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 SMRT. Show all posts
Showing posts with label SMRT. Show all posts
Monday, November 24, 2014
Friday, October 31, 2014
CIMB Research Summary - 31 Oct 2014
Unisem - Outstanding quarter
Unisem’s 9M14 core net profit beat expectations, forming 105% of our and 91% of consensus full-year estimates. 3Q14 core net profit jumped to RM27.1m, the highest in 15 quarters, driven by stronger sales volume of higher-margin packages such as wafer-level CSP (WLCSP) and bumping. We raise our FY14-16 EPS by 7-54%, and maintain our Add rating with a higher target price of RM2.25, based on 16.7x CY16 P/E, 1 s.d. below its historical mean of 19x. There were no surprises from Unisem’s analyst briefing. However, we were encouraged to learn that the company plans to pare down its borrowings completely by FY15, and it expects to reward its shareholders with higher dividends as it progressively returns to profitability.
Pavilion REIT - A positive 3Q14 for Pavilion
Pavilion REIT's (Pavilion) 3Q14 core net profit of RM63m brought its 9M14 number to RM175.3m, which is above expectations at 79% of our full-year forecast, and 80% of the consensus figure. Net property income (NPI) grew by 16.3% yoy, underpinned by an 8.8% revenue growth and lower property expenses. We raise our FY14-16earnings forecast by 4-4.1% p.a. resulting in a higher DDM-based target price of RM1.50 vs. RM1.45 previously. Despite the positive results, we maintain our Hold call on the stock as: 1) we see few rerating catalysts in the near-term, and 2) current dividend yields of 5.4-5.5% imply further yield compression will be limited, that would not augur well for the share price. We prefer Axis REIT in this space.
SMRT Holdings Bhd - Oh my English!
We believe that SMRT is the cheapest education stock on Bursa. With 80% recurring revenue and a projected 35-50% 3-year EPS CAGR, in turn supported by its medical university and English language teacher training contracts, this under-researched gem is poised for a re-rating. SMRT is trading at only 9-11x FY16 P/E. Assuming SMRT’s FY16 net profit to be around RM21m to RM27.5m (without Pro ELT and with Pro ELT) and pegging the value of the stock at 16x FY16 P/E (in line with the education sector), it could trade up to RM1.04-1.38, giving investors 40-86% upside. Potential re-rating catalysts are its transfer from the ACE market to the Main Board and award of the Pro ELT contract.
Unisem’s 9M14 core net profit beat expectations, forming 105% of our and 91% of consensus full-year estimates. 3Q14 core net profit jumped to RM27.1m, the highest in 15 quarters, driven by stronger sales volume of higher-margin packages such as wafer-level CSP (WLCSP) and bumping. We raise our FY14-16 EPS by 7-54%, and maintain our Add rating with a higher target price of RM2.25, based on 16.7x CY16 P/E, 1 s.d. below its historical mean of 19x. There were no surprises from Unisem’s analyst briefing. However, we were encouraged to learn that the company plans to pare down its borrowings completely by FY15, and it expects to reward its shareholders with higher dividends as it progressively returns to profitability.
Pavilion REIT - A positive 3Q14 for Pavilion
Pavilion REIT's (Pavilion) 3Q14 core net profit of RM63m brought its 9M14 number to RM175.3m, which is above expectations at 79% of our full-year forecast, and 80% of the consensus figure. Net property income (NPI) grew by 16.3% yoy, underpinned by an 8.8% revenue growth and lower property expenses. We raise our FY14-16earnings forecast by 4-4.1% p.a. resulting in a higher DDM-based target price of RM1.50 vs. RM1.45 previously. Despite the positive results, we maintain our Hold call on the stock as: 1) we see few rerating catalysts in the near-term, and 2) current dividend yields of 5.4-5.5% imply further yield compression will be limited, that would not augur well for the share price. We prefer Axis REIT in this space.
SMRT Holdings Bhd - Oh my English!
We believe that SMRT is the cheapest education stock on Bursa. With 80% recurring revenue and a projected 35-50% 3-year EPS CAGR, in turn supported by its medical university and English language teacher training contracts, this under-researched gem is poised for a re-rating. SMRT is trading at only 9-11x FY16 P/E. Assuming SMRT’s FY16 net profit to be around RM21m to RM27.5m (without Pro ELT and with Pro ELT) and pegging the value of the stock at 16x FY16 P/E (in line with the education sector), it could trade up to RM1.04-1.38, giving investors 40-86% upside. Potential re-rating catalysts are its transfer from the ACE market to the Main Board and award of the Pro ELT contract.
Subscribe to:
Posts (Atom)