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Total Cumulative Posts 106
Joined Dec 2011
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Corporate

STOCK: BHS (7241)

Blog 13 Jul 2014, 4:13:01 PM
涨的不停。。。。{:thumbup}
Corporate

STOCK: AFFIN (5185)

Blog 13 Apr 2014, 9:07:10 AM
[b]CIMB Research lowers Affin target price to RM3.46 [/b]


KUALA LUMPUR: CIMB Equities Research has lowered the target price of Affin Holdings to RM3.46 when it has completed its acquisition of HwangDBS Investment Bank (HDIB).

It said on Wednesday the target price was lower than the theoretical ex-price of RM3.71.

At the briefing on Tuesday, it said Affin targeted synergies of RM84mil in FY15-17 and RM43mil per annum starting from FY18 from the acquisition of HDIB.





“Factoring in the synergies, we think that the deal would still be dilutive, though the EPS dilution could be reduced from 12-15% to 10-12%. Our DDM-based target price (cost of equity of 12.7%; long term growth of 4%) is intact.

“The stock is still rated as Reduce due to its 1) below-industry loan growth, 2) suppressed margins, 3) upturn in credit costs, and 4) EPS dilution from the HDIB deal. We prefer RHB Capital in the Malaysian banking space,” said CIMB Research.



Corporate

STOCK: PADINI (7052)

Blog 13 Apr 2014, 9:06:09 AM
[QUOTE=rockbum @ 27 May 2013, 01:52 PM]2616[/QUOTE]
[b]Maybank Research ups Padini target price to RM2.35 [/b]

KUALA LUMPUR: Maybank Investment Bank Research has raised the target price of Padini Holdings from RM1.96 to RM2.35, which is an upside of 25%.

It said on Padini was on track to add 11 new big outlets in FY14 and it is eyeing another five new locations for FY15.

Mayban Research said Padini group will have seven new Brands Outlet (BO) and four new Padini Concept Stores (PCS) by end-FY14 as compared to its original assumption of five new BO and four new PCS.

“This will add 90,000-100,000 sq ft to the group’s total retail space of about 720,000 sq ft as at end-FY13 (+14% YoY),” it said.





Maybank Research said BO will spearhead earnings growth over the next few years, given its value proposition and bundling strategy which are well accepted by the shoppers.

Positively, same-store sales growth (SSSG) for BO and PCS improved in 2QFY14, taking 1HFY14 SSSG of BO and PCCS to +24% and -3.6% respectively.

“The group is reviewing its pricing strategy to offer more value-added products amid rising living costs. We raise our earnings by 2% for FY14 and FY15, taking into account the higher-than-expected new store openings,” it said.

Maybank Research said for FY15-16, it assumed a flat SSSG for all brands except for BO (+5% to 7% per annum).

“Higher valuations are warranted for Padini, given that the domestic consumer sector trades at a CY14 price-to-earnings ratio of 18.2 times and offers a two-year (CY13-15) earnings CAGR of just 10% vs 12.6 times PER and 12% earnings compounded annual growth rate for Padini.

“Moreover, Padini’s yields are attractive at 5.9% for 12 months forward. We are raising our TP to RM2.35 (+25%) on a higher CY14 PER target of 14.8 times (12 times previously), two standard deviation above its historical mean,” it said.
Corporate

STOCK: AIRPORT (5014)

Blog 13 Apr 2014, 9:05:24 AM
[QUOTE=garlic @ 08 May 2013, 11:47 PM]2567[/QUOTE]
[b]Maybank KE Research maintains Sell on MAHB[/b]

KUALA LUMPUR: Maybank KE Research has maintained its Sell call on MAHB with a target price of RM7.03, it said on Wednesday.

Maybank KE said Datuk Aziz Kaprawi, Deputy Minister of Transport, said the Kuala Lumpur International Airport 2 (KLIA2) is on track for operations on 2 May and the Low Cost Carrier Terminal (LCCT) will close on 9 May.

“However, AirAsia doubts the readiness of KLIA2 and will stay at the LCCT; it will only move after all the safety and security concerns have been addressed.

“PM Najib said over the weekend that AirAsia has to move, and the government will hear its grouses,” it said.





The research house added both MAHB and the Ministry of Transport (MOT) are confident it is on track for 2 May launch but concerns linger as to whether this is possible as KLIA2 has yet to receive a Certificate of Completion and Compliance (CCC).

“We revise our FY14-FY16 earnings by a decrease of 7.9%, 7.2% and a rise of 4.8% to take into account the additional 40% stake in Sabiha Gökçen airport by end of 1H14.

“Our forecast is premised on a later KLIA opening date of Sept 1, 2014.

“Should the KLIA2 open on time, this would positively impact our FY14 net profit forecast by a small 1.2%,” it said.
Corporate

STOCK: SAPNRG (5218)

Blog 13 Apr 2014, 9:04:03 AM
[QUOTE=devan @ 19 Nov 2013, 01:52 PM]2983[/QUOTE]
[b]AmResearch maintains Buy on SapuraKencana [/b]

KUALA LUMPUR: AmResearh has maintained its Buy recommendation on SapuraKencana Petroleum Bhd , with an unchanged fair value of RM5.70 a share, based on an FY15 PE of 22 times, which is the 2007 peak achieved by Kencana Petroleum.

"We maintain SapuraKencana’s FY15F-FY17F earnings, which will not be affected by changes in shareholder stakes. Seadrill has placed out 230 million SapuraKencana shares at RM4.30 a share, valued at RM989mil," it said on Thursday.

This will reduce Seadrill’s stake in SapuraKencana from 12% to 8%. Seadrill’s chairman and major shareholder John Fredriksen has said that his company, which entered into a lock-up agreement for its remaining stake in SapuraKencana, will remain as a long-term strategic investor in the group.

"We believe that should Seadrill eventually disposes of its entire stake in SapuraKencana, it will be gradual given that Seadrill has a strong business relationship with the group via 50:50 joint ventures in 6 pipe-laying flexible support vessels, each potentially worth US$300mil. According to Fredriksen, Seadrill is currently exploring other business ventures with SapuraKencana," it said.





Following this share sale, AmResearch said Seadrill will be the fourth largest shareholder in the group after Sapura Holdings (16.8%), EPF (11.7%) and Khasera Baru (10%). SapuraKencana’s president/chief executive officer, Tan Sri Shahril Shamsuddin is the major shareholder of Sapura Holdings while Datuk Mokhzani Mahathir controls Khasera Baru.

"The changes in shareholder levels does not affect our positive outlook on SapuraKencana’s prospects given the group’s US$898mil (RM2.8bil) acquisition of Newfield International’s oil & gas production blocks in Peninsula Malaysia, Sabah & Sarawak.

"As SapuraKencana is poised to become a truly formidable regional O&G upstream operator, its share price has outpaced the FBMKLCI by 39% over the past 12 months. But its aggressive acquisitive earnings acceleration translates to a still attractive FY15F PE of 16 times currently - a 45% discount to SapuraCrest Petroleum’s peak of 29 times in 2007," it said.
Corporate

STOCK: DRBHCOM (1619)

Blog 13 Apr 2014, 9:02:05 AM
[b]Public Invest Research keeps Outperform call on DRB-Hicom[/b]

KUALA LUMPUR: Public Invest Research said with DRB-Hicom’s (DRB) share price hovering near its 52-week low, it believes the current price offers an attractive entry level for long-term value investors.





“While we recognise the valid concerns over Proton’s performance weighing down DRB-Hicom, we believe it has unjustifiably overshadowed the value of group’s other businesses,” it said on Thursday.

Public Invest Research pointed out the other businesses range from integrated logistics (KLAS, Konsortium Logistik & POS Malaysia) to Islamic banking (Bank Muamalat) to defence and concession businesses (Deftech, Alam Flora & Puspakom) as well as its valuable land banks and properties.

“We maintain our Outperform call on DRB-Hicom with a lower target price of RM3.40 (previously RM3.53) after factoring in POS Malaysia market valuation and a slower-than-expected turnaround in Proton’s performance,” it said.
Corporate

STOCK: DIALOG (7277)

Blog 13 Apr 2014, 9:00:53 AM
[QUOTE=airasia @ 15 Feb 2012, 01:10 AM]580[/QUOTE]
[b]RHB Research maintains Buy on Dialog [/b]

KUALA LUMPUR: RHB Research is maintaining a Buy recommendation on Dialog Group with an unchanged sum-of-parts (SOP) based fair value of RM3.71.

It said on Friday Dialog announced that its unit Dialog E&C Sdn Bhd was served with a notice of arbitration from Tanjung Langsat Port Sdn Bhd (TLP) following the provision of an engineering, procurement, construction & commissioning (EPCC) contract in 2006.

The RM89.5mil contract was for the development of the 100,000 cubic metre oil terminal project at Tanjung Langsat Port, Johor.

TLP claims that it suffered losses and damages caused by a fire in August 2008 in a part of the facility after the completion and handover of the project by Dialog E&C. TLP also claimed the fire was due to the latter's breaches of its obligations under the contract.





RHB Research said TLP was claiming between RM546.6mil and RM561.24mil in total for various reasons. These include an indemnity against all of its liability towards its dedicated users, which include - and not limited to – US$20.8mil (RM66.2mil) for the loss of products stored in the facility; US$2.1mil (RM6.7mil) for additional costs, fees and expenses incurred; and US$118.4mil (RM378.9mil) for the dedicated user's loss of use of the facility.

“The potential claim of RM546.6mil to RM561.2mil makes up about 37.5%-38.6% of Dialog's equity as at Dec 2013. It also currently sits on a net debt position of RM397.9mil.

“At this juncture, we are unable to determine the likelihood and actual quantum of the claim. We believe, however, this might be a long-drawn-out case and that the potential liability may eventually be smaller than the headline amount.

“According to its statement, management believes that this will not affect Dialog's FY14 operational and financial position. We are maintaining our Buy recommendation at the moment - pending more details - with an unchanged: i) SOP-based RM3.71 fair value, and ii) FY14/15 earnings estimates,” it said.
Corporate

STOCK: BONIA (9288)

Blog 13 Apr 2014, 8:57:37 AM
[QUOTE=francis84 @ 23 Jul 2013, 11:39 AM]2751[/QUOTE]
[b]CIMB Research starts coverage of Bonia, target price RM8.11 [/b]

KUALA LUMPUR: CIMB Equities Research has initiated coverage of local retailer Bonia Corp with an Add recommendation and a target price of RM8.11, which is 62.2% over the last traded price of RM5.

It said on Thursday that Bonia, after lying low in the past few years to focus on internal restructuring and strategy realignment, it is leading other Malaysian brands in becoming a truly regional premium brand.

“Its international expansion is a potential re-rating catalyst,” it said.





CIMB Research said the valuation is derived from 19.3 times CY15 P/E, a 20% premium over its target market P/E, due to Bonia’s relatively higher earnings growth trajectory.

“This implies that there is 62% upside to its current share price,” it added, pointing out Bonia has a network of 1,027 sales outlets and 164 standalone boutiques throughout Asia, including Singapore, Malaysia, China, Taiwan, Japan, Vietnam, Thailand, Myanmar, Indonesia, Brunei, Oman, and Saudi Arabia.

The group is primarily focused on the manufacturing of leather goods and shoes and their design, promotion and marketing under its in-house brands. In addition to its flagship fashion label, Bonia, the group’s two other major in-house brands are Sembonia and Carlo Rino.

“The group’s EPS is expected to more than double in three years’ time. We estimate that Bonia’s EPS will rise by 125% from 21 sen in FY13 to 46 sen in FY16, translating into three-year EPS CAGR of 31.1%.

“We are of the opinion that the stock’s current valuation does not reflect the company’s earnings growth trajectory, as it is trading at only 12.5 times FY15F P/E and 10.2 times FY16 P/E,” said CIMB Research.
Corporate

STOCK: AIRASIA (5099)

Blog 06 Mar 2014, 9:30:29 AM
[b]AmResearch maintains its Hold call on AirAsia[/b]

KUALA LUMPUR: AmResearch maintains its “hold” call on AirAsia at an unchanged fair value of RM2.50 a share following a recent post-results discussion with management.

It said on Wednesday that from a 15% average equity in the current fleet, some of the new NEOs will entail 40% equity coming from old A320 sales proceeds (net of US$20mil or RM65.49mil per aircraft).

The impact however, will be very gradual, AmResearch added.

The first four NEOs will be delivered in FY16 but the majority will be delivered in FY17 and beyond at a rate of 24-34 per annum vs. sales of 6-9 old A320 per annum. Unit cost is targeted to be reduced by 4% to 5% in FY14.

AmResearch said measures include reduction in fuel uptake, merging operational functions with AirAsia X, and renegotiation of engineering contracts.

“However, the savings are in ringgit terms and these might be negated by the strength of the US dollar; year-to-date average at RM3.3 to US$1 versus FY13 forecast average of 3.15. Our model factors in RM3.20:USD.

“Every 10 sen weakening in the ringgit:US dollar impacts bottomline by 7%. Management has no plans to hedge operational forex requirements currently,” the research house said.

AmResearch added ancillary revenue was to increase RM5 to RM7 per pax to RM47 by allowing pre-bookings up to 60 minutes before flight, incentives for travel agents and bundling of other transportation modes.

New ancillary initiatives will add a further RM3 per pax such as on-board Wi-Fi and Duty Free products.

“Our projections model in RM47-RM49 per pax of ancillary income over FY14-16F,” the research house said, adding that Project Emirates was to increase loads by 2 percentage points to 82%.

“The key midterm strategy is to leverage on KLIA2 and better connectivity from Fly-Thru to grow corporate base from 2% currently. The delay in KLIA2 completion does not result in incremental cost to AirAsia, according to management. However, we think it is a constraint on AirAsia’s capacity expansion.

“AirAsia is slowing capacity growth, with deferred deliveries of seven A320s in FY14 and 12 in FY15. These will be converted into NEOs,” it added.

AmResearch said that listing plans for Indonesia AirAsia would likely be shelved as management prefers instead to consolidate all its units under one holding company.

However, this may take time as it requires approval and lobbying of individual governments that Air Asia operates in.

The idea in the past was for the mature associates to recapitalise and undertake their own on balance sheet aircraft, and create a ring fence around AirAsia from further sub-funding.

While AirAsia fared well relative to local peers, the research house said the earnings momentum had slowed significantly given competitive pressure, constraints to expand and a weaker ringgit, which might offset a big part of the group’s unit cost reduction drive.
Corporate

STOCK: ALLIANZ (1163)

Blog 06 Mar 2014, 9:29:57 AM
[b]RHB Research Neutral on Allianz Malaysia[/b]

KUALA LUMPUR: RHB Research is maintaining its Neutral outlook on Allianz Malaysia with a fair value of RM11.50.

It said on Tuesday Allianz Malaysia is adopting a more cautious stance and has opted to preserve capital for future expansion.

“Yet, we see Allianz likely to achieve a high double-digit topline growth despite new challenges. We expect its general insurance unit to maintain its cost efficiency, and its life insurance unit to perform in line with the growth of its agency and bancassurance channels,” it said.
Corporate

STOCK: PERDANA (7108)

Blog 06 Mar 2014, 9:29:19 AM
[b]RHB Research ups Perdana Petroleum fair value to RM2.10[/b]

KUALA LUMPUR: RHB Research is maintaining its Neutral outlook on Perdana Petroleum but raised the fair value from RM1.90 to RM2.10.

It said on Wednesday Perdana Petroleum won the first contract in 2014 for one of its accommodation barges – Perdana Enterprise.

“The contract, valued at RM52mil, is for a primary term of two years, with an extension option of one year. We raise our FY14F/15F EPS by 9%, as we factor in this favourable charter win and lower our tax assumption,” it said.
Corporate

STOCK: BAUTO (5248)

Blog 06 Mar 2014, 9:28:49 AM
[b]RHB Research sees more upside for Berjaya Auto[/b]

KUALA LUMPUR: RHB Research is retaining its Buy call on Berjaya Auto with a new target price of RM2.20 from RM1.95 based on a FY15F 12.5 times price-to-earnings.

It said on Wednesday it came out from its recent corporate luncheon with Berjaya Auto feeling very positive on its prospects.

“We believe Berjaya Auto’s growth rate in the next few years will easily outstrip that of its peers as well as the broader market, helped by its compelling product range and increased localisation,” it said.
Corporate

STOCK: AFFIN (5185)

Blog 06 Mar 2014, 9:28:20 AM
[b]Alliance Research maintains Neutral on Affin Holding[/b]

KUALA LUMPUR: Alliance Research is maintaining its Neutral call on Affin Holdings Bhd, trimming its target price to RM4.35 from RM4.57.

The research house said on Wednesday that post earnings revision, it was maintaining a 10% discount on its valuation model to reflect the earnings dilution from its equity raising exercise to acquire Hwang-DBS's selective assets.

The target price implied a 1.0 times FY14 price-to-book and a sustainable 9.9% return on equity based on Alliance Research's Gordon Growth valuation model.

Earnings estimates will also be adjusted to reflect the dilutive impact from the enlarged share base once the right issue price and number of new shares to be issued are determined.

"The group does not see stress in its hire purchase portfolio. We understand that its current portfolio comprises 80% new car and 80% non-national car segments, which so far have not experienced any material deterioration in the asset quality. As such, management remains comfortable of growing its hire purchase portfolio given that the group has already adopted a stringent credit underwriting policy," Alliance said.

Presently, Alliance Research's computation shows that should Affin fix its rights issue price at 10% discount to its last closing price of RM4.09, the group will need to issue about 340mil shares to raise RM1.25bil, which represent about 23% of its current share base.

Assuming that there are no substantial synergistic benefits to be yielded from the acquisitions in the immediate term, this could dilute the group's forward earnings per share by about 11%.

The research house said the potential earnings dilution for Affin will vary depending of the number of new shares to be issued by the group; should the group fix its right issue price at 25% (rather than 10%) discount to its last closing price of RM4.09, the group will need to issue about 410m new shares, representing about 27% of its current share base.
Corporate

STOCK: AFFIN (5185)

Blog 06 Mar 2014, 9:27:52 AM
[b]RHB Research maintains Neutral on Affin, FV RM4.30[/b]

KUALA LUMPUR: RHB Research is maintaining its Neutral outlook on Affin Holdings with fair value of RM4.30.

It said on Tuesday that preserving asset quality still appears to be its key focus, which means loans growth is likely to remain modest.

“Further details (for example integration costs and synergies) on the HwangDBS IB deal will only be forthcoming after financial closure. That aside, we think net profit growth would be under pressure due to normalising credit costs,” it said.
Corporate

STOCK: MAHSING (8583)

Blog 06 Mar 2014, 9:26:10 AM
[b]AmResearch maintains Buy on Mah Sing[/b]

KUALA LUMPUR: AmResearch is maintaining its our Buy call on Mah Sing Group with its fair value tweaked slightly downwards to RM3.60 a share, at parity to realised net asset value (RNAV), as it rolls forward its valuation base to FY14F.

The research house said on Monday the stock's near-term share price weakness was a good time to accumulate a property bell-weather ahead of a re-acceleration of property sales.

AmResearch added this was backed by solid unbilled sales of RM4.4bil or 2.6 times FY13 property revenue, and a robust three-year EPS CAGR of 12%," it said.

Mah Sing had a strong finish for the year, posting a FY13F net profit of RM281mil that surpassed FY12's earnings by 22% on-year on the back of a 13% on-year jump in revenue. It declared a first and final dividend per share (tax-exempt) of 8.0 sen, translating to a yield of 3.8%.

"Assuming a similar payout of 40%, we project forward yields of 5%-6% over the next three years," it said.

AmResearch said Mah Sing met its internal sales target of RM3bil for FY13 (FY12: RM2.5bil). Key projects that contributed include The Meridin@Medini, M Residence@Rawang, Icon City, PJ and M City, Jln. Ampang.

The group added six more value-accretive land with a combined gross development value of RM9.3bil in 2013. This raised its undeveloped landbank's gross development value (GDV) to a healthy RM29bil.

"Moving into FY14F, we expect Mah Sing's pre-sales to accelerate to RM4bil from RM3.2bil a year ago. More importantly, 81% of its residential products would be at attractive price points of RM700,000 and below," it said.

AmResearch said this would be underpinned by Mah Sing's exciting pipeline of new launches, that is Southville City@KL South and D'sara Sentral.

Following the strong success of Savanna Executive Suites, Mah Sing is set to roll out 196 units of Garden Link Homes at Southville City. Over in Johor, Bandar Meridin East could debut in 2Q14. Phase 1 offers affordable homes prices from RM300,000 to RM500,000.
Corporate

STOCK: SIME (4197)

Blog 06 Mar 2014, 9:25:33 AM
[b]Affin Research sees stronger earnings for Sime Darby in FY15-16[/b]

KUALA LUMPUR: Affin Research expects Sime Darby's earnings in the financial years ending June 30, 2015 and 2016 to be higher, underpinned by a strengthening global economy.

It issued the research note on Sime Darby on Monday following the latter's release of its earnings for the first six months ended Dec 31, 2013.

Affin Research said pre-tax profit in 2QFY14 was marginally lower on-year at RM1,002.9mil due to lower contributions from industrial, motor and energy & Utilities were almost offset by higher profit from property.

"On-quarter, however, 2QFY14 PBT surged by 40% due to higher profits from plantation (higher sales volume and crude palm oil), property (higher profit recognition from development in Denai Alam, Nilai Impian and Isola) and motor (improved performance from all operations except Australia/NZ).

The research house said the industrial profit fell 20% due to recognition of disposal gains of RM42mil in 2QFY13 as well as lower equipment deliveries and product support sales," the report said.

"Performance for plantation was affected by lower crude palm oil average selling price (RM2,377 a tonnes versus RM2,432 a tonne in 1HFY13), lower sales volume and a 14.3% decline in FFB production, industrial by lower equipment deliveries and product support sales to the mining sector in Australia," it said.

"While FY14 profit is not as good as we had predicted, we expect FY15-16 profits to be higher as the global economy strengthens. We maintain "Add" rating and target price of RM10.30, based on the market average price earnings of around 15.5 times on our CY15 earnings per share forecast," it said.

Downside risks to its rating include lower economic growth, changes in rules and regulations dampening CPO prices, and higher foreign exchange losses due to currency weakness in key operating countries.
Corporate

STOCK: SCABLE (5170)

Blog 25 Feb 2014, 3:38:15 PM
[b]AmResearch downgrades Sarawak Cable to Hold, lower FV of RM1.70[/b]

KUALA LUMPUR: AmResearch downgrades its call on Sarawak Cable Bhd from BUY to HOLD with a lower fair value of RM1.70 a share from RM2.33 a share previously.

“We have cut our FY13F earnings as we expect further amortisation of intangible assets in 4QFY13,” it said on Monday.

The research house said RM2.4mil was recognised in the preceding two quarters for these assets. We understand that the amortisation relates to projects with contract revenue following its acquisition of Trenergy last year.

“We also tweaked our forecasts for FY14F-FY15F to reflect lower margins, increased competition and a slowdown in near-term job prospects for the group. We also take this opportunity to introduce our FY16F numbers with a forecasted net profit of RM46.6mil or 9.1 sen a share,” it said.

AmResearch said while the FY13F numbers are expected to be weak, it expects earnings to improve in the coming years due to progressive recognition of the 500kV backbone line packages (worth RM620mil) it secured last November.

“We understand that the group would only begin recognising contributions from the 500kV line package from FY14F onwards.

“We have trimmed our new order book assumption for FY14F-FY15F to RM350mil-RM400mil per annum as we foresee a slowdown in new contracts being awarded in the near term,” it added.

The research house also highlighted that it was recently reported that the Sarawak government would go ahead with building the Baram (1,200MW) and Baleh (1,295MW) dams.

However, AmResearch expects both projects to be rolled out only within the next two years. As such, the transmission package could only be dished out earliest in 2016.

“Besides that, we understand that there are plans for a second phase of the 500kV line and another two 275kV lines to link the various growth nodes within SCORE. Nevertheless, Sarawak Cable will be kept busy with the roll-out of the 500kV job.

“Until then, some of the prospective near-term jobs include the Tanjong Manis-Bintulu line. Based on the current price, Sarawak Cable is trading at 9.0 times PE of FY15F earnings,” it said.
Corporate

STOCK: TUNEPRO (5230)

Blog 25 Feb 2014, 3:37:49 PM
[b]RHB Research maintains Buy on Tune Ins[/b]

KUALA LUMPUR: RHB Research said insurer Tune Ins’ FY13 core profit of RM71mil surpassed its and consensus estimates by 113% and 109%.

It said on Tuesday the strong growth in online/travel premiums significantly boosted blended margins.

“For FY14, we believe its fundamentals and expansion plans for its travel business and Malaysian operations will outweigh potential weakness in the first half of 2014 from Thailand’s tourism slump. Maintain BUY with our fair value at RM2.40 (two times FY14F EPS),” it said.
Corporate

STOCK: HOVID (7213)

Blog 25 Feb 2014, 3:37:25 PM
[b]CIMB Research keeps Hovid target price at 43 sen[/b]

KUALA LUMPUR: CIMB Equities Research is maintaining its Add call for Hovid and target price of 43 sen, which is 23.1% above the last traded price of 35 sen.

It said on Tuesday that despite meeting just 39% of its full-year forecast and 33% of consensus numbers, Hovid’s 1HFY6/14 core net profit was broadly in line with expectations as 2H should be stronger due to seasonally higher sales and the weaker ringgit which will boost exports.

“We maintain our Add call, earnings forecasts and SOP-based target price. Increased product registrations in export markets and stronger 2H earnings could spark a re-rating,” it said.

CIMB Research said Hovid's 2Q net profit fell 13% on-year to RM3.7mil because a higher portion of its sales came from lower-margin products. This led to a fall in EBITDA margin from 17.6% a year earlier to 14.4%.

“We suspect that EBITDA margin may also have been crimped by higher operational costs, probably due to the introduction of the minimum wage policy early last year.

“We expect Hovid to report stronger earnings in 2H due to seasonally stronger sales. On top of that, Hovid is a beneficiary of the weak ringgit because half of its revenue is derived from export sales, which are predominantly quoted in US$.

“The ringgit has averaged 3.31 to the greenback year-to-date, 3% weaker than the average in July-December 2013. The company is also actively pushing its export sales by registering its existing products with the health authorities in the export markets.

“It plans to roll out 10-15 products this year, which should expand its existing 400-strong product range by 3-4%. Increased registrations of Hovid's drugs in its export markets will spur demand as more products are made available in these export markets. This will help to widen its profit margin and lead to higher profitability,” it said.

CIMB Research said it likes Hovid's strong long-term earnings growth prospects as the pharmaceutical markets in Malaysia and its key export destinations are set to grow at double-digit rates, driven by ageing populations and greater access to healthcare services and medicines.

Hovid remains its top pick for exposure to the Malaysian healthcare sector. Potential re-rating catalysts are increased product registrations in its export markets and stronger 2H earnings.
Corporate

STOCK: UMWOG (5243)

Blog 25 Feb 2014, 3:36:50 PM
[b]CIMB Research upbeat on UMW Oil and Gas[/b]

KUALA LUMPUR: CIMB Equities Research is upbeat on UMW Oil and Gas on its record finish for FY13 with core net profit coming in at our forecast and 97% of consensus.

It said on Tuesday the strong financial performance was underpinned by higher charter rate for Naga 2, higher utilisation for Naga 3 and a full-quarter contribution from Naga 4.

“These factors are behind UMW-OG’s fiery record finish for FY13 with core net profit coming in at our forecast and 97% of consensus. In the months ahead, we expect active newsflow as the company secures first contracts for Naga 6, Naga 7 and Naga 8, and a second contract for Naga 5.

“We continue to value UMW-OG at 22.5 times CY15 P/E, a 40% premium over our target market P/E but still within the historical P/E range of the oil & gas big caps. We maintain our contrarian Add call, with the aggressive fleet expansion as a potential re-rating catalyst,” it said.

CIMB Research pointed out an improved charter rate for Naga 2, higher utilisation of Naga 3 and a full-quarter contribution from Naga 4 in 4Q pushed UMW-OG's FY13 core net profit up a blistering 120% on-year to a record RM159mil, after stripping out RM31m gains from a property sale in Singapore.

“Drilling services, which consist of the Naga 1 semi-sub and the Naga 2, Naga 3 and Naga 4 jack-ups, contributed 93% to group pretax,” it said.

CIMB Research said riding on the high demand for jack-ups in Malaysia and other markets in Southeast Asia, UMW-OW is aggressively adding new assets.

It pointed out Naga 5 and Naga 8 are under construction at Keppel's yard in Singapore. Naga 8, which is slated for delivery in Sep 2015, is still without a contract, but Naga 5, which will be rolled out in May 2014, has been contracted to work for Nido Petroleum in the Philippines starting from June 2014 under a US$7mil six-week contract.

Naga 6 and Naga 7 are under construction at China Merchants Heavy Industry’s yard in Shenzen for delivery in September 2014 for Naga 6 and December 2014 for Naga 7. Naga 6 and Naga 7 have yet to be contracted.

“In Malaysia, there are currently 18 jack-ups, of which the two locally-owned ones are Naga 3 and Naga 4. Of the 16 foreign-owned ones, the contracts for 10 will expire this year. This will provide significant job opportunities for UMW-OG,” it pointed out.
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