Healthcare - overall - CIMB Healthcare Corporate Day
Nearly 100 investors and 10 companies participated in our inaugural Healthcare Corporate Day yesterday. The consensus was that Malaysia has huge demand potential for healthcare products and services. Strong healthcare demand will benefit the companies that are involved in the healthcare value chain, from hospital operators and pharmaceutical players to rubber product manufacturers. We maintain Overweight on the Hospital and Pharmaceutical sectors as they are the direct beneficiaries of stronger healthcare demand. We retain our Neutral call on the rubber glove sector due to intensifying competition as rubber glove players rush to grab a share in the growing nitrile segment. We prefer IHH, Pharmaniaga, and Kossan.
CapitaMalls Malaysia Trust - Sg. Wang affected by MRT construction
CMMT's 3Q14 core net profit was RM35.7m, bringing its 9M14 core net profit to RM110.6m. This is broadly in line with our expectations as it accounted for 70% of our full-year forecast. We trim our FY14-16 earnings by 1.4-1.5% for housekeeping purposes. Our DDM-based target price is thus lowered slightly to RM1.46. We maintain our Hold call on the stock as we see little in terms of catalysts while we think that investor interest for REITs in general has slumped due to the recent interest rate hike, which reduces the attractiveness of the asset class.
Daibochi Plastic & Packaging - F&B gets a bad wrap
Daibochi’s 9M14 net profit, at 78% of our full-year forecast, was 17% below our and market expectations, mainly due to a slowdown in the F&B sector during 3Q. However, demand recovered from early 4Q onwards. We cut our FY14 EPS to reflect slower sales and higher operating costs but maintain FY15-16 numbers. With the year-end approaching, we roll forward our P/E target of 13x (based on sector) to CY16, which raises our target price to RM4.75. We upgrade the stock from hold to Add. Potential catalysts include more major export orders and a further decline in raw material prices.
Axis REIT - A decent quarter
Axis REIT's (Axis) 3QFY14 core net profit of RM19.2m brings its 9MFY14 core net profit to RM61.9m, which makes up 62% and 64% of our and consensus full-year estimates, respectively. We consider this as in line as we anticipate stronger earnings in the 4Q as Axis completes its acquisition of a few properties, which will contribute to earnings. We finetune our earnings forecasts for housekeeping purposes while our DDM-based target price is raised slightly to RM3.86 (from RM3.82 previously) after we roll forward our valuation base year. We maintain our Add call on the stoc
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