HLIB Research Summary - 26 Nov 2014

UMW Oil and Gas (HOLD çè)

3Q Result Briefing

• Despite the current weakness in oil price, it expects capex for upstream from national oil companies to remain intact given the need to maintain production.
• Current low oil price environment also provides opportunity to expanding asset. There are 70 new rigs being built but only 30 are built by operator while the rest are for speculative built.
• Despite benefiting from localisation of rigs, we are cautious on the near term outlook given pressure on charter rate amidst declining oil price. We understand that some new contract’s charter rate have seen 3-5% drop.
• We maintain our HOLD call and TP of RM2.90 based on unchanged 16x FY15 earnings.

WCT (HOLD çè)

REIT potential

• Eyeing RM3.8bn jobs domestically and RM3.3bn overseas, we caution on intense competition and fluid timing.
• Property sales target cut from RM1.2bn to RM600m given softening market.
• Exploring REIT potential next year, investment properties worth >RM2bn but move still at early stages.
• Maintain HOLD (TP: RM2.04), muted outlook for construction and property offset by REIT potential.

IHH (SELL çè)

9M14 Results In Line

• 9M14 core net profit of RM540.8m came in within expectations, accounting for 77.5% of HLIB’s full year forecast, but shy of consensus estimates by 7.1%, if annualised.
• Inpatient admission volume: grew healthily yoy in all three key markets, with SG, MY and Turkey gaining 12.1%, 10.2% and 10.5%, respectively. However, qoq growth was rather flat, with SG (+1.5%), MY (-3.7%) and Turkey (-5.2%) due to seasonality.
• Average revenue per inpatient admission: intensity strengthened in all three home markets, SG, MY and Turkey (YoY: 2.5%, 7.8%, 1.7%; QoQ: 2.8%, 1.4% 4.8%), driven by more complex cases.
• IHH is poised to capitalise on the growing demand for quality private healthcare in emerging markets. Revenue growth will be backed by increasing capacity from new facilities which captures increasing demand.
• Challenges include inflationary impact on staff costs, rentals and other operating expenses and start-up costs of newly commissioned hospitals. Expects an environment of volatile FOREX in the emerging markets.
• Reiterate SELL with unchanged SOP-derived TP of RM3.72 as share price has run ahead of fundamentals.

IJM Plantations (HOLD çè)

1H rises 62% on higher output

• 1HFY03/15 core net profit of RM126.7m (+62.4%) was slightly ahead of expectations, accounted for 53.8-55.2% of consensus and our full-year estimates.
• Key variance against our forecast - Better-than-expected FFB output.
• We raised our FY03/15-16 net profit forecasts by 1.1-2.4%, mainly to account for a slightly higher FFB yield assumption.
• Maintain TP of RM3.52 (based on unchanged 17x FY03/17 EPS of 20.7 sen), as we are leaving our FY03/17 net profit forecast unchanged. Maintain HOLD recommendation. 

Inari Amerton (BUY çè)

1QFY15 Results In Line

• 1QFY15 core net profit of RM30.6m was within expectations, accounting for 23.1% and 22.4% of HLIB and consensus’ full year estimates, respectively.
• Declared 1^st single tier dividend of 1.8 sen per share and a special dividend of 0.4 sen per share.
• RF business continues to be robust, contributing almost 50% of revenue. RF demand is expected to grow resiliently in to 2QFY15 as backlog piles.
• Amertron’s contribution weakened mainly due to seasonality but this was well cushioned by RF’s gain. Amertron’s transformation is on track to expand margins through synergy and efficiency.
• Reiterate BUY with unchanged fair value of RM3.41 based on unchanged 15.1x CY15 P/E.

Perdana Petroleum (BUY çè)

Surprise Dividend…

• In line QoQ, 3QFY14 Core profit increased by 12.5% bringing 9MFY14 to RM73m, making up 75% of HLIB and consensus full-year estimates, respectively.
• Declared interim dividend of 2 sen/share.
• QoQ, EBIT margin continue to improve from 35% to 37% due to cost control measures. YoY, 9MFY14 average vessel utilisation increased from 78% to 93%.
• Despite in line 9MFY14 result, we reduced our FY15 earnings by 10% mainly to reflect disposal of Petra Superior.We maintained our BUY call with TP reduced from RM1.87 to RM1.68 pegged at an unchanged 12x FY15 P/E post earnings adjustment

TdC (BUY é)

9M14 Results In Line

• 9M14 turnover of RM438m was translated into much-anticipated core net profit of RM112m, accounting for 74% and 94% of HLIB and street’s FY forecasts, respectively.
• QoQ: weaker top line (-3%) was mainly due to lower global bandwidth sales and income from one-time non-recurring contracts. Excluding those, revenue would have increase by 1.7% qoq on the back of higher data and data centre sales.
• YoY: revenue advanced 14% thanks to contribution from data centre (+16%), GBS and non-recurring contracts despite voice’s contraction (-8.7%).
• YTD GBS which traditionally back-loaded in 4Q, surged 218.4% yoy to RM31.2m, somewhat ahead of expectations.
• Pre-sale of submarine cable should help TdC to monetize and accelerate returns on investments.
• Upgrade from HOLD to BUY after raising SOP-derived fair value by 15.7% from RM5.09 to RM5.89.

Uzma (HOLD ê)

3Q Result: Below

• Below Expectation mainly due to lower activities for oilfield services coupled with drilling campaign for RSC to commence only in 1Q15.
• QoQ, PATAMI margin improve from 8% to 10% mainly due to the tax incentive given by MIDA for acquisition of MMSVS.
• FY14 and FY15 earnings are reduced by 18% and 12% respectively.
• Although we still like the company in the long run, we are cautious on the near term outlook amidst lower oil price and lack of contract newsflow in next 3-6 months.  Thus, we downgraded our call from BUY to HOLD with TP reduce from RM3.66 to RM2.75, based on lower P/E of 12 x (versus 14 previously) post earnings adjustment.

Traders Brief

Sideway with slight upside bias today

• Yesterday’s white candlestick which indicated that bulls were in control on Tuesday would continue to climb higher today. Resistances are 1850, 1860 and 1880. However, KLCI might erase some gains during the day as hourly chart showed that KLCI would take a breathier after follow-through technical rebounds on Monday and Tuesday. Next supports are pegged at 1836, 1823 and 1812.
• The general outlook of KLCI remains weak and bearish as a result of its medium-term downtrend line, unless 1850 is taken out.
• Yesterday, took profit on UNISEM as it hit more than R1.
• Today’s recommendation: Impulse Trading BUY on KUB.

 

Impulse Trading - KUB

KUB: Triumph into the skies

• The double breakouts on hourly and daily charts were strongly substantiated by all hourly and daily bullish momentum indicators. Since all indicators are pointing to strong momentum, our target price projection is pegged at RM0.56, RM0.58 and RM0.62.
• However, KUB’s share price is likely to encounter a stiff resistance near RM0.55. Inability to break above RM0.55 is likely to turn overall outlook negatively. Immediate supports at RM0.52 with cut loss below RM0.51.