Bursa Malaysia Daily Market Report - 27 February

Transcription

1. Tuesday , 27 February, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1 . A l l ia n c e B a n k M a la ys i a Be r h a d : So f te r 3 Q 1 8 R e su l ts o n H ig h e r O p e ra tin g E x p e n se s and Taxes 2 . H o n g L e o n g Ba n k Be r h a d : R e c o rd 1 H PA T o n St ro n g U n d e r ly in g Pe rf o m a n c e 3 . K P J H e a lt h c a re Be rh a d : Be t te r M a r g in s in 4 Q 4 . P a d in i H o ld i n g s Be rh a d : E a rn in g s I m p a c t e d b y H ig h e r Di s t rib u t io n C o s t s 5 . P e t ro n a s Da g a n g a n Be rh a d : De c e n t C lo s e to F Y 1 7 6 . P e t ro n a s Ga s Be r h a d : St ro n g Bo o s t f ro m N e w Pe n g e ra n g R GT 7 . Q L Re s o u rc e s Be rh a d : Po s it iv e R e v e n u e C o n tr i b u tio n s A c ro s s Se g m e n t s 8 . S e rb a D in a m ik H o l d in g s Be r h a d : S t ro n g E a rn i n g s C o n t in u e 9 . S ig n a t u re In t e rn a t io n a l Be rh a d : R e v e n u e So a re d a n d M a rg in N o rm a l i s e d in 2 Q F Y 1 8 1 0 . S im e D a r b y P ro p e rt y Bh d : We a k M a r g in s D ra g g e d 1 1 . S u n w a y C o n s t r u c t io n G ro u p Be rh a d : D ra g g e d b y W e a k 4 Q 1 7 C o n s t ru c tio n M a rg in 1 2 . T io n g N a m L o g is t ic s H o l d in g s Be r h a d : S ta r t - u p c o s ts C o n tin u e to W e ig h o n P ro f i t 1 3 . W C T H o l d i n g s Be r h a d : F Y 1 7 E a rn in g s G ro w th Dr iv e n b y C o n s tru c t io n Div i s io n Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks ( L oc al ) 2. D ai l y St o ck S cr een 3. D ai l y For ei gn T ech n i c al St o ck P i cks ( F SS T I ) 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 Tuesday , 27 February 2018 TA Research, e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (26.02.2018) (mil) Main Market 1,697.5 Warrants 532.3 ACE Market 475.5 Bond 9.3 ETF 1.3 LEAP 0.2 Total 2,716.1 Off Market 95.2 Volume +/-chg (RMmn) -631.9 2,543.2 -98.9 94.8 -101.4 101.2 1.4 2.9 -0.9 1.5 0.2 0.1 2,743.7 19.3 274.7 Value Value/ +/-chg Volume Up Down 62.0 1.50 290 304 -2.0 0.18 148 154 5.9 0.21 35 53 0.6 0.31 4 1 -1.0 1.16 1 1 0.1 0.31 1 0 1.01 479 513 32.5 2.89 Major Indices Index +/- chg Malaysia FBMKLCI FBMEMAS FBMSCAP February Futures Other Markets DOW JONES NASDAQ (US) FTSE (UK) NIKKEI (JAPAN) KOSPI (KOREA) HANG SENG (HK) FSSTI (S'PORE) SET (BANGKOK) JCI (JAKARTA) SHANGHAI SHENZHEN AUSTRALIA -1.42 -28.86 -18.58 1.50 -0.08 -0.22 -0.11 0.08 3.52 2.65 -0.24 4.29 25,709.27 7,421.46 7,289.58 22,153.63 2,457.65 31,498.60 3,555.85 1,834.18 6,554.67 3,329.57 1,815.02 6,042.18 399.28 84.07 45.17 260.85 6.13 231.43 22.63 26.12 -65.13 40.55 39.85 42.39 1.58 1.15 0.62 1.19 0.25 0.74 0.64 1.44 -0.98 1.23 2.24 0.71 4.01 7.50 -5.18 -2.69 -0.40 5.28 4.49 4.59 3.13 0.68 -4.44 -0.38 (mn) 20.0 20.0 20.0 15.0 8.5 2.5 2.0 2.0 2.0 1.5 % YTD chg 1,860.08 13,284.92 17,009.76 1,861.50 (RM) @ @ @ @ @ @ @ @ @ @ 5.52 1.38 0.20 2.72 7.20 4.80 0.05 5.85 0.29 2.67 Counter TENAGA PCHEM AXIATA MAXIS DIGI SIMEPLT PETGAS GENTING MISC GENM Mkt Cap. Chg (RM’mn) (RM) 88,503 64,400 50,580 46,785 38,020 37,405 34,944 34,176 30,309 29,200 Important Dates LBS - 1:10 Bonus Issue - BI of up to 162.9m shares. 1 bonus share for every 10 subdivided shares held. Ex-Date: 22/02/2018. Entitlement Date: 26/02/2018. LISTING ON: 27/02/2018. -0.02 -0.06 -0.06 -0.02 -0.01 -0.02 -0.02 -0.18 -0.23 -0.12 Failure of the index to hold onto early gains and its close just off yesterday's low suggests evident profit-taking and selling pressure capping near-term upside potential. Key resistance is at 1,880, the upper Bollinger band matching the 2 Feb peak of 1,880, while the record high at 1,896 of July 2014 should act as formidable upside hurdle. Immediate uptrend supports will be at 1,848 and 1,841, the steeply rising 10 and 30-day moving averages, followed by the 50-day ma at 1,815. Further rally on AirAsia shares towards the 176.4%FR (RM4.68) will aggravate overbought technical momentum and encourage profit-taking and selling, with next key resistance seen at the 200%FR (RM5.02), while key retracement supports upon correction are at the 150%FR (RM4.30) and 138.2%FR (RM4.14). Similarly, a breakout on AirAsia X above the 76.4%FR (44sen) will meet strong profit-taking resistance near the 100%FR (49.5sen), with next hurdle at the 22/5/17 peak (55sen), while key retracement supports are at the 61.8%FR (41sen) and 50%FR (38sen). News Bites Top 10 KLCI Movers Based on Mkt Cap. Off Market SIMEPLT SIMEPROP SGB-PA SIME CIMB IOICORP XINGHE LITRAK EURO DRBHCOM % chg Bursa Malaysia's blue chips stayed range bound Monday, despite the firmer regional tone due to spillover from the strong session on the US stock market last Friday. The KLCI ended down 1.42 points at 1,860.08, after ranging between early high of 1,867.98 and low of 1,859.98, as losers edged gainers 513 to 479 on total turnover of 2.71bn shares worth RM2.74bn. Vol. (mn) 9.31 6.41 3.58 1.43 3.93 5.44 0.83 3.94 1.01 9.55 • The Sarawak government is in talks with AirAsia Bhd to build a lowcost carrier terminal in the city. • Dagang NeXchange Bhd has secured a contract to provide directional drilling equipment to Baker Hughes (M) Sdn Bhd. • Vertice Bhd has been awarded a road construction contract worth RM59.13mn in Pengerang, Kota Tinggi, Johor. • JAKS Resources Bhd (JAKS) has obtained an interim stay, restraining 2 banks from releasing guarantee proceeds with total amount of RM50mn to Star Media Group Bhd. • MY E.G. Services Bhd will invest 15mn yuan (RM9.24mn) to acquire 3.12% stake in China-based augmented reality and virtual reality developer, Ximmerse. • Power Root Bhd co-founder Datuk Low Chee Yen, who was also its managing director, has been re-designated as the group's executive deputy chairman starting today. • Fiamma Holdings Bhd foresees a muted bottom-line growth for FY18 due to slow consumer spending and soft property market. • Kronologi Asia Bhd expects FY18 to be another record year as it eyes double-digit revenue growth, driven by full year contribution from its newly-acquired Hong Kong-based subsidiary. • Singapore's industrial production jumped much more than expected in January helped by a surge in biomedical manufacturing and electronics output. • Japan's leading index declined more than initially estimated in December, latest figures from the Cabinet Office showed. • Purchases of newly built single-family homes in the U.S. - a relatively narrow slice of all U.S. home sales - fell 7.8% in January after dropping 7.6% in December. • Borrowing by U.K. companies fell the most in almost three years in January, according to new figures from the banking industry. • Britain's services sectors, making up the biggest part of the economy, saw growth improve this month, helped by a rebound at restaurants, bars and other consumer industries. Exchange Rate HSSEB - 1:10 Rights Issue - RI of up to 31.9m shares together with USD/MYR 3.9025 -0.016 BI of up to 15.9m shares and up to 47.9m free detachable warrants. 1 rights share for every 10 existing shares held, at an issue price of USD/JPY 106.92 -0.130 RM1.30 per rights share, together with 1 bonus share and 3 warrants EUR/USD 1.232 0.0024 for every 2 rights shares subscribed. Trading of Rights: 22/02 - 28/02/2018. Application Closed: 08/03/2018. LISTING ON: 21/03/2018. Disclaimer Commodities Futures Palm Oil (RM/mt) 2,540.00 16.00 Crude Oil ($/Barrel) 64.03 0.46 Gold ($/tr.oz.) 1,334.70 4.20 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. Tuesday , February 27, 2018 FBMKLCI: 1,860.08 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 Profit-Taking and Selling Cap Near-Term Upside Potential Bursa Malaysia’s blue chips stayed range bound Monday, despite the firmer regional tone due to spillover from the strong session on the US stock market last Friday. The KLCI ended down 1.42 points at 1,860.08, after ranging between early high of 1,867.98 and low of 1,859.98, as losers edged gainers 513 to 479 on total turnover of 2.71bn shares worth RM2.74bn. Key Resistance at 1,880, Support at 1,848 Failure of the index to hold onto early gains and its close just off yesterday’s low suggests evident profit-taking and selling pressure capping near-term upside potential. Key resistance is at 1,880, the upper Bollinger band matching the 2 Feb peak of 1,880, while the record high at 1,896 of July 2014 should act as formidable upside hurdle. Immediate uptrend supports will be at 1,848 and 1,841, the steeply rising 10 and 30-day moving averages, followed by the 50day ma at 1,815. Sell Strength on AirAsia & AirAsia X Further rally on AirAsia shares towards the 176.4%FR (RM4.68) will aggravate overbought technical momentum and encourage profit-taking and selling, with next key resistance seen at the 200%FR (RM5.02), while key retracement supports upon correction are at the 150%FR (RM4.30) and 138.2%FR (RM4.14). Similarly, a breakout on AirAsia X above the 76.4%FR (44sen) will meet strong profit-taking resistance near the 100%FR (49.5sen), with next hurdle at the 22/5/17 peak (55sen), while key retracement supports are at the 61.8%FR (41sen) and 50%FR (38sen). Japan’s Nikkei Outperformed Regional Peers Global equities continued to build on their recent gains on Monday, after late week strength for U.S. equity markets helped to lift the overall market sentiment. Gains in the region tracked the rally seen on Wall Street on Friday, which saw U.S. stock indexes notching gains of more than 1 percent. Investor sentiment was also helped by the Federal Reserve’s semi-annual monetary-policy report to Congress released Friday. The report signaled that the Fed wasn’t worried about the volatility in financial markets earlier this month and remained on track to gradually raise interest rates. U.S. monetary policy is back in focus with two appearances from Federal Reserve Chairman Jerome Powell. Powell will speak before the House Financial Services Committee on Tuesday and the Senate Banking Committee two days later to give his Humphrey-Hawkins testimony. Japan’s Nikkei share average rose to near three-week highs, with most sectors advancing as investor confidence continued to improve after Wall Street made steady gains. The Nikkei ended the day up 1.2 percent at 22,153.63, after earlier touching 22,226.53, the highest since Feb. 7. China stocks also extended gains, with major indexes climbing for a sixth session in a row, led by start-ups which saw their best day in seven months on expectations they will benefit from a proposal to delay reforms for initial public offerings (IPOs). The Shanghai Composite index was up 1.2 percent at 3,329.57. In down under, the S&P/ASX 200 edged up 0.71 percent as the index reclaimed the 6,000 level. The heavily weighted financials sector rose 0.94 percent, making it one of the best-performing sectors for the day. In South Korea, the Kospi index added 0.25 percent, to 2,456.80. Page 1 of 9
4. 27-Feb-18 Wall Street Starts the Week on Strong Footing as Yields Dip Further U .S. stocks rose to more than three-week highs on Monday, recovering much of the losses sustained in a sell-off earlier this month, as continuing gains in Treasuries pushed yields further below 2.9 percent, alleviating investors fear that higher rates will accelerate fiscal tightening. The yield on the 10-year Treasury note, eased to 2.86 percent, slipping from a four-year high it hit last week. Yields fall as bond prices rise. Investors are also bracing for a busy week that will feature several Federal Reserve speakers, including the new Fed Chairman Jerome Powell’s appearance in front of Congress. New Fed Chair Jerome Powell is set to address Congress later in the day, when he is expected to address monetary policy in his first semiannual economic testimony. Though many market experts hope Powell will pacify an ongoing tug-of-war between bonds and stocks, the central bank could stick to script and assure lawmakers of a continued, gradual path of rate hikes. The day’s gains were broad, with 10 of the 11 primary S&P 500 sectors in solidly higher as the tech and telecommunications sectors posted strong gains. Among the notable gainers were Apple Inc. AAPL, which rose 2 percent, Intel Corp. which added 2.9 percent. The Dow Jones Industrial Average rose 399.28 points, or 1.58 percent, to 25,709.27 the S&P 500 gained 32.30 points, or 1.18 percent, to 2,779.60, and the Nasdaq Composite added 84.07 points, or 1.15 percent, to 7,421.46. 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 Tuesday, February 27, 2018, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 9
5. 27-Feb-18 N e w s i n B r i e f Corporate The Sarawak government is in talks with AirAsia Bhd to build a low-cost carrier terminal in the city , with the cost to be split evenly between the 2 parties. (New Straits Times) Dagang NeXchange Bhd has secured a contract to provide directional drilling equipment to Baker Hughes (M) Sdn Bhd. The contract, estimated at RM9mn per year, will begin on March 1, 2018 for 2 years and with an extension options of up to 2 years. (Bernama) Comments: We are mildly positive on the contracts secured as it is a step in the right direction for DNeX. However, assuming 5% PAT margins, the contract will only contribute RM0.45mn per year which is less than 1% of our earnings forecast. That said, it will help defray depreciation costs for the directional drilling equipment. We maintain our earnings forecast and TP of RM0.72/share. Reiterate BUY. Vertice Bhd has been awarded a road construction contract worth RM59.13mn in Pengerang, Kota Tinggi, Johor. The contract is mainly for provision of engineering, procurement, construction and commissioning for the interconnecting road from Rapid Site to JKR Road. The construction period is about 14 months commencing from 26 February 2018 to 8 April 2019. (Bursa Malaysia/The Sun) JAKS Resources Bhd (JAKS) has obtained an interim stay, restraining 2 banks from releasing guarantee proceeds with total amount of RM50mn to Star Media Group Bhd. JAKS said the stay order, granted to 51%-owned subsidiary JAKS Island Circle Sdn. Bhd., would last until the High Court hears the inter-parte injunctions, which will see both sides presenting their arguments on March 7. (Bursa Malaysia/The Edge) MY E.G. Services Bhd will invest 15mn yuan (RM9.24mn) to acquire 3.12% stake in Chinabased augmented reality and virtual reality developer, Ximmerse. The group said the investment is part of the group's expansion strategy to tap into fast evolving technologies which bring commercial value. (Bursa Malaysia/The Edge/Bernama) Power Root Bhd co-founder Datuk Low Chee Yen, who was also its managing director, has been re-designated as the group’s executive deputy chairman starting today. The 43-yearold, who holds about 16.5% direct stake and 1.63% indirect interest in the group, has 17 years of experience in the food and beverage industry. (Bursa Malaysia/The Edge) Fiamma Holdings Bhd foresees a muted bottom-line growth for FY18 due to slow consumer spending and soft property market. The group is expecting a single-digit revenue growth for its trading and services business that consists of mainly the distribution of electrical appliances and home furniture after a flat growth in FY17. (The Edge) Kronologi Asia Bhd expects FY18 to be another record year as it eyes double-digit revenue growth, driven by full year contribution from its newly-acquired Hong Kong-based subsidiary. (The Edge) QL Resources Bhd's net profit rose 3.2% YoY to RM57.86mn in 3QFY18 from RM56.04mn a year ago, on higher contribution from its integrated livestock farming segment. Quarterly revenue also rose 11.6% YoY to RM892.02mn from RM799.06mn. For 9MFY18, the group's net profit increased 7.5% YoY to RM159.87mn from RM148.69mn, while revenue grew 12.8% YoY to RM2.48bn from RM2.20bn. (Bursa Malaysia/The Edge) Page 3 of 9
6. 27-Feb-18 Petronas Dagangan Bhd saw its net profit grow 6 .53% YoY to RM278.58mn for 4QFY17 from RM261.49mn, thanks to higher sales volume and increase in average selling price. Meanwhile, quarterly revenue was also up 17.81% YoY to RM7bn from RM5.94bn last year. For FY17, the group achieved another record-breaking year on the back of improved margins and gain from disposal of its subsidiaries. Its net profit was 68.69% YoY higher at RM1.59bn from RM944.61mn a year ago while revenue was at RM26.74bn, up 24.16% YoY from RM21.53mn. The group declared an interim dividend of 27sen/share and special interim dividend of 22sen/share. (Bursa Malaysia/The Edge) Serba Dinamik Holdings Bhd’s net profit for 4QFY17 contracted by 16.6% YoY to RM80.5mn from RM96.6mn due to one-off additional tax liabilities including penalty in the quarter under review. Quarterly revenue increased by 8.97% YoY to RM797.4mn from RM731.8mn. For FY17, the group’s net profit more than doubled to RM310mn from RM151.8mn while revenue increased by 92.6% YoY to RM2.71bn from RM1.41bn a year ago. The group declared a fourth interim dividend of 1.6sen/share. (Bursa Malaysia/The Edge) Sime Darby Property Bhd’s net profit in 2QFY18 declined by 5.06% YoY to RM138.08mn from RM145.44mn previously, as higher taxes and lower results of joint ventures mitigated a jump in gross profit. Meanwhile, quarterly revenue jumped 65.4% YoY to RM677mn from RM409.35mn. For 1HFY18, the group’s net profit soared 90.07% YoY to RM559.77mn from RM294.5mn while revenue also expanded 33.6% YoY to RM1.14bn, from RM853.71mn previously. The group declared an interim dividend of 2.0sen/share. (Bursa Malaysia/The Edge) Pos Malaysia Bhd’s net profit slid 72% YoY to RM9.48mn for 3QFY18 from RM33.41mn a year ago. The postal group was hit by lower revenue coupled with higher operational costs. Quarterly revenue decreased by 2% YoY to RM620.72mn from RM635.72. For 9MFY18, the group’s net profit fell 11% YoY to RM64.22mn from RM71.99mn despite revenue was higher by 26% YoY at RM1.82bn compared with RM1.45bn a year ago. (Bursa Malaysia/The Edge) Alliance Bank Malaysia Bhd's net profit dropped 5% YoY to RM122.55mn in 3QFY18 from RM129.68mn, due to increase in operating expenses and higher taxes. Meanwhile, quarterly revenue increased 2.47% YoY to 388.0mn from 378.64mn, mainly from net interest income and other operating income. For 9MFY18, the group’s net profit declined 3.64% YoY to RM380.36mn, from RM394.74mn a year earlier while revenue increased 6.02% YoY to RM1.17bn from RM1.10bn. (Bursa Malaysia/The Edge) Hong Leong Financial Group Bhd's net profit grew by 12% YoY to RM495.34mn for 2QFY18 from RM443.03mn, mainly due to higher contribution from the commercial banking division. Revenue increased marginally to RM1.37bn from RM1.35bn a year ago. For 1HFY18, the group's net profit came in 15% YoY higher at RM950.6mn versus RM829.23mn in the previous year while revenue had increased by 3% YoY to RM2.64bn compared to RM2.54bn a year ago. (Bursa Malaysia/The Edge) Hong Leong Bank Bhd's net profit increased 24% YoY to RM683.07mn for 2QFY18 from RM549.94mn. This was mainly due to higher quarterly revenue, higher share of profit from the Bank of Chengdu and Sichuan Jincheng Consumer Finance joint venture as well as lower allowance for impairment losses on loans, advances and financing. Quarterly revenue came in 4% YoY higher at RM1.23bn compared with RM1.18bn. For 1HFY18, group's net profit was 21% YoY higher at RM1.32bn versus RM1.09bn a year ago, while revenue increased by 6% to RM2.41bn from RM2.27bn. The bank declared a single interim dividend of 16sen/share. Meanwhile, the bank has cut its loan growth target for FY18 to between 3% to 4% from an initial forecast of 5% to 6% as industry credit growth remains subdued and the bank continues to be selective of its borrowers. (Bursa Malaysia/The Edge) Page 4 of 9
7. 27-Feb-18 Sunway Construction Group Bhd 's net profit fell by a marginal 0.8% YoY to RM31.8mn in 4QFY17 from RM32.06mn, dragged down by its precast segment. Quarterly revenue, however, was up 35.3% YoY to RM748.17mn from RM553.15mn. For FY17, net profit rose 11.6% YoY to RM137.81mn from RM123.52mn, while revenue grew 16.1% YoY to RM2.08bn from RM1.79bn. The group declared a second interim dividend of 4sen/share. (Bursa Malaysia/The Edge) WCT Holdings Bhd’s net profit soared nearly 17 times to RM59.27mn in 4QFY17 from RM3.51mn a year ago, thanks to stronger revenue and its other income which surged about six-fold. Meanwhile, revenue for the quarter grew 28% YoY to RM579.4mn from RM453.17mn. For FY17, the group's net profit jumped 126% YoY to RM154.62mn from RM68.38mn, despite revenue slipped 1% YoY to RM1.91bn from RM1.93bn. The group proposed a final single-tier dividend of 3sen/share. (Bursa Malaysia/The Edge) KPJ Healthcare Bhd’s net profit for 4QFY17 grew by 18% YoY to RM61.32mn compared with RM52.0mn a year ago due to higher revenue from Malaysian operations. Meanwhile, quarterly revenue grew 13% YoY to RM833.73mn from RM736.01mn. For FY17, the group’s net profit increased by 8% YoY to RM165.55mn from RM153.62mn a year ago while revenue grew 7% YoY to RM3.18bn from RM2.97bn in the previous year. The group declared a single interim dividend of 0.5sen/share. (Bursa Malaysia/The Edge) Bumi Armada Bhd reported net profit of RM63.82mn for 4QFY17 versus net loss of RM1.38bn a year earlier as the oil and gas support service provider registered higher revenue and lower impairment. The quarterly revenue rose 523.2% to RM662.15mn from RM106.25mn. For FY17, the group’s net profit stood at RM352.25mn compared against a net loss of RM1.97bn a year earlier while revenue jumped 82.3% YoY higher to RM2.4bn from RM1.32bn. (Bursa Malaysia/The Edge) Tiong Nam Logistics Holdings Bhd’s net profit dropped 43% YoY to RM9.83mn in 3QFY18 from RM17.26mn a year ago due to higher effective tax rate. Quarterly revenue, however, expanded 24% YoY to RM172.78mn from RM139.28mn due to increase in logistics and warehousing as well as property development revenue. For 9MFY18, the group’s net profit dipped 46.15% YoY to RM23.56mn from RM43.75mn, while revenue grew 18.33% YoY to RM487.13mn against RM411.69mn a year ago. (Bursa Malaysia/The Edge) Genting Plantations Bhd's net profit fell 38% YoY to RM117.69mn, from RM189.25mn a year earlier. Meanwhile, quarterly revenue increased 3% YoY to RM528.42mn from RM513.41mn, on higher property sales and higher offtake of refined palm products and biodiesel. For FY17, net profit was slightly lower at RM337.7mn versus RM338.21mn in FY16, while revenue jumped 22% YoY to RM1.80bn from RM1.48bn. The group proposed a final single-tier dividend of 11sen/share. (Bursa Malaysia/The Edge) Padini Holdings Bhd saw its net profit slipped 8.27% YoY to RM49.97mn for 2QFY18, from RM54.47mn on a decrease in gross profit margin. The quarterly revenue, however, was up 7.92% YoY to RM460.43mn from RM426.65mn, due to increased number of outlets. For 1HFY18, the group’s net profit were 2.29% YoY lower at RM81.19mn from RM83.09mn while the revenue was 5.28% YoY higher at RM775.61mn, from RM736.68mn previously. The group declared a third interim dividend of 2.5sen/share. (Bursa Malaysia/The Edge) Page 5 of 9
8. 27-Feb-18 Manulife Holdings Bhd ’s net profit for 4QFY17 fell 76.4% YoY to RM6.64mn from RM28.1mn as its investment holding segment, life insurance business and asset management services all saw weaker performance, even though a 76.7% YoY jump in quarterly revenue to RM401.5mn from RM227.3mn. For FY17, the group’s net profit fell 39.7% YoY to RM28mn, from RM46.4mn despite revenue increasing 30.4% YoY to RM1.35bn from RM1.04bn a year earlier. The group declared a first and final dividend of 8sen/share. (Bursa Malaysia/The Edge) Page 6 of 9
9. 27-Feb-18 N e w s I n B r i e f Economy Asia Singapore Factory Output Surges Past Expectations Singapore ’s industrial production jumped much more than expected in January helped by a surge in biomedical manufacturing and electronics output. Manufacturing output rose 17.9% in January from a year earlier, data from the Singapore Economic Development Board showed. The surge in output comes after its biggest decline in two years in December. The Lunar New Year, which fell in January last year and shut factories, also meant that last month’s export numbers benefited from extra working days. Despite most analysts were expecting a surge in on-year growth, the rate at which it grew came as a surprise. The median forecast in a Reuters survey predicted an 8.2% expansion from the year-ago period in January. On a month-on-month and seasonally adjusted basis, industrial production rose 6.7% in January. The median forecast was for an expansion of 4.7%. This comes after Singapore’s factories posted their biggest on-year output decline in two years in December, contracting a revised 3.4% year-on-year and declining 0.5% on a seasonally adjusted month-on-month basis. Biomedical manufacturing grew 2.5% in January from a year earlier after suffering a 34.5% contraction in the previous month, contributing to the higher-than-expected on-year overall manufacturing output growth. (Reuters) IMF Chief Calls on Indonesia to Boost Growth Rate to Absorb Workers International Monetary Fund (IMF) Managing Director Christine Lagarde called on Indonesia to boost its potential growth rate and channel revenues to more development spending to help create jobs for its growing labor force. After meeting with President Joko Widodo at the start of a week-long trip to Indonesia, Lagarde praised the country's economic management and stronger policies. "Indonesia's economy continues to prove resilient with a sound economic performance and favorable outlook," she said in a statement issued after the meeting. But in recent years, Indonesia has struggled to get its growth rate to exceed 5%, well below the pace of China and India, amid tepid consumer demand and foreign direct investment. GDP growth failed to meet the government's 5.2% budget target last year and the IMF is forecasting that Indonesia, Southeast Asia's largest economy, will grow by 5.3% in 2018. Lagarde said she and Widodo discussed the importance of achieving higher potential growth to help create jobs, adding "This requires mobilizing revenues to finance development spending and support reforms in the product, labor and financial markets." (The Star) Japan Leading Index Falls More-than Estimated Japan's leading index declined more than initially estimated in December, latest figures from the Cabinet Office showed. The leading index, which measures the future economic activity, dropped to a 5-month low of 107.4 in December from 108.2 in November. The reading was below the flash estimate of 107.9. The coincident index that reflects the current economic activity improved to 120.2 in December from 117.9 in the previous month. However, the December figure was revised down from 120.7. The lagging index came in a 119.1 in December versus 118.7 in the preceding month. (RTT) Page 7 of 9
10. 27-Feb-18 United States U .S. New-Home Sales Drop Again, but Economists Don’t See Housing-Market Downswing Two months of steep declines in sales of new homes across the U.S. haven’t persuaded many economists that the housing market is turning lower. Purchases of newly built single-family homes—a relatively narrow slice of all U.S. home sales—fell 7.8% in January after dropping 7.6% in December, according to data released Monday by the Commerce Department. Purchases have declined for four of the past six months. The January drop bucked the 4.0% growth economists surveyed by The Wall Street Journal had expected. Analysts are pointing to weather and the volatile nature of the new-home sales data to explain away what could be seen as an emerging downtrend in the housing market. Instead, the declines were concentrated in the Northeast and South. Winter weather, particularly in Southern states, might have kept prospective buyers from the search, some economists said. (The Wall Street Journal) New Fed Chairman Jerome Powell to Testify Before Congress on Capitol Hill Federal Reserve Chairman Jerome Powell heads to Capitol Hill this week for his first public appearance since being sworn in as the central bank’s new leader earlier this month. He starts Tuesday with the release of his prepared testimony at 8:30 a.m., EST followed by his appearance before the House Financial Services Committee starting at 10 a.m. He returns Thursday to answer questions from the Senate Banking Committee, beginning at 10 a.m. The spotlight shines brightly on any inaugural hearing for a new Fed chair. But Tuesday’s testimony promises to be very carefully parsed by market participants because of the market swoon and a large increase in federal spending that have occurred since Fed officials met in late January and since Mr. Powell took the helm. Markets have been on edge for any hint the Fed might pick up the pace of interest rate increases, though officials haven’t indicated such a shift in recent interviews and public speeches. (The Wall Street Journal) Europe and Uni ted Kingdom Caution Prevails When It Comes to U.K. Corporate Borrowing Borrowing by U.K. companies fell the most in almost three years in January, according to new figures from the banking industry. Lending to non-financial companies dropped 1.4% from a year earlier, led by declines in construction and property-related sectors, lobby group UK Finance said. Separate data showed mortgage approvals for house purchase declined almost 10% last month compared with a year earlier. UK Finance said the figures show business “continues to err on the side of caution,” with borrowing by manufacturers rising only “modestly.” Companies have adopted a “wait and see attitude to trading uncertainties, opting to use their deposits as buffers for spending decisions,” said UK Finance Managing Director Eric Leenders. The figures underline the slowdown in the housing market, with mortgage approvals falling a seasonally adjusted 9.4% on the year to 40,117. (Bloomberg) U.K. Consumer Services Grow at Fastest Pace in a Year, CBI Says Britain’s services sectors, making up the biggest part of the economy, saw growth improve this month, helped by a rebound at restaurants, bars and other consumer industries. After faster inflation meant a rough ride for household spending in 2017, the figures from the Confederation of British Industry suggest some improvement. Consumer services growth was the strongest in a year, while confidence also picked up. The report also showed that business services such as accountancy and marketing expanded at the fastest pace in more than two years in February. The U.K. economy is lagging behind most other advanced nations as the decision to leave the European Union damps investment and fans inflation. Growth in the last three months of 2017 was revised down to 0.4% last week, and the CBI said the expansion will remain “subdued” this year. (Bloomberg) Page 8 of 9
11. 27-Feb-18 Share Buy-Back : 26 February 2018 Company CNI E&O GLOMAC JCBNEXT KPJ MALAKOF SCGM SNTORIA SYSCORP UNIMECH YILAI Bought Back Price (RM) Hi/Lo (RM) 100,000 10,000 30,000 1,000 400,000 738,300 8,000 127,000 271,000 12,100 25,300 0.11 1.45 0.52 1.70 0.935/0.915 0.92/0.915 2.33/2.32 0.65/0.62 0.25/0.23 1.03/1.02 0.75 0.11/0.105 1.45/1.44 0.53/0.52 1.70/1.66 0.945/0.915 0.94/0.91 2.34/2.30 0.65/0.605 0.25/0.23 1.03/1.02 0.75 Total Treasury Shares 7,157,100 25,373,747 5,685,400 254,500 66,170,600 17,856,400 805,600 4,093,000 623,000 6,851,810 8,982,308 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 9 of 9
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) PER (X) Div Yield (%) FY18 FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 26-Feb-18 AUTOMOBILE BAUTO 2.20 2.50 13.6% Buy 2,550 0.49 14.3 19.9 15.4 11.1 5.2 5.5 2.47 -10.9 1.84 19.6 MBMR 2.30 2.47 7.4% Hold 899 0.68 24.7 26.9 9.3 8.6 2.6 3.0 2.60 -11.5 2.01 14.4 0.0 4.5 PECCA 1.35 1.86 37.8% Buy 249 0.45 11.1 12.5 12.1 10.8 4.1 4.5 1.70 -20.6 1.26 7.1 -12.9 SIME 2.73 2.13 -22.0% Sell 18,566 1.57 13.2 16.4 20.7 16.7 1.2 1.5 3.06 -10.8 2.03 34.7 23.5 UMW 6.69 4.37 -34.7% Sell 7,816 1.31 20.7 36.9 32.3 18.1 1.5 2.7 6.98 -4.2 4.70 42.3 28.7 BANKS & FINANCIAL SERVICES ABMB 4.12 4.60 11.7% Buy 6,378 1.26 32.6 35.8 12.6 11.5 3.9 3.9 4.49 -8.2 3.62 13.8 1.0 AFFIN 2.53 2.70 6.7% Hold 4,916 0.93 24.2 28.1 10.4 9.0 3.2 3.2 2.98 -15.0 2.22 13.9 9.5 AMBANK 4.53 5.50 21.4% Buy 13,654 1.40 48.6 52.0 9.3 8.7 4.0 4.0 5.70 -20.5 4.06 11.6 2.7 CIMB 7.20 7.50 4.2% Hold 66,424 1.68 50.8 56.0 14.2 12.9 4.1 3.9 7.36 -2.2 4.91 46.6 10.1 HLBANK 18.52 19.30 4.2% Hold 37,885 0.84 116.8 126.8 15.9 14.6 2.6 2.6 19.18 -3.4 13.28 39.5 8.9 MAYBANK 10.40 10.50 1.0% Hold 112,673 1.00 70.6 77.4 14.7 13.4 4.8 4.8 10.56 -1.5 8.59 21.1 6.1 PBBANK 22.90 27.30 19.2% Buy 88,428 0.72 153.3 166.5 14.9 13.8 2.8 2.8 23.04 -0.6 19.66 16.5 10.2 RHBBANK 5.40 5.70 5.6% Hold 21,654 1.55 52.2 53.8 10.4 10.0 2.8 2.8 5.61 -3.7 4.71 14.6 8.0 BURSA 11.16 11.80 5.7% Buy 5,999 0.93 43.9 45.0 25.4 24.8 3.2 3.2 11.32 -1.4 8.57 30.2 10.3 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 BUILDING MATERIALS ANNJOO 3.80 4.34 14.2% Buy 1,965 1.33 43.8 46.7 8.7 8.1 5.7 6.5 3.98 -4.5 2.27 67.4 -1.6 CHINHIN 1.01 1.36 34.7% Buy 562 1.01 12.4 12.0 8.1 8.4 5.0 5.9 1.49 -32.2 1.00 1.5 -16.5 ENGTEX 1.11 1.38 24.3% Buy 472 0.82 14.2 16.1 7.8 6.9 3.7 4.9 1.52 -27.0 1.01 9.9 0.9 GADANG 1.07 1.69 57.9% Buy 706 1.10 14.2 18.1 7.5 5.9 2.8 2.8 1.37 -21.9 1.01 5.9 -3.6 GAMUDA 4.98 6.00 20.5% Buy 12,236 0.86 34.5 35.7 14.4 14.0 2.4 2.4 5.52 -9.8 4.58 8.7 0.4 IJM 2.84 2.89 1.8% Sell 10,305 1.15 13.7 18.2 20.7 15.6 3.3 3.3 3.61 -21.3 2.66 6.8 -6.9 CONSTRUCTION KAB 0.28 0.38 33.9% Buy 9 na 31.4 37.3 0.9 0.8 3.6 4.3 0.33 -15.2 0.25 14.3 -6.7 PESONA 0.41 0.55 35.8% Buy 281 1.11 5.8 4.8 7.0 8.5 3.7 3.7 0.74 -44.9 0.39 5.2 -10.0 -6.4 SENDAI 0.81 0.55 -32.1% Sell 633 1.21 9.1 8.5 8.9 9.5 1.2 1.2 1.39 -41.7 0.51 60.4 SUNCON 2.46 2.65 7.7% Hold 3,179 0.57 14.7 16.4 16.7 15.0 3.3 3.7 2.64 -6.8 1.70 44.7 -2.0 WCT 1.58 1.64 3.8% Under Review 2,223 0.89 12.6 11.2 12.5 14.2 1.9 1.9 2.48 -36.2 1.46 8.2 -2.5 LITRAK 5.84 6.26 7.2% Hold 3,082 0.37 45.6 47.1 12.8 12.4 4.3 4.3 6.15 -5.0 5.40 8.1 5.2 CARLSBG 18.10 18.09 -0.1% Buy 5,568 0.77 87.8 91.8 20.6 19.7 4.8 5.0 18.28 -1.0 14.12 28.2 18.3 HEIM 21.02 21.64 2.9% Hold 6,350 0.39 93.0 101.3 22.6 20.8 4.0 4.3 21.52 -2.3 16.98 23.8 11.2 AEON 1.53 1.97 28.8% Sell 2,148 0.33 6.7 7.7 22.9 19.9 2.6 2.9 2.57 -40.5 1.52 0.7 -13.1 AMWAY 7.54 8.18 8.5% Buy 1,239 0.47 43.9 45.2 17.2 16.7 5.0 5.3 8.18 -7.8 7.04 7.1 2.2 F&N 30.52 33.74 10.6% Buy 11,187 0.25 122.7 145.8 24.9 20.9 2.6 3.1 31.00 -1.5 22.80 33.9 13.0 CONSUMER Brewery Retail HUPSENG 1.09 1.25 14.7% Buy 872 0.41 5.7 5.9 19.1 18.4 5.5 5.5 1.28 -14.8 1.05 3.8 0.0 JOHOTIN 1.25 1.75 40.0% Buy 388 0.95 12.8 13.5 9.8 9.3 4.0 4.3 1.76 -29.0 1.16 7.8 3.3 NESTLE 122.00 129.90 6.5% Hold 28,609 0.54 322.2 360.2 37.9 33.9 2.5 2.7 124.00 -1.6 75.40 61.8 18.2 PADINI 5.35 4.67 -12.7% Sell 3,520 0.77 28.0 30.4 19.1 17.6 2.3 2.4 5.50 -2.7 2.77 93.3 1.3 POHUAT 1.54 2.01 30.5% Buy 338 0.59 22.9 25.4 6.7 6.1 5.2 5.2 2.07 -25.6 1.43 7.7 -14.0 QL 4.95 5.41 9.3% Hold 8,031 0.59 12.8 14.7 38.6 33.6 0.9 1.0 4.98 -0.6 3.26 52.1 13.8 SIGN 0.61 0.92 50.8% Buy 140 0.69 6.9 9.2 8.8 6.7 4.1 5.7 1.07 -43.0 0.57 7.0 -13.5 29.80 34.72 16.5% Hold 8,509 1.40 170.8 168.8 17.4 17.7 5.4 5.4 49.40 -39.7 29.30 1.7 -25.5 GENTING 8.92 11.53 29.3% Buy 34,176 1.47 54.4 59.8 16.4 14.9 1.8 1.8 10.00 -10.8 8.70 2.5 -3.0 GENM 5.16 6.51 26.2% Buy 29,200 1.44 27.0 30.6 19.1 16.9 1.7 1.9 6.38 -19.1 4.87 6.0 -8.3 2.26 3.34 47.8% Buy 3,044 0.60 21.5 26.0 10.5 8.7 7.1 8.0 2.98 -24.2 2.20 2.7 0.9 CCMDBIO 2.87 2.70 -5.9% Buy 801 0.88 15.0 16.1 19.1 17.9 3.4 3.6 3.03 -5.3 1.97 45.7 13.4 IHH 6.09 6.40 5.1% Buy 50,179 0.79 11.9 15.0 51.3 40.7 0.5 0.6 6.33 -3.8 5.42 12.4 3.9 KPJ 0.93 1.13 22.2% Buy 3,900 0.55 3.9 4.3 23.9 21.5 2.4 2.6 1.14 -18.9 0.87 6.3 -4.6 HARTA 11.52 7.80 -32.3% Sell 19,071 1.11 25.2 28.9 45.7 39.9 1.3 1.5 12.18 -5.4 4.68 146.2 7.9 KOSSAN 8.68 9.73 12.1% Buy 5,551 0.53 37.4 42.1 23.2 20.6 2.2 2.4 8.79 -1.3 5.62 54.4 7.0 SUPERMX 2.68 2.70 0.7% Buy 1,757 0.62 20.0 22.6 13.4 11.9 2.5 2.9 2.74 -2.2 1.69 58.6 34.0 TOPGLOV 10.00 9.35 -6.5% Sell 12,560 0.66 41.6 50.8 24.1 19.7 1.4 1.7 10.24 -2.3 4.56 119.3 25.2 KAREX 1.08 1.00 -7.4% Sell 1,083 0.76 2.8 5.2 39.1 20.7 0.6 1.2 2.31 -53.2 1.03 4.9 -16.9 SCIENTX 8.49 10.01 17.9% Buy 4,151 0.88 67.5 79.4 12.6 10.7 2.5 3.1 9.85 -13.8 7.20 17.9 -2.0 SKPRES 1.88 2.20 17.0% Buy 2,350 0.86 10.4 14.8 18.1 12.7 2.8 3.9 2.35 -20.0 1.24 51.6 -17.5 ASTRO 2.51 3.10 23.5% Buy 13,087 0.82 14.0 13.7 18.0 18.3 5.2 5.4 2.94 -14.6 2.40 4.6 -5.3 MEDIA PRIMA 0.55 0.45 -18.2% Sell 610 1.21 -3.8 -1.7 na na 0.0 0.0 1.28 -57.0 0.53 4.8 -27.6 STAR 1.31 1.25 -4.6% Sell 967 1.05 6.7 6.7 19.5 19.5 9.2 9.2 2.22 -40.9 1.31 0.0 -20.6 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
13. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) FY18 PER (X) Div Yield (%) FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.47 0.72 53.2% Buy 825 1.56 4.2 4.5 11.2 10.4 2.1 2.1 0.69 -31.9 0.38 25.3 -3.1 LCTITAN 5.33 6.10 14.4% Buy 12,115 na 56.3 60.9 9.5 8.8 4.7 5.1 6.53 -18.4 4.14 28.7 13.4 MHB 0.81 0.81 0.6% Sell 1,288 1.36 0.5 1.7 167.3 48.2 0.0 0.0 1.16 -30.6 0.63 28.8 -2.4 MISC 6.79 7.00 3.1% Sell 30,309 1.12 50.1 53.8 13.6 12.6 4.4 4.4 7.90 -14.1 6.76 0.4 -8.5 PANTECH 0.61 0.69 13.1% Buy 454 1.22 6.1 6.8 10.0 9.0 4.5 5.0 0.74 -17.6 0.47 31.2 -5.4 PCHEM 8.05 8.84 9.8% Hold 64,400 0.86 52.5 53.8 15.3 15.0 3.2 3.2 8.28 -2.8 6.80 18.4 4.5 SAPNRG 0.69 1.25 81.2% Buy 4,135 1.96 -6.5 -5.0 na na 0.0 0.0 2.10 -67.1 0.66 4.5 -2.8 SERBADK 3.55 4.15 16.9% Buy 5,213 na 27.7 31.5 12.8 11.3 2.5 2.8 3.66 -3.0 1.63 117.8 9.6 UMWOG 0.33 0.51 56.9% Buy 2,670 1.82 0.4 1.2 80.4 26.2 0.0 0.0 0.68 -52.4 0.27 20.4 6.6 UZMA 1.41 1.56 10.6% Sell 451 0.85 13.1 14.2 10.8 9.9 0.0 0.0 1.98 -28.8 1.26 11.9 10.2 FGV 2.01 1.98 -1.5% Sell 7,333 1.62 3.5 4.4 58.2 46.1 2.5 2.5 2.18 -7.8 1.51 33.1 18.9 IJMPLNT 2.30 2.69 17.0% Sell 2,025 0.22 9.1 12.5 25.2 18.3 3.5 3.9 3.38 -32.0 2.28 0.9 -16.1 IOICORP 4.79 5.08 6.1% Sell 30,100 0.93 20.9 21.6 22.9 22.2 6.1 3.6 4.82 -0.6 4.31 11.1 5.5 KFIMA 1.53 1.89 23.5% Buy 432 0.69 14.1 14.7 10.8 10.4 5.9 5.9 1.96 -21.9 1.45 5.5 -2.5 KLK 25.50 27.07 6.2% Hold 27,157 0.65 120.7 125.7 21.1 20.3 2.4 2.4 25.78 -1.1 23.66 7.8 2.0 SIMEPLT 5.50 6.25 13.6% Buy 37,405 na 21.0 22.1 26.1 24.9 2.5 2.7 6.00 -8.3 4.58 20.1 -8.3 TSH 1.59 2.10 32.1% Buy 2,195 0.52 9.3 9.6 17.1 16.6 1.5 1.5 1.90 -16.3 1.56 1.9 -3.6 UMCCA 6.31 6.73 6.7% Sell 1,323 0.39 22.7 34.8 27.8 18.1 2.7 2.9 7.08 -10.9 5.76 9.5 -3.1 GLOMAC 0.52 0.46 -11.5% Sell 413 0.73 3.0 4.4 17.6 11.8 3.8 3.8 0.67 -22.7 0.50 5.1 -6.2 HUAYANG 0.58 0.58 0.9% Sell 202 0.91 0.7 3.4 88.0 16.9 0.9 0.9 1.16 -50.4 0.58 0.0 -5.7 IBRACO 0.77 0.92 19.5% Hold 382 na 9.1 12.4 8.4 6.2 5.2 6.5 0.98 -21.0 0.50 54.0 -5.5 IOIPG 1.91 2.00 4.7% Sell 10,517 0.86 16.3 15.6 11.7 12.2 3.1 3.1 2.22 -14.0 1.79 6.7 3.2 MAHSING 1.25 1.69 35.2% Buy 3,035 0.93 13.0 12.6 9.6 10.0 5.2 5.2 1.64 -23.8 1.21 3.3 -13.8 PLANTATIONS PROPERTY SIMEPROP 1.35 1.61 19.3% Sell 9,181 na 9.2 9.1 14.7 14.8 1.5 1.5 1.78 -24.2 1.04 29.8 -24.2 SNTORIA 0.64 0.76 18.8% Buy 361 0.16 8.3 8.6 7.7 7.5 1.6 1.6 0.91 -29.6 0.56 14.3 -7.9 SPB 4.71 5.28 12.1% Hold 1,618 0.55 21.2 26.1 22.3 18.0 2.5 2.5 5.50 -14.4 4.39 7.3 -3.9 SPSETIA 3.28 3.77 14.9% Buy 12,310 0.94 21.3 21.9 15.4 15.0 3.7 3.7 4.38 -25.2 3.07 6.8 -18.0 SUNWAY 1.60 1.74 8.7% Hold 7,833 0.93 11.9 12.6 13.4 12.7 3.1 3.8 1.96 -18.3 1.31 22.0 -1.8 SUNREIT 1.70 1.87 10.0% Hold 5,007 0.83 10.0 10.7 16.9 15.9 5.9 6.3 1.90 -10.5 1.64 3.7 -10.5 CMMT 1.09 1.64 50.5% Buy 2,221 0.71 7.9 8.6 13.8 12.6 7.5 8.2 1.83 -40.4 1.09 0.0 -40.4 REIT POWER & UTILITIES MALAKOF 0.92 0.82 -10.9% Sell 4,579 0.93 6.6 7.2 13.9 12.8 7.6 7.6 1.30 -29.2 0.86 7.0 -6.1 PETDAG 25.70 22.08 -14.1% Under Review 25,532 0.45 105.1 105.7 24.4 24.3 3.0 3.1 26.20 -1.9 21.00 22.4 5.9 PETGAS 17.66 19.10 8.2% Under Review 34,944 0.88 98.8 99.5 17.9 17.7 3.9 4.0 20.62 -14.4 15.82 11.6 1.0 TENAGA 15.62 18.33 17.3% Buy 88,503 0.55 131.3 127.5 11.9 12.3 4.4 4.2 16.12 -3.1 13.44 16.2 2.4 YTLPOWR 1.18 1.16 -1.7% Sell 9,173 0.89 8.6 8.9 13.7 13.2 4.2 4.2 1.50 -21.3 1.11 6.3 -8.5 TELECOMMUNICATIONS AXIATA 5.59 6.50 16.3% Buy 50,580 1.53 15.9 19.5 35.1 28.7 1.4 2.8 5.82 -4.0 4.32 29.4 1.8 DIGI 4.89 5.15 5.3% Hold 38,020 0.95 19.7 20.4 24.8 24.0 4.0 4.2 5.19 -5.8 4.36 12.2 -4.1 MAXIS 5.99 6.05 1.0% Sell 46,785 1.07 25.2 25.0 23.8 23.9 3.2 3.2 6.60 -9.2 5.48 9.3 -0.3 TM 6.00 7.20 20.0% Buy 22,548 0.63 23.2 24.9 25.9 24.1 3.5 3.7 6.69 -10.3 5.85 2.6 -4.8 ELSOFT 2.59 3.30 27.4% Buy 712 0.84 13.1 15.0 19.7 17.3 3.6 4.1 2.95 -12.2 1.58 63.7 -4.1 IRIS 0.19 0.25 35.1% Buy 457 2.47 0.6 0.7 33.4 27.7 0.0 0.0 0.25 -24.5 0.12 60.9 0.0 INARI 3.42 3.35 -2.0% Under Review 7,066 0.71 14.0 15.7 24.4 21.8 2.9 3.3 3.82 -10.5 1.88 82.3 0.6 TECHNOLOGY Semiconductor & Electronics Note: INARI proposed bonus issue shares on the basis of 1 for 2. For more detail please refer to 30.01.18 report. MPI 9.32 10.70 14.8% Hold 1,854 0.83 73.9 86.9 12.6 10.7 3.4 3.4 14.52 -35.8 8.62 8.1 -26.1 UNISEM 2.71 2.70 -0.4% Sell 1,989 1.14 17.1 18.4 15.8 14.7 4.4 4.4 4.25 -36.2 2.52 7.5 -25.8 TRANSPORTATION Airlines AIRASIA 4.46 3.83 -14.1% Buy 14,905 1.05 38.3 39.8 11.7 11.2 1.1 1.3 4.49 -0.7 2.58 72.9 33.1 AIRPORT 8.70 8.61 -1.0% Sell 14,435 1.29 17.9 18.7 48.7 46.6 1.5 1.1 9.45 -7.9 6.36 36.8 -1.0 Freight & Tankers PTRANS 0.30 0.46 53.3% Buy 378 na 2.3 3.8 12.8 8.0 2.3 3.6 0.38 -21.4 0.16 94.1 7.1 TNLOGIS 1.16 1.45 25.0% Buy 530 1.04 10.3 10.5 11.3 11.0 4.3 4.3 1.83 -36.7 1.10 5.5 -13.4 WPRTS 3.64 4.06 11.5% Buy 12,412 0.43 15.6 20.0 23.3 18.2 1.0 1.3 4.19 -13.1 3.12 16.7 -1.6 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) % upside Recom Market Cap. (S$m) Beta EPS (cent) FY18 FY19 PER (X) FY18 FY19 Div Yield (%) FY18 FY19 52week 52week % Chg High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 29.63 30.50 2.9% Buy 75,967 1.13 212.3 246.0 14.0 12.0 2.2 2.4 29.7 -0.3 18.47 60.4 OCBC 13.47 14.30 6.2% Buy 56,377 1.22 109.5 123.2 12.3 10.9 6.7 7.7 13.5 -0.1 9.42 43.0 19.2 8.7 UOB 28.46 27.80 -2.3% Hold 47,314 1.18 216.6 243.9 13.1 13.1 2.8 2.8 28.6 -0.3 21.30 33.6 7.6 PLANTATIONS WILMAR 3.22 3.31 2.8% Hold 20,603 0.82 29.9 31.8 10.8 10.1 2.5 2.8 3.9 -16.8 2.97 8.4 4.2 IFAR 0.36 0.53 49.3% Hold 509 0.94 5.2 5.7 6.8 6.2 3.6 3.9 0.5 -34.9 0.35 1.4 -9.0 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
14. RESULTS UPDATE Tuesday , February 27, 2018 FBMKLCI: 1,860.08 Sector: Finance THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM4.60 (+11.7%) Alliance Bank Malaysia Berhad Last Traded: RM4.12 Softer 3Q18 Results on Higher Operating Expenses an d Taxes Li Hsia Wong Tel: +603-2167 9610 liwong@ta.com.my Review ABMB reported softer 3QFY18 results, bringing reported YTD net profit to RM380.4mn, or 3.6% decline from RM394.7mn a year ago. ROE stood at 9.5%, from 10.5% in FY17. Nevertheless, results came within expectations with YTD net profit representing 80% and 77% of ours and consensus full year estimates respectively. Accounting for 74% of our forecast, topline growth momentum was encouraging. Total income expanded by 6% YoY, faster than historical 4year CAGR. Combined with Islamic net financing income, total net interest income (NII) advanced by 5.3% YoY. Growth was driven by ongoing focus on better risk adjusted return (RAR) loans and NIM expansion. Growing selectively, gross loans broadened by 0.3% QoQ mostly due to increases in better RAR loans such as SME, commercial, share margin and consumer unsecured lending. Targeting bookings of RM500mn per month, management also noted continued strong build-up of RM310mn QoQ for the Alliance One account in 3QFY18. In the meantime, lower RAR loans such as mortgages, HP, Biz Premises and corporate loans collectively decreased by 6.6% YoY. The 12.4% increase in better RAR loans helped support gross interest margin, which widened by 10 bps YTD to 4.85%. Overall NIM rose 10 bps to 2.36%, also driven in part, by a 4.3% YoY increase in CASA deposits. CASA ratio improved to 39.5% from 34.1% a year ago. Overall COF for the bank slipped 2 bp YTD due to more efficient funding mix. Management expects NIM to be enhanced by some 2 bps and 5 bps in FY18 and FY19 due to the recent increase in OPR. Including Islamic Banking, non-NII improved by 8.4% YoY. According to management, client based fee income grew at a stronger pace of 4.1% YoY or by RM9.8mn, spurred by higher wealth management fees and banking services fees. Higher FX trading income and stronger treasury income from derivatives also helped boost non client based non-NII. Annualised net credit charge improved to 18.9 bps vs. 24.3 bps in FY17. Excluding one-off write back from credit rating scale alignment from corporates amounting to 9 bps, normalised net credit cost stood at 27.9 bps, below management’s target of <30 bps. Going forward, management foresees credit cost to continue normalising as personal financing delinquency rate stabilises along with and potential write back from unsecured debt sale and efforts to intensify R&R remedial action for corporates. Gross impaired loans ratio stood at 1.2% (9MFY17: 1.0%). Loan loss coverage slipped to 116.9% (9MFY17: 137.1%). This includes Regulatory Reserve. BUY www.taonline.com.my 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 ABMB MK 2488 Main Market 1548.1 6,378.2 4.49/3.62 1115.0 50.0 1.28 Major Shareholders (%) Vertical Theme - 29.1 EPF - 11.7 Forecast Revision FY18 6.8 505.2 493.6 102.4 FY19 0.6 554.5 558.5 99.3 FY18 10.1 0.9 52.1 1.2 3.5 1.2 FY19 10.5 0.9 47.4 1.3 3.7 1.1 vs. TA vs. Consensus % of FY 80.0 77.0 Within Within Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth ABMB (4.8) 11.7 7.3 8.1 FBM KLCI (0.5) 8.3 4.9 9.8 Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Financial Indicators ROE (%) ROA (%) CTI Ratio (%) Gross NPL Ratio (%) BV/ Share (RM) Price/ BV (x) Scorecard (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
15. 27-Feb-18 Elsewhere , total overhead expenses surged 14% YoY (+13.2% QoQ), capturing RM59.5mn in transformation expenses for restructuring expenses (RM40.1mn) and scaling up of sales personnels (RM8.5mn). As guided by management, operating expenses accelerated in 3Q, and will continue to increase heavily in 4Q. To recap, management guided that total investment costs will amount to RM90mn in FY18 to scale up sales personnel, restructuring costs, upgrade technology and marketing. The effort, which is in line with ABMB’s transformation programme, would create new revenue streams and encourage cost savings on the back of greater efficiencies. ABMB’s cost to income (CTI) ratio broadened to 49.8% from 46.3% a year ago. Excluding the transformation costs, BAU CTI would have improved to around 44.9% Lastly, the CET1 Capital Ratio and total capital ratio for the group stood above regulatory requirements at 13.6% and 18.7% respectively. Day-1 impact from MFRS9 is expected to reduce CET1 by 50 bps. Elsewhere, ABMB also reported healthy liquidity position as the liquidity coverage ratio stood at 132% while the net stable funding ratio (NSFR) is reported to be above 100%. Impact We trim our FY18 credit charge assumption to 24 bps from 34 bps on the back of better-than-expected YTD allowances on loans and other assets. Providing further clarity, we believe that most banks have more than sufficient capital buffers to withstand the impact from the implementation of the MFRS9. Nevertheless, we maintain our conservative stance and maintain FY19 and FY20 credit charge assumptions at 38 bps and 28 bps respectively. Taken together, we adjust our FY18/19/20 net profit estimates to RM505.2/554.5/624.1mn from RM473.2/551.4/620.6mn previously. Outlook Falling short of guidance (of 5-6% for FY18), total loans contracted by 0.5% YoY, underpinned by a decline in lower RAR loans namely mortgages, HP loans and corporate loans. Nevertheless, the bank continues to register good progress with the Alliance One Account. Benefiting from first mover advantage, management believes that growth from this loan consolidation service has helped offset contraction of conventional mortgages since Nov’ 17. By FY19, management plans to ramp up monthly disbursements to RM500mn and capture some 8% of industry market share of new mortgage origination. Also making good progress is the SME space. Underpinned by continued productivity improvement, loan acceptance run-rates during the quarter increased 40% compared to 1Q. Initiatives include enhancing sales and hunter teams as well as pre-approved / top-up programs for existing SME borrowers and key target industries. Ramping up digitization, processes are streamlined to deliver better turnaround time and customer experience. Other topline growth drivers include Alliance@Work, which appears to be gaining decent traction with the bank on-track to on-board ~10,000 employees’ account by March 2018. In the meantime, management will focus on keeping costs lean via streamlining of branch network (consolidation of 5 branches by March 2018). In addition to a VSS undertaken earlier, management expects an annualised savings (PBT) of some RM20mn per annum. Page 2 of 3
16. 27-Feb-18 Valuation We remain positive on ABMB ’s transformation plans and foresee exciting growth prospects for the group, going forward. Valued at an implied FY19 PBV of 1.25x, we maintain ABMB’s TP at RM4.60. We upgrade the stock from HOLD to BUY on the back of the potential total upside in excess of 12%. Table 1: Earnings Summary (RMmn) FYE Dec Net interest income Non-interest income Islamic Banking Total operating income Pre-provisioning profit Pretax profit Net profit EPS (sen) EPS growth (%) Gross div (sen) Div yield (%) 2016 847.8 332.2 244.2 1424.1 735.2 694.8 522.0 33.7 (1.6) 14.5 3.5 2017 847.5 324.8 297.0 1469.4 777.5 681.4 512.1 33.1 (1.9) 16.0 3.9 2018F 906.0 360.9 320.8 1587.6 760.2 664.8 505.2 32.6 (1.3) 16.0 3.9 2019F 952.8 401.3 346.5 1700.6 893.8 729.6 554.5 35.8 9.8 16.0 3.9 2020F 1004.6 446.7 374.2 1825.5 954.2 821.1 624.1 40.3 12.6 16.0 3.9 Table 2: 3QFY18 Results Analysis (RMmn) YE 31 Mar Net interest income Non-interest income Islamic banking Total income Overhead expenses Profit before allowances Allowances/impairments PBT Net profit EPS (sen) 3Q FY17 218.4 85.4 74.8 378.6 (174.3) 204.3 (32.4) 171.9 129.7 8.4 2Q FY18 230.4 85.4 78.1 393.9 (190.2) 203.7 (33.5) 170.2 122.8 7.9 3Q FY18 220.3 88.9 78.8 388.0 (215.3) 172.7 8.0 180.7 122.6 7.9 QoQ (4.4) 4.1 0.9 (1.5) 13.2 (15.2) >100.0 6.2 (0.2) (0.2) YoY 0.9 4.1 5.3 2.5 23.5 (15.5) >100.0 5.1 (5.5) (5.5) YTD FY17 634.8 246.8 220.6 1,102.2 (510.7) 591.5 (68.6) 522.9 394.7 25.5 YTD FY18 668.1 265.5 234.9 1,168.5 (581.9) 586.6 (55.8) 530.8 380.4 24.6 YoY 5.2 7.6 6.5 6.0 13.9 (0.8) (18.7) 1.5 (3.6) (3.6) 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 Tuesday, February 27, 2018, the analyst, Wong Li Hsia, 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 3 of 3
17. RESULTS UPDATE Tuesday , February 27, 2018 FBMKLCI: 1,860.08 Sector: Finance THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM19.30 (+4.2%) Hong Leong Bank Berhad Last Traded: RM18.52 Record 1H PAT on Strong Underlying Perfomance Li Hsia Wong Tel: +603-2167 9610 HOLD liwong@ta.com.my Review HLBB reported encouraging 1HFY18 results. Registering YTD net profit of RM1,322.0mn, results came within expectations, representing 55% of ours and consensus full year estimates of RM2,390mn and RM2,422mn respectively. The encouraging set of results were anchored by a combination of higher operating income (+5.8% YoY), positive JAWS and robust asset quality. Giving an added boost to PBT, contribution from China associates more than doubled to RM283mn from RM140mn a year ago, accounting for almost 20% (from 10% in 1HFY17) of total PBT. Sequentially, net profit advanced 6.9% QoQ, driven by higher income (+4.2% QoQ) and softer operating expenses (+1.7% QoQ), but more meaningfully due to a 77% decline in loan allowances. Yearly, total loan allowances and other impairments stood at RM53.3mn in 1HFY18 vs. RM53.2mn a year ago. The gross impaired loans ratio (GIL) stood little changed at 0.97% (FY17: 0.96%) as the GIL in Malaysia was unchanged at 1.01%. The marginal increase was mostly driven by upticks in the overseas operation (+11 bps YTD). Nevertheless, management noted no major stress in its portfolios. By major segments, the GIL for mortgages and transport vehicles stood at 0.55% (FY17: 0.54%) and 0.85% (FY17: 0.81%). Meanwhile, the GIL ratio for the SME segment improved to 1.47% (FY17: 1.49%). Other asset quality indicators such as loan loss coverage was stable at 96% (1HFY17: 107%). Total income expanded. Leading the increase, net interest income (NII) (including Islamic Banking operations) climbed 9% YoY, lifted by an 8 bps expansion in the net interest margin (NIM). Management noted that the NIM improved on the back of appropriate loan pricing and effective funding costs management. In tandem with slower industry-wide growth, total loans and advances of 1.8% YoY was below our forecast of 4% and management’s guidance of around 5%-6. With that, management is revising its loan growth target to 3-4% for FY18. Leveraging on its strong retail franchise and fueled by the bank’s digital initiatives, CASA deposits broadened by some 9.3% YoY. Supporting NIM, CASA mix strengthened to 27% of total deposits during the quarter (vs. 25% in FY17). HLBB’s strength in individual deposits remained intact with a market share of some 12%. Deposits from individuals and business enterprises climbed 1.3% and 3.7% YoY. The loan to deposit ratio stood little changed at 80.8% - below the industry’s average of around 91.4%. Including Islamic Banking operations, non-NII slipped to RM625mn from RM640mn. Fee income contracted by RM22mn to RM291mn as better wealth management income (+21% YoY) helped cushion decreases in credit card fees (-7% YoY). Meanwhile, FX income was stable YoY at c. RM33mn while trading and investment income improved by 5% YoY. www.taonline.com.my 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 HLBK MK 5819 Main Market 2045.6 37,884.5 16.48/13.02 1070.2 17.4 0.57 Major Shareholders (%) Hong Leong Financial - 65.7 EPF - 13.4 Forecast Revision FY18 0.0 2389.7 2422.0 98.7 FY19 0.0 2594.8 2572.0 100.9 FY18 ROE (%) 11.5 ROA (%) 1.2 CTI Ratio (%) 44.3 Gross Impaired Loans Ratio (%) 1.0 81.4 LD Ratio (%) BV/ Share (RM) 11.8 Price/ BV (x) 1.6 FY19 11.6 1.3 43.2 0.9 82.2 12.6 1.5 Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Financial Indicators Scorecard vs. TA vs. Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth % of FY 55.0 55.0 Within Within HLBK (0.4) 22.3 19.9 36.4 FBM KLCI (0.5) 8.3 4.9 9.8 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
18. 27-Feb-18 Operating expenses remained tightly managed . Registering 6 consecutive quarters of positive JAWS, the cost to income (CTI) ratio further improved to 42.5% from 43.6% a year ago. Total operating expenses broadened by 1.7% QoQ and 3.2% YoY. Making up 55% of total expenses, personnel cost stayed pat at RM558mn YoY. Meanwhile, establishment costs broadened the most (+9.7% YoY), most of which were invested in the bank’s digital banking transformation. Elsewhere, its capital position remains strong with a CET1, Tier 1 and Total Capital Ratio of 13.1%, 13.8% and 15.8%. An interim single tier dividend of 16.0 sen per share has been proposed for the current quarter – higher than 15.0 sen a year ago. This translates to a payout ratio of around 28%. Impact No change to our earnings estimates. Outlook An overall solid 1HFY18 as results met most key KPIs. Management foresees another year with decent earnings momentum. Growth will be underpinned by well managed expenses coupled with stronger topline growth. Loan growth is expected to strengthen to a new but softer FY18 target of 3-4%, underpinned by mortgages and SME. Expectations of steady NIM will also be a catalyst in keeping ROE between 10% and 11% (FY17: 10.3%). HLBB achieved ROE of 11.5% in 1HFY18. Overall asset quality is envisaged to remain benign. Management noted that the overall book remained healthy with no major stress in any portfolio segments. Nevertheless, normalizing of credit charges are expected on the back of lower recoveries. GIL ratio is expected to be maintained below 1%. In China, management reiterated that the downside risks in asset quality stemming from Bank of Chengdu have abated. Quality indicators have improved on the back of efforts to ramp up recovery and strengthen stringent credit processes, as reflected in the strong performance. Management expects further moderate recovery and stronger contributions in 2018. Valuation TP is maintained at RM19.30. Our TP translates to an implied FY18 PBV of 1.6x. At current share price, the stock continues to trade at a premium to the industry’s and mid-cap peers’ average of 1.2x and 1.1x respectively. We maintain our HOLD recommendation on HLBB. Table 1: Earnings Summary (RMmn) FYE Dec Net interest income Non-interest income Islamic Banking Total operating income Pre-provisioning profit Pretax profit Net profit EPS (sen) EPS growth (%) Gross div (sen) Div yield (%) 2016 2655.1 1055.3 467.5 4177.9 2091.1 2381.7 1903.4 93.0 (14.8) 41.0 2.2 2017 2854.4 1146.1 550.1 4550.6 2543.1 2748.3 2145.0 104.9 12.7 45.0 2.4 2018F 2908.8 1218.4 616.1 4743.2 2642.7 2987.1 2389.7 116.8 11.4 48.0 2.6 2019F 3121.6 1297.7 677.7 5097.0 2896.6 3243.4 2594.8 126.8 8.6 48.0 2.6 2020F 3198.2 1384.9 745.5 5328.6 3020.9 3435.9 2748.7 134.4 5.9 48.0 2.6 Page 2 of 3
19. 27-Feb-18 Table 2 : 1HFY18 Results Analysis (RMmn) YE 30 June Net interest income Non interest income Income from Islamic Banking Total income Operating expenses Operating profit Total allowances Share of associate profit Pretax profit Taxation Tax rate (%) Net profit EPS (sen) 2Q FY17 708.6 331.8 138.4 1178.7 (500.7) 678.0 (26.8) 45.3 696.6 (146.7) 21.1 549.9 26.9 1Q FY18 740.5 278.3 159.8 1178.6 (507.1) 671.5 (43.4) 152.3 780.4 (141.4) 18.1 639.0 31.2 2Q FY18 748.7 323.1 156.8 1228.6 (515.8) 712.7 (9.9) 130.3 833.1 (150.0) 18.0 683.1 33.4 QoQ 1.1 16.1 (1.9) 4.2 1.7 6.1 (77.1) (14.5) 6.8 6.1 (0.6) 6.9 6.9 YoY 5.7 (2.6) 13.3 4.2 3.0 5.1 (62.9) 187.4 19.6 2.3 (14.5) 24.2 24.2 YTD FY17 1399.0 608.0 268.0 2275.0 (991.4) 1283.6 (53.2) 140.8 1371.2 (278.7) 20.3 1092.6 53.4 YTD FY18 1489.2 601.4 316.6 2407.2 (1023.0) 1384.2 (53.3) 282.6 1613.5 (291.5) 18.1 1322.0 64.6 YoY 6.4 (1.1) 18.1 5.8 3.2 7.8 0.3 100.7 17.7 4.6 (11.1) 21.0 21.0 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 Tuesday, February 27, 2018, the analyst, Wong Li Hsia, 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 3 of 3
20. RESULTS UPDATE Tuesday , February 27, 2018 FBMKLCI: 1,860.08 Sector: Healthcare THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM1.13 (+22.2%) KPJ Healthcare Berhad Last Traded: RM0.925 Better Margins in 4Q Tan Kam Meng, CFA Buy Tel: +603-2167 9605 kmtan@ta.com.my Review KPJ’s FY17 core net profit of RM160.4mn (+18.6% YoY) came in above ours and consensus estimates at 107.1% and 108.5% respectively. The variance was due to stronger-than-expected margins in 4Q17 as a result of better cost management. FY17’s revenue and EBITDA respectively grew by 7.1% YoY to RM3.2bn and 3.1% YoY to RM438.5mn. This was driven by the group’s core hospital operations in Malaysia mainly due to higher revenue per patient (outpatient +4.5% YoY, inpatient +5.5% YoY) along with higher patient traffic (outpatients +0.4% YoY and inpatients +2.4% YoY). Coupled with the net addition of 123 operating beds to 3,052 beds, new hospitals like KPJ Rawang, KPJ Klang and KPJ Pasir Gudang have shown encouraging growth. Overseas, Indonesian FY17 operations suffered LBITDA of RM0.1mn vs. EBITDA of RM80.1mn in FY16. We attribute this to: i) lower profit from Permata Hijau hospital due to lower number of patients, and ii) cases whereby BPJS (Badan Penyelenggaraan Jaminan Sosial Kesehatan) which acts as an insurer, providing healthcare management for the public not paying the full patient bill. Meanwhile, its Australian retirement village project, i.e.: Jeta Garden, remained unprofitable with a loss before zakat and taxes of RM8.1mn (vs. -RM10.5mn in FY16). Separately, an interim dividend of 0.5sen/share was declared (FY17: 1.78sen/share vs. FY16: 1.2sen/share). Impact • Our FY18/FY19/FY20 earnings are revised by +3.8%/+3.9%/+4.0% to RM165.9mn/RM184.6mn/RM208.9mn after revising our GP margin higher by +0.3%/0.2%/0.3%. Outlook KPJ Perlis (+60 beds) is likely to commence operations by March-18, provided no major issues from MOH inspection, which has yet to began. We expect patient traffic to continue growing as the group is targeting to open 5 new hospitals and expand 4 existing hospitals this year. www.taonline.com.my 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 (%) KPJ MK 5878 Main Market 4,217.7 3,900.0 1.14/0.87 2,300.5 18.5 0.6 Johor Corp - 44.1 EPF - 12.8 Waqaf An-Nur Corporation Bhd - 5.0 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 3.8 3.9 164.8 183.5 168.1 185.9 98.0 98.7 Buy (Maintained) Financial Indicators Net gearing (x) CFPS (RM) P/CFPS (x) ROAA (%) ROAE (%) NTA/Share (RM) Price/ NTA (x) FY18 0.7 0.1 10.8 3.9 9.2 0.4 2.5 FY19 0.7 0.1 10.1 4.1 9.8 0.4 2.4 % of FY 107.1 108.5 Above Above KPJ (3.6) (8.4) (11.5) (9.1) FBM KLCI 0.3 8.2 5.1 9.8 Scorecard vs. TA vs. Consensus Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth (12-Mth) Share Price relative to the FBMKLCI Valuation & Recommendation Our TP for KPJ is revised higher to RM1.13/share (previously RM1.12/share) based on SOTP valuation. Reiterate Buy. Source: Bloomberg Page 1 of 3