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| | | | | | | | | | | | | | Share Price: | MYR7.80 | Target Price: | MYR8.00 | Recommendation: | Hold | | |
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| | | Plans on track | | We remain neutral on KLCCP's near-term earnings outlook post its FY17 analyst briefing, mainly premised on stable income from its office assets. Nonetheless, we look forward to the longer term with likely injection/ completion of high quality assets for the earnings step-up. Our earnings forecasts and DDM-TP of MYR8.00 are intact (cost of equity: 7.3%). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,343.5 | 1,366.8 | 1,489.4 | 1,530.0 | Net property income | 1,019.7 | 1,014.8 | 1,099.9 | 1,137.7 | Distributable income | 674.6 | 671.5 | 670.4 | 691.3 | DPU (sen) | 33.4 | 33.2 | 33.8 | 34.9 | DPU growth (%) | 2.7 | (0.5) | 1.9 | 3.2 | Price/DPU(x) | 23.4 | 23.5 | 23.1 | 22.4 | P/BV (x) | 1.1 | 1.1 | 1.0 | 1.0 | DPU yield (%) | 4.3 | 4.3 | 4.3 | 4.5 | ROAE (%) | 7.0 | 6.8 | 5.5 | 5.4 | ROAA (%) | 4.1 | 4.1 | 4.1 | 4.2 | Debt/Assets (x) | 0.1 | 0.1 | 0.1 | 0.1 |
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| | | | | | | | | | | | Share Price: | MYR1.55 | Target Price: | MYR1.60 | Recommendation: | Hold | | |
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| | | 4Q17: Earnings on track | | 4Q17 results and final gross DPU of 4.28sen (FY17: 8.24sen) were in-line. Earnings were mainly lifted by positive rental reversion, improved occupancy and increased in 'Other' income. We lower FY18-19 earnings forecasts by 1%-6% after adjusting our assumptions, which lead to lower DDM-TP by 10sen to MYR1.60. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 459.7 | 490.0 | 540.7 | 577.5 | Net property income | 314.8 | 322.9 | 355.3 | 377.9 | Distributable income | 248.8 | 249.7 | 266.2 | 289.3 | DPU (sen) | 7.4 | 7.4 | 7.4 | 8.0 | DPU growth (%) | 0.5 | 0.0 | (0.8) | 8.4 | Price/DPU(x) | 20.9 | 20.9 | 21.1 | 19.4 | P/BV (x) | 1.2 | 1.2 | 1.2 | 1.1 | DPU yield (%) | 4.8 | 4.8 | 4.7 | 5.1 | ROAE (%) | 8.0 | 6.3 | 6.0 | 6.2 | ROAA (%) | 4.5 | 4.1 | 4.2 | 4.2 | Debt/Assets (x) | 0.3 | 0.3 | 0.3 | 0.3 |
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| | SECTOR RESEARCH | | | | | | OPR hiked by 25bps to 3.25%
by Desmond Ch'ng |
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| | | | | | The 25bp OPR hike is expected to have a marginally positive impact (+2.7% average) on banks' 2018 earnings, arising primarily from NIM expansion amid the faster upward repricing of variable rate loans. Our in-house view, however, is that this will be the only OPR hike for the year and as such, while sentiment towards banks will likely remain positive in the short term, we maintain our NEUTRAL view on the sector, with BUYs on CIMB, BIMB and HLFG. | |
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| | MACRO RESEARCH | | | | | | One and Done…
by Suhaimi Ilias |
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| | | | | | BNM raised the Overnight Policy Rate (OPR) by +25bps to 3.25% at its first Monetary Policy Committee (MPC) meeting of 2018, in line with our view of there being a +25bps hike this year, but the timing was earlier vs our view of a "post-election" hike. Maintain our view of single rate hike in 2018 unless there are upside surprises to growth and inflation vs our forecasts of growth and inflation moderation this year. | |
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| | | | | | COMEX Gold: Upward Trajectory to be Extended
by Nik Ihsan Raja Abdullah |
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| | | | | | Rate hike by Bank Negara Malaysia bolstered share price performances of banking stocks, which in turn supported the local bourses. At day's end, the FBMKLCI rose 8.82pts to 1,845.86, led by gains in HLFG, PMAH, PBK and RHBBANK. Market breadth, however, was negative with losers outpacing gainers by 515 to 468. | |
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| NEWS | | | Outside Malaysia:
U.S. New-Home sales declined more than forecast in December and were revised down in the prior period, showing the market returned to a less exuberant pace as the year drew to a close, according to government data. Single-family home sales fell 9.3% MoM, the most since Aug. 2016, to 625k annualized pace after 689k rate. Median sales price increased 2.6% YoY to USD335,400. Supply of homes at current sales rate rose to 5.7 months from 4.9 months; 295,000 new houses were on market at end of December. Purchases totalled 608k in 2017, up from 561k a year earlier. (Source: Bloomberg)
U.S: Jobless claims rise from lowest in almost 45 years, underscoring a still historically tight jobs market, Labor Department figures showed. Jobless claims increased by 17k to 233k. Continuing claims fell by 28k to 1.937m in week ended Jan. 13 (data reported with one-week lag). Four-week average of initial claims, a less-volatile measure than the weekly figure, dropped to 240,000 from the prior week's 243,500. (Source: Bloomberg)
E.U: Some ECB officials are said to prefer June for next policy shift. As the European Central Bank considers when to start signaling the end of its crisis-era stimulus, some officials prefer delaying any significant change in language until June, according to people familiar with the matter. While one faction of the Governing Council wants to start a series of small tweaks in their policy wording at the next meeting on March 8 -- setting them on the path to winding down their bond-buying program -- others prefer to gather more evidence that inflation will pick up, said the people, asking not to be identified because the debate was private. No decision has been taken, the people said. (Source: Bloomberg)
Germany: Business confidence unexpectedly improved in January, suggesting Europe's largest economy is off to a strong start in a year that could see the European Central Bank phase out its crisis-era stimulus. The Ifo Institute's gauge of business sentiment increased to 117.6 from 117.2 in December. The reading matches a record-high reached in November. Consumer confidence is set to rise in February to the highest level since 2001, according to a separate report by GfK. The strong readings underpin the Bundesbank's view that the German economy will maintain its momentum after expanding last year at the fastest pace since 2011. Growth is set to be supported by domestic spending and booming global trade, while progress by Chancellor Angela Merkel in forming a coalition after four months of political stalemate is alleviating uncertainty. (Source: Bloomberg)
Japan: Key price gauge rose at the same pace in December as in November, underscoring challenges for the Bank of Japan as it attempts to get faster inflation toward its 2% target. Core consumer prices, excluding fresh food, rose 0.9% YoY in December. Stripping out fresh food and energy, prices climbed 0.3% YoY. Overall prices gained 1% YoY. (Source: Bloomberg) | |
| | | | | Other News:
Brahim: Now supplies food on KTMB's ETS. The group has made its catering services available on board all electric train services operated by Keretapi Tanah Melayu Bhd (KTMB), as well as at rail cafes at KTMB's stations and terminals. Its subsidiary Brahim's SATS Food Services S/B had signed a catering services agreement with KTMB for the provision of total food and beverage solutions. The agreement is effective May 1, 2017 and will continue for a fixed initial term of five years until April 30, 2022 with an option to extend or renew for another five years. (Source: The Edge Financial Daily)
Aeon Co: Aeon Malaysia, honestbee sign MoU. Aeon Co and honestbee inked a Memorandum of Understanding to establish a business alliance to tap consumers' demand for home grocery delivery service. The retailer said the alliance with online concierge and delivery specialist honestbee will allow both parties to develop new services that match rapidly-changing customer demand. The new service will be launched at Aeon Malaysia's flagship store in Mid Valley mall. (Source: The Edge Financial Daily)
TRIplc: 2Q net profit jumps four times on concession income. The group announced that its net profit for its second financial quarter ended Nov 30, 2017 (2QFY18) jumped more than four-fold to MYR6.4m from MYR1.54m a year earlier, mainly from two concessions' income from maintenance activities. For the first half of its financial year 2018 (1HFY18), net profit surged to MYR12.56m from MYR3.12m in the previous corresponding period, while revenue climbed to MYR63.53m from MYR21.73m. (Source: The Edge Financial Daily) | |
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