Netflix shares fell more than 8% in after-hours trading , as a disappointing second-quarter outlook and leadership changes outweighed otherwise solid first-quarter results. Weak Guidance Sparks Sell-Off Netflix forecast Q2 earnings of US$0.78 per share , below analyst expectations of US$0.84 , while revenue is projected at US$12.57 billion , missing the US$12.64 billion consensus . The weaker guidance raised concerns over near-term growth momentum , triggering a sharp negative market reaction. Strong Q1 Performance Fails to Impress For the first quarter: Revenue rose 16% YoY to US$12.25 billion (above estimates) Earnings surged 86% to US$1.23 per share However, earnings were boosted by a US$2.8 billion one-off termination fee , reducing the quality of underlying growth. Operating margin improved to 32.3% , but still came in below expectations (32.4%) , further dampening sentiment. Rising Costs and Strategic Sh...
Maintain Buy call with lower Target Price (TP) of
RM0.90 (+29%)
 |
| Eversendai Corp |
Strong job win
momentum to continue
Following strong job wins in 2015, the momentum would
continue in 2016 especially from Middle East and Malaysia. Variation order
claim is expected to pick up in 2016, providing upside to our earnings
forecasts. The pick up in job flows from key global events in the Middle East
would re-rate the stock. Post earnings forecasts adjustments, we maintain BUY
on Eversendai with a lower MYR0.90 TP (-10%) based on 12x 2017 PER.
Potential job wins
from ME and Malaysia
Eversendai’s 2015 record high job wins of MYR1.73b was
mainly from Middle East (64% of total) and 65% consisted of structural steel
works. In 2016, Eversendai would continue tendering actively in Middle East and
Malaysia but would tender selectively in India. The major events including
World Expo 2020 in Dubai and World Cup 2022 in Qatar would continue to drive
construction jobs in the Middle East. Locally, it could benefit from RAPID, KL118
Tower and upcoming power plant works.
More variation order
claims in 2016
Management guided its normalised 2015 net margin should be
~5% (vs. 3.1% reported net margin) due to revision of its variation orders
value. Outlook for its margins remains challenging due to competition and lack
of iconic project works. Positively, it has started variation orders claim on
the Qatar National Museum project in 2015 and expects further claims from Qatar
and the Tanjong Bin power plant project in 2016.
Revising earnings
forecasts
We incorporate the higher-than-expected 2015 job wins (vs.
our earlier forecast of MYR1.5b) but we revise down our margin assumptions.
Subsequently, we reduce our 2016/17/18 EPS estimates by -8%/-10%/-7%. Our new
TP is MYR0.90 (-10%) after we roll forward our valuation to 2017 EPS based on
an unchanged 12x PER. Key re-rating catalyst would emanate from accelerating
job awards from the Middle East as the construction for the major events goes
into full swing. Maintain BUY.
Source: Maybank IB Research, 04 March 2016
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