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| | | | | | | | | | | | | | | | Share Price: | MYR1.67 | Target Price: | MYR2.00 | Recommendation: | Buy | | |
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| | | Disposes KRR Indonesia | | We are positive on BFood's disposal of PT Boga Lestari Sentosa, the entity which operates the Kenny Rogers Roasters (KRR) outlets in Indonesia, which could improve earnings growth prospects going forward. We increase our FY18-20 earnings forecasts by 7-12% and TP by 20sen to MYR2.00 (pegged to unchanged 27x CY18 PER at -0.5SD of mean). | | |
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| | FYE Apr (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 554.4 | 605.4 | 632.6 | 680.0 | EBITDA | 79.5 | 74.8 | 94.4 | 100.2 | Core net profit | 22.3 | 18.5 | 24.8 | 29.5 | Core FDEPS (sen) | 5.9 | 4.8 | 6.5 | 7.8 | Core FDEPS growth(%) | (13.7) | (17.2) | 34.2 | 19.4 | Net DPS (sen) | 4.3 | 3.5 | 3.5 | 4.1 | Core FD P/E (x) | 28.5 | 34.4 | 25.7 | 21.5 | P/BV (x) | 1.6 | 1.6 | 1.6 | 1.6 | Net dividend yield (%) | 2.5 | 2.1 | 2.1 | 2.5 | ROAE (%) | 5.4 | 2.8 | 6.3 | 7.3 | ROAA (%) | 3.1 | 2.4 | 3.2 | 3.7 | EV/EBITDA (x) | 11.2 | 11.7 | 8.8 | 8.2 | Net debt/equity (%) | 49.3 | 62.3 | 55.3 | 52.2 |
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| | | | | | | | | | | | | | Share Price: | MYR6.75 | Target Price: | MYR6.20 | Recommendation: | Hold | | |
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| | | Buying surgical glove specialist | | We are positive on Top Glove's proposed acquisition of Aspion because: (i) Aspion is a surgical glove specialist with cutting-edge technology which Top Glove has been unsuccessful in developing; (ii) the acquisition will enhance Top Glove's margins/ROE; (iii) the acquisition will be EPS accretive given the low borrowing cost. Maintain our EPS forecasts, HOLD call and TP of MYR6.20 for now (20x 2018 PER, +1SD to mean). Top Glove presently trades at 22x 2018 PER. | | |
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| | FYE Aug (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,888.5 | 3,409.2 | 3,746.6 | 4,036.4 | EBITDA | 523.3 | 485.0 | 567.1 | 614.1 | Core net profit | 361.1 | 332.7 | 370.4 | 403.9 | Core EPS (sen) | 29.1 | 26.8 | 29.9 | 32.6 | Core EPS growth (%) | 29.0 | (7.9) | 11.3 | 9.0 | Net DPS (sen) | 14.5 | 14.5 | 14.9 | 16.3 | Core P/E (x) | 23.2 | 25.2 | 22.6 | 20.7 | P/BV (x) | 4.6 | 4.2 | 3.8 | 3.5 | Net dividend yield (%) | 2.1 | 2.1 | 2.2 | 2.4 | ROAE (%) | 21.1 | 17.4 | 17.6 | 17.6 | ROAA (%) | 13.5 | 11.9 | 12.1 | 12.3 | EV/EBITDA (x) | 9.5 | 14.2 | 14.6 | 13.3 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.07 | Target Price: | MYR1.12 | Recommendation: | Hold | | |
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| | | Redeveloping prime site in Sydney | | We are neutral on EWI's latest potential acquisition in Sydney via a put and call option agreement. Upon the completion of the acquisition by end-2018, EWI will redevelop the land into 125 units of apartment worth AUD139m in GDV. This would enhance our RNAV/shr estimate by +1sen. We keep our earnings forecasts and our RNAV-TP of MYR1.12 (on an unchanged 0.75x P/RNAV peg). Reiterate HOLD. | | |
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| | FYE Oct (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 0.0 | 0.7 | 0.5 | 0.6 | EBITDA | 0.0 | (37.6) | (63.4) | (60.5) | Core net profit | 0.0 | (220.1) | (125.2) | 207.1 | Core FDEPS (sen) | 0.0 | (89.3) | (5.2) | 8.6 | Core FDEPS growth(%) | na | nm | nm | nm | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core FD P/E (x) | nm | nm | nm | 12.4 | P/BV (x) | nm | 2.4 | 0.8 | 0.9 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | na | (408.0) | (9.5) | 7.9 | ROAA (%) | na | (35.4) | (5.3) | 5.8 | EV/EBITDA (x) | na | na | nm | nm | Net debt/equity (%) | nm | 803.5 | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR1.71 | Target Price: | MYR2.02 | Recommendation: | Buy | | |
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| | | 3Q17: In-line | | 9M17 earnings were lower YoY/QoQ, but within our estimates. We expect earnings growth in the coming quarters in the view of favourable steel prices and positive demand. We maintain our earnings forecasts; any share price weakness in respond to the 3Q17 results is a good opportunity to accumulate for the positives ahead. Our unchanged TP is based on 10.5x FY18 PER (5-year average historical forward PER). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,017.1 | 1,035.2 | 1,142.4 | 1,236.7 | EBITDA | 96.3 | 106.4 | 106.8 | 118.7 | Core net profit | 35.5 | 68.5 | 61.2 | 70.8 | Core EPS (sen) | 9.6 | 18.6 | 16.6 | 19.2 | Core EPS growth (%) | nm | 94.0 | (10.8) | 15.7 | Net DPS (sen) | 8.0 | 14.0 | 8.3 | 9.6 | Core P/E (x) | 17.8 | 9.2 | 10.3 | 8.9 | P/BV (x) | 0.8 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 4.7 | 8.2 | 4.8 | 5.6 | ROAE (%) | 6.9 | 8.7 | 7.4 | 8.3 | ROAA (%) | 4.4 | 8.0 | 6.8 | 7.5 | EV/EBITDA (x) | 1.8 | 4.9 | 3.0 | 2.5 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR8.24 | Target Price: | MYR7.93 | Recommendation: | Hold | | |
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| | | 3Q17 not as good as it should be | | 3Q17 core net profit was MYR41.7m (+59% YoY, -26% QoQ) post adjusting for normalised tax. This brings 9M17 core earnings to MYR162m which disappointed, at only 40% of our full year forecast. The key variance is the weak performance of Turkey's ISG and higher-than-expected unit cost. Cash flow wise, MAHB is performing strongly (as expected) - this suggests that the business is still healthy. Maintain HOLD, with a trimmed DCF-based TP of MYR7.93. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 3,870.2 | 4,172.8 | 4,545.0 | 4,970.6 | EBITDA | 1,342.0 | 1,488.9 | 1,642.6 | 1,851.1 | Core net profit | (113.3) | 48.2 | 234.6 | 436.2 | Core EPS (sen) | (7.1) | 2.9 | 14.1 | 26.3 | Core EPS growth (%) | nm | nm | 386.7 | 86.0 | Net DPS (sen) | 1.0 | 1.7 | 8.3 | 9.0 | Core P/E (x) | nm | 283.7 | 58.3 | 31.3 | P/BV (x) | 1.5 | 1.6 | 1.6 | 1.5 | Net dividend yield (%) | 0.1 | 0.2 | 1.0 | 1.1 | ROAE (%) | 0.5 | 0.8 | 3.6 | 5.6 | ROAA (%) | (0.5) | 0.2 | 1.1 | 2.1 | EV/EBITDA (x) | 10.1 | 9.4 | 10.7 | 9.1 | Net debt/equity (%) | 52.2 | 46.1 | 45.2 | 34.6 |
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| | | | | | | | | | | | | | Share Price: | MYR9.03 | Target Price: | MYR8.40 | Recommendation: | Hold | | |
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| | | Results miss | | 3Q17 results were again below expectations due to an absence of IRU sales, and the presence of forex losses and higher-than-expected P&L tax. Maintain HOLD with a lower MYR8.40 TP (-6%) post our earnings revisions. TDC's growth prospects appear largely priced-in in our view, with no strong rerating catalysts in the horizon. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 682.4 | 766.9 | 868.6 | 985.5 | EBITDA | 263.9 | 292.6 | 278.0 | 340.0 | Core net profit | 171.2 | 246.6 | 162.5 | 200.9 | Core EPS (sen) | 29.8 | 42.8 | 28.1 | 34.7 | Core EPS growth (%) | 34.0 | 43.5 | (34.3) | 23.6 | Net DPS (sen) | 80.2 | 30.6 | 7.0 | 8.7 | Core P/E (x) | 30.3 | 21.1 | 32.1 | 26.0 | P/BV (x) | 2.5 | 2.4 | 2.4 | 2.2 | Net dividend yield (%) | 8.9 | 3.4 | 0.8 | 1.0 | ROAE (%) | 21.0 | 19.1 | 7.4 | 8.9 | ROAA (%) | 6.4 | 9.2 | 5.8 | 6.9 | EV/EBITDA (x) | 16.2 | 14.2 | 17.8 | 14.2 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR3.88 | Target Price: | MYR3.85 | Recommendation: | Hold | | |
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| | | Limited upside from now | | The stronger 3Q17 net profit (+65% QoQ, +106% YoY) was within expectations. We maintain our earnings forecasts, projecting a better 4Q17 on higher export sales and slight margin expansion. Rolling forward our valuation to 2018, our TP is raised to MYR3.85 (+3%) based on an unchanged 10x PER (mean) on 30% diluted EPS. Given the limited upside to our TP, we downgrade AJR to HOLD (from BUY). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,760.9 | 1,870.1 | 2,294.1 | 2,374.5 | EBITDA | 12.4 | 296.1 | 348.0 | 350.1 | Core net profit | (74.9) | 166.8 | 211.0 | 215.7 | Core EPS (sen) | (14.3) | 31.9 | 37.7 | 38.5 | Core EPS growth (%) | nm | nm | 18.0 | 2.2 | Net DPS (sen) | 0.0 | 15.0 | 16.1 | 16.5 | Core P/E (x) | nm | 12.2 | 10.3 | 10.1 | P/BV (x) | 2.2 | 1.9 | 1.6 | 1.5 | Net dividend yield (%) | 0.0 | 3.9 | 4.2 | 4.3 | ROAE (%) | (13.6) | 16.7 | 18.3 | 16.6 | ROAA (%) | (2.9) | 7.0 | 8.8 | 8.5 | EV/EBITDA (x) | 128.1 | 6.9 | 8.1 | 7.7 | Net debt/equity (%) | 133.6 | 84.6 | 63.3 | 49.2 |
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| | | | | | | | | | | | | | Share Price: | MYR0.24 | Target Price: | MYR0.25 | Recommendation: | Hold | | |
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| | | 9M17: Within expectation | | Earnings rebounded strongly QoQ in 3Q17, driven by its Europe operations. Our estimates are unchanged. The next 6 months, in our view, are crucial to KNM. It needs to build a consistent earnings stream, manage its costs and steadily grow its RE operations to warrant a re-rating. Otherwise, KNM is fairly valued, trading at 0.5x fwd NTA. Our unchanged MYR0.25 TP is based on 0.5x FY17E NTA (in line with peers). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,641.3 | 1,646.8 | 1,320.3 | 1,550.7 | EBITDA | 205.7 | (160.8) | 94.8 | 144.0 | Core net profit | 45.7 | (262.3) | 7.0 | 45.7 | Core EPS (sen) | 2.4 | (12.3) | 0.3 | 2.1 | Core EPS growth (%) | 3.4 | nm | nm | 551.1 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 9.8 | nm | 72.9 | 11.2 | P/BV (x) | 0.2 | 0.2 | 0.2 | 0.2 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 2.0 | (12.2) | 0.3 | 1.9 | ROAA (%) | 1.1 | (5.8) | 0.2 | 1.0 | EV/EBITDA (x) | 7.1 | nm | 14.5 | 9.2 | Net debt/equity (%) | 19.2 | 37.4 | 35.8 | 33.9 |
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| | | | | | | | | | | | | | Share Price: | MYR0.20 | Target Price: | MYR0.08 | Recommendation: | Sell | | |
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| | | 9M17: Below expectation | | 9M17 results came in below ours/consensus, on widening QoQ losses, leading to substantial cuts in our FY17-19E earnings. In addition, Alam needs to address its debt repayment issue with an amicable restructuring solution. This, in our view, outweighs the potential positives emerging from OSV tenders in 1Q18. Until these issues are addressed, Alam remains a SELL, Valuations are expensive. Our TP pegs on a 0.1x BV, in line with the valuations of peers that faced similar debt default risk. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 350.2 | 229.5 | 163.7 | 267.6 | EBITDA | 79.9 | (27.8) | 26.0 | 42.3 | Core net profit | 68.1 | (133.0) | (31.2) | (7.6) | Core EPS (sen) | 7.4 | (14.4) | (3.4) | (0.8) | Core EPS growth (%) | 14.4 | nm | nm | nm | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 2.7 | nm | nm | nm | P/BV (x) | 0.2 | 0.2 | 0.3 | 0.3 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 5.8 | (22.3) | (3.6) | (1.1) | ROAA (%) | 5.2 | (12.4) | (3.3) | (0.8) | EV/EBITDA (x) | 5.8 | nm | 10.2 | 5.7 | Net debt/equity (%) | 7.8 | 14.9 | 12.7 | 9.8 |
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| | | | | | MACRO RESEARCH | | | | | | | Quarterly GDP growth peaked or peaking?
by Suhaimi Ilias |
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| | | | | | In Sep 2017, the index of leading economic indicators growth was sustained at +2.6% YoY (Aug 2017: +2.6% YoY; July: +2.7% YoY), while the index of coincident economic indicators slowed for the second month to +3.0% YoY (Aug 2017: +4.5% YoY; July 2017: +5.4%), suggesting the uptrend in quarterly economic growth since 3Q 2016 up to 3Q 2017 may have peaked or may be peaking in 4Q 2017. | |
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| | | | | | | | Slowed on easing fuel & food inflation
by Suhaimi Ilias |
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| | | | | | Inflation in Oct 2017 moderated to +3.7% YoY (Sep 2017: +4.3% YoY) on smaller rise in fuel and food prices. Core inflation also eased to +2.3% YoY (Sep 2017: +2.4% YoY). For Jan-Oct 2017, inflation rate was +4.0% YoY (Jan-Oct 2016: +2.2% YoY) while core inflation was +2.5% YoY (Jan-Oct 2016: +2.5% YoY). Maintain our 2017 and 2018 forecasts at +4.0% and 2.5%-3.0% respectively. | |
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| | | | | | | | ASEAN Small Cap Highlight: Chasing the Big Caps
by Nik Ihsan Raja Abdullah |
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| | | | | | MSCI AC ASEAN INDEX (MXSO Index) performed well in 2017, registering a cumulative return of 21.7% YTD (excluding dividend). It has also outperformed its small-cap brethren - the MSCI AC ASEAN SMALL CAP INDEX (MXSOSC Index), which posted a return of just 13.5% YTD. Notwithstanding that, we believe the latter will play catch up soon, replicating the performance by MXSO Index. The index is holding steady above the uptrend line drawn from the low of 860.50 in February 2016. | |
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| | NEWS | | | Outside Malaysia:
U.K: Could be set back for missing EU's deadline, Davidson says. The U.K. is close to running out of time in its divorce negotiations with the European Union and would be set back by missing a December deadline to resolve several thorny issues, Scottish Conservative Party leader Ruth Davidson said. Failing to resolve issues such as the status of the Irish border and the payment from the U.K. would further cut the time available to reach a new trading deal with the bloc, and add to uncertainties for business. The EU has set Dec. 4 for Prime Minister Theresa May, leader of the U.K. Conservatives, to outline solutions on the two issues before trade talks begin. (Source: Bloomberg)
China: Early indicators signal that economy cooled in November. Confidence among China's sales managers and steel producers waned in November, matching the mood among international investors, while sentiment among small businesses improved, according to the earliest available indicators. As the country's leaders underline a shift to more sustainable economic growth rates, and push through reforms to cut pollution and curb financial risk, the world's second- largest economy is on a long-term slowdown, even though output in 2017 has exceeded expectations. Economists see gross domestic product expanding 6.8% this year before decelerating to 6.4% in 2018. (Source: Bloomberg)
Crude Oil: Trades near highest in more than two years before OPEC meets. OPEC and Russia, a partner in the deal, have crafted the outline of an agreement to extend curbs to the end of next year, according to people involved in the conversations. In the U.S., drillers targeting crude added nine rigs last week, according to Baker Hughes. Oil has advanced about 25% since the start of September on speculation the Organization of Petroleum Exporting Countries and its allies will prolong output reductions to drain a global glut. Brent for January was USD 63.81/bbl. (Source: Bloomberg) | |
| | | | | Other News:
Eita Resources: Gets MYR14m sub-contract to supply 18 lift units. Its wholly-owned EITA Elevator (M) S/B received a letter of award from Synergy Promenade S/B to supply and install 18 units of lifts for the building located on Jalan Perumahan Gurney in Kuala Lumpur. Eita expects to complete the sub-contract by Sept 9, 2019. (Source: The Edge Financial Daily)
Damansara Realty: Gets EPU approval for 53-acre Johor land acquisition. The group has received the Economic Planning Unit (EPU)'s approval for the acquisition of a piece of 53.14-acre land in Johor for MYR130.3m. The acquisition forms part of its proposed MYR141.5m settlement agreement with Johor state investment arm Johor Corp, allowing it to reduce its net current liabilities and return its balance sheet to health. (Source: The Edge Financial Daily)
Datasonic: Q2 earnings up 25.7% on better cost management. Net profit soared 25.7% to MYR20.06m for the second quarter ended September 30, 2017 against MYR15.95m in the previous corresponding period, underpinned by reduced costs from effective control measures implemented. The group has proposed to declare an interim dividend of 1 sen per share for the quarter under review. As at 30 Sep 2017, its order book stood at around MYR800m. (Source: The Sun Daily)
SKP Resources: 2Q net profit rises 54.4% to MYR35.07m. Net profit for 2QFY17 rose 54.4% to MYR35.07m from MYR22.72m a year ago, following a 30.2% rise in quarterly revenue to MYR594.16m from MYR456.45m. Cumulative six-month net profit jumped 67% to MYR68.43m from MYR40.97m a year earlier, with revenue rising 44% to MYR1.12b from MYR777.01m. Moving forward, SKP said it is confident of reporting consistent positive growth in the bottomline, backed by the strong orderbooks from its existing customers and operational efficiency. (Source: The Edge Financial Daily) | |
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