RHB Research Summary - 6 Nov 2014

Hartalega (HART MK, BUY, FV: MYR7.70)
Site Visit To The Next Generation Complex
Company Update
We visited Hartalega’s NGC site recently and gathered that all expansions are on track. Maintain BUY and a MYR7.70 TP (21x 2015 P/E, 11.8% upside).The first two lines will commence operations by end-November and December respectively. The NGC is designed to achieve high efficiency and productivity. Despite a potential short-term earnings impact, this expansion is crucial to retaining its market leadership.

British American Tobacco (ROTH MK, SELL, TP: MYR59.60)
Corporate News Flash
A MYR1.50 Excise-Led Price Hike
BAT announced that the prices of all its branded cigarettes were raised by MYR1.50 per pack effective yesterday, citing the 3-sen increase per stick in excise duty as the reason. Maintain SELL, with a higher DCF-based TP of MYR59.60 (from MYR57.80), suggesting a downside of 12.2%. We expect a significant drop in sales volume following the price hike but believe the higher ASP would more than offset the decline.

Malaysia Marine and Heavy Engineering (MMHE MK, SELL, TP: MYR2.01)
Results Review
Slow Orderbook Replenishment
Malaysia Marine and Heavy Engineering (MMHE)’s 9MFY14 net profit of MYR113.4m were within our estimate, at 71.4% of full-year numbers but fell below consensus at 69.4%. We maintain our earnings estimate for FY14 but lower our FY15F net profit by 22%. Maintain SELL, with a lower TP of MYR2.01 based on 15.5x P/E, which is at a 15% discount to mid-cap oil & gas counters under our coverage.

Perisai Petroleum Teknologi (PPT MK, SELL, TP: MYR0.88)
Results Review
Further Disappointment
Perisai posted a disappointing 9MFY14 core profit of MYR0.33m, well below our and consensus estimates. The disappointing numbers were due to the underutilisation of two of its marine assets as well higher finance costs from its borrowings. As we remain wary over its future earnings, we slash our FY14F/FY15F numbers by 95%/38% respectively. We downgrade our recommendation to SELL, with a lower TP of MYR0.88 based on 14.6x FY15F P/E.

CIMB Research Summary - 6 Nov 2014

IFCA MSC - Best quarter ever

3Q14 net profit was a record high for IFCA. At 178% annualized 9M14 net profit, IFCA’s 3Q results was above our (no consensus) expectations due to higher-than-expected top-line growth. We raise our FY14-16 EPS by 36%-100% to reflect stronger top-line growth and target price also rises based on unchanged 21x 2016 P/E(in line with domestic peers). The stock remains an Add with potential catalysts such as record 3Q14 net profit and move to Main Board in 2015.


Perisai Petroleum - In recovery mode

Perisai reduced its core net loss to RM3m as at end-Sep 2014 as the company returned to profitability in 3Q14, thanks to early profits from PP101 that started work in mid-Aug. We deem the performance broadly in line as we expect a stronger earnings recovery in 4Q14 given the first full-quarter of contribution from PP101, mitigating the loss of income from the unemployment of Rubicone and E3. We continue to value the stock based on CY16 P/E of 14.8x with an unchanged 30% discount to the P/E of the oil & gas big caps. We maintain our Add recommendation, with the full deployment of the assets as the potential re-rating catalyst.


Malaysia Marine & Heavy Eng - Running dry

MMHE's 9M14 net profit undershot expectations, forming only 70% of our and consensus full-year forecasts due to project delays. More worryingly, the company's dry spell, which resulted in the order book shrinking to a record low of RM1.7bn, ran counter to the positive outlook of its peers. Despite a rollover, our target price falls as we cut FY14-16 EPS for lower contract win assumptions. We now value the stock at 21.2x CY16 P/E (formerly 23.4x CY15 P/E) as we lower the target premium from 40% to 30% over our 16.3x target market P/E to reflect the current weak oil price sentiment. We maintain our Reduce call, with the potential de-rating catalysts of slower order book momentum and extended project delays. Switch to SapuraKencana.


Petronas Gas - More gas coming

We were pleasantly surprised that the Pengerang regasification terminal is expected to start soon, according to the conference call with PetGas yesterday. Once the terminal is completed in three years, PetGas's EBIT could be boosted by another 10-11%. We make no changes to our earnings forecasts and SOP-based target price of RM26.44. We remain optimistic on PetGas's earnings outlook, underpinned by its gas processing and transportation agreements which could see it continue to enjoy stable earnings and cashflow. We maintain our Add call on the stock. We expect the announcement of the Pengerang regasification terminal to act as a re-rating catalyst.

Research Summary: 6 August 2014

Research Summary: 6 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Axis REIT	Brighter growth prospects	Neutral	RM3.34
RHB	Results review	Hartalega	Consolidation mode	Neutral	RM6.95
RHB	Results review	MHB	Still disappointing	Sell	RM3.10
RHB	Sector update	Telco	Staying connected – Aug 2014	Neutral
CIMB	Flash note	Axis REIT	More excitement ahead	Add	RM3.82
CIMB	Results note	MHB	Better yardstick elsewhere	Reduce	RM3.25
CIMB	Results note	Tasek	Dividend surprise in 2Q	Hold	RM15.30
CIMB	Results note	Hartalega	More challenges ahead	Hold	RM6.46
Maybank	Initiate coverage	Boustead Plantations	Plantation estates for free, anyone?	Buy	RM2.16
Maybank	Results review	MHB	In line; changes in methods	Buy	RM4.60
Maybank	Results review	Hartalega	High take-up for new capacity	Buy	RM7.30
Maybank	Technical	MFlour		Short-term buy
Kenanga	Company update	Axis REIT	Focusing on industrial assets	Market perform	RM3.53
Kenanga	Results note	Hartalega	Looking forward to a better 2H15	Outperform	RM7.48
Kenanga	Results note	MHB	Lower results, trimming forecasts	Underperform	RM3.24