7-Eleven Malaysia (SEM MK, BUY, TP: MYR2.00)
Growth Intact
Company Update
We attended 7-Eleven’s 3Q14 briefing yesterday and received some updates on the drivers behind its recent quarterly performance as well as progress on its business expansion plan. Maintain BUY and a MYR2.00 TP, derived from a 28x FY15F P/E (25% upside). It remains confident over achieving 600 net store openings by 2016 and expanding its margin via an improved product mix.
UOA Development (UOAD MK, BUY, TP: MYR2.40)
New Sales Surged In 3Q
Results Review
3Q14 results came in within expectations. Maintain BUY with a revised MYR2.40 TP (from MYR2.45, 11.1% upside). New sales jumped to MYR672m in 3Q (2Q: MYR362m), bringing the 9M total to MYR1.37bn. A few new projects contributed to the sales while others, which did not do well previously, also showed improvements. Thus, we think it is possible for UOAD to end the year with about MYR1.7bn in sales.
IJM Land (IJMLD MK, BUY, FV: MYR3.97)
Hit By Unrealised Forex Loss
Results Review
IJMLD’s 2QFY15 results missed expectations. Maintain BUY with a revised TP of MYR3.97 (19.6% upside). New sales achieved MYR450m, same as last quarter’s, and projects in the Klang Valley region contributed 40-50% of 1H’s total sales of MYR900m. We expect sales to grow steadily in view of the healthy pipeline of launches. However, given the weaker 1H results, we cut our FY15-16 earnings by 10-11%.
IJM Plantations (IJMP MK, NEUTRAL , FV: MYR3.30)
Contributions From Indonesia The Saviour
Results Review
IJM Plantation’s 1HFY15 results were within expectations, registering core net profit growth of 64% YoY. We maintain our NEUTRAL recommendation, with an unchanged TP of MYR3.30. Although we continue to like the growth prospects of its Indonesian FFB, this was offset by its significant leverage to CPO price movements, which negatively affected valuations.
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).
Ta Ann Holdings (TAH MK, BUY, FV: MYR4.40) (upgrade from Neutral)
Stronger Earnings, Surprisingly Large Dividend
Results Review
Ta Ann’s 9MFY14 results were above expectations, due to stronger timber earnings. Given the continued strength in log dynamics, smaller losses at its plywood division and stabilised CPO prices, we upgrade our recommendation on Ta Ann to BUY (from Neutral), with a higher TP of MYR4.40 (a 15.8% upside). The company declared a surprisingly large DPS of 10 sen, translating into a net payout of 73% and net yield of 5.3%.
Hong Leong Bank (HLBK MK, NEUTRAL, TP: MYR15.90)
Writebacks Helped Sustain Profitability
Results review
HL Bank’s 1QFY15 (Jun) results were in line. Maintain NEUTRAL with a revised TP of MYR15.90 (9.7% upside), mainly after rolling forward valuations. A mild NIM expansion QoQ coupled with writebacks in depreciation and loan impairment allowances boosted bottomline, but non-interest income and loan growth were both soft. Contribution from BoC also saw moderating growth. We keep our earnings forecasts.
BIMB Holdings (BIMB MK, NEUTRAL, TP: MYR4.70)
No Surprise To Results And Dividends
Results Review
9M14’s MYR377m core profit is in line. Maintain NEUTRAL and SOP-based MYR4.70 TP (10.1% upside). BIMB’s results were supported by strong 21% financing growth and stable NIM of 2.7%. A 14.7 sen interim dividend was declared. Management’s key strategies remain unchanged and, while the near-term environment is challenging, long-term prospects remain good given its leading position in Islamic banking.
Daya Materials (DAYA MK, NEUTRAL, TP: MYR0.23)
More To Be Done For Consistent Earnings Delivery
Results Review
Daya’s 9M14 MYR16m profit was within our/above consensus numbers, buoyed by North Sea subsea contracts and improved progress from technical services. Maintain NEUTRAL, with our TP lowered to MYR0.23 (8% upside) from MYR0.31. While long-term prospects are supported by subsea contracts, the share price upside may only be apparent once a consistent earnings delivery can offset dilution risks from fundraising.
Inari Amertron (INRI MK, BUY, TP: MYR3.82)
Decent Start To FY15
1QFY15 Results Review
Inari Amertron’s (Inari) 1QFY15 (Jun) core earnings soared 61.9% YoY to MYR30.8m, in line with expectations. We maintain our BUY call and keep our TP unchanged at MYR3.82, (or MYR3.10 fully-diluted ex-rights), based on a 17.5x CY15 P/E. This implies a 32.6% upside. Management declared its first interim DPS of 1.8 sen and a special DPS of 0.4 sen, translating into a payout ratio of 36.7% for the quarter.
Notion (NVB MK, NEUTRAL, TP: MYR0.45)
Disappointing End To FY14
FY14 Results Review
Notion’s FY14 (Sep) core loss of MYR19.6m was greater than our/consensus expectations on continued weakness in its overall utilisation rate due to subpar camera component sales. Given the lack of earnings visibility in the near term, we maintain our NEUTRAL call as we trim our TP to MYR0.45 (based on an average of 8x FY15 P/E and 0.6x FY15 P/NTA), implying an 8.2% downside.
Time dotCom (TDC MK, NEUTRAL, TP: MYR5.20)
Perfect Timing
Results Review
Time’s 9M14 results were broadly in line as 9M revenue grew strongly on the back of higher global bandwidth sales and better contribution from its data and data centre business. Maintain NEUTRAL and a DCF-based TP of MYR5.20 (1% downside). Time announced its land acquisition for a new data centre last week, in line with its future expansion plans. We keep our earnings forecasts unchanged for now.
Freight Management (FMH MK, NEUTRAL, TP: MYR1.64)
Invest And Restructure For Stronger Growth
Results Review
1QFY15 (Jun) earnings came in weaker than expected due to restructuring of its air freight division, cessation of a major 3PL contract as well as subpar performance from the tug & barge wing. We remain NEUTRAL on Freight Management with a lower TP of MYR1.64 (11.3x FY15F P/E, 6.3% downside). We are still positive on its growth potential after the investment and restructuring are completed.
Favelle Favco (FFB MK, BUY, TP: MYR4.03)
Big Results From Heavy Lifting
Results Review
Favelle Favco’s 9MFY14 core profit jumped 15.6% YoY to MYR70.0m on the back of increased crane sales, smashing our expectations as it makes up 97% of our estimates. Maintain BUY with a higher TP of MYR4.03 (from MYR3.62), based on 10x FY15 P/E, implying a 27% upside with dividend yields of 5.0-5.3% going forward. In light of the strong earnings, we revise our FY14 and FY15 earnings upwards by 17% and 11% respectively.
Perdana Petroleum (PETR MK, BUY, TP: MYR1.62)
Sailing Along Smoothly
Results Review
Perdana Petroleum’s 9MFY14 core profit of MYR70.6m came in line with our and consensus estimates at 78%/74% respectively, driven by higher utilisation as well as maiden contributions from Perdana Resolute. We maintain our BUY recommendation with a TP of MYR1.62. We marginally adjust our earnings downwards by 1%/8% for FY14/FY15 to account for the sale of Perdana Superior.
Hovid (HOV MK, NEUTRAL, TP:MYR0.39)
An Upbeat Start To FY15
Results Review
Hovid’s 1QFY15 (Jun) earnings came in within our and street’s estimates at 26.4% of our FY forecast, attributable to higher sales volume and favourable foreign exchange rates. We maintain NEUTRAL with a MYR0.39 TP, a 2.6% upside. We expect Hovid’s earnings to gradually recover throughout the year, assisted by the new capacity injection next year. No changes were made to our earnings forecasts.
IHH Healthcare (IHH MK, NEUTRAL, TP:MYR4.63)
Growing Steadily
Results Review
IHH’s 9MFY14 earnings came in within our but above consensus estimates at 75.7% and 78.3% respectively. Maintain NEUTRAL and SOP-based TP of MYR4.61. This was mainly attributed to: i) an increase in complex cases and ii) an increase in inpatient admissions. Moving forward, we expect better earnings in 4Q as it is a traditionally stronger quarter for IHH. We make no changes to our forecasts.
KPJ Healthcare (KPJ MK, NEUTRAL, TP: MYR3.67)
Sailing Smoothly
Results Review
KPJ’s 9MFY14 earnings were within our and consensus expectations, at 72.0%/74.4% respectively. Maintain NEUTRAL and TP of MYR3.67 (6.0% downside) as KPJ is on track to meet our full year earnings forecasts. Revenue and core profit grew by 13.2% and 33.4% YoY respectively on the back of stronger contributions from Malaysian hospitals as well as its aged care facility in Australia.
WCT (WCTHG MK, NEUTRAL, TP: MYR2.02)
FY14 Property Sales Target Halved
Company Update
We maintain our NEUTRAL call, earnings forecasts and TP of MYR2.02 implying a 6% upside. During an analyst briefing yesterday, WCT reiterated its guidance for MYR2.0bn construction job wins in FY14 but cut its property sales target by half. WCT is not an ideal proxy to the construction sector as it has yet to secure any Klang Valley MRT job. Its property business is facing headwinds amid various cooling measures.
Protasco (PRTA MK, BUY, TP: MYR2.43)
9M14 Core Net Profit Rises 29% YoY
Results Review
Protasco’s 9M14 results met our forecast. We maintain our BUY call, earnings forecasts and TP of MYR2.43 (implying a 47% upside). The company offers investors the best of both worlds – high earnings growth (driven by public housing contracts and a property development project De Centrum) and a high dividend yield of 6% (underpinned by strong cash flow from road maintenance concessions).
IJM Corp (IJM MK, BUY, TP: MYR7.50)
1HFY15 Core Profit Declines 7% YoY
Results Review
IJM Corp’s 1HFY15 (Mar) results disappointed. We cut our FY15/FY16 earnings forecasts by 20%/19% and TP by 5% to MYR7.50 (implying a 12% upside), but maintain our BUY call. Its construction division is poised for an “earnings renaissance” backed by a record order backlog. Prime locations of its new launches should buoy sales despite headwinds in the property sector.
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