Economic Update - Float on RON95 and diesel
Today, the government announced that subsidies for RON95 and diesel will be eliminated and the pricing for these two fuels will transition to a managed float similar to the one currently in place for RON97. This is in line with the government’s subsidy rationalisation agenda and a positive signal indicating that fiscal reforms are progressing in the right direction. The decision to float is timely as the switch should have a benign impact on inflation given that the average market price is close to the current fixed retail price. Moving forward, falling global oil prices put the possibility of lower inflation on the table, given a more direct pass-through of falling global oil prices to domestic pump prices. Furthermore, the government will now have more fiscal space and more control over the fiscal deficit. We understand that the government has earmarked about RM12bn for fuel subsidy spending in 2015, and is likely to channel the savings through BR1M handouts or other means of targeted assistance.
Genting Bhd - No excitement
GENT’s 9M14 core net profit of RM1.4bn was below our expectations, at 62% of our previous full-year and consensus forecasts on poor performance across the board at GENM, GENP and GENS. No interim dividend was declared in 3Q, as expected. Upon transfer of coverage, our FY14-16 EPS forecasts are cut following our earnings cuts for GENP, GENM and GENS. We also introduce a new target price of RM9.90, still based on 20% holding company discount to our RNAV of RM12.40 (lowered from RNAV of RM14.34 after GENS’s target price was lowered from S$1.72 to S$1.22). With total return of only 6.2%, we downgrade our rating from add to Hold as continued operational headwinds faced by GENS and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment. We advise investors to switch from GENT to GENM for exposure to the gaming sector.
SMRT Holdings Bhd - MEGB’s white knight
7-Eleven Malaysia Holdings Berhad - Growing but below expectations
Genting Malaysia - More bad luck in Genting
Lafarge Malaysia Bhd - Preventing cracks from volatility
Pharmaniaga Bhd - Dividend surprise in 3Q
SBC Corp - Jesselton Quay is the key…
Star Publications - Still cloudy skies
Thong Guan Industries - Feeling Japan’s blues
Economic Update - Oct inflation rises slightly
Welcome to Bursa Malaysia/KLSE Research Summary
Showing posts with label SBC. Show all posts
Showing posts with label SBC. Show all posts
Monday, November 24, 2014
Monday, November 3, 2014
CIMB Research Summary - 3 Nov 2014
Tenaga Nasional - Positive 4Q14 results
Tenaga's FY8/14 core net profit of RM4.7bn was in line with expectations, at 103% and 101% of our and consensus FY14 estimates, respectively. We expected Tenaga to post positive net profit growth in FY14, given that less LNG was burned in 4Q14 and there was gradual recovery in the IPP coal power plants. We lower FY15-16 EPS by 1.0-1.1% after we updated our FY14 numbers and introduce our FY17 estimates. Our target price is raised to RM13.62, as we roll over to 12.8x FY16 P/E (still at 20% discount to the market P/E). We maintain our Hold call on Tenaga as there is lack of clarity on the fuel cost pass-through (FCPT) mechanism.
SapuraKencana Petroleum - Shine bright like a Diamante
We have learned from management that it is business as usual in post-election Brazil and rig utilisation has improved. Sapura Diamante has been dispatched to work for Petrobras in Brazilian waters. Meanwhile, management has secured contracts for the four rigs that were unemployed in 2Q. We roll over valuations and our target price falls as we now value the stock at 21.2x CY16 P/E (formerly 23.4x CY15 P/E), a 30% premium over our target market P/E of 16.3x. We cut our premium from 40% to 30% to reflect the current weak oil price sentiment. We maintain our Add rating, with strong order book momentum and a successful E&P venture as potential re-rating catalysts. SapuraKencana remains our top pick among the O&G big caps.
Banks - Sep 14 tracker – Loan growth “back in business”
Loan growth recovered from 8.6% yoy in Aug 14 to 9% yoy in Sep 14, the first material improvement since Jan 14. We are encouraged by the rebound in business loan growth (from 5.6% yoy in Aug 14 to 6.7% yoy in Sep 14), but not surprised by the weaker consumer loan momentum. Even if loan growth recovers to our projected 9-10% in 2014, it would still be slower than the 10.6% achieved in 2013. Other concerns for banks are margin compression and the upturn in credit costs. All these numbers point to a bleak earnings outlook that underpins our Underweight rating on the sector. Maybank remains our top pick.
MY E.G. Services - Bonus issue is pleasant surprise
MyEG’s announcement on its proposed 1-for-1 bonus issue was a positive surprise to us. The company last proposed a bonus issue six years ago. We maintain our FY15-17 EPS forecasts and target price of RM5.28, based on an unchanged 21x CY16 P/E (on par with its peer average). We maintain our Add recommendation, with the government’s final approval for the CSTM project and further developments on the road safety diagnostic system project as potential re-rating catalysts.
Perisai Petroleum - Down but not out
SBC Corp - 1:2 bonus issue nailed down
Economic Update - Oct loans growth edges up
Tenaga's FY8/14 core net profit of RM4.7bn was in line with expectations, at 103% and 101% of our and consensus FY14 estimates, respectively. We expected Tenaga to post positive net profit growth in FY14, given that less LNG was burned in 4Q14 and there was gradual recovery in the IPP coal power plants. We lower FY15-16 EPS by 1.0-1.1% after we updated our FY14 numbers and introduce our FY17 estimates. Our target price is raised to RM13.62, as we roll over to 12.8x FY16 P/E (still at 20% discount to the market P/E). We maintain our Hold call on Tenaga as there is lack of clarity on the fuel cost pass-through (FCPT) mechanism.
SapuraKencana Petroleum - Shine bright like a Diamante
We have learned from management that it is business as usual in post-election Brazil and rig utilisation has improved. Sapura Diamante has been dispatched to work for Petrobras in Brazilian waters. Meanwhile, management has secured contracts for the four rigs that were unemployed in 2Q. We roll over valuations and our target price falls as we now value the stock at 21.2x CY16 P/E (formerly 23.4x CY15 P/E), a 30% premium over our target market P/E of 16.3x. We cut our premium from 40% to 30% to reflect the current weak oil price sentiment. We maintain our Add rating, with strong order book momentum and a successful E&P venture as potential re-rating catalysts. SapuraKencana remains our top pick among the O&G big caps.
Banks - Sep 14 tracker – Loan growth “back in business”
Loan growth recovered from 8.6% yoy in Aug 14 to 9% yoy in Sep 14, the first material improvement since Jan 14. We are encouraged by the rebound in business loan growth (from 5.6% yoy in Aug 14 to 6.7% yoy in Sep 14), but not surprised by the weaker consumer loan momentum. Even if loan growth recovers to our projected 9-10% in 2014, it would still be slower than the 10.6% achieved in 2013. Other concerns for banks are margin compression and the upturn in credit costs. All these numbers point to a bleak earnings outlook that underpins our Underweight rating on the sector. Maybank remains our top pick.
MY E.G. Services - Bonus issue is pleasant surprise
MyEG’s announcement on its proposed 1-for-1 bonus issue was a positive surprise to us. The company last proposed a bonus issue six years ago. We maintain our FY15-17 EPS forecasts and target price of RM5.28, based on an unchanged 21x CY16 P/E (on par with its peer average). We maintain our Add recommendation, with the government’s final approval for the CSTM project and further developments on the road safety diagnostic system project as potential re-rating catalysts.
Perisai Petroleum - Down but not out
SBC Corp - 1:2 bonus issue nailed down
Economic Update - Oct loans growth edges up
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