Allianz Malaysia (ALLZ MK, BUY, TP: MYR13.50)
New Leadership for Life
Company Update
In Allianz’s 3Q14 briefing yesterday, we met with the new CEO for life insurance and gathered business updates. Allianz retained its view that the environment ahead remains challenging, but expects its strategies to sustain its above-industry growth. Its key targets, namely 10k life agents by FY15 and <90% non-life combined ratio, are still intact. Maintain BUY, SOP TP MYR13.50 (12% upside).
TDM Berhad (TDM MK, NEUTRAL, FV: MYR0.85)
Dragged Down By Higher Costs And Taxes
Results Review
TDM’s 9M14 results were below expectations, with net profit comprising 61-62% of our and consensus’ FY14 projection, due to higher unit costs and higher effective tax rates. Post-earnings revision, we reduce our SOP-based fair value to MYR0.85 from MYR0.90, implying downside risk of 5.5%. We maintain our Neutral recommendation, as valuations remain fair at current levels
WCT (WCTHG MK, NEUTRAL, FV: MYR2.02)
9M14 Core Net Profit Declines 16% YoY
Results Review
WCT’s 9MFY14 results met our forecast but missed consensus estimates. We maintain our NEUTRAL call and forecasts but cut TP by 13% to MYR2.02 (implying a 5% upside). WCT is not an ideal proxy to the construction sector as it has yet to secure any work packages from the Klang Valley MRT project. Also, its property business is facing headwinds amid various cooling measures.
Affin (AHB MK, NEUTRAL, FV: MYR3.30)
Elevated Costs Dampens 3Q14 Results
Results review
Affin’s 3Q14 results were below our and consensus estimates due to higher-than-expected overheads and credit cost. That said, 3Q14 net profit surged 27% QoQ, underpinned by stronger operating income (NIM expansion, higher non interest income) and lower credit cost. Overheads, however, stayed elevated, partly due to integration costs. Maintain Neutral with revised MYR3.30 TP (8% upside).
Axiata Group (AXIATA MK, NEUTRAL, TP: MYR7.20)
Dragged Down By Celcom and Forex Losses
Results Review
Axiata’s 9MFY14 net profit came in below expectations following an abysmal showing from Celcom and forex losses. Management appears cautiously optimistic on its outlook (the worst of Celcom’s IT issues are behind), although we note competition remains a key risk. We cut FY14/15 earnings by 12%/6% to reflect the poorer showing for Celcom. SOP-based TP is lowered slightly to MYR7.20. Maintain NEUTRAL.
Parkson Holdings (PKS MK, SELL, TP: MYR2.06)
Challenging Outlook
Results Review
Parkson Holdings’ results were below expectations, with 1QFY15 (FYE June) net profit down 34.2% y-o-y to MYR20.2m. SSSG has now turned negative across most of its market, below management’s earlier targets. We expect conditions to remain challenging over the next twelve months and maintain SELL, with a lower SOP-derived FV of MYR2.06 (previously MYR2.31).
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