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| | | | | | | | | | | | | | Share Price: | MYR6.75 | Target Price: | MYR7.70 | Recommendation: | Buy | | |
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| | | Sells asset management stakes | | The partial sale of its asset management business to Principal Financial Group is marginally positive in that pricing is decent and it will enhance CIMB's CET1 ratio by about 18bps. We maintain our BUY call, but roll forward valuations to FY19 on a higher P/BV peg of 1.3x from 1.2x previously, supported by a higher ROE of 10.4% for FY19 versus 10.0% for FY18. Our TP is thus raised to MYR7.70 from MYR6.95. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Operating income | 15,395.8 | 16,065.3 | 16,935.0 | 17,450.1 | Pre-provision profit | 6,146.8 | 7,413.6 | 7,993.5 | 8,328.0 | Core net profit | 3,411.2 | 3,414.4 | 4,457.7 | 4,849.6 | Core EPS (MYR) | 0.40 | 0.39 | 0.50 | 0.55 | Core EPS growth (%) | 5.6 | (2.4) | 27.9 | 8.8 | Net DPS (MYR) | 0.14 | 0.20 | 0.26 | 0.28 | Core P/E (x) | 16.8 | 17.2 | 13.4 | 12.3 | P/BV (x) | 1.4 | 1.3 | 1.3 | 1.2 | Net dividend yield (%) | 2.1 | 3.0 | 3.9 | 4.1 | Book value (MYR) | 4.87 | 5.24 | 5.37 | 5.64 | ROAE (%) | 8.7 | 7.9 | 9.6 | 10.0 | ROAA (%) | 0.8 | 0.7 | 0.9 | 1.0 |
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| | | | | | | | | | Ta Ann (TAH MK)
by Chee Ting Ong |
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| | | | | Share Price: | MYR3.51 | Target Price: | MYR3.86 | Recommendation: | Hold | | |
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| | | Taking a 30%-stake in underperforming SPLB | | We are Neutral on Ta Ann's proposed acquisition of a non-controlling 30% equity stake in SPLB for MYR170m cash. The acquisition price appears fair. Until the existing native issues plaguing part of the land is resolved, we doubt SPLB's valuation will accrete in the near future. By our prelim estimates, this acquisition merely raises Ta Ann's EPS by ~2% (after 5% borrowing cost). Pending an update, we maintain our earnings and HOLD call with an unchanged TP of MYR3.86 on 15x FY17 PER. | | |
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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) | 9.3 | 12.4 | 13.6 | 13.3 | P/BV (x) | 1.3 | 1.2 | 1.2 | 1.1 | Net dividend yield (%) | 4.7 | 2.8 | 3.3 | 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 | 7.2 | 6.4 | Net debt/equity (%) | 11.2 | 5.4 | 20.0 | 10.9 |
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| | | | | | | | | | | | Share Price: | MYR4.28 | Target Price: | MYR6.00 | Recommendation: | Buy | | |
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| | | 3Q18: Within estimates | | 3QFY2/18 results were in-line but third interim net DPS of 10.0sen (YTD: 21.0sen) was above our estimate. Earnings growth was mainly held up by the duty free and property segments. Our FY18-20 earnings forecasts and MYR6.00 SOP-TP are intact. | | |
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| | FYE Feb (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 768.1 | 809.4 | 812.2 | 834.0 | EBITDA | 107.8 | 118.9 | 113.5 | 122.2 | Core net profit | 50.7 | 38.4 | 39.5 | 40.8 | Core EPS (sen) | 20.0 | 15.1 | 15.6 | 16.1 | Core EPS growth (%) | 40.4 | (24.3) | 2.9 | 3.4 | Net DPS (sen) | 17.5 | 22.5 | 21.0 | 16.1 | Core P/E (x) | 21.4 | 28.3 | 27.5 | 26.6 | P/BV (x) | 2.7 | 2.3 | 3.5 | 3.3 | Net dividend yield (%) | 4.1 | 5.3 | 4.9 | 3.8 | ROAE (%) | 10.8 | 12.4 | 10.0 | 12.9 | ROAA (%) | 6.5 | 4.4 | 4.1 | 4.0 | EV/EBITDA (x) | 11.4 | 9.8 | 10.7 | 9.7 | Net debt/equity (%) | 6.8 | net cash | net cash | net cash |
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| | SECTOR RESEARCH | | | | | | Awaiting catalysts
by Wei Sum Wong |
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| | | | | | The property sector outlook remains just as challenging into 2018. While there are improvements in property demand and mortgage loan applications and approvals, BNM's potential OPR hike and rising unsold stocks could dampen buying sentiment. In our view, it will still take some time for the broad-based property supply-demand to rebalance. That said, stock valuations are beaten down, now at 0.32-0.66x P/RNAV (avg: 0.55x); hence, we maintain our NEUTRAL stance. Sunway is our top BUY. | |
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| | MACRO RESEARCH | | | | | | Signs of moderating GDP growth
by Suhaimi Ilias |
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| | | | | | Industrial production growth picked up to +5.0% YoY in Nov 2017 (Oct 2017: +3.4% YoY) on faster manufacturing (Nov 2017: +6.7% YoY; Oct 2017: +4.2% YoY) amid slower mining (Nov 2017: +0.2% YoY; Oct 2017: +0.8% YoY) and electricity (Nov 2017: +3.9% YoY; Oct 2017: +4.7% YoY). IP eased to +4.2% YoY in Oct–Nov 2017 (3Q 2017: +5.9% YoY) and together with other key indicators suggest real GDP growth moderated in 4Q 2017. | |
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| | | | | | FBMMES Index: Taking A Break
by Nik Ihsan Raja Abdullah |
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| | | | | | Late buying support on selected blue chip stocks helped narrow losses. At day's end, the benchmark index fell 6.04pts to 1,816.88, off its intraday low of 1,812.78, led by declines in PTG, GENT and DIGI. Market breadth remained negative with losers outpacing gainers by 781 to 265. A total of 4.01b shares worth MYR3.05b changed hands. It appears that FBMKLCI is in a consolidation mode. | |
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| NEWS | | | Outside Malaysia:
U.S: Budget deficit is widening on increased spending, just as tax cuts look set to knock the other side of the government's ledger: revenue. The U.S. budget gap rose 7% to USD225b in the first quarter of the government's fiscal year from a year earlier, the Treasury Department reported. Spending rose at a slightly higher pace than revenue, increasing 5% to USD994.5b between October and December. Receipts gained 4% to USD769.5b. (Source: Bloomberg)
U.S: Wholesale prices fell in December for the first time in more than a year on declining costs for services, a potential sign that inflation pressures are easing in the economy, a Labor Department report showed. Producer-price index fell 0.1% MoM after 0.4% MoM gain the previous month; first decline since Aug. 2016. PPI rose 2.6% from a year earlier (est. 3%) after 3.1% gain in prior 12- month period. Excluding food and energy, core gauge fell 0.1% MoM and 2.3% YoY. Most of the monthly drop in the PPI reflected a 0.2% decline in the cost of services, while goods prices were unchanged. A drop in the index for automotive fuel retailing was a major driver, along with falls in costs for loan services, airline passenger services and apparel retailing. (Source: Bloomberg)
U.S: Filings for unemployment benefits unexpectedly rose to a three-month high last week during a holiday period when claims tend to be volatile, Labor Department figures showed. Jobless claims increased by 11k to 261k (est. 245k), highest since week ended Sept. 23, when filings were elevated due to hurricanes. Continuing claims fell by 35k to 1.867m in week ended Dec. 30 (data reported with one-week lag), lowest since Dec.1973. Four-week average of initial claims, a less-volatile measure than the weekly figure, rose to 250,750 from the prior week's 241,750. Even with the latest increase, claims remain low by historical standards, with levels below 300,000 seen as indicating a healthy labor market as companies remain reluctant to fire workers. (Source: Bloomberg)
Indonesia: Eight interest-rate cuts later, Indonesia still isn't spending. Indonesia's consumers may be more confident than ever, but they still aren't spending much. While Bank Indonesia's consumer confidence index hit a record high in December, retail sales grew just 2.6% compared to a year earlier. Lackluster sales threatens to hamper recovery in Southeast Asia's biggest economy, with spending by consumers and firms making up half of gross domestic product. That's presenting a dilemma for policy makers after an aggressive run of monetary easing that's seen eight interest rate cuts. (Source: Bloomberg) | |
| | | | | Other News:
Uzma: Bags two contracts from Petronas Carigali. Its wholly owned subsidiary Uzma Engineering S/B was awarded two contracts by Petronas Carigali for an undisclosed contract sum. It received a letter of award from Petronas on December 28, 2017 for the provision of 340K and 460K Hydraulic Workover Unit for a period of three years, commencing December 22. (Source: The Sun Daily)
LBS Bina: Launches first 2018 project as company eyes MYR1.8b sales. The group has launched its first property project in 2018, a planned MYR954.7m condominium development in Bukit Jalil. LBS had earlier said it was eyeing property sales of MYR1.8b this year. The development, known as Residensi Bintang Bukit Jalil, features a 47-storey north tower and 50-storey south tower on a 2.19ha (5.47-acre) land. The tract is near the Bukit Jalil City Mall and Paradigm Garden City Mall. (Source: The Edge Financial Daily)
HLT Global: To diversify into rubber gloves manufacturing business. HLT Global has proposed to acquire HL Rubber Industries S/B (HLRI) for MYR33m, in a move which will see it diversify into the rubber gloves manufacturing business. HLT said it has entered into a heads of agreement with Suntel International Co Ltd, Kan Mei Yoong and Lee Sow Yin for the proposed acquisition of 5.77m ordinary shares, representing 55% of the issued share capital of HLRI. (Source: The Sun Daily)
Berjaya Assets: Ups stake in 7-Eleven Malaysia to 4.63%. The group has increased its stake in 7-Eleven Malaysia Holdings to 4.63% after acquiring a 0.34% stake from the open market for an average price of RM1.54 per share or a total of MYR5.72m. (Source: The Edge Financial Daily) | |
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