RHB Research Summary - 19 Nov 2014

Berjaya Food (BFD MK, BUY, TP: MYR4.00)

From Grande To Venti

Initiation

We initiate coverage on Berjaya Food with a BUY recommendation and MYR4.00 TP, implying a 24.6x FY16 (Apr) P/E and offering a 30.7% upside. Its recently-completed acquisition of the remaining 50% stake in BStarbucks could propel its 3-year-earnings CAGR to 47.7%. Starbucks Coffee, Malaysia’s largest coffee chain with 175 outlets YTD, is set to aggressively expand its number of outlets over the next few years.

 

 

Hartalega (HART MK, BUY, TP: MYR7.50)

Consolidation Phase

Results Review

1HFY15 (Mar) earnings came in broadly within expectations. We maintain our BUY recommendation on Hartalega with a lower TP of MYR7.50 (21x CY15 P/E, 10.3% upside). Declining ASPs, heightened operating expenses and intensified competition have offset its higher sales volume. Nonetheless, we remain positive on its outlook in view of new capacity from the NGC and resilient demand.

 

 

Tasco (TASCO MK, BUY, TP: MYR3.90)

Within Expectations

Results Review

We maintain our BUY call on Tasco with an unchanged TP of MYR3.90 (11.3x FY15F P/E, 27.5% upside). 1HFY15 (Mar) results came in within expectations, with both international business solutions (IBS) and domestic business solutions (DBS) divisions contributing positively to the group. Contract logistics unit reported the strongest growth and we believe this could be the main earnings growth driver moving forward.

 

 

 

TSH Resources (TSH MK, NEUTRAL, TP: MYR2.28)

Poor Downstream Drag Earnings

Results Review

TSH Resources’ 9M14 results were below expectations due to continuing losses at its 50%-owned refinery, although losses narrowed due to higher utilisation. Maintain NEUTRAL on fair valuations at current levels but our SOP-derived TP is reduced to MYR2.28 (from MYR2.47) a 1.3% upside. We also reduce our FY14/FY15 earnings forecast by 11%/8% to account for weaker refining performance. 

 

 

 

Suria Capital (SURIA MK, BUY, TP: MYR3.50)

Results Largely In Line

Results Review

Suria Capital’s 9M14 numbers came in largely within expectations and we believe 4Q14 may be better. We keep our BUY recommendation with an unchanged DCF-based MYR3.50 TP, a 35.7% upside. Heightened operating expenses have offset the growth in revenue and the Jesselton Quay project may need more time to realised. However, we understand that it is still in progress. 

 

 

 

MBM Resources (MBM MK, BUY, TP: MYR3.55) (Upgraded)

On The Rebound

Results Review

MBMR’s 9M14 results were broadly in line. Upgrade to BUY with a new MYR3.55 TP (25.9% upside) as we expect recurring net profit to rebound 39.2% in 2015 from the alloy wheel business breaking even in 2015 and associates Perodua and Hino enjoying more favourable JPY exchange rates. The stock’s undemanding valuations suggest that the recovery is not yet priced in by the market.

 

 

 

Apex Healthcare (APEX MK, NEUTRAL, TP: MYR3.75)

Anchored By Stronger Exports

Results Review

Apex’s 9M14 results were slightly below our expectation, as its core net profit of MYR24m (+14% YoY) accounted for about 71% of our FY14 full-year target.  As such, we maintain NEUTRAL with our TP still at MYR3.75 (1.4% upside), pegged to an unchanged target 12x FY15F P/E. We also pare our FY14F revenue and net profit by 2% and 6% respectively but are maintaining our FY15F and FY16F numbers.

 

 

 

Wing Tai Malaysia (WING MK, SELL, TP: MYR1.76)

Double Whammy

Results Review

1QFY15 results were below our expectations. Downgrade to SELL (from Neutral) with a lower SOP-based MYR1.76 TP (from MYR2.10, a 12.9% downside). Its MYR11m core net profit – accounting for around 15% of our full-year target – fell 29% YoY on lower contribution from property development and apparel retailing. We are lowering our FY15 revenue and net profit forecasts by 12% and 19% respectively.

 

 

 

Malaysian Resources Corp (MRC MK, BUY, TP: MYR2.05)

Coming Along Nicely

Results Review

MRCB’s 3Q14 earnings came in above expectations, driven by earlier-than-expected contributions from one of its projects. We maintain our BUY call and RNAV-derived TP of MYR2.05 (37.7% upside). We raise our FY14/FY15 net profit estimates by 50%/8% after revising our revenue assumptions. MRCB’s near-term prospects remain positive, underpinned by total unbilled property sales of MYR2.9bn.

 

 

 

Lafarge Malayan Cement (LMC MK, BUY, TP: MYR11.27)                                                                                        

Stiff Competition May Dampen Short-Term Outlook

Result Review

As Lafarge’s 9M14 profit of MYR206.1m represented only 47.9/52.5% of our/street’s full-year estimates, we downgrade the stock to NEUTRAL and pare our TP to MYR10.00 (1.4% downside) from MYR11.27. We cut our FY14F/FY15F earnings by 29.1%/11.1% respectively, but keep our target P/E at +2SD from its historical trading range or at 21.6x FY15 EPS as it is still the best proxy to government infrastructure spending. 

 

 

 

CIMB (CIMB MK, NR)

Dampened By Higher Loan Impairment Allowances

Results Review

CIMB’s 3Q14 net profit of MYR890m (-16% YoY, -6% QoQ) missed consensus expectations, with the QoQ and YoY drop in net profit mainly due to higher loan impairment allowances (+119% YoY, +62% QoQ) that CIMB Niaga booked in. 9M14 annualised ROE was 11.6% (vs underlying 9M13 ROE of 14.4%) and CIMB said it would not be able to meet its 13.5-14% ROE target for 2014.

 

 

 

Dialog Group (DLG MK, BUY,  TP: MYR2.00)

Results Review

Dialog’s 1QFY15 core profit of MYR49m was deemed in line (but below consensus estimates), as a boost from Malaysian upstream and downstream activities offsets temporary slowdown in some of its international activities. Further phases of PIDT project is on schedule. Maintain BUY and TP MYR2.00 (33% upside), as we like Dialog’s continued growth in both offshore and onshore businesses.

 

 

 

Tune Ins Holdings (TIH MK, BUY,  TP: MYR3.00)

Rejuvenating Its Take-Up Rate

Company Update

The share price correction yesterday was likely due to temporary setbacks in 3Q results and a cancellation of agreement with Al Hai LLC, which management said to be non-material as it is still on the lookout for MENA and Indonesia partnerships. Maintain BUY and its MYR3.00 TP (24x FY15F P/E, 45% upside). We envision long-term value from its associates, potential partnerships and a recovery in travel demand.

 

 

 

OCK Group (OCK MK, BUY, TP : MYR1.59)

Rising Up The Ranks

Company Update

We believe OCK’s transfer to the Main Market (20 Nov) and the 1-for-2 bonus issue (ex-date: 24 Nov) would catalyse a re-rating of the stock. Maintain BUY with a revised TP of MYR1.59 (ex-bonus TP of MYR1.06) (12.8% upside). We lower our FY14 earnings forecast by 28% due to the delay in the USP contract award and recognition of PMT in 4Q14. The stock’s FY14-16 EPS CAGR remains a compelling 32%. 

 

 

 

Tambun Indah (TILB MK, BUY, TP: MYR2.50)

Unbilled Sales Underpin Resilient Earnings

Results Review

Tambun’s 3Q14 results were within expectations. Maintain BUY with a MYR2.50 TP (18.5% upside). Due to a lack of new launches in 3Q, new sales fell to MYR74m, from MYR149m in 2Q. We expect Tambun to end the year with MYR430m in sales (vs MYR500m in FY13). Although the recent land deal was called off, we remain confident of management’s ability and expect some new land parcels to be secured next year. 

 

 

 

Sunway (SWB MK, BUY, TP: MYR3.90)

Attractive Dividend Angle

Results Review

Sunway’s 3Q14 results came in within our expectation but below market consensus. New sales fell slightly to MYR393m from MYR459m in 2Q. The dividend angle for the stock may have been underappreciated by the market. With the listing of SCG, shareholders could potentially receive a cash dividend of 25-30 sen, on top of the normal dividend payout of 10 sen. Maintain BUY with MYR3.90 TP (20.7% upside).

 

HLIB Research Summary - 19 Nov 2014

TM Berhad (HOLD çè)

DTTB Deal

• TM announced the agreement with MYTV Broadcasting SB for the provision of Digital Terrestrial Television (DTT) infrastructure, network facilities and related services.
• The pack is for a period of 15 years with an annual contract value of RM70.5m.
• A much anticipated positive development as TM continues to monetize its widely distributed fibre backhaul network.
• Besides that, this one-stop solution covers 50 transmission sites as well as data warehousing located in Cyberjaya data centre.
• Reiterate HOLD after raising our DDM-derived fair value by 13.6% from RM6.05 to RM6.87 as we roll forward our valuation to FY16.

Matrix (BUY çè)

• BSS: Hijayu 1B completed, launched Hijayu 3A (phase 3) with take up rate of over 30% and will be launching phase 4 in 4QFY14.
• STV: Land sales target of RM100m is likely to be surpassed should the deal for 55acres of land is succeeded. FY15 land sales target remained at RM100m.
• STP: Developed on the newly acquired land of 164 acres. 80 acres have been carved out for an automobile investor currently in negotiation.
• TSI: Launched Impiana Height (phase 1) with GDV of RM63.5m and take up of 37.8%.
• FY15: Remained positive despite challenging outlook ahead given its advantage of low land costs and upcoming launched are skewed more to mid- to high-end property developments.
• We maintain our TP at RM3.74 (20% discount to RNAV), which implies FY15E P/E of 7.2x. Maintain BUY.

CIMB Group (TRADING BUY çè)

CIMB Niaga – From Hero To Zero

• 3QFY14 results below HLIB and consensus expectations mainly due to sharp rise in Niaga NPLs and provision.
• Besides Niaga, IB also suffered from lower volume and deal flows.  Ex Niaga, 9MFY14 profit grew 6% yoy.
• 4QFY14 – Singapore strong growth but corporate banking and Indonesia still under pressure.  Others will be stable.
• Indonesia asset quality May deteriorate further but it expect to bottom out by 4Q14/1Q15.  Recent fuel price hike not expected to have significant impact. 
• Deal pipeline in 1H15 better.
• FY14 forecast cut by 13% while FY15-16 lowered by 2-3%.
• Target price lowered to RM6.91 based on Gordon Growth with ROE of 12.4% and WACC of 10.1%.  
• Despite concerns about merger dilution and duplication as well as uncertainties in Indonesia , we believe the selldown to 1.4x FY14 P/B has been over exaggerated.  Maintain TRADING BUY as values emerged amid uncertainties. 

Lafarge (HOLD çè)

Well below Expectations

• 9MFY14 net profit of RM206.1m (-19.5%) accounted for 57.9% and 52.5% of our and consensus full-year forecasts.
• Declared 3^rd interim single-tier DPS of 8 sen. YTD, Lafarge has declared NDPS of 26 sen.
• YoY. Intense competition, lower cement sales volume, higher electricity tariff as well as the removal of fuel subsidy have resulted in 3QFY14 net profit declining by 54.4% to RM54.8m.
• QoQ. 3QFY14 revenue decreased by 7.3% mainly due to lower selling prices and lower volumes due to the impact of the festive season. In line with lower revenue and higher operating costs arising from the fuel subsidy removal, net profit declined by 29.1%.
• Maintain TP of RM9.74. (based on unchanged 19.5x, in line with the regional forward P/E for cement stocks and 2015 EPS of 49.9 sen) Maintain HOLD for now. We will review our forecast pending the analyst briefing on 21 November. 

Hartalega (HOLD çè)

1H15 Results In Line

• 1H15 core net profit of RM107m (-23% yoy) came in within our expectations but below consensus.
• Declared 1^st interim dividend of 3.0 sen per share (1HFY14: 3.5 sen).
• 2Q15 revenue weakened (-2% yoy) despite volume growth, indicating ASP decline.
• EBITDA margin fell (5.8ppt yoy) due to high NGC start-up costs and higher electricity and natural gas cost.
• Hartalega views that the incoming NGC capacity (first two lines set to commission by 4QCY14) will be able to sustain earnings and mitigate concern of lower ASP.
• Although there is an 11.3% upside to our TP, we remain conservative and maintain our HOLD call due to the declining ASP trend and competitive environment.
• Reiterate HOLD with unchanged TP of RM7.34, pegged to an unchanged multiple of 16.2x of CY16 EPS, based on 1SD above 5-year historical average P/E.

Sunway (BUY é)

9MFY14 Results Above Expectations

• 9MFY14 core PATAMI came above expectations due to wider-than-expected margins from property development.
• 9MFY14 revenue of RM3.4bn showed a growth of 5% yoy mainly coming from the stronger sales in property development, construction, quarry and healthcare segments.
• No material updates on SunCon to date, apart from the recent announcement on the changes in numbers of shares offered in the proposed listing of SunCon following the exercise of warrants and ESOS (ratio of 1 SunCon for every 10 Sunway shares remained unchanged).
• We tweaked our margins higher hence FY14-15 is up by 7.1-7.2%. Post earnings revision, our TP is upgraded to RM3.65 from RM3.55, based on SOP valuation. We upgraded our recommendation to BUY as we remain optimistic with the group, especially with its proposed listing of SunCon as it would further enhance shareholders’ value.

TSH Resources (HOLD çè)

Within expectations

• 9MFY14 core net profit of RM111.9m (+29.8%) accounted for 79.8-80.5% of consensus and our full-year forecasts. we consider the results within expectations as we anticipate CPO prices to remain low.
• Maintain earnings forecasts, TP of RM2.09, as well as our HOLD recommendation on the stock.  

MRCB (BUY çè)

3Q results: Staging a comeback  

• 9M core earnings at RM56m vs loss of RM111m in previous year, surpasses our expectations.
• Secures RM141m resort job in Desaru, vying for incinerator job in Kepong.
• Property sees contribution from 9 Seputeh and PJ Sentral.
• Maintain BUY (TP: RM1.91), turnaround signs are insight.

MBM (BUY çè)

In Line – Expect Strong 4Q14

• Reported 3Q14 core earnings of RM25.3m and 9M14 of RM80.3m, in-line with HLIB’s forecast (73.3%) and consensus (68.3%).
• Weak result in 3Q14, due to lower group sales volume (stopped production of Viva in 3Q14, prior to new launch Axia in Sep) and lower TIP (affecting components manufacturing).
• Expect strong earnings in 4Q14, mainly due to maiden deliveries of highly demanded Perodua Axia, increasing production of OMI Alloy wheel and increasing TIP (especially Perodua and Proton).
• Maintained BUY with unchanged Target Price of RM4.00, based on SOP.

Tambun Indah (HOLD çè)

9MFY14 Results Within Expectations

• TILB’s 9MFY14 reported PATAMI of RM76.3m came in within expectations.
• Declared first single tier interim dividend of 3 sen/share.
• 3Q14 revenue grew 20.3% yoy driven by increased progress billings, higher take-up rates as well as introduction of new development projects.
• Gross margin in 3QFY14 improved by 7.7-ppts, returning to its usual >30%.
• TP remained unchanged at RM2.14 (based on unchanged 10% discount to RNAV). Maintain HOLD.

Traders Brief

Relief rally will spur KLCI to retest 1836-1850 resistance zones

• Technically, the strong rebound yesterday had injected some positive momentum to the market, supported by expectations of traditional year-end end Nov/Dec window dressing activities and bottom-up technical oscillators. Further upside targets are 1823 (38.2% FR) and 1836 (23.6% FR). Stiff resistance is situated at 1850 (downtrend line and 200- SMA).
• Short term supports are 1812 (50% FR) and 1800
• Today’s recommendation (FIG5): Trading BUY on PENTA.          

Trading Idea - PENTA

PENTA-Poised to surpass 52-wk high

• Valuation wise, at RM0.41, PENTA is trading at 0.91x P/B, about 68% lower against its peers’ average P/B of 2.8x. As a result, we believe laggard equipment manufacturer like PENTA is likely play catch up against its peers, given improving fundamentals.
• Technically, a decisive breakout above RM0.44 will spur prices to retest RM0.47-0.485 zones. In the wake of a positive breakout above the key support-turned-resistance at RM0.40, and supported by the Tweezer bottoms formation and improving technical oscillators coupled with the higher lows, PENTA is likely to advance further to a cluster of immediate resistances at RM0.42 (10-d SMA) to RM0.44 (50% FR). A decisive breakout above RM0.44 will spur prices higher towards RM0.47-0.485 levels. Key supports are RM0.385-0.40. Cut loss at RM0.37

RHB Research Summary - 12 Nov 2014

GD Express Courier (GDX MK, BUY, TP: MYR2.42)

Poised For a New Quantum Leap

Initiating Coverage

We initiate coverage on GDEX with a BUY call and DCF-derived MYR2.42 TP (a 20.4% upside), valuing the stock at an implied 81x FY15F P/E. It has seen 10 years of strong earnings growth, which is expected to remain resilient in the coming years on the capacity expansion of its express delivery service and logistics arm as the drivers. Opportunity in the AEC is a key catalyst to drive GDEX’s earnings higher.

 

 

Tambun Indah (TILB MK, BUY, TP: MYR2.50)

Land Deal Terminated

Company Update

Tambun has terminated the deal to acquire 209.5 acres of land, as certain terms were not met. Although this could disappoint the market, we still like Tambun for its solid management team and >500-acre land at Seberang Perai. Moving forward, management can still embark on other landbanking opportunities. For now, without the new land, we lower our TP to MYR2.50 (14.7% upside). Maintain BUY. 

 

 

Tune Ins Holdings (TIH MK, BUY,  TP: MYR3.00)

Rejuvenating Its Multi-Channel Growth

Results Preview

We expect no major surprises from Tune Ins’ 3Q14 results, as passengers carried by its airline partners are on track to meet our full-year forecast, which had factored in lower travel demand. Reiterate BUY and MYR3.00 TP (24x FY15F P/E, 42% upside). We see a long-term transformation in this growth stock, buoyed by its new leadership, a swift global expansion and sharpening of its multichannel capabilities.

 

Economic Highlights - Industrial Production And Manufacturing Sales Moderated In September, Pointing To More Moderate Real GDP Growth In 3Q (Published on 11 Nov 2014)

Industrial production moderated to 5.4% YoY in September, from 6.5% in August. The reading was slightly lower than the median estimate of a 5.5% gain as a modest increase in export demand dampened manufacturing activities. Along with a slower growth in electricity production, industrial activities experienced a more moderate growth during the month. These were, however, mitigated by a faster increase in the production from the mining sector. Cumulatively, the increase in industrial activities weakened to 4.1% YoY in 3Q (2Q: +5.9%).

 

Research Summary: 20 August 2014

Research Summary: 20 August 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Tune Ins	Integrating its associate business in Thailand	Buy	RM3.00
RHB	Sector update	Auto	Non-national marques gain market share	Neutral
RHB	Results preview	AirAsia	Look beyond this 2QFY14 earnings	Buy	RM2.78
RHB	Results review	Matrix	Property sales pick up in 2Q	Buy	RM3.80
RHB	News flash	Bumi Armada	Nine FPSO and counting	Buy	RM4.54
RHB	Results review	Perdana Petroleum	Bright prospects ahead	Buy	RM2.20
RHB	Results review	Tambun Indah	High property demand in Pearl City	Buy	RM3.00
RHB	Results review	TH Plantations	Expect a stronger 2H2014	Neutral	RM2.06
RHB	Results review	MBM Resources	Light at the end of the tunnel?	Neutral	RM2.88
RHB	Results review	AirAsiaX	Going through a tough period	Sell	RM0.68
CIMB	Flash note	Tune Ins	Tuning up the volume in 2H14	Add	RM2.71
CIMB	Results note	Perdana Petroleum	Counting ship	Add	RM2.40
CIMB	Results note	Uchi Technologies	Weaker coffee brew	Hold	RM1.35
CIMB	Results note	AirAsiaX	Losses can’t get any worse but…	Reduce	RM0.72
Maybank	Results review	AirAsiaX	On a wing and a prayer	Sell	RM0.72
Maybank	Results review	Perdana Petroleum	1H14 results in line	Buy	RM2.55
Maybank	Results review	MBM Resources	2Q14: within radar	Buy	RM3.60
Maybank	Results review	TH Plantations	Bogged down by higher cost	Sell	RM1.65
Maybank	Sector	Automotive	Seasonally stronger 2H begins	Overweight
Maybank	Company update	Bumi Armada	Secures LOI for FPSO Madura	Buy	RM4.55
Maybank	Technical	IHH		Short-term buy
Kenanga	Sector update	Automotive	Slowing down	Neutral
Kenanga	Results note	Perdana Petroleum	Stable 2Q14 results	Outperform	RM2.47
Kenanga	Results note	MBM Resources	Within expectations	Underperform	RM2.92
Kenanga	Results note	Matrix	Steady performance	Under review	Under review
Kenanga	Quick bites	Parkson	Divestment of Festival City Mall for RM349m	Underperform	RM2.48
Kenanga	Company update	Maxis	Still transforming	Market perform	RM6.87
HL	Sector	Automotive	Continuous sales momentum in July	Overweight
HL	Results review	Tambun Indah	Sustainbale demand underpins healthy sales	Buy	RM2.60
HL	Results review	Matrix	Results on the rebound	Buy	RM3.74
HL	Results review	Perdana Petroleum	Sustainable growth	Buy	RM2.18
HL	Results review	MBM Resources	In line – expect stronger 2H14	Buy	RM4.00
HL	Newsbreak	Bumi Armada	Madura landed	Buy	RM4.70