Bursa Malaysia Daily Market Report - 12 May

Transcription

1. Friday , 12 May, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. IPO-Inta Bina Group Berhad: Facing Headwind 2. Malaysian Economy: Still-steady IPI Growth; Moderation in Manufacturing Output 3. Plantation Sector: Stockpiles Up for the 2nd Consecutive Month 4. SP Setia Berhad: Anticipate Stronger Profits in 2Q & 3Q 5. Wilmar International Limited: A Good Start to the Year 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 Friday, 12 May 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (11.05.2017) (mil) Main Market 2,261.4 Warrants 280.4 ACE Market 998.3 Bond 12.6 ETF 0.0 Total 3,552.8 Off Market 77.9 Volume +/-chg (RMmn) 148.7 3,290.8 11.6 38.9 156.4 147.1 5.2 1.3 0.00 0.0 3,478.2 -14.7 296.6 Value +/-chg 725.4 5.3 9.6 0.0 0.01 76.0 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP May 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 (mn) 21.0 20.7 20.0 7.7 7.1 Up Down 394 270 110 55 48 50 5 0 3 1 560 376 % chg % YTD chg 1,775.39 12,718.89 17,675.26 1,776.00 8.83 73.53 103.86 9.00 0.50 0.58 0.59 0.51 8.14 10.92 20.11 8.59 20,919.42 6,115.96 7,386.63 19,961.55 2,296.37 25,125.55 3,271.11 1,550.27 5,653.01 3,061.50 1,819.15 5,878.34 -23.69 -13.18 1.39 61.46 26.25 110.13 21.14 -10.04 0.00 8.72 -3.41 2.90 -0.11 -0.22 0.02 0.31 1.16 0.44 0.65 -0.64 0.00 0.29 -0.19 0.05 5.85 13.61 3.41 4.43 13.32 14.20 13.55 0.48 6.73 -1.36 -7.62 3.75 Top 10 KLCI Movers Based on Mkt Cap. Off Market KANGER SPSETIA MAYBANK VERSATL BJASSET Value/ Volume 1.46 0.14 0.15 0.10 1.31 0.98 3.81 @ @ @ @ @ (RM) 0.23 3.69 9.37 1.08 1.10 Counter TENAGA SIME PCHEM CIMB IHH MAXIS AXIATA DIGI PETGAS GENTING Mkt Cap. (RM’mn) 78,773 63,452 58,560 53,498 50,954 49,268 47,652 39,497 37,833 36,291 Chg (RM) 0.02 0.02 0.16 0.06 0.01 0.01 0.06 0.01 0.62 0.01 Vol. (mn) 9.62 21.95 10.85 25.85 6.11 4.62 7.21 7.56 1.64 5.63 Important Dates SAMCHEM - 1:1 Bonus Issue - BI of 136.0m shares. Ex-Date: 09/05/2017. Entitlement Date: 12/05/2017. LISTING ON: 15/15/2017. L&G - 8:5 Rights Issue - RI of up to 1,914.1m shares. 8 rights shares for every 5 existing share held, at an issue price of RM0.21 per rights share. LISTING ON: 18/05/2017. Review & Outlook Blue chips rose on Thursday, with Petronas counters leading gains along with crude oil price after weekly US oil supplies fell and Saudi exports to Asia declined. The KLCI climbed 8.83 points to end at 1,775.39, near the day's low of 1,774.59 and off an early high of 1,780.49, as gainers led losers 560 to 379 on better turnover of 3.55bn shares worth RM3.48bn. The recovery on oil price and the local currency, together with expectations for stronger 1Q GDP growth should underpin positive sentiment in the near-term. As for the index, immediate uptrend supports will be at 1,752 and 1,744, the rising 30 and 50-day moving average levels, with better support from the lower Bollinger band at 1,727. Immediate upside hurdle stays at 1,782, the 76.4%FR of the 1,867 to 1,503 downswing closely matching the recent two-year high, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Axiata needs convincing breakout above the 50%FR (RM5.48) to aim for the 61.8%FR (RM5.80) and 76.4%FR (RM6.20) ahead, while breakout support at RM5.16 matches the 38.2%FR level. Genting Malaysia should re-test the 26/4/17 peak (RM6.07) while sustained bullish momentum would target the 123.6%FP (RM6.14), 138.2%FP (RM6.34) and 150%FP (RM6.50) going forward. Uptrend support comes from the rising 30-day ma (RM5.69). • • • • • • • • • • • • • News Bites Malaysia's industrial output expanded 4.6% in March from a year ago, boosted by the manufacturing sector, but the growth was slower than Bloomberg's survey of a 4.8% increase. The April MPOB data showed palm oil stockpiles rose 1.6mn tonnes (+3.0% MoM, -11.3% YoY), within market expectations of 1.63mn 1.65mn tonnes, and the monthly production increased to 1.55mn tonnes (+5.7% MoM, +19.0% YoY). SP Setia Bhd's 1Q17 net profit drop 14.8% YoY to RM105.2mn but we deem this to be within expectations as we expect a lumpy revenue recognition from the remaining 9 blocks of Phase 1 Battersea Power Station in 2Q17 and 3Q17. Malaysia Airports Holdings Bhd registered 10.7mn passengers in April 2017, an increase of 14.7% YoY. Kerjaya Prospek Group Bhd has bagged a contract worth RM207.4mn for the construction of 166 units of three-storey semi-detached houses, 99 units of three-storey bungalows and ancillary works in Shah Alam. Mitrajaya Holdings Bhd has bagged a RM160.1mn contract to build residential buildings for a higher learning institution here. CAB Cakaran Corp Bhd has proposed to undertake a share split of every two existing shares into five split shares, and a bonus issue of up to 138.7mn new split shares to be credited as fully paid-up with 1 bonus share for every four split shares. Matang Bhd has lost the bid for two parcels of oil palm land in Raub, Pahang, alongside a 60-tonne per hour palm oil mill on-site. Lay Hong Bhd clarified that its plan to sell a 30% stake in its grocery retailer unit, G-Mart Borneo Retail Sdn Bhd, for a reduced price of RM9.5mn to PanPages Bhd is not expected to result in material gain or loss. Star Media Group Bhd's board of directors has given the green light for the sale of its 52.5% stake in Cityneon Holdings Ltd, according to sources familiar with the matter. PRG Holdings Bhd has submitted an application to the Hong Kong Stock Exchange for the proposed listing of its manufacturing business on the Growth Enterprise Market. 7-Eleven Malaysia Holdings Bhd aims to have 20 customers a store per day for offline payment solution through its partnership with Lazada Malaysia and MOLPay. The European Union raised its 2017 economic growth forecast to 1.9% from 1.8% previously, saying the bloc's revival is strengthening despite geopolitical risks that could undermine its fifth year of recovery. Exchange Rate USD/MYR 4.3476 0.0006 USD/JPY 114.05 0.3200 EUR/USD 1.087 0.0001 Commodities Futures Palm Oil (RM/mt) 2,602.00 34.00 Crude Oil ($/Barrel) 47.82 0.48 Gold ($/tr.oz.) 1,225.00 5.90 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 Friday , May 12, 2017 FBMKLCI: 1,775.39 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 Stronger Oil Price & 1QGDP Growth Outlook to Underpin Sentiment Blue chips rose on Thursday, with Petronas counters leading gains along with crude oil price after weekly US oil supplies fell and Saudi exports to Asia declined. The KLCI climbed 8.83 points to end at 1,775.39, near the day’s low of 1,774.59 and off an early high of 1,780.49, as gainers led losers 560 to 379 on better turnover of 3.55bn shares worth RM3.48bn. Uptrend Support at 1,752/1,744 The recovery on oil price and the local currency, together with expectations for stronger 1Q GDP growth should underpin positive sentiment in the near-term. As for the index, immediate uptrend supports will be at 1,752 and 1,744, the rising 30 and 50-day moving average levels, with better support from the lower Bollinger band at 1,727. Immediate upside hurdle stays at 1,782, the 76.4%FR of the 1,867 to 1,503 downswing closely matching the recent two-year high, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. BUY AXIATA & Genting Malaysia Axiata needs convincing breakout above the 50%FR (RM5.48) to aim for the 61.8%FR (RM5.80) and 76.4%FR (RM6.20) ahead, while breakout support at RM5.16 matches the 38.2%FR level. Genting Malaysia should re-test the 26/4/17 peak (RM6.07) while sustained bullish momentum would target the 123.6%FP (RM6.14), 138.2%FP (RM6.34) and 150%FP (RM6.50) going forward. Uptrend support comes from the rising 30-day ma (RM5.69). Oil Prices Lift Most Asian Markets Asian markets traded higher on Thursday as strong gains in oil prices buoyed energy shares. Oil prices extended their 3 percent-plus overnight gains, their biggest one-day jump since December 1, following a steep drop in U.S. inventories and support from Iraq and Algeria for an extension to OPEC supply cuts. Investors are watching tax reform developments in the U.S. after President Donald Trump's firing of FBI chief James Comey. Markets in Indonesia were closed for a public holiday. Japan's Nikkei share average rose as optimism from the weakening yen offset mixed performances in U.S. shares overnight. The Nikkei finished 0.31 percent higher at 19,961.55, as investors were cautious with the Nikkei benchmark index near the key resistance line of 20,000 points. In down under, the benchmark ASX 200 traded up 0.05 percent or 2.90 points to close at 5,878.30, as major banks finished the session divided as investors continue to consider the implications a $6.2 billion levy on the country’s biggest lenders will have on market valuations. Meanwhile, China stocks reversed earlier losses to end higher on Thursday, with sentiment helped by expectations that the central bank will inject funds via its medium-term lending facility on Friday. The blue-chip CSI300 index rose 0.57 percent to 3,356.65 points, while the Shanghai Composite Index added 0.29 percent to 3,061.50 points. Page 1 of 8
4. TA Securities 12-May-17 A Member of the TA Group Retailers Drag Wall Street Lower U .S. stocks fell on Thursday, as retail stocks fell sharply on the back of Macy's weak quarterly results and raised new doubts about the strength of the American consumer. Consumerdiscretionary shares in the S&P 500 fell 0.6 percent, posting the biggest decline among the S&P 500’s 11 sectors, after retail giants including Macy’s and Kohl’s posted tepid quarterly results. Shares of Macy’s shed 17 percent after the firm reported a bigger-than-expected slide in revenue for the first quarter, while Kohl's dropped 7.86 percent after it reported a drop in quarterly sales. The weak sales at department stores underscored rising angst that the biggest part of the U.S. economy isn’t picking up the pace enough to raise growth rates. Investors will get a fresh read on Friday with U.S. retail sales. At the same time, political intrigue continues to roil Washington two days after the president abruptly fired the head of the FBI. The path for interest rates will remain a major focus amid growing bets for a Fed increase in June and talk of tapering by the European Central Bank. In economic news, the producer price index rose 0.5 percent in April, more than the expected increase of 0.2 percent. Initial jobless claims, meanwhile, totaled 236,000, below the expected 245,000. The Dow Jones Industrial Average lost 23.69 points, or 0.11 percent, to 20,919.42, the S&P 500 fell 5.19 points, or 0.22 percent to 2,394.44 and the Nasdaq Composite eased 13.17 points, or 0.22 percent, to 6,115.96. Page 2 of 8
5. TA Securities 12-May-17 A Member of the TA Group News In Brief Corporate Malaysia Airports Holdings Bhd registered 10 .7mn passengers in April 2017, an increase of 14.7% YoY. On the local front, airports in Malaysia registered 8.2mn passengers in April 2017 (+16.9% YoY). In Istanbul, SGIA registered 8.1% YoY increase in passenger in April 2017 (Bursa Malaysia). Comment: The 16.9% YoY growth seen in Malaysian airports came mainly from the international segment, which was up 20.1% while the domestic segment grew 13.8% YoY. Cumulatively, the 4M17 passenger growth expanded further to 11.4% versus 9.6% in March17. The growth was in line with our full-year expectation of 6.7% considering a higher base in 2H16. In Istanbul, the cumulative growth of 0.6% for 4M17 was also in line with our full-year projections of 5% as 2H16 traffic was affected by military coup and terrorist bombing in Istanbul. Maintain Sell on MAHB with unchanged target price of RM8.10. Star Media Group Bhd’s board of directors has given the green light for the sale of its 52.5% stake in Cityneon Holdings Ltd, according to sources familiar with the matter. The stake sale will enable the group to unlock the value of its investment in the republic. The deal is expected to bring in more than RM350mn. (The Edge) Comments: We are negative on the reported outcome of discussions. At its last closing price, the group’s stake in Cityneon is worth SGD122.7mn (RM378.7mn). Given its already sizeable net cash position of RM297.9mn, we do not discount the possibility of special dividends totaling RM0.51/share. However, opting for a longer term view, we believe the sale is a step back for the group. It would then need to seek for new businesses to diversify its dwindling print revenues. Our FY17-19 earnings estimates are expected to be reduced by 9.5-20.8%. We leave our earnings unchanged pending an official announcement. Maintain SELL on Star with a TP of RM2.30/share. Kerjaya Prospek Group Bhd has bagged a contract worth RM207.4mn for the construction of 166 units of three-storey semi-detached houses, 99 units of three-storey bungalows and ancillary works in Shah Alam. This project is Kerjaya Prospek’s second contract award for the year and brings the current outstanding orderbook to RM2.5bn. (Bursa Malaysia / The Edge) Mitrajaya Holdings Bhd has bagged a RM160.1mn contract to build residential buildings for a higher learning institution here. Mitrajaya said its wholly-owned subsidiary Pembinaan Mitrajaya Sdn Bhd has accepted the proposed job, which will commence on May 18 for a duration of 24 months and is expected to be completed by May 2019. (Bursa Malaysia / The Edge) CAB Cakaran Corp Bhd has proposed to undertake a share split and bonus issue to enhance the marketability and trading liquidity of its shares. The share split will involve subdivision of every two existing shares into five split shares, and a bonus issue of up to 138.7mn new split shares to be credited as fully paid-up with 1 bonus share for every four split shares. The company expects these proposals to be completed by the third quarter of 2017. (Bursa Malaysia / The Edge) Matang Bhd has lost the bid for two parcels of oil palm land in Raub, Pahang, alongside a 60-tonne per hour palm oil mill on-site, the company announced. Matang bid for the leasehold land — totalling 4,219.79 acres — from Raub Mining & Development Company Sdn Bhd and Raub Oil Mill Sdn Bhd in April 19, and it intended to pay via bank borrowings and fund raising exercises. (Bursa Malaysia / The Edge) Lay Hong Bhd clarified that its plan to sell a 30% stake in its grocery retailer unit, G-Mart Borneo Retail Sdn Bhd, to PanPages Bhd, is not expected to result in material gain or loss. Lay Hong will reduce the price of the stake sale by 12% to RM9.5mn, from RM10.8mn announced previously, if the net assets in its management accounts for financial year ended Page 3 of 8
6. TA Securities 12-May-17 A Member of the TA Group March 31 , 2017 (FY2017) — which was not unaudited — turns out to be less than 12% of the upcoming audited accounts. (Bursa Malaysia / The Edge) PRG Holdings Bhd has submitted an application to the Hong Kong Stock Exchange for the proposed listing of its manufacturing business on the Growth Enterprise Market. PRG said subject to the approvals of the relevant regulatory authorities being obtained, it expects the proposed listing to be completed before the end of 2017. Upon completion of the proposed listing, PRG will continue to be a controlling shareholder holding not more than 75% of the enlarged issued share capital of Listco. (Bursa Malaysia / The Edge) 7-Eleven Malaysia Holdings Bhd aims to have 20 customers a store per day for offline payment solution through its partnership with Lazada Malaysia and MOLPay. Through this payment gateway, 7-Eleven is hoping to enhance customer traffic as well as boost its store sales, said its chief executive officer Gary Brown. The convenience store chain operator has recorded a 1.5% decline in same store sales growth in 2016 due to goods and services tax impact. (The Edge) S P Setia Bhd, saw its net profit for the first quarter ended March 31, 2017 (1QFY17) drop 14.8% to RM105.2mn from RM123.4mn a year ago, despite higher revenue. S P Setia attributed the drop in earnings to lower other income generated from its wood-based manufacturing, trading activities, and the operation of retail mall and Setia City Convention Centre. (Bursa Malaysia / The Edge) Three-A Resources Bhd registered a 54.26% increase in net profit for the first quarter ended March 31, 2017 (1QFY17) to RM10.3mn from RM6.7mn a year ago. The company attributed the increase in earnings to higher product margins and lower foreign currency losses of RM39,000 compared with RM1.2mn a year ago. (Bursa Malaysia / The Edge) Page 4 of 8
7. TA Securities 12-May-17 A Member of the TA Group News In Brief Economy Asia Malaysia Industrial Output Up 4 .6%, Lower than Expected Malaysia's industrial output expanded 4.6% in March from a year ago, boosted by the manufacturing sector, but the growth was slower than Bloomberg's survey of a 4.8% increase. The Statistics Department said the industrial production index's (IPI) growth was supported by positive growth in manufacturing index (5.9%) and mining index (2.0%). However, the electricity index declined by 0.2%. The department said the major sub-sectors which recorded an expansion in March 2017 were the electrical and electronics products (8.5%); petroleum, chemical, rubber and plastic products (3.6%); and wood products, furniture, paper products, printing (10.3%). The mining sector output posted a higher growth of 2.0% in March 2017 after an increase of 0.4% recorded in February 2017. The growth in March 2017 was driven by a sustained increase of 7.9% in natural gas index. However, the crude oil index contracted at slower pace of 2.6%. The electricity sector output decrease marginally by 0.2% in March 2017 after registering a growth of 1.5% in February 2017. (The Star) Japan Current Account Surplus Rises to 2.907 Trillion Yen Japan posted a current account surplus of 2.907 trillion yen in March, down 2.2% on year. The headline figure exceeded forecasts for 2.593 trillion yen and was up from 2.813 trillion yen in February. The trade surplus came in at 865.5 billion yen, also topping expectations for 855.0 billion yen following the 1.076 trillion yen surplus in the previous month. Exports were up 13.1% on year to 7.165 trillion yen after coming in at 6.333 trillion yen a month earlier. Imports climbed 15.4% to 6.300 trillion yen after showing 5.257 trillion yen in February. The capital account showed a deficit of 31.5 billion yen following the 1.19 billion yen shortfall in the previous month. The financial account had a surplus of 5.024 trillion yen, up from 1.775 trillion yen a month earlier. Other news in Japan: Overall bank lending in Japan was up 3.0% on year in April, coming in at 514.531 trillion yen. That was in line with expectations and unchanged from the previous month. Excluding trusts, lending also advanced an annual 3.0% to 447.634 trillion yen - again unchanged and matching forecasts. The current index of Economy Watchers' survey rose to 48.1 in April from 47.4 in March. Economists had expected the index to climb to 47.8. The outlook index also improved to 48.8 in April from 48.1 in the preceding month. It was forecast to rise slightly to 48.2. (RTT News) South Korea Jobless Rate Climbs in April South Korea's unemployment rate increased in April, figures from Statistics Korea showed. The seasonally adjusted jobless rate rose to 4.0% in April from 3.7% in March. In the corresponding month last year, the unemployment rate was also 3.7%. On an unadjusted basis, the jobless rate held steady at 4.2% in April. The number of unemployed people grew to 1.17 million in April from 1.14 million in the preceding month. A year ago, the jobless figure totaled 1.08 million. (RTT News) United States. U.S. Producer Prices Rebound Strongly in April U.S. producer prices rebounded more than expected in April amid rising costs for goods and services, leading to the biggest annual gain in five years in a sign that inflation pressures were rising. The Labor Department said its producer price index for final demand increased 0.5% last month after slipping 0.1% in March. The PPI increased 2.5% in the 12 months through April, the biggest gain since February 2012, after advancing 2.3% in March. Economists polled by Reuters had forecast the PPI rising 0.2% and gaining 2.2% from a year ago. Producer prices are firming as the drag from a strong dollar and lower oil prices fades. Firming inflation, combined with a tightening labor market could keep the Federal Page 5 of 8
8. TA Securities 12-May-17 A Member of the TA Group Reserve on track to raise interest rates next month . The U.S. central bank lifted its shortterm interest rate by a quarter of a percentage point in March and has forecast two more hikes this year. Prices for final demand services rose 0.4% in April, accounting for almost two-thirds of the increase in the PPI last month. They had dipped 0.1% in March. (Reuters) U.S. Jobless Claims Fell to 236,000 Last Week The number of Americans applying for first-time unemployment benefits fell last week, the latest sign of steady job creation. Initial jobless claims, a proxy for layoffs across the U.S., decreased by 2,000 to a seasonally adjusted 236,000 in the week ended May 6, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had forecast 244,000 new claims. Estimates of jobless claims can be jumpy from week to week, but generally have hovered near four-decade lows in recent months, suggesting that employers are holding on to workers. The four-week moving average of initial claims, which evens out some volatility, rose by 500 last week to 243,500. The number of claims drawn by workers for longer than a week—so-called continuing claims—dropped 61,000 to 1.92 million in the week ended April 29. That was the lowest level since November 1988. The four-week moving average for continuing claims slid to its lowest level since February 1974. Data on continuing claims are released with a one-week lag. (The Wall Street Journal) Europe and United Kingdom BoE says ‘Smooth’ Brexit Would Lead to Normalised Interest Rates U.K. interest rates will be able to rise towards more normal levels during the next three years if Theresa May negotiates a “smooth” Brexit, the Bank of England said as it published forecasts suggesting that the recent economic slowdown will be temporary. But in a stark warning to the U.K. prime minister less than one month before the general election, the central bank made it clear that its sanguine forecasts depended on Mrs. May coming back from Brussels with a Brexit deal that ensures companies will not have to make sharp adjustments as the UK leaves the EU. In its quarterly inflation report, the BoE said the positive outlook for improved growth and a fall in inflation back towards the 2% target next year was dependent on big assumptions. The bank’s forecast of growth rates about 1.8% into the medium-term, with stable inflation, relied upon the assumption “that the adjustment to the U.K.’s new relationship with the EU is smooth”, the rate-setting Monetary Policy Committee said. At its May meeting, the MPC voted 7-1 in favour of keeping interest rates at the historic low of 0.25% and maintaining the level of money pumped into the economy under the quantitative easing scheme at £435bn. In the inflation report, the MPC accepted it had been too optimistic about economic performance in the first half of 2017, and that the weak 0.3% growth rate recorded in the first three months of the year was likely to extend into the second quarter. But the committee added that it expected the squeeze on household incomes from higher inflation to ease later in the year, with higher business investment and exports aiding a recovery. The BoE’s forecasts were barely changed from February. In the near term, the central bank expects a little more inflation, with prices rising faster than wages in 2017, intensifying the squeeze on household incomes. However, consumption weakness is expected to improve during 2018 as inflation falls and wages rise. The BoE slightly revised its 2017 growth forecast, from 2% to 1.9%. The bank revised its central forecast for the next two years up by 0.1%, to 1.7% in 2018 and 1.8% in 2019, reflecting sterling’s recent strength leading to lower import prices and inflation — and therefore easing the squeeze on incomes. Inflation is forecast to peak towards the end of the year, rising from 2.3% in March to 2.8% in the fourth quarter. The BoE has forecast that inflation will stay above the 2% target for the foreseeable future; the bank said inflation is expected to be 2.3% in three years’ time. (Financial Times) U.K. Manufacturing Sector Suffers Unexpected Slowdown in March Britain's industrial sector slowed down for the third consecutive month, after output suffered an unexpected slowdown in March. According to the Office for National Statistics (ONS), manufacturing production fell 0.6% in March from the month before, compared with a 0.1% decline recorded in the previous month and analysts' expectations for a 0.2% drop. On a year-on-year basis, production rose 2.3 %, falling short of forecast for a 3% gain and Page 6 of 8
9. TA Securities 12-May-17 A Member of the TA Group from the previous month 's revised 3% reading. The ONS added basic metals, and metal products provided the largest downward pressure on manufacturing in March, while warmer-than-average temperatures led to a decrease in energy supply, which fell 4.2% from the previous month. Meanwhile, overall industrial production – a broader gauge of the industry – fell 0.5% in March, compared with analysts' expectations for output to drop 0.4%. February's 0.7% decline was revised slightly downward, to a 0.8% drop. On an annual basis, meanwhile, industrial production rose 1.4% from the corresponding period in the previous year, compared with a revised 2.5% increase in the previous month and forecast for a 1.9% gain. (International Business Times) EU Raises Growth Forecasts but Warns on Threat from Brexit and Trump The European Union raised its 2017 economic growth forecast Thursday, saying the bloc’s revival is strengthening despite geopolitical risks that could undermine its fifth year of recovery. Gross domestic product in the 28-country EU will grow by 1.9% in both 2017 and 2018, the bloc estimated in its latest economic outlook, up from its February forecast of 1.8%. It raised its GDP forecast for the 19-member Eurozone to 1.7% this year from its previous forecast of 1.6% and maintained its estimate of 1.8% economic growth in 2018. The thrice-yearly review comes on the heels of Emmanuel Macron’s presidential victory in France on a business friendly and pro-EU platform, and as centrist politicians across Europe appear to be beating back a populist backlash against the bloc. After years of tepid economic growth fueled voters’ anger against the EU, officials in Brussels say the drag on investments is slowly disappearing as a busy election cycle nears the finish line with Germany’s polls in September. Members of the common-currency area are seen with an average deficit of 1.4% of GDP in 2017, unchanged from the EU’s earlier forecast. The gap is seen declining to 1.3% in 2018, down slightly from the previous estimate of 1.4%. A temporary increase in inflation toward the European Central Bank’s target of close to but below 2% will moderate as the impact of rising oil prices fades, the EU said. The Eurozone’s inflation rate is seen slightly lower at the end of 2017, at 1.6%, rather than the 1.7% forecast in February, and accelerating to 1.8% in 2018, in line with the EU’s previous outlook. (The Wall Street Journal) Germany's Wholesale Price Inflation Steady at 4.7% Germany's wholesale price inflation remained stable in April, figures from Destatis showed. Wholesale prices advanced 4.7% year-on-year in April, the same pace of growth as seen in March. The most significant contributors to the increase were higher cost of solid fuels and mineral oil products and ores and metals. On a monthly basis, wholesale prices climbed 0.3% in April after staying flat in the prior month. (RTT News) Page 7 of 8
10. TA Securities 12-May-17 A Member of the TA Group Share Buy-Back : 09 May 2017 Company AMPROP GRANFLO TEXCHEM Bought Back Price (RM) Hi/Lo (RM) 57,700 9,900 1,000 0.835/0.825 0.23 1.46 0.84/0.82 0.235/0.23 1.46/1.44 Total Treasury Shares 13,542,100 6,123,800 2,542,200 Source: Bursa Malaysia 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 8 of 8 We accept no We, our associates, directors, employees may have an interest in
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 11-May-17 2.15 2.55 5.87 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 2.36 2.04 5.12 0.96 0.58 1.23 10.8 22.7 17.7 15.8 23.8 27.6 20.0 11.3 33.2 13.6 10.7 21.3 5.5 3.5 1.9 7.3 3.5 3.1 2.44 2.70 7.00 -11.9 -5.6 -16.1 1.95 1.95 4.43 10.3 30.8 32.5 0.9 19.2 28.4 4.10 3.40 5.40 6.10 15.80 9.20 22.10 4.70 10.00 1.28 0.96 1.33 1.34 0.66 0.96 0.80 1.31 0.71 35.8 29.4 46.4 50.6 101.3 73.6 136.6 49.0 40.3 37.7 33.1 50.6 55.6 109.8 82.6 140.4 51.7 39.0 12.4 10.0 12.0 11.7 13.8 12.6 14.6 11.2 25.3 11.8 8.9 11.0 10.6 12.8 11.3 14.2 10.6 26.1 3.4 2.7 2.9 3.4 2.9 5.4 2.8 2.2 3.3 3.4 2.7 3.2 3.8 2.9 5.4 2.9 2.2 3.3 4.49 3.00 5.70 5.98 14.12 9.68 20.58 5.59 10.38 -0.9 -1.7 -2.5 -1.2 -0.7 -3.8 -3.0 -1.6 -1.7 3.60 2.08 3.90 4.11 12.70 7.50 18.72 4.46 8.20 23.6 41.8 42.6 43.7 10.4 24.1 6.6 23.3 24.4 19.6 23.4 29.0 31.0 3.9 13.5 1.2 16.8 15.3 0.45 1.30 5.35 3.56 1.01 2.08 2.28 5.76 0.49 1.62 5.49 3.27 0.58 1.90 1.50 5.58 0.80 0.68 1.06 1.09 1.21 na 1.11 0.12 5.7 14.6 31.6 16.8 9.6 12.6 11.9 44.3 5.7 13.5 36.4 20.9 9.9 12.5 11.8 45.8 7.9 8.9 16.9 21.2 10.5 16.4 19.2 13.0 7.9 9.6 14.7 17.0 10.2 16.6 19.3 12.6 0.0 2.2 2.2 2.7 1.0 2.6 1.3 4.3 2.2 2.2 2.2 2.7 1.0 2.6 1.3 4.3 0.51 1.35 5.36 3.61 1.05 2.13 2.49 6.13 -11.8 -3.8 -0.2 -1.4 -3.8 -2.3 -8.4 -6.0 0.36 0.80 4.64 3.07 0.41 1.42 1.41 5.15 25.0 63.3 15.3 16.0 149.4 46.5 61.7 11.8 3.4 23.8 11.9 11.3 75.7 22.4 31.8 -2.0 1.99 2.00 0.46 15.4 15.6 12.9 12.7 5.0 5.0 2.40 -17.1 1.93 3.1 -1.0 14.90 18.50 15.41 21.08 0.53 0.57 69.6 93.1 77.5 21.4 101.9 19.9 19.2 18.2 4.7 4.5 5.2 5.0 15.30 18.74 -2.6 -1.3 12.68 14.58 17.5 26.9 7.0 12.9 2.40 7.65 24.68 82.56 3.35 1.81 4.95 1.03 2.23 9.59 27.41 88.66 3.76 2.74 4.17 1.10 0.49 0.35 0.36 0.37 0.50 0.69 0.43 0.58 6.5 35.9 120.5 293.6 22.3 25.1 12.7 9.3 7.5 40.5 148.1 326.2 24.7 25.3 15.8 12.8 36.9 21.3 20.5 28.1 15.0 7.2 39.0 11.1 31.8 18.9 16.7 25.3 13.6 7.1 31.4 8.1 0.8 3.9 2.8 3.3 4.5 4.4 0.9 4.9 0.9 5.0 3.0 3.4 5.1 4.4 1.0 4.9 3.00 9.39 27.00 83.68 3.58 2.04 4.98 1.07 -20.0 -18.6 -8.6 -1.3 -6.4 -11.3 -0.6 -3.7 2.11 7.30 22.44 74.12 2.13 1.43 4.14 0.78 13.7 4.8 10.0 11.4 57.3 26.6 19.5 32.1 -6.6 4.4 5.1 5.6 31.4 4.6 14.3 29.6 46.00 52.08 1.05 198.6 187.4 23.2 24.5 4.3 4.3 55.64 -17.3 40.61 13.3 4.1 9.73 5.90 10.34 6.10 1.35 1.27 45.0 25.7 51.0 27.9 21.6 23.0 19.1 21.2 0.5 1.4 0.6 1.5 10.00 6.07 -2.7 -2.8 7.50 4.17 29.8 41.4 22.5 30.6 2.79 0.14 3.81 0.10 0.72 1.34 22.1 0.2 24.6 0.3 12.6 70.9 11.3 46.4 5.7 0.0 6.8 0.0 3.42 0.15 -18.4 -3.4 2.73 0.05 2.2 180.0 -5.7 180.0 6.19 4.16 6.40 4.61 0.78 0.52 13.9 13.3 17.9 16.5 44.5 31.2 34.5 25.3 0.7 1.5 0.7 1.8 6.79 4.37 -8.8 -4.8 5.78 3.85 7.1 8.1 -2.5 -0.5 5.70 6.38 2.09 5.15 2.17 6.05 6.80 1.90 5.05 2.55 0.57 0.12 0.30 -0.22 0.28 19.5 35.8 16.2 26.6 4.3 24.4 40.5 18.3 30.2 7.1 29.3 17.8 12.9 19.4 50.6 23.3 15.8 11.4 17.0 30.7 1.4 2.8 2.3 2.6 0.5 1.9 3.2 2.6 2.9 0.8 5.73 7.07 2.69 5.45 2.64 -0.5 -9.8 -22.3 -5.5 -17.8 3.87 5.62 1.88 4.20 1.96 47.3 13.5 11.2 22.6 10.7 18.0 -3.2 -0.9 -3.7 -8.1 INDUSTRIAL SCIENTX SKPRES 8.61 1.28 8.50 1.75 0.57 0.48 67.9 9.1 78.0 14.1 12.7 14.1 11.0 9.1 2.4 3.4 2.8 5.3 8.99 1.44 -4.2 -11.1 5.90 1.12 45.9 14.3 28.5 -0.8 MEDIA ASTRO MEDIA PRIMA STAR 2.73 1.09 2.52 3.20 0.95 2.30 1.03 0.69 0.63 13.2 7.8 14.8 14.5 8.1 15.6 20.6 14.0 17.1 18.9 13.5 16.2 4.6 5.7 7.1 4.8 6.0 7.1 3.01 1.52 2.70 -9.3 -28.3 -6.7 2.56 1.00 2.20 6.6 9.0 14.5 5.0 -5.2 12.5 0.45 0.84 7.03 0.44 6.05 1.29 0.61 34.8 15.5 5.5 48.3 21.0 48.8 1.7 -3.2 6.0 1.0 44.9 4.9 18.5 -29.7 1.30 43.8 10.0 BANKS & FINANCIAL SERVICES AFG 4.45 AFFIN 2.95 AMBANK 5.56 CIMB 5.91 HLBANK 14.02 MAYBANK 9.31 PBBANK 19.96 5.50 RHBBANK BURSA 10.20 CONSTRUCTION BPURI GADANG GAMUDA IJM SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N 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 EATECH 0.60 0.45 1.04 11.5 11.9 5.2 5.0 0.0 0.0 1.18 -49.2 MHB 0.97 0.95 1.81 -1.2 1.3 na 74.1 0.0 0.0 1.23 -21.1 MISC 7.42 7.65 0.82 56.8 54.7 13.1 13.6 4.0 4.0 7.84 -5.4 PANTECH 0.65 0.69 1.28 4.1 5.0 15.5 12.9 2.8 3.1 0.67 -3.0 PCHEM 7.32 7.91 1.06 34.7 39.3 21.1 18.6 2.6 2.6 7.80 -6.2 SENERGY 1.92 2.02 2.42 5.3 4.6 36.6 41.4 0.0 0.0 2.10 -8.6 UMWOG 0.62 0.80 2.01 -12.0 -3.6 na na 0.0 0.0 1.04 -40.9 Note: UMWOG proposed 14 for 5 rights issue shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.87 1.40 1.39 11.3 12.2 16.6 15.3 0.0 0.0 2.02 -7.4
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 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 1.90 3.10 4.62 24.86 9.33 6.19 1.53 3.88 3.93 22.75 8.24 7.52 1.80 0.46 1.09 0.91 1.25 0.50 6.3 13.7 18.7 111.8 30.8 32.7 11.1 15.7 21.1 119.1 35.3 34.5 30.0 22.6 24.6 22.2 30.3 18.9 17.1 19.7 21.9 20.9 26.4 17.9 2.6 2.3 2.2 2.2 2.4 2.6 2.6 2.6 2.6 2.4 3.0 2.7 2.52 3.70 4.81 25.50 9.55 6.51 -24.6 -16.2 -4.0 -2.5 -2.3 -4.9 1.31 3.00 4.07 22.62 7.10 5.53 45.0 3.3 13.5 9.9 31.4 11.9 22.6 -8.8 5.0 3.6 15.2 3.2 0.69 1.08 0.86 2.16 1.55 0.78 3.68 3.60 0.69 1.07 1.00 2.10 1.60 0.80 4.10 3.40 0.65 0.66 0.33 0.93 0.71 0.29 0.67 0.49 3.4 20.0 7.3 14.7 14.5 6.4 25.6 27.2 7.0 17.4 11.2 15.3 12.5 9.7 22.8 29.1 20.0 5.4 11.8 14.7 10.7 12.2 14.4 13.2 9.8 6.2 7.7 14.1 12.4 8.0 16.2 12.4 5.8 3.7 4.1 3.2 3.9 1.3 3.8 3.3 5.8 3.2 4.7 3.5 3.5 1.3 3.8 3.3 0.83 1.43 1.05 2.46 1.70 1.00 3.77 3.66 -16.4 -24.6 -18.6 -12.2 -8.8 -22.5 -2.4 -1.6 0.68 1.05 0.85 1.85 1.34 0.69 2.80 2.84 1.5 2.9 1.2 16.9 15.7 12.3 31.4 26.7 -0.7 -4.4 -14.5 10.8 8.4 -3.1 17.6 20.0 1.72 1.48 1.86 1.72 0.54 0.59 8.9 8.1 10.1 8.6 19.4 18.3 17.0 17.2 5.2 5.7 5.9 6.0 1.84 1.72 -6.5 -14.0 1.60 1.44 7.5 2.8 0.0 -3.3 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.22 24.28 19.12 13.92 1.53 1.45 20.19 19.02 17.37 1.81 0.72 0.75 0.76 1.02 0.58 6.6 98.4 88.2 131.9 8.8 6.1 102.3 101.3 130.8 10.6 18.5 24.7 21.7 10.5 17.5 19.9 23.7 18.9 10.6 14.5 5.7 3.0 3.2 3.2 6.5 5.7 3.1 3.7 3.3 6.5 1.80 25.70 22.66 14.90 1.64 -32.2 -5.5 -15.6 -6.6 -6.7 1.14 22.50 18.10 13.00 1.38 7.0 7.9 5.6 7.1 10.9 -10.9 2.0 -10.2 0.1 2.7 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 5.31 5.08 6.56 6.43 5.25 4.95 5.95 6.95 1.26 0.95 0.71 0.68 16.7 20.8 25.1 21.4 17.6 21.1 25.4 22.3 31.8 24.4 26.1 30.0 30.1 24.1 25.8 28.8 1.6 4.1 3.0 3.0 1.7 4.1 3.0 3.1 5.99 5.19 6.60 6.90 -11.4 -2.1 -0.6 -6.8 4.11 4.36 5.36 5.81 29.2 16.5 22.4 10.7 12.5 5.2 9.7 8.1 TECHNOLOGY Semiconductor & Electronics IRIS 0.19 INARI 2.12 MPI 12.88 UNISEM 3.69 0.14 2.35 13.15 3.55 1.43 0.78 0.50 0.82 -1.2 10.5 94.2 26.9 0.9 na 12.6 20.2 115.7 13.7 29.1 13.7 21.0 16.9 11.1 12.7 0.0 2.0 2.1 3.3 0.0 2.3 2.1 3.3 0.24 2.15 13.06 3.69 -20.8 -1.4 -1.4 0.0 0.10 1.28 7.02 2.20 90.0 65.3 83.5 67.7 72.7 27.7 73.8 56.4 3.50 8.08 3.02 8.10 1.16 1.45 33.5 17.2 34.9 17.5 10.4 46.9 10.0 46.2 1.1 1.2 1.4 1.2 3.53 8.31 -0.8 -2.8 2.12 5.76 65.1 40.3 52.8 33.3 1.73 3.90 1.88 4.51 0.81 0.68 15.4 19.3 21.5 17.4 11.2 20.2 8.0 22.4 3.2 3.7 4.0 3.3 1.87 4.59 -7.5 -15.0 1.23 3.74 40.7 4.3 8.8 -9.3 PROPERTY GLOMAC HUAYANG IBRACO IOIPG MAHSING SNTORIA SPSETIA SUNWAY REIT SUNREIT CMMT TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.93 OCBC 10.56 UOB 23.97 PLANTATIONS WILMAR IFAR 3.43 0.49 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 21.40 11.10 23.60 1.23 1.13 1.09 173.8 87.8 195.7 190.2 12.0 92.5 12.0 209.4 12.2 11.0 11.4 11.4 2.9 5.7 2.9 2.9 6.7 2.9 20.9 10.6 24.0 0.0 -0.3 -0.2 14.63 8.84 17.41 43.1 28.6 37.7 20.7 18.4 17.5 3.72 0.53 0.90 1.11 28.9 3.9 31.1 4.3 11.0 11.5 2.3 2.0 2.6 2.1 4.0 0.6 -14.3 -17.6 2.96 0.44 15.9 11.4 -4.5 -6.7 11.9 12.5 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. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
13. IPO TA Securities Friday , 12 May 2017 FBM KLCI: 1,775.39 Sector: Construction A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Inta Bina Group Berhad Fair Value: RM 0.25 Ace Market Listing Facing Headwinds Not rated THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Ooi Beng Hooi Tel: +603-2167 9612 benghooi@ta.com.my Background Inta Bina Group Berhad (Inta Bina) is primarily a building contractor with more than 25 years of operating history in the construction industry in Malaysia. It is involved in the construction of residential buildings, commercial buildings, industrial buildings and leisure properties. It has completed more than 110 building construction projects mainly in the Klang Valley and Johor. IPO Statistic The IPO entails a public issue of 107.1mn new ordinary shares (representing 20.0% of enlarged issued and paid-up share capital), and an offer for sale of up to 26.8mn shares (representing 5.0% of enlarged issued and paid-up share capital) by offeror to selected investors, at IPO price of RM0.25/share. www.taonline.com.my Share Information Listing 535.3 Market Cap @ RM0.54 (RM mn) 133.8 Issue price (RM) 0.25 Oversubscription rate N/A Estimated free float (%) 35.7 Tentative listing date Main Competitive Advantages 1. Established track record; 2. Commitment to quality; and 3. Established relationship with clients. FY15 271.9 26.4 21.4 7.9 19.2 16.8 11.5 2.2 11.6 na na 31.1 FY16 257.1 27.7 23.4 9.1 20.5 17.8 12.7 2.4 10.5 na na 25.9 Tentative Date Opening of the IPO 5 May 2017 Closing of the IPO 15 May 2017 Balloting of Applications 17 May 2017 Allotment of Shares 23 May 2017 Listing 25 May 2017 Ratio & Analysis NTA per share (post IPO) (sen) 0.29 Price to NTA (x) 0.54 Proforma ROE (%) 35.8 Proforma ROA (%) 14.2 Proforma Gearing (x) Valuation At IPO price of RM0.25/share, Inta Bina is trading at a trailing PER of 10.5x FY16 earnings. We value Inta Bina at 10x CY18 EPS, on a par with our target P/E for the small-cap segment, and arriving at a fair value of RM0.25/share. Earnings Summary (RM mn) FYE December (RMmn) Revenue Gross profit EBITDA EBITDA margin (%) Operating profit PBT PAT EPS * (sen) PER^ (x) Gross dividend * (sen) Dividend yield^ (%) ROE (%) 25 May 2017 Tentative Listing Dates Event Public issue: • 13.4mn new shares for application by the Malaysian public; • 13.4mn new shares for application by the Bumiputera investors; • 20.0mn new shares for application by eligible directors, employees and business associates/ persons; • 6.7mn new shares by way of private placement to selected investors; and • 53.5mn new shares by way of private placement to MITI-approved Bumiputera investors. Ace Market Enlarged Share Capital (mn) FY17F 281.7 28.5 23.9 8.5 21.1 18.9 13.0 2.4 10.3 0.8 3.2 18.1 FY18F 295.3 29.2 24.8 8.4 21.6 18.9 13.3 2.5 10.1 0.8 3.2 14.4 Note: *based on enlarged share base of 535.3mn, ^ based on IPO price of RM0.25/share Page 1 of 5 FY19F 307.2 29.2 24.9 8.1 21.8 19.0 13.2 2.5 10.1 0.8 3.2 13.0 Utilisation of Proceeds net cash RM(mn) % Capex 5.0 18.7 Repayment of bank borrowings 9.0 33.6 General working capital 9.6 35.7 Estimated listing expenses 3.2 12.0 26.8 100.0 TOTAL
14. TA Securities 12-May-17 A Member of the TA Group Business Overview Inta Bina Group Berhad (Inta Bina) is primarily a building contractor with more than 25 years of operating history in the construction industry in Malaysia. It is involved In the construction of residential buildings, commercial buildings, industrial buildings and leisure properties. It has completed more than 110 building construction projects mainly in the Klang Valley and Johor. Currently, it has only 1 subsidiary, i.e. Inta Bina Sdn Bhd, and it does not have any associated companies. Exhibit 1: IPO Structure Public Issue Malaysian public Bumiputera investors Eligible directors, employees, business associates/ persons 13.4mn new shares 13.4mn new shares 20.0mn new shares Private placement to identified investors 6.7mn new shares Private placement to MITI-approved Bumiputera investors Offer of Sale Placement to MITI-approved Bumiputera investors 53.5mn new shares 26.8mn vendor shares Source: Company, TA Securities Utilisation of proceeds The estimated gross proceeds of RM26.8m raised are expected to be utilised for the following manners: Exhibit 5: Utilisation of proceeds Description Estimated timeframe for utilisation from Date of Listing Capex Within 12 to 18 months Amount (RM'mn) % of Total Gross Proceeds 5.0 18.7 Repayment of bank borrowings 6 months 9.0 33.6 General working capital 12 months 9.6 35.7 Estimated listing expenses 1 month 3.2 12.0 26.8 100.0 Total gross proceeds Source: Company, TA Securities Competitive Advantages 1) Established track record Inta Bina has more than 25 years of operating history and it has a diversified pool of client portfolio that includes public listed property developers such as Eco World Development Group Bhd, S P Setia Bhd, UEM Sunrise Bhd, Gamuda Bhd, Mah Sing Group Bhd, Lum Chang Holdings Limited, Paramount Corporation Bhd, Plenitude Berhad, Selangor Dredging Bhd, Tropicana Corporation Bhd and Engtex Group Bhd. 2) Commitment to quality The group has been actively participating in building construction projects that are assessed under both CONQUAS and QLASSIC by Building and Construction Authority Singapore and Construction Industry Development Board respectively. These accreditations service to highlight the group’s ongoing commitment in providing quality construction services. In comparison to the industry average, Inta Bina’s average score for all CONQUAS assessed projects is 78.2%, as compared with the industry average of 76.0% as at LPD. 3) Established relationship with clients The group strives to complete projects within the contract period and maintain high quality of works in order to foster trust and further entrench its Page 2 of 5
15. TA Securities 12-May-17 A Member of the TA Group relationship with its existing clients . It is believed that these have enabled the group to maintain more than 10 years of working relationship with its clients such as Gamuda Bhd, S P Setia Bhd and Engtex Group Bhd. In addition, Inta Bina also established working relationship with other major property developers including Eco World Development Group Bhd, Paramount Corporation Bhd, Plenitude Bhd, Perdana Parkcity Sdn Bhd, Selangor Dredging Bhd, Tropicana Corporation Bhd and UEM Sunrise Bhd. Key Risks Relating to Business and Industry 1) Continuity of order book is not assured The contracts are awarded on a project-to-project basis and it is common for jobs to be awarded based on competitive bidding. As such, there is no assurance of continuity from one project to the next project. Significant depletion of order book will adversely affect the group’s long term sustainability and business growth. 2) Delay or cancellation of projects by clients Unfavourable economic conditions or financial performance of its customers may cause them to terminate the projects and the group’s business may be adversely affected by such events. 3) Availability and fluctuations in prices of raw materials As the demand for raw materials such as concrete and steel bars are price sensitive, the group may not be able to obtain sufficient quantities of raw materials for its projects when the materials are scarce in the market. This may affect the progress of works on site, potentially causing delay in completion of projects beyond contractual deadlines. Also, the fluctuation in prices of raw materials could affects the group’s financial performance. 4) Failure to complete projects within the stipulated contract period The timely completion of projects is dependent on various factors which include timey receipt of requisite licenses, permits or regulatory approvals, availability of construction materials, equipment and labour, availability of financing and satisfactory performance of subcontractors appointed. Any adverse development in respect of these factors can lead to interruptions or delays in completing a project, which may result in clients imposing liquidated damages which could affect the group’s profitability and cash flow. 5) Dependence on foreign workers The construction industry is highly dependent on the employment of foreign workers due to the shortage of local workers in the local construction industry. Any disruption on supply of foreign workers, new policies or amendment in policies relating to the employment of foreign workers in the construction industry may greatly disrupt its progress on sites, causing delay in timely completion of projects. 6) Dependence on the services of subcontractors The group engages subcontractors to carry out different parts of construction activities. Any failure of a subcontractor to provide its contracted services as per requirements may lead to damages and penalties being imposed on the group, and adversely impact the financial performance of the group. Financial Highlight The revenue ranged between RM245.8mn and RM271.9mn for the period between FY14 and FY16. Going forward, we forecast the revenue to grow gradually in FY17, FY18 and FY19 as the group could secure more jobs with the purchase of new plant and machinery. Post-IPO, the group intends to spend RM5.0mn on capex to increase its machinery and equipment. Page 3 of 5
16. TA Securities 12-May-17 A Member of the TA Group Its net margin fluctuated between 4 .2% and 4.9% in the past 3 years. Given the challenging outlook for the property sector, coupled with the competitive environment of the building construction segment, we estimate the net margin to decline gradually from 4.9% in FY16 to 4.6%, 4.5% and 4.3% in FY17, FY18 and FY19 respectively. Exhibit 6: Financial performance Source: Company, TA Securities Outlook Currently, the group has an outstanding order book of RM486.2mn (including RM40.3mn from a project which is held abeyance), translating into 1.9x FY16 revenue. The group has submitted tenders for 9 projects with a total tendered sum of RM434.1mn. The outlook of the group’s business is largely dependent on the conditions of property development industry as its clients are mainly local property developers. We are less sanguine on the outlook for the property sector given the cautious sentiment in the property sector, coupled with property buyers facing difficulty in obtaining financing. Dividend Policy The group does not have an official dividend policy. However, it is the group’s intention to pay dividends to shareholders in the future. The quantum of dividend will depend upon factors such as the group’s performance, capex requirements and financial condition. Earnings Forecast We expect earnings growths of +1.8%, +2.5% and -0.6% for FY17, FY18 and FY19 respectively. Our earnings projections are premised upon the following assumptions: • Revenue growth of 4.0% to 9.6% between FY17 and FY19, after utilising RM5.0mn from IPO proceeds to increase its capacity; • PBT margin of 6.2% to 6.7% between FY17 and FY19; and • Order book replenishment assumptions of RM285mn, RM300mn and RM310mn for FY17, FY18 and FY19 respectively. Valuation There are no other listed local competitors that are directly comparable to Inta Bina. While Kerjaya Prospek Group Bhd focuses mainly on building construction, Kerjaya Prospek is a building contractor of much larger scale with a market capitalization of RM1.6bn. Furthermore, Kerjaya Prospek is a niche construction player in high-rise buildings, as evidenced by its above Page 4 of 5
17. TA Securities 12-May-17 A Member of the TA Group average margin . We assign a target PE multiple of 10x to Inta Bina and arrive at a target price of RM0.25. This is considering i) Inta Bina’s relatively small market capitalization upon listing; ii) the company is expected to be in net cash position upon listing; iii) the headwinds currently faced by the property sector which is likely to affect jobs flow for building construction; and iv) stiff competition in the building construction segment, as evidenced by high number of registered contractors in this segment and relatively low net profit margin at mid-single digit margin. Not rated. Peer Comparison Price (RM) KERJAYA Source: Bloomberg, TA Securities Market Cap (RM mn) 3.12 1606.2 EPS (sen) FY18 PE (x) FY18 P/B (x) FY18 ROE (%) FY18 Debt/Equity (x) FY18 Dividend Yield (%) FY18 26.0 12.0 1.9 15.8 net cash 2.6 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. 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 5 of 5
18. TA Securities ECONOMIC REPORT A Member of the TA Group Friday , May 12, 2017 FBMKLCI: 1,775.39 MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Malaysian Economy Still-steady IPI Growth; Moderation in Manufacturing Output THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage shazma@ta.com.my farid@ta.com.my Tel: +603-2167 9609 Summary Malaysia's Industrial Production Index (IPI) rose by a lower-than-expected 4.6% YoY to 133.6 points in March 2017, mainly driven again by electricity output as well as moderate manufacturing production. Note that, March's overall output growth came in below consensus estimate of 4.8% YoY. March's overall performance is also below February’s 4.7% YoY increase. On a MoM, seasonally adjusted basis, overall IPI declined by 0.7%. Manufacturing production growth moderated to 5.9% YoY (February 2017: +6.6% YoY) but still above 5-year average gain of 5.1%. Country's manufacturing sector still charted a steady growth since December 2016, benefitting from a recovery in global trade and manufacturing demand. Also, mining output increased by 2.0% YoY in March 2017, as compared with 0.4% YoY gain previously while electricity dropped by 0.2% YoY during the month. Meanwhile, the sales value of the manufacturing sector continued to increase by double digit growth of 13.6% YoY to record RM65.9bn during the month as compared to RM58.0bn reported a year ago. In tandem with improving sales, manufacturers has added the pace of hiring in March 2017. As a result, productivity increased by 11.2% YoY to RM63,008. As a whole, overall production increased 4.3% YoY in 1Q17 after posting growth of 5.0% YoY the prior quarter and 2.8% in the 1Q16. Manufacturing sectors had been improving and was trending in tandem with the exports growth momentum during the same period. As such, we believe that the economy is poised for another year of resilient growth, on the basis of better manufacturing output data. The first quarter of real GDP data is set to announce on 19th May 2017. We believe that our GDP projection of 4.5% for 1Q17 is achievable and are maintaining our GDP forecast of 4.5% for 2017 at this juncture. Going forward, we would anticipate stable growth levels in the factory output for 2Q17 given the improving domestic and external demand for Malaysian products. Malaysia’s economic environment will continue to be supportive of strong factory output. To recap, exports had surged by an outstanding 24.1% YoY totaling RM82.6bn and we expect the trade segment will maintain sustainable growth for the rest of the year, benefiting from the weak Ringgit. Moreover, Malaysia’s Purchasing Manager Index (PMI) manufacturing survey improved in April 2017. The headline Nikkei Malaysia PMI improved to 50.7 in April. Although indicative of only marginal growth, the index compared favourably to March’s 49.5 and indicated the first net improvement in the health of the sector since March 2015. Page 1 of 4 www.taonline.com.my
19. TA Securities 12-May-17 A Member of the TA Group Figure 1 : IPI Manufacturing vs. GDP manufacturing vs. GDP (1Q11 – 1Q17e) 9.0 8.0 7.0 6.0 YoY % 5.0 4.0 3.0 0.0 -1.0 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016p 2Q2016 3Q2016 4Q2016 1Q2017e 2.0 1.0 GDP Growth GDP Manufacturing IPI Manufacturing Sources: Department of Statistics, TA Securities IPI Registered a Still-steady Growth Industrial Production Index (IPI) increased by 4.6% YoY to 133.6 points in March 2017, down slightly from a 4.7% YoY in February 2017 and it was lower than consensus projection of 4.8% YoY. The moderation was due to a contraction of electricity sector but was offset by the increase in manufacturing and mining output from further moderation. Namely, manufacturing and mining output increased by 5.9% YoY and 2.0% YoY, respectively while output of electricity contracted by 0.2% YoY, as compared with 1.5% YoY gain previously. On a monthly comparison, IPI declined by 0.7% MoM, s.a. due to a drop in the manufacturing (0.4% MoM, s.a.), mining (0.7% MoM, s.a) and electricity (2.7% MoM, s.a.) sectors. Figure 2: Industrial Production Index (January 2011 – March 2017) Index All divisions (LHS) YoY % (RHS) 3MMA YoY % 140 12 135 10 130 8 125 6 120 4 115 2 110 0 105 -2 95 -4 90 -6 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 100 Sources: Department of Statistics, TA Securities Figure 3: Summary of IPI (October 2016 – March 2017) (2010=100) 2016 Oct-16 IPI Mining Electricity Manufacturing Manufacturing Sales Value 3.8% 1.6% 8.5% 4.3% 1.3% 4.2% 3.5% 6.9% 4.2% 1.9% Nov-16 Dec-16 6.2% 4.7% 9.7% 6.5% 8.2% 4.7% 5.8% 6.1% 4.3% 10.6% Jan-17 Feb-17 Mar-17 1Q17 3.5% 1.1% 1.1% 4.6% 10.7% 4.7% 0.4% 1.5% 6.5% 15.7% 4.3% 1.2% 0.7% 5.7% 13.3% Sources: Department of Statistics, TA Securities Page 2 of 4 4.6% 2.0% -0.2% 5.9% 13.6%
20. TA Securities 12-May-17 A Member of the TA Group Moderation in the Manufacturing Sector During the month , the manufacturing output (65.9% of total IPI) rose by 5.9% YoY as compared with 6.6% YoY gain observed in February 2017. The slower increase was mainly due to the moderation of export-oriented industries, which rose by 6.2% YoY, as compared with 6.3% gain previously. Within this industry: E&E products registered a same pace growth in the previous month (+8.5% YoY). Particularly, manufacture of computer, electronics & optical products rose by 8.5% YoY (February 2017: +8.1% YoY); growth for manufacture of electrical equipment eased to 8.7% YoY in March from February’s 11.5% YoY gain; and manufacture of machinery & equipment moderated to 8.3% YoY (February 2017: +11.0% YoY). Also, petroleum, chemical, rubber & plastic products rose by 3.6% YoY slightly below February’s 3.7% YoY, which improved on stronger output growth of manufacture of coke & refined petroleum products (March 2017: +3.3% YoY; February 2017: +2.2% YoY) and manufacture of basic pharmaceutical products & pharmaceutical preparations (March 2017: +7.6% YoY; February 2017: +3.9% YoY), but moderation seen in manufacture of chemicals & chemical products (March 2017: +4.0% YoY; February 2017: +4.8% YoY) as well as manufacture of rubber and plastics products (March 2017: +3.6% YoY; February 2017: +6.2% YoY). Similarly, output growth in domestic oriented industries also moderated from 7.4% YoY in February 2017 to 5.1% YoY in March 2017. The output of food, beverages & tobacco posted a growth of 5.7% YoY underpinned by slower output for food products at 4.3% YoY (February 2017: +16.6% YoY). On the other hand, output of transport equipment & other manufactures improved to 6.2% YoY (February 2017: +1.7% YoY) while non-metallic mineral products, basic metal & fabricated metal products gained 4.0% YoY during the months compared with 3.9% YoY increase previously. Mining Output Increases in March 2017 The output growth for the mining sector (28.9% of total IPI) posted a stronger growth of 2.0% YoY in March 2017. This was mainly due to the increase in natural gas index (March 2017: 7.9% YoY). However, crude oil index declined by 2.6% YoY as compared with 4.7% YoY contraction previously. On a seasonally adjusted terms, mining output declined by 0.7% in March 2017 On the flip side, the electricity output (5.2% of total IPI) contracted by 0.2% YoY in March 2017 as compared with 1.5% YoY gain observed in the previous month. Note that the IPI component of electricity had registered it first contraction annual growth since August last year as the result of high base impact. On a seasonally adjusted terms, electricity output dropped by 2.7% as compared to the previous month. Figure 4: IPI Sub-sectors Performance (January 2011 – March 2017) YoY % 20% Mining Production Manufacturing Production Electricity Production 15% 10% 5% 0% -5% -10% -15% -20% Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 -25% Sources: Department of Statistics, TA Securities Page 3 of 4