Bursa Malaysia Daily Market Report - 6 February

Transcription

1. Tuesday , 06 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. Bu rs a M a l a ys i a Be r h a d : St ro n g F Y 1 7 R e su l t s Wi th in E x p e c ta t io n s S a p u r a En e rg y Bh d : N e w C o n t ra c t s in M a l a y s ia & B ra z i l S e m ic o n d u c t o r S e c t o r : R e c o r d Sa le s f o r th e Se c o n d Y e a r R u n n in g S e rb a D in a m ik H o l d in g s Be r h a d : A n o th e r H y d ro p o w e r P la n t A c q u i re d 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 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 Tuesday , 06 February 2018 For Internal Circulation Only TA Research, e-mail : taresearch@ta.com.my KLSE Market Statistics (05.02.2018) Volume Main Market 1,623.2 -77.9 Warrants 469.8 -0.1 ACE Market 558.4 126.5 Bond 5.2 -4.3 ETF 0.2 0.2 LEAP 0.0 (0.1) Total 2,656.8 Off Market 41.7 -20.0 2,677.9 80.1 87.1 1.4 0.4 0.0 2,846.8 103.2 Value -414.3 4.6 6.3 -0.9 0.3 0.0 -326.7 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 Review & Outlook Value/ 1.65 104 0.17 48 0.16 12 0.26 3 1.75 0 0.00 0 1.07 167 2.47 % chg % YTD chg 1,853.07 13,220.69 16,713.62 1,843.50 -17.41 -155.89 -308.73 -16.50 -0.93 -1.17 -1.81 -0.89 3.13 2.15 -1.98 3.28 24,345.75 6,967.53 7,334.98 22,682.08 2,491.75 32,245.22 3,482.93 1,810.32 6,589.68 3,487.50 1,806.30 6,026.23 -1175.21 -273.42 -108.45 -592.45 -33.64 -356.56 -46.89 -17.03 -39.14 25.42 -15.23 -95.16 -4.60 -3.78 -1.46 -2.55 -1.33 -1.09 -1.33 -0.93 -0.59 0.73 -0.84 -1.55 -1.51 0.93 -4.59 -0.36 0.98 7.77 2.35 3.23 3.68 5.45 -4.90 -0.64 (mn) (RM) 5.51 1.08 0.10 1.30 0.96 1.35 1.53 0.74 0.82 0.37 Counter Mkt Cap. Chg (RM’mn) (RM) MAYBANK 108,395 PBBANK 84,876 CIMB 65,409 AXIATA 50,851 IHH 49,190 MAXIS 46,941 DIGI 38,331 HLBANK 38,048 SIMEPLT 37,337 GENTING 35,807 -0.08 -0.02 -0.16 -0.08 -0.06 -0.09 -0.05 -0.20 -0.06 -0.06 Vol. (mn) 16.51 6.01 30.83 8.73 8.35 3.41 6.90 1.48 6.40 4.05 Important Dates PDZ - 4:2 Rights Issue - RI of up to 434.7m shares together with up to 325.9m free detachable warrants. 4 rights shares together with 3 warrants for every 2 existing shares held, at an issue price of RM0.10 per rights share. LISTING ON: 07/02/2018. MASTEEL - 1:3 Bonus Issue - BI of up to 106.8m shares. 1 bonus share for every 3 existing shares held. Ex-Date: 12/02/2018. Entitlement Date: 14/02/2018. LISTING ON: 15/02/2018. Bursa Malaysia shares fell for profit-taking correction on Monday following the sharp correction last Friday on Wall Street, sparked by concerns rising US bond yields and inflation may quicken the pace of interest rate increases. The KLCI slumped 17.41 points to close at 1,853.07, off an early low of 1,842.06 and high of 1,857.39, as losers trashed gainers 966 to 167 on total turnover of 2.65bn shares worth RM2.84bn. The cautious market undertone due to worries over rising US bond yields and interest rates should keep a lid on stock prices, and extend the current overbought correction. Failure of immediate support from the rising 10-day moving average now at 1,850, will test the mid Bollinger band at 1,837, with stronger supports from 1,816, the 30-day ma, and then 1,800 and 1,796, the breakout level. Immediate resistance will be last Friday's high of 1,880, followed by the 150%FP at 1,888, subsequent to the all-time high of 1,896 on July 2014. Short-term bearish momentum on ABMB point to profit-taking correction potential towards the 61.8%FR (RM4.15), with better support from the 50%FR (RM4.04), while overhead resistance from RM4.40 and the 11/5/ 17 high (RM4.49) indicate limited upside. Similarly, AMMB should ease for correction towards the 100-day moving average (RM4.42), with stronger support at the 23.6%FR (RM4.32), before buyers return to nibble. Immediate upside is restricted by the upper Bollinger band (RM4.91), matching the recent high. News Bites Top 10 KLCI Movers Based on Mkt Cap. Off Market SIMEPLT 12.0 @ EFORCE-WA 7.0 @ TITIJYA-PA 5.0 @ ORNA 4.1 @ LAYHONG 3.5 @ YNHPROP 2.2 @ AMVERTON 2.1 @ AMPROP 1.0 @ SAPNRG 1.0 @ UMWOG 1.0 @ 584 280 96 3 3 0 966 • Sapura Energy Bhd secured Engineering and Construction contracts totalling RM905mn in Malaysia and India. • Serba Dinamik Holdings Berhad announced that it has entered into a MoU with Maju to acquire a 40% stake in three 70%-owned subsidiaries of Maju for RM24.9mn cash. • Vivocom International Holdings Bhd has secured a RM27.6mn contract from China Construction Third Engineering Group (M) Sdn Bhd for aluminium and glazing works in Melaka. • Anzo Holdings Bhd, which has been anticipating securing a potential RM1.2bn contract to build the Paragon@KLNorthgate shopping centre in Selayang with a partner, is not going to see the project take off anytime soon. • DBE Gurney Resources Bhd has proposed to diversify into property development and construction via a joint development with Misi Jutari Sdn Bhd for a mixed development project in Perak. • PCCS Group Bhd is proposing to sell a 2.6-acre leasehold land in Batu Pahat, Johor, together with three buildings on-site for RM8.5mn. • Kenanga Investment Bank Bhd has advised the minority shareholders of property company MCT Bhd to reject the takeover offer of 88 sen a share by the Philippines' Ayala Land. • Kuantan Flour Mills Bhd's external auditors McMillan Woods Thomas has issued a qualified opinion on the company's audited financial statements for FY17, amid uncertainty over its proposed regularisation plan. • Kinsteel Bhd said Bursa Securities has granted it an extension of time until June 30 this year to submit its regularisation plan to the relevant authorities for approval, provided that Kinsteel makes the requisite announcement by March 31. • Bursa Malaysia Bhd's net profit for FY17 climbed 15.2% to RM223.0mn. It was within expectations. • Hong Leong Industries Bhd's second quarter net profit grew 20.8% to RM82.9mn from RM68.7mn a year ago, on higher sales revenue from its consumer products segment. • The Caixin/Markit services purchasing managers' index rose to 54.7 in January from December's 53.9, marking the highest reading since May 2012. Exchange Rate USD/MYR 3.9000 0.013 USD/JPY 109.14 -0.740 EUR/USD 1.238 -0.0111 Commodities Futures Palm Oil (RM/mt) 2,493.00 19.00 Crude Oil ($/Barrel) 63.43 -1.63 Gold ($/tr.oz.) 1,342.40 7.20 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. Tuesday , February 06, 2018 FBMKLCI: 1,853.07 xx 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 Rising US Rate Worries to Cap Prices Bursa Malaysia shares fell for profit-taking correction on Monday following the sharp correction last Friday on Wall Street, sparked by concerns rising US bond yields and inflation may quicken the pace of interest rate increases. The KLCI slumped 17.41 points to close at 1,853.07, off an early low of 1,842.06 and high of 1,857.39, as losers trashed gainers 966 to 167 on total turnover of 2.65bn shares worth RM2.84bn. Better Supports at 1,837, Then 1,816 The cautious market undertone due to worries over rising US bond yields and interest rates should keep a lid on stock prices, and extend the current overbought correction. Failure of immediate support from the rising 10-day moving average now at 1,850, will test the mid Bollinger band at 1,837, with stronger supports from 1,816, the 30-day ma, and then 1,800 and 1,796, the breakout level. Immediate resistance will be last Friday’s high of 1,880, followed by the 150%FP at 1,888, subsequent to the all-time high of 1,896 on July 2014. Take Profit on ABMB & AMMB Short-term bearish momentum on ABMB point to profit-taking correction potential towards the 61.8%FR (RM4.15), with better support from the 50%FR (RM4.04), while overhead resistance from RM4.40 and the 11/5/17 high (RM4.49) indicate limited upside. Similarly, AMMB should ease for correction towards the 100-day moving average (RM4.42), with stronger support at the 23.6%FR (RM4.32), before buyers return to nibble. Immediate upside is restricted by the upper Bollinger band (RM4.91), matching the recent high. Asian Shares Extend Global Rout as Rising Bond Yields Spooks Investors The global stock-market rout continued Monday in Asia, following heavy selling in the U.S. and Europe on Friday. The declines followed Friday’s heavy selling in Europe and the U.S. after some downbeat corporate earnings reports and an uptick in wages in the latest U.S. monthly employment report. Also, bond yields have been rising and any acceleration in inflation could prompt central banks to tighten monetary policy faster than expected. Yields on the benchmark 10-year U.S. Treasury’s have risen to 2.86 percent from 2.42 percent at the start of the year. They started 2017 at 2.43 percent. On economic front, China's service sector expanded at a faster pace in January, a private gauge showed Monday, a reading that tallies with official data pointing to continued resilience in the sector. The Caixin China services purchasing managers' index rose to 54.7 in January, the highest reading since May 2012. Japan’s Nikkei share average fell sharply as fear that U.S. inflation may be finally gathering pace pound global equities, with investors dumping small-cap shares. The Nikkei tumbled 2.5 percent to 22,682.08, its biggest one-day drop since Nov 9, 2016. In Australia, the ASX 200 fell 95.16 points, or 1.55 percent, to 6,026.23, with all sectors declining. The heavily weighted financial sub-index was down 1.44 percent, while the energy and materials sectors fell 2.68 percent and 2.22 percent, respectively. South Korea's Kospi index fell 1.34 percent. Meanwhile, China stocks recouped early losses to end higher, as sentiment was lifted by a private survey showing China’s services sector got off to a flying start in 2018. The Shanghai Composite index was up 25.30 points or 0.73 percent at 3,487.38. Page 1 of 7
4. 6-Feb-18 Dow Tumbles Over 1 ,100 Points as Rout Deepens U.S. stocks tumbled Monday, with the Dow recording its worst one-day point drop in history, as investors grappled with rising bond yields and potentially firming inflation. All 30 of the blue-chip Dow industrial components finished negative. The blue-chip index is now down 1.5 percent for the year and off 8.5 percent from its Jan. 26 high, approaching the 10 percent mark that would represent a correction. Friday’s January jobs report sparked worries over inflation and a surge in bond yields, as well as concerns that the Federal Reserve will raise rates at a faster pace than expected. Rising inflation and a crash in the bond market were cited as the greatest tail risk for markets in Bank of America Merrill Lynch’s January fund manager survey. The financial sector was the biggest loser, tanking 5 percent, followed by health care, industrials, energy, telecommunications, and information technology which all fell more than 4 percent. The Dow Jones Industrial Average fell 1,175.21 points, or 4.6 percent, to 24,345.75, the S&P 500 lost 113.19 points, or 4.10 percent, to 2,648.94 and the Nasdaq Composite dropped 273.42 points, or 3.78 percent, to 6,967.53. 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 06, 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 7
5. 6-Feb-18 N e w s i n B r i e f Corporate Sapura Energy Bhd has secured several contracts with a combined value of about RM905mn via its subsidiaries . Its unit Sapura Fabrication Sdn Bhd secured three provision of engineering, procurement, construction and commissioning contracts. Two of them are from Petronas Carigali Sdn Bhd, while the remainder is from Hess Exploration And Production Malaysia BV. Another unit, Sapura Offshore Sdn Bhd, secured two projects: one involving the transportation and installation works for the Bokor Central Processing Platform project for Malaysia Marine and Heavy Engineering Sdn Bhd, and the other is for the provisioning of offshore/onshore pipelines and terminal works for the Fifth Oil Berth project at Mumbai Port Trust. (Bursa Malaysia / The Edge) Serba Dinamik Holdings Bhd is acquiring a 40% stake in Maju Renewable Energy Sdn Bhd, Maju RE (Talang) Sdn Bhd and Maju RE (Temenggor) Sdn Bhd from Maju Holdings Sdn Bhd — which are controlled by businessman Tan Sri Abu Sahid Mohamed — for a combined RM24.9mn. The wholly-owned subsidiaries of the target companies have been granted approval by the Sustainable Energy Development Authority Malaysia to develop hydro power plants within the Temenggor and Belum Forest Reserves in Perak, with a total of 60-megawatt (MW) generating capacity. They have also entered into renewable energy (RE) power purchase agreements with Tenaga Nasional Bhd to supply RE generated by the power plants to the national power grid. (Bursa Malaysia / The Edge) Vivocom International Holdings Bhd has secured a RM27.6mn contract from China Construction Third Engineering Group (M) Sdn Bhd for aluminium and glazing works in Melaka. The group said its subsidiary Neata Aluminium (M) Sdn Bhd had accepted the letter of award from China Construction. The project will be completed by September 2019. (Bursa Malaysia / The Edge) Anzo Holdings Bhd, which has been anticipating securing a potential RM1.2bn contract to build the Paragon@KLNorthgate shopping centre in Selayang with a partner, is not going to see the project take off anytime soon. Its developer KL Northgate Sdn Bhd is now reviewing the whole development concept and development components of the project, in view of the "current real estate glut and the imbalance in the supply-demand conditions". (Bursa Malaysia / The Edge) DBE Gurney Resources Bhd has proposed to diversify into property development and construction via a joint development with Misi Jutari Sdn Bhd for a mixed development project in Perak. The project, developed on a 3.7-hectare land in Bota Kanan in Perak Tengah district, comprises 95 units of semi-detached and terrace houses and 19 units of shop houses. (Bursa Malaysia / The Edge) PCCS Group Bhd is proposing to sell a 2.6-acre leasehold land in Batu Pahat, Johor, together with three buildings on-site for RM8.5mn. The buildings comprise a one-and-a-half storey building cum offices, a two-and-a-half storey factory building cum offices, and a single storey factory building — with a combined floor area of 8,467.17 sq metres. (Bursa Malaysia / The Edge) Kenanga Investment Bank Bhd has advised the minority shareholders of property company MCT Bhd to reject the takeover offer of 88 sen a share by the Philippines' Ayala Land. Kenanga IB said on Monday as the offer price was a discount of 50 sen or 36.23% over the estimated fair value per MCT share of RM1.38, it described the offer as not fair. (Bursa Malaysia / StarBiz) Page 3 of 7
6. 6-Feb-18 Kuantan Flour Mills Bhd 's external auditors McMillan Woods Thomas has issued a qualified opinion on the company's audited financial statements for the year ended Sept 30, 2017 (FY17), amid uncertainty over its proposed regularisation plan. (Bursa Malaysia / The Edge) Kinsteel Bhd said Bursa Securities has granted it an extension of time until June 30 this year to submit its regularisation plan to the relevant authorities for approval, provided that Kinsteel makes the requisite announcement by March 31. The requisite announcement has to contain the details of the regularisation and sufficient information to demonstrate that it is able to turn around its operations along with a timeline for the completion of the plan. (Bursa Malaysia / The Edge) Bursa Malaysia Bhd’s net profit for the fourth quarter ended Dec 31, 2017 (4QFY17) rose 10.2% to RM55.3mn, from RM50.2mn, due to better performance of the securities market. Net profit for FY17 climbed 15.2% to RM223.0mn from RM193.6mn from FY16. According to Bursa Malaysia, its profit after tax and minority interest was the highest recorded since 2007, and highest full year operating revenue since its listing in 2005. (Bursa Malaysia / The Edge) Hong Leong Industries Bhd's second quarter net profit grew 20.8% to RM82.9mn from RM68.7mn a year ago, on higher sales revenue from its consumer products segment. The group attributed the higher sales in the quarter ended Dec 31, 2017 (2QFY18) to favourable sales mix. Total net profit for the first two quarters increased 23.51% to RM164.8mn, from RM133.4mn in the previous corresponding period. (Bursa Malaysia / The Edge) Daibochi Plastic and Packing Industry Bhd saw its earnings jump 33.7% to RM7.9mn in the fourth quarter ended Dec 31, 2017 (4QFY17) boosted by new contributions from Daibochi Myanmar, improved wastage control, enhanced operating efficiency, and better sales mix. In FY17, its earnings rose 5.9% to RM26.0mn from RM24.5mn in FY16. Its revenue rose 4.7% to RM388.6mn from RM371.2mn mainly due to new contributions from Daibochi Myanmar. (Bursa Malaysia / StarBiz) Hume Industries Bhd fell into the red with a net loss of RM4.4mn in its second quarter ended Dec 31, 2017, after booking higher cost of sales, operating expenses and finance costs. In contrast, it posted a net profit of RM9.2mn in the corresponding period last year. In its cumulative first half (1HFY18), the group made a net loss of RM4.0mn compared with a net profit of RM17.2mn in the previous corresponding period. The decline in earnings was mainly due to lower selling price and higher operating expenses, it said. (Bursa Malaysia / The Edge) Page 4 of 7
7. 6-Feb-18 N e w s I n B r i e f Economy Asia China 's Service Sector Grows at Fastest Pace in Nearly Six Years China’s services sector got off to a flying start in 2018, expanding at its fastest pace in almost six years as new orders surged and companies rushed to hire more staff, a private survey showed. Economists also attributed the robust strength in services in January to better access to bank loans at the start of the year and solid demand before the long Lunar New Year celebrations, which fall in mid-February. The Caixin/Markit services purchasing managers’ index (PMI) rose to 54.7 in January from December’s 53.9, marking the highest reading since May 2012. The 50-mark separates growth from contraction on a monthly basis. The upbeat findings, which echoed those of an official gauge of the non-manufacturing sector last week, bode well for Beijing’s longer-term goal of overhauling and modernizing its economic growth model. The government is counting on growth in consumption and services, particularly in high value-added areas such as finance and technology, to reduce the economy’s traditional reliance on heavy industry, investment and exports. The services sector already accounts for over half of China’s economy, with rising wages giving its consumers more spending power at home and abroad. New business increased at the fastest pace in 32 months, the Caixin survey showed, with respondents linking the rise to new projects, company expansions and greater initiatives to win new clients. The effort led companies to hire new workers at the fastest pace in five months. (Reuters) Other PMI service sector news: Japan's service sector activity expanded at a slightly faster pace in January, results of a survey by IHS Markit showed. The seasonally adjusted services purchasing managers' index, or PMI, rose to 51.9 in January from 51.1 in December. The Nikkei composite output index, which combines scores from the manufacturing and services indexes, also climbed to 52.8 in January from 52.2 in the preceding month. (RTT, Markit Economics) Australia' service sector activity expanded at an accelerated pace in January. The Performance of Services Index, or PSI, rose by 2.9 points to 54.9 in January from 52.0 December. Any reading above 50 indicates expansion in the sector. Among components, new orders, sales, employment all increased at faster rates during January. (RTT, AIG) The Indian service sector expanded at a faster pace in January, driven by a renewed increase in new business, survey data from IHS Markit showed. The headline Nikkei Services Purchasing Managers' Index rose to 51.7 in January from 50.9 in December. (RTT) Indonesia’s Economy Grows Faster Than Estimated in 4th Quarter Indonesia’s economy expanded more than economists forecast last quarter, helped by an aggressive run of monetary policy easing aimed at spurring growth in the Southeast Asian nation. Gross domestic product rose 5.19% in the fourth quarter from a year earlier, the statistics bureau said. The median estimate of 17 economists surveyed by Bloomberg was for growth of 5.1%. Compared with the previous quarter, GDP fell 1.7% compared with the 1.71% decline economists had forecast. GDP rose 5.07% in 2017, matching estimates. While the economy has been buoyed by stronger exports and a surge in investment, it’s being stifled by lackluster consumer spending and sluggish credit growth. Retail sales grew just 2.6% in December compared to a year earlier, a worry for policy makers since spending by businesses and consumers makes up about half of GDP. Finance Minister Sri Mulyani Indrawati expects a pick-up in growth this year as global trade strengthens. The central bank is forecasting growth of 5.1% to 5.5% this year. Bank Indonesia has signaled the end of policy Page 5 of 7
8. 6-Feb-18 easing after 200 basis points of interest rate relief over the past two years . Governor Agus Martowardojo said last month that the benchmark rate of 4.25% is in line with efforts to maintain economic stability and boost the economic recovery. (Bloomberg) United States U.S. Services Sector Activity Jumps to 12-1/2-Year High U.S. services sector activity raced to a near 12-1/2-year high in January, buoyed by robust growth in new orders, the latest sign of strong momentum in the economy at the start of the year. Economic growth is showing strength even before the stimulus from a $1.5 trillion tax cut package, which came into effect last month, has started to filter through. That is causing concern that the economy could overheat. The yield on the benchmark 10-year Treasury note has risen to a four-year high as investors anticipate a slightly faster pace of interest rate increases from the Federal Reserve than has been expected. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017. The Institute for Supply Management’s (ISM) survey added to a report on Friday showing a pickup in job gains in January and the strongest annual wage growth in more than 8-1/2 years. The ISM said its non-manufacturing activity index jumped 3.9 points to 59.9, the highest reading since August 2005. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of U.S. economic activity. New orders jumped 8.2 points to 62.7, the best reading since January 2011. Services industry respondents tied the surge in orders to the tax cuts and the strengthening economy. The survey’s production index rose 2.0 points and a measure of services sector employment soared 5.3 points to a record high. (Reuters) Jerome Powell Sworn in as Federal Reserve Chairman Jerome Powell took the oath of office as chairman of the Federal Reserve’s board of governors, succeeding Janet Yellen, the central bank said. The Senate last month confirmed Mr. Powell to become the central bank’s 16th chairman, clearing the way for a new leader likely to continue raising interest rates to keep the nation’s economic expansion on track. The Fed said the oath was administered by Fed governor Randal Quarles, who joined the central bank in October as vice chairman for supervision. Mr. Powell’s term as chairman is four years, although his term as a member on the Fed’s powerful board of governors runs for another decade, until Jan. 31, 2028. (The Wall Street Journal) Europe and Uni ted Kingdom Eurozone Businesses Began Year in Best Shape for Over a Decade Eurozone businesses began 2018 by increasing activity faster than at any time in well over a decade as new orders surged despite firms raising prices at the steepest rate in almost seven years, a survey showed. The Eurozone emerged as one of the best-performing major economies last year. Forward-looking indicators in the survey suggest that momentum will continue for at least another few months - welcome news for the European Central Bank as it moves to unwind policy. IHS Markit’s Final Composite Purchasing Managers’ Index, seen as a good overall growth indicator for the Eurozone, rose to 58.8 in January from December’s 58.1 and up from the flash estimate of 58.6. It is now at its highest since June 2006 and well above the 50 mark that separates growth from contraction. Earlier figures from Germany, Europe’s biggest economy, showed private sector growth was at a near seven-year high while in France the business boom showed no sign of abating in January. (Reuters) Eurozone Retail Sales Decline in December Eurozone retail sales declined in December after recovering a month ago, Eurostat reported. The volume of retail trade dropped 1.1% month-on-month in December, in contrast to the 2% rise posted in November. Sales were forecast to drop 1%. Sales volume of food, drinks and tobacco dropped 0.7% on month and non-food product sales decreased 1.2%. On a yearly basis, retail sales growth eased to 1.9% from 3.9% in the previous month. Economists had forecast sales to rise 1.8%. Sales in the EU28 decreased 1% month-on-month in December but grew 2.4% annually. The average retail trade for the year 2017 rose by 2.6% in both the euro area and EU28. Page 6 of 7
9. 6-Feb-18 Separately , Eurozone investor confidence weakened in February, survey data from think tank Sentix showed. The investor sentiment index fell unexpectedly to 31.9 from 32.9 in January. The score was forecast to rise to 34.5. While the situation remained strong, expectations deteriorated to its lowest level since February 2017. The current conditions index climbed to 49.5 in February from 48.0 in January. This was the highest level since February 2017. Meanwhile, the expectations index dropped to 15.5 from 18.8 a month ago. (RTT) UK Economy Suffers Sharp Slowdown at Start of 2018: IHS Markit Britain’s economy slowed sharply in January, according to a survey that cast doubt on growing expectations among investors that the Bank of England might be gearing up to raise interest rates again in the coming months. Sterling fell and British government bonds briefly rose after financial data firm IHS Markit said growth in the world’s sixth-biggest economy looked set to slow to 0.3% in the first quarter, down from 0.5% in the last three months of 2017. The slowdown was driven mostly by Britain’s dominant services sector, where activity growth fell to a 16-month low of 53.0 last month from 54.2 in December, as measured by IHS Markit’s Purchasing Managers’ Index (PMI). (Reuters) Share Buy-Back: 05 February 2018 Company DUFU GENM GLOMAC GRANFLO HEVEA MALAKOF NYLEX PWF SNTORIA UNIMECH YILAI Bought Back Price (RM) 350,000 950,000 20,000 160,000 100,000 1,000,000 10,000 10,000 330,000 23,200 100,000 1.20/1.12 5.48/5.44 0.52/0.51 0.225/0.22 0.97/0.967 0.915/0.91 0.84/0.815 1.00 0.61/0.59 1.04/1.02 0.75 Total Treasury Shares 1.20/1.07 9,781,600 5.49/5.44 274,907,400 0.52/0.50 5,453,400 0.225/0.22 8,370,000 0.99/0.95 1,072,000 0.93/0.905 9,276,800 0.84/0.815 5,653,824 1.01/0.995 1,131,706 0.61/0.58 2,591,000 1.04/1.02 6,636,610 0.75 8,114,408 Source: Bursa Malaysia Hi/Lo (RM) 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 7 of 7
10. 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 05-Feb-18 AUTOMOBILE BAUTO 2.18 2.50 14.7% Buy 2,526 0.43 14.3 19.9 15.3 11.0 5.3 5.5 2.47 -11.7 1.84 18.5 MBMR 2.36 2.32 -1.7% Under Review 922 0.72 23.2 23.9 10.2 9.9 2.0 2.0 2.60 -9.2 2.01 17.4 -0.9 7.3 PECCA 1.42 1.86 31.0% Buy 262 0.29 11.1 12.5 12.7 11.4 3.9 4.3 1.70 -16.5 1.28 10.9 -8.4 SIME 2.93 1.97 -32.8% Hold 19,926 1.48 12.0 12.7 24.5 23.2 1.0 1.1 3.06 -4.2 2.03 44.6 32.6 UMW 6.88 4.37 -36.5% Sell 8,038 1.36 20.7 36.9 33.3 18.7 1.5 2.6 6.98 -1.4 4.70 46.4 32.3 BANKS & FINANCIAL SERVICES ABMB 4.29 4.60 7.2% Hold 6,641 1.30 30.6 35.6 14.0 12.0 3.7 3.7 4.49 -4.5 3.62 18.5 5.1 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 4.58 5.50 20.1% Buy 13,805 1.35 48.6 52.0 9.4 8.8 3.9 3.9 5.70 -19.6 4.06 12.8 3.9 CIMB 7.09 7.50 5.8% Hold 65,409 1.62 50.8 56.0 13.9 12.7 4.1 3.9 7.36 -3.7 4.91 44.4 8.4 HLBANK 18.60 19.30 3.8% Hold 38,048 0.73 114.2 120.9 16.3 15.4 2.4 2.4 18.80 -1.1 13.18 41.1 9.4 MAYBANK 10.02 10.50 4.8% Hold 108,401 1.06 70.6 77.4 14.2 12.9 5.0 5.0 10.24 -2.1 8.17 22.6 2.2 PBBANK 21.98 25.10 14.2% Buy 84,876 0.67 142.4 149.8 15.4 14.7 2.6 2.7 22.62 -2.8 19.66 11.8 5.8 RHBBANK 5.30 5.70 7.5% Hold 21,253 1.58 52.2 53.8 10.2 9.9 2.8 2.8 5.61 -5.5 4.71 12.5 6.0 BURSA 10.88 11.80 8.5% Buy 5,848 0.96 43.9 45.0 24.8 24.2 3.3 3.3 11.02 -1.3 8.08 34.6 7.5 -11.1 Note: BURSA proposed bonus issue of shares on the basis of 1 for 2. Ex-Target price RM7.04 BUILDING MATERIALS ANNJOO 3.43 4.40 28.3% Buy 1,770 1.24 45.1 48.9 7.6 7.0 6.4 7.6 3.98 -13.8 2.27 51.1 CHINHIN 1.10 1.36 23.6% Buy 612 1.04 12.4 12.0 8.8 9.1 4.5 5.5 1.49 -26.2 0.89 23.6 -9.1 ENGTEX 1.06 1.38 30.2% Buy 451 0.69 14.2 16.1 7.5 6.6 3.9 5.2 1.52 -30.3 1.06 0.0 -3.6 GADANG 1.11 1.69 52.3% Buy 733 1.02 14.2 18.1 7.8 6.1 2.7 2.7 1.37 -19.0 1.01 9.9 0.0 GAMUDA 4.98 6.00 20.5% Buy 12,233 0.81 34.5 35.7 14.4 14.0 2.4 2.4 5.52 -9.8 4.58 8.7 0.4 IJM 2.89 2.89 0.0% Sell 10,486 0.86 13.7 18.2 21.1 15.9 3.3 3.3 3.61 -19.9 2.71 6.6 -5.2 KAB 0.28 0.38 33.9% Buy 9 na 31.4 37.3 0.9 0.8 3.6 42.9 0.33 -15.2 0.25 14.3 -6.7 PESONA 0.45 0.55 23.6% Buy 309 0.91 5.8 4.8 7.7 9.3 3.4 3.4 0.74 -39.5 0.44 2.3 -1.1 -5.2 CONSTRUCTION SENDAI 0.82 0.55 -32.9% Sell 640 1.23 9.1 8.5 9.0 9.7 1.2 1.2 1.39 -41.0 0.51 62.4 SUNCON 2.53 2.65 4.7% Buy 3,269 0.59 14.7 16.4 17.2 15.4 2.2 2.4 2.64 -4.2 1.69 49.7 0.8 WCT 1.59 1.64 3.1% Hold 2,237 0.85 12.6 11.2 12.6 14.2 1.9 1.9 2.48 -35.8 1.46 8.9 -1.9 LITRAK 5.70 6.26 9.8% Hold 3,008 0.37 45.6 47.1 12.5 12.1 4.4 4.4 6.15 -7.3 5.40 5.6 2.7 CARLSBG 16.42 18.06 10.0% Buy 5,051 0.81 86.2 88.7 19.0 18.5 5.2 5.4 16.42 0.0 13.98 17.5 7.3 HEIM 19.60 19.14 -2.3% Buy 5,921 0.50 84.0 88.3 23.3 22.2 3.9 4.1 19.64 -0.2 15.82 23.9 3.7 AEON 1.61 1.97 22.4% Sell 2,260 0.41 6.7 7.7 24.1 20.9 2.5 2.8 2.70 -40.4 1.60 0.6 -8.5 AMWAY 7.70 8.18 6.2% Buy 1,266 0.42 43.9 45.2 17.5 17.0 4.9 5.2 8.18 -5.9 7.04 9.4 4.3 F&N 29.88 33.74 12.9% Buy 10,952 0.27 122.7 145.8 24.4 20.5 2.7 3.2 30.30 -1.4 22.64 32.0 10.7 CONSUMER Brewery Retail HUPSENG 1.09 1.25 14.7% Hold 872 0.44 5.5 5.6 20.0 19.5 4.1 4.6 1.28 -14.8 1.08 0.9 0.0 JOHOTIN 1.26 1.75 38.9% Buy 391 0.72 12.8 13.5 9.9 9.4 4.0 4.3 1.76 -28.4 1.16 8.6 4.1 NESTLE 116.60 120.50 3.3% Buy 27,343 0.48 325.4 368.7 35.8 31.6 2.5 2.9 117.00 -0.3 75.40 54.6 13.0 PADINI 5.17 4.67 -9.7% Sell 3,401 0.72 28.0 30.4 18.5 17.0 2.4 2.5 5.50 -6.0 2.36 119.1 -2.1 POHUAT 1.51 2.01 33.1% Buy 332 0.65 22.9 25.4 6.6 5.9 5.3 5.3 2.07 -27.0 1.48 2.0 -15.6 QL 4.81 3.26 -32.2% Sell 7,804 0.45 12.8 14.7 37.5 32.7 0.9 1.0 4.84 -0.6 3.26 47.8 10.6 SIGN 0.63 0.92 47.2% Buy 143 0.86 6.9 9.2 9.0 6.8 4.0 5.6 1.07 -41.6 0.62 1.6 -11.3 33.32 52.08 56.3% Buy 9,514 1.40 187.4 175.4 17.8 19.0 6.0 6.0 51.04 -34.7 31.40 6.1 -16.7 GENTING 9.36 11.53 23.2% Buy 35,807 1.43 54.4 59.8 17.2 15.7 1.7 1.7 10.00 -6.4 8.23 13.7 1.7 GENM 5.44 6.51 19.7% Buy 30,813 1.48 27.0 30.6 20.1 17.8 1.7 1.8 6.38 -14.7 4.87 11.7 -3.4 2.28 3.34 46.5% Buy 3,071 0.71 21.5 26.0 10.6 8.8 7.0 7.9 3.00 -24.0 2.23 2.2 1.8 CCMDBIO 2.80 2.70 -3.6% Buy 781 0.90 15.0 16.1 18.6 17.4 3.5 3.7 3.03 -7.6 1.97 42.1 10.7 IHH 5.97 6.40 7.2% Buy 49,190 0.76 11.9 15.0 50.2 39.9 0.5 0.6 6.35 -6.0 5.42 10.1 1.9 KPJ 0.94 1.12 19.1% Buy 4,009 0.47 3.7 4.2 25.1 22.6 2.2 2.4 1.14 -17.5 0.90 4.4 -3.1 HARTA 11.36 7.30 -35.7% Sell 18,796 1.11 25.8 30.5 44.1 37.3 1.0 1.2 12.18 -6.7 4.67 143.3 6.4 KOSSAN 8.44 8.80 4.3% Buy 5,397 0.51 38.3 43.0 22.1 19.6 2.3 2.5 8.79 -4.0 5.62 50.2 4.1 SUPERMX 2.12 1.80 -15.1% Sell 1,390 0.65 15.3 17.9 13.8 11.8 2.5 2.9 2.50 -15.2 1.69 25.4 6.0 TOPGLOV 9.12 9.35 2.5% Sell 11,452 0.55 41.6 50.8 21.9 18.0 1.6 1.9 10.00 -8.8 4.56 100.0 14.1 KAREX 1.11 1.00 -9.9% Sell 1,113 0.61 2.8 5.2 40.2 21.3 0.6 1.2 2.47 -55.1 1.10 0.9 -14.6 SCIENTX 8.45 9.84 16.4% Buy 4,131 0.66 67.5 74.1 12.5 11.4 2.1 2.2 9.85 -14.2 6.89 22.6 -2.4 SKPRES 1.90 2.20 15.8% Buy 2,375 0.59 10.4 14.8 18.3 12.8 2.7 3.9 2.35 -19.1 1.24 53.2 -16.7 ASTRO 2.56 3.10 21.1% Buy 13,348 0.92 14.0 13.7 18.3 18.7 5.1 5.3 2.94 -12.9 2.45 4.5 -3.4 MEDIA PRIMA 0.64 0.45 -29.7% Sell 710 1.22 -3.8 -1.7 na na 0.0 0.0 1.28 -50.0 0.58 10.3 -15.8 STAR 1.37 1.25 -8.8% Sell 1,011 1.14 6.7 6.7 20.4 20.4 8.8 8.8 2.22 -38.2 1.31 4.6 -17.0 Tobacco BAT GAMING Casino NFO BJTOTO HEALTHCARE Hospitals/ Pharmaceutical Rubber Gloves INDUSTRIAL MEDIA
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) FY18 PER (X) Div Yield (%) FY19 FY18 FY19 FY18 FY19 52weeks 52weeks % Chg High Price % Chg Low Price % Chg YTD OIL & GAS DNEX 0.46 0.72 56.5% Buy 808 1.38 4.2 4.5 11.0 10.2 2.2 2.2 0.69 -33.3 0.29 61.4 -5.2 LCTITAN 5.36 6.10 13.8% Buy 12,183 na 56.3 60.9 9.5 8.8 4.7 5.0 6.53 -17.9 4.14 29.5 14.0 MHB 0.78 0.78 0.0% Sell 1,248 1.78 -0.8 0.0 na 3329.5 0.0 0.0 1.16 -32.8 0.63 24.8 -5.5 MISC 7.20 6.48 -10.0% Sell 32,139 1.15 46.3 51.7 15.6 13.9 4.2 4.2 7.90 -8.9 6.89 4.5 -3.0 PANTECH 0.64 0.69 7.8% Buy 476 1.13 6.1 6.8 10.5 9.4 4.3 4.8 0.74 -13.5 0.46 39.1 -0.8 PCHEM 8.02 7.96 -0.7% Hold 64,160 0.95 49.8 52.6 16.1 15.3 2.7 2.9 8.28 -3.1 6.80 17.9 4.2 SAPNRG 0.71 1.25 77.3% Buy 4,224 2.11 -6.5 -5.0 na na 0.0 0.0 2.10 -66.4 0.67 6.0 -0.7 SERBADK 3.52 4.16 18.2% Buy 5,169 na 27.7 32.7 12.7 10.8 2.3 2.8 3.66 -3.8 1.51 133.1 8.6 UMWOG 0.33 0.51 56.9% Buy 2,670 1.73 0.4 1.2 80.4 26.2 0.0 0.0 0.70 -53.8 0.27 20.4 6.6 UZMA 1.40 1.56 11.4% Sell 448 0.94 13.1 14.2 10.7 9.8 0.0 0.0 1.98 -29.3 1.26 11.1 9.4 FGV 1.88 2.01 6.9% Sell 6,859 1.50 3.7 4.5 50.7 41.4 2.7 2.7 2.18 -13.8 1.51 24.5 11.2 IJMPLNT 2.34 2.69 15.0% Sell 2,061 0.16 9.1 12.5 25.6 18.7 3.4 3.8 3.58 -34.6 2.33 0.4 -14.6 IOICORP 4.65 4.12 -11.4% Sell 29,220 0.94 21.0 21.7 22.1 21.5 3.4 6.5 4.81 -3.3 4.31 7.9 2.4 KFIMA 1.56 1.89 21.2% Buy 440 0.49 13.3 14.5 11.7 10.8 5.8 5.8 1.96 -20.4 1.55 0.6 -0.6 KLK 25.14 26.18 4.1% Hold 26,773 0.70 120.7 126.3 20.8 19.9 2.4 2.5 25.50 -1.4 23.66 6.3 0.6 SIMEPLT 5.49 6.25 13.8% Buy 37,337 na 21.0 22.1 26.1 24.9 2.6 2.7 6.00 -8.5 4.58 19.9 -8.5 TSH 1.65 2.10 27.3% Buy 2,278 0.64 9.3 9.6 17.7 17.2 1.4 1.5 1.94 -14.9 1.56 5.8 0.0 UMCCA 6.43 6.73 4.7% Sell 1,348 0.34 22.7 34.8 28.3 18.5 2.6 2.8 7.08 -9.2 5.76 11.6 -1.2 GLOMAC 0.51 0.46 -9.8% Sell 405 0.63 3.0 4.4 17.2 11.5 3.9 3.9 0.68 -24.7 0.50 2.0 -8.0 HUAYANG 0.60 0.58 -2.5% Sell 209 0.89 0.7 3.4 91.1 17.5 0.8 0.8 1.21 -50.8 0.60 0.0 -2.5 IBRACO 0.71 0.92 30.5% Hold 350 na 9.1 12.4 7.7 5.7 5.7 7.1 0.98 -27.7 0.68 3.7 -13.5 IOIPG 2.00 2.02 1.0% Hold 11,012 0.82 16.5 16.3 12.1 12.3 3.0 3.0 2.22 -9.9 1.79 11.7 8.1 MAHSING 1.36 1.69 24.3% Buy 3,302 0.93 13.0 12.6 10.4 10.8 4.8 4.8 1.64 -17.1 1.36 0.0 -6.2 PLANTATIONS PROPERTY SIMEPROP 1.53 1.61 5.2% Sell 10,405 na 9.2 9.1 16.6 16.8 1.3 1.3 1.78 -14.0 1.04 47.1 -14.0 SNTORIA 0.60 0.76 26.7% Buy 339 0.15 8.3 8.6 7.3 7.0 1.7 1.7 0.91 -34.0 0.58 3.4 -13.7 SPB 4.86 5.28 8.6% Hold 1,670 0.66 21.2 26.1 23.0 18.6 2.5 2.5 5.50 -11.6 4.39 10.7 -0.8 SPSETIA 3.28 3.77 14.9% Buy 11,244 1.02 21.3 21.9 15.4 15.0 3.7 3.7 4.38 -25.2 3.07 6.8 -18.0 SUNWAY 1.71 1.74 1.8% Hold 8,372 0.86 11.9 12.6 14.4 13.6 2.9 3.5 1.96 -12.7 1.30 31.7 4.9 SUNREIT 1.71 1.87 9.4% Hold 5,036 0.90 10.0 10.7 17.0 16.0 5.9 6.2 1.90 -10.0 1.64 4.3 -10.0 CMMT 1.38 1.64 18.8% Buy 2,812 0.68 7.9 8.6 17.5 16.0 5.9 6.4 1.83 -24.6 1.35 2.2 -24.6 REIT POWER & UTILITIES MALAKOF 0.91 1.16 28.2% Buy 4,512 0.82 6.0 6.8 15.1 13.3 7.7 7.7 1.32 -31.4 0.86 5.2 -7.7 PETDAG 25.70 22.08 -14.1% Sell 25,532 0.36 105.1 105.7 24.4 24.3 3.0 3.1 26.20 -1.9 21.00 22.4 5.9 PETGAS 18.04 19.10 5.9% Buy 35,696 0.83 98.8 99.5 18.3 18.1 3.8 3.9 21.04 -14.3 15.82 14.0 3.2 TENAGA 15.82 18.33 15.9% Buy 89,636 0.57 131.3 127.5 12.0 12.4 4.3 4.1 16.12 -1.9 13.30 18.9 3.7 YTLPOWR 1.21 1.17 -3.3% Sell 9,406 0.78 9.8 10.3 12.3 11.8 4.1 4.1 1.50 -19.3 1.11 9.0 -6.2 TELECOMMUNICATIONS AXIATA 5.62 6.50 15.7% Buy 50,851 1.61 15.9 19.5 35.3 28.9 1.4 2.8 5.82 -3.4 4.24 32.5 2.4 DIGI 4.93 5.15 4.5% Hold 38,331 0.93 19.7 20.4 25.0 24.2 4.0 4.1 5.19 -5.0 4.36 13.1 -3.3 MAXIS 6.01 6.10 1.5% Hold 46,941 1.05 26.2 25.7 22.9 23.4 3.3 3.3 6.60 -8.9 5.48 9.7 0.0 TM 6.13 7.20 17.5% Buy 23,036 0.54 23.2 24.9 26.4 24.7 3.4 3.7 6.69 -8.4 5.85 4.8 -2.7 ELSOFT 2.61 2.70 3.4% Hold 718 0.71 13.4 15.3 19.5 17.1 3.6 4.1 2.95 -11.5 1.53 70.3 -3.3 IRIS 0.21 0.25 19.0% Buy 519 2.20 0.6 0.7 38.0 31.5 0.0 0.0 0.25 -14.3 0.12 82.6 13.5 INARI 3.13 3.35 7.0% Under Review 6,453 0.89 14.0 15.7 22.3 19.9 3.2 3.6 3.82 -18.1 1.80 74.2 -7.9 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 9.43 10.70 13.5% Hold 1,876 0.75 73.9 86.9 12.8 10.9 3.4 3.4 14.52 -35.1 8.32 13.3 -25.3 UNISEM 2.85 3.25 14.0% Under Review 2,091 1.24 19.0 20.3 15.0 14.0 4.2 4.2 4.25 -32.9 2.53 12.6 -21.9 TRANSPORTATION Airlines AIRASIA 4.15 3.83 -7.7% Buy 13,869 1.25 38.3 39.8 10.8 10.4 1.2 1.4 4.34 -4.4 2.56 62.1 23.9 AIRPORT 9.17 8.64 -5.8% Sell 15,215 1.44 19.7 20.1 46.4 45.5 1.1 1.3 9.45 -3.0 6.35 44.4 4.3 Freight & Tankers PTRANS 0.29 0.44 54.4% Buy 358 na 2.3 3.6 12.5 8.0 2.5 3.8 0.38 -25.4 0.15 95.9 1.8 TNLOGIS 1.20 1.80 50.0% Buy 548 1.11 13.6 14.0 8.8 8.5 4.2 4.2 1.83 -34.5 1.19 0.8 -10.4 WPRTS 3.37 4.02 19.3% Hold 11,492 0.61 15.5 20.0 21.7 16.9 3.4 4.5 4.26 -20.9 3.34 0.9 -8.9 SNAPSHOT OF FOREIGN STOCKS UNDER COVERAGE Company Share Price Target Price (S$) (S$) % upside Recom Market Cap. (S$m) Beta EPS (cent) PER (X) Div Yield (%) FY18 FY19 FY18 FY19 FY18 FY19 52week 52week % Chg High Price % Chg Low Price % Chg YTD BANKS & FINANCIAL SERVICES DBS 26.14 23.30 -10.9% Sell 67,020 1.23 189.1 214.6 13.8 12.2 2.3 2.3 27.4 -4.6 18.12 44.3 OCBC 12.56 13.50 7.5% Buy 52,571 1.22 104.1 110.6 12.1 11.4 6.7 7.7 13.3 -5.7 9.38 33.9 5.2 1.4 UOB 27.17 26.90 -1.0% Hold 45,185 1.09 215.4 229.3 12.6 12.6 2.6 2.6 28.5 -4.5 20.43 33.0 2.7 PLANTATIONS WILMAR 3.10 3.63 17.1% Hold 19,835 0.85 29.9 31.8 10.4 9.8 2.6 2.9 4.0 -21.9 3.06 1.3 0.3 IFAR 0.39 0.53 35.9% Hold 559 1.03 5.2 5.7 7.5 6.8 3.3 3.6 0.6 -32.8 0.37 6.8 0.0 BUY : Total return within the next 12 months exceeds required rate of return by 5%-point. HOLD : Total return within the next 12 months exceeds required rate of return by between 0-5%-point. SELL : Total return is lower than the required rate of return. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium.
12. RESULTS UPDATE Tuesday , February 06, 2018 FBMKLCI: 1,852.92 Sector: Finance THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM11.80 (+8.5%) Bursa Malaysia Berhad Last Traded: RM10.88 Strong FY17 Results Within Expectations Li Hsia Wong Tel: +603-2167 9610 BUY liwong@ta.com.my Review Bursa posted stronger sequential results, reversing QoQ contractions in the 3Q. FY17 net profit strengthened to RM223.0mn, improving 15.2% from a year ago to represent 103% and 100% of ours and consensus estimates. The board is recommending final dividend of 18.5 sen per share. In addition to interim and special dividends of 20.0 sen and 15.0 sen declared earlier, total dividends for FY17 will add up to 53.5 sen (FY16: 34.0 sen). Excluding the special dividend, FY17 DPS translates to a payout ratio of 93%. FY17 PBT advanced 13.0% YoY, largely underpinned by higher trading activities in the securities market. Total operating revenue broadened by 10.4% YoY, spurred by a 21.9% YoY increase in securities trading revenue - thanks to an uplift in retail trades and increase in local participation. Derivatives trading revenue, however, decreased 9.2% YoY following the revision of guarantee fee rate to 0.3% p.a. imposed on margin on contracts’ open positions (2016: 0.5% p.a.) along with an overall decline in the number of FBMKLCI Futures (FKLI) contracts traded. Bursa Suq Al-Sila’ (BSAS) average daily value (ADV) broadened to RM19.6bn vs. RM16.3bn in FY16 due to the introduction of volume based pricing scheme. Nevertheless, the segment’s trading revenue contracted due to volume discount incentives given. Elsewhere, all other revenue streams reported mixed results. Of note, listing and issuers services fees jumped 15.4% YoY on the back of an increase in listing of larger IPOs, higher number of structured warrants listed and increase in corporate exercises. Reporting positive JAWS, total operating expenses were kept lean with overall operating expenses rising 6% YoY. Driving most of the increase, staff cost climbed 7% YoY (or RM9.0mn) while other operating expenses expanded by 6.8% YoY (or RM5.7mn). Cost to income ratio and ROE both improved by 2%-points and 3%-points to 45% and 26% respectively. By segment, the securities market benefitted from higher trading activities. Securities trading revenue made up ~50% of total operating revenue in FY17. Foreign ADV traded climbed to RM506mn in 2017 vs RM491mn a year ago. Total foreign inflows in 2017 stood at RM10.8bn, vs. an outflow of RM3.2bn in 2016. Nevertheless, by trading mix, trading participation by foreign institutions narrowed to a decade low of 22% (2016: 27%) as local funds shored up the market. Comparing between trading participation by retailers and institutions, retail investors made up a wider 23% of total trading participation vs. 21% in 2016. The ADV accelerated to RM2,314mn vs. RM1,812mn in FY16. Along with that, market capitalisation advanced to www.taonline.com.my Share Information Bloomberg Code BURSA MK Stock Code 1818 Listing Main Market 537.5 Share Cap (mn) 5,385.8 Market Cap (RMmn) 10.978/8.081 52-wk Hi/Lo (RM) 927.4 12-mth Avg Daily Vol ('000 shrs) 69.5 Estimated Free Float (%) 0.77 Beta Major Shareholders (%) Capital Market Devp Fund - 18.6 KWAP - 17.0 EPF - 7.2 Forecast Revision Forecast Revision (%) Net profit (RMmn) Consensus TA's / Consensus (%) Previous Rating Financial Indicators FY18 FY19 12.5 8.5 235.7 241.9 231.8 241.3 101.7 100.2 Hold (Downgraded) FY18 Net cash 27.1 1.6 6.7 36.0 3.3 FY19 Net cash 27.1 1.7 6.5 36.0 3.3 vs. TA vs. Consensus % of FY 103.0 100.0 Within Within Share Performance (%) Price Change 1 mth 3 mth 6 mth 12 mth BURSA (0.2) 12.4 7.1 25.7 FBM KLCI (0.8) 7.9 4.5 9.4 Net gearing (%) ROE (%) NTA/Share (RM) Price/ NTA (x) Dividend (sen) Div. yield (%) Scorecard (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 3
13. 6-Feb-18 RM1 ,907bn from RM1,667bn a year ago while trading velocity increased to 32% (FY16: 27%). Trading of the crude palm oil futures (FCPO) was higher while the number of average daily contracts (ADC) for FBMKLCI futures contracted. ADC for FCPO stood at 49,051 from 46,406 in FY16 while ADC for the FKLI dipped to 8,371 vs. 11,183 a year ago. Trading velocity for FCPO softened to 19% (from 22% in FY16) while the trading velocity for FKLI fell to 6% (FY16: 9%). Combined, ADC traded was of little changed at 57,677 contracts compared to 57,829 a year ago. Of this, 85% of total trades were in FCPO and 15% in FKLI. By participation, foreign institutions traded 68% and 33% of the FKLI and FCPO. On the Islamic market trading activity front, the BSAS trading revenue accounted for some 3% of total operating revenue. BSAS trading revenue contracted by 3.7% YoY despite ADV rising by some 20.2% YoY and the market capitalization of Shari’ah compliant stocks improved to RM1,154mn (FY16: RM1,031mn). The number of trading participants broadened to 135 (FY16: 124) while the number of sukuk listed stood unchanged at 25 (FY16: 23). Impact Incorporating reported FY17 results, we tweaked our FY18 and FY19 net profit forecast higher to RM235.7mn and RM241.9mn from RM209.5mn and RM222.9mn. We forecast modest profit growth of 3.3% to RM249.9mn in FY20. Raising our trading velocity assumption to 30% from 27%, we predict trading volumes to improve by some 9% YoY in FY18 on the back of heightened GE sentiments, increase in IPO listings and corporate exercises - before softening to growth of c. 3% for FY19 and FY20. Outlook Trading activities for the securities market strengthened in the 4Q, boosted by an inflow of foreign funds amounting to RM713mn during the quarter. We foresee market activities to remain buoyant in 1QFY18, supported by the impending general election (GE14). Gathering data from various industry sources, IPO listing and corporate exercises are expected to strengthen in 2018. In the meantime, management expects volatility in commodity prices and the underlying equity market will continue to affect hedging and trading activities of the FCPO and FKLI contracts. Valuation We raise Bursa’s TP to RM11.80 from RM11.10 on the back of the upward revision to our earnings estimates. The TP is based on an implied FY18 PER of around 25x. Our assumption is based on the group’s 3-year average payout in excess of 90% and decent dividend yields of around 3.3% (excluding special dividends). BUY maintained. Key potential upside risks to our TP include: (1) further compression in risk premiums, (2) further pick-up in velocity, (3) improvement in BSAS and derivatives trading, (4) sustained improvement in retail sentiments, and (5) return of foreign investors in full swing. Nevertheless, we also note potential downside risk to Bursa’s TP such as: (1) sustained outflow of foreign funds due to geopolitical risks in the region, (2) tightening of monetary policies in major economies affecting trading volatilities, and (3) inability to sustain trading interest in the derivatives market. Page 2 of 3
14. 6-Feb-18 Table 1 : Earnings Summary (RMmn) FYE Dec Revenue EBITDA EBITDA Margins (%) Pretax profit Net profit EPS (Sen) EPS Growth (%) PER (x) Gross Div (sen) Div Yield (%) ROE (%) FY16 506.8 294.8 58.2 270.6 193.6 36.0 (2.8) 30.2 34.5 3.2 22.3 FY17 556.8 330.2 59.3 305.9 223.0 41.5 (23.2) 26.2 53.5 4.9 26.2 FY18F 586.4 346.2 59.0 323.8 235.7 43.8 5.7 24.8 36.0 3.3 27.1 FY19F 602.9 353.0 58.6 332.1 241.9 45.0 2.6 24.2 36.0 3.3 27.1 FY20F 619.8 362.5 58.5 342.8 249.9 46.5 3.3 23.4 36.0 3.3 27.0 Table 2: FY17 Results Analysis (RMmn) FYE 31 Dec Operating revenue 4Q FY16 3Q FY17 4Q FY17 QOQ YOY YTD FY16 YTD FY17 YOY 112.5 122.6 130.0 6.0 15.5 472.7 522.1 10.4 2.0 11.2 7.6 11.2 46.2 (0.1) 34.1 34.8 Total revenue Other income 123.7 130.3 141.2 8.4 14.1 506.8 556.8 9.9 Staff cost (29.1) (31.8) (37.3) 17.4 28.2 (128.6) (137.5) 7.0 Depreciation (6.1) (5.9) (5.8) (2.5) (4.9) (24.2) (23.8) (1.8) Other operating expenses (19.6) (21.4) (23.4) 9.4 19.1 (83.4) (89.1) 6.8 Profit before tax 69.0 71.1 74.6 5.0 8.2 270.6 305.9 13.0 Taxation (16.6) (18.0) (17.4) (3.4) 4.7 (67.9) (75.7) 11.4 Profit after tax 52.4 53.1 57.3 7.8 9.3 202.7 230.2 13.6 (20.7) Minority interests 2.2 1.5 2.0 32.3 (9.8) 9.0 7.2 Net profit 50.2 51.6 55.3 7.1 10.2 193.6 223.0 15.2 EPS 9.3 9.6 10.3 7.1 10.2 36.0 41.5 15.2 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 06, 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
15. COMPANY UPDATE Tuesday , February 06, 2018 FBMKLCI: 1,853.07 Sector: Oil & Gas THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* TP: RM1.25 (+77%) Sapura Energy Bhd Last Traded: RM0.71 New Contracts in Malaysia & Brazil Kylie Chan Sze Zan Tel: +603-2167 9601 BUY kyliechan@ta.com.my Review Sapura Energy Bhd (SAPE) secured Engineering and Construction (E&C) contracts (Figure 1) totalling RM905mn in Malaysia and India. www.taonline.com.my Share Information Bloomberg Code SAPE MK Stock Code 5218 Listing Figure 1: New Contract Details Scope Client Project Schedule Minor EPCC (ePCC) 5,992 Market Cap (RMmn) 8,389 1.00 52-wk Hi/Lo (RM) Petronas Carigali Petronas Carigali EPCC Plus Installation* (EPCC+I) Hess E&P Malaysia * Option Transportation and Installation (T&I) Share Cap (mn) Par Value (RM) Malaysia Engineering, Procurement, Construction, and Commissioning (EPCC) Main Market Kinarut ERB WEST Compressor Upgrading Project Until 4Q2020 (3 years) Bokor Betty Brownfield & Rejuvenation Until 2Q2022 (4.5 years) FFD Phase 2 Facilities, North Malay Basin 12-mth Avg Daily Vol ('000 shrs) Bokor CPP Project Mumbai Port Trust Fifth Oil Berth Project 11,954 Estimated Free Float (%) 43 Beta 3.20 Major Shareholders (%) Sapura Holdings - 15.9 EPF - 10.8 Khasera - 10.1 Until 2Q2020 Forecast Revision (%) FY18 Forecast Revision (%) Malaysia Marine and Heavy Engineering (MMHE) 2.10/1.29 Until Mar-2020 0.0 FY19 0.0 Core Net Profit (RM mn) (22.7) 119.9 Consensus 255.0 427.8 TA/Consensus (%) Previous Rating (8.9) 28 Sell (Upgraded) Mumbai, India Offshore/Onshore Pipeline and Terminal Works Financial Indicators Until May-2019 Source: Company, TA Research These maiden new projects for FY19 fall within our FY19 E&C orderbook replenishment assumptions of RM4.5bn. Inclusive of these new wins, we estimate SAKP’s orderbook (excluding JCEs) to be approximately RM11.7bn, which translates to 1.5x of historical FY17 revenue. FY18 1.2 1.2 ROA (%) nm nm ROE (%) nm nm NTA/Share (RM) 2.1 2.1 P/NTA (x) 0.3 0.3 Share Performance Price Change (%) Impact Maintain forecasts. Valuation SAPE is a proxy to oil price recovery, given that it is one of the few large cap integrated E&P companies. We believe the focus should be on the group’s crown jewel E&P portfolio, with sizeable total net reserves and resources of 243mn boe (Oil: 14mn boe, Gas: 229 mn boe). Furthermore, we anticipate that FY19 cash profits will receive a boost from the E&P portfolio on the back of: 1) successful 7-well in-fill drilling campaign at SAPE’s oilfields, and 2) maiden gas production from SK316 (start: Nov-17). A major catalyst would be the potential separate listing for the group’s E&P assets. Recall that in end-Jan 2018, the group confirmed media reports that SAPE has engaged advisors to evaluate and advise on the potential listing of the latter. Assuming the blue skies scenario, whereby SAPE unlocks its E&P assets at attractive valuations, and raises significant cash proceeds, this would: 1) strengthen SAPE’s balance sheet, 2) lower net gearing of 1.3x (total debt: RM17bn), and 3) ease working capital and capex requirements. We FY19 Net Debt/Equity (x) SAPE FBMKLCI 1 mth (3.1) 1.2 3 mth (3.1) 2.5 6 mth 16.4 9.5 12 mth 31.2 10.1 (12-Mth) Share Price relative to the FBMKLCI Source: Bloomberg Page 1 of 4
16. 6-Feb-18 believe the benefits would be more than offset diluted E &P profits at the holding company level. Maintain Buy on SAPE with unchanged TP of RM1.25 based on 0.6x CY18 P/B. [ TH E RE M A ININ G OF T H IS P A GE IS IN TE N TI O NA L L Y L E F T BL AN K] Page 2 of 4
17. 6-Feb-18 Table 1 : Earnings Summary (RMmn) Income Statememt Balance Sheet FYE 31 Jan (RMmn) 2016 2017 2018E 2019F 2020F Revenue 10,184.0 7,651.3 5,982.7 6,641.1 7,680.4 Core EBITDA 4,870.4 2,880.4 1,971.0 1,878.1 1,830.0 Goodwill 8,176.8 8,443.5 8,443.5 8,443.5 8,443.5 Depreciation (1,430.4) (1,792.1) (1,694.7) (1,627.0) (1,571.7) Invt in Associates & JCEs 1,568.5 1,858.6 2,105.9 2,377.9 2,704.3 Net finance cost (741.9) (776.1) (752.1) (734.9) (720.8) Other receivables & Tax Jointly Controlled Ent 190.3 456.9 247.3 272.0 326.4 Other assets (1,800.1) (191.9) 5.4 0.0 0.0 (0.9) 0.0 0.0 0.0 0.0 577.2 (223.1) (211.8) (136.1) (179.1) (173.1) (91.4) (117.4) Exceptionals Allowance for Impairment 1,087.4 Core Pretax Profit (78.8) Taxation MI 0.1 (2.2) 2.3 1.8 1.8 1,008.7 396.0 (388.5) (301.4) (251.7) (791.3) 204.0 (383.1) (301.4) (251.7) (sen) 16.9 6.6 (6.5) (5.0) (4.2) Core Net Profit Reported Net Profit Per Share Data Core EPS FYE 31 Jan (RMmn) Fixed assets & O&G Expend Non-Current Assets Inventories 3,519.5 3,518.6 3,165.4 2,728.4 95.1 95.1 95.1 95.1 6,828.4 7,342.2 6,318.2 6,262.6 6,295.4 36,492.0 37,483.9 36,012.5 35,651.9 35,539.5 16,262.1 15,483.0 15,183.0 14,883.0 14,583.0 1,472.3 1,304.5 1,304.5 1,304.5 1,304.5 17,734.5 17,030.6 16,730.6 16,430.6 16,130.6 Borrowings 2,091.1 3,511.1 3,411.1 3,311.1 3,211.1 Trade & other Payables 4,338.6 3,800.3 3,114.3 3,457.0 3,998.0 114.8 61.7 61.7 61.7 61.7 6,544.5 7,373.0 6,587.0 6,829.8 7,270.8 24,279.0 24,403.6 23,317.6 23,260.3 23,401.4 Current Assets Borrowings 0.0 Derivatives & Tax Book Value (RM) 2.0 2.2 2.1 2.1 2.0 Non-current liabilities Ratios Other Liabilities FYE 31 Jan (RMmn) 2016 2017 2018E 2019F 2020F 29,244.0 194.6 (4.2) 0.1 29,389.3 1,947.5 Other assets 0.0 2.0 29,694.3 Cash and Deposits (5.0) 0.2 30,141.7 631.3 0.0 2.1 29,663.6 2,840.7 (6.5) 0.2 260.7 4,438.8 545.8 6.6 2.1 260.7 4,438.8 2,456.3 1.0 2.2 260.7 4,438.8 491.7 1.4 0.5 260.7 4,438.8 2,212.8 16.9 2.0 240.3 4,772.4 458.5 (sen) 0.8 2020F 13,396.6 3,269.1 (sen) (RM) 2019F 13,868.3 572.2 Reported EPS (RM) 2018E 14,445.3 4,114.1 DPS FCF 2017 15,140.0 Trade and other rcvb Total Assets Net Tang Asset 2016 14,905.7 Current Liabilities Valuations Core PER (x) 4.2 10.6 (10.8) (14.0) (16.7) Reported PER (x) 4.2 10.6 (10.8) (14.0) (16.7) Dividend yield (%) 1.9 1.4 0.0 0.0 0.0 EV/EBITDA (x) 4.2 6.7 9.6 10.1 10.3 Total Liabilities Share capital 5,992.2 5,992.2 5,992.2 5,992.2 5,992.2 Retained earnings & others 6,214.8 7,084.0 6,700.8 6,399.4 6,147.7 P/BV (x) 0.3 0.3 0.3 0.3 0.3 Minority interests 6.1 4.2 1.9 0.0 P/NTA (x) 0.3 0.3 0.3 0.3 0.3 Equity 12,213.0 13,080.3 12,694.8 12,391.6 12,138.1 (1.8) FCF Yield (%) 117.0 69.2 29.1 22.2 20.6 Total Equity + Liabilities 36,492.0 37,483.9 36,012.5 35,651.9 35,539.5 Profitability ratios EBITDA margin (%) 47.8 37.6 32.9 28.3 23.8 EBIT margin (%) 33.8 14.2 4.6 3.8 3.4 FYE 31 Jan (RMmn) PBT margin (%) 10.7 7.5 (3.7) (3.2) (1.8) PBT Net margin (%) 9.9 5.2 (6.5) (4.5) (3.3) Core ROE (%) 8.3 3.0 (3.1) (2.4) (2.1) Core ROA (%) 2.8 1.1 (1.1) (0.8) (0.7) Liquidity ratios Cash Flow Statement 2016 2017 2018E 2019F 2020F (712.6) 385.2 (217.7) (211.8) (136.1) Depreciation 1,430.4 1,792.1 1,694.7 1,627.0 1,571.7 Net Interest 741.9 776.1 752.1 734.9 720.8 Working Cap Changes 717.8 420.4 337.1 45.1 71.2 Income taxes Paid (78.8) (179.1) (173.1) (91.4) (117.4) Interest Received Current ratio (x) 1.0 1.0 1.0 0.9 0.9 Share of results of JCEs Quick ratio (x) 1.0 0.9 0.9 0.8 0.8 Others CF from Operations 18.2 23.8 30.6 30.6 27.6 (190.3) (456.9) (247.3) (272.0) (326.4) 0.0 0.0 0.0 0.0 0.0 2,710.1 3,005.2 2,181.8 1,862.4 1,811.3 (1,100.0) Leverage ratios Total Debt/ Assets (x) 0.5 0.5 0.5 0.5 0.5 Capex Total Debt/Equity (x) 1.5 1.4 1.4 1.4 1.4 Acquisitions Net (cash)debt/ Equity (x) 1.3 1.2 1.2 1.2 1.2 Others Interest coverage (x) 4.5 1.4 0.4 0.3 0.3 Revenue (%) 2.4 (24.9) (21.8) 11.0 15.7 Interest Expense EBITDA (%) 68.8 (40.9) (31.6) (4.7) (2.6) Others PBT (%) (144.1) (154.1) (156.5) (2.7) (35.8) Core net profit (%) (16.7) (60.7) (198.1) (22.4) (16.5) Core EPS (%) (16.7) (60.7) (198.0) (22.4) (16.5) Growth ratios (424.4) (190.6) (1,000.0) (1,050.0) 0.0 0.0 0.0 0.0 0.0 (69.5) 412.8 0.0 0.0 0.0 CF from Investing (732.5) 22.8 (1,000.0) (1,050.0) (1,100.0) Net Change in Debt 1,375.9 317.9 (400.0) (400.0) (400.0) (760.2) (799.9) (782.7) (765.5) (748.4) CF from Financing Net Cash Flow Beginning Cash Key Assumptions E&C Orderbook Replennishment Effect of exchg rates 4,500 4,446 4,446 Ending Cash (1,949.9) (1,047.1) 0.0 0.0 0.0 (1,414.8) (1,588.8) (1,182.7) (1,165.5) (1,148.4) 562.8 1,439.2 (0.9) (353.2) (437.0) 1,256.6 1,947.5 3,519.5 3,518.6 3,165.4 128.2 132.8 0.0 0.0 0.0 1,947.5 3,519.5 3,518.6 3,165.4 2,728.4 Page 3 of 4
18. 6-Feb-18 (TH I S P A GE IS IN TE N TI ON AL L Y L E F T B L AN K ) Stock Recommendation Guideline BUY : HOLD : SELL : Not Rated: Total return within the next 12 months exceeds required rate of return by 5%-point. Total return within the next 12 months exceeds required rate of return by between 0-5%-point. Total return is lower than the required rate of return. The company is not under coverage. The report is for information only. Total Return is defined as expected share price appreciation plus gross dividend over the next 12 months. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting. Required Rate of Return of 7% is defined as the yield for one-year Malaysian government treasury plus assumed equity risk premium. Disclaimer The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein. As of Tuesday, February 06, 2018, the analyst, Kylie Chan Sze Zan , who prepared this report, has interest in the following securities covered in this report: (a) nil Kaladher Govindan – Head of Research TA SECURITIES HOLDINGS BERHAD (14948-M) A Participating Organisation of Bursa Malaysia Securities Berhad Menara TA One 22 Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 603 – 2072 1277 Fax: 603 – 2032 5048 www.ta.com.my Page 4 of 4
19. SECTOR UPDATE Tuesday , February 06, 2018 FBMKLCI: 1,853.07 Kelli123THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY* Semiconductor Sector Neutral Record Sales for the Second Year Running (Maintained) Wilson Loo, CFA Tel: +603-2167 9606 wilsonloo@ta.com.my www.taonline.com.my Sales Crossed Above the US$400bn Mark For the second year running, global semiconductor sales in 2017 reached record highs at US$412.2bn (+21.6% YoY). This is the first time it crossed above the US$400bn mark. Likewise, record high sales were achieved during 4Q2017 (+5.7% QoQ, +22.5% YoY) and December 2017 (+3.9% QoQ, +22.3% YoY). Overall, memory products (DRAM and NAND flash) stood out in 2017, recording the highest sales (US$124.0bn) and fastest growth (+61.5% YoY). If excluding memory products, sales grew by close to 10%. For 2018, WSTS forecasts the industry’s sales growth to moderate to single-digit levels. Figure 1: Global Chip Sales US$bn 40.0 Worldwide Sales (LHS) % 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0 YoY Growth (RHS) 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Mar-17 Jul-15 May-16 Sep-14 Jan-13 Nov-13 Mar-12 Jul-10 May-11 Sep-09 Jan-08 Nov-08 Mar-07 Jul-05 May-06 Sep-04 Jan-03 Nov-03 0.0 Source: SIA, TA Securities Broad Based Growth Across All Regions During December 2017, all regions sustained their double-digit YoY sales growth. Meanwhile, on a MoM basis, only Europe’s sales contracted, albeit marginally by 1.6%. For 2017, the strongest growth was observed from the Americas (+35.0% YoY) and this was followed by China (+22.2% YoY), Europe (+17.1% YoY), Asia Pacific/All Other (+16.4% YoY) and Japan (+13.3% YoY). Figure 2: Growth in Sales by Region (% YoY) Figure 3: Breakdown of Sales by Region (%) % 100% Americas 100.0 Europe Japan Asia Pacific Worldwide 90% 80% 80.0 70% 60.0 60% 40.0 50% 40% 20.0 30% 20% 0.0 10% -20.0 Jan-17 Sep-17 May-16 Jan-15 Sep-15 May-14 Sep-13 Jan-13 Sep-11 May-12 Jan-11 May-10 Jan-09 Sep-09 May-08 Jan-07 Americas Europe Jan-17 Sep-17 May-16 Jan-15 Sep-15 May-14 Jan-13 Sep-13 May-12 Jan-11 Japan Sep-11 May-10 Jan-09 Sep-09 May-08 Jan-07 Sep-07 May-06 Jan-05 Sep-05 May-04 Jan-03 Source: SIA, TA Securities Sep-07 May-06 Jan-05 Sep-05 May-04 Jan-03 Sep-03 -60.0 Sep-03 0% -40.0 Asia Pacific Source: SIA, TA Securities Page 1 of 3
20. 6-Feb-18 Billings Improve After 4 Consecutive Months of Declines Billings in December 2017 at US $2,388mn (+16.4% MoM, +27.7 YoY) was the highest for the year. Having sustained monthly YoY billings growth at double-digit levels throughout the year, billings for 2017 grew by 38.9% YoY. The robust growth was driven by investments in 3D NAND and leading edge technologies. For 2018, SEMI expects the momentum to sustain as new fabs in China begin equipping. Figure 4: Billings (US$mn) US$mn 3,000 Billings (LHS) % 300.0 YoY Growth (RHS) 250.0 2,500 200.0 2,000 150.0 1,500 100.0 50.0 1,000 0.0 500 -50.0 Oct-17 Jan-17 Apr-16 Jul-15 Oct-14 Jan-14 Apr-13 Jul-12 Oct-11 Jan-11 Apr-10 Jul-09 Oct-08 Jan-08 Apr-07 Jul-06 Oct-05 -100.0 Jan-05 0 Source: SEMI, TA Securities Neutral We are maintaining our Neutral stance on the sector. While the sector offers room for earnings growth, our concerns in 2018 lie with its rich valuations and downside risks from the strengthening Ringgit and rising commodity prices. We have HOLD recommendations on MPI and Elsoft. Note that we have upgraded MPI following the sell down on the stock, which we opine has been overdone. Meanwhile, we have placed Inari and Unisem under review as we await the release of their upcoming results. Peers Comparison EPS Price TP (RM) (RM) Recom. EPS Growth PER Mkt Cap CY18 CY19 CY18 CY19 CY18 CY19 RM mn (sen) (sen) (%) (%) (x) (x) Inari Amertron 3.13 3.35 Under Review 6,422.0 15.2 16.9 25.8 10.7 20.6 18.6 Unisem 2.85 3.25 Under Review 2,091.4 19.0 20.3 -16.0 7.1 15.0 14.0 MPI 9.43 10.70 HOLD 1,875.6 76.2 89.5 -1.6 17.5 12.4 10.5 Elsoft 2.61 2.70 HOLD 718.1 13.4 15.3 18.7 13.9 19.4 17.0 26.1 29.7 12.9 11.4 18.1 16.3 CY19 CY18 CY19 CY18 CY19 Weighted average NTA/Share P/NTA CY18 CY19 CY18 ROE CY19 CY18 DPS Div yield (RM) (RM) (x) (x) (%) (%) (sen) (sen) (%) (%) Inari Amertron 0.5 0.5 6.3 5.7 31.7 31.9 10.7 11.8 3.4 3.8 Unisem 2.1 2.2 1.3 1.3 9.2 9.5 12.0 12.0 4.2 4.2 MPI 6.0 6.5 1.6 1.4 13.3 14.3 32.0 32.0 3.4 3.4 Elsoft 0.4 0.5 21.4 19.2 32.3 32.9 9.4 10.7 3.6 4.1 Weighted average 1.7 1.9 5.5 5.0 24.4 24.8 14.4 15.2 3.6 3.8 Page 2 of 3