CIMB Research Summary - 21 Nov 2014

Mah Sing Group - Sales picking up pace
Mah Sing's 9M results were in line with our expectations but above consensus as net profit made up 74% of our full-year forecast and 79% of consensus. It achieved new sales of RM2.45bn, 68% of its full-year target of RM3.6bn. We expect 4Q new sales to be stronger on the back of the conversion of the record bookings achieved in 2H14. Mah Sing has also proposed to undertake a rights issue with free warrants to raise up to RM630m as well as a 1-for-4 bonus. We have tweaked our EPS forecasts for the conversion of ESOS and warrants. We retain our Add call and target basis of parity with RNAV. Mah Sing remains one of our top picks for the sector, with potential re-rating catalysts that include its 1) strong and consistent earnings growth, 2) record sales in the face of tough market conditions, and 3) aggressive landbanking efforts.


YTL Power International - 1Q15 core net profit grew 3.8%
YTL Power's 1Q15 core net profit of RM243.8m was in line with our and consensus estimates, accounting for 24% of our full-year forecast. While revenues declined yoy to RM3.36bn (from RM3.98bn in 1Q14), earnings rose 3.8% yoy due to forex gains in its investment-holding division. No dividends were declared during the quarter, which was expected. We make no changes to our earnings forecasts while our SOP-based target price is reduced to RM2.34 (from RM2.39 previously) as we roll forward our valuation base year. We maintain our Add call on the stock, with new power plant bids and a turnaround of its WiMax division as potential re-rating catalysts.


QL Resources - Strong as usual
QL’s 1HFY54 net profit came in line with our expectation (meeting 47.5% of our full-year forecast) and consensus (45%). We deem this to be in-line as 1H is seasonally weak. 1H revenue rose 10.6% yoy, driven by stronger sales volume and selling prices. Despite higher operating costs, net profit increased by a larger extent of 14.3% yoy, thanks to the lower net interest expense and higher associate profit. Given the in-line results, we maintain our FY15-17 EPS forecasts, Add call and target price, still based on the consumer sector average of 23x CY15 P/E. QL remains our top pick in the sector. The turnaround of its Indonesia, Vietnam, palm oil and shrimp farming businesses is a key potential re-rating catalyst. As we had expected, no dividend was declared, in line with our forecast.

AirAsia X Bhd - Excellent strategic manoeuvres

Bumi Armada - Madura still floats our boat

Eco World Development Group Bhd - Strong start to maiden year

Genting Plantations - Stronger 4Q earnings in store

Kossan Rubber Industries - Non-core punctures 3Q

Oriental Holdings - Forex gain from yen debt

SapuraKencana Petroleum - New kid on the blocks

YTL Corporation - Let's focus on the HSR

MIB Research Summary - 20 Nov 2014

AirAsia X Bhd: Maintain Sell Fighting for survival

3Q14 core net loss of MYR185m (vs. profit MYR16m in 3Q13) was greater than forecast on weak yields and higher cost. All sectors were loss making with the exception of Nepal. Maintain SELL with a lower TP of MYR0.57 (from MYR0.63). AirAsia Bhd: Maintain Hold Losing the low cost advantage 3Q14 core net income of MYR112.4m (-28% YoY, +342% QoQ) was within expectations. Credible signs that market has bottomed, but expect slow yield recovery. Earnings growth driven by lower fuel cost. Maintain HOLD, target price raised to MYR2.60 (from MYR2.30) due to positive earnings revision. AMMB Holdings: Maintain Hold Better, on lower provisions 2QFY15 core net profit rebounded 35% QoQ, but 1HFY15 core earnings still down 14% YoY. FY15 forecast maintained, trimming FY16-17 by 5% p.a. to factor in slower loans growth and lower NIMs. HOLD maintained, lowering TP to MYR6.90 from MYR7.70 on a lower CY15 P/BV peg of 1.5x (1.7x previously). Kuala Lumpur Kepong: Maintain Hold Set back by oleochemicals business  Shariah-compliant FY9/14 results hurt by weak downstream earnings. Muted earnings outlook in FY9/15 as oleo-chemical, refinery and property businesses remain challenging. Maintain HOLD on unchanged TP of MYR23.20 after rolling forward our valuation on unchanged 23x PER target. Boustead Plantations: Maintain Buy Rich land value caps downside  Shariah-compliant 3Q14 results disappointed due to low CPO ASP achieved and lower-than-expected FFB output. Share price downside limited, backed by strategic land that has development potential, offering a RNAV of e.MYR2.96/sh. Maintain BUY with a revised SOP-TP of MYR2.03 (previously MYR2.16). TH Plantations: Maintain Hold Hit by dry spell  Shariah-compliant Results below our and consensus forecasts. Cut FY14 net profit by 9% on lower production and CPO ASP. FY15-16 forecasts unchanged but have downside potential. Maintain HOLD and TP of MYR1.65 on 15x 2015 PER. Star Publications: Maintain Buy Dividend yields look enticing  Shariah-compliant 3Q14 results slightly below; trim estimates by 6-11%. 18sen p.a. DPS may still hold; yields very attractive at 7.8%. Trim TP from MYR2.89 to MYR2.65 but upgrade to BUY. MSM Malaysia: Maintain Buy Expect a pickup in 4Q14  Shariah-compliant 9M14 results were above expectations at 80%/77% of our and consensus full-year forecasts. Anticipating a better 4Q14 on higher margin assumption, FY14 net profit forecast raised 5%. Upgrade to BUY with a higher TP of MYR5.50 (14x FY15 PER). Inari Amertron: Maintain Buy 1QFY6/15: Expect a strong start Expect net profit of MYR32-35m (+4-13% QoQ), supported by strong growth in overall smartphone demand. Inari is a beneficiary of the stronger USD, providing upside to our earnings forecasts. Reiterate BUY with a Street-high cum-rights TP of MYR4.20 (on unchanged 17x CY15 PER peg). Plantations: Maintain Neutral El Nino Alert! The Australia Bureau of Meteorology (ABM) upgraded the threat of an upcoming El Nino; with at least 70% probability. The new El Nino threat may boost sentiment and drive CPO price higher, aided by seasonal price recovery in 1Q15. Investors should position for a short term trade. BUY First Resources, Bumitama Agri, Sime Darby, Sarawak Oil Palms, Ta Ann and TSH Resources for earnings recovery play. TECHNICAL: Low of 1,805 with rebound confirmation The FBMKLCI advanced 6.01 points to 1,824.39 yesterday, while the FBMEMAS and FBM100 also closed higher by 32.19 points and 34.44 points, respectively. We recommend a “Nibble on Dips” stance for the index. Trading idea is a Short-Term Buy on GAB with upside target areas at MYR13.94 & MYR14.17. Stop loss is at MYR12.48. NEWS MSM: MSM plans to expand through acquisitions. MSM Malaysia Holdings, the sugar refiner remains focused on growing through acquisitions, having set its sight on its only local competitor, Central Sugars Refinery Sdn Bhd, that is owned by Tradewinds (M). MSM is already in talks to acquire an Asian upstream company and is also in discussions with a foreign partner to buy over a sugar plantation company in the region. (Source: The Star) Bina Puri: Bina Puri eyes listing of Indonesian power assets. Bina Puri Holdings plans to list its Indonesian power assets, possible as early as next year, saide group executive director Matthew Tee Kai Woon. The group has seven micro diesel-generated power plants across Indonesia, with a total capacity of 25MW. (Source: The Edge Financial Daily) U.S: Housing starts fall on multifamily as permits climb. Residential-construction permits in the U.S. climbed in October to a six-year high, pointing to a pickup in homebuilding after a slowdown in multifamily projects led to a drop in activity. Groundbreakings for single-family homes, condominiums and apartments fell 2.8 %to a 1.01 million annualized rate following September's 1.04 million pace, which was stronger than previously reported, the Commerce Department reported. Permits for future projects rose to the highest level since June 2008. (Source: Bloomberg) U.S: Fed officials saw need to watch for price expectations drop. Many Federal Reserve policy makers last month said they should be on the lookout for signs of a decline in expectations for inflation, minutes of their meeting show. "Many participants observed the committee should remain attentive to evidence of a possible downward shift in longer- term inflation expectations," according to a record of the Oct. 28-29 Federal Open Market Committee meeting released in Washington. "Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered." (Source: Bloomberg)

RHB Research Summary - 20 Nov 2014

Press Metal (PRESS MK, BUY, TP: MYR5.75)

Capacity To Surge With New Power Deal

Company Update

We applaud Press Metal’s plan to double its Samalaju plant’s capacity, which would lift total smelting capacity to 760,000 tpa (~1.5% of global primary aluminium consumption). Maintain BUY, with a higher TP of MYR5.75 (68.1% upside) – at a 10% discount from our fully-diluted DCF valuation. We also lift FY16F earnings by 27.7% as the new plant will most probably replicate its low-cost model, which is in the first quartile of the global cost curve. 

 

 

AMMB (AMM MK, BUY, TP: MYR7.45)

Underlying Trends Generally Positive

Results Rev,iew

AMMB’s 2QFY15 (Mar) results met our and consensus expectations. A much improved set of results together with low valuations means we retain our BUY call, albeit with a revised TP of MYR7.45 (14% upside). Underlying trends were generally positive this quarter, with 2QFY15 net profit up 35% QoQ (underlying basis), driven by a combination of NIM expansion, tight cost control and lower credit cost.

 

 

Kuala Lumpur Kepong (KLK MK, NEUTRAL, TP: MYR20.70) 

Weaker Manufacturing Contributions

Results Review

KLK’s FY14 (Sep) results were within our expectations but below consensus. Stronger profits from the plantation division offset weaker contributions from the manufacturing and property divisions. While we like the company’s strong management and steady growth strategy, we keep our NEUTRAL call with a revised SOP-based TP of MYR20.70 from MYR21.30 (10% downside), as valuations remain fair at current levels.

 

 

TH Plantations (THP MK, SELL, TP: MYR1.22)

Hit By Delayed Impact Of Dry Weather In Sarawak

Results Review

THP’s 9M14 results were below expectations, due to weaker-than-expected FFB production resulting in lower cost efficiency. We maintain our SELL recommendation with a lower TP of MYR1.22 (from MYR1.40)  a 25% downside. Despite THP’s decent annual FFB expected production growth of 10-15% over the next few years, we believe this may not be enough to offset the impact of lower CPO prices.

 

 

MSM Malaysia (MSM MK, BUY, TP: MYR5.74) (Upgraded)

To Benefit From Low Raw Sugar Prices

Results Review/Briefing Note

We consider MSM’s 9M14 earnings to be in line, as 4Q14 could see a recovery in EBIT margins. While MSM still faces potentially declining domestic volumes, we believe the absence of an LTC come 2015 and the current low raw sugar prices would bode well for margins. We raise our TP to MYR5.74 from MYR5.23 (17% upside) and upgrade to BUY. We highlight MSM’s decent dividend yield of 4-5.5% per annum.

 

 

AirAsia X (AAX MK, SELL, TP: MYR0.57)

Still In Turbulence

Results Review

As AirAsia X’s 9M14 earnings were below expectations, we maintain SELL with a lower TP of MYR0.57 (from MYR0.68, 1.5x FY15F P/BV, 11.6% downside). Earnings continued to come under pressure due to weakening passenger yields and escalation of costs. Airline incidents compounded the already intense operating environment but management is confident that the situation will improve.

 

 

Esthetics International Group (EIG MK, BUY, TP: MYR1.40)

Lifted By Favourable Tax Rate

Results Review

Esthetics’ 1HFY15 (Mar) core earnings of MYR9.3m were above our expectations due to a favourable tax rate. Core PBT of MYR11.5m was largely in line at 53.8% of our full-year estimate. Following the recent share price weakness, we upgrade our call to BUY and nudge up our SOP-based TP to MYR1.40 (from MYR1.35). This implies a 27.3% upside. Management declared its first interim DPS of 1.5 sen.

 

 

AirAsia (AIRA MK, BUY, TP: MYR3.11)

At a Yield Inflection Point

Results Review

9M14 earnings came in better than expected, prompting us to adjust our FY14/FY15/FY16 earnings upwards by 104%/14%/17%. Maintain BUY with a higher MYR3.11 TP (from MYR2.73, a 26.4% upside). Better-than-expected 3Q14 net profit was largely attributed to the lower average jet fuel cost incurred. The upward pricing rationalisation of airfares is expected kick-in on a stronger note next year.

 

Research Summary: 20 August 2014

Research Summary: 20 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Tune Ins	Integrating its associate business in Thailand	Buy	RM3.00
RHB	Sector update	Auto	Non-national marques gain market share	Neutral
RHB	Results preview	AirAsia	Look beyond this 2QFY14 earnings	Buy	RM2.78
RHB	Results review	Matrix	Property sales pick up in 2Q	Buy	RM3.80
RHB	News flash	Bumi Armada	Nine FPSO and counting	Buy	RM4.54
RHB	Results review	Perdana Petroleum	Bright prospects ahead	Buy	RM2.20
RHB	Results review	Tambun Indah	High property demand in Pearl City	Buy	RM3.00
RHB	Results review	TH Plantations	Expect a stronger 2H2014	Neutral	RM2.06
RHB	Results review	MBM Resources	Light at the end of the tunnel?	Neutral	RM2.88
RHB	Results review	AirAsiaX	Going through a tough period	Sell	RM0.68
CIMB	Flash note	Tune Ins	Tuning up the volume in 2H14	Add	RM2.71
CIMB	Results note	Perdana Petroleum	Counting ship	Add	RM2.40
CIMB	Results note	Uchi Technologies	Weaker coffee brew	Hold	RM1.35
CIMB	Results note	AirAsiaX	Losses can’t get any worse but…	Reduce	RM0.72
Maybank	Results review	AirAsiaX	On a wing and a prayer	Sell	RM0.72
Maybank	Results review	Perdana Petroleum	1H14 results in line	Buy	RM2.55
Maybank	Results review	MBM Resources	2Q14: within radar	Buy	RM3.60
Maybank	Results review	TH Plantations	Bogged down by higher cost	Sell	RM1.65
Maybank	Sector	Automotive	Seasonally stronger 2H begins	Overweight
Maybank	Company update	Bumi Armada	Secures LOI for FPSO Madura	Buy	RM4.55
Maybank	Technical	IHH		Short-term buy
Kenanga	Sector update	Automotive	Slowing down	Neutral
Kenanga	Results note	Perdana Petroleum	Stable 2Q14 results	Outperform	RM2.47
Kenanga	Results note	MBM Resources	Within expectations	Underperform	RM2.92
Kenanga	Results note	Matrix	Steady performance	Under review	Under review
Kenanga	Quick bites	Parkson	Divestment of Festival City Mall for RM349m	Underperform	RM2.48
Kenanga	Company update	Maxis	Still transforming	Market perform	RM6.87
HL	Sector	Automotive	Continuous sales momentum in July	Overweight
HL	Results review	Tambun Indah	Sustainbale demand underpins healthy sales	Buy	RM2.60
HL	Results review	Matrix	Results on the rebound	Buy	RM3.74
HL	Results review	Perdana Petroleum	Sustainable growth	Buy	RM2.18
HL	Results review	MBM Resources	In line – expect stronger 2H14	Buy	RM4.00
HL	Newsbreak	Bumi Armada	Madura landed	Buy	RM4.70