CIMB Research Summary - 23 Oct 2014

Healthcare - overall - CIMB Healthcare Corporate Day

Nearly 100 investors and 10 companies participated in our inaugural Healthcare Corporate Day yesterday. The consensus was that Malaysia has huge demand potential for healthcare products and services. Strong healthcare demand will benefit the companies that are involved in the healthcare value chain, from hospital operators and pharmaceutical players to rubber product manufacturers. We maintain Overweight on the Hospital and Pharmaceutical sectors as they are the direct beneficiaries of stronger healthcare demand. We retain our Neutral call on the rubber glove sector due to intensifying competition as rubber glove players rush to grab a share in the growing nitrile segment. We prefer IHH, Pharmaniaga, and Kossan.


CapitaMalls Malaysia Trust - Sg. Wang affected by MRT construction

CMMT's 3Q14 core net profit was RM35.7m, bringing its 9M14 core net profit to RM110.6m. This is broadly in line with our expectations as it accounted for 70% of our full-year forecast. We trim our FY14-16 earnings by 1.4-1.5% for housekeeping purposes. Our DDM-based target price is thus lowered slightly to RM1.46. We maintain our Hold call on the stock as we see little in terms of catalysts while we think that investor interest for REITs in general has slumped due to the recent interest rate hike, which reduces the attractiveness of the asset class.


Daibochi Plastic & Packaging - F&B gets a bad wrap

Daibochi’s 9M14 net profit, at 78% of our full-year forecast, was 17% below our and market expectations, mainly due to a slowdown in the F&B sector during 3Q. However, demand recovered from early 4Q onwards. We cut our FY14 EPS to reflect slower sales and higher operating costs but maintain FY15-16 numbers. With the year-end approaching, we roll forward our P/E target of 13x (based on sector) to CY16, which raises our target price to RM4.75. We upgrade the stock from hold to Add. Potential catalysts include more major export orders and a further decline in raw material prices.


Axis REIT - A decent quarter

Axis REIT's (Axis) 3QFY14 core net profit of RM19.2m brings its 9MFY14 core net profit to RM61.9m, which makes up 62% and 64% of our and consensus full-year estimates, respectively. We consider this as in line as we anticipate stronger earnings in the 4Q as Axis completes its acquisition of a few properties, which will contribute to earnings. We finetune our earnings forecasts for housekeeping purposes while our DDM-based target price is raised slightly to RM3.86 (from RM3.82 previously) after we roll forward our valuation base year. We maintain our Add call on the stoc

HLIB Research Summary - 23 Oct 2014

Construction (OVERWEIGHT  é)

Building on to a stronger 2015

• Development expenditure to increase 15% YoY in 2015
• Domestic contract flows remain robust with 9M14 at RM11bn (+4% YoY), likely to surpass 2013 at RM15bn
• 11MP, to be unveiled in May 2015 will be the next catalyst
• Key projects to watch out for: MRT Line 2, LRT Line 3, various highways and Warisan Merdeka
• Upgrade to sector to OVERWEIGHT with top picks being Gamuda (big cap) and HSL (small cap).

CMMT (HOLD çè)

9MFY14 Results

• 9MFY14 core net profit came in within our expectation but a little below consensus, accounting for 71.8% and 71.0% respectively.
• Dividend 2.12 sen was declared during the quarter, bringing the YTD dividend to 6.65 sen, accounting for 77.8% of our full year DPU expectation.
• Occupancy rate remain stable at 97.9%.
• We derived new TP of RM1.46 (previously RM1.36) with target yield of 6.3% (previously 7.0%) based on historical average yield spread of CMMT and 7-year MGS.  Maintain HOLD.

Traders Brief

Volatility is here to stay for a while     

• The technical rebound from recent low of 1766 towards our short term resistance near 1825-1834 levels is likely to continue but it will not be smooth, as sentiment could be affected by external volatility and potential hurdles in the CIMB/RHBCAP/MBSB mega bank merger after Bursa disallowed EPF to vote by virtue of EPF being the common major shareholder in all three affected companies. Moreover, a sharp fall below 1766 will reignite force selling and margin calls activities.
• Closed positions: We had closed our positions of UNISEM, VITROX and AZRB on 21 Oct after their share prices hit our upside and supports targets. 
• Today’s recommendation: Trading BUY on ARMADA.

Trading idea - ARMADA

ARMADA: Values resurfaced for LT investors

• Current share price is 29% below our Institutional target price of RM2.06. Armada’s share prices plunged 46% from 52-week high of RM2.52 in May to as low as RM1.36 (16 Oct) before closing at RM1.47 on 21 Oct.
• Technically, the selldown presents good trading opportunity to catch the imminent technical rebound as recent two candlesticks on weekly chart formed “Bullish Harami” candlestick pattern, suggesting impending reversal signal.
• We expect share prices to move higher towards RM1.53 and RM1.64, with a long term objective of RM1.76. Critical supports are located at RM1.40 and RM1.36. Cut loss below RM1.34.

MIB Research Summary - 23 Oct 2014

MY Banking Sector: Maintain Neutral EPF not allowed to vote on merger

Seems like the right call by Bursa from a legal perspective. A temporary setback but merger likely to still push ahead. HOLD maintained on CIMB (TP: MYR7.60), given prevailing uncertainties. Prefer RHB (BUY; TP: MYR10.45) for exposure to this merger. Perdana Petroleum: Maintain Buy Strong growth ahead  Shariah-compliant Targets Shell EOR/Dayang’s HUC for its newbuild - Emerald. Dayang is keen on LTH’s block but a GO may not happen. Our top OSV pick (15x 2015 PER). Its brownfield exposure insulates its business from capex cut & oil price volatility. CapitaMalls Malaysia Trust: Maintain Buy Earnings on track 9M14 core net profit of MYR111m (+0.6% YoY) was within our expectation but below consensus. We see an upturn in demand for yield stocks with the return of market volatility and slower global economic growth. No change to earnings forecasts and MYR1.74 DCF-based TP. Maintain BUY. CMMT offers 6.4% net yield (2015) vs its retail REIT peers of 5%. Technicals: Sell all rebounds above the 1,800-mark The FBMKLCI declined 6.92 points to 1,796.22 on Tuesday, while the FBMEMAS and FBM100 also closed lower by 41.82 points and 39.59 points, respectively. We recommend a “Sell on Rallies” stance for the index. Trading idea is a Take Profit call on MPI with downside target areas at MYR4.33 & MYR3.69.

RHB Research Summary - 23 Oct 2014

Inari Amertron (INRI MK, BUY, TP: MYR3.82)

Pricing Of Rights Shares Fixed

Corporate News Flash

Inari Amertron has finalised rights issue pricing at MYR1.50 per rights share. The free warrants attached to the rights share are priced at MYR2.00 exercise price. We believe the proceeds raised from the rights issue could help to expand its core businesses to propel earnings growth in the medium term. Hence, we maintain BUY and keep our TP at MYR3.82 (or MYR3.10 fully diluted ex-rights), implying a 41.5% upside.

 

 

TAS Offshore (TOC MK, BUY, TP: MYR1.42)

Margins Decline Drastically Despite Revenue Surge

Results Review

1QFY15 QoQ revenue came in at 24% of our full-year target but bottomline was at 18% of our FY15 estimate. YoY, revenue surged 157% but core net margins declined to 7%. Maintain BUY with a lower MYR1.42 TP (a 67.1% upside), pegged to 9.5x FY15F P/E. The improved results were on higher sales recognition on vessels delivered. We lower our FY15-16 margins assumption and revise net profit down by 5-11%.

 

 

CapitaMalls Malaysia Trust (CMMT MK, NEUTRAL, TP: MYR1.41)

No Spark To Ignite Yet

Results Review

CMMT’s 9MFY14 came in within expectations at 72/71% of ours/consensus estimates. A decent DPU of 2.12 sen was declared. Earnings growth continued to be affected by Sg. Wang Plaza’s decline due to the ongoing MRT construction works. We note that CMMT’s upcoming change of guard on 1 Nov is unlikely to have an impact on future performance. Maintain NEUTRAL and DDM-based TP of MYR1.41.

 

Daibochi (DPP MK, NEUTRAL, TP: MYR4.10)

Earnings Slip Yet Again

Results Review

Daibochi’s 9M14 earnings of MYR17.8m were below expectations. Despite a 13.2% YoY surge in 9M14 sales, earnings declined 13.1%, largely due to higher raw material prices since 2H13. We retain our forecasts pending an analyst briefing today. Daibochi’s valuations are not compelling at this juncture. Maintain NEUTRAL and MYR4.10 TP, pegged to an unchanged 13x P/E 2015 EPS (a 3.5% downside).

 

Research Summary: 18 July 2014

Research Summary: 18 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
Maybank	Results review	Digi	Strong earnings delivery again	Hold	RM5.60
Maybank	Results review	Bursa	Earnings in line, dividend surprise	Hold	RM8.00
Maybank	Results review	Pavilion Reit	Continues to grow	Buy	RM1.52
Maybank	Results review	CMMT	No surprises	Buy	RM1.74
Maybank	Technical	SPSetia		Short-term buy
CIMB	Results note	CMMT	Property assessment rate boost	Hold	RM1.49
CIMB	Results note	Pavilion Reit	Hit by weaker tourist arrivals	Hold	RM1.45
CIMB	Results note	Digi	Delivering as usual	Add	RM6.00
CIMB	Results note	Bursa	Good dividend surprise	Add	RM10.00
RHB	Results review	Digi	Leading the way	Buy	RM6.50
RHB	Results review	Bursa	Yet more dividends	Buy	RM9.10
RHB	Results review	Hua Yang	Optimistic on sales prospects	Buy	RM2.70
RHB	Results review	Pavilion Reit	Expect 2HFY14 to be stronger	Neutral	RM1.48
RHB	Results review	CMMT	No surprises	Neutral	RM1.41
Kenanga	Results note	CMMT	1H14 within expectations	Outperform	RM1.59
Kenanga	Results note	Pavilion Reit	Within expectations	Outperform	RM1.41
Kenanga	Company update	Hua Yang	Gearing up for growth	Outperform	RM2.60
Kenanga	Results note	Bursa	1H14 results inline	Outperform	RM8.60
Kenanga	Results note	CIMB	CIMB Thai: weak macro outlook	Market perform	RM8.00
Kenanga	Results note	Digi	Results on track	Market perform	RM5.53
Kenanga	Quick bites	Maybulk	RM320.0m loan facility secured	Outperform	RM2.53