Bursa Malaysia Daily Market Report - 28 February

Transcription

1. Wednesday , 28 February, 2018 TA RESEARCH’S ‘DAILY COMPILED REPORTS’ For Internal Circulation Only N ew s 1. D ai l y M arke t C om men t a ry 2. D ai l y B ri ef Fu nd a me n tal Rep o r ts 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. A i rA s ia Be rh a d : A A C Di sp o sa l N e x t M o n th A m w a y (M a l a ys i a ) H o l d i n g s Be rh a d : E x p e c t s Be t te r Pe r f o r m a n c e in 2 0 1 8 C C M D u o p h a rm a B io t e c h B h d : E x p e c t G ro w th M o m e n tu m to C o n t in u e C h in H in Be rh a d : M a n u f a c tu rin g Se g m e n t R e m a i n s th e C o r e Dr iv e r Da g a n g N e Xc h a n g e Be rh a d : A n a su r ia De liv e r s De c e n t P ro f i t s En g t e x G ro u p Be rh a d : E x p e c t a Be tt e r Y e a r A h e a d Eve rs e n d a i C o r p o ra t io n Be r h a d : L if tb o a t s R e m a in a C o n c e rn Ge n t i n g Be rh a d : A Sp e c ia l “ A n g Po w ” Ge n t i n g M a la ys ia Be r h a d : St ro n g 4 Q R e su l ts w i th Div i de n d Su rp ri s e IH H H e a l t h c a re Be rh a d : F u n da m e n ta l s I n ta c t IJ M C o rp o r a t io n Be rh a d : A n o th e r We a k Q u a r t e r IJ M P l a n t a t io n Be rh a d : N o t O u t o f th e Wo o d s Y e t In a r i A m e rt ro n Be rh a d : A n o th e r R e c o rd Q u a r te r Jo h o re T i n Be r h a d : A tt ra c tiv e Div i de n d Y ie ld P e c c a Be r h a d : M y v i to Bo o st 2 H E a rn in g s P e s o n a M e t ro H o ld i n g s Be rh a d : D ra g g e d b y C o n st ru c tio n D iv i sio n P e t ro n a s Da g a n g a n Be rh a d : U p p in g th e Ga m e A m i d st Su b du e d R e ta i l V o lu m e s P e t ro n a s Ga s Be r h a d : R o b u s t Pro f i t s f ro m Pe n g e ra n g R GT RH B Ba n k Be r h a d : F Y 1 7 R e su l t s Wi th in E x p e c ta tio n s S im e D a r b y P ro p e rt y Bh d : Sa le s M o m e n tu m i s Pic k in g U p S P S e t i a Be r h a d : S t il l t h e N o 1 De v e lo p e r in T e rm s o f Do m e s tic Sa le s S t a r M e d ia G ro u p Be r h a d : W e ig h te d b y L o w e r A dv e r t is in g E x p e n d itu re T e le k o m M a la ys ia Be r h a : I n te rn e t L e a d s th e Wa y T S H Re s o u rc e s Be rh a d : O u tlo o k R e m a in s P ro m i s in g U M W H o l d in g s B h d : S l ip p e d Ba c k in to L o s se s U M W O i l & G a s C o rp o ra t i o n B h d : M a s s iv e I m p a ir m e n t s C a r ri e d O u t U zm a Bh d : M a rg in s E x p a n d A g a in WC T H o l d i n g s Be r h a d : C o n s t ru c t io n D iv i s io n t o R e m a in a Br ig h t Sp o t i n 2 0 1 8 Te ch n ic al R ep o rt s 1. D ai l y Te ch n ic a l St o ck Pi cks ( L oc al ) 2. D ai l y St o ck S cr een 3. D ai l y For ei gn T ech n i c al St o ck P i cks ( A US ) Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my
2. Daily Market Commentary Wednesday , 28 February 2018 TA Research, e-mail : taresearch@ta.com.my For Internal Circulation Only Review & Outlook KLSE Market Statistics (27.02.2018) (mil) Main Market 1,621.7 Warrants 442.4 ACE Market 684.6 Bond 10.3 ETF 1.6 LEAP 0.0 Total 2,760.7 Off Market 146.3 Volume +/-chg (RMmn) -75.8 2,694.8 -89.9 84.5 209.1 110.2 1.1 2.9 0.2 1.8 (0.2) 0.0 2,894.2 51.1 381.7 Value Value/ +/-chg Volume 151.6 1.66 -10.3 0.19 8.9 0.16 0.0 0.28 0.3 1.18 -0.1 0.34 1.05 106.9 2.61 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 % YTD chg 11.38 64.04 -71.58 6.50 0.61 0.48 -0.42 0.35 4.15 3.14 -0.66 4.65 25,410.03 7,330.35 7,282.45 22,389.86 2,456.14 31,268.66 3,540.39 1,830.39 6,598.93 3,292.07 1,808.92 6,056.86 -299.24 -91.11 -7.13 236.23 -1.51 -229.94 -15.46 -3.79 44.25 -37.51 -6.10 14.68 -1.16 -1.23 -0.10 1.07 -0.06 -0.73 -0.43 -0.21 0.68 -1.13 -0.34 0.24 2.79 6.18 -5.27 -1.65 -0.46 4.51 4.04 4.37 3.83 -0.46 -4.76 -0.14 (mn) 44.4 27.5 17.7 10.0 10.0 9.4 8.0 5.0 3.0 2.0 1.5 1.3 1.3 1.1 1.0 1.0 % chg 1,871.46 13,348.96 16,938.18 1,868.00 (RM) @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ 0.55 1.69 0.17 2.74 1.45 15.66 6.02 0.50 0.14 5.45 0.65 25.84 0.04 0.60 2.50 0.99 Counter MAYBANK TENAGA PBBANK CIMB PCHEM IHH HLBANK SIMEPLT PETGAS GENTING Mkt Cap. Chg (RM’mn) (RM) 113,323 89,296 88,814 67,254 64,960 50,344 39,030 37,609 35,419 34,444 0.06 0.14 0.10 0.09 0.07 0.02 0.56 0.03 0.24 0.07 The local benchmark climbed to close at a more than three-year high Tuesday, helped by strength in Hong Leong Bank and key plantation stocks on better-than-expected earnings. The KLCI rose 11.38 points to end at 1,871.46, off an early high of 1,872.35 and low of 1,865.79, but losers beat gainers 563 to 443 on turnover totaling 2.76bn shares worth RM2.89bn. Stocks are likely to trade cautiously as investors digest new Fed Chairman Jerome Powell's testimony for clues on the US central bank's rate hike plot and his views on inflation. Key resistance for the index will be the 2 Feb peak of 1,880, followed by the upper Bollinger band at 1,882, while the record high at 1,896 of July 2014 should act as formidable upside hurdle. Immediate uptrend supports will be at 1,852 and 1,843, the steeply rising 10 and 30-day moving averages, followed by the 50-day ma at 1,818. Any price weakness in Ekovest shares towards the lower Bollinger band (94sen) will be attractive to bargain for rebound upside towards the 61.8%FR (RM1.14), with a convincing breakout to aim for the 76.4%FR (RM1.28) ahead. Key retracement support is from the 38.2%FR (90sen). Likewise, Gadang should attract buyers on any dips towards the lower Bollinger band (RM1.00), matching the 23.6%FR support, while a confirmed breakout above the 50%FR (RM1.12) should target the 61.8%FR (RM1.18) and 76.4%FR (RM1.25) going forward. News Bites Top 10 KLCI Movers Based on Mkt Cap. Off Market FIAMMA SUNREIT VIZIONE SIME ROHAS TENAGA TM VERSATL VSOLAR RHBBANK G3-WA PETDAG MHB-C5 ENCORP AFFIN HIBISCS Up Down 281 349 120 138 38 69 3 4 0 3 1 0 443 563 Vol. (mn) 25.32 14.59 7.18 17.66 10.22 7.19 1.18 5.40 0.68 4.88 Important Dates HSSEB - 1:10 Rights Issue - RI of up to 31.9m shares together with 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 RM1.30 per rights share, together with 1 bonus share and 3 warrants for every 2 rights shares subscribed. Trading of Rights: 22/02 - 28/02/2018. Application Closed: 08/03/2018. LISTING ON: 21/03/2018. • Tropicana Corp Bhd is acquiring Marivaux Holdings Sdn Bhd, which owns 112 acres of land near Genting Highlands, Pahang, for RM78.3mn. • Hua Yang Bhd has unveiled Aviary Residence, the first phase of its Puchong Horizon flagship development in the Klang Valley. • Inspection, test and measurement equipment, materials and engineering solutions provider, QES Group Bhd's IPO for the public portion, has received an oversubscription rate of 19x. • Trading in the shares of AWC Bhd will be suspended today pending the release of a material announcement. • Genting Malaysia Berhad's FY17 net profit halved to RM1.2bn from RM2.9bn in FY16 due to forex translation losses. • Telekom Malaysia Bhd's net profit rose to RM730.5mn in FY17 from RM613.4mn posted a year ago on the back of higher internet revenue contribution. • RHB Bank Bhd's net profit rose 16% to RM2.0bn for FY17, largely driven by higher net funding income and lower loan loss impairment. • For FY17, S P Setia Bhd's profit rose to RM1,069mn. It achieved total sales of RM4.1bn, surpassing the sales target of RM4bn. • UMW Oil and Gas Corp Bhd's FY17 revenue rose to RM586.5mn attributable to higher utilisation of its 7 jack-up rigs. • Boustead Plantations Bhd ended FY17 with a higher net profit of RM665.2mn mainly driven by gains realised from land disposal in Penang. • ANZ-Roy Morgan Australian Consumer Confidence bounced 2.3% to 117.9, partially recovering from the 3.5% fall the previous week. • Federal Reserve Chairman Jerome Powell said the economy's prospects have brightened in recent months, indicating the central bank is on track to keep gradually lifting short-term interest rates and perhaps even pick up the pace this year. • U.S. consumer confidence rose to its highest level since 2000 in February, showing Americans shrugged off financial market gyrations earlier in the month. • U.S. home prices continued to rise rapidly in the waning days of 2017, but there are early signs that price gains that have well outstripped wages and inflation could begin to ease this year. • Eurozone economic confidence dropped to a 3-month low in February on broad-based weakness across sectors excluding services. • Germany's headline consumer price inflation slowed for a third straight month in February and at a faster-than-expected pace. Exchange Rate USD/MYR 3.9236 0.021 USD/JPY 107.34 0.420 EUR/USD 1.223 -0.0083 Commodities Futures Palm Oil (RM/mt) 2,542.00 2.00 Crude Oil ($/Barrel) 62.84 -1.19 Gold ($/tr.oz.) 1,319.20 -15.50 Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. Kaladher Govindan, Head of Research MENARA TA ONE, 22 JALAN for TA SECURITIES HOLDINGS BERHAD (14948-M) A PARTICIPATING ORGANISATION OF BURSA MALAYSIA SECURITIES BHD P RAMLEE, 50250 KUALA LUMPUR, MALAYSIA TEL : 603 - 2072 1277. FAX : 603 - 2032 5048 www.ta.com.my
3. Wednesday , February 28, 2018 FBMKLCI: 1,871.46 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 Cautious on Powell Testimony The local benchmark climbed to close at a more than three-year high Tuesday, helped by strength in Hong Leong Bank and key plantation stocks on better-than-expected earnings. The KLCI rose 11.38 points to end at 1,871.46, off an early high of 1,872.35 and low of 1,865.79, but losers beat gainers 563 to 443 on turnover totaling 2.76bn shares worth RM2.89bn. Key Resistance at 1,880, Support at 1,852 Stocks are likely to trade cautiously as investors digest new Fed Chairman Jerome Powell's testimony for clues on the US central bank's rate hike plot and his views on inflation. Key resistance for the index will be the 2 Feb peak of 1,880, followed by the upper Bollinger band at 1,882, while the record high at 1,896 of July 2014 should act as formidable upside hurdle. Immediate uptrend supports will be at 1,852 and 1,843, the steeply rising 10 and 30-day moving averages, followed by the 50-day ma at 1,818. Bargain Ekovest & Gadang Any price weakness in Ekovest shares towards the lower Bollinger band (94sen) will be attractive to bargain for rebound upside towards the 61.8%FR (RM1.14), with a convincing breakout to aim for the 76.4%FR (RM1.28) ahead. Key retracement support is from the 38.2%FR (90sen). Likewise, Gadang should attract buyers on any dips towards the lower Bollinger band (RM1.00), matching the 23.6%FR support, while a confirmed breakout above the 50%FR (RM1.12) should target the 61.8%FR (RM1.18) and 76.4%FR (RM1.25) going forward. Asian Markets Fluctuate as Powell Testimony Looms Asian markets were mixed on Tuesday, with several indexes giving up early gains as investors await the first public comments from Federal Reserve Chairman Jerome Powell as head of the Federal Reserve. The pace of U.S. monetary policy tightening remains a hot debate and traders are betting that Powell won’t seek to shock financial markets with overly hawkish comments this week. Powell’s debut appearance is seen as critical for financial markets at a time when many investors are nervous about the Fed’s policy normalization following years of stimulus after the financial crisis almost a decade ago. Japan’s Nikkei share average hit a three-week high, led by gains in large-cap and exporters’ shares as easing in U.S. bond yields overnight improved sentiment. The Nikkei rose 1.1 percent to 22,389.86, its highest close since Feb. 5 and almost recovering to its 100-day moving average at 22,419. In Sydney, the S&P/ASX 200 edged up 0.24 percent to close at 6,056.9, with the financials and materials sub-indexes contributing to gains on the broader index. Mainland stocks closed lower after recording sharp gains in the last session, although small caps bucked the trend. The benchmark Shanghai composite lost 1.14 percent to close at 3,291.53 while the Shenzhen composite shed 0.34 percent. Page 1 of 8
4. 28-Feb-18 Wall Street Sink as Powell ’s Testimony Stokes Fears U.S. stock-market indexes close sharply lower Tuesday, their biggest daily drops since the selloff three weeks ago after comments from Federal Reserve Chairman Jerome Powell revived fears about more interest-rate increases than expected this year. The new chair signaled the central bank could hike rates more than three times this year in an effort to keep the economy from overheating, sparking anxiety among equity traders. Powell also said individual Fed members will be crafting new projections at the central bank's meeting in March, which would be influenced by federal government's ambitious fiscal policies including tax cuts. Powell’s first semi-annual economic testimony as Fed chief before the U.S. Congress comes at a sensitive time for the market, which had been trying to recover from the recent selloff, which confirmed the market was in a correction, or down 10 percent from a Jan. 26 record high. Fears over rising rates in part had sparked the selloff. All 11 major S&P 500 sectors traded lower Tuesday, with consumer discretionary stocks shedding 2.1 percent and realestate companies declining more than 2 percent. The Dow Jones Industrial Average fell 299.24 points, or 1.16 percent, to 25,410.03, the S&P 500 lost 35.32 points, or 1.27 percent, to 2,744.28 and the Nasdaq Composite dropped 91.11 points, or 1.23 percent, to 7,330.35. 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, February 28, 2018, the chartist, Stephen Soo, who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 2 of 8
5. 28-Feb-18 N e w s i n B r i e f Corporate Genting Malaysia Berhad ’s FY17 net profit halved to RM1.2bn from RM2.9bn in FY16. This was mostly due to forex translation losses, excluding which the group would have seen a 3% decline in EBITDA. Full-year revenue rose 4.5% to RM9.3bn from RM8.9bn on higher revenue from the group’s leisure and hospitality businesses in Malaysia, the US and Bahamas, as well as higher contribution from the UK and Egyptian casino business. (Bursa Malaysia/ The Edge) Telekom Malaysia Bhd's net profit rose to RM730.5mn in FY17 from RM613.4mn posted a year ago. Revenue increased to RM12,085.1mn from RM12,060.9mn previously, on the back of higher internet revenue contribution, which rose 8.3% to RM4.0bn against FY16. (Bursa Malaysia/ Bernama) RHB Bank Bhd's net profit rose 16% to RM2.0bn for FY17, largely driven by higher net funding income and lower loan loss impairment compared with RM1.7bn the year before. Revenue edged up to RM10,570.8mn from RM10,568.8mn in 2016. (Bursa Malaysia/ The Edge) For FY17, S P Setia Bhd’s profit rose to RM1,069mn, higher than RM1,067mn in FY16 but revenue eased to RM4.5bn from RM5.7bn in FY16. It achieved total sales of RM4.1bn, surpassing the sales target of RM4bn. (Bursa Malaysia/ New Straits Times) MMC Corp Bhd's net profit for FY17 fell to RM267.5mn from RM600.9mn in FY16. Revenue declined 10.1% to RM4.2bn from RM4.6bn previously. The lower revenue was mainly due to completion of MRT Sungai Buloh - Kajang Line in 2016 and no sale of land in respect of the overall development of Senai Airport City Sdn Bhd. (Bursa Malaysia/ Bernama) AirAsia Bhd’s full-year net profit rose slightly by 1.1% from RM1.6bn to RM1.6bn on the back of a 41.8% rise in revenue from RM6.8bn to RM9.7bn. The growth was attributed to an 11% increase in the total passengers carried and a rise in load factor to 88% compared with 87% in 2016. (Bursa Malaysia/ The Sun) For 1HFY18, Inari Amertron Bhd registered a 23.4% increase in net profit to RM137.0mn, from RM111.1mn in the same period last year. Half-year revenue rose 34.6% to RM749.1mn from RM556.6mn in 1HFY17. The group announced a second interim dividend of 2.5 sen/share. (Bursa Malaysia/ The Edge) UMW Oil and Gas Corp Bhd's net loss for FY17 fell to RM1.1bn against a net loss of RM1.2bn posted a year ago. Revenue, however, rose to RM586.5mn from RM321.1mn previously. The improvement in the revenue was attributable to higher utilisation of its 7 jack-up rigs as a result of the increase in demand for drilling services due to gradual recovery in oil prices. (Bursa Malaysia/ Bernama) Page 3 of 8
6. 28-Feb-18 Boustead Plantations Bhd ended FY17 with a net profit of RM665 .2mn compared with RM227.8mn chalked up in the previous year mainly driven by gains realised from land disposal in Penang amounting to RM555mn. Stronger profit from operations also contributed to these positive results, on the back of better crop production and higher CPO prices. (Bursa Malaysia/ Bernama) IJM Corp Bhd saw its 3QFY18 net profit drop 26.7% to RM101.4mn mainly due to lower contributions from its property and manufacturing and quarrying divisions. The weak quarterly results dragged IJM's net profit down by 18.9% to RM338.6mn for 9MFY18. Revenue, however, rose 5.3% to RM4.6bn 9MFY18. (Bursa Malaysia/ The Edge) Ekovest Bhd’s net profit for 1HFY18 grew by 19.1% to RM96.6mn from RM81.1mn. Revenue grew 10.4% to RM528.5mn from RM478.5mn. Its net profit for 2QFY18 rose by 33.9% to RM54.9mn from RM41.0mn a year ago on the back of higher sales recognition for the EkoCheras project. (Bursa Malaysia/ The Sun) Page 4 of 8
7. 28-Feb-18 N e w s I n B r i e f Economy Asia Bank Negara Says RM3 .3bn Funds Still Available for SMEs A total of RM3.3 billion in funding is still available under the Bank Negara Malaysia's (BNM) Funds for small and medium enterprises (SMEs) for working capital and the purchase of machinery. BNM Development Finance and Enterprise Department Director Marina Kahar said local SMEs, including start-ups, should leverage the fund to finance and lower their cost of doing business. She said the funding could be applied through commercial and Islamic banks, development financial institutions and Credit Guarantee Corp Malaysia Bhd. A lack of awareness about such funds and grants provided by government agencies and financial institutions is one of the main reasons why they are not fully utilised, she told a media briefing. She said the largest source of financing to SMEs at 97% came from financial institutions which provided consolidated funds. The service sector topped the list of recipients of funding at 63%, followed by manufacturing (15%), construction (12%), agriculture (6%) and other sectors (4%). (The Star) Bank Negara Keeps Tight Rein on Digital Currencies with Policy Paper Bank Negara Malaysia is keeping a tight rein on digital currencies such as bitcoin with effective measures against money laundering and terrorism financing risks. In its policy statement issued on Tuesday, it emphasised that while digital currencies are not legal tender in Malaysia, it wanted to increase the transparency of digital currency activities in the country. Bank Negara highlighted the reporting obligations on the digital currency business “are not an authorisation, licensing, endorsement or validation by the bank of digital currency exchange services, and that digital currencies are not legal tender in Malaysia”. Its document, entitled Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies (Sector 6), incorporated the feedback received during public consultation on the exposure draft released on Dec 14, 2017. It received feedback from representatives of existing digital currency exchangers, industry associations, law firms, financial institutions, academia as well as interested individuals. Bank Negara pointed out digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions which it regulates. (The Star) Japanese Are Selling U.S. Bonds Over Budget, Dollar Fears Japanese investors may be America’s bond bears. They are shifting toward selling U.S. Treasury bonds and other dollar-based debt after fears have picked up in recent weeks that the Trump administration’s budget and other policies add up to a weak dollar. The concerns expressed by asset managers could be short-lived and are hard to measure precisely in data, so far. Still, any questioning in Tokyo of the dollar or of the U.S. Treasury is significant because Japanese holders including the government own nearly $1.1 trillion in Treasury bonds, a close second to China. For years, the U.S. economy has relied on Japan and China to recycle their trade surpluses back into the U.S. by buying American debt. Japan’s suspicions were fanned by Treasury Secretary Steven Mnuchin’s remark in January that “a weaker dollar is good for trade.” He quickly walked it back, but the president’s economic report, issued Feb. 21, revived the idea by saying a lower dollar would be an “important corrective mechanism” for the U.S. trade deficit. (The Wall Street Journal) Page 5 of 8
8. 28-Feb-18 ANZ-Roy Morgan Australian Consumer Confidence Up 2 .3% to 117.9 ANZ-Roy Morgan Australian Consumer Confidence bounced 2.3% to 117.9, partially recovering from the 3.5% fall the previous week. The details were broadly positive, with four out of five sub-indices posting gains. Views towards current economic conditions firmed 0.4% after sharp losses in the previous two weeks. While views toward current economic conditions have only stabilised after these falls, they remain above their long term average. Consumers were more optimistic about future conditions, with this sub-index bouncing 6% last week and almost offsetting the 8.8% drop in the previous week. Views towards current finances jumped 6% bringing the sub-index to a six-week high of 110.4. The recovery in sentiment around future conditions was more modest (1.5%), offsetting the 1.3% fall in the previous week. Sentiment around the ‘time to buy a household item’ continues its downward trend, slipping 1.5% to 133.5. Inflation expectations edged up to 4.5% on a four-week basis. (Roy Morgan) United States Fed’s Powell Says His Economic Outlook Has Improved Federal Reserve Chairman Jerome Powell said the economy’s prospects have brightened in recent months, indicating the central bank is on track to keep gradually lifting short-term interest rates and perhaps even pick up the pace this year. “My personal outlook for the economy has strengthened since December,” he told members of the House Financial Services Committee on Tuesday in his first Capitol Hill appearance since taking over as Fed chief earlier this month. “We’ve seen continuing strength in the labor market. We’ve seen some data that will, in my case, add some confidence to my view that inflation is moving up to target. We’ve also seen continued strength around the globe, and we’ve seen fiscal policy become more stimulative,” he said in answer to a question about what could cause the Fed to raise rates more than three times this year. He added that he “wouldn’t want to prejudge that” outcome. But many investors took his comments as a sign of increased odds the Fed could lift its benchmark federal-funds rate four times in 2018, up from the three moves penciled in by officials in December. The Fed raised rates in December to a range of between 1.25% and 1.5% and is likely to lift them at its March 20-21 meeting. Mr. Powell cited a variety of reasons for his increased optimism. Employers have continued to add jobs—180,000 a month on average over the past six months—and unemployment remains at a 17-year-low. Wage gains, which have been sluggish since the recession, should begin to pick up, he said. Inflation, which has undershot the Fed’s 2% target for years, is also showing signs of accelerating and should reach the goal in coming years, he said. (The Wall Street Journal) U.S. Durable Orders Fell in January Demand for long-lasting factory goods fell in January and a widely watched proxy for U.S. business investment dropped for the second straight month, offering one of the first indications of how business owners may be responding to extra cash and incentives offered in the Trump administration’s tax overhaul. Overall orders for durable goods, manufactured products intended to last at least three years, declined a seasonally adjusted 3.7% in January from the prior month, the Commerce Department said. Economists surveyed by The Wall Street Journal had expected a 1.6% decline. Orders for transportation equipment, a more volatile component of the measure, largely drove the headline decline, falling 10%. The business-investment gauge, new orders for nondefense capital goods excluding aircraft, shrank 0.2% in the first month of 2018 from December. January’s decline came on the heels of a tax overhaul passed in late 2017 that aimed to rev up investment by firms. Many economists expect overall U.S. economic growth will be healthy in 2018, bolstered by the recent tax-law changes. In December, the business-investment measure also fell from the prior month. But more broadly it has been rising steadily. It was up 8% in January from a year earlier. (The Wall Street Journal) Page 6 of 8
9. 28-Feb-18 U .S. Consumer Confidence Reaches Highest Level Since 2000 U.S. consumer confidence rose to its highest level since 2000 in February, showing Americans shrugged off financial market gyrations earlier in the month. The Conference Board said Tuesday its measure of U.S. consumer confidence increased to 130.8 in February in from 124.3 in January. Economists surveyed by The Wall Street Journal had expected a February reading of 127.0. ”Despite the recent stock market volatility, consumers expressed greater optimism about short-term prospects for business and labor market conditions, as well as their financial prospects.” said Lynn Franco, director of economic indicators at the Conference Board. February’s reading was the highest monthly level since November 2000. The increase in the Conference Board reading reflected that Americans feel better about both the current and future state of the economy. The present situation index rose to 162.4 from 154.7; the expectations index rose to 109.7 in February from 104.0. Ms. Franco said the labor force was the main driver of the improvement. The unemployment rate has held at a 17-year low since October, and wages grew at a faster rate in January. (The Wall Street Journal) U.S. Home Prices Continued to Rise at End of 2017 Home prices continued to rise rapidly in the waning days of 2017, but there are early signs that price gains that have well outstripped wages and inflation could begin to ease this year. The S&P CoreLogic Case-Shiller National Home Price Index, which covers the entire nation, rose 6.3% in December, up from a 6.1% year-over-year increase reported in November. The 10-city index gained 6% over the year, unchanged from November. The 20-city index gained 6.3%, down slightly from 6.4% the previous month. That was in line with the expectations of economists surveyed by The Wall Street Journal, who expected the 20-city index to rise 6.3% in December. Home price gains accelerated in 2017 compared with 2016, when prices grew more in the 5% range. Nonetheless, the pace of both new and existing home sales have slowed in recent months, which could ultimately put pressure on sellers to lower prices, especially as interest rates are beginning to rise. (The Wall Street Journal) Europe and Uni ted Kingdom Eurozone Corporate Lending Surges to Post-crisis High Lending to Eurozone companies surged to its highest rate since mid-2009 while a broader indicator of money circulating in the currency bloc, which often foreshadows future activity, was unchanged as expected, data showed. Lending to non-financial corporations expanded by 3.4% in January, compared with 3.1% a month ago, while household lending growth held steady at a post-crisis high of 2.9%, the European Central Bank said in a regular monthly statement. Buying over 2 trillion euros ($2.47 trillion) worth of debt in the past three years, the ECB has labored away to depress borrowing costs and kick start lending, all in the hope of rekindling inflation. While its efforts have paid off and lending growth is trending around its best level since the global financial crisis, it remains well below its pre-crisis mark as many banks, under pressure to repair their balance sheets, are still reluctant to lend to the real economy. The annual growth rate of the M3 measure of money supply, seen by some as a precursor of economic activity, was steady at 4.6%. (Reuters) Eurozone Economic Confidence Weakens in February Eurozone economic confidence dropped to a 3-month low in February on broad-based weakness across sectors excluding services. The economic sentiment index fell to 114.1 in February from 114.9 in the previous month, survey data from the European Commission showed. This was the lowest since last November, but slightly above the expected score of 114. The consumer confidence index slid to 0.1 from 1.4 a month ago. The score came in line with the flash estimate. The decrease in consumer confidence reflected more negative assessments of all its components with the biggest decline in consumers' future unemployment and savings expectations. The industrial sentiment index dropped to 8.0, as expected, from 9.0 in January, mainly due to a strong reduction in managers' production expectations. Similarly, the sentiment index for retail trade dropped to 4.3 from 5.2. The decline resulted from more negative views on both the present and the expected business situation. (RTT) Page 7 of 8
10. 28-Feb-18 German Inflation Eases More-than Expected , Lowest Since November 2016 Germany's headline consumer price inflation slowed for a third straight month in February and at a faster-than-expected pace, to its lowest level since November 2016, preliminary data showed. The consumer price index rose 1.4% year-on-year following 1.6% increase in January, the flash estimates from Destatis showed. Economists had forecast 1.5% inflation. The latest figure was the lowest since November 2016, when it was 0.8%. On a month-onmonth basis, the CPI rose 0.5% in February, in line with economists' expectations. Food price inflation slowed sharply to 1.1% from 3.1% and energy inflation tumbled to 0.1% from 0.9%. The harmonized index of consumer prices, or HICP, which is meant for EU comparison, climbed 1.2% year-on-year after a 1.4% rise in January. Economists had forecast a 1.3% increase. (RTT) Share Buy-Back: 27 February 2018 Company BCB E&O GLOMAC KPJ MALAKOF SCGM SNTORIA SYSCORP UNIMECH YILAI Bought Back Price (RM) Hi/Lo (RM) 1,000 170,000 31,000 600,000 1,000,000 22,000 74,000 231,600 28,600 100,000 0.44 1.46 0.54/0.52 0.955/0.92 0.92 2.32/2.30 0.64/0.63 0.245/0.235 1.03/1.00 0.75 0.44 1.46/1.43 0.54/0.51 0.955/0.92 0.925/0.91 2.34/2.30 0.64/0.625 0.25/0.235 1.03/1.00 0.75 Total Treasury Shares 12,141,200 25,543,747 5,716,400 66,770,600 18,856,400 827,600 4,167,000 854,600 6,880,410 9,082,308 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 8 of 8
11. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) PER (X) Div Yield (%) FY18 FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD 27-Feb-18 AUTOMOBILE BAUTO 2.18 2.50 14.7% Buy 2,526 0.49 14.3 19.9 15.3 11.0 5.3 5.5 2.47 -11.7 1.84 18.5 MBMR 2.29 2.47 7.9% Hold 895 0.68 24.7 26.9 9.3 8.5 2.6 3.1 2.60 -11.9 2.01 13.9 -0.9 4.1 PECCA 1.35 1.86 37.8% Buy 249 0.45 11.1 12.5 12.1 10.8 3.7 4.4 1.70 -20.6 1.26 7.1 -12.9 SIME 2.75 2.13 -22.5% Sell 18,702 1.57 13.2 16.4 20.9 16.8 1.2 1.5 3.06 -10.1 2.03 35.7 24.4 UMW 6.49 4.37 -32.7% Sell 7,582 1.31 20.7 36.9 31.4 17.6 1.5 2.8 6.98 -7.0 4.70 38.1 24.8 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 4.54 5.50 21.1% Buy 13,684 1.40 48.6 52.0 9.4 8.7 4.0 4.0 5.70 -20.4 4.06 11.8 2.9 CIMB 7.29 7.50 2.9% Hold 67,254 1.68 50.8 56.0 14.3 13.0 4.0 3.8 7.39 -1.4 4.91 48.5 11.5 HLBANK 19.08 19.30 1.2% Hold 39,030 0.84 116.8 126.8 16.3 15.0 2.5 2.5 19.28 -1.0 13.28 43.7 12.2 MAYBANK 10.46 10.50 0.4% Hold 113,378 1.00 70.6 77.4 14.8 13.5 4.8 4.8 10.58 -1.1 8.59 21.8 6.7 PBBANK 23.00 27.30 18.7% Buy 88,814 0.72 153.3 166.5 15.0 13.8 2.7 2.8 23.04 -0.2 19.66 17.0 10.7 RHBBANK 5.47 6.10 11.5% Buy 21,935 1.55 54.3 59.0 10.1 9.3 2.7 2.7 5.61 -2.5 4.71 16.1 9.4 BURSA 11.30 11.80 4.4% Buy 6,074 0.93 43.9 45.0 25.8 25.1 3.2 3.2 11.48 -1.6 8.57 31.8 11.7 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 1.02 1.39 36.3% Buy 568 1.01 11.4 11.1 8.9 9.2 6.3 5.5 1.49 -31.5 1.00 2.5 -15.7 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 5.00 6.00 20.0% Buy 12,285 0.86 34.5 35.7 14.5 14.0 2.4 2.4 5.52 -9.4 4.58 9.2 0.8 IJM 2.90 2.89 -0.3% Sell 10,522 1.15 13.7 18.2 21.1 16.0 3.3 3.3 3.61 -19.7 2.66 9.0 -4.9 CONSTRUCTION KAB 0.29 0.38 31.6% Buy 9 na 31.4 37.3 0.9 0.8 3.5 4.2 0.33 -13.6 0.25 16.3 -5.0 PESONA 0.41 0.46 12.2% Buy 285 1.11 5.0 4.5 8.3 9.0 3.7 3.7 0.74 -44.2 0.39 6.5 -8.9 SENDAI 0.87 0.55 -36.8% Sell 679 1.21 9.1 8.5 9.6 10.2 1.1 1.1 1.39 -37.4 0.51 72.3 0.6 SUNCON 2.40 2.65 10.4% Hold 3,101 0.57 14.7 16.4 16.3 14.6 3.3 3.8 2.64 -9.1 1.70 41.2 -4.4 WCT 1.60 1.50 -6.3% Sell 2,251 0.89 11.3 10.8 14.1 14.8 1.9 1.9 2.48 -35.4 1.46 9.6 -1.2 LITRAK 5.72 6.26 9.4% Hold 3,019 0.37 45.6 47.1 12.5 12.1 4.4 4.4 6.15 -7.0 5.40 5.9 3.1 CARLSBG 18.38 18.09 -1.6% Buy 5,654 0.77 87.8 91.8 20.9 20.0 4.8 5.0 18.40 -0.1 14.12 30.2 20.1 HEIM 21.10 21.64 2.6% Hold 6,374 0.39 93.0 101.3 22.7 20.8 4.0 4.3 21.52 -2.0 16.98 24.3 11.6 AEON 1.49 1.97 32.2% Sell 2,092 0.33 6.7 7.7 22.3 19.3 2.7 3.0 2.52 -40.9 1.46 2.1 -15.3 AMWAY 7.54 8.18 8.5% Under Review 1,239 0.47 48.4 49.9 15.6 15.1 5.0 5.3 8.18 -7.8 7.04 7.1 2.2 F&N 30.66 33.74 10.0% Buy 11,238 0.25 122.7 145.8 25.0 21.0 2.6 3.1 31.00 -1.1 22.80 34.5 13.6 CONSUMER Brewery Retail HUPSENG 1.11 1.25 12.6% Buy 888 0.41 5.7 5.9 19.5 18.8 5.4 5.4 1.28 -13.3 1.05 5.7 1.8 JOHOTIN 1.23 1.48 20.3% Buy 382 0.95 11.1 11.9 11.1 10.3 4.9 5.3 1.76 -30.1 1.16 6.0 1.7 NESTLE 122.10 129.90 6.4% Hold 28,632 0.54 322.2 360.2 37.9 33.9 2.5 2.7 124.00 -1.5 75.40 61.9 18.3 PADINI 5.13 4.67 -9.0% Sell 3,375 0.77 28.0 30.4 18.3 16.9 2.4 2.5 5.50 -6.7 2.77 85.3 -2.8 POHUAT 1.58 2.01 27.2% Buy 347 0.59 22.9 25.4 6.9 6.2 5.1 5.1 2.07 -23.6 1.43 10.5 -11.7 QL 4.93 5.41 9.7% Hold 7,999 0.59 12.8 14.7 38.4 33.5 0.9 1.0 4.98 -1.0 3.26 51.4 13.3 SIGN 0.64 0.92 43.8% Buy 146 0.69 6.9 9.2 9.2 7.0 3.9 5.5 1.07 -40.2 0.57 12.3 -9.2 28.00 34.72 24.0% Hold 7,995 1.40 170.8 168.8 16.4 16.6 5.7 5.7 49.02 -42.9 28.00 0.0 -30.0 GENTING 8.99 11.58 28.8% Buy 34,444 1.47 55.1 61.8 16.3 14.5 1.8 1.8 10.00 -10.1 8.70 3.3 -2.3 GENM 5.27 6.68 26.8% Buy 29,822 1.44 27.6 32.0 19.1 16.5 2.3 2.5 6.38 -17.4 4.87 8.2 -6.4 2.25 3.34 48.4% Buy 3,031 0.60 21.5 26.0 10.5 8.6 7.1 8.0 2.98 -24.5 2.20 2.3 0.4 CCMDBIO 3.00 3.40 13.3% Buy 837 0.88 16.2 17.4 18.5 17.3 3.6 3.7 3.05 -1.6 1.97 52.3 18.6 IHH 6.11 6.40 4.7% Sell 50,344 0.79 11.9 15.0 51.4 40.9 0.5 0.6 6.33 -3.5 5.42 12.7 4.3 KPJ 0.95 1.13 19.6% Buy 3,984 0.55 3.9 4.3 24.5 22.0 2.3 2.5 1.14 -17.1 0.87 8.6 -2.6 HARTA 11.60 7.80 -32.8% Sell 19,204 1.11 25.2 28.9 46.0 40.2 1.3 1.5 12.18 -4.8 4.70 146.8 8.6 KOSSAN 8.67 9.73 12.2% Buy 5,544 0.53 37.4 42.1 23.2 20.6 2.2 2.4 8.79 -1.4 5.62 54.3 6.9 SUPERMX 2.63 2.70 2.7% Buy 1,724 0.62 20.0 22.6 13.2 11.6 2.6 2.9 2.74 -4.0 1.69 55.6 31.5 TOPGLOV 10.10 9.35 -7.4% Sell 12,686 0.66 41.6 50.8 24.3 19.9 1.4 1.7 10.24 -1.4 4.56 121.5 26.4 KAREX 1.08 1.00 -7.4% Sell 1,083 0.76 2.8 5.2 39.1 20.7 0.6 1.2 2.30 -53.0 1.03 4.9 -16.9 SCIENTX 8.60 10.01 16.4% Buy 4,205 0.88 67.5 79.4 12.7 10.8 2.4 3.0 9.85 -12.7 7.20 19.4 -0.7 SKPRES 1.91 2.20 15.2% Buy 2,388 0.86 10.4 14.8 18.4 12.9 2.7 3.9 2.35 -18.7 1.24 54.0 -16.2 ASTRO 2.50 3.10 24.0% Buy 13,035 0.82 14.0 13.7 17.9 18.3 5.2 5.4 2.94 -15.0 2.40 4.2 -5.7 MEDIA PRIMA 0.54 0.45 -16.7% Sell 599 1.21 -3.8 -1.7 na na 0.0 0.0 1.28 -57.8 0.53 2.9 -28.9 STAR 1.32 1.25 -5.3% Sell 974 1.05 6.7 6.7 19.6 19.6 9.1 9.1 2.22 -40.5 1.31 0.8 -20.0 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
12. For Internal Circulation Only SNAPSHOT OF STOCKS UNDER COVERAGE Company Share Price Target Price (RM) (RM) % upside Recom Market Cap. (RMm) BETA EPS (sen) FY18 PER (X) Div Yield (%) FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.47 0.72 53.2% Buy 825 1.56 4.2 4.5 11.2 10.4 2.1 2.1 0.69 -31.9 0.38 25.3 -3.1 LCTITAN 5.43 6.10 12.3% Buy 12,342 na 56.3 60.9 9.6 8.9 4.6 5.0 6.53 -16.8 4.14 31.2 15.5 MHB 0.81 0.81 0.0% Sell 1,296 1.36 0.5 1.7 168.3 48.5 0.0 0.0 1.16 -30.2 0.63 29.6 -1.8 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 6.73 0.9 -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 8.12 8.84 8.9% Hold 64,960 0.86 52.5 53.8 15.5 15.1 3.2 3.2 8.28 -1.9 6.80 19.4 5.5 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 11.1 SERBADK 3.60 4.15 15.3% Buy 5,287 na 27.7 31.5 13.0 11.4 2.5 2.8 3.66 -1.6 1.63 120.9 UMWOG 0.33 0.39 18.2% Buy 2,711 1.82 0.4 1.2 86.3 28.5 0.0 0.0 0.68 -51.4 0.27 22.2 8.2 UZMA 1.41 1.57 11.3% Hold 451 0.85 13.1 13.9 10.8 10.2 0.0 0.0 1.98 -28.8 1.26 11.9 10.2 FGV 1.98 1.98 0.0% Sell 7,223 1.62 3.5 4.4 57.4 45.4 2.5 2.5 2.18 -9.2 1.51 31.1 17.2 IJMPLNT 2.29 2.25 -1.7% Sell 2,017 0.22 6.7 10.8 33.9 21.2 3.5 3.9 3.38 -32.2 2.28 0.4 -16.4 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 1.51 1.89 25.2% Buy 426 0.69 14.1 14.7 10.7 10.3 6.0 6.0 1.96 -23.0 1.45 4.1 -3.8 KLK 25.52 27.07 6.1% Hold 27,178 0.65 120.7 125.7 21.1 20.3 2.4 2.4 25.78 -1.0 23.66 7.9 2.1 SIMEPLT 5.53 6.25 13.0% Buy 37,609 na 21.0 22.1 26.3 25.1 2.5 2.7 6.00 -7.8 4.58 20.7 -7.8 TSH 1.57 1.97 25.5% Buy 2,168 0.52 8.9 9.4 17.6 16.7 1.4 1.5 1.90 -17.4 1.56 0.6 -4.8 UMCCA 6.32 6.73 6.5% Sell 1,325 0.39 22.7 34.8 27.8 18.1 2.7 2.8 7.08 -10.7 5.76 9.7 -2.9 GLOMAC 0.54 0.46 -14.8% Sell 429 0.73 3.0 4.4 18.3 12.2 3.7 3.7 0.67 -19.7 0.50 9.1 -2.6 HUAYANG 0.58 0.58 0.0% Sell 204 0.91 0.7 3.4 88.8 17.1 0.9 0.9 1.16 -50.0 0.58 0.9 -4.9 IBRACO 0.71 0.92 29.6% Hold 352 na 9.1 12.4 7.8 5.7 5.6 7.0 0.98 -27.2 0.50 42.0 -12.9 IOIPG 1.84 2.00 8.7% Sell 10,131 0.86 16.3 15.6 11.3 11.8 3.3 3.3 2.22 -17.1 1.79 2.8 -0.5 MAHSING 1.22 1.69 38.5% Buy 2,962 0.93 13.0 12.6 9.3 9.7 5.3 5.3 1.64 -25.6 1.20 1.7 -15.9 PLANTATIONS PROPERTY SIMEPROP 1.43 1.51 5.6% Hold 9,725 na 7.5 7.5 19.0 19.1 2.8 2.1 1.78 -19.7 1.04 37.5 -19.7 SNTORIA 0.64 0.76 18.8% Buy 360 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 4.74 5.28 11.4% Hold 1,629 0.55 21.2 26.1 22.4 18.1 2.5 2.5 5.50 -13.8 4.39 8.0 -3.3 SPSETIA 3.29 3.73 13.4% Buy 12,348 0.94 21.7 21.2 15.2 15.5 3.6 3.6 4.38 -24.9 3.07 7.2 -17.8 SUNWAY 1.63 1.74 6.7% Hold 7,980 0.93 11.9 12.6 13.7 12.9 3.1 3.7 1.96 -16.8 1.31 24.3 0.0 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 1.04 1.64 57.7% Buy 2,119 0.71 7.9 8.6 13.2 12.0 7.9 8.6 1.83 -43.2 1.02 2.0 -43.2 REIT POWER & UTILITIES MALAKOF 0.92 0.82 -10.9% Sell 4,578 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 25.80 24.08 -6.7% Sell 25,631 0.45 114.7 116.3 22.5 22.2 3.3 3.4 26.20 -1.5 21.00 22.9 6.3 PETGAS 17.90 19.46 8.7% Buy 35,419 0.88 99.3 100.0 18.0 17.9 3.9 3.9 20.24 -11.6 15.82 13.1 2.4 TENAGA 15.76 18.33 16.3% Buy 89,296 0.55 131.3 127.5 12.0 12.4 4.3 4.1 16.12 -2.2 13.44 17.3 3.3 YTLPOWR 1.17 1.16 -0.9% Sell 9,095 0.89 8.6 8.9 13.5 13.1 4.3 4.3 1.50 -22.0 1.11 5.4 -9.3 -0.5 TELECOMMUNICATIONS AXIATA 5.46 6.50 19.0% Buy 49,405 1.53 15.9 19.5 34.3 28.1 1.5 2.9 5.82 -6.2 4.35 25.5 DIGI 4.88 5.15 5.5% Hold 37,942 0.95 19.7 20.4 24.8 24.0 4.0 4.2 5.19 -6.0 4.36 11.9 -4.3 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 6.03 7.20 19.4% Buy 22,660 0.63 22.8 24.9 26.4 24.3 3.4 3.7 6.69 -9.9 5.85 3.1 -4.3 ELSOFT 2.58 3.30 27.9% Buy 710 0.84 13.1 15.0 19.7 17.2 3.6 4.1 2.95 -12.5 1.58 63.1 -4.4 IRIS 0.18 0.25 42.9% Buy 433 2.47 0.6 0.7 31.6 26.2 0.0 0.0 0.25 -28.6 0.12 52.2 -5.4 INARI 3.45 3.35 -2.9% Under Review 7,127 0.71 15.0 16.8 23.0 20.6 2.9 3.3 3.82 -9.7 1.88 83.9 1.5 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 9.20 10.70 16.3% Hold 1,830 0.83 73.9 86.9 12.5 10.6 3.5 3.5 14.52 -36.6 8.62 6.7 -27.1 UNISEM 2.70 2.70 0.0% Sell 1,981 1.14 17.1 18.4 15.8 14.6 4.4 4.4 4.25 -36.5 2.52 7.1 -26.0 TRANSPORTATION Airlines AIRASIA 4.46 4.93 10.5% Buy 14,905 1.05 40.9 40.9 10.9 10.9 1.8 1.8 4.49 -0.7 2.58 72.9 33.1 AIRPORT 8.79 8.61 -2.0% Sell 14,584 1.29 17.9 18.7 49.2 47.0 1.5 1.1 9.45 -7.0 6.43 36.7 0.0 Freight & Tankers PTRANS 0.30 0.46 55.9% Buy 372 na 2.3 3.8 12.6 7.8 2.4 3.6 0.38 -22.7 0.16 90.9 5.4 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 3.68 4.06 10.3% Buy 12,549 0.43 15.6 20.0 23.6 18.4 1.0 1.3 4.19 -12.2 3.12 17.9 -0.5 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 29.06 30.50 5.0% Buy 74,506 1.13 212.3 246.0 13.7 11.8 2.2 2.4 29.7 -2.2 18.47 57.3 OCBC 13.33 14.30 7.3% Buy 55,791 1.22 109.5 123.2 12.2 10.8 6.7 7.7 13.6 -2.1 9.42 41.5 16.9 7.6 UOB 28.38 27.80 -2.0% Hold 47,179 1.18 216.6 243.9 13.1 13.1 2.8 2.8 28.8 -1.5 21.30 33.2 7.3 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 0.37 0.53 45.2% Hold 524 0.94 5.2 5.7 7.0 6.4 3.5 3.8 0.5 -33.0 0.35 4.3 -6.4 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
13. RESULTS UPDATE Wednesday , February 28, 2018 FBMKLCI: 1,871.46 Sector: Transportation THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM4.93 (+10.4%) AirAsia Berhad Last Traded: RM4.46 AAC Disposal Next Month Tan Kam Meng, CFA Tel: +603-2167 9605 BUY kmtan@ta.com.my Review AirAsia’s (AAB) FY17 consolidated earnings of RM1.64bn contained forex gain of RM325mn, fair value loss on derivative of RM340.5mn, remeasurement gain of RM214.4mn and negative goodwill of RM121.0mn. Excluding all these, AirAsia’s FY17 core profit of RM1.84bn came in within our expectations but higher than consensus estimates. Malaysia AirAsia (MAA), Indonesia AirAsia (IAA) and Philippines AirAsia (PAA) (AAB) – huge capacity growth (see Figure 1 & 2). AAB’s 4Q17 capacity (ASK) increased by 14.0% YoY and this additional capacity was well absorbed by demand (RPK) growth of 14.7%, implying a stable load factor of 86%. In terms of breakdown, RPK growth came mainly from the Philippines (+34.5%) and Malaysia operations (+14.8%) as the two units added more aircraft into operations. As far as yield is concerned, 4Q17 yield (rev/ASK) declined by 4.2% YoY while cost (cost/ASK) declined 0.9%. We believe the decline in yield is normal given the huge capacity growth. Thailand (TAA) – Yield stress (see Figure 3 & 4). 4Q17 demand growth was fuelled by competitive yield arising from intensifying competition in the market. ASK and RPK grew 14.7% and 25.0% YoY respectively in 4Q17, contributing to higher load factor of 88% (+7.3%pts). However, the 4Q17 yield was a little stressed as cost escalated faster than the revenue. India (AAI) – growing at supernormal rate (see Figure 5 & 6). India operations managed to turnaround in 4Q17 after achieving the critical mass in 4Q17. AirAsia India (AAI) recorded a net profit of INR132.4mn in 4Q17 versus a loss of INR152.7mn in the same period last year. 4Q17 ASK and RPK grew at a supernormal rates of 64.4% and 66.0% YoY respectively with 87.2% load factor. Overall, the group’s FY17 result performance was promising as the huge increase in capacity was well absorbed by the increase in demand. The impact of higher staff cost (20.8%) and fuel (23.4%) was mitigated by increase in revenue (12.9%). AAB group’s core earnings rose 20.2% to RM1.8bn. www.taonline.com.my Share Information Bloomberg Code AIRAMK Stock Code 5099 Listing Main Market 3341.9 Share Cap (mn) 14904.9 Market Cap (RMmn) 0.1 Par Value 4.49/2.58 52-wk Hi/Lo (RM) 10435.4 12-mth Avg Daily Vol ('000 shrs) 62.8 Estimated Free Float (%) Beta 1.1 Major Shareholders (%) Tune Live Sdn Bhd - 16.7% Tune Air Sdn Bhd - 15.5% JP Morgan - 5.0% Forecast Revision Forecast Revision (%) Net profit (RMm) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 7.4 4.1 1365.4 1368.4 1,488.0 1522.0 91.8 89.9 Buy (Maintained) Financial Indicators Net debt/equity (x) CFPS (sen) P/CFPS (x) ROE (%) ROA (%) NTA/Share (RM) Price/ NTA (x) FY18 0.6 6.4 70.1 15.2 6.4 0.4 12.1 FY19 0.5 1.7 270.1 13.5 6.0 0.4 10.8 % of FY 104.0 120.0 Within Above AIRASIA 7.7 42.0 34.3 65.2 FBM KLCI 0.2 8.9 5.5 10.5 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 Impact We raise our 18-19 earnings projections by 4.1-7.4% after incorporating FY17 results performance into our forecast. We also take this opportunity to change our USDMYR assumption to 4.00 from 4.10 previously for FY18-19. Source: Bloomberg Page 1 of 4
14. 28-Feb-18 Outlook 2018 would see a net addition of 30 aircraft to be deployed in Malaysia (7), Thailand (7), Indonesia (3), Philippines (6), India (7) and Japan (1). We expect AAB’s ASK to grow 5.3% in 2018. The capex is limited as the group has migrated to sale and leaseback approach from asset ownership. In other words, new aircraft will be owned by AAC and subsequently leased to AirAsia group. The long-awaited AAC disposal is expected to be announced next month. Management has confirmed this several times during the conference call without sharing much details on the disposal. Valuation We raise AirAsia’s target price higher to RM4.93 (from RM3.83 previously) based on revised 12x CY18 EPS. The uptick in PE by 2x multiple is to reflect the future earnings sustainability at above RM1bn given the increase in fleet size. Also, investment sentiment is expected to remain buoyant for the next one month as AirAsia is set to announce the AAC deal. As such, we maintain our Buy recommendation on the stock. Table 1: Earnings Summary (RMmn) FYE Dec 31 Revenue EBITDA EBITDA margin (%) Pretax profit Adj PBT Reported net profit Adj core profit* Reported EPS (sen) Adjusted EPS** (sen) Adjusted EPS growth (%) PER (x) GDPS (sen) Div yield (%) Core ROE (%) FY15 6297.7 2299.1 36.5 215.0 719.3 541.0 683.4 19.4 24.6 142.7 18.2 4.0 0.9 15.2 2016 6846.1 2822.1 41.2 2133.1 2273.5 2050.0 2270.2 73.7 81.6 232.2 5.5 12.0 2.7 41.0 FY17# 9710.2 3689.6 38.0 2087.8 1838.3 1640.3 1848.7 49.0 56.5 (30.7) 7.9 12.0 2.7 25.1 FY18F# 9708.0 2819.6 29.0 1424.8 1432.3 1365.4 1365.4 40.8 41.0 (27.4) 10.9 8.0 1.8 15.2 FY19F# 11120.5 3080.3 27.7 1460.8 1469.3 1368.4 1368.4 40.9 41.2 0.3 10.8 8.0 1.8 13.5 * Core net profit comprises share of profits from JV and associates, which have negative book value ** Based on group's core net profit # Consolidating IAA and PAA's earnings Page 2 of 4
15. 28-Feb-18 Table 2 : 4Q17 Results Analysis (RMmn) (Proforma) YE 31 Dec (RM'mn) Revenue (Proforma) 4Q16 3Q17 4Q17 QoQ (% ) YoY (% ) FY16 FY17 YoY (% ) 2406.1 2447.8 2657.4 8.6 10.4 8600.5 9710.2 12.9 E B ITDA 743.6 765.5 919.4 20.1 23.6 2711.5 3016.8 11.3 Deprecia tion (205.0) (271.2) (222.9) (17.8) 8.7 (802.4) (918.4) 14.5 E B IT 538.6 494.3 696.5 40.9 29.3 1909.1 2098.4 9.9 Net fina nce cos t (91.8) (120.1) (146.7) 22.1 59.7 (470.8) (511.8) 8.7 J V & As s ocia tes (2.7) 25.1 22.8 (9.2) (945.6) 86.1 91.7 6.5 (125.9) 122.6 (20.9) (117.1) (83.4) 511.6 246.0 (51.9) 0.0 (6.0) 18.8 >100 >100 0.0 (4.2) >100 264.1 486.0 574.3 390.0 2.7 357.5 (27.9) 614.0 (40.5) 18.2 71.8 117.5 57.5 1900.1 1388.5 2088.5 1838.3 9.9 32.4 45.0 >-100 (6.4) (37.3) nm 259.2 EI Unrecorded los s es from AAI P BT Adj PBT* Current ta x Deferred ta x 112.8 (23.8) (99.5) 318.5 >100 (127.6) (458.5) MI* 120.5 71.0 (61.6) (186.7) (151.1) 156.5 47.6 >100 R eported net profit Adj. net profit* 500.2 513.2 505.3 400.6 372.7 511.9 (26.2) 27.8 (25.5) (0.2) 1922.6 1538.6 1640.3 1848.7 (14.7) 20.2 R eported E P S (s en) 18.0 15.1 11.2 (25.8) (37.6) 73.4 47.5 (35.3) Adj E P S (s en) 18.4 12.0 15.4 28.5 (16.5) 57.7 48.4 (16.1) Dividend (s en) 12.0 0.0 0.0 nm nm 12.0 12.0 nm ppt ppt E B ITDA ma rg in (% ) 30.9 31.3 34.6 3.3 3.7 31.5 31.1 (0.5) E B IT ma rg in (% ) 22.4 20.2 26.2 6.0 3.8 22.2 21.6 (0.6) ppt Adj P B T ma rg in (% ) 16.2 14.6 23.1 8.5 6.9 16.1 18.9 2.8 Core net ma rg in (% ) 21.3 16.4 19.3 2.9 (2.1) 17.9 19.0 1.1 * E s timate s Figure 1: AAB: Additional capacity fully absorbed by surging demand % mn ASK (LHS) RPK (LHS) Load factor (RHS) 16000 15000 Figure 2: AAB: Yield down on additional capacity sen 18.0 Spread/ASK Revenue/ASK Cost/ASK 100 84 86 88 86 88 88 86 16.0 86 14.0 80 14000 12.0 10.0 13000 60 8.0 6.0 12000 40 4.0 1.4 2.0 11000 2.7 2.5 3.0 1.3 2.1 2.0 2.4 0.0 10000 20 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1Q16 3Q16 1Q17 3Q17 4Q17 Page 3 of 4
16. 28-Feb-18 Figure 3 : TAA: No big surprises in strong load mn 6,000 ASK (LHS) RPK (LHS) Load factor (RHS) 84 83 THB % 100 89 87 Figure 4: TAA: Narrowing spread in 4Q17 86 Spread/ASK Revenue/ASK Cosk/ASK 1.8 86 81 5,000 2.0 1.6 80 1.4 4,000 1.2 60 1.0 3,000 0.8 40 0.6 2,000 0.4 0.4 20 1,000 0.3 0.1 0.1 0.2 0.1 0.1 0.1 0.2 0.2 0.0 0.1 0.1 0.0 - 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q15 Figure 5: AAI: Both ASK and RPK growing at supernormal rates mn 1,800 ASK (LHS) 1,600 79 1,400 Load factor (RHS) 91 88 87 86 90 86 87 84 87 83 3Q15 1Q16 3Q16 1Q17 3Q17 3Q17 RPK (LHS) 76 Figure 6: AAI: First profit in 4Q17 INR % 100 400.0 Spread/ASK Revenue/ASK Cost/ASK 350.0 80 300.0 250.0 1,200 60 1,000 200.0 150.0 100.0 800 40 600 50.0 8.8 0.0 400 20 200 -50.0 -15.9 1Q16 1Q15 3Q15 1Q16 3Q16 1Q17 -20.5 -11.9 -51.8 -100.0 - -9.1 -22.4 -78.1 3Q16 1Q17 3Q17 3Q17 Source: AirAsia & TA Research 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, February 28, 2018, the analyst, Tan Kam Meng, 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 4 of 4
17. RESULTS UPDATE Wednesday , February 28, 2018 FBMKLCI: 1,871.46 Sector: Consumer THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Amway (Malaysia) Holdings Berhad TP: RM8.18 (+8.5%) Last Traded: RM7.54 Expects Better Performance in 2018 Damia Othman Tel: +603-2167-9602 Under Review damia@ta.com.my Review Amway’s FY17 adjusted net earnings came in within our full-year forecast and consensus estimates at 97% and 103% respectively. FY17 revenue declined by 9.5% YoY to RM984.2mn on the back of: i) stronger buy ahead of price increased in early 2016; ii) positive momentum amongst Amway Business Owners (ABOs) and; iii) higher qualifiers responding to the 40th anniversary sales programmes. Consequently, profit before tax reduced by 3.4% YoY to RM70.5mn due to higher import costs from: i) weaker Ringgit and; ii) increased in product prices. QoQ, revenue improved by 3.2% to RM251.4mn attributed to: i) the encouraging response to launch of new products; and ii) positive sales momentum towards new performance year in Sep-17. Profit before tax however declined by 8.3% QoQ to RM17.8mn on the back of higher operating expenses. The board declared a fourth single-tier interim dividend of 5.0sen/share and special single-tier interim dividend of 7.5sen/share. Cumulatively, the group has declared a total DPS of 27.5sen/share for FY17 (previously 30.0sen/share in FY16). Impact No change to our earnings forecasts pending an analyst briefing. Outlook Amway hedges its foreign exchange rate to US Dollar on an annual basis between Apr -May. Considering that close to 80% of Amway’s products are imported coupled with strengthening of Ringgit to US Dollar, we project higher gross margins in FY18. Furthermore, management guided that the group will continue with its prudent costs management, which will support the bottom-line growth. We believe that Amway’s topline growth will be driven by aggressive promotional activities and trade programmes through; i) increase in ABOs productivity; ii) Amway Headquarters’ 60 years anniversary programmes and; iii) introduction of new products to cater to market demands. hi g h e r www.taonline.com.my Share Information Bloomberg Code Stock Code Listing Share Cap (mn) Market Cap (RMmn) Par Value (RM) 52-wk Hi/Lo (RM) 12-mth Avg Daily Vol ('000 shrs) Estimated Free Float (%) Beta Major Shareholders (%) Amway Global Development Skim Amanah Saham Bumiputra Kumpulan Wang Persaraan Employees Provident Fund Amw MK 6351 Main Market 164.4 1,239.6 1.00 8.18/7.04 24.0 10.3 0.47 51.7 13.1 9.7 6.5 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating FY18 FY19 0.0 0.0 79.5 82.0 64.7 67.1 123 122 Buy (Maintained) Financial Indicators Net Gearing ROE (%) ROA (%) NTA/Share (RM) Price/NTA (x) FY18 Net cash 37.1 21.0 1.5 5.5 FY19 Net cash 32.3 18.8 1.6 5.0 % of FY17 97 103 Within Within Amway (4.6) 7.0 3.9 (5.8) FBM KLCI 0.2 8.9 5.5 10.5 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 We place our call Under Review pending analyst briefing with no change in our target price of RM8.18/share based on DDM valuation (WACC: 7.8%, g: 3.0%). Source: Bloomberg Page 1 of 2
18. 28-Feb-18 Quarterly Results Analysis (RMmn) FYE Dec 31 (RMmn) Revenue 4QFY16 251.0 3QFY17 243.7 4QFY17 251.4 QoQ (%) 3.2 YoY (%) 0.1 FY16 1,087.5 FY17 984.2 YoY (%) (9.5) Adj. EBIT Extra-ordinary items Net finance income 10.8 2.0 1.8 20.4 (2.2) 1.3 18.4 (1.8) 1.3 (10.0) (17.2) 4.6 70.3 nm (28.2) 64.0 2.0 7.0 70.1 (4.9) 5.4 9.5 nm (23.6) Profit Before Tax Adj. PBT 14.6 12.6 19.4 21.7 17.8 19.7 (8.3) (9.2) 22.2 56.0 73.0 71.0 70.5 75.4 (3.4) 6.2 Taxation Reported Net Profit Adj. Net Profit (3.1) 11.5 9.5 (4.5) 15.0 17.2 (4.4) 13.5 15.3 (2.7) (9.9) (10.9) 41.2 17.1 60.7 (18.4) 54.6 52.7 (18.4) 52.1 57.1 0.0 (4.6) 8.4 (sen) (sen) (sen) 7.0 5.8 15.0 9.1 10.4 5.0 8.2 9.3 12.5 (9.9) (10.9) >+100 17.1 60.7 (16.7) 33.2 32.0 30.0 32.0 34.7 27.5 (3.7) 8.4 (8.3) (%) (%) (%) (%) 4.3 5.0 3.8 24.5 8.4 8.9 7.0 20.7 7.3 7.8 6.1 22.2 %-points (1.1) (1.1) (1.0) 1.5 %-points 3.0 2.8 2.3 (2.3) 5.9 6.5 4.8 25.9 7.1 7.7 5.8 24.3 %-points 1.2 1.1 1.0 (1.5) FY19F 1,114.0 109.9 103.6 109.4 82.0 82.0 49.9 49.9 20.5 40.0 4.9 FY20F 1,147.4 105.3 105.3 107.1 80.3 80.3 48.9 48.9 20.5 40.0 5.3 EPS Adj. EPS DPS Adj. EBIT Margin Adj. PBT Margin Adj. Net Margin Effective Tax Rate Earnings Summary (RMmn) FYE Dec 31 (RM mn) Revenue EBITDA Adj. EBIT Reported PBT Reported Net Profit Adj. Net Profit EPS Adj. EPS PER Dividend/share Div. Yield (sen) (sen) (x) (sen) (%) FY16 1,087.5 88.8 64.0 73.0 54.6 52.7 33.2 32.0 27.3 30.0 4.0 FY17 984.2 80.9 70.1 70.5 52.1 57.1 32.0 34.7 27.3 27.5 3.6 FY18E 1,081.5 107.1 100.6 106.0 79.5 79.5 48.3 48.3 21.5 38.0 4.6 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 Wednesday, February 28, 2018, the analyst, Damia Othman, 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 2
19. RESULTS UPDATE www .bursamids.com Wednesday, February 28, 2018 Sector: Healthcare THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM3.40 EX: RM 1.46 (+16.9%) CCM Duopharma Biotech Bhd Last Traded: RM3.00 Expect Growth Momentum to Continue Tan Kam Meng, CFA Tel: +603-2167 9605 BUY kmtan@ta.com.my Review CCM Duopharma Biotech Bhd’s FY17 net profit of RM42.5mn (+56.7% YoY) came above our estimates at 108.7%. The variance was due to lower-thanexpected tax rate during the quarter. Revenue was in line, accounting for 103.3% of our estimates. www.taonline.com.my Stock Return Information KLCI 1871.5 E xpected S ha re P rice R eturn (% ) 13.3 E xpected Dividend R eturn (% ) 3.6 E xpected Tota l R eturn (% ) 16.9 Share Information B loomberg Code YoY, FY17’s revenue and PBT grew respectively by 49.5% to RM468.0mn and 64.5% to RM51.8mn. The robust performance was due to: i) effect of the RM300.0mn contract from the Ministry of Health to supply insulin to all government hospitals and clinics effective 2 December 2016 to 1 December 2019, and ii) shift to more specialty products which command a higher margin. CCMD MK S tock Code 7148 Lis ting Ma in Ma rket Is s ued S ha re (mn) 279.0 Ma rket Ca p (R Mmn) 836.9 52-wk Hi/Lo (R M) 3.05/1.97 E s tima ted F ree F loa t (% ) 35.8 B eta (x) 0.8 3-Month Avera g e Volume ('000) 153.0 Top 3 Shareholders (% ) QoQ, PBT margin drop by 9.7% to RM12.8mn as there was lower demand from the government sector and also additional factory maintenance cost. A final dividend of 6.0sen/share was proposed. (FY17: 8.5sen/share vs. FY16: 6.5sen/share) Separately, the group announced a bonus issue of 4 bonus share for every 3 shares held. This will potentially result in the issue of additional 371.9mn new shares. We are positive on this as it will help improve trading liquidity. Impact We raised our FY18/19/20 earnings estimates higher by +8.0%/8.0%/8.7% after raising our growth assumptions as we see more introduction of new products into the market. Outlook We expect the group to continue growing on the back of sustained increase in demand for pharmaceuticals from both the public and private sector. In terms of the strengthening Ringgit against the USD, it will help lower its cost of raw materials as well as packaging materials. P NB 46.9 EPF 6.3 S kim Ama na h S a ha m B umiputera 3.3 Share Performance (% ) Price Change 1 mth CCMD FBM KLCI 7.9 0.2 3 mth 24.0 8.9 12 mth 37.6 10.5 FY18 FY19 Financial Info 0.3 0.5 5.6 5.1 R OE (% ) NTA/S ha re (R M) 9.5 9.8 1.7 1.7 P rice/NTA (x) 1.8 1.7 Net g ea ring R OA (% ) Scorecard % of FY vs . TA vs . Cons ens us 108.7 Above N/A N/A (12-Mth) Share Price relative to the FBMKLCI Valuation Our TP for CCM Duopharma Biotech Bhd is revised higher to RM3.40/share (RM2.70/share previously), based on a higher target PE of 21.0x (previously 18.0x) against CY18 EPS. The upgrade in PE multiple is to reflect its growing exposure to more niche products. Reiterate Buy. Source: Bloomberg Page 1 of 3
20. 28-Feb-18 Table 1 : Earnings Summary FYE Dec (RM mn') FY16 FY17 FY18F FY19F FY20F Revenue 312.9 468.0 488.6 511.6 536.1 EBITDA 55.1 78.3 88.4 96.4 124.2 (22.3) (23.7) (26.7) (27.8) (39.8) Net finance cost (1.3) (2.6) (3.0) (5.8) (14.6) PBT 31.5 51.8 58.6 62.8 69.8 Taxation (4.7) (9.7) (13.5) (14.5) (16.0) PAT (-MI) 27.1 42.5 45.2 48.4 53.7 EPS (sen) 9.9 15.1 16.2 17.3 19.3 Depreciation & amortisation (26.3) 56.9 6.7 7.1 11.0 31.2 19.9 18.5 17.3 15.6 DPS (sen) 6.5 8.5 10.7 11.2 12.2 Dividend yield (%) 2.2 2.8 3.6 3.7 4.1 EPS growth (%) PER (x) Table 2: FY17 Results Analysis FYE Dec (RM mn') 3QFY17 4QFY17 QoQ Revenue 74.0 115.4 112.3 (2.7) 150.6 312.9 468.0 49.5 EBITDA 12.4 22.6 18.2 (19.4) 145.7 55.1 78.3 42.1 Depreciation & amortisation (5.6) (7.6) (4.9) (35.6) 86.5 (22.3) (23.7) 6.6 6.8 15.0 13.4 (11.3) 193.9 32.8 54.5 66.2 EBIT Finance income 4QFY16 YoY FY16 FY17 YoY 0.9 0.4 1.0 173.3 114.8 4.2 2.7 (35.9) (1.4) (1.2) (1.6) 28.2 107.1 (5.6) (5.4) (2.3) PBT 6.3 14.2 12.8 (9.7) 202.6 31.5 51.8 64.5 Tax 2.5 (3.1) (1.1) (65.7) (42.7) (4.7) (9.7) 108.4 PAT (-MI) 8.4 11.4 11.9 4.1 139.8 27.1 42.5 56.7 EPS (sen) 3.4 4.0 4.2 5.8 122.6 9.9 15.1 53.0 DPS (sen) 4.0 0.0 6.0 nm 149.0 6.5 8.5 30.8 Finance costs Profitability ratio EBITDA margin % % % pp pp % % pp 16.8 19.6 16.2 (3.4) (0.5) 17.6 16.7 (0.9) EBIT margin 9.2 13.0 11.9 (1.1) 2.6 10.5 11.6 1.2 PBT margin 8.5 12.3 11.4 (0.9) 2.9 10.1 11.1 1.0 (40.2) 21.7 8.2 (13.4) 48.4 14.8 18.7 3.9 11.4 9.9 10.6 0.7 (0.8) 8.7 9.1 0.4 Tax rate PAT (-MI) margin Page 2 of 3