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| | | | | | | | | | | | | | Share Price: | MYR5.71 | Target Price: | MYR7.10 | Recommendation: | Buy | | |
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| | | 1Q18 short-fall on raw material cost | | 1Q18 core net profit of MYR242m (-18.8% YoY, -38.6% QoQ) was below ours and consensus making up 17.2% of our full-year forecast. Raw material cost has spiked and this has eaten into margin as product prices rose slowly with a lag-effect. Underlying demand remains strong on tight global supply-demand and margins should improve in 2Q18 as ASPs have caught-up of late. We lower FY18E core net profit by 7% and our new TP is MYR7.10 based on an unchanged 6.5x 2018 EV/EBITDA. Maintain BUY. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 8,136.6 | 7,824.3 | 10,568.7 | 11,373.5 | EBITDA | 2,193.0 | 1,568.7 | 2,085.0 | 2,438.0 | Core net profit | 1,396.5 | 1,091.9 | 1,304.8 | 1,518.5 | Core EPS (sen) | 80.8 | 55.0 | 57.4 | 66.8 | Core EPS growth (%) | 123.1 | (32.0) | 4.5 | 16.4 | Net DPS (sen) | 6.9 | 23.0 | 18.9 | 22.0 | Core P/E (x) | 7.1 | 10.4 | 9.9 | 8.5 | P/BV (x) | 1.2 | 1.0 | 1.1 | 1.0 | Net dividend yield (%) | 1.2 | 4.0 | 3.3 | 3.9 | ROAE (%) | 18.6 | 10.9 | 11.0 | 11.9 | ROAA (%) | 16.7 | 9.7 | 9.6 | 10.3 | EV/EBITDA (x) | na | 3.7 | 5.0 | 4.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | Share Price: | MYR3.96 | Target Price: | MYR4.60 | Recommendation: | Buy | | |
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| | | FPSO Layang charter details revealed | | FPSO Layang charter is positive to Yinson, for it will contribute at least MYR50m p.a. in net profit from FY21 and add 30sen to NPV/shr (based on firm charter). We do not rule out further job wins favouring Yinson in the mid-term. Tender prospects are strong, on improving capex cycle and oil price. We raise FY21 earnings forecast. Our revised TP of MYR4.60 is SOP-based. | | |
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| | 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) | 19.3 | 12.6 | 14.7 | 15.5 | P/BV (x) | 1.8 | 1.6 | 1.5 | 1.4 | 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 | 8.3 | 8.0 | Net debt/equity (%) | 114.7 | 90.1 | 72.9 | 57.3 |
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| | SECTOR RESEARCH | | | | | | Stable loan growth in March | NEUTRAL
by Desmond Ch'ng |
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| | | | | | While loan growth was stable at about 4.4% YoY in March 2018, we will be monitoring trends in loan applications and approvals, where there is some weakness in momentum. We maintain our industry loan growth forecast of 4.5% for 2018 (4.1% in 2017) and our Neutral call on the sector, with Alliance Bank, HLFG and BIMB being our BUYs. | |
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| | MACRO RESEARCH | | | | | | Fund Flows & Lookouts
by Chew Hann Wong |
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| | | | | | April 2018 saw foreign investors returning as net buyers of Malaysia equities at e.MYR1.5b, which brings 2018 YTD (Jan-Apr) net buy to e.MYR3.5b. Daily trading activities slowed towards end April and we expect this to persist in the run-up to GE14 polling day (9 May). GE14 outcome will, in turn, determine the market's immediate direction. We make no change to our end-2018 KLCI target of 1,880 for now. | |
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| | | | | | Up on higher deposit growth
by Suhaimi Ilias |
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| | | | | | Money supply (M3) growth quickened to +5.9% YoY in Mar 2018 (Feb 2018: +4.8% YoY), driven by faster deposit growth (Mar 2018: +4.9% YoY; Feb 2018: +3.8% YoY) and rise in external reserves (end- Mar 2018: USD107.8b; end-Feb 2018: USD103.7b) amid moderation in net private credit growth (Mar 2018: +6.8% YoY; Feb 2018: +7.4% YoY). | |
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| | | | | | Hang Seng Index: Potential Breakout from Triangle Pattern
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI rose 6.90pts to 1,870.34 on Monday, led by gains in PBK, SIME and GENT. Easing geopolitical risks and stronger corporate earnings in the US helped spur blue chip stocks. Broader market, however, remained lackluster, with losers outpacing gainers by 411 to 401. A total of 1.70b shares worth MYR1.84b changed hands. As Malaysia's GE14 looms, trading could be choppy in the near-term. All eyes will also be on the US FOMC Meeting. | |
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| NEWS | | | Outside Malaysia:
U.S: Factory gauge dips to nine-month low as prices pick up. U.S. manufacturing expanded last month at the slowest pace since July, while prices paid for materials continued to accelerate amid supply constraints and tariff concerns, data from the Institute for Supply Management showed. Factory index fell to 57.3 from 59.3; readings above 50 indicate expansion. Measure of production declined to 57.2 from 61; lowest level since November 2016 and biggest drop in a year. Prices-paid gauge rose for fifth consecutive month to 79.3, the highest since April 2011, from 78.1. (Source: Bloomberg)
U.S: Factory managers fuming as Trump tariffs add to headaches. Very concerning. Two products eliminated. Commodity prices rising. Business planning "is at a standstill." That's what a few American manufacturers said they're facing as the Trump administration weighs tariffs on imported metals and Chinese products, creating uncertainty for companies that by most other accounts are going gangbusters. The threats of a trade war are worsening the headaches for factories already struggling to find the workers, supplies and delivery trucks to keep up with robust demand, according to a report by the Institute for Supply Management. Overall, the ISM survey several showed the industry remains in a healthy, if constrained, expansion. "Business is off the charts," according to a transportation equipment maker, while a producer in the computer and electronics sector said the "new-order rate exceeds shipment rate." (Source: Bloomberg)
U.S: Downplays prospects of breakthrough in China trade meetings. The Trump administration sought to temper expectations for a swift breakthrough on trade issues with China as a delegation of senior U.S. officials prepares to visit Beijing this week. "It's a big, big challenge. There's a very different system over there and it's a system that in all honesty has probably worked pretty well for the Chinese," Trade Representative Robert Lighthizer said at an event at the U.S. Chamber of Commerce in Washington. "It has not worked well for us." The U.S. and China could "spend the next year developing how we deal with each other over a period of time," Lighthizer said. "You end up learning how to deal with it, how to kind of manage it, between the two of you, and we're in the early stages of that," he said. (Source: Bloomberg)
Turkey: Cut deeper into junk by S&P on risk of 'hard landing'. Turkey's credit rating was lowered by S&P Global Ratings, which cited deteriorating inflation outlook and the long-term depreciation and volatility of the nation's exchange rate. S&P reduced its foreign currency rating to BB-/B, on par with Brazil and Vietnam, according to a statement. That's below where it's rated by Moody's Investors Service and Fitch Ratings. "There is a risk of a hard landing for Turkey's overheating, credit-fueled economy," S&P said in the statement. "This is reflected in the rising imbalances in Turkey's economy, most notably in its widening debt-financed current account deficit and high inflation." (Source: Bloomberg)
Crude Oil: OPEC production dips as group keeps over-delivering on cuts deal. OPEC continues to over deliver on its production cuts, with output falling further last month as the group nears its goal of rebalancing the oil market. The cartel pumped 31.93 million barrels a day, down from a revised 31.97 million in March, a Bloomberg News survey of analysts, oil companies and ship-tracking data found. OPEC and a group of non-OPEC oil producers led by Russia are well into their second year of an agreement that's boosted prices to the highest since 2014. (Source: Bloomberg) | |
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Censof: Bags MYR73m contract from HRDF. The group has bagged a contract worth MYR73.3m to implement an integrated core and finance system for the Human Resources Development Fund. Censof said the five-year contract took effect on April 25. (Source: The Edge Financial Daily)
MISC: Takes delivery of final LNG carrier. The group has taken delivery of Seri Cemara, the last of five new liquefied natural gas (LNG) carriers, from South Korea's Hyundai Heavy Industries Co Ltd. The vessel will be chartered to Petroliam Nasional Bhd (Petronas) for the next 15 years, upon delivery. MISC said the 150,200 coal-bed methane LNG carrier is part of the group's long term fleet expansion programme to cater to the energy transportation needs of Petronas. The delivery of Seri Cemara brings the current number of MISC's LNG fleet to 29 vessels. (Source: The Edge Financial Daily)
YKGI: YKGI,Ajiya ink deal for partnership in East Malaysia. YKGI Holdings, whose net profit jumped 51 times for the first quarter ended March 31, 2018, has inked a subscription cum shareholders agreement with Ajiya Bhd to form a joint venture (JV) company known as Asteel Ajiya S/B in East Malaysia. This JV will involve the manufacturing and sale of safety glass, supply and installation of Ajiya Green Integrated Building System and trading of metal door frame, window frame, metal ceiling and sunshade products in East Malaysia. (Source: The Sun Daily) | |
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