Bursa Malaysia Daily Market Report - 18 May

Transcription

1. Thursday , 18 May, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports 1. 2. 3. 4. 5. 6. 7. Amway (Malaysia) Holdings Berhad: Extremely Challenging Year Ahead Hua Yang Berhad: Results Dragged by Lower-than-Expected Margin Inari Amertron Berhad: Iris Scanning Gaining Momentum Mah Sing Group Berhad: Buys Land in Titiwangsa Malaysian Economy: Headline Inflation Moderates in April 2017 Media Prima Berhad: Embarking on an Odyssey Scientex Berhad: Future Growth Will Be Moderated Technical Reports 1. Daily Technical Stock Picks 2. Daily Stock Screen 3. Foreign Technical Stock Watch (AUS, HK & FSSTI) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research
2. Daily Note Daily Market Commentary (A Participating Organisation of Bursa Malaysia Securities Bhd) Menara TA One, 22 Jalan P Ramlee, 50250 Kuala Lumpur Tel : 603 - 2072 1277. Fax : 603 - 2032 5048 Thursday, 18 May 2017 For Internal Circulation Only KLSE Market Statistics (17.05.2017) (mil) Main Market 2,280.3 Warrants 411.4 ACE Market 755.7 Bond 4.3 ETF 0.0 Total 3,451.7 Off Market 186.9 Volume +/-chg (RMmn) -159.7 2,708.3 74.1 59.0 20.0 112.5 1.8 1.2 0.03 0.0 2,881.0 159.6 89.5 Value +/-chg -969.1 16.2 -6.0 -0.3 0.04 22.0 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP May Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA 1,775.65 12,728.69 17,730.47 1,770.50 (mn) 62.0 62.0 21.4 9.6 7.5 7.0 6.0 5.0 2.8 1.8 Up Down 311 317 62 97 41 56 2 3 1 0 417 473 % chg % YTD chg -0.14 -0.07 -0.17 -0.08 8.16 11.01 20.49 8.25 Review & Outlook Blue chips on Bursa Malaysia extended profit-taking consolidation on Wednesday, as investors locked in profits after last week's strong run-up and in line with lackluster regional markets amid political and legal turmoil surrounding the US President. The KLCI ended 2.5 points down to 1,775.65, off an early high of 1,779.94 and low of 1,770.22, as losers beat gainers 473 to 417 on total turnover of 3.45bn shares worth RM2.88bn. Following the overnight US correction, blue chips will be in correction mode amid reduced risk appetite following renewed political uncertainty in the US, as concerns intensify the US President might have committed an impeachable offense in relation to the recent firing of the FBI Director. Immediate uptrend supports for the index remain at the rising 30 and 50day moving average levels, now at 1,756 and 1,749, with better support from the lower Bollinger band at 1,740. Immediate upside hurdle for the benchmark stays at Tuesday's new two-year high of 1,787, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Affin Holdings could fall on profit-taking correction due to hook down momentum indicators, with better chart supports from the 100-day ma (RM2.66) and 50%FR (RM2.54). Key resistance level is at the peak of 28/ 04/15 (RM3.00), matching the upper Bollinger band. Further rise on Alliance Financials Group should meet stronger profit-taking resistance towards the peak of 11/05/17 (RM4.49) and upper Bollinger band (RM4.57), while support rests at the mid Bollinger band (RM4.22), reinforced by the 100-day ma (RM3.96). • 20,606.93 6,011.24 7,503.47 19,814.88 2,293.08 25,293.63 3,224.10 1,548.29 5,615.49 3,104.44 1,867.68 5,786.03 Off Market NETX NETX-WB HUBLINE SGB SAMCHEM PTRANS KLCC ECONBHD VERSATL STERPRO -2.50 -9.35 -29.64 -1.50 Value/ Volume 1.19 0.14 0.15 0.29 1.33 0.83 0.48 TA Research e-mail : taresearch@ta.com.my @ @ @ @ @ @ @ @ @ @ (RM) 0.08 0.04 0.06 0.73 0.85 0.28 7.81 2.35 1.30 0.21 Exchange Rate USD/MYR 4.3238 0.0016 USD/JPY 112.43 -1.2100 EUR/USD 1.111 0.0056 -372.82 -158.63 -18.56 -104.94 -2.25 -42.31 -3.61 1.94 -31.51 -8.52 2.42 -64.49 -1.78 -2.57 -0.25 -0.53 -0.10 -0.17 -0.11 0.13 -0.56 -0.27 0.13 -1.10 4.27 11.67 5.05 3.66 13.16 14.97 11.92 0.35 6.02 0.03 -5.15 2.12 • • • • • Top 10 KLCI Movers Based on Mkt Cap. • Counter • Mkt Cap. (RM’mn) MAYBANK 95,725 PBBANK 77,384 SIME 63,384 CIMB 53,860 MAXIS 48,968 PETGAS 37,675 IOICORP 28,906 RHBBANK 21,895 PPB 20,225 YTLCORP 16,014 Chg Vol. (RM) (mn) -0.01 10.56 -0.12 3.66 -0.01 15.00 -0.02 7.46 -0.03 4.12 -0.66 1.15 -0.04 0.84 -0.02 1.92 -0.04 0.40 -0.01 4.80 Commodities Futures Palm Oil (RM/mt) 2,641.00 31.00 Crude Oil ($/Barrel) 48.96 0.73 Gold ($/tr.oz.) 1,261.20 24.40 • • • • • • • Important Dates L&G - 8:5 Rights Issue - RI of up to 1,914.1m shares. 8 rights shares for every 5 existing share held, at an issue price of RM0.21 per rights share. LISTING ON: 18/05/2017. 3A - 1:4 Bonus Issue - BI of 98.4m shares. Ex-Date: 23/05/2017. Entitlement Date: 25/05/2017. LISTING ON: 26/05/2017. • • • News Bites The consumer price index climbed 4.4% YoY in April 2017, slower than the 5.1% YoY rise in the previous month, which was the strongest inflation since November 2008. TRX City Sdn Bhd will be conducting a request for proposal process to seek interested parties to be the role of master developer of Bandar Malaysia. Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah has been appointed chairman of both TRX City and Bandar Malaysia. UEM Sunrise Bhd's 1QFY17 revenue doubled to RM541.8mn and PBT surged twenty times to RM61.3mndue to progress made by Residensi 22, Aurora, Conservatory and completion of Teega. Carlsberg Brewery Malaysia Bhd's 1QFY17 net profit grew by 7.0% YoY to RM68.5mn. It was above ours but within consensus expectations. Amway (Malaysia) Holdings Bhd's 1QFY17's revenue and net profit respectively declined by 22.5% YoY to RM237.2mn and 47.6% YoY to RM9.5mn. It was below expectations. Hua Yang Bhd's FY17 revenue and net profit declined by 33.1% YoY to RM385.4mn and 44.8% YoY to RM60.7mn respectively. It was below expectations. UEM Sunrise Bhd has appointed Tan Sri Zamzamzairani Mohd Isa as its new chairman to replace Tan Sri Dr Ahmad Tajuddin Ali who has retired. MyEG Services Bhd confirmed that negotiation with the existing shareholders of Eat Drink KL is currently on-going and has not been finalized. Datuk Jamaludin Osman, the former group managing director of Island & Peninsular Bhd, has been appointed as a non-independent and nonexecutive director of MMC Corp Bhd. BIMB Holdings Bhd is contemplating a group-wide restructuring in a bid to maximise value for shareholders and fulfil regulatory compliance. Petra Energy Bhd returned to the black in 1QFY17 with a net profit of RM5.3mn compared to a net loss of RM7.1mn in 1QFY16. Scientex Bhd has raised RM156mn through a private placement, involving the issuance of 20mn new shares at issue price of RM7.80 per share. Malaysian Resources Corp Bhd has proposed a one-for-one renounceable rights issue to pare down its borrowings and to finance the refurbishment of the national sports complex in Bukit Jalil. Mah Sing Group Bhd is acquiring 5 pieces of adjoining freehold land in Kuala Lumpur that has an estimated GDV of up to RM650mn for a total purchase consideration of up to RM60mn. Seacera Group Bhd is acquiring a warehouse in Melaka from QM Sports Sdn Bhd for RM16.9mn, which is to be satisfied via RM12.4mn worth of shares and RM4.5mn cash. Priceworth International Bhd's plan to undertake logging operations within Sabah's Forest Management Unit 5 compartments 57 and 58 in Trus Madi has been approved by the Sabah Forestry Department. Core machine orders in Japan climbed a seasonally adjusted 1.4% on month in March, which missed expectations for an increase of 2.5% following the 1.5% gain in February. DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Thursday , May 18, 2017 FBMKLCI: 1,775.65 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 Weaker on Overnight US Correction Blue chips on Bursa Malaysia extended profit-taking consolidation on Wednesday, as investors locked in profits after last week’s strong run-up and in line with lackluster regional markets amid political and legal turmoil surrounding the US President. The KLCI ended 2.5 points down to 1,775.65, off an early high of 1,779.94 and low of 1,770.22, as losers beat gainers 473 to 417 on total turnover of 3.45bn shares worth RM2.88bn. Supports at 1,756 & 1,749, Next at 1,740 Following the overnight US correction, blue chips will be in correction mode amid reduced risk appetite following renewed political uncertainty in the US, as concerns intensify the US President might have committed an impeachable offense in relation to the recent firing of the FBI Director. Immediate uptrend supports for the index remain at the rising 30 and 50day moving average levels, now at 1,756 and 1,749, with better support from the lower Bollinger band at 1,740. Immediate upside hurdle for the benchmark stays at Tuesday’s new two-year high of 1,787, followed by the 1,800 psychological level and 18 May 2015 high of 1,823. Sell Affin & Alliance Affin Holdings could fall on profit-taking correction due to hook down momentum indicators, with better chart supports from the 100-day ma (RM2.66) and 50%FR (RM2.54). Key resistance level is at the peak of 28/04/15 (RM3.00), matching the upper Bollinger band. Further rise on Alliance Financials Group should meet stronger profit-taking resistance towards the peak of 11/05/17 (RM4.49) and upper Bollinger band (RM4.57), while support rests at the mid Bollinger band (RM4.22), reinforced by the 100-day ma (RM3.96). Asian Markets Lost Ground on Trump Administration Uncertainties Asian markets lost ground on Wednesday as growing concerns over the turmoil engulfing President Donald Trump’s administration weighed on risk appetite, boosting the yen and gold. Trump asked Comey to end the agency's investigation into ties between former White House national security adviser Michael Flynn and Russia, according to a source who has seen a memo written by Comey. The reports raised questions about whether charges of obstruction of justice could be laid against Trump, weakening confidence in the U.S. president's ability to push through an aggressive stimulus program that investors had been banking on since his election last November. U.S. economic data published on Tuesday was mixed after soft retail sales and inflation data on Friday, also undermining investors' optimism on the U.S. economy. Japanese stocks dropped after the dollar eased against the yen on weak U.S. economic data, while financial stocks underperformed, hit by lower U.S. yields. The Nikkei shares average fell 0.5 percent to 19,814.88. In down under, Australia's S&P/ASX 200 dropped 1.10 percent, or 64.52 points, to end at 5786.00. China stocks also snapped a four-day winning streak to end lower, as investors remained cautious amid lingering concerns over tighter regulation Page 1 of 8
4. TA Securities 18-May-17 A Member of the TA Group and economic growth despite recent soothing regulatory comments . The blue-chip CSI300 index fell 0.5 percent, to 3,409.97 points, while the Shanghai Composite Index lost 0.3 percent to 3,104.44 points. Wall Street Tumble on Trump Turmoil The S&P500 and the Dow notched their biggest one-day fall since Sept. 9 as investor hopes for tax cuts and other pro-business policies faded after reports that U.S. President Donald Trump tried to interfere with a federal investigation set off alarm bells on Wall Street. Wednesday’s selling was sparked by reports that President Donald Trump had allegedly asked then-FBI Director James Comey to back off the investigation of former national security adviser Michael Flynn, which prompted some congressional Republicans to call for further investigation. In a statement issued Tuesday evening, the White House denied the account. However, the developments intensified doubts that Trump would be able to follow through on his promises for tax cuts, deregulation and fiscal stimulus. Those pledges had helped fuel a record-setting post-election rally on Wall Street. Bank stocks, which had one of the strongest runs in the wake of Mr. Trump’s victory in November, were among the hardest hit. The KBW Nasdaq Bank Index of large U.S. commercial lenders notched its worst day since the Brexit selloff, falling 4.1 percent. It’s now down 3.1 percent for the year, led by a 3.8 percent loss for JPMorgan. The Dow Jones Industrial Average fell 372.82 points, or 1.78 percent, to 20,606.93, the S&P 500 lost 43.64 points, or 1.82 percent, to 2,357.03 and the Nasdaq Composite dropped 158.63 points, or 2.57 percent, to 6,011.24. Page 2 of 8
5. TA Securities 18-May-17 A Member of the TA Group News In Brief Corporate TRX City Sdn Bhd will be conducting a request for proposal (RFP) process to seek interested parties to be the role of master developer of Bandar Malaysia. The site would remain under the 100% ownership of the Ministry of Finance. The RFP process, which will commence immediately, will entail strict criteria and require interested parties to display relevant experience, a proven track record, speed of delivery, content creation and the financial capability to deliver a project of this scale. Parties have up to June 30 to submit their proposals. (The Star/The Edge) Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah has been appointed chairman of both TRX City and Bandar Malaysia. His new duties include heading a team with overall responsibility for these projects, as well as the monetisation of 1Malaysia Development Bhd’s remaining real estate assets. (The Star) Sime Darby Berhad announced the incorporation of Sime Darby Elco Power Korea Limited (SDEPKL), an indirect wholly-owned subsidiary of the group in The Republic of Korea. The principal activities of SDEPKL are assembly, sales, provision, import and export, lease and maintenance of, and provision of technology services for engines and power systems in the Republic of Korea. (Bursa Malaysia) MyEG Services Bhd confirmed that negotiation with the existing shareholders of Eat Drink KL is currently on-going and has not been finalized. (Bursa Malaysia) Datuk Jamaludin Osman, the former group managing director of property developer Island & Peninsular Bhd, has been appointed as a non-independent and non-executive director of MMC Corp Bhd. (The Edge) BIMB Holdings Bhd is contemplating a group-wide restructuring in a bid to maximise value for shareholders and fulfil regulatory compliance. (The Star) UEM Sunrise Bhd’s 1QFY17 revenue doubled to RM541.8mn and PBT surged twenty times to RM61.3mn. The higher revenue is mainly due to revenue contribution derived from the progress made by Residensi 22, Aurora, Conservatory and completion of Teega. The robust bottom line was in tandem with higher revenue from property development and the revision of estimated cost for completed projects. (Bursa Malaysia) UEM Sunrise Bhd has appointed Tan Sri Zamzamzairani Mohd Isa as its new chairman to replace Tan Sri Dr Ahmad Tajuddin Ali who has retired. (The Star) Carlsberg Brewery Malaysia Bhd’s 1QFY17 revenue grew by 10.3% YoY to RM502.6mn on higher volume in both Malaysia and Singapore and a price increase in 2016. Correspondingly, net profit grew by 7.0% YoY to RM68.5mn, albeit partially offset by higher share of losses in its associate company in Sri Lanka, Lion Brewery (Ceylon) Plc of RM5.9mn versus RM1.2mn in 1QFY16. (Bursa Malaysia) Scientex Bhd has raised RM156mn through a private placement, involving the issuance of 20mn new shares at issue price of RM7.80 per share. The company had placed out 4.3% of new issues shares to long-term institutional investors to raise proceeds to be used for working capital and expansion plans for its manufacturing and property development segments. (The Star) Ire-Tex Corporation Bhd has made a police report against its director, Mr Kong Hon Kay, in connection with possible breaches of Sections 245 (5) and (6) of the Companies Act, 2016. (Bursa Malaysia) Page 3 of 8
6. TA Securities 18-May-17 A Member of the TA Group Malaysian Resources Corp Bhd (MRCB) has proposed a one-for-one renounceable rights issue to pare down its borrowings and to finance the refurbishment of the national sports complex in Bukit Jalil. The cash call, which will be sweetened by free detachable warrants on one-for-five basis, will raise between RM2.2bn and RM2.9bn. Concurrently, the group’s substantial shareholders, the Employee Provident Fund and Gapurna Sdn Bhd, are applying to authorities for exemption from the obligation to undertake a mandatory offer arising from the application for excess rights shares under the proposed rights issue, as well as the subsequent exercise of the rights warrants into new MRCB shares. (The Edge) Mah Sing Group Bhd is acquiring 5 pieces of adjoining freehold land with a total net land area measuring approximately 3.6 acres and estimated gross development value of up to RM650mn for a total purchase consideration of up to RM60mn. The group intends to develop a residential condominium on the land which will front the 234.8 acres Titiwangsa Lake Garden. The proposed development is expected to commence in the second half of 2017 and to be developed over a span of 3-4 years. (Bursa Malaysia) Amway (Malaysia) Holdings Bhd’s 1QFY17’s revenue and net profit respectively declined by 22.5% YoY to RM237.2mn and 47.6% YoY to RM9.5mn. The poor bottom line performance was due to lower sales and higher import costs, albeit partially offset by lower provisions for sales incentives and Amway Business Owner incentive trips. A first interim dividend of 5.0sen per share for FYE17 was declared. (Bursa Malaysia) Paramount Corporation Bhd’s 1QFY17’s net profit declined by 10.9% YoY to RM13.3mn despite revenue growth of 26.1% YoY to RM142.9mn. Higher revenue from the property division ameliorated marginally lower contributions from the education division. The decline in earnings was due to a gain of RM2.3mn in 1QFY16 arising from the disposal of apartments that were no longer required. (Bursa Malaysia) Apex Healthcare Bhd’s 1QFY17 revenue and net profit respectively increased by 4.9% YoY to RM154.7mn and 2.9% YoY to RM10.1mn. Revenue from all business units performed in line with expectations, with good progress made in securing more public sector sales in both Malaysia and Singapore and three new pharmaceutical products under the group’s brands were launched successfully in the current quarter. (Bursa Malaysia) Red Sena Bhd remained in the red with net losses of RM3.8mn in 2QFY17 compared to net losses of RM3.2mn in 2QFY16. The group as a special purpose acquisition company will only generate revenue once it has completed the qualifying acquisition. (Bursa Malaysia) Petra Energy Bhd returned to the black in 1QFY17 with a net profit of RM5.3mn compared to a net loss of RM7.1mn in 1QFY16. The improved bottom line performance was mainly due to profit from the services segment and production and development segment. Revenue declined by 38.5% YoY to RM69.6mn. (Bursa Malaysia) Hua Yang Bhd’s 4QFY17’s revenue and net profit respectively declined by 36.8% YoY to RM80.7mn and 55.7% YoY to RM9.5mn. The weaker YoY performance was due to the completion of three high rise projects in Klang Valley namely Metia Residences, Residensi Flora @ One South and Sentrio Suites. For FY17, revenue and net profit respectively declined by 33.1% YoY to RM385.4mn and 44.8% YoY to RM60.7mn. A final dividend of 2.0sen per share for FYE17 was proposed. (Bursa Malaysia) Cabnet Holdings Bhd’s initial public offering’s public portion was oversubscribed by 48.3 times. The 10mn shares made by way of private placement to identified investors have been fully placed out. (Bursa Malaysia) Seacera Group Bhd (SGB) is acquiring a warehouse in Melaka from QM Sports Sdn Bhd for RM16.9mn which is to be satisfied via the issuance of 8,857,143 new ordinary shares in SGB at an issue price of RM1.40 amounting to approximately RM12.4mn in aggregate and cash payment of RM4.5mn. The property is to serve as the group’s warehousing and Page 4 of 8
7. TA Securities 18-May-17 A Member of the TA Group distribution hub for the southern region of Peninsular Malaysia . (Bursa Malaysia) KKB Engineering Bhd turned in a net loss of RM1.5mn in 1QFY17 compared to a net loss of RM2.0mn in 1QFY16 due to the increasing cost of raw materials and higher direct overhead costs. Revenue however increased by 93.7% YoY to RM42.9mn mainly due to the improved revenue from the construction division and steel pipes manufacturing division, albeit offset by lower revenue of the LP Gas cylinder manufacturing division. (Bursa Malaysia) Cepatwawasan Group Bhd returned to the black in 1QFY17 with a net profit of RM6.2mn compared to a net loss of RM0.4mn in 1QFY16. The improvement was in tandem with its plantation segment’s higher fresh fruit bunches selling price and production, oil mill segment’s higher milling margin, and power plant segment’s return to the black. A dividend of 1.5sen per share was approved. (Bursa Malaysia) Formosa Prosonic Industries Bhd recorded a 1QFY17 PBT of RM10.7mn compared to a loss before tax of RM0.9mn in 1QFY16 on the back of higher sales and foreign exchange gains. Revenue increased by 9.2% YoY to RM75.5mn. (Bursa Malaysia) Priceworth International Bhd’s (PWI) plan to undertake logging operations within Sabah's Forest Management Unit 5 compartments 57 and 58 in Trus Madi has been approved by the Sabah Forestry Department. In view of the approval and as agreed by parties to the Log Extraction and Timber Sale Agreement, PWI will immediately commence operations for the extraction and removal of all commercial logs and merchantable timber. (Bursa Malaysia) Focus Lumber Bhd’s 1QFY17’s revenue declined by 10.2% YoY to RM47.8mn mainly due to lower sales volume as well as lower selling price in US dollar. Net profit however increased by 88.9% YoY to RM6.3mn due to improved production recovery rate, lower production cost per cubic metre and a significant decrease in losses from foreign currency transactions. (Bursa Malaysia) ACE Market-bound building contractor Inta Bina Group Bhd's initial public offering for the public portion has received an oversubscription rate of 42.7 times. (The Edge) SCH Group Bhd entered into three separate memorandum of understanding (MoU) with Sewara Engineering Sdn Bhd, Stigma Impiana Sdn Bhd and Dataran 888 Sdn Bhd. The MoU sets forth the general understanding between the parties in respect of the exclusive collaboration on the excavation and removal and subsequent distribution and sale of the deposits from the Bohol Retention Pond, Nanyang Retention Pond and Permaisuri Retention Pond in Kuala Lumpur. The deposits are materials which can be used, amongst others, for mixing with cements, bitumen, lime, gypsum, or other adhesive to form concrete or mortar that includes but is not limited to quarry sand, gravel, crushed stone and slag. (Bursa Malaysia) Anzo Holdings Bhd’s 4QFY17 revenue increased by 441.1% YoY to RM7.6mn and returned to the black with a net profit of RM1.3mn compared to a net loss of RM3.8mn in 4QFY16. The improvement is mainly due to construction billings from Porto De Melaka project amounting to RM5.7mn, the reversal on provision for doubtful debts of RM1.3mn and no further inventory write down in the quarter. For FY17, revenue increased by 100.6% YoY to RM12.3mn and losses declined to RM4.6mn from RM10.9mn in FY16. (Bursa Malaysia) Eversafe Rubber Bhd’s 1QFY17 revenue and net profit respectively came in at RM18.7mn and RM1.0mn. An interim dividend of 1.8sen for FYE17 was declared. (Bursa Malaysia) Page 5 of 8
8. TA Securities 18-May-17 A Member of the TA Group News In Brief Economy Asia Malaysia Inflation Eases More-than Expected in April 2017 Malaysia 's Consumer Price Index (CPI) eased at a faster-than-expected pace in April, figures from the Department of Statistics (DoS) showed. The consumer price index climbed 4.4% YoY in April 2017, slower than the 5.1% YoY rise in the previous month, which was the strongest inflation since November 2008. Consensus had expected a 4.5% increase for the month. Transport costs alone surged 16.7% annually in April 2017 (March 2017: 23% YoY) while prices of food & non-alcoholic beverages grew by 4.1% YoY, the same pace like in the previous month. On a monthly basis, consumer prices dropped 0.3% from March. To-date, inflation increased by 4.3% YoY. (DoS) Japan Core Machine Orders Gain 1.4% in March 2017 Core machine orders in Japan climbed a seasonally adjusted 1.4% on month in March, the Cabinet Office said - coming in at 862.3 billion yen. That missed expectations for an increase of 2.5% following the 1.5% gain in February. On a yearly basis, core machine orders fell 0.7%, missing forecasts for a gain of 1.2% following the 5.6% spike in the previous month. The total value of machine orders, which includes volatile ones for ships and electric power companies, climbed 1.3% on month but dropped 11.9% on year to 2,235.5 billion yen. Manufacturing orders gained 0.6% on month and lost 4.9% on year to 352.9 billion yen in March, while non-manufacturing orders dropped 3.9% on month and added 2.2% on year to 496.4 billion yen. Government orders jumped 15.0% on month and tumbled 24.1% on year to 263.7 billion yen. Orders from overseas slipped 2.8% on month and 2.6% on year to 846.2 billion yen. Orders from agencies shed 3.1% on month and gained 5.8% on year to 124.4 billion yen. Separately, Japan's industrial production declined less than initially estimated in March. Industrial production fell 1.9% month-over-month in March instead of a 2.1% decrease reported earlier. In February, production had risen 3.2%. Shipments dropped 0.8% over the month, slower than the 1.1% decrease seen in the flash data published on April 28. At the same time, inventories grew 1.5%, revised down slightly from 1.6%. On a yearly basis, industrial production growth eased to 3.5% in March from 4.7% in February. (RTT News) Australia Needs Housing Slowdown for Stability on AAA, S&P Says Australia’s prized AAA rating will only rest on a firm footing once there’s a “meaningful moderation” in housing and credit, S&P Global Ratings said as it maintained a negative outlook on the country’s sovereign score. The country’s rating was affirmed by the credit assessor after the latest federal government budget projected a return to surplus by 2021, although S&P noted that revenue could disappoint and lawmakers may struggle to implement fiscal repair policies. It also highlighted risks stemming from Australia’s high level of external indebtedness. S&P has maintained a negative outlook on the country since last July when it issued a warning in the wake of a knife-edge federal election. Home prices in Sydney and Melbourne have surged in the wake of unprecedented interest-rate cuts by the Reserve Bank of Australia as the country navigates its way through the aftermath of a mining boom. Regulators have progressively tightened lending restrictions amid concerns about financial stability. (Bloomberg) Australia's Consumer Sentiment Weakens In May Australia's consumer confidence deteriorated in May, data from the Westpac Bank showed Wednesday. The Westpac-Melbourne Institute Index of Consumer Sentiment dropped to 98.0 in May from 99.0 in April. A reading below 100 indicates pessimists outnumber optimists. Respondent’s confidence on property market as well as expectations for house purchases weakened sharply. (RTT News) United States Full Employment Confronts Trump, Fed With Tougher Trade-Offs In April, when the unemployment rate dropped to 4.4%, it marked the completion of a slow and joyless recovery from the Great Recession. Eight years on, the U.S. has effectively Page 6 of 8
9. TA Securities 18-May-17 A Member of the TA Group returned to “full employment,” meaning unemployment can’t go sustainably lower. In reaching this milestone, the U.S. has closed one troubled chapter for the economy while opening a fresh one with tricky new trade-offs for the Federal Reserve and President Donald Trump. For years, low interest rates and hefty government budget deficits, whatever their downsides, had one clear upside: They created more jobs in an economy that desperately needed them. That is no longer true. At full employment, those economic policy choices become harder. The Fed and Trump administration could try to push unemployment even lower and see what happens, but history isn’t encouraging. Unemployment has been this low only twice since 1990 and both times an asset bubble and inflation pressures emerged and recession soon followed. Unemployment of 4.4% today may not mean what it did in previous decades since it has been pushed down by an exodus of working-age people from the labor force. Some economists think those workers might flood back when conditions are right, serving as a hidden reserve of labor to keep growth humming even when official unemployment seems low. Employment as a share of the working age population is still nearly 3 percentage points below its 2007 level. But this is deceptive. The share of workers over 54 years old, and thus more likely to retire early and drop out of the labor force, has grown since then. (The Wall Street Journal) Europe and United Kingdom UK Wage Growth Falls Behind Inflation even as Jobless Rate Sinks to 42-year Low The unemployment rate in the period between January and March unexpectedly fell to its lowest level in nearly 42 years at 4.6%. Economists polled by Reuters had expected the rate to remain at 4.7%. And the number of people in work rose by a strong 122,000, taking the employment rate to a new record of 74.8%, the Office for National Statistics said. The BOE is watching closely for signs of a pick-up in wages that could add to inflation that seems to be heading for around 3% due to the fall in the value of the pound since the Brexit referendum and as oil prices rise. So far the central bank believes there is little pressure on most employers to raise pay sharply that could feed a more permanent inflation problem. Instead, the Bank has softened its previous forecasts for a rise in unemployment that it expects to stand at 4.7% this year, still above the level, which it considers inflationary. The ONS said workers' total earnings including bonuses rose by an annual 2.4% in the first quarter of 2017, edging up from growth of 2.3% in the three months to February and in line with the forecast in the Reuters poll of economists. The BoE expects wages to rise by 2% this year before picking up in 2018 and 2019. Data released showed consumer price inflation picked up speed in April to hit 2.7% and many economists think it will reach 3% soon. The ONS said the number of unemployment benefit claimants rose by 19,400 to just under 793,000 in April, slower than an increase of 33,500 in March. (CNBC) Eurozone inflation confirmed at 1.9% Inflation in the Eurozone rebounded to 1.9% in April, the EU statistics agency has confirmed. Final readings from Eurostat confirmed earlier estimates of both inflation and core inflation – which excludes volatile oil and food prices and has lagged behind the main measure in recent months. Year on year core inflation rose from 0.7% in March to 1.2%. Inflation was highest in the Baltics, with Estonia, Lithuania and Latvia all seeing annual price increases of more than 3%. Romania, Ireland and Slovakia lagged behind, with year on year rates less than 1%. Higher transport, package holiday and heating oil costs were the biggest drivers of the increase, with telecoms and clothing prices declining. Separately, Eurozone Construction output dropped 1.1% in March from February, when it grew 5.5%. Building construction fell 1.7% on a monthly basis, in contrast to February's 5.1% increase. At the same time, growth in civil engineering eased to 1.1% from 7.1%. Yearon-year, construction output growth came in at 3.6% versus 5.5% in February. In the EU28, construction output dropped 0.8% from previous month, while it grew 3.7% from prior year. (Financial Times, RTT News) Page 7 of 8
10. TA Securities 18-May-17 A Member of the TA Group Share Buy-Back : 17 May 2017 Company TEXCHEM Bought Back Price (RM) Hi/Lo (RM) 1,000 1.47 1.48/1.44 Total Treasury Shares 2,544,200 Source: Bursa Malaysia Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. 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
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 17-May-17 2.06 2.42 5.80 Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 2.36 2.04 5.12 0.96 0.59 1.22 10.8 22.7 17.7 15.8 23.8 27.6 19.1 10.7 32.8 13.1 10.2 21.0 5.8 3.7 1.9 7.6 3.7 3.1 2.44 2.70 7.00 -15.6 -10.4 -17.1 1.95 1.95 4.43 5.6 24.1 30.9 -3.3 13.1 26.9 4.10 3.40 5.40 6.10 15.80 9.20 22.10 4.70 10.00 1.30 0.95 1.33 1.34 0.67 0.96 0.80 1.31 0.71 35.8 29.4 46.4 50.6 101.3 73.6 136.6 49.0 40.3 37.7 33.1 50.6 55.6 109.8 82.6 140.4 51.7 39.0 12.4 9.8 11.8 11.8 13.9 12.7 14.7 11.2 24.8 11.8 8.7 10.9 10.7 12.8 11.3 14.3 10.6 25.6 3.4 2.8 2.9 3.4 2.9 5.4 2.8 2.2 3.4 3.4 2.8 3.3 3.7 2.9 5.4 2.9 2.2 3.4 4.49 3.00 5.70 5.99 14.28 9.68 20.58 5.59 10.38 -1.1 -4.0 -3.5 -0.7 -1.4 -3.5 -2.6 -2.3 -3.7 3.60 2.08 3.90 4.11 12.70 7.50 18.72 4.46 8.20 23.3 38.5 41.0 44.7 10.9 24.5 7.1 22.4 22.0 19.4 20.5 27.6 31.9 4.3 13.9 1.6 15.9 13.0 0.44 1.31 5.45 3.50 0.89 2.04 2.31 5.85 0.49 1.62 5.49 3.27 0.68 1.90 1.50 5.58 0.80 0.67 1.06 1.09 1.20 na 1.11 0.13 5.7 14.6 31.6 16.8 10.4 12.6 11.9 44.3 5.7 13.5 36.4 20.9 11.4 12.5 11.8 45.8 7.7 9.0 17.3 20.8 8.6 16.1 19.5 13.2 7.7 9.7 15.0 16.7 7.8 16.3 19.6 12.8 0.0 2.1 2.2 2.7 1.1 2.7 1.3 4.3 2.3 2.1 2.2 2.7 1.1 2.7 1.3 4.3 0.51 1.35 5.48 3.61 1.05 2.13 2.49 6.13 -13.7 -3.1 -0.5 -3.0 -15.7 -4.2 -7.2 -4.6 0.36 0.80 4.65 3.07 0.41 1.42 1.41 5.20 22.2 64.6 17.2 14.0 118.5 43.7 63.8 12.5 1.1 24.8 14.0 9.4 53.9 20.0 33.5 -0.5 2.03 2.00 0.47 15.4 15.6 13.2 13.0 4.9 4.9 2.40 -15.4 1.93 5.2 1.0 14.80 18.44 17.84 21.08 0.55 0.57 74.8 93.1 81.3 19.8 101.9 19.8 18.2 18.1 5.0 4.5 5.5 5.0 15.30 18.74 -3.3 -1.6 12.84 14.60 15.3 26.3 6.3 12.6 2.33 7.75 25.30 82.10 3.41 1.84 4.90 1.03 2.23 8.62 27.41 88.66 3.76 2.74 4.17 1.10 0.49 0.35 0.35 0.37 0.50 0.68 0.46 0.58 6.5 26.4 120.5 293.6 22.3 25.1 12.7 9.3 7.5 30.5 148.1 326.2 24.7 25.3 15.8 12.8 35.9 29.4 21.0 28.0 15.3 7.3 38.6 11.1 30.9 25.4 17.1 25.2 13.8 7.3 31.1 8.1 0.8 3.9 2.8 3.3 4.4 4.3 0.9 4.9 1.0 4.5 3.0 3.4 5.0 4.3 1.0 4.9 3.00 9.29 27.00 83.68 3.63 2.04 5.00 1.07 -22.3 -16.5 -6.3 -1.9 -6.1 -9.8 -2.0 -3.7 2.11 7.30 22.44 74.12 2.13 1.43 4.14 0.78 10.4 6.2 12.7 10.8 60.1 28.7 18.3 32.1 -9.3 5.7 7.8 5.0 33.7 6.4 13.1 29.6 45.00 52.08 1.06 198.6 187.4 22.7 24.0 4.4 4.4 55.64 -19.1 40.61 10.8 1.9 9.97 5.76 11.53 6.58 1.35 1.28 49.4 25.7 55.6 27.9 20.2 22.4 17.9 20.7 0.5 1.4 0.6 1.6 10.00 6.07 -0.3 -5.1 7.50 4.17 33.0 38.0 25.5 27.5 2.73 0.15 3.81 0.10 0.73 1.31 22.1 0.2 24.6 0.3 12.3 73.5 11.1 48.0 5.9 0.0 7.0 0.0 3.42 0.15 -20.2 -3.3 2.70 0.05 1.1 190.0 -7.8 190.0 6.00 4.18 6.40 4.61 0.78 0.52 13.9 13.3 17.9 16.5 43.2 31.4 33.4 25.4 0.7 1.5 0.7 1.8 6.73 4.37 -10.8 -4.3 5.78 3.85 3.8 8.6 -5.5 0.0 5.76 6.35 2.07 5.22 2.16 6.05 6.80 1.90 5.05 2.55 0.61 0.16 0.31 -0.22 0.28 19.5 35.8 16.2 26.6 4.3 24.4 40.5 18.3 30.2 7.1 29.6 17.7 12.7 19.6 50.4 23.6 15.7 11.3 17.3 30.6 1.4 2.8 2.3 2.6 0.5 1.9 3.2 2.6 2.9 0.8 5.85 7.07 2.69 5.45 2.64 -1.5 -10.2 -23.0 -4.2 -18.2 3.91 5.62 1.88 4.20 1.96 47.3 13.0 10.1 24.3 10.2 19.3 -3.6 -1.9 -2.4 -8.5 INDUSTRIAL SCIENTX SKPRES 8.69 1.36 9.69 1.75 0.59 0.49 54.4 9.1 66.4 14.1 16.0 15.0 13.1 9.7 2.4 3.2 2.8 5.0 8.99 1.44 -3.3 -5.6 5.96 1.12 45.8 21.4 29.7 5.4 MEDIA ASTRO MEDIA PRIMA STAR 2.70 1.10 2.48 3.20 0.65 1.75 1.04 0.67 0.68 13.2 4.3 10.6 14.5 5.0 9.1 20.4 25.7 23.5 18.7 22.1 27.4 4.6 3.1 7.3 4.8 3.6 7.3 3.01 1.52 2.70 -10.3 -27.6 -8.1 2.56 1.00 2.20 5.5 10.0 12.7 3.8 -4.3 10.7 0.45 0.84 7.03 0.44 6.16 1.29 0.61 33.7 13.1 8.4 46.0 18.7 50.4 2.5 -4.0 3.8 3.7 42.7 4.7 19.8 -29.1 1.30 37.7 5.3 BANKS & FINANCIAL SERVICES AFG 4.44 AFFIN 2.88 AMBANK 5.50 CIMB 5.95 HLBANK 14.08 MAYBANK 9.34 PBBANK 20.04 5.46 RHBBANK BURSA 10.00 CONSTRUCTION BPURI GADANG GAMUDA IJM SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N NESTLE PADINI POHUAT QL SIGN Tobacco BAT GAMING Casino GENTING GENM NFO BJTOTO LUSTER HEALTHCARE Hospitals IHH KPJ Rubber Gloves HARTA KOSSAN SUPERMX TOPGLOV KAREX OIL & GAS EATECH 0.60 0.44 1.05 11.5 11.9 5.2 5.0 0.0 0.0 1.18 -49.6 MHB 0.95 0.95 1.85 -1.2 1.3 na 72.5 0.0 0.0 1.23 -22.8 MISC 7.62 7.65 0.83 56.8 54.7 13.4 13.9 3.9 3.9 7.90 -3.5 PANTECH 0.64 0.69 1.28 4.1 5.0 15.3 12.7 2.8 3.1 0.67 -4.5 PCHEM 7.31 7.91 1.06 39.2 41.6 18.7 17.6 2.9 3.0 7.80 -6.3 SENERGY 1.94 2.02 2.43 5.3 4.6 36.9 41.8 0.0 0.0 2.10 -7.6 UMWOG 0.62 0.80 2.03 -12.0 -3.6 na na 0.0 0.0 1.04 -40.4 Note: UMWOG proposed 14 for 5 rights issue shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.79 1.40 1.40 11.3 12.2 15.9 14.6 0.0 0.0 2.02 -11.4
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 1.99 3.15 4.60 24.90 9.32 6.13 1.53 3.88 4.15 22.75 8.24 7.52 1.81 0.46 1.08 0.93 1.25 0.50 6.3 13.7 18.7 111.8 30.8 32.7 11.1 15.7 21.1 119.1 35.3 34.5 31.4 23.0 24.5 22.3 30.3 18.7 17.9 20.0 21.8 20.9 26.4 17.8 2.5 2.2 2.2 2.2 2.4 2.6 2.5 2.5 2.6 2.4 3.0 2.8 2.52 3.70 4.81 25.50 9.55 6.51 -21.0 -14.9 -4.4 -2.4 -2.4 -5.8 1.31 3.00 4.10 22.72 7.30 5.53 51.9 5.0 12.2 9.6 27.7 10.8 28.4 -7.4 4.5 3.8 15.1 2.2 0.69 1.07 0.86 2.11 1.53 0.83 3.63 3.50 0.69 1.07 1.00 2.26 1.67 0.80 4.10 3.40 0.66 0.66 0.30 0.93 0.70 0.31 0.67 0.49 3.4 17.2 7.3 14.7 14.5 6.4 25.6 27.2 7.0 17.4 11.2 15.3 13.9 9.7 22.8 29.1 20.0 6.2 11.8 14.3 10.5 13.0 14.2 12.9 9.8 6.1 7.7 13.8 11.0 8.5 15.9 12.0 5.8 3.7 4.1 3.3 3.9 1.2 3.9 3.4 5.8 3.3 4.7 3.6 3.9 1.2 3.9 3.4 0.83 1.43 1.05 2.46 1.70 1.00 3.77 3.66 -16.4 -25.3 -18.1 -14.2 -10.0 -17.5 -3.7 -4.4 0.68 1.05 0.84 1.85 1.34 0.69 2.80 2.84 1.5 1.9 2.4 14.2 14.2 19.6 29.6 23.2 -0.7 -5.3 -14.0 8.2 7.0 3.1 16.0 16.7 1.72 1.50 1.86 1.72 0.54 0.59 8.9 8.1 10.1 8.6 19.4 18.6 17.0 17.4 5.2 5.6 5.9 6.0 1.84 1.72 -6.5 -12.8 1.60 1.44 7.5 4.2 0.0 -2.0 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.19 24.40 19.04 13.94 1.52 1.45 20.19 19.60 17.37 1.81 0.70 0.75 0.77 1.01 0.60 6.6 98.4 88.2 131.9 8.8 6.1 102.3 101.3 130.8 10.6 18.1 24.8 21.6 10.6 17.4 19.4 23.9 18.8 10.7 14.4 5.9 3.0 3.3 3.2 6.6 5.9 3.1 3.7 3.3 6.6 1.80 25.70 22.66 14.90 1.64 -33.9 -5.1 -16.0 -6.4 -7.3 1.14 22.78 18.10 13.00 1.38 4.4 7.1 5.2 7.2 10.1 -13.1 2.5 -10.6 0.3 2.0 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 5.40 5.02 6.52 6.45 5.25 4.95 5.95 6.95 1.26 0.95 0.71 0.68 16.7 20.8 25.1 21.4 17.6 21.1 25.4 22.3 32.3 24.1 26.0 30.1 30.7 23.8 25.6 28.9 1.6 4.2 3.1 3.0 1.7 4.2 3.1 3.1 5.99 5.19 6.60 6.90 -9.8 -3.3 -1.2 -6.5 4.11 4.40 5.36 5.81 31.4 14.1 21.6 11.0 14.4 3.9 9.0 8.4 TECHNOLOGY Semiconductor & Electronics IRIS 0.20 INARI 2.17 MPI 12.90 UNISEM 3.40 0.14 2.40 13.15 3.55 1.43 0.80 0.54 0.83 -1.2 10.3 94.2 26.9 0.9 na 12.6 21.1 115.7 13.7 29.1 12.6 22.1 17.2 11.2 11.7 0.0 3.7 2.1 3.5 0.0 2.3 2.1 3.5 0.24 2.23 13.28 3.70 -16.7 -2.7 -2.9 -8.1 0.10 1.28 7.02 2.20 100.0 69.2 83.8 54.5 81.8 30.7 74.1 44.1 3.47 8.17 3.02 8.10 1.13 1.47 33.5 17.2 34.9 17.5 10.3 47.4 10.0 46.7 1.2 1.2 1.4 1.2 3.59 8.34 -3.3 -2.0 2.12 5.76 63.7 41.8 51.5 34.8 1.69 3.90 1.88 4.51 0.81 0.68 15.4 19.3 21.5 17.4 10.9 20.2 7.9 22.4 3.3 3.7 4.1 3.3 1.87 4.59 -9.6 -15.0 1.23 3.74 37.4 4.3 6.3 -9.3 PROPERTY GLOMAC HUAYANG IBRACO IOIPG MAHSING SNTORIA SPSETIA SUNWAY REIT SUNREIT CMMT TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.80 OCBC 10.42 UOB 23.14 PLANTATIONS WILMAR IFAR 3.75 0.50 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.23 1.13 1.09 173.8 87.8 195.7 190.2 12.0 92.5 11.9 209.4 11.8 10.9 11.3 11.0 2.9 5.7 3.0 2.9 6.7 3.0 21.0 10.7 24.0 -1.0 -2.2 -3.7 14.72 8.84 17.41 41.3 26.8 32.9 20.0 16.8 13.4 3.72 0.53 0.91 1.12 28.9 3.9 31.1 4.3 12.0 11.6 2.1 1.9 2.4 2.1 4.0 0.6 -6.3 -16.8 2.96 0.44 26.7 12.5 4.5 -5.7 13.0 12.6 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. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
13. TA Securities RESULTS UPDATE Thursday , May 18, 2017 A Member of the TA Group FBMKLCI: 1,775.65 Sector: Consumer MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Amway (Malaysia) Holdings Berhad TP: RM8.62 (+11.2%) Last Traded: RM7.75 Extremely Challenging Year Ahead HOLD THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Tel: +603-2072 1277 ext. 9602 damia@ta.com.my Review • Amways’ 1QFY17 earnings came in below expectations at 18% of our full-year forecast and 17% of consensus estimates. The variance was due to lower than expected revenue from soft consumer sentiment. • Excluding exceptional items of RM1.3mn, adjusted net profit came in at RM10.7mn (+12.8% QoQ, -41.3% YoY). The 41.3% YoY drop in earnings was due to i) lower sales, and ii) higher import costs on account for weak Ringgit. These were partly offset by lower provision for sales incentives and Amway Business Owners (ABO) incentives trips. • Revenue showed a decline of 22.5% YoY to RM237.2mn on the back of strong buy up in 1QFY16 ahead of price increases in February and April last year. Also note that Amway’s 40th anniversary sales programme contributed to high revenue in 1QFY16 as well. The decline in 1QFY17 revenue can also be attributable to softer consumer sentiment. Looking at the net margin, it contracted by 1.4%-pts from 6.0% to 4.5% in 1QFY17 mainly due to higher import cost. 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 (%) Amway Global Development Skim Amanah Saham Bumiputra Kumpulan Wang Persaraan Employees Provident Fund Amw MK 6351 Main Market 164.4 1,274.1 9.29/7.30 15.8 11.3 0.4 51.7 13.1 9.2 6.0 Forecast Revision Forecast Revision (%) Adj. Net Profit (RM mn) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 (26.6) (24.7) 43.4 50.1 64.0 69.4 67.7 72.2 Buy (Downgraded) • QoQ, revenue declined by 5.5% due to consolidation of 2016 ABO’s Performance which was steered by strong ABO momentum from the 40th anniversary programmes. Net margin improved by 0.7%-pts from 3.8% in the previous quarter due to reduction in operating expenses. • The board declared its first interim dividend of 5 sen/share, which is equivalent to the same period last year. Impact • We reduced our earnings for FY17 and FY18 by 26.6% and 24.7% respectively due to weaker-than-expected 1Q17 results performance. Outlook • Management guided that FY17 outlook will be extremely challenging due to softer economic condition and weakening Ringgit against US Dollar. Management plans to mitigate this by i) managing operational costs, on top of ii) continued implementation sales and marketing initiatives and iii) continued support to ABO’s businesses. Financial Indicators Net Gearing ROE (%) ROA (%) NTA/Share (RM) Price/NTA (x) FY18 Net cash 25.4 11.8 1.2 7.5 Scorecard vs TA vs Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth % of FY16 18 Below 17 Below Amway 2.0 2.2 1.1 (14.7) FBM KLCI 2.4 4.0 9.2 8.7 (12-Mth) Share Price relative to the FBM KLCI Valuation • We reduced our target price to RM8.62/share (previously RM9.59/share) based on DDM valuation. We downgrade our call from Buy to Hold due to i) contracting margins, ii) weak Ringgit, iii) higher productions costs and iii) softer market sentiment. Source: Bloomberg Page 1 of 2 FY17 Net cash 21.2 10.6 1.2 7.2
14. TA Securities 18-May-17 A Member of the TA Group 1QFY17 Results Analysis (RMmn) FYE December (RM'mn) Revenue 1QFY16 305.9 4QFY16 251.0 1QFY17 237.2 QoQ (%) (5.5) YoY (%) (22.5) Adj. EBIT Extra-ordinary items (EI) Net finance (costs)/income 23.3 (0.2) 1.8 10.8 2.0 1.8 13.1 (1.3) 1.5 21.3 nm (16.7) (44.0) nm (13.9) Profit Before Tax (PBT) Adj. PBT 24.9 25.1 14.6 12.6 13.3 14.6 (8.8) 15.8 (46.5) (41.8) Taxation Reported Net Profit Adj. Net Profit (6.8) 18.0 18.3 (3.1) 11.5 9.5 (3.9) 9.5 10.7 24.9 (17.8) 12.8 (43.4) (47.6) (41.3) 11.0 11.1 5.0 7.0 5.8 15.0 5.7 6.5 5.0 (17.8) 12.8 (66.7) (47.6) (41.3) 0.0 5.5 6.2 4.5 26.4 %-points 1.2 1.1 0.7 1.9 %-points (2.1) (2.0) (1.4) (0.7) EPS Adj. EPS DPS (sen) (sen) (sen) Adj. EBIT Margin Adj. PBT Margin Adj. Net Margin Effective Tax Rate (%) (%) (%) (%) 7.6 8.2 6.0 27.1 4.3 5.0 3.8 24.5 Earnings Summary (RMmn) FYE December 31 (RM’mn) Revenue EBITDA EBIT Reported PBT Reported Net Profit Adj. Net Profit EPS Adj. EPS PER Dividend/share Div. Yield FY15 1,019.9 89.4 82.1 89.3 63.9 64.0 38.9 39.0 22.7 45.0 4.4 (sen) (sen) (x) (sen) (%) FY16 1,087.5 72.5 66.0 73.0 54.6 52.6 33.2 32.0 29.2 30.0 3.4 FY17E 1,153.4 57.3 50.9 57.8 43.4 43.4 26.4 26.4 29.2 30.0 3.4 FY18F 1,221.6 65.7 59.5 66.8 50.1 50.1 30.5 30.5 25.1 35.0 4.0 FY19F 1,304.7 85.4 79.3 86.8 65.1 65.1 39.6 39.6 21.9 40.0 4.6 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 2 of 2
15. TA Securities RESULTS UPDATE Thursday , May 18, 2017 A Member of the TA Group FBMKLCI: 1,775.65 Sector: Consumer MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Carlsberg (M) Berhad TP: RM17.84 (+20.6%) Last Traded: RM14.80 Strong Beginning to the Year Buy THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Tel: +603-2072 1277 ext. 1324 kjtan@ta.com.my Review Carlsberg reported its 1QFY17 core profit of RM67.4mn (+7.1% YoY). The results came in above ours but within consensus estimates at 31.5% and 28.7% respectively. The variance was mainly due to stronger-than-expected contributions from both Malaysia and Singapore segment. No dividend was declared for the quarter under review. www.taonline.com.my Share Information Bloomberg Code CAB MK Stock Code 2836 Listing Main Market Share Cap (mn) 307.6 Market Cap (RMmn) 4,552.5 0.50 Par Value (RM) 52-wk Hi/Lo (RM) 15.30 / 12.84 YoY, the group’s revenue grew by 10.3% to RM502.6mn. This can be attributed to higher average selling price. Recall that back in March and July last year Carlsberg raised prices by 3% to 5% each time. The increase was in response to change in excise duties structure in March last year. 12-mth Avg Daily Vol ('000 shrs) QoQ, PBT expanded by 8.3% to RM88.0mn due to 1) higher sale volume in both Malaysia and Singapore segments, 2) price increase, 3) effective cost management. Malaysia and Singapore’s total revenue increased by 6.7% and 18.7% respectively helped by solid Chinese New Year sales. Forecast Revision Lion Brewery (Ceylon) registered a higher share loss of RM5.9mn versus RM1.2mn in 1QFY16 mainly due to an impairment loss on one of its brands, Miller Brewery Ltd. Outlook Domestically, we remain cautious on the week consumer sentiment. However, new innovative productions like Carlsberg Smooth Draught and Somersby cider are well received by customers. This should help maintain sales volume. We project that Lion Brewery (Ceylon) will be back to profitable in the second quarter FY17 as it has resumed full operation after the flood. It used to command 85% of beer market share in Sri Lanka. Valuation We raise our target price to RM17.84 (from RM15.41 previously) based on DCF methodology (COE: 7.6%, g: 2.5%). We upgrade the stock from Hold to Buy after rolling forward our DCF valuation. 0.6 Major Shareholders (%) Carlsberg Asia Pte Ltd - 50.7% FY17 FY18 7.3 5.0 Net profit (RMm) 230.0 250.2 Forecast Revision (%) Consensus 234.1 254.6 TA's / Consensus (%) 98.0 98.3 Previous Rating Buy (Upgraded) Financial Indicators FY17 FY18 Net cash Net cash CFPS (sen) 0.9 0.9 P/CFPS (x) 16.7 17.7 ROAA (%) ROAE (%) 33.6 35.1 67.2 69.8 NTA/Share (RM) Price/ NTA (x) 1.1 1.1 14.1 13.7 Scorecard % of FY17 vs. TA 31.5 Above vs. Consensus 28.7 Within Share Performance (%) Price Change 1 mth CAB MK FBM KLCI 1.0 1.0 3 mth 1.0 1.0 6 mth 1.0 1.1 12 mth 1.2 1.1 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg Page 1 of 2 49.3 Beta Net gearing (x) Impact We raise our FY17 and FY18 earnings projections higher by 7.3% and 5% respectively after revising Malaysia’s MLM volume assumptions higher to 4.3%/3.1% to be in line with the higher-than-expected volume growth. 115.6 Estimated Free Float (%)
16. TA Securities 18-May-17 A Member of the TA Group 1QFY17 Results Analysis (RMmn) FYE Dec Revenue ---> Malaysia ---> Singapore EBIT ---> Malaysia ---> Singapore Depreciation & Amortisation Associates Profit before Tax (PBT) Taxation Minority Interest (MI) Net Profit Core Net Profit EPS (sen) DPS (sen) 1QFY16 455.7 319.7 136.0 79.4 60.8 20.0 11.9 -1.2 78.1 (14.0) (1.1) 62.9 62.9 20.6 0.0 4QFY16 434.6 276.1 158.5 83.5 61.2 24.8 13.7 -3.2 81.2 (32.5) (1.6) 47.1 47.1 15.4 67.0 1QFY17 502.6 341.1 161.5 89.8 68.9 26.3 13.1 -5.9 88.0 (19.5) (1.1) 67.4 67.4 22.0 0 QoQ (%) 15.6 23.5 1.9 7.5 12.7 5.9 (4.8) 86.7 8.3 (40.1) (29.9) 43.2 43.2 43.2 nm Margins EBIT Margin (%) ---> Malaysia ---> Singapore PBT Margin (%) Tax Rate (%) Net Profit Margin (%) Core Net Profit Margin (%) 17.4 19.0 14.7 17.1 18.0 13.8 13.8 19.2 22.2 15.6 18.7 40.1 10.8 10.8 17.9 20.2 16.3 17.5 22.1 13.4 13.4 (1.3) (1.9) 0.6 (1.2) (17.9) 2.6 2.6 Earnings Summary (RMmn) FYE Dec Revenue EBITDA Depreciation & Amortisation EBIT Net Finance Cost Equity Accounted Associate PBT EI Taxation MI Net Profit Revenue Growth (%) EPS (sen) EPS Growth (%) PER (x) DPS (sen) Dividend Yield (%) YoY (%) 10.3 6.7 18.8 13.1 13.5 31.3 10.1 405.9 12.7 39.0 3.1 7.1 7.1 7.0 0.0 0.4 1.2 1.5 0.4 4.2 (0.4) (0.4) FY15 1,659.9 323.3 (32.8) 290.5 (5.6) 16.1 301.0 (12.5) (63.4) (4.3) 233.3 FY16 1,679.5 327.8 (33.7) 294.1 (5.2) (5.1) 283.9 0.0 (73.2) (5.7) 205.0 FY17F 1,885.2 337.1 (35.6) 301.6 (4.5) 13.3 310.3 0.0 (74.5) (5.8) 230.0 FY18F 1,979.4 364.0 (35.7) 328.2 (4.6) 13.9 337.5 0.0 (81.0) (6.3) 250.2 FY19F 1,999.7 362.6 (34.0) 328.6 (4.6) 9.7 333.7 1.0 (80.1) (6.2) 247.4 1.5 70.6 2.0 21.0 72.0 4.9 1.2 67.0 -5.1 22.1 72.0 4.9 2.3 75.2 12.2 19.7 74.5 5.0 1.4 81.8 8.8 18.1 81.0 5.5 2.3 80.9 -1.1 18.3 80.1 5.4 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Required Rateof 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 BursaMalaysia Securities Berhad) Kaladher Govindan – Head of Research Page 2 of 2
17. TA Securities RESULTS UPDATE Thursday , 18 May 2017 FBMKLCI: 1,775.65 Sector: Property A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM1.07 (+0.0%) Hua Yang Berhad Last traded: RM1.07 Results Dragged by Lower-than-Expected Margin Sell THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Thiam Chiann Wen Tel: +603-2167 9615 cwthiam@ta.com.my Review Hua Yang’s FY17 net profit of RM60.7mn came in below expectations, accounting for 86% and 83% of ours and consensus forecasts respectively. The variance was largely due to lower-than-expected margin. A final dividend of 2sen/share was proposed. This brought the total dividend for FY17 to 4sen/share, in line with our projections. Based on the last close, this translates to a dividend yield of 3.7% FY17 net profit plunged 45% YoY to RM60.7mn, due to: 1) 33% drop in revenue, and 2) 3.9ppt contraction in EBIT margin. The drop in earnings was due to lower sales achieved in FY15-16. Meanwhile, we attribute the weaker EBIT margin to less favourable product mix. QoQ, 4QFY17 net profit decreased 9% to RM9.5mn despite revenue growing by 9%. Weak earnings were largely attributed to higher finance costs in association with additional borrowings to fund working capital for new launches such as Astetica Residences and Meritus Residensi, as well as the initial acquisition of 10.8% in Magna Prima Bhd. www.taonline.com.my Share Information Bloomberg Code Stock Name Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) HYB MK HUAYANG 5062 Main Market 352.0 376.6 1.00 1.43/1.05 268.5 58.4 0.7 Heng Holdings - 31.1 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.0 0.0 61.4 63.4 80.8 81.2 75.7 77.7 Sell (Maintained) Financial Indicators Hua Yang recorded RM113.3mn sales in 4QFY17, which was a significant improvement as compared to 4QFY16 and 3QFY17 sales of RM81.3mn RM24.0mn respectively. The improvement was largely driven by new contribution from Astetica Residences and Meritus Residensi, which were launched in 4QFY17. All in, FY17 sales stood at RM238.5mn, representing a drop of 29% YoY. This was within our sales projection of RM241mn but below management’s sales target of RM300mn. Net Debt / Equity (%) FCPS (sen) Price / CFPS (x) ROE (%) ROA (%) NTA/Share (RM) Price/NTA (x) FY18 33.9 9.2 11.6 9.9 5.7 1.8 0.6 FY19 29.3 10.4 10.3 9.4 5.7 1.9 0.6 Scorecard Given that these new launches are still in the early stage of construction, unbilled sales eased to RM214mn as at Mar-17 from RM216mn a quarter ago. This provides the group with less than 12 months of earnings visibility. Impact Earnings forecast unchanged pending more updates from an analyst briefing later today. Outlook Management expects better sales performance in FY18, underpinned by recent launches in 4QFY17 worth RM718mn. In addition, the group will also roll out new properties worth RM322mn in FY18. We expect landed residential properties in Bandar University Seri Iskandar and Meritus Residensi, Mainland Penang to be the key contributor to FY18 sales. vs TA vs Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth Below Below HUAYANG FBM KLCI 0.0 (8.5) (1.8) (21.6) 2.0 4.0 9.4 8.6 (12-Mth) Share Price relative to the FBM KLCI Valuation We maintain our Sell recommendation with an unchanged target price of RM1.07/share, based on 6x CY18 EPS. Source: Bloomberg Page 1 of 2 % of FY 86 83
18. TA Securities 18 /05/17 A Member of the TA Group Earnings Summary (RM mn) FYEMar 31 FY15 Revenue 583.6 EBITDA 155.9 EBITDA margin (%) 26.7 Pretax profit 153.4 Net profit 110.6 Core net profit 110.6 EPS* (sen) 31.4 EPS growth (%) 34.5 PER (x) # 3.4 GDPS* (sen) 9.8 Div yield (%) # 9.1 Core ROE (%) 25.9 *Adjusted for 1:3 bonus issue completed in FY17 # Based on EPS and DPS after * FY16 575.7 147.9 25.7 144.8 110.1 110.1 31.3 (0.4) 3.4 3.8 3.5 21.9 FY17 385.4 83.4 21.6 80.6 60.7 60.7 17.3 (44.8) 6.2 4.0 3.7 10.7 FY18F 344.1 87.4 25.4 83.0 61.4 61.4 17.4 0.6 6.1 3.5 3.3 9.9 FY19F 366.2 90.9 24.8 85.7 63.4 63.4 18.0 3.2 5.9 3.5 3.3 9.4 4QFY17 Results Analysis (RM mn) YE 31 Mar Turnover Gross Profit 4Q17 3Q17 4Q17 QOQ(%) YOY(%) FY16 FY17 YOY(%) 127.6 40.2 74.0 21.9 80.7 30.3 9.1 38.0 (36.8) (24.8) 575.7 194.5 385.4 131.0 (33.1) (32.6) EBIT Net Int Inc/ (exp) Pretax Taxation Reported Net Profit Core Net Profit EPS -adj (sen) GDPS -adj (sen) 26.6 (0.2) 26.4 (5.0) 21.4 21.4 6.1 0.0 12.8 (0.0) 12.8 (2.3) 10.4 10.4 3.0 2.0 13.5 (1.0) 12.5 (3.0) 9.5 9.5 2.7 2.0 6.1 nm (2.1) 29.8 (9.2) (9.2) (9.1) 0.0 (49.0) 448.4 (52.6) (39.2) (55.8) (55.8) (55.7) 0.0 145.4 (0.6) 144.8 (34.6) 110.1 110.1 31.3 3.8 82.2 (1.6) 80.6 (19.9) 60.7 60.7 17.3 4.0 (43.5) 140.1 (44.3) (42.6) (44.8) (44.8) (44.8) 6.7 Gross margin (%) EBIT Margin (%) Pretax Margin (%) Net Margin (%) Effective Tax Rate (%) 31.5 29.6 37.5 7.9 6.0 33.8 34.0 20.8 17.2 16.8 (0.5) (4.0) 20.7 17.2 15.5 16.8 14.1 11.7 18.9 18.3 24.2 * EPS and DPS were adjusted for 1:3 bonus issue completed in FY17 (1.8) (2.4) 5.9 (5.2) (5.0) 5.4 25.3 25.1 19.1 23.9 21.3 20.9 15.8 24.7 0.2 (3.9) (4.2) (3.4) 0.7 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) 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 2 of 2
19. COMPANY UPDATE TA Securities Thursday , May 18, 2017 FBMKLCI: 1,775.65 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 Inari Amertron Berhad TP: RM2.40 (+10.6%) Iris Scanning Gaining Momentum Last Traded: RM2.17 BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Paul Yap, CFA Tel: +603-2167 9603 paulyap@ta.com.my Inari held its 3QFY17 briefing yesterday. Improved RF revenues are expected in the 4QFY17, as we expect RF utilisation rates to rebound to 75% (3QFY17: 70%). Preparing for the launch of a popular smartphone model in the later part of the year, space has been freed up in P13 to accommodate an additional 70 testers. The group is also proceeding with the expansion of P13B, which will add another 70 testers, eventually bringing its RF capacity to 840 testers. Likewise, its iris scanning business is also gathering momentum. Existing capacity of 5mn units/month will be expanded to 10mn units/month and 16mn units/month by July 2017 and September 2017 respectively. We adjust our earnings estimates for FY17-19 by -2.11.2%. Our TP is raised to RM2.40/share. BUY. 3QFY17 Highlights Despite seasonal weakness, Inari reported flattish revenue for 3QFY17. Although RF revenues moderated 5% QoQ, this was compensated by maiden iris scanning contributions, Inari Semiconductor Labs (ISL) and fiber revenues from Amertron’s Philippines operations. Having been qualified in February, the group built 2.8mn iris scanning units between February and March 2017. Reported capex of RM70.4mn for 9MFY17 trailed its full year guidance of RM180mn. This variance was mainly due to a delay in testers for Inari Integrated Systems (IIS), as lower cost testers are sourced. IIS is now projected to have 30 testers by June 2017 (previously 58 testers). We also saw a higher dividend payout ratio of 84.0%. This was to reward shareholders given its comfortable net cash position of RM334.7mn. Future upsides will depend on cash needs and requirements, with targets to keep cash levels at ~RM350mn. Preparing for RF Ramp We expect improved RF revenues for the 4QFY17. RF utilisation rates are expected to rebound to 75% from 70% in the 3QFY17. Current RF tester capacity stands at 700. Space has been made free in P13 to accommodate an additional 70 testers. To support the ramp up of a major smartphone model in the later part of the year, the group has also proceeded with expansion plan for P13B (extension of P13). The extension will cost RM5.5mn and is targeted for completion in August 2017 (with construction works beginning last week). This will be able to accommodate another 70 testers, bringing its eventual capacity to 840 testers. Not solely for RF, P13B will cater for ISL’s VCSEL and chip on chip expansions as well. Iris Scanning Gaining Momentum Beginning in February 2017, Inari Optical Technology’s (IOT) iris scanning business is already at full capacity of 5mn units/month in April 2017. We believe this has been built in into the latest Samsung Galaxy S8. Transferring a line from its customer, capacity will be doubled to 10mn units/month by July 2017. Another ramp up is expected in September 2017, with capacity expected to reach 16mn units/month. Via the localisation of equipment, the group is anticipated to realise cost savings and productivity gains for the third line. While there are still risks relating to the successful adoption of iris scanning functions in smartphones, we believe this segment could be a future growth Page 1 of 3 T 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 (%) INRI MK 0166 Main Market 1985.7 4,308.9 2.23/1.282 5,609.3 58.3 0.8 Insas Berhad - 19.7 Kumpulan Wang Persaraan - 7.0 Norges Bank - 5.9 EPF - 5.3 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 (2.1) 0.4 204.2 250.1 196.8 247.2 103.8 101.2 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 12.5 17.4 20.9 26.6 0.4 5.2 FY18 Net cash 13.8 15.7 21.3 27.0 0.5 4.4 INRI 6.4 17.3 28.7 59.9 FBM KLCI 2.0 4.0 9.4 8.6 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg
20. TA Securities 18-May-17 A Member of the TA Group driver for the group , helping reduce its reliance on RF revenues. Changes to Earnings Make the following changes to our earnings: 1) Reduce the number of assumed testers at IIS to 30 by June 2017. 2) Increase our iris scanning capacity to 10mn units/month and 16mn units/month by July and September 2017. We adjust our FY17/FY18/FY19 earnings by -2.1%/0.4%/1.2% to RM204.2mn /RM250.1mn/RM283.1mn. Valuation We raise our TP for Inari slightly to RM2.40/share – based on a PE of 18x and CY18 EPS. We like the group for its steady growth, with an estimated 3-year CAGR of 24.1%. – driven by its RF expansion plans and new iris scanning business. Maintain BUY. Page 2 of 3