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| | | | | | | | | | | | | | Share Price: | MYR8.46 | Target Price: | MYR9.00 | Recommendation: | Hold | | |
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| | | 1Q18 above | | 1Q18 core net profit of MYR158.6m (+138% YoY) was above expectation at 36% of our full-year forecast. Revenue was boosted by a 2ppt YoY rise in the higher yielding international passenger mix to 48.1%. Unit cost decreased by 3.7% YoY on scalability benefits. We raise our FY18-20E earnings by 1.6%/3.7%/3.4%, factoring the higher international passenger mix and the stronger 1Q18. As such, our TP has been raised to MYR9.00 (+48sen) pegged to an unchanged mean of 10.5x 2018 EV/EBITDA. Maintain HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,172.8 | 4,652.3 | 5,576.5 | 5,476.9 | EBITDA | 1,488.9 | 1,679.9 | 2,366.6 | 2,092.0 | Core net profit | 48.2 | 143.2 | 443.1 | 527.6 | Core EPS (sen) | 2.9 | 8.6 | 26.3 | 30.6 | Core EPS growth (%) | nm | 197.2 | 204.6 | 16.5 | Net DPS (sen) | 0.0 | 9.8 | 9.0 | 12.0 | Core P/E (x) | 291.2 | 98.0 | 32.2 | 27.6 | P/BV (x) | 1.6 | 1.6 | 1.5 | 1.5 | Net dividend yield (%) | 0.0 | 1.2 | 1.1 | 1.4 | ROAE (%) | 0.8 | 2.7 | 8.7 | 6.1 | ROAA (%) | 0.2 | 0.7 | 2.0 | 2.4 | EV/EBITDA (x) | 9.4 | 10.5 | 7.1 | 7.5 | Net debt/equity (%) | 46.1 | 35.4 | 30.6 | 17.4 |
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| | | | | | | | | | | | Share Price: | MYR2.76 | Target Price: | MYR3.00 | Recommendation: | Hold | | |
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| | | A largely routine start | | GMB's results were in line, with the earnings variance seemingly volume-driven. Our base case remains that the IBR framework will continue, although it is unclear for now whether a tariff surcharge is required for 2H18. Maintain HOLD with an unchanged MYR3.00 TP. Risk-reward remains balanced presently. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 4,053.0 | 5,348.8 | 6,042.3 | 6,649.6 | EBITDA | 264.6 | 301.7 | 293.2 | 303.0 | Core net profit | 165.1 | 194.6 | 173.2 | 184.1 | Core EPS (sen) | 12.9 | 15.2 | 13.5 | 14.3 | Core EPS growth (%) | 55.6 | 17.9 | (11.0) | 6.3 | Net DPS (sen) | 12.9 | 13.0 | 13.5 | 14.3 | Core P/E (x) | 21.5 | 18.2 | 20.5 | 19.3 | P/BV (x) | 3.5 | 3.4 | 3.4 | 3.4 | Net dividend yield (%) | 4.7 | 4.7 | 4.9 | 5.2 | ROAE (%) | 16.6 | 18.8 | 16.5 | 17.5 | ROAA (%) | 7.7 | 8.5 | 7.1 | 7.0 | EV/EBITDA (x) | 10.2 | 12.3 | 11.4 | 10.9 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | | | | | | | | | | | Share Price: | MYR13.16 | Target Price: | MYR15.50 | Recommendation: | Buy | | |
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| | | 1Q18 results above expectations | | While 1Q18 results were above expectations, we maintain our forecasts in view of the slowdown in life sales and amid ongoing price competition in the general insurance space. Valuations, however, remain undemanding. Our SOP-derived TP is lowered to MYR15.50 (from MYR16.30) and we maintain our BUY call on Allianz. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Net earned premiums | 3,690.5 | 3,928.3 | 3,893.2 | 3,930.3 | Core profit (MYR m) | 312.1 | 288.0 | 317.1 | 346.9 | BVPS (MYR) | 8.3 | 4.1 | 4.5 | 5.0 | P/B (x) | 1.6 | 3.2 | 2.9 | 2.6 | EVPS (MYR) | na | na | na | na | PEV (x) | na | na | na | na | VNB (MYR) | na | na | na | na | VNB multiple (x) | na | na | na | na | ROE (%) | na | na | na | na | ROA (%) | 2.1 | 1.7 | 1.8 | 1.8 |
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| | | | | | | | | | | | Share Price: | MYR | Target Price: | MYR4.20 | Recommendation: | Buy | | |
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| | | Steady start to the year | | 1Q18 was in-line with ours/consensus FY18 earnings. YoY growth was supported by higher progress billing at Don Sahong and higher volume of lime products sold. Don Sahong's physical cumulative completion stands at 54.7% as of end-Mar 2018, on track to hit 80% completion by end-2018. Our earnings forecasts and RNAV-based TP of MYR4.20 remain unchanged. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 915.5 | 910.9 | 767.9 | 662.5 | EBITDA | 258.2 | 218.9 | 224.5 | 185.4 | Core net profit | 121.5 | 131.7 | 120.0 | 92.5 | Core EPS (sen) | 35.1 | 34.3 | 31.3 | 24.1 | Core EPS growth (%) | 90.1 | (2.4) | (8.9) | (22.9) | Net DPS (sen) | 5.0 | 4.0 | 2.0 | 2.0 | Core P/E (x) | 10.1 | 10.3 | 11.4 | 14.7 | P/BV (x) | 1.2 | 1.1 | 1.0 | 1.0 | Net dividend yield (%) | 1.4 | 1.1 | 0.6 | 0.6 | ROAE (%) | na | na | na | na | ROAA (%) | 8.7 | 7.7 | 5.8 | 3.7 | EV/EBITDA (x) | 2.7 | 7.4 | 9.2 | 13.4 | Net debt/equity (%) | net cash | 6.1 | 35.9 | 58.5 |
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| | | | | | | | | | | | Share Price: | MYR1.43 | Target Price: | MYR1.75 | Recommendation: | Buy | | |
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| | | Could have been better; the show has yet to begin | | 3QFY6/18 results disappointed due to slower work progress at its property developments but this ought to catch-up in the medium term. We opine that investors' focus ought to be on the Encore Melaka theatre that will premiere on 1 Jul 2018 and which we estimate will generate ~MYR50m in net profit p.a.. Our earnings estimates, BUY call and MYR1.75 SOP-TP are unchanged pending a briefing. We continue to like YTB as the best proxy to Melaka's booming tourism industry. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 17.9 | 85.4 | 298.5 | 663.3 | EBITDA | 2.1 | 18.6 | 64.8 | 182.4 | Core net profit | 0.9 | 13.7 | 39.8 | 120.1 | Core FDEPS (sen) | 0.5 | 3.2 | 5.4 | 16.4 | Core FDEPS growth(%) | (83.2) | 492.7 | 70.4 | 201.4 | Net DPS (sen) | 0.0 | 0.0 | 0.0 | 0.0 | Core FD P/E (x) | nm | 44.9 | 26.4 | 8.7 | P/BV (x) | 2.6 | 1.3 | 1.2 | 1.0 | Net dividend yield (%) | 0.0 | 0.0 | 0.0 | 0.0 | ROAE (%) | 1.0 | 6.9 | 11.1 | 25.7 | ROAA (%) | 0.7 | 3.9 | 5.3 | 11.2 | EV/EBITDA (x) | 72.4 | 29.8 | 14.3 | 4.7 | Net debt/equity (%) | net cash | net cash | 11.2 | net cash |
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| | | | | | | | | | | | Share Price: | MYR1.33 | Target Price: | MYR1.76 | Recommendation: | Buy | | |
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| | | Dividend yields of above 5% | | Given prevailing concerns over a stagnating civil service workforce, we are cutting our TP to MYR1.76 from MYR1.95, by discounting further our CY19 P/BV peg to 1x from 1.1x (CY19 ROE: 15.8%). Nevertheless, one has to bear in mind that RCE commands a market share of just about 1% of loans to the civil service and thus there is still room for growth. Valuations are unjustified with the stock trading at a prospective FY19 PER of just 5.1x and prospective dividend yield of 5.6%. BUY maintained. | | |
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| | FYE Mar (MYR m) | FY17A | FY18A | FY19E | FY20E | Operating income | 166.7 | 188.3 | 201.9 | 213.8 | Pre-provision profit | 123.6 | 147.0 | 156.9 | 166.7 | Core net profit | 73.7 | 88.7 | 92.1 | 95.0 | Core EPS (MYR) | 0.24 | 0.26 | 0.26 | 0.27 | Core EPS growth (%) | 94.0 | 8.8 | (0.6) | 3.2 | Net DPS (MYR) | 0.03 | 0.07 | 0.07 | 0.07 | Core P/E (x) | 5.6 | 5.1 | 5.1 | 5.0 | P/BV (x) | 1.1 | 0.9 | 0.8 | 0.7 | Net dividend yield (%) | 2.3 | 5.3 | 5.3 | 5.3 | Book value (MYR) | 1.16 | 1.46 | 1.62 | 1.82 | ROAE (%) | 16.4 | 18.5 | 16.8 | 15.5 | ROAA (%) | 4.5 | 5.0 | 4.8 | 4.6 |
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| | | | | | | | | | | | Share Price: | MYR0.83 | Target Price: | MYR0.91 | Recommendation: | Hold | | |
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| | | A weak start | | Tambun Indah (TI)'s 1Q18 net profit of MYR11m (-51% YoY) was within our expectations but below consensus. 1Q18 locked-in sales of MYR22m (-39% YoY) fell short due to the lack of new launches and cautious buying mode pre-GE14. Management is however keeping its sales target of MYR150m for 2018. We maintain our earnings forecasts and MYR0.91 RNAV-TP on an unchanged 0.3x P/RNAV peg. HOLD. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 360.8 | 282.1 | 252.9 | 253.7 | EBITDA | 145.8 | 113.4 | 70.7 | 71.7 | Core net profit | 107.0 | 83.4 | 54.1 | 55.2 | Core FDEPS (sen) | 24.9 | 19.2 | 12.5 | 12.7 | Core FDEPS growth(%) | 11.7 | (22.6) | (35.2) | 2.1 | Net DPS (sen) | 9.0 | 7.7 | 5.0 | 5.1 | Core FD P/E (x) | 3.3 | 4.3 | 6.6 | 6.5 | P/BV (x) | 0.7 | 0.6 | 0.6 | 0.6 | Net dividend yield (%) | 10.9 | 9.4 | 6.1 | 6.2 | ROAE (%) | na | na | na | na | ROAA (%) | 14.1 | 11.1 | 7.0 | 6.7 | EV/EBITDA (x) | 4.5 | 4.0 | 5.0 | 4.5 | Net debt/equity (%) | 10.2 | 2.0 | net cash | net cash |
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| | | | | | | | | | | | Share Price: | MYR1.50 | Target Price: | MYR1.24 | Recommendation: | Sell | | |
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| | | Some headwinds and tailwinds | | While the sales outlook has turned more positive, taking cue from the improvement in 1Q18 MIER CSI and with the near-term boost from zero-rated GST, we remain concern that this may not be able to offset the potential negative impact of the minimum wage hike in the medium term. We maintain our earnings forecasts, SELL call and TP of MYR1.24 (27x CY19 PER, about peer average). | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,103.4 | 2,187.1 | 2,289.1 | 2,459.8 | EBITDA | 126.6 | 140.0 | 140.3 | 155.3 | Core net profit | 54.0 | 51.0 | 47.6 | 56.4 | Core EPS (sen) | 4.4 | 4.2 | 3.9 | 4.6 | Core EPS growth (%) | (3.2) | (5.6) | (6.7) | 18.5 | Net DPS (sen) | 4.7 | 2.0 | 1.9 | 2.3 | Core P/E (x) | 34.0 | 36.0 | 38.6 | 32.6 | P/BV (x) | 52.2 | 24.8 | 18.8 | 14.6 | Net dividend yield (%) | 3.1 | 1.4 | 1.3 | 1.5 | ROAE (%) | 52.6 | 93.4 | 55.4 | 50.4 | ROAA (%) | 7.1 | 6.5 | 5.8 | 6.4 | EV/EBITDA (x) | 14.0 | 14.1 | 13.8 | 12.3 | Net debt/equity (%) | 188.2 | 157.2 | 102.6 | 62.4 |
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| | MACRO RESEARCH | | | | | | Brent Crude Oil: Downside Risk Likely to be Limited
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI plunged 21.56pts to 1,775.84 on Monday as foreign selling persisted. Big cap stocks were heavily sold down ahead of mid-week break. Decliners were led by ASTRO, SIME and IHH. Market breadth was negative with losers outpacing gainers by 600 to 360. A total of 2.18b shares worth MYR2.28b changed hands. As corporate earnings took center stage, coupled with softening oil price and the sluggish performance in Wall Street overnight, market will likely to stay volatile in the near-term. | |
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| NEWS | | | Outside Malaysia:
U.S: Trump ratchets up pressure on China with swerve on tariff plans. President Donald Trump said he's moving ahead with plans to impose tariffs on USD50 billion of Chinese imports and curb investment in sensitive technology, ratcheting up pressure on Beijing days before the next round of trade negotiations. In a statement, the White House said a final list of targeted imports will be released by June 15 and the tariffs will be imposed "shortly thereafter." It's the most specific the administration has been about the timing for the duties to take effect. The administration also said new restrictions on Chinese investment and enhanced export controls will be announced by June 30 and then implemented shortly after. China's commerce ministry responded hours later with a statement, saying it was surprised by the U.S. announcement and remains confident the country can protect its interests. (Source: Bloomberg)
U.S: Consumer confidence increases, bolstered by labour market. U.S. consumer confidence rose in May to a three-month high as a strong job market helped send views on the current state of the economy to the best in 17 years, according to figures from the New York-based Conference Board. Confidence index rose to 128 from downwardly revised 125.6 in April. Present conditions measure advanced to 161.7, highest since March 2001, from 157.5. Consumer expectations gauge increased to 105.6 from 104.3. (Source: Bloomberg)
U.S: Home prices in 20 cities increase more than forecast in March, driven by rising demand and a lack of inventory, according to S&P CoreLogic Case-Shiller data released. 20-city property values index increased 6.8% YoY, matching the YoY gain in February that was the largest since June 2014. National home-price gauge climbed 6.5% YoY, matching February's YoY advance that was the biggest since May 2014. Seasonally adjusted 20-city index rose 0.5% MoM after a 0.8% MoM gain. (Source: Bloomberg)
Italy: Bond rout driven by liquidity vacuum as buyers vanish. The free-fall in Italy's debt underscored that even one of Europe's biggest debt markets is subject to the traders' adage that liquidity often dries up just when you need it most. The country is struggling to form a government more than two months after its last parliamentary election and fear that populist parties could turn a repeat poll into a de facto referendum on euro membership have sent yields surging in Italy's EUR1.6tr (USD1.85tr) bond market. With liquidity thinned and a lack of willing market makers, the yield premium on 10-year notes over similar German securities climbed to 290 basis points, a level unseen since July 2013. The sheer size of the gyrations may also have provided further impetus, with financial institution risk models potentially prompting forced selling by some investors. (Source: Bloomberg)
Japan: Retail sales pick up in April, beating expectations. Retail sales rose 1.4% MoM in April from March, when they fell a revised 0.6% MoM. Sales increased 1.6% YoY. Sales at department stores and supermarkets fell 0.8% YoY. Japan needs stronger consumption to bolster a recovery that's depended heavily on exports. Wages have been growing as companies hire more permanent, full-time workers, giving households more purchasing power. Increased spending would make Japan's recovery more durable while also aiding Bank of Japan Governor Haruhiko Kuroda in his quest to generate 2% inflation. (Source: Bloomberg) | |
| | | | | Other News:
Kerjaya Prospek: Confident of achieving MYR1b order book target for FY18. The group, which recently secured a contract worth MYR357.3m, hopes to land more construction jobs to meet its internal replenishment order book target of MYR1b for the current financial year ending Dec 31, 2018. Currently, Kerjaya Prospek's construction division has 24 ongoing projects, with an outstanding order book of about MYR3.05b as at March 31 that will continue to provide clear earnings visibility for at least three years. (Source: The Edge Financial Daily)
Supermax: 3Q net profit jumps 70%, pays 3sen dividend. The group saw its net profit rise 69% to MYR33.38m in the third financial quarter ended March 31, 2018 from MYR19.75m a year ago on higher revenue, increased production capacity and improved operational efficiency. Earnings per share was 5.06sen versus 2.94sen previously. Quarterly revenue grew 6.1% to MYR327.07m from MYR308.23m a year ago, on the back of strong demand for gloves and higher output despite the weaker US dollar versus the ringgit. The group declared an interim dividend of 3 sen, payable on June 28. (Source: The Edge Financial Daily)
Lay Hong: 4Q net profit nearly doubles on higher revenue. Lay Hong's net profit nearly doubled to MYR10.99m in the fourth financial quarter ended March 31, 2018 from MYR5.68m a year ago, mainly due to higher revenue. Earnings per share stood at 1.76sen compared to 0.93sen previously. Quarterly revenue rose 28.8% to MYR224.62m from MYR174.35m a year ago. (Source: The Edge Financial Daily) | |
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