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| | | | | | | | | | | | | | Share Price: | MYR3.01 | Target Price: | MYR3.79 | Recommendation: | Buy | | |
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| | | Strengthening foothold in Cheras | | We are neutral on SPSB's latest land deal in Cheras. While it is strategically located in the fringe of city centre, we are concerned on its planned development amid an overcrowded high-rise property segment. Also, SPSB can only start launching post the completion of QSPH phase 1 (within 48 months), putting on financial stress on its cash flow in the near term. We maintain our earnings forecasts and MYR3.79 RNAV-TP (on an unchanged 0.75x P/RNAV peg). BUY. | | |
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| | FYE Dec (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 5,711.4 | 4,520.1 | 5,047.6 | 5,824.3 | EBITDA | 1,759.0 | 1,513.7 | 1,110.5 | 1,281.3 | Core net profit | 955.8 | 890.1 | 601.2 | 1,073.7 | Core FDEPS (sen) | 27.7 | 22.3 | 13.9 | 24.8 | Core FDEPS growth(%) | (21.5) | (19.4) | (37.9) | 78.6 | Net DPS (sen) | 20.0 | 15.5 | 7.4 | 13.9 | Core FD P/E (x) | 10.9 | 13.5 | 21.7 | 12.1 | P/BV (x) | 0.7 | 0.8 | 1.0 | 1.7 | Net dividend yield (%) | 6.6 | 5.1 | 2.4 | 4.6 | ROAE (%) | na | na | na | na | ROAA (%) | 4.7 | 3.4 | 2.0 | 3.4 | EV/EBITDA (x) | 7.4 | 12.0 | 21.9 | 19.7 | Net debt/equity (%) | 10.9 | 10.1 | 49.2 | 53.2 |
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| | SECTOR RESEARCH | | | | | | Remains challenging | NEUTRAL
by Wei Sum Wong |
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| | | | | | Properties going 'under the hammer' are expected to continue to rise in the coming quarters especially for high-end residential and residential under commercial titles such as SOVO, SOHO and SOFO. Apart from sub-sales, auction properties pose another form of competition to the developers. Elsewhere, margin compression is expected to continue as developers offer various marketing schemes to clear their inventories. The sector is trading at an undemanding 54% discount to RNAVs. Maintain NEUTRAL. | |
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| | MACRO RESEARCH | | | | | | Reserves down in 2H Apr after surge in 1H Apr
by Suhaimi Ilias |
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| | | | | | External reserves fell -USD0.5b in 2H of Apr 2018 to USD109.5b at end-Apr 2018, after the +USD2.2b surge in 1H of Apr 2018 to USD110.0b as at 15 Apr 2018. For the whole of Apr 2018, external reserves rose +USD1.7b (end-Mar 2018: USD107.8b). The latest tally is equivalent to 7.5 months of retained imports and 1.1 times of short-term external debt. | |
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| | | | | | S&P 500 Index: Surviving the 200-day EMA Challenge
by Nik Ihsan Raja Abdullah |
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| | | | | | Dark cloud loomed over the local bourses as sentiment turned cautious ahead of GE14. At day's end, the FBMKLCI plunged 13.63pts to 1,828.20, led by declines in CIMB, MAY and TNB. Market breadth was negative with losers outpacing gainers by 750 to 187. A total of 1.92b shares worth MYR2.09b changed hands. Expect another volatile session today. Investors will continue to be risk-averse ahead of the polling day tomorrow. This is in spite of the firmer US markets. | |
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| NEWS | | | Outside Malaysia:
U.S: Companies see 2018 spending surge as tariffs lift costs. U.S. companies lifted their outlook for investment this year, while noting that tariffs will raise prices and cause supply disruptions, according to a private survey. The Institute for Supply Management's semi-annual forecast showed factory purchasing managers see capital spending jumping 10.1% in 2018, well above the 2.7% projection made in the last report released in December. Service provider's project investment will climb 6.8%, up from 3.8%. Employment plans ticked up for manufacturers, and were unchanged in services from the prior survey. The report also showed a small share cited tax legislation as the driver for capital spending plans, though more than in the previous survey taken before the law was enacted. For most, the general business outlook spurred their decisions. A special question showed large majorities of purchasing managers reported difficulty hiring for open positions in the past six months, but just 53% in manufacturing said they had raised wages to attract workers. (Source: Bloomberg)
U.S: Consumer borrowing cools on slump in revolving credit. U.S. consumer borrowing rose at a slower pace in March as credit-card debt outstanding declined by the most since the end of 2012, Federal Reserve figures showed. Total credit increased USD11.6b and prior month revised up to USD13.6b gain. Revolving credit outstanding dropped USD2.6b m/m, after a USD515m decrease in Feb. Non-revolving debt outstanding climbed USD14.2b for a second month. (Source: Bloomberg)
E.U: ECB warns on trade tensions as Euro-Area economy falters. The European Central Bank warned that a rise in trade protectionism would undermine the global economy, and said the U.S. would be among the worst-affected. The cautionary comments coincide with data showing factory orders in Germany unexpectedly slid for a third month in March, another sign of the weakness that's dogged the euro-area economy since the start of the year. Separate reports showed investor confidence in the currency bloc fell for a fourth month and a retail gauge suggested that sales contracted for the first time in more than a year. The ECB has cited tariffs as one of its chief concerns as the institution's policy makers edge toward the end of their stimulus programs. President Mario Draghi has warned that while the impact of already-adopted protectionist measures is limited, the prospect alone of trade war between the U.S. and China -- two of the bloc's biggest trading partners -- could damage confidence and reduce consumption and investment. (Source: Bloomberg)
Japan: Household spending falls for second month in March, adding to concerns about a possible economic contraction during the quarter. Household spending fell 0.7% YoY in the month, the Ministry of Internal Affairs and Communications said. Lacklustre consumption has been a weakness in Japan's recent economic expansion, while production to meet overseas demand has driven growth. Modest wage gains haven't spurred significant spending increases despite monetary and fiscal stimulus. Slowly rising inflation is also weighing on real wages and spending power. While labor cash earnings have edged up over the recent months, real earnings, adjusted for inflation, have fallen for three consecutive months. (Source: Bloomberg)
Indonesia: Economy expanded at a slower pace last quarter than forecast, a setback for the government after eight interest rate cuts in the past two years. The currency fell to the lowest since 2015. GDP rose 5.06% YoY in the first quarter, the statistics bureau said. Compared with the previous quarter, GDP fell 0.42%. Indonesia's central bank had been cutting rates since the beginning of 2016 in a bid to spur growth in Southeast Asia's biggest economy. While consumer spending has been sluggish, growth was supported last year by a pick up in exports. Financial markets have been roiled in recent weeks as higher U.S. interest rates prompted outflows from emerging markets. That's closed the door on further easing by Bank Indonesia and raised the prospect of the first rate hike since November 2014 as policy makers look to protect a currency. (Source: Bloomberg) | |
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GFM Services: Plans 10% private placement to raise up to MYR20.68m. The group has proposed to raise up to MYR20.68m via a private placement of up to 10% of its issued shares in tranches to part finance its acquisitions of KP Mukah Development S/B. The acquisition will provide a platform for the group to enhance its revenue and gain immediate access to KP Mukah, a profitable facilities management company which currently holds a concession awarded by the Government and Universiti Teknologi MARA valid from 17 Sep 2012 till 17 Sep 2035. (Source: The Edge Financial Daily)
Tan Chong Motor: Lines up new MYR500m auto hub to expand global footprint. The group plans to set up an automotive hub in Bagan Datuk, Perak, with an estimated long-term investment of MYR500m, to cater to the expansion needs of the local and export markets. The new auto hub, Tan Chong Automotive & Commercial Vehicle Hub, will be located on a 338-acre piece of freehold land in Bagan Datuk. The first phase of the project will require the group to spend about MYR100m for land acquisition and the construction of a bus and truck plant. Once completed, the new plant will cater to the production expansion needs of the local and export markets. (Source: The Edge Financial Daily)
Petronas: Bank Islam, Petronas, SJPP ink MoU to help Petronas vendors. Bank Islam Malaysia Bhd has signed a memorandum of understanding with Petroliam Nasional Bhd (Petronas) and Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) to provide financial solution to Petronas vendors nationwide via the SME Vendor Financing Programme aimed at benefiting the local oil and gas services and equipment sector. (Source: The Sun Daily)
Luxchem: Targets 10% revenue growth this year, sets lower capex. A cautiously optimistic Luxchem Corp Bhd, which is eyeing 10% growth in terms of exports sales for its manufacturing division, is banking on the regional market for potential growth due to the saturated domestic market. (Source: Then Sun Daily) | |
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