Bursa Malaysia Daily Market Report - 25 August

Transcription

1. Friday , 25 August, 2017 For Internal Circulation Only TA RESEARCH’S ‘DAILY COMPILED REPORTS’ News 1. Daily Market Commentary 2. Daily Brief Fundamental Reports Aeon Co. (M) Bhd: Positive Operating Profits Across Segments AMMB Holdings Berhad: 1QFY18 Profit up on Stronger NII and Lower Tax Amway (Malaysia) Holdings Berhad: Optimising Expenses Level Chin Hin Bhd: Expect Better Earnings in 2H17 Genting Berhad: Surprised Interim Dividend in 2Q17 Genting Malaysia Berhad: Not So Lucky in 2Q17 Hong Leong Bank Berhad: Better NIM, Stronger Contributions from BOCD Kossan Rubber Industries Berhad: Weighted by Technical Rubber Products Division 9. KPJ Healthcare Berhad: 2QFY17 A Seasonally Slower Quarter 10. MBM Resources Berhad: Alloy Wheel Plant Still Bleeding 11. Nestle (Malaysia) Berhad: Positive Earnings Growth for FY17 Expected 12. QL Resources Berhad: Strong Topline Offset by Reduced Margins 13. Sentoria Group Berhad: Results Driven by Property Development Division 14. Sunway Construction Group Berhad: Higher Construction Margin Offset by Lower Precast Revenue 15. Uzma Bhd: Further Margin Expansion 16. WCT Holdings Bhd: Better Construction Margin from Local Projects (24 August 2017) 17. White Horse Bhd: Improved QoQ but Not Out of the Woods Yet 1. 2. 3. 4. 5. 6. 7. 8. Technical Reports 1. Daily Technical Stock Picks 2. Daily Stock Screen 3. Foreign Technical Stock Watch (AUS & FSSTI) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. for TA SECURITIES HOLDINGS BERHAD (14948-M) MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 (A Participating Organisation of Bursa Malaysia Securities Berhad) Kaladher Govindan – Head of Research
2. Daily Note Daily Market Commentary (A Participating Organisation of Bursa Malaysia Securities Bhd) Menara TA One, 22 Jalan P Ramlee, 50250 Kuala Lumpur Tel : 603 - 2072 1277. Fax : 603 - 2032 5048 Friday, 25 August 2017 TA Research e-mail : taresearch@ta.com.my For Internal Circulation Only KLSE Market Statistics (24.08.2017) Volume (mil) +/-chg (RMmn) Main Market 1,269.4 -145.5 1,773.3 Warrants 172.0 -50.6 25.0 ACE Market 680.4 322.4 179.5 Bond 10.2 10.2 1.7 ETF 0.1 0.04 0.2 Total 2,132.1 1,979.6 Off Market 102.6 -68.3 78.7 Value +/-chg -56.9 -0.7 69.2 0.1 0.01 -150.3 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP August 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 HUBLINE 27.7 @ MTRONIC 26.0 @ SUNREIT 24.5 @ AEONCR-LR 9.3 @ LAYHONG 5.0 @ TADMAX 3.6 @ CIMB 3.5 @ VERSATL 1.2 @ MEXTER 1.2 @ Review & Outlook Up Down 297 288 72 85 55 37 5 4 4 0 433 414 % chg % YTD chg 1,775.50 12,643.65 17,088.06 1,772.00 2.56 23.10 29.43 4.50 0.14 0.18 0.17 0.25 8.15 10.27 16.12 8.35 21,783.40 6,271.33 7,407.06 19,353.77 2,375.84 27,518.60 3,272.16 1,575.96 5,894.12 3,271.51 1,890.48 5,745.48 -28.69 -7.08 24.41 -80.87 9.44 116.93 12.11 2.58 -19.91 -16.19 -11.51 8.32 -0.13 -0.11 0.33 -0.42 0.40 0.43 0.37 0.16 -0.34 -0.49 -0.61 0.14 10.23 16.50 3.70 1.25 17.24 25.08 13.59 2.14 11.28 5.41 -3.99 1.41 Top 10 KLCI Movers Based on Mkt Cap. Off Market (mn) Value/ Volume 1.40 0.15 0.26 0.17 1.23 0.93 0.77 (RM) 0.06 0.05 1.73 0.15 0.97 0.38 6.72 0.58 0.32 Exchange Rate USD/MYR 4.2794 -0.0004 USD/JPY 109.30 -0.1100 EUR/USD 1.179 0.0010 Counter TENAGA CIMB PCHEM AXIATA MAXIS DIGI GENTING GENM IOICORP HLBANK Mkt Cap. (RM’mn) 80,811 57,440 49,517 45,301 44,001 38,175 37,143 34,294 31,705 28,843 Chg (RM) 0.02 0.02 0.01 0.02 0.02 0.03 0.01 0.05 0.04 0.09 Vol. (mn) 8.50 6.27 1.98 1.60 2.95 1.80 2.92 1.49 2.23 2.78 Commodities Futures Palm Oil (RM/mt) 2,777.00 38.00 Crude Oil ($/Barrel) 47.62 -0.75 Gold ($/tr.oz.) 1,287.80 -5.00 Important Dates AMEDIA - 3:1 Rights Issue - RI of up to 965.6m shares together with up to 321.9m free detachable warrants. 3 rights shares together every 1 existing share held, at an issue price of RM0.05 per rights share, together with 1 warrant for every 3 rights shares subscribed. LISTING ON: 29/08/2017. Bursa Malaysia shares reverse earlier losses to edge onto positive territory yesterday, lifted by late buying interest on selected blue chip heavyweights, while key regional markets closed mixed after a threat from President Trump about possible government shutdown. The index rose 2.56 points at 1,775.50, from low of 1,768.52 and high of 1,775.76, as gainers edged losers 433 to 414 on a turnover of 2.13bn shares worth RM1.98bn. Overall market sentiment should remain cautious as investors are likely return their focus on a central banking conference in Jackson Hole, later in the day. Immediate resistance for the index remains at 1,782, the upper Bollinger band, followed by the 16 June peak of 1,796. On the downside, a confirmed breakdown below the 100-day moving average level at 1,765 would accelerate correction to next major support at 1,729, matching a key support in April. Ekovest shares remain in base building mode pending convincing rebound above the 61.8%FR (RM1.14) to aim for the 76.4%FR (RM1.28), RM1.40 and subsequently the 13/3/17 peak (RM1.52). Key retracement support is from the 50%FR (RM1.02). Likewise, Naim Holdings should rebuild support pending a sustained rebound to test key resistance from the 76.4%FR (RM1.36), while crucial supports are from the 11/8/17 low (RM1.16) and the 123.6%FP (95sen). News Bites • • • • • • • • • • • • • • • Gross domestic product that is measured in US dollar is not relevant or appropriate for a matured and sophisticated economy like Malaysia, said Finance Minister II Datuk Seri Johari Abdul Ghani. Business conditions for the manufacturing sector in Malaysia are expected to improve in the 2H17, according to a survey conducted by the Federation of Malaysian Manufacturers and the Malaysian Institute of Economic Research. AMMB Holdings Bhd 1QFY18 net profit rose 1.6% YoY to RM328.3mn supported by higher net interest income. Hong Leong Bank Group FY17 net profit grew 12.7% to RM2.15bn from RM1.9bn a year ago underpinned by solid top-line performance, sustained margin, efficiency improvements and moderate recovery from associate's contribution. Genting Bhd's 2QFY17 net profit grew 57% YoY to RM456.33mn from RM289.82mn, helped by a gain on disposal of available-for-sale financial assets. Genting Malaysia Bhd 2QFY17 net profit declined 60% YoY to RM193.42mn on unfavourable foreign exchange translation and higher operating costs. QL Resources Bhd's 1QFY18 net profit was up marginally by 0.2%YoY to RM42.21mn. WCT Holdings Bhd's 2QFY17 net profit fell 33% YoY to RM21.48mn after being dragged by unrealised foreign exchange loss of RM16.2mn. Sunway Construction Group Bhd 2QFY17 net profit grew 17.6% YoY to RM36.76mn on better margins. Kossan Rubber Industries Bhd's 2QFY17 net profit rose 11% YoY to RM45.51mn from RM40.97 million a year earlier due to improved glove sales. KPJ Healthcare Bhd's 2QFY17 net profit grew 6% YoY to RM32.16mn from RM30.33mn a year earlier, as revenue improved. It was within expectations. AirAsia X Bhd's 2QFY17 net profit surged 4,551% YoY to RM47.44mn from RM1.02mn in the previous year's corresponding quarter on the back of foreign exchange gains and higher deferred tax. Petron Malaysia Refining & Marketing Bhd's 2QFY17 net profit grew 48% YoY to RM91mn, thanks to one-off gain from the disposal of service stations to the government. Mlabs Systems Bhd's joint venture has secured a contract worth USD10mn for computer generated imagery production work, over a production period of one year. The top 'AAA' long-term debt rating of the United States will be in danger if lawmakers do not raise borrowing limits in a timely fashion, ratings agency Fitch warned. 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 Friday , August 25, 2017 FBMKLCI: 1,775.50 A Member of the TA Group MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Daily Brief Market View, News In Brief: Corporate, Economy, and Share Buybacks THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Market View Tel: +603-2072 1277 taresearch@ta.com.my www.taonline.com.my External Uncertainties to Dampen Sentiment Bursa Malaysia shares reverse earlier losses to edge onto positive territory yesterday, lifted by late buying interest on selected blue chip heavyweights, while key regional markets closed mixed after a threat from President Trump about possible government shutdown. The index rose 2.56 points at 1,775.50, from low of 1,768.52 and high of 1,775.76, as gainers edged losers 433 to 414 on a turnover of 2.13bn shares worth RM1.98bn. Resistance at 1,782, Support at 1,765 Overall market sentiment should remain cautious as investors are likely return their focus on a central banking conference in Jackson Hole, later in the day. Immediate resistance for the index remains at 1,782, the upper Bollinger band, followed by the 16 June peak of 1,796. On the downside, a confirmed breakdown below the 100-day moving average level at 1,765 would accelerate correction to next major support at 1,729, matching a key support in April. Buy Ekovest & Naim Holdings Ekovest shares remain in base building mode pending convincing rebound above the 61.8%FR (RM1.14) to aim for the 76.4%FR (RM1.28), RM1.40 and subsequently the 13/3/17 peak (RM1.52). Key retracement support is from the 50%FR (RM1.02). Likewise, Naim Holdings should rebuild support pending a sustained rebound to test key resistance from the 76.4%FR (RM1.36), while crucial supports are from the 11/8/17 low (RM1.16) and the 123.6%FP (95sen). Asian Stocks Traded Sideways Following Wall Street Dips on Trump Threat Stocks in Asia traded sideways on Thursday after a threat from President Donald Trump about a possible government shutdown halted a recovery in the dollar and risk off sentiment emerged in markets. Trump on Tuesday in the U.S. said he would be willing to "close down" the government to secure funds needed to build a wall along the U.S.-Mexico border. The president had repeatedly pledged he would construct a border wall that Mexico would pay for as part of his plan to tackle illegal immigration, although Mexico has said it would not be funding the barrier. Investors focused their attention on a key meeting of central bankers that could shed light on monetary policy globally. China stocks fell the most in nearly two weeks on Thursday, as China Unicom tumbled after rallying earlier in the week as excitement over state enterprise reforms cooled. The bluechip CSI300 index fell 0.6 percent, to 3,734.65, while the Shanghai Composite Index lost 0.5 percent to 3,271.51 points. Japan's Nikkei share average fell to a 3-1/2-month low, dragged down by Wall Street losses, a stronger yen and steel makers after reports that the country's biggest producer was cutting prices. The Nikkei ended the session 0.4 percent lower at 19,353.77 points. In Australia, the S&P/ASX 200 added 0.16 percent, with gains in the materials sub-index offset by losses in the industrials and heavily-weighted financials subindexes. Page 1 of 10
4. TA Securities 25-Aug-17 A Member of the TA Group Wall Street Slips Ahead of Central Bankers Meeting U .S. stocks dipped on Thursday as political uncertainty in Washington kept investors cautious ahead of comments on monetary policy from central bankers gathered for their annual meeting in Jackson Hole, Wyoming. Investors set their sights on Jackson Hole, Wyoming as leaders of global central banks gathered for the annual Jackson Hole economic symposium. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are attending, and are scheduled to speak about global monetary policy later in the day. The focus on central bankers' views will be a departure from the past two weeks, when the stock market was roiled by concerns over geopolitics, mayhem in Washington, and President Donald Trump's controversial comments. Consumer staples down 1.3 percent, were the worst performing of the 11 major S&P sectors, led lower by a 9.5 percent drop in J.M. Smucker after its posted disappointing results and lowered its earnings forecast. The Dow Jones Industrial Average fell 28.69 points, or 0.13 percent, to 21,783.40, the S&P 500 lost 5.07 points, or 0.21 percent, to 2,438.97 and the Nasdaq Composite dropped 7.08 points, or 0.11 percent, to 6,271.33. Page 2 of 10
5. TA Securities 25-Aug-17 A Member of the TA Group News In Brief Corporate AMMB Holdings Bhd 1QFY18 net profit rose 1 .6% to RM328.3mn from RM323mn a year ago, supported by higher net interest income of RM23.9mn. Gross loans, advances and financing increased to RM92.8bn on growth in mortgages and trade facilities. Moving forward, the group will continue to focus on its strategic priorities, such as penetrating into targeted segments and expanding in areas that it is strong in. (Bursa Malaysia) Hong Leong Bank Group 4QFY17 net profit fell 14% to RM482.92mn from RM558.54mn a year earlier. Meanwhile. FY17 net profit grew 12.7% to RM2.15bn from RM1.9bn a year ago underpinned by solid top-line performance, sustained margin, efficiency improvements and moderate recovery from associate’s contribution. The board has recommended a final dividend of 30sen per share, bringing total dividend to 45sen per share for FY17. This is 4sen per share higher than the last financial year. (Bursa Malaysia) Hong Leong Financial Group Bhd 4QFY17 net profit fell 34.2% to RM258.8mn from RM393.5mn a year earlier. However, FY17 net profit grew 10.9% to RM1.5bn from RM1.36bn. PBT grew 20.5% to a record RM3.09bn with stronger contributions recorded from all three core business of banking, insurance and commercial banking. (Bursa Malaysia) Genting Bhd’s 2QFY17 net profit grew 57% to RM456.33mn from RM289.82mn, helped by a gain on disposal of available-for-sale financial assets. Its 1HFY17, net profit surge 153% to RM1.05bn from RM416.09mn boosted by a gain of RM302.2mn recognised from the completion of the disposal of Genting Singapore Plc’s 50% interest in associate Landing Jeju Development Co Ltd and gain on disposal of available-for-sale financial assets. (Bursa Malaysia/The Edge) Genting Malaysia Bhd 2QFY17 net profit declined 60% to RM193.42mn from RM476.44mn a year earlier on unfavorable foreign exchange translation and higher operating costs. Its 1HFY17 net profit shrank 18.98% to RM516.94mn from RM638.01mn. Going forward, Genting Malaysia said it remained cautious on the near-term outlook of the leisure and hospitality industry, but optimistic on its longer-term growth potential. (Bursa Malaysia/The Edge) AirAsia X Bhd's 2QFY17 net profit surged 4,551% to RM47.44mn from RM1.02mn in the previous year's corresponding quarter on the back of foreign exchange gains. The higher profit for the quarter was attributed to foreign exchange gains of RM28.47mn and higher deferred tax of RM21.02mn. However, its 1HFY17 net profit dropped 68% to RM57.78mn from RM180.51mn, despite revenue growth of 20% to RM2.22bn from RM1.85bn. (Bursa Malaysia/The Edge) Iskandar Waterfront City Bhd registered a net profit of RM147,000 for 2QFY17, compared with a net loss of RM3.82mn in the corresponding quarter last year. However its 1HFY17 revenue slid 11% to RM26.16mn. Its net loss widened substantially to RM56.31mn from RM8.61mn mainly due to the one-off expense arising from its Employees Share Option Scheme. (The Edge) Petron Malaysia Refining & Marketing Bhd’s 2QFY17 net profit grew 48% to RM91mn from RM61.53mn a year ago, thanks to one-off gain from the disposal of service stations to the government. Its 1HFY17 net profit jumped 2.5 times to RM199.54mn from RM78.15mn, while revenue grew 43% to RM4.97bn, from RM3.49bn. Looking ahead, it said the recent trends of the global oil prices continues to reflect the volatile market conditions. (Bursa Malaysia/The Edge) Page 3 of 10
6. TA Securities 25-Aug-17 A Member of the TA Group Ajinomoto (M) Bhd's 1QFY18 net profit declined by 39.2% to RM7.88mn from RM12.96mn a year ago, due to lower revenue and higher operating expenses. On outlook, it said the business environment is expected to be challenging in view of foreign currency exchange rate fluctuations, which will impact costs and price of raw materials. (Bursa Malaysia) QL Resources Bhd’s 1QFY18 net profit was up marginally by 0.2% to RM42.21mn from RM42.13mn a year on higher revenue. Its quarterly revenue rose 16.27% to RM778.47mn due to higher sales in POA segment and integrated livestock farming segment. (Bursa Malaysia/The Edge) Yee Lee Corp Bhd posted a 28% lower net profit for 2QFY17 to RM7.3mn from RM10.14mn on lower earnings across all its divisions, including contributions from Spritzer Bhd. Its 6MFY17 net profit slipped 37.74% to RM13.49mn from RM21.67mn a year ago. (The Edge) OldTown Bhd’s 1QFY18 net profit grew 21% to RM16.58mn from RM13.7mn. The written back provision boosted PBT at its cafe chain segment by 49% to RM6.45mn. It said weak consumer sentiment will continue to impact consumer purchasing behaviour, which is expected to create a tougher business environment for its cafés. (Bursa Malaysia) WCT Holdings Bhd's 2QFY17 net profit fell 33% to RM21.48mn from RM32.07mn a year ago, after being dragged by unrealised foreign exchange loss of RM16.2mn. However, its 6MFY17, net profit was up 33% RM54.56mn from RM40.89mn. Going forward, it said the engineering and construction division is expected to continue to build on its strong order book after securing about RM2bn worth of new contracts in FY16, backed by the government's infrastructure development and spending. (Bursa Malaysia/The Edge) Sunway Construction Group Bhd 2QFY17 net profit grew 17.6% to RM36.76mn from RM31.27mn on better margins. For 6MFY17, its net profit grew 18.4% to RM71.42mn. Outstanding orderbook amounts to RM4.3bn with RM1bn new orderbook as at end-June 2017. (Bursa Malaysia/The Edge) Sunsuria Bhd 3QFY17 net profit grew 374% to RM31.9mn from RM6.7mn a year ago mainly due to higher property sales. Its 9MFY17 net profit jump 214% to RM 60.5mn from RM19.3mn. (Bursa Malaysia) Kossan Rubber Industries Bhd's 2QFY17 net profit rose 11% to RM45.51mn from RM40.97 million a year earlier due to improved glove sales. Its 1HFY17 net profit slid marginally to RM92.05mn from RM92.27mn a year earlier, as contribution from its technical rubber products segment fell. Moving forward, it said on completion of commissioning of Plant 16 in end-July, its annual glove production capacity has grown to 25bn pieces, up 3bn pieces. (Bursa Malaysia/The Edge) KPJ Healthcare Bhd's 2QFY17 net profit grew 6% to RM32.16mn from RM30.33mn a year earlier, as revenue improved. Its 1HFY7 net profit climbed 9% to RM70.44mn from RM64.51mn, as revenue improved 5% to RM1.59bn from RM1.51bn. Moving forward, the group is confident revenue from matured and new hospitals will continue to improve and that its results would improve in tandem with more new hospitals completing their gestation period. (Bursa Malaysia/The Edge) Yong Tai Bhd 4QFY17 net profit rose 45% to RM3.43mn from RM2.36mn in the same quarter last financial year. For FY17, net profit grew 80% to RM6.59mn from RM3.67mn. The improved financial performance was attributable to the commencement of Page 4 of 10
7. TA Securities 25-Aug-17 A Member of the TA Group development in Impression City , as well as its newly launched Amber Cove serviced apartment. (Bursa Malaysia/The Edge) Kian Joo Can Factory Bhd's 2QFY17 net profit fell 61.6% to RM15.13mn from RM39.49mn last year, due to higher material and production costs. 6MFY17 net profit declined 34.6% to RM33.57mn from RM51.36mn. Going forward, it expects labour costs and average costs of materials, such as paper rolls, tin plates, and aluminium to hike further. (Bursa Malaysia/The Edge) PPB Group Bhd 2QFY17 net profit was RM89.29mn compared to net loss of RM78.72mn over the same period last year thanks largely to turnaround in associate Wilmar's business. Quarterly revenue meanwhile was relatively unchanged at RM1.06bn. Its 1HFY17 net profit grew 167.2% to RM447.6mn from RM167.5mn a year ago. (Bursa Malaysia) Hap Seng Consolidated Bhd 2QFY17 net profit grew 3.8% to RM629.72mn from RM606.6mn. Its 1HFY17 net profit rose 5% to RM784.1mn from RM746.81mn. Going forward, the group expects to post satisfactory results for the current financial year. (Bursa Malaysia/The Edge) Johore Tin Bhd’s 2QFY17 net profit dropped 27% to RM6.88mn from RM9.37mn a year ago, dragged down by the provision for doubtful debts in the food & beverage segment. Its 1HFY17, net profit grew 24% to RM17.2mn, from RM13.87mn. On prospects, it expects the tin manufacturing industry to remain profitable as the raw material price is seen to be on the upward trend. (The Edge) Southern Acids (M) Bhd's 1QFY18 net profit fell 14.8% to RM7.75mn from RM9.1mn a year ago, mainly due to lower contribution from the oleochemical segment. On outlook, it said the oleochemical segment's prospect for FY18 will "remain more challenging". (The Edge) Southern Steel Bhd returned to the black in the fourth quarter ended June 30, 2017 4QFY17 with a net profit of RM5.57mn compared with a net loss of RM112.68mn in 4QFY16, due to other operating income and tax credit. Its FY17, net profit was RM93.3mn compared with a net loss of RM221.15mn. On outlook, with the firming of international steel prices, imports reducing and steady domestic demand, the group expects its FY18 performance to be satisfactory. (The Edge) Matrix Concepts Holdings Bhd's 1QFY18 net profit dropped 12% to RM45.55mn from RM51.92mn a year earlier as revenue fell on lower property development income. The group announced a dividend of 3.25sen a share for the quarter in review. (Bursa Malaysia/The Edge) Pestech International Bhd's 4QFY17 net profit surged 85.5% to RM41.7mn from RM22.5mn a year ago. Its FY17 net profit grew 30.1% to RM90.9mn due to higher gross profit margin arising from one of Pestech's subsidiaries. (The Edge) Prestariang Bhd's 2QFY17 net profit climbed 57% to RM5.82mn from RM3.71mn, helped by the higher revenue generated during the quarter. Its 1HFY17 net profit grew 34% to RM9.03mn mainly due to the flow through higher revenue contributed by software and services and education segments. (Bursa Malaysia/The Edge) Far East Holdings Bhd's 2QFY17 net profit more than tripled to RM25.05mn from RM7.58mn in the corresponding quarter last year, thanks to improved prices and production. 1HFY17 net profit jump 209% to RM49.23mn from RM15.93mn a year ago due to higher average crude palm oil and palm kernel prices, which increased 19% and 16% respectively during the period under review. (Bursa Malaysia/The Edge) Page 5 of 10
8. TA Securities 25-Aug-17 A Member of the TA Group Mlabs Systems Bhd ’s joint venture has secured a contract worth USD10mn for computer generated imagery production work, over a production period of one year. It said further to the investment and shareholders’ agreement between its unit Multimedia Research Lab Sdn Bhd and China-based Red Dragon Media Ltd (RDM), the company had accepted a letter of award from RDM to act as the main contractor for the project. (The Edge) Page 6 of 10
9. TA Securities 25-Aug-17 A Member of the TA Group News In Brief Economy Asia Manufacturing Sector Expected to Improve in Second Half Business conditions for the manufacturing sector in Malaysia are expected to improve in the second half of 2017 , according to a survey conducted by the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER). Forwardlooking indicators by both institutions suggested Malaysian manufacturers expected conditions to improve over the next six months, especially with local sales and production volume increasing, while production cost pressure somewhat easing. The optimism was reflected in the FMM-MIER Business Conditions Index on expectations for the second half of 2017, which rose 10 points to 110, with 31% expecting business conditions to improve. On that note, FMM president Tan Sri Dr Lim Wee Chai said Malaysian manufacturing companies were expected to do well for the six months to December 2017. Lim said that, the latest survey results showed that business activity has remained fairly stable for Malaysian manufacturing firms in recent months, while the outlook for the second half of 2017 is favourable, with firms expecting business conditions to improve, especially local sales and production volume. He added that, manufacturers have been facing increasing costs mainly in the range of 1% to 5% YoY. (The Star) Malaysia’s GDP in USD Not Relevant Gross domestic product that is measured in US dollar is not relevant or appropriate for a matured and sophisticated economy like Malaysia, said Finance Minister II Datuk Seri Johari Abdul Ghani. "Economic activity in Malaysia is measured primarily through activities transacted by households, businesses and governments in ringgit. Hence, measurement in ringgit terms is more reflective of our economy," he said in a statement. (The Edge) Indonesia’s Move to Cut Rates Fails to Lift Consumer Spending A cut in interest rates by Indonesia’s central bank may not be enough to give sluggish consumer spending a jolt, as weakness in purchasing power and a reluctance by banks to lend undercuts efforts to boost South-East Asia’s biggest economy. Bank Indonesia (BI) on unexpectedly cut its benchmark policy rate for the first time since October, bringing the rate down 25 basis points to 4.5%. It also announced some plans to tweak credit rules in a bid to boost lending and consumption. Josua Pardede, economist at Bank Permata, said he expected the average interest rates banks offered to remain above 10% by year-end despite policy rate cut. The central bank had already trimmed the benchmark six times by a total of 1.5 percentage points last year, to limited effect. Commercial banks only followed slowly by lowering their lending and deposit rates, but loan growth has remained weak partly because banks concentrated on tackling bad loans. Consequently, economic growth in the country with 250 million people has failed to accelerate as policymakers had hoped. The secondquarter’s annual growth rate of 5.01% – the same as in the first quarter – highlighted how the economy is stuck in a lower gear. Policymakers have openly said they are confused over why people aren’t spending, with some officials calling it “a mystery”. Private consumption accounts for over half of Indonesia’s gross domestic product. (The Star) Australia Says Organised Crime in Financial Sector Costing US$28b a Year Organised crime in the financial sector is costing Australia A$36 billion (US$28.43 billion) a year, the criminal intelligence authority said. Money laundering was the main threat amid the rise of online banking and digital currencies, the Australian Criminal Intelligence Commission (ACIC) said in a report on organized crime in the country. The Australian government earlier this month accused the country's second-largest bank, Commonwealth Bank of Australia, of widespread breaches of money-laundering and counter-terrorism financing rules. The government is concerned that encryption technology, including cryptocurrencies, allows transactions to evade detection, potentially enabling criminal activity and tax evasion. (The Edge Market) Page 7 of 10
10. TA Securities 25-Aug-17 A Member of the TA Group World Bank Raises Thailand 2017 Growth Forecast to 3 .5% Thailand’s economy is expected to grow 3.5% this year, up from 3.2% initially predicted in April, and rising to 3.6% next year, the World Bank said. South-East Asia’s second-largest economy is gaining momentum as farm incomes recover from drought, merchandise and tourism exports rise and fiscal stimulus continues, the World Bank said in a statement. In April, it predicted 2018 GDP growth of 3.3% for Thailand. It said that Thailand has the potential to raise growth to above 4% by addressing structural bottlenecks - education equality, services liberalisation and public infrastructure management However, risks to the economic recovery include political uncertainty, if reforms and elections become postponed, while a deterioration in the global environment, including increased trade protectionism and a slowdown in the Chinese economy may impede Thailand’s export momentum and private investment recovery, the international lender said. Thailand’s economy expanded a better-than-expected 3.7% in the second quarter from a year earlier, prompting the state planning agency to raise its 2017 growth projection to 3.5%-4.0% from a range of 3.3%-3.8%. (Reuters) Japan Leading Index Climbs Less Than Estimated Japan's leading index improved less than initially estimated in June, latest figures from the Cabinet Office showed. The leading index, which measures the future economic activity, climbed to 105.9 in June from 104.7 in May. The reading for June was revised down from 106.3. However, the latest score was the strongest since June 2015, when it marked 106.2. Meanwhile, the coincident index that reflects the current economic activity rose to 117.1 in June from 115.8 in the prior month. The flash score for June was 117.2. The lagging index also improved from 116.5 in May to 117.4 in June. (RTT News) United States US Debt Rating in Doubt, Fitch Warns The top 'AAA' long-term debt rating of the United States will be in danger if lawmakers do not raise borrowing limits in a timely fashion, ratings agency Fitch warned. Congress faces looming deadlines to approve spending for 2018 and raise legal limits on the amount the United States can borrow in order to meet immediate funding obligations - raising the prospect that the US could default on its sovereign debt for the first time ever and cause havoc on global markets. The non-partisan Congressional Budget Office estimates that the US Treasury has until October before exhausting the "extraordinary measures" it put in place in March, when the US reached its current US$19.8tn borrowing limit. Lawmakers return from August recess on Sept 5, making the window for action even tighter. In the event the limit is not raised, prioritising some payments over others, as some have suggested Washington may be forced to do, "may not be compatible with 'AAA' status," Fitch said. The Trump administration has called on lawmakers to raise the debt limit "as soon as possible". Failure to adopt spending legislation, resulting in a government shutdown, would not directly affect the US debt rating, "but it would highlight how political divisions pose challenges to the budgetary process," Fitch said. President Donald Trump's insistence that Congress fund his proposed wall along the Mexican border, a key campaign pledge, could upset delicate negotiations on Capitol Hill. Speaking in Phoenix, Arizona on Tuesday, Mr Trump threatened a government shutdown if Democrats continued to oppose the plan. (The Business Times) Home Sales Decline in July to Slowest Pace This Year Sales of previously owned homes fell in July to their weakest level this year, as a shortage of homes for sale weighs more heavily on the market. Existing home sales fell 1.3% to a seasonally adjusted annual rate of 5.44 million, the National Association of Realtors said Thursday. The sales pace is still up 2.1% from July of last year. “Nearly all realtors across the country are reporting that the inventory shortage is limiting sales potential,” said Lawrence Yun, chief economist at the National Association of Realtors. At the current sales pace there was 4.2 months of supply of homes on the market, down from 4.8 months a year ago. There were 9% fewer homes on the market in July than there were a year earlier. (The Wall Street Journal) Page 8 of 10
11. TA Securities 25-Aug-17 A Member of the TA Group U .S. Jobless Claims Rose Slightly Last Week The number of Americans filing new applications for unemployment benefits rose slightly last week but remains low, suggesting employers are reluctant to cut staff in a tight labor market. Initial jobless claims, a proxy for layoffs across the U.S., rose by 2,000 to a seasonally adjusted 234,000 in the week ended Aug. 19, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected 235,000 new claims last week. Initial claims for the week ended Aug. 12 were unrevised at 232,000. Data on jobless claims can be volatile. The typically smoother four-week moving average was 237,750 last week, down by 2,750 from the prior week. That was the lowest average since May. Initial claims have hovered in a historically low range for several years. They have remained below 300,000 for 129 consecutive weeks, the longest such streak since 1970. As a share of the workforce, the layoff proxy is trending at the lowest level on records back to the 1960s. (The Wall Street Journal) Europe and United Kingdom UK Q2 GDP Growth Confirmed at 0.3% Private consumption growth in the UK slowed further than expected in the second quarter after helping to prop up growth at the end of last year, according to official figures which confirmed the economy expanded by 0.3%. A second estimate from the Office for National Statistics contained no revisions from the preliminary figures released last month, but provided more detail on the different components of growth. Household spending increased only 0.1% over the three months to June, down from 0.4% in the first quarter and worse than the 0.3% growth economists had expected. ONS head of GDP Darren Morgan said the weak pound was “hitting household budgets”. The shortfall in private consumption was made up for by higher than expected contributions from government spending and particularly capital investment. However, the investment increase was driven by government spending and housing construction, with business investment flat. (Financial Times) UK Finance Sector Proposes 'Ambitious' Post-Brexit Trade Pact The UK's financial sector is seeking an "ambitious" trade pact between Britain and the European Union to try to prevent a costly shift of jobs and business to the continent once the country leaves the bloc, according to a draft report seen by Reuters. Unless Britain negotiates new trading relations with the EU, banks, insurers and fund managers in Britain could be locked out of the bloc's markets when it leaves the EU in March 2019. The International Regulatory Strategy Group (IRSG) said in the draft report, to be submitted to the British government in September, that such a trade pact would allow UK firms to operate in the EU without the cost of having a local licence. It admitted negotiating such a pact could be challenging. Other EU capitals have been vying to attract London's financial businesses since the Brexit vote. Currently, banks authorised in London can "passport" or offer their services to customers across the EU without the need for a licence in each country, but this will end when Britain leaves, forcing the country to agree new trading terms. Initially, the financial sector called for continued full passporting rights after Brexit, which is being negotiated over two years since Britain triggered the process in March, following a referendum vote in June last year. The new proposals mark a departure from that stance, a recognition that the EU is likely to rule out future passporting. (The Star) EU Worker Exodus Threatens UK Food Industry, Some Leaving Already - Survey Nearly half of businesses operating in Britain's food supply chain say European Union workers are thinking about leaving because of uncertainty around Brexit, an industry survey showed. Food processing makes up the biggest chunk of British manufacturing and relies heavily on immigrants, all though much of debate so far around Britain's departure from the EU has focused on sectors like car production and aerospace. 47% of companies in Britain's food supply chain - which includes farms, food processors, supermarkets and restaurants - said their EU workers were considering their future as a direct result of the June 2016 Brexit vote, according to the survey compiled by several trade bodies. Page 9 of 10
12. TA Securities 25-Aug-17 A Member of the TA Group Nearly a third of respondents to the survey , conducted between March and May, said some EU staff had already departed. While Britain's economy has slowed sharply this year, evidence that the Brexit vote made an impact on the labour market is less clear. Still, official data last week showed the number of EU-born people working in Britain rose just 1.6% YoY in the second quarter, the weakest increase in seven years. (The Business Times) Share Buy-Back: 24 August 2017 Company BKAWAN KOMARK TROP Bought Back Price (RM) Hi/Lo (RM) 5,900 24,000 30,000 18.90/18.80 0.255/0.24 0.96/0.955 18.90/18.80 0.25/0.245 0.96/0.94 Total Treasury Shares 33,018,231 4,632,700 4,256,542 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 10 of 10
13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company AUTOMOBILE BAUTO MBMR UMW Share Price (RM) 24-Aug-17 1.86 2.18 5.65 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 2.09 5.04 0.80 0.49 1.33 10.3 20.7 19.7 15.8 23.2 30.6 18.0 10.5 28.6 11.7 9.4 18.4 6.3 1.9 2.3 8.5 2.1 3.5 2.33 2.70 5.98 -20.2 -19.3 -5.5 1.85 2.08 4.09 0.5 4.8 38.0 -12.7 1.9 33.8 4.80 3.70 5.70 8.00 17.50 11.00 23.60 5.80 11.10 1.27 0.87 1.33 1.48 0.60 0.93 0.77 1.31 0.67 33.6 29.4 43.9 49.6 104.9 71.4 137.2 50.7 40.2 30.5 33.6 48.6 55.2 114.2 80.7 142.4 54.5 39.0 11.4 8.6 10.3 13.5 14.8 13.4 15.0 10.0 25.1 12.6 7.5 9.3 12.2 13.6 11.9 14.4 9.3 25.9 4.2 3.2 3.9 3.0 2.9 5.2 2.7 2.4 3.4 4.2 3.2 4.0 3.4 2.9 5.2 2.8 2.4 3.4 4.49 3.00 5.70 6.87 16.30 9.84 20.76 5.59 10.98 -14.5 -15.7 -20.7 -2.2 -4.9 -2.7 -1.0 -9.3 -8.0 3.60 2.08 3.90 4.49 12.70 7.50 19.40 4.53 8.08 6.7 21.6 15.9 49.7 22.0 27.6 6.0 11.9 25.0 3.2 5.9 4.9 49.0 14.8 16.7 4.3 7.6 15.8 0.36 1.30 5.41 3.46 0.59 1.08 2.32 1.85 5.91 0.45 1.75 6.00 3.50 0.78 0.58 2.26 1.49 6.26 0.74 0.52 0.95 1.07 0.86 1.26 na 1.01 0.16 5.5 15.3 27.9 15.3 4.9 8.3 12.7 11.5 42.0 5.5 14.3 34.6 20.2 5.7 9.6 12.5 11.6 45.7 6.4 8.5 19.4 22.7 11.8 13.0 18.3 16.1 14.1 6.5 9.1 15.6 17.1 10.2 11.2 18.5 16.0 12.9 0.0 2.3 2.2 2.2 4.3 0.9 2.4 1.6 4.2 0.0 2.3 2.2 2.7 4.3 0.9 2.4 1.6 4.2 0.51 1.37 5.52 3.61 0.74 1.39 2.41 2.48 6.15 -30.4 -5.1 -2.0 -4.2 -20.4 -22.3 -3.7 -25.3 -3.9 0.33 0.89 4.65 3.07 0.39 0.41 1.56 1.53 5.57 9.2 46.9 16.3 12.7 50.0 166.7 48.7 20.9 6.1 -18.4 23.8 13.2 8.1 -3.3 87.8 36.5 7.6 0.5 1.31 1.97 1.58 1.67 na 0.41 8.7 6.7 11.8 10.0 15.1 29.5 11.1 19.8 3.1 5.1 4.6 5.1 1.49 2.19 -12.1 -10.0 0.85 1.92 55.0 2.6 50.6 -2.0 14.98 18.40 18.06 19.14 0.49 0.49 79.3 79.6 86.2 84.0 18.9 23.1 17.4 21.9 5.3 3.9 5.7 4.1 15.30 19.10 -2.1 -3.7 13.72 15.56 9.2 18.3 7.6 12.3 2.05 7.28 24.60 1.18 84.20 4.29 1.91 4.95 0.89 2.23 8.62 27.41 1.50 92.76 4.10 2.46 4.32 1.23 0.58 0.34 0.24 0.41 0.37 0.54 0.73 0.32 0.49 6.5 30.7 121.1 6.5 292.8 22.3 27.4 15.7 8.1 7.5 38.7 151.0 6.6 325.4 24.7 27.0 16.7 11.6 31.5 23.7 20.3 18.1 28.8 19.2 7.0 31.5 11.0 27.3 18.8 16.3 17.8 25.9 17.4 7.1 29.7 7.7 2.0 4.5 2.8 5.1 3.3 3.5 3.1 0.9 2.8 2.3 4.8 3.0 5.1 3.3 4.0 4.2 0.9 3.9 3.00 8.74 26.00 1.28 85.20 4.31 2.06 5.00 1.07 -31.7 -16.7 -5.4 -7.8 -1.2 -0.5 -7.3 -1.0 -16.8 1.98 7.05 22.44 1.13 74.12 2.26 1.50 4.14 0.78 3.5 3.3 9.6 4.3 13.6 89.8 27.3 19.5 14.1 -20.2 -0.7 4.8 2.5 7.7 68.9 10.4 14.3 11.9 44.04 52.08 0.98 198.6 187.4 22.2 23.5 4.5 4.5 51.04 -13.7 40.61 8.5 -0.3 9.79 6.05 11.51 6.53 1.44 1.39 45.6 21.0 54.4 27.1 21.5 28.8 18.0 22.3 1.4 1.3 1.6 1.5 10.00 6.38 -2.1 -5.2 7.50 4.22 30.6 43.3 23.2 33.9 2.30 0.13 3.34 0.13 0.79 1.35 19.3 0.4 23.2 0.4 11.9 35.8 9.9 36.1 6.1 0.0 7.0 0.0 3.42 0.16 -32.7 -18.8 2.27 0.05 1.3 160.0 -22.3 160.0 6.01 4.20 6.41 4.70 0.74 0.49 7.9 13.3 13.1 16.4 75.7 31.6 45.9 25.6 0.5 1.5 0.5 1.8 6.70 4.35 -10.3 -3.4 5.54 3.85 8.5 9.1 -5.4 0.5 6.89 7.15 1.85 5.61 1.48 6.87 7.60 1.80 6.05 2.20 0.55 0.08 0.31 -0.24 0.27 19.5 33.9 12.4 26.4 3.7 24.6 40.0 15.1 29.8 5.5 35.4 21.1 14.9 21.2 39.7 28.0 17.9 12.2 18.8 26.9 1.2 2.4 2.0 2.4 0.6 1.6 2.8 2.4 2.7 0.9 7.40 7.36 2.38 5.94 2.62 -6.9 -2.9 -22.3 -5.6 -43.5 4.30 5.62 1.82 4.20 1.38 60.2 27.2 1.6 33.6 7.2 42.7 8.5 -12.3 4.9 -37.3 INDUSTRIAL SCIENTX SKPRES 8.51 1.47 9.28 1.75 0.44 0.56 55.1 8.6 66.6 10.6 15.4 17.1 12.8 13.8 2.1 2.8 2.4 3.5 8.99 1.48 -5.3 -0.7 6.01 1.15 41.6 27.8 27.0 14.0 MEDIA ASTRO MEDIA PRIMA STAR 2.66 0.70 2.38 3.50 0.60 1.35 1.16 0.67 0.63 13.2 0.9 3.3 14.5 2.8 4.0 20.1 81.7 71.7 18.4 24.8 58.9 4.7 1.0 17.6 4.9 3.2 7.6 2.95 1.46 2.65 -9.8 -52.1 -10.2 2.47 0.66 2.19 7.7 6.9 8.7 2.3 -39.1 6.3 -28.3 -17.2 -41.8 -8.2 -5.1 -7.9 -29.0 -7.0 -67.7 0.23 4.14 0.67 7.03 0.44 6.48 1.33 1.51 0.28 120.0 30.7 1.5 3.1 48.3 10.8 12.0 41.7 8.9 94.1 -16.8 -26.2 -1.4 44.9 2.9 -8.0 42.7 -65.1 -29.3 1.30 7.7 -17.6 BANKS & FINANCIAL SERVICES AFG 3.84 AFFIN 2.53 AMBANK 4.52 CIMB 6.72 HLBANK 15.50 MAYBANK 9.57 PBBANK 20.56 5.07 RHBBANK BURSA 10.10 CONSTRUCTION BPURI GADANG GAMUDA IJM PESONA SENDAI SUNCON WCT LITRAK Building Materials CHINHIN 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 0.50 0.76 0.93 3.7 4.6 13.5 10.8 2.0 2.0 0.69 LCTITAN 5.41 6.88 na 43.1 64.9 12.5 8.3 3.1 5.7 6.53 MHB 0.68 0.78 1.97 -2.0 -0.5 na na 0.0 0.0 1.16 MISC 7.25 6.56 0.89 56.3 46.9 12.9 15.5 4.1 4.1 7.90 PANTECH 0.65 0.69 1.15 4.0 6.1 16.2 10.5 2.8 4.3 0.68 PCHEM 7.18 7.62 0.98 34.7 39.3 20.7 18.3 2.6 2.6 7.80 SENERGY 1.49 1.71 2.46 6.6 4.0 22.5 37.6 0.7 0.7 2.10 SERBADK 2.14 2.77 na 22.1 25.2 9.7 8.5 3.3 3.6 2.30 UMWOG 0.31 0.80 2.03 -12.0 -3.5 na na 0.0 0.0 0.95 Note: UMWOG proposed rights issue of shares. Ex-Target price RM0.43. For more details please refer to 08.05.17 report. UZMA 1.40 1.55 1.57 11.3 12.3 12.4 11.4 0.0 0.0 1.98
14. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price (RM) PLANTATIONS FGV IJMPLNT IOICORP KLK SIME UMCCA 1.64 3.03 4.59 24.40 9.23 6.25 Target Price BETA (RM) 1.55 3.58 4.15 26.18 10.02 7.52 1.98 0.48 1.19 0.83 1.29 0.35 EPS (sen) PER (X) FY17 FY18 FY17 FY18 4.2 12.3 18.8 103.4 34.0 37.5 8.5 14.1 21.1 120.4 37.5 34.5 38.9 24.6 24.5 23.6 27.1 16.6 19.3 21.6 21.8 20.3 24.6 18.1 Div Yield (%) 52weeks 52weeks FY17 FY18 High Price % Chg Low Price % Chg 3.0 2.3 2.2 2.1 2.7 3.7 3.0 2.6 2.6 2.5 3.4 2.7 2.52 3.70 4.81 25.50 9.70 6.55 -34.9 -18.1 -4.6 -4.3 -4.8 -4.6 1.42 2.95 4.30 23.00 7.56 5.50 PROPERTY GLOMAC 0.65 0.70 0.40 1.6 6.3 40.5 10.2 4.2 4.2 0.83 -21.8 0.61 HUAYANG 0.85 0.96 0.54 17.3 10.2 4.9 8.3 4.7 2.4 1.43 -40.7 0.80 IBRACO 0.89 1.00 0.45 5.2 11.1 17.0 8.0 3.9 4.5 1.05 -15.2 0.76 IOIPG 2.12 2.25 0.95 17.4 17.4 12.2 12.2 3.3 3.5 2.46 -13.8 1.85 MAHSING 1.55 1.76 0.85 14.3 13.5 10.8 11.5 4.2 4.2 1.70 -8.8 1.34 SNTORIA 0.81 0.98 0.22 6.2 10.3 13.1 7.8 1.2 1.2 1.00 -19.0 0.69 SPB 4.88 5.98 0.53 25.6 22.8 13.6 15.3 2.5 2.5 5.19 -6.0 4.32 SPSETIA 3.49 4.10 0.68 11.6 12.5 37.2 34.7 4.0 4.0 4.50 -22.4 3.10 SUNWAY 4.32 4.15 0.48 15.5 15.6 17.8 17.6 1.2 1.2 4.40 -1.8 2.89 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 1.70 1.87 0.49 9.2 10.0 18.4 17.0 5.4 5.9 1.84 -7.6 1.63 CMMT 1.48 1.72 0.46 8.1 8.6 18.3 17.2 5.7 6.0 1.72 -14.0 1.45 % Chg YTD 15.5 2.7 6.7 6.1 22.1 13.6 5.8 -10.9 4.3 1.7 14.0 4.7 5.7 6.3 17.9 14.8 15.7 17.4 12.9 12.6 49.4 -7.2 -24.8 -11.0 8.7 8.4 1.2 10.4 11.5 44.0 4.3 2.1 -1.2 -3.3 POWER & UTILITIES MALAKOF PETDAG PETGAS TENAGA YTLPOWR 1.09 24.10 18.98 14.28 1.41 1.22 21.47 19.37 17.38 1.45 0.66 0.71 0.77 0.88 0.52 6.8 98.2 87.6 131.9 8.2 6.9 102.3 100.1 130.6 10.6 15.9 24.5 21.7 10.8 17.1 15.9 23.6 19.0 10.9 13.3 6.4 3.0 3.3 3.1 5.0 6.4 3.2 3.7 3.2 3.5 1.69 25.70 22.50 14.90 1.64 -35.5 -6.2 -15.6 -4.2 -14.0 1.00 22.96 18.10 13.00 1.38 9.5 5.0 4.9 9.8 2.2 -20.4 1.3 -10.9 2.7 -5.4 TELECOMMUNICATIONS AXIATA DIGI MAXIS TM 4.89 4.91 5.80 6.43 5.20 4.90 5.85 7.50 1.39 0.99 0.77 0.62 14.5 20.0 24.5 21.4 15.9 20.4 24.7 22.3 33.6 24.5 23.7 30.0 30.7 24.1 23.5 28.8 1.5 4.1 3.4 3.0 1.6 4.2 3.4 3.1 5.77 5.19 6.60 6.90 -15.3 -5.4 -12.1 -6.8 4.11 4.63 5.48 5.81 19.0 6.0 5.8 10.7 3.6 1.7 -3.0 8.1 TECHNOLOGY Semiconductor & Electronics IRIS 0.18 INARI 2.60 MPI 14.16 UNISEM 4.08 0.28 2.75 15.40 4.30 1.25 0.72 0.21 0.57 -2.3 10.1 89.4 26.9 -0.3 na 13.1 25.8 110.2 15.8 32.1 15.1 na 19.8 12.9 12.7 0.0 3.8 1.9 2.9 0.0 3.5 1.9 2.9 0.22 2.65 14.30 4.25 -18.2 -1.9 -1.0 -4.0 0.10 1.52 7.20 2.27 80.0 70.9 96.7 79.7 63.6 56.6 91.1 72.9 3.28 8.52 3.34 8.10 0.99 1.48 37.6 17.2 37.1 17.5 8.7 49.4 8.8 48.7 1.2 1.2 1.5 1.2 3.59 9.45 -8.6 -9.8 2.16 5.91 51.9 44.2 43.2 40.6 1.80 3.64 2.05 4.05 0.70 0.79 12.4 17.1 19.7 15.1 14.5 21.2 9.1 24.1 2.4 3.5 3.9 3.1 1.87 4.50 -3.7 -19.1 1.47 3.58 22.4 1.7 13.2 -15.3 TRANSPORTATION Airlines AIRASIA AIRPORT Freight & Tankers TNLOGIS WPRTS SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price (S$) BANKS & FINANCIAL SERVICES DBS 20.48 OCBC 11.03 UOB 23.76 PLANTATIONS WILMAR IFAR 3.22 0.46 Target Price Beta (S$) EPS (cent) PER (X) FY17 FY18 FY17 FY18 Div Yield (%) 52week 52week FY17 FY18 High Price % Chg Low Price % Chg % Chg YTD 23.30 12.00 25.40 1.23 1.15 1.06 172.9 87.7 192.9 189.2 11.8 92.4 12.6 206.5 12.3 10.8 11.9 11.5 2.9 5.7 2.9 2.9 6.7 2.9 22.3 11.5 24.6 -8.0 -4.0 -3.4 14.80 8.84 17.91 38.4 32.4 32.7 18.1 23.7 16.5 3.72 0.53 0.95 1.06 28.9 4.9 31.1 5.2 10.3 8.9 2.5 2.6 2.8 2.8 4.0 0.6 -19.5 -22.7 3.03 0.44 6.3 4.5 -10.3 -12.4 11.1 9.5 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.
15. TA Securities RESULTS UPDATE Friday , August 25, 2017 A Member of the TA Group FBMKLCI: 1,775.5 Sector: Consumer MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Aeon Co. (M) Bhd TP: RM2.23 (+8.9%) Last Traded: RM2.05 Positive Operating Profits Across Segments HOLD THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Damia Othman Tel: +603-2167-9602 damia@ta.com.my Review Aeon Co. (M) Bhd’s 1HFY17 core earnings came in broadly in line with our full-year forecasts at 44% but below consensus estimates at 39%. The group’s 1HFY17 core earnings declined by 6.0% YoY to RM40.5mn due to increase in taxation. At PBT level, 1HFY17 earnings improved by 6.9% YoY to RM82.4mn due to i) higher revenue (+1.4% YoY) of RM2.1bn, ii) leading to better margins. In terms of breakdown, the retail segment revenue had little change (-<1.0% YoY) due to cautious spending by consumers. However, operating profit for the retail segment has increased by more than double on the back of i) strategic pricing, ii) positive response to marketing activities and iii) cost efficiency efforts. Revenue for the property management segment increased (+11.6% YoY) due to contributions from new shopping malls which opened in March and May last year. This has also led to increase in operating profit by 5.8% YoY. QoQ, 2QFY17 PBT increased by 18.0% to RM44.6mn due to increase in operating profits level from both retail (> +100% QoQ) and property management (+3.2% QoQ) segments. The improvement was because of higher margins from strategic pricing, positive response from marketing activities and non-operating expenses. No dividend was declared for the quarter under review. Impact We made no change in our earnings forecasts. Outlook Management will implement appropriate i) pricing, ii) re-alignment of merchandise mix and assortment iii) active promotions and iv) strengthening operational efficiency to improve the group’s financial performance within the retailing segment. In terms of property management segment, the group will continue to maintain sustainable occupancy rate with a balanced tenant mix to ensure customers will continue to visit Aeon malls as their shopping destinations. www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Aeon Co Aberdeen EPF Aeon MK 6599 Main Market 1,404.0 2,878.2 1.0 3.00/1.98 667.0 32.1 0.6 51.68 19.1 7.66 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 0.0 0.0 91.5 105.6 102.8 118.7 89.0 89.0 Sell (Upgraded) Financial Indicators Net debt/equity (%) ROE (%) ROA (%) NTA/Share (RM) Price/ NTA (x) Scorecard vs TA vs Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth FY17 35.8 4.7 2.0 1.4 1.5 FY18 34.1 5.4 2.2 1.4 1.5 % of FY17 44 Within 39 Below Aeon FBM KLCI (6.8) 0.7 (13.9) 0.1 (20.2) 4.5 (27.6) 5.7 (12-Mth) Share Price relative to the FBM KLCI Management also guided that Aeon will continue to renovate selected stores and shopping malls to create a refreshing shopping ambience with added space, better retail options and merchandise assortments. Valuation We upgrade our call from Sell to Hold with an unchanged target price of RM2.23/share based on DDM valuation (k: 6.5%, g: 3.0%). Reasons for our call upgrade include i) improvement in retailing segment margins, ii) sustainable occupancy rate across Aeon malls and iii) continuous efforts to improve customers’ shopping experience. Page 1 of 2 Source: Bloomberg
16. TA Securities 25-Aug-17 A Member of the TA Group 2QFY17 Results Analysis (RMmn) FYE 31 Dec (RMmn) Revenue EBIT Extraordinary Items Net Interest Associates Profit before Tax Taxation Minority Interest Net Profit Core Net Profit Core EPS (sen) DPS (sen) 2QFY16 974.8 41.3 (0.9) (9.3) 0.1 32.2 (14.2) (1.1) 18.0 16.0 1.4 - 1QFY17 1,072.0 46.9 (1.0) (9.1) 0.0 37.8 (16.7) (1.5) 21.1 18.6 1.3 - 2QFY17 1,008.1 54.9 (1.4) (10.0) (0.4) 44.6 (20.3) (1.0) 24.3 22.0 1.8 - 4.2 3.3 1.8 44.1 4.4 3.5 2.0 44.1 5.4 4.4 2.4 45.4 EBIT Margin (%) PBT Margin (%) Net Margin (%) Tax Rate (%) QoQ (%) (6.0) 17.1 36.3 9.3 nm 18.0 21.6 (36.8) 15.2 18.3 36.0 nm %-points 1.1 0.9 0.4 1.3 YoY (%) 3.4 32.9 61.9 7.8 nm 38.7 42.9 (11.0) 35.3 37.0 32.4 nm %-points 1.2 1.1 0.6 1.4 1HFY16 2,050.4 91.1 (1.1) (14.4) 0.3 77.1 (31.1) (1.8) 46.0 43.1 3.4 - 1HFY17 2,080.0 101.8 (2.4) (19.1) (0.3) 82.4 (36.9) (2.5) 45.5 40.5 3.4 - 4.4 3.8 2.2 40.3 4.9 4.0 2.2 44.8 YoY (%) 1.4 11.8 120.1 33.0 nm 6.9 18.7 39.8 (1.1) (6.0) 0.6 nm %-points 0.5 0.2 (0.1) 4.5 2QFY17 Segmental Analysis (RMmn) FYE 31 Dec (RMmn) Revenue Retailing Property Management Operating profit Retailing Property Management Operating margin (%) Retailing (%) Property Management (%) 2QFY16 974.8 824.4 150.4 50.3 1.0 49.3 1QFY17 1,072.0 908.8 163.1 55.5 1.4 54.1 2QFY17 1,008.1 843.7 164.4 61.0 5.2 55.8 5.2 0.1 32.8 5.2 0.2 33.2 6.1 0.6 34.0 QoQ (%) (6.0) (7.2) 0.8 9.9 > +100 3.2 %-points 0.9 0.5 0.8 YoY (%) 3.4 2.3 9.3 21.3 > +100 13.3 %-points 0.9 0.5 1.2 1HFY16 2,050.4 1,756.9 293.5 106.5 2.5 103.9 1HFY17 2,080.0 1,752.5 327.5 116.5 6.6 109.9 5.2 0.1 35.4 5.6 0.4 33.6 YoY (%) 1.4 (0.2) 11.6 9.5 > +100 5.8 %-points 0.4 0.2 (1.8) Earnings Summary (RMmn) FYE 31 Dec (RMmn) Revenue Core EBIT Core EBIT margin Exceptional Item Reported PBT Core Net profit Core EPS EPS Growth PER Net Dividend Dividend Yield (%) (sen) (%) (x) (sen) (%) FY15 3,834.6 227.0 5.9 210.8 129.9 9.3 (38.4) 21.7 4.0 2.0 FY16 4,038.7 181.2 4.5 147.1 70.2 5.0 (46.0) 40.2 3.0 1.5 FY17E 4,251.4 255.0 3.4 17.0 212.9 91.5 6.5 30.4 30.8 4.1 2.0 FY18F 4,711.6 250.3 3.7 207.2 105.6 7.5 15.4 26.7 4.8 2.4 FY19F 4,942.9 280.9 3.7 236.3 120.4 8.6 14.0 23.4 5.5 2.7 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. 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 2 of 2
17. TA Securities RESULTS UPDATE Friday , August 25, 2017 FBM KLCI: 1,775.50 A Member of the TA Group Sector: Finance MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 AMMB Holdings Berhad TP: RM5.70 (+26.1%) Last Traded: RM4.52 1QFY18 Profit up on Stronger NII and Lower Tax BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TA Research Team Coverage Tel: +603-2167 9609 kaladher@ta.com.my Review AMMB reported YoY improvement in its 1QFY18 results. Yearly, 1Q18 net profit climbed 1.6% to RM328.3mn. QoQ, net profit slipped 2.2%. Nevertheless, accounting for some 22% and 23% of ours and consensus estimates, YTD FY18 results are within expectations. Making up 25% of our full year forecast, total income strengthened 3.3% YoY. Stronger net interest income (NII) and contribution from Islamic banking operations were muted by a 13.3% decrease in the insurance business. Non-operating income (non-NII) improved, rising 2.5% YoY. NIM stabilized. Widening 8 bps YoY, the improvement was driven by ongoing portfolio rebalancing activities, better yields from wholesale and better deposit mix. Nevertheless, continuing pressure in retail resulted in a 4 bps QoQ compression in the NIM. Total gross loans gained some momentum, rising 2% YTD due to an increase in advances for mortgages, retail SME, business banking and wholesale banking. Registering an increase of 2.5% YoY, non-NII (excluding the insurance business) strengthened due to increased DCM activities, as well as better contribution from the wealth management and cards business. Contributions from the insurance business however, declined with general insurance impacted by an increase in claims experience while the life business was affected by lower premiums, lower non-NII, higher actuarial valuations and higher operating expenses. Expense growth increased 3.3% YoY. Keeping a lid on personnel costs, the increase in overhead costs were mostly driven by higher admin and general expenses and compliance costs. Accounting for 25% of our full year forecast, the increase in expense was well within our expectations. AMMB’s cost-to-income (CTI) ratio improved to 56.3% (FY17: 57.4%, FY16: 58.8%). Driven by recoveries, the net credit cost stood at -5 bps during the quarter. Excluding recoveries, credit cost improved to 48 bps from 58 bps in the previous year as both the individual and collective allowances eased YoY. Formation of new impaired loans increased slightly, bringing AMMB’s gross impaired loans ratio (GIL) to 1.88%. Retail GIL deteriorated 9 bps to 1.42% while Wholesale GIL improved 5 bps to 2.39% in 1QFY18. Loans loss coverage ratio stood little changed at 79.8% (FY17: 79.7%). Despite registering benign asset quality, management is watchful on corporate loans impairment. Exposure to the O&G and the commercial real estate sector stood at 2% and 8% of total gross loans. Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) AMM MK 1015 Main Market 3,014 13,624 1.00 5.70/3.90 3,474 41.9 1.33 ANZ - 23.8 AmCorp - 13.0 EPF - 9.5 Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.2 (0.7) 1,463.5 1,650.6 1,405.0 1,440.0 104.2 114.6 Buy (maintained) Financial Indicators FY18 8.8 1.1 58.9 1.9 82.3 5.7 0.8 FY19 9.3 1.1 58.0 1.9 81.8 6.1 0.7 vs TA vs Consensus % of FY 22% 23% Within Within Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth AMMB (8.7) (13.2) (2.4) 3.0 FBM KLCI 0.9 0.5 4.8 5.8 ROE (%) ROA (%) CTI Ratio (%) Gross impaired loans ratio Allowance Coverage (%) BV/ Share (RM) Price/ BV (x) Scorecard (12-Mth) Share Price relative to the FBM KLCI Lastly, proforma FY17 CET1 and Total Capital Ratio were healthy at 11.7% and 16.4%. Impact Incorporating 1QFY18 results, we tweak our FY18/19/20e net profit to RM1,463.5/1,650.6/1,881.5mn from RM1,460.2/1,661.6/1,863.3mn respectively. Source: Bloomberg Page 1 of 2 www.taonline.com.my
18. TA Securities 25-Aug-17 A Member of the TA Group Outlook Accelerating penetration in targeted segments and expanding into key GDP sectors , management believes AMMB is on track to register stronger earnings growth in FY18. Ongoing efforts to balancing growth of quality assets, deposit mix and maximizing fees would also help optimize returns. Valuation We maintain AMMB’s TP at RM5.70. Trading at FY18 PBV of 0.8x, we believe valuations are attractive. Buy reiterated on AMMB. Key upside/downside to TP include: 1) strong pickup in capital market activities, 2) unexpected increase in unemployment rate resulting in high default rates among retail borrowers, 3) cost pressure resulting in further NIM compression, 4) better-than-expected contribution from insurance division, FX, Derivative and Wealth Management units, 5) diverse income flow due to AMMB’s corporate transformation strategies and from tie-up with MetLife, and 6) potential M&A takeover target or exit of ANZ. Earnings Summary (RMmn) FYE Mar Net interest income Non-interest income Islamic Banking Total operating income Pre-provisioning profit Pretax profit Core net profit EPS (sen) EPS growth (%) Gross div (sen) Div yield (%) 2016 1,637.8 1,249.7 805.8 3,693.3 1,519.0 1,731.0 1,302.2 43.2 (32.1) 15.5 3.4 1QFY18 Results Analysis (RMmn) YE 31 Mar 1Q FY17 Net interest income 392.3 Non interest income 214.9 Insurance business 142.2 Islamic banking 197.2 Share in results of associates and JVs 4.6 Net income 951.2 Overhead expenses (535.5) Profit before allowances 415.7 PBT 479.4 Net profit 323.0 4Q FY17 404.2 314.2 74.0 213.7 0.5 1,006.7 (582.6) 424.1 440.7 335.8 1Q FY18 416.2 220.3 123.2 225.3 (2.8) 982.2 (553.1) 429.1 449.1 328.3 QoQ 3.0 (29.9) 66.5 5.4 >(100.0) (2.4) (5.1) 1.2 1.9 (2.2) YoY 6.1 2.5 (13.3) 14.3 >(100.0) 3.3 3.3 3.2 (6.3) 1.6 YTD FY17 392.3 214.9 142.2 197.2 4.6 951.2 (535.5) 415.7 479.4 323.0 YTD FY18 416.2 220.3 123.2 225.3 (2.8) 982.2 (553.1) 429.1 449.1 328.3 YoY 6.1 2.5 (13.3) 14.3 >(100.0) 3.3 3.3 3.2 (6.3) 1.6 11.1 10.9 (2.2) 1.6 10.7 10.9 1.6 EPS (sen) 10.7 2017 1,564.6 1,359.1 805.2 3,728.9 1,568.4 1,801.2 1,324.6 43.9 1.7 17.6 3.9 2018F 1,638.4 1,469.9 845.4 3,953.7 1,725.0 1,934.6 1,463.5 48.6 10.5 18.0 4.0 2019F 1,771.4 1,598.9 887.7 4,258.1 1,915.3 2,168.4 1,650.6 54.8 12.8 18.0 4.0 2020F 1,995.8 1,750.6 932.1 4,678.6 2,193.6 2,457.0 1,881.5 62.4 14.0 20.0 4.4 Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. 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 2 of 2
19. TA Securities COMPANY UPDATE Friday , August 25, 2017 A Member of the TA Group FBMKLCI: 1,775.50 Sector: Consumer MENARA TA ONE, 22 JALAN P. RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL: +603-20721277 / FAX: +603-20325048 Amway (Malaysia) Holdings Berhad TP: RM8.62 (+18.4%) Last Traded:RM7.28 Optimising Expenses Level BUY THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Damia Othman Tel: +603-2167-9602 damia@ta.com.my We came back from Amway’s 1HFY17 analyst briefing feeling more optimistic of the year’s earnings prospects. For 2H17, the group will focus on: i) continuous sales and marketing programmes to support the Amway Business Owners (ABOs), ii) enhance physical presence and infrastructure, and iii) continue to prudently manage the operating expenses. We increase our earnings forecasts by 16.2% and 26.9% for FY17 and FY18 respectively and upgraded our call from Hold to Buy with an unchanged target price of RM8.62/share based on DDM valuation. New Product Launches and Continuous ABO Support Management guided that Amway will continue to focus on the existing sales and marketing programmes to drive sales for FY17. As such, we can expect new product launches in September within the beauty range and a new air purifier within the automotive range in November. Given the growing beauty industry and Malaysia being one of the highest car ownership in the world (3rd in the world according to 2014 Nielsen Global Survey of Automotive Demand), the two new products to be launched in 2H17 is expected to receive positive response from the consumers given the high market base. Furthermore, Amway will continue to support ABO through improved digital experience such as i) interactive flipbooks which come in three languages, and ii) launch of mobile-friendly website (May-17). This is on top of other existing ABO support like i) achievements recognition, ii) leadership conferences and iii) rallies, workshops, seminars and events to create a wholesome ABO community. Support provided towards ABO has led to double-digit increase in the number of ABOs mainly from Malay and Indian ethnicity. However, given the soft consumer sentiment and high-base effect from 40th anniversary programmes in FY16, revenue per ABO is expected to be lower in FY17 as compared to FY16. Moreover, management guided that there will be no price increase in 2HFY17. Due to the absence of the 40th anniversary programme, we expect FY17 revenue to decline by 4.1% YoY to RM1.0bn given the high-baseeffect. Enhance Physical Presence Amway is expected to relocate two stores in Klang Valley and Penang as the current stores are old buildings with seven – nine years of age. These stores are expected to be revamped with a new concept: i) to bring in new ABO prospects, ii) provide a warm and natural settings to convert prospects to ABOs and iii) more focused towards the products and Amway community. Management guided that the enhancement funding is not expected to be significant. We estimate that this new enhancement of stores will costs Amway between RM1.0 – RM2.0mn. We now assume higher capex of RM7mn versus RM5mn previously for FY17. Prudent Management of Expenses Operating expenses for FY17 is expected to be lower as compared to the previous year as management is prudently managing the level. Some of the cost-trimming would be on: i) lower distribution expenses and ii) lower provision for sales incentives. In terms of forex movement, management guided Page 1 of 3 www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Amway Global Development Skim Amanah Saham Bumiputra Kumpulan Wang Persaraan Employees Provident Fund Amw MK 6351 Main Market 164.4 1,196.8 6.00 8.74/7.05 19.5 10.6 0.3 51.7 13.1 9.7 6.1 Forecast Revision Forecast Revision (%) Adj. Net Profit (RM mn) Consensus TA's / Consensus (%) Previous Rating FY17 FY18 16.2 26.9 50.4 63.6 50.3 57.4 100.1 110.7 Hold (Upgraded) Financial Indicators Net Gearing ROE (%) ROA (%) NTA/Share (RM) Price/NTA (x) FY17 FY18 Net cash Net cash 24.2 29.7 12.8 15.4 1.3 1.3 7.1 6.9 Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth Amway FBM KLCI (1.0) 0.7 (6.1) 0.1 (8.8) 4.5 (15.3) 5.7 (12-Mth) Share Price relative to the FBM KLCI Source: Bloomberg
20. TA Securities 25-Aug-17 A Member of the TA Group that Amway Malaysia has hedged the MYR /USD rate between Apr-17 to May18. Note that our in-house MYR/USD estimate is MYR4.25/USD for 2017 and MYR4.15/USD for 2018. Hence, we believe that i) lower operating expenses and ii) strengthening of Ringgit, will keep net profit margin constant for FY17 at 4.8% level. Forecast We increase our earnings forecasts by 16.2% and 26.9% for both FY17 and FY18 respectively after taking into consideration i) lower operating expenses and ii) lower costs of sales from devaluation of Ringgit to keep net margin at a constant despite that we expect iii) a decline in revenue due to a high-baseeffect from the 2016 40th anniversary programmes. Valuation We upgrade our call from Hold to Buy with unchanged target price of RM8.62/share based on DDM valuation (k: 7.8%, g: 3.0%). Investment merits for our Buy call includes i) 80% dividend policy commitment by management, ii) strengthening of Ringgit expected to reduce costs of sales and iii) introduction of new products as well as new ABO sign-ups to support sales being above RM1.0bn level. Page 2 of 3