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| | | | | | | | | | | | | | Share Price: | MYR8.10 | Target Price: | MYR8.50 | Recommendation: | Hold | | |
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| | | 2017F to be a record | | 2017 results (tentatively out 20 Feb) could be slightly ahead of our expectation on stronger-than-expected ASP which is benefiting from the uptrend in crude oil prices. PCHEM's share price has spiked by 9% in the past month and is now close to our TP of MYR8.50 (9.1x 2018 EV/EBITDA ― 10% premium to industry peers). Due to the limited upside to our TP, the stock is now a HOLD. | | |
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| | FYE Dec (MYR m) | FY15A | FY16A | FY17E | FY18E | Revenue | 13,536.0 | 13,860.0 | 16,925.8 | 17,116.0 | EBITDA | 4,660.0 | 5,291.0 | 6,463.9 | 6,547.7 | Core net profit | 2,780.0 | 3,183.0 | 4,202.0 | 4,205.4 | Core EPS (sen) | 34.8 | 39.8 | 52.5 | 52.6 | Core EPS growth (%) | 9.0 | 14.5 | 32.0 | 0.1 | Net DPS (sen) | 18.0 | 19.0 | 27.0 | 27.0 | Core P/E (x) | 23.3 | 20.4 | 15.4 | 15.4 | P/BV (x) | 2.6 | 2.4 | 2.4 | 2.2 | Net dividend yield (%) | 2.2 | 2.3 | 3.3 | 3.3 | ROAE (%) | 11.7 | 11.3 | 15.4 | 14.8 | ROAA (%) | 9.4 | 10.1 | 13.1 | 12.7 | EV/EBITDA (x) | 11.0 | 9.4 | 9.3 | 8.8 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | Share Price: | MYR1.22 | Target Price: | MYR1.35 | Recommendation: | Buy | | |
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| | | 4Q17 earnings in-line | | 4Q17 results and final interim gross DPU of 4.16sen (FY17: 8.39sen) were within estimates. The stronger core earnings were mainly driven by Menara Shell's contributions and rental step-ups. We tweak our FY18-19 earnings forecasts by -3% p.a.. Our DDM-TP is unchanged at MYR1.35. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 131.8 | 180.1 | 183.7 | 186.0 | Net property income | 102.3 | 140.0 | 136.6 | 138.1 | Distributable income | 59.2 | 92.4 | 97.9 | 100.0 | DPU (sen) | 7.5 | 7.6 | 7.8 | 7.4 | DPU growth (%) | 8.8 | 0.1 | 2.8 | (4.8) | Price/DPU(x) | 16.2 | 16.2 | 15.7 | 16.5 | P/BV (x) | 0.6 | 0.9 | 1.0 | 1.0 | DPU yield (%) | 6.2 | 6.2 | 6.4 | 6.1 | ROAE (%) | 5.6 | 5.1 | 6.6 | 6.8 | ROAA (%) | 3.0 | 3.8 | 4.0 | 4.1 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | MACRO RESEARCH | | | | | | Research Guide
by Chew Hann Wong |
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| | | | | | Invest Malaysia Kuala Lumpur 2018 Conference will feature 61 Malaysian PLCs with a combined market capitalisation of MYR768b (USD195b), comprising an almost equal mix of 31 large caps and 30 mid-small caps (<MYR4b market cap). The Conference will be held on 23-24 January 2018. | |
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| NEWS | | | Outside Malaysia:
U.S: Shutdown starts amid blame game as Trump marks first year. The U.S. government began a partial shutdown on Saturday as finger-pointing intensified on both sides and members of Congress explored whether there was any hope of bringing it to a quick end. The shutdown began a year to the day after Donald Trump was inaugurated, and the president was typically defiant. "This is the One Year Anniversary of my Presidency and the Democrats wanted to give me a nice present," he wrote on Twitter. House members were told to be available for votes in case a spending agreement was reached in the Senate, which planned to begin its session at noon. (Source: Bloomberg)
China: Curbs to pinch developers addicted to shadow bank funding. China's crackdown on risks in the USD 38tr banking industry will ripple through the property sector, which became reliant on financing from shadow banking products in recent years. The nation's banking watchdog stepped up restrictions on lenders' entrusted loan business earlier this month, plugging another shadow banking loophole after prohibiting trust funds backed by banks from investing in property in December. Regulators have made it a key priority this year to reduce systemic dangers and the flow of money into riskier areas. While no updated public data exists on the flow of shadow banking funds into real estate, the most recent available numbers show the huge amounts of money at stake. (Source: Bloomberg)
U.K: Macron offer on Brexit deal highlights May's difficult choices. French President Emmanuel Macron offered U.K. Prime Minister Theresa May the possibility of a Brexit deal that covered financial services, even as he set out options that make clear how difficult it will be for her to satisfy both business and her Conservative Party. In a BBC interview, Macron said that May's stated positions made "full access" to the European Union's single market impossible. He said what was on offer was "something perhaps between this full access and a trade agreement." However, he did seem to shift position a little, by suggesting financial services could be included if May were also prepared to give ground. (Source: Bloomberg)
Crude Oil: OPEC, Russia signal global oil alliance may endure past 2018. OPEC and Russia reaffirmed that they'll persevere with oil-production cuts until the end of the year to clear a global glut and signaled their readiness to cooperate beyond that. Russia is prepared to continue cooperating with OPEC and its de-facto leader Saudi Arabia even after the cuts expire, Energy Minister Alexander Novak said in an interview held jointly with his Saudi counterpart. Producers should keep limits on output through 2018 as the market may re- balance at the end of the year or in 2019, Saudi Energy Minister Khalid Al-Falih said. Neither minister said whether the cuts would continue in 2019. (Source: Bloomberg) | |
| | | | | Other News:
Comintel: In talks to implement waste-to-energy system in Hanoi. The group has entered into talks with Thanh Cong Cooperative to install its green waste management waste-to-energy system at the Xuan Son municipal solid waste treatment plant in Hanoi, Vietnam. Its wholly-owned subsidiary, Green Waste Management S/B has entered into a letter of intent with Thanh Cong for the project, which see it appointed as the engineering, procurement and construction contractor for the supply, installation and commission of the system. The plant has a design capacity to treat 600 tonnes of municipal solid waste per day and generate approximately five megawatts of electric energy. (Source: The Edge Financial Daily)
Atta Global : Proposes property play diversification. The group has proposed to diversify into property development, construction and property investment in anticipation of the commencement of a property development project by a subsidiary this year. The steelmaker said its 55%-owned unit Tetap Gembira Development S/B (TGDSB) intends to undertake a mixed development project, consisting of a 23-floor building in Penang. (Source: The Edge Financial Daily)
Freight Management: Gets special tax incentive package. Its wholly-owned subsidiary FM Global Logistics S/B has been granted a special incentive package from the Malaysian Investment Development Authority (Mida) for development of an e-Commerce fulfilment hub in Shah Alam, Selangor. The special incentive will enable it to qualify for income tax exemption via Investment Tax Allowance (ITA) of 60% of qualifying capital expenditure within a five-year period, and the ITA can be utilised to deduct up to 70% of the statutory income for each year of assessment. (Source: The Edge Financial Daily) | |
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