Monday, April 23, 2018

FW: [Maybank IB] Today's Research - Malaysia

 

 

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COMPANY
RESEARCH

Alliance Bank | Positioning for long-term growth
Desmond Ch'ng

Yinson Holdings | Signs MOU with Sumitomo
Thong Jung Liaw

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MACRO
RESEARCH

Malaysia | Continued strong rise in reserves
Suhaimi Ilias

Regional | ASEAN Equities: It's Just a Pullback
Nik Ihsan Raja Abdullah

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COMPANY RESEARCH

Malaysia

TP Revision

Alliance Bank (ABMB MK)
by Desmond Ch'ng

Share Price:

MYR4.48

Target Price:

MYR5.00

Recommendation:

Buy

Positioning for long-term growth

Initiatives in the pipeline are aimed at positioning the group for medium- to long-term growth, which management targets to be 10% per annum on average over the next two to three years. Positively, this should also sustain ROEs above 10% for the group over the medium term. With this in mind and with a very healthy capital position, we raise our TP to MYR5.00 (+30sen) on a higher CY19 PBV peg of 1.3x (1.2x previously). BUY maintained.

FYE Mar (MYR m)

FY16A

FY17A

FY18E

FY19E

Operating income

1,424.1

1,469.4

1,558.5

1,644.6

Pre-provision profit

735.2

777.5

794.3

857.9

Core net profit

522.0

512.1

516.2

555.5

Core FDEPS (MYR)

0.34

0.34

0.34

0.36

Core FDEPS growth(%)

(1.7)

(1.9)

0.8

7.6

Net DPS (MYR)

0.14

0.16

0.16

0.17

Core FD P/E (x)

13.1

13.4

13.3

12.3

P/BV (x)

1.4

1.3

1.3

1.2

Net dividend yield (%)

3.2

3.6

3.6

3.9

Book value (MYR)

3.17

3.35

3.52

3.71

ROAE (%)

11.2

10.3

9.8

10.1

ROAA (%)

1.0

0.9

0.9

1.0

Malaysia

Company Update

Yinson Holdings (YNS MK)
by Thong Jung Liaw

Share Price:

MYR4.01

Target Price:

MYR4.30

Recommendation:

Buy

Signs MOU with Sumitomo

Yinson's strategic partnership with Sumitomo, which is akin to the Modec-Mitsui and SBM Offshore-Mitsubishi collaborations, offers financial strength, and access to capital as Yinson takes on high capex projects (USD1b & above). This MOU is sentiment positive but earnings neutral for now, pending further details. Our TP is SOP-based.

FYE Jan (MYR m)

FY17A

FY18A

FY19E

FY20E

Revenue

764.2

910.2

1,113.4

1,114.1

EBITDA

283.8

645.0

771.4

771.7

Core net profit

219.5

341.6

294.0

279.2

Core EPS (sen)

20.6

31.4

26.9

25.5

Core EPS growth (%)

26.8

52.6

(14.3)

(5.1)

Net DPS (sen)

16.8

10.0

10.0

10.0

Core P/E (x)

19.5

12.8

14.9

15.7

P/BV (x)

1.8

1.7

1.6

1.5

Net dividend yield (%)

4.2

2.5

2.5

2.5

ROAE (%)

8.5

11.6

10.8

9.6

ROAA (%)

3.9

5.3

4.4

4.0

EV/EBITDA (x)

21.4

10.8

8.4

8.0

Net debt/equity (%)

114.7

90.1

72.9

57.3

MACRO RESEARCH

MY: Malaysia External Reserves, mid-Apr 2018

Continued strong rise in reserves
by Suhaimi Ilias

Economics Research

Total gross external reserves jumped +USD2.2b to USD110.0b at mid-Apr 2018, highest since end-Feb 2015, following the +USD4.1b surge in Mar 2018 (end-Mar 2018: USD107.8b; end-Feb 2018: USD103.7b), supported by capital, trade and corporate flows. The latest tally is equivalent to 7.7 months of retained imports and 1.1 times of short-term external debt.

RN: Regional Traders' Almanac

ASEAN Equities: It's Just a Pullback
by Nik Ihsan Raja Abdullah

Technical Research

After our analysis last week, MSCI AC ASEAN (PR) Index (MXSO Index) established a new up leg. On the daily chart, MXSO Index has climbed above the upper Bollinger Band, which is a bullish sign. There is, however, a minor resistance near the 61.8% Fibonacci Retracement level. Note that Stochastic is also showing some signs of exhaustion. Therefore, a short-term pullback is possible. In the immediate term, MXSO Index could retest the middle Bollinger Band and its 50-day EMA line.

NEWS

Outside Malaysia:

U.S: Hints at China truce as world warns of trade-war threat. U.S. Treasury Secretary Steven Mnuchin said he's considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing. Mnuchin said he's "cautiously optimistic" of reaching an agreement with China that bridges their differences over trade. "A trip is under consideration," Mnuchin told reporters in Washington at the IMF's spring meetings. "I'm not going to make a comment on timing, nor do I have anything confirmed." China's Ministry of Commerce said it is aware that the U.S. is considering a visit to Beijing to negotiate economic and trade issues and welcomes such a move. A visit by the U.S. Treasury secretary to China could signal a breakthrough in the spat between the world's two- biggest economies, whose threats to slap tariffs on each other have rattled markets and raised fears of a trade war. It would come at a sensitive time for the region's geopolitics, with negotiations under way on a planned meeting between President Donald Trump and North Korean leader Kim Jong-Un. (Source: Bloomberg)

China: PBOC Governor says country 'determined' in opening-up reforms. China has a specific timetable for opening up its financial sector and aims to put in place measures for opening before the end of this year, People's Bank of China Governor Yi Gang says in a statement. Remarks were made at the International Monetary and Financial Committee meeting in Washington April 20-21, according to the statement posted on PBOC's website. China will continue to uphold multilateralism, support a multilateral and open trade system, and advocate cooperation and dialogue according to Yi. (Source: Bloomberg)

South Korea: Governor Lee says BOK doing research on adding jobs to mandate. Bank of Korea is doing research on adding employment stability to its mandate of price stability, according to the central bank statement, citing Governor Lee Ju-yeol as telling reporters during his trip to Washington. Lee said the central bank remains cautious because with interest rate as the main tool; it's difficult to achieve multiple goals. Lee said it might be too much for the central bank to aim for both, financial stability and also employment stability. (Source: Bloomberg)

Crude Oil: Libya pipeline fire may crimp oil output amid fragile recovery. A fire at an oil pipeline supplying Libya's biggest export terminal may reduce the OPEC member's production by as much as 100,000 barrels a day, the National Oil Corp. said. The fire struck a valve along Waha Oil Co.'s pipeline to Es Sider port, the NOC said in a statement. The incident could crimp the North African nation's output by 70,000 to 100,000 barrels a day, it said. (Source: Bloomberg)

:

AirAsia: To increase flights within Sabah and Sarawak to grow domestic operations. The company sees room for expanding its domestic operations, which contribute about 40% to its revenue currently, with intercity flights within Sabah and Sarawak. CEO Riad Asmat, who recently took over the reins of the Malaysian unit, told SunBiz in an exclusive interview that the airline has a strong foothold in Sabah and Sarawak, but there are areas where it could "still serve". The airline which has hubs in state capitals Kuching and Kota Kinabalu, its busiest routes, will look into timings, putting in the right aircraft and rescheduling flights once it obtains approvals for the routes, which Riad declined to reveal. (Source: The Sun Daily)

Protasco: Projects at least 10% growth in FY18 profit.The company is confident of achieving a positive growth in its bottom line in 2018 after two years of shrinking profits , thanks to the government's spending on infrastructure and afordable housing. The executive vice chairman and group managing director, Datuk Seri Chong Ket Pen projects a minimum of 10% growth in Protasco's net profit for FY18, driven by higher government spending on infrastructure maintenance as well as a ordable housing for civil servants under the Perumahan Penjawat Awam 1Malaysia (PPA1M) scheme. Chong said the group has undertaken four phases of PPA1M, and is looking to secure the fifth and sixth phases. (Source: The Edge Financial Daily)

Federal Furniture: Expects profit to be construction-led. After more than five decades in the furniture business, construction is set to be the mainstay of the company following the completion of its acquisition of Pembinaan Masteron Sdn Bhd (PMSB). According to the managing director Datuk Choy Wai Hin, furniture will still be their business; but top-line and profit generator will be led by PMSB. He projected 75% of FFHB's turnover would come from construction in the furniture, and a significant portion of its furniture business would also be tied to construction (in the form of interior design jobs post-building). (Source: The Edge Financial Daily)

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