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| | | | | | | | | | | | | | Share Price: | MYR15.04 | Target Price: | MYR16.00 | Recommendation: | Hold | | |
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| | | Starting strong | | 1Q18 results were ahead of expectations, although Tenaga under-recovered on generation costs. Concerns over the integrity of IBR's pass-through mechanism have heightened following the change in government. Our base case remains that a dismantling of the IBR framework is unlikely. Maintain HOLD with an unchanged MYR16.00 TP. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 44,531.5 | 63,244.0 | 48,768.0 | 49,984.6 | EBITDA | 14,794.2 | 20,667.5 | 15,541.3 | 16,184.4 | Core net profit | 7,725.8 | 9,341.6 | 6,571.2 | 6,692.0 | Core FDEPS (sen) | 136.9 | 164.6 | 115.8 | 117.9 | Core FDEPS growth(%) | 9.6 | 20.2 | (29.7) | 1.8 | Net DPS (sen) | 32.0 | 82.4 | 58.0 | 59.1 | Core FD P/E (x) | 11.0 | 9.1 | 13.0 | 12.8 | P/BV (x) | 1.6 | 1.5 | 1.4 | 1.3 | Net dividend yield (%) | 2.1 | 5.5 | 3.9 | 3.9 | ROAE (%) | 14.8 | 17.6 | 11.2 | 10.8 | ROAA (%) | 6.2 | 6.7 | 4.5 | 4.5 | EV/EBITDA (x) | 6.5 | 5.5 | 7.1 | 6.8 | Net debt/equity (%) | 32.6 | 43.9 | 40.2 | 36.8 |
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| | | | | | | | | | | | Share Price: | MYR0.30 | Target Price: | MYR0.33 | Recommendation: | Buy | | |
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| | | Leveraging on the recovering JU market | | UMWOG is renamed Velesto Energy, effective 25 May 2018. Velesto is more enthusiastic of the JU market now vs. a year ago. Tender pipeline in 2018 is on the rise on the back of a flat DCR setting. Optimising utilisation remains key. Velesto expects its JU utilisation to reach its peak in 2H18, capitalising on domestic demand, which would see it returning to the black this FY. That is in-line with our assessment of the JU market and Velesto's financials. Maintain BUY and MYR0.33 TP. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 321.1 | 586.5 | 675.5 | 698.0 | EBITDA | 79.0 | 234.3 | 301.8 | 316.8 | Core net profit | (309.7) | (140.3) | 12.3 | 21.9 | Core EPS (sen) | (14.3) | (1.7) | 0.2 | 0.3 | Core EPS growth (%) | nm | nm | nm | 77.8 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core P/E (x) | nm | nm | 196.4 | 110.4 | P/BV (x) | 0.3 | 0.9 | 0.9 | 0.9 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | (42.1) | (45.7) | 0.5 | 0.8 | ROAA (%) | (4.4) | (2.5) | 0.3 | 0.5 | EV/EBITDA (x) | 64.2 | 15.7 | 10.4 | 9.2 | Net debt/equity (%) | 142.3 | 43.6 | 26.1 | 17.5 |
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| | | | | | | | | | | | Share Price: | MYR2.52 | Target Price: | MYR3.10 | Recommendation: | Buy | | |
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| | | Value emerges | | 1Q18 results were in-line and hence, we maintain our EPS forecasts. However, given the uncertainty of mega infrastructure projects implementation, we reduce our TP to MYR3.10 (-19%) as we lower our 2018 PER target to 8x (from 10x, -0.5SD to mean). We upgrade AJR to BUY (from HOLD): (i) share price has fallen 35% YTD and the stock now trades at 12-mth fwd PER of only 6x, hence, we think it has already priced-in the negatives; (ii) 2Q18 earnings could be stronger YoY (but seasonally stronger QoQ). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 1,870.1 | 2,195.2 | 2,338.1 | 2,366.9 | EBITDA | 296.1 | 323.8 | 347.6 | 349.6 | Core net profit | 166.8 | 199.8 | 219.5 | 223.7 | Core EPS (sen) | 31.9 | 35.7 | 39.2 | 39.9 | Core EPS growth (%) | nm | 11.7 | 9.9 | 1.9 | Net DPS (sen) | 15.0 | 19.0 | 18.9 | 19.3 | Core P/E (x) | 7.9 | 7.1 | 6.4 | 6.3 | P/BV (x) | 1.2 | 1.1 | 1.0 | 0.9 | Net dividend yield (%) | 6.0 | 7.5 | 7.5 | 7.6 | ROAE (%) | 16.7 | 18.0 | 17.1 | 16.0 | ROAA (%) | 7.0 | 8.5 | 9.0 | 9.0 | EV/EBITDA (x) | 6.9 | 8.7 | 5.9 | 5.5 | Net debt/equity (%) | 84.6 | 64.3 | 53.9 | 41.5 |
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| | | | | | | | | | | | Share Price: | MYR1.39 | Target Price: | MYR1.57 | Recommendation: | Hold | | |
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| | | Briefing note (SDPR MK, CP MYR 1.39, HOLD, TP MYR1.57, Property) | | Key takeaways from SDPR's briefing include: 1) SDPR is keeping its 12MFY6/18 sales target of MYR2b despite slower sales in 3QFY6/18, 2) the development of MVV project will be put on hold pending further information from the new government on the HSR project and 3) mid-range landed properties will remain the focus while the disposal of non-core assets/land is ongoing. We adjust our earnings forecasts by 20-87% to factor in the change in FYE from June to December. Maintain HOLD. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,590.7 | 2,564.4 | 1,712.9 | 2,342.8 | EBITDA | 1,033.1 | 556.2 | 1,018.9 | 915.8 | Core net profit | 749.1 | 607.9 | 841.5 | 701.1 | Core EPS (sen) | 11.0 | 8.9 | 12.4 | 10.3 | Core EPS growth (%) | 33.6 | (18.8) | 38.4 | (16.7) | Net DPS (sen) | 0.0 | 0.0 | 4.9 | 4.1 | Core P/E (x) | 12.6 | 15.5 | 11.2 | 13.5 | P/BV (x) | 1.8 | 1.5 | 1.0 | 0.9 | Net dividend yield (%) | 0.0 | 0.0 | 3.6 | 3.0 | ROAE (%) | 18.2 | 10.7 | 10.5 | 7.1 | ROAA (%) | 6.2 | 4.5 | 5.9 | 4.6 | EV/EBITDA (x) | na | na | 10.5 | 12.7 | Net debt/equity (%) | 22.4 | 1.4 | 10.0 | 17.8 |
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| | | | | | | | | | | | Share Price: | MYR2.76 | Target Price: | MYR2.45 | Recommendation: | Sell | | |
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| | | Above expectations | | 9MFY6/18 core earnings was ahead of our expectations as the Logistic and Healthcare divisions surprised on the upside. Along with stronger order book visibility at the Industrial division, we lift FY18-20 earnings forecasts by 8%-9%, having adjusted our revenue and margin assumptions upwards for the respective divisions. Correspondingly, our SOP-based TP is raised to MYR2.45 (+9%). Despite a higher TP, we believe that SDB's near-term earnings growth potential has been fully priced in; SELL. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 29,452.0 | 31,087.0 | 33,234.0 | 34,926.1 | EBITDA | 1,471.0 | 1,319.0 | 1,691.4 | 1,888.7 | Core net profit | 807.7 | 933.0 | 856.3 | 882.2 | Core EPS (sen) | 12.8 | 13.7 | 12.6 | 13.0 | Core EPS growth (%) | (66.8) | 7.5 | (8.2) | 3.0 | Net DPS (sen) | 27.0 | 23.0 | 8.2 | 8.4 | Core P/E (x) | 21.6 | 20.1 | 21.9 | 21.3 | P/BV (x) | 0.5 | 0.5 | 1.5 | 1.4 | Net dividend yield (%) | 9.8 | 8.3 | 3.0 | 3.1 | ROAE (%) | 2.5 | 1.8 | 3.0 | 6.9 | ROAA (%) | 1.3 | 1.4 | 1.9 | 3.7 | EV/EBITDA (x) | 16.9 | 12.8 | 12.9 | 11.4 | Net debt/equity (%) | 36.3 | 2.8 | 14.8 | 11.6 |
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| | | | | | | | | | | | Share Price: | MYR6.26 | Target Price: | MYR7.00 | Recommendation: | Buy | | |
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| | | A Good Start despite FX drag | | 1Q18 core earnings were in line excluding a FX loss of MYR104m from USD cash balances. We cut FY18-20E EPS by 2% to account for higher start-up costs in China. Maintain BUY and SOTP TP of MYR7.00 with growth intact. All home markets continue to deliver healthy volumes and pricing, while the new Gleneagles HK (GHK) continued to ramp up and notably narrow its losses. IHH is confident of extracting long-term value for Fortis if it wins the deal and has a healthy pipeline of 665 new beds for 2018. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 10,021.9 | 11,155.6 | 12,328.6 | 14,202.0 | EBITDA | 2,188.9 | 2,795.9 | 2,585.5 | 2,950.0 | Core net profit | 866.0 | 608.3 | 898.3 | 1,048.6 | Core FDEPS (sen) | 10.5 | 7.4 | 10.9 | 12.7 | Core FDEPS growth(%) | (4.0) | (29.8) | 47.7 | 16.7 | Net DPS (sen) | 3.0 | 3.0 | 3.0 | 3.0 | Core FD P/E (x) | 59.7 | 85.0 | 57.6 | 49.3 | P/BV (x) | 2.3 | 2.4 | 2.3 | 2.2 | Net dividend yield (%) | 0.5 | 0.5 | 0.5 | 0.5 | ROAE (%) | 2.8 | 4.5 | 4.0 | 4.6 | ROAA (%) | 2.4 | 1.6 | 2.3 | 2.6 | EV/EBITDA (x) | 27.0 | 18.2 | 21.0 | 18.1 | Net debt/equity (%) | 21.1 | 2.8 | 3.7 | 0.6 |
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| | MACRO RESEARCH | | | | | | Dollar Tantrums & Original Sin
by Hak Bin Chua |
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| | | | | | The EM sell-off has been more discriminating in Asia, targeted at countries with current account deficits and reliant on external financing, particularly the Philippines, Indonesia and India. We detect an increase in "original sin" in Indonesia and the Philippines. Since the 2013 taper tantrums, Thailand and Indonesia have shown the biggest improvement in resilience indicators. Sell-offs in Indonesia, Thailand and Vietnam appear overdone in the current tantrums. | |
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| | | | | | ASEAN Equities: Rebound could be Temporary
by Nik Ihsan Raja Abdullah |
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| | | | | | MXSO Index violated the 830 support last week, hitting a new low of 822, but fell short of our second target at 818.00. Following the formation of a "Bullish Harami" candlestick pattern, which is a bullish reversal signal, the index could extend its recovery in the near-term. Note that RSI and Stochastic indicators also show positive readings. As the index swung back inside the Bollinger Band, we reckon that selling pressure has subsided. | |
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| | | | | | Sign of further GDP slowdown in 2Q18
by Suhaimi Ilias |
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| | | | | | Index of leading economic indicators slowed for the second consecutive month to +0.3% YoY in Mar 2018 (Feb 2018: +1.8% YoY). As we view the index leading GDP by 2-3 months, it implies slower 2Q 2018 real GDP growth after the economy moderated to +5.4% YoY in 1Q 2018 from +5.9% YoY in 4Q 2017. | |
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| NEWS | | | Outside Malaysia:
The Human Resources Ministry is looking into reducing the dependency on foreign workers, said its minister M. Kulasegaran. In his fourth official day as minister, Kulasegaran said the foreign workers policy was now subject to review as priority is to be given to local workers. "We will allow foreign workers out of necessity, (but) the priority is to be given to our workers, our people first," he told a press conference at the Industrial Court in Wisma Perkeso here Thursday (May 24). He was asked about the agreement made in 2016 between the previous administration and the Bangladesh government to bring in about 1.5 million Bangladeshi workers to Malaysia. Kulasegaran also said his ministry was already having meetings to review the minimum wage rate, which Pakatan Harapan pledged to gradually increase to RM1,500 a month. However, he said it may take some time to come up with concrete plans as the country's debts and finances have to be managed and looked into first. He confirmed that the Employment Insurance Scheme (EIS) would continue.
China: Industrial profit growth accelerates on higher output, snapping a streak of slowing expansion since October. Industrial profits advanced 21.9% YoY in April, versus a 3.1% YoY increase in March and 16.1% YoY in January and February combined. Total profits for the month were CNY 576.03b (USD 90.1b), the National Bureau of Statistics said. The acceleration was bolstered by higher output, rebounding factory inflation and improved profit margins particularly in the steel, chemical and auto industries, the bureau said in a separate statement. Industrial output climbed 7% YoY last month, though decelerating investment and retail sales signal a looming economic slowdown. (Source: Bloomberg)
Indonesia: Bank Indonesia's new Governor is wasting no time on rate hikes. Indonesia's new central bank governor is putting his stamp of authority on his role, calling an unscheduled policy meeting for Wednesday and setting the stage for a second interest rate increase in two weeks to stem a rout in the currency. A day after Governor Perry Warjiyo was sworn into office, Bank Indonesia announced the monetary policy board will meet this week, about a month before its next regular monthly scheduled one. The quick action reflects his pledge to be pre-emptive and ahead of the curve when it comes to policy. With the U.S. Federal Reserve set to raise interest rates next month and a selloff in global emerging markets intensifying, Bank Indonesia is seen increasing its benchmark rate by 25 basis points from 4.5%, according to nine of the 17 economists surveyed by Bloomberg. Others don't expect a rate move, but an expansion of macro-prudential measures to maintain stability. (Source: Bloomberg)
Crude Oil: OPEC and allies are said to have already cleared oil surplus. OPEC and allied oil producers including Russia concluded that the crude market re-balanced in April, when their output cuts achieved a key goal of eliminating the global surplus. The excess in oil inventories, which has weighed on prices for three years, plunged in April to less than the five-year average for stockpiles in developed nations, according to people with knowledge of the data assessed at the meeting of the Joint Technical Committee of OPEC and other producers last week in Jeddah, Saudi Arabia. The re-balance is sure to be the focus of a tense meeting between OPEC and its partners in the production cuts when they meet in Vienna next month. Top producers Saudi Arabia and Russia announced last week that the suppliers may boost output in the second half of the year. The trouble is, officials from several countries in the agreement, both inside OPEC and outside, said they disapproved of the proposal and saw difficulties in reaching a consensus. (Source: Bloomberg) | |
| | | | | Other News:
Malaysia Steel Works: Reports 26% lift in 1Q net profit on higher demand, prices. The group saw a 25.8% increase in net profit for the first quarter ended March 31, 2018 to MYR17.72m, compared with MYR14.08m a year ago, as it sold more products at higher selling prices. Revenue grew 24.7% to MYR434.8m from MYRM348.72m a year ago. The steel player attributed the increase in its revenue and profit to stronger domestic demand and the strengthening of local steel price, which helped boost its selling price and volume sold.(Source: The Edge Financial Daily)
My EG Services: Says not subject of any corruption investigation by MACC. The group has clarified that neither the company nor any of its directors was the subject of any investigation by the Malaysian Anti-Corruption Commission. "The board reiterates that the company is not the subject of any investigation whatsoever, past or present, being carried out by MACC on it or on any of its directors," MyEG said in a strongly-worded statement, which was filed with Bursa Malaysia today. (Source: The Edge Financial Daily) | |
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