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| | | | | | | | | | | | | | | | Share Price: | MYR0.96 | Target Price: | MYR1.20 | Recommendation: | Buy | | |
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| | | 9MFY18 results a miss | | 9MFYE1/18 results fell short, prompting cuts in our FY18-20E earnings and SOP-based TP to MYR1.20. An asset impairment exercise is likely in 4QFY18. While the results were disappointed, the historical low share price fully reflects shortfall. Trading at 0.5x BV, SAPE remains a BUY. | | |
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| | FYE Jan (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 10,184.0 | 7,651.3 | 5,917.6 | 6,202.1 | EBITDA | 3,056.4 | 3,913.3 | 2,162.4 | 2,118.4 | Core net profit | 1,009.4 | 447.3 | (400.3) | (374.8) | Core EPS (sen) | 16.9 | 7.5 | (6.7) | (6.3) | Core EPS growth (%) | (16.8) | (55.5) | nm | nm | Net DPS (sen) | 1.4 | 1.0 | 1.0 | 3.0 | Core P/E (x) | 5.7 | 12.8 | nm | nm | P/BV (x) | 0.5 | 0.4 | 0.5 | 0.5 | Net dividend yield (%) | 1.4 | 1.0 | 1.0 | 3.1 | ROAE (%) | (6.5) | 1.6 | (4.1) | (3.1) | ROAA (%) | 2.8 | 1.2 | (1.1) | (1.1) | EV/EBITDA (x) | 9.0 | 6.5 | 9.8 | 10.0 | Net debt/equity (%) | 134.1 | 115.7 | 123.7 | 127.6 |
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| | | | | | | | | | | | Ta Ann (TAH MK)
by Chee Ting Ong |
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| | | | | Share Price: | MYR3.44 | Target Price: | MYR3.86 | Recommendation: | Hold | | |
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| | | Post meeting note | | Ta Ann's elevated inventory levels at end–Sept 2017 (largely at its plywood division) remains our key concern even as management assures us it is taking steps to address the situation in 4Q17. We prefer to stay cautious and wait for earnings delivery. Despite 13% upside potential to our unchanged TP of MYR3.86 on 15x FY17 PER (5-year mean), we keep Ta Ann as a HOLD amidst uncertainty over its timber outlook. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 1,048.3 | 1,147.8 | 957.2 | 988.6 | EBITDA | 317.4 | 268.6 | 264.7 | 279.8 | Core net profit | 168.4 | 125.6 | 114.4 | 117.3 | Core EPS (sen) | 37.9 | 28.2 | 25.7 | 26.4 | Core EPS growth (%) | 66.0 | (25.4) | (8.9) | 2.5 | Net DPS (sen) | 16.7 | 10.0 | 11.6 | 11.9 | Core P/E (x) | 9.1 | 12.2 | 13.4 | 13.0 | P/BV (x) | 1.3 | 1.2 | 1.1 | 1.1 | Net dividend yield (%) | 4.8 | 2.9 | 3.4 | 3.4 | ROAE (%) | 15.9 | 10.2 | 8.7 | 8.5 | ROAA (%) | 8.7 | 6.2 | 5.2 | 5.0 | EV/EBITDA (x) | 6.4 | 7.0 | 7.0 | 6.3 | Net debt/equity (%) | 11.2 | 5.4 | 20.0 | 10.9 |
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| | | | | | MACRO RESEARCH | | | | | | | External reserves continue to drift higher
by Suhaimi Ilias |
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| | | | | | External reserves rose to USD101.9b at 30 Nov 2017 (15 Nov 2017: USD101.5b), supported by indication of net foreign buying in bond market and sustained positive trade flows amid net foreign selling in equities. Current reserves level is equal to 7.5 months of retained imports and 1.1 times of short-term external debt. Slow rise in external reserves suggest further unwinding in BNM net FX shorts position. | |
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| | | | | | | | Hang Seng Index – Major Uptrend At Risk
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI climbed 0.72pts to 1,719.05 yesterday, off its intraday high of 1,723.40 as late selldown weighed on key blue chips. Broader market, however, remained negative with losers outpacing gainers by 455 to 388. A total of 1.80b shares worth MYR2.51b changed hands. Despite the firmer US markets, investors will likely stay cautious ahead of the weekend break. O&G stocks will hog the limelight after SAPE plunged yesterday. Technically, we expect FBMKLCI to trade between 1,715 and 1,725 today. | |
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| | NEWS | | | Outside Malaysia:
U.S: Consumer borrowing increases by most in nearly a year. U.S. consumer credit outstanding rose in October by the most since November 2016 on larger credit-card balances, Federal Reserve data showed. Total credit rose USD 20.5b or at a 6.5% annualized rate after a downwardly revised USD 19.2b gain. Non-revolving debt outstanding climbed USD 12.2b. Revolving credit outstanding increased USD 8.3b, also the biggest gain since November 2016. The 9.9% annualized increase in revolving debt, which includes credit cards, shows Americans carried bigger balances heading into the holiday-shopping season. While incomes are rising and home and stock values have boosted household net worth to a record, consumers with fewer assets may find it difficult to boost their spending as their debt burdens mount. (Source: Bloomberg)
U.S: Household wealth hit record USD 96.9tr last quarter, driven by a stock-market surge and rising property values, figures from the Federal Reserve in Washington showed. Net worth for households and non-profit groups rose by USD 1.7t QoQ, or 1.8%, to USD 96.9tr from a downwardly revised USD 95.2tr, according to Fed's financial accounts report, previously known as flow of funds survey. Value of financial assets, including stocks and pension fund holdings, increased by USD 1.4tr to USD 78.9tr. Household debt increased at a 3.7% annual rate after 3.8% in the second quarter. Household real-estate assets rose by USD 444.1b; owner's equity as share of total real- estate holdings climbed to 58.6% from 58.3%.(Source: Bloomberg)
E.U: Private consumption and investment drove euro-area economic growth in 3Q 2017 underpinning a recovery that has spread across the 19-nation bloc. Consumer spending contributed 0.2 percentage point to GDP, with gross fixed capital formation adding another 0.2 point, the European Union's statistics office said. The economy expanded 0.6% from the second quarter, unrevised from an earlier estimate. (Source: Bloomberg)
Germany: Industrial production unexpectedly declined for a second month in October as workers took extra days off, interrupting a run that put Europe's largest economy on track toward its best performance in six years. Output declined 1.4% from September, when it fell a revised 0.9%, the Economy Ministry in Berlin said. Production was up 2.7% YoY The report comes after factory orders unexpectedly rose for a third month in October as exporters benefited from surging demand for investment goods from outside the euro area. With order books brimful and business confidence at record levels, the Bundesbank predicts growth momentum will be maintained in the final quarter and beyond. (Source: Bloomberg)
China: Foreign-exchange reserves increased for a 10th month in November amid continued stability in the yuan. The world's largest foreign-currency stockpile climbed USD10.1b to USD3.12t, the People's Bank of China said. Better sentiment around China's currency and the capital controls that have been in place all year have helped rebuild the holding, which fell below USD3t in January for the first time since 2011. Still, outflow pressures loom, with monetary policy normalization in other major economies poised to reduce demand for emerging-market assets. (Source: Bloomberg) | |
| | | | | Other News:
Construction: PDP for HSR likely to be known by 1Q18. The winner of the bid for the Kuala Lumpur high-speed rail (HSR) project delivery partner (PDP) will likely be known by the 1Q18. The deadline to submit the PDP tender proposal is end-January 2018. MyHSR Corp called for the tender to appoint the PDP for the mega project on Nov 22. The PDP will develop the detailed design for the infrastructure works, including stations and alignment structures within Malaysia, as well as construct them within budget and on time. (Source: The Edge Financial Daily)
Gamuda: MD cautious on sub-contract prices, warns against complacency. Gamuda, which is targeting to replenish its construction order book by MYR6b-MYR8b a year over the next two years, has warned that it cannot be complacent about sub-contract prices over the next few years as this may affect contract costs. Gamuda group MD, Datuk Lin Yun Ling said most of its sub-contractors are concerned about the supply chain being over-stretched when there are many big projects coming in. (Source: The Sun Daily)
ML Global: Clinches MYR78.05m construction contract. ML Global's wholly owned subsidiary MITC Engineering S/B (MITCE) has bagged a MYR78.05m contract from LCB Management S/B for the proposed development of a 24-storey apartment building in Bandar Sunway, Petaling Jaya. The developer Wonderful Insights S/B had instructed LCB Management, which is the managing contractor, to appoint MITCE as the works contractor for the project. The project comprises 359 apartment units, with one level of podium facilities, four levels of podium car park and one level of semi-basement car park. The contract is slated to go on for 24 months and is scheduled to commence in December 2017 and completed in December 2019. (Source: The Sun Daily)
Acoustech: Exits audio business. Acoustech is exiting its loss-making audio business with the disposal of its wholly-owned subsidiary Formosa Prosonic Technics S/B (FPT) to speaker systems manufacturer Formosa Prosonic Industries for MYR10.6m. FPT manufactures moulded plastic components for speaker systems. Upon completion of the proposed disposal, Acoustech will focus on its profitable property development business. Acoustech has entered into a share sale agreement with Formosa Prosonic for the proposed disposal, which will result in Acoustech incurring an estimated one-off loss of MYR1.18m. It intends to use the proceeds from the proposed disposal to fund existing property developments and for working capital. (Source: The Edge Financial Daily)
JF Technology: Appoints ex-Mida deputy CEO Phang as chairman. JF Technology has appointed Datuk Phang Ah Tong as the company's independent non-executive chairman from Jan 1, 2018. Phang, 60, was formerly deputy CEO of the Malaysian Investment Development Authority (Mida). He is replacing Datuk Foong Wei Kuong, 57, to be redesignated as MD of JF Technology. Phang has over 36 years of experience in promoting foreign and domestic investments. (Source: The Edge Financial Daily) | |
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