MONEY MASTER

Maintain OUTPERFORM with higher target price (TP) of RM1.85 UEMS delivered a lower than expected 3QFY16 net profit of RM36.3m (-23.9% YoY, -33.6% QoQ), primarily due to change in product mix, higher marketing costs, liquidated ascertained damages (LADs) and higher taxes during the quarter. YTD, the Group registered RM94.0m (-49.1% YoY), which constituted c.58% and c.49% of our and consensus full year net profit estimates. On year to year comparison, 9M15 was also lifted by one-off gain. Separately, we understand that the litigation with IRB, whereby the court ruled in favor of IRB and issued UEMS penalty of RM73.8m, is now pending an appeal to contest IRB’s rejection earlier. UEMS believes that it has a strong case, and hence no provision was made as yet. As for launches in FY17, UEMS plans to launch more projects, which among others include Solaris 3, Artisan Hills, St Kilda and Alderbridge. All told, FY16-18 earnings are adjusted downwards by 14%/10%/10% to account for...

Upgrade outperform with an unchanged target price (TP) of RM1.31 DRB-Hicom (DRB) reported a net loss of RM309.6m in 2QFY17 (2QFY16: net profit of RM3.9m). Cumulatively, its 1HFY17 net loss was RM478.9m. Excluding one-off loss on re-measurement of previously held equity interest in Pos Malaysia of RM130.2m as well as forex loss on borrowings and payables of RM98.3m, the core net loss for 1HFY17 was RM250.4m. It was below our and market expectations, making up 57% and more than 100% of full-year loss estimates. Its revenue for 2QFY17 increased by 5.7% QoQ to RM2.6bn, on the back of higher sales volume for Proton (+5.1%). Given a sharp fall of 27% in DRB’s share price since October, our unchanged TP of  RM1.31  suggests a potential upside of 34%. We see the completion of its foreign strategic partner exercise as near term catalyst. Hence, we upgrade our call on DRB to  Outperform . Automotive division.  DRB’s automotive division recorded 2Q17 pre-tax ...

Retain outperform with target price (TP) of RM1.00 Wah Seong’s 9MFY16 performance continues to be affected by the lack of projects in the O&G segment fueled by the deferment of capital expenditure activities by oil majors. Revenue subsequently recorded RM946.4m (-32.0% YoY), and with a core loss of RM30.0m (->100.0% YoY). This was further hampered by the softer market in Malaysia and thus saw a reduction in renewable energy (RE) activities. Wah Seong’s results missed both ours and consensus’ estimates by >100.0%. On a positive note, the Group’s orderbook was boosted to RM3.6bn (2QFY16 - RM795m) to include the Nord Stream 2 award which affirms Wah Seong’s recovery going forward as the prevailing weaker performance is due to the depleting orderbook, and not from its execution capabilities. Our Outperform view on Wah Seong, is retained but with an adjusted TP of RM1.00 pegged to 8x PE and FY17F EPS of 12.5sen. Our adjustment is due to our lowered estimates from t...

Maintain outperform with an unchanged target price (TP) of RM2.23 The Group’s 9MFY16 net profit of RM57.5m (+8.4% YoY) came in within expectations, at 73% of our and 74% of consensus full-year estimates. With the group currently undertaking 16 on-going projects against the backdrop of a record-high unbilled sales amount of RM1.46bn, the company remains primed for sustained growth in the coming few financial years, particularly owing to its predominant focus on affordably-priced properties which stand it in better stead. Recent corporate exercises in which 1) the construction division was spun off into ML Global and 2) land acquisitions in Dengkil and Alam Perdana, are positive and underscores management’s focus on long-term shareholder value creation. While we leave FY16 estimates unchanged, we are lifting FY17 and FY18 net profits by 15.1% and 22.2% respectively, scaling back on our previously-conservative sales assumptions. Our  Outperform  call is affirmed with an...

Maintain BUY recommendation with target price (TP) of RM0.50 TRC Synergy delivered a much improved earnings performance in 3QFY16, due to improved margins and FX translation gains which bolstered its net profit to RM15.1m (+77.6% YoY, +251.2 QoQ). YTD, it registered 9MFY16 net of RM20.7m (-3.7% YoY). Stripping out FX gains (of c.RM7m), it registered net profit of RM8.1m during the quarter, or YTD net profit of RM13.7m, slightly above expectations or constituting c.78% of our full year estimates. FY16 earnings were adjusted upwards by c.40%, to account primarily for FX gains. Outstanding orderbook is estimated at c.RM1bn, driven by jobs such as Pan Borneo Highway (30% stake: contract value is RM1.31bn). Maintain Trading  Buy  and  RM0.50  TP, pegged at PER multiple of c.10x of our FY17 EPS. Outstanding order book at estimated RM1bn.  With no new jobs secured in 3QFY16, the Group’s outstanding orderbook is estimated at c.RM1bn. To recap, key job wi...

Maintain OUTPERFORM call with an unchanged target price (TP) of RM0.85 TDM 9MFY16 reported a core net profit of RM36.1m, making up 55% of our full year earnings forecasts after stripping out unrealized gain on the foreign exchange in fixed income securities amounting to RM8.4m and impairment loss on receivable, RM1.3m. Though it fell below our expectations, we think that it will be able to catch up in 4Q given the recovery in FFB production and sharp increase in CPO prices. Hence, our earnings forecasts remain unchanged. No dividend was declared for the quarter. We maintain our  Outperform  call with an unchanged TP of  RM0.85 . 3QFY16 revenue (QoQ: -0.3%, YoY: +4.3%).  3QFY16 revenue increased 4.2% YoY to RM102.8m, led by an improved revenue from healthcare segment while plantation sales remained steady. During the quarter, plantation sales fell slightly to RM57.9m as weaker FFB production (-26.7% YoY) was cushioned by stronger CPO prices (+25.2%...

Maintain BUY recommendation with higher target price (TP) of RM1.75 Protasco’s 3Q2016 net profit declined 7.0% Y.o.Y to RM14.3 mln,  dragged down by the weakness in the maintenance segment due to the non-renewal of two state roads maintenance contracts, coupled with lower contributions from its property development segment with the near completion of Phase 1 of De Centrum project. Revenue for the quarter fell marginally by 0.4% Y.o.Y to RM302.8 mln. Cumulative 9M2016 net profit slipped 9.1% Y.o.Y to RM42.0 mln.  Revenue for the period fell marginally, by 0.9% Y.o.Y to RM826.1 mln. Despite that, the reported earnings came slightly above our expectations, accounting to 77.2% of our previous full year net profit forecast of RM54.4 mln. The reported revenue, meanwhile, only amounted to 71.5% of our previous revenue forecast of RM1.16 bln. Segmentally,  the maintenance division’s 3Q2016 pretax profit slumped 66.7% Y.o.Y to RM8.9 mln on the non-renewal of t...

Maintain outperform with unchanged target price (TP) of RM0.50   MK Land started FY17 with a net profit of RM4.1m (+46.4% YoY, -1.7% QoQ), which was below expectations. The 1Q net profit only constituted 15% of our full year estimates. With no meaningful launch in FY16 in the Klang Valley and while existing inventory is still slow moving, revenue dropped 21.3% QoQ. As reported, we already expected the Group’s earnings to remain slow due to the lack of new launches and absence of land sale. The timing of new projects are still sketchy, given current tough operating environment. Pending clarity from Management, we keep our earnings unchanged for now and maintain our  Outperform  call from a valuation standpoint with  TP  of  RM0.50 , pegged at a c.70% discount to our RNAV estimate. Limited new launches.  So far, it has only launched the first phase of its Residensi Suasana @ Damai condominium project. We understand that only c.65% of the...

Upgrade to OUTPERFORM from neutral call with revised target price (TP) of RM9.80 Genting Berhad (GENT) reported a 3Q16 net profit of RM577.2m, increasing by 60% YoY mainly due to lower fair value loss on derivative instruments and lower impairment losses. After stripping out these losses and other exceptional items, 9MFY16 core net profit accounted for 76% of our full-year estimates. 3Q16 adjusted EBITDA was down 12% YoY largely due to net foreign exchange losses on financial assets compared with net foreign exchange gain in the previous year recorded under the investments & others segment. At adjusted EBITDA level, most key segments posted higher contribution i.e. leisure & hospitality and plantation. Our SOTP-based TP is revised up from RM9.00 to RM9.80 due to the upward revision in our TP for Genting Malaysia (GENM) as well as a higher consensus valuation on Genting Singapore (GENS). Given the recent retracement in its share price, we now see value in GENT and...

Maintain neutral call with raise the target price (TP) to RM4.60 Genting Malaysia (GENM) reported a 70.3% increase in 3Q16 net profit to RM555.7m. Stripping out gain on disposal of assets, reversal of previously recognized impairment losses and tax relief on capex, 9M16 core net profit of RM960.3m came in within expectations. Its UK and US operations delivered stronger performance on the back of higher hold percentage, higher bad debt recovery and pick-up in business volume. We maintain our earnings forecasts for FY16-18F. However, we raise our SOTP-based TP to from RM4.05 to  RM4.60  to factor in higher earnings multiples for its UK and US operations given the improvement in earnings visibility. We maintain our  Neutral  rating on GENM. We believe any meaningful earnings contribution from GITP Phase 1 project would only be felt towards end 2017. 3Q16 revenue rose 8.5% YoY on stronger Leisure & Hospitality contribution.  The group achieved a r...

Maintain neutral call with lower target price (TP) of RM6.08 IHH’s 3QFY16 revenue was RM2.44bn (+18.3% YoY), while its 9MFY16 stood at RM7.4bn (+20.0% YoY). Excluding exceptional items, IHH’s 3QFY16 core net profit increased 73.2% YoY, bringing its YTD core net profit to RM643.5m (+9.5% YoY), below our and consensus’ estimates, accounting for 60.7% and 65.1% of full year estimates respectively. The Group expects the pre-operating and start-up costs of new operations to partially erode its profitability during the initial stages. In addition, staff cost is expected to rise due to increased competition from trained healthcare personnel. As such, we adjust our cost accordingly and cut our earnings estimates by 13%-23% for FY16-18F and maintain our  Neutral  call on IHH with a lower  TP  of  RM6.08  (previously RM7.02), premised on our FY17 blended EV/EBITDA. Parkway Pantai’s (PPL) revenue was higher by 19.6% YoY to RM1.54bn for 3QFY16,  while...

Maintain neutral call with target price (TP) of RM2.50 AirAsia reported net profit of RM353.9m for its 3QFY16, compared to a net loss of RM405.7m. Excluding forex loss of RM2.7m, tax incentives of RM118.7m and gain on disposal of its aircraft of RM84.2m, its core net profit for the quarter was RM391.1m (3QFY15: core net profit of RM158.1m). For 9MFY16, AirAsia core net profit was RM1.18bn, which came in within our but above consensus full year expectations, accounting for 72.5% and 85.7% respectively. The improvement in 3Q results was due to higher passenger seat sales and aircraft operating lease income by 9.3% YoY and 29.3% YoY respectively, as well as lower fuel expenses by 20.6% YoY. We maintain our  Neutral  call on AirAsia, with target price of  RM2.50  pegged on 8x FY17F EPS. Our target price is based on FY17F enlarged share capital that includes the proposed share placement to Tune Live Sdn Bhd. 3QFY16 revenue was RM1.69bn (+11.3% YoY),  c...

Upgrade to BUY from neutral with target price (TP) of RM5.00 Axiata reported normalised earnings of RM506m (-1.7% YoY) for 3Q16, after stripping out accelerated depreciation, forex loss, non-cash accounting adjustment and gain on disposal of tower assets. 9M16 annualised net profit of RM1,341m came in below expectations, accounting for 68% of our and market estimates. We cut our earnings forecasts by 9% and revise down our  TP  to  RM5.00 . At 20x forward PER, valuation looks appealing relative to its historical trends, though we are still concerned with the underlying risks attached to its overseas expansions and hence, we are only upgrading Axiata to  Trading Buy  from Neutral. 3Q16 revenue increased by 7.7% YoY.  The increase in group’s revenue was mainly due to contribution from Nepal and higher revenues in Sri Lanka, Bangladesh and Cambodia. However, this was partially offset by lower revenue from Malaysia and Indonesia, which saw a decl...

Downgraded from outperform to NEUTRAL with target price (TP) of RM1.80 HSL registered 3QFY16 net profit of RM16.3m (+34.9% QoQ, -8.9% YoY), which was below our and consensus expectations. YTD, the Group’s net profit came in at RM44.7m (-18.0% YoY) which constituted only 59% and 54% of our and consensus full year estimates. The discrepancy was mainly due to our overly aggressive billings assumptions, especially for the new projects secured this year such as the RM1.7bn Pan Borneo Highway package and the RM750m Kuching Centralised Wastewater Management Package 2. As such, we revise our billings assumptions and our FY16F-17F earning expectations downwards by 20%/16%.  TP  is consequently cut from RM2.15 to  RM1.80 , pegged at an unchanged 12x FY17F EPS. With limited upside, HSL is downgraded from Outperform to  Neutral . Construction business.  We understand that physical works have begun on the section of the Pan Borneo Highway (70% stake in JV or...

Maintain outperform recommendation with target price (TP) of RM4.80 IGB Corporation delivered a markedly higher net profit of RM148.1m in 3QFY16 (+228.4% YoY, +173.8% QoQ), due primarily to a one-off gain of RM136.2m from the disposal of its 65%-owned MiCasa Yangon. YTD, the Group registered RM245.0m in net profit (+47.9% YoY). After stripping out the one-off gain, the net profit YTD is estimated at RM174.3m, which was marginally above our expectations but below consensus, constituting 80% and 68% of respective full year estimates. The better than expected performance was driven mainly by the retail and hotel divisions. As such, we adjust our FY16 estimates upwards by 42%, after imputing the one-off gain from the asset disposal. Maintain  Outperform  and  RM4.80  TP, which is based on 30% discount to our RNAV estimate, as we continue to like the strong cash flow generative abilities of the company and believe that the stock is under-appreciated despite ...

Maintain a neutral call with an unchanged target price (TP) of RM1.21 Perdana  announced that its subsidiary Perdana Nautika Sdn Bhd (PNSB) has been awarded a c.RM 67.0m contract from Petronas Carigali Sdn Bhd (PCSB). The contract is for the supply of a floating accommodation vessel for a period of 3 years, with an optional extension of 2 years commencing 17 September 2016. We are pleased with this award as it reaffirms the Group’s plans to attain a better fleet utilization rate for 2HFY16 which will improve its current rate of 53% as at 2QFY16. We continue to recommend Perdana with a Neutral call with a unchanged TP of RM1.21 , based on our DCF approach using a 10.9% WACC. Our estimates have accounted for sufficient contract replenishments albeit considering a lower utilisation rate assumption coupled with a less aggressive expansion plan going forward. Perdana remains suspended in the interim while awaiting the final takeover structure. PCSB award did not come as ...

Remain neutral with unchanged target price (TP) of RM0.88 NTPM Holdings Bhd NTPM’s 1QFY17 revenue came in at RM151.4m (+5.6% YoY, +4.7% QoQ), while net profit slipped to RM9.4m (-27.4% YoY, -6.6% QoQ). The higher revenue was driven by increase in sales of tissue products, meeting 21% of our revenue forecast for FY17F. The lower net profit which only met 13% of our FY17F net profit forecast awas attributed to higher losses incurred in the post commencement of Vietnam's initial tissue operations and thus margin deterioration was recorded owing to higher energy and labour costs. While Vietnam’s operations have hampered the Group’s performance this quarter, we do expect its contributions to be more visible in the medium term and to breakeven by FY18. We continue to maintain our Neutral view with a TP of RM0.88 pegged to a 14x PE multiple on FY17F EPS of 6.3sen. Paper products segment saw improvements in revenue by 8.9% YoY to RM105.4m (+4.6% QoQ). PBT however declined 20...

Maintain our neutral call with target price (TP) of RM2.36 Yesterday, AirAsia announced its 2QFY16 preliminary operating statistics, delivering strong load factor at 85.5% (1QFY16 at 85.6%). Its traffic volume saw a 12.2% YoY growth to 16.8bn revenue-passenger-kilometres (RPKs) on the back of increased in passengers carried by 12.2% YoY. However, the operational numbers was flat QoQ. AirAsia is scheduled to release its 2QFY16 results and passenger yield data on 29th August 2016. We maintain our Neutral call on AirAsia, with target price of RM2.36 , pegged on 8x FY17F EPS. Our target price is based on enlarged share capital, including the proposed share placement to Tune Live Sdn Bhd. Malaysia (MAA) operating statistics . Malaysia AirAsia (MAA) increased in passengers’ carried by +10.0% YoY to 6.55m, though its seat capacity was flat YoY (+1.4%) at 7.54m. Available-seat-kilometres (ASK) increased by +9.8% YoY to 10.0bn and revenue-passenger-kilometres (RPK) increased by +18.6% ...

Maintain Outperform with unchanged SOTP-derived TP of RM1.80.  WCT Holdings WCT Holdings Berhad , via its joint-venture with KKB Engineering Berhad, secured one of the Pan Borneo packages worth RM1.29bn. This job win, which is the Group’s first in FY16, is expected to take 51 months from now to complete. WCT owns 30% of the JV, with the remaining owned by KKB Engineering Berhad. As such, its net stake of c.RM390m is within our replenishment rate of RM2bn p.a. for the Group. This job win is estimated to raise the Group’s outstanding orderbook to RM4.8bn. ensuring earnings visibly for the next few years. Maintain Outperform with SOP-derived TP of RM1.80. RM1.29bn Pan Borneo Package . The scope of works, among others includes upgrading of Pan Borneo Highway in Sarawak which involving Phase 1, spanning from Sungai Arip Bridge to Bintulu Airport junction. The works are including piling works, civil works which includes demolition & site clearance, earthworks, geotechni...

Maintain our Outperform call with an unchanged target price (TP) of RM8.50 Our recent meeting with Kossan’s management reaffirmed our belief that Group’s expansion plans and operational improvements are on track.  We believe our Outperform recommendation for Kossan will be supported by i) continuous improvements in productivity and efficiencies through R&D initiatives, reflected through its growing margins over the years (from 7.6% in 1QFY12 to 12.4% in 1QFY16 - Figure 1), ii) diverse product range, and iii) most of the additional capacities for new products contribute by FY18 onwards. Widening product mix . Under immense competition, Kossan continues to improve their products to differentiate themselves. For instance, they introduced and patented its latest “accelerator free” nitrile glove, which minimizes latex protein and chemical allergies. We are also positive on other new innovative offerings which are expected to be launched by end-2016. Continuou...