MIB Research Summary - 26 Nov 2014

WCT Holdings: Upgrade to Buy Unlocking values; uplift to BUY  Shariah-compliant

Accelerating the REIT-ing of its malls with MYR2b asset value; positive in unlocking the values of its property investments. Negatives on property and construction priced in after the share price fell 17% since Aug 2014. Lowering earnings forecasts, but upgrade the stock to BUY with a shaved TP of MYR2.20 (-2%). UMW Oil & Gas Corporation: Maintain Buy Cautiously optimistic on outlook  Shariah-compliant 70 newbuilds to enter market in 2015; expects softer DCRs. Cost/safety aspects, not DCR, to accelerate scrapping policy. Healthy tenders pipeline (6-to-1 bid-to-JU ratio), committed to grow JU fleet beyond 7 units; not ruling out M&A. Maintain BUY with an unchanged SOP-based MYR3.90 TP. 7-Eleven Malaysia Holdings: Maintain Hold Trimming earnings for one-off 9M14 results included a one-off provision write-back of MYR3.8m. Trimming FY14/15 earnings by 3%/2%. Positively, 7EM has tied up with 2 service providers. Maintain HOLD with lower a TP of MYR1.73 (from MYR1.78). Hong Leong Bank: Maintain Buy Title of report 1QFY15 results within expectations at 25% of our full-year forecast and consensus. As highlighted before, future fund raising cannot be ruled out; we are factoring this into our valuations. Forecasts and BUY maintained, TP raised to MYR16.50 from MYR16.20 on rolling forward valuations (CY15 P/BV of 1.8x). Hong Leong Financial Group: Downgrade to Hold Insurance earnings lowered 1QFY15 earnings lagged due to lower insurance contributions; cut FY15/16 earnings by 10%. RNAV based TP however raised to MYR19.45 from MYR19.10 on rolling forward HL Bank’s valuations. Share price has risen 17% YTD, outperforming peers. Cut to HOLD, prefer HL Bank (TP: MYR16.50) for exposure. BIMB Holdings: Maintain Hold Weaker takaful contributions  Shariah-compliant 3Q14 results within expectations; Takaful earnings weaker QoQ. FY15/16 forecasts trimmed by 4% to factor in lower NIM. HOLD maintained with an unchanged SOP TP of MYR4.40. IJM Corporation: Maintain Buy Orderbook to chalk new high  Shariah-compliant 1HFY3/15 results fall short mainly due to higher tax rates. Construction outstanding orderbook could reach a new high of MYR6.6b while property sales would remain robust. Earnings forecasts are unchanged. Reiterate BUY at an unchanged RNAV-based TP of MYR7.40. Ta Ann Holdings: Maintain Buy Earnings outperformed, TP raised  Shariah-compliant 3Q14 core PATMI beat expectations. FY14-15 EPS raised by 6%/5% on stronger timber earnings outlook but partly offset by weaker plantation earnings. Maintain BUY with a higher TP of MYR5.00 (+5%). Inari Amertron: Maintain Buy Accelerating onto the fast lane  Shariah-compliant 1QFY6/15 net profit within expectations. Inari is Shariah compliant, offering exposure to the growing smart devices market via its partnership with Avago. Reiterate BUY with an unchanged MYR4.20 cum-rights TP (17x CY15 PER), offering a 46% upside. Perdana Petroleum: Maintain Buy Results on track; pursuing growth  Shariah-compliant 9M14 earnings in line; 77% of ours/consensus 12M forecasts. Majority of contracts are long term. OSVs are new (4 years average) and utilisation level is the highest among peers. BUY with an unchanged MYR2.40 TP (12x 2016 PER). Barakah Offshore Petroleum: Maintain Hold Overshot expectations  Shariah-compliant 12MFY14 core net profit made up 84% of ours and consensus’15MFY14 forecasts. Raise 15MFY14 earnings by 16% for the strong 4QFY14 results. Maintain HOLD with an unchanged MYR1.35 TP (10x 2016 PER). TIME dotCom: Maintain Hold Sequentially weaker core showing  Shariah-compliant 9M14 EBITDA and net profit were in line with our expectation at 73% and 71% of our full-year forecasts respectively. Near-term risk-reward remains uncompelling, given the stock’s 48% YTD rally. Maintain HOLD, TP unchanged at MYR5.00. IHH Healthcare: Maintain Hold Seasonal weakness  Shariah-compliant 9M14 core roughly in line, at 69% of our FY14E & 70% of consensus. 3Q seasonally weaker, 4Q the strongest. Ramp-up of hospitals & new beds to spur growth. Lower EPS by 2% for higher tax rate. SOTP TP raised to MYR4.82 from MYR4.81 for marked-to-market stakes. Maintain HOLD given high valuation vs. peer. Singapore GDP 3Q 2014 Stabilising after slowdown 3Q 2014 real GDP growth revised up to +2.8% YoY from +2.4% YoY reported earlier as manufacturing and services expanded to offset weak construction. Adjust our 2014 growth estimate to +3.2% (2014 YTD: +3.3% YoY; 2014 previous: +3.3%). For 2015, we expect growth to moderate slightly to +3.0%. MTI estimates real GDP growth of around +3.0% for 2014 and +2.5-4.0% for 2015. TECHNICAL: Re-testing 1,843 and 1,858 The FBMKLCI gained 4.79 points to 1,838.56 yesterday, while the FBMEMAS and FBM100 also closed higher by 14.65 points and 16.47 points, respectively. We recommend a “Buy on Dips” stance for the index. Trading idea is a Short-Term Buy on TM with upside target areas at MYR7.87 & MYR8.44. Stop loss MYR6.97. NEWS Aviation: PAC lambasts MAHB for ignoring AirAsia's concerns. The Public Accounts Committee (PAC) yesterday slammed Malaysia Airports Holdings (MAHB) for ignoring the needs of stakeholders such as AirAsia when constructing klia2 in Sepang. PAC also called for the Auditor – General (AG) to audit MAHB's performance since it was first established. (Source: The Edge Financial Daily) Sona Petroleum: Gets SC approval, faces task to secure Salamander Energy asset. Sona Petroleum may have received approval from the Securities Commission (SC) but it faces a testing time to secure the asset it is eyeing which is owned by UK-listed Salamander Energy Plc. SC has approved the acquisition of a 40% stake in Salamander Energy's Thai unit Salamander Energy (Bualang Holdings) Ltd for USD282.2m (MYR912m). (Source: The Star) Berjaya Auto: MYR192m BAuto share placement. Berjaya Corp unit Berjaya Group (BGroup) has placed out 60 million ordinary shares of Berjaya Auto (BAuto) for MYR192m. This represented about 7.42% of BAuto’s existing issued and paid-up share capital. Following the completion of the placement, BGroup's shareholdings in BAuto will be reduced to 36.74% from 44.16% previously. (Source: The Star) Malaysia's September 2014 unemployment rate was stable at 2.7% as it dropped -0.4% YoY and -0.7% MoM to 377,200. Unemployment rate has been below 3% since April 2014, indicating a robust job market conditions and virtually a full-employment situation. Employment increased by +1.4% YoY and +1.3% YoY to 13.7m, while total labour force in September 2014 expanded by +0.9% YoY and +1.3% MoM to 14.1 million people, especially those in the 30-34 years age group. As labour force and employment rose and unemployment rate fell, the labour force participation rate (LFPR) increased to 67.9% in September (Aug 2014: 67.1%). (Source: Department of Statistics Malaysia) U.S: Consumer confidence unexpectedly dropped in November as Americans became less upbeat about the economy and labor market. The Conference Board's index fell to 88.7 this month from an October reading of 94.1 that was the strongest since October 2007, the New York-based private research group said. (Source: Bloomberg) U.S: Economy expands more than previously estimated reflecting bigger gains in consumer spending and business investment and capping the strongest six months of growth in a decade. Gross domestic product, the value of all goods and services produced, rose at a 3.9% annualized rate, up from an initial estimate of 3.5%, Commerce Department figures showed. After the 4.6% increase in the second quarter, it marked the biggest back-to-back advance since late 2003. (Source: Bloomberg) Germany: GDP gained by 0.1% QoQ in 3Q 2014, the Federal Statistics Office said. Germany relied on domestic consumers for economic growth last quarter as investment fell, putting the strength of the nation's recovery at risk. Private consumption climbed 0.7% QoQ, while capital investment sank 0.9% QoQ. (Source: Bloomberg) Vietnam: Expands foreign property ownership to boost economy. Vietnamese lawmakers approved a law allowing broad foreign ownership of property, as the government seeks to boost an ailing real-estate market and accelerate economic growth. Foreigners with a valid visa as well as foreign companies and international organizations operating in Vietnam now will be permitted to purchase houses and apartments. Current laws restrict ownership to foreigners married to Vietnamese and those foreigners deemed to make significant contributions to the nation's development. (Source: Bloomberg)

RHB Research Summary - 26 Nov 2014

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.

HLIB Research Summary - 26 Nov 2014

UMW Oil and Gas (HOLD çè)

3Q Result Briefing

• Despite the current weakness in oil price, it expects capex for upstream from national oil companies to remain intact given the need to maintain production.
• Current low oil price environment also provides opportunity to expanding asset. There are 70 new rigs being built but only 30 are built by operator while the rest are for speculative built.
• Despite benefiting from localisation of rigs, we are cautious on the near term outlook given pressure on charter rate amidst declining oil price. We understand that some new contract’s charter rate have seen 3-5% drop.
• We maintain our HOLD call and TP of RM2.90 based on unchanged 16x FY15 earnings.

WCT (HOLD çè)

REIT potential

• Eyeing RM3.8bn jobs domestically and RM3.3bn overseas, we caution on intense competition and fluid timing.
• Property sales target cut from RM1.2bn to RM600m given softening market.
• Exploring REIT potential next year, investment properties worth >RM2bn but move still at early stages.
• Maintain HOLD (TP: RM2.04), muted outlook for construction and property offset by REIT potential.

IHH (SELL çè)

9M14 Results In Line

• 9M14 core net profit of RM540.8m came in within expectations, accounting for 77.5% of HLIB’s full year forecast, but shy of consensus estimates by 7.1%, if annualised.
• Inpatient admission volume: grew healthily yoy in all three key markets, with SG, MY and Turkey gaining 12.1%, 10.2% and 10.5%, respectively. However, qoq growth was rather flat, with SG (+1.5%), MY (-3.7%) and Turkey (-5.2%) due to seasonality.
• Average revenue per inpatient admission: intensity strengthened in all three home markets, SG, MY and Turkey (YoY: 2.5%, 7.8%, 1.7%; QoQ: 2.8%, 1.4% 4.8%), driven by more complex cases.
• IHH is poised to capitalise on the growing demand for quality private healthcare in emerging markets. Revenue growth will be backed by increasing capacity from new facilities which captures increasing demand.
• Challenges include inflationary impact on staff costs, rentals and other operating expenses and start-up costs of newly commissioned hospitals. Expects an environment of volatile FOREX in the emerging markets.
• Reiterate SELL with unchanged SOP-derived TP of RM3.72 as share price has run ahead of fundamentals.

IJM Plantations (HOLD çè)

1H rises 62% on higher output

• 1HFY03/15 core net profit of RM126.7m (+62.4%) was slightly ahead of expectations, accounted for 53.8-55.2% of consensus and our full-year estimates.
• Key variance against our forecast - Better-than-expected FFB output.
• We raised our FY03/15-16 net profit forecasts by 1.1-2.4%, mainly to account for a slightly higher FFB yield assumption.
• Maintain TP of RM3.52 (based on unchanged 17x FY03/17 EPS of 20.7 sen), as we are leaving our FY03/17 net profit forecast unchanged. Maintain HOLD recommendation. 

Inari Amerton (BUY çè)

1QFY15 Results In Line

• 1QFY15 core net profit of RM30.6m was within expectations, accounting for 23.1% and 22.4% of HLIB and consensus’ full year estimates, respectively.
• Declared 1^st single tier dividend of 1.8 sen per share and a special dividend of 0.4 sen per share.
• RF business continues to be robust, contributing almost 50% of revenue. RF demand is expected to grow resiliently in to 2QFY15 as backlog piles.
• Amertron’s contribution weakened mainly due to seasonality but this was well cushioned by RF’s gain. Amertron’s transformation is on track to expand margins through synergy and efficiency.
• Reiterate BUY with unchanged fair value of RM3.41 based on unchanged 15.1x CY15 P/E.

Perdana Petroleum (BUY çè)

Surprise Dividend…

• In line QoQ, 3QFY14 Core profit increased by 12.5% bringing 9MFY14 to RM73m, making up 75% of HLIB and consensus full-year estimates, respectively.
• Declared interim dividend of 2 sen/share.
• QoQ, EBIT margin continue to improve from 35% to 37% due to cost control measures. YoY, 9MFY14 average vessel utilisation increased from 78% to 93%.
• Despite in line 9MFY14 result, we reduced our FY15 earnings by 10% mainly to reflect disposal of Petra Superior.We maintained our BUY call with TP reduced from RM1.87 to RM1.68 pegged at an unchanged 12x FY15 P/E post earnings adjustment

TdC (BUY é)

9M14 Results In Line

• 9M14 turnover of RM438m was translated into much-anticipated core net profit of RM112m, accounting for 74% and 94% of HLIB and street’s FY forecasts, respectively.
• QoQ: weaker top line (-3%) was mainly due to lower global bandwidth sales and income from one-time non-recurring contracts. Excluding those, revenue would have increase by 1.7% qoq on the back of higher data and data centre sales.
• YoY: revenue advanced 14% thanks to contribution from data centre (+16%), GBS and non-recurring contracts despite voice’s contraction (-8.7%).
• YTD GBS which traditionally back-loaded in 4Q, surged 218.4% yoy to RM31.2m, somewhat ahead of expectations.
• Pre-sale of submarine cable should help TdC to monetize and accelerate returns on investments.
• Upgrade from HOLD to BUY after raising SOP-derived fair value by 15.7% from RM5.09 to RM5.89.

Uzma (HOLD ê)

3Q Result: Below

• Below Expectation mainly due to lower activities for oilfield services coupled with drilling campaign for RSC to commence only in 1Q15.
• QoQ, PATAMI margin improve from 8% to 10% mainly due to the tax incentive given by MIDA for acquisition of MMSVS.
• FY14 and FY15 earnings are reduced by 18% and 12% respectively.
• Although we still like the company in the long run, we are cautious on the near term outlook amidst lower oil price and lack of contract newsflow in next 3-6 months.  Thus, we downgraded our call from BUY to HOLD with TP reduce from RM3.66 to RM2.75, based on lower P/E of 12 x (versus 14 previously) post earnings adjustment.

Traders Brief

Sideway with slight upside bias today

• Yesterday’s white candlestick which indicated that bulls were in control on Tuesday would continue to climb higher today. Resistances are 1850, 1860 and 1880. However, KLCI might erase some gains during the day as hourly chart showed that KLCI would take a breathier after follow-through technical rebounds on Monday and Tuesday. Next supports are pegged at 1836, 1823 and 1812.
• The general outlook of KLCI remains weak and bearish as a result of its medium-term downtrend line, unless 1850 is taken out.
• Yesterday, took profit on UNISEM as it hit more than R1.
• Today’s recommendation: Impulse Trading BUY on KUB.

 

Impulse Trading - KUB

KUB: Triumph into the skies

• The double breakouts on hourly and daily charts were strongly substantiated by all hourly and daily bullish momentum indicators. Since all indicators are pointing to strong momentum, our target price projection is pegged at RM0.56, RM0.58 and RM0.62.
• However, KUB’s share price is likely to encounter a stiff resistance near RM0.55. Inability to break above RM0.55 is likely to turn overall outlook negatively. Immediate supports at RM0.52 with cut loss below RM0.51.

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 - 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).