MONEY MASTER

Retain BUY with target price (TP) of RM2.19 INVESTMENT HIGHLIGHTS Strong reassurance from visit to HSL in Sarawak Affordable housing and wastewater works will support earnings growth Reaffirm earnings estimates Maintain  BUY  with an adjusted  TP  of  RM2.19 Strong reassurance from visit to HSL in Sarawak . We emerged from HSL’s Kuching Wastewater Treatment and La Promenade visit in Sarawak with reassurance on our revenue, target orderbook and earnings forecasts for FYE17/FYE18/FYE19 Key takeaways from visit: Compelling underlying sewerage needs.  HSL’s key competency in sewerage and wastewater engineering i.e. micro tunnelling and piping will anchor its future earnings prospect due to the strong need of efficient wastewater and sewerage connection in Kuching, Miri and Sibu from growing population. In a revised master plan in 2007, Sarawak Sewerage Department (SSD) has estimated that 3 Wastewater plants are needed to support ...

Retain HOLD with a higher target price (TP) of RM5.00 Highlights Outlook improving.  We are turning more positive on AMMB as previous concern on various issues is now easing while management recently guided on a more upbeat outlook with a higher loan growth projection for FY18. Higher loan growth in FY18 . For several years, AMMB’s loan growth was impacted by its rebalancing effort, especially to diversify away from hire purchase segment. We believe AMMB is now comfortable with current composition of hire purchase loan given the corrected yield in the segment reinforced by improving 2017 TIV outlook. Given this, we believe AMMB will achieve a loan growth of 6% in FY18, which majority will be driven by corporate and SME segments. Various tie-ups in SME space.  We notice that AMMB had recently made various tie-ups with SME related organizations to offer financing to this segment. Overall, we are positive on these tie-ups on future contribution to the SME segmen...

Retain HOLD call with a higher target price (TP) of RM85.73 Highlights We attended Nestle’s 1Q17 briefing and came away feeling neutral on the company’s prospects going forward. Nestle anticipates half of revenue growth in FY17 will be driven by new product launches, in particular, the launch of new varieties of KitKat chocolates. We share management’s optimism on its new KitKat products, given: (1) its lion share in Malaysia’s chocolate product market which market share has grown from 14.4% in 2013 to 16.8% in 2016 (and overtook Cadbury as Malaysia’s most popular chocolate); (2) Majority of Malaysian consumers (two-third, according to a Nielsen report) prefer new and innovative products from brands that are familiar to them. Additionally, we believe that the launch of the Kit Kat confectionary store in Mid Valley in late-2016 (where consumers can customize KitKat chocolate bars with up to 10,000 combinations) will serve as its marketing base (apart from allowing N...

Reaffirm BUY with an unchanged target price (TP) of RM4.84 INVESTMENT HIGHLIGHTS Syarikat Takaful Malaysia Bhd (STMB)’s 1QFY17 PAZTAMI of RM56.8m (+23%yoy) was within ours and consensus expectations Family Takaful continued to support the growth in 1QFY17 earnings As the result is within our estimates, we make no changes to our existing forecast numbers Hence we reiterate our  BUY  recommendation with an unchanged  TP  of  RM4.84  per share 1QFY17 PAZTAMI met expectations.  Despite challenging macroeconomic condition, STMB has continued to deliver solid PAZTAMI performance in 1QFY17, where it grew +23.0%yoy to RM56.8m. The increase was as a result of higher Wakalah fee income of RM186.3m (+13.0%yoy) to the Group and its portfolio rebalancing strategy to reduce exposure in risky assets. Overall, the reported earnings came in line with ours (at 29.1%) and consensus’ (at 29.5%) expectations. Strong 1QFY17 earnings growth in t...

Reaffirm OUTPERFORM call with a higher target price (TP) of RM4.48 We remain bullish on Mega First (MFCB) as more construction profits are recognized from its 80%-owned 260MW Don Sahong Hydropower project in Laos this year. Progress is expected to nearly triple (up from 16.5% to 45%- 50%) while double-digit growth is also expected from the resources segment. We reaffirm our  Outperform  call with a higher  TP  of  RM4.48  (up from RM3.16) after rolling over our valuations to FY18 while also lowering our discount attached to the Don Sahong Hydropower project in light of the lower exposure risks as the plant moves closer to completion. Targeting a bigger milestone this year.  The USD500m (RM2.5bn) Don Sahong hydropower project is very much on track. As the time of writing, the completion rate has reached 23% and is expected to reach about 45%- 50% by year-end. About RM362m had already been invested for excavation and foundation works last...

Retain BUY with an unchanged target price (TP) of RM17.00 News/Comments According to Edge Weekly, TNB has proposed to acquire 70% stake in the 1,440MW combined cycle gas turbine (CCGT) power plant project (Track 4A) that was previously awarded to SIPP Energy (SIPP). The acquisition is meant to provide a strong balance sheet for SIPP Energy to finance the project as well as expertise in managing the project, as existing SIPP Energy lacks strong balance sheet (currently negative equity position). Track 4A was initially targeted to start operation by mid- 2018, when Energy Commission (EC) proceeded with direct award to a consortium of SIPP, YTL Power International (YTLP) and TNB back in mid-2014, on fast track basis (as opposed to open tender). Subsequently YTLP and TNB pulled out respectively and now left only SIPP. The news also disclosed the levelised tariff of 37sen/kWh for Track 4A (based on reference rate of RM3.80/US$) and indicated potential effective...

Retain HOLD with a higher target price (TP) of RM12.21 Highlights FFB output growth to mitigate lower palm prices…  GENP registered FFB output growth of 28.5% yoy in 1Q17 , boosted by yield recovery (as lagged impact of El Nino subsided since end-FY16) and more areas moving into mature and higher yielding bracket (for its plantation estates in Indonesia). Management remains confident that the strong FFB output growth achieved in 1Q17 will sustain into the next few quarters (with output ratio of 45:55 in 1H and 2H), underpinned by young age profile for its plantation operations in Indonesia (with average age of only ~ 5 years as at end- FY16), which will in turn cushion lower palm product prices. The opening of GHPO to boost JV’s earnings from 2H…  We expect the opening of Genting Highland Premium Outlet (GHPO, likely by end-2Q) to perform as well as Johor Premium Outlets (JPO), if not better, as it will be serving a more diverse group of shoppers vis-à-...

Downgrade to MARKET PERFORM from OUTPERFORM with a higher target price (TP) of RM9.38 We met up with SCIENTX?s management last week and came away feeling comforted as their expansion plans are well on track. As expected, the Group is focused on the expansion of its BOPP and PE plants, and longer term growth of stretch film plant in Arizona, US. All in, we maintain FY17-18E earnings. Downgrade to MARKET PERFORM (from OP) but increase TP to RM9.38 on a higher PE of 6.8x for our property segment. PE plant expansion at Ipoh to be completed by end CY17 . As part of expanding its consumer segment, SCIENTX is in the midst of completing capacity expansion at its PE plant in SGW Ipoh to 24,000MT p.a. by end CY17 (1HFY18), increasing total capacity for the PE segment to 84,000MT p.a. which is on track. BOPP plant focused on ramping up capacity.  The BOPP plants in Rawang and Pulau Indah currently have a total capacity of 60,000MT p.a. (as at Dec 2016) and will continue ...

Upgrade to OUTPERFORM with a higher target price (TP) to RM1.31 from RM1.23   Yesterday, HUAYANG announced that it will be acquiring another 20.1% stake in Magna Prima Bhd for a cash consideration of RM123.8m, effectively raising their stake to 30.9%, as part of their land banking strategy, of which we are mildly positive due to MAGNA’s strategic land banks in Klang Valley. No changes in FY17-18E earnings. Upgrade to OUTPERFORM with a higher Target Price of RM1.31 (from RM1.23) on a higher RNAV of RM3.05 with an unchanged discount factor of 57%. News.   Yesterday, HUAYANG announced that they will be acquiring another 20.1% stake in Magna Prima Bhd (MAGNA) for a cash consideration of RM123.8m - indicating RM1.85/share (same price as previous acquisition) effectively raising its stake to 30.9%. The acquisition will be funded through HUAYANG’s internally generated funds, and the exercise is expected to be completed by 2Q17 should there are no objections from its EG...

Retain HOLD with a target price (TP) of RM2.62 Press Metal Bhd (April 19, RM2.79) Maintain hold with a fair value of RM2.62:  The global demand for aluminium is expected to grow modestly at 5% annually from financial year 2017 (FY17) to forecasted FY19 (FY19F), largely attributed to the transportation and construction segments which account for half of the global primary demand, while supply is expected to remain flat at 60 million tonnes. Currently, demand for aluminium stands at 59 million tonnes with supply at 59 million tonnes. The slow supply growth is mainly due to the curb on aluminium production in China where the government has issued a policy draft to cut down production during the winter season. The curb is to tackle pollution which worsens in winter. Experts reckoned that if the China policy kicks in, they forecast a reduction of 1.3 million tonnes of aluminium production (4% of total production in China). The positive outlook for aluminium i...

Reiterate MARKET PERFORM with an unchanged target price (TP) of RM9.50 SIME recently announced a tender invitation for the repurchase of its 2018 and 2023 sukuk totalling USD800.0m. Meanwhile, SPSETIA announced the acquisition of 342.5 acres land in Bangi from SIME’s 40%- owned associate Seriemas for RM447.6m. We are neutral on both developments, though we upgrade FY18E NP by 6% to reflect one-off gains. Maintain MARKET PERFORM with unchanged TP of RM9.50 based on SoP. Sukuk repurchase and associate’s land sale.  Sime Darby Berhad (SIME) recently invited eligible holders of its outstanding 2018 and 2023 sukuk to tender the respective sukuk (totaling USD800.0m) for repurchase. The company also announced a consent solicitation seeking the substitution of Sime Darby Plantation Sdn. Bhd. (Plantation) as the new obligor for the said sukuk, among other adjustments to the terms and conditions. Separately, SP Setia Berhad (SPSETIA) recently announced the acquisition of 342.5 ...

Retain OUTPERFORM with higher target price (TP) of RM3.22 Astro Malaysia Holdings Bhd (April 18, RM2.69) Maintain outperform with a higher target price (TP) of RM3.22:  We met with Astro Malaysia Holdings Bhd recently to get updates on business operations and strategies moving forward. Despite current cautious consumer sentiment and weak advertisement expenditure (adex), we believe Astro’s earnings will remain resilient on the back of its subscription-based business model with a vast 5.1 million household customer base. Its advertising income has consistently outperformed the industry, with an overall +10% year-on-year (y-o-y) adex growth in the financial year 2017 (FY17) compared with a 2% contraction for the industry. The pay TV segment is anticipated to remain challenging, with management expecting pay TV subscribers base to remain flat at about 3.4 million to 3.5 million household base. The group will be focusing on the upselling of premium content and val...

Retain HOLD with a target price (TP) of RM7.35 MISC Bhd (April 18, RM7.33) Maintain hold with a fair value of RM7.35:  Further to our update last Friday, management has claimed that the upstream report on Chevron’s award of another floating, storage and offloading vessel (FSO) to MISC Bhd is incorrect as the project’s details are still at a preliminary stage and far from completion. Recall that the report had indicated that the FSO could be used for the Ubon field in the Gulf of Thailand. The Ubon project has been downsized in the past year as Chevron and its joint-venture partners sought to improve the project’s economic viability. The revised version of the development plan includes a downsized processing platform and an FSO for associated liquids. Back in August last year, MISC secured its maiden project in Thailand with a US$230 million charter from Chevron to lease and operate an FSO for the Benchamas 2 project, at Block B8/32 in the Pattini bas...