MONEY MASTER

BUY recommendation with target price (TP) of RM3.78 INVESTMENT MERIT We are issuing a “Trading Buy” on NHFATT with a FV of RM3.78 based on 10.0x PE on FY17E earnings. The group is expanding its export base for both its manufacturing and trading segments, making them less vulnerable to the discouraging automotive market sentiment in the country. Margins are also expected to stabilise as the group has moved away from the gestation costs incurred to develop overseas arms. In the business of manufacturing and trading of replacement automotive parts.  NHFATT is involved in the manufacturing of REM metal and plastic automotive body parts (primarily focusing on Japanese marques), such as bumpers, doors, fenders, grilles, hoods and lamps. The group also trades third-party automotive parts, accessories and service items, such as engine oils and lubricants. Production costs on the manufacturing segment are exposed to USD rate fluctuations, where c.50% of raw materials are i...

Downgrade to SELL with lower target price (TP) of RM0.68 Review Excluding the disposal gain of c.RM80mn (net) and a one-off grant of RM26.3mn, Glomac’s 1HFY17 normalised net profit of RM4.9mn came in below expectations. It only accounted for 8% of both ours and consensus’ full-year forecasts. The variance was largely due to 1) lower-than-expected revenue, and 2) weaker-than-expected property margin. Glomac’s 1HFY17 headline revenue and PBT grew 25% and 140% YoY to RM335.4mn and RM143.5mn respectively. However, normalized revenue and PBT would have declined by 29% and 80% YoY after adjusting for the impact of land disposal (Cheras land sale to PR1MA for RM145.6mn announced in Oct-15) and one-off grant received for upgrade and improvement of infrastructure surrounding Glomac Damansara development amounting to RM26.3mn. The poor results were attributable to slow progress billing as its previous key contributing projects are nearing completion or have completed during the per...

Maintain perform with higher target price (TP) of RM4.38 9M16 core PATAMI of RM110.8m (+2.5% YoY) came in within expectations at 72% and 79% of our and consensus full-year forecasts. Maintain MARKET PERFORM and target price of RM4.38 based on unchanged 27x FY17E EPS. Within expectations.  9M16 core PATAMI of RM110.8m (+59% YoY) came in within expectations at 72% and 79% of our and consensus full-year forecasts after excluding a one-off provision for ESOS payments (RM13.8m). A third interim single-tier DPS of 1.5 sen was declared, bringing 9M16 DPS to 4.8 sen which is within our expectation. Key Result Highlights QoQ,  3Q16 top line came flat at RM767m driven by lower outpatients volume (-2%) but mitigated by higher inpatients (+3%). Revenue growth came from new hospitals, namely KPJ Kuantan, KPJ Klang, KPJ Rawang, KPJ Pasir Gudang and KPJ Maharani and organic growth from existing operating units. However, 3Q16 core PATAMI fell 15% to RM32.8m comp...

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...

Maintain HOLD with lower target price (TP) of RM1.68 Results 3Q16 core net profit of RM18.9m (qoq: -18.5%; yoy: - 18.1%) took 9M16 core net profit to RM57.8m (-18.2%), accounting for 59.1% and 56.5% of our and consensus full- year forecasts. We deem the results below expectations, despite expecting stronger 4Q results (underpinned by stronger 4Q FFB output and sustained palm product prices). Deviations Higher-than-expected finance costs. Dividend None. Highlights QoQ…  Despite a flattish revenue growth, 3Q16 core net profit declined by 18.5% to RM18.9m, as higher plantation earnings (arising from FFB output recovery), reduced losses on wood product division, and higher associate and JV contribution were more than offset by higher finance costs and tax expense. FFB output increased by 30.1% to 151.3k tonnes, boosted mainly by output recovery at its Indonesian operations (while Sabah estate has yet to show improvement). YTD…  9M16 core ne...

Maintain BUY with higher target price (TP) of RM2.66 Results Kimlun reported 3QFY16 results with revenue coming in at RM224.2m (-9% QoQ, -7% YoY) and earnings of RM16.5m (-32% QoQ, -16% YoY). Cumulative 9M earnings totalled RM57.7m, increasing +17% YoY. Deviation 9M earnings made up 84% of our full year forecast (77% of consensus) which is above expectations. The stronger than expected results was attributed to the manufacturing division which enjoyed superior gross margins of 32% for the 9M period vs 24.8% last year. This was due to (i) stronger SGD against MYR and (ii) higher proportion of MRT deliveries last year which generally commands a lower margin. Dividends None declared. Highlights Orderbook remains healthy. Kimlun’s orderbook currently stands at RM2.1bn comprising RM1.8bn for construction and RM280m for manufacturing. Overall, this translates to a healthy cover ratio of 2x on FY15 revenue. Bags MRT2 TLS contract. Kimlun announced t...

Retain outperform with lower target price (TP) of RM2.48 9M16 CNP of RM62.1m was below expectations, accounting for 68%/59% of our/streets? full-year estimates, respectively. The negative deviation was due to lower-than- expected operating margin stemming from the provisioning on its crane division coupled with a higher- than-expected contribution to its non-controlling interest. No dividend declared as expected. FY16-17E CNP was lowered by 7%-6%. No changes in call OUTPERFORM but lowered TP to RM2.48 (previously, RM2.53). Below expectations.  9M16 CNP of RM62.1m came in below expectations, making up only 68% and 59% of our and streets? full- year estimates, respectively. We believe the negative deviation was due to lower-than-expected operating margins mainly driven by the provisioning incurred on its crane division coupled with a higher-than- expected contribution to its non-controlling interest. No dividend was declared, as expected. Result highlights. YoY-Y...

Maintain HOLD with new target price (TP) of RM56.20 Dutch Lady’s 9M16 earnings of RM111.3m came in below expectation, making up only 68% of our full year forecast. Earnings fell 3.9% YTD mainly due to higher cost of sales and continued investments in support of the brand. Uptrend in milk prices putting pressure on company bottom line. We revised our FY16 and FY17 earnings forecast downwards to RM150.4m and RM163.7m respectively. Hold call retained with new target price of RM56.20. YTD earnings drop. Dutch Lady recorded a 9M16 revenue growth of 6.2% to RM776.1m due mainly to launch of the newly improved formula for Friso powdered milk which is specially targeted for children and introduction of Ready to Drink (RTD) UHT 125ml milk with Disney Marvel and Frozen character packaging. However, earnings dropped 3.9% YTD to RM111.3m from RM115.8m driven by i) higher costs of sales, and ii) greater advertising and promotion expenses in support of the brand as well as ...

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 outperform with unchanged target price (TP) of RM0.93 9M16 PATAMI of RM14.6m came in largely within expectation. No dividend was declared, as expected. Moving forward, we expect the group to record a strong sequential quarter, in tandem with the telecom operators’ tendencies to ramp up capex in the 4Q of each financial year. We made no changes to our FY16E/FY17E earnings forecasts for now, pending today’s briefing. Maintained OUTPERFORM call with an unchanged TP of RM0.93 based on DCF valuation (WACC: 9.1%, TG: 1.5%). Broadly in line.  9M16 PATAMI of RM14.6m (+12% YoY) came in largely within expectations at 53.2%/51.7% of our/market consensus’ full-year estimates (vs. the historical 9M contribution of 53%-58% range of full-year results for the past three years). Despite the 9M16 merely accounting for about half of our full-year estimate, we expect the group to record a strong 4Q underpinned by telecom operators, who tend to ramp up capex during the last ...

Maintain UNDERPERFORM with lower target price (TP) of RM4.27 9M16 results came in below expectations. Negative deviation was largely in part due to greater losses in the O&G segment. No dividend was declared, as expected. Post-results, we forecast core NL for FY16 and cut FY17E core NP by 43% to account for greater losses assumption in the O&G segment. Maintain UNDERPERFORM with a lower TP of RM4.27 (from RM4.45, previously) based on SoP valuation. 9M16 results were below expectations,  as the group reported a 9M16 core LATAMI of RM125.6m which missed our/consensus’ full-year core NP estimates of RM94.3/RM103.9m. Negative deviations were mainly due to significantly higher losses arising from the oil & gas segment from lower rig utilisation rates as well as highly competitive charter rates alongside steep overhead costs. YoY,  9M16 revenue fell by 23% due to weakness across all segments. The auto segment saw a decline in total sales (-18%) as co...

Maintain UNDERPERFORM with an unchanged target price (TP) of RM0.99 9M16 core net profit of RM150.5m was within expectations, accounting for 76% of our full-year estimates. No property sales data was available. As expected, no dividend was declared. No changes to FY16-17E core earnings. Maintain UNDERPERFORM with an unchanged Target Price of RM0.99 based on 5.5x FY17E PER. Within expectation.  9M16 CNP of RM150.5m is in line with our expectation, accounting for 76% of our full-year estimate while there is no consensus available. No dividends declared as expected. Property sales data are not available, while we are expecting property sales of RM349.9m for FY16. Results review.  9M16 CNP saw sharp decline of 26% underpinned by 23% decrease in revenue as a result of lower progressive billings for its property project attributable to weak property sales due to the challenging market environment, especially in Johor. QoQ, its 3Q16 CNP picked up with an ...

Maintain PERFORM with lower target price (TP) of RM14.30 9M16 core net profit of RM157.9m (+2.6% YoY)   missed our (66%) and market (66%) expectations. As expected, no DPS was declared. Weakness in Sri Lanka is not a big concern as production has resumed and earnings contribution is not too high. Outlook remains challenging on the back soft of consumer sentiment. FY16E/FY17E earnings trimmed by 7%/3%. Maintain MARKET PERFORM on CARLSBG with lower TP of RM14.30 (from RM14.70). 9M16 below expectations.   9M16 core net profit of RM157.9m (+2.6% YoY) was below expectations, accounting for 66% of our in-house forecast and 65% of consensus. The negative deviation can be attributed to the weaker-than-expected performance in Sri Lankan operations. Note that 9M15 core net profit has been adjusted for impairment loss of RM12.5m arising from the divestment of Luen Heng F&B Sdn Bhd (LHFB) in May 2015. No DPS was declared, as expected. YoY,  the Group reported...

Upgrade from sell to HOLD with target price (TP) of RM15.52 Review Carlsberg reported its 9MFY16 net profit of RM157.9mn (+11.7% YoY). The results came within ours (71%) but below streets estimates (66%). No dividend was declared, similar to last corresponding period. YoY, the group revenue grew marginally by 0.6% to RM1.2bn. This was driven by positive contribution from Singapore segment. The segment recorded a double-digit growth of 10.6% to RM424.6mn supported by 1) stronger sales volume as well as 2) higher contribution from subsidiary company Maybev. Meanwhile, Malaysia segment logged a slight contraction of 3.9% to RM820.3mn underpinned by loss of contribution from Luen Heng business. Note that, Luen Heng is a distributor and supplier of wines and spirit and the disinvestment was completed last August 2015. For 9MFY16, the group’s operating profit expanded by 15.5% YoY to RM204.5mn owing to strong contribution from both segments. This was attributable t...

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...