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CALLS | | Malaysia | IHH Healthcare
Start-up drag stabilising and priced in; U/G to BUY
John Cheong | | | | | | |
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| | | | | | | | | | | | | | | | Share Price: | MYR9.58 | Target Price: | MYR10.30 | Recommendation: | Hold | | |
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| | | Another positive surprise | | Bursa's 1-for-2 bonus issue is a positive surprise after a special DPS (15sen) paid on 23 Aug 2017. The bonus issue will make Bursa shares more affordable and in turn, help to raise the stock's liquidity. There is no impact to our earnings forecasts, and we maintain our EPS forecasts for now. Our TP is unchanged at MYR10.30, based on 25x 2017 PER, in-line with the average of peers. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 518.5 | 506.8 | 551.8 | 571.1 | EBITDA | 302.5 | 294.8 | 333.9 | 344.5 | Core net profit | 198.6 | 193.6 | 221.2 | 228.5 | Core EPS (sen) | 37.2 | 36.2 | 41.3 | 42.6 | Core EPS growth (%) | 0.0 | (2.8) | 14.1 | 3.3 | Net DPS (sen) | 34.5 | 34.0 | 53.5 | 40.5 | Core P/E (x) | 25.8 | 26.5 | 23.2 | 22.5 | P/BV (x) | 6.4 | 5.9 | 6.4 | 6.3 | Net dividend yield (%) | 3.6 | 3.5 | 5.6 | 4.2 | ROAE (%) | 25.6 | 23.2 | 26.5 | 28.2 | ROAA (%) | 10.6 | 8.6 | 9.1 | 9.3 | EV/EBITDA (x) | 13.8 | 15.1 | 15.0 | 14.5 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR5.65 | Target Price: | MYR6.30 | Recommendation: | Buy | | |
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| | | Start-up drag stabilising and priced in; U/G to BUY | | Upgrade IHH to BUY from HOLD. The 12M share price correction of 12% has priced in the start-up drag of new HK hospital and its EBITDA loss has stabilised, in our view, supported by robust 69% QoQ topline growth in 2Q17 (all 4 home markets delivered double-digit YoY revenue growth). The shares are undervalued at 19.5x FY18E EV/EBITDA or 1SD below the 5-yr mean (19.0x) given our EBITDA growth forecast. We raised our SOTP TP by 2.5% to MYR6.30 after raising the future EBITDA margin for Singapore. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 8,455.5 | 10,021.9 | 11,355.2 | 13,314.9 | EBITDA | 2,218.7 | 2,188.9 | 2,241.7 | 2,656.7 | Core net profit | 899.2 | 866.0 | 563.0 | 849.8 | Core FDEPS (sen) | 10.9 | 10.5 | 6.8 | 10.3 | Core FDEPS growth(%) | 14.5 | (4.0) | (35.0) | 51.0 | Net DPS (sen) | 3.0 | 3.0 | 3.0 | 3.0 | Core FD P/E (x) | 51.7 | 53.9 | 82.9 | 54.9 | P/BV (x) | 2.1 | 2.1 | 2.1 | 2.0 | Net dividend yield (%) | 0.5 | 0.5 | 0.5 | 0.5 | ROAE (%) | 4.5 | 2.8 | 2.5 | 3.8 | ROAA (%) | 2.8 | 2.4 | 1.5 | 2.1 | EV/EBITDA (x) | 27.4 | 27.0 | 23.1 | 19.5 | Net debt/equity (%) | 19.3 | 21.1 | 12.4 | 10.9 |
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| | | | | | | | | | | | | | Share Price: | MYR4.90 | Target Price: | MYR5.40 | Recommendation: | Hold | | |
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| | | 3Q17 results below expectations | | There was little to excite in RHB's latest quarter, with results coming in below expectations. What is nevertheless positive is the build-up in the group's LLC, which has traditionally been among the lowest, to 100% by year end. Our FY17-19E earnings are trimmed by 2-4% while our TP is lowered marginally to MYR5.40 (-5sen), pegging an unchanged P/BV of 0.9x for prospective ROEs of 9%. HOLD maintained. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Operating income | 6,174.7 | 6,193.2 | 6,347.6 | 6,709.3 | Pre-provision profit | 2,545.0 | 3,094.5 | 3,186.4 | 3,443.3 | Core net profit | 1,798.4 | 1,681.6 | 2,045.9 | 2,214.3 | Core EPS (MYR) | 0.69 | 0.44 | 0.51 | 0.55 | Core EPS growth (%) | (3.3) | (36.9) | 17.0 | 8.2 | Net DPS (MYR) | 0.12 | 0.12 | 0.15 | 0.17 | Core P/E (x) | 7.1 | 11.2 | 9.6 | 8.9 | P/BV (x) | 1.0 | 0.9 | 0.8 | 0.8 | Net dividend yield (%) | 2.4 | 2.4 | 3.1 | 3.5 | Book value (MYR) | 5.11 | 5.42 | 5.94 | 6.36 | ROAE (%) | 9.9 | 8.5 | 9.0 | 9.0 | ROAA (%) | 0.8 | 0.7 | 0.9 | 0.9 |
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| | | | | | | | | | | | Sunway (SWB MK)
by Wei Sum Wong |
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| | | | | Share Price: | MYR1.64 | Target Price: | MYR1.84 | Recommendation: | Hold | | |
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| | | Earnings in line | | Sunway's 9M17 net profit is within expectations. While its construction outstanding orderbook (under Sunway Construction Group or SCG) is at an all-time high of MYR6.8b, Sunway's 9-month locked in property sales fell short at MYR533m due to the lack of new launches in 9M17. We maintain our earnings forecasts and MYR1.84 RNAV-TP (on an unchanged 0.7x P/RNAV peg). Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 4,448.4 | 4,655.6 | 5,398.2 | 7,007.9 | EBITDA | 427.2 | 1,596.1 | 787.8 | 1,085.2 | Core net profit | 590.7 | 547.4 | 544.0 | 662.0 | Core EPS (sen) | 14.4 | 12.6 | 11.2 | 13.6 | Core EPS growth (%) | (1.6) | (12.5) | (11.3) | 21.7 | Net DPS (sen) | 17.0 | 5.7 | 5.0 | 6.1 | Core P/E (x) | 11.4 | 13.0 | 14.6 | 12.0 | P/BV (x) | 1.1 | 1.0 | 1.0 | 1.0 | Net dividend yield (%) | 10.4 | 3.5 | 3.1 | 3.7 | ROAE (%) | na | na | na | na | ROAA (%) | 4.1 | 3.2 | 2.9 | 3.5 | EV/EBITDA (x) | 21.7 | 6.1 | 16.4 | 12.8 | Net debt/equity (%) | 45.2 | 40.5 | 48.7 | 57.8 |
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| | | | | | | | | | | | | | Share Price: | MYR3.98 | Target Price: | MYR3.60 | Recommendation: | Hold | | |
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| | | 2QFY18: Within estimates | | 2QFY18 results were within expectations. We expect a seasonally stronger 2H, supported by festivities. Better contribution from the palm oil and livestock divisions should support earnings growth. Our earnings forecasts are unchanged. We keep our HOLD call with an unchanged DCF-TP of MYR3.60 (WACC: 7.0%, long-term growth: 2.0%). | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,853.9 | 3,012.0 | 3,241.6 | 3,492.3 | EBITDA | 368.1 | 394.6 | 411.2 | 468.8 | Core net profit | 192.1 | 185.9 | 208.1 | 234.9 | Core EPS (sen) | 11.8 | 11.5 | 12.8 | 14.5 | Core EPS growth (%) | 4.9 | (3.2) | 12.0 | 12.9 | Net DPS (sen) | 4.3 | 7.3 | 5.2 | 5.8 | Core P/E (x) | 33.6 | 34.7 | 31.0 | 27.5 | P/BV (x) | 4.1 | 3.7 | 3.5 | 3.2 | Net dividend yield (%) | 1.1 | 1.8 | 1.3 | 1.5 | ROAE (%) | 12.7 | 11.7 | 11.6 | 12.3 | ROAA (%) | 7.1 | 6.2 | 6.4 | 6.9 | EV/EBITDA (x) | 16.5 | 16.4 | 18.0 | 16.0 | Net debt/equity (%) | 31.3 | 33.5 | 40.5 | 39.8 |
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| | | | | | | | | | | | | | Share Price: | MYR0.95 | Target Price: | MYR1.14 | Recommendation: | Hold | | |
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| | | 3Q17 : Within expectations | | 3Q17 core net profit was within ours but above consensus forecasts. YoY growth was attributed to stronger contribution from the Middle East and smaller losses at the Oil & Gas division. Despite the recovery in earnings, its balance sheet remains a concern given its high gearing and receivables. Our earnings forecasts are unchanged pending an update with management. HOLD call and TP are intact at MYR1.14 pegged to unchanged 12x FY18E PER (-0.5 SD). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,788.8 | 1,574.6 | 1,872.8 | 1,745.2 | EBITDA | 124.3 | (182.1) | 167.3 | 175.8 | Core net profit | 47.5 | (80.6) | 65.7 | 73.5 | Core EPS (sen) | 6.1 | (10.4) | 8.5 | 9.5 | Core EPS growth (%) | 100.0 | nm | nm | 11.8 | Net DPS (sen) | 0.5 | 0.0 | 0.7 | 0.8 | Core P/E (x) | 15.5 | nm | 11.2 | 10.0 | P/BV (x) | 0.7 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 0.5 | 0.0 | 0.7 | 0.8 | ROAE (%) | 5.5 | (25.6) | 7.1 | 7.4 | ROAA (%) | 2.0 | (2.8) | 2.1 | 2.2 | EV/EBITDA (x) | 10.2 | nm | 9.3 | 8.5 | Net debt/equity (%) | 58.9 | 87.0 | 81.3 | 68.5 |
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| | | | | | | | | | | | Glomac (GLMC MK)
by Wei Sum Wong |
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| | | | | Share Price: | MYR0.63 | Target Price: | MYR0.68 | Recommendation: | Hold | | |
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| | | Results miss | | Glomac's 1HFY4/18 net profit made up just 7-8% of our full-year forecast. 1HFY4/18 locked-in property sales also fell short due to the lack of new launches, but could pick up in the subsequent quarters with projects worth MYR728m of GDV to be launched. We lower our earnings forecasts by 21-40%, our RNAV-TP by 3sen to MYR0.68 (on an unchanged 0.35x P/RNAV peg). We maintain HOLD. | | |
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| | FYE Apr (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 473.3 | 616.6 | 581.8 | 367.9 | EBITDA | 172.0 | 166.1 | 282.4 | 77.2 | Core net profit | 54.8 | 70.9 | 29.5 | 30.7 | Core EPS (sen) | 7.6 | 9.8 | 4.1 | 4.3 | Core EPS growth (%) | (41.2) | 30.0 | (58.4) | 3.9 | Net DPS (sen) | 4.3 | 4.0 | 3.0 | 0.9 | Core P/E (x) | 8.3 | 6.4 | 15.3 | 14.7 | P/BV (x) | 0.5 | 0.5 | 0.4 | 0.4 | Net dividend yield (%) | 6.8 | 6.4 | 4.8 | 1.4 | ROAE (%) | na | na | na | na | ROAA (%) | 3.1 | 3.7 | 1.5 | 1.5 | EV/EBITDA (x) | 6.8 | 5.8 | 2.7 | 9.7 | Net debt/equity (%) | 42.1 | 30.0 | 23.6 | 21.6 |
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| | | | | | MACRO RESEARCH | | | | | | | FBMKLCI: Light at the End of the Tunnel
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI bucked the regional downtrend to end the day 2.63pts higher at 1,719.86, led by late buying support on selected blue chips such as TNB, DIGI and GENM. Market breadth remained negative with losers outpacing gainers by 548 to 343. A total of 1.64b shares worth MYR1.78b changed hands. With US markets ended mixed overnight amid uncertainty over US tax bill, we expect trading to be choppy today. Locally, market will continue focus on corporate earnings. | |
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| | NEWS | | | Outside Malaysia:
U.S. New-Home sales unexpectedly rise to highest in a decade. U.S. purchases of new homes unexpectedly advanced in broad fashion last month, reaching the strongest pace in a decade and offering an encouraging signal for residential construction, according to government data released. Single-family home sales rose 6.2% MoM to 685k annualized pace, the highest since Oct. 2007, a revised 645 rate. (Source: Bloomberg)
E.U: The European Central Bank is sticking to the substance of its plan to toughen bad-loan rules for euro-area banks even as it makes some adjustments in response to a barrage of criticism from Rome and Brussels, according to people with knowledge of the matter. The ECB was accused of overreach in its recent proposal to hold banks to firm deadlines for writing down loans that turn sour. Daniele Nouy, the central bank's head of supervision, has said that the wording of the plan will be improved and some concessions could be made. But the core of the plan will remain in place, the people said, asking not to be identified because the deliberations are private. The draft guidance requires banks to provision fully for loans that turn sour from the start of next year, with a two year deadline for unsecured nonperforming debt and seven years for secured. (Source: Bloomberg)
Italy: Consumer confidence unexpectedly fell this month as shoppers start to plan their Christmas gift expenditures. The household sentiment dropped to 114.3 from a revised 116.0 in October, statistics agency Istat said. Manufacturing sentiment was little changed, slipping slightly to 110.8 in November from 110.9 the month before. The Italian economy has expanded for 13 straight quarters, rebounding from the longest recession since the World War II. Still the European Commission predicts Italy will have the lowest economic growth rate in the 19-nation euro through 2019. The country's unemployment rate was unchanged in September at 11.1% with youth joblessness at 35.7%. (Source: Bloomberg)
S. Korea: December manufacturers' confidence falls to 82. Manufacturers' business confidence in November was at 84, according to Bank of Korea statement. Proportion of companies surveyed complaining about weak domestic demand falls to 20.8% from 21.6% in last survey. Confidence index for non-manufacturers for December rises to 80 from 79. Results based on survey conducted November 13-20, with responses from 1,724 manufacturers and 1,054 non-manufacturers. Readings below 100 indicate that pessimists outnumber optimists. (Source: Bloomberg) | |
| | | | | Other News:
Zecon: To sell 49% of hospital concession to Sarawak for MYR155m. The group is disposing of a 49% stake in wholly-owned subsidiary Zecon Medicare S/B to the Sarawak state government for MYR155m. The group had entered into a share purchase agreement (SPA) with the State Financial Secretary of Sarawak (SFSS) today for the disposal of 3.92m shares in Zecon Medicare S/B. Zecon Medicare holds the 30-year concession to develop the UKM Specialist Children's Hospital, granted by the federal government. The proposed disposal is expected to be completed by the first half of 2018. (Source: The Edge Financial Daily)
Eastern & Oriental: Now wholly owns concession to reclaim Seri Tanjung Pinang land in Penang. The group has taken up the remaining 4.4% stake it does not own in Bridgecrest Resources S/B (BRSB) for MYR33m. E&O said its wholly-owned indirect unit Kamunting Management Services S/B has entered into a share sale agreement with North Zest Sdn Bhd (NZSB) for the share acquisition. (Source: The Edge Financial Daily)
Mega First: PPA with Sabah Electricity yet to be renewed. Mega First Corp said there is a possibility that it has to stop supplying energy from its Sabah plant to Sabah Electricity S/B because the power purchase agreement, which will expire on Dec 2, 2017, has yet to be renewed. Earnings contribution from Serudong Power in the final quarter will be adversely affected if it stops supplying energy on Dec 2, and for the rest of the month. (Source: The Sun Daily)
BTM Resources: BTM, SEPCO enter pact on waste incinerator in Malacca. BTM Resources has entered into a heads of agreement (HoA) with SEPCO Electric Power Construction Corp for the award of an engineering, procurement, construction and commissioning with finance (EPC + F) contract. The HoA follows a memorandum of understanding entered into in April 2017 by BTM and China Western Power International Pte Ltd and Sichuan No. 2 Electric Power Construction Co (Sichuan Power) in Chengdu, China, for the establishment of a MYR435m municipal solid waste to energy generation plant in Malacca. (Source: The Sun Daily) | |
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