Blue-Chip Plantation Proxy
Company Update
With the seasonal peak for FFB production almost over, CPO prices have a window of opportunity to strengthen between now and 1Q15. This would bode well for a company like KLK, where we estimate every MYR100/tonne change in CPO prices could affect its net earnings by 4-6% per annum. We raise our SOP-based TP to MYR21.30 (7.3% downside) from MYR19.80 and upgrade the stock to NEUTRAL.
Press Metal (PRESS MK, BUY, TP: MYR9.45)
3Q Profit Steps Up
Result Review
Press Metal posted 3Q14 earnings of MYR82.7m from a loss in 3Q13 on higher aluminium prices. Maintain BUY, with a higher MYR9.45 DCF TP (38% upside). We continue to like the company, as it is a world-class low-cost aluminium smelter that can leverage on the bottoming out of aluminium prices. We lift our FY15F earnings by 11.3% after accounting for a lower effective tax rate and higher value-added sales.
IOI Properties Group (IOIPG MK, BUY, TP: MYR3.38)
Potential Key Beneficiary of MRT Line 2
Company Update
IOIPG remains our Top Pick for the sector. Since the proposed stops for the MRT Line 2 are still not firmed up – given that the railway will end at Putrajaya – it emerges as the key beneficiary of the project. It has >500 acres of landbank there, and the IOI City Mall will likely be a valuable asset. With this MRT line, the GDV for its landbank in Putrajaya will likely rise further. Maintain BUY, with our TP at MYR3.38 (23% upside).
Unisem (UNI MK, BUY, TP: MYR2.16)
Within Expectations
3QFY14 Results Review
Unisem’s 9M14 core profit of MYR37.8m came in within our expectations. 3Q14 core earnings of MYR27.1m marked a 150.2% QoQ jump on improvement in its overall utilisation rate to 70% from 65%. Management declared an interim DPS of 2.0 sen. Maintain BUY, with our TP still at MYR2.16 (P/NTA of 1.4x, 28.6% upside).
Pavilion REIT (PREIT MK, NEUTRAL, TP: MYR1.48)
Lower Cost Base Buoys Earnings Growth
Results Review
Pavilion REIT’s 9M14 results came in line with expectations at 76%/77% of our/consensus estimates. Net property income (NPI) margins saw an improvement to 70.4% in 9MFY14 (1HFY14: 68.4%) due to 3Q14’s lower cost base. Earnings will continue to be driven by its organic growth through more asset enhancement exercises. Maintain NEUTRAL, with an unchanged DDM-based TP of MYR1.48 (0% upside).
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