Bursa Malaysia Daily Market Report - 1 August

Transcription

1. Tuesday , 01 August, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. 2. 3. 4. 5. Astro Malaysia Holdings Berhad: Shift in Growth Drivers Axiata Group Berhad: Transformation Bearing Fruit Banking Sector: Healthier Loan Growth in June Lotte Chemical Titan Holding Bhd: Surprise Water Woes Malaysia Airports Holdings Berhad: Strong 2Q17 Results as Expected Technical Reports 1. Daily Technical Stock Picks 2. Daily Stock Screen 3. Foreign Technical Stock Watch (AUS, HK & FSSTI) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research
2. Daily Note Daily Market Commentary (A Participating Organisation of Bursa Malaysia Securities Bhd) Menara TA One, 22 Jalan P Ramlee, 50250 Kuala Lumpur Tel : 603 - 2072 1277. Fax : 603 - 2032 5048 Tuesday, 01 August 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (31.07.2017) Volume (mil) +/-chg (RMmn) Main Market 1,119.6 44.4 2,421.7 Warrants 231.9 135.3 15.9 ACE Market 576.4 113.5 145.0 Bond 7.2 -1.9 0.8 ETF 0.0 -0.13 0.0 Total 1,935.1 2,583.5 Off Market 38.3 -59.7 125.9 Value +/-chg 341.3 4.2 35.3 -0.6 -0.14 -35.8 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP August Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA BIMB SEM BINTAI TENAGA IRETEX GBGAQRS Up Down 237 396 42 111 25 72 4 7 1 0 309 586 % chg % YTD chg 1,760.03 12,552.60 17,274.82 1,763.50 -7.05 -39.03 -63.79 -5.00 -0.40 -0.31 -0.37 -0.28 7.21 9.47 17.39 7.83 21,891.12 6,348.12 7,372.00 19,925.18 2,402.71 27,323.99 3,329.52 1,576.08 5,840.94 3,273.03 1,879.10 5,720.59 60.81 -26.55 3.63 -34.66 1.72 344.60 -1.23 -4.98 9.91 19.79 10.72 17.77 0.28 -0.42 0.05 -0.17 0.07 1.28 -0.04 -0.31 0.17 0.61 0.57 0.31 10.77 17.93 3.21 4.24 18.57 24.20 15.58 2.15 10.27 5.46 -4.57 0.97 Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) 11.1 9.5 6.5 4.0 4.0 2.0 Value/ Volume 2.16 0.07 0.25 0.12 1.56 1.34 3.29 @ @ @ @ @ @ (RM) 4.40 1.35 0.14 14.16 0.18 1.38 Exchange Rate USD/MYR 4.2810 -0.0011 USD/JPY 110.57 -0.6600 EUR/USD 1.173 0.0024 Counter Mkt Cap. (RM’mn) MAYBANK 100,556 TENAGA 79,905 PBBANK 78,311 SIME 64,268 IHH 59,291 PCHEM 48,610 PETGAS 37,081 IOICORP 32,114 PETDAG 23,624 RHBBANK 20,050 Chg (RM) -0.10 -0.04 -0.26 -0.05 -0.09 -0.05 -0.22 -0.10 -0.08 -0.03 Vol. (mn) 18.73 13.02 11.48 6.83 27.70 3.67 1.94 1.50 0.44 1.39 Commodities Futures Palm Oil (RM/mt) 2,675.00 22.00 Crude Oil ($/Barrel) 50.17 0.38 Gold ($/tr.oz.) 1,268.60 -0.40 Important Dates CAB - 1:4 Bonus Issue - BI of 138.6m subdivided shares. 1 bonus share for every 4 subdivided shares. Ex-Date: 02/08/2017. Entitlement Date: 04/08/2017. LISTING ON: 07/08/2017. Late profit-taking interest on selected banking heavyweights forced the local benchmark index to end a weak trading session sharply lower on Monday. The KLCI slumped 7.05 points to settle at the day's low of 1,760.03, off an early high of 1,768.10, as losers beat gainers 586 to 309 on higher turnover of 1.93bn shares worth RM2.58bn. Bearish technical indicators, weak market breadth and buying momentum should act to depress stocks into extended profit-taking consolidation. On the index, immediate support from the 100-day moving average level now at 1,759 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,710. Immediate resistance stays at the 50-day moving average now at 1,770, next 1,782, followed by the recent peak of 1,796. Hook-down momentum indicators on CIMB point to short-term downside bias with breakdown below the 138.2%FP (RM6.48) to grease slide towards the 123.6%FP (RM6.23), with stronger support seen from the 100-day moving average (RM6.04). Similar bearish hook-down indicators on Maybank implies profit-taking correction potential towards RM9.40, with better support from the 100-day ma (RM9.32) and RM9.20. Overhead resistance is from the 3/5/17 high (RM9.68). News Bites • • • • • • • • • • • • • • • • • Malaysia's loan growth strengthened in June, rising 5.7% YoY from an increase of 5.5% May. YTD, loan growth is up 1.8%, vs. an increase of 1.4% a year ago. Malaysia Airports Holdings Bhd's 1HFY17 net profit climbed to RM128.9mn from RM26.4mn a year earlier. It was within our expectations but above consensus. Lotte Chemical Titan Holding Bhd's 1H17 core net profit of RM458mn (-31% YoY) was below expectations due to unexpected water supply cut and higher-than-expected costs. PT Bank CIMB Niaga Tbk's unaudited consolidated net profit for 1H2017 grew by 87.5% YoY to 1.4 trillion rupiah (RM449.7mn). IHH Healthcare Bhd's indirect wholly-owned subsidiary, Parkway Pantai Limited subscribed for a 55% equity interest in Angsana Holding for total consideration of SGD9.3mn. Mudajaya Group Bhd has bagged two contracts worth RM151.4mn from Petronas for the RAPID project in Pengerang, Johor. AWC Bhd has bagged a RM42.4mn subcontract from the Public Works Department to undertake facilities management of Kompleks Kementerian Luar Negeri in Putrajaya. ManagePay Systems Bhd has been appointed by the Malaysia Economic Development Council as partner and service provider for the latter's Mapem/MPay Prepaid MasterCard programme for foreigners in Malaysia. Tan Sri Dr Teh Hong Piow, the founder and non-executive chairman of Public Bank Bhd, is stepping down from the role in 2019. Palette Multimedia Bhd aborted plans to diversify into the traditional Chinese medicine industry after it decided not to proceed to buy a 51% stake in Genopharma Sdn Bhd. Hengyuan Refining Co Bhd is unaware of any reason that could have caused the recent rally in its share price. Berjaya Corp Bhd called off a proposed joint venture to operate a new pharmacy chain with Australia-based CW Retail Asia Pty Ltd. Iris Corp Bhd's external auditor Messrs Baker Tilly Monteiro Heng said it was unable to perform appropriate audit procedures to obtain sufficient and appropriate audit evidence that it considered necessary involving Iris' subsidiaries for FY17. WMG Holdings Bhd is looking to launch RM1.3bn of new projects postlisting via a reverse take-over of Tekala Corporation Berhad. Metronic Global Bhd has extended the special audit it launched in May to review certain projects and transactions undertaken by the group till Aug 19. China's manufacturing purchasing managers' index fell to 51.4 in July, compared to the 51.5 median forecast in a Bloomberg survey of economists, and the 51.7 reading in June. The US Pending Home Sales Index, based on contracts signed last month, jumped 1.5% to a reading of 110.2. DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Tuesday , August 01, 2017 FBMKLCI: 1,760.03 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Daily Brief Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Market View Tel: +603-2072 1277 taresearch@ta.com.my www.taonline.com.my Extended Profit-Taking Consolidation Late profit-taking interest on selected banking heavyweights forced the local benchmark index to end a weak trading session sharply lower on Monday. The KLCI slumped 7.05 points to settle at the day’s low of 1,760.03, off an early high of 1,768.10, as losers beat gainers 586 to 309 on higher turnover of 1.93bn shares worth RM2.58bn. Break Below 1,759 to See Next Support at 1,729 Bearish technical indicators, weak market breadth and buying momentum should act to depress stocks into extended profit-taking consolidation. On the index, immediate support from the 100-day moving average level now at 1,759 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,710. Immediate resistance stays at the 50-day moving average now at 1,770, next 1,782, followed by the recent peak of 1,796. SELL CIMB & Maybank Hook-down momentum indicators on CIMB point to short-term downside bias with breakdown below the 138.2%FP (RM6.48) to grease slide towards the 123.6%FP (RM6.23), with stronger support seen from the 100-day moving average (RM6.04). Similar bearish hook-down indicators on Maybank implies profit-taking correction potential towards RM9.40, with better support from the 100-day ma (RM9.32) and RM9.20. Overhead resistance is from the 3/5/17 high (RM9.68). Asian Markets Higher Despite Weaker China PMI Asian stock markets traded mostly higher on Monday supported by better-than-expected corporate results and a climb in commodity prices. Brent crude futures were at $52.85 per barrel, up 33 cents or 0.6 percent. Japan's Nikkei ended lower as a sell-off in index heavyweight stocks, SoftBank and Fanuc offset gains in steelmakers and other companies with upbeat earnings. The Nikkei shares average lost 0.17 percent to 19,925.18, while Korean Kopsi ended higher by 0.07 percent to 2,402.71. In down under, the benchmark ASX200 ended higher by 0.31 percent to close at 5,720.59 driven by the strong showing in its materials sub-index. BHP Billiton and Rio Tinto jumped over 2 percent, in line with the jump in Chinese iron-ore futures. In China, official manufacturing PMI for July stood at 51.4, compared to a Reuters forecast of 51.6. The July figure was also below June's reading of 51.7. Meanwhile, the official services PMI came in at 54.5 for July, compared to the 54.9 seen in June. China stocks ended higher, as investors piled into resource firms which forecast jumps in first-half earnings, reinforcing a rotation into blue chips that feature solid growth and fundamentals. The blue-chip CSI300 index rose 0.43 percent to 3,737.87 points, while the Shanghai Composite Index gained 0.64 percent to 3,274.13 points. Page 1 of 7
4. TA Securities 1-Aug-17 A Member of the TA Group Dow Hits Record High While Tech Retreats The Dow closed at a record high on Monday with strong corporate earnings helping lift U .S stocks to gains in July. Of the 58 percent of S&P 500 that have reported results so far, 72 percent had topped estimates on both the top and bottom lines. Goldman Sachs and Home Depot contributed the most gains, while Boeing rose 0.49 percent after announcing it expects a record number of aircraft orders from India. Meanwhile, tech stocks dragged the Nasdaq lower. The S&P 500 information technology dipped 0.53 percent, with Facebook falling 1.86 percent and Alphabet down 1.34 percent. Apple, which is expected to report quarterly results tomorrow, dipped 0.54 percent. In economic news, pending home sales rose 1.5 percent. The Dow Jones Industrial Average rose 60.81 points, or 0.28 percent, to 21,891.12, the S&P 500 lost 1.80 points to 2,470.30 and the Nasdaq Composite fell 26.55 points, or 0.42 percent, to 6,348.12. Page 2 of 7
5. TA Securities 1-Aug-17 A Member of the TA Group News In Brief Corporate PT Bank CIMB Niaga Tbk ’s (CIMB Niaga) unaudited consolidated net profit for 1H2017 grew by 87.5% YoY to 1.4 trillion rupiah (RM449.7mn), or earnings per share of 54.92 rupiah. In a filing with Bursa Malaysia on Monday, CIMB Group Holdings Bhd said the improved net profit was supported by an increase in net interest income (NII) of 8.9% YoY to 6.33 trillion rupiah (RM2.03bn) and a 16.9% YoY decline in provision expense. President director Tigor M. Siahaan said CIMB Niaga was optimistic the positive performance in H1 would provide a strong impetus for further improvement of results. (The Star) Comments: CIMB Niaga’s 1H net profit exceeded our estimates. Encouragingly, the better performance was supported by an increase in operating income and lower provisions. As expected, asset quality has progressively improved on the back of management’s portfolio rebalancing and improved risk management policies. We forecast PBT contributions from the Indonesian unit to contribute to 20% of the group’s PBT in 2017, an increase from 17% in 2016. No change to our earnings estimates pending the release of CIMB’s results in August. Buy maintained based on a TP of RM8.00. IHH Healthcare Bhd’s indirect wholly-owned subsidiary, Parkway Pantai Limited subscribed for a 55% equity interest in Angsana Holding for total consideration of SGD9.3mn. Angsana provides molecular diagnostic test services, including biochemistry, chemistry, haematology and molecular blood analysis and testing. (Bursa Malaysia) Mudajaya Group Bhd has bagged two contracts worth RM151.4mn from Petronas to undertake procurement, construction and commissioning works for the utilities, interconnecting and offsite facilities of the RAPID project in Pengerang, Johor. (Bursa Malaysia) Genting Malaysia Bhd sold of its entire equity interest in its indirect wholly-owned unit EGenting Sdn Bhd for RM3mn. E-Genting Sdn Bhd is considered a non-core asset and was sold to management service provider RW Tech Labs Sdn Bhd. (Bursa Malaysia) AWC Bhd has bagged a RM42.4mn subcontract from the Public Works Department to undertake facilities management of Kompleks Kementerian Luar Negeri in Putrajaya. The subcontract is for a period of five years from Aug 1, 2017 to July 31, 2022. (Bursa Malaysia) ManagePay Systems Bhd (MPay) has been appointed by the Malaysia Economic Development Council (Mapem) as partner and service provider for the latter's Mapem/MPay Prepaid MasterCard programme for foreigners in Malaysia. MPay will provide foreigners with financial services namely MPay Wallet mobile application for smartphones, physical MPay MasterCard prepaid cards, salary crediting programme and remittance services. (Bursa Malaysia) Tan Sri Dr Teh Hong Piow, the founder and non-executive chairman of Public Bank Bhd, is stepping down from the role in 2019. He will be bestowed the title of chairman emeritus on Jan 1, 2019 when he retires in recognition of his par excellence contributions to the group over the past 51 years. However, Teh will stay on as adviser to provide guidance to support the continued growth of Public Bank. (Bursa Malaysia) Palette Multimedia Bhd aborted plans to diversify into the traditional Chinese medicine industry after it decided not to proceed to buy a 51% stake in Genopharma Sdn Bhd, as the latter’s current financial performance was below expectations. Hengyuan Refining Co Bhd is unaware of any reason that could have caused the recent rally in its share price. It replied to an unusual market activity query by Bursa Malaysia after its share price rose by 15.8% to reach an intraday high of RM7.99 (highest price in 3 years). (Bursa Malaysia) Page 3 of 7
6. TA Securities 1-Aug-17 A Member of the TA Group Berjaya Corp Bhd called off a proposed joint venture to operate a new pharmacy chain with Australia-based CW Retail Asia Pty Ltd . No reason was provided for the termination. (Bursa Malaysia) Malaysia Airports Holdings Bhd's net profit rose 614% to RM66.93mn 2QFY17 from RM9.4mn a year earlier as revenue increased on passenger growth. For 1HFY17, net profit climbed to RM128.9mn from RM26.4mn a year earlier. (Bursa Malaysia) Lotte Chemical Titan Holding Bhd reported a 72% drop in its net profit to RM113.6mn for 2QFY17, from RM404.0mn a year earlier. It attributed the poor earnings to a decrease in sales volume due to the unplanned water interruption by Syarikat Air Johor in April 2017, coupled with lower sales during the festive holiday in June. This caused higher cost of goods sold and higher unit production costs amid the water interruption. For 1HFY17, cumulative net profit declined 32% to RM455.8mn from RM676.2mn a year earlier. (Bursa Malaysia) United Plantations Bhd's 2QFY17 net profit rose 51.7% to RM109.8mn from RM72.4mn a year ago, mainly due to higher production, higher crude palm oil and palm kernel prices, and lower costs of production. For 1HFY17, the group posted a 41.9% increase in net profit to RM187.4mn from RM132.1mn a year ago. (Bursa Malaysia) Texchem Resources Bhd sank deeper into the red in 2QFY17 due to lower profit in its industrial and restaurant divisions. The group reported a net loss of RM6.1mn for the quarter compared with RM3.52mn for 2QFY16. For 2HFY17, the group’s net loss widened by 16.7% to RM6.7mn from RM5.7mn for the same period of FY16. (Bursa Malaysia) Perusahaan Sadur Timah Malaysia Bhd reported a 76% drop in net profit for 1QFY18 to RM2.8mn, from RM11.8mn a year earlier, due to a lower profit margin, despite higher sales volume. The group was unable to pass through the production cost hike to customers as it wanted to maintain price competitiveness. (Bursa Malaysia) Iris Corp Bhd’s external auditor has expressed a qualified opinion on the troubled group’s financial statement for FY17. Messrs Baker Tilly Monteiro Heng said it was unable to perform appropriate audit procedures to obtain sufficient and appropriate audit evidence that it considered necessary involving Iris’ subsidiaries for FY17. (Bursa Malaysia) WMG Holdings Bhd is looking to launch RM1.3bn of new projects post-listing via a reverse take-over of Tekala Corporation Berhad. WMG plans to launch the new projects on its existing 44.12 acres of land in Sabah, comprising both residential and commercial properties. (The Edge) Metronic Global Bhd has extended the special audit it launched in May to review certain projects and transactions undertaken by the group till Aug 19. The special audit, carried out by Ferrier Hodgson MH Sdn Bhd, was initially supposed to be completed in two months. (Bursa Malaysia) Page 4 of 7
7. TA Securities 1-Aug-17 A Member of the TA Group News In Brief Economy Asia Malaysia PPI for Local Production Increased 6 .4% The producer price index (PPI) for local production rose 6.4% on a YoY basis in June 2017. Among the sectors which showed significant increases during this period were mining (+10.2%), manufacturing (+6.6%), agriculture, forestry & fishing (+5.0%) and electricity & gas supply (+0.8%). However, index for water supply decreased (-0.7%). On a monthly basis, PPI for local production declined by 1.1% in June 2017 compared to May 2017. This was due to decreases in four sectors namely, mining (-5.2%), agriculture, forestry & fishing (-2.3%), manufacturing (-0.5%) and water supply (-0.3%). However, electricity & gas supply remained unchanged. (Department of Statistics Malaysia) Singapore Bank Lending up 0.4% in June: MAS Bank lending in Singapore rose 0.4% in June from the month before, preliminary data from the Monetary Authority of Singapore showed. This was a shade stronger when compared with the 0.3% growth in May 2017 from the month before. Loans through the domestic banking unit - which capture lending in all currencies but mainly reflect Singapore-dollar lending - stood at S$636bn in June, up from S$633bn in May. From a year ago, bank lending in June was up 7.6%. This compared with the 6.8% YoY growth in May. (The Business Times) China Factory PMI Suggests Economic Momentum Dialed Back in July China's official factory gauge dialed back a notch in July as a push by authorities to curb financial risks spreads. The manufacturing purchasing managers’ index fell to 51.4 in July, compared to the 51.5 median forecast in a Bloomberg survey of economists, and the 51.7 reading in June. The non-manufacturing PMI stood at 54.5 compared to 54.9 a month earlier. Numbers higher than 50 indicate improving conditions; below 50 signals deterioration. The world's second-largest economy performed more strongly than analysts had anticipated in the 1H2017, buoyed by a turnaround for exports and resilient domestic demand. Challenges lie ahead for the second half as policy makers vow to tackle excessive leverage and have slowed the pace of credit expansion. (Bloomberg/Reuters) Australia Private Sector Credit Gains 0.6% in June Private sector credit in Australia was up 0.6% on month in June, the Reserve Bank of Australia said - beating forecasts for 0.4%, which would have been unchanged. On a yearly basis, credit gained 5.4% - exceeding forecasts for 5.2% and up from 5.0% in the previous month. Housing credit gained 0.5% on month and 6.6% on year, while personal credit eased 0.1% on month and 1.4% on year and business credit added 0.9% on month and 4.4% on year. Broad money gained 0.8% on month and 7.7% on year. (RTT News) Japan Industrial Output Rebounds in Sign of Further Recovery Japan’s industrial production rebounded in June, as global demand continued to support the nation’s economic recovery. Industrial output rose 1.6% in June from the previous month, just below the median estimate for a 1.7% increase and following a 3.6% decline in May. The decline in May partly reflected Golden Week holidays, when many factories cut back output. Output in the transport sector rose 4.2% in June, rebounding from a 13.0% tumble in the previous month, as output of passenger cars and automobile recovered. Measured year on year, production rose 4.9% (forecast +4.8%). Production rose 1.9% in the second quarter from the previous quarter, the biggest gain since the beginning of 2014. Production is forecast to rise 0.8% in July and rise 3.6% in August. (Bloomberg) Page 5 of 7
8. TA Securities 1-Aug-17 A Member of the TA Group Japan 's Housing Starts Rebound in June Japan's housing starts rebounded in June, figures from the Ministry of Land, Infrastructure, Transport and Tourism showed Monday. Housing starts increased unexpectedly 1.7 %yearon-year in June, reversing a 0.3 percent fall in May. Housing starts were forecast to drop 0.2%. Annualized housing starts increased to 1.003 million from 0.998 million in the previous month. The expected level was 987,000. Construction orders received by big 50 contractors also recovered in June after falling for two straight months. Orders advanced 2.3% annually, in contrast to a 0.5% fall in May. (RTT News) United States US Pending Home Sales Bounce Back in June Contracts to buy previously owned homes rebounded in June after three straight monthly declines, but the housing market remains constrained by a shortage of properties available for sale. The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, jumped 1.5% to a reading of 110.2. Economists had forecast pending home sales rising 0.7% last month. Pending home contracts become sales after a month or two, and last month's surge implied a pickup in existing home sales after they dropped 1.8% in June. The housing market has been stymied by a dearth of properties, which has pushed up prices and sidelined first-time homebuyers. Pending home sales increased 0.5% from a year ago. In June, contracts rose 0.7% in the Northeast and advanced 2.1% in the South. They shot up 2.9% in the West but fell 0.5% Midwest. (Reuters) Fed's Fischer Warns Political Uncertainty Hurts Economic Growth Federal Reserve Vice Chairman Stanley Fischer said political and economic uncertainty has contributed to slow economic growth in the U.S. and around the world. “Uncertainty about the outlook for government policy in health care, regulation, taxes, and trade can cause firms to delay projects until the policy environment clarifies,” Fischer said in the text of a speech he’s scheduled to deliver Monday in Brazil. The Fed’s benchmark policy rate stands in a range of 1.00% to 1.25%, low by historical standards and especially unusual considering that unemployment sat at 4.3% in May, a 16year low. Interest rates also remain low at the European Central Bank and the Bank of Japan, both of which are still engaged in stimulus efforts through bond purchases. Simulations performed by Fed economists, Fischer said, suggest “the slowdown in growth appears likely to be the primary factor depressing the long-run equilibrium rate, although the contributions from demographics and weak investment demand were also sizable.” (Bloomberg) Europe and United Kingdom Inflation Hits Low Bar Draghi Set as Stimulus Debate Gets Closer Consumer-price growth in the euro area stayed at 1.3% -- enough to argue that deflation risks have disappeared, but too little to meet the European Central Bank president’s goal of just under 2%. While it confirms Draghi’s prediction that inflation would remain near June levels in the coming months, it also reinforces his assessment that, despite better economic growth, there isn’t yet a self-sustained upward trend. Meanwhile, core inflation that excludes energy, food, alcohol and tobacco, rose slightly to 1.2% from 1.1% in June. Final data is due on August 17. So far, Draghi and his Governing Council have steered away from a formal discussion about what will happen to the ECB’s EUR2.3 trillion quantitative-easing programme after its scheduled end in December. While policy makers’ guidance ties bond-buying to progress on the inflation front, the Italian has suggested that purchases could be pared without tightening the stance. Officials will have ample time to ponder economic data and policy options ahead of their Sept. 7 meeting, and probably even thereafter. (Bloomberg) Page 6 of 7
9. TA Securities 1-Aug-17 A Member of the TA Group U .K. Consumer Credit Cools. But It’s Still Red Hot Consumer credit growth slowed in June after the Bank of England officials took action to limit some areas of risk from borrowing. Unsecured lending rose 10% from a year earlier, the least in more than a year, the U.K. central bank said on Monday. It grew GBP1.5 billion on the month. The BOE in June responded to the rapid buildup of credit by ordering lenders to hold billions of pounds of extra capital and strengthened rules on mortgage lending to rein in what one official called “pockets of risk.” The BOE will announce an interest-rate decision on Thursday. While three of eight policy makers supported an immediate increase at the last meeting, since then date has shown that inflation has slowed, the economic expansion is weak and wage growth is tepid. Borrowing on credit cards grew an annual 9% in June. Lending including vehicle finance, personal loans and overdrafts rose by 10.6%. Separate figures showed a slowdown in the mortgage market as well, with home-loan approvals slipping to 64,684 in June, the least since September. (Bloomberg) Share Buy-Back: 31 July 2017 Company AMPROP GRANFLO SALCON UNIMECH Bought Back Price (RM) Hi/Lo (RM) 78,000 20,000 100,000 24,000 0.825/0.80 0.23/0.225 0.52/0.515 1.07/1.05 0.825/0.810 0.23/0.22 0.52 1.06/1.05 Total Treasury Shares 607,581,247 483,115,711 677,694,452 125,845,624 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. liability for any direct or indirect loss arising from the use of this document. the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 7 of 7 We accept no We, our associates, directors, employees may have an interest in
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 31-Jul-17 1.96 2.25 5.83 Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 2.37 2.28 5.04 0.94 0.64 1.28 10.3 24.1 19.8 15.8 25.3 30.6 19.0 9.4 29.5 12.4 8.9 19.0 6.0 4.0 2.2 8.1 4.0 3.4 2.44 2.70 6.47 -19.7 -16.7 -9.9 1.88 2.08 4.09 4.3 8.2 42.4 -8.0 5.1 38.1 4.80 3.70 5.70 8.00 17.50 11.00 23.60 5.80 11.10 1.26 0.97 1.34 1.41 0.66 0.96 0.81 1.33 0.72 33.6 29.4 43.9 49.6 105.2 73.4 137.2 50.7 40.3 30.5 33.6 48.4 55.2 115.5 82.9 142.4 54.5 39.0 11.7 8.7 11.3 13.2 14.9 13.0 14.8 9.9 25.7 12.9 7.7 10.2 11.9 13.6 11.5 14.2 9.2 26.5 4.1 3.1 3.6 3.1 2.6 5.2 2.8 2.4 5.0 4.1 3.1 3.6 3.4 2.6 5.2 2.9 2.4 3.3 4.49 3.00 5.70 6.87 16.30 9.68 20.66 5.59 11.14 -12.5 -14.3 -13.2 -4.7 -3.7 -1.4 -1.8 -10.6 -7.0 3.60 2.08 3.90 4.30 12.70 7.50 19.38 4.53 8.20 9.2 23.6 26.9 52.3 23.6 27.2 4.6 10.4 26.3 5.6 7.5 14.8 45.2 16.3 16.3 2.8 6.2 17.1 0.37 1.27 5.30 3.47 0.65 1.16 2.13 1.90 5.91 0.45 1.57 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.77 0.61 1.00 1.07 0.85 1.25 na 1.07 0.15 5.6 14.8 28.1 15.3 4.9 8.3 12.6 12.8 42.0 5.5 13.0 34.8 20.3 5.7 9.6 12.5 12.9 45.8 6.6 8.6 18.9 22.6 13.0 14.0 16.8 14.8 14.1 6.7 9.8 15.2 17.1 11.3 12.0 17.0 14.8 12.9 0.0 2.4 2.3 2.2 3.9 0.9 2.6 1.6 4.2 0.0 2.4 2.3 2.7 3.9 0.9 2.6 1.6 4.2 0.51 1.37 5.52 3.61 0.74 1.39 2.15 2.48 6.15 -27.5 -7.3 -4.0 -3.9 -12.2 -16.5 -0.9 -23.2 -3.9 0.37 0.89 4.65 3.07 0.37 0.41 1.56 1.50 5.57 0.0 43.5 14.0 13.0 74.3 186.4 36.5 26.6 6.1 -14.9 21.0 10.9 8.4 6.6 101.7 25.3 10.5 0.5 1.99 2.00 0.48 11.0 11.5 18.1 17.3 5.0 5.0 2.19 -9.1 1.93 3.1 -1.0 15.00 17.98 17.84 19.14 0.51 0.58 74.8 79.6 81.3 84.0 20.1 22.6 18.4 21.4 5.0 4.0 5.4 4.2 15.30 19.10 -2.0 -5.9 13.72 15.56 9.3 15.6 7.8 9.8 2.19 7.35 24.90 1.21 83.92 3.74 1.92 4.99 0.89 2.23 8.62 27.41 1.50 88.66 4.10 2.46 4.41 1.23 0.53 0.36 0.33 0.43 0.36 0.47 0.69 0.40 0.53 6.7 26.4 121.1 6.5 290.1 22.3 27.5 15.7 8.1 7.9 40.6 151.0 6.6 327.7 24.7 27.0 16.6 11.6 32.6 27.9 20.6 18.6 28.9 16.8 7.0 31.8 11.0 27.8 18.1 16.5 18.3 25.6 15.1 7.1 30.0 7.7 1.8 1.4 2.8 5.0 3.3 4.0 3.1 0.9 2.8 2.2 2.0 3.0 5.0 3.3 4.5 4.2 1.0 3.9 3.00 8.85 26.52 1.31 85.20 3.89 2.04 5.00 1.07 -27.0 -16.9 -6.1 -7.5 -1.5 -3.9 -5.9 -0.2 -16.8 2.11 7.30 22.44 1.13 74.12 2.26 1.48 4.14 0.78 3.8 0.7 11.0 7.0 13.2 65.4 29.7 20.5 14.1 -14.8 0.3 6.0 5.1 7.3 47.3 11.0 15.2 11.9 44.00 52.08 0.99 198.6 187.4 22.2 23.5 4.5 4.5 51.50 -14.6 40.61 8.4 -0.4 9.72 6.00 11.51 6.54 1.36 1.28 49.3 25.7 54.7 27.7 19.7 23.3 17.8 21.6 0.5 1.3 0.6 1.5 10.00 6.38 -2.8 -6.0 7.50 4.22 29.6 42.1 22.3 32.8 2.38 0.12 3.34 0.13 0.73 1.18 19.3 0.4 23.2 0.4 12.3 31.7 10.3 31.9 5.9 0.0 6.7 0.0 3.42 0.16 -30.4 -28.1 2.28 0.05 4.4 130.0 -19.6 130.0 5.90 4.16 6.39 4.70 0.78 0.52 9.5 13.3 15.0 16.5 61.8 31.2 39.5 25.3 0.6 1.5 0.6 1.8 6.73 4.37 -12.3 -4.8 5.54 3.85 6.5 8.1 -7.1 -0.5 7.07 7.10 1.92 5.74 1.62 6.85 7.60 1.80 6.05 2.20 0.57 0.13 0.27 -0.20 0.30 19.5 35.8 12.3 26.4 3.7 24.6 40.0 15.1 29.8 5.5 36.3 19.8 15.6 21.7 43.4 28.8 17.8 12.7 19.2 29.5 1.1 2.5 1.9 2.3 0.6 1.6 2.8 2.3 2.6 0.8 7.40 7.15 2.38 5.94 2.64 -4.5 -0.7 -19.3 -3.4 -38.6 4.06 5.62 1.88 4.20 1.51 74.1 26.3 2.1 36.7 7.3 46.4 7.7 -9.0 7.3 -31.4 INDUSTRIAL SCIENTX SKPRES 8.66 1.38 9.71 1.75 0.56 0.43 54.5 8.6 66.3 10.6 15.9 16.1 13.1 13.0 2.1 3.0 2.3 3.8 8.99 1.44 -3.7 -4.2 6.01 1.15 44.1 20.0 29.3 7.0 MEDIA ASTRO MEDIA PRIMA STAR 2.58 0.90 2.34 3.50 0.60 1.40 1.06 0.58 0.63 13.2 1.7 7.1 14.6 2.8 6.5 19.5 52.7 33.0 17.7 31.9 36.1 4.8 1.5 7.7 5.0 2.5 7.7 3.01 1.48 2.65 -14.3 -39.2 -11.7 2.47 0.87 2.19 4.5 4.0 6.8 -0.8 -21.7 4.5 -15.9 -28.0 -36.6 -6.5 -1.5 -10.9 -26.7 -71.2 0.20 4.65 0.73 7.03 0.44 6.48 1.33 0.29 190.0 1.1 1.4 5.1 51.7 7.3 15.8 5.3 127.5 -27.7 -19.7 0.5 48.3 -0.4 -4.9 -65.7 -24.7 1.30 14.6 -12.4 BANKS & FINANCIAL SERVICES AFG 3.93 AFFIN 2.57 AMBANK 4.95 CIMB 6.55 HLBANK 15.70 MAYBANK 9.54 PBBANK 20.28 5.00 RHBBANK BURSA 10.36 CONSTRUCTION BPURI GADANG GAMUDA IJM PESONA SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N HUPSENG NESTLE PADINI POHUAT QL SIGN Tobacco BAT GAMING Casino GENTING GENM NFO BJTOTO LUSTER HEALTHCARE Hospitals IHH KPJ Rubber Gloves HARTA KOSSAN SUPERMX TOPGLOV KAREX OIL & GAS DNEX 0.58 0.76 1.00 3.7 4.6 15.8 12.7 1.7 1.7 0.69 LCTITAN 4.70 6.88 na 42.5 63.9 11.1 7.4 3.6 6.6 6.53 MHB 0.74 0.87 1.81 -1.2 1.3 na 56.1 0.0 0.0 1.16 MISC 7.39 6.85 0.85 56.4 48.9 13.1 15.1 4.1 4.1 7.90 PANTECH 0.66 0.69 1.29 4.0 6.2 16.5 10.7 2.7 4.1 0.67 PCHEM 6.95 7.74 1.07 39.2 40.5 17.7 17.2 3.0 3.2 7.80 SENERGY 1.54 1.71 2.52 6.6 4.0 23.3 38.8 0.6 0.6 2.10 UMWOG 0.30 0.80 2.09 -11.7 -3.5 na na 0.0 0.0 1.04 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.49 1.55 1.45 12.0 12.6 12.5 11.8 0.0 0.0 1.98
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.63 3.03 4.47 24.80 9.45 6.35 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.79 0.47 1.05 0.86 1.23 0.41 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.7 111.8 34.0 37.6 8.5 15.7 21.0 119.1 37.5 34.5 38.6 24.6 23.9 22.2 27.8 16.9 19.2 19.2 21.3 20.8 25.2 18.4 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 3.1 2.3 2.2 2.2 2.6 3.6 3.1 2.6 2.7 2.4 3.3 2.7 2.52 3.70 4.81 25.50 9.70 6.55 -35.3 -18.1 -7.1 -2.7 -2.6 -3.0 1.42 2.95 4.22 22.98 7.44 5.50 PROPERTY GLOMAC 0.66 0.70 0.54 1.6 6.3 41.1 10.4 4.6 4.6 0.83 -20.6 0.61 HUAYANG 0.82 0.96 0.65 17.3 10.2 4.8 8.0 4.9 2.4 1.43 -42.8 0.82 IBRACO 0.90 1.00 0.46 5.2 11.1 17.2 8.1 3.9 4.4 1.05 -14.3 0.76 IOIPG 2.10 2.25 0.86 17.4 17.4 12.1 12.0 3.3 3.6 2.46 -14.6 1.85 MAHSING 1.58 1.76 0.73 14.3 13.5 11.0 11.7 4.1 4.1 1.70 -7.1 1.34 SNTORIA 0.84 0.98 0.22 6.2 10.3 13.5 8.1 1.2 1.2 1.00 -16.5 0.69 SPB 4.86 5.98 0.60 25.6 22.8 12.9 14.5 2.5 2.5 5.19 -6.4 4.32 SPSETIA 3.31 4.10 0.73 11.6 12.6 36.9 33.9 4.2 4.2 4.50 -26.4 3.00 SUNWAY 4.28 4.15 0.48 15.5 15.6 17.5 17.3 1.2 1.2 4.32 -0.9 2.84 Note: SUNWAY proposed bonus issue of shares and warrants. Ex-Target price RM1.69. For more details please refer to 15.06.17 report. REIT SUNREIT 1.71 1.86 0.51 8.9 10.1 19.3 16.9 5.2 5.9 1.84 -7.1 1.63 CMMT 1.54 1.72 0.58 8.1 8.6 19.1 17.9 5.5 5.8 1.72 -10.5 1.45 % Chg YTD 14.8 2.7 5.9 7.9 27.0 15.4 5.2 -10.9 1.6 3.3 16.7 6.3 7.4 0.6 19.2 13.7 17.9 21.0 12.4 10.3 50.6 -5.8 -27.4 -10.0 7.7 10.5 4.4 9.9 5.8 42.7 4.9 6.2 -0.6 0.7 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.03 23.78 18.74 14.12 1.40 1.13 21.47 19.60 17.38 1.45 0.70 0.78 0.77 0.98 0.52 7.1 98.4 88.2 175.9 8.2 6.4 102.3 101.3 130.6 10.6 14.5 24.2 21.2 8.0 17.0 16.1 23.3 18.5 10.8 13.2 6.8 3.1 3.3 3.0 5.0 5.8 3.2 3.8 3.2 3.6 1.80 25.70 22.50 14.90 1.64 -42.8 -7.5 -16.7 -5.2 -14.6 1.01 22.96 18.10 13.00 1.39 2.0 3.6 3.5 8.6 0.7 -24.8 -0.1 -12.0 1.6 -6.0 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.63 4.80 5.65 6.36 5.20 4.90 5.85 7.50 1.29 0.90 0.70 0.68 14.6 20.0 25.5 21.4 16.0 20.4 25.7 22.3 31.7 24.0 22.2 29.7 29.0 23.5 22.0 28.5 1.6 4.2 3.5 3.0 1.7 4.3 3.5 3.2 5.99 5.19 6.60 6.90 -22.7 -7.5 -14.4 -7.8 4.11 4.63 5.48 5.81 12.7 3.7 3.1 9.5 -1.9 -0.6 -5.5 6.9 TECHNOLOGY Semiconductor & Electronics IRIS 0.17 INARI 2.56 MPI 14.20 UNISEM 3.84 0.28 2.30 15.60 3.95 1.37 0.74 0.48 0.73 -2.6 10.3 94.2 26.9 -0.3 na 12.4 24.9 112.9 15.1 27.1 14.3 na 20.7 12.6 14.2 0.0 3.1 1.9 3.1 0.0 1.9 1.9 3.1 0.24 2.58 14.28 3.84 -29.2 -0.8 -0.6 0.0 0.10 1.50 7.20 2.27 70.0 71.0 97.2 69.2 54.5 54.2 91.6 62.7 3.23 8.75 3.34 8.10 1.12 1.35 37.6 17.2 37.1 17.5 8.6 50.8 8.7 50.0 1.2 1.1 1.5 1.1 3.59 9.45 -10.0 -7.4 2.16 5.86 49.5 49.3 41.0 44.4 1.76 3.73 2.05 4.05 0.72 0.70 14.3 17.1 22.7 15.1 12.3 21.8 7.7 24.7 2.4 3.4 4.0 3.0 1.87 4.59 -5.9 -18.7 1.47 3.61 19.7 3.3 10.7 -13.3 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 21.62 OCBC 11.36 UOB 23.99 PLANTATIONS WILMAR IFAR 3.34 0.50 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.23 1.17 1.08 173.8 87.7 195.6 190.2 12.4 92.4 12.9 209.3 12.3 11.4 12.3 11.5 2.8 5.7 2.9 2.8 6.7 2.9 22.3 11.5 24.6 -2.8 -1.1 -2.5 14.72 8.84 17.51 46.9 37.4 37.0 24.7 27.4 17.6 3.72 0.53 0.93 1.10 28.9 4.9 31.1 5.2 10.7 9.5 2.4 2.4 2.7 2.6 4.0 0.6 -16.5 -16.8 2.97 0.44 12.5 12.5 -7.0 -5.7 11.5 10.2 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
12. COMPANY UPDATE TA Securities Tuesday , August 01, 2017 FBMKLCI: 1,760.03 Sector: Media A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Astro Malaysia Holdings Berhad TP: RM3.50 (+35.7%) Last Traded: RM2.58 Shift in Growth Drivers BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap, CFA Tel: +603-2167 9603 www.taonline.com.my paulyap@ta.com.my Yesterday, we attended Astro’s Investor Day. Despite concerns over OTT threats, its Pay TV business is expected to remain relevant, albeit growing at more modest rates. Adapting to the changing landscape, content will be a key differentiator, while efforts will also be placed on digitalising existing assets. Detailing its five year strategy, future growth will be driven by Go Shop, digital adex, licensing revenues and Tribe. Its home shopping revenues are estimated to grow more than seven folds to RM1.9bn by FY22 – as it increases customer penetration, coupled with ambitions to expand regionally. We adjust our earnings estimates by 0.7-4.8%. We value Astro at a higher TP of RM3.50/share. BUY. Share Information Bloomberg Code ASTRO MK Stock Code 6399 Listing Main Market Share Cap (mn) 5,209.5 Market Cap (RMmn) 13,440.6 52-wk Hi/Lo (RM) 3.01/2.47 12-mth Avg Daily Vol ('000 shrs) 2,047.0 Estimated Free Float (%) 41.7 Beta 1.06 Major Shareholders (%) Pantai Cahaya Bulan Ventures - 20.7 All Asia Media Equities - 19.5 Pay TV to Grow at Slower Rate Media Partners Asia estimates that Malaysian video industry revenues will grow at a CAGR of 3.9% YoY between 2017 and 2022. Despite disruptive online threats, Pay TV is still expected to remain dominant in the future, commanding the lion share of revenues. In most instances, it is not an either or decision, with individuals subscribing to both OTT and Pay TV services. That said, online videos are expected to grow at a faster rate, increasing its revenue share to ~10% at the expense of Pay TV. Pay TV subscription revenues are expected to grow at a slower 5 year CAGR of 1.8% YoY (FY12-17: 5.9% YoY) in the future, driven by higher ARPUs. E Asia Broadcast Network Systems - 8.1 EPF - 6.2 Forecast Revision (%) FY18 0.7 3.2 Core Net Profit (RMm) 759 764 Consensus TA/Consensus Previous Rating 714 766 106.3 99.7 Buy (Maintained) Financial Indicators FY18 Leveraging on Content Content will remain a key differentiator to attract eyeballs. The group’s strength is the provision of local, live and premium content. Home to a diverse nation, the bulk of the close to 4 hours/day spent on viewing Astro remains on localised content. In fact, 76% of viewing time spent on its platforms are its own content. The group produced 13k hours of content in 2016. In Polis Evo, Journey and Ola Bola, the group has three out of the top 5 local box office hits. Meanwhile, Didi & Friends is a popular show targeted at children, amassing 2.9mn viewers. Via eGG, the group hopes to capture the growing interest in eSports, which may also lead to licensing revenues in the future. Home Shopping to Lead Growth With a slowdown in Pay TV subscription revenues, future growth opportunities will stem from its home shopping business and digital ventures. Its home shopping business, Go Shop, is estimated to grow seven folds to RM1.9bn by FY22. With only 1mn existing Go Shop customers, there is still plenty of room for growth when compared to the group’s existing reach of 23mn individuals. Focus will be on building its customer base, while encouraging repeat purchases. Already having a presence in Singapore, there are ambitions to further grow the business regionally. There are also opportunities to expand digital adex. Although it is a tall order to take on the likes of Google and Facebook in the digital adex space, the group can leverage on the provision of premium content (better customer engagement) and targeted ad offerings. It recently launched an independent digital marketing arm, Blaze Digital, offering digital solutions for marketers across its 21 digital brands and 11 independent digital publications. Page 1 of 3 FY19 Forecast Revision (%) FY19 Net Gearing (%) 5.3 4.5 CFPS (sen) 39.9 39.3 P/CFPS (x) 6.5 6.6 ROE (%) 11.2 10.5 ROA (%) 111.4 98.2 NTA/Share (RM) -0.3 -0.3 P/NTA (x) -9.7 -9.9 ASTRO FBMKLCI Share Performance Price Change (%) 1 mth 2.0 (0.2) 3 mth (4.4) (0.5) 6 mth (5.1) 5.3 12 mth (12.8) 5.7 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg
13. TA Securities 1-Aug-17 A Member of the TA Group Change in Revenue Composition Given the slower growth , contributions from subscription revenues are expected to decrease to 55% of total revenues in FY22 (FY17: 78%). Go Shop revenues is then expected to overtake adex, as the second largest contributor to revenue at 21% (FY17: 5%). Within adex, growth will be driven by digital adex, which is expected to grow at a CAGR of 44%, making up 13% of total adex (FY17: 4%). Changes to Estimates Adjusting for lower expected depreciation, we revise our FY18/FY19/FY20 estimates upwards by 0.7%/3.2%/4.8% to RM759mn/RM764mn/RM845mn. Valuation We value Astro at a higher TP of RM3.50/share – based on a DCF valuation with unchanged WACC of 7.0% and long term growth rate of 1.0%. We continue to like the group for its dominant and resilient Pay TV subscription business. Future growth will be supported by its home shopping and digital ventures. Valuations remain undemanding, as it trades more than 1SD below its historical PE and EV/EBITDA. Dividend yields are also attractive at 5.0-5.4%. BUY. Figure 1 : Forward PE Figure 2 : Forward EV/EBITDA x x 32.0 11.5 +1sd: 28.8x 11.0 +1sd: 10.4x 10.5 10.0 Mean: 9.7x 9.5 Source: Company, TA Securities Source: Company, TA Securities Page 2 of 3 Feb-16 May-16 Aug-15 Nov-15 Feb-15 May-15 Aug-14 Nov-14 Feb-14 May-14 Aug-13 Feb-13 Nov-12 Feb-17 May-17 Aug-16 Nov-16 Feb-16 May-16 Aug-15 Nov-15 Feb-15 May-15 Aug-14 Nov-14 Feb-14 May-14 Aug-13 Nov-13 8.0 Feb-13 8.5 16.0 May-13 18.0 Nov-12 9.0 Nov-13 -1sd: 9.1x -1sd: 20.4x 20.0 May-13 22.0 Feb-17 Mean: 24.6x 24.0 May-17 26.0 Aug-16 28.0 Nov-16 30.0
14. TA Securities 1-Aug-17 A Member of the TA Group P &L FYE Jan 31 (RMmn) Revenue EBITDA Depreciation & amortisation* EBIT Net finance costs Share of associates PBT Taxation MI Net profit Core net profit EPS (sen) DPS (sen) FY16 FY17 5,475.4 5,612.6 1,940.7 1,816.7 (825.8) (721.5) 1,114.9 1,095.2 (293.8) (236.3) 8.3 1.8 829.4 860.7 (221.4) (228.5) 7.4 6.7 615.3 638.8 656.1 689.9 12.6 13.3 12.0 12.5 FY18F 5,753.3 1,921.9 (680.8) 1,241.1 (234.0) 1.9 1,008.9 (242.1) (7.8) 758.9 758.9 14.6 13.0 FY19F 5,971.0 1,880.2 (629.3) 1,250.9 (227.9) 2.0 1,024.9 (246.0) (15.3) 763.7 763.7 14.7 13.5 FY20F 6,235.5 1,961.9 (597.2) 1,364.6 (219.4) 2.0 1,147.3 (275.4) (26.5) 845.5 845.5 16.2 14.0 Balance Sheet FYE Jan 31 (RMmn) Fixed assets Associates + Subsidiaries Goodwill Others LT assets FY16 FY17 FY18F FY19F FY20F 2,129.4 1,817.9 2,457.5 2,220.0 2,011.3 30.2 4.3 4.3 4.3 4.3 2,001.5 2,044.6 2,097.6 2,151.6 2,207.7 651.6 692.2 711.6 723.7 738.4 4,812.6 4,558.9 5,271.1 5,099.6 4,961.6 Inventories Trade receivables Cash Others Current assets 20.6 955.4 635.7 476.7 2,088.4 20.4 858.5 376.3 451.8 1,706.9 16.9 958.9 566.5 451.8 1,994.1 17.6 995.2 733.2 451.8 2,197.8 18.3 1,039.2 957.0 451.8 2,466.4 Total assets 6,901.0 6,265.9 7,265.2 7,297.4 7,428.1 Trade payables ST borrowings Others Current liabilities 1,658.4 519.5 103.5 2,281.4 1,626.5 629.3 24.3 2,280.1 1,499.3 441.9 24.3 1,965.5 1,418.3 447.0 24.3 1,889.6 1,382.7 449.2 24.3 1,856.2 LT borrowings Others LT liabilities 3,285.6 720.2 4,005.7 2,776.3 579.7 3,356.0 3,977.4 589.4 4,566.7 4,023.2 562.4 4,585.5 4,042.9 550.5 4,593.4 *excludes amortisation of film library and programme rights Ratios FYE Jan 31 (RMmn) Valuations PER (x) EV/EBITDA (x) Dividend yield (%) PBV (x) FY16 FY17 FY18F FY19F FY20F 20.5 8.3 4.7 22.4 19.5 8.9 4.8 21.5 17.7 8.4 5.0 18.7 17.6 8.6 5.2 16.9 15.9 8.2 5.4 14.6 Profitability ratios (%) ROAE ROAA EBITDA margin PBT margin 98.8 9.6 35.4 15.1 110.9 10.5 32.4 15.3 111.4 11.2 33.4 17.5 98.2 10.5 31.5 17.2 93.9 11.5 31.5 18.4 Liquidity ratios (x) Current ratio Quick ratio 0.9 0.9 0.7 0.7 1.0 1.0 1.2 1.2 1.3 1.3 Leverage ratios (x) Total liabilities/equity Net debt/equity Net debt/EBITDA Int. coverage ratio 10.2 5.2 1.6 3.8 8.9 4.8 1.7 4.6 8.9 5.3 2.0 5.3 7.9 4.5 2.0 5.5 6.6 3.6 1.8 6.2 Growth ratios (%) Sales Pretax Earnings Total assets 4.7 15.1 15.7 2.5 2.5 1.9 5.1 (9.2) 2.5 19.3 10.0 15.9 3.8 1.6 0.6 0.4 4.4 11.9 10.7 1.8 Share capital Reserves Shareholders' funds MI 520.5 6,715.7 6,715.7 6,715.7 6,715.7 80.2 (6,092.3) (5,997.0) (5,923.0) (5,793.2) 600.7 623.4 718.7 792.7 922.5 13.1 6.4 14.2 29.5 56.0 Total liabilities and equity 6,901.0 Cash Flow FYE Jan 31 (RMmn) PBT Depreciation and amortisation Net finance cost Other non-cash Changes in WC Tax paid Interest received Others Operational cash flow FY16 FY17 FY18F FY19F FY20F 829.4 845.5 1,008.9 1,024.9 1,147.3 1,176.1 1,089.5 1,044.5 1,004.0 981.1 180.8 175.7 234.0 227.9 219.4 53.6 204.9 2.3 2.3 2.3 (59.3) (142.9) 6.4 5.4 6.6 (281.3) (302.3) (242.1) (246.0) (275.4) 44.5 17.9 21.2 29.2 38.0 0.0 0.0 0.0 0.0 0.0 1,943.8 1,888.2 2,075.1 2,047.8 2,119.3 Capex Others Investing cash flow Net share issue Dividend paid Net change in debts Interest paid Others Financial cash flow Net cash flow Opening cash flow Forex Closing cash flow (671.8) 362.6 (309.2) 6,265.9 (616.0) 83.3 (532.8) 7,265.2 (807.1) 0.0 (807.1) 7,297.4 (814.3) 0.0 (814.3) 7,428.1 (822.4) 0.0 (822.4) 0.0 0.0 0.0 0.0 0.0 (650.3) (663.8) (663.6) (689.7) (715.7) (442.4) (527.2) 81.4 50.9 21.9 (131.2) (122.6) (255.2) (257.2) (257.4) (1,131.1) (301.9) (240.3) (170.7) (122.0) (2,355.0) (1,615.6) (1,077.8) (1,066.7) (1,073.2) (720.5) 1,353.6 2.5 635.7 (260.2) 635.7 0.8 376.3 190.2 376.3 0.0 566.5 166.8 566.5 0.0 733.2 223.8 733.2 0.0 957.0 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
15. COMPANY UPDATE TA Securities Tuesday , August 01, 2017 FBMKLCI: 1,760.03 Sector: Telco A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM5.20 (+12.3%) Axiata Group Berhad Last Traded: RM4.63 Transformation Bearing Fruit Under Review THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap, CFA Tel: +603-2167 9603 paulyap@ta.com.my Review XL Axiata reported a good set of results, with a 1HFY17 normalised net profit of Rp114bn. Results came broadly within our expectations, at 48% and 47% of our revenue and EBITDA. Recoveries at XL appear to be underway, as service revenue strengthened 9% QoQ, its highest growth since embarking on its transformation programme. Data monetisation efforts are yielding results, with data now accounting for 67% of service revenues. In line with this, EBITDA increased 12% QoQ. Addressing challenges with regards to its dual brand strategy and distribution channels, a total of 2.5mn net adds were reported during the quarter. Its expansion outside Java is also bearing fruit, reporting twice the market growth rate. YoY. Total revenues stood flattish. Service revenue growth of 4% YoY was offset by lower incoming off-net traffic and foregone tower leasing revenues. However, powered by data monetisation activities and a lower base in the 2HFY16, we do expect revenue growth to intensify in the coming quarters. Subscribers are responding well to industry wide data monetisation activities. Despite a reduction in bonus quotas, data usage continues to increase (+176% YoY). Data revenues now account for 53% of total revenues. Investing in its network, 4G LTE services are now available in 288 cities with 13.6k 4G BTS. An additional 9k 3G/4G BTS has also been rolled out ex-Java, leading to revenue and traffic growth in the region. EBITDA declined 8% YoY, with margins moderating 3.3pp. Higher opex were a result of higher interconnection (+57% YoY) and sales & marketing expenses (+15% YoY). This was due to its Any-Net minutes offerings and marketing spent on new product launches and communicating its improved network quality. Its dual brand strategy appears to be on a better footing, with XL and Axis now reported growing in their respective segment. Issues relating to its traditional distribution channel has been rectified with spending on advocacy and availability of XL product. As a result, 6.5mn subscriber net adds were reported during the quarter. Due to a higher base last year, blended ARPU decreased 8% YoY to Rp34k. That said, with better price discipline, we expect this figure to improve moving forward. Outlook Guidance was left unchanged. Revenue growth is predicted to be in line with the market (high single digits) in 2017. EBITDA margins are estimated in the high 30’s, while capex is guided at Rp7.0trn. Being ahead of the curve with regards to data, we expect XL to sustain its growth momentum on better price discipline in the industry. Additionally, issues relating to its dual brand strategy and distribution channels appear to be under control and should fare better ahead. While ex-Java provides a promising growth angle, costly network rollouts and uncertainties regarding spectrum sharing regulations remain the key stumbling block. Page 1 of 3 www.taonline.com.my Share Information Bloomberg Code AXIATA MK Stock Code 6888 Listing Main Market Share Cap (mn) 8,998.1 Market Cap (RMmn) 41,661.3 52-wk Hi/Lo (RM) 5.99/4.11 12-mth Avg Daily Vol ('000 shrs) 5,968.5 Estimated Free Float (%) 23.5 Beta 1.3 Major Shareholders (%) Khazanah Nasional Bhd - 37.5 EPF - 16.1 Skim Amanah Saham Bumiputera - 11.9 Forecast Revision FY17 Forecast Revision (%) FY18 - - Net Profit (RM mn) 1,309 1,434 Consensus (RM mn) 1,398 1,631 93.6 87.9 TA/Consensus (%) Previous Rating Hold (Under Review) Financial Indicators FY17 FY18 Net Gearing (%) 1.8 1.6 CFPS (sen) 70.2 81.9 P/CFPS (x) 6.6 5.7 ROE (%) 5.5 5.9 ROA (%) 1.8 1.9 NTA/Share (RM) 1.0 1.2 P/NTA (x) 4.4 4.0 Share Performance Price Change (%) Axiata FBMKLCI 1 mth (4.1) (0.2) 3 mth (10.1) (0.5) 6 mth (2.1) 5.3 12 mth (19.3) 5.7 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg
16. TA Securities 1-Aug-17 A Member of the TA Group Impact We make no changes to our earnings estimates . Valuation We value Axiata at a TP of RM5.20/share – based on a SOP valuation. Marked as a catalyst for the group, recoveries at XL are progressing well. However, we maintain our Under Review recommendation till the release of the group’s 2QFY17 results. This is to assess the progress of recoveries at Celcom and the performance of its overseas Opcos. Table 1: Earnings Summary (RMmn) FYE Dec Revenue EBITDA EBITDA margin (%) Depreciation and amortization EBIT Net finance costs JV/Associates EI Profit before tax Taxation MI Profit after tax Core profit EPS (sen) EPS growth (%) PER (x) EV/EBITDA (x) DPS (sen) Dividend yield (%) FY15 19,883 7,284 36.6 (4,170) 3,114 (658) 434 441 3,331 (695) (82) 2,554 2,071 23.1 (8.2) 20.1 8.5 20.0 4.2 FY16 21,565 8,013 37.2 (5,595) 2,418 (1,018) 30 (290) 1,140 (482) (153) 504 1,418 15.8 (31.5) 29.3 7.7 8.0 1.7 FY17F 22,756 8,588 37.7 (5,614) 2,975 (1,082) 50 0 1,943 (492) (142) 1,309 1,309 14.6 (7.7) 31.7 7.2 7.3 1.6 FY18F 23,556 9,126 38.7 (5,709) 3,417 (1,046) (75) 0 2,295 (616) (245) 1,434 1,434 16.0 9.6 29.0 6.8 8.0 1.7 FY19F 24,196 9,622 39.8 (5,723) 3,899 (1,027) (40) 0 2,832 (747) (342) 1,743 1,743 19.4 21.5 23.8 6.4 15.5 3.4 Table 2: Axiata’s Sum of Parts Valuation Celcom (Malaysia) XL Axiata (Indonesia) Idea Cellular (India) Dialog Axiata (Sri Lanka) Robi (Bangladesh) M1 (Singapore) Smart (Cambodia) Ncell (Nepal) Holding Co Net Cash Total Equity Value (RM mn) 23,529.4 16,772.7 22,207.3 2,784.2 3,358.5 5,324.5 2,266.5 9,127.5 Stake 100.0% 66.4% 19.8% 83.3% 68.7% 28.5% 82.5% 80.0% Effective Equity Value (RM mn) 23,529.4 11,130.3 4,385.9 2,319.8 2,307.0 1,519.6 1,869.9 7,302.0 Value /Share (RM) 2.62 1.24 0.49 0.26 0.26 0.17 0.21 0.81 -7,621.3 46,742.7 -0.85 5.20 Page 2 of 3 % of SOP 50.3% 23.8% 9.4% 5.0% 4.9% 3.3% 4.0% 15.6% -16.3% Valuation Method DCF: WACC 7.0%, TG: 1.0% DCF: WACC 9.0%, TG: 3.0% Consensus TP Consensus TP DCF: WACC 13.8%, TG: 3.0% Consensus TP 10x CY18 EPS 10x CY18 EPS
17. TA Securities 1-Aug-17 A Member of the TA Group Table 3 : XL Axiata’s 1HFY17 Results Analysis (Rpbn) FYE Dec Revenue Cellular telecommunications services Other telecommunications services Discount cellular revenue Total Opex EBITDA Depreciation & amortisation EBIT Other Expenses Net finance costs Net forex gain/(loss) JV/Associates Others PBT Tax Net profit Normalised net profit 2QFY16 5,238 4,969 283 (14) (3,172) 2,065 (2,090) (24) (2) (438) 6 (48) 478 (26) 81 56 18 1QFY17 5,266 5,039 237 (10) (3,417) 1,848 (1,679) 169 (242) (348) 43 (44) 107 (73) 119 47 20 2QFY17 5,667 5,446 228 (7) (3,595) 2,073 (1,702) 371 (272) (366) 20 (50) 124 99 (2) 96 94 QoQ (%) 7.6 8.1 (3.8) (30.0) 5.2 12.2 1.4 119.5 12.4 5.2 (53.5) 13.6 15.9 (235.6) (101.7) 104.3 370.0 YoY (%) 8.2 9.6 (19.4) (50.0) 13.3 0.4 (18.6) (1,645.8) 13,500.0 (16.4) 233.3 4.2 (74.1) (480.8) (102.5) 71.4 422.2 1HFY16 10,854 10,282 605 (33) (6,597) 4,256 (3,961) 296 (80) (934) 411 (108) 551 215 9 225 (141) 1HFY17 10,933 10,485 465 (17) (7,012) 3,921 (3,381) 540 (514) (714) 63 (94) 231 26 117 143 114 YoY (%) 0.7 2.0 (23.1) (48.5) 6.3 (7.9) (14.6) 82.4 542.5 (23.6) (84.7) (13.0) (58.1) (87.9) 1,200.0 (36.4) (180.9) Profitability ratios EBITDA margin (%) EBIT margin (%) PBT margin (%) Net profit margin (%) Tax rate (%) 39.4 (0.5) (0.5) 0.3 311.5 35.1 3.2 (1.4) 0.4 163.0 36.6 6.5 1.7 1.7 2.0 1.5 3.3 3.1 1.3 (161.0) (2.8) 7.0 2.2 1.3 (309.5) 39.2 2.7 2.0 (1.3) (4.2) 35.9 4.9 0.2 1.0 (450.0) (3.3) 2.2 (1.7) 2.3 (445.8) Operational metrics Subscriber base (mn) Postpaid ('000) Prepaid (mn) 44.0 490 43.5 48.0 540 47.4 50.5 582 49.9 2.5 42 2.5 6.5 92 6.4 ARPU (IDR '000) Postpaid Prepaid 37 120 36 34 116 33 (8.1) (3.3) (8.3) Total data traffic (Petabyte) 193 531 175.6 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3
18. TA Securities A Member of the TA Group SECTOR REPORT Tuesday , August 01, 2017 FBM KLCI: 1,760.03 Sector: Finance MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Banking Sector Healthier Loan Growth in June THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Team Coverage Tel: +603-2167 9610 liwong@ta.com.my Loans and Advances Widened 5.7% YoY Loan growth strengthened in June, rising 5.7% YoY from an increase of 5.5% May. YTD, loan growth is up 1.8%, vs. an increase of 1.4% a year ago. From a month ago, total loans outstanding climbed at a more robust pace of 0.6%. By segment, consumer loans accelerated by 5.9% YoY (+0.6% MoM). Business loans advanced at a stronger pace of 5.4% YoY (+0.6% MoM). Sequentially, total business loans recovered after contracting for two straight months in April and May. We believe that while loans to the SME segment remained buoyant, other business loans spurred the overall increase in business loans. By segment, we note higher demand for working capital (+7.1% YoY, +1.5% MoM) – and by sector, transport, storage and communications (+20.1% YoY, +1.1% MoM), construction (+10.6% YoY, +3.2% MoM) and electricity, gas and water supply (+9.0% YoY, +2.4% MoM). Consumer loans continued to broaden on the back of drawdowns for residential mortgages (+8.9% YoY, +1.0% MoM). Advances for credit cards widened by 2.5% YoY and 0.8% MoM. Loans for the purchase of passenger cars resumed its downward momentum, contracting 0.6% YoY. Meanwhile, loans taken for the purchase of securities slipped sequentially for the third consecutive month (+4.9% YoY, -0.2% MoM). Loan Applications Fell in June, Approvals Recovered Loan applications slipped (-15.3% YoY, -14.6% MoM) after climbing for four months from February to May. Advancing for five months, application for consumer loans total decreased by 4.6% YoY and 18.4% MoM in June. Compared to a year ago, application for credit cards and purchase of securities fell by 8.1% YoY (-14.9% MoM) and 32% YoY (48.8% MoM). Application for loans to buy passenger cars also reversed strong gains in May to decrease by 22.3% YoY and 16.4% MoM. Meanwhile, loan applications for the purchase of residential mortgages remained healthy, widening 6.2% YoY (but eased 14.2% MoM). In the business segment, application for credit slipped for the fourth straight month, decreasing by another 25.9% YoY (-9.1% MoM). Meanwhile, total loans approved recovered in June, broadening 9.8% YoY, and another 6.7% MoM. Approvals were underpinned by increases in all key segments, led by business and SME segments. Loans approved for the consumer segment rose 4.3% YoY but softened by some 6% MoM. Overall approval rate surged yearly and sequentially to 51.6% from 41.4% in May and 39.8% a year ago. Business and consumer loan approval rates stood at 56.8% and 47.6% respectively. By major sub-segments, approval for the purchase of residential properties rose to 44.6% while approval for non-residential properties widened to 46.5%. Repayment of Loans Increased YoY Repayments climbed again in June, up 2.4% YoY. The banking system’s net impaired loans ratio stood at 1.2%. Loan loss provisions improved slightly to 83.2% from 82.0% in May. During the month, impairment ratios for residential properties, personal loans and credit cards stood unchanged at 1.1%, 2.2% and 1.3%. Meanwhile, the impairment ratio for the purchase of passenger cars improved to 0.8% from 0.9% in May. However, the impairment ratio for non-residential properties deteriorated slightly by 10 bps to 1.2%. Page 1 of 3 TA Research Team Coverage
19. TA Securities 1-Aug-17 A Member of the TA Group By segment , the gross impaired loans ratio for the construction and manufacturing sectors improved from 7.8% and 4.2% in May to 7.2% and 4.1% in June while wholesale, retail and trade stayed pat at 2.1%. Elsewhere, loans taken for working capital also strengthened to 2.4% from 2.5% in May. Elsewhere, the banking system’s capital buffers remained ample with CET1 and Total Capital Ratio of 12.9% and 17.0%. Deposits Strengthened on Higher CASA, Stable Average Lending Rates Total deposits (excl. Repo) advanced at a decent pace of 3.5% YoY (-0.2% MoM). CASA balances in commercial banks maintained its upward momentum for the 9th month, increasing 8.4% YoY (+0.7% MoM). The CASA ratio climbed to 27.2% from 25.9% a year ago. The loan to deposit (LD) ratio stood at 90.4% (June 2016: 89.6%) while the liquidity coverage ratio (LCR) jumped to 141% from 123% in June 2016. Elsewhere, the average 1 and 12 months fixed deposit rates stood little changed at 2.87% and 3.10%. The average lending rate widened by 1 bp MoM to 5.20%. Maintain Overweight We reiterate our overweight stance on the sector, premised on a more sanguine macro outlook and the sector’s attractive valuations. Maintaining our loan growth assumption of 5.6% for 2017, we note that consumer spending remains resilient and supportive of loan growth while optimism among businesses have improved. Elsewhere, the banking system’s asset quality remains intact, backed by unchanged gross impaired loans ratio of 1.2% and LCR in excess of 100%. We believe the overall debt profile for the country remains healthy. Other drivers for earnings growth include potential hikes in the overnight policy rate (OPR), leading to margin expansion. We expect the increase in rate to augur well for the banking sector as margins are compressed by competitive pressures. Table 1: Peers comparison Ma yba nk CIMB Publ i c Ba nk Hong Leong AMMB RHB Bank Al l i ance Affi n Simple average Price (RM) 9.54 6.55 20.28 15.70 TP (RM) 11.00 8.00 23.60 17.50 Capital upside (%) 15.3% 22.1% 16.4% 11.5% BUY BUY BUY BUY 4.95 5.00 3.93 2.57 5.70 5.80 4.80 3.70 15.2% 16.0% 22.1% 44.0% BUY BUY BUY BUY P/BV Ma yba nk CIMB Publ i c Ba nk Hong Leong AMMB RHB Ca p Al l i ance Affi n Simple average FY17 (x) 1.3 1.2 2.1 1.4 0.9 0.9 1.2 0.7 1.2 Mkt Cap RM mil 97,799 59,291 78,311 32,114 Profit growth FY17 FY18 (%) (%) 11.6 13.1 26.1 11.3 1.8 3.8 13.1 9.8 FY17 (x) 13.0 13.2 14.8 14.9 FY18 (x) 11.5 11.9 14.2 13.6 14,920 20,050 5,993 4,993 39,184 1.7 20.8 (1.9) 1.4 11.3 11.3 9.9 11.7 8.7 12.2 10.2 9.2 12.9 7.7 11.4 ROE FY18 (x) 1.2 1.2 1.9 1.4 0.9 0.8 1.1 0.7 1.2 FY17 (%) 10.7 9.7 14.8 10.2 8.5 9.0 10.8 7.3 10.1 10.2 7.6 (9.3) 14.0 9.3 ROA FY18 (%) 11.4 10.3 14.1 10.8 8.8 9.0 9.3 8.9 10.3 FY17 (%) 1.0 0.9 1.4 1.1 1.0 0.8 0.9 0.8 1.0 Source: TA Research, Bursa M alaysia, Bloomberg Page 2 of 3 PER DPS FY18 (%) 1.1 0.9 1.4 1.2 1.1 0.9 0.8 0.9 1.0 FY17 (sen) 50.0 20.3 56.0 41.0 17.6 12.0 16.0 8.0 27.6 FY18 (sen) 50.0 22.6 58.0 41.0 18.0 12.0 16.0 8.0 28.2 Div yield FY17 FY18 (%) (%) 5.2% 5.2% 3.1% 3.5% 2.8% 2.9% 2.6% 2.6% 3.6% 3.6% 2.4% 2.4% 4.1% 4.1% 3.1% 3.1% 3.4% 3.4%
20. TA Securities 1-Aug-17 A Member of the TA Group ( T HI S P AGE I S I NT E N T I ON AL L Y L E FT B L ANK) Sector Recommendation Guideline OVERWEIGHT: The industry, as per our coverage universe, is expected to outperform the FBMKLCI over the next 12 months. NEUTRAL: The industry, as per our coverage universe, is expected to perform in line with the FBMKLCI over the next 12 months. UNDERWEIGHT: The industry, as per our coverage universe, is expected to underperform the FBMKLCI over the next 12 months. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 3 of 3