MONEY MASTER

Maintain overweight on aviation sector Aviation industry Last week, it was reported that the Transport Minister has confirmed the upward revision for PSCs, which will be implemented for all airports in Malaysia starting 1st January 2017.  While rates are not firmed up yet, tentative new rates suggest all airports will have the same structure with International and Domestic PSCs at RM73 and RM11 in addition to a new segment known as ASEAN routes at RM35. We are positive on the tentative rates, as they indicate 10% higher PSC revenue for AIRPORT translating to a potential 25% upgrade to our FY17E earnings. While the magnitude of hike might appear huge for AIRASIA operating in KLIA2, we note that the effective impact would be minimal as most of AIRASIA’s international flights are flown towards ASEAN countries, which will fall under the new RM35 ASEAN segment – allowing them to keep their competitive pricings. We upgrade AIRPORT’s FY17E earnings by 25% on the back of a 1...

Maintain Market Perform with marginally increased target price (TP) of RM8.80 1H16 NP came in within expectations .  As expected, an interim DPS of 17.0 sen was declared. Fluctuation in Ringgit, China’s economic slowdown, BREXIT as well as the expectations of a gradual rise in US interest rate will continue to cast a long shadow over market sentiment; hence, suppressing trading sentiment. Our FY16E/FY17E NPs have been tweaked by +2% following house-keeping purposes. Maintain MP with TP marginally increased to RM8.80 (from RM8.56). Within expectations . BURSA reported 2Q16 net profit (NP) of RM49.5m (-1% QoQ; 0% YoY), bringing 1H16 NP to RM99.4m (+3%) which made up 53% and 48% of our and the consensus’ full-year estimates, respectively. As expected, an interim DPS of 17.0 sen (representing 92% of dividend payout ratio) was declared under the quarter reviewed. YoY, 1H16 operating revenue increased by 3% with better performance in stable revenue (+6%) superseding the m...

Reiterate Buy Call with unchanged target price (TP) of RM1.53 Jaks Resources Bhd We met up with management to get clarification on its FY15 results performance and the progress of its flagship Vietnam project. We came back feeling reaffirmed with its prospects premised on managements’ commitment and focus in executing its on-going projects, which are progressing well on time coupled with its aim to de-gear further from its current net gearing levels of 1.0x through the disposal of its investment property assets and development project. Hence, we are reiterating our Trading Buy call on JAKS with an unchanged FV of RM1.53 based on 25% discount to its SoP value of RM2.04. 2015, a year of improvements. Recently, JAKS just concluded its FY15 results, which registered Core Net Profit (CNP) of RM14.5m and was lower than our full-year expectations of RM19.3m. Our CNP was derived after excluding the net gains from the disposal of the 70% stake in a subsidiary (RM30.1m), disposal g...