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| | | | | | | | | | | | | | | | Share Price: | MYR18.48 | Target Price: | MYR18.30 | Recommendation: | Hold | | |
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| | | Some new launches in 2H17 | | While revenue growth maybe moderate in 2018, its on-going cost management drive (eg. global procurement initiatives, new zero-based budgeting project into 2018) should help support earnings growth (+5% YoY). We expect a seasonally stronger 4Q earnings on festivities demand. We maintain our earnings forecasts, HOLD call and DCF-TP of MYR18.30. | | |
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| | FYE Jun (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,748.9 | 2,810.3 | 1,844.8 | 1,919.2 | EBITDA | 329.0 | 607.2 | 431.0 | 448.4 | Core net profit | 214.2 | 427.3 | 287.0 | 301.6 | Core EPS (sen) | 70.9 | 141.4 | 95.0 | 99.8 | Core EPS growth (%) | 8.1 | 99.5 | (32.8) | 5.1 | Net DPS (sen) | 71.0 | 145.0 | 95.0 | 100.0 | Core P/E (x) | 26.1 | 13.1 | 19.5 | 18.5 | P/BV (x) | 14.8 | 14.2 | 13.7 | 13.2 | Net dividend yield (%) | 3.8 | 7.8 | 5.1 | 5.4 | ROAE (%) | 58.4 | 111.2 | 71.7 | 72.7 | ROAA (%) | 30.7 | 57.1 | 36.3 | 37.4 | EV/EBITDA (x) | 13.2 | 8.3 | 12.9 | 12.4 | Net debt/equity (%) | 6.0 | 17.8 | net cash | net cash |
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| | | | | | | | | | | | | | Share Price: | MYR2.28 | Target Price: | MYR2.90 | Recommendation: | Buy | | |
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| | | Fundamentals really are beginning to improve | | 2QFY4/18 earnings and dividends marginally disappointed on poorer than expected motor vehicle sales. That said, we note positively that Sports Toto Malaysia (STM) 2QFY18 gross NFO revenue/draw surged 4% YoY. While we trim our earnings estimates by 4-5% and SOP-based TP by 5%, they are largely due to the motor dealership segment. More crucially, we remain convinced that the NFO industry is stabilising. At current levels, BST offers very attractive dividend yields of >7.5% p.a.. | | |
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| | FYE Apr (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,563.2 | 5,731.4 | 5,518.0 | 5,580.8 | EBITDA | 496.4 | 430.3 | 496.8 | 505.1 | Core net profit | 308.6 | 252.0 | 296.1 | 305.5 | Core EPS (sen) | 22.9 | 18.7 | 22.0 | 22.7 | Core EPS growth (%) | (10.3) | (18.3) | 17.5 | 3.1 | Net DPS (sen) | 19.0 | 14.0 | 17.0 | 17.5 | Core P/E (x) | 10.0 | 12.2 | 10.4 | 10.1 | P/BV (x) | 4.0 | 4.0 | 3.7 | 3.4 | Net dividend yield (%) | 8.3 | 6.1 | 7.5 | 7.7 | ROAE (%) | 42.5 | 30.9 | 36.9 | 35.1 | ROAA (%) | 12.6 | 9.6 | 11.8 | 13.0 | EV/EBITDA (x) | 9.7 | 10.7 | 7.7 | 7.4 | Net debt/equity (%) | 73.5 | 93.1 | 75.7 | 61.8 |
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| | | | | | NEWS | | | Outside Malaysia:
U.S: Homebuilder sentiment hits highest level in 18 years. Confidence among U.S. homebuilders jumped in December to the highest level since July 1999, as a growing economy boosts housing demand, according to data from the National Association of Home Builders/Wells Fargo. Housing market index rose to 74 from a downwardly revised 69 in Nov 2017. Current sales gauge increased to 81, highest since 1999, from 77; future sales index rose to 79, highest since 2005, from 76. (Source: Bloomberg)
U.K: Factories enjoyed another month of strong demand in December, with orders staying at their highest level in almost three decades. The Confederation of British Industry said its monthly factory index was at 17 for a second month, matching the highest level since August 1988. The measure for export orders slowed to 16, from 20 in November, but remained far above its long-run average. U.K. factories are benefiting from the twin effects of a Brexit-driven weaker pound and resurgence in global trade. The CBI said 14 of 17 sub sectors reported higher-than-usual orders in December, and demand was particularly strong for motor vehicles and transport equipment, and mechanical engineering. (Source: Bloomberg)
U.K: Prime London property has had a tough year, but there are signs that the slump is easing. The capital's three most expensive boroughs -- the City of Westminster, Camden, and Kensington and Chelsea -- each saw sales jump by more than 20% in the third quarter from the same period in 2016, according to a report from LSL Acadata published. The year-earlier period was in the immediate aftermath of the Brexit vote, and the surge indicates that "momentum is returning to sales in prime central London following the downturn in transactions experienced during late 2016," the report said. (Source: Bloomberg)
Crude oil: Trades near USD57/bbl as US crude stockpiles seen extending drop. Inventories probably lost 3 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Nigerian oil workers suspended strike action and agreed to continue talks next month, according to a union spokesman, while output from a Libyan field returned to normal after a power outage, said a person familiar with the matter. Brent for February settlement was USD63.41/bbl. (Source: Bloomberg) | |
| | | | | Other News:
Chin Hin: Unit awarded MYR238.3m construction job in Johor. Chin Hin Group's indirect wholly owned subsidiary Metex Modular S/B has clinched a MYR238.3m contract for the construction of an integrated workers complex with comprehensive facilities in Pengerang, Johor. The contract it had on December 15 accepted a letter of award from Saujana Vision S/B, which is involved in the business as builders and contractors of construction works. The project will be developed with land owner Kumpulan Prasarana Rakyat Johor S/B and Saujana Vision. The contract is for a contract period of 12 months commencing from January 1, 2018 and it will be funded via internally generated funds and/or external borrowings. (Source: The Sun Daily)
Bina Puri: Bags its first power project in Malaysia. Bina Puri has bagged a project from the Energy Commission to develop a 5MW solar photovoltaic plant in Kunak, Sabah under the commission's large-scale solar plant initiative to increase penetration of renewable energy in the country. Bina Puri has secured the project through its wholly-owned subsidiary, BP Energy S/B. The project, on a build-own-operate basis, is located in Kampung Dasar in Kunak, and all the documentation is expected to be finalised by March 2018. (Source: The Edge Financial Daily)
Coastal Contracts: Starts arbitration against guarantors of aborted JSK Gas deal. Coastal Contracts has started arbitration proceedings against guarantors of a deposit sum given under a memorandum of understanding (MoU) with PT. Jaya Samudra Karunia Internasional (JSK) for the acquisition of a 49% interest in PT. Jaya Samudra Karunia Gas (JSK Gas) to recoup USD3.85m (MYR15.7m) owing to the group, more than a year after the agreement was terminated. Coastal filed an arbitration petition against an individual and a company, a company and two individuals, for breach of the MoU signed between Coastal, the sellers and the company, and breach of two deeds of personal guarantee executed by the guarantors in favour of Coastal. Following the MoU, Coastal lodged a refundable deposit in an amount of USD6m with the sellers and/or the company on Aug 9, 2016. After the MoU was terminated on Oct 28, 2016 Coastal was entitled to a refund of the full deposit. (Source: The Sun Daily)
Ekovest: To table IWCity proposal to shareholders, KPRJ agrees to sell. Ekovest, which has decided to put forward the proposed takeover of Iskandar Waterfront City (IWCity) to minority shareholders, has entered into a conditional share sale agreement with Kumpulan Prasarana Rakyat Johor S/B (KPRJ) to acquire its 6.40% interest in IWCity for MYR80.39m cash or MYR1.50 per share. A proposed offer to acquire the 62% stake it does not own in IWCity is to be tabled to non-interested shareholders at an EGM, targeted to be held in mid February 2018 or earlier. The proposed offer is for either MYR1.50 cash for an IWCity share, or one Ekovest share for one IWCity share. Tycoon Tan Sri Lim Kang Hoo, who controls both Ekovest and IWC, made a proposal to merge the two companies after a proposed deal between IWC and parent company Iskandar Waterfront Holdings S/B fell through. (Source: The Sun Daily)
Salcon: Unit clinches MYR77.1m water system upgrade contract in Vietnam. Salcon's unincorporated JV Bach Dang-Salcon has received a water supply system upgrade project in Vietnam for VND426b (MYR77.1m). It had received the letter of acceptance dated Dec 14 issued by Haiphong Water Joint Stock Company, the water authority of Haiphong City, Vietnam. It involves the rehabilitation and upgrade of the second phase of the Haiphong water supply system. Work will begin on Jan 5, 2018 and be completed within 24 months. (Source: The Sun Daily) | |
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