Bursa Malaysia Daily Market Report - 24 July

Transcription

1. Monday , 24 July, 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. YTL Power International Berhad: Expect Lower Dividends 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, 24 July 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (21.07.2017) Volume (mil) +/-chg (RMmn) Main Market 1,166.5 -43.5 1,630.8 Warrants 138.0 52.9 14.2 ACE Market 554.6 140.3 132.0 Bond 5.1 -4.8 1.5 ETF 0.1 0.08 0.2 Total 1,864.2 1,778.7 Off Market 162.2 26.6 482.6 Value +/-chg -263.1 5.3 29.5 -0.5 0.11 -136.3 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP July 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 1.40 0.10 0.24 0.31 1.42 0.95 2.98 Up Down 338 249 50 74 43 59 3 1 2 1 436 384 % chg % YTD chg 1,759.16 12,540.01 17,322.61 1,762.00 3.53 23.29 69.83 5.50 0.20 0.19 0.40 0.31 7.15 9.36 17.72 7.73 21,580.07 6,387.75 7,452.91 20,099.75 2,450.06 26,706.09 3,314.12 1,573.51 5,765.42 3,237.98 1,845.81 5,722.84 -31.71 -2.25 -34.96 -44.84 8.22 -34.12 20.99 -1.77 -59.78 -6.88 -2.16 -38.61 -0.15 -0.04 -0.47 -0.22 0.34 -0.13 0.64 -0.11 -1.03 -0.21 -0.12 -0.67 9.20 18.66 4.34 5.16 20.90 21.39 15.04 1.98 8.85 4.33 -6.26 1.01 Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) YTL 113.0 @ MAYBANK 21.0 @ BIMB 18.2 @ SIME 4.1 @ MERCURY 2.0 @ ANNJOO 1.5 @ QL 1.0 @ (RM) 1.29 9.63 4.50 9.52 1.47 2.85 4.89 Counter Mkt Cap. (RM’mn) MAYBANK 101,485 TENAGA 79,905 IHH 57,481 CIMB 55,760 PCHEM 49,517 AXIATA 43,270 PETGAS 37,240 GENTING 36,228 GENM 33,897 MISC 33,032 Chg (RM) 0.01 0.04 0.04 0.02 0.05 0.01 0.14 0.01 0.10 0.01 Vol. (mn) 11.82 1.38 20.20 4.13 1.65 5.89 0.30 1.29 4.96 1.74 Important Dates VITROX - 1:1 Bonus Issue - BI of 236.3m shares. 1 bonus share for every 1 existing share. LISTING ON: 24/07/2017. Bearish technical momentum for the FBM KLCI has lessened somewhat following the profit-taking correction during the past five weeks, which should pave the way for base building process prior to belated oversold rebound to copy the strong recovery on global peers to record highs. If the local market should suffer further correction this week, it would aggravate oversold momentum, which should then strengthen oversold rebound going forward. On the index, immediate support from the 100-day moving average level now at 1,756 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,707. Immediate resistance stays at the 50-day moving average now at 1,772, next 1,782, followed by the recent peak of 1,796. Sector-wise, while blue chips are likely to extend sideways or range bound trade, lower liner construction related counters like Bina Puri, Gadang, Hock Seng Lee, Mudajaya and Sunway Construction should attract bargain hunters at cheaper levels. News Bites • • • • • • • • • • • • Mulpha International Bhd, which was recently in the news over alleged poor practices at its retirement village in Australia, has put one of its key assets in that country for sale and could unlock at least A$300mn. Boustead Heavy Industries Corporation Berhad, via its JV, received a letter from the Ministry of Defence to extend its In Service Support contract for the Royal Malaysian Air Force EC725 helicopters for RM215mn. Landmarks Berhad, via its indirect wholly owned subsidiary, executed a share sale agreement to dispose its 20% equity interest in MSL Properties Sdn Bhd to MCL Land Limited for RM87.4mn. TRC Synergy is disposing a 3,621 square metre land in Melbourne to Forza 588 Swan Street Pty Ltd for AUD9.7mn. Felda Global Ventures Holdings Bhd has reiterated that it was not involved in any conspiracy or personal agenda in conducting the internal investigation process on Datuk Zakaria Arshad and three other senior management staff. CIMB Group Holdings Bhd's subsidiary Touch 'n Go is set to launch an "e-wallet" using technology pioneered by Alipay, sources said. Sapura Resources Berhad entered into a MOU with Lufthansa Technik AG, for the purpose of setting up a Maintenance, Repair and Overhaul service provider in the area of narrow-body and wide-body aircraft base maintenance. UEM Sunrise Bhd launched its third project in Melbourne, Australia Mayfair, with a GDV of about RM1bn. Sunway Bhd is set to launch various projects with a total GDV of RM5bn in Penang over the next 10 years. Kossan Rubber Industries Bhd is going all out to complete an overhaul of its plants for automation by 2020. Bank Negara Malaysia's international reserves amounted to US$99.1bn (RM425.4bn), as at July 14, 2017 and is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt. Eurozone inflation may slow more than earlier expected in the coming years but economic growth and the drop in unemployment could exceed past projections, the European Central Bank's Survey of Professional Forecasters showed. Exchange Rate USD/MYR 4.2843 -0.0075 USD/JPY 111.47 -0.8400 EUR/USD 1.165 0.0139 Commodities Futures Palm Oil (RM/mt) 2,572.00 -5.00 Crude Oil ($/Barrel) 45.60 -1.13 Gold ($/tr.oz.) 1,255.00 11.10 ORION - 7:2 Rights Issue - RI of up to 465.9m shares together with up to 232.9m free detachable warrants. 7 rights shares together every 2 existing shares held, at an issue price of RM0.17 per rights share, with 1 free warrant for every 2 rights shares subscribed. LISTING ON: 02/08/2017. 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 , July 24, 2017 FBMKLCI: 1,759.16 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 Consolidation to Continue but Invest Malaysia May Ignite Buying Interest The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) was stuck in tight trading ranges last week, with most investors in profit-taking mode despite China’s stronger-than-expected 2Q GDP growth of 6.9%, overshadowed by concerns the Chinese government may further regulate the economy. The absence of spillover buying interest following record closing highs on Wall Street also discouraged investor commitments and forced stocks to remain in consolidation mode. Week-on-week, the FBM KLCI rose 4.16 points, or 0.24 percent to 1,759.16, as gains on BAT (+RM1.22), Genting Malaysia (+24sen), Axiata (+12sen) and Petronas Chemicals (+12sen) offset losses on Hong Leong Bank (-18sen) and Hong Leong Financial Group (-10sen). Average daily traded volume and value improved mildly to 1.99 billion shares and RM2 billion, compared with the 1.86 billion shares and RM1.86 billion average respectively the previous week. The downside pressure on the FBMKLCI seemed to have abated last week after the slew of corrections since late June this year. A recovery could follow through this week, if the Invest Malaysia Kuala Lumpur event tomorrow and Wednesday could stir interest in the local equity market. The Prime Minister’s key note address tomorrow morning will be closely followed to see whether there is any interesting announcement that will benefit the capital market. More clues on the current strength of the nation’s economic recovery, especially after the strongerthan expected 1Q17 GDP of 5.6%, and hints about the timing of the 14th general election have the potential to excite some investors. The participating companies will showcase their companies the following day and if they succeed in convincing investors about their growth prospects and investment merits, the seminar should attract selective interest, especially from foreigners, in some stocks. Bursa Malaysia’s website highlights 44 participating companies with 18 large track presentations. These presentations may not alter much the FBMKLCI component’s 2-year forward consensus average earnings growth forecast of around 7%. However, the updates may provide fund managers and investors sufficient clues on these companies’ ability to outperform expectations and close the FBMKLCI’s earnings growth with other developing economies in this region. For instance, consensus earnings growth forecast for the same period for Thailand, Indonesia and Philippines points to an average growth of 11.4%. With lower earnings growth and recent price gains, the FBMKLCI trades at a slight premium of 8.1% (in term of price-to-earnings ratio) to these markets. The premium valuation is not strange as it had mostly traded at a premium in the past due to Malaysia’s sound fundamentals, strong financial system and active participation of government-linked funds in the equity market but it has narrowed over the years with other regional economies improving their competitive positioning significantly. The consoling factor is that it is still 20% cheaper compared to them in term of price-to-book valuation (PBV). Besides, drivers like recovering GDP and corporate earnings growth, undervalued Page 1 of 7
4. TA Securities 24-Jul-17 A Member of the TA Group ringgit and the award of large scale domestic projects prior to the next general election have the potential to attract interest . Thus, investors should take the opportunity to increase exposure in undervalued companies, especially in blue chips, upon any price weakness. Banks stand out in this category as valuation appears attractive with average sector’s PBV of 1.2x and most of them are still trading below their minus one standard deviation when compared to their historical PBV cycle. Point to note is that valuations today are still below average sector’s PBV in 2004 (4.1x), 2008 (3.4x) and 2013 (1.7x). With sanguine outlook for the economy, corporate earnings and capital market activities, banks’ return-on-equity and asset quality should reflect these improvements. Besides, with many expecting an election rally, there is more room for these bellwether stocks to garner the limelight, which is already apparent since the beginning of this year with significant improvement in their foreign shareholding levels. Buy Maybank (TP: RM11.00), CIMB (TP: RM8.00), PBBank (TP: RM23.60), RHBBank (TP: RM5.80), AmBank (TP: RM5.70), HLBank (TP: RM17.50), and Affin (TP: RM3.70). That aside, the US Federal Reserve is expected to maintain its fund target rate in this week’s meeting. What is more important for the market is the timing of its QE tapering. Fed may not provide any definitive answers to this and is likely to wait for more affirmative economic data before committing. The second quarter GDP and core PCE announcements this Friday could shed some light on what to expect next. Page 2 of 7
5. TA Securities 24-Jul-17 A Member of the TA Group News In Brief Corporate Mulpha International Bhd , which was recently in the news over alleged poor practices at its retirement village in Australia, has put one of its key assets in that country - the Hayman Island for sale. If successful, it could unlock at least A$300mn or RM1bn for the asset-rich but debt-heavy property developer according to reports. (The Star) Boustead Heavy Industries Corporation Berhad, via its JV, received a letter from the Ministry of Defence to extend its In Service Support contract for the Royal Malaysian Air Force EC725 helicopters for RM215mn. The contract extension is for another three years and eight days, effective 24 March 2017. (Bursa) Landmarks Berhad, via its indirect wholly owned subsidiary, executed a share sale agreement to dispose its 20% equity interest in MSL Properties Sdn Bhd to MCL Land Limited for RM87.4mn. MSL’s major asset is the Wangsa Walk Mall. Its stake in MSL is deemed as not strategic and does not accord any management control. Cash proceeds will be utilised to finance its Treasure Bay Bintan project and as working capital. (Bursa) TRC Synergy is disposing a 3,621 square metre land in Melbourne to Forza 588 Swan Street Pty Ltd for AUD9.7mn (RM32.2mn). The disposal is expected to result in an estimated net gain on disposal of RM4.4mn. Proceeds will be utilised for impending development activities, repayment of bank borrowings, working capital and land related expenses. (Bursa) Felda Global Ventures Holdings Bhd has reiterated that it was not involved in any conspiracy or personal agenda in conducting the internal investigation process on Datuk Zakaria Arshad and three other senior management staff. The investigation was considered a fiduciary responsibility of the board in order to discharge its duty of care to the listed company and its shareholders. (Bernama) CIMB Group Holdings Bhd’s subsidiary Touch ‘n Go is set to launch an “e-wallet” using technology pioneered by Alipay, sources said. The service is positioned to shake up the payments business here. This is because of the widespread usage of Touch ‘n Go cards – there are about 17mn such cards issued – and the robustness of the Alipay back-end technology that would be deployed. (The Star) Sapura Resources Berhad entered into a MOU with Lufthansa Technik AG, for the purpose of setting up a Maintenance, Repair and Overhaul service provider in the area of narrowbody and wide-body aircraft base maintenance. This is to serve the Malaysia, South Asia and Southeast Asia markets. (Bursa) UEM Sunrise Bhd launched its third project in Melbourne, Australia - Mayfair, with a GDV of about RM1bn. Mayfair offers 158 bespoke residences with layouts of one to five bedrooms, built-ups from 750sqft to 6,000sqft and priced from RM2.4mn to RM43mn. Construction on the single-phase residential project would start in the first quarter of next year and scheduled for completion in the second quarter of 2021. (Bernama) Sunway Bhd is set to launch various projects with a total GDV of RM5bn in Penang over the next 10 years. One of the company’s major development plans on Penang island would be the Sunway Valley City, a RM2bn integrated project in Paya Terubong. (The Star) Kossan Rubber Industries Bhd is going all out to complete an overhaul of its plants for automation by 2020. The group aims to slash its headcount per million pieces – which stands about three now – to 1.6 in five years. (The Edge) Page 3 of 7
6. TA Securities 24-Jul-17 A Member of the TA Group Cycle & Carriage Bintang Berhad reported a 68.2% YoY decline in its 1HFY17 net profit to RM9.3mn. Revenue fell 4.0% YoY to RM708.2mn.Unit sales were 13% lower during the period, with the model mix moving away from S-Class to the lower margin GLC-Class and EClass. Margins suffered further due to strong competition in the premium car market. (Bursa) Page 4 of 7
7. TA Securities 24-Jul-17 A Member of the TA Group News In Brief Economy Asia Business Process Outsourcing in Malaysia to Reach US $1.4bn by 2021 Malaysia’s Business process outsourcing market is expected to grow at a compounded annual rate of 7.9% and reach US$1.4bn by end-2021, said International Data Corporation (IDC). The growth of the BPO market was mainly related to the increase in demand for customer care and high-end analytics solution by Malaysian enterprises, it said in its latest research titled, “Business Process Outsourcing (BPO) Market in Malaysia 2017”. The research highlighted that the human resources, and finance and accounting sectors made up three-fourths of the total BPO market in 2016, followed by the customer care sector at 14% and procurement sector, the smallest, at 9%. Head of services (IDC ASEAN) Sreenath Kandarpah said that majority of Malaysian enterprises would eventually rely on BPO providers to deliver efficient and effective services for their business process. Other news in Malaysia: • Bank Negara Malaysia's (BNM) international reserves amounted to US$99.1 billion (RM425.4 billion), as at July 14, 2017, compared with US$98.9 billion (RM424.8 billion) registered as at June 30, 2017. BNM said that the reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt. • The Government has yet to decide whether to revise the fuel price mechanism from the weekly to the daily basis, Second Finance Minister Datuk Johari Abdul Ghani said. (The Star/Bernama) China's Central Bank Pumps in Most Funds Since January China’s central bank used its open-market operations to boost the supply of cash in the financial system after demand driven by tax and dividend payments pushed the overnight money rate to a four-week high. The People’s Bank of China added a net CNY 40bn through reverse-repurchase agreements, bringing this week’s injections to CNY 510bn ($75.4bn) the most in six months. The monetary authority was also said to have added funds through some commercial lenders. The nation’s interbank funding costs have risen this week amid signs the government is in no hurry to let up on its efforts to reduce borrowing levels. Authorities will actively prevent and resolve systemic financial risks, and ramp up efforts to reduce leverage in the economy, the official Xinhua News Agency reported, citing President Xi Jinping at a high-profile conference last weekend. (Bloomberg) Indonesia Central Bank Says 2Q GDP Growth Likely Slower Than Expected Indonesia's central bank said Southeast Asia's biggest economy likely grew more slowly than it initially expected in the second quarter due to weaker consumption. Dody Budi Waluyo, Bank Indonesia's (BI) executive director of economic and monetary policy, said growth was expected to be "around 5.1%" in the April-June quarter, reflecting soft household consumption and despite better investment growth. Walyu added that, BI's 'stimulus' to support consumption is by managing the inflation rate while the central bank's monetary stance remained neutral. BI kept its benchmark interest rate steady at 4.75%. (The Edge Market) Aussie Dollar's Rollercoaster Shows Dilemma Facing Central Banks Australia’s central bank whipsawed the nation’s currency this week, underscoring just how difficult policy makers are finding it to even discuss an end to ongoing stimulus. Minutes of the Reserve Bank of Australia’s July meeting included a discussion of the level of the neutral interest rate, which was estimated at about 3.5% -- a long way from the current 1.50%. Traders interpreted the discussion as a signal that rate hikes were on the way and sent the Australian dollar soaring, effectively tightening conditions in the economy. The RBA’s No. 2 official used a speech to hammer home that policy makers were not signalling Page 5 of 7
8. TA Securities 24-Jul-17 A Member of the TA Group tighter policy . The Aussie promptly tumbled. (Bloomberg) BOJ Blames Japan's Unique Labour Practice for Low Wages, Inflation A gap in pay and working conditions between temporary and permanent employees is preventing a tightening job market from pushing up overall wages and inflation, the Bank of Japan said in a rare analysis of the country's job market. Wages for temporary workers are "clearly on the rise" as companies struggle to lure employees, with the job market having tightened to levels not seen since Japan's asset-inflated bubble era in the early 1990s, the BOJ said. BOJ added that permanent workers' pay remains stagnant because labour unions representing these employees, who enjoy better benefits than those on the temporary roll, tend to prioritise job security over higher pay. Japan's unique pay scale, where salaries rise according to seniority, also discourages job hopping and prevents a tight job market from pushing up overall wage. The slow growth in permanent workers' income, which makes up nearly 70% of total wage-earners' income, partly explains why wage growth is subdued despite a strong economy. Japan's jobless rate rose to 3.1% in May, while the availability of jobs rose for the third straight month to reach the highest since February 1974. But core consumer prices in May rose just 0.4% from a year earlier, well below the BOJ's two per cent target. (The Business Times) Europe and United Kingdom UK Public Sector Finances Deteriorate in June The UK government borrowed more than expected last month, pushing up the country’s deficit by nearly £2bn in the three months to the end of June. Public sector net borrowing, excluding taxpayer backed banks, hit £6.85bn in June, higher than an average forecast of around £4.8bn and driving the country’s cumulative borrowing bill to £22.8bn in the financial year to date. That marks a rise of nearly 9% compared to the April-June period in 2016, according to the Office for National Statistics. Of the bill, £26.4bn was borrowed by central government but local governments were in a surplus of £5.2bn. The UK’s overall debt pile now stands at 80.9 per cent of GDP – or £1.62tn – an improvement from the 81.5% recorded in the same month last year. In its election manifesto, the Conservative party promised to eliminate the UK’s deficit by the “middle” of the 2020s – dropping a previous pledge to bring the country into surplus by 2018/19. The deficit measures the difference between what the government earns in tax receipts and its expenditure. Britain’s Office for Budget Responsibility, which independently audits the government’s finances, thinks borrowing will rise by a total of £58.3bn this year. (Financial Times) ECB Survey Sees Lower Inflation, Higher GDP Growth Eurozone inflation may slow more than earlier expected in the coming years but economic growth and the drop in unemployment could exceed past projections, the European Central Bank's Survey of Professional Forecasters showed. The ECB, which uses the survey in policy decisions, kept its ultra-easy policy unchanged, calling for patience and persistence in getting inflation back up to its target. The survey, based on responses from 56 forecasters, sees inflation at 1.5% this year, 1.4% in 2018 and 1.6% in 2019, all 0.1 percentage point below previous projections made three months ago. The longer-term expectation for five years out was unchanged at 1.8%. (The Business Times) Page 6 of 7
9. TA Securities 24-Jul-17 A Member of the TA Group Share Buy-Back : 21 July 2017 Company FIAMMA GLBHD PRESBHD Bought Back Price (RM) Hi/Lo (RM) 490,000 100,000 50,000 0.54/0.535 0.60 2.05/2.01 0.555/0.535 0.60 2.14/2.01 Total Treasury Shares 21,310,000 8,001,800 1,547,500 TA RESEARCH – Remisiers’ Briefing Topic: Weekly Market Outlook Speaker: Kaladher/ Stephen Soo Venue: Auditorium, 10th Floor Menara TA One Date: 24 July 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. liability for any direct or indirect loss arising from the use of this document. 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 We accept no We, our associates, directors, employees may have an interest in
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 21-Jul-17 1.93 2.23 5.75 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 5.04 0.94 0.62 1.26 10.3 24.1 19.8 15.8 25.3 30.6 18.7 9.3 29.1 12.2 8.8 18.8 6.1 4.0 2.3 8.2 4.0 3.5 2.44 2.70 6.47 -20.9 -17.4 -11.1 1.88 2.08 4.09 2.7 7.2 40.5 -9.4 4.2 36.2 4.80 3.70 5.70 8.00 17.50 11.00 23.60 5.80 10.00 1.29 0.96 1.32 1.38 0.67 0.96 0.79 1.32 0.69 33.6 29.4 43.9 49.6 105.2 73.4 137.2 50.7 40.3 30.5 33.6 48.4 55.2 115.5 82.9 142.4 54.5 39.0 11.9 9.0 11.4 12.8 14.9 13.1 14.8 10.0 25.1 13.1 7.9 10.4 11.5 13.6 11.6 14.3 9.3 25.9 4.0 3.0 3.5 3.2 2.6 5.2 2.8 2.4 3.4 4.0 3.0 3.6 3.6 2.6 5.2 2.8 2.4 3.4 4.49 3.00 5.70 6.87 16.30 9.68 20.66 5.59 11.14 -11.4 -12.0 -11.9 -7.6 -3.8 -0.5 -1.5 -9.1 -9.2 3.60 2.08 3.90 4.12 12.70 7.50 19.30 4.53 8.20 10.6 26.9 28.7 54.0 23.5 28.4 5.5 12.1 23.4 7.0 10.5 16.5 40.8 16.1 17.4 3.2 7.9 14.4 0.38 1.30 5.26 3.50 0.65 1.16 2.04 1.94 5.98 0.45 1.57 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.80 0.64 1.04 1.08 1.01 1.29 na 1.10 0.10 5.6 14.6 28.1 15.3 4.9 8.3 12.6 11.9 42.0 5.6 13.5 34.8 20.3 5.7 9.6 12.5 12.0 45.8 6.7 8.9 18.7 22.8 13.1 14.0 16.1 16.3 14.2 6.8 9.6 15.1 17.2 11.4 12.0 16.3 16.2 13.1 0.0 2.2 2.3 2.1 3.8 0.9 2.7 1.5 4.2 0.0 2.2 2.3 2.7 3.8 0.9 2.7 1.5 4.2 0.51 1.37 5.52 3.61 0.74 1.39 2.15 2.48 6.15 -25.5 -5.1 -4.7 -3.0 -11.6 -16.5 -5.1 -21.6 -2.8 0.38 0.89 4.65 3.07 0.37 0.41 1.56 1.50 5.57 1.3 46.9 13.1 14.0 78.1 186.4 30.8 29.3 7.4 -12.6 23.8 10.0 9.4 7.4 101.7 20.0 12.8 1.7 1.97 2.00 0.49 11.0 11.5 17.9 17.1 5.1 5.1 2.19 -10.0 1.93 2.1 -2.0 15.00 17.72 17.84 21.08 0.50 0.59 74.8 93.1 81.3 20.1 101.9 19.0 18.4 17.4 5.0 4.7 5.4 5.2 15.30 19.10 -2.0 -7.2 13.72 15.56 9.3 13.9 7.8 8.2 2.20 7.38 24.98 1.21 83.28 3.71 1.95 4.85 0.91 2.23 8.62 27.41 1.50 88.66 4.10 2.46 4.41 1.23 0.49 0.35 0.32 0.47 0.36 0.48 0.66 0.43 0.57 6.7 26.4 121.1 6.5 290.1 22.3 27.5 15.7 8.1 7.9 40.6 151.0 6.6 327.7 24.7 27.0 16.6 11.6 32.7 28.0 20.6 18.6 28.7 16.6 7.1 30.9 11.2 27.9 18.2 16.5 18.3 25.4 15.0 7.2 29.1 7.8 1.8 1.4 2.8 5.0 3.3 4.0 3.1 0.9 2.8 2.2 2.0 3.0 5.0 3.4 4.6 4.1 1.0 3.9 3.00 8.89 26.52 1.32 85.20 3.89 2.04 5.00 1.07 -26.7 -17.0 -5.8 -8.2 -2.3 -4.6 -4.4 -3.0 -15.4 2.11 7.30 22.44 1.13 74.12 2.26 1.47 4.14 0.78 4.3 1.1 11.3 7.0 12.4 64.1 32.7 17.1 16.0 -14.4 0.7 6.4 5.1 6.5 46.1 12.7 12.0 13.8 44.16 52.08 1.01 198.6 187.4 22.2 23.6 4.5 4.5 55.46 -20.4 40.61 8.8 0.0 9.56 5.98 11.51 6.54 1.35 1.29 49.3 25.7 54.7 27.7 19.4 23.3 17.5 21.6 0.5 1.3 0.6 1.5 10.00 6.38 -4.4 -6.3 7.50 4.22 27.5 41.6 20.3 32.3 2.29 0.13 3.34 0.13 0.75 1.26 19.3 0.4 23.2 0.4 11.9 34.4 9.9 34.7 6.1 0.0 7.0 0.0 3.42 0.16 -33.0 -21.9 2.28 0.05 0.4 150.0 -22.6 150.0 6.01 4.18 6.39 4.70 0.77 0.51 9.5 13.3 15.0 16.5 63.0 31.4 40.2 25.4 0.6 1.5 0.6 1.8 6.73 4.37 -10.7 -4.3 5.54 3.85 8.5 8.6 -5.4 0.0 6.86 7.00 1.91 5.75 1.55 6.85 7.60 1.80 6.05 2.20 0.57 0.16 0.34 -0.19 0.30 19.5 35.8 12.3 26.4 3.7 24.6 40.0 15.1 29.8 5.5 35.2 19.5 15.5 21.7 41.6 27.9 17.5 12.7 19.3 28.2 1.2 2.6 1.9 2.3 0.6 1.6 2.9 2.4 2.6 0.9 7.40 7.15 2.38 5.94 2.64 -7.3 -2.1 -19.7 -3.2 -41.3 4.06 5.62 1.88 4.20 1.51 69.0 24.6 1.6 36.9 2.6 42.0 6.2 -9.5 7.5 -34.3 INDUSTRIAL SCIENTX SKPRES 8.71 1.34 9.71 1.75 0.52 0.50 54.5 8.6 66.3 10.6 16.0 15.6 13.1 12.6 2.1 3.1 2.3 3.9 8.99 1.44 -3.1 -6.9 6.01 1.15 44.9 16.5 30.0 3.9 MEDIA ASTRO MEDIA PRIMA STAR 2.48 0.90 2.36 3.45 0.60 1.40 1.05 0.66 0.64 13.2 1.7 7.1 14.5 2.8 6.5 18.7 52.7 33.3 17.1 31.9 36.4 5.0 1.5 7.6 5.2 2.5 7.6 3.01 1.48 2.67 -17.6 -39.2 -11.6 2.47 0.87 2.19 0.4 4.0 7.8 -4.6 -21.7 5.4 -14.5 -3.1 -34.5 -6.3 -4.5 -10.6 -24.8 -68.8 0.20 6.33 0.75 7.03 0.44 6.48 1.33 0.29 202.6 0.0 1.3 5.3 46.0 7.6 18.8 14.0 131.4 -2.6 -16.9 0.7 42.7 -0.1 -2.5 -62.9 -19.7 1.30 22.3 -6.5 BANKS & FINANCIAL SERVICES AFG 3.98 AFFIN 2.64 AMBANK 5.02 CIMB 6.35 HLBANK 15.68 MAYBANK 9.63 PBBANK 20.36 5.08 RHBBANK BURSA 10.12 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 0.76 1.03 3.7 4.6 16.1 12.9 1.7 1.7 0.69 LCTITAN 6.33 7.41 na 60.3 71.5 10.5 8.9 4.1 5.5 6.53 MHB 0.76 0.87 1.83 -1.2 1.3 na 58.0 0.0 0.0 1.16 MISC 7.40 6.85 0.79 56.4 48.9 13.1 15.1 4.1 4.1 7.90 PANTECH 0.64 0.69 1.27 4.1 4.9 15.3 12.9 2.8 3.1 0.67 PCHEM 6.97 7.74 1.06 39.2 40.5 17.8 17.2 3.0 3.2 7.80 SENERGY 1.58 1.71 2.49 6.6 4.0 23.9 39.9 0.6 0.6 2.10 UMWOG 0.33 0.80 2.10 -11.7 -3.5 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 1.59 1.55 1.48 12.0 12.6 13.3 12.6 0.0 0.0 1.98
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.72 3.00 4.48 24.74 9.54 6.47 Target Price BETA (RM) 1.55 3.88 4.15 26.19 10.02 7.52 1.79 0.47 1.07 0.86 1.23 0.43 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.7 111.8 34.0 37.6 8.5 15.7 21.0 119.1 37.5 34.5 40.8 24.4 23.9 22.1 28.0 17.2 20.2 19.1 21.3 20.8 25.4 18.8 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 2.9 2.3 2.2 2.2 2.6 3.6 2.9 2.7 2.7 2.4 3.2 2.6 2.52 3.70 4.81 25.50 9.70 6.55 -31.7 -18.9 -6.9 -3.0 -1.6 -1.2 1.42 2.96 4.21 22.92 7.42 5.50 PROPERTY GLOMAC 0.64 0.70 0.56 1.6 6.3 40.2 10.1 4.7 4.7 0.83 -22.4 0.61 HUAYANG 0.89 0.96 0.66 17.3 10.2 5.2 8.7 4.5 2.2 1.43 -37.9 0.89 IBRACO 0.91 1.00 0.39 5.2 11.1 17.4 8.2 3.8 4.4 1.05 -13.3 0.76 IOIPG 2.17 2.25 0.86 17.4 17.4 12.5 12.4 3.2 3.5 2.46 -11.8 1.85 MAHSING 1.55 1.76 0.73 14.3 13.5 10.8 11.5 4.2 4.2 1.70 -8.8 1.34 SNTORIA 0.85 0.98 0.27 6.2 10.3 13.8 8.2 1.2 1.2 1.00 -15.0 0.69 SPB 4.95 5.98 0.59 25.6 22.8 12.7 14.3 2.4 2.4 5.19 -4.6 4.32 SPSETIA 3.26 4.10 0.68 27.1 29.5 15.2 14.0 4.3 4.3 4.50 -27.6 2.93 SUNWAY 4.12 4.15 0.48 18.3 18.4 13.2 13.1 2.9 2.9 4.20 -1.9 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 1.69 1.86 0.51 8.9 10.1 19.1 16.7 5.2 6.0 1.84 -8.2 1.63 CMMT 1.55 1.72 0.59 8.1 8.6 19.2 18.0 5.4 5.8 1.72 -9.9 1.45 % Chg YTD 21.1 1.4 6.4 7.9 28.6 17.6 11.0 -11.8 1.8 3.1 17.8 8.3 4.9 0.6 20.5 17.5 15.7 23.2 14.5 11.3 45.0 -7.9 -21.2 -9.0 11.3 8.4 6.2 12.0 4.2 37.3 3.7 6.9 -1.7 1.3 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.04 23.72 18.82 14.12 1.42 1.13 21.47 19.60 17.37 1.45 0.76 0.76 0.77 1.02 0.53 7.1 98.4 88.2 131.9 8.2 6.4 102.3 101.3 130.8 10.6 14.6 24.1 21.3 10.7 17.2 16.2 23.2 18.6 10.8 13.4 6.7 3.1 3.3 3.1 7.0 5.8 3.2 3.8 3.2 7.0 1.80 25.70 22.50 14.90 1.64 -42.2 -7.7 -16.4 -5.2 -13.4 1.01 22.92 18.10 13.00 1.39 3.0 3.5 4.0 8.6 2.2 -24.1 -0.3 -11.6 1.6 -4.7 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.72 4.71 5.54 6.35 5.25 4.90 5.85 7.50 1.31 0.93 0.71 0.66 14.6 20.0 25.5 21.4 16.0 20.4 25.7 22.3 32.4 23.5 21.7 29.6 29.5 23.1 21.6 28.5 1.5 4.2 3.6 3.0 1.7 4.3 3.6 3.2 5.99 5.19 6.60 6.90 -21.2 -9.2 -16.1 -8.0 4.11 4.63 5.48 5.81 14.8 1.7 1.1 9.3 0.0 -2.5 -7.4 6.7 TECHNOLOGY Semiconductor & Electronics IRIS 0.18 INARI 2.43 MPI 13.86 UNISEM 3.58 0.28 2.30 15.60 3.95 1.34 0.79 0.51 0.82 -2.6 10.3 94.2 26.9 -0.3 na 12.4 23.6 112.9 14.7 27.1 13.3 na 19.6 12.3 13.2 0.0 3.3 1.9 3.4 0.0 2.0 1.9 3.4 0.24 2.49 13.94 3.72 -27.1 -2.4 -0.6 -3.8 0.10 1.50 7.20 2.27 75.0 62.3 92.5 57.7 59.1 46.4 87.0 51.7 3.29 8.84 3.34 8.10 1.12 1.44 37.6 17.2 37.1 17.5 8.7 51.3 8.9 50.5 1.2 1.1 1.5 1.1 3.59 9.45 -8.4 -6.5 2.16 5.77 52.3 53.2 43.7 45.9 1.73 3.74 2.05 4.05 0.75 0.67 14.3 17.1 22.7 15.1 12.1 21.8 7.6 24.7 2.5 3.4 4.0 3.0 1.87 4.59 -7.5 -18.5 1.47 3.61 17.7 3.6 8.8 -13.0 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 21.48 OCBC 11.09 UOB 23.98 PLANTATIONS WILMAR IFAR 3.37 0.48 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 1.14 1.09 173.8 87.7 195.6 190.2 12.4 92.4 12.6 209.3 12.3 11.3 12.0 11.5 2.8 5.7 2.9 2.8 6.7 2.9 22.0 11.3 24.3 -2.1 -1.4 -1.3 14.72 8.84 17.51 45.9 34.1 37.0 23.9 24.3 17.5 3.72 0.53 0.91 1.12 28.9 4.9 31.1 5.2 10.8 9.1 2.4 2.5 2.7 2.7 4.0 0.6 -15.8 -20.2 2.97 0.44 13.5 8.0 -6.1 -9.5 11.6 9.8 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
12. T e c h n i c a l TA Se c u r i t i e s V i e w Monday , July 24, 2017 A M em b e r o f t h e TA G r o u p MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Technical Outlook FBM KLCI: 1,759.16 (+4.16, +0.24%) THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist : Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my www.taonline.com.my Belated Oversold Rebound Likely on Less Bearish Momentum The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FMB KLCI) was stuck in tight trading ranges last week, with most investors in profit-taking mode despite China’s strongerthan-expected 2Q GDP growth of 6.9%, overshadowed by concerns the Chinese government may further regulate the economy. The absence of spillover buying interest following record closing highs on Wall Street also discouraged investor commitments and forced stocks to remain in consolidation mode. Week-on-week, the FBM KLCI rose 4.16 points, or 0.24 percent to 1,759.16, as gains on BAT (+RM1.22), Genting Malaysia (+24sen), Axiata (+12sen) and Petronas Chemicals (+12sen) offset losses on Hong Leong Bank (-18sen) and Hong Leong Financial Group (-10sen). Average daily traded volume and value improved mildly to 1.99 billion shares and RM2 billion, compared with the 1.86 billion shares and RM1.86 billion average respectively the previous week. Bursa Malaysia shares drifted lower Monday in line with the softer regional tone, and in spite of China’s stronger-than-expected 2Q GDP growth of 6.9%, as investors were wary the Chinese government may further regulate the economy. The KLCI ended up 0.19 point at 1,755.19, off an early high of 1,759.52 and low of 1,752.78, as losers edged gainers 441 to 417 on moderate turnover of 2.04bn shares worth RM1.71bn. Local stocks stayed range bound in listless trade the next day, with lacking positive local or external leads forcing investors to stay sidelined. The KLCI closed flat at 1,754.92, after moving between opening high of 1,758.14 and low of 1,752.57, as gainers edged losers 457 to 385 on mildly higher total turnover of 2.16b shares worth RM2.22bn. Blue chips staged mild rebound Wednesday on light bargain hunting from local funds, encouraged by China’s strong economic growth and market reform agenda. The KLCI closed up 2.35 points at 1,757.27, off an opening low of 1,753.74 and high of 1,760.82, as gainers led losers 460 to 391 on total turnover of 2.17bn shares worth RM2.29bn. Stocks slipped back into sideways trading the subsequent day, as investors stayed in profit-taking mode due to weak follow-through buying interest in spite of record closes on the overnight Wall Street market. The KLCI eased 1.64 points to settle at 1,755.63, off the opening high of 1,759.85 and low of 1,753.96, as losers beat gainers 465 to 373 on lower turnover of 1.72bn shares worth RM2bn. Range bound trade persisted Friday, with most investors sidelined due to lack of positive local leads, but late bargain hunting on selected heavyweights lifted the blue-chip benchmark to end higher ahead of the weekend. The index was up 3.53 points to close at the day’s high of 1,759.16, off an earlier low of 1,752.40, as gainers led losers 436 to 384 on moderate total turnover of 1.86bn shares worth RM1.78bn. Trading range for the blue-chip benchmark index last week dwindled further to 8.42 points, compared to the 9.07-point range the previous week, as key index heavyweights remain trapped in narrow range trading mode. For the week, the FBM-EMAS Index gained 45.33 points or 0.36 percent to 12,540.01, while the FBM-Small Cap Index rose 192.04 points, or 1.12 percent to 17,322.61, as small cap stocks staged modest recovery from the previous week’s profit-taking correction. Page 1 of 3
13. TA Se c u r i t i e s 23-Jul-17 A M e m be r o f t h e TA G r o u p Last Friday ’s late rebound encouraged the daily slow stochastics indicator for the FBM KLCI to recover from oversold territory, but the weekly indicator’s signal line slipped down closer towards the oversold level. The 14-day Relative Strength Index (RSI) indicator also recovered to a less bearish reading of 44.40 as of last Friday, while the 14-week RSI hooked up for an improved reading of 56.88. Chart 1 As for trend indicators, the daily Moving Average Convergence Divergence’s (MACD) signal line is turning up to suggest reducing bearish momentum, but the bearish trend reading on the weekly MACD indicator still stands (Chart 2). The -DI and +DI lines on the 14-day Directional Movement Index (DMI) trend indicator retained a negative trend reading but the ADX line turned south again, signaling a trendless market. Chart 2 Conclusion Bearish technical momentum for the FBM KLCI has lessened somewhat following the profit-taking correction during the past five weeks, which should pave the way for base building process prior to belated oversold rebound to copy the strong recovery on global peers to record highs. If the local market should suffer further correction this week, it would aggravate oversold momentum, which should then strengthen oversold rebound going forward. On the index, immediate support from the 100-day moving average level now at 1,756 must hold to prevent further correction to 1,729, a key support level in April, while crucial uptrend support is from the 200-day moving average at 1,707. Immediate resistance stays at the 50-day moving average now at 1,772, next 1,782, followed by the recent peak of 1,796. Page 2 of 3
14. TA Se c u r i t i e s 23-Jul-17 A M e m be r o f t h e TA G r o u p Sector-wise , while blue chips are likely to extend sideways or range bound trade, lower liner construction related counters like Bina Puri, Gadang, Hock Seng Lee, Mudajaya and Sunway Construction should attract bargain hunters at cheaper levels. 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 Monday , July 24, 2017 FBM KLCI: 1,759.16 Sector: Power & Utilities A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 YTL Power International Berhad TP: RM1.45 (+2%) Last Traded: RM1.42 Expect Lower Dividends Sell THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Kylie Chan Sze Zan Tel: +603-2167 9601 kyliechan@ta.com.my Key takeaways from our recent meeting with YTL Power (YTLP) include:- 1) 1Bestarinet’s monthly billings to the government will peak in mid 2019-20, but is slightly offset by higher tower site rentals, 2) YES 4G is shifting its focus to the Enterprise segment due to competitive Retail headwinds, and 3) Power Seraya’s bid for Singapore’s 5th desalination plant may be awarded as early as Oct-17. www.taonline.com.my Share Information Bloomberg Code YTLP MK Stock Code 6742 Listing Main Market Share Cap (mn) 7,758.7 Market Cap (RMmn) 11,017.4 Par Value We believe dividends will likely be shaved in FY18F-19F due to tight cash flows, a stretched balance sheet, hefty capex for pipeline projects, and YTLP’s intention to build its war chest for future M&As. This is in contrast to our earlier assertion in Mar-17, which was based on management’s guidance. Downgrade YTLP to Sell with a lower TP of RM1.45. 0.50 52-wk Hi/Lo (RM) 1.64/1.39 12-mth Avg Daily Vol ('000 shrs) 3,097.0 Estimated Free Float (%) 24.0 Beta Major Shareholders (%) 0.36 YTL Corp Berhad - 47.3 Cornerstone Crest - 6.3 Forecast Revision 1Bestarinet Payments Snowballing. The rollout of 1Bestarinet Phase 2 is progressing on track, whereby YTLP is progressively expanding its coverage to reach the government’s target of 10k schools nationwide (current: 7k). Accordingly, payments from the government would step-up as the group reaches set milestones. Therefore, management expects monthly billings to peak by mid 2019-20, upon achieving its rollout target. On a related note, the higher billings are partially offset by higher tower site rental costs. Recall that YTLP pays rental to erect telecommunication towers at the premises of selected schools. Nevertheless, according to management, the quantum of increase has a marginal impact on profits. Forging Ahead with 4G. Whereas for YES 4G (launched: Jun-16), competition in the Retail segment has far surpassed management’s expectations. Therefore, the group is now shifting its focus to the Enterprise segment instead. Services offered in the business space include Dedicated Internet Access, Dedicated Lease Line, 4G-VPN, Cloud PBX etc. Recently, the group secured a contract to provide Wifi solutions, including network installation, for Genting Malaysia (GenM) staff at Resorts World Genting. Management sees immense potential for this project, with the impending launch of 20th Century Fox World by 1H18. We estimate that GenM has a staff count of approximately 13,000 currently, which should ramp up following the launch of the new theme park. Additionally, YTLP is also bidding for various corporate accounts, including projects at Johor Port and Westports. FY17 FY18 0.0 0.0 Net Profit (RM mn) 640.0 823.6 Consensus Forecast Revision (%) 703.4 823.9 TA's / Consensus (%) 91.0 100.0 Previous Rating Buy (Downgraded) Financial Indicators FY17 FY18 Net Debt/Equity (x) 1.1 1.0 FCFPS (RM) 0.2 0.1 P/CFPS (x) 6.8 12.2 ROE (%) 5.0 6.3 ROA (%) 1.4 1.8 NTA/Share (RM) 0.6 0.6 Price/NTA (x) 2.4 2.2 Share Performance (%) Price Change YTLP FBM KLCI 1 mth (2.1) (1.1) 3 mth (4.1) 0.2 6 mth (2.1) 4.7 12 mth 0.0 6.1 (12-Mth) Share Price relative to the FBM KLCI Enterprise Prospects More Promising. We are positive on YES’ thrust into the Enterprise segment, which may enable profits to finally turn around. Competition in the retail prepaid segment, which is YES’ target market, will likely intensify following the entry of Webe. To recap, Webe is TM’s new mobile 4G offering that will launch prepaid packages by 2H17. This would likely exacerbate pressure on ARPUs (Figure 1), and hence margins, in a crowded market. The Top 3 incumbents (Maxis, Digi, and Celcom) have seen dwindling subscriber base (Figure 2) and falling ARPUs (except for Maxis) due to disruptive new market entrants such as UMobile. Meanwhile, since its launch in 2007, UMobile has struggled with profitability (2012-14: RM200mn-444mn Page 1 of 4 Source: Bloomberg
16. TA Securities 24-Jul-17 A Member of the TA Group loss ). The harsh market conditions are evident from UMobile’s target to achieve EBITDA breakeven by 2018. Figure 1 : Prepaid ARPUs Figure 2: Prepaid Subscriber Base 45 35,000 43 30,000 Subscribers ('000) 41 ARPU (RM) 39 37 35 33 31 29 25,000 20,000 15,000 10,000 5,000 27 25 Maxis Source: MCMC, Various Celcom 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 0 Digi Maxis Source: MCMC, Various Various Projects Chugging Along. Whereas for other utility plants, YTLP is busy with a slew of upcoming projects, including:- 1) USD2.7bn Tanjung Jati Coal (Indonesia), 2) USD2.1bn Attarat Shale (Jordan), and 3) Power Seraya’s bid for Singapore’s 5th water desalination plant. For the 1,320 MW Tj. Jati plant, the project is close to achieving financial close. Recall that YTLP recently issued a Sukuk Murabahah of RM2.5bn in end-May 2017 (interest rate: 5.05%). This is mainly to finance the group’s equity portion of the project, which translates to RM1.8bn based on the group’s 80% stake (assuming 20:80 equity: debt). Whereas Power Seraya’s final tender for the desalination plant was submitted in earlyJune-17. Management expects its potential award to take place as early as Oct17. Lastly, on the local front, management alluded that it was conducting due diligence on older gas plant projects, which may prelude a potential acquisition. On the Hunt for M&A? In spite of the robust pipeline of projects, we get the sense that management is keen for chunky acquisitions, particularly for assets in developed countries. We had previously highlighted our view that YTLP is building its war chest for M&As, particularly when asset values turn attractive. Our earlier conjecture is now reinforced by YTLP’s recent move to leverage up, despite a robust cash pile of RM9.3bn. This was evident from issuance of the new RM2.5bn sukuk, which translates to interest payments of approximately RM126mn p.a. Estimate Negative FCFs. Based on our estimates, YTL Power will have average negative FCFE (Figure 3) of RM873mn p.a. in 2018-20F. This is underpinned by average chunky outflows for capex of RM2bn p.a., interest payments of RM1bn p.a, and debt repayment of RM860mn p.a. The group has upcoming bond and term loan repayments amounting to RM5.3bn due in 2017-19, which we expect to be refinanced. On the bright side, interest coverage is expected to remain healthy, at an average of 3.6x, underpinned by a healthy EBIT margin of 16% in FY18F-19F. However, net debt/EBITDA is precariously high, at 4.6x, versus Malaysian listed peers’ average of 3.6x. Lower Dividend Payout Assumptions. Therefore, we believe there is a high likelihood that dividends will be shaved in FY18F-19F. This is due to tight cashflows, a stretched balance sheet, and capex requirements for several multi-billion projects in the pipeline. This is in contrast to our earlier assertion back in Mar-17, which was based on management’s guidance that long term dividends will remain intact. Additionally, recall that back then, YTLP’s cash flows were not dragged by interest payments for its new RM2.5bn sukuk. Accordingly, for our new forecasts, we incorporate the new sukuk, and also lower our FY17/18/19 dividend payout assumptions. As a result, our FY17/18/19 DPS (Figure 4) is reduced to 7/5/5 sen (previous: 10 sen p.a). Page 2 of 4 Celcom Digi
17. TA Securities 24-Jul-17 A Member of the TA Group Figure 3 : Free Cash Flow to Equity (FCFE) Figure 4: DPS and Yield Spike due to sukuk drawdown for Tj. Jati 3,000 2,500 12 10.0 10 1,000 4.0 500 0 (500) DPS (sen) 6.0 7 8 FCFE Yield (%) 1,500 8 6 8.0 2,000 FCFE (RM mn) 12.0 5 6 4 3 4 2.0 2014 2015 2016 2017E 2018F 2019F 2 2020F 2 1 0.0 (1,000) (1,500) 0 (2.0) 0 2014 2015 2016 2017E Lower Target Price. Following recent developments, we incorporate the following changes to our SOP valuation (Figure 5):- 1) a change in Wessex’s valuation to DCF (previous: RCV, Regulatory Capital Value), which we view as a more accurate gauge of Wessex’s intrinsic value, 2) a downgrade in YES’ valuation to 0.7x FY18E BV (previous: 0.8x) due to competitive headwinds, 3) increase in WACC for Malaysian power assets to 12% (previous: 9%) following full settlement of debt and higher market risk premium. Lost Allure as Dividend Play. As a result of these changes, our TP for YTL Power is reduced to RM1.45 (previous: RM1.81). On the back of this, we downgrade our recommendation to Sell (previous: Buy). We believe investors will gravitate away from YTLP when the stock loses its allure of dividends. This is given the fact that the group’s new pipeline projects will only be completed later in FY20. Figure 5: SOP Valuation Equity Value (RM mn) Per Share (RM) 183 0.02 DCF (WACC: 12%) Power Seraya 5,380 0.65 DCF (WACC: 6%) Wessex Water Operating Assets Malaysia power assets Method 8,127 0.98 DCF (WACC: 8.9%) 35%-associate Jawa Power 778 0.09 DCF (WACC: 15.0%) 33.5%-associate Electranet 2,107 0.26 0.8x Regulated Asset Base, RAB (AUD3.00/RM) YES 1,040 0.13 0.7x FY18E Book Value Total 17,615 Less: Holding Co. Net Debt (5,843) Warrants Conversion 180 Total Equity Value 11,951 Englarged shares (mn) 8,259 Target Price 1.45 0.02 Implied CY18 PER of 15x Page 3 of 4 2018F 2019F Dividend Yield (%) 3,500
18. TA Securities 24-Jul-17 A Member of the TA Group Earnings Summary Income Statement FYE June (RM mn) Revenue EBITDA Depreciation Net interest expense Associates EI and FX Pretax profit Taxation Minority interest Net Profit Core Net Profit Per Share Data Core EPS DPS Book Value FCF Ratios FYE June (RM mn) Valuations Core PER Dividend Yield EV/EBITDA P/BV FCF Yield Profitability Ratios EBITDA margin EBIT margin Pretax margin Core net margin ROE ROA 2015 2016 11,858.1 10,240.5 3,135.5 2,557.4 (1,379.4) (1,242.6) (795.3) (823.7) 287.6 630.1 (1.2) 178.8 1,247.2 1,300.0 (326.8) (140.2) (1.6) (115.1) 918.8 1,044.7 920.0 865.9 (sen) (sen) (RM) (sen) (x) (%) (x) (x) (%) (%) (%) (%) (%) (%) (%) 2017E 2018F 2019F 9,818.6 10,780.9 10,936.5 2,651.3 3,096.4 3,143.1 (1,220.2) (1,404.2) (1,441.5) (833.5) (849.4) (815.3) 284.7 293.3 299.1 0.0 0.0 0.0 882.3 1,136.1 1,185.5 (167.3) (236.0) (248.2) (75.0) (76.5) (78.0) 640.0 823.6 859.3 640.0 823.6 859.3 11.2 10.0 1.4 16.3 10.5 10.0 1.5 18.6 7.8 7.0 1.6 20.9 10.0 5.0 1.6 11.6 10.4 5.0 1.7 11.9 2015 2016 2017E 2018F 2019F 12.7 7.0 7.7 1.0 11.4 11.2 7.0 8.8 0.9 13.1 18.3 4.9 8.3 0.9 14.7 14.2 3.5 7.1 0.9 8.2 13.6 3.5 7.0 0.8 8.4 26.4 14.8 10.5 7.8 8.2 2.1 25.0 12.8 12.7 8.5 8.6 2.0 27.0 14.6 9.0 6.5 5.0 1.4 28.7 15.7 10.5 7.6 6.3 1.8 28.7 15.6 10.8 7.9 6.3 1.9 Liquidity ratios Current ratio Quick ratio (x) (x) 2.7 2.7 4.7 4.5 4.9 4.8 4.3 4.2 4.0 3.9 Leverage ratios Gross Gearing Net gearing Total Debt/ Assets Interest Coverage (x) (x) (x) (x) 2.1 1.3 0.6 3.9 1.9 1.1 0.6 3.1 2.0 1.1 0.6 3.2 1.9 1.0 0.6 3.6 1.7 1.0 0.5 3.9 (%) (%) (%) (%) (%) (17.9) 9.9 10.7 (19.4) (19.4) 9.8 16.8 28.8 28.7 28.7 1.4 1.5 4.3 4.3 4.3 Growth ratios Revenue EBITDA PBT Core net profit Core EPS (13.6) (18.4) 4.2 (5.9) (6.0) (4.1) 3.7 (32.1) (26.1) (26.1) Balance Sheet FYE June (RM mn) Property, Plant & Equip Intangibles Associates Others Non-Current Assets 2015 2016 2017E 2018F 2019F 21,204.7 20,003.1 20,060.0 20,593.4 21,089.4 7,580.7 8,058.3 8,058.3 8,058.3 8,058.3 1,807.8 2,119.0 2,219.2 2,322.3 2,427.6 616.9 1,047.8 1,047.8 1,047.8 1,047.8 31,210.1 31,228.2 31,385.2 32,021.8 32,623.0 Inventories Trade receivables Cash and Deposits Others Current Assets 440.4 2,294.0 9,608.3 84.9 12,427.7 438.4 1,716.9 9,674.2 64.5 11,894.1 420.4 1,646.2 12,307.1 64.5 14,438.2 461.6 1,807.5 11,327.7 64.5 13,661.3 468.2 1,833.6 10,403.6 64.5 12,770.0 Total Assets 43,637.8 43,122.3 45,823.4 45,683.1 45,393.0 Borrowings Deferred taxation Others Non-Current Liabilities 23,424.0 2,117.7 1,944.2 27,485.8 23,836.4 1,827.0 2,213.3 27,876.7 25,991.0 1,827.0 2,213.3 30,031.3 25,132.6 1,827.0 2,213.3 29,172.9 24,274.2 1,827.0 2,213.3 28,314.5 Trade payables Deferred Taxes Borrowings Others Current Liabilities 2,168.3 138.3 1,910.4 306.3 4,523.3 1,877.5 125.3 277.6 250.8 2,531.3 2,276.2 125.3 277.6 250.8 2,929.9 2,499.3 125.3 277.6 250.8 3,153.0 2,535.3 125.3 277.6 250.8 3,189.1 Share capital Reserves Minority interest Equity 3,710.8 7,682.9 235.0 11,628.7 4,050.8 8,444.5 219.0 12,714.3 4,050.8 8,517.4 294.0 12,862.2 4,050.8 8,935.9 370.5 13,357.2 4,050.8 9,390.1 448.5 13,889.4 Total Equity + Liabilities 43,637.8 43,122.3 45,823.4 45,683.1 45,393.0 FYE Aug (RM mn) Cashflow Statement Pretax Profit Depreciation Net Interest Associates & JCEs Net change in working capital Tax paid Others CF from Operations 2015 2016 2017E 2018F 2019F 1,247.2 1,379.4 795.3 (287.6) (32.2) (326.8) (893.4) 1,881.9 1,300.0 1,242.6 823.7 (630.1) 341.6 (140.2) (826.0) 2,111.5 882.3 1,220.2 833.5 (284.7) 487.4 (167.3) 0.0 2,971.4 1,136.1 1,404.2 849.4 (293.3) 20.5 (236.0) 0.0 2,881.0 1,185.5 1,441.5 815.3 (299.1) 3.3 (248.2) 0.0 2,898.3 Capex Interest income Dividends Received Others CF from Investing (1,569.8) 16.2 290.5 (72.8) (1,335.9) (1,252.0) 71.0 408.4 (563.1) (1,335.6) (1,277.1) 48.2 184.6 0.0 (1,044.3) (1,937.6) 55.0 190.1 0.0 (1,692.5) (1,937.6) 59.1 193.9 0.0 (1,684.6) Dividends Net Change in debt Interest paid Others CF from Financing (817.3) (46.7) (821.4) 1,100.1 (585.4) (930.3) (556.7) (894.7) 1,671.3 (710.4) (567.1) 2,154.6 (881.7) 0.0 705.8 (405.1) (858.4) (904.4) 0.0 (2,167.9) (405.1) (858.4) (874.3) 0.0 (2,137.8) Net Cash Flow Beginning Cash FX Ending Cash (39.4) 8,890.9 671.7 9,523.2 65.5 9,523.2 85.5 9,674.2 2,632.9 9,674.2 0.0 12,307.1 (979.4) (924.1) 12,307.1 11,327.7 0.0 0.0 11,327.7 10,403.6 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months Total return within the next 12 months Total return is lower than the required The company is not under coverage. exceeds required rate of return by 5%-point. exceeds required rate of return by between 0-5%-point. rate of return. 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 or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD(14948-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research Page 4 of 4
19. Monday , 24 July, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED LOCAL TECHNICAL REPORTS’ Local Technical Reports 1. Weekly Technical Stock Picks 2. Daily Money Flow 3. Technical Stock Picks a. FBMKLCI b. Stocks Under Coverage c. PLANTATION Sector d. CONSTRUCTION Sector e. PROPERTY Sector 4. Weekly Ace Market Stock Watch 5. Weekly Small Cap Stock Watch 6. Weekly Stock Screen 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
20. T e c h n i c a l TA Se c u r i t i e s V i e w Monday , July 24, 2017 A M em b e r o f t h e TA G r o u p MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Weekly Technical Stock Picks Malaysia THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Chartist: Stephen Soo Tel: +603-2167 9607 stsoo@ta.com.my BINA PURI Upper Middle Lower BOLLINGER BANDS RM RM RM DMI Recent Signal Signal Change RM0.38 0.43 0.40 0.37 SELL SIMPLE MOVING AVERAGES RM 0.39 RM 0.41 RM 0.41 DAILY MACD Recent Signal SELL Signal Change 10-day 30-day 50-day DIALOG Upper Middle Lower Recent Signal Signal Change BOLLINGER BANDS RM RM RM DMI www.taonline.com.my RM1.92 1.95 1.92 1.89 SELL SIMPLE MOVING AVERAGES RM 1.91 RM 1.92 RM 1.92 DAILY MACD Recent Signal BUY Signal Change 10-day 30-day 50-day Page 1 of 9