Bursa Malaysia Daily Market Report - 23 February

Transcription

1. Friday , 23 February, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. A x ia t a G ro u p Be r h a d : E x c lu d in g I de a , O v e ra ll A C o m m e n da b le Y e a r K o s s a n Ru b b e r I n d u s t r ie s Be rh a d : O p t im i s tic o n F Y 1 8 o u tlo o k K u m p u la n F im a Be r h a d : T u rn in g M o re P o s i tiv e M BM Re s o u rc e s Be r h a d : K itc h e n S in k in g E x e rc i se C a rr ie d O u t M e d ia P r im a Be rh a d : A Bu m m e r Y e a r Du e to De c lin in g T ra d it io n a l A d e x N e s t le (M a l a ys i a ) Be r h a d : Se e n a s De f e n s iv e S to c k P e ra k T ra n s it Be rh a d : L i s tin g T ra n s f e r I s O n T h e C a rd s P u b l ic Ba n k B e r h a d : R e c o r d P BT S im e D a r b y Bh d : Be tt e r 2 H E x p e c te d S im e D a r b y P la n t a t io n Be rh a d : L o o k in g I n to S o y b e a n Bu s in e s s S K P Re s o u rc e s Be rh a d : Sa le s De c lin e d Q o Q A f t e r Se a so n a ll y S t ro n g e r 2 Q F Y 1 8 U n is e m ( M ) Be r h a d : 4 Q F Y 1 7 We ig h te d b y S tr e n g th e n in g R in g g it W ilm a r In t e r n a t io n a l L im it e d : Su g a r , th e Sw e e t Po is o n Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks ( L oc al ) 2. D ai l y St o ck S cr een 3. D ai l y For ei gn T ech n i c al St o ck P i cks ( A US ) 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 Friday , 23 February 2018 TA Research, e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (22.02.2018) Main Market 1,536.5 Warrants 464.3 ACE Market 337.3 Bond 2.8 ETF 1.7 LEAP 0.0 Total 2,342.7 Off Market 130.0 Volume 266.2 -209.3 4.2 0.1 0.0 0.0 119.9 1,902.7 87.0 69.3 0.8 2.0 0.0 2,061.7 961.7 Value -441.8 -32.1 4.5 0.1 0.0 0.0 924.3 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 Value/ 1.24 262 0.19 139 0.21 33 0.28 3 1.16 5 0.00 0 0.88 442 7.40 % chg % YTD chg 1,855.07 13,276.76 16,932.16 1,850.00 -3.10 -5.52 43.72 -6.00 -0.17 -0.04 0.26 -0.32 3.24 2.58 -0.70 3.64 24,962.48 7,210.09 7,252.39 21,736.44 2,414.28 30,965.68 3,488.46 1,788.63 6,593.06 3,268.56 1,771.97 5,950.88 164.70 -8.14 -29.18 -234.37 -15.37 -466.21 -27.77 -12.53 -50.34 69.40 32.82 7.16 0.66 -0.11 -0.40 -1.07 -0.63 -1.48 -0.79 -0.70 -0.76 2.17 1.89 0.12 0.98 4.44 -5.66 -4.52 -2.16 3.50 2.51 1.99 3.74 -1.17 -6.71 -1.88 295 110 42 4 2 0 453 Blue chips eased on profit-taking Thursday, mirroring weakness in key regional markets after overnight US stocks fell as investors fear the Fed meeting minutes may signal multiple interest rate increases.The KLCI dipped 3.1 points to end at 1,855.07, after trading between opening low of 1,854.03 and high of 1,860.01, as losers narrowly edged gainers 453 to 442 on total turnover of 2.34bn shares worth RM2.06bn. Sideways trade should persist ahead of the weekend, with most investors likely sidelined given the cautious market undertone with worries over rising US inflation forcing more interest rate increases down the road. Immediate resistance for the index will be at 1,877, the upper Bollinger band, with the 2 Feb peak of 1,880 acting as a formidable upside hurdle. Immediate uptrend supports will be at 1,842 and 1,838, the respective 10 and 30-day moving averages, while crucial resistance-turn-support level is at 1,796, the June 2017 peak matching the recent low. Sapura Energy shares remains in base building mode at current levels, but is attractive to bargain for recovery upside towards the upper Bollinger band (82sen), with a breakout to aim for the 76.4%FR (92sen). Crucial support is from the recent low of 66sen. Likewise, UMW Oil & Gas should attract bargain hunters at current levels, pending recovery for breakout above the 200-day moving average (36sen) to target the 76.4%FR (42sen) and 61.8%FR (52sen) ahead. Crucial support will be from the 23/10/17 low (27sen). News Bites • Gas Malaysia Bhd has teamed up with the Perak Government to build a 140km pipeline with an estimated cost of RM180mn. • Muhibbah Engineering (M) Bhd's 49%-owned Muhibbah Engineering Middle East LLC has bagged a construction project worth approximately Qatari Riyal 143mn (RM149mn) from the Economic Zones Company, Qatar. • Selangor Mentri Besar Datuk Seri Mohamed Azmin Ali, his predecessor Tan Sri Abdul Khalid Ibrahim and the Selangor Government secured a major victory against Puncak Niaga Bhd's RM14bn claim. • Vivocom International Holdings Bhd is proposing a 2-for-3 rights issue in order to raise up to RM75.27mn. • Seacera Group Bhd (SGB) is acquiring a 70% stake in a firm that has Top 10 KLCI Movers Based on been awarded a RM338mn roadwork contract in Pahang. Off Market Mkt Cap. • Sime Darby Plantation Bhd's interest in acquiring a stake in India's ailing (mn) (RM) vegetable oil producer Ruchi Soya Industries Ltd is still at a preliminary Counter Mkt Cap. Chg Vol. stage, said Executive Deputy Chairman and Managing Director Tan Sri (RM’mn) (RM) (mn) MAYBANK 58.9 @ 10.15 Bakke Salleh. TENAGA 88,616 -0.06 5.37 SIME 42.5 @ 2.75 • Perak Transit Bhd proposes to transfer from the ACE Market to Main PCHEM 64,880 -0.03 6.48 TENAGA 12.0 @ 15.64 Market of Bursa Malaysia after slightly more than a year since its listing AXIATA 51,304 -0.01 6.17 SGB 2.9 @ 0.70 in October 2016. IHH 49,355 -0.04 3.64 AIRPORT 2.1 @ 8.77 • Axiata Group Bhd's president and group CEO Tan Sri Jamaludin Ibrahim MAXIS 47,488 -0.03 3.38 VERTICE 2.0 @ 0.90 said there is no ongoing re-merger talks between the company and DIGI 38,020 -0.05 1.97 CHINHIN 1.9 @ 1.13 Telekom Malaysia Bhd. SIMEPLT 37,405 -0.03 4.46 DRBHCOM 1.6 @ 2.64 • Datuk Mohd Shukrie Mohd Salle, the former group chief executive HLBANK 37,271 -0.42 0.45 INARI 1.0 @ 3.43 officer of Pos Malaysia Bhd, is joining AirAsia Bhd's new logistics arm, GENTING 34,904 -0.02 2.30 GBH 1.0 @ 1.40 Redbox Logistics. MISC 31,247 -0.12 2.07 CAELY 1.0 @ 1.05 • UCrest Bhd, a mobile health platform developer, is expanding its footprint in Russia by collaborating with YSAR+ Joint Stock Company to integrate its online hospital system with YSAR+'s medical software system. • Ink maker Toyo Ink Group Bhd said it is unaware of the reasons for the Exchange Rate Commodities Futures recent sharp rise in the price of the company's shares. USD/MYR 3.9197 0.008 Palm Oil (RM/mt) 2,490.00 -1.00 • The trading of Scientex Bhd's shares will be suspended with effect from Crude Oil ($/Barrel) 62.71 1.37 USD/JPY 107.34 -0.400 9.00 a.m., Friday, 23 February 2018 pending a material announcement. • Bank Negara Malaysia's international reserves dipped USD100mn to Gold ($/tr.oz.) 1,333.40 6.80 EUR/USD 1.229 0.0008 USD103.6bn (RM406.bn) as at Feb 15, 2018 from USD103.7bn on Jan 30, 2017. • The number of Americans filing applications for new unemployment benefits fell last week for the third time in the past four weeks. Important Dates • The U.K. economy expanded less than previously estimated in the fourth quarter as consumers and businesses absorbed faster inflation, LBS - 1:10 Bonus Issue - BI of up to 162.9m shares. keeping the country in the slow lane of global growth. • Germany's business confidence weakened notably in February as near 1 bonus share for every 10 subdivided shares held. term outlook of firms deteriorated on political uncertainty and market Ex-Date: 22/02/2018. Entitlement Date: 26/02/2018. turmoil. LISTING ON: 27/02/2018. 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. Friday , February 23, 2018 FBMKLCI: 1,855.07 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Daily Brief Market View, News in Brief: Corporate, Economy, and Share Buybacks Chartist: Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my M a r k e t V i e w Sideways on US Inflation Concerns Blue chips eased on profit-taking Thursday, mirroring weakness in key regional markets after overnight US stocks fell as investors fear the Fed meeting minutes may signal multiple interest rate increases. The KLCI dipped 3.1 points to end at 1,855.07, after trading between opening low of 1,854.03 and high of 1,860.01, as losers narrowly edged gainers 453 to 442 on total turnover of 2.34bn shares worth RM2.06bn. Key Resistance at 1,877/80, Support at 1,842/38 Sideways trade should persist ahead of the weekend, with most investors likely sidelined given the cautious market undertone with worries over rising US inflation forcing more interest rate increases down the road. Immediate resistance for the index will be at 1,877, the upper Bollinger band, with the 2 Feb peak of 1,880 acting as a formidable upside hurdle. Immediate uptrend supports will be at 1,842 and 1,838, the respective 10 and 30-day moving averages, while crucial resistance-turn-support level is at 1,796, the June 2017 peak matching the recent low. Bargain Sapura Energy & UMWOG Sapura Energy shares remains in base building mode at current levels, but is attractive to bargain for recovery upside towards the upper Bollinger band (82sen), with a breakout to aim for the 76.4%FR (92sen). Crucial support is from the recent low of 66sen. Likewise, UMW Oil & Gas should attract bargain hunters at current levels, pending recovery for breakout above the 200-day moving average (36sen) to target the 76.4%FR (42sen) and 61.8%FR (52sen) ahead. Crucial support will be from the 23/10/17 low (27sen). Asian Markets Mixed as Fed Minutes Rattles Investors Asian stocks were mixed in Thursday trade, with Asian markets largely building on the sharp selloff in U.S. stocks overnight that was stoked by fresh concerns about higher interest rates. The retreat came after minutes of the Federal Reserve’s last policy meeting showed the usual concerns that inflation might disappoint, but also an expectation of faster economic growth due to fiscal stimulus. In particular, members agreed that “the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate.” That led investors to narrow the odds on faster hikes with a host of Fed fund futures hitting contract lows. Three rate rises are now almost fully priced in for this year, compared to two as recently as December. Japan’s Nikkei share average fell on Thursday on across-the-board selling after U.S. shares dropped overnight on speculation about faster interest rate hikes, while Ricoh stumbled after a media report said it was considering an impairment charge. The Nikkei declined 1.1 percent to 21,736.44. In South Korea, the Kospi also slipped 15.37 points, or 0.63 percent, to 2,414.28. Australia's ASX 200 swung between gains and losses before finishing higher modestly. The index ended up 7.2 points, or 0.12 percent, at 5,950.9. The heavily weighted financial subindex finished up 0.39 percent and the energy sector declined 1.32 percent. Materials gained 0.53 percent. China’s major stock indexes scored their best single-day gains in more than 18 months, as investors played catch-up buying after the week-long Lunar New Year holiday. The Shanghai Composite index was up 69.57 points or 2.17 percent at 3,268.73, its best single-day gain since August 2016. Page 1 of 8
4. 23-Feb-18 Dow Gets Lift From Energy Sector The Dow and S &P 500 advanced on Thursday to halt a two-session losing skid, buoyed by gains in industrial and energy shares as U.S. Treasury yields eased, while the Nasdaq lost ground for a third straight session. Major indexes advanced early as worries about a faster pace of interest rate hikes by the U.S. Federal Reserve were eased by comments by St. Louis Fed President James Bullard, who expressed concerns that a “bunch of hikes” could turn Fed policy restrictive. Those gains faded, however, and major indexes finished well off session highs as investors exercised caution in what is likely to be a rising interest rate environment. Market participants are still largely expecting the Fed to raise rates three times this year, beginning with its next meeting in March. Energy firms were among the biggest gainers Thursday, as oil prices rally after data showing a surprise draw in U.S. crude inventories and a drop in the dollar. WTI futures rose 1.6 percent, to USD62.66 a barrel, after hitting a two-week intraday high above USD63. Brent crude futures were also up 1.4 percent, at USD66.31 a barrel. Chesapeake Energy Corp.’s surged 22 percent after the company topped earnings estimates for the fourth quarter. The stock was one of the biggest boosts to the energy sector. Industrial shares also climbed 0.59 percent, led by a 3.34 percent gain United Technologies Corp after the aero parts maker said it is exploring a breakup of its business portfolio. However, the Nasdaq composite closed lower for a fourth straight day, notching its longest losing streak since November 2016, as declines in Netflix, Google-parent Alphabet and the iShares Nasdaq Biotechnology exchangetraded fund (IBB) pressured the index lower. The Dow Jones Industrial Average rose 164.70 points, or 0.66 percent, to 24,962.48, the S&P 500 gained 2.63 points, or 0.10 percent, to 2,703.96, and the Nasdaq Composite dropped 8.14 points, or 0.11 percent, to 7,210.09. 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 Friday, February 23, 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 2 of 8
5. 23-Feb-18 N e w s i n B r i e f Corporate Gas Malaysia Bhd has teamed up with the Perak Government to build a 140km pipeline with an estimated cost of RM180mn , in order to supply natural gas to its customers in Kinta Valley. Under the agreement, Perak State Government has agreed to contribute towards the development cost in the form of capital contribution of RM10mn. The group will fund the project through combination of internally generated funds and borrowings. (Bursa Malaysia/The Star) Muhibbah Engineering (M) Bhd's 49%-owned Muhibbah Engineering Middle East LLC has bagged a construction project worth approximately Qatari Riyal 143mn (RM149mn) from the Economic Zones Company, Qatar. The construction contract is for the design, construction and erection of syncrolift and travel lift with ancillaries and all associated works in Marsa Um Alhoul. The timeline for completion is expected to be 1Q2019. (Bursa Malaysia/New Straight Times) Selangor Mentri Besar Datuk Seri Mohamed Azmin Ali, his predecessor Tan Sri Abdul Khalid Ibrahim and the Selangor Government secured a major victory against Puncak Niaga Bhd’s RM14bn claim in relation to the takeover of water assets in the state. Nevertheless, the group said it will file an appeal with the Court of Appeal. (Bursa Malaysia/The Sun) Vivocom International Holdings Bhd is proposing a 2-for-3 rights issue in order to raise up to RM75.27mn. The cash will be sweetened by free detachable warrants on the basis of 1-for-2 warrants E for every 2 rights shares subscribed. The proceeds will be used for working capital, future viable investments, and estimated expenses in relation to the exercise. The proposal is expected to be completed by 3Q2018. (Bursa Malaysia/The Edge) Seacera Group Bhd (SGB) is acquiring a 70% stake in a firm that has been awarded a RM338mn roadwork contract in Pahang. The group will be paying RM35mn for the stake in construction and civil engineering firm Teras Sari Resources Sdn Bhd, via the issuance of 35mn new SGB’s shares. (Bursa Malaysia/The Edge) Sime Darby Plantation Bhd's interest in acquiring a stake in India's ailing vegetable oil producer Ruchi Soya Industries Ltd is still at a preliminary stage, said Executive Deputy Chairman and Managing Director Tan Sri Bakke Salleh. In the meantime, the group also reported 2QFY18 results, with its net profit rise 34.5% YoY to RM429mn from RM319mn thanks to higher earnings from its upstream operations arising from higher sales of palm products and reduced finance costs as a result of lower borrowings. The quarterly revenue also grew 4.1% YoY to RM4.09bn from RM3.93bn. For 1HFY18, the group’s net profit more than tripled to RM1.45bn from RM470mn due to gain on sale of land and one-off reversal of accruals. Meanwhile, the revenue also increased 13.08% YoY to RM7.63bn from RM6.74bn. The group declared an interim dividend of 3.5sen/share. (Bursa Malaysia/The Edge/Bernama) Perak Transit Bhd proposes to transfer from the ACE Market to Main Market of Bursa Malaysia after slightly more than a year since its listing in October 2016. Meanwhile, the group also announced 4QFY17 results, with its net profit soared 7% YoY to RM8.37mn from RM7.83mn, driven by higher contribution from all its business segments even though quarterly revenue decreased 8.1% YoY to RM25.25mn from RM27.48mn. For FY17, the net profit increased 33.7% YoY to RM28.83mn from RM21.57mn. Revenue also rose 18.4% YoY to RM106.77mn from RM90.18mn. (Bursa Malaysia/The Sun) Page 3 of 8
6. 23-Feb-18 Axiata Group Bhd ’s president and group CEO Tan Sri Jamaludin Ibrahim said there is no ongoing re-merger talks between the company and Telekom Malaysia Bhd. Rather, both companies will undertake usual business collaboration to leverage on their respective strengths. (The Edge) Datuk Mohd Shukrie Mohd Salle, the former group chief executive officer of Pos Malaysia Bhd, is joining AirAsia Bhd’s new logistics arm, Redbox Logistics. (The Edge) UCrest Bhd, a mobile health platform developer, is expanding its footprint in Russia by collaborating with YSAR+ Joint Stock Company to integrate its online hospital system with YSAR+'s medical software system. The system will be used for both medical consultation, analysis and prescription both inside and outside of the hospitals. (Bernama) Ink maker Toyo Ink Group Bhd said it is unaware of the reasons for the recent sharp rise in the price of the company's shares, in respond to the Bursa Securities' unusual market activity query earlier. (Bursa Malaysia/The Edge) The trading of Scientex Bhd’s shares will be suspended with effect from 9.00 a.m., Friday, 23 February 2018 pending a material announcement. (Bursa Malaysia) Axiata Group Bhd returned to the black in 4QFY17, posting a net profit of RM24.73mn compared to a net loss of RM309.49mn a year ago, mainly due to improved earnings before interest, tax, depreciation and amortisation and foreign exchange gains. Meanwhile, quarterly revenue climbed 8.15% YoY to RM6.26bn from RM5.79bn thanks to strong growth from Indonesia, Malaysia and Bangladesh. For FY17, the group's net profit expanded 80.36% YoY to RM909.48mn from RM504.25mn, while revenue rose 13.16% YoY to RM24.4bn from RM21.57bn in FY16. The group also declared a final dividend of 3.5sen/share. (Bursa Malaysia/The Edge) Public Bank Bhd’s net profit grew by a marginal 0.18% YoY to RM1.49bn in 4QFY17 from RM1.48bn, mainly due to higher net interest income, net fee and commission income, income from Islamic banking business and other operating income. These were partially offset by higher operating overheads in line with higher business volume and higher loan impairment allowance. The quarterly revenue was also up 5.2% YoY to RM5.35bn from RM5.08bn. For FY17, the group's net profit increased 5.1% YoY to RM5.47bn from RM5.21 while revenue rose 3.8% YoY to RM20.86bn from RM20.1bn. The group declared a second interim dividend of 34sen/share. In the meantime, the group’s chairman and founder Tan Sri Dr Teh Hong Piow cautions that there is potential downside pressure emanating from the continued low consumer market sentiment and uncertainties lingering on the global economy. (Bursa Malaysia/The Edge) Sime Darby Bhd’s net profit fell 53% YoY in 2QFY18 to RM305mn from RM653mn a year ago despite quarterly revenue rise 9.02% YoY to RM8.82bn from RM8.09bn as motor division suffered big drop in earnings due to losses in Vietnam. For 1HFY18, net profit expanded by 37.96% YoY to RM1.62bn from RM1.18bn, while revenue increased 12.91% YoY to RM16.96bn from RM15.02bn. The board declared an interim dividend of 2.0sen/share. (Bursa Malaysia/The Edge) MBM Resources Bhd suffered its first loss in 4QFY17, posting a net loss of RM191.74mn compared to a net profit of RM7.57mn a year ago due to impairment charges. Quarterly revenue, however, rose by a marginal 1.5% YoY to RM443.77mn from RM437.23mn. Meanwhile, the poor quarterly performance resulted in the group posting its first net loss of RM148.83mn for FY17 compared to a net profit of RM66.07mn a year ago. Revenue, however, increased 3.7% YoY to RM1.73bn from RM1.67bn. The group declared a second interim dividend of 1.5sen/share. (Bursa Malaysia/The Edge) Page 4 of 8
7. 23-Feb-18 Media Prima Bhd reported a net loss of RM378 .15mn in 4QFY17 compared to a net profit of RM4.99mn a year ago, while revenue declined 4% YoY to RM306.19mn from RM318.63mn. For FY17, the group reported a wider net loss of RM650.61mn, a significant increase from RM59.2mn in FY16, amid impairments and other exceptional items totaling RM497.4mn. Meanwhile, the revenue for the year fell 7% YoY to RM1.19bn from RM1.28bn. (Bursa Malaysia/The Edge) Kian Joo Can Factory Bhd posted a 77.58% YoY increased in its net profit to RM46.9mn for 4QFY17 from RM26.41mn due to higher sales revenue. Meanwhile, the quarterly revenue rose 15.17% YoY to RM494.42mn against RM429.31mn because of increasing demand for the group's products and upward adjustments of selling price to absorb the increase in the cost of direct material. For F17, the group’s net profit dipped 30.05% YoY to RM89.96mn from RM128.61mn even though revenue grew 7.05% YoY to RM1.84bn from RM1.72bn. An interim dividend of 4.0sen/share was declared. (Bursa Malaysia/The Edge) Unisem (M) Bhd’s net profit dipped 37.62% YoY to RM32.02mn in 4QFY17 from RM51.34mn a year ago due to the depreciation of the US dollar coupled with lower profit margins arising from change in product mix. Meanwhile, quarterly revenue fell 1.3% YoY slightly to RM357.41mn from RM362.13mn. For FY17, the group’s net profit decreased by 1.74% YoY to RM159.46mn from RM162.29mn due to lower profit margins arising from change in product mix as well as the recognition of foreign exchange losses even though revenue rose 10.81% YoY to RM1.47bn from RM1.32bn. A final dividend of 4.0sen/share was proposed. (Bursa Malaysia/The Edge) SKP Resources Bhd’s net profit in its 3QFY18 slipped 1.25% YoY to RM30.04mn from RM30.42mn, as lower cost of sales and operating expenses were offset by a drop in revenue. Revenue for the quarter declined 10.57% YoY to RM518.69mn from RM580.02mn. For 9MFY18, the group saw its net profit rise 37.93% YoY to RM98.47mn from RM71.38mn, as revenue rose 20.69% to RM1.64bn from RM1.36bn due to higher contribution from existing key customers in the period. (Bursa Malaysia/The Edge) Kossan Rubber Industries Bhd's net profit rose 2.4% YoY in 4QFY17 to RM46.5mn, from RM45.4mn a year earlier, mainly on a better showing by its gloves division. Quarterly revenue grew 9% YoY to RM477.8mn from RM438.2mn. For FY17, the net profit increased 7.9% YoY to RM185.6mn from RM172mn. Revenue also rose 17.4% YoY to RM1.96bn from RM1.67bn. (Bursa Malaysia/The Edge) Apex Healthcare Bhd’s net profit for 4QFY17 grew 89.4% YoY to RM12.8mn from RM6.76mn a year earlier, due to the higher sales and a greater proportion of high margin products in the associates’ revenue mix. Meanwhile, quarterly revenue rose 5.85% YoY to RM152.59mn from RM144.15mn due to decent growth in pharmaceutical sales to both private and government sectors. For FY17, the group’s net profit rose 27.19% YoY to RM44.46mn from RM34.96mn while revenue increased by 6.71% YoY to RM620.26mn from RM581.27mn. The group recommended a final single-tier dividend of 6.5sen/share. (Bursa Malaysia/The Edge) Page 5 of 8
8. 23-Feb-18 N e w s I n B r i e f Economy Asia BNM International Reserves at US $103.6bil Bank Negara Malaysia’s international reserves dipped USD100mn to USD103.6bn (RM406.bn) as at Feb 15, 2018 from USD103.7bn on Jan 30, 2017. The reserves position is sufficient to finance 7.1 months of retained imports and is 1.1 times the short-term external debt. The main components of the international reserves were foreign currency reserves (USD97bn), International Monetary Fund reserves position (USD800mn), Special Drawing Rights (SDRs) (USD1.2bn), gold (USD1.5bn) and other reserve assets (USD3.1bn). (The Star) PM Says Malaysia Not Going Bankrupt Datuk Seri Najib Tun Razak has reiterated that Malaysia would not go bankrupt as it managed to reduce its debt to 50.4% against the self-imposed ceiling of 55%, garnered higher foreign reserves, while works on infrastructure projects are in full swing. The Prime Minister said the government had made bold decisions such as implementing the Economic Transformation Programme to boost the economy, creating 2.26 million jobs and raising income to between 5.0-6.0% per year. "We have a self-imposed limit of 55% of GDP (gross domestic product), we have reduced it to 50.4%. “During the Asian Financial Crisis, our reserves was down to USD2bn, we didn't go bankrupt then. Now, our reserves are about USD124bn. Can you say we're bankrupt?" he said at the "Budget 2018 with the Rakyat” programme, here. Permodalan Nasional Bhd Chairman Tan Sri Abdul Wahid Omar was present. Najib, who is also Finance Minister, said Malaysia's economic growth of 5.9% in 2017 was among the highest in the world, while its inflation and unemployment rate were low. (The Star) United States U.S. Jobless Claims Fell Last Week The number of Americans filing applications for new unemployment benefits fell last week for the third time in the past four weeks. Initial jobless claims, a proxy for layoffs across the U.S., declined by 7,000 to a seasonally adjusted 222,000 in the week ended Feb. 17, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal expected 230,000 new claims last week. Jobless claims have fallen three out of the past four weeks after hitting a nearly 45-year low in January, signaling the labor market’s tightness. Weekly jobless claims have held below a healthy 300,000 for about three years, the longest streak since the 1970s. ”Businesses want to retain workers, and the incredibly low level of claims supports that view,” Joel Naroff, Naroff Economic Advisors chief economist, said in a note to clients last week. Still, claims data can be volatile. The four-week moving average, a steadier measure, fell 2,250 to 226,000 last week. (The Wall Street Journal) Quarles Says Fed Should Continue Gradual Pace Federal Reserve Vice Chairman Randal Quarles said Thursday the U.S. central bank should continue to move short-term interest rates up, but stopped short of saying how many times officials should raise rates this year. The Fed’s policy committee voted in January to keep its benchmark federal-funds rate at a range between 1.25% and 1.5%. Officials in December penciled in three rate increases for 2018, though markets expect those forecasts could show a fourth increase when officials release new projections at their meeting next month. Speaking at a monetary policy symposium in Tokyo Thursday, Mr. Quarles said current Fed policy “remains accommodative.” He added that he would keep a close eye on economic indicators and adjust his views accordingly. The speech marked the first time Mr. Quarles, the Fed’s vice chairman for supervision and regulation, has spoken at length about the U.S. economy since he joined the Fed in November. (The Wall Street Journal) Page 6 of 8
9. 23-Feb-18 Europe and Uni ted Kingdom ECB minutes highlight policymakers ’ fears over currency wars The extent of European officials’ concerns over the weakness of the dollar was laid bare on Thursday in a set of European Central Bank accounts that highlighted fears that the US administration was deliberately trying to engage in currency wars. The accounts of the ECB’s January monetary policy vote also reveal that the governing council’s hawks pushed for a change in the bank’s communications, saying economic conditions were now strong enough to drop a commitment to boost the quantitative easing programme in the event of a slowdown. Mario Draghi, ECB president, last month hit out at US Treasury secretary Steven Mnuchin’s claim that a weak dollar was good for the American economy, saying Washington needed to uphold the rules of the international monetary system, which forbid nations from deliberately devaluing their currencies. The remarks were seen as a signal that the US could ditch its strong dollar policy — and in so doing damage euro exports and lower imported inflation. US President Trump has since reaffirmed the strong dollar policy. (Financial Times) U.K. Economy Stays in the Slow Lane as Growth Revised Lower The U.K. economy expanded less than previously estimated in the fourth quarter as consumers and businesses absorbed faster inflation, keeping the country in the slow lane of global growth. The 0.4% expansion -- revised down from 0.5%-- also left full-year growth below the initial estimate. On an annualized basis, the rate was 1.6% in the quarter, compared with a 2.6% pace in the U.S. Household-spending growth slowed in the fourth quarter, business investment was stagnant and exports fell. The pound fell for a fifth day against the dollar and was down 0.2% at $1.3884 as of 11:10 a.m. London time. Gilts were little changed, with the 10-year yield at 1.559%. (Bloomberg) German Ifo Business Sentiment Falls More Than Forecast Germany's business confidence weakened notably in February as near term outlook of firms deteriorated on political uncertainty and market turmoil, survey data from the Munich-based Ifo Institute showed Thursday. The business sentiment index fell more-than-expected to 115.4 from 117.6 in January. The score was expected to ease to 117 in February. A similar lower reading was last seen in September 2017. Ifo President Clemens Fuest said companies were less satisfied with their current business situation, but the indicator was at its second highest level since 1991. The score signaled economic growth of 0.7 percent in the first quarter. After the euphoria of recent months, companies' assessments of the business outlook for the months ahead were also far less optimistic, Fuest added. The current conditions index dropped to 126.3 in February from 127.8 a month ago. This was also below the forecast of 127. (RTT) Page 7 of 8
10. 23-Feb-18 Share Buy-Back : 22 February 2018 Company E&O GLOMAC KPJ MALAKOF SCGM UNIMECH YILAI Bought Back Price (RM) Hi/Lo (RM) 90,000 12,600 100,000 450,000 22,900 4,800 100,000 1.45 0.54/0.52 0.95/0.94 0.93/0.925 2.33/2.28 1.02/1.01 0.75 1.45/1.44 0.54/0.52 0.95/0.94 0.935/0.91 2.40/2.28 1.02/1.01 0.75 Total Treasury Shares 25,333,747 5,650,400 65,670,600 16,618,100 785,100 6,837,710 8,799,208 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 8 of 8
11. 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 22-Feb-18 AUTOMOBILE BAUTO 2.19 2.50 14.2% Buy 2,538 0.50 14.3 19.9 15.4 11.0 5.3 5.5 2.47 -11.3 1.84 19.0 MBMR 2.29 2.32 1.3% Under Review 895 0.70 23.2 23.9 9.9 9.6 2.0 2.1 2.60 -11.9 2.01 13.9 -0.5 4.1 PECCA 1.36 1.86 36.8% Buy 251 0.36 11.1 12.5 12.2 10.9 4.1 4.5 1.70 -20.0 1.26 7.9 -12.3 SIME 2.75 1.97 -28.4% Under Review 18,702 1.53 12.5 14.6 22.1 18.8 1.1 1.3 3.06 -10.1 2.03 35.7 24.4 UMW 6.60 4.37 -33.8% Sell 7,711 1.29 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 4.20 4.60 9.5% Hold 6,502 1.29 30.6 35.6 13.7 11.8 3.8 3.8 4.49 -6.5 3.62 16.0 2.9 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 4.58 5.50 20.1% Buy 13,805 1.39 48.6 52.0 9.4 8.8 3.9 3.9 5.70 -19.6 4.06 12.8 3.9 CIMB 7.13 7.50 5.2% Hold 65,778 1.68 50.8 56.0 14.0 12.7 4.1 3.9 7.36 -3.1 4.91 45.2 9.0 HLBANK 18.22 19.30 5.9% Hold 37,271 0.84 114.2 120.9 16.0 15.1 2.5 2.5 18.80 -3.1 13.28 37.2 7.2 MAYBANK 10.20 10.50 2.9% Hold 110,483 1.01 70.6 77.4 14.5 13.2 4.9 4.9 10.24 -0.4 8.38 21.7 4.1 PBBANK 22.28 27.30 22.5% Buy 86,034 0.69 153.3 166.5 14.5 13.4 2.8 2.9 22.62 -1.5 19.66 13.3 7.2 RHBBANK 5.38 5.70 5.9% Hold 21,574 1.56 52.2 53.8 10.3 10.0 2.8 2.8 5.61 -4.1 4.71 14.2 7.6 BURSA 10.88 11.80 8.5% Buy 5,848 0.94 43.9 45.0 24.8 24.2 3.3 3.3 11.30 -3.7 8.57 26.9 7.5 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 BUILDING MATERIALS ANNJOO 3.65 4.40 20.5% Buy 1,887 1.31 45.1 48.9 8.1 7.5 6.0 7.1 3.98 -8.3 2.27 60.8 -5.4 CHINHIN 1.00 1.36 36.0% Buy 556 1.03 12.4 12.0 8.0 8.3 5.0 6.0 1.49 -32.9 0.99 1.5 -17.4 ENGTEX 1.10 1.38 25.5% Buy 468 0.83 14.2 16.1 7.8 6.8 3.8 5.0 1.52 -27.6 1.01 8.9 0.0 GADANG 1.06 1.69 59.4% Buy 700 1.10 14.2 18.1 7.5 5.8 2.8 2.8 1.37 -22.6 1.01 5.0 -4.5 GAMUDA 5.06 6.00 18.6% Buy 12,433 0.89 34.5 35.7 14.7 14.2 2.4 2.4 5.52 -8.3 4.58 10.5 2.0 IJM 2.90 2.89 -0.3% Sell 10,522 1.08 13.7 18.2 21.1 16.0 3.3 3.3 3.61 -19.7 2.66 9.0 -4.9 CONSTRUCTION KAB 0.28 0.38 33.9% Buy 9 na 31.4 37.3 0.9 0.8 3.6 4.3 0.33 -15.2 0.25 14.3 -6.7 PESONA 0.41 0.55 35.8% Buy 281 1.06 5.8 4.8 7.0 8.5 3.7 3.7 0.74 -44.9 0.39 5.2 -10.0 SENDAI 0.81 0.55 -31.7% Sell 629 1.17 9.1 8.5 8.9 9.5 1.2 1.2 1.39 -42.1 0.51 59.4 -6.9 SUNCON 2.36 2.65 12.3% Buy 3,050 0.60 14.7 16.4 16.1 14.4 2.3 2.5 2.64 -10.6 1.70 38.8 -6.0 WCT 1.64 1.64 0.0% Hold 2,307 0.86 12.6 11.2 13.0 14.7 1.8 1.8 2.48 -33.7 1.46 12.3 1.2 LITRAK 5.89 6.26 6.3% Hold 3,109 0.35 45.6 47.1 12.9 12.5 4.2 4.2 6.15 -4.2 5.40 9.1 6.1 CARLSBG 18.00 18.09 0.5% Buy 5,537 0.80 87.8 91.8 20.5 19.6 4.9 5.1 18.00 0.0 14.12 27.5 17.6 HEIM 20.80 21.64 4.0% Hold 6,284 0.38 93.0 101.3 22.4 20.5 4.0 4.4 20.80 0.0 16.98 22.5 10.1 AEON 1.56 1.97 26.3% Sell 2,190 0.43 6.7 7.7 23.3 20.3 2.6 2.9 2.70 -42.2 1.54 1.3 -11.4 AMWAY 7.78 8.18 5.1% Buy 1,279 0.48 43.9 45.2 17.7 17.2 4.9 5.1 8.18 -4.9 7.04 10.5 5.4 F&N 30.50 33.74 10.6% Buy 11,180 0.21 122.7 145.8 24.9 20.9 2.6 3.1 31.00 -1.6 22.80 33.8 13.0 CONSUMER Brewery Retail HUPSENG 1.10 1.25 13.6% Buy 880 0.40 5.7 5.9 19.3 18.6 5.5 5.5 1.28 -14.1 1.05 4.8 0.9 JOHOTIN 1.26 1.75 38.9% Buy 391 0.69 12.8 13.5 9.9 9.4 4.0 4.3 1.76 -28.4 1.16 8.6 4.1 NESTLE 121.50 129.90 6.9% Hold 28,492 0.50 322.2 360.2 37.7 33.7 2.5 2.7 123.10 -1.3 75.40 61.1 17.7 PADINI 5.01 4.67 -6.8% Sell 3,296 0.79 28.0 30.4 17.9 16.5 2.5 2.6 5.50 -8.9 2.72 84.3 -5.1 POHUAT 1.57 2.01 28.0% Buy 345 0.45 22.9 25.4 6.8 6.2 5.1 5.1 2.07 -24.1 1.43 9.8 -12.3 QL 4.90 3.26 -33.5% Sell 7,950 0.55 12.8 14.7 38.2 33.3 0.9 1.0 4.98 -1.6 3.26 50.5 12.6 SIGN 0.59 0.92 55.9% Buy 135 0.75 6.9 9.2 8.5 6.4 4.2 5.9 1.07 -44.9 0.57 3.5 -16.3 30.50 34.72 13.8% Hold 8,709 1.37 170.8 168.8 17.9 18.1 5.2 5.2 49.52 -38.4 29.30 4.1 -23.8 GENTING 9.11 11.53 26.6% Buy 34,904 1.51 54.4 59.8 16.8 15.2 1.8 1.8 10.00 -8.9 8.70 4.7 -1.0 GENM 5.37 6.51 21.2% Buy 30,388 1.48 27.0 30.6 19.9 17.5 1.7 1.9 6.38 -15.8 4.87 10.3 -4.6 2.26 3.34 47.8% Buy 3,044 0.66 21.5 26.0 10.5 8.7 7.1 8.0 2.98 -24.2 2.20 2.7 0.9 CCMDBIO 2.90 2.70 -6.9% Buy 809 0.89 15.0 16.1 19.3 18.1 3.4 3.6 3.03 -4.3 1.97 47.2 14.6 IHH 5.99 6.40 6.8% Buy 49,355 0.76 11.9 15.0 50.4 40.0 0.5 0.6 6.33 -5.4 5.42 10.5 2.2 KPJ 0.95 1.12 17.9% Buy 4,006 0.51 3.7 4.2 25.4 22.8 2.2 2.4 1.14 -16.7 0.87 9.2 -2.1 HARTA 11.60 7.80 -32.8% Sell 19,204 1.16 25.2 28.9 46.0 40.2 1.3 1.5 12.18 -4.8 4.68 147.9 8.6 KOSSAN 8.70 9.73 11.8% Buy 5,563 0.50 37.4 42.1 23.2 20.7 2.1 2.4 8.79 -1.0 5.62 54.8 7.3 SUPERMX 2.63 2.70 2.7% Buy 1,724 0.41 20.0 22.6 13.2 11.6 2.6 2.9 2.63 0.0 1.69 55.6 31.5 TOPGLOV 9.80 9.35 -4.6% Sell 12,309 0.57 41.6 50.8 23.6 19.3 1.5 1.8 10.00 -2.0 4.56 114.9 22.7 KAREX 1.11 1.00 -9.9% Sell 1,113 0.64 2.8 5.2 40.2 21.3 0.6 1.2 2.37 -53.2 1.03 7.8 -14.6 SCIENTX 8.67 9.84 13.5% Buy 4,239 0.85 67.5 74.1 12.9 11.7 2.1 2.2 9.85 -12.0 7.00 23.9 0.1 SKPRES 1.89 2.20 16.4% Buy 2,363 0.83 10.4 14.8 18.2 12.8 2.7 3.9 2.35 -19.6 1.24 52.4 -17.1 ASTRO 2.56 3.10 21.1% Buy 13,348 0.92 14.0 13.7 18.3 18.7 5.1 5.3 2.94 -12.9 2.40 6.7 -3.4 MEDIA PRIMA 0.62 0.45 -27.4% Sell 688 1.36 -3.8 -1.7 na na 0.0 0.0 1.28 -51.6 0.58 6.9 -18.4 STAR 1.34 1.25 -6.7% Sell 989 1.10 6.7 6.7 19.9 19.9 9.0 9.0 2.22 -39.6 1.31 2.3 -18.8 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
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) FY18 PER (X) Div Yield (%) FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.47 0.72 53.2% Buy 825 1.47 4.2 4.5 11.2 10.4 2.1 2.1 0.69 -31.9 0.38 25.3 -3.1 LCTITAN 5.25 6.10 16.2% Buy 11,933 na 56.3 60.9 9.3 8.6 4.8 5.1 6.53 -19.6 4.14 26.8 11.7 MHB 0.83 0.81 -1.8% Sell 1,320 1.37 0.5 1.7 171.4 49.4 0.0 0.0 1.16 -28.9 0.63 32.0 0.0 MISC 7.00 7.00 0.0% Sell 31,247 1.14 50.1 53.8 14.0 13.0 4.3 4.3 7.90 -11.4 6.89 1.6 -5.7 PANTECH 0.62 0.69 12.2% Buy 458 1.25 6.1 6.8 10.1 9.0 4.5 5.0 0.74 -16.9 0.47 32.3 -4.7 PCHEM 8.11 8.84 9.0% Hold 64,880 0.89 52.5 53.8 15.4 15.1 3.2 3.2 8.28 -2.1 6.80 19.3 5.3 SAPNRG 0.70 1.25 79.9% Buy 4,165 2.01 -6.5 -5.0 na na 0.0 0.0 2.10 -66.9 0.66 5.3 -2.1 SERBADK 3.47 4.16 19.9% Buy 5,096 na 27.7 32.7 12.5 10.6 2.3 2.9 3.66 -5.2 1.63 112.9 7.1 UMWOG 0.33 0.51 54.5% Buy 2,711 1.75 0.4 1.2 81.7 26.6 0.0 0.0 0.69 -52.1 0.27 22.2 8.2 UZMA 1.40 1.56 11.4% Sell 448 0.88 13.1 14.2 10.7 9.8 0.0 0.0 1.98 -29.3 1.26 11.1 9.4 FGV 2.04 2.01 -1.5% Sell 7,442 1.48 3.7 4.5 55.1 44.9 2.5 2.5 2.18 -6.4 1.51 35.1 20.7 IJMPLNT 2.30 2.69 17.0% Sell 2,025 0.18 9.1 12.5 25.2 18.3 3.5 3.9 3.38 -32.0 2.28 0.9 -16.1 IOICORP 4.78 4.12 -13.8% Sell 30,037 0.90 21.0 21.7 22.7 22.1 3.3 6.3 4.81 -0.6 4.31 10.9 5.3 KFIMA 1.53 1.89 23.5% Buy 432 0.69 14.1 14.7 10.8 10.4 5.9 5.9 1.96 -21.9 1.45 5.5 -2.5 KLK 25.58 27.07 5.8% Hold 27,242 0.62 120.7 125.7 21.2 20.4 2.3 2.4 25.78 -0.8 23.66 8.1 2.3 SIMEPLT 5.50 6.25 13.6% Buy 37,405 na 21.0 22.1 26.1 24.9 2.5 2.7 6.00 -8.3 4.58 20.1 -8.3 TSH 1.59 2.10 32.1% Buy 2,195 0.54 9.3 9.6 17.1 16.6 1.5 1.5 1.91 -16.8 1.56 1.9 -3.6 UMCCA 6.34 6.73 6.2% Sell 1,329 0.40 22.7 34.8 27.9 18.2 2.7 2.8 7.08 -10.5 5.76 10.0 -2.6 GLOMAC 0.54 0.46 -14.8% Sell 429 0.71 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 -1.7% Sell 208 0.90 0.7 3.4 90.3 17.4 0.8 0.8 1.16 -49.1 0.58 2.6 -3.3 IBRACO 0.77 0.92 19.5% Hold 382 na 9.1 12.4 8.4 6.2 5.2 6.5 0.98 -21.0 0.50 54.0 -5.5 IOIPG 2.05 2.02 -1.5% Hold 11,288 0.84 16.5 16.3 12.4 12.6 2.9 2.9 2.22 -7.7 1.79 14.5 10.8 MAHSING 1.22 1.69 38.5% Buy 2,962 0.93 13.0 12.6 9.3 9.7 5.3 5.3 1.64 -25.6 1.21 0.8 -15.9 SIMEPROP 1.43 1.61 12.6% Sell 9,725 na 9.2 9.1 15.5 15.7 1.4 1.4 1.78 -19.7 1.04 37.5 -19.7 SNTORIA 0.64 0.76 18.8% Buy 361 0.11 8.3 8.6 7.7 7.5 1.6 1.6 0.91 -29.6 0.56 14.3 -7.9 SPB 4.80 5.28 10.0% Hold 1,649 0.68 21.2 26.1 22.7 18.4 2.5 2.5 5.50 -12.7 4.39 9.3 -2.0 SPSETIA 3.27 3.77 15.3% Buy 12,273 0.95 21.3 21.9 15.3 15.0 3.7 3.7 4.38 -25.4 3.07 6.5 -18.3 SUNWAY 1.63 1.74 6.7% Hold 7,980 0.92 11.9 12.6 13.7 12.9 3.1 3.7 1.96 -16.8 1.31 24.3 0.0 SUNREIT 1.72 1.87 8.7% Hold 5,066 0.86 10.0 10.7 17.1 16.1 5.8 6.2 1.90 -9.5 1.64 4.9 -9.5 CMMT 1.14 1.64 43.9% Buy 2,323 0.69 7.9 8.6 14.4 13.2 7.2 7.8 1.83 -37.7 1.09 4.6 -37.7 PLANTATIONS PROPERTY REIT POWER & UTILITIES MALAKOF 0.93 0.82 -11.4% Sell 4,604 0.89 6.6 7.2 14.0 12.9 7.6 7.6 1.30 -28.8 0.86 7.6 -5.6 PETDAG 25.50 22.08 -13.4% Sell 25,333 0.39 105.1 105.7 24.3 24.1 3.1 3.1 26.20 -2.7 21.00 21.4 5.1 PETGAS 17.96 19.10 6.3% Buy 35,538 0.87 98.8 99.5 18.2 18.0 3.8 3.9 20.96 -14.3 15.82 13.5 2.7 TENAGA 15.64 18.33 17.2% Buy 88,616 0.56 131.3 127.5 11.9 12.3 4.4 4.2 16.12 -3.0 13.44 16.4 2.5 YTLPOWR 1.22 1.17 -4.1% Sell 9,484 0.90 9.8 10.3 12.4 11.9 4.1 4.1 1.50 -18.7 1.11 9.9 -5.4 TELECOMMUNICATIONS AXIATA 5.67 6.50 14.6% Buy 51,304 1.55 15.9 19.5 35.6 29.1 1.4 2.8 5.82 -2.6 4.24 33.7 3.3 DIGI 4.89 5.15 5.3% Hold 38,020 0.94 19.7 20.4 24.8 24.0 4.0 4.2 5.19 -5.8 4.36 12.2 -4.1 MAXIS 6.08 6.05 -0.5% Sell 47,488 1.09 25.2 25.0 24.1 24.3 3.2 3.2 6.60 -7.9 5.48 10.9 1.2 TM 6.05 7.20 19.0% Buy 22,736 0.64 23.2 24.9 26.1 24.3 3.5 3.7 6.69 -9.6 5.85 3.4 -4.0 ELSOFT 2.60 2.70 3.8% Hold 715 0.73 13.4 15.3 19.4 17.0 3.6 4.1 2.95 -11.9 1.58 64.4 -3.7 IRIS 0.19 0.25 35.1% Buy 457 2.40 0.6 0.7 33.4 27.7 0.0 0.0 0.25 -24.5 0.12 60.9 0.0 INARI 3.44 3.35 -2.6% Under Review 7,107 0.71 14.0 15.7 24.6 21.9 2.9 3.3 3.82 -9.9 1.87 84.3 1.2 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 10.00 10.70 7.0% Hold 1,989 0.70 73.9 86.9 13.5 11.5 3.2 3.2 14.52 -31.1 8.62 16.0 -20.8 UNISEM 2.95 2.70 -8.5% Sell 2,165 1.11 17.1 18.4 17.2 16.0 4.1 4.1 4.25 -30.6 2.52 17.1 -19.2 TRANSPORTATION Airlines AIRASIA 4.40 3.83 -13.0% Buy 14,704 1.34 38.3 39.8 11.5 11.0 1.1 1.4 4.43 -0.7 2.58 70.5 31.3 AIRPORT 8.76 8.61 -1.7% Sell 14,535 1.31 17.9 18.7 49.0 46.9 1.5 1.1 9.45 -7.3 6.35 38.0 -0.3 Freight & Tankers PTRANS 0.31 0.46 50.8% Buy 384 na 2.3 3.8 13.0 8.1 2.3 3.5 0.38 -20.1 0.15 103.3 8.9 TNLOGIS 1.13 1.80 59.3% Buy 516 1.09 13.6 14.0 8.3 8.0 4.4 4.4 1.83 -38.4 1.10 2.7 -15.7 WPRTS 3.70 4.06 9.7% Buy 12,617 0.49 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 29.00 30.50 5.2% Buy 74,352 1.19 212.3 246.0 13.7 11.8 2.2 2.4 29.5 -1.6 18.47 57.0 16.7 OCBC 13.10 14.30 9.2% Buy 54,830 1.22 109.5 123.2 12.0 10.6 6.7 7.7 13.3 -1.7 9.42 39.1 5.7 UOB 27.52 27.80 1.0% Hold 45,753 1.16 216.6 243.9 12.7 12.7 2.9 2.9 28.5 -3.3 21.30 29.2 4.0 PLANTATIONS WILMAR 3.04 3.31 8.9% Hold 19,452 0.81 29.9 31.8 10.2 9.6 2.6 3.0 3.9 -21.4 2.97 2.4 -1.6 IFAR 0.36 0.53 49.3% Hold 509 0.99 5.2 5.7 6.8 6.2 3.6 3.9 0.5 -34.9 0.35 1.4 -9.0 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.
13. RESULTS UPDATE Friday , February 23, 2018 FBMKLCI: 1,855.07 Sector: Telecommunications THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM6.50 (+14.6%) Axiata Group Berhad Last Traded: RM5.67 Excluding Idea, Overall A Commendable Year Wilson Loo, CFA Tel: +603-2167 9606 BUY wilsonloo@ta.com.my Review Axiata reported 4QFY17 core net profit of RM210.0mn (-40.3% QoQ, +170.6% YoY), bringing FY17’s cumulative to RM1,206mn (-14.9% YoY). This was slightly below ours and consensus estimates at 93.2% and 94.0%. A second interim dividend of 3.5sen/share was proposed (YTD: 8.5sen/share versus 8.0sen/share in FY16), representing a dividend payout ratio of 64% which is in line with guidance. Overall, FY17 was a commendable year for the group with revenue and EBITDA growth of 13.2% YoY and 15.2% YoY, exceeding headline KPI’s for revenue growth of 9% to 11% and EBITDA growth of 7% to 9%. If not for the aggravation of Idea’s losses (YTD RM450mn), performance would have been better. Encouragingly, Celcom and XL were on track with their turnarounds and losses at Robi are narrowing with on the back of synergies with Airtel flowing through. Concerns however remain at Ncell with falling ILD revenues (-19.6% YoY). On another note, the group was also ahead of its cost optimisation initiatives with RM1.3bn in cost savings made versus the targeted RM800.0mn. Celcom. The focus on customer experience to capture high-value customers continued to pay off. Both revenue and EBITDA grew for four consecutive quarters sequentially across the year. With a growing share of high value subscribers, higher postpaid and prepaid ARPUs more than offset churns of 138k and 872k respectively throughout the year. FY17 revenue and EBITDA grew by 0.6% YoY and 3.0% YoY while core PATAMI declined by 1.4% YoY. XL. Continuing the recovery trend, service revenue grew for the sixth consecutive quarter, albeit at a slower pace by 1.4% QoQ, driven by data revenue (+8% QoQ) while total subscribers enlarged by 1.0mn QoQ, being the ninth consecutive quarter of net adds. This corresponded with its innovative data-led products under the Dual-Brand Strategy and continued network enhancements especially in ex-Java. With FY17 revenue and EBITDA growing by 7.0% YoY and 3.3% YoY, XL returned to the black. That said, the sustainability of the recovery trend remains a concern given recent challenges from intensifying competition and the imminent deadline for prepaid SIM registration by 28 February 2018. Dialog. 4QFY17 was weaker with PAT -14.8% QoQ due to moderate growth in data traffic, higher marketing expense, depreciation and net finance cost. Above all, FY17 was yet another stronger year with revenue, EBITDA and PAT advancing by 8.6% YoY, 15.9% YoY, 19.3% YoY. This was driven by the mobile division’s robust data revenue growth (+38.9% YoY) on increasing smartphone penetration and 4G usage, fixed division’s aggressive customer acquisition and reconnections as well as cost management initiatives which contributed to expansion in EBITDA margins by 2.3pp YoY to 36.0%. www.taonline.com.my Share Information Bloomberg Code AXIATA MK Stock Code 6888 Listing Main Market 9048.3 Share Cap (mn) 51,303.8 Market Cap (RMmn) 5.82/4.24 52-wk Hi/Lo (RM) 5,937.8 12-mth Avg Daily Vol ('000 shrs) 23.2 Estimated Free Float (%) 1.6 Beta Major Shareholders (%) Khazanah Nasional Bhd - 37.3 EPF - 16.5 Skim Amanah Saham Bumiputera - 12.0 Forecast Revision FY18 Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY19 - - 1,442 1,760 1,519 1,823 95.0 96.5 Buy (Maintained) Financial Indicators FY18 1.3 89.7 6.3 5.9 1.9 1.2 4.8 FY19 1.2 93.4 6.1 7.0 2.3 1.3 4.4 vs. TA vs. Consensus % of FY 93.2 94.0 Below Below Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth Axiata 1.4 7.0 16.4 25.2 FBM KLCI 0.9 7.8 4.6 8.8 Net debt/EBITDA (x) CFPS (sen) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) Scorecard (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 6
14. 23-Feb-18 Robi . While still in the red during the quarter, FY17’s losses have narrowed further from BDT15.7bn in FY16 to BDT2.6bn in FY17. This was on the back of the flow through of synergies from the Robi-Airtel merger which exceeded expectations. Expectations are to breakeven by this year. Robi is ready for the deployment of 4G services with the 4G licence recent obtained on February 2018. Ncell. FY17 revenue, EBITDA and PAT declined by 1.0% YoY, -1.7% YoY and -6.8% YoY. Robust growth in data revenue (+17.9% YoY) was insufficient to arrest the decline ILD revenues due to a combination of competition and shift to OTT platforms. Edotco. On the back of a growing tower portfolio with maiden contributions from Tanzanite, Pakistan, FY17 revenue and EBITDA grew by 11.8% YoY and 3.3% YoY. YoY, the number of owned towers increased by 9.3% to 16.5k and managed sites grew by 7.3% YoY 10.9k sites while tenancy ratio in 4QFY17 increased to 1.57x (4QFY16: 1.44x). Meanwhile, the acquisition of Deodar is now expected to be completed in 2QCY18. Smart. FY17’s revenue, EBITDA and PAT grew by 5.4% YoY, 5.5% YoY and 7.7% YoY. This was driven by growth in data revenue (+28.4% YoY) which accounted for 51.5% of total revenue. However, due to challenges from heightening price competition, 4QFY17’s revenue and EBITDA declined by 2.6% QoQ and 6.4% QoQ. Associates. With aggravating challenges within India’s mobile industry triggered by the entry of a new player, Idea fell deep in the red, contributing losses of RM450mn to the group. As for M1, it reported a lower profit of RM122mn (FY16: RM129mn). Impact We leave our earnings estimates unchanged and introduce FY20 earnings estimates of RM2.0bn. Outlook For 2018, headline KPIs include revenue and EBITDA growth of 6.3% and 5.8% respectively. CAPEX was guided at RM7.4bn and ROIC and ROCE at 5.0-5.5% and 4.5-5.0% respectively. Among others, ~RM2.0bn of CAPEX has been earmarked for continued enhancements of network in for XL in Indonesia, especially towards the ex-Java region. And in tandem with the group’s convergence aspirations, it will begin investments in the rollout of fixed wireless broadband in Malaysia, Indonesia, Cambodia as well as carry on with expansion in Sri Lanka. Challenges for the group stem from Indonesia with the recent intensifying of competition in the run up to the deadline for prepaid SIM registration and Nepal with expectations for ILD revenues to continue declining. Of note, Ncell is a key earnings contributor to the group with its core net profit accounting for 50.7%. Similarly, price competition is also a concern at Cambodia and India. Meanwhile, while no specific timeline was provided, it was highlighted that upon completion of the Idea-Vodafone merger, there will be a non-cash technical impairment of RM1.2bn to RM1.8bn. Valuation We value Axiata at an unchanged TP of RM6.50/share based on SOP valuation. At current levels, the group is trading circa 1SD below its historical average. Reiterate Buy. Key risks include intensifying competition in key markets and regulatory issues. Page 2 of 6
15. 23-Feb-18 Table 1 : Earnings Summary (RMmn) FYE Dec Revenue EBITDA EBITDA margin (%) Depreciation and amortisation EBIT Net finance costs JV/Associates EI Profit before tax Taxation MI Profit after tax Core profit EPS (sen) EPS growth (%) PER (x) EV/EBITDA (x) DPS (sen) Dividend yield (%) FY16 21,565 8,013 37.2 (5,595) 2,418 (1,018) 30 (290) 1,140 (482) (153) 504 1,418 15.8 (31.5) 35.9 8.7 8.0 1.4 Equity Value (RM mn) 27,865.0 19,121.5 8,689.3 7,748.9 23,565.1 3,461.4 4,190.9 5,148.0 2,266.5 Celcom (Malaysia) XL Axiata (Indonesia) Ncell (Nepal) edotco Idea Cellular (India) Dialog Axiata (Sri Lanka) Robi (Bangladesh) M1 (Singapore) Smart (Cambodia) Stake 100.0% 66.4% 80.0% 62.4% 18.1% 83.3% 68.7% 28.5% 82.5% FY17 24,402 9,230 37.8 (5,988) 3,242 (1,012) (404) 110 1,936 (774) (253) 909 1,206 13.4 (14.9) 42.2 7.5 8.5 1.5 FY18F 25,639 10,086 39.3 (6,046) 4,040 (1,011) (361) 0 2,668 (909) (317) 1,442 1,442 16.1 19.6 35.3 6.9 8.0 1.4 Effective Equity Value (RM mn) 27,865.0 12,689.0 6,951.4 4,833.0 4,265.3 2,884.1 2,878.7 1,469.2 1,869.9 Holding Co Net Cash Total Value/Share (RM) % of SOP 3.11 1.41 0.77 0.54 0.48 0.32 0.32 0.16 0.21 48.0% 21.8% 12.0% 8.3% 7.3% 5.0% 5.0% 2.5% 3.2% -0.85 6.50 -13.1% -7,621.3 58,084.4 Figure 1: Forward PE FY19F 26,350 10,646 40.4 (6,110) 4,536 (981) (316) 0 3,238 (1,066) (412) 1,760 1,760 19.6 22.0 28.9 6.5 15.7 2.8 FY20F 27,282 11,125 40.8 (6,229) 4,896 (904) (348) 0 3,644 (1,197) (467) 1,980 1,980 22.1 12.5 25.7 6.3 17.7 3.1 Valuation Method DCF: WACC 6.3%, TG: 1.0% DCF: WACC 8.6%, TG: 3.0% 10x CY18 EPS EV/EBITDA: 14x CY18 EBITDA Consensus TP Consensus TP DCF: WACC 13.8%, TG: 5.0% Consensus TP 10x CY18 EPS Figure 2: Forward EV/EBITDA x x 10.5 40.0 10.0 +1sd: 35.3x +1sd: 9.5x 9.5 35.0 9.0 Mean: 30.7x 30.0 Mean: 8.3x 8.5 8.0 25.0 7.5 -1sd: 26.1x -1sd: 7.0x 7.0 20.0 6.5 Dec-17 Jun-17 Sep-17 Mar-17 Dec-16 Jun-16 Sep-16 Mar-16 Dec-15 Jun-15 Sep-15 Mar-15 Dec-14 Jun-14 Sep-14 Mar-14 Dec-13 Jun-13 Sep-13 Dec-17 Jun-17 Sep-17 Mar-17 Dec-16 Jun-16 Sep-16 Mar-16 Dec-15 Jun-15 Sep-15 Mar-15 Dec-14 Jun-14 Sep-14 Mar-14 Dec-13 Jun-13 Sep-13 Mar-13 Source: Bloomberg, TA Securities Mar-13 6.0 15.0 Source: Bloomberg, TA Securities Page 3 of 6
16. 23-Feb-18 Table 2 : FY17 Results Analysis (RMmn) FYE Dec Revenue Celcom XL Dialog Robi Smart Ncell Others EBITDA Depreciation and amortisation EBIT Finance income Finance cost JV/Associates Others PBT Tax MI PAT Core net profit Celcom XL Dialog Robi Smart Ncell Others Capex EPS (sen) DPS (sen) Profitability ratios (%) EBITDA margin EBIT margin PBT margin Net profit margin Tax rate 4QFY16 5,789 1,644 1,699 664 797 306 595 84 1,980 (1,747) 233 55 (343) (53) (165) (274) 2 (37) (309) 78 205 (54) 44 (117) 54 180 (235) 2,301 (4) 3 3QFY17 6,202 1,653 1,913 675 921 296 598 145 2,477 (1,504) 973 84 (289) (142) (64) 562 (243) (81) 239 352 240 30 87 (14) 63 135 (189) 1,418 3 0 4QFY17 6,261 1,714 1,856 674 943 277 629 168 2,325 (1,517) 808 63 (307) (127) (26) 411 (308) (78) 25 210 253 63 73 (13) 67 162 (396) 1,949 0 4 QoQ (%) 1.0 3.7 (3.0) (0.1) 2.4 (6.4) 5.2 15.9 (6.1) 0.9 (17.0) (25.4) 6.2 (10.7) (59.1) (27.0) 26.9 (3.7) (89.6) (40.3) 5.4 110.0 (16.1) (7.1) 6.3 20.0 109.5 37.4 (88.9) n/a YoY (%) 8.1 4.3 9.2 1.5 18.3 (9.5) 5.7 100.0 17.5 (13.1) 246.8 14.0 (10.5) 138.4 (84.1) (250.0) (19,611.2) 107.2 (108.0) 170.6 23.4 (216.7) 65.9 (88.9) 24.1 (10.0) 68.5 (15.3) (108.6) 16.7 FY16 21,565 6,613 6,637 2,460 2,783 1,089 1,630 353 8,013 (5,595) 2,418 183 (1,201) 30 (290) 1,140 (482) (153) 504 1,418 964 (135) 241 (18) 259 440 (333) 6,141 6 8 FY17 24,402 6,593 7,366 2,656 3,640 1,188 2,402 557 9,230 (5,988) 3,242 242 (1,253) (404) 110 1,936 (774) (253) 909 1,206 900 66 271 (56) 288 611 (875) 6,265 10 9 YoY (%) 13.2 (0.3) 11.0 8.0 30.8 9.1 47.4 57.8 15.2 7.0 34.1 31.9 4.3 (1,452.7) (137.8) 69.9 60.4 65.5 80.4 (14.9) (6.6) (148.9) 12.4 211.1 11.2 38.9 162.8 2.0 78.9 6.3 34.2 4.0 (4.7) 1.3 0.6 39.9 15.7 9.1 5.7 43.2 37.1 12.9 6.6 3.3 75.1 pp (2.8) (2.8) (2.5) (2.3) 31.9 pp 2.9 8.9 11.3 2.0 74.5 37.2 11.2 5.3 6.6 42.3 37.8 13.3 7.9 4.9 40.0 pp 0.7 2.1 2.7 (1.6) (2.4) *adjusted for forex gains/losses, XL gain on disposal of towers, XL accelerated depreciation, others Page 4 of 6
17. 23-Feb-18 FYE Dec Celcom (RMmn) Revenue EBITDA Normalised EBITDA EBITDA margin (%) PATAMI Normalised PATAMI PATAMI margin (%) Subscribers ('000) Postpaid Prepaid ARPU (RM) Postpaid Prepaid XL (Rpbn) Revenue EBITDA EBITDA margin (%) PAT Normalised PAT PATAMI margin (%) Subscribers ('000) Postpaid Prepaid ARPU (IDR '000) Postpaid Prepaid Dialog (SLRmn) Revenue EBITDA EBITDA margin (%) PAT PAT margin (%) Subscribers ('000) Postpaid Prepaid ARPU (SLR) Postpaid Prepaid Robi (BDTmn) Revenue EBITDA EBITDA margin (%) PAT PAT margin (%) Subscribers ('000) Postpaid Prepaid ARPU (BDT) Postpaid Prepaid 4QFY16 3QFY17 4QFY17 QoQ (%) YoY (%) FY16 FY17 YoY (%) 1,646 585 635 38.6 200 281 17.1 1,655 622 688 41.6 237 309 18.7 1,777 658 734 41.3 259 336 18.9 7.4 5.8 6.7 (0.3) 9.3 8.7 0.2 8.0 12.5 15.6 2.7 29.5 19.6 1.8 6,623 2,329 2,527 38.2 965 1,228 18.5 6,662 2,398 2,639 39.6 904 1,245 18.7 0.6 3.0 4.4 1.5 (6.3) 1.4 0.1 Net adds (138) (872) 21,411 8,057 37.6 375 (374) (1.7) 22,901 8,321 36.3 376 735 3.2 7.0 3.3 (1.3) 0.3 (296.5) 5.0 86,745 29,212 33.7 9,041 10.4 94,196 33,866 36.0 10,784 11.4 8.6 15.9 2.3 19.3 1.0 52,680 14,348 27.2 (3,891) (7.4) 68,347 13,010 19.0 (2,843) (4.2) 29.7 (9.3) (8.2) (26.9) 3.2 2,960 7,596 2,863 6,803 2,822 6,724 Net adds (41) (79) 80 31 84 33 87 34 3.6 3.0 8.7 9.7 5,274 1,822 34.5 216 (124) (2.4) 5,976 2,280 38.2 95 223 3.7 5,975 2,120 35.5 137 398 6.7 (0.0) (7.0) (2.7) 44.2 78.5 2.9 13.3 16.4 0.9 (36.6) (421.0) 9.0 Net adds 170 6,859 533 45,941 631 51,857 703 52,800 Net adds 72 943 118 33 112 34 111 33 (0.9) (2.9) (5.9) 0.0 22,775 7,422 32.6 1,251 5.5 24,218 9,400 38.8 3,721 15.4 24,801 9,115 36.8 3,171 12.8 2.4 (3.0) (2.1) (14.8) (2.6) 8.9 22.8 4.2 153.5 7.3 Net adds 46 926 1,253 10,572 1,314 11,350 1,299 11,498 Net adds (15) 148 1,171 301 1,146 311 1,139 308 (0.6) (1.0) (2.7) 2.3 14,551 1,874 12.9 (4,272) (29.4) 17,480 3,883 22.2 (469) (2.7) 18,595 3,735 20.1 (1,348) (7.2) 6.4 (3.8) (2.1) 187.4 (4.6) 27.8 99.3 7.2 (68.4) 22.1 Net adds 67 9,009 (19.6) (18.1) 342 33,489 369 40,843 409 42,498 Net adds 40 1,655 281 149 231 129 226 122 (2.2) (5.4) Page 5 of 6
18. 23-Feb-18 FYE Dec Ncell (NPRmn) Revenue EBITDA EBITDA margin (%) PAT PAT margin (%) 4QFY16 3QFY17 4QFY17 QoQ (%) YoY (%) FY16 FY17 YoY (%) 14,343 9,528 66.4 5,390 37.6 14,576 8,790 60.3 4,578 31.4 15,328 9,728 63.5 4,469 29.2 5.2 10.7 3.2 (2.4) (2.3) 6.9 2.1 (3.0) (17.1) (8.4) 58,651 37,660 64.2 20,297 34.6 58,054 37,035 63.8 18,924 32.6 (1.0) (1.7) (0.4) (6.8) (2.0) Net adds (85) 1,601 1,384 662 47.8 214 15.5 1,547 684 44.2 183 11.8 11.8 3.3 (3.6) (14.5) (3.6) 490 14,427 443 15,489 405 16,028 Net adds (38) 539 342 319 349 291 342 302 (2.0) 3.8 0.0 (5.3) edotco (RMmn) Revenue EBITDA EBITDA margin (%) PAT PAT margin (%) 351 148 42.2 18 5.1 388 165 42.5 45 11.6 414 170 41.1 31 7.5 6.7 3.0 (1.5) (31.1) (4.1) 17.9 14.9 (1.1) 72.2 2.4 Tenancies ('000) Towers ('000) Managed sites ('000) Tenancy ratio (x) 21,772 15,124 10,185 1.44 24,598 16,391 10,821 1.50 25,878 16,533 10,931 1.57 1,280 142 110 4,106 1,409 746 Subscribers ('000) Postpaid Prepaid ARPU (BDT) Postpaid Prepaid 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 Friday, February 23, 2018, the analyst, Wilson Loo, 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 6 of 6
19. RESULTS UPDATE Friday , February 23, 2018 FBMKLCI: 1,855.07 Sector: Healthcare THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kossan Rubber Industries Berhad TP: RM9.73 (+11.8%) Last Traded: RM8.70 Optimistic on FY18 outlook Tan Kam Meng, CFA Tel: +603-2167 9605 Buy kmtan@ta.com.my Review Kossan’s FY17 net profit of RM183.6mn (+10.0% YoY) was within ours and consensus estimates at 99% and 95% of full-year forecast respectively. FY17’s revenue and net profit grew by respective 17.4% to RM1.9bn and 10.0% to RM183.6mn. The commendable results were mainly due to higher sales volumes (+6%) and ASP (+7%) that more than offset higher cost of latex (natural latex +30%, nitrile latex +14%). FY17 earnings growth could have been higher if not dragged by the group’s TRPs division, which PBT declined by 47% due to a longer time-lag to pass through the surge in natural rubber cost to customers. QoQ, results performance was flattish as expected due to no new capacity in the gloves division. PBT climbed 1.4% to RM59mn while the plant utilisation rate remained optimal at above 80%. Separately, the company proposed a share split of 1 existing share into 2 shares. We view this positively as it will improve trading liquidity. The number of outstanding shares will double to 1.28bn shares. Impact We make no change to our earnings estimates. Outlook We expect to see full contributions from Plant 16 in FY18 following the completion of 8 new production lines. To recap, Plant 16 has a capacity of 3.0bn gloves/annum and this will increase the group’s overall capacity by 13.6% to 25.0bn gloves/annum. Meanwhile, Plant 17 (1.5bn gloves/annum) and Plant 18 (3.0bn gloves/annum are expected to begin operations by 3QFY18 and 4QFY18 respectively. For FY18/FY19/FY20, we project the group to deliver earnings growth of 30%/12%/18%. www.taonline.com.my Share Information Bloomberg Code KRI MK Stock Code 7153 Listing Main Market 639.5 Share Cap (mn) 5,563.4 Market Cap (RMmn) 8.79/5.62 52-wk Hi/Lo (RM) 614.1 12-mth Avg Daily Vol ('000 shrs) 32.8 Estimated Free Float (%) 0.5 Beta Major Shareholders (%) Kossan Holdings Bhd - 51.1 EPF - 8.54 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.0 0.0 239.3 268.9 237.8 275.1 0.6 (2.2) Buy(Upgraded) Financial Indicators Net gearing (x) CFPS (RM) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) FY18 0.0 0.4 21.1 13.9 19.4 2.0 4.4 FY19 0.0 0.5 19.0 14.3 19.7 2.2 4.0 % of FY 99.0 95.0 Within Within KRI 1.0 7.0 21.7 34.3 FBM KLCI 0.9 7.8 4.6 8.8 Scorecard vs. TA vs. Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth (12-Mth) Share Price relative to the FBMKLCI Valuation & Recommendation Our TP for Kossan is revised higher to RM9.73/share (previously RM8.60/share), based on a higher PE multiple of 26.0x (previously 23.0x) against CY18 EPS. The revision is premised on robust demand for rubber gloves and strong earnings growth prospects. Upgrade from hold to Buy. Key risks include fluctuations in raw material prices and delays in expansion plans. Source: Bloomberg Page 1 of 3
20. 23-Feb-18 FY17 Results Analysis FYE Dec (RM mn') 4QFY16 3QFY17 4QFY17 QoQ YoY FY16 FY17 YoY 438.2 489.2 477.8 (2.3) 9.0 1,668.0 1,957.4 17.4 380.9 425.9 414.3 (2.7) 8.8 1,439.6 1,716.4 19.2 - TRPs 38.2 37.9 42.2 11.2 10.3 160.6 162.0 0.9 - Clean-room 15.7 24.8 20.2 (18.4) 29.1 64.8 76.4 17.9 Revenue - Gloves EBITDA 73.9 78.9 80.0 1.4 8.1 279.3 311.9 11.7 Dep. & Amor. (17.2) (17.9) (18.0) 0.4 4.7 (69.3) (72.1) 4.1 EBIT 56.8 61.0 62.0 1.7 9.2 220.0 239.8 9.0 Net finance cost (2.4) (2.8) (3.0) 8.0 25.2 (8.9) (10.2) 14.3 EI 8.2 1.2 9.9 740.6 20.7 19.3 27.2 41.0 54.4 58.2 59.0 1.4 8.5 210.0 229.6 9.3 43.0 53.6 53.5 (0.1) 24.4 178.6 209.9 17.5 - TRPs 8.7 3.6 4.4 21.7 (49.3) 30.6 16.2 (47.0) - Clean-room 1.3 0.8 0.6 (18.9) (49.9) 2.6 2.9 11.9 Tax (9.0) (12.2) (12.5) 3.0 38.9 (38.9) (44.0) 13.2 MI (0.7) (0.3) (0.6) 61.4 (24.4) (4.1) (2.0) (52.4) PAT (-MI) 44.6 45.7 45.9 0.5 2.9 166.9 183.6 10.0 pp pp 0.6 (0.1) PBT - Gloves Margins: EBITDA margin (%) PBT margin (%) 16.9 16.1 16.7 pp 16.7 15.9 (0.8) 12.4 11.9 12.3 0.5 (0.1) 12.6 11.7 (0.9) - Gloves 11.3 12.6 12.9 0.3 1.6 12.4 12.2 (0.2) - TRPs 22.8 9.6 10.5 0.9 (12.3) 19.1 10.0 (9.0) 8.2 3.2 3.2 (0.0) (5.0) 4.1 3.9 (0.2) Tax rate (%) 16.6 20.9 21.2 0.3 4.7 18.5 19.2 0.6 PAT (-MI) margin (%) 10.2 9.3 9.6 0.3 (0.6) 10.0 9.4 (0.6) FY17 FY18F FY19F - Clean-room Earnings Summary FYE Dec (RM mn') R e ve nue FY16 FY20F 1,668.0 1,957.4 2,157.7 2,502.1 2,828.9 E BITDA 279.3 311.9 391.9 436.0 508.3 De p. & Am or. (69.3) (72.1) (76.1) (81.6) (86.7) Ne t fina nce cos t 0.0 (10.2) (3.2) (3.0) (2.7) P BT 210.0 229.6 312.6 351.4 419.9 Ta xa tion (39.0) (44.0) (67.2) (75.5) (94.3) (4.1) (1.6) (6.1) (6.9) (8.1) MI P AT (-MI) 167.0 184.0 239.3 268.9 317.5 E P S (s e n) 26.1 28.8 37.4 42.1 49.5 (19.6) 10.1 29.6 12.4 17.7 P E R (x) 33.3 30.2 23.2 20.7 17.6 DP S (s e n) 11.0 14.4 18.7 21.0 22.3 1.3 1.7 2.2 2.4 2.6 E P S g rowth (% ) Divide nd yie ld (% ) Page 2 of 3