Kenanga - 26 Nov 2014

IDEAS OF THE DAY

l  Results Note: BARAKAH, BIMB, DLADY, HLBANK, IHH, IJM, IJMLAND, IJMPLNT, KPJ, NOTION, PERDANA, TAANN, UOADEV, UZMA

l  On Our Technical Watch: ASTRO, KAREX

NEWS HIGHLIGHTS

l  Sona gets SC approval, faces task to secure Salamander Energy asset

l  Contraves bags GBP3.9m job from Boustead Naval

l  KKB Engineering's unit bags RM43.9m contract

l  EEMSB wins RM79.0m MRT Corp job

l  RM192.0m BAuto share placement

FOREIGN NEWS HIGHLIGHTS

l  Apple tops USD700.0b valuation, fueled by new products

l  Ship broker Clarkson looks to acquire Norway's Platou for USD440.0m

l  United Technologies’ CEO leaves with USD172.0m package

l  Carlyle to buy tyre firm stake in maiden South Africa deal

 

ECONOMIC NEWS HIGHLIGHTS (MACRO BITS) 

Global

l  OECD Sees Gradual World Recovery, Urges ECB To Do More

 

Malaysia

l  IMF: Growth Prospects Still Strong

l  Malaysia’s September Unemployment Rate Stays At 2.7pc

 

Asia

l  China Cuts Key Short-Term Money Rate As Beijing Pushes Down Cash Costs

 

USA    

l  Consumer Confidence In U.S. Unexpectedly Dropped In November

l  Home Prices In 20 U.S. Cities Increase At A Slower Pace

l  US Economy Grows Faster Than First Forecast

 

Europe

l  UK Service Sector Grows Steadily In Three Months To November

l  Jump In Private Consumption Helps Germany Avoid Recession In Third Quarter

l  Italy Retail Sales Post Fifth Consecutive Monthly Fall In September

 

Currencies

l  Dollar Weakens Against Rivals After Consumer-Confidence Data

 

Commodities

l  Oil Down 2 Pct As Pre-Opec Talks Don't Lead To Output Cut

l  Gold Edges Higher As U.S. Dollar Eases; Swiss Vote Eyed

HLIB Research Summary - 26 Nov 2014

UMW Oil and Gas (HOLD çè)

3Q Result Briefing

• Despite the current weakness in oil price, it expects capex for upstream from national oil companies to remain intact given the need to maintain production.
• Current low oil price environment also provides opportunity to expanding asset. There are 70 new rigs being built but only 30 are built by operator while the rest are for speculative built.
• Despite benefiting from localisation of rigs, we are cautious on the near term outlook given pressure on charter rate amidst declining oil price. We understand that some new contract’s charter rate have seen 3-5% drop.
• We maintain our HOLD call and TP of RM2.90 based on unchanged 16x FY15 earnings.

WCT (HOLD çè)

REIT potential

• Eyeing RM3.8bn jobs domestically and RM3.3bn overseas, we caution on intense competition and fluid timing.
• Property sales target cut from RM1.2bn to RM600m given softening market.
• Exploring REIT potential next year, investment properties worth >RM2bn but move still at early stages.
• Maintain HOLD (TP: RM2.04), muted outlook for construction and property offset by REIT potential.

IHH (SELL çè)

9M14 Results In Line

• 9M14 core net profit of RM540.8m came in within expectations, accounting for 77.5% of HLIB’s full year forecast, but shy of consensus estimates by 7.1%, if annualised.
• Inpatient admission volume: grew healthily yoy in all three key markets, with SG, MY and Turkey gaining 12.1%, 10.2% and 10.5%, respectively. However, qoq growth was rather flat, with SG (+1.5%), MY (-3.7%) and Turkey (-5.2%) due to seasonality.
• Average revenue per inpatient admission: intensity strengthened in all three home markets, SG, MY and Turkey (YoY: 2.5%, 7.8%, 1.7%; QoQ: 2.8%, 1.4% 4.8%), driven by more complex cases.
• IHH is poised to capitalise on the growing demand for quality private healthcare in emerging markets. Revenue growth will be backed by increasing capacity from new facilities which captures increasing demand.
• Challenges include inflationary impact on staff costs, rentals and other operating expenses and start-up costs of newly commissioned hospitals. Expects an environment of volatile FOREX in the emerging markets.
• Reiterate SELL with unchanged SOP-derived TP of RM3.72 as share price has run ahead of fundamentals.

IJM Plantations (HOLD çè)

1H rises 62% on higher output

• 1HFY03/15 core net profit of RM126.7m (+62.4%) was slightly ahead of expectations, accounted for 53.8-55.2% of consensus and our full-year estimates.
• Key variance against our forecast - Better-than-expected FFB output.
• We raised our FY03/15-16 net profit forecasts by 1.1-2.4%, mainly to account for a slightly higher FFB yield assumption.
• Maintain TP of RM3.52 (based on unchanged 17x FY03/17 EPS of 20.7 sen), as we are leaving our FY03/17 net profit forecast unchanged. Maintain HOLD recommendation. 

Inari Amerton (BUY çè)

1QFY15 Results In Line

• 1QFY15 core net profit of RM30.6m was within expectations, accounting for 23.1% and 22.4% of HLIB and consensus’ full year estimates, respectively.
• Declared 1^st single tier dividend of 1.8 sen per share and a special dividend of 0.4 sen per share.
• RF business continues to be robust, contributing almost 50% of revenue. RF demand is expected to grow resiliently in to 2QFY15 as backlog piles.
• Amertron’s contribution weakened mainly due to seasonality but this was well cushioned by RF’s gain. Amertron’s transformation is on track to expand margins through synergy and efficiency.
• Reiterate BUY with unchanged fair value of RM3.41 based on unchanged 15.1x CY15 P/E.

Perdana Petroleum (BUY çè)

Surprise Dividend…

• In line QoQ, 3QFY14 Core profit increased by 12.5% bringing 9MFY14 to RM73m, making up 75% of HLIB and consensus full-year estimates, respectively.
• Declared interim dividend of 2 sen/share.
• QoQ, EBIT margin continue to improve from 35% to 37% due to cost control measures. YoY, 9MFY14 average vessel utilisation increased from 78% to 93%.
• Despite in line 9MFY14 result, we reduced our FY15 earnings by 10% mainly to reflect disposal of Petra Superior.We maintained our BUY call with TP reduced from RM1.87 to RM1.68 pegged at an unchanged 12x FY15 P/E post earnings adjustment

TdC (BUY é)

9M14 Results In Line

• 9M14 turnover of RM438m was translated into much-anticipated core net profit of RM112m, accounting for 74% and 94% of HLIB and street’s FY forecasts, respectively.
• QoQ: weaker top line (-3%) was mainly due to lower global bandwidth sales and income from one-time non-recurring contracts. Excluding those, revenue would have increase by 1.7% qoq on the back of higher data and data centre sales.
• YoY: revenue advanced 14% thanks to contribution from data centre (+16%), GBS and non-recurring contracts despite voice’s contraction (-8.7%).
• YTD GBS which traditionally back-loaded in 4Q, surged 218.4% yoy to RM31.2m, somewhat ahead of expectations.
• Pre-sale of submarine cable should help TdC to monetize and accelerate returns on investments.
• Upgrade from HOLD to BUY after raising SOP-derived fair value by 15.7% from RM5.09 to RM5.89.

Uzma (HOLD ê)

3Q Result: Below

• Below Expectation mainly due to lower activities for oilfield services coupled with drilling campaign for RSC to commence only in 1Q15.
• QoQ, PATAMI margin improve from 8% to 10% mainly due to the tax incentive given by MIDA for acquisition of MMSVS.
• FY14 and FY15 earnings are reduced by 18% and 12% respectively.
• Although we still like the company in the long run, we are cautious on the near term outlook amidst lower oil price and lack of contract newsflow in next 3-6 months.  Thus, we downgraded our call from BUY to HOLD with TP reduce from RM3.66 to RM2.75, based on lower P/E of 12 x (versus 14 previously) post earnings adjustment.

Traders Brief

Sideway with slight upside bias today

• Yesterday’s white candlestick which indicated that bulls were in control on Tuesday would continue to climb higher today. Resistances are 1850, 1860 and 1880. However, KLCI might erase some gains during the day as hourly chart showed that KLCI would take a breathier after follow-through technical rebounds on Monday and Tuesday. Next supports are pegged at 1836, 1823 and 1812.
• The general outlook of KLCI remains weak and bearish as a result of its medium-term downtrend line, unless 1850 is taken out.
• Yesterday, took profit on UNISEM as it hit more than R1.
• Today’s recommendation: Impulse Trading BUY on KUB.

 

Impulse Trading - KUB

KUB: Triumph into the skies

• The double breakouts on hourly and daily charts were strongly substantiated by all hourly and daily bullish momentum indicators. Since all indicators are pointing to strong momentum, our target price projection is pegged at RM0.56, RM0.58 and RM0.62.
• However, KUB’s share price is likely to encounter a stiff resistance near RM0.55. Inability to break above RM0.55 is likely to turn overall outlook negatively. Immediate supports at RM0.52 with cut loss below RM0.51.

CIMB Research Summary - 26 Nov 2014

UOA Development - Missed launch and sales targets
UOA Dev's 9MFY14 core net profit was broadly in line with expectations as it made up 69% of our full-year forecast and 75% of consensus estimates. 9M new sales amounted to RM1.37bn, of which nearly half came from 3Q. However, UOA Dev is unlikely to match 2013's record sales of around RM2bn due to launch delays. This is a disappointment. We cut our FY15-16 EPS forecasts by 5-10% and downgrade the stock from Add to Hold, after widening the target basis from 20% discount to RNAV to 30% as we factor in the missed launch and sales targets. The relatively high dividend yield of 5-6% remains the key reason to hold on to the stock. For exposure to the property sector, investors should switch to Mah Sing Group.

Hovid Bhd - Decent start to FY15
Hovid’s 1QFY6/15 core net profit was broadly in line, making up 27% of our and consensus full-year forecasts. Its sales and profit margin improved marginally due to higher selling prices and a favourable foreign exchange rate. As expected, no dividend was declared. We trim our FY15-17 EPS by 1-2% after updating our financial model with the latest numbers from its annual report. We keep our SOP-based target price at RM0.41, but upgrade it to Hold from Reduce as its share price has corrected by 18% since we downgraded it to Reduce in Aug 14. We prefer Pharmaniaga for its higher upside.

7-Eleven Malaysia Holdings Berhad - More to come

BIMB Holdings - Signs of weaknesses in underlying trend

Eksons Corporation - Backed by cash

Hong Leong Bank - Non-interest income dampener

IJM Corp Bhd - Construction piles up numbers

KPJ Healthcare - Hale and hearty in 3Q

Perdana Petroleum - Making waves with a record quarter and a surprise dividend

Ta Ann - Lifted by strong log earnings
UMW Oil & Gas - Middle East fuels future growth
Uzma - Fuelled by new acquisitions
WCT Holdings - Re-strategising for 2015

Research Summary: 3 July 2014

Research Summary: 3 July 2014

Research House	Type	Company/Sector	Report Title	Rating/Call	Target
RHB	Company update	Jaya Tiasa	Fundamentals improve	Buy	RM2.95
CIMB	Flash note	UMW O&G	Seven up!	Add	RM518
CIMB	Company note	Uzma	Innovation-fuelled growth	Add	RM4.68
Maybank	Technical	SP Setia		Short-term buy
Maybank	Sector update	Property	Sentiment still strong, BUT…	Neutral	N/A
Maybank	Company update	Eco World	Strengthening presence in Semenyih	Buy	RM6.59
Maybank	Company update	SP Setia	Something’s brewing?	Hold	RM3.36
Kenanga	Quick bites	Uzma	M&A #1 fulfilled	Outperform	RM4.30
Kenanga	Quick bites	Axiata	Bye-bye samart i-Mobile	Market perform	RM6.96