Bursa Malaysia Daily Market Report - 19 June

Transcription

1. Monday , 19 June, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. 2. 3. Daily Market Commentary Weekly Strategy Weekly Technical Outlook Fundamental Reports 1. 2. Dagang NeXchange Bhd: Project Delay Offset by Better Margins Top Glove Corporation Bhd: 3QFY17 Weaker QoQ on Deferred Orders and Higher Costs Technical Reports 1. Weekly Technical Stock Picks 2. Daily Money Flow Technical Stock Picks FBMKLCI Stocks Under Coverage PLANTATION Sector CONSTRUCTION Sector PROPERTY Sector 3. Weekly Ace Market Stock Watch 4. Weekly Small Cap Stock Watch 5. Weekly Stock Screen Foreign Technical Reports 1. Foreign Stock Watch (AUS) 2. Foreign Stock Watch (HK) 3. Foreign Stock Watch (FSSTI) 4. Foreign Stock Watch (US) 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 Monday, 19 June 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (16.06.2017) Volume (mil) +/-chg (RMmn) Main Market 1,188.9 -197.3 2,816.4 Warrants 215.2 -68.7 27.7 ACE Market 579.2 281.5 75.8 Bond 11.8 -9.1 5.7 ETF 0.1 0.06 0.1 Total 1,995.2 2,925.7 Off Market 98.6 58.8 80.6 Value +/-chg 670.3 -2.5 -5.2 -4.5 0.07 - Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP June 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 Value/ Volume 2.37 0.13 0.13 0.48 1.14 1.47 0.82 Up Down 268 342 44 122 45 53 1 5 1 3 359 525 % chg % YTD chg 1,791.31 12,751.84 17,474.68 1,798.00 1.30 -5.48 -12.37 6.00 0.07 -0.04 -0.07 0.33 9.11 11.21 18.75 9.94 21,384.28 6,151.76 7,463.54 19,943.26 2,361.83 25,626.49 3,231.44 1,576.58 5,723.64 3,123.17 1,866.05 5,774.03 24.38 -13.74 44.18 111.44 0.18 61.15 -0.65 3.05 -52.65 -9.32 -3.66 10.84 0.11 -0.22 0.60 0.56 0.01 0.24 -0.02 0.19 -0.91 -0.30 -0.20 0.19 8.21 14.28 4.49 4.34 16.55 16.48 12.17 2.18 8.06 0.63 -5.23 1.91 With the FBM KLCI's stubborn ascent to another fresh two-year high last Friday sustaining overbought readings on technical momentum indicators, a profit-taking correction is still due. Meantime, weaker buying momentum and market undertone should see investors staying sidelined and cautious for another week. Nonetheless, the relative upside resilience vis-à-vis global peers suggests that there are still interested buyers on dips cushioning downside, meaning that profit-taking corrections are likely to be shallow. Immediate uptrend supports for the index remains at the rising 10 and 30-day moving average levels at 1,787 and 1,775 respectively, followed by better support from the 50-day moving average at 1,765. Immediate upside hurdles are from the 1,800 psychological level and 18 May 2015 high of 1,823, with next key hurdle from the 27 April 2015 peak of 1,867. Sector-wise, blue chips are likely to extend profit-taking consolidation this week, but construction related lower liners such as Gadang, Kim Lun, KKB Engineering and WCT Holdings should encourage investors to bargain hunt on any share price weakness. News Bites • • • • • • Top 10 KLCI Movers Based on Mkt Cap. Off Market YINSON PMETAL EFORCE VOIR-WA TAWIN ANCOM (mn) 60.0 23.0 8.0 2.5 2.0 1.0 @ @ @ @ @ @ (RM) 3.20 2.70 1.00 0.50 1.21 0.80 Counter TENAGA PBBANK SIME PCHEM AXIATA MISC HLBANK IOICORP KLK TM Mkt Cap. (RM’mn) 81,716 78,774 65,424 57,680 44,780 33,032 31,950 28,780 26,944 24,990 Chg (RM) 0.02 0.02 0.01 0.05 0.02 0.05 0.22 0.11 0.56 0.10 Important Dates JHM - 1:1 Bonus Issue - BI of 123.7m shares. 1 bonus share for every 1 existing share. Entitlement Date: 19/06/2017. LISTING ON: 20/06/2017. SEG - 5:7 Bonus Issue - BI of 516.8m shares. 5 bonus shares for every 7 existing shares. Ex-Date: 22/06/2017. Entitlement Date: 28/06/2017. LISTING ON: 29/06/2017. Vol. (mn) 30.43 5.67 13.06 6.80 8.66 3.02 2.18 5.20 3.36 8.38 • • • • • • • Top Glove Corporation Berhad's 9MFY17 earnings of RM234.1mn (20.8% YoY) was within ours and consensus estimates. Felda Global Ventures Holdings Bhd said it has not held any discussion with the Federal Land Development Authority on the possibility of a plantation trust. Boustead Holdings Bhd's 51%-owned subsidiary MHS Aviation Bhd was given a 90-day notice by Petronas Carigali Sdn Bhd's over the latter's intention to terminate a contract originally signed in June 2011. IHH Healthcare Bhd is likely to buy a majority controlling stake in Fortis Healthcare Ltd and both are said to be in the advanced stage of negotiations and due diligence, according to news reports in India. Eastern & Oriental Bhd is divesting one of its subsidiaries, E&O Express Sdn Bhd, which owns and operates the Lone Pine Hotel in Batu Feringghi, Penang, for RM85mn. Fajarbaru Builder Group Bhd has bagged a RM12.8mn contract from Petronas Dagangan Bhd to build an underground pipeline foundation at KLIA2. Hengyuan Refining Co Bhd is investing USD160mn (RM700mn) in two projects at its refining complex in Port Dickson, Negri Sembilan. Barakah Offshore Petroleum Bhd said it is not expecting improvement in its bottom line this year compared to FY16, but foresees more jobs secured next year. Rev Asia Bhd asserted that its core business will remain in the technology sector following the sale of its 70%-owned digital media subsidiary to Media Prima Bhd. NetX Holdings Bhd has proposed to issue and allot up to 500mn new shares to Australian investment bank Macquarie Bank for about RM25.5mn, which it will use to fund the development of a mobile payment exchange system. Malaysia will raise its crude palm oil export tax to 6.5% in July from 6% this month. The Bank of Japan left interest rates and its commitment to buying government bonds unchanged, maintaining its aggressive monetary stimulus aimed at lifting inflation. The US housing starts dropped 5.5% in May from the prior month to a seasonally adjusted annual rate of 1.092mn. Exchange Rate USD/MYR 4.2755 0.0075 USD/JPY 111.27 1.5800 EUR/USD 1.118 0.0012 Commodities Futures Palm Oil (RM/mt) 2,482.00 31.00 Crude Oil ($/Barrel) 44.68 0.44 Gold ($/tr.oz.) 1,255.20 -0.30 DISCLAIMER The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD Kaladher Govindan, Head of Research
3. TA Securities Monday , June 19, 2017 FBMKLCI: 1,791.31 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Strategy Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kaladher Govindan Market View Tel: +603-2167 9609 kaladher@ta.com.my www.taonline.com.my FBMKLCI Could Remain in Consolidation Mode Despite profit-taking pressure after an extended three-day holiday the previous weekend following a steep correction on US technology shares, the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) managed to test another new two-year high last Friday, after the US Federal Reserve raised interest rates for the second time this year and guided for one more hike in 2017. For the week, the FBM KLCI added 2.42 points, or 0.14 percent to 1,791.31, with gains on core plantation counters KLK (+50sen) and PPB Group (+26sen), and Hong Leong Bank (+42sen) offsetting losses on Maxis (-31sen) and Petronas Gas (-30sen). Average daily traded volume and value moderated further to 1.99bn shares and RM2.56 billion, compared with the 2.2 billion shares and RM2.4 billion average respectively the previous week, as trading momentum slowed amid the cautious mood following the much-anticipated US interest rate hike. The benchmark FBMKLCI could remain in a consolidation mode this week in the absence of drivers to propel the index. The Brent crude oil price’s strength, which rose above USD55/barrel since late December 2016 and sustained above USD50/barrel throughout most part of this year, and weakness in the USD due to delays in implementation of President Trump’s promised economic reforms painted a favourable outlook for the ringgit and contributed in net inflow of foreign funds into Malaysian equities so far. The recovery in the benchmark index was sustained by favourable economic outlook, especially after a stronger-than-expected first quarter GDP, recovery in corporate earnings and expectations of a general election this year, which normally results in a vibrant market. The benchmark index could hold on to these gains as the anticipated gradual tightening pace in the US monetary policy and internal headwinds faced by President Trump are expected to hold sway over his intended expansionary fiscal policy and limit US dollar’s strength. However, subdued crude oil prices and its weaker outlook could turn out to be a dampener for the ringgit and benchmark index in the immediate term. Brent crude oil price has dipped below USD50/barrel in June and indications of rising crude oil supply will offset supply cuts imposed by OPEC and non-OPEC producers are negative factors that could check the ringgit’s strength and affect foreign holdings in equities in the coming weeks, if prices remain weak. No major economic data are due for announcement this week locally and externally. Malaysia’s Consumer Price Index that will be released this week is expected to be within consensus expectations of 4.2% year-on-year (YoY) versus April’s 4.4% YoY due to weakness in fuel prices compared to April but overall inflation is likely to remain elevated above 4% YoY due to higher transportation and food and non-alcoholic beverages costs. Page 1 of 7
4. TA Securities 19-Jun-17 A Member of the TA Group Externally , the subdued US economic data could continue to undermine the Federal Reserve’s tightening bias and allay concerns about a weaker ringgit against the USD and the subsequent impact on fund outflows. For instance, the US housing starts and building permits data released last Friday continued to show signs of weakness that could affect the US economic growth in the second quarter. The housing starts fell 5.5% to a seasonally adjusted annual rate of 1.09 million units in May, for a third straight month and the lowest level in eight months, versus forecast 1.22 million units as construction activity declined broadly. This as mainly attributed to shortage of construction workers and short supply of land. Consumer sentiment measured by the University of Michigan slipped as well to 94.5 in June, the lowest level since the presidential election in November, versus forecast 97.3 due to concerns about Trump’s economic policies and chances of them passing through the Congress. Page 2 of 7
5. TA Securities 19-Jun-17 A Member of the TA Group News In Brief Corporate Felda Global Ventures Holdings Bhd said it has not held any discussion with the Federal Land Development Authority (Felda) on the possibility of a plantation trust. The plantation company denied a report in a local newspaper that its major shareholder, Felda, is exploring the possibility to carve out its upstream business. (Bernama) Boustead Holdings Bhd’s 51%-owned subsidiary MHS Aviation Bhd (MHS) was given a 90-day notice by Petronas Carigali Sdn Bhd's (PCSB) over the latter's intention to terminate a contract originally signed in June 2011. MHS received the letter notifying of PCSB’s intention to terminate, without cause, the contract for the provision of rotary wing aircraft, equipment and services for Heavy Type Aircraft EC225. (Bursa Malaysia) Top Glove Corp Bhd posted a 24% rise in net profit to RM77.7mn 3QFY17, from RM62.5mn a year earlier on a 29.3% increase in revenue from the year before. For the cumulative nine-month period, however, net profit contracted 20% to RM234.1mn from RM295.4mn in the previous year, despite 16% growth in revenue to RM2.5bn from RM2.2bn. It declared first interim dividend of 6 sen per share. (Bursa Malaysia) IHH Healthcare Bhd and Fortis Healthcare Ltd are said to be in the advanced stage of negotiations and due diligence according to news reports in India. IHH is likely to buy a majority controlling stake in Fortis. However, IHH’s spokesperson said that it is not appropriate to comment on specific transactions at this juncture when asked about the Indian reports. (The Edge) Eastern & Oriental Bhd is divesting one of its subsidiaries, E&O Express Sdn Bhd, which owns and operates the Lone Pine Hotel in Batu Feringghi, Penang, for RM85mn. Following the divestment, it expects to realise an estimated gain on disposal after taxation of approximately RM23.3mn. A share sale agreement has been inked with Langkawi Saga Shopping Centre Sdn Bhd and Lubritrade Trading Pte Ltd to effect the disposal. (Bursa Malaysia) Fajarbaru Builder Group Bhd has bagged a RM12.8mn contract from Petronas Dagangan Bhd to build an underground pipeline foundation at klia2. The contract is for the engineering, procurement, construction and commissioning of phase two of Jet-A1 underground pipeline foundation and associated works for PetDag's subsidiary, Kuala Lumpur Aviation Fuelling System Sdn Bhd and will last for 34 weeks. (Bursa Malaysia) Hengyuan Refining Co Bhd is investing USD160mn (RM700mn) in two projects at its refining complex in Port Dickson, Negri Sembilan. The first project, estimated at USD135mn would enable the group to economically produce Euro 4M Mogas with the installation of an integrated complex whilst the second project, estimated at USD25mn, involves the replacement of the top dome and catalyst separation system of the regenerator reactor of the Long Residue Catalytic Cracking Unit. (Bursa Malaysia) Barakah Offshore Petroleum Bhd said it is not expecting improvement in its bottom line this year compared to FY16, but foresees more jobs secured next year. The upstream oil and gas company has yet to secure any new contract for its transportation and installation division. (The Edge) Rev Asia Bhd asserted that its core business will remain in the technology sector following the sale of its 70%-owned digital media subsidiary to Media Prima Bhd. The sale is expected to be completed by the third quarter of this year, and will award shareholders with the proposed dividend of 44 sen per share. (The Edge) Page 3 of 7
6. TA Securities 19-Jun-17 A Member of the TA Group NetX Holdings Bhd has proposed to issue and allot up to 500mn new shares to Australian investment bank Macquarie Bank for about RM25 .5mn, which it will use to fund the development of a mobile payment exchange system. Macquarie Bank does not have any intention to change any person in the board or participate in management of the Group. (Bursa Malaysia) Page 4 of 7
7. TA Securities 19-Jun-17 A Member of the TA Group News In Brief Economy Asia Malaysia Jobless Rate Remains Stable Malaysia 's unemployment rate held steady in April, after falling marginally in the previous month, figures from the Department of Statistics showed. The jobless rate came in at 3.4% in April, the same rate as in March. In the corresponding month last year, the jobless rate was 3.5%. The number of unemployed people rose to 511,900 in April from 510,800 in March. A year ago, the jobless figure totaled 511,500. The labor force participation rate remained unchanged at 67.7% in April. The seasonally adjusted jobless rate was 3.4% in April, up slightly from 3.3% in the prior month. (Department of Statistics) Malaysia to Raise CPO Export Tax Next Month Malaysia will raise its crude palm oil export tax to 6.5% in July from 6% this month. According to the Malaysian Palm Oil Board, effective July 1-31 the calculated palm oil reference price will be RM2,890.04 (US$676.35) per tonne. “A price above RM2,250 incurs a tax, which starts from 4.5% and can reach a maximum of 8.5%,“ it said. Malaysia, which is the world’s second largest palm oil producer after Indonesia, has lowered the tax for a third consecutive month in June, down from 7% in May. (The Star) Bank of Japan Keeps Policy on Hold The Bank of Japan left interest rates and its commitment to buying government bonds unchanged, maintaining its aggressive monetary stimulus aimed at lifting inflation, which continues to show weakness despite brighter spots elsewhere in the economy. The decision reaffirming the central bank’s ultra-easy stance comes less than two days after the Federal Reserve raised interest rates for the third time in six months despite renewed weakness in U.S. inflation. The Fed also gave more details on how it plans to trim its balance sheet, a topic that Japan’s central bank is gradually starting to talk about after months of insisting that it was still too early to discuss. The BOJ board voted 7-2 to keep its target for 10-year Japanese government bond yields at around zero and a shorter-term interest rate at minus 0.1%, as widely expected by economists. The bank also reiterated that it would continue to buy government bonds at an annual pace of about ¥80 trillion ($720 billion). Controlling short- and long-term interest rates has become the bank’s principal policy tool since a revamp of its measures last September, but the passage on its bond purchases is seen by investors as a symbolic gauge of the bank’s commitment to its easing policy. The actual rate of purchases has fallen well below the ¥80 trillion annual pace in recent months. Speculation has been growing in markets that the BOJ’s next step might be a tightening move, instead of easing, as investors and politicians become increasingly nervous about the bank’s ballooning balance sheet and what might happen to the overall value of its assets if the price of bonds suddenly falls. (The Wall Street Journal) Singapore NODX Falls Less than Expected in May Singapore's non-oil domestic exports declined at a slower-than-expected pace in May, data from the International Enterprise Singapore showed. NODX fell 1.2% year-over-year in May, much slower than the 5.6% decrease economists had expected. This was followed by a 0.8% drop in April. Exports of electronic products expanded 23.3% annually in May after a 4.8% rise in the prior month. It was expected to grow by 11.9%. The increase in electronic domestic exports was largely contributed by ICs, PCs and parts of PCs. At the same time, non-electronic NODX declined 9.0% yearly in May, compared to the 2.9% fall in April. On a monthly basis, NODX rose by a seasonally adjusted 8.1% in May, reversing a 9.0% decrease in the preceding month. (RTT News) China Removes 27 Restrictions for Foreign Investment in Free-Trade Zones China has removed 27 restrictions in its newly issued negative list for foreign investment in its free-trade zones, its cabinet said on Friday in a notice. Chinese leaders have pledged to open the world’s second-largest economy wider to foreign investors but a negative list is in Page 5 of 7
8. TA Securities 19-Jun-17 A Member of the TA Group place for its eleven free-trade zones - which enjoy looser trade and financial regulations on a trial basis - that specifies the areas that are off limits to foreign capital . Among the beneficiaries of the new negative list across more than 20 industries are foreign manufacturers of rail transportation equipment and civilian satellites, who would no longer be obliged to enter a joint venture with Chinese partners or let the Chinese side take the majority share. Previously restricted sectors such as precious metals and lithium mining, as well as internet access services, credit rating services, and large-scale theme park construction are now open to foreign capital. Rules on banking services, which in the past forbade foreign banks from underwriting Chinese government bonds, have also been eased. China opened its first free-trade zone in Shanghai in 2013. Since then, ten major provinces and cities such as Zhejiang and Chongqing have been approved to establish such zones. (The Star) United States U.S. Housing Starts Fall for Third Consecutive Month in May U.S. housing starts decreased for the third consecutive month in May, a sign home builders are struggling to meet buyer demand. Housing starts dropped 5.5% in May from the prior month to a seasonally adjusted annual rate of 1.092 million, the Commerce Department said. This figure carries a margin of error of 11.9%. Residential building permits, an indication of how much construction is in the pipeline, fell 4.9% to an annual pace of 1.168 million last month, the agency said. Economists surveyed by The Wall Street Journal had expected a 3.4% increase for starts and a 0.8% rise for permits. Starts fell in May for singlefamily and multifamily construction. Permits last month were down 10.4% for buildings with multiple units and down 1.9% for single-family homes. Data on housing starts tend to be volatile from month to month and can be subject to sharp revisions. Looking past monthto-month fluctuations, starts in the first five months of the year were up 3.2%. Permits during this period increased 5.5%. (The Wall Street Journal) U.S. Consumer Sentiment Declined in Early June A closely watched gauge of U.S. consumer sentiment dropped in early June, a sign that political tensions in Washington may be denting Americans’ confidence in the economy. The University of Michigan said its preliminary June reading on consumer sentiment was 94.5, its lowest level since November and down from May’s final figure of 97.1. Economists surveyed by The Wall Street Journal had expected a preliminary June reading of 97.0; the index was still up 1.1% in June from a year earlier. The report “suggests softening in consumer enthusiasm, although we expect that sentiment at these levels will still be supportive of consumer spending in the coming months,” Barclays economist Blerina Uruci said in a note to clients. (The Wall Street Journal) U.S. Exports to Mexico Fall as Uncertainty Over Nafta Lingers Friction between the U.S. and Mexico over trade is starting to cut into sales for U.S. farmers and agricultural companies, adding uncertainty for an industry struggling with low commodity prices and excess supply. Over the first four months of 2017, Mexican imports of U.S. soybean meal—used to feed poultry and livestock—dropped 15%, the first decrease for the period in four years, according to data from the U.S. Department of Agriculture. Shipments of U.S. chicken meat fell 11%, the biggest decline for the period since 2003. U.S. corn exports to Mexico declined 6%. Mexico is the largest U.S. export market for those commodities. The numbers reflect how Mexican companies are now increasingly buying grain on a short-term basis and purchasing more chicken from Brazil, troubling some industry officials and analysts. The trade data, which is the latest available, indicates that Mexico is starting to follow through on aspirations to buy food from a wider range of countries, and reduce reliance on the U.S. (The Wall Street Journal) Europe and United Kingdom Eurozone Inflation Falls to 1.4% Inflation in the eurozone has fallen back below the European Central Bank’s target, easing pressure on doves on its policymaking council to take steps towards ending its quantitative easing programme. Eurostat, the Commission’s statistics bureau, reported that annual inflation across the single currency area had eased from 1.9% in April to 1.4% in the year to May. The ECB targets inflation of just under 2%. Its policymakers are set to meet in Tallinn Page 6 of 7
9. TA Securities 19-Jun-17 A Member of the TA Group next Thursday to discuss whether to present a more positive message on economic developments . While the Eurozone’s economic recovery is becoming increasingly strong and broad, price pressures remain subdued. The flash estimates showed core inflation – a measure which strips out changes in prices for volatile goods such as energy and food, and is seen as a better indicator of longer term inflation pressures – remained weak, at 0.9%, down from 1.2% in April. The weak core rate eases pressure on the ECB to begin dismantling its quantitative easing programme, under which it is currently buying €60bnworth of bonds a month. The plan is to carry on buying that amount until at least the end of this year. However, the council is expected to begin discussions at some point in the summer on unwinding the programme in 2018. Separately, Eurozone labor cost increased at a steady pace in the first quarter. Hourly labor cost grew 1.5% on a yearly basis, the same rate as seen in the fourth quarter of 2016. The annual growth in wages eased to 1.4% from 1.6% in the previous quarter. At the same time, other cost climbed 1.6% versus 1.4% a quarter ago. In the EU28, hourly labor cost increased again by 1.7%. (Financial Times) Share Buy-Back: 16 June 2017 Company AMPROP FIAMMA GLBHD TEXCHEM UNIMECH Bought Back Price (RM) Hi/Lo (RM) 20,000 500,000 25,000 1,000 15,200 0.80 0.55 0.62/0.61 1.42 0.15/0.14 0.80/0.795 0.555/0.54 0.62/0.61 1.42/1.38 0.15/0.14 Total Treasury Shares 13,749,100 16,110,000 6,983,400 2,577,400 5,087,910 TA RESEARCH – Remisiers’ Briefing Topic: Weekly Market Outlook Speaker: Kaladher/ Stephen Soo Venue: Auditorium, 10th Floor Menara TA One Date: 19 June 2017 (Today) Time: 12.40pm 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 7 of 7
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 16-Jun-17 1.99 2.25 5.95 Target Price BETA (RM) EPS (sen) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 2.37 2.28 5.41 0.98 0.60 1.26 10.3 24.1 19.7 15.8 25.3 29.8 19.2 9.4 30.3 12.6 8.9 19.9 5.9 4.0 2.2 7.9 4.0 3.2 2.44 2.70 7.00 -18.4 -16.7 -15.0 1.95 1.95 4.43 2.1 15.4 34.3 -6.6 5.1 30.2 4.60 3.50 5.30 7.00 15.90 9.90 22.10 5.20 10.00 1.27 0.95 1.33 1.37 0.67 0.96 0.79 1.34 0.70 33.6 29.4 43.9 49.6 101.6 73.3 136.6 50.6 40.3 30.4 33.1 48.3 54.8 110.2 82.3 140.4 54.0 39.0 11.6 9.3 11.6 13.6 15.4 13.1 14.9 10.0 26.0 12.8 8.3 10.6 12.3 14.2 11.7 14.5 9.4 26.8 4.1 2.9 3.5 3.0 2.6 5.2 2.7 2.4 3.2 4.1 2.9 3.5 3.3 2.6 5.2 2.8 2.4 3.2 4.49 3.00 5.70 6.87 15.74 9.68 20.58 5.59 11.14 -13.1 -8.7 -10.5 -2.0 -0.8 -0.5 -0.9 -9.7 -5.9 3.60 2.08 3.90 4.11 12.70 7.50 19.02 4.53 8.20 8.3 31.7 30.8 63.7 23.0 28.4 7.3 11.5 27.8 4.8 14.6 18.3 49.2 15.7 17.4 3.4 7.2 18.4 0.42 1.29 5.37 3.48 0.66 1.19 2.01 2.14 5.93 0.46 1.62 5.49 3.50 0.78 0.58 2.26 1.49 6.26 0.80 0.62 1.07 1.10 1.04 1.29 na 1.05 0.08 5.7 14.6 31.6 15.3 4.9 8.3 12.6 11.9 42.0 5.7 13.5 36.4 20.3 5.7 9.6 12.5 12.0 45.8 7.4 8.8 17.0 22.7 13.2 14.3 15.9 17.9 14.1 7.3 9.6 14.8 17.1 11.5 12.3 16.0 17.9 13.0 0.0 2.2 2.2 2.2 3.8 0.8 2.7 1.4 4.2 0.0 2.2 2.2 2.7 3.8 0.8 2.7 1.4 4.2 0.51 1.35 5.48 3.61 0.74 1.20 2.15 2.48 6.15 -17.6 -4.6 -2.0 -3.6 -10.9 -0.8 -6.5 -13.5 -3.6 0.36 0.80 4.65 3.07 0.33 0.41 1.50 1.46 5.55 16.7 62.1 15.5 13.4 98.5 193.8 34.0 46.5 6.8 -3.4 22.9 12.3 8.7 8.3 107.0 18.2 24.4 0.9 2.01 2.00 0.47 11.0 11.5 18.3 17.5 5.0 5.0 2.19 -8.2 1.93 4.1 0.0 14.80 18.98 17.84 21.08 0.50 0.57 74.8 93.1 81.3 19.8 101.9 20.4 18.2 18.6 5.0 4.4 5.5 4.8 15.30 19.10 -3.3 -0.6 12.90 14.90 14.7 27.4 6.3 15.9 2.20 7.50 24.86 1.22 83.10 3.55 1.93 4.90 0.93 2.23 8.62 27.41 1.39 88.66 4.10 2.50 4.41 1.36 0.50 0.35 0.34 0.46 0.36 0.50 0.66 0.43 0.56 6.7 26.4 120.5 6.1 293.5 22.3 27.5 15.7 9.3 7.9 30.5 148.1 6.2 326.2 24.7 27.5 16.6 12.7 32.7 28.4 20.6 20.1 28.3 15.9 7.0 31.2 10.0 27.9 24.6 16.8 19.6 25.5 14.4 7.0 29.4 7.3 1.8 4.0 2.8 4.9 3.3 4.2 3.1 0.9 5.4 2.2 4.7 3.0 4.9 3.4 4.8 4.1 1.0 5.4 3.00 8.89 27.00 1.35 83.68 3.66 2.04 5.00 1.07 -26.7 -15.6 -7.9 -9.5 -0.7 -2.9 -5.4 -2.0 -13.1 2.11 7.30 22.44 1.13 74.12 2.12 1.43 4.14 0.78 4.3 2.7 10.8 7.9 12.1 67.4 35.0 18.3 19.2 -14.4 2.3 5.9 6.0 6.3 39.8 11.6 13.1 17.0 45.52 52.08 1.05 198.6 187.4 22.9 24.3 4.4 4.4 55.64 -18.2 40.61 12.1 3.1 9.72 5.65 11.53 6.58 1.34 1.28 49.3 25.7 55.5 27.9 19.7 22.0 17.5 20.3 0.5 1.4 0.6 1.6 10.00 6.38 -2.8 -11.4 7.50 4.19 29.6 34.7 22.3 25.0 2.60 0.13 3.81 0.13 0.74 1.26 22.1 0.4 24.6 0.4 11.8 34.4 10.6 34.6 6.2 0.0 7.3 0.0 3.42 0.16 -24.0 -21.9 2.48 0.05 4.8 150.0 -12.2 150.0 5.97 4.20 6.65 4.70 0.78 0.52 10.3 13.3 16.4 16.5 57.9 31.5 36.4 25.5 0.7 1.5 0.7 1.8 6.73 4.37 -11.3 -3.9 5.54 3.85 7.8 9.1 -6.0 0.5 6.81 6.51 2.01 5.61 1.80 6.05 7.70 1.80 5.75 2.40 0.61 0.16 0.33 -0.20 0.28 20.0 35.8 12.3 26.6 3.7 24.2 40.5 15.3 30.2 6.1 34.0 18.2 16.3 21.1 48.3 28.1 16.1 13.1 18.6 29.7 1.3 2.8 1.8 2.4 0.5 1.6 3.1 2.3 2.7 0.8 7.12 7.07 2.38 5.94 2.64 -4.4 -7.9 -15.5 -5.6 -31.8 4.06 5.62 1.88 4.20 1.65 67.7 15.8 6.9 33.6 9.1 41.0 -1.2 -4.7 4.9 -23.7 INDUSTRIAL SCIENTX SKPRES 8.45 1.31 9.69 1.90 0.55 0.50 54.4 8.6 66.4 11.4 15.5 15.3 12.7 11.5 2.5 3.2 2.8 4.2 8.99 1.44 -6.0 -9.0 5.97 1.12 41.5 17.0 26.1 1.6 MEDIA ASTRO MEDIA PRIMA STAR 2.65 0.94 2.20 3.45 0.60 1.40 1.03 0.65 0.64 13.2 1.7 7.1 14.5 2.8 6.5 20.0 55.1 31.0 18.3 33.3 33.9 4.7 1.5 8.2 4.9 2.4 8.2 3.01 1.52 2.70 -12.0 -38.2 -18.5 2.51 0.94 2.20 5.6 0.5 0.0 1.9 -18.3 -1.8 -14.5 -26.3 -6.3 -9.0 -7.6 -12.4 -51.4 0.19 0.84 7.03 0.44 6.36 1.29 0.51 210.5 1.8 5.3 39.1 13.4 42.6 0.0 131.4 -6.6 0.7 36.0 3.3 13.6 -42.3 -13.5 1.30 33.1 1.8 BANKS & FINANCIAL SERVICES AFG 3.90 AFFIN 2.74 AMBANK 5.10 CIMB 6.73 HLBANK 15.62 MAYBANK 9.63 PBBANK 20.40 5.05 RHBBANK BURSA 10.48 CONSTRUCTION BPURI GADANG GAMUDA IJM PESONA SENDAI SUNCON WCT LITRAK Building Materials WTHORSE CONSUMER Brewery CARLSBG HEIM Retail AEON AMWAY F&N HUPSENG NESTLE PADINI POHUAT QL SIGN Tobacco BAT GAMING Casino GENTING GENM NFO BJTOTO LUSTER HEALTHCARE Hospitals IHH KPJ Rubber Gloves HARTA KOSSAN SUPERMX TOPGLOV KAREX OIL & GAS DNEX 0.59 0.74 1.03 3.5 4.3 17.0 13.9 1.7 1.7 0.69 MHB 0.86 0.95 1.84 -1.2 1.3 na 65.3 0.0 0.0 1.16 MISC 7.40 7.65 0.82 61.4 54.7 12.1 13.5 4.1 4.1 7.90 PANTECH 0.61 0.69 1.28 4.1 5.0 14.6 12.1 3.0 3.3 0.67 PCHEM 7.21 7.91 1.07 39.2 41.6 18.4 17.3 2.9 3.1 7.80 SENERGY 1.84 2.02 2.46 9.6 7.2 19.1 25.5 0.5 0.5 2.10 UMWOG 0.51 0.80 2.01 -12.0 -3.6 na na 0.0 0.0 1.04 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.73 1.55 1.40 12.0 12.9 14.5 13.4 0.0 0.0 2.00
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.76 3.06 4.58 25.30 9.62 6.07 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.76 0.46 1.09 0.87 1.23 0.47 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.7 111.8 34.0 32.7 8.5 15.7 21.0 119.1 37.5 34.5 41.7 24.9 24.5 22.6 28.3 18.6 20.7 19.4 21.8 21.2 25.6 17.6 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 2.8 2.3 2.2 2.2 2.6 2.8 2.8 2.6 2.6 2.3 3.2 2.8 2.52 3.70 4.81 25.50 9.67 6.51 -30.2 -17.3 -4.8 -0.8 -0.5 -6.8 1.42 3.00 4.21 22.72 7.30 5.53 PROPERTY GLOMAC 0.67 0.69 0.59 3.4 7.0 19.3 9.5 6.0 6.0 0.83 -19.4 0.67 HUAYANG 1.06 1.07 0.65 17.3 17.4 6.1 6.1 3.8 3.3 1.43 -26.0 1.05 IBRACO 0.86 0.92 0.34 4.9 10.2 17.5 8.4 4.1 4.7 1.05 -18.6 0.79 IOIPG 2.17 2.25 0.89 17.4 17.4 12.5 12.4 3.2 3.5 2.46 -11.8 1.85 MAHSING 1.59 1.70 0.72 14.4 14.2 11.0 11.2 4.1 4.1 1.70 -6.5 1.34 SNTORIA 0.86 0.98 0.29 6.2 10.3 13.9 8.3 1.2 1.2 1.00 -14.5 0.69 SPB 4.84 5.98 0.59 25.6 22.8 14.3 16.0 3.8 3.8 5.19 -6.7 4.32 SPSETIA 3.65 4.10 0.66 11.7 12.6 34.2 31.7 1.3 1.3 4.50 -18.9 2.80 SUNWAY 4.00 3.95 0.46 15.6 15.9 17.4 17.1 6.7 6.8 4.05 -1.2 2.84 Note: SUNWAY proposed bonus issue of shares and warrants. Ex-Target price RM1.69. For more details please refer to 15.06.17 report. REIT SUNREIT 1.73 1.86 0.51 8.9 10.1 19.5 17.1 5.1 5.8 1.84 -6.0 1.60 CMMT 1.54 1.72 0.56 8.1 8.6 19.1 17.9 5.5 5.8 1.72 -10.5 1.45 % Chg YTD 23.9 2.0 8.8 11.4 31.8 9.8 13.5 -10.0 4.1 5.4 18.8 1.2 0.0 1.0 8.9 17.5 18.7 23.9 12.0 30.4 40.8 -4.3 -6.2 -14.5 11.3 11.2 6.9 9.5 16.6 33.3 8.1 6.2 0.6 0.7 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.15 24.30 18.90 14.44 1.44 1.23 21.47 19.60 17.37 1.90 0.72 0.76 0.76 1.01 0.57 7.1 98.4 88.2 131.9 8.2 6.4 102.3 101.3 130.8 10.7 16.2 24.7 21.4 10.9 17.5 17.9 23.8 18.7 11.0 13.5 6.1 3.0 3.3 3.0 6.9 6.1 3.1 3.7 3.2 6.9 1.80 25.70 22.66 14.90 1.64 -36.1 -5.4 -16.6 -3.1 -12.2 1.13 22.92 18.10 13.00 1.38 1.8 6.0 4.4 11.1 4.3 -16.1 2.1 -11.3 3.9 -3.4 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.99 4.95 5.88 6.65 5.50 4.95 6.10 7.50 1.29 0.94 0.69 0.68 15.0 20.8 25.1 21.4 16.7 21.1 25.4 22.3 33.2 23.7 23.4 31.0 30.0 23.5 23.1 29.8 1.5 4.2 3.4 2.9 1.7 4.3 3.4 3.0 5.99 5.19 6.60 6.90 -16.7 -4.6 -10.9 -3.6 4.11 4.64 5.50 5.81 21.4 6.7 6.9 14.5 5.7 2.5 -1.7 11.8 TECHNOLOGY Semiconductor & Electronics IRIS 0.15 INARI 2.02 MPI 13.20 UNISEM 3.56 0.28 2.40 15.90 4.10 1.34 0.80 0.51 0.80 -2.6 10.3 94.2 26.9 -0.3 na 12.6 19.6 115.7 14.0 29.1 13.2 na 16.0 11.4 12.2 0.0 4.0 2.0 3.4 0.0 2.5 2.0 3.4 0.24 2.23 13.50 3.70 -37.5 -9.4 -2.2 -3.8 0.10 1.41 7.02 2.27 50.0 43.6 88.0 56.8 36.4 21.7 78.1 50.8 3.27 8.79 3.23 8.10 1.12 1.48 37.6 17.2 35.9 17.5 8.7 51.0 9.1 50.3 1.2 1.1 1.5 1.1 3.59 9.45 -8.9 -7.0 2.16 5.76 51.4 52.6 42.8 45.0 1.79 3.75 2.05 4.05 0.74 0.67 14.3 17.1 22.7 15.1 12.5 21.9 7.9 24.8 2.4 3.4 3.9 3.0 1.87 4.59 -4.3 -18.3 1.33 3.62 34.6 3.6 12.6 -12.8 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.45 OCBC 10.64 UOB 22.95 PLANTATIONS WILMAR IFAR 3.52 0.49 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.22 1.13 1.09 173.8 87.7 195.6 190.2 11.8 92.4 12.1 209.3 11.7 10.8 11.5 11.0 2.9 5.7 3.1 2.9 6.7 3.1 21.2 10.8 24.0 -3.4 -1.1 -4.5 14.72 8.84 17.41 38.9 29.4 31.8 17.9 19.3 12.5 3.72 0.53 0.92 1.12 28.9 4.9 31.1 5.2 11.3 9.3 2.3 2.5 2.6 2.6 4.0 0.6 -12.0 -18.5 2.96 0.44 18.9 10.2 -1.9 -7.6 12.2 10.0 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.
12. T e c h n i c a l TA Securities V i e w Monday , June 19, 2017 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Technical Outlook FBM KLCI: 1,791.31 (+2.42, +0.14%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Overbought Corrections Likely to be Shallow Despite profit-taking pressure after an extended three-day holiday the previous weekend following a steep correction on US technology shares, the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) managed to test another new two-year high last Friday, after the US Federal Reserve raised interest rates for the second time this year and guided for one more hike in 2017. For the week, the FBM KLCI added 2.42 points, or 0.14 percent to 1,791.31, with gains on core plantation counters KLK (+50sen) and PPB Group (+26sen), and Hong Leong Bank (+42sen) offsetting losses on Maxis (-31sen) and Petronas Gas (-30sen). Average daily traded volume and value moderated further to 1.99bn shares and RM2.56 billion, compared with the 2.2 billion shares and RM2.4 billion average respectively the previous week, as trading momentum slowed amid the cautious mood following the much-anticipated US interest rate hike. The local stock market eased lower Tuesday, as investors came back from an extended threeday weekend and took profits following a correction on US technology shares overnight and ahead of a key interest rate decision by the US central bank. The KLCI slipped 4.45 points to close at 1,784.44, off an early high of 1,793.01 and near session low of 1,784.31, as losers beat gainers 557 to 349 on cautious trade totaling 2.05bn shares worth RM2.57bn. The local benchmark closed at a fresh two-year high the next day, lifted by strength in defensive gaming stocks and banks but the broader market ended mixed ahead of the US Federal Reserve’s key decision on raising interest rates. The KLCI rose 7.91 points to settle at 1,792.35, off an early low of 1,786.92 and high of 1,793.07, as gainers edged losers 483 to 381 on cautious turnover of 1.95bn shares worth RM2.49bn. Stocks settled slightly lower Thursday, in line with softer regional markets after the US Federal Reserve raised interest rates for the second time this year and guided for one more hike in 2017. The KLCI dipped 2.34 points to close at 1790.01, off an early high of 1,795.01 and low of 1,788.27, as losers beat gainers 546 to 346 on moderate turnover of 1.99bn worth RM2.27bn. Caution over the US central bank’s plan for a gradual pace on raising interest rates and shrinking the government’s bloated balance sheet kept most investors sidelined ahead of the weekend. The index ended 1.3 points up Friday at 1,791.31, off the early high of 1,796.75 and low of 1,787.84, as losers edged gainers 525 to 359 on flat turnover of 1.99bn shares worth RM2.92bn. Trading range for the blue-chip benchmark index last week shrank to a narrow 12.44 points, compared to the 19.98-point range the previous week, as key index heavyweights stayed in sideways consolidation. For the week, the FBM-EMAS Index eased 12.85 points or 0.1 percent to 12,751.84, while the FBM-Small Cap Index shed 56.83 points, or 0.32 percent to 17,474.68, as small cap stocks also slipped into sideways range bound trade. Page 1 of 3
13. TA Securities 19-Jun-17 A Member of the TA Group The daily slow stochastic momentum indicator for the FBM KLCI is overbought again following its rise to another two-year high last Friday , while the weekly indicator’s signal line stayed up in overbought territory. The 14-day Relative Strength Index (RSI) indicator rehooked upwards to a positive reading of 62.51, but the 14-week RSI inched higher for a moderately overbought reading of 72.34. Chart 1 On trend indicators, the daily Moving Average Convergence Divergence (MACD) edged higher and is set to challenge the bearish divergence line, while the weekly MACD indicator’s signal line turned back up to maintain its uptrend cue (Chart 2). The 14-day Directional Movement Index (DMI) trend indicator also sustained its uptrend signal, with the +DI and –DI lines expanding on a rising ADX line. Chart 2 Conclusion With the FBM KLCI’s stubborn ascent to another fresh two-year high last Friday sustaining overbought readings on technical momentum indicators, a profit-taking correction is still due. Meantime, weaker buying momentum and market undertone should see investors staying sidelined and cautious for another week. Nonetheless, the relative upside resilience vis-à-vis global peers suggests that there are still interested buyers on dips cushioning downside, meaning that profit-taking corrections are likely to be shallow. Page 2 of 3
14. TA Securities 19-Jun-17 A Member of the TA Group Immediate uptrend supports for the index remains at the rising 10 and 30-day moving average levels at 1 ,787 and 1,775 respectively, followed by better support from the 50-day moving average at 1,765. Immediate upside hurdles are from the 1,800 psychological level and 18 May 2015 high of 1,823, with next key hurdle from the 27 April 2015 peak of 1,867. Sector-wise, blue chips are likely to extend profit-taking consolidation this week, but construction related lower liners such as Gadang, Kim Lun, KKB Engineering and WCT Holdings should encourage investors to bargain hunt on any share price weakness. Chart 3 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 3 of 3
15. COMPANY UPDATE TA Securities A Member of the TA Group www .bursamids.com Monday, June 19, 2017 Sector: Oil & Gas MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 TP: RM0.74 (+25.4%) Dagang NeXchange Bhd Last Traded: RM0.59 Project Delay Offset by Better Margins Buy THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Abel Goon Tel: +603 2072 1277 ext. 1641 abelgoon@ta.com.my We are still rather positive on DNeX’s future prospects after an analysts’ briefing hosted by management. Although the Thai border Vehicle Entry Permit and Road Charges (VEP-RC) and new brownfield acquisition are unlikely to materialise this year, DNeX’s FY17 earnings growth will be sustained by:- 1) higher margins from the trade facilitation business, 2) increased contribution, from OGPC and 3) mini-bid wins from the directional drilling umbrella contract. Thus, we maintain our Buy recommendation on DNeX. After adjusting our forecasts, our TP is adjusted higher to RM0.74/share. Key takeaways from the analysts’ briefing are as below: As DNeX is in a net cash position, any future acquisitions or business expansion could be implemented via borrowings. Furthermore, it will be able to pay out dividends to reward shareholders. Revenue from trade facilitation remained consistent in 1Q17. However, there was significant margin expansion as DNeX managed to secure higher margin permits such as motor approved permits and private jetty permits. We believe the introduction of new permit applications via National Single Window implies that the uCustoms system, which would have ended DNeX’s monopoly would be delayed again. Therefore, it is highly probable that DNeX will maintain its monopoly after Sep-18. VEP-RC margins also improved as the opex portion has higher margins compared to the capex portion. Besides that, management expects an additional RM8.5mn to be billed by end-17 for the final capex portion payment. On the other hand, we understand that DNeX is still in talks with the government regarding the Thai border VEP-RC. Hence, no timeline has been confirmed. Thus, we believe it is unlikely to materialise in FY17. Contributions from the eWork permit system (rehiring of foreign workers) will only commence in 2Q17. The Group has processed about 16k foreign workers since Feb, which is within expectations. In our opinion, DNeX’s partner may be able to secure the renewal of foreign worker permits as well going forward. Stock Return Information KLCI Expected Share Price Return (%) Expected Dividend Return (%) Expected Total Return Page 1 of 4 1,791.31 25.4 1.7 27.1 Share Information Bloomberg Code DNEX MK Stock Code 4456 Listing Main Market Issued Share (mn) 1749.8 Market Cap (RMmn) 1032.4 Par Value 0.20 52-wk Hi/Lo (RM) 0.69/0.19 Estimated Free Float (%) 67.3 Beta 1.0 3-mth Avg Daily Vol ('000 shrs) 60,251 Top 3 Shareholders Arcadia Acres Censof Holdings Bhd Abdul Manaf 20.6 16.8 3.9 Share Performance (%) Price Change DNEX 1 mth (3.3) 3 mth 49.4 12 mth 150.8 FBM KLCI 1.3 2.6 10.3 Financial Info Debt to Equity Ratio ROA (%) ROE (%) NTA per share (RM) Price to NTA (x) FY17 FY18 Net Ca s h Net Ca s h 12.1 13.9 0.2 2.9 13.1 15.0 0.2 2.5 (12-Mth) Share Price relative to the FBM KLCI In the energy division, DNeX secured two mini-bids worth RM7mn from Petronas Carigali which will be recognised in 2Q17. Going forward, we expect it to secure more mini-bids as it is the sole local player competing under the umbrella contract. However, management revealed that margins have not been as lucrative as previously expected given that competition remains tight. OGPC continues to contribute positively to the Group and also saw a slight margin expansion. Management’s near-term goal is to expand into the downstream segment, which would further expand margins and increase the number of contracts available. www.taonline.com.my Source: Bloomberg
16. TA Securities 19-Jun-17 A Member of the TA Group Recall that associate contribution in 1Q17 was rather subdued at RM4 .5mn. This was due to lower production (-33% QoQ) at Anasuria field, arising from well intervention works being during the quarter. However, the works have since been completed and management expects production to normalise in subsequent quarters. Besides that, management also revealed that there will be a planned production shut-down at Anasuria for a turnaround in Sep-17. The shutdown would last for circa 20 days and would likely register some lumpy costs. Lastly, management revealed that winning the tender for a new brownfield is now a long shot given the large number of bids. That said, DNeX still intends to acquire a brownfield with similar characteristics to Anasuria. The required characteristics are: 1) divested by an oil major, 2) late cycle and able to be turned around via lower production costs and 3) upside to oil reserves. Note that we have not included any earnings from new brownfields at this juncture. Impact We make the following changes to our earnings forecast: Assume the Thai border VEP-RC will only begin in FY18 as compared to FY17 previously. Lower net average daily production for Anasuria field as a result of well intervention and planned shutdown. Increase margins for trade facilitation, and assume DNeX maintains its monopoly in FY19. Recall that we had previously expected DNeX to lose one-third of market share. Thus, our earnings are increased by 3.6%/2.8%/15.3% for FY17/18/19. Valuation We increase our TP to RM0.74/share based on SOP valuations after accounting for change in earnings. Maintain BUY on DNeX as in our opinion, it expanded into the O&G sector at the right time. Furthermore, high margin, recurring income from its government-linked contracts should cushion any downside risk. Figure 1. Production/day (bbl) Average production/day (LHS) QoQ Change (RHS) 4,500 40% 3,891 4,000 3,500 30% 29% 3,214 20% 3,010 3,000 2,596 10% 2,500 0% 2,000 -6% -10% 1,500 -20% 1,000 -30% 500 -33% 0 -40% 2Q16 3Q16 Source: Company, TA Research Page 2 of 4 4Q16 1Q17
17. TA Securities 19-Jun-17 A Member of the TA Group SOP Valuation Segments IT Energy Total Equity Value (RM mn) Shares outstanding (mn) SOP TP (RM) PER 24.0 11.0 EV 808.0 479.1 1287.1 1749.8 0.74 Basis Peers’ average 19% premium to peers’ average Earnings Summary Income Statement FYE 31 Dec (RMmn) Revenue EBITDA Depreciation Net finance cost Associate & JV Forex & EI PBT Taxation & Zakat MI Net profit Core net profit Core EPS Diluted EPS DPS BVPS NTA/Share Ratios FYE 31 Dec (RMmn) Valuations Core PER Div. Yield P/BV FCF Yield (sen) (sen) (sen) (RM) (RM) (x) (%) (x) (%) 2015 95.6 33.1 (9.8) 0.2 0.0 0.0 23.4 (7.6) (4.6) 11.2 11.2 2016 178.5 34.3 (9.8) (0.6) 33.7 84.4 142.1 (9.8) 1.5 133.7 49.4 2017E 232.3 63.3 (15.0) 0.3 28.0 0.0 76.7 (13.2) (0.6) 62.8 62.8 2018F 257.3 65.1 (13.0) 0.4 40.8 0.0 93.3 (16.1) (0.8) 76.5 76.5 2019F 281.1 68.8 (11.8) 0.5 39.5 0.0 97.0 (16.7) (0.8) 79.4 79.4 0.6 0.6 0.0 0.1 0.1 2.8 2.3 2.0 0.2 0.2 3.6 2.9 1.0 0.3 0.2 4.4 3.4 1.0 0.3 0.2 4.5 3.6 1.0 0.3 0.3 2015 2016 2017E 2018F 2019F 92.0 0.0 10.3 1.0 20.9 3.4 2.6 0.8 16.4 1.7 2.3 5.2 13.5 1.7 2.0 4.9 13.0 1.7 1.8 5.1 Profitability ratios EBITDA margin EBIT margin PBT margin Core Net Margin Core ROE Core ROA (%) (%) (%) (%) (%) (%) 34.6 24.3 24.5 11.7 11.1 6.5 19.2 13.8 79.6 27.7 12.2 10.8 27.3 20.8 33.0 27.0 13.9 12.1 25.3 20.3 36.3 29.7 15.0 13.1 24.5 20.3 34.5 28.3 14.0 12.3 Liquidity ratios Current ratio Quick ratio (x) (x) 2.0 2.0 3.3 3.3 3.2 3.2 3.2 3.2 3.5 3.5 Leverage ratios Equity/total liabilities Net debt / equity (x) (x) Growth ratios Revenue Core Net Profit (%) (%) 1.4 7.2 6.6 6.5 7.1 Net Cash Net Cash Net Cash Net Cash Net Cash 10.1 (8.1) 86.8 >100 30.2 27.2 10.7 21.7 9.3 3.9 52.5 4.3 4.5 62.5 4.3 4.5 62.5 4.3 4.5 Key Assumptions Crude oil price (USD/bbl) USD/MYR rate NSW growth (%) Page 3 of 4 Balance Sheet FYE 31 Dec (RMmn) PPE JV & Associates Others Non-current assets 2015 21.3 0.0 10.3 31.6 2016 32.3 177.0 103.4 312.7 2017E 27.2 205.1 103.4 335.8 2018F 24.3 245.9 103.4 373.6 2019F 22.5 285.4 103.4 411.3 Trade receivables Cash and equivalents Others Current assets 93.7 46.1 1.9 141.7 68.6 72.3 3.9 144.8 89.3 89.0 3.9 182.2 102.4 105.5 3.9 211.8 108.1 124.6 3.9 236.6 Total Assets 173.3 457.5 517.9 585.4 647.9 1.5 0.7 2.2 0.0 12.1 12.1 0.0 12.1 12.1 0.0 12.1 12.1 0.0 12.1 12.1 50.7 18.5 1.6 70.8 42.1 0.0 1.7 43.8 54.8 0.0 1.7 56.4 64.2 0.0 1.7 65.9 66.3 0.0 1.7 67.9 Shareholders equity MI Total Equity 101.0 (0.7) 100.3 403.5 (1.9) 401.7 450.7 (1.2) 449.4 508.0 (0.5) 507.5 567.6 0.3 567.9 Total E&L 173.3 457.5 517.9 585.4 647.9 2015 23.4 9.8 (0.2) 0.0 (2.4) (9.6) (0.1) 21.0 2016 142.1 9.8 0.6 (33.7) 16.4 (13.1) (67.6) 54.4 2017E 76.7 15.0 (0.3) (28.0) (8.0) (13.2) 0.0 42.1 2018F 93.3 13.0 (0.4) (40.8) (3.7) (16.1) 0.0 45.3 2019F 97.0 11.8 (0.5) (39.5) (3.5) (16.7) 0.0 48.5 Capex Interest Others Investing cash flow (18.4) 1.6 (9.0) (25.7) (5.9) 0.2 (119.9) (125.6) (10.0) 0.3 0.0 (9.7) (10.0) 0.4 0.0 (9.6) (10.0) 0.5 0.0 (9.5) Net share issue Dividend paid Repay borrowings Others Financial cash flow 0.0 0.0 (18.5) (3.5) (22.0) 126.3 (7.8) (20.0) 2.4 100.9 0.0 (15.7) 0.0 0.0 (15.7) 0.0 (19.1) 0.0 0.0 (19.1) 0.0 (19.9) 0.0 0.0 (19.9) Net cash flow Beginning Cash Forex & Restric. Cash End Cash (26.7) 63.6 9.2 46.1 29.7 36.9 5.7 72.3 16.7 66.6 5.7 89.0 16.6 83.3 5.7 105.5 19.1 99.9 5.7 124.6 LT Borrowings Others Non-Current liabilities Trade payables ST Borrowings Others Current liabilities Cash Flow Statement FYE 31 Dec (RMmn) Pretax profit Depreciation Net interest JV & Associate Changes in WC Tax Others Operational cash flow
18. TA Securities 19-Jun-17 A Member of the TA Group ( T HI S P AGE I S I NT E N T I ON AL L Y L E FT B L ANK) 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. This report has been prepared by TA SECURITIES HOLDINGS BERHAD for purposes of Mid and Small Cap Research Scheme ("MidS") administered by Bursa Malaysia Berhad and will be compensated to undertake the scheme. TA SECURITIES HOLDINGS BERHAD has produced this report independent of any influence from the MidS or the subject company. For more information about MidS and other research reports, please visit Bursa Malaysia’s website at: www.bursamids.com for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 4 of 4
19. R E S U L T S UPDATE TA Securities Monday , June 19, 2017 FBM KLCI: 1,791.31 Sector: Healthcare A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Top Glove Corporation Bhd TP: RM5.75 (+2.5%) Last traded: RM5.61 3QFY17: Weaker QoQ on Deferred Orders and Higher Costs Under Review THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Wilson Loo Tel: +603-2167 9606 wilsonloo@ta.com.my Review Top Glove’s 9MFY17 earnings of RM234.1mn (-20.8% YoY) was within ours and consensus estimates at 70.2% and 68.6% respectively. We expect a sequentially stronger 4QFY17 on the back of higher sales volume and transitory benefit from the downtrend in raw material prices since 3QFY17. For 9MFY17, revenue grew by 15.7% YoY to RM2.5bn mainly on higher sales volume of 5% YoY. Earnings however declined by 20.8% YoY to RM234.1mn due to the high base effect in 1HFY16 whereby the USD was stronger against the Ringgit and raw material prices were lower and subdued. QoQ, earnings declined by 6.4% to RM77.7mn primarily due to lower sales volume and the time lag in passing through the higher cost of raw materials. Sales volume declined by 5% QoQ as upward revisions to ASPs of circa 9% QoQ to pass through the higher cost of raw materials led to some orders being deferred. The average prices of natural rubber latex and nitrile latex respectively increased by 18.7% to RM7.06/kg and 24.1% QoQ to USD1.34/kg. Nonetheless, the decline in EBITDA margins was marginal by 0.7%-points QoQ due to improved efficiency and cost management. Despite lower sales volume, revenue grew by 2.1% QoQ to RM869.6mn on the higher ASPs. Meanwhile, the group’s financial position remained robust. Its net cash position improved from RM39.0mn in 2QFY17 to RM95.7mn in 3QFY17. Separately, a first interim dividend of 6.0sen was declared, similar to the previous corresponding period. www.taonline.com.my Share Information Bloomberg Code TOPG MK Stock Code 7113 Listing Main Market Share Cap (mn) 1253.7 Market Cap (RMmn) 7,033.0 Par Value 0.50 52-wk Hi/Lo (RM) 5.94/4.20 12-mth Avg Daily Vol ('000 shrs) 3,468.6 Estimated Free Float (%) 44.5 Beta -0.2 Major Shareholders (%) Tan Sri Dato Sri Lim, Wee-Chai - 29.4 EPF - 8.9 Firstway United Corp - 5.1 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating Financial Indicators Net gearing (x) CFPS (RM) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth Page 1 of 3 FY18 Net cash 0.4 14.8 12.7 18.2 1.7 3.3 % of FY17 70.2 68.6 Within Within TOPG 3.9 7.9 8.3 18.4 FBM KLCI 1.3 2.6 9.6 10.3 (12-Mth) Share Price relative to the FBM KLCI Fueling the medium to longer term growth, expansion plans remain intact. Over 2017 to 2018, the group targets to add 5 new factories with total capacity of 11.7bn pieces of gloves/annum. These would increase the group’s capacity to 60.0bn pieces of gloves/annum by December 2018. The factories include F30 (2.8bn pieces/annum), F31 (3.0bn pieces/annum), F32 (4.8bn pieces/annum) in Klang as well as F33 in Nilai and F34 in Muar both with a combined capacity of 1.1bn pieces/annum. Valuation & Recommendation We place our earnings forecasts, target price of RM5.75/share and recommendation under review pending a financial results briefing to be held tomorrow. FY17 Net cash 0.3 16.5 12.0 17.5 1.6 3.6 Scorecard vs TA vs Consensus Outlook We expect QoQ improvements in 4QFY17 on the back of recovered and organic growth in sales volume. Demand will be supported by expectations for lower ASPs in tandem with the pass through of cost savings from the recent decline in raw material prices. During 3QFY17, the price of natural rubber latex was generally on a downtrend, declining by 18.2% from RM7.75/kg at end-February to RM6.34/kg at end-May. FY17 FY18 333.4 379.1 341.2 379.5 97.7 99.9 Hold (Under Review) Source: Bloomberg
20. TA Securities 19-Jun-17 A Member of the TA Group Figure 1 : Forward PER x 25.0 23.0 21.0 19.0 17.0 15.0 13.0 11.0 9.0 7.0 5.0 +1SD: 19.8x Average: 16.1x Jan-17 Apr-17 Jul-16 Oct-16 Jan-16 Apr-16 Jul-15 Oct-15 Jan-15 Apr-15 Jul-14 Oct-14 Jan-14 Apr-14 Jul-13 Oct-13 Jan-13 Apr-13 Jul-12 Oct-12 -1SD: 12.4x Source: Bloomberg, TA Securities Table 1: Earnings Summary FYE Aug 31 (RMmn) Revenue EBITDA Depreciation & amortisation EBIT Share of associates EI PBT Taxation MI Net profit (-MI) Core net profit (-MI) EPS EPS growth DPS Dividend yield PER FY15 2,510.5 454.3 -98.8 355.5 -11.7 -10.1 363.5 -82.3 -1.4 279.8 289.9 FY16 2,888.5 522.7 -107.2 415.5 1.3 10.1 442.2 -79.8 -1.7 360.7 350.6 FY17F 3,352.6 561.1 -137.8 423.3 1.4 0.0 424.1 -89.1 -1.7 333.4 333.4 FY18F 3,745.8 626.9 -146.2 480.7 1.5 0.0 482.3 -101.3 -1.9 379.1 379.1 FY19F 4,191.4 702.2 -151.4 550.8 1.7 0.0 555.5 -116.7 -2.2 436.7 436.7 22.5 55.0 11.5 2.0 25.4 29.1 28.9 14.4 2.5 19.7 26.8 -7.6 13.4 2.3 21.3 30.5 13.7 15.2 2.7 18.7 35.2 15.2 17.5 3.1 16.3 (sen) (%) (sen) (%) (x) Table 2: 9MFY17 Results Analysis FYE Aug 31 (RMmn) 3QFY16 2QFY17 3QFY17 869.6 121.5 -28.6 92.9 1.4 -0.1 -2.8 91.5 -14.0 0.2 77.7 80.5 QoQ % 2.1 -2.5 5.1 -4.6 -56.6 -205.3 -244.4 -10.9 -28.5 -210.8 -6.4 -0.8 YoY % 29.4 33.0 8.0 43.2 -78.2 -109.7 -267.1 24.1 27.3 -150.8 24.4 32.5 Revenue EBITDA Depreciation & Amortisation EBIT Net Finance costs Share of results of associate EI PBT Tax MI Net profit (-MI) Core net profit (-MI) 672.3 91.4 -26.5 64.9 6.5 0.6 1.7 73.7 -11.0 -0.3 62.5 60.8 851.5 124.7 -27.2 97.5 3.3 0.1 1.9 102.7 -19.5 -0.1 83.1 81.1 EBITDA margin (%) EBIT margin (%) PBT margin (%) Tax rate (%) Net profit (-MI) margin (%) Core net profit (-MI) margin (%) 13.6 9.7 11.0 14.9 9.3 9.0 14.6 11.4 12.1 19.0 9.8 9.5 14.0 10.7 10.5 15.3 8.9 9.3 %-pts -0.7 -0.8 -1.5 -3.8 -0.8 -0.3 %-pts 0.4 1.0 -0.4 0.4 -0.4 0.2 Page 2 of 3 9MFY16 9MFY17 2,166.4 424.1 -80.7 343.4 20.4 0.8 2.2 366.9 -69.9 -1.5 295.4 293.2 2,506.8 354.5 -82.1 272.4 9.2 -0.9 3.2 284.0 -49.6 -0.3 234.1 230.9 YoY % 15.7 -16.4 1.7 -20.7 -54.8 -214.1 41.5 -22.6 -29.1 -80.0 -20.8 -21.2 19.6 15.9 16.9 19.1 13.6 13.5 14.1 10.9 11.3 17.5 9.3 9.2 %-pts -5.4 -5.0 -5.6 -1.6 -4.3 -4.3