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| | | | | | | | | | | | | | Share Price: | MYR4.48 | Target Price: | MYR4.80 | Recommendation: | Hold | | |
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| | | MSS to drive cost savings | | The focus on SME lending is a step in the right direction toward driving loan growth, NIMs and CASA. We raise our FY19/20E earnings by 4% p.a. to factor in potential MSS savings. In the near term, 2HFY18 earnings could be weaker HoH, in our view, due to the impact of the one-off MSS cost as well as lower credit recoveries. HOLD maintained with a slightly higher TP of MYR4.80 (MYR4.50 previously), on a 2018 PBV target of 0.8x (0.75x previously), led by the earnings upgrade. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Operating income | 3,693.3 | 3,728.9 | 3,883.8 | 4,167.1 | Pre-provision profit | 1,519.0 | 1,568.4 | 1,580.8 | 1,973.3 | Core net profit | 1,355.9 | 1,216.5 | 1,386.6 | 1,532.2 | Core EPS (MYR) | 0.45 | 0.40 | 0.46 | 0.51 | Core EPS growth (%) | (17.2) | (10.3) | 13.7 | 10.5 | Net DPS (MYR) | 0.16 | 0.18 | 0.18 | 0.20 | Core P/E (x) | 9.9 | 11.1 | 9.7 | 8.8 | P/BV (x) | 0.9 | 0.8 | 0.8 | 0.7 | Net dividend yield (%) | 3.5 | 3.9 | 4.1 | 4.5 | Book value (MYR) | 5.03 | 5.32 | 5.72 | 6.02 | ROAE (%) | 9.2 | 7.8 | 8.3 | 8.7 | ROAA (%) | 1.0 | 0.9 | 1.0 | 1.1 |
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| | SECTOR RESEARCH | | | | | | Nov 2017 adex: Geared up for the holidays | NEUTRAL
by Samuel Yin Shao Yang |
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| | | | | | Nov 2017 total gross adex fell 9% YoY but grew 6% MoM. This is largely expected given that weak consumer sentiment was further exacerbated by the structural shift of ads to digital platforms. That said, consumer spending perked up in Nov 2017 with the start of Malaysia's mega year-end sales. We keep our 2017/2018 total gross adex growth forecasts of -10% YoY/+5% YoY for now. Maintain NEUTRAL with HOLD calls on all stocks under our media coverage with the exception of a SELL on MPR. | |
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| | MACRO RESEARCH | | | | | | MYR – Is It Correcting Towards its Fair Value?
by Saktiandi Supaat |
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| | | | | | We believe there is room for MYR to extend its gains. In fact we see this episode as a correction towards its fundamental value. Based on BIS data, the current level of MYR REER is about 7.6% undervalued relative to its 10-year average. On z-score basis, MYR REER is about 1.3 standard deviation below its 10-year mean and remains "relatively cheap" amongst AXJs. While momentum is bearish, technicals are flagging the risk of technical rebound in USDMYR, possibly towards 4.03, 4.05 in the near term | |
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| | | | | | KLTEC Index: Intermittent Profit-Taking
by Nik Ihsan Raja Abdullah |
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| | | | | | After rising for 8th consecutive days, FBMKLCI finally took a breather. At day's end, the benchmark fell 5.20pts to 1,826.95, led by declines in AMM, SIME and RHBBANK. Market breadth was bearish with losers outpacing gainers by 716 to 387. A total of 6.47b shares worth MYR4.41b changed hands. Expect trading to be volatile today but limelight will focus on selected construction and O&G stocks which secure new projects (such as MHB, UZMA and DAYA). | |
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| NEWS | | | Outside Malaysia:
Global: World Bank raises outlook as growth hits fastest pace since 2011. The World Bank lifted its forecast for global growth, predicting the global recovery will continue to gain steam after reaching the fastest clip in six years. The development lender raised its estimate for global economic growth for this year to 3.1%, up 0.2 percentage point from an estimate in June, it said in its latest Global Economic Prospects report. The world economy probably expanded 3% last year, which would be the fastest pace since 2011. Global growth is expected to last for at least the next couple of years, as conditions improve for commodity exporters hurt by the oil crash, said the Washington-based lender. Increased investment and manufacturing activity is driving a broad cyclical recovery, aided by benign financial conditions, loose monetary policy and improved confidence, it said. (Source: Bloomberg)
U.S: Job openings declined in November to a six-month low, though the level is still consistent with an improving labor market, Labor Department data showed. Number of positions waiting to be filled dropped by 46k to 5.88m. Job Openings and Labor Turnover Survey, or JOLTS Layoffs were little changed at 1.69m. (Source: Bloomberg)
E.U: Joblessness in the Euro Area declined to the lowest level since early 2009, adding to evidence that the 19-nation economy has found its feet. The unemployment rate dropped to 8.7% in November from 8.8% the previous month, according to a report from Eurostat. Strengthened momentum is being reflected in a better labor market and elevated business sentiment. In Spain, the jobless rate is at a nine-year low, while Germany's is the lowest on record. (Source: Bloomberg)
Germany: Industrial production rebounded in November, setting up the euro area's biggest economy for a strong finish to the year and adding to the picture of robust growth in the currency bloc. Led by demand for investment goods, output increased 3.4% from the previous month, data from the Economy Ministry showed. Production surged 5.6% YoY, the most since 2011. Germany is undergoing an economic boom amid the broadest euro-zone expansion in almost two decades and strengthening global demand. (Source: Bloomberg)
U.K: Britain's clothing chains and department stores are taking a hit as faster food-price inflation eats into the amount consumers have for non-essential spending. Industry figures published showed non-food sales fell an annual 1.4% in the fourth quarter, the most since 2009. Online demand proved stronger, leaving high street sales down by an even bigger 3.7%, a blow to retailers hoping for Christmas cheer after a tough 2017. In December alone, overall retail sales rose a "meagre" 0.6% on a like-for-like basis, according to the British Retail Consortium. (Source: Bloomberg) | |
| | | | | Other News:
Mitrajaya: Bags MYR103m civil servant housing project. The group has been appointed as the main building works contractor for a public housing project in Precint 17, Putrajaya under the 1Malaysia Civil Servants Housing Programme (PPA1M). The MYR103.06m contract was awarded to the construction firm's wholly-owned unit, Pembinaan Mitrajaya S/B by Putrajaya Homes S/B. The contract will commence on Jan 15, 2018 for duration of 36 months and it is expected to be completed by Jan 14, 2021. (Source: The Edge Financial Daily)
Uzma: Secures umbrella contracts from Petronas Carigali. Uzma said it had received three umbrella contracts for the provision of electrical submersible pumps and services from Petronas Carigali S/B. The contract, secured by the group's wholly owned subsidiary Uzma Engineering S/B, is effective for three years from Nov 20, 2017 to Nov 19, 2020. The contract has an option for a further one year extension. (Source: The Sun Daily)
Serba Dinamik: Proposes private placement to raise up to MYR433.89m. The group has proposed to place out new shares to independent third party investor(s) to be identified in order to raise up to MYR433.89m, mainly for the partial development of Pengerang eco-Industrial Park (PeIP). The placement will involve up to 133.5 million new shares representing 10% of the company enlarged issued share capital. For illustrative purposes, the indicative issue price of a placement share would be MYR3.25 per share, based on the five-day VWAP of shares.(Source: The Edge Financial Daily) | |
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