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| | | | | | | | | | | | Ta Ann (TAH MK)
by Chee Ting Ong |
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| | | | | Share Price: | MYR3.46 | Target Price: | MYR3.86 | Recommendation: | Hold | | |
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| | | SPLB offers good long-term potential but needs rework | | Ta Ann has a long-term plan to increase its total planted area to 100,000ha (2016A: 41,640ha). The acquisition of a 30% stake in SPLB may just be the start as Ta Ann may eventually raise its stake further. While we share Ta Ann's view in that SPLB has good long term-potential, turning around the latter may take time and the acquisition may not be earnings accretive in the short term. Maintain our earnings forecasts and HOLD call with unchanged TP of MYR3.86 on 15x FY17 PER (5-year mean). | | |
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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 | 12.3 | 13.5 | 13.1 | P/BV (x) | 1.3 | 1.2 | 1.1 | 1.1 | Net dividend yield (%) | 4.8 | 2.9 | 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 | 7.1 | 6.3 | Net debt/equity (%) | 11.2 | 5.4 | 20.0 | 10.9 |
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| | | | | | | | | | | | Share Price: | MYR4.77 | Target Price: | MYR4.00 | Recommendation: | Sell | | |
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| | | A decent run in share price | | While QL's prospects remain positive, valuations are demanding, following the relentless gain in its share price. The stock now trades at a prospective CY19 PER of 31x versus the consumer sector average of 21x. We now rate QL a SELL (from HOLD). Our earnings forecasts are unchanged but we raise our DCF-based TP to MYR4.00 (+40sen; WACC: 7.0%, long-term growth: 2.0%) on rolling forward valuations. | | |
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| | FYE Mar (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,853.9 | 3,012.0 | 3,241.6 | 3,492.3 | EBITDA | 368.1 | 394.6 | 411.1 | 468.8 | Core net profit | 192.1 | 185.9 | 208.0 | 234.9 | Core EPS (sen) | 11.8 | 11.5 | 12.8 | 14.5 | Core EPS growth (%) | 4.9 | (3.2) | 11.9 | 12.9 | Net DPS (sen) | 4.3 | 7.3 | 5.2 | 5.8 | Core P/E (x) | 40.3 | 41.6 | 37.2 | 32.9 | P/BV (x) | 4.9 | 4.4 | 4.2 | 3.9 | Net dividend yield (%) | 0.9 | 1.5 | 1.1 | 1.2 | ROAE (%) | 12.7 | 11.7 | 11.6 | 12.3 | ROAA (%) | 7.1 | 6.2 | 6.4 | 6.9 | EV/EBITDA (x) | 16.5 | 16.4 | 21.1 | 18.7 | Net debt/equity (%) | 31.3 | 33.5 | 40.5 | 39.8 |
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| | SECTOR RESEARCH | | | | | | Bark up the right trees in 2018
by Samuel Yin Shao Yang |
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| | | | | | For GENM, we expect 2018 earnings to rebound YoY due to normalizing VIP win rate and continued gaming volume growth. For GENS, we expect earnings growth to shift from cost rationalization in 2017 to VIP market recovery in 2018. Thanks to the above, we expect earnings of their parent, GENT to double to ~MYR3b by 2019. We tweak our GENM TP up by 2% to MYR5.35, GENS TP up by 3% to SGD1.46, GENT TP up by 2% to MYR12.50. Maintain BUY calls on GENT and GENS; HOLD on GENM. | |
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| | MACRO RESEARCH | | | | | | Plantation Index: Mild Correction Ahead
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI shrugged off early sell down to end the day 2.60pts higher at 1,828.63 yesterday, led by gains in HLBK, TM and GENM. Broader market, however, remained lethargic, with losers outpacing gainers by 678 to 321. A total of 4.97b shares worth MYR2.97b changed hands. Market will likely stay volatile today. The rally in overnight US markets will lend support to the local bourses but after rising for fourth consecutive days, we believe FBMKLCI is due for a correction. | |
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| NEWS | | | Outside Malaysia:
U.S: Manufacturing output rose in December for fourth month, capping the strongest quarter since 2010 and underscoring a resurgence in manufacturing that's primed for further advances, Federal Reserve data showed. Factory output rose 0.1% after rising an upwardly revised 0.3%. Total industrial production, which also includes mines and utilities, increased 0.9% after a revised 0.1% decrease. Capacity utilization, measuring the amount of a plant that is in use, rose to 77.9% from 77.2%. (Source: Bloomberg)
U.S: Homebuilder sentiment cools in January from 18-year high. Sentiment among America's homebuilders eased in January to the second-highest level since 2005, a sign the housing market will continue to make strides this year, according to data from the National Association of Home Builders/Wells Fargo. Housing Market Index fell to 72 from December's 74 reading that was the strongest since 1999. Measure of six-month sales outlook slipped to 78 from a 12-year high of 79. Current sales gauge for single-family homes cooled to 79 from 80. (Source: Bloomberg)
U.S: China holding of Treasuries fell in November after gaining in the previous month, according to the U.S. Treasury Department. The holdings fell USD12.55b to USD1.18t and total 8.1% of U.S. government debt. Foreign holding of Treasuries rose to 43.93% from 42.76% in the same month last year. Total net foreign purchases of U.S. equities and long-term bonds totalled USD34.81b in November 2017, up USD10.46b in October and from USD16.98b in November 2016, according to Treasury. (Source: Bloomberg)
Canada: Bank of Canada raises rates but cautions stimulus still needed. The Bank of Canada indicated it's in no rush to pursue aggressive interest rate hikes, citing "important unknowns" such as the future of Nafta as it raised borrowing costs for the third time since July. At a rate decision, central bank officials led by Governor Stephen Poloz sought to quell expectations Canada's economic boom could prompt them to move quickly with additional hikes, downplaying any worries about the economy overheating and inflation rising above target. The quarter-point increase brought the benchmark overnight rate to 1.25%, the highest since the 2009 recession. (Source: Bloomberg) | |
| | | | | Other News:
Vizione: Proposes to raise up to MYR67.11m in private placement. The group has proposed a private placement of up to 406.71m shares at an indicative price of 16.5 sen per share to raise as much as MYR67.11m in order to fund its construction projects. Of the proceeds, a maximum of MYR32.9m will be allocated to Vizione's construction of affordable housing in Gombak while a maximum of MYR32.9m would be allocated towards the construction of four office blocks in Semenyih, Selangor. (Source: The Edge Financial Daily)
Fajarbaru Builder: Bags MYR12.93m works contract for KLIA satellite building. Its subsidiary Fajarbaru Builder Group S/B has secured a MYR12.93mi contract to upgrade the satellite building at the Kuala Lumpur International Airport (KLIA) Complex. The contract is for a period of 14 months, starting from Feb 1, 2018 to March 31, 2019, and will entail works for the mezzanine, passenger and ground floors.(Source: The Edge Financial Daily)
Sunsuria: Proposes diversification into construction. Sunsuria, which is involved in property development and investment, is proposing to diversify its existing principal activities of property development to include construction and related businesses. The group anticipates the construction and related businesses may in the future contribute 25% or more of the net profits of Sunsuria group and/or result in a diversion of more than 25% of the net assets of Sunsuria group. (Source: The Sun Daily) | |
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