 29.3 | 35.4 | 31.0 | 28.9 | P/BV (x) | 2.9 | 2.8 | 2.6 | 2.5 | Net dividend yield (%) | 1.7 | 1.2 | 1.6 | 1.7 | ROAE (%) | 9.8 | 9.8 | 8.6 | 8.8 | ROAA (%) | 4.0 | 3.2 | 3.4 | 3.4 | EV/EBITDA (x) | 16.0 | 16.7 | 14.1 | 13.5 | Net debt/equity (%) | 72.5 | 72.2 | 72.7 | 73.7 |
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| | | | | | | | | | | | | | Share Price: | MYR0.79 | Target Price: | MYR0.68 | Recommendation: | Hold | | |
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| | | 9M17: In line | | 9M17 core earnings made up 71% of our FY estimate. BArmada recognising a one-off MYR74m gain from the sale of Armada Intrepid was one of the highlights in 3Q17. Otherwise, the core business delivered to expectations. Moving forward, BArmada needs to address four key issues: FPSO Kraken, TGT, Perdana and gearing, to warrant a re-rating. Our TP is SOP-based. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,179.7 | 1,416.6 | 2,365.0 | 2,777.9 | EBITDA | 1,101.7 | 552.6 | 1,086.3 | 1,470.3 | Core net profit | 360.7 | (83.3) | 230.5 | 616.4 | Core EPS (sen) | 6.1 | (1.4) | 3.9 | 10.5 | Core EPS growth (%) | (22.2) | nm | nm | 167.4 | Net DPS (sen) | 0.8 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 12.8 | nm | 20.0 | 7.5 | P/BV (x) | 0.6 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 1.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | (3.4) | (29.2) | 6.1 | 9.9 | ROAA (%) | 2.2 | (0.4) | 1.1 | 2.9 | EV/EBITDA (x) | 11.4 | 24.6 | 12.9 | 9.1 | Net debt/equity (%) | 89.1 | 176.3 | 159.0 | 132.9 |
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| | | | | | | | | | | | | | Share Price: | MYR1.47 | Target Price: | MYR1.61 | Recommendation: | Hold | | |
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| | | 3Q17: Construction still a drag | | 2Q17 results were below ours/consensus expectations largely on slower construction progress. We trim FY17E earnings by 3% after tweaking for slower works recognition. However, our FY18E/FY19E earnings are raised by 5%/6% after updating our FY17 job win assumption to MYR650m as YTD job wins have hit MYR643m. We have assumed the recent job wins to contribute only from FY18 onwards. Subsequently, we derive a higher TP of MYR1.61 (+5%) pegged to unchanged 12x FY18 PER (-1 SD). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 654.7 | 498.5 | 404.7 | 635.2 | EBITDA | 109.2 | 83.7 | 67.9 | 109.1 | Core net profit | 76.2 | 56.5 | 43.9 | 73.9 | Core EPS (sen) | 13.9 | 10.3 | 8.0 | 13.4 | Core EPS growth (%) | (0.9) | (25.9) | (22.4) | 68.4 | Net DPS (sen) | 2.4 | 2.4 | 2.4 | 2.4 | Core P/E (x) | 10.6 | 14.3 | 18.4 | 10.9 | P/BV (x) | 1.2 | 1.2 | 1.1 | 1.0 | Net dividend yield (%) | 1.6 | 1.6 | 1.6 | 1.6 | ROAE (%) | na | na | na | na | ROAA (%) | 9.4 | 6.7 | 5.1 | 8.2 | EV/EBITDA (x) | 8.6 | 9.5 | 9.5 | 5.9 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | PETRONAS' 9M17 report card
by Thong Jung Liaw |
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| | | | | | PETRONAS' 3Q17 results trend mirrored that of its global peers – QoQ earnings strength, cost management, prudent spending. The outcome of OPEC's Nov 2017 meet will be closely monitored in shaping expectations (i.e. oil price direction, capex plan) for 2018. We have raised our 2017-18 crude oil ASP forecasts to USD54/bbl and USD60/bbl respectively. On the domestic front, we expect a revival of new awards by 1Q18. Our key BUYs are Yinson, Dialog, Wah Seong and SAPE. | |
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| | | | MACRO RESEARCH | | | | | | | 33 additions, 22 deletions
by Desmond Ch'ng |
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| | | | | | The Securities Commission's (SC) revised Shariah compliant securities/ stocks list, released last evening, will take effect from today, 24 Nov. It includes 33 additions, 22 deletions. The number of Shariah compliant stocks now stands at 686 (74% out of the total 929 listed stocks, including REITs, on Bursa Securities). This is an increase of 10 from the May 2017 Shariah list, which comprised 676 compliant stocks. | |
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| | | | | | | | Reserves stable at USD101.5b
by Suhaimi Ilias |
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| | | | | | Total gross external reserves at 15 November 2017 was the same as at end-Oct 2017 i.e. USD101.5b as indication of net foreign buying in bonds offset net foreign selling in equities amid sustained positive trade flows. Current reserves level is equal to 7.5 months of retained imports and 1.1 times of short-term external debt. Year to date, external reserves rose +7.3%. | |
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| | | | | | | | KLCSU Index: Trapped in a Consolidation Mode
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI eased 2.27pts to 1,721.27 yesterday, led by declines in ROTH, PETD and GENT. The selloff in China markets weighed on sentiment. Market breadth turned negative with losers outpacing gainers by 445 to 433. A total of 2.09b shares worth MYR1.87b changed hands. With US markets closed for the Thanksgiving holiday, investors will look at corporate earnings for guide. Trading, however, could be choppy as investors switch to risk-off mode ahead of US manufacturing data. | |
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| | NEWS | | | Outside Malaysia:
OECD: Warned that rising private debt loads in both advanced and developing economies pose a risk to growth as Canada, South Korea and the U.K. lead the world in household borrowing. "Household and corporate debt in many advanced and emerging market economies is high," the Organization for Economic Cooperation and Development said in a pre-released section of a report to be presented next week. "While higher indebtedness does not necessarily imply that problems are just around the corner, it does increase vulnerability to shocks" With the global economy showing its most even expansion since the financial crisis, debt levels and credit quality are among the risks that could trigger a downturn. Consumer debt tops 100% of GDP in Canada, with South Korea and Britain both above 80%. On corporate borrowing, the OECD warned about a shift in risk from banks to the bond market and a "substantial" decrease in credit quality. (Source: Bloomberg)
E.U: The Euro-Area economy picked up momentum in November as companies boosted hiring at the fastest pace in 17 years to work through their backlog of orders. A Purchasing Managers' Index for manufacturing and services rose to 57.5 in November from 56 in October, according to HIS Markit. That's the highest level in 79 months. The euro-area economy is on track for its best annual performance in a decade. Supported by monetary stimulus from the European Central Bank, the 19-nation bloc has seen unemployment drop from a record and is enjoying its most synchronized expansion since before the single currency was founded. The German economy, the region's largest, expanded 0.8% in the third quarter, driven by exports and investment, according to a separate report. (Source: Bloomberg)
Germany: Exports and investment propelled growth in 3Q 2017, putting Europe's biggest economy in a strong position to weather rising political uncertainty after coalition talks collapsed. Trade added 0.4 percentage point to economic expansion in the July-September period, with company spending on equipment contributing 0.1 percentage point, the Federal Statistics Office said. GDP increased 0.8%, putting the economy firmly on course for its best annual performance in six years. (Source: Bloomberg)
U.K: Consumers drove the British economy in the third quarter as spending on cars rebounded but Brexit appears to be inflicting a toll on business investment. Household spending rose 0.6%, the fastest pace in a year, the Office for National Statistics said. But business investment slowed and net trade acted as a drag on growth. Overall GDP rose an unrevised 0.4%, up from 0.3% in the previous three months. The report comes a day after Chancellor of the Exchequer Philip Hammond announced a downgrade to the economic outlook as a result of a sluggish productivity and Brexit headwinds. (Source: Bloomberg)
S. Korea: Consumer confidence rises to highest since 2010 as the economic outlook improved and geopolitical tensions eased. The Bank of Korea's monthly consumer sentiment index rose to 112.3 in November from 109.2 the previous month. The improvement follows an upgrade in the country's economic forecast by the International Monetary Fund to 3.2% from 3% for 2017. South Korea's agreement with China to move beyond a year-long dispute over deploying a U.S. (Source: Bloomberg) | |
| | | | | Other News:
Heitech Padu: Bags MYR33.3m security infra supply job from SSM. The group has bagged a MYR33.3m contract from the Companies Commission of Malaysia for the supply, rental, implementation and maintenance of security infrastructure. The contract period is from Nov 20 to Aug 21, 2021, Heitech Padu said. (Source: The Edge Financial Daily)
Nestle: Launches global procurement hub in Malaysia. Nestlé yesterday launched its global procurement hub in Malaysia, which will source required ingredients, materials and services from around the world to supply the needs of over 100 countries globally. As a key Asian market for Nestlé, Malaysia was selected to host one of the group's three global procurement hubs, known as "Nestrade", it said in a statement. (Source: The Sun Daily)
Malaysia Steel: Posts over 30-fold rise in 3Q net profit; plans bonus issue. Malaysia Steel Works' (Masteel) net profit for the third quarter surged by more than 30 times to MYR38.67m from MYR1.24m a year ago, thanks to higher selling prices of steel bar and increased sales volume. The sharp rise in earnings was also due to improving market conditions and robust demand from the domestic construction industry, said the group. Masteel also proposed to issue up to 106.81m bonus shares to its shareholders, on the basis of one bonus share for every three existing shares held (1-for-3) on an entitlement date to be fixed. (Source: The Edge Financial Daily)
PPB Group: 3Q earnings flattish at RM382m. PPB reported a marginal increase of 0.13% in its net profit for the third quarter ended Sept 30, 2017 (3QFY17) at MYR381.97m compared with MYR381.45m in the same quarter a year ago despite recording higher revenue. Quarterly revenue rose 9.7% YoY to MYR1.08b from MYR983.72m, as all major business segments recorded higher revenue during the quarter. (Source: The Edge Financial Daily) | |
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