Bursa Malaysia/KLSE Research Summary: HLIB Research Summary

Axiata (HOLD çè)

9M14 Results Below Expectations

9M14 recorded a disappointing core net profit of RM1.79bn, only accounting for 67.7% and 68.5% of HLIB and consensus FY forecasts, respectively, mainly due to weaker-than-expected Celcom results caused by prolonged IT related issues.
Celcom: Sales contracted 4% yoy as subscriber base churned by 195k qoq ended with 13.2m. Data revenue inched up 20% yoy while small screen data by 41%.
XL: Sales expanded 11% yoy as all product segment registered healthy growths led by data with 43% yoy and followed by VAS, voice and SMS with 42%, 4% and 4% yoy, respectively.
Dialog: YTD sales grew 6% yoy with data and voice revenues expanded 55% and 4% yoy, respectively. Pay TV’s subscribers increased to 410k.
Robi: YTD revenue and EBITDA grew 6%, 10%, respectively despite heightened competition. EBITDA margin improved by 1.7-ppt to 39.9%.
Smart: YTD revenue, EBITDA and PAT grew 37%, 74% and 197%, respectively. YTD data revenue growth of 119% with data contributing 21% of total revenue.
Maintain HOLD although SOP-derived TP was raised by 9.7% from RM6.92 to RM7.59 as valuations were rolled forward to FY16 and imputing higher consensus TP for Axiata’s associates.

Affin Holdings (NEUTRAL çè)

Overheads The Culprit

9MFY14 results below HLIB and consensus expectations mainly due to higher-then-expected overheads.
Additional RM24.1m integration cost (IC) in 3Q, on top of RM9.6m in 2Q. Ex IC, overheads still jumped 9.5% qoq.
Interim div 15 sen, in line with its dividend policy of 50%.
3QFY14 stronger qoq due to acceleration in loans growth, higher NIM, higher non-interest income and lower provision. Partly offset by higher overheads.
YTD integration cost RM33.7m, remaining RM20.3m over next 9-15 months based on guidance of RM54m total.
Impaired loans ratio stable albeit rise in absolute amount.
FY14 cut 11% while FY15-16 forecasts cut 6.4-6.5% to reflect higher cost and integration cost.
Target price cut to RM2.90 (Gordon Growth with ROE at 8% and WACC at 9.3%) vs. RM3.44. Maintain HOLD.

UMW O&G (HOLD çè)

3Q Result: Below

Below Expectation: Despite full contribution from Naga 5, higher than expected tax rate and lower margin from oilfield services have resulted in the shortfall against our expectations.
FY14 and FY15 earnings reduced by 12% and 14% respectively after factored in higher tax rate and readjust downward average charter rate from US$147k/day to US$142k/day in FY15 to reflect pressure from declining oil price.
We maintain our HOLD call and TP reduced from of RM3.29 to RM2.90 based on unchanged 16x FY15 earnings, post earnings adjustment.

WCT (HOLD çè)

Squeeze in margins

9M core earnings at RM100m (-40% YoY) was below expectations.
Disappointing results due to margin compression from additional cost for NDIA project.
Orderbook at RM2.3bn, implying 2.1x revenue cover.
Property sales target cut from RM1.2bn to RM617m.
Maintain HOLD, TP lowered to RM2.04 from RM2.34.

Momentum Idea - MMSV

MMSV: Uptrend likely to continue

MMSV’s share price is in the midst of building Wave 3, a second uptrend. Yesterday’s white candlestick on improved volume resulted in RSI, MACD and Slow Stochastics gaining upward momentum. Thus, share price is expected to trend higher towards RM0.67 and RM0.695, with a long term objective of RM0.76. Supports are at RM0.63 and RM0.61. Cut loss below RM0.60.

Traders Brief

Likely to retest 1836-1850 resistance territory

On technical front, KLCI could stage a follow-through technical rebound today as yesterday’s long white candlestick has broken above 10-, 30- and 50-d SMAs. Immediate resistances are 1836 (23.6% FR), 1850 (downtrend line and 200-d SMA) and 1860.
However, since KLCI is still on medium-term downtrend line, the chart outlook for KLCI still remains weak and bearish unless 1850 is taken out. Next supports are pegged at 1823 (38.2% FR), 1812 (50% FR) and 1800 (psychological level).
Today’s recommendation: Momentum BUY on MMSV

Bursa Malaysia/KLSE Research Summary