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| | | | | | | | | | | | | | Share Price: | MYR | Target Price: | MYR3.00 | Recommendation: | Buy | | |
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| | | Ending FY18 with a bang! | | FY4/18 core earnings of MYR143m (+19% YoY) was above our and consensus expectations at 106%/111% of full-year. FY18 DPS of 10.4sen (87% DPR) also beats our FY18 estimate of 7.0sen (60% DPR). Nonetheless, we lower our FY19/FY20 net profit forecasts by 7%/8% to account for (i) higher JPY100/MYR of 3.65 (from 3.60) and (ii) the delay in CX-8 launch to 2QFY20. Correspondingly, our TP is lowered to MYR3.00 (-8%), on unchanged 14.5x CY19 PER (mean). BAuto is our Top BUY Pick for the sector. | | |
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| | FYE Apr (MYR m) | FY17A | FY18A | FY19E | FY20E | Revenue | 1,660.0 | 1,992.9 | 2,100.8 | 2,452.9 | EBITDA | 166.5 | 184.4 | 279.3 | 314.6 | Core net profit | 118.8 | 143.4 | 223.3 | 249.6 | Core EPS (sen) | 10.2 | 12.3 | 19.2 | 21.4 | Core EPS growth (%) | (40.8) | 20.7 | 55.7 | 11.8 | Net DPS (sen) | 11.7 | 10.4 | 15.3 | 17.1 | Core P/E (x) | 22.8 | 18.9 | 12.1 | 10.9 | P/BV (x) | 6.1 | 5.7 | 5.2 | 4.7 | Net dividend yield (%) | 5.0 | 4.5 | 6.6 | 7.4 | ROAE (%) | 24.1 | 30.4 | 44.7 | 45.7 | ROAA (%) | 12.5 | 15.9 | 24.7 | 24.8 | EV/EBITDA (x) | 14.2 | 12.9 | 8.9 | 7.9 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | Retail trade slowed but expect to pick up
by Suhaimi Ilias |
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| | | | | | Distributive trade index picked up (Apr 2018: +6.5% YoY; Mar 2018: +5.4% YoY) on rebound in motor vehicles trade (Apr 2018: +5.8% YoY; Mar 2018: +-3.7% YoY) amid sustained growth in wholesale trade (Apr 2018: +6.9% YoY; Mar 2018: +7.0% YoY) and despite slower retail trade (Apr 2018: +6.2% YoY; Mar 2018: +6.4% YoY). 0% GST in June-Aug 2018 is expected to be positive for retail trade and auto sales. | |
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| | | | | | Stable unemployment rate
by Suhaimi Ilias |
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| | | | | | Unemployment rate in Apr 2018 remained at 3.3% for the third month in a row as job growth outpaced labour force growth, and have been hovering in the 3.3%-3.4% range since Aug 2017. Our 2018 average unemployment rate forecast is 3.3% (2017: 3.4%). Low jobless rate sustained healthy increases in salaries and wages. Decision on minimum wage hike is expected in Aug 2018. | |
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| | | | | | KLFIN Index: Seeking Support at Golden Ratio
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI fell for the third day ahead of Fed, ECB and BOJ policy meetings. At day's end, the benchmark fell 11.64pts to 1,764.16. Decliners were led by ASTRO, GENT and MAYBANK. Broader market was negative with losers outpacing gainers by 571 to 309. A total of 2.35b shares worth MYR2.38b changed hands. Market could remain volatile today as investors turn risk-off ahead of Hari Raya holiday and major central bank meetings. | |
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| NEWS | | | Outside Malaysia:
U.S: Inflation in May accelerates to six-year high, reinforcing the Federal Reserve's outlook for gradual interest-rate hikes while eroding wage gains that remain relatively tepid despite an 18-year low in unemployment. The consumer price index rose 0.2% from the previous month and 2.8% YoY from a year earlier, matching estimates. The annual gain was the biggest since February 2012 and follows a 2.5% YoY increase in April. Excluding food and energy, the core gauge was up 0.2% from the prior month and 2.2% YoY from May 2017. (Source: Bloomberg)
U.S: Small-Business optimism hits second-highest on record. A gauge of optimism among U.S. small- business owners rose to a 34-year high amid increasingly sunny expectations for sales and profits, a National Federation of Independent Business survey showed. Sentiment index rose 3 points to 107.8, second- highest in gauge's history behind reading of 108 in 1983. Net 31% expect sales to increase, up 10 points from prior month and highest since Nov 2017. Record 34% of respondents said it's a good time to expand; net 3%, also a record high, reported higher quarterly profits. (Source: Bloomberg)
Germany: Investor confidence tumbled to its lowest level since 2012 as U.S. trade tariffs and Italy's political turmoil added to concerns that the economy is weakening. The ZEW Center for European Economic Research in Mannheim said that its index of investor expectations fell to minus 16.1 in June from minus 8.2 in May, marking the fourth monthly decline this year. The negative reading means that more of those investors surveyed saw a worsening of the outlook than forecast an improvement. The downbeat assessment comes after Italy, Germany's fifth largest trading partner, triggered doubts over its commitment to euro-area membership when its new populist government promised to implement spending plans that would break European Union rules. (Source: Bloomberg)
U.K: Employment rises more than forecast but wage growth slows. The U.K. economy continued to create jobs at a healthy pace in the three months through April but wage growth unexpectedly slowed. The employment rate reached a record-high 75.6% after the economy added 146,000 jobs. The jobless rate held at 4.2%, its lowest since 1975. However, a surprise moderation in the pace of wage growth may suggest the economy retains a margin of spare capacity. Pay growth excluding bonuses slowed to 2.8% between February and April, the Office for National Statistics said. (Source: Bloomberg)
China: Credit growth slows as shadow-banking clampdown gains pace. China's broadest measure of new credit slumped in May to the lowest in almost two years, as a campaign to rein in the shadow banking sector gained traction. Aggregate financing stood at CNY760.8b (USD118.8b) in May, the People's Bank of China said, compared with CNY1.56t in April. The change was driven by a fall in off-balance sheet lending of CNY421.5b, the most since data began in 2006, according to data compiled by Bloomberg. New yuan loans stood at CNY1.15t, and broad M2 money supply increased 8.3% YoY. (Source: Bloomberg) | |
| | | | | Other News:
Tiger Synergy: Undertakes MYR22m property project in Klang. The group will undertake a MYR22.3m mixed development property in Sungei Kandis, Klang. Comprising either a residential or commercial development, the project will be carried out on a joint-venture basis with the group's wholly-owned units, Pembinaan Terasia S/B and Harapan Handal S/B. Tiger Synergy said the two subsidiaries inked a joint-venture agreement today under which Tiger Synergy said Harapan Handal will contribute to the development land. (Source: The Edge Markets)
George Kent: 1Q net profit rises 16.49% to MYR21.54m. The group's net profit for the first quarter ended April 30, 2018 rose 16.49% YoY to MYR21.54m from MYR18.5m, driven mainly by its metering business. Revenue for the quarter, however, fell to MYR99.76m from MYR129.42m previously. Going forward, with a strong balance sheet, the group will increase its resources substantially, in terms of manpower and financial resources, to accelerate the growth in its metering and other water-related businesses and investments through M&As and strategic partnerships.(Source: The Edge Markets)
Poh Kong: Gold price swings take shine off Poh Kong Q3 results. Poh Kong Holdings Bhd's net profit for the third quarter ended April 30, 2018 fell 41.8% to MYR4.31m from MYR7.4m a year ago, as the fluctuation of gold prices affected the group's operating profits. For the nine-month period, Poh Kong's net profit dropped 5% to MYR14.48m from MYR15.24m a year ago, while revenue jumped 18.5% to MYR731.35m compared with MYR617.01m in the corresponding period last year. (Source: The Sun Daily) | |
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