Bursa Malaysia Daily Market Report - 19 February

Transcription

1. Monday , 19 February, 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. Sunway Bhd: Expands Further In Singapore Wegmans Holdings Berhad: Wegmans the Carpenter (IPO) 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 , 19 February 2018 TA Research, e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (15.02.2018) Volume Main Market 601.5 -676.2 Warrants 286.7 -50.7 ACE Market 221.9 -88.7 Bond 3.2 -1.2 ETF 0.0 -1.7 LEAP 0.0 0.0 Total 1,113.3 Off Market 117.5 82.3 979.4 45.9 45.7 0.7 0.0 0.0 1,071.8 9.6 Value -879.1 -19.0 -15.5 -0.4 -2.0 0.0 -158.4 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP February 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 86.3 13.4 9.5 4.0 3.5 % YTD chg 3.35 45.76 148.98 7.50 0.18 0.35 0.91 0.41 2.31 1.35 -3.23 2.86 25,219.38 7,239.47 7,294.70 21,720.25 2,421.83 31,115.43 3,443.51 1,805.89 6,591.58 3,199.16 1,739.15 5,904.04 19.01 -16.97 59.89 255.27 0.00 0.00 0.00 5.03 0.00 0.00 0.00 -4.95 0.08 -0.23 0.83 1.19 0.00 0.00 0.00 0.28 0.00 0.00 0.00 -0.08 2.02 4.87 -5.11 -4.59 -1.85 4.00 1.19 2.98 3.71 -3.27 -8.43 -2.66 (mn) 0.09 0.05 0.06 0.05 0.04 Exchange Rate USD/MYR 3.8940 -0.009 USD/JPY 106.37 -0.610 EUR/USD 1.241 -0.0047 Counter PCHEM CIMB IHH DIGI SIMEPLT HLBANK GENTING GENM NESTLE KLK Mkt Cap. Chg (RM’mn) (RM) 64,800 64,671 49,767 37,942 37,337 37,271 34,521 30,445 27,999 26,901 0.02 0.05 0.04 0.05 0.09 0.02 0.09 0.04 2.10 0.04 Momentum indicators for the FBM KLCI issued mixed signals following last week's cautious rebound, with weak buying momentum and most market players staying sidelined suggesting that the near-term direction remains uncertain. Choppy trading conditions should linger, with concerns higherthan-expected US inflation could accelerate rising interest rates and overshadow the rosy economic outlook to dampen investors risk appetite. On the index, immediate resistance will be 1,840, mirroring the 9 Jan high, with the 2 Feb peak of 1,880 acting as a formidable upside hurdle. Monitor the crucial resistance-turn-support level at 1,796, the June 2017 peak matching the recent low, which must hold to prevent further correction potential towards next support from 1,778, the 38.2%FR of the 1,614 low of Nov 2016 to the recent 1,880 high. Failure of this support means that the 50%FR at 1,747 should be tested for resilience. Stock-wise, construction related stocks like Gadang, Kimlun, KKB Engineering and Mudajaya should attract bargain hunters looking for rebound upside, while oil & gas related stocks such as Bumi Armada and Dialog should also attract buyers given their resilient uptrends. News Bites Top 10 KLCI Movers Based on Mkt Cap. (RM) @ @ @ @ @ 122 69 19 3 0 0 213 % chg 1,838.28 13,117.49 16,500.77 1,836.00 Off Market ATTA-PA ATTA-LA XINGHE PERISAI NICORP Review & Outlook Value/ 1.63 326 0.16 157 0.21 57 0.22 4 1.64 0 0.00 0 0.96 544 0.08 Vol. (mn) 5.60 11.73 0.66 1.03 1.14 0.20 3.27 1.30 0.05 0.30 Commodities Futures Palm Oil (RM/mt) 2,506.00 2.00 Crude Oil ($/Barrel) 61.61 0.87 Gold ($/tr.oz.) 1,349.40 -4.20 Important Dates LBS - 1:10 Bonus Issue - BI of up to 162.9m shares. 1 bonus share for every 10 subdivided shares held. Ex-Date: 22/02/2018. Entitlement Date: 26/02/2018. LISTING ON: 27/02/2018. MASTEEL - 1:3 Bonus Issue - BI of up to 106.8m shares. 1 bonus share for every 3 existing shares held. Entitlement Date: 14/02/2018. LISTING ON: 15/02/2018. ï Sunway Bhd in a joint venture with Hoi Hup Realty Pte Ltd and S C Wong Pte Ltd (30:60:10) plans to acquire and redevelop a private residential property, Brookvale Park in Clementi, Singapore for S$530.0mn (RM1.6bn). ï Johor Port Bhd, a subsidiary of MMC Corporation Bhd, will invest RM10.0mn to set up facilities at the Tanjung Bruas Port, Melaka. ï Gas Malaysia Bhd's FY17 net profit increased 17.9% YoY to RM194.6mn on the increase in volume of gas sold and partly offset by higher operating expenses. ï United States fund manager FMR LLC has emerged as a substantial shareholder in Supermax Corporation Bhd with a 5.028% stake. ï Sunsuria Bhd has entered into a Joint Development Agreement with CI Medini Sdn Bhd to develop a 6-storey stratified multi-storey shops with a gross development value of RM187.0mn in Johor Bahru. ï PIE Industrial Bhd hopes to finalise contract talks with several big multinational clients by the third quarter of this year for the supply of box-build electronics. ï Amanahraya Real Estate Investment Trust (AREIT)'s FY17 net income climbed 83.2% YoY to RM74.3mn while DPU fell 6.8% YoY to 5.5sen. ï Pansar Bhd was issued an unusual market activity query by Bursa Malaysia Securities Bhd on the sharp rise of its share price recently. ï KKB Engineering Bhd's oil and gas subsidiary OceanMight Sdn Bhd is bidding for six offshore structures' fabrication projects in Sarawak worth a combined RM370.0mn. ï TH Heavy Engineering Bhd sees itself a step closer towards resolving its financial difficulties. ï Indonesia's exports grew more than expected and imports logged a strong double-digit expansion. Elsewhere, the central bank left its benchmark interest rate unchanged. ï Japan reappointed central bank chief Haruhiko Kuroda for another term. Meanwhile, industrial production grew more than initially estimated in December. ï Singapore Non-oil Domestic Exports (NODX) advanced 8.8% last year, a stark reversal from the 2.8% decline in 2016. ï A gauge of U.S. consumers' confidence in the economic outlook rebounded this month. ï U.S. producer prices rose in January, the latest sign of building inflation pressure in the economy. ï U.S. housing construction got off to a strong start in 2018, which could help boost economic growth and ease home-price increases in the coming months. ï The number of Americans filing applications for new unemployment benefits rose last week, but remained near historic lows. ï U.K. retail sales barely grew in January, more evidence consumers are reluctant to splash out amid a squeeze from rising prices. 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 , February 19, 2018 FBMKLCI: 1,838.28 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 Trading to Remain Choppy The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) managed to latch on moderate gains last week, as investor confidence improved slightly after the Malaysian economy grew faster than forecast last year. Market sentiment was also boosted by improvement in key regional markets led by the strong performance from Wall Street as traders waded back into the market, hunting for bargains amid signs of stability after one of the worst weeks for equity benchmarks in two years. For the week, the FBM KLCI added 18.46 points, or 1.01 percent to 1,838.28, with gains on Nestle (+RM3.30), Hong Leong Bank (+32sen) and Genting Berhad (+23sen) accounting for slightly more than half of the index’s rise. Average daily traded volume and value were at 1.61 billion shares and RM1.94 billion, compared to the 3.13 billion shares and RM3.28 billion average respectively the previous week, as trading activity slowed with most investors sidelined ahead of the Chinese New Year festival break. Historically, the FBMKLCI showed strong tendency to rally post-Chinese New Year period, mostly up to early-May before the optimism wanes. This tendency could be attributed mainly to institutional funds taking positions in blue chips to benefit from the final dividend payouts post conclusion of fourth quarter results reporting season that ends in February. It’s anybody’s guess whether this trend will continue this year, amid prevailing jitteriness over the strong US economic data, which is viewed as a cause for concern as it would stoke inflation and cause interest rates to rise. While rising interest rates on the back of strong economic footing and corporate earnings should not be bad for the US initially, the concern is about the impact on foreign fund outflows from the emerging markets as the US dollar strengthens. Even for the US, rising rates is a telltale sign that the economy could be fast approaching its peak in this economic upcycle and eventually will reach an inflection point when the rising rates impact consumption, businesses and financial markets and eventually pushes the economy in an opposite direction into a recession. It may not happen this year but that possibility is heightened by President Trump’s expansionary fiscal plans and could occur as early as next year, if continued tightening in the US job market leads to greater inflation and monetary tightening. Trade wars that could erupt subsequent to President Trump’s threat last week to impose quotas on imports of aluminum and steel, including a tariff of at least 24 percent on steel imports from all countries, is a faster route to global recession, if any of the affected countries retaliate with counter measures. China has already cautioned that it will pursue measures to protect its own rights. Thus, while the local market could remain resilient from buying support ahead of the 14th GE and could resume its upswing, the volatility that we witnessed just recently will not fade away and is likely to persist for the rest of this year. While investors will be looking for clues in the FOMC meeting minutes for January that will be released this Thursday, it will be more interesting to see what will happen in the 20th and 21st March US Federal Reserve Page 1 of 9
4. 19-Feb-18 meeting when the new chairman chairs his first meeting . As the upside for the benchmark FBMKLCI index appears limited, for exposure, investors should pursue a bottom up approach by cherry picking value plays in the banking (AMMB - TP: RM5.50; PBBANK - TP: RM25.10), building materials (ANJOO - TP: RM4.40; CHINHIN - TP: RM1.36; ENGTEX - TP: RM1.38), construction (GADANG - TP: RM1.69; GAMUDA - TP: RM6.00; KAB - TP: RM0.38; PESONA - TP: RM0.55), and consumer (F&N - TP: RM33.74; HUPSENG - TP: RM1.25; JOHOTIN - TP: RM1.75; POHUAT - TP: RM2.01; and SIGN - TP: RM0.92) sectors and move on to defensive picks as we approach the second half of this year. 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, February 19, 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 9
5. 19-Feb-18 N e w s i n B r i e f Corporate Sunway Bhd in a joint venture with Hoi Hup Realty Pte Ltd and S C Wong Pte Ltd (30:60:10) plans to acquire a private residential property, Brookvale Park in Clementi, Singapore for S$530.0mn (RM1.6bn). The property will be redeveloped into a new private residential development with an allowed plot ratio of 1.6 times, subject to authorities’ approval. (Bursa Malaysia) Johor Port Bhd, a subsidiary of MMC Corporation Bhd, will invest RM10.0mn to set up facilities at the Tanjung Bruas Port, Melaka, to roll out the country’s first roll-on/roll-off service between Malaysia and Indonesia. (The Star) Gas Malaysia Bhd’s 4QFY17 and FY17 net profit increased 49.2% YoY to RM77.0mn and 17.9% YoY to RM194.6mn on the increase in volume of gas sold and partly offset by higher operating expenses. A second interim dividend of 4.0sen/share was declared. (Bursa Malaysia) United States fund manager FMR LLC has emerged as a substantial shareholder in Supermax Corporation Bhd with a 5.028% stake. (The Star) Sunsuria Bhd has entered into a Joint Development Agreement with CI Medini Sdn Bhd to jointly undertake development of a 6-storey stratified multi-storey shops called Pusat Perdagangan ION Akses, with a gross development value of RM187.0mn in Johor Bahru. (Bursa Malaysia) PIE Industrial Bhd hopes to finalise contract talks with several big multinational clients by the third quarter of this year for the supply of box-build electronics. (The Star) Amanahraya Real Estate Investment Trust (AREIT)’s 4QFY17 net income surged 264.9% YoY to RM49.4mn while distribution per unit (DPU) fell 5.6% YoY to 1.3sen. For FY17, net income climbed 83.2% YoY to RM74.3mn while DPU fell 6.8% YoY to 5.5sen. (Bursa Malaysia) Pansar Bhd was issued an unusual market activity query by Bursa Malaysia Securities Bhd on the sharp rise of its share price recently. (Bursa Malaysia) KKB Engineering Bhd’s oil and gas subsidiary OceanMight Sdn Bhd is bidding for six offshore structures’ fabrication projects in Sarawak worth a combined RM370.0mn. (The Star) TH Heavy Engineering Bhd sees itself a step closer towards resolving its financial difficulties, as its plan to novate its floating, production, storage, offloading facility charter contract with JX Nippon Oil & Gas Exploration (M) Ltd makes progress with 100% approval from its shareholders secured. (The Edge) Page 3 of 9
6. 19-Feb-18 N e w s I n B r i e f Economy Asia Malaysia Capable of Achieving GDP of RM2 Trillion by 2022 Malaysia is capable of achieving a Gross Domestic Product (GDP) of RM2 trillion by 2022 if the annual growth rate is maintained at between 5% and 6%, said the Department of Statistics. Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said the country was on the right track to achieving the target based on its strong economic position. He said factors which contributed to the nation's economic growth included the government's focus on the digital economy, innovation and creativity, as well as emphasis on getting a more substantial contribution from the small and medium enterprises business segment. Mohd Uzir said Malaysia's GDP rose to RM1.35 trillion in 2017 from RM1.23 trillion in 2016, adding, it is expected to increase to almost RM1.5 trillion this year based on the current favourable environment, the continuous inflow of foreign investments and execution of major infrastructure projects. Mohd Uzir said the nation's economy was projected to grow at a rate of between 5.0% and 5.5% this year. He said inflation was also expected to contract to between 3.0% and 3.5% compared with 3.7% previously, with the unemployment rate to remain stable at around 3.4%. Mohd Uzir said the increase in the overseas spending rate was proof of the rise in disposable income among the people. Last year, Malaysians had spent RM45bil for overseas trips, including pilgrimages, compared with RM39bil in the preceding year. Mohd Uzir said the government's efforts at attracting quality and value-added investments would also help expand the job market for skilled workers and increased wages. As of last year, Malaysia's workforce comprised skilled workers (27.2%), semi-skilled workers (59.2%) and low-skilled workers (13.6%). (The Star) RBA's Lowe Says Inflation, Jobs Will Decide Next Rate Hike The timing of Australia’s first interest-rate increase since 2010 will depend on progress in lowering unemployment and returning inflation to the midpoint of the central bank’s target, Governor Philip Lowe said. “As things currently stand, we expect that progress to be steady, but to be only gradual,” Lowe said in his opening statement to a parliamentary panel in Sydney. “Given this assessment, the Reserve Bank board does not see a strong case for a near-term adjustment of monetary policy.” The RBA chief generally reiterated views he expressed earlier this month that rates are unlikely to rise until unemployment is closer to 5% and inflation nearer the middle of its 2% to 3% target. While business investment has improved and hiring strengthened, continuing labor market slack and firm intent on containing costs are keeping a lid on wages. (Bloomberg) Indonesia's Exports Rise More than Forecast; Imports Surge Indonesia's exports grew more than expected and imports logged a strong double-digit expansion, figures from statistics bureau showed. Exports climbed 7.86% year-on-year in January, which was bigger than the expected 7.3%. At the same time, imports advanced 26.44% compared to the expected growth of 18.3%. On a monthly basis, exports dropped 2.81%, while imports grew 0.26% in January. As a result, the trade balance registered a deficit of $670 million in January confounding expectations for a surplus of $280 million. (RTT) Bank Indonesia Holds Interest Rate Amid Currency Volatility Indonesia’s central bank left its benchmark interest rate unchanged as policymakers guard against currency volatility following a rout in global markets that put the rupiah under renewed pressure. Governor Agus Martowardojo and his board held the seven-day reverse repurchase rate at 4.25%, as forecast by 24 economists surveyed by Bloomberg. While South-East Asia’s biggest economy is expected to improve marginally in 2018, supported by an aggressive run of easing over the past two years, the central bank has shifted its focus to currency risks. Bank Indonesia confirmed last week that it stepped in to Page 4 of 9
7. 19-Feb-18 stabilize the rupiah after the currency fell to its lowest since June 2016 . Martowardojo said the current policy stance was in line with efforts to ensure economic stability. Annual inflation is expected to remain within the central bank’s target range for 2018 of 2.5% to 4.5%. The consumer price index eased to 3.25% in January, its slowest pace of increase in more than a year. Bank Indonesia sees that the easing of monetary policy has been sufficient to continue to boost momentum in the domestic economy’s recovery. Going forward, Bank Indonesia believes that sustaining the stability of the economy will be the main foundation for the creation of stronger and sustainable economic growth. (Bloomberg) Japan Reappoints Kuroda as BOJ Chief Japan reappointed central bank chief Haruhiko Kuroda for another term, and chose an advocate of bolder monetary easing as one of his deputies in a strong signal to investors that policymakers are in no rush to turn off a sweeping stimulus program. The selection of the new BOJ leadership comes amid heightened anxiety in Japanese and global financial markets, fueled partly by speculation over how quickly major central banks will wind down their crisis-era policies. In a widely expected move, the government nominated Kuroda, a 73-year-old former finance ministry bureaucrat, to serve another five-year term when the current one ends in April. That would make him the longest serving BOJ head in half a century, a sign of premier Shinzo Abe’s confidence in the governor’s ability to pull Japan’s economy out of stagnation. Tokyo stocks rose on relief the BOJ will maintain its huge stimulus - a cornerstone of the premier’s “Abenomics” reflationist policies - even as other major central banks head towards the exit. However, many market watchers fear the BOJ’s massive money printing project, which is about to enter its fifth year, is increasingly untenable, distorting financial markets and hurting the country’s banks. While growth in the world’s third-largest economy has improved thanks largely to stronger global demand, inflation remains far short of the BOJ’s 2% target. (Reuters) Japan Industrial Production Climbs More than Estimated Japan's industrial production grew more than initially estimated in December, latest figures from the Ministry of Economy, Trade and Industry showed. Industrial production advanced a seasonally adjusted 2.9% month-over-month in December, faster than the 2.7% rise reported earlier. In November, production had grown at a stable rate of 0.5%. Shipments also increased 2.9% over the month, revised up from a 2.7% gain estimated initially. At the same time, inventories dropped 0.3%, just below the 0.4% fall seen in the flash data. On a yearly basis, industrial production growth eased to 2.1% in December from 3.0% in November. Data also showed that capacity utilization rose 2.8% monthly in December after remaining flat in the preceding month. (RTT) Trade Forecast Upgraded after Export Jump in 2017 The solid export performance last year, when non-oil domestic shipments grew at the fastest pace in seven years, has prompted an upward review of trade expectations for this year. Singapore Non-oil Domestic Exports (NODX) advanced 8.8% last year, a stark reversal from the 2.8% decline in 2016. This was the fastest growth since 2010 and beat International Enterprise (IE) Singapore's earlier prediction of 6.5% to 7% expansion. Trade growth is expected to be firm this year, though there could be moderation from last year's rapid pace, the trade promotion agency said yesterday. IE Singapore now predicts NODX growth of 1% to 3% this year, up from its previous prediction of 0% to 2%. Favourable sector-specific export trends in the machinery and chemicals clusters are expected to continue into 2018, coupled with a slight pick-up in global growth projected by the IMF in its latest update. (The Business Times) Page 5 of 9
8. 19-Feb-18 United States Consumer Sentiment Rebounds in February A gauge of consumers ’ confidence in the economic outlook rebounded this month, as low unemployment and optimism about the new tax regime outweighed financial-market volatility for American households. The University of Michigan said its consumer-sentiment index was 99.9 in February, up from 95.7 in January. The preliminary result overshot economists’ expectations for a reading of 95.0 for February. A final reading for the month will be released March 2. This month’s rebound came after sentiment had dropped for the prior three months, albeit it from an elevated level. February’s reading was the highest since October when the index hit 100.7, its highest level since 2004. Only 6% of consumers negatively referenced stock prices in the latest survey. By contrast, 35% favorably referenced government policies in February, as they did in January, the highest level in more than half a century. An index that tracks expectations about the future rose 4.5% on the month to 90.2. An index tracking confidence in the current economic situation increased 4.2% to 115.1. The report showed households’ expectations about inflation haven’t shifted so far this year. Consumers this month expected a 2.7% rise in inflation over the next year, a level unchanged since December. They expected a 2.5% rise in inflation over the next five years, as they did in January. (The Wall Street Journal) The Latest Sign of Building Inflation Pressure? January’s Rise in Import Prices Prices for foreign-made goods imported to the U.S. rose in January, driven by a broad range of product price increases and capping a week of solid inflation readings. Import prices increased 1% in January from a month earlier, the Labor Department said, beating expectations of economists surveyed by The Wall Street Journal. The January rise matched November’s increase and hasn’t been exceeded since May 2016, when the index grew 1.2%. The import-price index, one of several gauges the Federal Reserve studies to understand U.S. inflation trends, is the latest showing a strengthening economy is putting some upward pressure on inflation. Increasing import prices can drive up the prices of U.S.-made goods that use imports as raw materials, translating into higher inflation in some pockets of the economy. Unlike most measures of inflation, import prices aren’t adjusted for seasonality. While swings in import prices are heavily influenced by volatile oil prices, The report showed an increase driven by a broader base of goods, including costs for vehicles, food and industrial supplies. Petroleum-import prices rose 4.3% from December. Prices for imports excluding petroleum increased 0.5% last month, an increase last exceeded in April 2011. Over the past year, overall import prices have grown 3.6%. (The Wall Street Journal) U.S. Producer Prices Returned to Upward Path in January U.S. producer prices rose in January, the latest sign of building inflation pressure in the economy. The producer-price index, a measure of the prices businesses charge for their goods and services, rose a seasonally adjusted 0.4% in January from a month earlier, the Labor Department said. From a year earlier, producer prices advanced 2.7% last month. The report is the latest showing inflation building in the economy after a long period of very small price increases. Separately, nominal hourly wages in January rose at the best rate from a year earlier since the recession ended in mid-2009. The Federal Reserve’s preferred inflation measure, the Commerce Department’s personal-consumption expenditures price index, has undershot the central bank’s 2% target for annual inflation in 66 of the past 68 months. But the producer-price data, which highlighted rising medical costs last month, suggest the January PCE index may advance more strongly when released on March 1. The PCE index is more weighted toward health care than the consumer-price index. Stronger inflation could cause Federal Reserve officials to contemplate picking up the pace of shortterm interest rate increases. The Fed’s next policy meeting is March 20-21. Officials in December penciled in three rate increases for this year. (The Wall Street Journal) U.S. Home Construction Rose 9.7% in January Housing construction got off to a strong start in 2018, which could help boost economic growth and ease home-price increases in the coming months. The number of new housing Page 6 of 9
9. 19-Feb-18 units under construction rose 9 .7% from a month earlier to an annual rate of 1.326 million, the Commerce Department said. That marked the third increase in four months. Builders also showed signs they are planning to ramp up construction later this year. The number of permits they lined up to build units rose 7.4% last month to an annual pace of 1.396 million. Nonetheless, economists said the numbers suggest that 2018 will continue a trend of gradual improvement in new-home construction that will remain well below normal levels. (The Wall Street Journal) New York Manufacturing Index Indicates Slower Growth in February Manufacturing activity in New York grew at a somewhat slower rate in the month of February, according to a report released by the Federal Reserve Bank of New York. The New York Fed said its general business conditions index fell to 13.1 in February from 17.7 in January, although a positive reading still indicates growth. Economists had expected the index to edge down to 17.5. Thirty-seven percent of respondents reported that conditions had improved over the month, while 24 percent reported that conditions had worsened. The report said the shipments index dipped to 12.5 in February from 14.4 in January, while the new orders rose to 13.5 from 11.9. The number of employees index climbed to 10.9 in February from 3.8 in January, indicating an acceleration in the pace of job growth. The New York Fed said input price growth picked up noticeably, with the prices paid index reaching its highest level in nearly six years. The prices paid index jumped to 48.6 in February from 36.2 in January, while the prices received index edged down to 21.5 from 21.7. Looking ahead, firms remained very optimistic about future business conditions. The index for future business conditions rose to 50.5 in February from 48.6 in January. (RTT) Philly Fed Index Unexpectedly Indicates Faster Growth in February A report released by the Federal Reserve Bank of Philadelphia on Thursday unexpectedly showed a faster rate of growth in regional manufacturing activity in the month of February. The Philly Fed said its index for current manufacturing activity climbed to 25.8 in February from 22.2 in January, with a positive reading indicating growth. Economists had expected the index to drop to 21.1. The unexpected increase by the headline index was partly due to a significant acceleration in new orders growth, as the new orders index surged up to 24.5 in February from 10.1 in January. The number of employees index also jumped to 25.1 in February from 16.8 in January, suggesting a pickup in hiring. On the other hand, the shipments index slumped to 15.5 in February from 30.3 in January, indicating a slowdown in the pace of growth. The Philly Fed noted price increases for inputs were more widespread, with the prices paid index climbing to 45.0 in February from 32.9 in January. The prices received index dipped to 23.9 from 25.1. (RTT) U.S. Jobless Claims Rose Last Week The number of Americans filing applications for new unemployment benefits rose last week, but remained near historic lows. Initial jobless claims, a proxy for layoffs across the U.S., increased by 7,000 to a seasonally adjusted 230,000 in the week ended Feb. 10, the Labor Department said. This matched expectations of economists surveyed by The Wall Street Journal. Weekly jobless claims have held below 300,000 for almost three years, the longest streak since 1970—when the U.S. population was far smaller than it is today. Jobless claims data can be volatile from week to week. The four-week moving average, a steadier measure, rose by 3,500 to 228,500 last week. The overall labor market has shown signs of tightness recently. The unemployment rate has been parked at 4.1%, a 17-year low, for the past four months, and January marked the 88th straight month of job creation, the Labor Department earlier said. The number of claims workers made for longer than a week rose by 15,000 to 1,942,000 in the week ended Feb. 3. Continuing claims are reported with a one-week lag. (The Wall Street Journal) Page 7 of 9
10. 19-Feb-18 US Industrial Production Fell 0 .1% in January U.S. factory output was flat for the second straight month in January, raising questions about the manufacturing outlook as production dropped in the aerospace, plastics and food industries. The lack of growth in U.S. manufacturing confounded analyst expectations for a 0.3% monthly gain. The Fed had previously estimated a small increase in output for December but revised the data to show no gain in that month. Overall industrial production fell 0.1% in January, dragged down by a 1.0% decline in mining output. Utilities output rose 0.6% last month. The industrial sector has received support over the last year from a strengthening global economy. Manufacturing output last month was held back by output declines of 0.2% at aerospace factories, 0.5% for those producing plastics and 0.4% in food industries. Output rose modestly overall for goods made to last at least six months, with gains in production of primary metals, computers, and motor vehicles. Capacity utilization, a measure of how fully industries are deploying their resources, fell to 77.5%. (Reuters) Homebuilders Shrug Off Higher Mortgage Rates, Stay Optimistic on Economic Boost from Tax Cuts Tax cuts are still making homebuilders feel better, even as mortgage rates rise to the highest level in more than four years. Builder confidence was unchanged in February from the prior month, remaining at 72 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Anything above 50 is considered positive sentiment. The index is up from 65 in February 2017 and hit a cyclical high of 74 last December, just as the Republican tax cut plan was being passed. Builders are excited about the probusiness political climate that will strengthen the housing market and support overall economic growth. Future sales expectations appear to be driving builder confidence. That component of the index rose to a post-recession high of 80, while the index measuring buyer traffic held steady at 54. Current sales conditions, however, fell one point to 78. (CNBC) Europe and Uni ted Kingdom U.K. Retail Sales Barely Grow as Consumers Subdued by Inflation U.K. retail sales barely grew in January, more evidence consumers are reluctant to splash out amid a squeeze from rising prices. Sales increased 0.1% from December, far below the 0.5% gain forecast by economists in a Bloomberg survey. From a year earlier, sales rose 1.6%, the weakest for a January in four years, the Office for National Statistics said. One of the bright spots was sales of sporting equipment, reflecting the traditional New Year enthusiasm for workouts and a pickup in gym membership. Food sales fell 0.4% on the month. British consumers are only slowly recovering from a period of shrinking real incomes after the 2016 Brexit vote pushed the pound lower, triggering a spike in inflation. While the Bank of England sees wage growth improving this year, it also says it will need to raise interest rates to keep prices under control. The ONS said the longer-term picture for retail sales is a “continued slowdown.” On a three-month basis, sales rose 1.5% compared with January 2017, down from rates above 4% a year ago. The BOE’s latest outlook won’t do much to lift U.K. retailers’ spirits. It said this month that consumption growth will “remain subdued in the near term.” Home furnishings retailer Laura Ashley said on Thursday that sales fell in the second half last year and that margins were being pressured by the pound’s drop. (Bloomberg) Germany Wholesale Price Inflation Accelerates In January Germany's wholesale price inflation accelerated slightly in January, after easing in the previous three months, data from Destatis showed. Wholesale prices climbed 2.0% yearover-year in January, faster than the 1.8% rise in December. Prices of ores, metals and semi-finished metal products grew 5.8% annually in January and those of chemical products surged by 9.2%. Prices also increased notably by 9.0% in old material and residues. On a monthly basis, wholesale prices increased 0.9% from December, when it dropped by 0.3%, which was the first fall in five months. (RTT) Page 8 of 9
11. 19-Feb-18 Share Buy-Back : 15 February 2018 Company E&O FIMACOR KPJ UNIMECH Bought Back Price (RM) Hi/Lo (RM) 5,000 10,000 428,900 11,000 1.46 2.10/2.00 0.92/0.885 1.04/1.01 1.46 2.10/2.00 0.92/0.885 1.04/1.01 Total Treasury Shares 25,153,747 4,192,500 65,349,400 6,790,910 Source: Bursa Malaysia 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 9 of 9
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) PER (X) Div Yield (%) FY18 FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 15-Feb-18 AUTOMOBILE BAUTO 2.20 2.50 13.6% Buy 2,549 0.49 14.3 19.9 15.4 11.1 5.2 5.5 2.47 -10.9 1.84 19.6 MBMR 2.26 2.32 2.7% Under Review 883 0.74 23.2 23.9 9.8 9.5 2.1 2.1 2.60 -13.1 2.01 12.4 0.0 2.7 PECCA 1.27 1.86 46.5% Buy 235 0.36 11.1 12.5 11.4 10.2 4.3 4.8 1.70 -25.3 1.26 0.8 -18.1 SIME 2.67 1.97 -26.2% Hold 18,158 1.54 12.0 12.7 22.3 21.1 1.1 1.2 3.06 -12.7 2.03 31.8 20.8 UMW 6.60 4.37 -33.8% Sell 7,711 1.28 20.7 36.9 31.9 17.9 1.5 2.7 6.98 -5.4 4.70 40.4 26.9 BANKS & FINANCIAL SERVICES ABMB 4.09 4.60 12.5% Hold 6,332 1.28 30.6 35.6 13.4 11.5 3.9 3.9 4.49 -8.9 3.62 13.0 0.2 AFFIN 2.53 2.70 6.7% Hold 4,916 0.93 24.2 28.1 10.4 9.0 3.2 3.2 2.98 -15.0 2.22 13.9 9.5 AMBANK 4.51 5.50 22.0% Buy 13,594 1.39 48.6 52.0 9.3 8.7 4.0 4.0 5.70 -20.9 4.06 11.1 2.3 CIMB 7.01 7.50 7.0% Hold 64,671 1.65 50.8 56.0 13.8 12.5 4.2 4.0 7.36 -4.8 4.91 42.8 7.2 HLBANK 18.22 19.30 5.9% Hold 37,271 0.83 114.2 120.9 16.0 15.1 2.5 2.5 18.80 -3.1 13.28 37.2 7.2 MAYBANK 10.10 10.50 4.0% Hold 109,340 1.02 70.6 77.4 14.3 13.0 5.0 5.0 10.24 -1.4 8.38 20.5 3.1 PBBANK 21.84 25.10 14.9% Buy 84,335 0.69 142.4 149.8 15.3 14.6 2.7 2.7 22.62 -3.4 19.66 11.1 5.1 RHBBANK 5.21 5.70 9.4% Hold 20,892 1.57 52.2 53.8 10.0 9.7 2.9 2.9 5.61 -7.1 4.71 10.6 4.2 BURSA 11.00 11.80 7.3% Buy 5,913 0.93 43.9 45.0 25.1 24.4 3.3 3.3 11.30 -2.7 8.08 36.1 8.7 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 BUILDING MATERIALS ANNJOO 3.66 4.40 20.2% Buy 1,891 1.34 45.1 48.9 8.1 7.5 6.0 7.1 3.98 -8.0 2.27 61.2 -5.2 CHINHIN 1.01 1.36 34.7% Buy 562 1.03 12.4 12.0 8.1 8.4 5.0 5.9 1.49 -32.2 0.94 8.0 -16.5 ENGTEX 1.08 1.38 27.8% Buy 459 0.87 14.2 16.1 7.6 6.7 3.8 5.1 1.52 -28.9 1.01 6.9 -1.8 GADANG 1.05 1.69 61.0% Buy 693 1.12 14.2 18.1 7.4 5.8 2.9 2.9 1.37 -23.4 1.01 4.0 -5.4 GAMUDA 4.98 6.00 20.5% Buy 12,236 0.90 34.5 35.7 14.4 14.0 2.4 2.4 5.52 -9.8 4.58 8.7 0.4 IJM 2.76 2.89 4.7% Sell 10,014 1.07 13.7 18.2 20.1 15.2 3.4 3.4 3.61 -23.5 2.66 3.8 -9.5 CONSTRUCTION KAB 0.28 0.38 36.4% Buy 9 na 31.4 37.3 0.9 0.7 3.6 4.4 0.33 -16.7 0.25 12.2 -8.3 PESONA 0.39 0.55 41.0% Buy 271 1.08 5.8 4.8 6.7 8.2 3.8 3.8 0.74 -46.9 0.39 1.3 -13.3 -8.7 SENDAI 0.79 0.55 -30.4% Sell 617 1.18 9.1 8.5 8.7 9.3 1.3 1.3 1.39 -43.2 0.51 56.4 SUNCON 2.46 2.65 7.7% Buy 3,179 0.60 14.7 16.4 16.7 15.0 2.2 2.4 2.64 -6.8 1.70 44.7 -2.0 WCT 1.54 1.64 6.5% Hold 2,167 0.87 12.6 11.2 12.2 13.8 1.9 1.9 2.48 -37.8 1.46 5.5 -4.9 LITRAK 5.85 6.26 7.0% Hold 3,087 0.37 45.6 47.1 12.8 12.4 4.3 4.3 6.15 -4.9 5.40 8.3 5.4 CARLSBG 17.16 18.09 5.4% Buy 5,279 0.79 87.8 91.8 19.6 18.7 5.1 5.3 17.20 -0.2 14.12 21.5 12.2 HEIM 20.44 21.64 5.9% Hold 6,175 0.39 93.0 101.3 22.0 20.2 4.1 4.5 20.50 -0.3 16.70 22.4 8.1 AEON 1.56 1.97 26.3% Sell 2,190 0.41 6.7 7.7 23.3 20.3 2.6 2.9 2.70 -42.2 1.55 0.6 -11.4 AMWAY 7.57 8.18 8.1% Buy 1,244 0.47 43.9 45.2 17.3 16.7 5.0 5.3 8.18 -7.5 7.04 7.5 2.6 F&N 30.00 33.74 12.5% Buy 10,996 0.21 122.7 145.8 24.5 20.6 2.7 3.2 30.30 -1.0 22.64 32.5 11.1 CONSUMER Brewery Retail HUPSENG 1.09 1.25 14.7% Buy 872 0.40 5.7 5.9 19.1 18.4 5.5 5.5 1.28 -14.8 1.05 3.8 0.0 JOHOTIN 1.20 1.75 45.8% Buy 373 0.72 12.8 13.5 9.4 8.9 4.2 4.5 1.76 -31.8 1.16 3.4 -0.8 NESTLE 119.40 120.50 0.9% Buy 27,999 0.51 325.4 368.7 36.7 32.4 2.5 2.8 120.20 -0.7 75.40 58.4 15.7 PADINI 5.25 4.67 -11.0% Sell 3,454 0.79 28.0 30.4 18.8 17.3 2.4 2.5 5.50 -4.5 2.56 105.1 -0.6 POHUAT 1.47 2.01 36.7% Buy 323 0.47 22.9 25.4 6.4 5.8 5.4 5.4 2.07 -28.9 1.43 2.8 -17.9 QL 4.93 3.26 -33.9% Sell 7,999 0.55 12.8 14.7 38.4 33.5 0.9 1.0 4.95 -0.4 3.26 51.4 13.3 SIGN 0.59 0.92 55.9% Buy 135 0.77 6.9 9.2 8.5 6.4 4.2 5.9 1.07 -44.9 0.57 3.5 -16.3 30.20 34.72 15.0% Hold 8,623 1.35 170.8 168.8 17.7 17.9 5.3 5.3 51.04 -40.8 29.30 3.1 -24.5 GENTING 9.01 11.53 28.0% Buy 34,521 1.50 54.4 59.8 16.6 15.1 1.8 1.8 10.00 -9.9 8.70 3.6 -2.1 GENM 5.38 6.51 21.0% Buy 30,445 1.50 27.0 30.6 19.9 17.6 1.7 1.9 6.38 -15.7 4.87 10.5 -4.4 2.22 3.34 50.5% Buy 2,990 0.66 21.5 26.0 10.3 8.5 7.2 8.1 2.98 -25.5 2.20 0.9 -0.9 CCMDBIO 2.93 2.70 -7.8% Buy 817 0.90 15.0 16.1 19.5 18.2 3.4 3.5 3.03 -3.3 1.97 48.7 15.8 IHH 6.04 6.40 6.0% Buy 49,767 0.76 11.9 15.0 50.8 40.4 0.5 0.6 6.30 -4.1 5.42 11.4 3.1 KPJ 0.92 1.12 21.7% Buy 3,879 0.51 3.7 4.2 24.6 22.1 2.3 2.5 1.14 -19.3 0.87 5.7 -5.2 HARTA 11.88 7.80 -34.3% Sell 19,657 1.21 25.2 28.9 47.1 41.1 1.3 1.5 12.18 -2.5 4.68 153.8 11.2 KOSSAN 8.55 8.80 2.9% Buy 5,467 0.55 38.3 43.0 22.4 19.9 2.2 2.5 8.79 -2.7 5.62 52.1 5.4 SUPERMX 2.33 2.70 15.9% Buy 1,528 0.46 20.0 22.6 11.7 10.3 2.9 3.3 2.50 -6.8 1.69 37.9 16.5 TOPGLOV 9.53 9.35 -1.9% Sell 11,967 0.57 41.6 50.8 22.9 18.8 1.5 1.8 10.00 -4.7 4.56 109.0 19.3 KAREX 1.06 1.00 -5.7% Sell 1,063 0.61 2.8 5.2 38.4 20.4 0.7 1.2 2.40 -55.8 1.03 2.9 -18.5 SCIENTX 8.33 9.84 18.1% Buy 4,073 0.84 67.5 74.1 12.3 11.2 2.2 2.3 9.85 -15.4 7.00 19.0 -3.8 SKPRES 1.87 2.20 17.6% Buy 2,338 0.85 10.4 14.8 18.0 12.6 2.8 3.9 2.35 -20.4 1.24 50.8 -18.0 ASTRO 2.60 3.10 19.2% Buy 13,556 0.92 14.0 13.7 18.6 19.0 5.0 5.2 2.94 -11.6 2.40 8.3 -1.9 MEDIA PRIMA 0.61 0.45 -26.2% Sell 677 1.37 -3.8 -1.7 na na 0.0 0.0 1.28 -52.3 0.58 5.2 -19.7 STAR 1.38 1.25 -9.4% Sell 1,018 1.09 6.7 6.7 20.5 20.5 8.7 8.7 2.22 -37.8 1.31 5.3 -16.4 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) FY18 PER (X) Div Yield (%) FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.46 0.72 56.5% Buy 808 1.50 4.2 4.5 11.0 10.2 2.2 2.2 0.69 -33.3 0.35 33.3 LCTITAN 5.16 6.10 18.2% Buy 11,729 na 56.3 60.9 9.2 8.5 4.8 5.2 6.53 -21.0 4.14 24.6 -5.2 9.8 MHB 0.85 0.81 -4.7% Sell 1,360 1.38 0.5 1.7 176.6 50.9 0.0 0.0 1.16 -26.7 0.63 36.0 3.0 MISC 7.04 7.00 -0.6% Sell 31,425 1.16 50.1 53.8 14.1 13.1 4.3 4.3 7.90 -10.9 6.89 2.2 -5.1 PANTECH 0.61 0.69 14.0% Buy 451 1.23 6.1 6.8 10.0 8.9 4.5 5.1 0.74 -18.2 0.47 30.1 -6.2 PCHEM 8.10 7.96 -1.7% Hold 64,800 0.91 49.8 52.6 16.3 15.4 2.7 2.8 8.28 -2.2 6.80 19.1 5.2 SAPNRG 0.69 1.25 82.5% Buy 4,105 1.99 -6.5 -5.0 na na 0.0 0.0 2.10 -67.4 0.66 3.8 -3.5 SERBADK 3.50 4.16 18.9% Buy 5,140 na 27.7 32.7 12.6 10.7 2.3 2.9 3.66 -4.4 1.63 114.7 8.0 UMWOG 0.32 0.51 59.4% Buy 2,629 1.76 0.4 1.2 79.2 25.8 0.0 0.0 0.70 -54.2 0.27 18.5 4.9 UZMA 1.35 1.56 15.6% Sell 432 0.91 13.1 14.2 10.3 9.5 0.0 0.0 1.98 -31.8 1.26 7.1 5.5 FGV 1.86 2.01 8.1% Sell 6,786 1.50 3.7 4.5 50.2 40.9 2.7 2.7 2.18 -14.7 1.51 23.2 10.1 IJMPLNT 2.28 2.69 18.0% Sell 2,008 0.19 9.1 12.5 25.0 18.2 3.5 3.9 3.40 -32.9 2.28 0.0 -16.8 IOICORP 4.71 4.12 -12.5% Sell 29,597 0.89 21.0 21.7 22.4 21.8 3.4 6.4 4.81 -2.1 4.31 9.3 3.7 KFIMA 1.51 1.89 25.2% Buy 426 0.68 13.3 14.5 11.4 10.4 6.0 6.0 1.96 -23.0 1.45 4.1 -3.8 KLK 25.26 27.07 7.2% Hold 26,901 0.62 120.7 125.7 20.9 20.1 2.4 2.5 25.40 -0.6 23.66 6.8 1.0 SIMEPLT 5.49 6.25 13.8% Buy 37,337 na 21.0 22.1 26.1 24.9 2.6 2.7 6.00 -8.5 4.58 19.9 -8.5 TSH 1.59 2.10 32.1% Buy 2,195 0.58 9.3 9.6 17.1 16.6 1.5 1.5 1.91 -16.8 1.56 1.9 -3.6 UMCCA 6.38 6.73 5.5% Sell 1,338 0.40 22.7 34.8 28.1 18.3 2.7 2.8 7.08 -9.9 5.76 10.7 -2.0 GLOMAC 0.54 0.46 -14.8% Sell 429 0.68 3.0 4.4 18.3 12.2 3.7 3.7 0.67 -19.7 0.50 9.1 -2.6 HUAYANG 0.59 0.58 -0.9% Sell 206 0.89 0.7 3.4 89.5 17.2 0.9 0.9 1.19 -50.8 0.58 1.7 -4.1 IBRACO 0.80 0.92 15.0% Hold 397 na 9.1 12.4 8.8 6.4 5.0 6.3 0.98 -17.9 0.50 60.0 -1.8 IOIPG 1.96 2.02 3.1% Hold 10,792 0.84 16.5 16.3 11.8 12.0 3.1 3.1 2.22 -11.7 1.79 9.5 5.9 MAHSING 1.23 1.69 37.4% Buy 2,986 0.91 13.0 12.6 9.4 9.8 5.3 5.3 1.64 -25.0 1.22 0.8 -15.2 PLANTATIONS PROPERTY SIMEPROP 1.44 1.61 11.8% Sell 9,793 na 9.2 9.1 15.7 15.8 1.4 1.4 1.78 -19.1 1.04 38.5 -19.1 SNTORIA 0.60 0.76 26.7% Buy 338 0.13 8.3 8.6 7.3 7.0 1.7 1.7 0.91 -34.0 0.56 7.1 -13.7 SPB 4.90 5.28 7.8% Hold 1,684 0.68 21.2 26.1 23.2 18.7 2.4 2.4 5.50 -10.9 4.39 11.6 0.0 SPSETIA 3.20 3.77 17.8% Buy 12,010 0.92 21.3 21.9 15.0 14.6 3.8 3.8 4.38 -27.0 3.07 4.2 -20.0 SUNWAY 1.65 1.74 5.5% Hold 8,078 0.91 11.9 12.6 13.9 13.1 3.0 3.6 1.96 -15.8 1.31 25.8 1.2 SUNREIT 1.72 1.87 8.7% Hold 5,066 0.87 10.0 10.7 17.1 16.1 5.8 6.2 1.90 -9.5 1.64 4.9 -9.5 CMMT 1.18 1.64 39.0% Buy 2,405 0.67 7.9 8.6 14.9 13.7 6.9 7.5 1.83 -35.5 1.16 1.7 -35.5 REIT POWER & UTILITIES MALAKOF 0.93 1.16 24.7% Buy 4,632 0.87 6.0 6.8 15.5 13.7 7.5 7.5 1.32 -29.5 0.86 8.1 -5.1 PETDAG 25.12 22.08 -12.1% Sell 24,956 0.40 105.1 105.7 23.9 23.8 3.1 3.1 26.20 -4.1 21.00 19.6 3.5 PETGAS 17.50 19.10 9.1% Buy 34,628 0.87 98.8 99.5 17.7 17.6 3.9 4.0 21.04 -16.8 15.82 10.6 0.1 TENAGA 15.70 18.33 16.8% Buy 88,956 0.57 131.3 127.5 12.0 12.3 4.4 4.1 16.12 -2.6 13.44 16.8 2.9 YTLPOWR 1.21 1.17 -3.3% Sell 9,406 0.88 9.8 10.3 12.3 11.8 4.1 4.1 1.50 -19.3 1.11 9.0 -6.2 TELECOMMUNICATIONS AXIATA 5.60 6.50 16.1% Buy 50,670 1.56 15.9 19.5 35.1 28.8 1.4 2.8 5.82 -3.8 4.24 32.1 2.0 DIGI 4.88 5.15 5.5% Hold 37,942 0.94 19.7 20.4 24.8 24.0 4.0 4.2 5.19 -6.0 4.36 11.9 -4.3 MAXIS 6.04 6.05 0.2% Sell 47,176 1.08 25.2 25.0 24.0 24.1 3.2 3.2 6.60 -8.5 5.48 10.2 0.5 TM 6.06 7.20 18.8% Buy 22,773 0.64 23.2 24.9 26.1 24.4 3.4 3.7 6.69 -9.4 5.85 3.6 -3.8 ELSOFT 2.50 2.70 8.0% Hold 688 0.74 13.4 15.3 18.7 16.4 3.8 4.3 2.95 -15.3 1.58 58.0 -7.4 IRIS 0.19 0.25 35.1% Buy 457 2.43 0.6 0.7 33.4 27.7 0.0 0.0 0.25 -24.5 0.12 60.9 0.0 INARI 3.42 3.35 -2.0% Under Review 7,062 0.72 14.0 15.7 24.4 21.8 2.9 3.3 3.82 -10.5 1.85 85.2 0.6 TECHNOLOGY Semiconductor & Electronics Note: INARI proposed bonus issue shares on the basis of 1 for 2. For more detail please refer to 30.01.18 report. MPI 8.63 10.70 24.0% Hold 1,716 0.70 73.9 86.9 11.7 9.9 3.7 3.7 14.52 -40.6 8.62 0.1 -31.6 UNISEM 2.64 3.25 23.1% Under Review 1,937 1.09 19.0 20.3 13.9 13.0 4.5 4.5 4.25 -37.9 2.52 4.8 -27.7 TRANSPORTATION Airlines AIRASIA 4.32 3.83 -11.3% Buy 14,437 1.33 38.3 39.8 11.3 10.8 1.2 1.4 4.34 -0.5 2.58 67.4 29.0 AIRPORT 8.65 8.64 -0.1% Sell 14,352 1.34 19.7 20.1 43.8 42.9 2.1 1.4 9.45 -8.5 6.35 36.2 -1.6 Freight & Tankers PTRANS 0.30 0.46 55.9% Buy 371 na 2.4 3.8 12.4 7.8 2.4 3.6 0.38 -22.7 0.15 96.7 5.4 TNLOGIS 1.13 1.80 59.3% Buy 516 1.11 13.6 14.0 8.3 8.0 4.4 4.4 1.83 -38.4 1.11 1.8 -15.7 WPRTS 3.70 4.06 9.7% Buy 12,617 0.51 15.6 20.0 23.7 18.5 1.0 1.3 4.19 -11.7 3.12 18.6 0.0 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) % upside Recom Market Cap. (S$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 28.28 30.50 7.9% Buy 72,506 1.19 212.8 246.6 13.3 11.5 2.3 2.5 28.4 -0.3 18.35 54.1 13.8 OCBC 12.78 14.50 13.5% Buy 53,496 1.22 109.5 123.2 11.7 10.4 6.7 7.7 13.3 -4.1 9.41 35.8 3.1 UOB 27.04 27.80 2.8% Hold 44,969 1.17 216.6 243.9 12.5 12.5 3.0 3.0 28.5 -5.0 21.01 28.7 2.2 PLANTATIONS WILMAR 3.03 3.63 19.8% Hold 19,388 0.81 29.9 31.8 10.1 9.5 2.6 3.0 4.0 -23.3 2.97 2.0 -1.9 IFAR 0.36 0.53 47.2% Hold 516 1.00 5.2 5.7 6.9 6.3 3.5 3.9 0.6 -36.8 0.35 2.9 -7.7 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
14. Technical View Monday , February 19, 2018 HIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Weekly Technical Outlook FBM KLCI: 1,838.28 (+18.46, +1.01%) Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Choppy Trading Amid US Inflation Worries The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) managed to latch on moderate gains last week, as investor confidence improved slightly after the Malaysian economy grew faster than had been forecast last year. Market sentiment was also boosted by improvement in key regional markets led by the strong performance from Wall Street as traders waded back into the market, hunting for bargains amid signs of stability after one of the worst weeks for equity benchmarks in two years. For the week, the FBM KLCI added 18.46 points, or 1.01 percent to 1,838.28, with gains on Nestle (+RM3.30), Hong Leong Bank (+32sen) and Genting Berhad (+23sen) accounting for slightly more than half of the index’s rise. Average daily traded volume and value were at 1.61 billion shares and RM1.94 billion, compared to the 3.13 billion shares and RM3.28 billion average respectively the previous week, as trading activity slowed with most investors sidelined ahead of the Chinese New Year festival break. Blue chips rose on Monday, helped by utility, banks and oil & gas heavyweights and regional gains as US stock index futures recovered further in Asian trade. The KLCI ended up 10.35 points at 1,830.17, off an early low of 1,824.89 and high of 1,834.45, but losers edged gainers 484 to 453 on slow turnover of 1.8bn shares worth RM2.26bn. Stocks ended slightly higher the following day, shored up by overnight Wall Street and regional gains on optimism over the Trump administration's USD200 billion infrastructure plan. The KLCI added 2.85 points to settle at 1,833.02, after oscillating between early high of 1,835.17 and low of 1,830.28, as gainers led losers 495 to 409 on reduced turnover of 1.61bn shares worth RM2.43bn. The local stock market edged higher Wednesday, boosted by the better-than-expected 4Q17 GDP growth of 5.9%, but buying momentum stayed cautious ahead of the release of US January inflation data as investors refrain from committing ahead of the Chinese New Year holidays. The KLCI added 1.91 points to settle at 1,834.93, off the high of 1,837.80 and low of 1,829.71, as gainers led losers 580 to 338 on slightly better turnover of 1.93bn shares worth RM1.98bn. Blue chips stayed range bound on cautious trade the next day, as most investors remained sideline ahead of the Chinese New Year break, while key regional markets extended rebound following the overnight rally stateside. For the half-day trading session, the KLCI added 3.35 points to close at 1,838.28, off a high of 1,842.73 and low of 1,837.98, as gainers edged losers 544 to 213 on total turnover of 1.11bn shares worth RM1.07bn. Trading range for the blue-chip benchmark index was 17.84 points, compared to the 61.54point range the previous week, as bargain hunters returned to stabilize stocks at cheaper levels. For the week, the FBM-EMAS Index added 142.43 points or 1.10% to 13,117.49 while the FBM-Small Cap Index climbed 380.03 points, or 2.36 percent to 16,500.77 as strong rotational buying interest in small cap stocks continued to attract retailers. Page 1 of 3
15. 19-Feb-18 The daily slow stochastic momentum indicator for the FBM KLCI is hooking up in the neutral zone , signaling reduced bearish momentum (Chart 1), but the weekly indicator trigger line is hooking down in overbought territory and is set to trigger a sell. The 14-day Relative Strength Index (RSI) improved slightly at 54.66, while the 14-week RSI improved to a better reading of 60.42 as of last Friday. Chart 1 Meanwhile, the daily Moving Average Convergence Divergence (MACD) signal line inched lower to indicate increasing downward momentum, while the weekly MACD indicator showed initial weakness on its upward trajectory (Chart 2). The +DI and –DI lines on the 14-day Directional Movement Index (DMI) expanded from each other, while the ADX line has turned down, signaling a weaker trending mode. Chart 2 Conclusion Momentum indicators for the FBM KLCI issued mixed signals following last week’s cautious rebound, with weak buying momentum and most market players staying sidelined suggesting that the near-term direction remains uncertain. Choppy trading conditions should linger, with concerns higher-than-expected US inflation could accelerate rising interest rates and overshadow the rosy economic outlook to dampen investors risk appetite. Page 2 of 3
16. 19-Feb-18 On the index , immediate resistance will be 1,840, mirroring the 9 Jan high, with the 2 Feb peak of 1,880 acting as a formidable upside hurdle. Monitor the crucial resistance-turnsupport level at 1,796, the June 2017 peak matching the recent low, which must hold to prevent further correction potential towards next support from 1,778, the 38.2%FR of the 1,614 low of Nov 2016 to the recent 1,880 high. Failure of this support means that the 50%FR at 1,747 should be tested for resilience. Stock-wise, construction related stocks like Gadang, Kimlun, KKB Engineering and Mudajaya should attract bargain hunters looking for rebound upside, while oil & gas related stocks such as Bumi Armada and Dialog should also attract buyers given their resilient uptrends. 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, February 19, 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
17. COMPANY UPDATE Monday , February 19, 2018 FBMKLCI: 1,838.28 Sector: Property THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM1.74 (+5.5%) Sunway Bhd Last Traded: RM1.65 Expands Further In Singapore Thiam Chiann Wen Tel: +603-2167 9615 HOLD cwthiam@ta.com.my Buying Brookvale Park in Singapore Sunway, in a joint venture (JV) with Hoi Hup Realty and S C Wong Pte Ltd (30:60:10), plans to acquire a private residential property, Brookvale Park, in Singapore for SGD530mn (RM1.6bn). According to the announcement, the property will be redeveloped into a new private residential development with an allowed plot ratio of 1.6 times, subject to authorities’ approval. More about Brookvale Park Located on 999-year leasehold land in Clementi, Singapore, Brookvale Park is currently a 160-unit private residential estate with a land area of 34,654 square metres – see Appendix 1. The site is located within the Sunset Way enclave, and is accessible by major roads and expressways such as Bukit Timah Road, Clementi Road, the Pan Island Expressway and Ayer Rajah Expressway – see Appendix 2. It is also in close proximity to tertiary and international education institutions such as Singapore Polytechnic, Ngee Ann Polytechnic, National University of Singapore, Singapore University of Social Sciences (formerly Singapore Institute of Management) and the Canadian International School. Other amenities in the area include Holland Village, Bukit Timah Nature Reserve, Beauty World Plaza and Bukit Timah Shopping Centre. Residential Development Based the press release issued by the sole marketing agent, Jones Lang LaSalle Incorporated (JLL), the site may be redeveloped into a residential development of up to 12 storeys, with a total gross floor area of 656,494 sq ft, including a 10% bonus balcony area. This implies the new development may potentially yield 550 units with an average size of 1,100 sq ft. Assume land cost to gross development value (GDV) ratio of 50-60%, we estimate GDV of between SGD877mn and SGD1.1bn. This will translate to an ASP of SGD1,450 -1,800 psf, in line with the recent transacted sale prices of The Creek @ Bukit, a new project located within the District 21 of Singapore comprising Upper Bukit Timah and Clementi. Favourable Purchase Price The purchase price of SGD530mn - which matches the reserve price – represents a land cost of about SGD932 per square foot per plot ratio (psf ppr), after factoring in an estimated development charge of about SGD26mn. This appears attractive if we compare it with recent land sales in the vicinity, such as Royalville at SGD1,960 psf ppr (Nov-17), Mayfair Gardens at SGD1,244 psf ppr (Nov-17) and the Government Land Sales sites at SGD939 and SGD1,540 psf ppr for Toh Tuck Road (Apr-17) and Fourth Avenue (Dec-17), respectively. Our view According to the announcement, Sunway’s cost of investment in the joint venture is estimated to be about SGD70.0mn or approximately RM210mn. We 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 (%) SWB MK 5211 Main Market 4895.7 8,077.9 1.96/1.31 5,732.2 30.0 0.9 Sungei Way Corp (50.9) EPF (5.7) Fook Ling Cheah (5.1) Forecast Revision FY17 Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 - - 553.1 572.9 568.8 611.2 98.7 94.4 Hold (Maintained) Financial Indicators Net gearing (x) CFPS (sen) P/CFPS (x) ROE (%) ROA (%) NTA/Share (RM) Price/ NTA (x) FY17 45.7 11.2 14.7 7.4 3.0 1.5 1.1 FY18 42.8 13.5 12.2 7.5 3.1 1.5 1.1 Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth SWB (2.4) (1.2) (7.7) 23.9 FBM KLCI 0.7 7.0 3.6 7.7 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
18. 19-Feb-18 believe Sunway will have no problem funding this investment , in view of its healthy gearing level of 37% coupled with a cash balance of RM5.2bn as at end Sept 2107. All in, we view this deal positively as it further increases the group’s development pipeline in Singapore. In addition, the site will also allow Sunway to capitalise on the strengthening Singapore residential market. Impact No change to our FY17-19 earnings pending more details on the proposed development. Valuation We maintain our Hold Recommendation on Sunway with an unchanged target price of RM1.74, based on average blended CY18 PE/PB of 15x/1.1x. Appendix 1: Brookvale Park Source: JLL Appendix 2: Brookvale Park Location Source: Google Map Page 2 of 3
19. 19-Feb-18 Earnings Summary FYE Dec 2015 Revenue 4448 .4 EBITDA 2016 4725.9 2017F 2018F 2019F FYE Dec 2017F 2018F 2019F 5217.0 5523.6 6008.3 PPE 1372.0 1906.4 1859.7 2137.0 2077.8 Land held for dev 1194.1 1191.5 1875.0 1875.0 1875.0 Associate & JV 3181.2 3223.1 3263.9 3283.0 3291.6 Investment Properties 2722.3 2752.9 2776.9 2800.9 2824.9 805.3 864.9 836.5 872.9 913.4 Depreciation (117.3) (137.2) (106.7) (122.6) (119.2) Amortisation (0.9) (0.8) (0.8) (0.7) (0.7) 2015 2016 EBIT 687.0 726.9 729.0 749.5 793.4 Goodwill 320.1 311.9 311.9 311.9 311.9 Finance cost (26.6) (59.9) (96.5) (95.2) (91.5) Others 471.6 294.0 294.0 293.2 292.5 Associate & JV 269.9 192.0 137.1 126.2 123.0 LT Assets 9261.3 9679.9 10381.4 10701.1 10673.8 EI 141.7 0.0 0.0 340.0 0.0 1120.5 Property dev. Cost 978.0 1209.4 1209.4 1209.4 1209.4 Inventories 693.1 661.8 671.8 711.3 773.7 Trade & other receivables 1823.3 2828.4 1829.5 1937.0 2107.0 2631.0 4059.8 3922.0 3713.7 3674.3 614.2 392.1 392.1 392.1 392.1 6739.6 9151.5 8024.7 7963.5 8156.5 PBT 930.4 859.0 786.8 Tax (130.9) (140.4) (141.6) (140.5) (148.5) (67.0) (132.7) (92.0) (67.1) (70.4) MI 824.9 Net profit 732.4 585.9 553.1 912.9 606.0 Cash & Cash equivalent Core profit 590.7 547.4 553.1 572.9 606.0 Others ST Assets Core EPS (sen) 12.3 11.4 11.5 11.9 12.6 DPS (sen) 13.8 5.2 5.0 5.0 6.0 Total Assets Trade and other payables 2258.5 2708.3 2315.5 2451.6 2666.7 2015 2016 2017F 2018F 2019F ST Borrowings 3217.6 4830.7 4780.7 4640.7 4590.7 Cash Flow (RM'mn) FYE Dec Asset held for sale 0.0 0.0 0.0 0.0 0.0 16000.9 18831.4 18406.1 18664.6 18830.3 PBT 930.4 859.0 786.8 1120.5 824.9 Others 88.1 44.4 44.4 44.4 44.4 Depr & Amort 117.3 137.2 106.7 123.4 119.9 ST Liabilities 5564.2 7583.3 7140.5 7136.6 7301.7 LT Borrowings 2815.2 2590.5 2540.5 2400.5 2350.5 408.2 438.4 438.4 438.4 438.4 3223.4 3028.9 2978.9 2838.9 2788.9 Change in working assets (131.8) (524.0) 596.2 (10.9) (17.3) Tax (130.9) (140.4) (141.6) (140.5) (148.5) 154.6 336.3 (40.7) (359.1) (8.6) CFO 939.6 668.1 Capex (698.9) (637.0) (743.5) (60.0) (60.0) Share Cap 1799.8 2063.1 4813.8 4813.8 4813.8 Property Inv (563.3) (156.2) (24.0) (24.0) (24.0) Reserves 4763.0 5392.7 2617.4 2952.7 2932.9 6562.7 7455.7 7431.2 7766.5 7746.7 650.6 763.5 855.5 922.6 993.0 16000.9 18831.4 18406.1 18664.6 18830.3 Others Others 1307.3 733.4 770.4 LT Liabilities 456.8 0.0 0 0 0 (805.4) (793.2) (767.5) (84.0) (84.0) Net Addition/Rpmt 1763.8 1259.5 (100.0) (280.0) (100.0) Dividend Paid (665.9) (250.5) (577.7) (577.7) (625.8) CFI Others Shareholder's Funds MI Others CFF 0.0 0.0 0.0 0.0 1097.9 1009.1 (677.7) (857.7) (725.8) 1232.0 883.9 (137.8) (208.3) (39.4) Liabilities + Equities 0.0 Ratios FYE Dec Change in cash FCF/share 7.5 (6.1) 11.2 13.5 14.3 2015 2016 2017F 2018F EPS Growth (%) (0.2) (7.3) 1.0 3.6 5.8 PER (x) 13.4 14.5 14.4 13.9 13.1 GDPS (sen) 13.8 5.2 5.0 5.0 6.0 8.4 3.2 3.0 3.0 3.6 3266.9 Div Yield (%) Assumptions Net Debt (RM mn) FYE Dec New Property Sales 3401.9 3361.4 3399.2 3327.5 2015 2016 2017F 2018F 2019F Net gearing (x) 0.5 0.5 0.5 0.4 0.4 1209 1052.5 1192.1 1258.8 1528.8 ROE (%) 9.5 7.8 7.4 7.5 7.8 3.2 Property Margins 23.4 24.7 24.2 23.6 22.7 Orderbook Replenishment 2800 2600.0 3700.0 2000.0 2000.0 9.2 10.1 10.6 10.2 9.7 Construction margins 2019F ROA (%) 4.1 3.1 3.0 3.1 NTA/share (RM) 1.3 1.5 1.5 1.5 1.5 P/NTA (x) 1.3 1.1 1.1 1.1 1.1 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, February 19, 2018, the analyst, Thiam Chiann Wen, 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 – 2031 6608 www.ta.com.my Page 3 of 3
20. IPO Monday , February 19, 2018 FBMKLCI: 1,838.28 Sector: Consumer THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM0.31 (+6.9%) Wegmans Holdings Berhad Ace Market Listing Wegmans the Carpenter Ooi Beng Hooi NOT RATED Tel: +603-2167 9612 benghooi@ta.com.my Background Wegmans is a home furniture manufacturer. The company is principally involved in the design, manufacture and sale of home furniture products. IPO Statistic The IPO entails a public issue of 100.0mn new ordinary shares, and an offer for sale of up to 50.0mn shares by the offeror to institutional and identified investors, at an IPO price of RM0.29/share. www.taonline.com.my Share Information Listing Ace Market Enlarged Share Capital (mn) 500.0 Market Cap @ RM0.25 (RM mn) 145.0 Issue price (RM) 0.29 Oversubscription rate N/A Estimated free float (%) Public issue: • 25.0mn new shares for application by the Malaysian public; • 15.0mn new shares for application by eligible persons; • 10.0mn new shares by way of private placement to institutional and identified investors. • 50.0mn new shares by way of private placement to identified Bumiputera investors approved by MITI. Main Competitive Advantages 1. Wide selection of designs for home furniture through continuous product design and development activities; and 2. Established business relationship. Tentative listing date 30.0 6 March 2018 Tentative Listing Dates Event Tentative Date Opening of the IPO 13 February 2018 Closing of the IPO 22 February 2018 Balloting of Applications 26 February 2018 Allotment of Shares 2 March 2018 Listing 6 March 2018 Ratio & Analysis Valuation At IPO price of RM0.29/share, Wegmans is priced at a trailing PER of 9.5x FY16 earnings. We value the company at 11x CY18 EPS, arriving at a fair value of RM0.31/share. Earnings Summary (RM’mn) NTA per share (post IPO) (sen) Price to NTA (x) 2.5 Proforma ROE (%) 67.4 Proforma ROA (%) 31.1 Proforma Gearing (x) 0.21 FYE Dec FY15 FY16 FY17F FY18F FY19F R e ve nue 66.2 85.6 84.5 87.0 89.2 Gros s profit 20.8 25.7 24.9 24.4 25.0 Utilisation of Proceeds E B ITDA 15.5 18.9 18.3 17.9 18.4 Capex E B ITDA m a rg in (% ) 23.3 22.1 21.6 20.6 20.6 Ope ra ting profit 15.2 18.5 17.9 17.5 18.0 P BT 15.0 18.2 16.9 16.7 17.1 Ne t profit 13.0 15.3 14.4 14.0 14.4 E P S * (s e n) 2.59 3.06 2.88 2.80 PER^ 11.2 9.5 10.1 10.4 RM(mn) % - New factories 11.0 37.9 - PPE 11.0 37.9 Working capital 3.5 12.1 2.87 Estimated listing expenses 3.5 12.1 10.1 TOTAL 29.0 100.0 Gros s divide nd (s e n) na na na 1.0 1.0 Divide nd yie ld^ na na na 4.0 4.0 84.1 67.4 45.4 28.6 22.5 R OE (% ) Note: *based on enlarged share base of 500mn, ^ based on IPO price of RM0.29/share Page 1 of 7 11.5