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| | | | | | | | | | | | | | Share Price: | MYR1.59 | Target Price: | MYR1.58 | Recommendation: | Hold | | |
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| | | Disposing The Power Station (SDPR MK, CP MYR1.59, HOLD, TP MYR1.58, Property) | | We are positive on the potential sale of Battersea Power Station (BPS) phase 2 (BPS2) commercial spaces (The Power Station building) to PNB and EPF. The potential sale proceeds, estimated at GBP1.6b (MYR8.8b; GBP643m for SDPR's 40% stake), could be re-deployed to develop the remaining phases of the BPS project. We maintain our earnings forecasts and MYR1.58 RNAV-TP (on an unchanged 0.55x P/RNAV peg). HOLD. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,590.7 | 2,564.4 | 1,712.9 | 2,342.8 | EBITDA | 1,033.1 | 556.2 | 1,018.9 | 915.8 | Core net profit | 749.1 | 607.9 | 829.1 | 541.5 | Core EPS (sen) | 11.0 | 8.9 | 12.2 | 8.0 | Core EPS growth (%) | 33.6 | (18.8) | 36.4 | (34.7) | Net DPS (sen) | 0.0 | 0.0 | 2.4 | 1.6 | Core P/E (x) | 14.4 | 17.8 | 13.0 | 20.0 | P/BV (x) | 2.0 | 1.7 | 1.1 | 1.0 | Net dividend yield (%) | 0.0 | 0.0 | 1.5 | 1.0 | ROAE (%) | 18.2 | 10.7 | 10.2 | 5.4 | ROAA (%) | 6.2 | 4.5 | 5.7 | 3.5 | EV/EBITDA (x) | na | na | 12.5 | 14.8 | Net debt/equity (%) | 22.4 | 1.4 | 16.7 | 23.6 |
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| | | | | | | | | | | | Share Price: | MYR15.60 | Target Price: | MYR16.00 | Recommendation: | Hold | | |
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| | | RP2 - Company's view | | Management's view of RP1 earnings being inflated is consistent with our expectation of a slight earnings step-down in RP2. Meanwhile, the 1H18 tariff subsidy would be funded by the extra c.MYR1b of revenue coming from capex difference (not directly by Tenaga's RP1 capex savings, as we earlier thought). This amount has been fully provided for. Maintain HOLD with an unchanged MYR16.00 TP. | | |
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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) | 12.5 | 11.4 | 9.5 | 13.4 | P/BV (x) | 1.9 | 1.7 | 1.5 | 1.4 | Net dividend yield (%) | 1.9 | 2.1 | 5.3 | 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 | 5.3 | 7.2 | Net debt/equity (%) | 33.3 | 32.6 | 38.3 | 36.4 |
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| | SECTOR RESEARCH | | | | | | End of palm biodiesel use in EU from 2021
by Chee Ting Ong |
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| | | | | | The EU Parliament has unfairly banned the use of palm biodiesel effective 1 Jan 2021. Some 3.3m MT of palm biodiesel demand is expected to be wiped out over the next 3 years, an equivalent of ~5% of 2016's global palm oil consumption. This is medium term negative for palm oil demand but its impact will be mitigated by the recent slowdown in new plantings in this region and accelerated replanting required in the coming years. Maintain NEUTRAL on the sector with selected BUYs on IOI, SOP and BAL. | |
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| | | | | | Dec 2017 adex: Ho Ho Hum
by Samuel Yin Shao Yang |
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| | | | | | 2017 total gross adex fell 13% YoY as consumer and adex sentiment remained poor. 2017 is the 4th consecutive year of total gross adex decline. The media industry's challenging operating environment in 2017 was further compounded with accelerated shift of ads away from the traditional platforms. Moving forward, our 2018 total gross adex forecast is unchanged at 5% YoY based on ~1x real GDP growth. Stay NEUTRAL with HOLD calls on all stocks under our media coverage with exception of a SELL on MPR. | |
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| | MACRO RESEARCH | | | | | | Dow Jones Industrial Average: Minor Correction Ahead
by Nik Ihsan Raja Abdullah |
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| | | | | | Dark cloud loomed over the local bourses on worries over US government shutdown. At day's end, the FBMKLCI fell 7.03pts to 1,821.60 yesterday, led by declines in GENM, PTG and AMM. Market breadth was weak with losers outpacing gainers by 764 to 274. A total of 4.6b shares worth MYR3.3b changed hands. The bears will continue to dominate trading today. The correction in overnight US markets coupled with profit taking ahead of weekend break will likely drag market lower. | |
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| NEWS | | | Outside Malaysia:
U.S: Filings for unemployment benefits plummeted to the lowest level in almost 45 years in a sign the job market will tighten further in 2018, Labor Department figures showed. Jobless claims decreased by 41k to 220k (est. 249k); lowest level since Feb. 1973, biggest drop since April 2009. Continuing claims rose by 76k to 1.952m in week ended Jan. 6 (data reported with one-week lag). Four-week average of initial claims, a less-volatile measure than the weekly figure, fell to 244,500 from the prior week's 250,750. The drop in claims shows that companies are increasingly holding on to their employees amid a shortage of skilled labor. Businesses are struggling to find workers to fill positions, particularly in manufacturing and construction, as cited in some anecdotes for the Federal Reserve's Beige Book released. (Source: Bloomberg)
U.S: Economic optimism keeps consumer comfort near 17-year high. Americans grew more upbeat last week about the economy's performance and the buying climate, allowing a measure of consumer sentiment to remain at an almost 17-year high, the Bloomberg Consumer Comfort Index showed. Weekly comfort index improved to 53.8, the highest since March 2001, from 53.5. Measure tracking current views of the economy rose to 56.8, also the strongest since March 2001, from 55.8. Index of buying climate rose to 45.1, highest since August, from 44.6. Monthly gauge of economic expectations climbed to 52.5 from 47. (Source: Bloomberg)
India: Slashed tax rates on some goods and services just days ahead of the country's budget, as it continues to rationalize its six-month-old regime to ease the pain for businesses hit by its chaotic roll out. A panel of federal and state finance minsters decided to revise GST rates on 29 goods and 53 services, Finance Minister Arun Jaitley told reporters after a meeting of the GST council. The rate cuts may lead to a revenue loss of INR10b (USD156.6m) to INR12b, an Indian official said separately, asking not to be identified citing rules. The adjustments are the latest in a series of tweaks the government has made to the GST. (Source: Bloomberg)
Indonesia: Central bank signaled the end of monetary policy easing as it focuses on inflation risks, such as rising food and oil costs. After keeping the benchmark interest rate at 4.25% - Assistant Governor Dody Budi Waluyo indicated there's limited room for rate cuts after eight reductions in the past two years. "The monetary stance remains neutral," he said. "We will bring inflation to meet the target of 3.5%. Future risks remain, but we see the window for cutting rates is closing." (Source: Bloomberg) | |
| | | | | Other News:
Crest Builder: Gets MYR149.5m hotel building job. Crest Builder has clinched a MYR149.5m contract to build a 44-storey hotel with a car park podium in Jalan Imbi here. Its wholly-owned subsidiary Crest Builder S/B secured the contract from Mega Capital Development S/B. The contract spans 39 months from Jan 12 this year. (Source: The Edge Financial Daily)
CCM: Chemical Company of Malaysia to reactivate Pasir Gudang plant. Chemical Company of Malaysia's (CCM) wholly owned subsidiary CCM Chemical S/B (CCMC) has approved the reactivation of its Pasir Gudang Works 1 plant, in a bid to grow its chlor-alkali business. The reactivation will cost the group MYR68.5m, which also includes equipment purchase and installation cost. The project is expected to begin in the first quarter of this year and scheduled for completion in the second quarter of 2019, with a project duration of 18 months. It will be funded by a combination of internal and external funds. (Source: The Sun Daily)
HSS Engineers: Invited to submit proposal for bridge project. HSS Engineers' associate company HSS Integrated S/B has been invited by the Federal Territories Ministry to submit its proposal for the provision of consultancy services for the execution of the Labuan-Menumbok Bridge Link feasibility study, which has a ceiling contract value of MYR14.3m. HSS Integrated and another wholly owned subsidiary of the group, HSS Engineering S/B, will collaborate to exclusively execute and complete the contract.(Source: The Sun Daily) | |
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