Economic Update - 3Q14 GDP – Slower but still looking good
Real GDP growth moderated from 6.5% yoy in 2Q14 to 5.6% yoy in 3Q14, higher than our 5.2% estimate but in line with market consensus. The moderation was expected given last year's high base as well as slower exports and industrial output in the last quarter. Noteworthy are the resilient growth of household consumption (6.7%) and the sharp slowdown of investment growth to 1.1%. Still, the building blocks are in place to support average real GDP growth of 6.0% in 2014 and 5.0% in 2015.
Petronas Gas - Pengerang regas terminal is on
PetGas announced that it will undertake the Pengerang regasification terminal project with Dialog and the Johor state government. The total project would cost RM2.7bn, of which PetGas’s portion would be approximately RM2bn. The new regasification terminal will be completed in 4QFY17 and we expect stable earnings contribution from the terminal to start in FY18. While we make no changes to FY14-16 earnings forecast, we raise our SOP-based target price to RM27.11 (from RM26.44 previously) as we imputed the contribution of the regasification terminal towards the earnings and cashflow for FY18 onwards. We maintain our Add call on the stock.
Dialog Group - All gassed up and ready to go
With Phase 1 of the Pengerang tank terminal complex nearing completion, Dialog is stepping on the gas with Phase 2 where it will develop LNG regasification facilities with Petronas Gas and the Johor state government in a project that will cost an estimated RM2.7bn, the company said in an announcement today. We understand that Dialog will also be involved in the construction of selected structures. Pending further details, we maintain our forecasts and continue to value the stock at 21.2x CY16 P/E, a 30% premium over our target market P/E of 16.3x. Pengerang’s attractive outlook is the potential re-rating catalyst that supports our Add call.
Tomypak Holdings - Slow road to recovery?
Tomypak’s 3Q14 results were in line with our expectation, with the annualised 9MFY14 net profit coming in at 101% of our full-year forecast. We maintain our EPS forecasts but until Tomypak’s quarterly earnings show continued signs of recovery, we are switching our valuation basis from earnings (previously 7.8x P/E, 30% discount to Daibochi P/E target ) to asset-based. As a result, our target price rises to RM1.37, now pegged at 1.3x 12-months average P/BV. We upgrade the stock from Reduce to Hold as share price downside looks limited with floor support at RM1.30, which is the acquisition cost price of the new major shareholder. For exposure in the packaging sector, we prefer Thong Guan Industries.
Guinness Anchor - Low base effect boosts top line
Economic Update - 3Q14 BOP: current account surplus narrows further
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