Bursa Malaysia Daily Market Report - 15 January

Transcription

1. Monday , 15 January, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only News 1. 2. 3. Daily Market Commentary Weekly Strategy Weekly Technical Outlook Fundamental Reports 1. 2. Jo h o re T i n Be r h a d : F & B C o n t in u e s to Su p p o r t E a rn in g s Top Glove Corporation Berhad: Proposed Acquisition of Aspion Technical Reports 1. 2. 3. 4. 5. Weekly Technical Stock Picks Daily Money Flow FBMKLCI Weekly Ace Market Stock Watch Weekly Small Cap Stock Watch Weekly Stock Screen Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
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Daily Market Commentary Monday , 15 January 2018 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (12.01.2018) Volume (mil) +/-chg (RMmn) Main Market 2,651.2 234.2 3,057.5 Warrants 606.8 155.2 99.3 ACE Market 665.7 -474.4 127.4 Bond 11.0 2.6 3.1 ETF 0.1 0.0 0.1 LEAP 0.0 0.0 0.0 Total 3,934.8 3,287.4 Off Market 98.2 43.9 127.1 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP January 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) Up Down 382 249 184 94 68 40 5 4 3 2 1 0 643 389 % chg % YTD chg 1,822.67 13,222.60 17,843.71 1,828.50 5.79 66.90 139.59 5.50 0.32 0.51 0.79 0.30 1.44 2.16 4.65 2.44 25,803.19 7,261.06 7,778.64 23,653.82 2,496.42 31,412.54 3,520.56 1,810.19 6,370.07 3,428.94 1,948.93 6,070.05 228.46 49.28 15.70 -56.61 8.51 292.15 7.88 7.39 -16.27 3.60 -4.19 2.43 0.89 0.68 0.20 -0.24 0.34 0.94 0.22 0.41 -0.25 0.10 -0.21 0.04 4.39 5.18 1.18 3.90 1.17 4.99 3.46 3.22 0.23 3.68 2.61 0.08 (RM) 1.10 4.06 0.12 1.50 0.45 0.40 0.30 1.25 0.18 Counter Mkt Cap. Chg (RM’mn) (RM) MAYBANK 106,248 PBBANK 80,628 PCHEM 64,640 CIMB 62,549 IHH 48,614 SIMEPLT 37,609 PETGAS 37,596 HLBANK 35,880 GENTING 35,806 KLK 26,816 0.01 0.02 0.01 0.03 0.04 0.01 0.50 0.08 0.18 0.06 Important immediate uptrend supports for the index are at 1,811, the 10day moving average level, and 1,796, the breakout level, while immediate resistance remains at the recent high of 1,840, matching the 123.6%FP of the Nov 2016 low to the breakout level, next will be 1,867, the April 2017 peak matching the 138.2%FP, followed by the all-time high of 1,896 on July 2014. News Bites Vol. (mn) 15.10 3.61 20.78 16.60 6.51 4.31 0.35 0.89 4.13 1.32 Important Dates PDZ - 4:2 Rights Issue - RI of up to 434.7m shares together with up to 325.9m free detachable warrants. 4 rights shares together with 3 warrants for every 2 existing shares held, at an issue price of RM0.10 per rights share. Application Closed: 22/01/2018. LISTING ON: 07/02/2018. GLOMAC - 1:10 Bonus Issue - BI of up to 74.8m shares. 1 bonus share for every 10 existing shares held. Ex-Date: 16/01/2018. Entitlement Date: 18/01/2018. LISTING ON: 19/01/2018. While momentum indicators for the FBM KLCI are hooking down to suggest further correction this week, trend indicators signaled that the present uptrend remain intact. Hence, we expect a shallow profit-taking consolidation for blue chips which is needed to further neutralize their overbought momentum, paving the way for building a higher support base. Meantime, the rallying US stock markets to new record highs may spillover to encourage bargain hunting on dips for recovery ahead. Sector-wise, index heavyweight oil & gas, plantation and utility blue chips should extend profit-taking consolidation to neutralize their overbought condition, while buying momentum sustain on oil & gas and construction related shares like Bumi Armada, Sapura Energy, UMW Oil & Gas, Wah Seong, and WCT Holdings once overbought momentum from recent gains has been neutralized. Top 10 KLCI Movers Based on Mkt Cap. Off Market YONGTAI-PA 60.0 @ SOP 11.4 @ LUSTER 8.7 @ ROHAS 5.0 @ FPGROUP 4.0 @ LEESK 2.3 @ STERPRO 1.9 @ CHINHIN 1.1 @ SCOMI 1.0 @ Review & Outlook Value Value/ +/-chg Volume 267.8 1.15 34.2 0.16 -62.7 0.19 1.5 0.28 -0.1 1.20 0.0 0.23 0.84 41.5 1.29 • Top Glove Corp Bhd signed a conditional share purchase agreement with Adventa Capital Pte Ltd to acquire the entire equity interest in glove manufacturer Aspion Sdn Bhd for RM1.4bn. • Paramount Corp Bhd is buying 41.41 acres of land in Cyberjaya for RM149.7mn to build a gated and guarded landed residential development. • Axiata Group Bhd has appointed Khazanah Nasional Bhd deputy managing director Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz as non-independent non-executive director of the group. • Hovid Bhd managing director David Ho Sue San and private equity group TAEL Partners Ltd have managed to accumulate 78.61% stake in the company at the closing date of acceptance. • Titijaya Land Bhd signed a MoU with Tokyu Land Corporation to establish a provisional collaboration to share and exchange knowledge and expertise in the real estate industry and to collaborate on property development projects. • Kelington Group Bhd is targeting a net profit growth of 30% in FY18 on anticipation of a few big jobs from China to replenish its orderbook this year. • G Neptune Bhd cancelled its plan for a private placement exercise to raise some RM3mn to support its working capital. • T7 Global Bhd formed a joint venture with a unit of China's largest construction and real estate conglomerate to bid for rail-related projects in Malaysia. • China's exports in US dollar rose 10.9% YoY in December, slowing from November's rate of 12.3% but comfortably besting a median forecast of 9.1% growth. Exchange Rate USD/MYR 3.9750 -0.0035 USD/JPY 111.08 -0.1400 EUR/USD 1.212 0.0081 Commodities Futures Palm Oil (RM/mt) 2,535.00 -31.00 Crude Oil ($/Barrel) 64.40 0.85 Gold ($/tr.oz.) 1,338.30 15.30 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. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Monday , January 15, 2018 FBMKLCI: 1,822.67 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks Kaladher Govindan Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my M a r k e t V i e w Healthy Profit Taking Consolidations Likely to Continue After peaking at the highest level not seen since April 2015, extreme overbought momentum encouraged profit-taking and forced a pullback on the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI). However, bargain hunters returned after a three-day pullback to nibble on oil & gas related lower liners ahead of the weekend, as global oil prices rose with Brent crude testing the USD70/barrel level. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) added 4.7 points, or 0.26 percent to 1,822.67, as gains on Petronas Gas (+64sen), Nestle (+60sen), Tenaga (+36sen) and Hong Leong Bank (+34sen) overshadowed falls on Genting Malaysia (-34sen) and Genting Berhad (-26sen). Average daily traded volume and value improved further to 5.42 billion shares worth RM3.82 billion, compared to the 4.92 billion shares and RM3.25 billion respectively the previous week, boosted by strong buying momentum on small caps and ACE Market stocks. We should continue to witness some healthy profit taking consolidations this week after the steep rally since December that helped the FBMKLCI to close the big valuation gap (in terms of price-to-earnings) with other regional peers. It is currently trading at consensus CY18 and CY19 PER of 16.3x and 15.2x versus key developing market’s average of 17.3x and 15.6x respectively. The slight valuation discount of 5.8% and 2.6% was caused by Philippines, which is trading at steeper multiples of 19.2x and 17.2x in those respective years. Although investors were aware about the stronger-than-expected GDP growth and recovery in corporate earnings, much of the interest since last December was driven by the strong recovery in crude oil price and ringgit, which was also positively impacted by the return of foreign funds. In fact, OPEC members like Iraq, UAE, Qatar and Oman are already calling for OPEC and allied producers to maintain production cuts until end-2018 as agreed, despite recent price gains. More details could emerge after a ministerial committee meeting between them in Oman this Sunday. The pact is unlikely to invalidate current agreement due to short-term volatility in prices. A review may only follow suit after the crude stockpiles dip below the five-year average or if price sustains around US$70 per barrel for at least six months or more. As the attraction of crude oil price recovery that broke USD70/barrel (Brent) last week and strong ringgit, which rose to RM3.97 against US dollar last week, is unlikely to fade away anytime soon, we should see a continuity in FBMKLCI’s rally to test the all-time high of 1,896, probably in 1Q18. Thus, there are still opportunities to pick up undervalued blue chip in the banking (Public Bank, TP:RM23.60 & Ambank, TP: RM5.10), telecommunication (TM, TP: RM6.10), plantation (Sime Darby Plantation, TP: RM6.25) and utilities (Tenaga TP: RM17.38) sectors, thematic plays in construction (Gamuda, TP: RM6.00 & Gadang, TP: RM1.73) and building materials (Ann Joo, TP: RM4.40 & Chin Hin, TP: RM1.49) sectors that will benefit from the multibillion infrastructure spending, consumption (Nestle, TP: RM120.50, Carlsberg, TP: RM18.06, Johor Tin, TP: RM1.75) stocks that will benefit from stronger ringgit, government Page 1 of 6
4. 15-Jan-18 handouts ahead of the 14th GE , hike in minimum salary (due in 2018) and FIFA World Cup, and finally the beneficiaries of higher crude oil price (Sapura Energy, TP: RM1.25 & UMW O&G, TP: RM0.51) . Meanwhile, in the absence of any major economic data locally, investors will be looking at global markets for direction this week. China, Malaysia’s major trading partner, is due to announce its fourth quarter 2017 GDP data this Thursday that would sum up the growth for the whole year. Full year economic growth is likely to outperform market expectations of 6.8% and official guidance of around 6.5% but unlikely to excite the market as the Chines Premier Li Keqiang has already indicated last week growth will be stronger at around 6.9% due to supply side reforms. Housing starts and building permits in the US this week should point to sustainability in economic recovery on the back of falling unemployment and rising wage levels. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ 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. As of Monday, January 15, 2018, the HOD, Kaladher Govindan, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 6
5. 15-Jan-18 N e w s I n B r i e f Corporate Axiata Group Bhd has appointed Khazanah Nasional Bhd deputy managing director Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz as non-independent non-executive director of the group . He replaces Kenneth Shen, who served on the board as Khazanah's nominee since 2011. (Bursa Malaysia) Hovid Bhd managing director David Ho Sue San and private equity group TAEL Partners Ltd have managed to accumulate 78.61% stake in the company at the closing date of acceptance. 44.89% of its total share capital has been received by the joint bringing their shareholding to 78.61%, from a 33.72% stake on Oct 9 last year when the offer document was despatched. (Bursa Malaysia) Top Glove Corp Bhd signed a conditional share purchase agreement with Adventa Capital Pte Ltd to acquire the entire equity interest in glove manufacturer Aspion Sdn Bhd for RM1.4bn. RM1.2bn of the purchase consideration will be satisfied with cash, funded entirely from a combination of conventional term loan and Islamic term financing. The remainder RM137mn would be via the issuance of some 20.51mn new Top Glove shares at about RM6.68 apiece. The group also plans to buy two more companies this year and is on the lookout to acquire four more companies by 2019. (Bursa Malaysia/The Edge) Paramount Corp Bhd is buying 41.41 acres of land in Cyberjaya for RM149.7mn to build a gated and guarded landed residential development. The proposed acquisition is in line with the group strategy of replenishing its land bank at locations with strong growth potential. (Bursa Malaysia) Kumpulan Perangsang Selangor Bhd's 60% subsidiary, King Koil Licensing Company Ltd, shifted its business strategy in the United States market in line with changing dynamics in the country's bedding industry in the past 24 months. It moved to wholesale revenue by selling its own products from royalties derived from licencing. (Bernama) Titijaya Land Bhd signed a Memorandum of Understanding with Tokyu Land Corporation to establish a provisional collaboration to share and exchange knowledge and expertise in the real estate industry and to collaborate if possible with each other for any property development projects undertaken. It currently has ongoing and future projects of about RM2.3bn and RM10bn in GDV respectively. (Bursa Malaysia/The Edge) G Neptune Bhd cancelled its plan for a private placement exercise to raise some RM3mn to support its working capital. G Neptune said it will not proceed with the exercise announced three years ago, and is looking into formulating a plan to regularise its financial condition. (Bursa Malaysia) T7 Global Bhd formed a joint venture with a unit of China's largest construction and real estate conglomerate to bid for rail-related projects in Malaysia. The JV, named T7 China Construction Third Engineering Sdn Bhd, will also take up other infrastructure and construction projects in the country. (Bursa Malaysia) Kelington Group Bhd is targeting a net profit growth of 30% in FY18 on anticipation of a few big jobs from China to replenish its orderbook this year. It is also expecting the same quantum of growth in FY17. (The Edge) Page 3 of 6
6. 15-Jan-18 N e w s I n B r i e f Economy Asia China Exports Best Expectations , Driving Up Trade Surplus China’s exports rose more than expected in December, but import growth slowed dramatically, helping to drive up the country’s trade surplus. The dollar value of outbound shipments from China climbed 10.9% year on year in December, slowing from November’s rate of 12.3% but comfortably besting a median forecast of 9.1% growth from economists surveyed by Reuters. Imports meanwhile grew far less than anticipated, with a year-on-year rise of just 4.5% undershooting expectations of a 13% climb and down substantially from the prior month’s pace of 17.7%. The divergent trends in trade flows boosted China’s trade surplus by about USD14bn from the previous month to USD54.7bn at the end of 2017, well above a median forecast of USD37bn. For the full year of 2017, exports increased 7.9% and imports advanced 15.9%. China's trade surplus with the US reached USD275.8bn in 2017 and the monthly surplus with the U.S. was USD25.6bn in December. (Financial Times) China to Step Up Banking Oversight in "Arduous" Fight on Financial Risks China will step up oversight in the banking sector this year to reduce financial risks, the country's banking regulator said, stressing that long-term efforts would be needed to control banking sector chaos. The China Banking Regulatory Commission (CBRC) said late on Saturday in a statement that its priorities included increasing supervision over shadow banking and interbank activities. "Banking shareholder management, corporate governance and risk control mechanisms are still relatively weak, and root causes creating market chaos have not fundamentally changed," the CBRC said. "Bringing the banking sector under control will be long-term, arduous, and complex," it said. The regulator said violations in corporate governance, property loans, and disposal of nonperforming assets will be punished more strictly, and that it would strengthen risk control in interbank activities, financial products and off-balance sheet business. (The Star) Singapore November Retail Sales Rise Highest in Nearly Two Years Singapore’s on-year retail sales in November jumped the highest in nearly two years thanks to a surge in computer and telecommunications equipment sales, data showed. Total retail sales rose 5.3% from a year earlier, after falling a revised 0.2% in the previous month, according to data from the Singapore Department of Statistics. Sales of computer and telecommunications equipment grew 16.6% from a year earlier and 46.5% from the month before. This is the highest on-year retail sales growth since March 2016 when it grew the same amount, Reuters data shows. On a month-on-month and seasonally adjusted basis, total retail sales rose 5.1% in November after rising 1.5% in the previous month. (Reuters) Japan November Current Account Surplus Y1.347 Trillion Japan posted a current account surplus of JPY1.347 trillion in November, the Ministry of Finance said - down 5.6% on year. That was shy of expectations for a surplus of JPY1.836 trillion and down from JPY2.176 trillion in October. The trade balance reflected a surplus of JPY181.0bn, also missing forecasts for a surplus of JPY314.1bn and down from JPY430.2bn in the previous month. Exports were up 13.9% on year to JPY6.768 trillion after gaining 14.3% a month earlier. Imports jumped an annual 17.6% to JPY6.587 trillion after rising 18.5% in the previous month. The capital account registered a deficit of 21.7 billion yen following the JPY17.1bn shortfall in October. The financial account saw a surplus of JPY1.404 trillion following the JPY853.2bn deficit in the previous month. Other news in Japan: Overall bank lending in Japan was up 2.5% on year in December, the Bank of Japan Page 4 of 6
7. 15-Jan-18 said - standing at JPY522 .1 trillion. That's down from the 2.7% increase in November. Excluding trusts, bank lending advanced an annual 2.4% to JPY454.1 trillion - also down from the 2.7% increase in the previous month. A measure of peoples' assessment of the Japanese economy decreased unexpectedly in December, though marginally, survey figures from the Cabinet Office showed. The current index of Economy Watchers' survey dropped to 53.9 in December from 54.1 in November. United States Consumer Prices, Retail Sales Bolster Economic Outlook A modest rise in consumer prices in December and solid growth in retail sales bolstered expectations that inflation is firming after a long run of softness and that U.S. economic growth ended 2017 on a robust note. Forecasters on Friday raised their expectations for fourth-quarter growth after the Commerce Department reported sales at U.S. retailers, restaurants and websites rose a seasonally adjusted 0.4% in December from the prior month. Macroeconomic Advisers estimated a 2.7% annual growth rate for gross domestic product in the final three months of 2017, up from its 2.3% estimate as of Thursday. Forecasters also saw signs of inflation picking up after the Labor Department reported stronger-than-expected growth last month in so-called core prices, which exclude the often-volatile categories of food and energy. The consumer-price index rose just 0.1% from November, but core prices jumped 0.3%, the most in 11 months. U.S. inflation has been largely subdued for the past half-decade, perplexing Federal Reserve officials who predicted bigger wage and price increases as the supply of labor and other economic resources became more scarce. The unemployment rate is at its lowest level in 17 years, meaning companies should in theory be competing more aggressively for workers. Many central bankers say inflation is finally poised to strengthen a bit. They don’t want consumer prices to shoot much higher, but they see modest and steady inflation as a sign that the economy isn’t running too soft. Friday’s report on consumer prices offered the latest evidence to support the Fed’s view that decelerating price pressures last spring would prove transitory. On a six-month annualized basis, core consumer prices rose 2.2% in December, up from a 0.9% gain in July and the strongest such increase since declines in prices for wireless-phone plans last March and prescription-drugs in April led to a string of soft inflation readings. Those declines— seen at the Fed as one-off events—have been holding down annual measures of inflation. But they are on track to wash out of inflation readings later this year. (The Wall Street Journal) U.S. Business Inventories Rise More Than Expected in November Business inventories in the U.S. increased by slightly more than anticipated in the month of November, according to a report released by the Commerce Department on Friday. The report said business inventories climbed by 0.4% in November, while economists had expected inventories to rise by 0.3%. Revised data showed no change in business inventories in October compared to the originally reported 0.1% drop. The bigger than expected increase in business inventories was partly due to a rebound in wholesale inventories, which rose by 0.8% in November after falling by 0.4% in October. Manufacturing inventories also increased by 0.4% in November after rising by 0.3% in October, while retail inventories inched up by 0.1% after coming in unchanged in the previous month. Additionally, the Commerce Department said business sales surged up by 1.2% in November after climbing by 0.8% in October. Wholesale and manufacturing sales jumped by 1.5% and 1.2%, respectively, while retail sales increased by 0.9%. With sales rising faster than inventories, the total business inventories/sales ratio edged down to 1.33 in November from 1.34 in October. (RTT News) Page 5 of 6
8. 15-Jan-18 Share Buy-Back : 12 January 2018 Company E&O HAIO KPJ MUDAJYA UNIMECH Bought Back Price (RM) 200,000 3,000 50,000 480,000 6,000 1.44/1.43 5.24 0.97/0.965 0.91/0.89 1.06/1.05 Total Treasury Shares 1.45/1.42 23,123,747 5.29/5.23 8,736,288 0.97/0.965 17,037,000 0.91/0.88 15,243,300 1.07/1.04 6,457,910 Source: Bursa Malaysia Hi/Lo (RM) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ 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. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 6 of 6
9. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) Recom Market Cap. (RMm) BETA EPS (sen) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 12-Jan-18 AUTOMOBILE BAUTO 2.34 2.50 Buy 2,710 0.74 14.3 19.9 16.3 11.7 4.9 5.1 2.47 -5.3 1.84 27.2 MBMR 2.39 2.32 Hold 934 0.80 23.2 23.9 10.3 10.0 1.9 2.0 2.60 -8.1 2.01 18.9 6.4 8.6 PECCA 1.57 1.69 Buy 290 na 11.1 12.5 14.1 12.6 3.5 3.9 1.70 -7.6 1.28 22.7 1.3 SIME 2.70 1.97 Hold 18,362 1.56 12.0 12.7 22.6 21.3 1.1 1.2 2.96 -8.8 1.93 40.0 22.2 UMW 6.60 4.37 Sell 7,711 1.39 20.7 36.9 31.9 17.9 1.5 2.7 6.63 -0.5 4.25 55.3 26.9 BANKS & FINANCIAL SERVICES ABMB 4.15 4.20 Buy 6,425 1.36 30.6 35.6 13.6 11.7 3.9 3.9 4.49 -7.6 3.62 14.6 1.7 AFFIN 2.47 2.50 Hold 4,799 0.88 24.2 28.1 10.2 8.8 3.2 3.2 2.98 -17.0 2.22 11.2 6.9 AMBANK 4.76 5.10 Buy 14,348 1.29 48.6 52.0 9.8 9.2 3.8 3.8 5.70 -16.5 4.06 17.2 7.9 CIMB 6.78 7.00 Hold 62,549 1.47 50.8 56.0 13.3 12.1 4.3 4.1 7.08 -4.2 4.71 43.9 3.7 HLBANK 17.54 17.50 Buy 35,880 0.68 114.2 120.9 15.4 14.5 2.6 2.6 17.80 -1.5 13.06 34.3 3.2 MAYBANK 9.85 9.70 Hold 106,248 1.05 70.9 77.7 13.9 12.7 5.1 5.1 9.86 -0.1 8.05 22.4 0.5 PBBANK 20.88 23.60 Buy 80,628 0.63 142.4 149.8 14.7 13.9 2.8 2.9 21.08 -0.9 19.66 6.2 0.5 RHBBANK 5.18 5.20 Hold 20,772 1.62 52.2 53.8 9.9 9.6 2.9 2.9 5.59 -7.3 4.71 10.0 3.6 BURSA 10.60 11.10 Buy 5,698 0.93 39.0 41.5 27.2 25.6 3.2 3.2 10.98 -3.4 8.08 31.2 4.7 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 CONSTRUCTION GADANG 1.11 1.73 Buy 731 0.97 14.3 18.2 7.8 6.1 2.7 2.7 1.37 -19.0 1.01 9.9 0.0 GAMUDA 5.16 6.00 Buy 12,672 0.85 34.5 35.7 15.0 14.5 2.3 2.3 5.52 -6.5 4.58 12.7 4.0 IJM 2.97 2.89 Sell 10,776 0.87 13.7 18.2 21.6 16.4 3.2 3.2 3.61 -17.7 2.71 9.6 -2.6 PESONA 0.49 0.55 Buy 337 0.87 5.8 4.8 8.4 10.2 3.1 3.1 0.74 -34.0 0.44 11.5 7.8 SENDAI 0.85 0.58 Sell 660 1.23 9.6 9.0 8.8 9.4 1.2 1.2 1.39 -39.2 0.51 67.3 -2.3 4.4 SUNCON 2.62 2.65 Buy 3,386 0.51 14.7 16.4 17.8 15.9 2.1 2.3 2.64 -0.8 1.67 56.9 WCT 1.75 1.64 Hold 2,462 1.07 12.6 11.2 13.8 15.7 1.7 1.7 2.48 -29.3 1.46 19.9 8.0 LITRAK 5.68 6.26 Hold 2,997 0.33 45.6 47.1 12.4 12.1 4.4 4.4 6.15 -7.6 5.40 5.2 2.3 ANNJOO 3.75 4.40 Buy 1,934 1.28 45.3 49.2 8.3 7.6 5.9 6.9 3.98 -5.8 2.27 65.2 -2.8 CHINHIN 1.17 1.49 Buy 651 1.12 12.4 12.0 9.4 9.7 4.3 5.1 1.49 -21.5 0.87 34.5 -3.3 ENGTEX 1.11 1.38 Buy 472 0.70 14.2 16.1 7.8 6.9 3.7 4.9 1.52 -27.0 1.07 3.7 0.9 CARLSBG 15.90 18.06 Buy 4,891 0.75 86.2 88.7 18.4 17.9 5.4 5.6 16.00 -0.6 13.94 14.1 3.9 HEIM 19.16 19.14 Buy 5,788 0.43 84.0 88.3 22.8 21.7 3.9 4.1 19.58 -2.1 15.78 21.4 1.4 AEON 1.68 1.97 Sell 2,359 0.39 6.7 7.7 25.1 21.8 2.4 2.7 2.70 -37.8 1.64 2.4 -4.5 AMWAY 7.68 8.18 Buy 1,262 0.39 43.9 45.2 17.5 17.0 4.9 5.2 8.18 -6.1 7.04 9.1 4.1 F&N 28.30 28.55 Hold 10,373 0.21 155.7 182.7 18.2 15.5 2.1 2.3 28.80 -1.7 22.64 25.0 4.8 Building Materials CONSUMER Brewery Retail HUPSENG 1.12 1.25 Hold 896 0.43 5.4 5.6 20.6 20.2 4.0 4.5 1.28 -12.5 1.08 3.7 2.8 JOHOTIN 1.22 1.75 Buy 379 0.72 12.8 13.5 9.5 9.1 4.1 4.4 1.76 -30.7 1.16 5.2 0.8 NESTLE 104.00 120.50 Buy 24,388 0.40 330.1 373.8 31.5 27.8 2.8 3.2 106.30 -2.2 74.12 40.3 0.8 PADINI 5.23 4.67 Sell 3,441 0.86 27.0 30.0 19.4 17.4 2.4 2.5 5.50 -4.9 2.26 131.4 -0.9 POHUAT 1.65 2.37 Buy 362 0.55 25.3 25.5 6.5 6.5 4.8 4.8 2.07 -20.2 1.62 1.9 -7.8 QL 4.79 3.26 Sell 7,771 0.43 12.8 14.7 37.4 32.5 0.9 1.0 4.84 -1.0 3.26 47.1 10.1 SIGN 0.71 0.92 Buy 163 0.94 6.9 9.2 10.2 7.7 3.5 4.9 1.07 -33.6 0.69 2.9 0.7 33.80 52.08 Buy 9,651 1.40 187.4 175.4 18.0 19.3 5.9 5.9 51.04 -33.8 33.80 0.0 -15.5 GENTING 9.36 11.53 Buy 35,806 1.56 54.4 59.8 17.2 15.7 1.7 1.7 10.00 -6.4 8.13 15.1 1.7 GENM 5.46 6.51 Buy 30,950 1.57 27.0 30.6 20.2 17.8 1.6 1.8 6.38 -14.4 4.64 17.8 -3.0 2.34 3.34 Buy 3,152 0.81 21.5 26.0 10.9 9.0 6.8 7.7 3.00 -22.0 2.23 4.9 4.5 CCMDBIO 2.89 2.70 Buy 806 0.87 15.0 16.1 19.2 18.0 3.4 3.6 2.96 -2.4 1.90 52.1 14.2 IHH 5.90 6.40 Buy 48,614 0.74 11.9 15.0 49.7 39.4 0.5 0.6 6.42 -8.1 5.42 8.9 0.7 KPJ 0.97 1.12 Buy 4,136 0.48 3.8 4.2 25.6 23.0 2.2 2.4 1.14 -14.9 0.90 7.8 0.0 HARTA 11.22 7.30 Sell 18,546 0.88 25.8 30.5 43.5 36.8 1.0 1.2 11.40 -1.6 4.53 147.7 5.1 KOSSAN 8.50 8.80 Buy 5,435 0.08 38.3 43.0 22.2 19.8 2.3 2.5 8.70 -2.3 5.62 51.2 4.8 SUPERMX 2.29 1.80 Sell 1,501 0.47 15.3 17.9 15.0 12.8 2.3 2.7 2.39 -4.2 1.69 35.5 14.5 TOPGLOV 9.00 9.35 Sell 11,296 0.09 41.6 50.8 21.6 17.7 1.6 1.9 9.25 -2.7 4.56 97.4 12.6 KAREX 1.31 1.00 Sell 1,313 0.66 2.8 5.2 47.4 25.2 0.5 1.0 2.52 -48.0 1.20 9.2 0.8 SCIENTX 8.99 9.84 Buy 4,348 0.56 68.2 74.9 13.2 12.0 2.3 2.9 9.85 -8.7 6.73 33.6 3.8 SKPRES 2.03 2.20 Hold 2,538 0.66 10.4 14.8 19.6 13.7 2.6 3.6 2.35 -13.6 1.24 63.7 -11.0 ASTRO 2.68 3.10 Buy 13,973 1.07 14.0 13.7 19.2 19.6 4.9 5.0 2.94 -8.8 2.45 9.4 1.1 MEDIA PRIMA 0.74 0.45 Sell 821 1.14 -3.8 -1.7 na na 0.0 0.0 1.28 -42.2 0.58 27.6 -2.6 STAR 1.47 1.25 Sell 1,085 1.10 6.7 6.7 21.9 21.9 8.2 8.2 2.22 -33.7 1.31 12.2 -10.9 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) Recom Market Cap. (RMm) BETA EPS (sen) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.53 0.72 Buy 930 1.36 4.2 4.5 12.6 11.7 1.9 1.9 0.69 -23.2 0.27 96.3 LCTITAN 5.08 6.66 Buy 11,547 na 63.4 68.2 8.0 7.5 4.9 5.3 6.53 -22.2 4.14 22.7 9.3 8.1 MHB 0.89 0.78 Sell 1,424 1.81 -0.5 0.3 na 262.2 0.0 0.0 1.16 -23.3 0.63 42.4 7.9 MISC 7.50 6.56 Sell 33,478 1.09 46.8 52.3 16.0 14.3 4.0 4.0 7.90 -5.1 6.89 8.9 1.1 PANTECH 0.68 0.69 Sell 506 1.13 6.1 6.8 11.1 9.9 4.0 4.5 0.74 -8.1 0.45 51.1 5.4 PCHEM 8.08 8.05 Hold 64,640 1.03 49.8 52.6 16.2 15.4 2.7 2.8 8.27 -2.3 6.80 18.8 4.9 SAPNRG 0.90 1.25 Buy 5,393 2.45 -6.5 -4.9 na na 0.0 0.0 2.10 -57.1 0.67 35.3 26.8 SERBADK 3.44 3.40 Sell 4,592 na 25.7 27.8 13.4 12.4 2.2 2.4 3.60 -4.4 1.51 127.8 6.2 UMWOG 0.42 0.51 Buy 3,451 1.91 0.4 1.2 103.9 33.9 0.0 0.0 0.88 -52.2 0.27 55.6 37.7 UZMA 1.56 1.56 Sell 499 1.00 13.1 14.2 11.9 11.0 0.0 0.0 1.98 -21.2 1.26 23.8 21.9 FGV 2.15 2.01 Sell 7,844 1.77 3.7 4.5 58.0 47.3 2.3 2.3 2.18 -1.4 1.51 42.4 27.2 IJMPLNT 2.53 2.69 Sell 2,228 0.18 9.1 12.5 27.7 20.2 3.2 3.6 3.60 -29.7 2.53 0.0 -7.7 IOICORP 4.64 4.12 Sell 29,157 1.15 21.0 21.8 22.0 21.2 3.4 3.7 4.81 -3.5 4.31 7.7 2.2 KFIMA 1.63 1.89 Buy 460 0.56 13.3 14.5 12.3 11.2 5.5 5.5 1.96 -16.8 1.56 4.5 3.8 KLK 25.18 26.18 Hold 26,816 0.81 120.7 126.3 20.9 19.9 2.4 2.5 25.50 -1.3 23.00 9.5 0.7 SIMEPLT 5.53 6.25 Buy 37,609 na 21.0 22.1 26.3 25.1 2.5 2.7 6.00 -7.8 4.58 20.7 -7.8 TSH 1.67 2.10 Buy 2,306 0.71 9.3 9.6 17.9 17.4 1.4 1.5 1.94 -13.9 1.56 7.1 1.2 UMCCA 6.58 6.73 Sell 1,379 0.40 22.8 34.8 28.9 18.9 2.6 2.7 7.08 -7.1 5.76 14.2 1.1 GLOMAC 0.61 0.50 Sell 437 0.66 3.0 4.4 20.5 13.7 3.3 3.3 0.75 -18.8 0.58 4.3 -0.8 HUAYANG 0.63 0.59 Sell 220 0.90 1.8 3.4 34.1 18.4 0.8 0.8 1.21 -48.3 0.60 5.0 2.5 IBRACO 0.89 0.92 Hold 442 na 9.1 12.4 9.8 7.2 4.5 5.6 0.99 -10.1 0.76 17.9 9.2 IOIPG 1.96 2.02 Hold 10,792 0.80 16.5 16.3 11.8 12.0 3.1 3.1 2.22 -11.7 1.79 9.5 5.9 MAHSING 1.48 1.69 Buy 3,591 0.89 13.0 12.6 11.3 11.8 4.4 4.4 1.64 -9.8 1.38 7.2 2.1 SIMEPROP 1.59 1.61 Sell 10,813 na 9.2 9.1 17.3 17.4 1.3 1.3 1.78 -10.7 1.04 52.9 -10.7 SNTORIA 0.64 0.76 Buy 362 0.19 8.3 8.6 7.7 7.5 1.6 1.6 0.91 -29.6 0.60 6.7 -7.9 PLANTATIONS PROPERTY Note: SNTORIA proposed bonus issue of warrants & right issue of shares. For more details please refer to SPB 5.00 5.28 Hold 1,718 0.66 21.2 26.1 23.6 19.1 2.4 2.4 5.50 -9.1 4.32 15.7 2.0 SPSETIA 3.34 3.77 Buy 11,449 0.94 21.3 21.9 15.7 15.3 3.6 3.6 4.38 -23.8 3.06 9.2 -16.5 SUNWAY 1.72 1.74 Hold 8,422 0.80 11.9 12.6 14.5 13.7 2.9 3.5 1.96 -12.2 1.27 35.1 5.5 SUNREIT 1.72 1.87 Hold 5,066 0.84 10.0 10.7 17.1 16.1 5.8 6.2 1.90 -9.5 1.64 4.9 -9.5 CMMT 1.42 1.72 Buy 2,894 0.71 8.6 8.9 16.5 15.9 6.3 6.5 1.83 -22.4 1.39 2.2 -22.4 REIT POWER & UTILITIES MALAKOF 0.99 1.16 Buy 4,948 0.81 6.0 6.8 16.5 14.6 7.1 7.1 1.36 -27.2 0.86 15.1 1.0 PETDAG 24.94 22.08 Sell 24,777 0.45 105.1 105.7 23.7 23.6 3.1 3.2 25.70 -3.0 21.00 18.8 2.8 PETGAS 19.00 19.10 Buy 37,596 0.97 98.8 99.5 19.2 19.1 3.6 3.7 21.04 -9.7 15.82 20.1 8.7 TENAGA 15.78 17.38 Buy 89,409 0.70 129.9 127.9 12.1 12.3 2.9 2.9 15.94 -1.0 13.00 21.4 3.4 YTLPOWR 1.30 1.17 Sell 10,305 0.87 9.6 10.1 13.5 12.9 3.8 3.8 1.50 -13.3 1.11 17.1 0.8 TELECOMMUNICATIONS AXIATA 5.55 5.75 Hold 50,217 1.35 16.0 19.5 34.7 28.4 1.5 2.8 5.82 -4.6 4.24 30.9 1.1 DIGI 4.70 5.20 Buy 36,543 0.79 20.0 20.6 23.5 22.8 4.3 4.4 5.19 -9.4 4.36 7.8 -7.8 MAXIS 6.01 6.10 Hold 46,941 0.72 26.2 25.7 22.9 23.4 3.3 3.3 6.60 -8.9 5.48 9.7 0.0 TM 6.00 7.20 Buy 22,548 0.49 23.2 24.9 25.9 24.1 3.5 3.7 6.69 -10.3 5.85 2.6 -4.8 ELSOFT 2.79 2.70 Hold 768 0.66 15.0 15.7 18.6 17.7 3.8 4.0 2.95 -5.4 1.36 104.5 3.3 IRIS 0.23 0.25 Buy 556 2.06 0.6 0.7 40.7 33.7 0.0 0.0 0.25 -8.2 0.12 95.7 21.6 TECHNOLOGY Semiconductor & Electronics INARI 3.41 3.35 Hold 7,012 0.86 14.2 15.9 24.0 21.5 2.9 3.3 3.82 -10.7 1.74 96.4 0.3 MPI 12.18 12.95 Hold 2,423 0.59 105.5 121.2 11.5 10.1 2.6 2.6 14.52 -16.1 7.63 59.6 -3.5 UNISEM 3.11 3.25 Sell 2,282 1.00 27.1 28.7 11.5 10.8 3.9 3.9 4.25 -26.8 2.37 31.2 -14.8 TRANSPORTATION Airlines AIRASIA 3.82 3.83 Buy 12,766 1.26 38.3 39.8 10.0 9.6 1.3 1.6 3.85 -0.8 2.35 62.6 14.0 AIRPORT 9.07 8.47 Sell 15,049 1.40 19.7 20.1 45.9 45.0 1.1 1.3 9.45 -4.0 6.11 48.4 3.2 Freight & Tankers PTRANS 0.30 0.44 Buy 371 na 2.3 3.6 12.9 8.3 2.4 3.6 0.38 -22.7 0.15 102.8 5.4 TNLOGIS 1.30 1.80 Buy 594 1.13 13.6 14.0 9.5 9.3 3.8 3.8 1.83 -29.1 1.29 0.8 -3.0 WPRTS 3.48 4.02 Hold 11,867 0.72 15.5 20.0 22.4 17.4 3.3 4.3 4.30 -19.1 3.34 4.2 -5.9 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) Recom Market Cap. (S$m) Beta EPS (cent) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52week 52week % Chg High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 26.34 23.30 Sell 67,368 1.25 189.1 214.6 13.9 12.3 2.3 2.3 26.7 -1.2 18.05 45.9 6.0 OCBC 12.99 13.50 Buy 54,368 1.22 104.1 110.6 12.5 11.7 6.7 7.7 13.0 -0.2 9.21 41.0 4.8 UOB 27.87 26.90 Hold 46,349 1.06 215.4 229.3 12.9 12.9 2.5 2.5 28.0 -0.4 20.38 36.8 5.4 PLANTATIONS WILMAR 3.16 3.63 Hold 20,219 0.83 29.9 31.8 10.6 9.9 2.5 2.8 4.0 -21.0 3.06 3.3 2.3 IFAR 0.41 0.53 Hold 581 1.02 5.2 5.7 7.8 7.1 3.1 3.5 0.6 -30.2 0.37 11.0 3.8 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.
11. Technical View Monday , January 15, 2018 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Technical Outlook FBM KLCI: 1,822.67 (+4.70, +0.26%) Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Consolidation to Neutralize Overbought Momentum After peaking at the highest level not seen since April 2015, extreme overbought momentum encouraged profit-taking and forced a pullback on the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI). However, bargain hunters returned after a three-day pullback to nibble on oil & gas related lower liners ahead of the weekend, as global oil prices rose with Brent crude testing the USD70/barrel level. For the week, the blue-chip benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) added 4.7 points, or 0.26 percent to 1,822.67, as gains on Petronas Gas (+64sen), Nestle (+60sen), Tenaga (+36sen) and Hong Leong Bank (+34sen) overshadowed falls on Genting Malaysia (-34sen) and Genting Berhad (-26sen). Average daily traded volume and value improved further to 5.42 billion shares worth RM3.82 billion, compared to the 4.92 billion shares and RM3.25 billion respectively the previous week, boosted by strong buying momentum on small caps and ACE Market stocks. Strong gains in key oil & gas, banking and utility heavyweights on Monday propped up the blue-chip benchmark to the highest level since April 2015, helped by spillover optimism from gains in key global markets to record highs. The KLCI rose 14.18 points to settle at the day’s high of 1,832.15, off an early low of 1,813.03, as gainers swarmed losers 853 to 312 on very strong turnover totaling 6.96bn shares worth RM4.59bn. Blue chips fell for correction the next day, as extreme overbought momentum and with stock prices at their highest since April 2015 encouraged profit-taking. The KLCI shed 5.2 points to end at 1,826.95, off an early high of 1,840.35 and low of 1,823.52, as losers bashed gainers 716 to 387 on strong volume totaling 6.47bn shares worth RM4.41bn. Blue chips stayed in profit-taking consolidation mode on Wednesday, as the local market has been perceived as overheated from the recent rally, in tandem with key regional markets as investors booked profits in high-tech shares, ahead of the corporate earnings season. The KLCI lost 4.03 points to end at 1,822.92, off a high of 1,830.63 and low of 1,821.27, as losers edge gainers 630 to 426 on higher turnover totaling 5.74bn shares worth RM3.77bn. The local market extended losses the following day, with blue chips leading falls in line with regional weakness as investors speculate that China may reduce US bond purchases. The KLCI lost 6.04 points to end at 1,816.88, off a high of 1,823.31 and low of 1,812.78, as losers thrashed gainers 781 to 265 on reduced turnover totaling 4.01bn shares worth RM3.04bn. The local benchmark recovered on Friday from three days of profit-taking, as bargain hunters returned to nibble on oil & gas related lower liners after global oil prices rose with Brent crude testing the USD70/barrel level. The index gained 5.79 points to settle at 1,822.67, off an opening high of 1,825.81 and low of 1,818.78, as gainers led losers 643 to 389 on moderate turnover of 3.93bn shares worth RM3.28bn. Page 1 of 3
12. 15-Jan-18 Trading range for the local blue-chip benchmark index last week shrank to 27 .57 points, compared to the 45.97 points range the previous week, as heavyweight blue chips eased back for profit-taking consolidation. For the week, the FBM-EMAS Index added 57.19 points, or 0.4 percent to 13,222.60, while the FBM-Small Cap Index rose 123.15 points, or 0.7 percent to close the week at 17,784.71. Due to last week’s profit-taking pullback, the daily slow stochastic momentum indicator for the FBM KLCI stayed overbought as it hooked down for a short-term sell (Chart 1), while the weekly indicator’s signal line has climbed deep into the overbought zone. The 14-day Relative Strength Index (RSI) indicator is moderately overbought with a reading of 70.01 as of last Friday, while the 14-week RSI climbed to an early overbought reading of 70.77. Chart 1 Meanwhile, the daily Moving Average Convergence Divergence (MACD) trend indicator’s trigger line is leveling to indicate lessening uptrend momentum, but the weekly MACD indicator’s buy signal remains intact (Chart 2). The +DI and –DI lines on the 14-day Directional Movement Index (DMI) trend indicator are contracting to also suggest reducing upward momentum, but the rising ADX line signaled a sustained up-trend. Chart 2 Page 2 of 3
13. 15-Jan-18 Conclusion While momentum indicators for the FBM KLCI are hooking down to suggest further correction this week , trend indicators signaled that the present uptrend remain intact. Hence, we expect a shallow profit-taking consolidation for blue chips which is needed to further neutralize their overbought momentum, paving the way for building a higher support base. Meantime, the rallying US stock markets to new record highs may spillover to encourage bargain hunting on dips for recovery ahead. Important immediate uptrend supports for the index are at 1,811, the 10-day moving average level, and 1,796, the breakout level, while immediate resistance remains at the recent high of 1,840, matching the 123.6%FP of the Nov 2016 low to the breakout level, next will be 1,867, the April 2017 peak matching the 138.2%FP, followed by the all-time high of 1,896 on July 2014. Sector-wise, index heavyweight oil & gas, plantation and utility blue chips should extend profit-taking consolidation to neutralize their overbought condition, while buying momentum sustain on oil & gas and construction related shares like Bumi Armada, Sapura Energy, UMW Oil & Gas, Wah Seong, and WCT Holdings once overbought momentum from recent gains has been neutralized. Chart 3 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ 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. As of Monday, January 15, 2018, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 3 of 3
14. COMPANY UPDATE www .bursamids.com Monday, January 15, 2018 Sector: Consumer THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM1.75 (+43.3%) Johore Tin Berhad Last Traded: RM1.22 F&B Continues to Support Earnings Damia Othman Tel: +603-2167-9602 BUY damia@ta.com.my Our recent meeting with Johore Tin Berhad (JTB) reaffirmed our positive view on the group’s FY18 – FY19 earnings prospect. This is on the back of i) persistent downtrend in the milk-based commodity price that will enhance Food and Beverages (F&B) profit margins, ii) growing demand for vegetable oil packaging products that will support top-line growth for the tin manufacturing segment, and iii) maiden contribution from joint venture in Mexico in FY19. We increase our FY17-19 earnings forecast by 2.6% - 8.0%. Target price is adjusted higher to RM1.75/share. Maintain BUY. Skimmed Milk Powder Price on a Downward trend The F&B division, which accounts for 70% of JTB’s earnings, is highly dependent on the movement of skimmed milk powder price, the main raw material to evaporated milk, condensed milk and re-packaged milk powder. According to Global Dairy Trade, skimmed milk powder price has declined by 35.0% YoY to US$1,699/tonne as of Jan-2018. Management guided that the downward trend in the milk powder price (see Figure 1) is due to high level of stock in the European Union (EU) of 300,000 tonnes while the global demand has been stagnant. Given that the stock is perishable, there will be pressure to sell off the milk-powder in the market to avoid wastages hence contributing to further decline in global milk powder price. www.taonline.com.my 6. Stock Return Information 5 FBM KLCI % Expected Share Price Return (%) Expected Dividend Return (%) Expected Total Return (%) 1,822.67 43.3 3.7 47.0 Share Information Bloomberg Code Stock Code Listing Issued Share (mn) Market Cap (RMmn) Par Value (RM) 52-wk Hi/Lo (RM) Estimated Free Float (%) Beta (x) 3-Month Average Volume ('000) Top 3 Shareholders (%) Goh's Family Hun Swee Lim Ng Keng Hoe Share Performance (%) Price Change 1 mth 3 mth 12 mth JTB MK 7167 Main Market 310.5 378.8 0.5 1.76/1.16 45.3 0.7 228.5 16.2 11.4 9.7 JTB 1.7 (6.2) (1.6) FBM KLCI 4.0 3.8 9.0 FY17 Net Cash 10.1 7.0 0.9 1.3 FY18 Net Cash 12.7 9.7 1.0 1.2 Financial Info Progress of Mexico JV Management guided that the progress on the construction of an 80,000-tonnes capacity evaporated milk and condensed milk factory by its 40%-owned joint venture, i.e. Able Dairies Mexico, is expected to complete by 4Q18. JTB sees this venture as an opportunity to gain market share from its sole competitor, i.e. Nestle Mexico, and to expand its F&B earnings further. Also, as Mexico is part of the Latin American Free Trade Association, the new plant/capacity will allow the company to penetrate new markets in the South America region. Note that upon commissioning in end-FY18, the new factory is expected to immediately ramp up its production to 30% to cater for JTB’s existing customers and new customers. As such, it would not see lower earnings as a result of lower share of profit (i.e. 40%) in the JV company. In the long term, the new plant would achieve economies of scale from higher sales to new markets in the Central and South American regions. Tinplate Price in Uptrend The main raw material to JTB’s tin manufacturing is tinplates, which are bought locally from Perusahaan Sadur Timah Malaysia (PERSTIMA) as well as imported from China and India. The price of exported tinplate in China has been on an Debt to Equity Ratio ROE (%) ROA (%) NTA/Share (RM) Price/NTA (x) (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 5
15. 15-Jan-18 uptrend since 1Q16 from USD628 /tonne level to USD814/tonne in Oct-17 (see Figure 2). As of Oct-17, the tinplate price had increased as much as 13.8% YoY, underpinned by closing down of small iron ore mills with outdated induction furnaces in China. Management believes that the price would continue escalating in 2018. However, we believe that the price will not exceed the 2013’s average price of US$977/tonne. Note that JTB adopts the cost-plus approach in pricing the finished tin products. As such, the rise in tinplate cost can be fully passed on to the customers, providing a gradual price movement during the 3-6 months lag time. Overall, we believe that the profit margin for tin manufacturing segment will normalize to double digit level for FY18 from 9.5% in 9M17. As far as sales are concerned, management guided that increasing demand for vegetable oil tin packaging is expected to increase, contributing to tin manufacturing top line growth. We project a growth of 5.2% YoY in revenue within the tin manufacturing segment for FY18 and FY19. Ringgit Strengthening to Benefit JTB We believe approximately 70% of JTB’s revenues are generated through export sales of tin manufacturing and F&B products while approximately 80% of JTB’s costs of goods sold are imported raw materials (i.e. tinplates and milk powder). Hence, JTB being a net importer will benefit from strengthening of Ringgit. Our sensitivity analysis finds that for every 5 sen appreciation in Ringgit against the dollar, JTB’s net core earnings increases by 3.0% YoY, ceteris paribus. Impact on 4QFY17 Results We raise our FY17 earnings projections by 8.0% to account for lower-thanexpected skimmed milk price and normalising tin manufacturing profit margin. We have also increased our earnings forecasts by 2.6% and 6.9% for FY18 and FY19 respectively premised on assumptions that: 1) ringgit will average to USDMYR4.10 in 2018 and 2019, as well as 2) commissioning of new plant in Mexico in 4Q18 with utilisation of 30% and 40% for FY18 and FY19 respectively. Recommendation Maintain BUY on JTB with higher SOP valuation of RM1.75sen/share (previously RM1.70/share) based on 16x F&B earnings and 8x tin manufacturing earnings for CY18. Downside risks to our call are i) slower-than-expected contributions from re-packaging of milk powder business, ii) lower-than-expected export sales and iii) unexpected allowance for doubtful debts. Figure 1: Downward Trend in Milk Powder Price Figure 2: Tinplate Price Escalating 1,100.0 4,950.0 1,000.0 3,950.0 950.0 USD/Tonne USD/Tonne 1,050.0 4,450.0 3,450.0 2,950.0 900.0 850.0 800.0 750.0 2,450.0 700.0 1,950.0 650.0 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 600.0 1,450.0 China Export Tinplate Price Global Skim Milk powder Price - RHS Source: Global Dairy Trade, TA Securities Source: Bloomberg, TA Securities Page 2 of 5
16. 15-Jan-18 Figure 3 : Revenue Breakdown 9MFY17 Figure 4: Profit Breakdown 9MFY17 Ti n ma nufacturing 21% Tin manufacturing 30% Food & beverage 70% Food & be vera ge 79% Source: Company, TA Securities Source: Company, TA Securities Valuation Method SOP Tin F&B CY18 PAT (RMmn) 10.4 29.3 SOP valuation Enlarged share base (mn) Target price/share (RM) PER (x) 8 16 Segment value (RMmn) 83.2 461.7 544.9 310.5 1.75 Page 3 of 5
17. 15-Jan-18 Earnings Summary INCOME STATEMENT FYE Dec 31 (RMmn) BALANCE SHEET 2015 2016 2017E 2018F 2019F FYE Dec 31 (RMmn) Revenue 417.4 441.2 492.6 520.4 563.3 EBITDA 33.4 57.1 50.7 64.2 66.6 Investment in JV EBIT 25.8 49.6 40.4 54.5 55.7 Goodwill Reported PBT 23.1 46.8 37.3 52.9 55.7 Reported Net Profit 15.7 35.5 28.9 39.7 41.8 Adj. Net Profit PPE 2015 2016 2017E 2018F 2019F 100.2 103.0 107.8 121.3 0.0 0.0 0.2 8.2 133.6 8.3 10.7 10.7 10.7 10.7 10.7 Non Current Assets 110.9 113.6 118.7 140.1 152.6 15.7 35.5 32.7 39.7 41.8 Inventories 130.6 80.5 94.5 99.8 108.0 Basic EPS (sen) 7.0 14.3 9.3 12.8 13.5 Trade Receivables 81.9 83.5 87.7 92.7 100.3 Adj. Basic EPS (sen) 5.1 11.4 10.5 12.8 13.5 Cash and bank balances 36.9 61.6 104.9 69.3 38.9 Taxation rate (%) 32.0 24.3 22.5 25.0 25.0 Others 6.7 7.8 7.8 7.8 7.8 GDPS (sen) 3.5 4.0 4.5 5.0 5.4 Current Assets 256.1 233.3 294.9 269.5 255.1 Dividend Yield (%) 2.9 3.3 3.7 4.1 4.4 TOTAL ASSETS 366.9 347.0 413.6 409.7 407.6 2015 2016 2017E 2018F 2019F FINANCIAL RATIOS Share capital FYE Dec 31 Valuations Core PER (x) 24.1 10.7 11.6 9.5 9.1 Div. Yield (%) 2.9 3.3 3.7 4.1 4.4 93.3 124.4 153.0 153.0 153.0 Reserves 101.6 100.2 135.2 159.4 184.4 Shareholders' funds 194.9 224.6 288.2 312.4 337.4 MI TOTAL EQUITY (2.5) (0.4) 192.4 224.3 (0.4) 287.8 (0.4) (0.4) 312.0 337.0 ROA (%) 4.3 10.2 7.0 9.7 10.3 ROE (%) 8.2 15.8 10.1 12.7 12.4 Long-term borrowings 6.5 4.4 4.2 2.7 1.2 NTA/share (RM) 0.6 0.7 0.9 1.0 1.1 Deferred tax liabilities 5.9 8.9 8.9 8.9 8.9 Net debt/equity (%) 37.6 Current Ratio (x) 1.6 2.7 Net Cash Net Cash Net Cash Others 2.1 Non Current Liabilities Quick Ratio (x) 0.8 1.4 1.8 2.0 2.4 Interest Coverage (x) 12.1 20.7 16.4 40.5 765.2 2.6 3.1 4.2 Trade Payables Short-term borrowings Margin Others Gross Profit (%) 21.4 24.7 25.5 28.3 28.1 EBITDA (%) 6.2 11.2 8.2 10.5 9.9 EBIT (%) 8.0 12.9 10.3 12.3 11.8 Reported PBT (%) 5.5 10.6 7.6 10.2 9.9 CASH FLOW STATEMENT Reported Net Profit (%) 3.8 8.0 5.9 7.6 7.4 FYE Dec 31 (RMmn) Adj. Net Profit (%) 3.8 8.0 6.6 7.6 7.4 PBT Revenue 31.8 5.7 11.7 5.6 8.2 0.3 0.3 0.3 13.4 11.9 10.4 38.6 38.1 25.7 33.7 35.6 101.0 62.3 57.6 29.1 0.6 22.6 21.1 21.1 21.1 21.1 Current Liabilities 161.7 109.1 112.4 85.8 60.2 174.5 122.7 125.8 97.7 70.6 2019F Finance costs (%) 0.3 13.6 TOTAL LIABILITIES Depreciation of PPE Growth 0.5 12.9 Others Gross Profit (%) 18.1 21.9 15.4 17.0 7.5 EBIT before ∆WC EBIT (%) 23.0 71.0 (11.2) 26.6 3.7 ∆WC (current assets) Cash in Operating activities 2017E 2018F 23.1 2015 46.8 2016 37.3 52.9 55.7 7.6 7.6 10.3 9.7 10.9 2.8 2.8 3.1 1.6 0.1 (5.7) 1.9 0.0 0.0 0.0 27.7 59.0 50.7 64.2 66.7 (24.0) 34.6 (10.2) (8.4) (12.9) 53.8 Reported PBT (%) 25.5 102.9 (20.2) 41.8 5.3 3.8 93.6 40.5 55.9 Adj. PBT (%) 32.0 103.0 (28.1) 57.4 5.3 Interest expense (2.3) (2.8) (3.1) (1.6) (0.1) Reported Net Profit (%) 20.9 125.9 (18.4) 37.2 5.3 Tax paid (8.3) (9.8) (8.4) (13.2) (13.9) Adj. Net Profit (%) 21.1 125.9 (7.9) 21.6 5.3 Adj EPS (%) 21.1 125.9 (7.9) 21.6 5.3 Others 0.3 0.0 0.0 0.0 (6.8) 81.4 29.1 41.0 39.8 CAPEX (25.3) (10.4) (15.2) (23.2) (23.3) Others 5.2 0.7 (0.2) 0.0 CFO CFI Dividend paid Drawdown of bills payable Repayment of term loans 0.0 (0.1) (20.1) (9.7) (15.3) (23.2) (23.4) (3.3) (3.7) (14.0) (15.5) (16.8) 3.3 1.7 0.0 0.0 0.0 (1.9) (2.0) (5.0) (30.0) (30.0) Others 40.8 (39.9) 48.6 (8.0) CFF 35.6 (45.6) 29.6 (53.5) (46.8) 26.2 43.4 (35.7) (30.3) Net ∆ in cash and equivalents 8.8 0.0 Page 4 of 5
18. 15-Jan-18 (THIS PAGE WAS INTENTIONALLY LEFT BLANK) 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 and/ 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. As of Monday, January 15, 2018, the analyst, Damia Othman, who prepared this report, has interest in the following securities covered in this report: (a) nil This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of Mid and Small Cap Research Scheme ("MidS") administered by Bursa Malaysia Berhad and will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the MidS or the subject company. For more information about MidS and other research reports, please visit Bursa Malaysia’s website at: www.bursamids.com Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 5 of 5
19. COMPANY UPDATE Monday , January 15, 2018 FBMKLCI: 1,822.67 Sector: Healthcare THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Top Glove Corporation Berhad TP: RM9.35 (3.8%) Last Traded: RM9.00 Proposed Acquisition of Aspion Tan Kam Meng, CFA Sell Tel: +603-2167 9605 kmtan@ta.com.my www.taonline.com.my We attended Top Glove’s 1QFY18 financial results briefing. However, the discussion was mostly centred on the proposed acquisition of Aspion. Management still see a strong demand for gloves in 1HFY18. The group has proposed to acquire Aspion for RM1,370mn, to be satisfied mainly by 90% cash funded by new borrowings and the remaining 10% via the issuance of 20.5mn new Top Gloves shares at an issue price of ~RM6.6813/share. The group also agreed to provide an incentive termed ‘Finesssis Incentive’ to ACPL for 3 financial years. Our FY17/FY18/FY19 earnings are revised by +4.3%/+16.5%/18.6% to RM441.4mn/RM532.8mn/RM573.4mn after inputting Aspion’s contributions. Maintain Sell on the stock with revised TP of RM9.35/share. Share Information Bloomberg Code TOPG MK Stock Code 7113 Listing Main Market Sha re Ca p (mn) 1,277.8 Ma rket Cap (RMmn) 11,500.2 52-wk Hi/Lo (RM) 9.25/4.56 12-mth Avg Da ily Vol ('000 shrs) 2,562.8 Estimated Free Floa t (%) 47.2 Beta 0.1 Ma jor Shareholders (%) Tan Sri Da to Sri Lim Wee Chai - 29.4 EPF - 6.0 Firstway United Corp - 5.1 1QFY18: Strong Results Was Mainly Demand Driven To recap, Top Glove begun FY18 on a strong note with 1QFY18 net profit of RM105.4mn (+6.9% QoQ, +43.8% YoY). This was mainly demand driven with sales volume increased 8% QoQ and 17% YoY (see Table 1). Attesting to the growth potential of emerging markets, regions like Asia ex-Japan and Africa recorded double digit growth sales volume growth on a QoQ and YoY basis. By product type, latex gloves continued to account for the bulk at 51% and this was followed by nitrile gloves, vinyl/TPE/CPE gloves and surgical gloves, at respective 35%, 12% and 2%. Forecast Revision (%) Figure 1: Quarterly Financial Performance Foreca st Revision (%) Net Profit (RM mn) Consensus TA/Consensus (%) Previous Ra ting Financial Indicators Net gearing (x) CFPS (sen) P/CFPS (x) ROAA (%) ROAE (%) NTA/Sha re (RM) Price/ NTA (x) Share Performance Price Change (%) 1 mth 3 mth 6 mth 12 mth Source: Company, TA Securities FY18 FY19 4.3 16.5 441.4 532.8 406.6 449.1 108.6 118.6 Sell (Ma inta ined) FY18 0.4 55.0 16.4 11.7 20.1 1.9 4.8 FY19 0.3 54.3 16.6 11.0 21.2 2.1 4.3 TOPG MK 30.1 49.8 59.0 71.1 FBMKLCI 4.0 3.8 3.9 9.0 (12-Mth) Share Price relative to the FBMKLCI Table 1: QoQ Movements 1QFY17 2QFY17 3QFY17 4QFY17 Sales Volume QoQ Movements 5% -1% -5% 14% 8% ASP in USD 1% 3% 9% -7% -2% Forex (USD/MYR) 4% 6% -2% -3% -2% Natural Latex (MYR/kg) 2% 33% 19% -21% -10% Nitrile Latex (USD/kg) 2% 10% 24% -27% 3% Source: Company, TA Securities 1QFY18 Source: Bloomberg Page 1 of 6
20. 15-Jan-18 Growth Momentum Should Sustain on Robust Demand Looking ahead , we continue to expect the group’s growth momentum to sustain. This would be underpinned by the group’s expansion plans and robust demand for rubber gloves supplemented by the prevailing shortage of vinyl gloves in China. Notwithstanding, for 2QFY18, we opine that results could be flattish due to the transitory time lag in passing through recent adversities from the natural gas hike by 22.9% to RM32.52/MMBtu for 1HCY18 and expectations for higher prices of nitrile latex on the back of rising prices of crude oil. Meanwhile, the group’s expansion plans remains very much intact with its nitrile focused capacity expansion in Klang expected to enlarge its current capacity of 51.9bn gloves p.a. by 15.0% to 59.7bn gloves p.a. by December 2018 (see Table 2). Note that this excludes imminent capacity from the acquisition of Aspion Sdn Bhd (Aspion), which is detailed below. On another note, for future expansion management highlighted the possibility for setting up factories in Vietnam given the advantages, which among others include trade incentives with the Europe region. Table 2: Expansion Plans Glove Type Current: 29 glove factories Expansion in progress: Target Commencement 550 Capacity (bn p.a.) 51.9 No. of Lines F31 (Klang, Malaysia) New Factory Nitrile 30 3.0 May-18 F32 (Klang, Malaysia) New Factory Nitrile 48 4.8 Dec-18 628 59.7 By December 2018: 31 glove factories Source: Company, TA Securities More Details on the Proposed Acquisition of Aspion Acquisition of Aspion Expected to Complete in April 2018. Encouragingly, following the term sheet entered into with Adventa Capital Pte Ltd (ACPL) back on 24 November 2017, the group announced that it is acquiring Aspion Sdn Bhd (Aspion) for a purchase consideration of RM1,370mn. This is within the RM1,280mn to RM1,440mn we deduced earlier. Against Aspion’s FYE October 2018 core PAT guarantee of RM80.9mn, the purchase consideration translates into an implied PE of 16.9x. To reiterate, we deem it as fair when benchmarked against peers that are trading in the range of 14.2x to 39.3x. Additionally, it was highlighted that any shortfall in FYE October 2018 and 2019 core PAT guarantee of RM80.9mn and RM108.3mn respectively will be subject to an aggregate maximum of RM100mn. The deal is subject to shareholders approval during the upcoming EGM and is expected to be completed in April 2018. Aspion will continue to be spearheaded by Mr Low Chin Guan, its current Managing Director, who will also be nominated as Top Glove’s executive director. ‘Finesssis Incentive’ – A New Feature of the Deal. Of note, on top of the purchase consideration of RM1,370mn, the group has agreed to provide an incentive termed ‘Finesssis Incentive’ to ACPL for 3 financial years (FYE October 2018 to 2020). In a nutshell, the incentive will be tied to the net profit derived from the sale of Finessis Gloves which are a new top-of-the-line surgical glove range of the Aspion Group. As detailed in Table 3, the incentives are structured in a staggered manner and the motive for this is to encourage the continuous roll out of new products with higher margins without requiring burdensome upfront initial investments by the group. Management alluded that the Finessis Incentive will be capitalised as investment costs. Page 2 of 6