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| | | | | | | | | | | | | | Share Price: | MYR25.26 | Target Price: | MYR26.40 | Recommendation: | Hold | | |
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| | | Expect a decent start to FY18 | | Despite lower 1QFY9/18 CPO ASP and FFB output compared to a year ago, we expect KLK to still deliver a decent set of 1Q results, with core net profit to meet ~28% of our full-year forecast. Given muted FY18 earnings growth outlook and limited upside to our slightly higher TP of MYR26.40 (+1%) post EPS forecasts uplift, KLK remains a HOLD. | | |
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| | FYE Sep (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 16,505.8 | 21,004.0 | 20,743.7 | 22,092.0 | EBITDA | 1,805.8 | 2,157.1 | 2,072.0 | 2,236.9 | Core net profit | 824.5 | 1,063.8 | 1,080.1 | 1,194.2 | Core EPS (sen) | 77.2 | 99.9 | 101.4 | 112.1 | Core EPS growth (%) | 0.7 | 29.3 | 1.5 | 10.6 | Net DPS (sen) | 50.0 | 50.0 | 60.8 | 67.3 | Core P/E (x) | 32.7 | 25.3 | 24.9 | 22.5 | P/BV (x) | 2.6 | 2.3 | 2.2 | 2.2 | Net dividend yield (%) | 2.0 | 2.0 | 2.4 | 2.7 | ROAE (%) | 15.8 | 9.1 | 9.2 | 9.8 | ROAA (%) | 4.6 | 5.6 | 5.5 | 5.9 | EV/EBITDA (x) | 16.0 | 13.6 | 14.4 | 13.2 | Net debt/equity (%) | 22.5 | 19.3 | 15.1 | 12.5 |
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| | | | | | | | | | | | Share Price: | MYR1.07 | Target Price: | MYR1.10 | Recommendation: | Hold | | |
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| | | New JV's earnings could come in earlier | | Earnings from EWI's proposed JV with Willmott Dixon (WD) could come in earlier if the JV's enbloc sale of its build-to-rent (BTR) units materialize. This is a positive as the proceeds can help to cushion new staff costs and marketing expenses for future projects. Details on the JV's development sites are still lacking. We estimate a +9sen/shr uplift to our RNAV estimate from the JV's six development sites under stage 1. We maintain our earnings forecasts, MYR1.10 RNAV-TP and HOLD rating. | | |
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| | FYE Oct (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 0.7 | 0.6 | 0.6 | 1,693.8 | EBITDA | (37.6) | (53.3) | (89.1) | 1,602.2 | Core net profit | (220.1) | (87.6) | 173.7 | 383.2 | Core EPS (sen) | (89.3) | (5.8) | 7.2 | 16.0 | Core EPS growth (%) | nm | nm | nm | 120.6 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 4.0 | Core P/E (x) | nm | nm | 14.8 | 6.7 | P/BV (x) | 2.4 | 0.6 | 1.0 | 0.9 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 3.7 | ROAE (%) | na | na | na | na | ROAA (%) | (35.9) | (4.5) | 6.2 | 12.8 | EV/EBITDA (x) | na | nm | nm | 1.2 | Net debt/equity (%) | 803.5 | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | FBMKLCI: Heading into Extreme Zone, Pullback Ahead
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI skyrocketed yesterday, rising 16.60pts to 1,870.52, led by gains in banking stocks on positive spillover from OPR hike last week. Advancers were led by PBK, HLBK and HLFG. Broader market, however, was in a subdued mood, with losers outpacing gainers by 623 to 370. A total of 3.00b shares worth MYR2.49b changed hands. After rising for three consecutive days, market will likely take a breather soon, particularly in this holiday-shortened week. | |
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| NEWS | | | Outside Malaysia:
U.S. Consumer spending rose in December, saving rate dipped. U.S. consumer spending rose at a solid pace in December after an upwardly revised advance a month earlier as shoppers splurged during the holiday season. While incomes also rose, the saving rate fell to a fresh 12-year low. Purchases, which account for about 70 percent of the economy, climbed 0.4% after a revised 0.8% advance, Commerce Department figures showed. Incomes also rose 0.4% as worker pay climbed the most in three months. (Source: Bloomberg)
E.U: ECB officials are said to assume QE will end in short taper. European Central Bank policy makers are sticking to the assumption that their bond-buying program will be wound down over about three months rather than brought to a sudden halt, according to euro-area officials familiar with the matter. Even the more-hawkish members of the Governing Council, who are pushing for policy language that would signal the end of crisis-era stimulus measures, endorse a gradual slowing of asset purchases after the latest extension concludes in September, the officials said, citing informal discussions. They asked not to be identified as the deliberations are confidential, and noted that no decision has been taken. (Source: Bloomberg)
U.K: Consumer confidence increases as New Year brings hope. Britons are starting 2018 with renewed optimism as a measure of consumer confidence rose by the most in a year in January. The jump was driven by the biggest increase in households' assessment of their financial position in the past month since November 2014, according to YouGov and the Centre for Economics and Business Research. The firms' overall index of sentiment climbed to 108.2 in January, from 107.1 previously. The nation has had a number of reasons to be cheerful this month, ranging from better-than-expected growth and a slight easing of inflation. The pound gained on speculation that a Brexit deal can be reached. Still, the U.K. is far from out of the woods, with the headline measure of confidence still below the 109.8 level it was at in January 2017. Expectations for house prices and job security over the next 12 months all fell, according to the survey. (Source: Bloomberg)
Japan: Consumer spending softens, labor market remains. Japan's consumer spending declined slightly in December while retail sales rose more than expected. The labor market remained around the tightest level in decades. Household spending fell 0.1% YoY. The unemployment rate edged up to 2.8%. The job-to-applicant ratio rose to 1.59. Retail sales rose 0.9% from November. Sales climbed 3.6% YoY in December. (Source: Bloomberg) | |
| | | | | Other News:
Prestariang: Bags contract extension worth MYR222.6m from finance ministry. Its wholly owned subsidiary, Prestariang Systems S/B, has received a letter of award from the Ministry of Finance for the extension of contract to supply of Microsoft software licences, products and services under MLA 3.0 to all government agencies and Institut Latihan Awam (Public Training Institute) in Malaysia. The extension of contract, worth MYR222.6m, is for three years, from Feb 1, 2018 until Jan 31, 2021. (Source: The Sun Daily)
SMTrack: To implement vessel fuel intelligent tracker system globally with new partner. The group is partnering with VFTech S/B to market and operate the latter's marine vessel fuel intelligent tracking system (Vessel-FIT), which has a real-time, worldwide tracking capability. Under the agreement, SMTrack and VFTech will form a 51:49 joint venture. VFTech will provide technological know-how in the maritime business while SMTrack said it would share its marketing and networking skills, and experience. (Source: The Edge Financial Daily)
HLT Global: Buys HL Rubber for MYR33m. The group is is planning to acquire a majority stake in a rubber glove maker to diversify its income stream. It had entered into a head of agreement (HOA) with Suntel International Co Ltd and two other individuals to purchase a 55% stake in HL Rubber Industries S/B for MYR33m. (Source: The Star) | |
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