Bursa Malaysia Daily Market Report - 27 December

Transcription

1. Wednesday , 27 December, 2017 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1 . K P J H e a lt h c a re Be rh a d : H o p e f u l f o r G re a te r T ra c tio n in 2 . T e n a g a N a s io n a l B e r h a d : T a r if f s M a in ta in e d f o r R P2 Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks (L o ca l) 2. D ai l y St o ck S cr een Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
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Daily Market Commentary Wednesday , 27 December 2017 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (26.12.2017) (mil) Main Market 1,248.1 Warrants 172.4 ACE Market 638.4 Bond 7.0 ETF 0.6 LEAP 0.0 Total 2,066.5 Off Market 99.6 Volume +/-chg (RMmn) 217.8 1,463.2 13.9 30.0 201.5 107.7 -2.7 1.6 -0.02 1.0 0.00 0.0 1,603.6 46.1 92.2 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP December 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 (mn) 21.4 17.5 16.8 10.0 10.0 5.0 4.0 3.3 2.6 2.2 1.5 1.5 1.5 1.1 1.0 % YTD chg -0.25 -4.67 10.52 0.00 -0.01 -0.04 0.06 0.00 7.20 10.38 14.16 7.49 24,746.21 6,936.25 7,592.66 22,892.69 2,427.34 29,578.01 3,378.16 1,752.48 6,221.01 3,306.13 1,892.02 6,069.71 -7.85 -23.71 0.00 -10.07 -13.20 0.00 -7.55 10.40 0.00 9.06 -9.54 0.00 -0.03 -0.34 0.00 -0.04 -0.54 0.00 -0.22 0.60 0.00 0.27 -0.50 0.00 25.22 28.85 6.30 19.77 19.78 34.44 17.27 13.58 17.45 6.52 -3.92 7.13 0.12 0.76 0.17 0.30 0.22 0.05 3.05 1.31 0.00 0.50 1.55 26.30 2.16 0.85 4.30 Counter Mkt Cap. Chg (RM’mn) (RM) MAYBANK 101,969 CIMB 59,782 AXIATA 48,678 GENTING 34,429 HLBANK 33,998 PETGAS 33,638 GENM 31,460 TM 23,487 NESTLE 23,450 HLFG 20,133 -0.01 -0.01 -0.01 -0.10 -0.02 -0.10 -0.04 -0.25 -2.00 -0.02 The local market stayed in profit-taking consolidation mode on Tuesday, in tandem with the subdued regional front as many markets remain closed for the extended Christmas holiday.The KLCI inched down by 0.25 points to end at 1,759.99, off an early low of 1,753.25 and high of 1,760.45, as losers edged gainers 489 to 387 on slower turnover of 2.06bn shares worth RM1.6bn. Market sentiment is likely to be subdued with investors staying aside for this shortened trading week ahead of the year-end holidays. Nonetheless, the index must sustain above the key 200-day moving average level, currently at 1,756, to enable challenge of stronger upside hurdles from 1,765 and 1,782, with the double-top peak of 1,793 and 1,796 acting as major resistance. Immediate uptrend supports are at 1,743 and 1,735, the respective 10 and 50-day moving averages, followed by 1,729, the 30-day ma, while crucial support will be the 5 Dec pivot low of 1,708. TM should stage further profit-taking correction due to hook-down momentum indicators, with better chart supports from the 10-day ma (RM6.14) and 23.6%FR (RM6.06), while key retracement levels are at 50%FR (RM6.35) and 61.8%FR (RM6.48). Similarly, Westports could also fall back for profit-taking correction from recent rally, with better supports from the lower Bollinger band (RM3.36) and the low of 06/12/17 (RM3.34). Resistance seen at 50%FR (RM3.90). News Bites Top 10 KLCI Movers Based on Mkt Cap. (RM) @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ % chg 1,759.99 12,657.08 16,799.22 1,758.00 Off Market TATGIAP ATTA KGROUP PUC SMTRACK TIGER SERBADK YNHPROP ATTA-PA PNEPCB PLENTIU F&N BAUTO KPOWER BIMB Review & Outlook Value Value/ +/-chg Volume Up Down 31.2 1.17 262 333 6.9 0.17 77 98 17.4 0.17 44 52 -0.4 0.23 2 4 0.30 1.64 2 2 0.00 0.00 0 0 0.78 387 489 -87.4 0.93 Vol. (mn) 8.96 6.44 3.68 0.67 0.59 0.37 0.79 0.94 0.02 0.07 • Tenaga Nasional Bhd said the government has approved for the electricity tariff in the current tariff schedule for Peninsular Malaysia to be maintained for the period of Jan 1, 2018 until Dec 31, 2020. • Malaysian Resources Corporation Bhd has entered into agreement with Lembaga Tabung Haji for the pilgrim fund to purchase 70% stake in 59INC Sdn Bhd for RM100.1mn cash. • Pensonic Holdings Bhd is buying two parcels of freehold land in in Kapar, Klang from Cekal Unggul Sdn Bhd for RM20.07mn cash. • Perak Transit Bhd has received approval in principle for an RM8.01mn grant from the Government to facilitate the construction of a new public transport terminal in Kampar, Perak. • Hibiscus Petroleum Bhd, which is acquiring 50% stake in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract from Shell Sabah Selatan Sdn Bhd for US$25mn, expects the deal to be completed on 31 March 2018. • Managepay Systems Bhd will provide services under its e-marketplace platform BuyMalaysia.com to small and medium enterprises registered under eTRADE programme by Malaysia External Trade Development Corporation. • Sona Petroleum Bhd, a special purpose acquisition company, has not obtained any tax clearance yet from Inland Revenue Board for final distribution of the remaining monies in the cash trust account. • Xidelang Holdings Ltd's Managing director and CEO Ding Pengpeng said the group will focus on merger and acquisitions as well as ecommerce activities in FY18. • Most Bank of Japan policymakers agreed that the central bank must persistently pursue powerful monetary easing, but that additional stimulus measures were unnecessary for now, minutes of the BOJ's October rate review showed. • The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in October, up from 6.1% in the previous month. Important Dates Exchange Rate 4.0823 -0.0015 113.31 0.0300 1.186 -0.0008 USD/MYR ECONBHD - 1:4 Bonus Issue - BI of up to 267.5m new split shares. USD/JPY 1 bonus share for every 4 split shares held. EUR/USD ECONBHD - 1:4 Bonus Issue - BI of up to 267.5m free warrants. 1 warrant for every 4 split shares held, on the same entitlement as the bonus issue of shares. Ex-Date: 26/12/2017. Entitlement Date: 28/12/2017. LISTING ON: 29/12/2017. Disclaimer Commodities Futures Palm Oil (RM/mt) 2,504.00 46.00 Crude Oil ($/Barrel) 59.80 1.45 Gold ($/tr.oz.) 1,287.60 8.50 The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Wednesday , December 27, 2017 FBMKLCI: 1,759.99 THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Daily Brief Market View, News In Brief: Corporate, Economy, and Share Buybacks Chartist: Stephen Soo Tel: +603-2167-9607 stsoo@ta.com.my www.taonline.com.my M a r k e t V i e w Sentiment Likely to Stay Subdued The local market stayed in profit-taking consolidation mode on Tuesday, in tandem with the subdued regional front as many markets remain closed for the extended Christmas holiday. The KLCI inched down by 0.25 points to end at 1,759.99, off an early low of 1,753.25 and high of 1,760.45, as losers edged gainers 489 to 387 on slower turnover of 2.06bn shares worth RM1.6bn. Key 200-day ma Resistance at 1,756, Support at 1,743 Market sentiment is likely to be subdued with investors staying aside for this shortened trading week ahead of the year-end holidays. Nonetheless, the index must sustain above the key 200day moving average level, currently at 1,756, to enable challenge of stronger upside hurdles from 1,765 and 1,782, with the double-top peak of 1,793 and 1,796 acting as major resistance. Immediate uptrend supports are at 1,743 and 1,735, the respective 10 and 50-day moving averages, followed by 1,729, the 30-day ma, while crucial support will be the 5 Dec pivot low of 1,708. Take Profit Telekom & Westports TM should stage further profit-taking correction due to hook-down momentum indicators, with better chart supports from the 10-day ma (RM6.14) and 23.6%FR (RM6.06), while key retracement levels are at 50%FR (RM6.35) and 61.8%FR (RM6.48). Similarly, Westports could also fall back for profit-taking correction from recent rally, with better supports from the lower Bollinger band (RM3.36) and the low of 06/12/17 (RM3.34). Resistance seen at 50%FR (RM3.90). Asian Markets Subdued in Thin Trade Most Asian stock markets started the week on a subdued note Tuesday, shrugging off upbeat Japanese economic data as market participants pondered about next year’s potential catalysts. The market had a muted reaction to data released earlier in the day, which showed that Japan’s core consumer prices rose for the 11th straight month, up 0.9 percent year-on-year, and household spending jumped in November. While the inflation rate remains distant from the Bank of Japan’s 2 percent target, the rise offered some hope that a steady economic recovery will gradually drive up prices. Japan’s Nikkei share average fell, confined in a tight range amid a paucity of catalysts from other markets, while gains in Takashimaya on upbeat earnings lifted retailers. The Nikkei ended the day 0.2 percent lower at 22,892.69 amid low trading volume. In South Korea, the Kospi gave up early gains to close down 0.54 percent at 2,427.34 as declines in blue chip tech names dragged the index lower. Meanwhile, China stocks ended firmer on Tuesday, led by financial and real estate firms, though trading was thin as year-end nears. The Shanghai Composite index was up 25.43 points or 0.78 percent at 3,305.89. Volume was thin as markets in Australia, Hong Kong and many financial centers in Europe remained shut Tuesday. Page 1 of 6
4. 27-Dec-17 Wall Street Edge Lower as Tech Offset Gains in Energy Sector U .S. stocks finished slightly lower in light volume trade Tuesday as shares of Apple tumbled, offsetting gains in energy stocks as oil prices hit their highest in more than two years. According to Taiwan’s Economic Daily, citing unidentified sources, Apple will slash its sales forecast for its flagship phone in the current quarter to 30 million units, down from what it said was an initial plan of 50 million units. The report, along with some recent brokerage calls on tepid iPhone X demand, made Apple shares sink 2.5 percent and contributing roughly 30 points to the blue-chip index’s decline. Shares of companies that supply parts to Apple, including Broadcom, Skyworks Solutions, and Lumentum Holdings, all fell. However, losses were curbed by a boost in energy stocks as oil prices jumped more than 2 percent to USD59.77 a barrel, helped by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts. Chevron rose 0.8 percent and EOG Resources gained 2.1 percent to lead the S&P energy sector 0.82 percent higher. The Dow Jones Industrial Average fell 7.85 points, or 0.03 percent, to 24,746.21, the S&P 500 lost 2.84 points, or 0.11 percent, to 2,680.50 and the Nasdaq Composite dropped 23.71 points, or 0.34 percent, to 6,936.25. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Wednesday, December 27, 2017, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 6
5. 27-Dec-17 N e w s I n B r i e f Corporate Tenaga Nasional Bhd (TNB) said the government has approved for the electricity tariff in the current tariff schedule for Peninsular Malaysia to be maintained for the period of Jan 1, 2018 until Dec 31, 2020. The group also stated that the implementation of the Imbalance Cost Past Through rebate for electricity customers is neutral on TNB and will not have any effect on its business operations and financial position. (Bursa Malaysia/The Edge) Malaysian Resources Corporation Bhd has entered into agreement with Lembaga Tabung Haji for the pilgrim fund to purchase 70% stake in 59INC Sdn Bhd, which owns 3 parcels of land in Setapak, measuring 111k sq m in total, for RM100.1mn cash. The cash proceed from the divestment will be utilised for working capital purposes and property development activities. (Bursa Malaysia/The Edge) Pensonic Holdings Bhd is buying two parcels of freehold land in in Kapar, Klang from Cekal Unggul Sdn Bhd for RM20.07mn cash. The two parcels of land, measuring 138k sq ft and 132k sq ft respectively, will be used to construct a new warehouse and office block. The land acquisition will be funded via both internal funds and bank borrowings. (Bursa Malaysia/The Edge) Perak Transit Bhd has received approval in principle for an RM8.01mn grant from the Government to facilitate the construction of a new public transport terminal in Kampar, Perak. (Bursa Malaysia/The Star) Comments: Similar to Terminal Amanjaya, which also received a government grant to facilitate the construction of an integrated express bus terminal, we are not entirely surprised by this government grant given to Perak Transit for the construction of Terminal Kampar. In terms of earnings contribution, the impact on yearly profit is insignificant as the grant will be amortised over a period of 50 years, i.e. RM160,280/year. However, it is cash flow positive as the grant will be given to the company when Terminal Kampar is completed, which is targeted in end-18. No change to our earnings estimates. We maintain our Buy recommendation with an unchanged target price of RM0.44/share for Perak Transit. Hibiscus Petroleum Bhd, which is acquiring 50% stake in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract from Shell Sabah Selatan Sdn Bhd for US$25mn, announced that both parties have clarified and agreed on the conditions set by Petronas for the deal. The proposed acquisition is expected to be completed on 31 March 2018. (Bursa Malaysia/The Edge) Managepay Systems Bhd will provide services under its e-marketplace platform BuyMalaysia.com to small and medium enterprises registered under eTRADE programme by Malaysia External Trade Development Corporation. The group said the collaboration will contribute to revenue and bottom line of the Company in year 2018 onwards. (Bursa Malaysia/The Edge) Sona Petroleum Bhd, a special purpose acquisition company, has not obtained any tax clearance yet from Inland Revenue Board for final distribution of the remaining monies in the cash trust account. (Bursa Malaysia) Vizione Holdings Bhd has appointed Mr. Bee Jian Ming, who holds a Certificate in Technology (Quantity Surveying), as its new executive director. He was previously employed to undertake quantity surveying in an interior design firm and also as a contract manager in another construction firm. (Bursa Malaysia) Xidelang Holdings Ltd’s Managing director and CEO Ding Pengpeng said the group will focus on merger and acquisitions as well as e-commerce activities in FY18. (The Sun) Page 3 of 6
6. 27-Dec-17 N e w s I n B r i e f Economy Asia Malaysia : No Hike in Electricity Tariffs The government has approved the current electricity tariff schedule for Peninsular Malaysia to be maintained for Jan 1, 2018, to Dec 31, 2020. (TNB) also said the government has agreed to provide RM929.37mil for the subsidy and rebate of 1.80sen/kWh for the period of Jan 1 to June 30, 2018. "This includes 0.28 sen/kWh of surcharge from additional cost of generation and 1.52 sen/kWh to continue the current Imbalance Cost Past Through (ICPT) rebate for the electricity customers," said the national power utility company. However, TNB added that the 1.52 sen/kWh ICPT rebate will not be made available to domestic consumers with a monthly consumption of 300 kWh and below. For other users, this means they will pay the same rate for their electricity usage for the period of Jan 1 to June 30, 2018. "In total, the Government has approved RM6.332 billion of total rebate to the electricity customers in Peninsular Malaysia over the period of March 2015 until June 2018," said TNB. In the same announcement, the energy major assured its customers that they would continue to benefit from reliable electricity supply as it further developed advanced technological infrastructure and other support programmes. These include the development of advanced metering infrastructure (AMI), fibre optic networks, efficient LED street lighting, solar projects in public universities, and education programmes as part of its corporate social responsibility initiatives. (The Star) Singapore Factory Output Up 5.3%, Lags Forecast Singapore’s industrial production in November rose 5.3% from a year earlier, underpinned by continued expansion in electronics output, although falls in pharmaceuticals output and marine and offshore engineering production tempered overall gains. The year-on-year rise in manufacturing output was lower than the median forecast of a 9% expansion in a poll. On a month-on-month and seasonally adjusted basis, manufacturing output fell 2.3% in November, data from the Economic Development Board showed, weaker than the median forecast of an increase of 0.7%. Separately, Singapore's consumer price inflation accelerated at a faster-than-expected pace in November, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. Consumer prices climbed 0.6% year-over-year in November, faster than the 0.4% rise in October. Economists had expected the inflation to increase to 0.5%. The pickup in inflation was mainly driven by higher private road transport and accommodation costs. Services inflation edged up to 1.6% in November from 1.5% in October. At the same time, food inflation remained stable at 1.5%. MAS Core Inflation, which excludes the costs of accommodation and private road transport, also held steady at 1.5%. (Reuters) Japan Jobless Rate Lowest Since 1993 Japan’s unemployment rate in November dipped to its lowest level since November 1993, official data showed, offering another sign that the world’s third-largest economy is on track to recovery even if the pace is slow. Figures released by the government showed unemployment stood at 2.7% last month while the jobs-to-applicants ratio improved slightly, up 0.01% from the previous month – the highest level in almost 44 years. The latest data come as Japan has notched up seven straight quarters of economic growth – the longest positive run for 16 years – with the upcoming 2020 Olympic Games giving the economy a shot in the arm. Confidence among Japan’s biggest manufacturers is also at an 11-year high, a key central bank survey showed earlier this month, as the world’s number-three economy picks up pace. However, consumer spending has remained weak and deflation continues to stalk the economy. Japan has battled deflation for many years and the central bank’s ultraloose monetary policy appears to be having limited impact. Other data showed that Japan’s consumer prices rose for the 11th straight month in November, but inflation was still far from the Bank of Japan’s (BoJ) two-percent inflation Page 4 of 6
7. 27-Dec-17 target seen as crucial to revive the world ’s third-largest economy. The core inflation rate was a 0.9% rise year-on-year in November, according to data published by the internal affairs ministry, far below the two-percent target set by the BoJ. Market consensus was a 0.8% rise, according to data compiled by Bloomberg News. When the volatile prices for fresh food and energy were stripped out, prices rose by even less – 0.3%, the ministry said. November household spending – seen as key for exiting deflation – expanded 1.7% from the same month a year earlier – much stronger than market consensus of a 0.5% rise. Household spending had remained flat in October after falling by 0.3% in September and rising by 0.6% in August. (The Business Times) BOJ Kuroda: Must Watch for Excessive Risk-Taking in Markets Bank of Japan Governor Haruhiko Kuroda said it was important to scrutinize whether economic expansion was leading to excessive risk-taking in financial markets. “In the current recovery phase, there are no signs of excessively bullish expectations in asset markets and financial institutions’ behavior. But financial developments warrant close attention,” he said in a speech delivered at a meeting of business lobby Keidanren. Kuroda also said the BOJ would maintain its “powerful” monetary support for the economy with inflation still distant from its 2% target. (Reuters) Most BOJ Policymakers Saw Need to Sustain 'Powerful' Easing: October Meeting Minutes Most Bank of Japan policymakers agreed that the central bank must persistently pursue powerful monetary easing, but that additional stimulus measures were unnecessary for now, minutes of the BOJ’s October rate review showed. “A few members said taking extreme monetary easing steps only to achieve the price goal ... could prevent monetary accommodation from producing intended policy effects,” the minutes showed. One board member said the effects and drawbacks of the BOJ’s purchases of exchange-traded funds (ETF) “should be examined from every angle” even if the move had yet to distort market functions at this point. The BOJ kept policy steady at the two-day meeting that ended on Oct. 31. But board newcomer Goushi Kataoka dissented to the decision on the view that more easing was needed, complicating future efforts by the bank to withdraw stimulus. (Reuters) United States National Home Price Index Continues Steady Gains in October The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in October, up from 6.1% in the previous month. The 10-City Composite annual increase came in at 6.0%, up from 5.7% the previous month. The 20-City Composite posted a 6.4% year-over-year gain, up from 6.2% the previous month. Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In October, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.2% increase, and San Diego with an 8.1% increase. Nine cities reported greater price increases in the year ending October 2017 versus the year ending September 2017. The charts on the following page compare year-over-year returns of different housing price ranges (tiers) for the top two cities, Seattle and Las Vegas. Before seasonal adjustment, the National Index, 10-City and 20-City Composites all posted a monthover-month gain of 0.2% in October. After seasonal adjustment, the National Index, 10-City and 20-City Composites all recorded a 0.7% month-over-month increase in October. Eleven of 20 cities reported increases in October before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment. (S&P Carelogic) Page 5 of 6
8. 27-Dec-17 Share Buy-Back : 26 December 2017 Company AJIYA E&O GLOMAC GRANFLO KPJ LEESK MALAKOF UNIMECH Total Treasury Shares 1,500,000 22,543,747 5,092,400 7,940,000 16,587,000 3,269,000 1,424,400 6,241,010 Bought Back Price (RM) Hi/Lo (RM) 1,100,000 80,000 23,000 36,000 50,000 23,400 100,000 29,200 0.59 1.42 0.60/0.595 0.235/0.23 0.995/0.985 0.36 0.90 1.03/1.02 0.595/0.58 1.44/1.41 0.60/0.59 0.235/0.23 0.995/0.985 0.365/0.35 0.92/0.895 1.03/1.02 Source: Bursa Malaysia Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 6 of 6
9. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) PER (X) Div Yield (%) FY17 FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD 26-Dec-17 AUTOMOBILE BAUTO 2.14 2.50 0.77 10.2 14.3 21.0 14.9 5.4 5.4 2.24 -4.5 1.84 16.3 MBMR 2.19 2.32 0.93 20.7 23.2 10.6 9.4 1.9 2.1 2.60 -15.8 2.01 9.0 0.5 2.3 PECCA 1.50 1.69 na 7.7 11.1 19.4 13.5 3.3 3.7 1.70 -11.8 1.28 17.2 -5.7 SIME 2.20 1.97 1.37 11.8 12.0 18.7 18.4 10.5 1.4 2.55 -13.7 1.84 19.8 19.0 UMW 5.00 4.37 1.32 -0.4 19.2 na 26.0 0.0 2.0 6.08 -17.8 4.09 22.2 18.4 BANKS & FINANCIAL SERVICES ABMB 4.05 4.20 1.43 33.1 30.6 12.2 13.2 4.0 4.0 4.49 -9.8 3.62 11.9 8.9 AFFIN 2.30 2.50 0.87 23.5 24.2 9.8 9.5 3.5 3.5 2.98 -22.7 2.22 3.6 -2.9 AMBANK 4.30 5.10 1.24 43.9 48.6 9.8 8.9 4.1 4.2 5.70 -24.6 4.06 5.9 -0.2 CIMB 6.48 7.00 1.62 48.7 50.9 13.3 12.7 3.8 3.9 7.08 -8.5 4.49 44.3 43.7 HLBANK 16.62 17.50 0.69 104.9 114.2 15.8 14.6 2.7 2.7 17.08 -2.7 13.02 27.6 23.1 MAYBANK 9.47 9.70 1.00 68.4 70.9 13.8 13.4 5.3 5.3 9.86 -4.0 7.74 22.4 15.5 PBBANK 20.70 23.60 0.64 137.2 142.4 15.1 14.5 2.7 2.8 21.08 -1.8 19.60 5.6 5.0 RHBBANK 4.96 5.20 1.66 50.6 52.2 9.8 9.5 3.0 3.0 5.59 -11.3 4.62 7.4 5.3 BURSA 9.96 11.10 0.85 40.2 39.0 24.8 25.6 3.4 3.4 10.98 -9.3 8.08 23.3 14.2 1.0 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 CONSTRUCTION GADANG 1.06 1.73 0.67 15.2 14.3 7.0 7.4 2.8 2.8 1.37 -22.6 1.01 5.0 GAMUDA 4.95 6.00 0.91 28.5 34.5 17.3 14.3 2.4 2.4 5.52 -10.3 4.58 8.1 3.6 IJM 3.00 2.89 0.79 15.3 13.7 19.7 21.9 2.5 3.2 3.61 -16.9 2.71 10.7 -6.3 PESONA 0.47 0.55 1.00 3.5 5.8 13.4 8.1 3.2 3.2 0.74 -36.1 0.44 8.0 -22.3 SENDAI 0.86 0.58 1.32 8.2 9.6 10.5 9.0 1.2 1.2 1.39 -38.1 0.51 70.3 49.6 SUNCON 2.41 2.65 0.51 11.3 14.7 21.3 16.4 2.3 2.3 2.44 -1.2 1.65 46.1 41.8 WCT 1.59 1.64 1.01 11.5 12.6 13.8 12.6 1.9 1.9 2.48 -35.8 1.46 8.9 -7.5 LITRAK 5.60 6.26 0.32 41.9 45.6 13.4 12.3 4.5 4.5 6.15 -8.9 5.55 0.9 -4.8 ANNJOO 3.77 4.40 1.35 41.2 45.3 9.2 8.3 4.2 5.8 3.98 -5.3 2.14 76.2 73.7 CHINHIN 1.22 1.49 1.21 5.7 12.4 21.3 9.8 2.5 4.1 1.49 -18.1 0.86 42.7 40.2 ENGTEX 1.08 1.38 0.62 12.9 14.2 8.4 7.6 1.2 3.8 1.52 -28.9 1.07 0.9 -10.7 CARLSBG 15.30 18.06 0.77 79.3 86.2 19.3 17.7 5.2 5.6 16.00 -4.4 13.90 10.1 9.9 HEIM 18.72 19.14 0.46 79.6 84.0 23.5 22.3 3.8 4.0 19.58 -4.4 15.78 18.6 14.3 AEON 1.71 1.97 0.39 4.7 6.7 36.2 25.6 2.0 2.3 2.70 -36.7 1.64 4.3 -33.5 AMWAY 7.37 8.18 0.37 35.7 43.9 20.6 16.8 4.1 5.2 8.18 -9.9 7.04 4.7 0.6 F&N 26.70 27.41 0.18 102.6 155.7 26.0 17.1 2.2 2.2 26.70 0.0 22.64 17.9 13.7 Building Materials CONSUMER Brewery Retail HUPSENG 1.09 1.25 0.42 5.2 5.4 21.2 20.1 4.1 4.1 1.28 -14.8 1.08 0.9 -5.3 JOHOTIN 1.17 1.48 0.68 9.7 12.5 12.0 9.4 3.8 4.3 1.76 -33.5 1.16 0.9 -5.6 NESTLE 100.00 120.50 0.40 292.7 330.1 34.2 30.3 2.8 3.0 102.40 -2.3 74.12 34.9 27.9 PADINI 5.20 4.67 0.78 23.5 27.0 22.2 19.3 2.2 2.4 5.50 -5.5 2.26 130.0 104.8 POHUAT 1.81 2.35 0.72 26.2 25.3 6.9 7.2 4.4 4.4 2.08 -13.0 1.66 9.0 4.6 QL 4.29 3.26 0.28 12.1 12.8 35.5 33.5 1.0 1.0 4.39 -2.3 3.26 31.8 28.8 SIGN 0.71 0.92 1.06 6.7 6.9 10.5 10.2 3.5 3.5 1.07 -33.6 0.70 1.4 -10.7 36.08 52.08 1.28 198.6 187.4 18.2 19.2 5.5 5.5 51.04 -29.3 34.06 5.9 -18.3 GENTING 9.00 11.53 1.51 48.7 54.4 18.5 16.5 1.6 1.8 10.00 -10.0 7.68 17.2 13.3 GENM 5.55 6.51 1.61 18.7 27.0 29.6 20.5 1.4 1.6 6.38 -13.0 4.47 24.2 22.8 BJTOTO 2.27 3.34 0.79 18.3 21.5 12.4 10.6 6.2 7.0 3.01 -24.6 2.25 0.9 -23.3 LUSTER 0.11 0.15 1.98 0.4 0.4 28.9 29.1 0.0 0.0 0.16 -34.4 0.05 110.0 110.0 Tobacco BAT GAMING Casino NFO HEALTHCARE Hospitals/ Pharmaceutical CCMDBIO 2.46 2.70 0.67 14.0 15.0 17.6 16.4 3.8 4.0 2.46 0.0 1.90 29.5 24.2 IHH 5.83 6.40 0.73 6.7 11.9 86.6 49.1 0.5 0.5 6.45 -9.6 5.42 7.6 -8.2 KPJ 1.00 1.12 0.43 3.6 3.8 28.0 26.3 2.0 2.1 1.14 -12.7 0.90 10.6 -4.8 HARTA 10.84 7.30 0.89 19.4 25.8 55.9 42.0 0.8 1.1 11.40 -4.9 4.53 139.3 124.4 KOSSAN 8.16 8.80 0.20 29.1 38.3 28.1 21.3 1.8 2.3 8.50 -4.0 5.62 45.2 23.8 SUPERMX 2.00 1.80 0.34 10.2 15.3 19.5 13.1 1.6 2.6 2.18 -8.3 1.69 18.3 -5.2 TOPGLOV 7.85 7.00 -0.02 26.2 33.7 30.0 23.3 1.8 2.1 8.19 -4.2 4.56 72.1 46.7 KAREX 1.29 1.00 0.41 2.8 2.8 46.3 46.7 1.6 0.5 2.52 -48.8 1.20 7.5 -45.3 SCIENTX 8.74 9.84 0.40 52.3 68.2 16.7 12.8 1.8 2.4 9.85 -11.3 6.68 30.8 30.4 SKPRES 2.20 2.20 0.50 8.3 10.4 26.6 21.2 1.9 2.4 2.32 -5.2 1.24 77.4 70.5 ASTRO 2.64 3.10 1.15 13.2 14.0 20.0 18.9 4.7 4.9 2.94 -10.2 2.45 7.8 1.5 MEDIA PRIMA 0.59 0.45 0.54 -7.6 -3.8 na na 0.0 0.0 1.28 -53.9 0.58 1.7 -48.7 STAR 1.39 1.25 0.84 5.6 6.7 24.7 20.7 30.2 8.6 2.22 -37.3 1.31 6.1 -28.6 Rubber Gloves INDUSTRIAL MEDIA
10. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) BETA EPS (sen) FY17 PER (X) Div Yield (%) FY18 FY17 FY18 FY17 52weeks 52weeks % Chg FY18 High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.49 0.72 1.32 3.5 4.2 14.2 11.7 2.0 2.0 0.69 -29.0 0.25 100.0 92.2 LCTITAN 4.68 6.66 na 42.8 63.4 10.9 7.4 4.9 5.3 6.53 -28.3 4.14 13.0 -28.0 -16.9 MHB 0.76 0.78 1.66 -2.0 -0.5 na na 0.0 0.0 1.16 -34.5 0.63 21.6 MISC 7.27 6.56 1.07 57.2 46.8 12.7 15.5 4.1 4.1 7.90 -8.0 6.89 5.5 -1.1 PANTECH 0.64 0.69 1.21 4.0 6.1 16.1 10.5 2.8 4.3 0.74 -13.5 0.44 47.1 43.8 PCHEM 7.60 8.05 0.98 52.7 49.8 14.4 15.3 3.0 2.9 7.81 -2.7 6.80 11.8 8.9 SAPNRG 0.72 1.25 2.49 6.6 -6.5 10.8 na 0.0 0.0 2.10 -66.0 0.70 2.1 -55.9 SERBADK 3.09 3.40 na 22.9 25.7 13.5 12.0 2.2 2.5 3.29 -6.1 1.51 104.6 106.0 UMWOG 0.30 0.51 1.65 -1.7 0.4 na 73.0 0.0 0.0 0.92 -68.0 0.27 9.3 -65.5 UZMA 1.30 1.56 1.05 11.6 13.2 11.2 9.8 0.0 0.0 1.98 -34.3 1.27 2.4 -23.5 FGV 1.69 2.01 1.75 2.1 3.7 80.8 45.6 3.0 3.0 2.18 -22.5 1.47 15.0 9.0 IJMPLNT 2.80 2.69 0.24 12.3 9.1 22.8 30.7 2.5 2.9 3.60 -22.2 2.70 3.7 -17.6 IOICORP 4.55 4.12 1.17 17.3 21.0 26.2 21.6 2.1 3.5 4.81 -5.4 4.31 5.6 3.4 KFIMA 1.57 1.89 0.52 19.9 13.3 7.9 11.8 5.7 5.7 1.96 -19.9 1.56 0.6 -7.6 KLK 24.84 26.18 0.78 100.5 120.7 24.7 20.6 2.0 2.4 25.50 -2.6 23.00 8.0 3.5 SIMEPLT 5.44 6.25 na 17.6 21.0 30.9 25.9 2.6 2.6 5.65 -3.7 4.58 18.8 -2.7 UMCCA 6.51 6.73 0.40 37.5 22.8 17.4 28.6 3.5 2.6 7.08 -8.1 5.67 14.8 9.0 GLOMAC 0.60 0.50 0.63 1.4 3.0 41.5 20.3 4.5 3.3 0.75 -19.5 0.58 3.4 -13.7 HUAYANG 0.61 0.59 0.78 17.3 1.8 3.5 33.1 6.6 0.8 1.21 -50.0 0.60 1.7 -46.5 IBRACO 0.88 0.92 na 3.3 9.1 27.0 9.6 2.3 4.5 1.02 -13.7 0.76 16.6 -12.0 IOIPG 1.83 2.02 0.67 18.9 16.5 9.7 11.1 3.3 3.3 2.22 -17.6 1.79 2.2 -6.1 MAHSING 1.47 1.69 1.04 13.8 13.0 10.6 11.3 4.4 4.4 1.64 -10.4 1.38 6.5 2.8 SIMEPROP 1.42 1.54 na 7.0 9.2 20.2 15.4 0.0 1.4 1.52 -6.6 1.04 36.5 0.0 SNTORIA 0.70 0.85 0.34 6.8 8.3 10.2 8.4 0.0 1.4 0.91 -23.6 0.60 15.8 -4.4 13.3 PLANTATIONS PROPERTY Note: SNTORIA proposed bonus issue of warrants & right issue of shares. For more details please refer to 25.09.17 report. SPB 5.01 4.83 0.74 17.6 21.2 28.5 23.7 2.4 2.4 5.50 -8.9 4.32 15.9 SPSETIA 3.28 3.77 0.81 21.3 21.3 15.4 15.4 3.7 3.7 4.38 -25.2 3.03 8.3 7.6 SUNWAY 1.68 1.74 0.79 11.5 11.9 14.6 14.1 3.0 3.0 1.96 -14.2 1.27 32.4 30.7 SUNREIT 1.71 1.87 0.73 9.2 10.0 18.5 17.0 5.4 5.9 1.81 -5.5 1.64 4.3 -0.6 CMMT 1.44 1.72 0.40 8.1 8.6 17.8 16.7 5.8 6.2 1.72 -16.3 1.39 3.6 -5.9 -34.3 REIT POWER & UTILITIES MALAKOF 0.90 1.16 0.66 6.3 6.0 14.3 15.0 7.8 7.8 1.42 -36.6 0.88 2.9 PETDAG 24.26 22.08 0.50 102.8 105.1 23.6 23.1 3.2 3.2 25.70 -5.6 21.00 15.5 1.9 PETGAS 17.00 19.10 0.95 89.1 98.8 19.1 17.2 3.9 4.1 21.76 -21.9 15.82 7.5 -20.2 TENAGA 14.98 17.38 0.69 131.6 129.9 11.4 11.5 3.1 3.1 15.68 -4.5 13.00 15.2 7.8 YTLPOWR 1.25 1.17 0.81 8.2 9.7 15.2 13.0 4.0 4.0 1.50 -16.7 1.11 12.6 -14.4 TELECOMMUNICATIONS AXIATA 5.38 5.75 1.33 14.3 16.0 37.6 33.6 1.3 1.5 5.47 -1.6 4.24 26.9 14.0 DIGI 4.82 5.20 0.78 19.5 20.0 24.7 24.1 4.1 4.1 5.19 -7.1 4.36 10.6 -0.2 MAXIS 6.00 6.10 0.74 26.0 26.2 23.1 22.9 3.3 3.3 6.60 -9.1 5.48 9.5 0.3 TM 6.25 7.20 0.62 22.6 23.2 27.7 26.9 3.3 3.3 6.69 -6.6 5.81 7.6 5.0 93.7 TECHNOLOGY Semiconductor & Electronics ELSOFT 2.72 2.70 0.62 11.3 15.0 24.1 18.2 2.9 3.9 2.95 -7.8 1.36 99.4 IRIS 0.18 0.25 1.84 -1.3 0.6 na 31.6 0.0 0.0 0.22 -20.5 0.10 75.0 59.1 INARI 3.37 3.05 0.97 11.2 14.2 30.1 23.8 2.9 3.0 3.48 -3.2 1.61 109.7 103.4 MPI 12.82 15.40 0.50 89.5 105.5 14.3 12.1 2.1 2.5 14.52 -11.7 7.38 73.7 73.0 UNISEM 3.50 3.85 1.10 23.5 27.1 14.9 12.9 3.4 3.4 4.25 -17.6 2.32 50.9 48.3 TRANSPORTATION Airlines AIRASIA 3.29 3.83 1.09 53.1 38.3 6.2 8.6 1.2 1.5 3.59 -8.4 2.16 52.3 43.7 AIRPORT 8.50 8.47 1.31 19.6 19.7 43.4 43.0 1.2 1.2 9.45 -10.1 5.91 43.8 40.3 Freight & Tankers PTRANS 0.28 0.44 na 2.1 2.3 13.6 12.3 2.5 2.5 0.38 -26.7 0.14 98.7 92.5 TNLOGIS 1.30 1.80 1.18 12.0 13.6 10.8 9.5 3.3 3.8 1.83 -29.1 1.29 0.8 -16.6 WPRTS 3.72 4.06 0.88 17.1 16.8 21.7 22.1 3.5 3.4 4.36 -14.7 3.34 11.4 -13.5 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) Beta EPS (cent) FY17 FY18 PER (X) FY17 FY18 Div Yield (%) FY17 52week 52week % Chg FY18 High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 24.65 23.30 1.25 172.7 189.1 14.3 13.0 2.4 2.4 -2.8 17.2 43.73 42.2 0.0 OCBC 12.29 13.50 1.20 95.5 104.0 12.9 11.8 5.7 6.7 -2.4 8.9 8.84 37.8 0.0 UOB 25.79 26.90 1.07 200.8 215.4 12.8 12.0 2.7 2.7 -3.9 20.1 28.63 26.4 0.0 PLANTATIONS WILMAR 3.09 3.63 0.85 25.6 29.9 12.1 10.3 2.3 2.6 -22.8 3.1 0.98 -13.9 0.0 IFAR 0.37 0.53 0.98 4.9 5.2 7.6 7.1 3.2 3.4 -36.2 0.4 1.37 -29.5 0.0 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
11. COMPANY UPDATE Wednesday , December 27, 2017 FBMKLCI: 1,759.99 Sector: Healthcare THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* KPJ Healthcare Berhad TP: RM1.12 (+12.6%) Last Traded: RM0.995 Hopeful for Greater Traction in FY18 Wilson Loo, CFA Tel: +603-2167 9606 BUY wilsonloo@ta.com.my www.taonline.com.my Notwithstanding competition from general practitioners and competitors’ newer hospitals as well as delays to the group’s upcoming hospitals, we opine that supported by tie ups with corporate clients, the group’s patient traffic in FY17 should at least sustain YoY. Besides, noting that the group’s cost-plus pricing model is intact amidst rising cost, we have revised our FY17/FY18/FY19 earnings estimates by +10.6%/+6.7%/+3.5% to RM149.8mn/RM159.8mn/RM177.7mn on expectations for it to achieve better margins. Looking into 2018, we are hopeful for the group to achieve greater traction given upside to patient traffic from the commencement of 5 new hospitals and completion of expansion of 4 existing hospitals. We also expect the group’s high gearing level to remain in check with CAPEX to be largely supported by its cash flow from operations. Maintain Buy with a TP of RM1.12/share. Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) FY17: Patient Traffic and Profitability Should at least Sustain YoY To recap, KPJ’s 9MFY17 net profit growth of 4.1% YoY was mainly driven by higher revenue per patient (outpatient +3.7% YoY, inpatient +5.4% YoY) rather than patient traffic (outpatients -0.3% YoY, inpatients +1.6%). Key contributing factors attributed to the subdued patient traffic include: 1) Poor consumer sentiment making general practitioners a more economical option as a first point of contact, 2) Competition from newer hospitals in urban areas (i.e. Columbia Asia, Gleneagles) and 3) The group’s absence of new hospital openings. Forecast Revision (%) Net Profit (RM mn) Consensus TA/Consensus (%) Previous Rating Indeed, FY17 will be another year since FY15 whereby the group has missed targets to extend its network as we note that KPJ Perlis which was slated to commence operations in 4QFY17 is still awaiting the green light from the Ministry of Health. Notwithstanding, we opine that FY17’s patient traffic should at least sustain with management alluding that tie ups with corporate clients are pretty much intact, continuing to account for the bulk of its revenue at about 60% to 70%. On another note, noting that the group has been able to keep its cost-plus pricing model intact amidst rising cost, we now expect the group’s FY17-FY19 GP margins to be higher towards the 29%-30% range from the 28%-29% range before. Correspondingly, our FY17/FY18/FY19 earnings are revised by +10.6%/+6.7%/+3.5% to RM149.8mn/RM159.8mn/RM177.7mn. KPJ MK 5878 Main Market 4,264.9 4,243.6 1.14/0.90 2,243.2 19.4 0.4 Johor Corp - 43.6 EPF - 12.7 Waqaf An-Nur Corporation Bhd - 7.1 Forecast Revision (%) FY17 FY18 10.6 6.7 149.8 159.8 149.5 167.5 100.2 95.4 Buy (Maintained) Financial Indicators Net gearing (x) CFPS (RM) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) FY17 0.7 0.1 10.1 3.7 8.7 0.4 2.8 FY18 0.7 0.1 11.6 3.8 8.9 0.4 2.7 Share Performance Price Change (%) 1 mth 3 mth 6 mth 12 mth KPJ (1.5) (4.3) (5.2) (4.1) FBMKLCI 2.3 (0.2) (1.1) 8.7 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 6
12. 27-Dec-17 Figure 1 : Inpatient YoY Growth Figure 2: CSI 140 10% KPJ IHH 120 8% Optimism Threshold 117 104 94 100 6% 80 4% 100 74 70 78 60 2% 40 0% 20 -2% 2013 2014 2015 2016 9MFY17 Source: Companies, TA Securities 0 2012 2013 2014 2015 2016 9MFY17 Source: MIER, TA Securities Hopeful for Greater Traction in FY18 We are hopeful for the group to achieve greater traction in FY18. Barring delays, we view upside to patient traffic from the commencement of 5 new hospitals (KPJ Perlis, KPJ Bandar Dato’ Onn, KPJ BDC, KPJ Miri and KPJ Batu Pahat) and the completion of expansion of 4 existing hospitals (KPJ Seremban, Sri Manjung, KPJ Johor and KPJ Ampang Puteri). The new hospitals will widen and extend the group’s network and leadership in Malaysia from 25 hospitals and 3,052 operating beds currently as well as enable it to tap on opportunities in underserved areas. Of note, with KPJ Perlis, the group will be a step closer towards completing its footprint across Malaysia, leaving Melaka and Terengganu as the only states it has yet to penetrate. Furthermore, we imagine that the hospital could garner encouraging reception in view that it will be the first private hospital in Perlis. As for the expanded hospitals, we believe that KPJ Seremban, KPJ Johor and KPJ Ampang Puteri could ride ahead of the gestation curve given their exposure to matured areas and track record of occupancy rates of above 70%. Our base case which accounts for delays projects inpatient traffic growth for FY17/FY18/FY19 at 2.5%/3.0%/4.0%. Table 1: Expansion Plans in 2018 Hospital New KPJ Perlis KPJ BDO KPJ Kuching KPJ Miri KPJ Batu Pahat Sub-total Expansion KPJ Seremban Sri Manjung KPJ Johor KPJ Ampang Puteri Sub-total Total New Beds Location Operating Beds Opening Perlis Johor Sarawak Sarawak Johor 60 90 114 61 90 415 1Q CY18 2Q CY18 3Q CY18 4Q CY18 CY18 N. Sembilan Perak Johor Selangor 90 30 31 150 301 1Q CY18 2Q CY18 2Q CY18 2Q CY18 716* * The new beds will be commissioned on a progressive basis, not all at once. Source: Company, TA Securities Page 2 of 6
13. 27-Dec-17 High Gearing Level Expected to Be in Check Management reiterated its CAPEX guidance for FY17-FY19 at RM250mn to RM300mn per annum , mainly to be expended for expansion of its network. And of note, this would have been higher if not for upcoming hospitals like KPJ Damansara 2, KPJ Batu Pahat and KPJ Kluang being pursued under an asset light model whereby the group will be leasing the hospitals from the developer. With expectations for FY17-FY19’s cash flow from operations to CAPEX ratio to remain above 1.0x, we expect the group’s highly geared balance sheet to be in check with net gearing hovering about its latest of 0.7x as at 3QFY17. Besides, if the group intends to unwind its balance sheet, we opine that likely alternatives in FY18 include the disposal of non-core and unprofitable assets (i.e. Jeta Gardens in Australia) or the pare down of its 38% stake in Al-Aqar Healthcare REIT worth RM384.6mn. Management alluded that the sale and leaseback of its 5 newer hospitals worth RM488.0mn is unlikely in the near term as the group has yet to fully utilise their investment tax allowances. Table 2: Newer Hospitals Hospital Market Value Opened In EBITDA PBT May 2013 +ve +ve 70.0 December 2013 +ve -ve 190.0 March 2014 +ve -ve 80.0 KPJ Bandar Maharani June 2014 +ve -ve 65.0 KPJ Pahang May 2016 +ve +ve 83.0 KPJ Pasir Gudang KPJ Sabah KPJ Rawang Total RM (mn) 488.0 Source: Company, TA Securities Enhancing Oncology Capabilities Recall that the group had in November 2017 officiated its adoption of IBM’s Watson for Oncology. In a nutshell, Watson for Oncology is a renowned cognitive platform developed with Memorial Sloan Kettering Cancer Centre, a world leader in cancer treatment, which serves to assist oncologists in the delivery of improved and effective treatment options based on a patient’s key medical attributes. Combined with its growing body of cancer research, patients stand to benefit from accelerated and personalised treatment. KPJ is the first hospital in Malaysia to adopt the service, which is currently available at 5 of its hospitals (KPJ Damansara, KPJ Ampang Puteri, KPJ Johor, KPJ Ipoh and KPJ Sabah). While it is rather early to ascertain reception to the group’s enhanced oncology capabilities, we opine that its efforts are commendable given that cancer is the third deadliest disease in Malaysia. And encouraging for drawing patient traffic, management alluded that the group will not be passing on its cost of investment to patients. Recommendation Our TP is raised slightly to RM1.12/share (RM1.09/share previously) based on SOTP valuation. We still like the group for its market leadership and growth ambitions in Malaysia’s private healthcare services space. The realisation of its on-going expansion plans will be the impetus for near-to-medium term growth. Reiterate Buy. Key risk includes delays to expansion plans and prolonged gestation of new or expanded hospitals. Page 3 of 6
14. 27-Dec-17 x 20 .0 19.0 18.0 17.0 16.0 15.0 14.0 13.0 12.0 11.0 10.0 Source: Bloomberg, TA Securities Jul-17 Oct-17 Jan-17 Apr-17 Jul-16 Oct-16 Jan-16 Apr-16 Jul-15 Oct-15 Jan-15 Apr-15 Jul-14 Oct-14 Jan-14 Apr-14 -1SD: 13.7x Jan-13 Jul-17 Oct-17 Jan-17 Apr-17 Jul-16 Oct-16 Jan-16 Apr-16 Jul-15 Oct-15 Jan-15 Apr-15 Jul-14 Oct-14 Jan-14 Apr-14 Jul-13 Oct-13 Jan-13 -1SD: 26.4x Jul-13 Average: 29.6x +1SD: 16.5x Average: 15.1x Oct-13 +1SD: 32.7x Apr-13 x 40.0 38.0 36.0 34.0 32.0 30.0 28.0 26.0 24.0 22.0 20.0 Figure 4: Forward EV/EBITDA Apr-13 Figure 3: Forward PER Source: Bloomberg, TA Securities Table 3: SOTP Valuation Segment Valuation Method Hospital Operations DCF (WACC: 8.0%, LT: 3.0%) Al-Aqar Healthcare REIT Equity Market Value (RM1.39/share) Value (RM mn) Stake (%) 4,388.6 100 384.6 38 4,773.2 Shares outstanding 4,254.3 Target Price/share RM1.12 Table 4: Peer Comparison Company Price TP Recomm. Country IHH Healthcare Bhd RM5.83 RM6.40 Buy Ramsay Healthcare Ltd AUD 69.59 N.R. Primary Healthcare Ltd AUD 3.64 Phoenix Healthcare Group Co Ltd Harmonicare Medical Holdings Ltd Apollo Hospitals Enterprise Ltd Fortis Healthcare Ltd Mkt Cap EPS Growth (%) PER (x) EV/EBITDA (x) ROE (%) Dividend Yield (%) (MYR CY17 CY18 CY17 CY18 CY17 CY18 CY17 CY18 CY17 CY18 Global 48,034 -35.9 76.5 86.5 49.0 22.8 18.3 2.5 4.2 0.5 0.5 N.R. Australia 44,284 11.1 9.4 25.4 23.2 12.7 11.7 24.5 23.6 2.1 2.3 N.R. N.R. Australia 5,978 -4.2 7.9 20.2 18.7 8.6 8.3 -9.5 5.3 3.0 3.3 HKD 9.71 N.R. N.R. Hong Kong 6,577 24.6 9.0 23.5 21.6 15.2 13.3 8.4 7.9 0.9 0.8 HKD 2.92 N.R. N.R. Hong Kong 1,157 -5.0 26.1 20.6 16.3 7.2 5.3 5.9 7.3 0.6 1.0 INR 1,176 N.R. N.R. India 10,419 -7.9 39.0 73.6 53.0 23.8 20.0 6.1 8.7 0.4 0.5 INR 151 N.R. N.R. India 4,970 -85.3 348.3 181.5 40.5 20.6 16.8 4.0 3.7 0.0 0.1 Mitra Keluarga Karyasehat Tbk PT IDR 1,820 N.R. N.R. Indonesia 7,963 0.2 5.6 37.9 35.8 28.1 25.2 19.5 19.5 1.8 2.0 Siloam International Hospitals Tbk PT IDR 9,975 N.R. N.R. Indonesia 4,876 1.5 24.2 136.4 109.9 20.3 17.0 2.5 2.8 0.1 0.1 KPJ Healthcare Bhd RM0.995 RM1.12 Buy Malaysia 4,244 0.4 6.7 33.2 31.1 14.5 13.5 8.7 8.9 2.0 2.1 Ryman Healthcare Ltd NZD 10.52 N.R. N.R. New Zld. 15,081 -13.1 12.7 28.8 25.6 23.4 22.8 13.9 10.9 1.8 2.1 Bangkok Dusit Med Service THB 21.20 N.R. N.R. Thailand 40,852 -3.6 12.8 40.6 36.0 24.3 22.2 15.6 14.4 1.4 1.4 Bumrungrad Hospital Rub Co THB 192.50 N.R. N.R. Thailand 17,449 1.5 12.5 38.1 33.8 22.9 20.9 24.8 23.9 1.4 1.5 Vibhavadi Medical Centre PCL THB 2.60 N.R. N.R. Thailand 4,268 50.1 6.3 32.5 30.6 25.8 22.5 11.9 12.8 0.8 0.8 Bangkok Chain Hospital PCL THB 15.90 N.R. N.R. Thailand 4,932 21.0 15.7 43.8 37.9 21.7 19.1 18.0 18.1 1.2 1.5 Chularat Hospital PCL THB 2.14 N.R. N.R. Thailand 2,928 3.3 17.0 40.4 34.5 23.6 21.0 18.2 19.2 1.7 1.7 30,530 3.5 27.8 48.0 36.3 20.3 18.1 13.5 13.6 1.3 1.4 Weighted Average Small Mkt Cap (<RM10bn) 4,957 1.3 55.1 61.6 38.4 17.7 15.4 6.8 9.2 1.2 1.3 Weighted Average Large Mkt Cap (>RM10bn) 36,077 4.0 21.9 45.0 35.8 20.9 18.7 14.9 14.5 1.3 1.4 Weighted Average Page 4 of 6
15. 27-Dec-17 Earnings Summary P &L (RM mn') FYE Dec 31 Revenue Balance Sheet (RM mn') FY15 FY16 FY17F FY18F FY19F 2,847.6 3,021.1 3,189.4 3,536.1 3,955.5 FY15 FY16 FY17F FY18F FY19F 1,831.9 1,966.5 2,104.2 2,173.3 2,235.4 Gross profit 826.4 898.0 936.6 Associates 475.5 391.5 419.9 450.4 483.1 EBITDA 340.0 375.4 391.7 422.6 451.5 Intangible assets 252.1 245.6 245.6 245.6 245.6 Depr & Amor 119.2 132.0 139.2 156.9 161.8 Others 331.7 336.0 336.0 336.0 336.0 Finance income 13.7 16.3 15.2 15.8 16.5 LT Assets Finance costs (64.2) (83.1) (85.0) (86.8) (88.6) Net finance costs (50.4) (66.8) (69.8) (71.0) (72.2) Inventories 48.1 47.1 50.5 56.2 63.0 PBTZ 209.6 210.2 211.1 225.2 250.3 Receivables 517.4 555.5 566.3 627.9 702.4 PAT (-MI) 135.3 149.2 149.8 159.8 177.7 Cash 433.2 359.4 380.6 390.0 410.9 Core PAT (-MI) 135.3 149.2 149.8 159.8 177.7 Others 25.6 33.9 33.9 33.9 33.9 2.7 3.0 3.0 3.2 3.6 ST Assets 1,024.3 995.9 Total Assets 3,915.6 3,935.5 4,137.0 4,313.2 4,510.1 EPS (sen) 1,027.4 1,145.6 FYE Dec 31 PPE 2,891.3 2,939.6 3,105.7 3,205.3 3,300.0 1,031.3 1,108.0 1,210.1 DPS (sen) 1.8 1.2 2.0 2.1 2.3 DPR (%) 64.7 40.2 65.9 65.9 65.9 Payables 616.9 490.9 588.9 656.3 735.2 FYE Dec 31 FY15 FY16 FY17F FY18F FY19F Borrowings 359.1 333.4 340.4 347.5 354.8 PBZT 209.6 210.2 211.1 225.2 250.3 Others 115.3 104.6 104.6 104.6 104.6 Non-cash 157.0 196.9 139.2 156.9 161.8 ST Liabilities 1,091.3 928.9 Changes in WC (120.3) (194.5) 83.8 0.1 (2.3) Others (57.3) (69.4) (13.1) (17.7) (25.2) Borrowings 1,178.9 1,242.3 1,268.3 1,294.8 1,321.9 CFO 189.1 143.2 420.9 364.5 384.5 Others Cash Flow (RM mn') LT Liabilities Purchase of PPE 85.4 79.5 1,033.9 1,108.4 1,194.6 79.5 79.5 79.5 1,264.3 1,321.8 1,347.8 1,374.4 1,401.4 (344.6) (258.0) (301.7) (252.2) (250.8) Purchase of inv. properties (0.1) 0.0 0.0 0.0 0.0 Share capital 527.2 531.8 531.8 531.8 531.8 Others 92.6 126.5 40.1 42.0 43.4 Treasury shares (54.8) (54.8) (54.8) (54.8) (54.8) Reserves 999.1 CFI (252.1) (131.5) (261.6) (210.2) (207.4) Borrowings 1,201.9 Repayment (915.3) (132.2) (135.5) (138.3) (141.2) NCI 164.4 168.4 171.9 175.5 Issue of shares 81.3 33.0 0.0 0.0 0.0 Interest paid (64.2) (83.1) (85.0) (86.8) (88.6) Dividends paid (83.5) (70.9) (86.0) (91.8) (102.0) Others (25.2) 3.0 0.0 0.0 0.0 CFF 195.1 (85.8) Net cash flow 132.0 (74.1) 21.2 9.4 20.9 Opening cash flow 305.3 433.2 359.4 380.6 390.0 Forex (4.1) 0.3 0.0 0.0 0.0 Closing cash flow 433.2 359.4 380.6 390.0 410.9 (138.1) (144.9) (156.3) 88.4 1,118.1 1,181.9 1,250.0 1,325.6 89.6 96.3 103.5 111.5 Total Equity 1,560.0 1,684.7 1,755.2 1,830.5 1,914.1 Liabilities + Equity 3,915.6 3,935.5 4,137.0 4,313.2 4,510.1 Ratios FYE Dec 31 FY15 FY16 FY17F FY18F FY19F PER (x) 36.8 33.4 33.2 31.1 28.0 EV/EBITDA (x) 16.7 15.2 14.5 13.5 12.6 Dividend yield (%) 1.8 1.2 2.0 2.1 2.4 Valuation ratios Profitability ratios Gross margins (%) 29.0 29.7 29.4 29.1 29.0 EBITDA margins (%) 11.9 12.4 12.3 12.0 11.4 PAT margins (%) 4.8 4.9 4.7 4.5 4.5 ROAA (%) 3.7 3.8 3.7 3.8 4.0 ROAE (%) 9.3 9.2 8.7 8.9 9.5 Total liabilities/equity (x) 1.5 1.3 1.4 1.4 1.4 Net debt/equity (x) 0.7 0.7 0.7 0.7 0.7 Int. coverage ratio (x) 3.4 2.9 3.0 3.1 3.3 Sales (%) 7.9 6.1 5.6 10.9 11.9 Gross profit (%) 6.8 8.7 4.3 9.7 11.5 EBITDA (%) 7.3 10.4 4.3 7.9 6.8 PAT (-MI) (%) -5.4 10.2 0.4 6.7 11.1 Leverage ratios Growth ratios Page 5 of 6
16. 27-Dec-17 (TH I S P A GE IS IN TE N TI ON AL L Y L E F T B L AN K ) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Wednesday, December 27, 2017, the analyst, Wilson Loo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 6 of 6
17. COMPANY UPDATE Wednesday , December 27, 2017 FBMKLCI: 1,759.99 Sector: Power & Utilities THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Tenaga Nasional Berhad TP: RM17.38 (+16%) Last Traded: RM14.98 Tariffs Maintained for RP2 Kylie Chan Sze Zan Tel: +603-2167 9601 BUY kyliechan @ta.com.my What Happened Tenaga made the following announcements with respect to Electricity Tariffs in Peninsula Malaysia for 2018-20:- 1) Current tariffs (since RP1: 2014) will be maintained, 2) In 1H18, the government will fund RM930mn for the subsidy and rebate of 1.80 sen/kwH (additional generation cost: 0.28 sen/kwH, ICPT rebate: 1.52 sen/kwH). www.taonline.com.my Share Information Bloomberg Code TNB MK Stock Code 5347 Listing Main Market Share Cap (mn) 5,666 Market Cap (RMmn) 84,877 Par Value (RM) Management’s justification for stable tariffs despite higher fuel prices currently include: 1) there will be increased generation mix for coal (57% by 2020) at the expense of more expensive LNG, and 2) gas price increase is built in the tariff. Tenaga reiterated that its financials are intact and any ICPT rebates will be fully funded by the government or passed-through to consumers. Additionally, balance of PPA savings will be minimal by end of RP1. Additionally, Tenaga announced the following programs: 1) Development of Advanced Metering Infrastructure (AMI) via installation of 1.5mn smart meters in major cities in the central area; 2) Development of additional fibre optic network to enhance security and reliability of electricity supply, 3) Installation of energy efficient LED street lighting in all capital cities, 4) Development of solar project in 10 public universities with a total capacity of 200MW or 20MW each; and 5) Educational program valued up to RM1bn in 2018-22. Our Take We are positive that the government will shoulder consumers’ burden of higher generation costs and ICPT rebates in 1H18. This reinforces the integrity of the ICPT mechanism in protecting Tenaga’s earnings. Additionally, we are not surprised, as we had highlighted earlier (in our report dated 20 Dec-17), that tariff hikes would be counter populist, particularly in the wake of a General Election. 15.68/13.00 12-mth Avg Daily Vol ('000 shrs) 10,042.0 Estimated Free Float (%) 37.0 Beta Major Shareholders (%) 0.5 Khazanah - 28.2 EPF - 11.3 Forecast Revision (%) FY17* Forecast Revision (%) Whereas pertaining to Regulatory Period 2 (RP2), details were scant, except that Tenaga’s WACC will be within 7%-7.5% (RP1: 7.5%). More granularity on RP2 parameters (e.g. equity beta, market return, fuel price and forex benchmark, approved capex, demand assumption, treatment of opex and capex efficiencies, official WACC etc.) will be announced by the Energy Commission (EC) in due time. 1.00 52-wk Hi/Lo (RM) FY18 0 0 Core Net Profit (RM mn) 7,458.1 7,449.1 Consensus 7,301.0 7,428.0 102.2 100.3 TA/Consensus (%) Previous Rating Buy (Maintained) *Annualized 16 months earnings Financial Indicators FY17 FY18 Net Debt/Equity (x) 0.5 0.4 ROA (%) 7.1 5.1 ROE (%) 12.4 12.0 BV/Share (RM) 10.8 11.5 1.4 1.3 P/BV (x) Share Performance Price Change (%) TNB FBMKLCI 1 mth (0.1) 2.3 3 mth 4.3 (0.2) 6 mth 5.8 (1.1) 12 mth 10.0 8.7 (12-Mth) Share Price relative to the FBMKLCI However, we acknowledge existing concerns that Tenaga’s earnings may potentially be reduced via lowered asset returns or a deflated Regulatory Asset Base (RAB). Nevertheless, we believe the impact on earnings is manageable, where we estimate that every 0.1 ppt reduction in WACC will shave FY18F-20F earnings by 0.6%- 0.7% p.a. Given the worst case scenario where Tenaga’s WACC is lowered to 7.0% this translates to a 3.1%-3.2% reduction for FY18F-20F forecasts. Underlying Source: Bloomberg Page 1 of 4
18. 27-Dec-17 key assumptions for our average RAB estimate of RM47 .8bn during RP2 include: 1) Average capex spend of RM5.1bn p.a., and 2) Estimated end-17 RAB of RM44.9bn. Impact Maintain forecasts pending official announcement on RP2 by EC. Valuation We maintain Buy on Tenaga (DCF TP: RM17.38), underpinned by: 1) International M&A plans (Target: 3.7GW new capacity by 2020) provide earnings boost, 2) Yield upside from proactive capital management and strong balance sheet (Net gearing: 0.6x, Cash: RM5bn), and 3) Attractive valuations – currently trading 1SD below historical mean FY18 P/E. [ TH E RE M A IN DE R OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Page 2 of 4
19. 27-Dec-17 Earnings Summary Income Statement Balance Sheet FYE Dec * (RM mn) 2015 2016 2017E** 2018F 2019F Revenue 43,286.8 44,531.5 61,879.5 48,862.8 51,382.9 EBITDA 13,921.8 14,794.2 20,734.4 15,712.6 16,328.9 Depreciation & amortisation Net interest expense FYE Dec* (RM mn) Property, Plant & Equip Prepaid Op Leases (5,294.2) (5,722.2) (8,214.8) (6,383.8) (6,585.5) Associates & JVs (662.7) (740.3) (1,303.2) (711.5) (793.4) Others Non-Current Assets Associates 101.1 93.3 128.1 100.9 103.9 Forex gain/(loss) (932.3) (358.2) (87.5) 70.3 0.0 Pretax profit 7,133.7 8,066.8 11,256.9 8,788.5 9,053.9 Inventories Taxation (1,072.8) (746.0) (1,463.4) (1,318.3) (1,991.9) Trade receivables Minority interest Net Profit Core Net Profit^ 57.5 46.8 63.0 49.2 51.2 6,118.4 7,367.6 9,856.5 7,519.3 7,113.2 7,050.7 7,725.8 7,458.1 7,449.1 7,113.2 126.5 138.6 133.8 133.7 127.6 Per Share Data 2015 2016 2017E** 2018F 2019F 90,300.3 96,512.7 103,297.9 106,914.1 110,328.6 5,111.6 5,172.7 5,172.7 5,172.7 5,172.7 757.6 1,838.2 1,966.3 2,067.2 2,171.2 2,170.5 2,623.3 2,623.3 2,623.3 2,623.3 98,340.0 106,146.9 113,060.3 116,777.4 120,295.8 843.8 792.3 1,106.5 878.1 932.6 8,639.4 8,276.8 11,019.6 8,745.1 9,288.1 Cash and Deposits 2,471.3 3,971.2 6,617.1 5,092.2 5,373.8 Others 6,840.5 13,715.0 13,715.0 13,715.0 13,715.0 18,795.0 26,755.3 32,458.2 28,430.4 29,309.5 Current Assets Total Assets 117,135.0 132,902.2 145,518.5 145,207.7 149,605.2 Core EPS^ (sen) DPS^ (sen) 29 32 46 46 45 Borrowings 23,722.8 33,837.1 33,635.6 32,434.1 31,232.7 Book Value (RM) 8.5 9.4 10.8 11.5 12.3 Employee benefits 10,230.0 11,048.8 11,048.8 11,048.8 11,048.8 FCF (sen) 65.2 77.5 114.0 68.7 87.6 Deferred taxation 7,054.1 6,961.9 7,400.9 7,796.4 8,394.0 Deferred income 1,425.1 1,165.6 1,165.6 1,165.6 1,165.6 11,643.9 11,205.1 11,205.1 11,205.1 11,205.1 54,075.9 64,218.5 64,456.0 63,650.0 63,046.1 13,098.0 Ratios Others FYE Dec* (RM mn) 2015 2016 2017E** 2018F 2019F Non-Current Liabilities Valuations Core PER (x) 11.8 10.8 11.2 11.2 11.7 Trade payables 10,441.5 11,409.1 15,853.7 12,581.4 Dividend Yield (%) 1.9 2.1 4.1 3.1 3.0 Other payables 678.6 661.6 919.3 729.6 759.5 EV/EBITDA (x) 7.7 7.8 5.5 7.2 6.9 Deferred income 1,200.6 1,139.2 1,139.2 1,139.2 1,139.2 1,488.8 P/BV (x) 1.8 1.6 1.4 1.3 1.2 Borrowings 1,985.8 1,488.8 1,488.8 1,488.8 FCFF Yield (%) 4.4 5.2 7.6 4.6 5.9 Others 1,285.7 1,385.3 1,385.3 1,385.3 1,385.3 15,592.2 16,084.0 20,786.3 17,324.3 17,870.8 Current Liabilities Profitability Ratios EBITDA margin (%) 32.2 33.2 33.5 32.2 31.8 Share capital EBIT margin (%) 19.9 20.4 20.2 19.1 19.0 Reserves Pretax margin (%) 16.5 18.1 18.2 18.0 17.6 Minority interest Net margin (%) 14.1 16.5 15.9 15.4 13.8 Equity Core net margin (%) 16.3 17.3 36.0 15.2 13.8 ROE (%) 15.6 15.5 12.4 12.0 10.7 ROA (%) 6.2 6.2 7.1 5.1 4.8 Total Equity + Liabilities 5,643.6 5,643.6 5,643.6 5,643.6 5,643.6 41,564.4 46,745.0 54,484.4 58,490.9 62,997.0 258.9 211.1 148.1 98.9 47.7 47,466.9 52,599.7 60,276.1 64,233.4 68,688.3 117,135.0 132,902.2 145,518.5 145,207.7 149,605.2 Cashflow Statement Liquidity ratios FYE Dec* (RM mn) Current ratio (x) 1.2 1.7 1.6 1.6 1.6 PAT Quick ratio (x) 1.2 1.6 1.5 1.6 1.6 Add: Net Taxes Depreciation Leverage ratios 2015 2016 2017E** 2018F 2019F 6,060.9 7,320.8 9,793.5 7,470.2 7,062.0 262.0 25.4 439.0 395.5 597.6 5,294.2 5,722.2 8,214.8 6,383.8 6,585.5 Net Interest 662.7 740.3 1,303.2 711.5 793.4 Gross Gearing (x) 0.5 0.7 0.6 0.5 0.5 Associates & JCEs (101.1) (93.3) (128.1) (100.9) (103.9) Net gearing (x) 0.5 0.6 0.5 0.4 0.4 Net change in working capital 1,032.1 1,364.7 1,645.3 (959.2) (51.0) Total Debt/ Assets (x) 0.2 0.2 0.3 0.2 0.2 Others (1,535.9) (1,714.5) 1,111.9 852.5 1,394.3 Interest Coverage (x) 21.0 20.0 15.9 22.1 20.6 Revenue (%) 1.2 2.9 39.0 (21.0) 5.2 Interest income EBITDA (%) 15.5 6.3 40.2 (24.2) 3.9 Others PBT (%) 0.3 13.1 39.5 (21.9) 3.0 CF from Investing Growth ratios Core Net Profit (%) 17.2 9.6 (3.5) (0.1) (4.5) Core EPS^ (%) 17.2 9.6 (3.5) (0.1) (4.5) CF from Operations 11,674.9 13,365.6 22,379.7 14,753.4 16,277.9 Capex (10,363.7) (11,142.8) (15,000.0) (10,000.0) (10,000.0) 82.3 299.0 264.7 441.1 318.3 (2,547.7) (7,552.1) 0.0 0.0 0.0 (12,829.1) (18,395.9) (14,735.3) (9,558.9) (9,681.7) (2,607.2) Dividends (1,636.7) (1,636.7) (2,204.7) (3,442.6) Net Change in debt (1,775.2) 9,063.4 (201.5) (1,201.5) (1,201.5) (451.1) (890.3) (1,568.0) (1,152.6) (1,111.6) Interest paid Others CF from Financing (388.7) 57.0 0.0 0.0 0.0 (4,251.7) 6,593.4 (3,974.1) (5,796.7) (4,920.3) * 2015-16: FYE Aug Net Cash Flow (5,641.4) 1,490.0 2,645.9 (1,524.9) 281.6 ** 16 months for FY17 Beginning Cash 8,112.5 2,471.3 3,955.1 6,601.0 5,076.1 ^ 12 months Pro-Rated for FY17E Ending Cash 2,471.3 3,955.1 6,601.0 5,076.1 5,357.7 Page 3 of 4
20. 27-Dec-17 [ TH E RE M A IN DE R OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Wednesday, December 27, 2017, the analyst, Kylie Chan Sze Zan , who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2031 6608 www.ta.com.my Page 4 of 4