| | | FEATURED
CALLS | Malaysia | YTL Power
Take a breather
Chi Wei Tan | | | | |
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| | | | | | | | | | | | | | Share Price: | MYR0.90 | Target Price: | MYR0.85 | Recommendation: | Hold | | |
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| | | Take a breather | | With the stock having gained 19% post our upgrade on 25 May, we no longer view risk-reward as being compelling. We downgrade the stock to HOLD (from BUY) with an unchanged MYR0.85 TP. Upside risk hinges on Tj Jati A successfully achieving financial close. We note the Yeoh family has been acquiring shares directly from the market in Apr and May 2018. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 10,240.5 | 9,778.2 | 9,412.0 | 9,587.9 | EBITDA | 2,777.5 | 2,464.2 | 2,587.2 | 2,694.4 | Core net profit | 872.0 | 676.5 | 539.2 | 593.0 | Core FDEPS (sen) | 11.2 | 8.7 | 6.9 | 7.6 | Core FDEPS growth(%) | (8.5) | (22.8) | (20.3) | 10.0 | Net DPS (sen) | 10.0 | 5.0 | 5.0 | 5.0 | Core FD P/E (x) | 8.0 | 10.3 | 12.9 | 11.8 | P/BV (x) | 0.6 | 0.5 | 0.5 | 0.5 | Net dividend yield (%) | 11.2 | 5.6 | 5.6 | 5.6 | ROAE (%) | 8.8 | 5.2 | 4.1 | 4.4 | ROAA (%) | 2.0 | 1.5 | 1.1 | 1.2 | EV/EBITDA (x) | 9.0 | 11.2 | 9.3 | 9.0 | Net debt/equity (%) | 115.6 | 125.1 | 127.6 | 127.0 |
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| | MACRO RESEARCH | | | | | | Broad-based industrial output pick up
by Suhaimi Ilias |
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| | | | | | Industrial production growth picked up in Apr 2018 on broad-based increase in manufacturing, mining and electricity output. Short-term forward-looking indicators - namely manufacturing PMI and imports of intermediate goods - suggest slowing growth in the near term, plus unscheduled public holidays in May 2018 due to the general election. Downside could be mitigated by consumption tax holiday in June-Aug 2018 benefiting consumer-related manufacturing activities. | |
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| | | | | | FBMKLCI Index: Muted Interest Ahead of Festive Season
by Nik Ihsan Raja Abdullah |
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| | | | | | Late sell down dragged FBMKLCI 2.52pts lower at 1,775.80 yesterday. Decliners were led by HLFG, ASTRO and YTL. Market breadth was negative with losers outpacing gainers by 488 to 404. Sentiment was rather cautious throughout the day on renewed concerns over trade tensions. A total of 2.62b shares worth MYR2.40b changed hands. All eyes will be on the Trump-Kim Summit today. But trading could be choppy ahead of Fed, ECB and BOJ policy meetings. | |
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| NEWS | | | Outside Malaysia:
U.S: Lawmakers seek to restore ZTE penalties in defense bill. The U.S. Senate plans to advance legislation to restore penalties on ZTE Corp., after President Donald Trump drew sharp criticism for easing restrictions to get the Chinese company back in business. Commerce Secretary Wilbur Ross last week announced the U.S. reached a deal with ZTE that includes a record fine, changes to the company's board and management and U.S. compliance officers. The U.S. blocked ZTE's access to U.S. suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations. The telecommunications company announced it was shutting down just weeks after the ban was announced. (Source: Bloomberg)
U.K: Manufacturing output fell the most in 51/2 years in April and construction posted a smaller-than-expected gain, casting fresh doubt over the health of the economy. Overall industrial production fell by 0.8% on the month, the most this year, with demand for energy declining as warmer weather returned. The construction industry's order book took a hit in the first quarter, falling 4.6%. Separate figures showed the trade deficit widening to GBP14b. Exports fell 5.9%, the largest drop since 2015, and imports rose 0.8 percent. Imports were boosted by higher crude volumes but rising oil prices had little impact. The figures may call into question whether trade will contribute to growth in the second quarter, with the shortfall including services widening to GBP5.3b in April. Goods export volumes fell 6.1%, the most since August 2014. (Source: Bloomberg)
Italy: Industrial output falls in slowdown sign for new leaders. Italian industrial production declined far more than expected in April, adding to signs of a slowdown in economic growth just as the new government tries to reassure investors on the country's outlook. Output decreased 1.2% MoM from March, when it rose 1.2% MoM, national statistics institute Istat said. From a year earlier, work-day adjusted industrial output rose 1.9% YoY. (Source: Bloomberg)
Brazil: Growth forecasts tumble as strike damage now clearer. Brazil's 2018 growth forecasts fell to the lowest since May 2016 and inflation estimates rose for the fourth straight week as economists accounted for the impact of a nationwide trucker strike that paralyzed the nation. Economists lowered their 2018 forecast for gross domestic product to 1.94%, its lowest level for the year since Michel Temer assumed the presidency, according to a weekly survey by the central bank. They also raised their end-2018 inflation outlook to 3.82%, up from 3.45% a month earlier. (Source: Bloomberg)
Crude Oil: Saudi oil output said to rise above 10mbpd. Saudi Arabia boosted daily oil output in May to the highest level since October, ahead of meetings with Russia and other global producers next week where they may propose raising production even further and phasing out 18 months of voluntary cuts. Saudi Arabia, which along with Russia is trying to garner support for lifting output limits, told the Organization of Petroleum Exporting Countries that its daily production rose 162,000 barrels a day to 10.030 million in May compared with the previous month, a person with knowledge of the data said, asking not to be identified because the information isn't public. (Source: Bloomberg) | |
| | | | | Other News:
Bina Darulaman: Bags MYR70m road maintenance contract in Kedah. The group has won a one-year extension of its state road maintenance contract with the Kedah government worth MYR70m. Bina Darulaman said its wholly-owned subsidiary BDB Infra S/B entered into a supplementary agreement with the State government yesterday for the extension. (Source: The Edge Financial Daily)
Malaysia Airlines: Second half more challenging due to rising oil prices. Malaysia Airlines Bhd (MAB) expects the second half of this year to be a more challenging period for the airline due to increasing global oil prices. Group CEO Captain Izham Ismail said the company will try its best to break even next year. (Source: The Sun Daily)
Daya Materials: Aims restructuring plan submission in August. Practice Note 17 (PN17) company Daya Materials Bhd is targeting to submit its regularisation plan to Bursa Malaysia Securities Bhd no later than the end of the third quarter of this year, before the deadline of March 2019. (Source: The Sun Daily)
Metronic Global: Awarded RM5m in adjudication proceedings against Ahmad Zaki. Its wholly-owned Metronic Engineering S/B has been awarded SAR4.73m (MYR5m) in an adjudication proceeding against Ahmad Zaki Resources Bhd. The claim is in relation to disputes over non-payment for works done and costs incurred by Metronic Engineering for the Al Faisal University Campus Development Project in Riyadh, Saudi Arabia. (Source: The Edge Financial Daily) | |
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