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| | | | | | | | | | | | | | Share Price: | MYR1.25 | Target Price: | MYR1.53 | Recommendation: | Hold | | |
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| | | Clearing the doubts | | Key takeaways from SDPR meeting: 1) sale of BPS2 commercial spaces to EPF-PNB would be concluded by July 2018 with earnings to be recognised upon completion of the BPS2 construction works in 4Q 2019-3Q 2020 and 2) management has received positive responses from the state government on its MVV project in Labu. We lower our FY18-20 earnings forecasts by -2% to -15%. Our RNAV-TP is lowered to MYR1.53 (-4sen; on an unchanged 0.55x P/RNAV peg). HOLD. | | |
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| | FYE Jun (MYR m) | FY16A | FY17A | FY18E | FY19E | Revenue | 2,590.7 | 2,564.4 | 2,970.7 | 2,676.9 | EBITDA | 1,033.1 | 556.2 | 1,563.2 | 1,145.8 | Core net profit | 749.1 | 607.9 | 983.8 | 788.0 | Core EPS (sen) | 11.0 | 8.9 | 14.5 | 11.6 | Core EPS growth (%) | 33.6 | (18.8) | 61.8 | (19.9) | Net DPS (sen) | 0.0 | 0.0 | 5.8 | 0.0 | Core P/E (x) | 11.3 | 14.0 | 8.6 | 10.8 | P/BV (x) | 1.6 | 1.3 | 0.9 | 0.8 | Net dividend yield (%) | 0.0 | 0.0 | 4.6 | 0.0 | ROAE (%) | 18.2 | 10.7 | 12.2 | 7.8 | ROAA (%) | 6.2 | 4.5 | 7.1 | 5.7 | EV/EBITDA (x) | na | na | 6.1 | 8.0 | Net debt/equity (%) | 22.4 | 1.4 | 7.8 | 4.0 |
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| | | | | | | | | | | | Share Price: | MYR2.94 | Target Price: | MYR3.00 | Recommendation: | Hold | | |
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| | | Tariff adjustment in line | | With doubts having emerged over the integrity of the pass-through mechanism, it was a relief to see a tariff surcharge being maintained in 2H18, albeit at a lower quantum. Net gas tariff is set to increase marginally by 0.5% in 2H18. There is no change to our earnings forecasts. Maintain HOLD with an unchanged MYR3.00 TP. | | |
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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) | 22.9 | 19.4 | 21.8 | 20.5 | P/BV (x) | 3.7 | 3.6 | 3.6 | 3.6 | Net dividend yield (%) | 4.4 | 4.4 | 4.6 | 4.9 | 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 | 12.2 | 11.6 | Net debt/equity (%) | net cash | net cash | net cash | net cash |
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| | MACRO RESEARCH | | | | | | KLCSU Index: Potentially One More Leg Down
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI gapped down at the opening bell and stayed in the negative territory throughout the day. At day's end, the benchmark fell 0.59pts to 1,763.57, extending losses for a fourth consecutive day. Sentiment was rather cautious with losers outpacing gainers by 469 to 397. A total of 2.1b shares worth MYR2.0b changed hands. Expect market to remain lackluster today as investors may choose to stay sidelines ahead of the Hari Raya holiday. | |
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| NEWS | | | Outside Malaysia:
U.S: Powell lauds economy as Fed Nudges up interest-rate hike path. Federal Reserve officials raised interest rates for the second time this year and upgraded their forecast to four total increases in 2018, as unemployment falls and inflation overshoots their target faster than previously projected. The so-called "dot plot" released showed eight Fed policy makers expected four or more quarter-point rate increases for the full year, compared with seven officials during the previous forecast round in March. The number viewing three or fewer hikes as appropriate fell to seven from eight. The median estimate implied three increases in 2019 to put the rate above the level where officials see policy neither stimulating nor restraining the economy. (Source: Bloomberg)
U.S: Trump says he may upset China on trade as tariffs loom. President Donald Trump said he'll confront China "very strongly" over trade in the coming weeks, as his administration prepares to follow through on a threat to slap tariffs on Chinese imports. "China could be a little bit upset about trade because we are very strongly clamping down on trade," Trump said in an interview. The interview was conducted aboard Air Force One after Trump met North Korean leader Kim Jong Un in Singapore. Trump has convened a meeting at the White House to talk with his trade team about whether to move forward with tariffs on Chinese goods, according to two people familiar with the plans. (Source: Bloomberg)
U.K: Inflation stays put as fuel prices rise most since 2011. The biggest increase in auto-fuel prices in more than seven years helped keep U.K. inflation from continuing its downward path last month. Consumer-price growth stayed at 2.4% YoY in May. Upward pressure was led by the price of fuel, which leaped by 3.8% in the month, the sharpest rise since January 2011, the Office for National Statistics said. There was also pressure from air fares and ferry prices. These effects were partly offset by computer games and energy prices, which failed to match the large gains seen a year earlier. (Source: Bloomberg)
U.K: Housing market stuck in the doldrums as prices stagnate. The U.K. housing market stayed stuck in a rut in May as activity and prices remained broadly flat, according to the Royal Institution of Chartered Surveyors. RICS's gauge of prices came in at minus 3 last month, up from minus 7 in April but still consistent with no change in prices, the organization said in a report. While there was some cause for optimism, with a measure of new instructions turning positive for the first time in 27 months, forward- looking indexes suggested the market is unlikely to gain near- term impetus, RICS said. (Source: Bloomberg)
India: Inflation picked up for a second straight month, giving ammunition to the central bank to further tighten monetary policy and squeezing returns for bond investors. Consumer prices rose 4.87% YoY in May, the statistics ministry said. It was the highest reading since January and comes on the back of rising food and fuel prices. The central bank expects oil averaging around USD78 a barrel to stoke inflation by 30 basis points, complicating its job of keeping inflation at the 4% mid-point of its target band over the medium term. (Source: Bloomberg) | |
| | | | | Other News:
GFM Services: Bags MYR33.4m facilities management contract from Perkeso. The group has won a four-year contract worth MYR33.4m from Pertubuhan Keselamatan Sosial (PERKESO) to provide integrated facilities management services for PERKESO's Rehabilitation Centre in Malacca through an open tender. GFM said that the contract is for a period of four years, commencing June 2018 until June 2022. (Source: The Edge Markets)
E.A. Technique: Bags contract from Petronas Carigali for fast crew boats. The group has recently been awarded a contract by Petronas Carigali S/B for the provision of a unit of Fast Crew Boat for Petroleum Arrangement Contractors (PACs) Production Operations, shared between Petronas Carigali and EnQuest Petroleum Production Malaysia Ltd. E.A. Technique said the three-year contract was offered vide a letter of award dated May 24, 2018. The job will start in July. (Source: The Edge Markets)
Enra: Buys Australian specialty chemicals distributor for MYR13.5m. The group is acquiring International Chemicals Engineering Pty Ltd (ICE), an Australian company involved in importing and distributing specialty chemicals in Australia and New Zealand. The acquisition price will be a cash consideration of up to AUD2.9m (MYR8.7m) and the assumption of AUD1.6m of existing shareholders' loans in ICE. The aggregate of these amount to AUD4.5m (MYR13.5m). (Source: The Edge Markets)
Petra Energy: Gets 1-year contract extension from Petronas Carigali. The group has received a one-year extension on its contract from Petronas Carigali S/B for the provision of hook-up, commissioning and topside major maintenance services. The contract was previously awarded to Petra Energy by Petronas Carigali for duration of five years from May 21, 2013 to May 20, 2018. No contract value was stated in the announcement. (Source: The Edge Markets) | |
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