| | | FEATURED
CALLS | Malaysia | Dialog Group
Pengerang will continue to excite
Thong Jung Liaw | | | | |
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| | | | | | | | | | | | | | Share Price: | MYR15.88 | Target Price: | MYR16.00 | Recommendation: | Hold | | |
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| | | More RP2 details released | | With more RP2 inputs being disclosed, our simulation shows a slight step-down in RP2 earnings from RP1 (attributable to the absence of "surplus revenue"). Our long-term thesis of Tenaga's valuation multiple possibly expanding (as doubts over the pass-through mechanism eventually dissipate) remains intact, but in the near term, we see potential downside risk to consensus forecasts. Downgrade to HOLD (from BUY) with a marginally lower MYR16.00 TP (-20sen). | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 43,286.8 | 44,531.5 | 63,143.5 | 48,768.0 | EBITDA | 13,921.8 | 14,794.2 | 20,860.8 | 15,477.4 | Core net profit | 7,050.7 | 7,725.8 | 9,320.1 | 6,615.0 | Core FDEPS (sen) | 124.9 | 136.9 | 164.0 | 116.4 | Core FDEPS growth(%) | 29.9 | 9.6 | 19.8 | (29.0) | Net DPS (sen) | 29.0 | 32.0 | 82.4 | 58.4 | Core FD P/E (x) | 12.7 | 11.6 | 9.7 | 13.6 | P/BV (x) | 1.9 | 1.7 | 1.5 | 1.5 | Net dividend yield (%) | 1.8 | 2.0 | 5.2 | 3.7 | ROAE (%) | 13.5 | 14.8 | 16.9 | 11.0 | ROAA (%) | 6.2 | 6.2 | 6.8 | 4.6 | EV/EBITDA (x) | 6.6 | 6.5 | 5.4 | 7.3 | Net debt/equity (%) | 33.3 | 32.6 | 38.3 | 36.4 |
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| | | | | | | | | | | | Share Price: | MYR2.64 | Target Price: | MYR3.00 | Recommendation: | Buy | | |
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| | | Pengerang will continue to excite | | Dialog is Malaysia's largest, most profitable and most efficiently-run tank terminal operator and we remain an enthusiast of its business and management. Demand for tank terminal facilities in Asia is rising and Dialog has the right resources to leverage on this opportunity pre-post RAPID. This would crystalise its untapped capacity potential (14m cu m) at Pengerang over time. We now incorporate 3m cu m of new capacity into our TP (vs. 1.25m cu m previously). Reiterate BUY. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,534.5 | 3,392.9 | 3,534.3 | 3,668.9 | EBITDA | 385.4 | 475.0 | 461.3 | 486.0 | Core net profit | 261.0 | 328.2 | 338.8 | 444.8 | Core EPS (sen) | 5.0 | 6.1 | 6.3 | 8.3 | Core EPS growth (%) | (0.9) | 20.8 | 3.2 | 31.3 | Net DPS (sen) | 2.2 | 2.6 | 2.7 | 3.6 | Core P/E (x) | 52.3 | 43.3 | 42.0 | 32.0 | P/BV (x) | 5.7 | 4.6 | 4.3 | 3.9 | Net dividend yield (%) | 0.8 | 1.0 | 1.0 | 1.3 | ROAE (%) | 13.4 | 13.4 | 10.6 | 12.9 | ROAA (%) | 6.7 | 6.6 | 5.8 | 7.4 | EV/EBITDA (x) | 20.7 | 21.9 | 32.3 | 30.6 | Net debt/equity (%) | net cash | net cash | 18.0 | 14.8 |
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| | MACRO RESEARCH | | | | | | KLTEC Index –Buying Interest has Emerged
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI was little changed yesterday. At day's end, the benchmark index rose 0.12pts to 1,826.03, off its intraday low of 1,818.64. Broader market was negative with losers outpacing gainers by 764 to 324. A total of 6.52b shares worth MYR3.37b changed hands. After rising for three consecutive days, FBMKLCI is likely to take a breather soon, mirroring losses in overnight US markets. O&G stocks will take the brunt of the selling following a sharp fall in oil price. | |
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| NEWS | | | Outside Malaysia:
U.K: Growth outlook dims as household spending seen weaker. Respondents to Bloomberg's first U.K. survey of 2018 showed few signs of New Year optimism. The median forecast for growth this year was kept at 1.4%, and no acceleration is seen in 2019. While GDP probably gained 1.6% in 2017, more than previously estimated, that's still the slowest in five years. The economy started cooling last year as accelerating inflation fuelled by the pound's post-Brexit vote slump squeezed consumers. But that didn't stop the Bank of England raising interest rates for the first time in a decade on concern about domestic price pressures. (Source: Bloomberg)
U.K: Inflation eased for the first time in six months in December, thanks to the cost of air fares as well as games and toys. The decline took the rate to 3% YoY from 3.1% YoY in November, which was the fastest in more than five years. A core measure of consumer-price growth slipped to a five-month low of 2.5% YoY. (Source: Bloomberg)
China: Outbound direct investment recorded the first annual slump since at least 2009, as officials tightened curbs on capital outflows and increased scrutiny on foreign acquisitions. Non-financial overseas investments plunged 29.4% to USD120b, the Commerce Ministry said in a statement. The drop came as policy makers have stepped up scrutiny of the country's most prolific dealmakers since late 2016, including conglomerates such as HNA Group Co., in an effort to slow offshore takeovers that contributed to a surge in fund outflows and rapid depreciation in the yuan. (Source: Bloomberg)
China: PBOC boosts injections as liquidity tightens on tax payments. China's central bank boosted injections via open-market operations to the most in two months to counter seasonal tightening of liquidity. The People's Bank of China pumped in a net CNY 270b (USD 42b), as sales of reverse-repurchase agreements more than offset maturities. That's the most since Nov. 16, data compiled by Bloomberg show. The PBOC raised the interest rate of 63-day reverse-repos by five basis points to 2.95%, following a similar hike on shorter-term contracts in December. The central bank last used the longer lending tool in November. (Source: Bloomberg)
Philippines: Central Bank chief strikes cautious tone on rate hike. The Philippine central bank is taking a cautious approach on raising interest rates, and is still studying the possible effect of higher taxes on inflation projections, Governor Nestor Espenilla said. "I wouldn't put it as if we're itching to raise interest rates" Espenilla, 59, said in an interview at his office in Manila. "Right now staff are busy doing surveys and assessing the impact of recent developments to determine if there are secondary effects and evidence of inflation expectations becoming more elevated. It's a data driven exercise." (Source: Bloomberg) | |
| | | | | Other News:
Advance Synergy: Expands property biz with Klang Valley commercial buildings buy. The group is acquiring two commercial properties — one located on Jalan Yap Ah Shak here and the other in Temasya Glenmarie, Shah Alam — for a combined MYR40.95m. Its wholly-owned unit Advance Synergy Realty S/B had signed a sale and purchase agreement with Petaling Garden S/B for the proposed acquisition of a 70% stake in a detached commercial five-storey building block in Jalan Yap Ah Shak for MYR18.9m, as well as with Temasya Development Co S/B for a 70% stake in a detached commercial four-storey building in Temasya Glenmarie for MYR22.05m. (Source: The Edge Financial Daily)
Caely: Proposes one-for-two warrants bonus issue. The group has proposed a bonus issue of 40m warrants on the basis of one warrant for every two existing shares held to reward its shareholders. Assuming an indicative exercise price of 50 sen per warrant, the exercise could raise up to MYR20m to be used for future working capital, including staff costs and other expenses. (Source: The Edge Financial Daily)
MMC: Liquidates JV company with Zelan. The group has passed a special resolution to liquidate MMC Zelan S/B, a joint venture company with Zelan Bhd, as part of its rationalisation efforts to wind up dormant subsidiaries. MMC and Zelan hold 60% and 40% in MMC Zelan respectively, a company which was supposed to undertake any light rail transit project but has not commenced any operations since its incorporation in May 2010. (Source: The Edge Financial Daily) | |
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