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| | | | | | | | | | | | | | Share Price: | MYR9.12 | Target Price: | MYR8.11 | Recommendation: | Sell | | |
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| | | Long-long term story | | We have engaged with both MAVCOM and MAHB and conclude that NOBODY knows what the final regulated asset base (RAB) structure looks like as they are far off from an amenable solution. We think MAHB's share price will range-bound into 2019 when a clearer outlook on the framework should be at hand. We switch our valuation methodology to EV/EBITDA pegging MAHB to its historical mean of 10.5x (on 2018). Our new TP is MYR8.52 and MAHB is now upgraded to HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,172.8 | 4,652.3 | 5,266.0 | 5,294.1 | EBITDA | 1,488.9 | 1,679.9 | 2,106.3 | 1,916.9 | Core net profit | 48.2 | 153.6 | 436.2 | 508.4 | Core EPS (sen) | 2.9 | 9.3 | 26.3 | 30.6 | Core EPS growth (%) | nm | 218.6 | 184.1 | 16.5 | Net DPS (sen) | 0.0 | 9.8 | 9.0 | 12.0 | Core P/E (x) | 314.0 | 98.5 | 34.7 | 29.8 | P/BV (x) | 1.7 | 1.7 | 1.6 | 1.6 | Net dividend yield (%) | 0.0 | 1.1 | 1.0 | 1.3 | ROAE (%) | 0.8 | 2.7 | 8.2 | 6.1 | ROAA (%) | 0.2 | 0.7 | 2.0 | 2.4 | EV/EBITDA (x) | 9.4 | 10.5 | 8.5 | 9.0 | Net debt/equity (%) | 46.1 | 34.3 | 29.4 | 22.0 |
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| | | | | | | | | | | | Share Price: | MYR3.40 | Target Price: | MYR3.70 | Recommendation: | Hold | | |
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| | | Assessing US-China trade risk | | Westports' Jan-Feb 2018 throughput was on a steady recovery trajectory. Separately, despite escalating US-China trade tension, Westports' exposure to the Asia-America route is c.8%. While the value of US-China trade potentially affected is e.1.2% of total US-China trade, a full-blown trade war is likely to undermine global trade and affect Westports' throughput. We maintain our earnings forecasts, HOLD call and DCF-derived TP of MYR3.70 (WACC: 7.2%, 2025-2054 growth rate: 2%). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,804.3 | 1,715.9 | 1,811.2 | 1,957.0 | EBITDA | 963.5 | 953.7 | 990.0 | 1,090.9 | Core net profit | 616.6 | 675.5 | 544.4 | 621.4 | Core EPS (sen) | 18.1 | 19.8 | 16.0 | 18.2 | Core EPS growth (%) | 22.1 | 9.6 | (19.4) | 14.1 | Net DPS (sen) | 14.0 | 14.3 | 12.0 | 13.7 | Core P/E (x) | 18.8 | 17.2 | 21.3 | 18.7 | P/BV (x) | 5.6 | 5.1 | 4.8 | 4.5 | Net dividend yield (%) | 4.1 | 4.2 | 3.5 | 4.0 | ROAE (%) | 32.1 | 30.0 | 23.2 | 25.0 | ROAA (%) | 14.7 | 14.3 | 10.5 | 11.7 | EV/EBITDA (x) | 16.0 | 14.2 | 12.5 | 11.2 | Net debt/equity (%) | 35.3 | 41.3 | 33.5 | 25.8 |
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| | MACRO RESEARCH | | | | | | Calendar effect on industrial output
by Suhaimi Ilias |
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| | | | | | Industrial production index growth slowed to +3.0% YoY in Feb 2018 from a revised +5.4% YoY in Jan 2018 (+3.0% YoY previously as the index was rebased to 2015 from 2010). MoM drop was a sharp -10.4% (Jan 2018: +1.5% MoM) reflecting the calendar effect of Lunar New Year holidays in the short month of Feb 2018. | |
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| | | | | | Exports down, imports surge, trade deficit widens
by Suhaimi Ilias |
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| | | | | | Exports fell -1.8% YoY in Feb 2018 (revised Jan 2018: +3.5% YoY), imports jumped by +18.6% YoY (Jan 2018: +11.4% YoY) and trade deficit remained above USD3b (Feb 2018: -USD3.06b; Jan 2018: -USD3.16b) for the fourth month in a row. Latest manufacturing PMI readings from Mar 2018 highlights turnaround in new exports orders which suggest that current downturn in exports should be short-lived. | |
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| | | | | | Brent Crude Oil: Going Into Fifth Gear
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI extended its gains to five consecutive days after rising 8.91pts yesterday. At day's end, the index inched 0.48% higher at 1,869.89, led by gains in ASTRO, SIME and PMETAL. Market breadth remained positive with gainers outpacing losers by 736 to 322. Volume was higher with 4.65b shares worth MYR3.21b changed hands. As geopolitical tensions take center stage, expect market to turn jittery today. | |
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| NEWS | | | Outside Malaysia:
U.S: Fed leans toward faster rate hikes as trade war poses risks. Federal Reserve officials leaned toward a slightly faster pace of policy tightening at their March meeting as their growth outlook and confidence in hitting their inflation target strengthened, according to minutes of the gathering released. A number of officials viewed a stronger economic outlook and greater confidence for higher inflation implying "the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected," the Federal Open Market Committee said in the records of its March 20-21 meeting. The minutes showed U.S. central bankers wrestling to match a policy to an economy that is receiving a boost from tax cuts and government spending at a time when unemployment is low and growth, by their estimate, is above its long-run speed limit. (Source: Bloomberg)
U.S: Core inflation gets long-awaited bump as phone drag fades. A key measure of U.S. inflation finally got a bump in March thanks to a fading drag from mobile-phone service costs, bearing out the Federal Reserve's forecast for a pickup in price gains. Excluding food and energy, the core consumer-price index rose 2.1% YoY from March 2017, after a 1.8% YoY gain in February, a Labor Department report showed. Including all components, the CPI was down 0.1% MoM from February on a drop in gasoline costs; overall prices were up an annual 2.4% YoY, also the biggest advance in a year. About half of the acceleration in annual core CPI came from the mobile-phone services category as last year's unusual weakness dissipated. That helps reinforce the view of policy makers that inflation had been weighed down by transient factors. Altogether, the data support Fed expectations that its preferred gauge of prices -- a separate consumption-based figure from the Commerce. (Source: Bloomberg)
U.K: Manufacturing shrank for the first time in 11 months in February, led by output of machinery and equipment. Factory production declined 0.2% MoM from January, when output was unchanged, the Office for National Statistics said. Overall industrial production rose a smaller-than-forecast 0.1% as below-average temperatures boosted demand for energy. It brings to an end an unprecedented run for manufacturers that has helped to underpin the economy as the squeeze from rising prices takes its toll on consumer spending. (Source: Bloomberg)
China: Consumer price index rose 2.1% YoY in Mar 2018, slower than the 2.9% YoY rise in February as it came in below the government's 3% target for this year. On a month-on-month basis, the CPI fell 1.1%, reversing a 1.2% gain in February. March's reading was probably distorted by the Lunar New Year holiday, which was in February this year. Prices tend to drop for a couple of months after the holiday. That trend suggests CPI inflation may slow further in April. Looking at the breakdown of the CPI, both food and non-food inflation eased. Food inflation slowed to 2.1% YoY from 4.4% YoY in February. Non-food inflation declined to 2.1% YoY from 2.5% YoY. (Source: Bloomberg) | |
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Sapura Energy: Sapura Energy, partners to develop Sarawak's SK408 gas fields. Its wholly-owned subsidiary Sapura Exploration and Production (Sarawak) Inc, Petronas Carigali S/B and Sarawak Shell Bhd have taken the final investment decision (FID) to develop Sarawak's Gorek, Larak and Bakong gas fields under phase one of the SK408 production sharing contract. The FID follows Petronas' approval for the field development plan. It also follows the signing of the key terms to the gas sales agreement for phase one of the SK408 gas field development. Sapura E&P is the development and production operator of the Larak and Bakong fields while Sarawak Shell is the development and production operator of the Gorek field. (Source: The Edge Financial Daily)
Fitters Diversified: To supply pipes for Felda water project in Pahang. Its subsidiary, Molecor S/B has been appointed as the strategic supplier of HYPRO® PVC-O pipes for Felda Water's MYR57.9m project in Pahang. The project awarded by the Ministry of Energy, Green Technology and Water to Felda Water, entails the installation and commissioning of main and distribution pipelines to supply treated water to 14 orang asli villages throughout five districts in Pahang, spanning 80km. (Source: The Sun Daily)
Cypark: Ties up with German firm on battery energy storage. The group is tying up with German-based 21st Century Clean Energy GmbH & Co KG to collaborate and cooperate in energy storage projects and to jointly expand their business opportunities in the area of renewable energy in Malaysia. Its wholly-owned subsidiary Cypark RE Store S/B has signed an MoU with 21st Century, which is the authorised German battery storage system developer and Tesvolt agent for Malaysia. The MoU is valid for two years with an option for extension. (Source: The Edge Financial Daily) | |
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