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| | | | | | | | | | | | | | | | Share Price: | MYR16.06 | Target Price: | MYR18.40 | Recommendation: | Buy | | |
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| | | HL Bank surprises positively | | At the current prices, HLFG's market cap of MYR18.4b does not even reflect the value of its 64% stake in HL Bank, which is valued at MYR20b (8% discount). This implies that investors are also getting HLFG's life and general insurance businesses for free, while gaining entry into the bank at a discount. We upgrade HLFG to BUY for exposure to a well-managed commercial bank and the fourth largest life insurer in the country, with an unchanged SOP TP of MYR18.40. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 4,543.3 | 5,034.6 | 5,338.6 | 5,614.6 | Pre-provision profit | 2,258.9 | 2,812.3 | 3,039.2 | 3,227.4 | Core net profit | 1,489.5 | 1,608.8 | 1,742.7 | 1,841.2 | Core EPS (MYR) | 1.35 | 1.41 | 1.52 | 1.61 | Core EPS growth (%) | (9.0) | 4.2 | 8.3 | 5.7 | Net DPS (MYR) | 0.38 | 0.38 | 0.44 | 0.47 | Core P/E (x) | 11.9 | 11.4 | 10.5 | 10.0 | P/BV (x) | 1.2 | 1.1 | 1.1 | 1.0 | Net dividend yield (%) | 2.4 | 2.4 | 2.7 | 2.9 | Book value (MYR) | 13.37 | 14.47 | 14.34 | 15.48 | ROAE (%) | 10.5 | 10.1 | 10.5 | 10.8 | ROAA (%) | 0.7 | 0.7 | 0.8 | 0.8 |
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| | | | | | | | | | | | | | Share Price: | MYR15.14 | Target Price: | MYR15.90 | Recommendation: | Hold | | |
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| | | Much stronger contributions from Bank of Chengdu | | HL Bank's 1QFY18 results were above expectations, supported primarily by a significant improvement in contributions from Bank of Chengdu, for which the earnings momentum appears to be sustainable. We upgrade our earnings by 4-5%, but our TP is maintained at MYR15.90. This pegs on a CY18 PBV of 1.4x, which is supported by a prospective CY18 ROE of 10.8%. HOLD maintained, given the limited upside – we prefer HLFG (HLFG MK; BUY) for indirect exposure instead. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 4,177.9 | 4,550.6 | 4,865.1 | 5,097.5 | Pre-provision profit | 2,263.1 | 2,543.1 | 2,790.7 | 2,953.2 | Core net profit | 2,075.4 | 2,145.0 | 2,454.4 | 2,580.6 | Core EPS (MYR) | 1.09 | 1.05 | 1.18 | 1.24 | Core EPS growth (%) | (16.7) | (3.6) | 12.2 | 5.1 | Net DPS (MYR) | 0.41 | 0.45 | 0.51 | 0.53 | Core P/E (x) | 13.9 | 14.4 | 12.9 | 12.2 | P/BV (x) | 1.6 | 1.4 | 1.4 | 1.3 | Net dividend yield (%) | 2.7 | 3.0 | 3.4 | 3.5 | Book value (MYR) | 9.74 | 10.47 | 10.87 | 11.32 | ROAE (%) | 11.0 | 9.8 | 10.6 | 10.7 | ROAA (%) | 1.1 | 1.1 | 1.2 | 1.2 |
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| | | | | | | | | | | | | | Share Price: | MYR4.30 | Target Price: | MYR5.10 | Recommendation: | Buy | | |
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| | | 3Q17 results within expectations | | BIMB's 3Q17 core earnings were within expectations and growth continues to be faster at Syarikat Takaful (STMB), which now accounts for 25% of group earnings. We maintain our earnings forecasts and BUY call, with an unchanged SOP-derived TP of MYR5.10. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Operating income | 2,289.7 | 2,440.0 | 2,580.7 | 2,667.4 | Pre-provision profit | 908.3 | 961.0 | 1,020.9 | 1,029.1 | Core net profit | 547.3 | 559.0 | 576.8 | 597.3 | Core EPS (MYR) | 0.35 | 0.36 | 0.36 | 0.38 | Core EPS growth (%) | (0.4) | 2.1 | 0.2 | 3.6 | Net DPS (MYR) | 0.12 | 0.13 | 0.14 | 0.15 | Core P/E (x) | 12.1 | 11.9 | 11.8 | 11.4 | P/BV (x) | 1.9 | 1.8 | 2.3 | 2.1 | Net dividend yield (%) | 2.8 | 3.0 | 3.3 | 3.5 | Book value (MYR) | 2.21 | 2.44 | 1.90 | 2.09 | ROAE (%) | 17.2 | 15.3 | 15.9 | 16.9 | ROAA (%) | 1.0 | 0.9 | 0.9 | 0.9 |
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| | | | | | | | | | | | | | Share Price: | MYR3.97 | Target Price: | MYR4.50 | Recommendation: | Buy | | |
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| | | The 'OMS' factor | | OMS continues to see improvement, reporting a profit in 3Q17. 15 furnaces are up and running with the remaining one expected to be commissioned by end-2017. OMS' contribution in FY17 could help offset the weakness from the construction material division. No change to our earnings and SOP-based TP of MYR4.50 for CMS. There is potential upside bias to our FY18E/FY19E earnings should OMS deliver stronger earnings. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,788.0 | 1,551.3 | 1,950.8 | 2,197.6 | EBITDA | 394.8 | 418.9 | 388.1 | 420.3 | Core net profit | 244.7 | 212.4 | 221.3 | 258.9 | Core EPS (sen) | 22.8 | 19.8 | 20.6 | 24.1 | Core EPS growth (%) | 7.0 | (13.2) | 4.2 | 17.0 | Net DPS (sen) | 4.5 | 6.3 | 8.2 | 9.6 | Core P/E (x) | 17.4 | 20.1 | 19.3 | 16.5 | P/BV (x) | 2.1 | 1.9 | 1.8 | 1.7 | Net dividend yield (%) | 1.1 | 1.6 | 2.1 | 2.4 | ROAE (%) | 13.0 | 8.0 | 9.7 | 10.7 | ROAA (%) | 8.1 | 6.4 | 6.1 | 6.6 | EV/EBITDA (x) | 14.3 | 10.5 | 11.1 | 10.3 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR2.61 | Target Price: | MYR2.90 | Recommendation: | Buy | | |
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| | | Positive revenue momentum to continue | | We expect FMCG to continue its positive revenue momentum, driven by exports to Greater China. As for its F&B segment, the focus will be on value meal offers and cost efficiencies. Our earnings forecasts, TP of MYR2.90 (18x CY18 PER; +1SD mean) are unchanged. Maintain BUY. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 393.4 | 425.2 | 459.4 | 503.5 | EBITDA | 84.7 | 97.1 | 107.9 | 115.7 | Core net profit | 55.3 | 65.6 | 69.8 | 75.8 | Core EPS (sen) | 11.9 | 14.2 | 15.1 | 16.4 | Core EPS growth (%) | 6.1 | 18.6 | 6.5 | 8.5 | Net DPS (sen) | 9.0 | 10.0 | 8.3 | 9.0 | Core P/E (x) | 21.9 | 18.4 | 17.3 | 16.0 | P/BV (x) | 3.3 | 3.3 | 3.0 | 2.8 | Net dividend yield (%) | 3.4 | 3.8 | 3.2 | 3.4 | ROAE (%) | 15.0 | 16.6 | 18.1 | 18.1 | ROAA (%) | 12.5 | 14.5 | 14.8 | 14.9 | EV/EBITDA (x) | 6.4 | 11.5 | 9.6 | 8.7 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR3.69 | Target Price: | MYR4.00 | Recommendation: | Hold | | |
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| | | 2QFY18 results within expectations | | Alliance Bank's investments in new products and in group restructuring should eventually bear fruit but in the meanwhile, the group will have to contend with higher costs in the near term. This in turn is expect to depress ROEs, for which we estimate to be 9.7-9.8% over the next two years. HOLD maintained with an unchanged TP of MYR4.00, pegged to a CY18 PBV of 1.1x. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 1,424.1 | 1,469.4 | 1,558.5 | 1,616.6 | Pre-provision profit | 735.2 | 777.5 | 794.3 | 829.8 | Core net profit | 522.0 | 512.1 | 516.2 | 535.3 | Core FDEPS (MYR) | 0.34 | 0.34 | 0.34 | 0.35 | Core FDEPS growth(%) | (1.7) | (1.9) | 0.8 | 3.7 | Net DPS (MYR) | 0.14 | 0.16 | 0.16 | 0.17 | Core FD P/E (x) | 10.8 | 11.0 | 10.9 | 10.5 | P/BV (x) | 1.2 | 1.1 | 1.0 | 1.0 | Net dividend yield (%) | 3.9 | 4.3 | 4.4 | 4.5 | Book value (MYR) | 3.17 | 3.35 | 3.52 | 3.70 | ROAE (%) | 11.2 | 10.3 | 9.8 | 9.7 | ROAA (%) | 1.0 | 0.9 | 0.9 | 1.0 |
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| | | | | | | | | | | | | | Share Price: | MYR6.86 | Target Price: | MYR6.90 | Recommendation: | Hold | | |
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| | | Looking forward to 2018 | | 3Q17 core net loss narrowed (-16% QoQ) but was still substantially above our/street's expectations due to higher costs. However, the higher revenue (+9% QoQ) was inline with our estimate, given the net bag ASP hike. While the recent attempt in bag & bulk ASP hikes was futile, we believe that recovery may materialise in 2018 given our expectation of infrastructure-led demand growth. Our EPS forecasts is unchanged for now, pending an analyst briefing. Maintain HOLD with a TP of MYR6.90 (1.9x P/B). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 2,750.8 | 2,552.2 | 2,318.1 | 2,654.6 | EBITDA | 511.6 | 302.1 | 216.8 | 392.2 | Core net profit | 252.3 | 84.9 | (22.2) | 111.5 | Core EPS (sen) | 29.7 | 10.0 | (2.6) | 13.1 | Core EPS growth (%) | (1.4) | (66.3) | nm | nm | Net DPS (sen) | 31.0 | 5.0 | 0.0 | 11.8 | Core P/E (x) | 23.1 | 68.6 | nm | 52.3 | P/BV (x) | 1.9 | 1.9 | 1.9 | 1.9 | Net dividend yield (%) | 4.5 | 0.7 | 0.0 | 1.7 | ROAE (%) | 8.1 | 2.5 | (0.7) | 3.7 | ROAA (%) | 6.0 | 2.0 | (0.5) | 2.6 | EV/EBITDA (x) | 14.8 | 20.7 | 27.4 | 15.0 | Net debt/equity (%) | 1.0 | 4.6 | 3.5 | 1.1 |
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| | | | | | | | | | | | | | Share Price: | MYR15.16 | Target Price: | MYR15.60 | Recommendation: | Hold | | |
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| | | 3Q17: Within expectations | | 3Q17 results were in line. Solid performance in Malaysia (MY) operations acted as a buffer to weaker Singapore (SG) earnings, the latter could be due to timing of A&P and/or pick up in competition, in our view. We expect 4Q to come in stronger QoQ driven by festivities. Our earnings forecasts, HOLD call and DCF-TP of MYR15.60 are unchanged. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,659.9 | 1,679.5 | 1,732.4 | 1,805.6 | EBITDA | 306.0 | 327.8 | 341.3 | 356.7 | Core net profit | 228.3 | 205.0 | 230.4 | 245.6 | Core EPS (sen) | 74.7 | 67.0 | 75.4 | 80.3 | Core EPS growth (%) | 7.9 | (10.2) | 12.4 | 6.6 | Net DPS (sen) | 72.0 | 72.0 | 75.0 | 80.0 | Core P/E (x) | 20.3 | 22.6 | 20.1 | 18.9 | P/BV (x) | 13.8 | 14.4 | 14.0 | 13.3 | Net dividend yield (%) | 4.7 | 4.7 | 4.9 | 5.3 | ROAE (%) | 66.7 | 62.4 | 70.5 | 72.2 | ROAA (%) | 34.5 | 31.0 | 34.2 | 35.0 | EV/EBITDA (x) | 11.7 | 13.0 | 13.6 | 13.0 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | SECTOR RESEARCH | | | | | | | OPEC: Outcome & assessment
by Thong Jung Liaw |
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| | | | | | The decision by OPEC, together with Russia and 9 non-OPEC members, to collectively extend the production cut of 1.8m bpd from Jun 2018 to Dec 2018, is within market consensus. What is positive from this is that both Libya and Nigeria have agreed to a production cap, which further strengthens this pact. Our 2017/18 average oil price estimates are unchanged, at USD54/60/bbl (dated Brent) respectively. Reiterate POSITIVE. Our key BUYs are Yinson, Dialog, Wah Seong and SAPE. | |
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| | | | | | | | 3Q17: Results roundup
by Thong Jung Liaw |
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| | | | | | Overall results for companies under our coverage are tracking to expectation. PETRONAS' results too, are in tandem with global peers with the notable exception being its higher capex spending. Separately, OPEC and its alliance's collective move to support a higher oil price has evoked market confidence. We expect a higher oil price environment in 2018. Our key BUYs are Yinson, Dialog, Wah Seong and SAPE. | |
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| | | | | | | | A revival in consumer loans
by Desmond Ch'ng |
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| | | | | | While overall industry loan growth continues to be sedate, there are promising signs of a pick-up in consumer loan demand. Also positive is the fact that gross impaired loan (GIL) formation appears to be slowing across most of the major consumer segments. NEUTRAL on the sector, but we have added HLFG to our BUY list for its attractive valuations and as a cheaper proxy to HL Bank. Other BUYs are CIMB and BIMB. | |
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| | | | | | | | Oct 2017: Very much the same
by Samuel Yin Shao Yang |
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| | | | | | Oct 2017 total gross adex remained weak (-16% YoY, -3% MoM) as ongoing poor consumer sentiment coupled with higher adoption of digital platforms for advertisements continue to impede adex growth. That said, with school holidays and year-end festivities approaching, there could be a minor pick up in adex. Our 2017/2018 total gross adex growth forecasts of -10% YoY/+5% YoY are unchanged for now. Note that during the 3Q17 results season, we downgraded MPR to SELL and upgraded STAR to HOLD. | |
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| | | | MACRO RESEARCH | | | | | | | Changes over two effective dates
by Chew Hann Wong |
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| | | | | | Effective 6 Dec, Westports and Sime Darby Property will be OUT of the FBM KLCI, and from 18 Dec, Nestle and Press Metal will be IN, replacing BAT and IJM. These changes will lead to the weights of the other existing FBM KLCI constituents being marginally higher. We make no change to our recommendations on the stocks affected with Westports, Nestle and BAT remaining as HOLDs, and IJM as BUY. Press Metal is Not Rated. | |
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| | | | | | | | Sustained Momentum
by Suhaimi Ilias |
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| | | | | | Money supply (M3) growth was sustained at +5.1% YoY in Oct 2017 (Sep 2017: +5.0% YoY) amid steady growth in deposits, credit and external reserves. Meanwhile, BNM net FX shorts position dropped for the sixth consecutive month as unwinding process continues. | |
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| | | | | | | | Technical Assessment of E-Commerce Giants & the ASEAN Beneficiaries
by Nik Ihsan Raja Abdullah |
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| | | | | | Using technical analysis, we analyse the current trend of Amazon and Alibaba, which have outperformed the NASDAQ Index YTD, after recording a gain of 55% and 99% respectively. Judging from the chart, both stocks are in a consolidation mode. After hitting a high of USD1,214, AMAZON may head towards USD1,128-USD1,150 in the near-term as correction takes place. For ALIBABA, the pullback is likely at its tail end as Stochastic is now oversold. | |
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| | NEWS | | | Outside Malaysia:
U.S: Manufacturing expands at healthy pace in November amid a burst of production and rising orders that signal durable gains in the industry, figures from the Institute for Supply Management showed. Factory index eased to 58.2 from 58.7 in Oct.; readings above 50 indicate expansion. Measure of production grew to 63.9, highest since March 2011, from 61; new orders rose to 64 from 63.4 Employment gauge was little changed at 59.7 after 59.8. (Source: Bloomberg)
S. Korea: Bank of Korea raises interest rates for first time since 2011, underscoring its confidence in the nation's economic recovery and inflation. The decision to raise the seven-day repurchase rate to 1.5% was forecast by 18 of 24 analysts surveyed by Bloomberg. South Korea's economy is projected to grow more than 3% this year and inflation is near the central bank's 2% target, creating room for the BOK to begin normalizing policy. With another rate increase by the Federal Reserve seen coming in December, the BOK would also want to avoid having higher U.S. rates triggering capital outflows from Korea. (Source: Bloomberg)
Singapore: Home prices vulnerable to rising supply, MAS says. The rising supply of homes and slowing population growth may undermine the recent recovery in Singapore residential property prices, according to the country's central bank. Future development projects could potentially add 20,000 private housing units over the next one or two years, more than doubling the existing number available for sale, the Monetary Authority of Singapore said in its annual financial stability report published. "Over the medium term, as these development projects are progressively completed, the private housing stock will grow," the MAS said. "If this is not matched by increased occupation demand, it will add to existing vacancies that are already relatively elevated and weigh on rentals and property prices." (Source: Bloomberg) | |
| | | | | Other News:
Tenaga Nasional: Wins bid to develop large scale solar PV plant. TNB has won a competitive bid conducted by the Energy Commission to develop a 30MWa.c. large scare solar photovoltaic plant at Bukit Selambau, Kedah. In a filing with Bursa Malaysia, TNB has received a letter of acceptance of offer from the commission to develop the plant. The letter of acceptance of offer requires TNB to satisfy certain obligations, including completion of negotiations and execution of project documents prior to the issuance of a formal letter of award for the project. (Source: The Sun Daily)
Tenaga Nasional: TNB's Lekir Bulk Terminal to challenge coastal fee and charges demand. TNB's indirect unit Lekir Bulk Terminal S/B (LBTSB) has applied for a judicial review of the Perak local government agencies demand for it to pay an unspecified amount of coastal fee and charges or face having its jetty operation license revoked. The review is against the demands made by Majlis Pengurusan Pesisir Pantai Perak (MPPPP), MPPPP's director, Perak state government, Majlis Mesyuarat Kerajaan Perak Darul Ridzuan and Perbadanan Kemajuan Negeri Perak. The move is in relation to a direction dated Nov 13, 2017 that was issued by MPPPP to LBTSB, which compels it to, among others, to settle an unspecified amount of coastal fee and charges. Failure to comply with the direction, TNB said will lead LBTSB to having its licence to operate its jetty revoked, which may result in LBTSB having to cease its operations in the said terminal. (Source: The Sun Daily)
Pensonic: Now at a crossroads, says CEO. Home-grown electrical appliances manufacturer and trader Pensonic Holdings, which has always counted on its bricks-and-mortar stores for ssales, is reinventing itself to keep up with the times amid a slower retail market. The group is planning to launch its own e-commerce platform in the middle of next year to tap into Malaysia's growing love for online shopping. Pensonic has put together a team to focus on the e-commerce platform and is spending about MYR500,000 for the infrastructure. Moving forward, its 700 retailers nationwide will also double up as pickup centres for customers. (Source: The Edge Financial Daily) | |
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