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| | | | | | | | | | | | | | Share Price: | MYR1.01 | Target Price: | MYR1.35 | Recommendation: | Buy | | |
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| | | Operationally stable | | We remain positive on MQREIT's fundamentals as earnings growth is still largely backed by long-term tenants, despite having some occupancy risks from upcoming leases expiries. Our earnings forecast and DDM-TP of MYR1.35 (cost of equity: 7.6%) are intact. MQREIT has the highest CY18E net DPU yield of 7.8% within our M-REITs coverage (sector: 6.2%). | | |
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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 | 98.2 | DPU (sen) | 7.5 | 7.6 | 7.8 | 7.2 | DPU growth (%) | 8.8 | 0.1 | 2.8 | (6.7) | Price/DPU(x) | 13.4 | 13.4 | 13.0 | 13.9 | P/BV (x) | 0.5 | 0.8 | 0.8 | 0.8 | DPU yield (%) | 7.5 | 7.5 | 7.7 | 7.2 | ROAE (%) | 5.6 | 5.1 | 6.6 | 6.6 | ROAA (%) | 3.0 | 3.8 | 4.0 | 4.1 | Debt/Assets (x) | 0.4 | 0.4 | 0.4 | 0.4 |
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| | | | | | | | | | | | Share Price: | SGD1.14 | Target Price: | SGD1.46 | Recommendation: | Buy | | |
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| | | Stay in the game | | Since GENS reported 4Q17 EBITDA fell 20% QoQ, its share price has tumbled 14%. Adjusting for normal VIP win rate and non-recurring items, 4Q17 EBITDA would have been 11% higher and a comfortable 24% of our FY18 forecast. In our view, all signals point to the VIP and mass markets improving going forward and GENS' current share price is unjustified as it implies 'crisis' valuations. Our unchanged SGD1.46 TP is based on 12x FY18 EV/EBITDA, in-line with the 9-year 12M forward EV/EBITDA mean. | | |
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| | FYE Dec (SGD m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,228.1 | 2,392.6 | 2,456.6 | 2,559.6 | EBITDA | 779.0 | 1,151.2 | 1,179.2 | 1,221.9 | Core net profit | 285.1 | 648.1 | 743.5 | 787.1 | Core FDEPS (cts) | 2.4 | 5.4 | 6.2 | 6.5 | Core FDEPS growth(%) | 7.1 | 127.1 | 14.7 | 5.9 | Net DPS (cts) | 3.0 | 3.5 | 3.5 | 3.5 | Core FD P/E (x) | 48.1 | 21.2 | 18.5 | 17.5 | P/BV (x) | 1.9 | 1.8 | 1.8 | 1.7 | Net dividend yield (%) | 2.6 | 3.1 | 3.1 | 3.1 | ROAE (%) | 7.3 | 8.2 | 9.8 | 9.9 | ROAA (%) | 2.4 | 6.2 | 7.7 | 8.1 | EV/EBITDA (x) | 8.9 | 11.3 | 8.9 | 8.2 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | FBMKLCI Index: Pre-election Rally or Dead Cat Bounce?
by Nik Ihsan Raja Abdullah |
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| | | | | | Easing trade war concerns lifted FBMKLCI 12.70pts higher at 1,849.71, extending its gains to three consecutive days. Advancers were led by PMAH, PCHEM and PETD. Broader market was positive with gainers outpacing losers by 702 to 249. A total of 2.21b shares worth MYR2.10b changed hands. Following the dissolution of parliament, FBMKLCI continued to ride on pre-election rally. Market, however, could remain volatile amid external uncertainties. | |
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| NEWS | | | Outside Malaysia:
U.S: Deficit to balloon beyond USD1tr by 2020, CBO says, as tax cuts and spending increases signed by President Donald Trump do little to boost long-term economic growth, according to the Congressional Budget Office. Spending will exceed revenue by USD804b in the fiscal year through September, jumping from a projected USD563b shortfall forecast in June, the non-partisan arm of Congress said in a report. In fiscal 2019, the deficit will reach USD981b, compared with an earlier projection of USD689b. The nation's budget gap was only set to surpass the trillion-dollar level. (Source: Bloomberg)
U.S: Trump hints at deal on Chinese trade as Xi readies response. President Donald Trump expressed optimism the U.S. will be able to reach a deal with China that diffuses trade tensions between the world's two biggest economies. Trump said his administration will "probably" come to an agreement with China to resolve a dispute that has roiled financial markets and raised fears of a major economic conflict between the nations. The U.S. is considering tariffs on as much as USD150b worth of Chinese imports, while China has vowed to respond with levies of its own on everything from U.S. soybeans to planes. The president said on it wouldn't be "nice" of Beijing to target American agriculture in retaliation. "Our farmers are great patriots. They understand they're doing this for the country," he told reporters at a cabinet meeting. "'We'll make it up to them." (Source: Bloomberg)
E.U: Investors are losing faith in the strength of the euro-area economy after a string of numbers that fell short of expectations. A monthly report from research group Sentix said their view of the economy has turned negative for the first time since July 2016. It said the downward dynamic was "even more pronounced" for Germany, where separate data showed a sharp drop in exports in February. The sudden weakness comes after the best year for euro-area economy in a decade, and has been blamed on a number of exceptional factors from bad weather to bottlenecks constraining the ability to handle additional demand. There's also the uncertainty surrounding the trade spat between U.S. President Donald Trump's administration and China. (Source: Bloomberg)
U.K: Consumer spending cools as snow keeps shoppers at home. U.K. household spending grew at the slowest pace in almost two years last month as freezing weather kept shoppers at home. Annual consumption growth slowed to 2%, the weakest since April 2016, Barclaycard said in a report. Spending in stores fell 1.9% as Britons opted for online shopping as the "Beast from the East" snowstorm engulfed the country. (Source: Bloomberg)
Singapore: Uncertainty index climbs as trade war clouds outlook. Rising U.S.-China trade tensions are raising alarm bells in export-reliant Singapore, with an index measuring economic uncertainty climbing to a five-month high in March. The Economic Policy Uncertainty Index for Singapore increased to 155 last month from 126 in February, showing the tariff threats are starting to make their mark. Yet there's still reason for calm. The index is at a relatively low level given last year's easing in policy and political uncertainty in Brazil, South Korea, France and the U.K., according to Steven Davis, an economist at the University of Chicago and one of the creators of the index. (Source: Bloomberg) | |
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Gamuda: SPLASH files suit against Syabas, seeks MYR4.21b. Gamuda's associate Syarikat Pengeluar Air Sungai Selangor S/B (SPLASH) has started legal proceedings against Syarikat Bekalan Air Selangor S/B (Syabas) for MYR4.21b owed. Its 40% owned SPLASH had served a writ together with a statement of claim on Syabas claiming the amount which was the outstanding receivables owed. SPLASH also sought interest on the outstanding Sum of each invoice at the rate of 1% plus the base lending rate of Malayan Banking (presently at 6.90% per annum) calculated on a daily basis from the date when such invoices are due for payment until the full payment of the same. (Source: The Star Online)
MAHB: Allocates MYR800m in KLIA Aeropolis DFTZ. Malaysia Airports Holdings (MAHB) has allocated MYR800m of its capital expenditure to build infrastructure, facilities, system and equipment for the 32.42-hectare Kuala Lumpur International Airport (KLIA) Aeropolis Digital Free Trade Zone (DFTZ), which is slated to be fully operational in the third quarter of 2020. KLIA Aeropolis DFTZ Park, dubbed the world's first e-world trade platform, was on track for site handover in August this year to the joint-venture company for facilities development. It is 20% completed and we foresee that the DFTZ will double KLIA's cargo volume to 1.5 million tonnes in the next 10 years from the current 700,000 tonnes per annum. The facility will encompass of 1.2 million square feet (sq ft) of gross floor area (GFA) for a cargo terminal, sorting centre, warehouse and operations office. (Source: The Star Online)
Ireka: Ireka, Japan's Hankyu Hanshin to develop MYR400m Nilai property project. Ireka Corp is partnering with Japan's Hankyu Hanshin Properties Corp to develop a property development project called Rimbun Kasia in Nilai, Negeri Sembilan, which carries a gross development value (GDV) of over MYR400m. Hankyu will take a 45% stake in its wholly owned subsidiary Meadowfield S/B, while Ireka will hold the remaining 55%. Ireka has signed a share purchase agreement with Hankyu for the proposed disposal of an 8.03% stake in Meadowfield for MYR6m. In addition, Ireka also signed a share subscription agreement with Hankyu for the subscription of a 45.26% stake in Meadowfield by Hankyu for MYR50.25m. The Rimbun Kasia project, which will be developed by Meadowfield, covers five parcels of residential project and one parcel of commercial project, over a 30.56-acre piece of land located in the town of Nilai. (Source: The Star Online)
Ikhmas Jaya: Bags 2 construction jobs worth MYR258m. Its wholly-owned Ikhmas Jaya S/B has been appointed as turnkey contractor by Naluri Rezeki S/B for the upgrading work at Kajang Hospital, Selangor, at a contract value of MYR198.98m. Under the contract, Ikhmas Jaya will design, construct, test, commission, maintain and complete the upgrading within 36 months, on a design-and-build basis. Separately, its subsidiary had, last Thursday, secured a construction contract from Putrajaya Ventures S/B, worth MYR58.75m. The 18-month contract, dubbed Package 1, includes the demolition of an existing three-storey office building with two basement levels and a two-storey bungalow on Lot 155, Jalan Ampang, Kuala Lumpur. (Source: The Edge Financial Daily)
FGV: Served with claims for MYR23.39m. Engineering services provider Fulle Technik S/B is claiming MYR23.39m from two subsidiaries of Felda Global Ventures Holdings for alleged breach of contractual obligations. Felda Global Ventures Research & Development S/B (FGVRD) and Felda Agricultural Services S/B (FAS) were served with Kuala Lumpur High Court writ of summons together with a statement of claim on April 5 by Fulle Technik. Besides the MYR23.39m, Fulle Technik is also claiming special damages, 5% interest per annum on general damages, 2.5% interest per annum on special damages, exemplary damages, 5% interest per annum on the judgment debt, cost incurred in respect of the suit and other reliefs. (Source: The Sun Daily) | |
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