CIMB Research Summary - 24 Oct 2014

Classic Scenic Bhd - Picture perfect

Classic Scenic (CSB) is a typical Warren Buffett-type company. It operates in a profitable niche industry with minimal capex and strong free cashflow. Berkshire Hathaway’s Larson Juhl is CSB’s third- largest customer. CSB offers investors dividend yields of almost 10%. Warren Buffett bought the US picture framing giant, Larson Juhl in 2002, citing superior economics as his reason. Investors have the same chance today in CSB. CSB has paid total dividends of 47 sen over the past five years, representing 40% of its current market cap. Combined with its net cash of 13 sen/share, this solid dividend-yielder could be worth RM1.53-2.06, based on SOP, offering investors 31-76% upside.


Public Bank Bhd - Banking on active asset-liability management

Public Bank’s (PBB) 9MFY14 net profit was in line with our expectation (at 74% of full-year forecast) but ahead of consensus (76%). We retain our EPS forecasts but our DDM-based target price (cost of equity of 10.3%; long-term growth of 4%) rises marginally as the valuation rollover to end-2015 was partly offset by the cut in the assumed growth rate for the interim phase from 7% to 6%, given the slowdown in loan growth. We still rate PBB a Reduce, premised on the expected (1) upturn in credit costs, (2) margin compression, and (3) weaker loan momentum. We prefer Maybank.


Malaysia Airports Holdings - Vying for full ownership of ISG

As we had expected, MAHB announced yesterday that it will exercise its ROFR to purchase another 40% of ISG, but the method of funding the RM1.2bn cost has not been decided. We keep our Hold call and DCF-based target price unchanged. Downside risk to the share price is limited, but weak traffic growth and KLIA2-related costs are likely to lead to uninspiring results in the coming quarters.


Daibochi Plastic & Packaging - Signs of recovery

At its 3Q14 briefing, Daibochi voiced its optimism over its topline growth prospects, which will be fuelled by export markets, particularly Australia. Another positive is raw material prices which have been falling since Sep. We maintain our EPS forecasts and target price, which is based on an unchanged 2016 P/E of 13x, on par with the sector. The stock remains an Add, with potential catalysts being major export orders and a further decline in raw material prices

RHB Research Summary - 24 Oct 2014

Malaysia Airports Holdings (MAHB MK, BUY, TP: MYR8.51)

Taking Full Control Of Sabiha Gokcen

Corporate News Flash

As anticipated, Malaysia Airports announced that it would exercise ROFR to block Limak’s 40% sale of Istanbul Sabiha Gokcen airport (ISG) to TAV. Funding details have yet to be revealed but we believe it may purely be a cash call. We maintain our MYR8.51 TP and BUY call (a 27.2% upside), pending its funding decision. ISG is on the verge of an earnings uptick that could materialise earlier than anticipated.

 

 

Cahya Mata Sarawak (CMS MK, BUY, TP: MYR5.00)                                

Continuing To Ride On SCORE

Company Update

CMS continues to be an excellent proxy to SCORE. Maintain BUY and SOP-based MYR5.00 TP, a 22% upside. Its OMS associate and MPA phosphate project are making good progress, and are set to benefit from attractive power tariffs. Investors also think its huge cash pile will allow CMS to participate in projects with attractive yields that may arise from SCORE’s developments or other opportunities.

 

 

Sime Darby (SIME MK, NEUTRAL, TP: MYR9.00)

Long Term Plans To Unlock Value

Company Update

Sime answered many questions on its strategy for the spinning off and listing of core units, latest acquisition and potential contributions from its Battersea project at our IMHK event last week. Despite its rather subdued earnings prospects, we believe news flow about its potential restructuring could support its share price. Maintain NEUTRAL, as we lift our SOP-based TP to MYR9.00 (from MYR8.75) a 1.4% downside.

 

 

Public Bank (PBK MK, NEUTRAL, TP: MYR20.60)

OPR Hike Booster

Results Review

Public Bank’s 3Q14 results were robust, underpinned by a sequential expansion in NIM following July’s 25bps OPR hike. Other positives: well-controlled overheads, low credit cost with stable asset quality while capital levels are now among the highest after its MYR4.8bn rights issue. Still, we believe the positives are largely priced in. Maintain NEUTRAL, with a revised MYR20.60 GGM-based TP (10.6% upside).

 

 

 

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

Looking Towards a Better 2015

Results Briefing

In view of Daibochi’s mediocre 9M14 thus far, we trim our earnings forecasts for FY14. However, we believe 2015 may be a record year, with earnings fuelled by its topline growth as well as margin expansion on the back of lower raw material prices. Despite this, valuations are not compelling at this juncture. Maintain NEUTRAL and a MYR4.10 TP (2.6% downside), premised on an unchanged 13x P/E 2015 EPS.

 

 

Hua Yang (HYB MK, BUY, TP: MYR2.74)

Dark Days Are Over

Results Review

Hua Yang’s 1HFY15 results were in line, coming in at 54/49% of ours/consensus estimates. Net profit more than doubled YoY, as contributions from its new projects started trickling in. With more projects to be launched in 2HFY15 (Mar), management’s full-year new sales target of MYR500-600m looks achievable (1HFY15: MYR192.2m). Maintain BUY, and a RNAV-based TP of MYR2.74 (19.0% upside).

 

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

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: 25 July 2014

Research Summary: 25 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Sector update	O&G	Storage, the preferred play over refineries	Overweight
RHB	Results review	Public Bank	Still tracking targets	Neutral	RM19.85
RHB	Company update	CIMB	CIMB Niaga 2Q14 results show muted numbers	Neutral	RM7.75
RHB	Results review	IGB REIT	Steady as expected	Neutral	RM1.27
RHB	Company update	MRCB	Taking up 100% stake in Penang Sentral	Buy	RM1.87
RHB	Company update	Sunway	Sales picked up strongly in 2Q	Buy	RM3.60
RHB	Company update	Dialog	Now neutral pending re-rating catalyst	Neutral	RM1.90
RHB	Results briefing	Daibochi	Fundamentals still intact	Neutral	RM4.10
RHB	Results review	Airport	Hit by higher depreciation and interest costs	Buy	RM8.51
RHB	Results review	Unisem	Finally back in the black	Buy	RM2.16
RHB	Eco highlights	Economics	Leading Index slowed in May, economic activities will likely grow at a moderate pace ahead
CIMB	Results note	Public Bank	Time to cash in on the price rally	Reduce	RM17.50
CIMB	Results note	IGB REIT	Stable Gardens and Valley	Hold	RM1.25
CIMB	Results note	Airport	Uncertainty is the enemy	Hold	RM7.50
CIMB	Results note	Unisem	Sequential improvement	Add	RM2.09
CIMB	Flash note	Daibochi	Stable raw material prices	Hold	RM4.38
CIMB	Eco update	Economics	May LI: Still favourable outlook
Maybank	Company update	Yinson	Sells Petroleo Nautipa for USD59m	Buy	M3.03
Maybank	Results review	Public Bank	Tepid growth in 1HFY14	Sell	RM19.20
Maybank	Results review	Airport	Surprise loss	Hold	RM6.90
Maybank	Results review	IGB REIT	Beat expectations	Hold	RM1.29
Maybank	Technical	FGV		Take profit
Kenanga	Results note	Unisem	Impressive turnaround	Market perform	RM1.64
Kenanga	Quick Bites	Yinson	Trading Petroleo Nautipa for longer-term plans	Underperform	RM2.31
Kenanga	Results note	Airport	Lower on KLIA2 opening	Market perform	RM8.06
Kenanga	Results note	CIMB	CIMB Niaga: weak showing	Market perform	RM8.00
Kenanga	Results note	IGB REIT	1H14 within expectations	Outperform	RM1.35
Kenanga	Results note	Public Bank	Looking to grow better yielding assets	Market perform	RM20.00