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| | | | | | | | | | | | | | Share Price: | MYR1.67 | Target Price: | MYR2.15 | Recommendation: | Buy | | |
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| | | A positive surprise | | After two years of losses, TCM has finally turned around, recording a core net profit of MYR7m in 1Q18 – above expectations. 1Q18 was mainly lifted by (i) MYR's strength and (ii) better sales mix. Looking ahead, with new model launches (i.e. Serena S Hybrid) to boost sales and a persistent MYR strength to contain imported costs, we have turned more upbeat on TCM's earnings recovery, lifting FY18/19/20E earnings by 55%/16%/4%. Our TP is unchanged at MYR2.15, pegged to 0.5x 2017 P/NTA (-1SD). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,460.8 | 4,341.2 | 4,465.2 | 5,064.0 | EBITDA | 158.9 | 95.7 | 224.6 | 265.2 | Core net profit | (48.4) | (74.4) | 34.8 | 79.1 | Core EPS (sen) | (7.4) | (11.4) | 5.3 | 12.1 | Core EPS growth (%) | nm | nm | nm | 127.5 | Net DPS (sen) | 2.0 | 2.0 | 2.0 | 2.0 | Core P/E (x) | nm | nm | 31.4 | 13.8 | P/BV (x) | 0.4 | 0.4 | 0.4 | 0.4 | Net dividend yield (%) | 1.2 | 1.2 | 1.2 | 1.2 | ROAE (%) | (1.9) | (3.1) | 1.2 | 2.8 | ROAA (%) | (0.9) | (1.4) | 0.6 | 1.4 | EV/EBITDA (x) | 16.8 | 23.8 | 10.8 | 9.0 | Net debt/equity (%) | 51.2 | 47.7 | 46.5 | 43.7 |
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| | | | | | | | | | | | Share Price: | MYR0.37 | Target Price: | MYR0.39 | Recommendation: | Hold | | |
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| | | 1Q18F looking good | | AirAsia X's 1Q18 results (out on 22 May) is looking promising on high load factors achieved of 83.9% (flat YoY) and strong resurgence in cargo market. We estimate a core net profit of MYR37.5m (+52% YoY, -63% QoQ), which we deem as in-line with expectations. We keep our earning forecasts, HOLD call and TP of MYR0.385 pending the actual 1Q18 results. The rising jet fuel price is an earnings downside risk. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,006.5 | 4,562.0 | 4,765.5 | 5,328.2 | EBITDAR | 1,235.6 | 1,196.9 | 1,302.6 | 1,465.7 | Core net profit | 205.5 | 85.5 | 133.6 | 200.4 | Core EPS (sen) | 5.0 | 2.1 | 3.2 | 4.8 | Core EPS growth (%) | nm | (58.4) | 56.3 | 50.0 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | 7.5 | 18.0 | 11.5 | 7.7 | P/BV (x) | 1.4 | 1.6 | 1.4 | 1.2 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 29.3 | 10.2 | 14.1 | 17.4 | ROAA (%) | 4.8 | 1.9 | 2.9 | 3.4 | EV/EBITDAR (x) | 1.8 | 1.5 | 2.1 | 3.0 | Net debt/equity (%) | 68.5 | 39.4 | 107.3 | 211.3 |
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| | MACRO RESEARCH | | | | | | ASEAN Equities: Selling Pressure still at Large
by Nik Ihsan Raja Abdullah |
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| | | | | | Last week, we had expected MXSO Index to bounce higher (refers to Regionals Traders' Almanac dated 14 May 2018). Momentum however was weaker-than-expected, and the index has now violated the 836.00 support. It seems that the bear is now gaining strength, and there is still risk to the downside. With both RSI and Stochastic indicators pointing south, there is a high possibility that MXSO Index may ease towards the lower support at 830.00. | |
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| NEWS | | | Outside Malaysia:
U.K: London housing slump deepens as Brexit slows U.K. property. London remains a weak spot in the slowing U.K. housing market as Brexit clouds the outlook, reports showed. The capital had an annual price decline of 0.2% in May, property website Rightmove said. Separately, Acadata reported that in April London was the only region showing an annual fall, clocking in a 2.5% drop. Overall, national price growth stood at 1% compared with a 9% high reached in 2016, Acadata said. Uncertainty surrounding Britain's exit from the European Union has hit London the hardest. At the national level, years of rampant home-price inflation and a shortage of properties for sale have also pushed ownership out of reach for many would-be homeowners. (Source: Bloomberg)
China: Will "significantly increase purchases" of U.S. goods, the White House said as Beijing's special envoy at talks in Washington declared a trade war has been averted between the world's two largest economies. A joint statement released by the White House following the talks didn't place a dollar figure on the increased purchases by China, or address a comment by President Donald Trump's top economic adviser suggesting Beijing had agreed to slash its annual trade surplus with the U.S. by USD200b. Vice Premier Liu He, a special envoy of China's President Xi Jinping, told reporters in Washington that talks with Treasury Secretary Steven Mnuchin, Secretary of Commerce Wilbur Ross and U.S. Trade representative Robert Lighthizer ended with a pledge not to engage in a trade war, according to a Xinhua news agency report. Liu said both sides agreed to stop "slapping tariffs" on each other and called his visit "positive, pragmatic, constructive and productive," Xinhua reported. Cooperation will be enhanced in such areas as energy, agriculture, health care, high-tech products and finance, a "win-win" choice for both nations. The statement said China agreed to "meaningful increases in U.S. agriculture and energy exports" with details to be worked out later. (Source: Bloomberg)
Japan: Exports picked up in April after lackluster data the previous month, despite friction with the U.S. and between the U.S. and China, Japan's two biggest trading partners. The value of exports rose 7.8% in April from a year earlier, while Imports rose 5.9% compared to same month previous year. The trade balance was a JPY626b surplus (USD5.6b). The data cover the first full month after the implementation of U.S. tariffs on steel and aluminum imports in March. (Source: Bloomberg) | |
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Kumpulan Perangsang Selangor. Unit gets MYR25m supplier contract extension. Its 51%-owned unit Aqua-Flo S/B has received a letter of extension to supply chemicals to water treatment plants operating under the Air Selangor Group, for a further period of five and a half months. It said estimated sums for the projects during the extended period will amount to MYR25.08m. (Source: The Edge Financial Daily)
Minho: To buy Klang land for MYR19.6m to expand timber storage facilities. Minho, which provides kiln-drying services, has proposed to acquire a 5.02-acre piece of industrial land in Kapar, Klang for MYR19.6m, as it seeks to expand its timber storage facilities. Its unit Victory Enterprise S/B had signed a sales and purchase agreement with Preferred Plot S/B to buy the land, which is adjacent to its existing factory. (Source: The Edge Financial Daily)
Ho Hup Construction: To revive earnings with MYR1.7b launches planned for FY18. The group said it will unveil property projects worth MYR1.7b for this financial year ending Dec 31, 2018, after holding off new launches in the past few years. "It is quite a big endeavour. But we think that the [weak] sentiment is towards the end of the cycle, and that has improved tremendously in the last couple of months, more so now with the results of the general election," its chief executive officer Datuk Derek Wong Kit Leong told a Press conference after the group's annual general meeting. (Source: The Edge Financial Daily) | |
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