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Bursa Malaysia Daily Market Report - 15 August

Mohd Noordin
By Mohd Noordin
4 years ago
Bursa Malaysia Daily Market Report - 15 August

Amanah, Ard, Mal, Commenda, Sales


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  1. Tuesday , 15 August, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. Malaysian Pacific Industries Berhad: Expecting to Outgrow the Industry 2. Media Prima Berhad: New Ventures Undergo Gestation Period 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 Tuesday , 15 August 2017 (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 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (14.08.2017) (mil) Main Market 964.8 Warrants 203.9 ACE Market 352.2 Bond 4.1 ETF 0.0 Total 1,525.0 Off Market 80.7 Volume +/-chg (RMmn) -119.9 1,577.1 -1.7 21.1 13.5 97.9 -6.7 0.6 -0.08 0.0 1,696.7 60.0 134.7 Value +/-chg -196.0 -10.0 9.3 -0.6 -0.12 107.0 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 (mn) 30.1 13.0 10.0 7.6 5.7 5.0 4.5 2.0 1.0 Up Down 365 211 72 63 64 38 5 3 0 1 506 316 % chg % YTD chg 1,771.08 12,545.61 16,724.24 1,774.50 4.12 43.17 101.56 8.50 0.23 0.35 0.61 0.48 7.88 9.41 13.65 8.50 21,993.71 6,340.23 7,353.89 19,537.10 2,334.22 27,250.23 3,308.69 1,561.31 5,801.49 3,237.36 1,879.77 5,730.41 135.39 83.68 43.93 -192.64 14.51 366.72 28.97 0.00 35.35 28.82 37.17 37.27 0.62 1.34 0.60 -0.98 0.63 1.36 0.88 0.00 0.61 0.90 2.02 0.65 11.29 17.78 2.95 2.21 15.19 23.86 14.85 1.19 9.53 4.31 -4.54 1.14 Top 10 KLCI Movers Based on Mkt Cap. Off Market EDUSPEC SIME TIGER EKA MTRONIC PTRANS IKHMAS TUNEPRO CARIMIN Value/ Volume 1.63 0.10 0.28 0.15 1.91 1.11 1.67 @ @ @ @ @ @ @ @ @ (RM) 0.01 9.41 0.06 0.08 0.07 0.30 0.70 1.00 0.30 Counter TENAGA PCHEM IHH MAXIS AXIATA PETGAS DIGI GENM MISC IOICORP Mkt Cap. (RM’mn) 80,471 56,880 49,434 44,832 43,281 37,200 36,698 34,011 32,943 28,026 Chg (RM) 0.02 0.09 0.09 0.04 0.01 0.02 0.04 0.19 0.09 0.02 Vol. (mn) 7.39 7.24 2.70 2.12 2.13 1.24 4.50 3.61 0.55 1.51 Important Dates AMEDIA - 3:1 Rights Issue - RI of up to 965.6m shares together with up to 321.9m free detachable warrants. 3 rights shares together every 1 existing share held, at an issue price of RM0.05 per rights share, together with 1 warrant for every 3 rights shares subscribed. Application Closed: 16/08/2017. LISTING ON: 29/08/2017. SLP - 1:5 Bonus Issue - BI of up to 52.8m shares. 1 bonus share for every 5 existing shares. Ex-Date: 18/08/2017. Entitlement Date: 22/08/2017. LISTING ON: 23/08/2017. Bursa Malaysia shares rose on Monday, encouraged by rebound in the region after Japan's 2Q GDP beat expectations and geopolitical tensions between the US and North Korea eased. The KLCI gained 4.12 points to close at 1,771.08, off an opening low of 1,766.37 and high of 1,772.56, as gainers led losers 506 to 316 on cautious turnover totaling 1.52bn shares worth RM1.69bn. While stocks should stage a relief rebound due to lower risk of military conflict in the Korean peninsula, the recovery could be mild given the weak follow-through buying momentum and market undertone. Immediate overhead resistance for the index will be at 1,783, the upper Bollinger band, followed by the 16 June peak of 1,796. On the downside, a breakdown below the 100-day moving average level at 1,764 may accelerate correction towards next major support at 1,729, a key support in April. Any further dips on Malakoff shares towards the 123.6%FP (98sen) could be attractive to buy for oversold rebound towards the prior 28/2/17 low (RM1.14), with next resistance from the 76.4%FR (RM1.30), and next crucial support from the 138.2%FP (88sen). Likewise, any weakness on Westports towards better support from RM3.40 or the 123.6%FP (RM3.34) should encourage bargain hunting ahead of oversold rebound towards the 50-day ma (RM3.71), with next hurdle from the 76.4%FR (RM3.82). News Bites • A JV between Bina Puri Holdings Bhd's unit and WNC Construction Co Ltd has entered into an agreement with a JV company of Fine 22 Properties Co Ltd and Thai Chemical Co Ltd, to undertake a THB250.6mn construction project. • Bursa Malaysia Securities Bhd has issued a consultation paper on the review of the Main Market and ACE Market Listing Requirements in relation to corporate governance requirements. • Felda Global Ventures Holdings Bhd is keen to offer its expertise in providing integrated logistics services with parties involved in the development of the East Coast Rail Link project. • Asia Knight Bhd plans to undertake a share capital reduction and buy a 60% stake in a plastic products producer for RM48mn, together with a rights issue with warrants to raise about RM34.9mn to part finance the purchase, to regularise PN17 status. • Eco World Development Group Bhd's has issued unrated mediumterm notes with a nominal value of RM250mn. • YFG Bhd has secured a RM235mn contract from Pierre Suite (M) Sdn Bhd for the construction of apartments in Kajang, Selangor. • Hap Seng Consolidated Bhd is disposing of 10.06 acres of leasehold land in Tawau, Sabah for RM175.28mn to a related party, Hong Kongbased Lei Shing Hong Ltd. • Asiamet Education Group Bhd, which operates the Asia Metropolitan University, is disposing of its campus building in Kota Bharu, Kelantan for RM10.2mn. • Mlabs Systems Bhd as entered into a distribution agreement with Hong Kong's Fortel Solution Ltd where Fortel would act as MRL's international distributor for its High Definition Video Conferencing products throughout China. • HSS Engineers Bhd's has accepted a letter of appointment and entered into a consultancy agreement with BBCC Development Sdn Bhd for a contract valued at RM6.42mn. • Despite a return to profitability in the second quarter, Media Prima Berhad's 1HFY17 results came below expectations with a core loss of RM28.9mn. • Utusan Melayu (M) Bhd narrowed its net loss to RM10.7mn for the second quarter ended June 30 from RM16.3mn a year ago. • China factory output rose 6.4% YoY in July, the slowest pace since January. Exchange Rate USD/MYR 4.2924 -0.0040 USD/JPY 109.73 0.6700 EUR/USD 1.180 0.0039 Commodities Futures Palm Oil (RM/mt) 2,676.00 -13.00 Crude Oil ($/Barrel) 47.50 -1.29 Gold ($/tr.oz.) 1,284.40 -7.10 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. Technical Comments : Buy Dips on Malakoff & Westports Any further dips on Malakoff shares towards the 123.6%FP (98sen) could be attractive to buy for oversold rebound towards the prior 28/2/17 low (RM1.14), with next resistance from the 76.4%FR (RM1.30), and next crucial support from the 138.2%FP (88sen). Likewise, any weakness on Westports towards better support from RM3.40 or the 123.6%FP (RM3.34) should encourage bargain hunting ahead of oversold rebound towards the 50-day ma (RM3.71), with next hurdle from the 76.4%FR (RM3.82). MALAKOFF Upper Middle RM1.02 (+0.02) BOLLINGER BANDS RM RM 1.06 1.03 10-day 30-day RM 1.01 50-day Lower DMI Recent Signal SELL 1.07 Recent Signal BUY Signal Change WESTPORTS Recent Signal Signal Change RM DAILY MACD Signal Change Upper Middle Lower SIMPLE MOVING AVERAGES RM 1.03 RM 1.03 BOLLINGER BANDS RM RM RM DMI RM3.61 (+0.02) 3.75 3.67 3.60 SELL SIMPLE MOVING AVERAGES RM 3.65 RM 3.68 RM 3.71 DAILY MACD Recent Signal SELL Signal Change 10-day 30-day 50-day Page 2 of 2
  4. TA Securities Tuesday , August 15, 2017 FBMKLCI: 1,771.08 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 Mild Relief Rebound Expected Bursa Malaysia shares rose on Monday, encouraged by rebound in the region after Japan’s 2Q GDP beat expectations and geopolitical tensions between the US and North Korea eased. The KLCI gained 4.12 points to close at 1,771.08, off an opening low of 1,766.37 and high of 1,772.56, as gainers led losers 506 to 316 on cautious turnover totaling 1.52bn shares worth RM1.69bn. Resistance at 1,783, Support at 1,764 While stocks should stage a relief rebound due to lower risk of military conflict in the Korean peninsula, the recovery could be mild given the weak follow-through buying momentum and market undertone. Immediate overhead resistance for the index will be at 1,783, the upper Bollinger band, followed by the 16 June peak of 1,796. On the downside, a breakdown below the 100-day moving average level at 1,764 may accelerate correction towards next major support at 1,729, a key support in April. Buy Dips on Malakoff & Westports Any further dips on Malakoff shares towards the 123.6%FP (98sen) could be attractive to buy for oversold rebound towards the prior 28/2/17 low (RM1.14), with next resistance from the 76.4%FR (RM1.30), and next crucial support from the 138.2%FP (88sen). Likewise, any weakness on Westports towards better support from RM3.40 or the 123.6%FP (RM3.34) should encourage bargain hunting ahead of oversold rebound towards the 50-day ma (RM3.71), with next hurdle from the 76.4%FR (RM3.82). Asian Markets Bounced Back as Tensions Eased Asian stock markets traded mostly higher on Monday after Japan GDP beats expectations and reduced fears of imminent military conflict between the U.S and North Korea lifted buying interest. Japanese economy grew at an annualized rate of 4 percent in the second quarter of the year ending in June compared to the previous year. That easily topped the 2.5 percent rise forecast in a Reuters poll. However, the Nikkei shares average fell 192.64 points or 0.98 percent to 19,537.10, following a holiday weekend and stronger yen. Korean Kospi rebounded by 0.63 percent to 2,334.22 after being pressured by geopolitical tensions for most of the last week. In down under, the benchmark ASX200 ended higher by 0.65 percent to close at 5,730.41 with the broader index driven by gains in the information technology, energy and heavily-weighted financials sub-indexes. Meanwhile, China stocks ended higher as investors sought opportunities in shares hit by losses last week even as economic data suggested the potential for slowing growth in the world's second-largest economy. The bluechip CSI300 index rose 1.30 percent to 3,694.68 points, while the Shanghai Composite Index gained 0.88 percent to 3,236.93 points. Thailand markets were closed for a public holiday. Page 1 of 8
  5. TA Securities 15-Aug-17 A Member of the TA Group Wall Street Higher as Tensions Fade U .S stock markets recovered further on Monday from last week's selloff as fears about the North Korea conflict faded. The S&P 500 posted its biggest one-day percentage gain since April as stocks rallied broadly. Secretary of State Rex Tillerson and U.S Secretary of Defense James Mattis stated that the current U.S administration would continue to pursue diplomatic resolutions with Pyongyang. Technology index rose 1.6 percent, giving the index its biggest boost. Snap Inc's gained 6.5 percent from a record low in a volatile trading session as big investors reported their latest stakes and a wave of employees became eligible to sell their shares. Meanwhile, Alibaba gained 1.9 percent after Dan Loeb's Third Point bought 4.5mn shares in the Chinese e-commerce company. The Dow Jones Industrial Average rose 135.39 points, or 0.62 percent, to 21,993.71, the S&P 500 gained 24.52 points or 1 percent, to 2,465.84 and the Nasdaq Composite rose 83.68 points or 1.34 percent at 6,340.23. Page 2 of 8
  6. TA Securities 15-Aug-17 A Member of the TA Group News In Brief Corporate A JV between Bina Puri Holdings Bhd ’s unit, Bina Puri Holdings (Thailand) Ltd and WNC Construction Co Ltd has entered into an agreement with a JV company of Fine 22 Properties Co Ltd and Thai Chemical Co Ltd, to undertake a THB250.6mn (RM35.0mn) construction project for the I’m Fine Condominium in Bangna, Thailand. The completion period is 12 months. (Bursa Malaysia/ The Edge) Comments: This is the first construction job win announced in 2017 since it last secured a construction project back in September 2016. The current outstanding construction order book is estimated at RM1.5bn, which would provide earnings visibility to the construction division for the next 2 to 3 years. No change to our earnings forecasts as the job win is within our FY17 order book replenishment assumption of RM800mn. Pending the announcement of 2Q17 financial results later this month, we maintain our HOLD call on the stock with an unchanged target price of RM0.45. Banks no longer rely on customer deposits for lending activities, as they have broadened their sources of funding to other areas such as bonds. According to a top banker, this is a reason why the loan-to-deposit (LDR) ratio is no longer a benchmark to determine the health of the financial system or a bank (StarBiz). Bursa Malaysia Securities Bhd has issued a consultation paper on the review of the Main Market and ACE Market Listing Requirements (LR) in relation to corporate governance requirements. The amendments are being proposed as a result of the introduction of the new Malaysian Code on Corporate Governance (MCCG) by the Securities Commission Malaysia (Bernama). Media Prima Bhd posted a pre-tax loss of RM135.6mn in the second quarter ended June 30, 2017 against a pre-tax profit of RM29.84mn in the same quarter a year ago. Revenue eased to RM328.77mn from RM349.55mn previously due to changes in consumer behaviour and digital disruptions that have impacted the media industry as a whole. Although the group has ventured into new digital and consumer-based business initiatives to complement its traditional media segments, these initiatives are still undergoing a gestation period (Bursa Malaysia). Felda Global Ventures Holdings Bhd (FGV) is keen to offer its expertise in providing integrated logistics services with parties involved in the development of the East Coast Rail Link (ECRL) project. Given that ECRL's construction would be based in Kuantan before expanding to Kelantan and Selangor, the group has the advantage in providing logistics services as its facilities were located either in or close to Kuantan Port (StarBiz). Asia Knight Bhd plans to undertake a share capital reduction and buy a 60% stake in a plastic products producer for RM48mn, together with a rights issue with warrants to raise about RM34.9mn to part finance the purchase, to regularise its Practice Note 17 (PN17) status. The proposed capital reduction will shrink its share capital to RM3.6mn from RM60.6mn and give rise to a credit of RM5mn, which it will use to offset its accumulated losses, according to its (Bursa Malaysia). Eco World Development Group Bhd’s (EW Bhd) has issued unrated medium-term notes (MTNs) with a nominal value of RM250mn. The bonds with a five-year tenure were issued on Monday. The proceeds raised would be used by Eco World Capital Assets for its general corporate purposes and/or to refinance any existing or for future financing of EW Bhd and/or its subsidiaries and/or joint ventures which the Eco World group is a party to (Bursa Malaysia). Page 3 of 8
  7. TA Securities 15-Aug-17 A Member of the TA Group YFG Bhd has secured a RM235mn contract from Pierre Suite (M) Sdn Bhd (PSSB) for the construction of apartments in Kajang, Selangor. The proposed project, which involved building, infrastructure and landscaping works, was expected to commence on a date to be notified in writing by PSSB and to be completed within 36 months from the commencement date (Bernama). Hap Seng Consolidated Bhd is disposing of 10.06 acres of leasehold land in Tawau, Sabah for RM175.28mn to a related party, Hong Kong-based Lei Shing Hong Ltd (LSH). The proposed disposal enables the group realise an attractive gain and the proceeds will be used to reduce bank borrowings and/or to contribute to the working capital of Hap Seng. The disposal consideration of about RM400 psf was arrived at on a willing-buyer willingseller basis based on a valuation by independent valuer VPC Alliance (Sabah) Sdn Bhd (The Edge). Utusan Melayu (M) Bhd narrowed its net loss to RM10.7mn for the second quarter ended June 30 from RM16.3mn a year ago. The lower losses were attributed to lower costs, which was reduced by RM9.6mn. The group had also recognised a gain on disposal of properties of RM3.7mn during last year’s corresponding quarter (StarBiz). Asiamet Education Group Bhd, which operates the Asia Metropolitan University, is disposing of its campus building in Kota Bharu, Kelantan for RM10.2mn. The building, comprising 11 units of shop lots with a net lettable area of 4,537 sqm, is being sold to Universiti Teknologi MARA (UiTM). The sale is in line with its “asset light strategy” to enhance its financial footing and to raise funds as working capital. The estimated gain from the disposal is about RM1.25mn (The Edge). Mlabs Systems Bhd as entered into a distribution agreement with Hong Kong's Fortel Solution Ltd. Through the agreement, Fortel would act as MRL's international distributor for its High Definition Video Conferencing products throughout China. Fortel agrees to exercise its best effort to commit sales of USD300K for MRL's products during its one-year term (The Edge). Guan Chong Bhd’s net profit more than doubled in its second quarter ended June 30, 2017 (2QFY17) to RM22.88mn from RM10.66mn last year, mainly due to lower bean prices and higher net gain on foreign exchange. EPS rose to 4.79 sen per share in the quarter from 2.23 sen per share a year ago (StarBiz). HSS Engineers Bhd's (HSSEB) associate company, HSS Integrated Sdn Bhd (HSSI), has accepted a letter of appointment and entered into a consultancy agreement with BBCC Development Sdn Bhd for a contract valued at RM6.42mn. The contract was for the appointment as the consultant civil and structural engineer and mechanical and electrical engineer for external infrastructure works for the Bukit Bintang City Centre mixed development project (Bursa Malaysia). Page 4 of 8
  8. TA Securities 15-Aug-17 A Member of the TA Group News In Brief Economy Asia MITI Expects 10 %-30% Rise in Export Revenue from Mid-tier Firms The Ministry of International Trade and Industry (MITI) is targeting a 10%-30% increase in total export revenue from Malaysian mid-tier companies (MTCs) this year, given their current positive performances. Deputy Minister Datuk Chua Tee Yong said last year, the export revenue for the total of 152 MTCs were RM6.82bn, up 10.41% from RM6.18bn in 2015. For this year, Chua said, a total of 21 MTCs from various sectors had been recruited. He said currently the companies were being consulted and evaluated of the suitable export markets to enter based on the business models. “These companies will undergo the nine-month training and evaluation activities under the MTC programme before they are included into the existing 152 MTCs,” he said. The MTC programme aims at enhancing the companies’ exports which currently achieved an annual export revenue of between RM20mil and RM500mn for services companies and between RM50mn and RM500mn for manufacturing companies. (The Star) Robust China Economic Growth Shows Signs of Fading in July China’s strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree. Industrial output, investment, retail sales and trade all grew less than expected last month, after the world’s second-largest economy put in a surprisingly strong showing in the first half, adding fuel to a global recovery. Factory output rose 6.4% in July from a year earlier, the slowest pace since January, according to data from the National Bureau of Statistics. Despite the softer-thanexpected reading, manufacturing activity still appears to be supported for now by an extended infrastructure boom. Beijing has been pouring money into road and rail projects that have fuelled demand for products from construction equipment to glass and steel. Other news in China: • Fixed-asset investment grew 8.3% in the first seven months of the year, cooling from 8.6% in the first half of the year. Growth in property investment, which mainly focuses on residential real estate but includes commercial and office space, eased to 4.8% in July from a year earlier, versus 7.9% in June, Reuters calculations based on official data showed. • Retail sales expanded 10.4% in July on-year, down from June’s 11% and forecasts for a 10.8% rise while car sales remained solid, automakers cut back production. • China’s home sales grew last month at the slowest pace in more than two years amid regulators’ moves to rein in soaring prices. The value of new homes sold rose 4.3% to 779 billion yuan ($117 billion) in July from a year earlier, according to Bloomberg calculations based on data released by the National Bureau of Statistics. Restrictions in bigger cities had spurred buying in smaller ones, forcing local authorities to sharply reverse policies they had put in place last year to reduce a glut of unsold homes in second and third-tier areas. (The Star/ Bloomberg) Page 5 of 8
  9. TA Securities 15-Aug-17 A Member of the TA Group Japan Posts 4 .0% Annualized GDP Growth in April-June Quarter Japan’s economy grew at a faster-than-expected pace of 4% in the April-June period, with strong spending by consumers and businesses driving the sixth straight quarter of growth under Prime Minister Shinzo Abe. The figure gave the world’s third-largest economy its longest expansion streak since 2006 and was faster than 2.6% growth in the U.S. for the same quarter. Japan’s pace of expansion, its quickest since January-March 2015, was also faster than the 2.5% growth expected by economists polled by The Wall Street Journal. Unlike recent quarters, when foreign demand for items such as smartphone components and semiconductor equipment drove Japan’s economy, strong private spending was the key factor in the April-June period. Household spending grew at an annualized 3.7% pace. The improvement is a welcome sign for Mr. Abe, who this month said boosting the economy was his priority. His ruling party suffered a defeat in Tokyo elections in July. Since he took office in late 2012, Mr. Abe has been trying to end decades of sluggish growth and deflation through his Abenomics policy package, aimed at getting the economy into a virtuous cycle of rising wages, prices and spending. Private consumption has picked up recently, in part because consumers who bought cars and electronics several years ago when the government offered incentives are now replacing those products. Spending by companies on new equipment and other capital expenditures rose an annualized 9.9% in the April-June quarter. Meanwhile, for the first time in four quarters, exports from Japan fell an annualized 1.9% in the April-June period from the previous three months. That was partly because of a slowdown in the global smartphone production cycle, although economists expect demand to pick up. After two decades in which prices generally fell, Japan is finally seeing modest inflation, albeit far from the central bank‘s 2% target. In June, the core consumer-price index rose 0.4%, marking a six-month winning streak. (The Wall Street Journal) India's Wholesale Price Inflation Accelerates in July India's wholesale price inflation accelerated in July largely due to rebound in food prices, data from the Ministry of Commerce & Industry showed. Wholesale prices climbed 1.88% YoY in July, faster than the 0.90% rise in June. Build up inflation rate in the financial year so far was 0.62% compared to a build up rate of 3.81% in the corresponding period of the previous year. The WPI food index increased 2.12% from last year, in contrast to a 1.25% fall in June. Data showed that food article prices advanced 2.15% reversing a 3.47% drop in the previous month. Meanwhile, non-food article prices fell 6.32%, following a 5.15% drop. The annual growth in fuel and power prices slowed to 4.37% from 5.28%. At the same time, manufactured products prices gained 2.18% after rising 2.27%. (RTT News) Europe and United Kingdom Euro Zone June Industry Output Drops by More Than Expected Industrial output in the 19 countries sharing the euro currency fell by more than expected in June, as the production of capital and durable goods fell following sharp increases in the previous month, European statistics office Eurostat said on Monday. Factory output fell most in Ireland and Malta, while the euro zone's two largest economies, Germany and France also showed a decline. Italy and the Netherlands showed an increase in monthly output, however. Overall, industrial production in the euro area fell by 0.6% in June but still increased by 2.6% on an annual basis, staying below the 0.5% drop forecast in a Reuters poll of 32 economists. After a 2.2% monthly rise in May, the production of capital goods, such as machinery, fell by 1.9%. The output of durable consumer goods declined 1.2% in June following a 1.4% rise in May. For May, Eurostat revised its overall estimates downwards by 10 basis points, to 1.2% for the monthly and 3.9% for the annual reading. (Reuters) Page 6 of 8
  10. TA Securities 15-Aug-17 A Member of the TA Group UK Employers See Measly Pay Growth Ahead , Companies Turn Gloomy British employers expect to raise pay only minimally over the next 12 months despite hiring more staff, a survey showed, suggesting the Bank of England is unlikely to come under much pressure to raise interest rates from their record low. The Chartered Institute of Personnel and Development (CIPD) said employers predicted their pay increases would average 1% despite more of them expecting to increase staff levels than in its previous survey three months ago. While private-sector employers expect to raise pay by an average 2%, the median pay rise was dragged down by public-sector employers and charities which plan to offer pay rises of 1% and 1.4% respectively. The CIPD said the weak outlook for pay was partly due to increases in migration from the European Union and the number of people looking for work over the past year. Respondents also cited uncertainty over Brexit, a higher minimum wage and costs related to the introduction of automatic pension enrolment as weighing on their pay decisions. The CIPD also said employers became more pessimistic over the past six months as the economy slowed. The ICAEW's index fell from a reading of 6.7 for April to June, to -8 for the three months from July - similar to the levels seen at the start of the year. Matthew Rideout, ICAEW's director of business, said this was due to the uncertainty around Brexit and the outcome of June's national election when Prime Minister Theresa May lost her parliamentary majority. (The Star) U.K. Property Market Set to Stay Subdued as Election Deals Blow Britain’s shock election result took its toll on the property market last month and the slowdown is likely to continue through the rest of the year. The most sluggish July in five years saw house prices in England and Wales slip by 0.2 percent from June to an average of GBP298,906 ($388,000) as political and economic uncertainty unsettled buyers, the report by Acadata and LSL Property Services Plc found. It left the annual rate of increase at just 2.9%, the weakest since July 2013. The report adds to signs that housing market is faltering as Brexit jitters and the squeeze on consumers from faster inflation cast doubt over the economic outlook. Acadata blamed the weakness last month on the June election, which saw Prime Minister Theresa May unexpectedly lose her parliamentary majority, and the continuing effect of a tax hike introduced last year. (Bloomberg) Page 7 of 8
  11. TA Securities 15-Aug-17 A Member of the TA Group Share Buy-Back : 14 August 2017 Company DAIBOCI GRANFLO HAIO KOMARK TNLOGIS TROP UNIMECH Bought Back Price (RM) Hi/Lo (RM) 11,900 25,000 19,000 12,000 300,000 58,000 10,500 2.19 0.24 4.07/4.03 0.25 1.73/1.70 0.96/0.95 1.05/1.03 2.19 0.24/0.235 4.07/4.02 0.25/0.24 1.73/1.69 0.96/0.945 1.05/1.03 Total Treasury Shares 293,100 6,679,800 9,314,088 4,394,000 11,458,700 3,946,042 5,495,510 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 Page 8 of 8
  12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 14-Aug-17 1.87 2.18 5.78 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 0.81 0.50 1.28 10.3 24.1 19.7 15.8 25.3 30.6 18.1 9.1 29.3 11.8 8.6 18.9 6.2 4.1 2.2 8.5 4.1 3.5 2.44 2.70 6.18 -23.4 -19.3 -6.5 1.87 2.08 4.09 0.0 4.8 41.2 -12.2 1.9 36.9 4.80 3.70 5.70 8.00 17.50 11.00 23.60 5.80 11.10 1.26 0.87 1.30 1.45 0.62 0.93 0.77 1.30 0.72 33.6 29.4 43.9 49.6 105.2 71.4 137.2 50.7 40.2 30.5 33.6 48.4 55.2 115.5 80.7 142.4 54.5 39.0 11.4 8.6 10.6 13.7 14.7 13.6 15.0 9.6 25.4 12.6 7.5 9.6 12.3 13.4 12.0 14.5 8.9 26.2 4.2 3.2 3.8 3.0 2.7 5.2 2.7 2.5 3.3 4.2 3.2 3.9 3.3 2.7 5.2 2.8 2.5 3.3 4.49 3.00 5.70 6.87 16.30 9.84 20.76 5.59 10.98 -14.5 -15.7 -18.6 -1.3 -5.2 -1.5 -0.9 -13.4 -7.1 3.60 2.08 3.90 4.49 12.70 7.50 19.40 4.53 8.08 6.7 21.6 19.0 51.0 21.7 29.2 6.1 6.8 26.2 3.2 5.9 7.7 50.3 14.5 18.2 4.4 2.8 17.0 0.34 1.23 5.40 3.34 0.62 1.10 2.14 1.87 5.89 0.45 1.75 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.61 0.44 1.00 1.07 0.82 1.11 na 0.97 0.17 5.5 15.3 27.9 15.3 4.9 8.3 12.7 11.5 42.0 5.5 14.3 34.6 20.2 5.7 9.6 12.5 11.6 45.7 6.1 8.1 19.4 21.9 12.4 13.3 16.9 16.2 14.0 6.1 8.6 15.6 16.5 10.8 11.4 17.1 16.2 12.9 0.0 2.4 2.2 2.2 4.1 0.9 2.6 1.6 4.2 0.0 2.4 2.2 2.8 4.1 0.9 2.6 1.6 4.2 0.51 1.37 5.52 3.61 0.74 1.39 2.23 2.48 6.15 -34.3 -10.2 -2.2 -7.5 -16.3 -20.9 -4.0 -24.4 -4.2 0.33 0.89 4.65 3.07 0.39 0.41 1.56 1.53 5.57 3.1 39.0 16.1 8.8 59.7 171.6 37.2 22.2 5.7 -23.0 17.1 13.0 4.4 1.7 91.3 25.9 8.7 0.2 1.31 1.95 1.58 2.00 na 0.41 8.6 11.0 11.8 11.5 15.2 17.8 11.1 17.0 3.1 5.1 4.6 5.1 1.49 2.19 -12.1 -11.0 0.85 1.92 55.0 1.6 50.6 -3.0 14.74 17.98 17.84 19.14 0.46 0.47 74.8 79.6 81.3 84.0 19.7 22.6 18.1 21.4 5.1 4.0 5.5 4.2 15.30 19.10 -3.7 -5.9 13.72 15.56 7.4 15.6 5.9 9.8 1.99 7.07 24.70 1.20 84.10 4.01 1.90 4.90 0.89 2.23 8.62 27.41 1.50 88.66 4.10 2.46 4.32 1.23 0.55 0.31 0.25 0.38 0.37 0.51 0.61 0.29 0.23 6.7 26.4 121.1 6.5 290.1 22.3 27.4 15.7 8.1 7.9 40.6 151.0 6.6 327.7 24.7 27.0 16.7 11.6 29.6 26.8 20.4 18.4 29.0 18.0 6.9 31.2 11.0 25.3 17.4 16.4 18.2 25.7 16.2 7.0 29.4 7.7 2.0 1.4 2.8 5.0 3.3 3.7 3.2 0.9 2.8 2.4 2.1 3.0 5.0 3.3 4.2 4.2 0.9 3.9 3.00 8.85 26.00 1.30 85.20 4.05 2.06 5.00 1.07 -33.7 -20.1 -5.0 -7.6 -1.3 -1.0 -7.8 -2.0 -16.8 1.98 7.07 22.44 1.13 74.12 2.26 1.50 4.14 0.78 0.5 0.0 10.1 6.1 13.5 77.4 26.7 18.3 14.1 -22.6 -3.5 5.2 4.3 7.5 57.9 9.8 13.1 11.9 43.20 52.08 0.99 198.6 187.4 21.8 23.0 4.6 4.6 51.50 -16.1 40.61 6.4 -2.2 9.66 6.00 11.51 6.54 1.37 1.35 49.3 25.7 54.7 27.7 19.6 23.3 17.6 21.6 0.5 1.3 0.6 1.5 10.00 6.38 -3.4 -6.0 7.50 4.22 28.8 42.1 21.6 32.8 2.30 0.12 3.34 0.13 0.75 1.17 19.3 0.4 23.2 0.4 11.9 31.7 9.9 31.9 6.1 0.0 7.0 0.0 3.42 0.16 -32.7 -28.1 2.28 0.05 0.9 130.0 -22.3 130.0 6.00 4.20 6.39 4.70 0.75 0.49 9.5 13.3 14.9 16.4 62.9 31.6 40.2 25.6 0.6 1.5 0.6 1.8 6.73 4.37 -10.8 -3.9 5.54 3.85 8.3 9.1 -5.5 0.5 6.77 7.15 1.83 5.65 1.41 6.87 7.60 1.80 6.05 2.20 0.52 0.05 0.18 -0.31 0.20 19.5 35.8 12.4 26.4 3.7 24.6 40.0 15.1 29.8 5.5 34.8 20.0 14.8 21.4 37.8 27.5 17.9 12.1 18.9 25.7 1.3 2.5 2.0 2.4 0.7 1.6 2.8 2.5 2.7 1.0 7.40 7.36 2.38 5.94 2.62 -8.5 -2.9 -23.1 -4.9 -46.2 4.23 5.62 1.83 4.20 1.38 60.0 27.2 0.0 34.5 2.2 40.2 8.5 -13.3 5.6 -40.3 INDUSTRIAL SCIENTX SKPRES 8.50 1.42 9.28 1.75 0.42 0.42 55.1 8.6 66.6 10.6 15.4 16.5 12.8 13.3 2.1 2.9 2.4 3.6 8.99 1.45 -5.5 -2.1 6.01 1.15 41.4 23.5 26.9 10.1 MEDIA ASTRO MEDIA PRIMA STAR 2.67 0.75 2.21 3.50 0.60 1.40 1.13 0.58 0.65 13.2 0.9 7.1 14.5 2.8 6.5 20.2 87.0 31.2 18.5 26.4 34.1 4.7 0.9 8.1 4.9 3.0 8.1 3.01 1.46 2.65 -11.3 -49.0 -16.6 2.47 0.75 2.19 8.1 0.0 0.9 2.7 -35.2 -1.3 -29.7 -28.0 -40.1 -6.6 -8.8 -8.8 -29.5 -13.9 -72.1 0.22 4.14 0.68 7.03 0.44 6.48 1.33 1.51 0.28 125.6 13.5 2.2 5.0 42.5 9.7 11.3 31.1 3.6 90.2 -27.7 -24.0 0.4 39.3 1.9 -8.6 32.0 -66.9 -27.3 1.30 10.8 -15.3 BANKS & FINANCIAL SERVICES AFG 3.84 AFFIN 2.53 AMBANK 4.64 CIMB 6.78 HLBANK 15.46 MAYBANK 9.69 PBBANK 20.58 4.84 RHBBANK BURSA 10.20 CONSTRUCTION BPURI GADANG GAMUDA IJM PESONA SENDAI SUNCON WCT LITRAK Building Materials CHINHIN 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 0.49 0.76 0.91 3.7 4.6 13.3 10.6 2.1 2.1 0.69 LCTITAN 4.70 6.88 na 43.1 64.9 10.9 7.2 3.6 6.6 6.53 MHB 0.70 0.78 1.96 -2.0 -0.5 na na 0.0 0.0 1.16 MISC 7.38 6.56 0.88 56.3 46.9 13.1 15.7 4.1 4.1 7.90 PANTECH 0.62 0.69 1.13 4.0 6.1 15.6 10.1 2.9 4.4 0.68 PCHEM 7.11 7.62 1.04 34.7 39.3 20.5 18.1 2.7 2.7 7.80 SENERGY 1.48 1.71 2.44 6.6 4.0 22.4 37.3 0.7 0.7 2.10 SERBADK 1.98 2.77 na 22.1 25.2 9.0 7.9 3.5 3.8 2.30 UMWOG 0.29 0.80 1.99 -12.0 -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 1.44 1.55 1.44 10.9 11.5 13.2 12.5 0.0 0.0 1.98
  13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.55 3.10 4.46 24.70 9.40 6.30 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.83 0.42 1.15 0.84 1.24 0.32 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.8 111.7 34.0 37.5 8.5 15.7 21.1 119.1 37.5 34.5 36.7 25.2 23.8 22.1 27.6 16.8 18.2 19.7 21.2 20.7 25.1 18.3 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 3.2 2.3 2.2 2.2 2.7 3.7 3.2 2.6 2.7 2.4 3.3 2.7 2.52 3.70 4.81 25.50 9.70 6.55 -38.5 -16.2 -7.3 -3.1 -3.1 -3.8 1.42 2.95 4.30 23.00 7.56 5.50 PROPERTY GLOMAC 0.68 0.70 0.38 1.6 6.3 42.7 10.8 4.0 4.0 0.83 -17.6 0.61 HUAYANG 0.81 0.96 0.57 17.3 10.2 4.7 7.9 4.9 2.5 1.43 -43.5 0.80 IBRACO 0.90 1.00 0.43 5.2 11.1 17.1 8.0 3.9 4.5 1.05 -14.8 0.76 IOIPG 2.11 2.25 0.90 17.4 17.4 12.1 12.1 3.3 3.6 2.46 -14.2 1.85 MAHSING 1.58 1.76 0.77 14.3 13.5 11.0 11.7 4.1 4.1 1.70 -7.1 1.34 SNTORIA 0.82 0.98 0.20 6.2 10.3 13.3 7.9 1.2 1.2 1.00 -18.0 0.69 SPB 4.84 5.98 0.51 25.6 22.8 12.7 14.3 2.5 2.5 5.19 -6.7 4.32 SPSETIA 3.25 4.10 0.69 11.6 12.5 36.1 33.6 4.3 4.3 4.50 -27.8 3.10 SUNWAY 4.19 4.16 0.47 15.5 15.6 17.3 17.2 1.2 1.2 4.40 -4.8 2.87 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 1.74 1.87 0.47 9.2 10.0 18.8 17.4 5.3 5.7 1.84 -5.4 1.63 CMMT 1.47 1.72 0.51 8.1 8.6 18.2 17.0 5.7 6.1 1.72 -14.5 1.45 % Chg YTD 9.2 5.1 3.7 7.4 24.3 14.5 0.0 -8.8 1.4 2.9 16.0 5.5 11.5 1.2 18.5 14.2 17.9 18.8 12.0 4.8 45.9 -2.2 -28.3 -10.5 8.2 10.5 2.5 9.5 3.8 39.7 6.7 1.4 1.2 -3.9 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.02 23.96 18.80 14.22 1.41 1.13 21.47 19.60 17.38 1.45 0.66 0.74 0.78 0.92 0.52 7.1 98.5 88.2 131.9 8.2 6.4 102.4 101.3 130.6 10.6 14.3 24.3 21.3 10.8 17.1 15.9 23.4 18.6 10.9 13.3 6.9 3.0 3.3 3.1 5.0 6.9 3.2 3.8 3.2 3.5 1.80 25.70 22.50 14.90 1.64 -43.3 -6.8 -16.4 -4.6 -14.0 1.00 22.96 18.10 13.00 1.38 2.5 4.4 3.9 9.4 2.2 -25.5 0.7 -11.7 2.3 -5.4 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.81 4.72 5.74 6.37 5.20 4.90 5.85 7.50 1.40 1.00 0.76 0.64 14.5 20.0 24.5 21.4 15.9 20.4 24.7 22.3 33.1 23.6 23.4 29.7 30.2 23.1 23.2 28.6 1.5 4.2 3.5 3.0 1.7 4.3 3.5 3.2 5.99 5.19 6.60 6.90 -19.7 -9.1 -13.0 -7.7 4.11 4.63 5.48 5.81 17.0 1.9 4.7 9.6 1.9 -2.3 -4.0 7.1 TECHNOLOGY Semiconductor & Electronics IRIS 0.17 INARI 2.37 MPI 13.12 UNISEM 3.87 0.28 2.30 15.60 4.30 1.17 0.72 0.21 0.53 -2.3 10.2 94.2 26.9 -0.3 na 12.3 23.2 112.9 13.9 32.1 14.4 na 19.3 11.6 12.1 0.0 3.4 2.1 3.1 0.0 2.1 2.1 3.1 0.24 2.58 14.28 4.25 -29.2 -8.1 -8.1 -8.9 0.10 1.50 7.20 2.27 70.0 58.3 82.2 70.5 54.5 42.8 77.1 64.0 3.27 8.58 3.34 8.10 0.85 1.38 37.6 17.2 37.1 17.5 8.7 49.8 8.8 49.1 1.2 1.2 1.5 1.2 3.59 9.45 -8.9 -9.2 2.16 5.91 51.4 45.2 42.8 41.6 1.70 3.61 2.05 4.05 0.63 0.76 12.4 17.1 19.7 15.1 13.7 21.1 8.6 23.9 2.5 3.6 4.1 3.1 1.87 4.59 -9.1 -21.4 1.47 3.58 15.6 0.8 6.9 -16.0 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 21.05 OCBC 11.38 UOB 24.10 PLANTATIONS WILMAR IFAR 3.20 0.47 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 1.15 1.05 172.9 87.7 192.9 189.2 12.2 92.4 13.0 206.5 12.5 11.1 12.3 11.7 2.9 5.7 2.9 2.9 6.7 2.9 22.3 11.5 24.6 -5.4 -1.0 -2.0 14.72 8.84 17.51 43.0 36.6 37.6 21.4 27.6 18.1 3.72 0.53 0.95 1.06 28.9 4.9 31.1 5.2 10.3 9.0 2.5 2.6 2.8 2.7 4.0 0.6 -20.0 -21.8 3.03 0.44 5.6 5.7 -10.9 -11.4 11.1 9.6 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.
  14. COMPANY UPDATE TA Securities Tuesday , August 15, 2017 FBMKLCI: 1,771.08 Sector: Technology A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Malaysian Pacific Industries Berhad TP: RM15.60 (+18.9%) Last Traded: RM13.12 Expecting to Outgrow the Industry BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap Tel: +603-2167 9603 paulyap@ta.com.my MPI held its annual investor day at Carsem’s S Site in Ipoh. Expecting to outgrow the industry, the group is forecasting for a 5.5-7.5% topline growth in FY18. Automotive remains its key focus, as it plans to double revenues from the segment. Building its track record and proving its reliability, MPI had been awarded as the 1st source for certain automotive products. Apart from the automotive market, another key area of growth is industrial, driven by servers. While smartphone unit growth is slowing down, opportunities are seen from growing content and Chinese smartphone vendors. Having a sizeable net cash position of RM419.7mn, M&A activities to acquire new technologies are currently under consideration. Investments will also be made in automation, as part of its Industrial 4.0 initiative. Remain BUY on MPI with a TP of RM15.60/share. Driven by Automotive and Industrial Outpacing the industry, management is estimating a revenue growth of 5.57.5% YoY in FY18 (we are forecasting 7.1% YoY). This will be driven by the automotive and industrial segment. Targets are to expand automotive contributions to 50% of revenues (3QFY17: 25%) in two to four years. Its vision is to be the globally preferred OSAT partner for automotive. Meanwhile, it is also seeing good demand for its copper clip products in the industrial segment, with end application in servers. Automotive Outlook The global automotive market is one of the fastest growing segments in the industry and is expected to reach US$48bn by 2020 (5 year CAGR of 6.4% YoY). Automotive revenues contributed to 8.3% of total semiconductor sales in 2015. Growth is underpinned by a rising number of new car sales, advanced vehicle safety, autonomous driving, vehicle electrification, increased connectivity, regulations regarding CO2 emissions and demand for comfort systems. In ten years, the average semiconductor content in a car is predicted to grow to 2% of its sale price (from 1% currently). Building Customer Trust Due to stringent quality requirements, a good track record and reliability is needed to compete in the automotive segment. Laying its early groundwork, the group has been involved in automotive products since the early 2000s. Initially starting as a 2nd source, we see increased trust being placed in the group, as it was subsequently awarded to be the 1st source for airbags, pressure and acceleration sensors. It counts six out of the top ten largest automotive vendors as its customers. Reflecting a lengthy process, it takes three to four years to develop an automotive product. However, once a product is qualified, it provides stable and recurring revenue potentially lasting for 8-10 years. Pockets of Opportunities Growing at a slower pace, smartphone volumes are expected to increase at a 5year CAGR of 3.8% YoY to 1.77bn units in 2021. That said, there are still pockets of growth in the industry. The China consumer market is growing well, with Huawei, Oppo and Xiaomi exhibiting strong double digit growth in 2Q2017. To capitalise on this, Carsem Suzhou is strategically positioned near design houses in Shanghai. Apart from unit growth, content within smartphones is also Page 1 of 3 www.taonline.com.my Share Information Bloomberg Code MPI MK Stock Code 3867 Listing Main Market 198.9 Share Cap (mn) 2,609.5 Market Cap (RMmn) 52-wk Hi/Lo (RM) 14.28/7.20 265.9 12-mth Avg Daily Vol ('000 shrs) 29.7 Estimated Free Float (%) 0.21 Beta Major Shareholders (%) Hong Leong Investment - 55.4 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 187.3 224.7 180.0 191.0 104.1 117.6 Buy (Maintained) Financial Indicators Net Debt/Equity (%) CFPS (sen) Price/CFPS (x) ROA (%) ROE (%) NTA/Share (RM) Price/NTA (x) Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth FY17 Net cash 188.0 7.0 12.7 17.9 5.3 2.5 FY18 Net cash 214.7 6.1 13.3 18.8 6.1 2.2 MPI (1.9) 1.7 45.8 61.6 FBM KLCI 0.9 (0.4) 3.6 4.8 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg
  15. TA Securities 15-Aug-17 A Member of the TA Group expected to increase . The number of sensors within a smartphone is estimated to grow from 12 (2014) to 20 sensors in 2021. However, given the competitive nature within the smartphone market, it was emphasised that margins will not be sacrificed to drive revenue growth. Investing Inwards Sitting on a sizeable war chest of RM419.7mn, the group remains on the lookout for potential M&A activities. This may involve both local and overseas acquisitions. Given the ability to expand itself (existing space available and through purchase of additional equipment), it will not acquire another OSAT. Instead, activities will be centred on acquiring new technologies, such as FOWLP, module level assembly, thermal material (>100mW/K), 2.5D and 3D packaging capability, cavity package (film insert mold), tri-temp automotive strip test and new automotive requirement (AEQ 100-06 and higher temp). As part of its Industrial 4.0 initiative, the group has also been investing in automation through the purchase of automated visual inspection equipment. In certain processes, this has helped reduced the workforce required by 70%. Nevertheless, as it remains in expansion mode, staff will be retained as they are redirected to new roles. Valuation Make no changes to our earnings. We maintain our BUY recommendation on MPI with a TP of RM15.60/share. This is based on an EV/EBITDA multiple of 6.0x and CY18 EBITDA. We like the group for its ambitions to expand revenues in the fast growing and stable automotive segment. We are forecasting a strong three years earnings CAGR of 14.5%YoY. Meanwhile, M&A activities and dividend upsides from its robust net cash position could act as potential rerating catalysts. Page 2 of 3
  16. TA Securities 15-Aug-17 A Member of the TA Group P &L FYE Jun 30 (RMmn) Revenue EBITDA Depreciation & amortisation EBIT Net finance costs Share of associates EI PBT Adj PBT Taxation MI Net profit Core net profit EPS (sen) DPS (sen) Ratios FYE Jun 30 (RMmn) Valuations PER EV/EBITDA Dividend yield PBV Profitability ratios ROAE ROAA EBITDA margin PBT margin FY15 FY16 FY17F FY18F FY19F 1,390.1 1,463.3 1,561.9 1,672.1 1,770.2 358.4 420.2 477.5 523.8 565.0 (204.1) (209.4) (192.2) (184.4) (180.9) 154.3 210.8 285.3 339.3 384.0 (1.3) (1.1) 7.4 11.7 17.0 0.0 0.0 0.0 0.0 0.0 0.0 (13.3) 0.0 0.0 0.0 153.0 196.4 292.7 351.0 401.1 153.0 209.7 292.7 351.0 401.1 (30.4) 0.4 (58.5) (70.2) (80.2) (14.1) (39.3) (46.8) (56.2) (64.2) 108.5 157.5 187.3 224.7 256.7 108.5 170.8 187.3 224.7 256.7 51.7 81.4 89.2 107.0 122.3 20.0 23.0 27.0 27.0 27.0 FY15 FY16 FY17F FY18F FY19F 25.4 6.7 1.5 3.2 16.1 5.7 1.8 2.8 14.7 5.0 2.1 2.5 12.3 4.6 2.1 2.2 10.7 4.2 2.1 1.9 13.6 8.4 25.8 11.0 18.6 12.4 28.7 14.3 17.9 12.7 30.6 18.7 18.8 13.3 31.3 21.0 18.6 13.2 31.9 22.7 1.7 1.4 3.1 2.7 3.9 3.4 4.8 4.3 5.7 5.2 Leverage ratios Total liabilities/equity Net debt/equity Int. coverage ratio 0.3 (0.1) 115.8 0.2 (0.2) 188.7 0.2 (0.4) (38.6) 0.2 (0.4) (29.1) 0.1 (0.5) (22.5) Growth ratios Sales Pretax Earnings Total assets 7.6 136.0 87.2 16.2 5.3 28.4 57.5 (1.1) 6.7 49.0 9.6 14.6 7.1 19.9 19.9 15.1 5.9 14.3 14.3 15.2 Liquidity ratios Current ratio Quick ratio Balance Sheet FYE Jun 30 (RMmn) Fixed assets Associates + Subsidiaries Goodwill Others LT assets FY15 843.5 0.0 0.0 0.0 843.6 FY16 753.4 0.0 0.0 0.0 753.4 FY17F 711.2 0.0 0.0 0.0 711.3 Inventories Trade receivables Cash Others Current assets 93.5 297.0 152.0 0.0 542.5 87.7 212.4 317.3 0.0 617.4 104.1 284.0 471.9 0.0 860.0 111.5 304.0 695.9 0.0 1,111.4 118.0 272.3 1,007.5 0.0 1,397.8 1,386.1 1,370.8 1,571.3 1,808.2 2,083.8 222.7 93.6 9.3 325.6 160.6 33.3 2.9 196.8 216.9 0.0 2.9 219.8 229.7 0.0 2.9 232.6 241.1 0.0 2.9 244.0 0.0 32.3 32.3 0.0 3.9 3.9 0.0 3.9 3.9 0.0 3.9 3.9 0.0 3.9 3.9 104.9 754.1 859.1 169.1 104.9 874.7 979.6 190.5 104.9 1,005.3 1,110.3 237.3 104.9 1,173.3 1,278.3 293.5 104.9 1,373.3 1,478.3 357.6 1,386.1 1,370.8 1,571.3 1,808.2 2,083.8 Total assets Trade payables ST borrowings Others Current liabilities LT borrowings Others LT liabilities Share capital Reserves Shareholders' funds MI Total liabilities and equity Cash Flow FYE Jun 30 (RMmn) PBT Depreciation and amortisation Net finance cost Other non-cash Changes in WC Tax paid Net finance cost Others Operational cash flow FY18F 696.8 0.0 0.0 0.0 696.8 FY19F 685.9 0.0 0.0 0.0 685.9 FY15 153.0 204.1 1.3 (8.6) (23.5) (17.6) (1.3) 1.5 308.9 FY16 196.4 209.4 1.1 14.3 32.3 (38.1) (1.1) 4.4 418.7 FY17F 292.7 192.2 (7.4) 0.0 (31.8) (58.5) 7.4 0.0 394.5 FY18F 351.0 184.4 (11.7) 0.0 (14.6) (70.2) 11.7 0.0 450.6 FY19F 401.1 180.9 (17.0) 0.0 36.5 (80.2) 17.0 0.0 538.3 Capex Others Investing cash flow (176.5) 2.6 (173.8) (125.1) 0.6 (124.5) (150.0) 0.0 (150.0) (170.0) 0.0 (170.0) (170.0) 0.0 (170.0) Net share issue Dividend paid Net change in debts Others Financial cash flow 0.0 (56.8) (12.2) 3.6 (65.4) 0.0 (64.7) (59.7) (4.5) (128.9) 0.0 (56.7) (33.3) 0.0 (90.0) 0.0 (56.7) 0.0 0.0 (56.7) 0.0 (56.7) 0.0 0.0 (56.7) Net cash flow Opening cash flow Forex Closing cash flow 69.7 78.1 4.2 152.0 165.3 152.0 0.0 317.3 154.6 317.3 0.0 471.9 224.0 471.9 0.0 695.9 311.6 695.9 0.0 1,007.5 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
  17. RESULTS UPDATE TA Securities Tuesday , August 15, 2017 FBM KLCI: 1,771.08 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 Media Prima Berhad TP: RM0.60 (-19.5%) Last Traded: RM0.745 New Ventures Undergo Gestation Period SELL THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap, CFA Tel: +603-2167 9603 paulyap@ta.com.my Review Despite a return to profitability in the second quarter, Media Prima’s 1HFY17 results came below expectations with a core loss of RM28.9mn. Breaking from historical trends, no dividends were declared during the quarter. Its dividend policy remains at 60-80% of PATAMI. 2QFY17 results included a one-off impairment of RM142.4mn, from the closure of Malaysian Newsprint Industries. After three consecutive quarters of losses, the group returned to the black at a core level. Adex rebounded 27.5% QoQ as its TV and print division registered profits. Similarly, radio revenues increased 43.6% QoQ, with profits more than tripling to RM7.9mn. Despite showing encouraging revenue growth (+15.4% QoQ), its home shopping business remained in gestation with a break even target of end 2018. www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) EPF - 13.6 Amanah Raya Bhd - 11.1 Altima Inc - 8.0 Morgan Stanley - 6.9 Skim Amanah Saham Bumiputera - 5.6 YoY. Adex declined 14.4% YoY – underpinned by a shift to digital media and weak consumer sentiment. As a result, its core TV and print division posted cumulative losses of RM20.7mn and RM17.0mn respectively. Proving resilient, its out-of-home segment recorded a healthy topline growth of 9.3% YoY. Profits, however, were held back by start-up costs incurred for its MRT segment. Forecast Revision Part of its transformation programme to grow non-traditional revenues, Odyssey revenues more than tripled to RM79.0mn. This made up 12.3% (+9.3pp) of its total revenues. However, as these initiatives remain in their gestation period, it resulted in a drag to bottom line with losses of RM20.8mn. Financial Indicators Impact Trimming our adex assumption for FY17, we cut our FY17 earnings estimates by 50.1% YoY to RM9.5mn. Outlook Traditional adex continues to be on a downward spiral, attributing to a shift to digital media and macroeconomic conditions. Advertisers remain defensive amid looming uncertainties. Albeit recovering, the consumer sentiment index is still below ideal levels at 80.7. While a potential general election and upcoming SEA Games might serve as a catalyst, we view these positive effects as temporary. A new transformation plan was introduced, named Odyssey. Centred around six pillars the plan aims to generate new income streams within non-ad, non-TV & print, beyond Malaysia and digital revenues. Focus will be placed on creating compelling content, while embracing digital platforms. Nevertheless, we still see challenges from the inability of growing digital revenues to offset the existing decline in traditional adex. Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 (50.1) (0.2) 9.5 31.3 41.0 60.6 23.1 51.6 Sell (Maintained) FY17 6.3 8.7 8.6 0.4 0.7 0.8 0.9 FY18 5.5 13.1 5.7 1.5 2.2 0.8 0.9 vs. TA vs. Consensus % of FY n/a n/a Below Below Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth MEDIA (16.8) (32.3) (29.0) (47.2) FBM KLCI 0.9 (0.4) 3.6 4.8 Net gearing (%) CFPS (sen) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) Scorecard (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg Page 1 of 5 MPR MK 4502 Main Market 1,109.2 826.4 1.46/0.745 1,616.1 53.9 0.58
  18. TA Securities 15-Aug-17 A Member of the TA Group Valuation We value Media Prima at an unchanged TP of RM0 .60/share – based on a DDM valuation with cost of equity at 8.9% and long term growth rate of 1.0%. The key risk to the stock are continued challenges in traditional adex. While we are positive on its transformation strategies, Odyssey contributions remain relatively small and are likely to be a drag on bottom line as it undergoes its gestation period. SELL. Figure 1 : Forward PE Figure 2 : Forward PB x x 145.0 2.1 125.0 1.9 105.0 1.7 +1sd: 1.7x 1.5 85.0 Mean: 1.3x 1.3 +1sd: 62.5x 65.0 1.1 45.0 Mean: 33.8x 0.9 25.0 -1sd: 0.9x -1sd: 5.0x 0.7 5.0 Source: Companies, TA Securities Table 1: Earnings Summary (RMmn) YE Dec 31 (RMmn) Revenue EBITDA Depreciation & amortisation Net finance cost Associates EI PBT Taxation MI Net profit Core net profit EPS (sen) EPS growth (%) PER (x) DPS (sen) Dividend yield (%) FY15 1,427.7 308.7 (99.8) (1.6) (7.2) 0.0 200.1 (61.4) 0.0 138.7 138.7 12.5 (10.7) 6.0 10.0 13.4 FY16 1,289.0 144.6 (101.5) 1.1 (10.1) (99.9) (65.9) (3.9) 10.6 (59.2) 40.7 3.7 (70.6) 20.3 8.0 10.7 Page 2 of 5 FY17F 1,455.9 122.5 (101.2) (9.9) 0.0 0.0 11.4 (2.8) 0.9 9.5 9.5 0.9 (76.8) 87.4 0.7 0.9 FY18F 1,562.6 164.1 (101.0) (17.6) 0.0 0.0 45.4 (11.4) (2.8) 31.3 31.3 2.8 230.7 26.4 2.3 3.0 FY19F 1,632.1 185.6 (100.9) (17.0) 0.0 0.0 67.7 (16.9) (2.3) 48.4 48.4 4.4 54.9 17.1 3.5 4.7 Feb-17 May-17 Aug-16 Nov-16 Feb-16 May-16 Aug-15 Source: Companies, TA Securities Nov-15 Feb-15 May-15 Aug-14 Nov-14 Feb-14 May-14 Aug-13 Nov-13 Feb-13 May-13 Aug-12 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 Feb-13 May-13 Aug-12 Nov-12 0.5
  19. TA Securities 15-Aug-17 A Member of the TA Group Table 2 : 1HFY17 Results Analysis (RMmn) FYE Dec Revenue EBITDA Depreciation and amortisation EBIT Interest income Finance Cost Share of (loss)/Profit of associate EI PBT Tax MI Net profit Core net profit EPS (sen) DPS (sen) Profitability Ratios (%) EBITDA margin EBIT margin PBT margin Tax rate PAT margin 2QFY16 349.6 59.2 (27.3) 31.9 3.4 (3.2) (0.2) (2.0) 29.8 (5.5) 3.5 27.9 29.9 2.5 2.0 1QFY17 272.2 (10.7) (26.1) (36.8) 2.7 (3.3) (1.9) 0.0 (39.4) (2.0) 2.9 (38.5) (38.5) (3.5) 0.0 2QFY17 328.8 36.0 (26.2) 9.8 2.6 (3.2) (2.4) (142.4) (135.6) (2.8) 5.5 (132.9) 9.5 (12.0) 0.0 QoQ (%) 20.8 (435.3) 0.3 (126.7) (2.9) (3.7) 27.7 n/a 244.5 39.1 89.1 245.5 (124.8) 245.2 n/a YoY (%) (5.9) (39.1) (4.1) (69.2) (22.9) (0.2) 1,014.8 7,021.5 (554.4) (49.1) 54.5 (576.1) (68.2) (575.4) n/a 1HFY16 653.6 106.0 (53.1) 52.9 6.5 (6.6) 0.4 (2.0) 51.1 (9.5) 3.6 45.2 47.2 4.1 2.0 1HFY17 601.0 25.3 (52.3) (27.0) 5.3 (6.5) (4.3) (142.4) (175.0) (4.8) 8.4 (171.4) (28.9) (15.5) 0.0 YoY (%) (8.1) (76.2) (1.6) (151.1) (17.9) (1.0) (1,299.2) 7,021.5 (442.2) (49.7) 135.9 (479.5) (161.4) (479.6) n/a 16.9 9.1 8.5 18.3 8.6 (3.9) (13.5) (14.5) (5.1) (14.1) 11.0 3.0 (41.2) (2.1) 2.9 pp 14.9 16.5 (26.8) 3.0 17.0 pp (6.0) (6.1) (49.8) (20.4) (5.7) 16.2 8.1 7.8 18.6 7.2 4.2 (4.5) (29.1) (2.7) (4.8) pp (12.0) (12.6) (36.9) (21.4) (12.0) Page 3 of 5
  20. TA Securities 15-Aug-17 A Member of the TA Group Table 3 : Segmental Information (RMmn) Segmental Information TV Network Gross revenue EBITDA PBT PAT 2QFY16 1QFY17 2QFY17 QoQ (%) YoY (%) 1HFY16 1HFY17 YoY (%) 183.1 30.6 19.7 16.1 132.6 (10.2) (23.0) (23.0) 165.8 15.1 2.3 2.3 25.0 (248.0) (109.9) (109.9) (9.4) (50.6) (88.4) (85.8) 353.2 47.3 25.6 22.1 298.4 4.9 (20.7) (20.7) (15.5) (89.6) (181.0) (194.0) 16.7 8.8 (7.7) (17.4) 9.1 1.4 16.8 18.7 (7.6) (7.4) 13.4 6.2 1.6 (7.0) (11.7) (13.2) 138.9 14.0 1.6 1.5 96.0 (5.8) (15.1) (17.0) 116.0 11.6 2.4 0.0 20.8 (300.6) (116.0) (100.1) (16.5) (17.1) 55.6 (99.3) 267.6 24.7 0.2 0.5 212.0 5.8 (12.7) (17.0) (20.8) (76.4) (5,185.1) (3,199.6) EBITDA margin (%) PAT margin (%) 10.1 1.1 (6.0) (17.7) 10.0 0.0 16.0 17.7 (0.1) (1.1) 9.2 0.2 2.7 (8.0) (6.5) (8.2) Radio Network Gross revenue EBITDA PBT PAT 21.9 8.4 7.6 7.7 14.6 2.5 2.1 2.1 21.0 8.4 7.9 7.9 43.6 231.2 284.0 284.0 (3.9) (0.9) 4.2 2.9 39.4 13.8 12.3 11.3 35.6 10.9 9.9 9.9 (9.5) (21.2) (19.0) (12.3) EBITDA margin (%) PAT margin (%) 38.5 35.0 17.2 14.0 39.7 37.5 22.5 23.5 1.2 2.5 35.0 28.7 30.5 27.8 (4.5) (0.9) Out-Of-Home Gross revenue EBITDA PBT PAT 43.4 11.5 9.1 7.1 41.3 11.2 8.7 7.1 48.9 11.4 8.7 6.9 18.4 1.9 (0.1) (2.4) 12.7 (0.6) (4.0) (2.1) 82.6 23.4 18.7 14.4 90.3 22.6 17.5 14.0 9.3 (3.6) (6.6) (2.5) EBITDA margin (%) PAT margin (%) 26.4 16.3 27.0 17.2 23.3 14.1 (3.8) (3.0) (3.1) (2.1) 28.3 17.4 25.0 15.5 (3.3) (1.9) Primeworks Studios Gross revenue EBITDA PBT PAT 28.9 2.2 2.1 1.8 26.4 1.9 1.9 1.4 28.6 1.6 1.6 1.4 8.6 (15.7) (15.9) 4.6 (1.0) (25.1) (25.2) (20.8) 55.4 6.1 6.1 5.0 55.0 3.5 3.5 2.8 (0.7) (42.0) (42.1) (44.3) 7.5 6.2 7.3 5.2 5.7 5.0 (1.6) (0.2) (1.8) (1.2) 11.0 9.0 6.5 5.1 (4.6) (4.0) Digital Gross revenue EBITDA PBT PAT 8.3 0.8 (0.2) (0.2) 9.9 1.6 0.2 0.2 10.8 1.3 (0.0) (0.0) 8.5 (15.1) (110.5) (110.5) 29.0 67.3 (91.2) (91.2) 16.9 2.3 0.3 0.3 20.7 2.9 0.2 0.2 22.1 25.7 (39.3) (39.3) EBITDA margin (%) PAT margin (%) 9.4 (2.7) 15.6 1.9 12.2 (0.2) (3.4) (2.1) 2.8 2.5 13.5 1.7 13.9 0.8 0.4 (0.8) 27.7 (3.8) (4.2) (4.2) 32.0 (4.3) (4.6) (4.6) 15.4 11.2 10.5 10.5 18.7 (7.1) (7.3) (7.3) 59.7 (8.1) (8.8) (8.8) 219.8 13.9 19.9 19.9 (13.8) (15.0) (13.3) (14.4) 0.5 0.6 (38.0) (39.2) (13.5) (14.7) 24.5 24.5 EBITDA margin (%) PAT margin (%) NSTP Gross revenue EBITDA PBT PAT EBITDA margin (%) PAT margin (%) Home Shopping Gross revenue EBITDA PBT PAT EBITDA margin (%) PAT margin (%) Page 4 of 5