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.

RHB Research Summary - 31 Oct 2014

Kuala Lumpur Kepong (KLK MK, NEUTRAL, TP: MYR21.30) (Upgraded)

Blue-Chip Plantation Proxy

Company Update

With the seasonal peak for FFB production almost over, CPO prices have a window of opportunity to strengthen between now and 1Q15. This would bode well for a company like KLK, where we estimate every MYR100/tonne change in CPO prices could affect its net earnings by 4-6% per annum. We raise our SOP-based TP to MYR21.30 (7.3% downside) from MYR19.80 and upgrade the stock to NEUTRAL. 

 

Press Metal (PRESS MK, BUY, TP: MYR9.45)

3Q Profit Steps Up

Result Review

Press Metal posted 3Q14 earnings of MYR82.7m from a loss in 3Q13 on higher aluminium prices. Maintain BUY, with a higher MYR9.45 DCF TP (38% upside). We continue to like the company, as it is a world-class low-cost aluminium smelter that can leverage on the bottoming out of aluminium prices. We lift our FY15F earnings by 11.3% after accounting for a lower effective tax rate and higher value-added sales. 

 

IOI Properties Group (IOIPG MK, BUY, TP: MYR3.38)

Potential Key Beneficiary of MRT Line 2

Company Update

IOIPG remains our Top Pick for the sector. Since the proposed stops for the MRT Line 2 are still not firmed up – given that the railway will end at Putrajaya – it emerges as the key beneficiary of the project. It has >500 acres of landbank there, and the IOI City Mall will likely be a valuable asset. With this MRT line, the GDV for its landbank in Putrajaya will likely rise further. Maintain BUY, with our TP at MYR3.38 (23% upside). 

 

Unisem (UNI MK, BUY, TP: MYR2.16)

Within Expectations

3QFY14 Results Review

Unisem’s 9M14 core profit of MYR37.8m came in within our expectations. 3Q14 core earnings of MYR27.1m marked a 150.2% QoQ jump on improvement in its overall utilisation rate to 70% from 65%. Management declared an interim DPS of 2.0 sen. Maintain BUY, with our TP still at MYR2.16 (P/NTA of 1.4x, 28.6% upside).

 

 

Pavilion REIT (PREIT MK, NEUTRAL, TP: MYR1.48)

Lower Cost Base Buoys Earnings Growth

Results Review

Pavilion REIT’s 9M14 results came in line with expectations at 76%/77% of our/consensus estimates. Net property income (NPI) margins saw an improvement to 70.4% in 9MFY14 (1HFY14: 68.4%) due to 3Q14’s lower cost base. Earnings will continue to be driven by its organic growth through more asset enhancement exercises. Maintain NEUTRAL, with an unchanged DDM-based TP of MYR1.48 (0% upside).

 

 

HLIB Research Summary - 31 Oct 2014

Pavilion REIT (BUY çè)

9MFY14 Results

• 9MFY14 net profit of RM175.29m (+10.13% yoy) came in within expectations, accounting for 75.4% and 77.0% of HLIB and consensus full year estimates, respectively.
• Dividend of 2.16 sen was declared during the quarter, bringing the accumulated dividend year to date to 6.00 sen, accounting for 78.0% and 77.9% HLIB and consensus full year DPU expectation, respectively.
• We maintain TP of RM1.44 and HOLD recommendation on the stock. Targeted yield remains at 5.7% based on historical average yield spread of Pavilion REIT and 7-year MGS.

Unisem (BUY çè)

9M14 Results Exceed Expectations

• 9M14 core net profit of RM38.3m surpassed HLIB and street’s full year forecasts by 31% and 29%, respectively if annualized.
• Tax exempt interim dividend of 4% or 2 sen per share (3Q13: none) with an ex-date on 13th Nov.
• Solid 3Q14 earnings chiefly due to strong demand of new smartphone launches as well as proliferation of 4G technology in China .
• Resilient demand in bumping, 8in and 12in wlCSP and flipchip has led to capacity expansions.
• Although demand momentum extended into Oct and Nov, Unisem expect sales to be flat to -5% qoq in 4Q14 to be cautious on Dec in view of year-end inventory adjustments.
• Overall utilization rate improved to 70% although wlCSP / flip-ship product lines were running at more than 80%.
• Reiterate BUY after raising our fair value by 22.4% from RM1.65 to RM2.02 reflecting the upward earnings revision.

Traders Brief

Marching higher towards 1850 amid bullish Dow

§       In the wake of bullish undertone from Wall St and Bursa Malaysia, KLCI could appreciate further to retest 200-d SMA near 1849 and 1857 (upper Bollinger band) in the near term before profit taking activities emerge amid overbought slow stochastics, slightly hawkish FOMC statement, and the start of Nov reporting season next week. Key supports rest with 1825 (30-d SMA), 1816 (20-d SMA), 1806 (38.2% FR) and 1800.

§       Today’s recommendation (FIG4). Momentum Buy on EFORCE (TP RM0.64-0.69; Cut loss RM0.55).

Momentum Idea

Poised for a technical rebound

• Poised to retest 200-d SMA near RM0.69. After ex-bonus issue on 14 Jul 2014, EFORCE’s share price fell to the low of RM0.51, correcting its long-term uptrend. We opine that this healthy correction would present good buying opportunity. Technically, “Inverted Hammer” and “Bullish Harami” patterns on daily and weekly chart respectively signal imminent technical rebound. Key resistances are situated at RM0.64-0.69 whilst supports fall on RM0.56-0.57. Cut loss below RM0.55.

Research Summary: 25 July 2014

Research Summary: 25 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Sector update	O&G	Storage, the preferred play over refineries	Overweight
RHB	Results review	Public Bank	Still tracking targets	Neutral	RM19.85
RHB	Company update	CIMB	CIMB Niaga 2Q14 results show muted numbers	Neutral	RM7.75
RHB	Results review	IGB REIT	Steady as expected	Neutral	RM1.27
RHB	Company update	MRCB	Taking up 100% stake in Penang Sentral	Buy	RM1.87
RHB	Company update	Sunway	Sales picked up strongly in 2Q	Buy	RM3.60
RHB	Company update	Dialog	Now neutral pending re-rating catalyst	Neutral	RM1.90
RHB	Results briefing	Daibochi	Fundamentals still intact	Neutral	RM4.10
RHB	Results review	Airport	Hit by higher depreciation and interest costs	Buy	RM8.51
RHB	Results review	Unisem	Finally back in the black	Buy	RM2.16
RHB	Eco highlights	Economics	Leading Index slowed in May, economic activities will likely grow at a moderate pace ahead
CIMB	Results note	Public Bank	Time to cash in on the price rally	Reduce	RM17.50
CIMB	Results note	IGB REIT	Stable Gardens and Valley	Hold	RM1.25
CIMB	Results note	Airport	Uncertainty is the enemy	Hold	RM7.50
CIMB	Results note	Unisem	Sequential improvement	Add	RM2.09
CIMB	Flash note	Daibochi	Stable raw material prices	Hold	RM4.38
CIMB	Eco update	Economics	May LI: Still favourable outlook
Maybank	Company update	Yinson	Sells Petroleo Nautipa for USD59m	Buy	M3.03
Maybank	Results review	Public Bank	Tepid growth in 1HFY14	Sell	RM19.20
Maybank	Results review	Airport	Surprise loss	Hold	RM6.90
Maybank	Results review	IGB REIT	Beat expectations	Hold	RM1.29
Maybank	Technical	FGV		Take profit
Kenanga	Results note	Unisem	Impressive turnaround	Market perform	RM1.64
Kenanga	Quick Bites	Yinson	Trading Petroleo Nautipa for longer-term plans	Underperform	RM2.31
Kenanga	Results note	Airport	Lower on KLIA2 opening	Market perform	RM8.06
Kenanga	Results note	CIMB	CIMB Niaga: weak showing	Market perform	RM8.00
Kenanga	Results note	IGB REIT	1H14 within expectations	Outperform	RM1.35
Kenanga	Results note	Public Bank	Looking to grow better yielding assets	Market perform	RM20.00