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).

 

MIB Research Summary - 10 Oct 2014

MY Banking Sector: Maintain Neutral CIMB-RHB-MBSB’s mega-merger

Outright winner is MBSB with potential cash option at MYR2.82/share (+19% upside). Positive for RHB - upgrade to BUY with a higher TP of MYR10.45. Positive for OSK with a FV MYR2.64. HOLD on CIMB with an unchanged TP of MYR7.60. Sime Darby: Maintain Buy Short term pain, long term gain  Shariah-compliant Expect neutral-to-slight negative earnings impact in the short term if Sime successfully privatises NBPO. But we are long term positive as PNG opens up a new market and provides future expansion opportunities for the group. Maintain BUY with an unchanged TP of MYR10.20 based on 18x 2015 PER. Technicals: Sell the Budget Day rebound (if any) The FBMKLCI advanced 5.41 points to 1,829.73 yesterday, while the FBMEMAS and FBM100 also closed higher by 42.72 points and 35.20 points, respectively. We recommend a “Sell on Rallies” stance for the index. Trading idea is a Take Profit call on NAIM with downside target areas at MYR3.08 & MYR2.28.

HLIB Research Summary - 10 Oct 2014

Banking (NEUTRAL  çè)

Mega Merger – Still Prefer RHB Cap

• CIMB, MBSB and RHB Cap announced merger structure and valuations, completion expected in mid-2015.
• CIMB and MBSB delist post capital distribution.
• CIMB valued at RM7.267 (1.7x P/B 1HFY13) and RHB Cap at RM10.028 (1.44x), both in line but MBSB at RM2.82 (1.9x) surprised on upside.
• Long-term positive but short-term pain (ROE dilution and integration cost).  Execution and overlaps key risks.
• MBSB winner, privatize at RM2.82 vs. RM2.37, +19%.
• Neutral to CIMB, valued at near current price.
• RHB Cap positvie, new valuation yardstick vs. current undervaluation.  At RM10.028, FY15 P/E and P/B at 11x and 1.1x although ROE will drop to high single-digit.
• Maintain BUY on RHB Cap with unchanged RM10.00 TP and HOLD on CIMB with unchanged RM7.22 TP.
• OSK still good proxy but price appreciation reduced SOP (after 10% discount) of RM2.63 with market price to 15%.

Sime Darby (HOLD çè)

A surprise offer for NBPOL

• Sime surprised the market by announcing its intention to make a general offer for all the shares in NBPOL at £7.15/share cash.
• The price tag values NBPOL at 2014-2015 P/E of 16.4-20.5x (based on consensus), current P/B of 2.04x, EV/ha of RM80,356 (planted oil palm estates). We believe the high price tag is justified given: (1) the scarcity of sizeable brownfield plantation land bank; (2) the rare opportunity to acquire quality brownfield asset (which has strong reputation and track record, and full RSPO certification); (3) it is a good platform for Sime to expand into plantation business in PNG.
• Sime would not have issue funding the acquisition, and the acquisition will only raise Sime’s net gearing from 0.22x to 0.44x, based on our estimates. Earnings wise, we estimate that the acquisition will add ~2.5% to Sime’s FY06/15 earnings.
• Maintain earnings, SOP-derived TP of RM9.75, and Hold recommendation.

Traders Brief

Jittery mood returns amid overnight Wall St slump and the tabling of Budget 2015 today

• Ahead of the Budget 2015 release today and the return of jittery mood in Wall St and overseas markets due to concern of global economic growth, KLCI is expected to experience some wild swings ahead, tracking external markets.
• Immediate rebound targets are 1833 (50% FR), 1838 (10-d SMA) and 1852 (200-d SMA). Only a strong breakout above 200-d SMA will lift the market from current downward consolidation. Conversely, a breakdown below 1818 will likely to spur further downside towards 1800 psychological support.

Trading Idea - Brent Crude Oil

Brent Crude Oil – Technical rebound on the card!

• Positive Divergence between price and Slow Stochastics suggests potential technical rebound. Moreover, “Spinning Top” candlestick at bottom on weekly chart indicates sign of reversal of recent correction. Thus, Crude Oil is expected to rebound in near term and subsequently resume its uptrend if the downtrend (USD97) is taken out. Critical resistances are located at USD97, USD102 and USD105 while supports at USD88.42, USD82.68 and USD76.75.

Research Summary: 4 August 2014

Research Summary: 4 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Hartalega	Ready for new growth wave	Neutral	RM6.95
CIMB	Flash note	Hovid	Running short of capacity	Reduce	RM0.42
CIMB	Flash note	Perdana Petroleum	No cold fleet	Add	RM2.40
CIMB	Flash note	Sime Darby	Preferred candidate for NBPOL	Hold	RM9.85
Maybank	Sector update	Oil and Gas	Roadshow feedback	Overweight
Maybank	Technical	PetGas		Take profit
Kenanga	Sector update	Plantation	Capped by ample soybean oil supply	Neutral
Kenanga	Quick bites	Redtone	Divesting China 3rd party payment license	Market perform	RM0.77

Research Summary: 7 July 2014

Research Summary: 7 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
CIMB	Sector update	Aviation	Who benefits and who loses from new LCC terminals?	Neutral
CIMB	IPO Note	Tanah Makmur	Prosperous land		RM1.88
CIMB	Flash note	MPI	Exciting times ahead	Add	RM7.00
CIMB	Flash note	E&O	Elmina land acquisition finalized	Add	RM3.06
CIMB	Flash note	Sime Darby	Sells 135 acres of land to E&O	Hold	RM9.85
CIMB	Eco update	Economic	May exports expand 16.3% yoy
Kenanga	Quick bites	Sime Darby	Unlocking asset value	Outperform	RM10.50
Kenanga	Company update	Asia Brands	Expanding cautiously	Market perform	RM4.05
Kenanga	Company update	MPI	Positioned well for next growth wave	Outperform	RM6.03
Kenanga	Eco viewpoint	Economic	Exports increased by 16.3%, imports by 11.9% in May
RHB	Sector Update	Banks	OPR hike mildly positive for banks	Neutral
RHB	Company update	E&O	First wellness township in the Klang Valley	Buy	RM3.60
RHB	News flash	Sime Darby	First collaboration with E&O in Elmina West	Neutral	RM10.40
RHB	News flash	Inari	Surprise cash call	Buy	RM3.49
RHB	Eco highlights	Economic	Supplementary budget but deficit target likely be met
RHB	Eco highlights	Economic	Export growth moderated in May, but remained strong
Maybank	Sector update	Banking	Short-term positive price reaction?	Neutral
Maybank	Company update	Sime Darby	Partners E&O at Elmina Estate	Buy	RM10.30
Maybank	Eco update	Econimic	External trade May 2014: So far so good
Maybank	Technical	Ulicorp		Short-term buy