Plantations - Preview of Oct palm oil stocks
A survey conducted by our futures team revealed that palm oil output was marginally lower in Oct, falling by an estimated 0.7% mom to 1.88m tonnes due to weaker yields from Peninsular Malaysia estates. Palm oil exports fell by c.2% mom due to lower demand from India. Overall, we project Malaysian palm oil inventory to rise by 3% mom to 2.15m tonnes in Oct 14. The CPO futures price has recently breached the top end of our near-term price range of RM2,300 per tonne due to higher soybean oil prices, concerns of dry weather in some key planting areas in Indonesia and the lagged impact of drought in Peninsular Malaysia on palm oil output. We maintain our Neutral sector rating and preference for First Resources, Astra Agro and SIMP.
Aviation - overall - Capacity cuts still not happening
OAG six-month forward schedules, as well as our checks and discussions with industry executives, strongly suggest that near-term capacity restructuring in Malaysia’s aviation industry will not happen as quickly as we had originally anticipated, despite the urgent tone in Khazanah’s recent document. The continuation of the low-yield environment and the delay in airlines’ capacity cuts will disadvantage AirAsia and AAX, but benefit MAHB. We retain our Neutral call for the sector. We currently have an Add call on AirAsia, but acknowledge that our target price of RM3.25 will need a longer time frame to realise. We have a Hold call on MAHB (target price of RM7.20), and a Reduce call on AAX (target price of RM0.72).
Malaysia Airports Holdings - Marginally profitable
At RM94m, MAHB's 9M14 earnings beat our expectation at 278% of our forecast but were below consensus at just 60% of consensus. Earnings fell by 98% yoy as traffic declined and costs escalated. We raise our FY14-16 forecasts, largely due to lower depreciation charges, resulting in a slightly higher DCF-based target price. While share price downside risk appears limited, we maintain Hold as weak traffic growth and KLIA2-related costs could lead to uninspiring results in the coming quarters.
SapuraKencana Petroleum - Fine gems sparkle in Brazil
In response to a media report on Petrobras’s failure to obtain auditor approval for its 3Q earnings, SapuraKencana’s management stated that its operations in Brazil are going smoothly and payments have been received on time. Sapura Diamante and Sapura Topazio have been deployed in Brazilian waters to work for Petrobras. We expect their early contributions to be reflected in SapuraKencana's 2HFY1/15 results. We continue to value the stock at 21.2x CY16 P/E, still at a 30% premium over our target market P/E of 16.3x. We maintain our Add rating, with strong order book momentum and a successful E&P venture as potential re-rating c
No comments:
Post a Comment