Beruflich Dokumente
Kultur Dokumente
23 January 2017
Great oaks from little acorns grow
The year 2017 will be fairly choppy. One key reason is the global political risk especially in the developed world,
namely Europe. Outcomes from the elections in Netherland, France and Germany could change the landscape of
the European Union (EU). Political noise is expected to emerge from elections in emerging countries.
Besides, central banks in advanced economies could gradually be coming to grips that the extremely loose
monetary policy is somewhat ineffective in boosting growth and/or inflation. They should start leaning towards a
more balanced scenario in 2017, suggesting a period of gradual normalisation of the monetary policy. In other
words, the emphasis on monetary policy is fading, overtaken by increasing call for fiscal measures to take up the
slack. Countries like China and Japan, to name a few, have announced or implemented spending programs. The
US is also expected to focus on fiscal stimulus through greater government and infrastructure spending.
Furthermore, global growth has disappointed since the Global Financial Crisis, and more so in recent years. We
expect a modest global growth in 2017 of 3.3% from 3.1% in 2016, and should improve to 3.7% in 2018. With the
global output gap exhibiting a smaller contraction, it is poised to return into positive territory by 2018. However, the
shift will not be smooth and/or evenly distributed.
With the view of modest global economic growth and low inflation, government bond yields will likely hover around
current levels in the near term. The key challenge in 2017 is to find yield at a reasonable risk. Investors could
potentially be presented with better yield levels to accumulate government bonds as economic optimism revives
on fiscal spending. But not all countries will be on the same page as some countries will be penalized, and will
need higher yields due to currency depreciation and/or government spending in countries with weak institutions
that will result in inflationary pressure. Odds for higher yields will stem from higher inflation, higher economic growth,
and the central banks repricing their monetary policy by moving away from the easy policy.
Meanwhile, fair optimism can be painted for the US and global equity markets in 2017. While it may be late in the
business cycle, the global economy and markets should continue to trail forward with the strength of the US to
compensate for the weakness from Japan and the Eurozone. The Asia ex-Japan region also remains favourable
given the income prospects, stable GDP growth, growing consumer class and benefits from a commodity play.
Looking at Malaysia, the economic growth will continue to be supported by domestic demand, primarily from the
private sector with public sector consolidating in line with the Government's efforts. Exports will complement the
economic growth with steady demand and stable commodity prices. GDP should expand by 4.5% in 2017 and
4.8% in 2018 from 4.2% in 2016. This is after taking into consideration of public debt, household debt and
consolidation of the fiscal deficit.
While the impact of higher US Treasury yields on the local Malaysian Government Securities (MGS) could be
muted and the KLCI should improve. However, the local bourse is expected to remain choppy in the 1H2017 owing
to noises from the external front, stronger USD and weaker yuan which will weigh on ringgit and potential lowering
of MSCI weighting on KLCI should the China shares be included.
Yet there is room for the KLCI to improve in the 2H2017. Support will come from (1) cyclical upturn in corporate
earnings, projected to grow by +7.6% on the back of a credible 4.5% GDP growth in 2017; (2) BNM’s
accommodative monetary policy with the OPR likely to remain at 3.00%; (3) a still favourable emerging-market
outlook with healthy growth, attractive yields and undervalued currencies that should attract portfolio investments;
(4) benefitting from firmer commodity prices; and (5) weak ringgit against the USD which we project at 4.48 as our
2017 full year average. Hence, our end-2017 KLCI target is pegged at 1,745 points.
Looking at the small and mid-cap stocks, we believe this segment will be able to offer attractive investment
opportunities as well as capture additional returns. Room for this segment to perform well is on our cards partly
supported by sustainable growth. Hence, our maiden list of 40 small and medium-sized public listed companies.
Companies were derived based on their average market capitalisation of below RM2.0bn with the ingredients to
enjoy sustainable long-term growth. Our list of companies are from automotive, insurance, construction, property
development, property investment, oil & gas, retail, food & beverages, manufacturing, and technology sectors of
the economy. Although some of these sectors are cyclical in nature, the companies in our list are well-equipped to
weather the economic cycle and emerge as the outperformers in their respective industries, with potential to
become regional champions in the future.
Table of Contents
7‐Eleven Malaysia Holdings ............................................ ........................................................................ 1
Al‐‘Aqar Healthcare REIT .......................................................................................................................... 2
Allianz Malaysia ....................................................................................................................................... 3
APM Automotive ..................................................................................................................................... 4
Ahmad Zaki Resources ............................................................................................................................. 5
Datasonic Group ...................................................................................................................................... 6
EG Industries ............................................................................................................................................ 7
Ekovest ..................................................................................................................................................... 8
GD Express ............................................................................................................................................... 9
George Kent ........................................................................................................................................... 10
GHL Systems .......................................................................................................................................... 11
Globetronics Technology ....................................................................................................................... 12
Glomac ................................................................................................................................................... 13
Hektar REIT ............................................................................................................................................ 14
Hua Yang Industries ............................................................................................................................... 15
JCY International .................................................................................................................................... 16
Kawan Food ........................................................................................................................................... 17
London Biscuits ...................................................................................................................................... 18
Matrix Concepts ..................................................................................................................................... 19
MKH ....................................................................................................................................................... 20
MRCB‐Quill REIT ..................................................................................................................................... 21
OldTown................................................................................................................................................. 22
PECCA Group.......................................................................................................................................... 23
Pintaras Jaya .......................................................................................................................................... 24
Power Root ............................................................................................................................................ 25
Prestariang ............................................................................................................................................. 26
Protasco ................................................................................................................................................. 27
Sasbadi Holdings .................................................................................................................................... 28
SYF Resources ........................................................................................................................................ 29
Tambun Indah Land ............................................................................................................................... 30
Thong Guan Industries ........................................................................................................................... 31
TRC Synergy ........................................................................................................................................... 32
Tropicana Corporation ........................................................................................................................... 33
Tune Protect .......................................................................................................................................... 34
Uchi Technologies .................................................................................................................................. 35
Unisem ................................................................................................................................................... 36
Uzma ...................................................................................................................................................... 37
VS Industry ............................................................................................................................................. 38
Yee Lee Corporation .............................................................................................................................. 39
YTL Hospitality REIT .............................................................................................................................. 40
7-ELEVEN MALAYSIA
(SEM MK Equity, SEVE.KL)
1
AL-’AQAR REIT
(AQAR MK EQUITY, Alqa.KL)
2
ALLIANZ MALAYSIA
(ALLZ MK EQUITY, AINM.KL)
Company Profile
Price RM10.20
Fair Value RM11.30 Allianz is a composite insurer involved in both general and life insurance.
52-week High/Low RM10.91/9.58
Allianz General was ranked 1st in 2015 for general insurance with a
market share of 12.4% by gross written premium (GWP), ahead of
YE to Dec FY15 FY16F FY17F AmGeneral and MSIG. Meanwhile for life insurance, Allianz Life was the
5th largest with a market share of 7.3% in terms of GWP. Allianz General
Revenue (RMmil) 4,519.5 4,612.3 4,720.0
Core net profit (RMmil) 308.9 311.6 331.5 has combined ratio of 89.9% for 9MFY16 (Industry for 2015: 88.3%) and
FD Core EPS (Sen) 89.4 90.6 96.3 the ratio has been consistently kept below 90.0% for the past 5 years.
FD Core EPS growth (%) 4.0 1.3 6.4 Conservative investment portfolio with investments mainly in government
DPS (Sen) 70.0 70.0 70.0 bonds (Allianz General: 52.4% and Allianz Life: 46.6% of total investment
PE (x) 11.4 11.3 10.6
Div yield (%) 6.9 6.9 6.9 assets). Minimal investment in equities (Allianz General: Nil and Allianz
Life:10.8% of its total investments).
Stock and Financial Data
Highlights
Shares Outstanding (million) 172.7 Stronger growth in premiums for life than general insurance. Allianz
Market Cap (RMmil) 1,761.5
Life's GWP expanded by a 5 year CAGR (2011-2015) of 14.0%, faster than
FD Book value (RM/share) 7.6
P/BV (x) 1.3 the 5 year CAGR (2011-2015) GWP of Alliance General of 11.0%. Focus
ROE (%) 12.6 for life insurance will be on investment linked products which will yield
Net Gearing (%) Net cash higher margins. Allianz is the largest for motor insurance, hence the
Major Shareholders Allianz SE (66.4%)
persistent slowdown in car sales as well as the gradual liberalisation of fire
Pertubuhan Keselamatan Social (3.1%) and motor tariffs will likely raise competitive pressure for its general
Public Regular Savings (1.9%) insurance business in the near term. Nevertheless, we expect the stronger
performance of life insurance to offset the slower earnings growth of its
Free Float 27.0
Avg Daily Value (RMmil) 0.9 general insurance business. The 10 year bancassurance deal with CIMB
will expire on August 2017.
Price performance 3mth 6mth 12mth
Diversified business portfolio with consistent underwriting profit. The
Absolute (%) 1.6 2.6 0.1 Group has a diversified portfolio mix for general insurance with motor, fire,
Relative (%) 1.2 1.0 (0.7) personal accident & health as well as marine insurance comprising 59.3%,
18.5%, 6.4% and 3.4% respectively of Allianz General's gross premiums.
The Group consistently reported underwriting profits for its life and general
insurance business.
Price RM3.46
Fair Value RM3.40 Company Profile
52-week High/Low RM3.90/RM3.30 APM Automotive is one of the largest manufacturers of automotive
parts in the local market with products that include suspension
YE to Dec FY15 FY16F FY17F parts, seats, interior and exterior plastics, heat exchange and
electrical components. APM is led by CEO Low Seng Chee, who
Revenue (RMmil) 1152.8 1175.9 1199.3 has had more than 30 years of experience in automotive
Core net profit (RMmil) 60.5 61.7 62.9 component manufacturing, auto assembly and retail.
Core EPS (Sen) 30.9 31.5 32.1
Core EPS growth (%) (38.6) (0.02) (0.02)
DPS (Sen) 19.5 19.8 20.8 Highlights
PE (x) 11.2 12.7 10.0
Div yield (%) 5.6 5.6 5.6 Pegged to auto market performance. APM has seen topline
erosion due to continued price pressure, lower off-take from OEMs
Stock and Financial Data for certain car models and lower sales from the domestic
replacement market. More significantly, higher raw material prices
Shares Outstanding (million) 195.6 due to a weaker ringgit and a lower production volume amid
Market Cap (RMmil) 705.6
Book value (RM/share) 6.06 overheads staying relatively fixed has lowered profit.
P/BV (x) 0.6 Emphasis on regional expansion. APM has identified regional
ROE (%) 4.1 expansion as a cornerstone of its long-term plan for growth. There is
Net Cash (%) (28.7) an urgent need to diversify its revenue streams due to shrinking
Major Shareholders Tan Chong Consolidated SdnBhd(37.5%) margins, increasing competition in replacement markets, and the
Wealthmark Holdings SdnBhd(7.8%) move by OEMs to source from beyond Malaysia. APM last October
Employees Provident Fund (EPF) (6.6%) announced an RM1.5bil sukuk programme for corporate purposes
and refinancing.
Free Float 26.1
Avg Daily Value (RMmil) 0.2 Net cash position and stable dividend payout. APM remains in a
strong net cash position (of RM224mil as of end-Sept 2016, circa
Price performance 3mth 6mth 12mth 30% of market cap). It had a payout of 36% for FY14, after 72% in
FY13 which included special dividends. Payout for 9MFY16 was 30%
Absolute (%) 1.8 (4.6) (5.9)
Relative (%) 2.8 (4.0) (2.5) of net profit.
Valuation
We value APM Automotive at RM3.40 based on an FY17F PE of
10x - below its historical 3-year average of 12.7x. It is currently
trading at an FY17F PE of 10.3X.
Technical View
APM is building base at RM 3.30- 3.48 levels after 3 years of
downtrend. APM has to successfully break and stay at its 200 days
moving average at RM3.60 prior confirmation of a trend reversal.
4
AHMAD ZAKI
(AZR MK Equity, AZRB.KL)
Price RM0.64
Fair Value RM0.74 Company Profile
52-week High/Low RM0.75/RM0.54
A contractor first listed on the now-defunct Second Board in 1999
and subsequently transferred to the Main Board in 2003, Ahmad
YE to Dec FY15 FY16F FY17F Zaki is also engaged in oil & gas support services, property
development/management and plantation. For 9MFY16,
Revenue (RMmil) 715.0 1,125.7 1,294.6
Core net profit (RMmil) 22.9 25.2 29.0 construction contributed >50% of total PBT, with the balance
Core EPS (Sen) 4.7 5.2 6.0 coming from its oil & gas and property businesses. Its plantation
Core EPS growth (%) 42.5 10.6 15.4 unit was in the red due to the relatively young age profile of the
DPS (Sen) 2.0 2.0 2.0
trees. At the helm of the company is group managing director Dato’
PE (x) 13.5 12.3 10.7
Div yield (%) 3.1 3.1 3.1 Wan Zakariah bin Haji Wan Muda.
Ahmad Zaki has been on a downtrend since May last year. It formed
triangular breakout in Dec 2016 but continued to stay below its 200
MA. Ahmad Zaki may need to convincingly break and stay at RM0.66
Source: AmInvestment Bank Bhd to confirm the trend of reversal.
5
DATASONIC GROUP
(DSON MK Equity, DSON.KL)
Price RM1.22
Fair Value RM1.71 Company Profile
52-week High/Low RM1.62/RM1.04
Datasonic Group (Datasonic) is engaged in the provision of
information and communications technology (ICT) solutions. This
YE to Mar FY16 FY17F FY18F includes smart card personalisation, customised solutions for
government, financial and commercial sectors, web-enabled i-Visa
Revenue (RMmil) 241.3 288.3 325.8
Core net profit (RMmil) 63.0 80.7 91.2 and e-Visa solutions, integrated security surveillance, Intelligent
Core EPS (Sen) 4.7 5.9 6.8 Transport Systems (ITS) and Total Hospital Information Systems.
Core EPS growth (%) 6.1 27.2 13.0
DPS (Sen) 3.0 3.0 4.0 Highlights
PE (x) 26.1 20.4 18.0
Div yield (%) 2.5 2.5 3.3 Stable cash flows from recurring need for chips. Datasonic is
currently responsible for the supply of 12 million MyKad raw cards
Stock and Financial Data and consumables until 31st December 2019. In addition, the
company has also secured contracts from the Home Affairs Ministry
Shares Outstanding (million) 1350.0 to supply 12.5 million passport chips and 13.4 million passport
Market Cap (RMmil) 1647.0
Book value (RM/share) 0.19 booklets until 30th November 2021. In total, the 3 awards command
P/BV (x) 6.4 a combined contract sum of RM803mil. This ensures stable cash
ROE (%) 30.7 flows and good earnings visibility at least for the next 3-5 years.
Net Gearing (%) 44.8
Early foothold in ITS. Datasonic has been investing in integrated
Major Shareholders Ben Ben Chew (24.9%) security surveillance and ITS in recent years to ready itself for
Bin Noordin Abu Hanifah(15.1%)
Gerbang Subur Sdn Bhd (9.7%)
increased surveillance to fight crime rates and traffic breaches. In
Penang, Datasonic captures over 90% market share in municipal
Free Float 34.3 closed-circuit television (CCTV) projects, supplying and installing a
Avg Daily Value (RMmil) 3.6 total of 583 High Definition CCTV cameras and 8 surveillance control
Price performance 3mth 6mth 12mth centres. In Malaysia, we note that surveillance CCTV penetration
remains low. Assuming 20,000 - 30,000 potential points for CCTV
Absolute (%) (14.0) 2.3 (13.2) installation in Klang Valley, we estimate these jobs to be worth
Relative (%) (14.3) 0.7 (14.1) RM2.4bil, which is 1.5x the group's market capitalisation.
Rising biometric applications. We understand that Datasonic is
also involved in the provision of biometric solutions (fingerprint, facial
recognition and iris scan) in relation to border control, smart access
control and other security controls. With the rise of security standards
and concerns, we think Datasonic could start to see meaningful
contribution from this area. However, we cannot quantify the impact
yet due to the lack of details.
Valuation
We value Datasonic at RM1.71 based on 26x CY17F EPS, which
represents its 3-year historical average.
Technical View
DSONIC’s profile diagram shows the stock mostly transacted in
Source: AmInvestment Bank Bhd between RM1.23 to RM1.40 in the past 10 months. Outside this
range, the next resistance is at RM1.60 and the next support is at
RM1.12. This indicates traders can buy at near RM1.12 and take
profit near RM1.60.
6
EG INDUSTRIES
(EG MK Equity, EGCM.KL)
Price RM0.86
Company Profile
Fair Value RM0.93
EG Industries (EG) is a leading electronics manufacturing services
52-week High/Low RM1.26/RM0.81
(EMS) provider, specialising in original equipment manufacturing
(OEM) and original design manufacturing (ODM). A one-stop provider,
YE to Jun FY16 FY17F FY18F the company provides a full suite of solutions which include tooling,
plastic injection. printed-circuit-board assembly (PCBA) and final
Revenue (RMmil) 712.7 872.0 988.8
Core net profit (RMmil) 9.8 21.7 27.0 assembly for a diverse global clientele. WE Holdings Ltd has an
Core EPS (Sen) 4.6 10.3 12.8 11.8%-indirect stake in EG via Singapore-headquartered Jubilee
Core EPS growth (%) (17.4) 121.9 24.2 Industries Holdings Ltd.
DPS (Sen) 0.0 0.0 0.0
PE (x) 18.6 8.4 6.7 Highlights
Div yield (%) 0.0 0.0 0.0
Transformation on the right track. We like EG for its strategy of
Stock and Financial Data continuously moving up the value chain as an EMS provider. From a
predominantly PCBA-oriented business, EG has ventured into box-build
Shares Outstanding (million) 211.3 and is now looking to offer "vertical-integration plus" (VI-plus) services.
Market Cap (RMmil) 180.6
Book value (RM/share) 1.17
This includes distribution services in the Asian region and a potential
P/BV (x) 0.7 plan to partner with or acquire an industrial design firm to enhance its
ROE (%) 10.1 ODM capacities.
Net Gearing (%) 68.6
EG plans to tap into the marketing expertise and distribution network of
Major Shareholders Jubilee Industries Holdings Ltd(11.8%) WE Holdings Ltd to offer distribution services to its customers. For
CIMB Principal Asset MgmtBhd(8.8%)
starters, it is now the sole distributor for Flic in Asia. By offering
Yeok Kian Tea (4.8%)
increasingly integrated services up and down the supply chain, we
Free Float 67.7 believe this would help EG set itself apart from other EMS suppliers and
Avg Daily Value (RMmil) 1.8 remain relevant to customers seeking simplification in outsourcing.
Price performance 3mth 6mth 12mth Rising box-build orders to drive growth. EG recently completed
construction of its new factory to expand its box-build segment and set
Absolute (%) 1.8 0..0 (22.3)
Relative (%) 2.8 0.6 (18.9) up its own injection moulding facilities. The company is targeting to
increase the revenue share of box-build segment to 30% in FY17F (from
18% in FY16), which would help drive better margins going forward due
to its higher value-add . Margin improvement was already evident in
1QFY17, where core EBIT margin rose 0.32%ppt from a year ago due to
increased box-build volume. As distribution revenue gather pace over
the next few years, we expect this to help buoy margins.
Valuation
We value the stock at a fully-diluted fair value of MYR0.93, based on
10x P/E for CY17F EPS, which is a slight discount to its peers' due to
its smaller earnings base. However, we highlight that any potential
rights issue or private placement (according to a local newspaper
report) may lead to EPS dilution.
Technical View
Source: AmInvestment Bank Bhd EG has been trading within a tight range of RM0.81 to RM0.90 in the
past 10 months with generally declining volume. However, there was a
rise in volume in December 2016. If market interest can pick up further,
EG could retest the RM0.90 resistance in the near-term. The next
resistance above the trading range is at RM1.00 and the next support
below the range is at RM0.76.
7
EKOVEST
(EKO MK Equity,EKOV.KL)
Stock and Financial Data Strong earnings visibility. Ekovest's earnings visibility is strong,
underpinned by an outstanding construction orderbook we estimate at
Shares Outstanding (million) 855.4 RM13bil (including RM3.7bil from DUKE3 and RM6.3bil from
Market Cap (RMmil) 2,061.5 DUKE2A), recurring toll road profit and unbilled property sales
Book value (RM/share) 1.59 reported at RM576m from two mixed developments, namely the
P/BV (x) 1.5
RM2.1bil EkoCheras in Cheras and RM610mil EkoTitiwangsa along
ROE (%) 15.2
Net Gearing (%) 152.2 Jalan Pahang, Kuala Lumpur.
Major Shareholders Kang Hoo Lim (20.2%) DUKE: two bites on the same cherry. Ekovest struck gold with the
Kota JayasamaSdnBhd (13.0%) RM1.1bil DUKE - a 18km KL city bypass located between Middle Ring
Ekovest Holdings SdnBhd (12.2%) Roads 1 & 2, opened to traffic in 2009. The viability of DUKE has
provided impetus for the development of DUKE2 (RM1.2bil, 16km,
Free Float 41.4
Avg Daily Value (RMmil) 2.2 completing 1H2017), DUKE3 (RM3.7bil, 50km, completing 2020) and
DUKE2A (RM6.3bil, 75km, completing 2023). Ekovest gets "two bites
Price performance 3mth 6mth 12mth from the same cherry" from these bypass projects - construction profits
and the DCF value of the concessions. Already, Ekovest is selling a
Absolute (%) 26.2 60.7 129.4
Relative (%) 27.2 61.3 132.7 40% stake in DUKE and DUKE2 to EPF for RM1.13bil that will
translate to a RM764mil "balance sheet gain on disposal" or
89sen/share gains. Ekovest has made known its intention to distribute
RM245mil or 29sen/share back to the shareholders.
River of Life: more jobs. Ekovest has bagged more works from River
of Life (RoL) - a government initiative to clean up the Klang river and
redevelop a 10.7km stretch along the river in downtown Kuala Lumpur.
In 4Q2016, it secured two RoL contracts worth a total of RM413mil, in
addition to the first contract worth RM164mil it won in 2014.
Valuation
We value Ekovest at RM2.43 based on 15x FY18F EPS, in line with
our benchmark 1-year forward target P/E of 13-15x for Mid-cap
construction stocks.
Technical View
Source: AmInvestment Bank Bhd
Ekovest started its uptrend in early 2016 and has formed triangular
breakout in September 2016. The uptrend remains intact and
supported at confluence of multiple support levels – RM2.22–RM2.32
which provides an opportunity for accumulation.
8
GD EXPRESS
(GDX MK Equity, GDEX.KL)
Going Places
Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2025)
Price RM1.69
Fair Value RM1.88 Company Profile
52-week High/Low RM1.80/RM1.46
GD Express Carrier Bhd (GDEX) is a local express carrier company
with core operations in last mile express delivery and logistics
YE to Jun FY16 FY17F FY18F operations. GDEX has the second largest market share in the
parcel delivery space, behind Pos Laju. The company was listed on
Revenue (RMmil) 219.8 255.8 305.2
Core net profit (RMmil) 34.4 40.3 47.9 the ACE Market in 2005 and subsequently transferred to the Main
Core EPS (Sen) 2.7 2.8 3.2 Market in 2013. At the helm of the company is Teong Teck Lean,
Core EPS growth (%) 9.5 3.7 14.3 who is the Managing Director/Group CEO and has a 37.98% stake
DPS (Sen) 1.0 2.0 2.4
in the company. Yamato Group is the second largest shareholder of
PE (x) 63.5 60.4 52.8
Div yield (%) 0.6 1.2 1.4 GDEX (22.84%), followed by Singapore Post (11.17%).
Valuation
We value GDEX at RM1.88 based on a discounted cash flow (DCF)
method.
Technical
9
GEORGE KENT
(GKEN MK Equity, GKMS.KL)
A "Rail" Player
Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2293)
Price RM3.06
Fair Value RM3.22 Company Profile
52-week High/Low RM3.11/RM1.14
Listed on Main Board in 1974 with a core business in the
manufacture of water meters, George Kent has over the years
YE to Jan FY16 FY17F FY18F expanded into the construction of water infrastructure (Sg Selangor
Water Supply Scheme Phases 1 & 3 and Pahang-Selangor Inter-
Revenue (RMmil) 536.2 546.4 628.4
Core net profit (RMmil) 50.1 75.1 86.3 state Raw Water Transfer), rail infrastructure (system works for
Core EPS (Sen) 13.3 20.0 23.0 LRT2 and MRT2, and project delivery partner (PDP) role for LRT3)
Core EPS growth (%) 78.3 50.4 15.0 and hospitals (Kuala Lipis hospital, Pahang and TanjungKarang
DPS (Sen) 5.6 5.6 5.6
hospital, Selangor). At the helm of the company is chairman and
PE (x) 23.0 15.3 13.3
Div yield (%) 1.8 1.8 1.8 controlling shareholder Tan Sri Dato' Tan Kay Hock.
Valuation
We value Gearge Kent at RM3.22 based on 14x FY18F EPS, in line
with our benchmark 1-year forward P/E of 13-15x for mid-cap
construction stocks.
Technical View
10
GHL SYSTEM
(GHLS MK Equity, GHLS.KL)
Absolute (%) 7.4 (5.9) (9.3) BNM pushes for higher card utilisation – as it is more cost-effective
Relative (%) 8.4 (5.3) (6.0) than paper-based payments, which depend on human processing.
Initiatives include Payment Card Reform Framework (PCRF)
announced in 2014 and ‘Chip and Pin’ to be implemented in 2017. The
PCRF reduced debit card transaction costs for merchants. On the other
hand, the ‘Chip and Pin’ will greatly improve payment security. These
actions encourage both merchants and consumers to expand adoption
of card payment.
Valuation
11
GLOBETRONICS
(GTB MK Equity, GNIC.KL)
Absolute (%) (0.9) 15.3 (38.0) USD strength magnifies growth. Given that 60-70% of Gtronic's
Relative (%) (1.2) 13.7 (38.8) revenue exposure is in the USD, our USD/MYR assumption of 4.48
for 2017F vs. 4.13 for 2016F amplifies revenue growth in FY17F from
28% to 35%. Based on our sensitivity analysis, a 5% appreciation in
the USD against the MYR would increase Gtronic's net profit by 3%.
Valuation
We value Gtronic at RM3.70 based on 16x FY17F EPS, which
represents its 5-year historical average.
Technical View
The stock has been trading within a bear channel in the past three
months with thin volume. We expect GTRONIC to continue trading
within the bear channel with the next support at RM3.08.
12
GLOMAC
(GLML MK Equity, GLOM.KL)
13
HEKTAR REIT
(HEKT MK EQUITY, HEKR.KL)
14
HUA YANG
(HYB MK Equity, HUAY.KL)
Technical View
Source: AmInvestment Bank Bhd
Hua Yang has been on downtrend since 2013. Share price of Hua
Yang is oversold and forming consolidation base at RM1.06 levels. .
With no signs of reversal, share price of Hua Yang is likely to stay at
this level.
15
JCY INTERNATIONAL
(JCYH MK Equity, JCYI.KL)
Company Profile
Price RM0.50
Fair Value RM0.45 Established in 2005, JCY manufacture hard disk drive (HDD)
52-week High/Low RM0.80/RM0.48 components for global storage original equipment manufacturers
(OEM) like Western Digital and Seagate. JCY has production plants
YE to Sep FY16 FY17F FY18F in Malaysia, Thailand and China and produces base plates, top
covers, actuators and antidiscs used in HDD.
Revenue (RMmil) 1740.5 1,715.9 1,707.7
Core net profit (RMmil) (8.2) 89.2 78.4 Highlights
Core EPS (Sen) (0.4) 4.2 3.9
Core EPS growth (%) n/a n.a. (7.1) Facing structural headwinds. Global HDD sales have been on a
DPS (Sen) 6.8 5.0 5.0 structural downtrend since 2011, driven by shrinking worldwide PC
PE (x) (125.0) 12.3 13.2 shipment as consumers shift to smartphone and tablets, which
Div yield (%) 2.6 9.7 9.7 usually use solid state drives (SSD). Furthermore, adoption of cloud
Stock and Financial Data
storage and new technology like 3D NAND is undermining the
demand for HDD.
Shares Outstanding (million) 2060.5
Market Cap (RMmil) 1030.1
Growth in enterprise storage does not help. Despite growing
Book value (RM/share) 0.55 demand for HDD used in enterprise storage like servers, this is not
P/BV (x) 0.9 enough to offset the declining trend in PC and this segment
ROE (%) (0.7) accounts for less than a quarter of total HDD units sales.
Net Gearing (%) Net Cash Furthermore, rise in enterprise storage is slow as many enterprise
users migrate from onsite server to centralised cloud server to
Major Shareholders YKY Investments Ltd (73.6%)
improve cost efficiency.
CIMB Bank Bhd(2.8%)
Bank Of New York Mellon (1.4%)
Positive PC shipment data. Nevertheless, the pace of decline in
Free Float 24.7 HDD shipment has been slowing and the latest data in 3Q2016
Avg Daily Value (RMmil) 1.2 showed that HDD shipments fell 4.0% year-on-year, which was the
smallest decline in two years.
Price performance 3mth 6mth 12mth
Automation to improve efficiency. JCY’s profit margin is volatile
Absolute (%) (3.4) (12.6) (36.4)
Relative (%) (2.3) (12.0) (33.0) due to its high operating leverage business model and cyclical
revenue trend. Hence, JCY has sought to improve its profitability
through automating its manufacturing process. This may help to
limit further downside to JCY’s margin, at least for the short-term.
Valuation
The company is currently trading at 1x FY17F P/B and FY17F
dividend yield at 9.7%. Our fair value for JCY is RM0.45 derived
from Gordon Growth Model, based on FY17 DPS of 5 cent, 10%
discount rate and negative long term dividend growth rate of -1%.
Technical View
Source: AmInvestment Bank Bhd
JCY is in a long-term downtrend as it is trading below 200MA and a
downtrend line. JCY has broken the previous support level of
RM0.50 and the next supports are at RM0.48 and RM0.40.
16
KAWAN FOOD
(KFB MK Equity, KWNF.KL)
Valuation
Our fair value of MYR4.40 is based on an FY17F P/E of 25.0x. It is a
slight discount of 10% to the average of F&B peers in Malaysia.
While its peers are considerably bigger, Kawan offers greater
earnings growth going forward with an 2-year EPS CAGR of 21%.
Technical View
Kawan is in a long-term uptrend but unable to break above RM4.00
Source: AmInvestment Bank Bhd
after two attempts in the past one year. The stock has been
consolidating between RM3.75 to RM4.00 in the past 3 months.
Given the benefit of long-term uptrend, Kawan could retest the High
at RM4.00 in the near-term and eventually break this long-term
resistance.
17
LONDON BISCUITS
(LBB MK Equity, LONB.KL)
Company Profile
Price RM0.74
Fair Value RM0.96 London Biscuits Berhad produces and trades confectionery, its four
52-week High/Low RM0.85/RM0.71
main categories are cakes, candy, potato chips and snacks.
Specifically, these products include corn snacks, dip cup chocolates,
YE to Jun FY16 FY17F FY18F cupcakes, layer cakes and Swiss rolls. London Biscuits holds a
19.7% stake in Khee San Berhad, a fellow public listed confectionery
Revenue (RMmil) 436.5 469 502
company, which brands include Fruit Plus.
Core net profit (RMmil) 18.6 18.5 24.0
Core EPS (Sen) 10.0 9.9 12.8 Highlights
Core EPS growth (%) 19.3 (1.0) 29.7
DPS (Sen) 0.0 0.0 0.0 Resilient demand but challenging environment curtails earnings
PE (x) 7.4 7.4 5.7
outlook. London Biscuit’s business commands resilient demand, with
Div yield (%) 0.0 0.0 0.0
revenue registering positive growth YoY over the 10 years to FY2016
Stock and Financial Data while growing at a CAGR of 15.0%. However, costly inputs and a
competitive environment have curtailed its gross margins resulting in
Shares Outstanding (million) 186.5 earnings growing 2.4% over the same period. The confectionery may
Market Cap (RMmil) 138.0 face further cost pressures with unfavourable outlook on two of its
Book value (RM/share) 2.16
P/BV (x) 0.3 main input costs, sugar and flour. Positively, we take comfort from its
ROE (%) 4.7 geographically well diversified customer base, with exports accounting
Net Gearing (%) 45.3 close to 50% of total revenue. Exports are well spread between South
East Asia, Asia Pacific and Middle East Region. Alongside being an
Major Shareholders MeileelanusaSdnBhd(21.5%)
RHB Asset Management SdnBhd(5.8%) exporter, London Biscuit is net beneficiary of a stronger USD too.
Employees Provident Fund (EPF) (3.6%)
Heavy capex spending likely to diminish. London Biscuit has
Free Float 69.1 consistently ploughed an average of 20% of revenue into capex over
Avg Daily Value (RMmil) 0.1 the past 10 years. The company has previously executed horizontal
acquisitions with confectionaries, Kuinos and Khee San while
Price performance 3mth 6mth 12mth
expanding capacity. We gather existing utilisation rates for its various
Absolute (%) 1.4 (0.7) (10.8) production lines range between 40% and 70%, with the higher margin
Relative (%) 2.4 0.0 (7.5) potato chip product line running close to 50%. The underutilised
capacity abates the need for capex on heavy capacity addition in the
near term.
Valuation
Our fair value of MYR0.96 is based on a P/E peg of 8.5x CY17F,
which is the 3-year average of its historical PE trading band. Its highly
levered balance sheet and shrinking margins justifies its valuations
trading at a discount to its peers which typically command close to
Source: AmInvestment Bank Bhd 15x PER. Despite this, there is upside to its current valuations.
Technical View
In the bigger picture, the stock is making a descending triangle. The
stock could keep consolidating within the triangle and eventually make
a breakout on either direction. The next support is at RM0.65 if a
bearish breakout happens. If LONBISC breaks the trend line
resistance, it could rally to retest the high at RM0.93.
18
MATRIX CONCEPTS
(MCH MK Equity, MATR.KL)
19
MKH
(MKH MK Equity, METR.KL)
Price RM2.87
Fair Value RM3.27 Company Profile
52-week High/Low RM2.93/RM1.98
MKH Berhad (formerly known as Metro Kajang Holdings Berhad)
was founded in 1979 was listed on Bursa Malaysia in 1995. Mainly
YE to Sep FY16 FY17F FY18F a property developer, the group has diversified into oil palm
plantation in Kalimantan, Indonesia, while being involved in
Revenue (RMmil) 1275.1 1396.4 1415.7
Core net profit (RMmil) 205.1 176.8 182.3 property investment, property management, construction, trading
Core EPS (Sen) 48.9 41.9 43.2 and furniture manufacturing activities.
Core EPS growth (%) 135.9 (14.3) 30.0
DPS (Sen) 7.0 8.0 8.0 Highlights
PE (x) 5.9 6.8 6.6
Div yield (%) 2.4 2.8 2.8 Strong sales sustained. Amid the overall market slowdown, MKH
has managed to maintain its FY16 new sales above at a satisfactory
Stock and Financial Data level. It registered RM776.1m of new sales in FY16, mainly due to
encouraging response to its residential developments launched in
Shares Outstanding (million) 419.4 Kajang and Greater Klang Valley with a greater focus on affordable
Market Cap (RMmil) 1204.2
Book value (RM/share) 3.05 housing. Its unbilled sales as at end-Sep 2016 stood at RM800.5m,
P/BV (x) 0.9 which provides strong earnings visibility for FY17.
ROE (%) 17.2
Net Gearing (%) 40.8 Focusing of affordable housing. MKH is launching new projects
with a total GDV of RM1.6bn in FY9/17, focusing on affordable
Major Shareholders Chen Choy & Sons Realty (41.4%) residential projects, with 73% of the new launches located within
Public Bank Group (9.8%)
KooiChiew Chen (2.0%)
Greater KL. With a strong track record in the Kajang / Semenyih
area, we expect MKH’s projects to benefit from the completion of the
Free Float 48.4 MRT Sungain Buloh – Kajang Line in 2017. Beyond FY17, MKH’s
Avg Daily Value (RMmil) 0.9 future projects have in total potential new GDV of RM9bn, providing it
Price performance 3mth 6mth 12mth with a sustained income stream for up to the next 8 years.
Much improved plantation division. MKH owns 18,388 hectares of
Absolute (%) 0.3 18.5 22.5
Relative (%) 1.4 19.2 25.9 “Hak Guna Usaha” in East Kalimantan for oil palm plantation. This
division recorded a much improved performance in FY9/16. Although
revenue inched down 2% YoY due to lower CPO sales volume, core
pre-tax profit improved 219% YoY to RM24.9m. This was mainly due
to improvement in average CPO and palm kernel prices, effective
cost control measures and lower interest expenses.
Valuation
We have an SOP-based fair value of RM3.27 for MKH. MKH’s
earnings visibility is anchored by its twin drivers of property and
plantations divisions.
Technical View
20
MRCB-QUILL REIT
(MQREIT MK EQUITY, MQRE.KL)
21
OLDTOWN
(OTB MK Equity, OLDT.KL)
Successful brew
Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2372)
Stock and Financial Data Opportunities abound in China. China’s coffee consumption of per
capita trails that of Malaysia by 35x while growing 15.5% CAGR between
Shares Outstanding (million) 451.5 2004 and2014. This bodes well for OldTown, including the fact that
Market Cap (RMmil) 857.8 instant coffee makes up 99% of total retail sales, according to
Book value (RM/share) 0.81 Euromonitor. The coffee producer is also buoyed over the sales
P/BV (x) 2.4
distribution switch through eCommerce platforms. We believe it
ROE (%) 15.7
Net Cash (%) 45.2 overcomes issues that previously plagued OldTown: 1) the virtual
platform overcomes physical limitations by leveraging on China’s already
Major Shareholders Old Town International Sdn Bhd (43.7%) established ecommerce distribution network and; 2) elimination of
Franklin Resources (10.5%)
imitated OldTown products restores consumer confidence, which was
Mawer Investment Management (9.5%)
undermined in the past.
Free Float 46.2
Avg Daily Value (RMmil) 0.9 Scale drives margin expansion. OldTown has seen its FMCG segment
PBT margins expand over the past 5 years. It is the result of both
Price performance 3mth 6mth 12mth economies of scale and management’s unrelenting initiatives to improve
profitability. Keeping in mind, revenue could more than double against a
Absolute (%) (4.5) 2.6 25.6
Relative (%) (3.5) 3.2 29.0 marginally higher OH expense base given utilisation rate at its FMCG
production remains at a low 42%.
F&B segment turnaround. We anticipate for its F&B segment to have
bottomed out in FY17. This comes off the back of tough F&B operating
conditions in FY15-16. The recovery alongside broad consumer
sentiment and favourable industry dynamics should prove positive for
OldTown’s F&B segment.
Valuation
Our TP of MYR2.38 is pegged to a FY2018 PER of 16.5x, which in turn
is pegged to a 25% discount to the average of its local FMCG peers. Its
peers are relatively larger and established but OldTown offers
diversified geography earnings base and greater earnings growth. The
stock offers an estimated dividend yield of 3.5% as well.
Technical View
Source: AmInvestment Bank Bhd
OldTown remains in a long-term uptrend as the stock stayed above
200MA. Nevertheless, it is retracing from its previous up-move which
started in June 2016 and has found support at RM1.85 level. If this level
is broken, the next support is at RM1.70. On the other hand, if the
downtrend line is broken, the stock could reverse into an uptrend and
retest the recent high at RM2.07.
22
PECCA GROUP
(PECCA MK Equity, PECC.KL)
Price RM1.62
Company Profile
Fair Value RM1.70
52-week High/Low RM2.04/RM1.47 Pecca Group Bhd (Pecca) makes car seat covers and serves three
different segments within the value chain of the automotive
YE to Jun FY16 FY17F FY18F industry: the Original Equipment Manufacturer (OEM), Pre-Delivery
Inspection (PDI) and Replacement Equipment Manufacturer (REM)
Revenue (RMmil) 126.3 130.1 133.9 segments. It is the dominant player in its sector with a 68% market
Core net profit (RMmil) 14.5 14.9 15.4
Core EPS (Sen) 9.7 9.9 10.3
share in 2015, having built strong relationships with its clients since
Core EPS growth (%) (24.5) 0.03 0.03 its first project from Proton in 2004. Pecca listed in April 2016 and is
DPS (Sen) 2.0 17.3 17.8 led by Datuk Teoh Hwa Cheng, who has 25 years in the leather
PE (x) 16.8 11 10 goods industry.
Div yield (%) 1.2 3.4 4.8
Highlights
Stock and Financial Data
Market leader. It is the dominant player in its sector, which is limited
Shares Outstanding (million) 149.4 to the provision of leather upholstery to locally-assembled passenger
Market Cap (RMmil) 304.6 cars.
Book value (RM/share) 0.56
P/BV (x) 2.9 Strong relationships with clients. Pecca serves the two national
ROE (%) n/a automakers which make up half of Malaysia's annual TIV, in addition
Net Cash (%) (38.9)
to Mitsubishi, Nissan, Hyundai and Toyota. About two thirds of its
Major Shareholders MRZ (45.6%) FY2015 revenue was derived from customers which it has had for at
RHB Asset Management SdnBhd (6.5%) least 6 years. These bonds are paramount in an industry where
Hwa Cheng Teoh (5.5%) barriers of entry are reducing due to fewer tariffs and non-tariff
Free Float 86.3 obstacles, and where there are no long-term contracts.
Avg Daily Value (RMmil) 1.8
Diversified revenue sources. Pecca's core business is in the
Price performance 3mth 6mth 12mth styling, manufacturing, distribution and installation of leather
upholstery for car seat covers to the OEM, PDI and REM segments.
Absolute (%) (15.9) 0.6 (3.0) It also earns about 10% of revenue from supplying leather cut pieces
Relative (%) (14.9) 1.3 0.4
to existing clients in the OEM segment, next to earning marginal
income from the supply of car door trim covers, covers for car
accessories and the service of sewing cut pieces supplied by clients.
Valuation
We value Pecca at RM1.70 based on FY17F PE of 11x at par to
the average for its peers.
Technical View
Pecca has been on a downtrend since November 2016 and is
currently hovering at the strong support level of RM1.55. It is likely to
be stay on range bound levels – RM1.55 to RM1.66.
23
PINTARAS JAYA
(PINT MK Equity, PINT.KL)
Price RM3.52
Fair Value RM4.00 Company Profile
52-week High/Low RM3.65/RM3.01
Pintaras Jaya is one of only a handful of large piling/foundation
specialist contractors in Malaysia. First starting as a private
YE to Jun FY16 FY17F FY18F company in 1989, it was listed on the now-defunct Second Board in
1994 and its listing was subsequently transferred to the Main Board
Revenue (RMmil) 136.9 191.1 229.4
Core net profit (RMmil) 17.8 42.2 50.6 in 1998. At the helm of the company is founder, chairman and
Core EPS (Sen) 10.9 25.7 30.8 managing director Dr Chiu Hong Keong. An engineer by profession,
Core EPS growth (%) (66.1) 135.8 19.8 he has more than three decades of experience in the construction
DPS (Sen) 20.0 20.0 20.0
industry.
PE (x) 32.3 13.7 11.4
Div yield (%) 5.7 5.7 5.7 Highlights
Stock and Financial Data Strong prospects. The prospects for the piling/foundation sector are
strong underpinned by large-scale infrastructure projects (MRT2,
Shares Outstanding (million) 163.5 Pan Borneo highway, SUKE, DASH, LRT3, etc), as well as
Market Cap (RMmil) 576.5
Book value (RM/share) 2.12 affordable housing (particularly, mid-priced and high-rise residential
P/BV (x) 1.7 projects in the urban areas). Typically, piling/foundation works make
ROE (%) 7.0 up about 10-15% of total construction project value.
Net Gearing (%) Net cash
Competition to ease. Pintaras Jaya's focus is largely on
Major Shareholders PintarasBinaSdnBhd (36.5%) piling/foundation works for high-rise property projects that command
Hong Keong Chiu (14.5%)
YokKeeKhoo (6.8%)
better margins versus those for infrastructure projects. With
piling/foundation capacity being soaked up by infrastructure projects,
Free Float 25.7 there is reduced competition for piling/foundation works for high-rise
Avg Daily Value (RMmil) 0.26 property projects in the market - which is positive to Pintaras Jaya.
Price performance 3mth 6mth 12mth Good earnings visibility. Pintaras Jaya's earnings visibility is good.
Its RM130mil outstanding orderbook, coupled with potential job wins
Absolute (%) 2.32 6.82 12.94
Relative (%) 3.35 7.47 16.30 against a backdrop of a buoyant local construction sector, should
keep it busy over the medium term.
Valuation
We value Pintaras Jaya at RM4.00 based on 13x FY18F EPS, at a
slight premium to our 1-year forward target PE of 10-12x for small-
cap construction stocks, to reflect a relatively less competitive piling
segment vis-à-vis general contracting.
Technical View
Pintaras is on range bound with resistance level at RM3.71. Pintaras
has formed higher-low and is likely to form triangular breakout in
2017.
24
POWER ROOT
(PWRT MK EQUITY, POWE.KL)
25
PRESTARIANG
(PRES MK EQUITY, PSTG.KL)
Stock and Financial Data SKIN to beef up future revenue streams. The government recently
approved Prestariang's proposal to implement Sistem Kawalan &
Shares Outstanding (million) 482.7 Imigresen Nasional (SKIN) with the objective to enhance national border
Market Cap (RMmil) 1004.0 security. The 15-year government-led border transformation programme
Book value (RM/share) 0.34 is potentially worth RM3.5bil, with an average annual payment of
P/BV (x) 6.2
ROE (%) 6.3 RM295mil commencing on the full commissioning of the system (in year
Net Cash (%) 73.9 4). This represents 2.5x-3.7x the company's revenue of RM80-120mil in
the past 3 years.
Major Shareholders Ekohati (20.7%)
Kumpulan Wang Persaraan (11.9%) ESBLA in the offing. Prestariang has introduced an initiative that
AIA Bhd (9.5%) combines digital technology with traditional teaching and learning aids
Free Float 43.1 to provide induction training and mentoring of teachers for science,
Avg Daily Value (RMmil) 2.0 technology, engineering and mathematics. We understand that
Prestariang is currently awaiting a letter of award from the Ministry of
Price performance 3mth 6mth 12mth Education. The project is expected to contribute at least RM50mil in
Absolute (%) (7.2) 5.3 (29.0)
2017F.
Relative (%) (6.2) 5.9 (25.6)
Polytechnic Premier 2.0. Prestariang is looking to introduce
Polytechnic Premier 2.0 to provide IT equipment to two polytechnic
colleges in Besut and Bagan Datoh. The project is expected to have a
concession period of 15 years. While we are positive that it can provide
further long term earnings visibility, management is currently still in the
midst of studying the project's feasibility. For now, we have not factored
in earnings contributions from this area.
Valuation
26
PROTASCO
(PRTA MK Equity, PRTO.KL)
Price RM1.11
Fair Value RM1.46 Company Profile
52-week High/Low RM1.39/RM1.04
A contractor specialising in road maintenance (based on
concessions and long-term contracts) listed on the Main Board in
YE to Dec FY15 FY16F FY17F 2003, Protasco expanded into property development in recent
years, anchored by the redevelopment of the 100-acre land in
Revenue (RMmil) 1,305.0 1,101.5 1,211.6
Bangithat houses the campus of its Infrastructure University Kuala
Core net profit (RMmil) 66.8 56.0 61.1
Core EPS (Sen) 15.9 13.3 14.6 Lumpur (IUKL). For 9MFY16, road maintenance contributed 45% of
Core EPS growth (%) n/a (16.4) 9.8 total PBT, followed by toll conventional construction (26%), property
DPS (Sen) 10.4 7.0 7.0 development (14%) and others (15%). At the helm of the company
PE (x) 7.0 8.3 7.6
is executive vice chairman, group managing director and controlling
Div yield (%) 9.4 6.3 6.3
shareholder Dato Sri Ir Chong Ket Pen.
Stock and Financial Data
Highlights
Shares Outstanding (million) 419.9 Recurring road maintenance profits. These are underpinned by:
Market Cap (RMmil) 483.6 (1) a 51%-owned 10-year concession expiring Feb 2026 for the
Book value (RM/share) 0.96
P/BV (x) 1.2 maintenance of federal roads in Selangor, Pahang, Kelantan and
ROE (%) 16.1 Terengganu (estimated outstanding value of RM3.9bil); (2) a wholly-
Net Gearing (%) 19.9 owned 15-year concession expiring Feb 2018 for the maintenance of
federal roads in Sibu, Bintulu and Mukah divisions in Sarawak
Major Shareholders Ket Pen Chong (22.9%)
Penmacorp Sdn Bhd (9.2%) (estimated outstanding value of RM148mil); (3) a 51%-owned 7-year
Kingdom Seekers (4.5%) contract expiring Dec 2019 for the maintenance of state roads in
Perak (estimated outstanding value of RM217mil); and (4) a 60%-
Free Float 50.5
owned 10-year contract expiring Aug 2026 for the maintenance of
Avg Daily Value (RMmil) 1.5
state roads in Kelantan (estimated outstanding value of RM129mil).
Price performance 3mth 6mth 12mth
A sizeable conventional construction orderbook. Apart from
Absolute (%) (8.7) (12.6) (8.6) recurring road maintenance profits, Protasco’s near-term earnings
Relative (%) (7.6) (11.9) (5.3) will also be well supported by a sizeable outstanding conventional
construction orderbook of RM742mil, which will keep it busy for at
least two years.
Source: AmInvestment Bank Bhd Protasco broke its multiple support line in November of RM1.60 prior
to ex bonus issue of one bonus issue share for every four existing
shares on December 2016. Since then, the stock price was
supported at RM1.19. Since the breakdown from the new support
level of RM1.19 – 20 MA, the support level has turned into
resistance.
27
SASBADI HOLDINGS
(SASB MK Equity, SAHO.KL)
Educational play
Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2372)
Price RM1.41
Fair Value RM1.90 Company Profile
52-week High/Low RM1.55/RM1.02
Malaysia’s leading educational publisher. It is a household name for
national school curriculum-based primary and secondary students.
YE to Aug FY16 FY17F FY18F
Highlights
Revenue (RMmil) 92.7 115.3 150.7
Core net profit (RMmil) 16.7 23.9 34.9 Ace in the hole. Sasbadi recently introduced a mobile platform
Core EPS (Sen) 6.2 8.6 12.5 based learning platform: iLearn Ace. Aside from digitising its physical
Core EPS growth (%) 2.6 43.3 45.3 content, it offers interactive learning to students as well including
DPS (Sen) 1.3 4.3 6.3
performance tracking, game simulation infused with educational
PE (x) 22.8 18.0 12.4
Div yield (%) 0.9 2.8 4.1 material and video lessons. Given that the number of primary and
secondary school children is close to 5mil students against an annual
Stock and Financial Data subscription fee of MYR350 all-content access, it only requires a
penetration rate of 5% to double Sasbadi’s FY16F’ MYR93m
Shares Outstanding (million) 279.4 revenue.
Market Cap (RMmil) 394.0
Book value (RM/share) 0.53 M&A supplements growth. Since its IPO in 2014, Sasbadi has
P/BV (x) 2.7
been active on the M&A front. Over the brief period since its IPO, it
ROE (%) 13.2
Net Cash (%) 3.8 has executed 4 various M&As to grow further. 3 of which were
publishers beyond Sasbadi’s areas of expertise and Distinct Motion
Major Shareholders King Hui Law (18.3%) Group - a learning robotics technology company. Going forward, it
KaryaKencanaSdnBhd(18.2%)
Swee Hang Lee (8.5%)
leaves private publishing companies ripe for an M&A with publicly-
listed Sasbadi.
Free Float 41.5
Avg Daily Value (RMmil) 0.8 Sturdy balance sheet. Despite the active M&A and consequent
capital outlay, Sasbadi’s balance sheet remains healthy. As of Sep
Price performance 3mth 6mth 12mth 2016, it remained in a cash position of RM26mil and a gearing of
0.13x. It leaves Sasbadi considerable financial flexibility to for further
Absolute (%) 31.8 14.6 15.1
Relative (%) 32.8 15.3 18.5 M&As.
Valuation
Our fair value of MYR1.90 is based on a P/E peg of 19.5x CY17F,
which is the 3-year average of its historical PE trading band. The
stock offers an estimated dividend yield of 2.8%-4.1% for FY17F-
FY18F.
Technical View
The stock is in consolidation after making a strong up-move since
Oct 16. It is now supported by 50MA average at RM1.35. A near-
term bullish breakout above RM1.45 is likely. If this happens, the
stock could make another measured move of RM0.50 to RM1.85.
28
SYF RESOURCES
(SYF MK Equity, SYFR.KL)
Company Profile
Price RM0.56
Fair Value RM0.72 SYF Resources (SYF) manufactures particle board and medium-density
52-week High/Low RM0.75/RM0.50 fibreboard (MDF), rubberwood furniture and has an upstream timber
processing unit. The company is also engaged in property development.
YE to Jul FY16 FY17F FY18F SYF is helmed by Dato’ Sri Ng Ah Chai, who is the group’s executive
chairman and CEO. Dato’ Sri Ng is also the co-founder of Seng Yip
Revenue (RMmil) 453.2 534.9 594.5 Furniture Sdn Bhd and a major shareholder of Kiara Susila Sdn Bhd -
Core net profit (RMmil) 38.2 45.1 53.6
which jointly develops several property development projects with SYF.
Core basic EPS (Sen) 6.2 7.4 8.8
Core EPS growth (%) 55.2 18.1 18.7 Dato’ Chee Hong Leong is also part of the management team. He
DPS (Sen) 0.0 0.0 0.0 serves as a non-independent executive director and is the chairman of
PE (x) 9.0 7.6 6.4 Kiara Susila.
Div yield (%) 0.0 0.0 0.0
Highlights
Stock and Financial Data
Board division in for rapid growth. Starting off with just a particle board
Shares Outstanding (million) 602.1 plant Gemas, SYF has started operations of its MDF plant in Rompin
Market Cap (RMmil) 343.4 earlier last month, where management expects plant utilisation to hit over
Book value (RM/share) 0.48 80% by 1H2017. SYF’s third plant (particle board) is expected to be up
P/BV (x) 1.2
ROE (%) 14.5 and running by mid-2017 and plans are already hatched to bring total
Net Gearing (%) 39.5 board capacity to 380,000 cubic metres by mid-2019. With the expansion,
earnings contribution of the boards division is expected to climb to 13%%
Major Shareholders Ah Chai Ng(51.4%)
in FY17F and to over 20% in FY18F (from approx. 7% in FY16). In our
Hong Leong Chee(11.0%)
Insas Credit & Leasing SdnBhd (9.0%) view, the recent acquisition of a controlling stake in Mieco Chipboard Bhd
(Mieco) by SYF’s major shareholder, Dato' Sri Ng Ah Chai could
Free Float 25.1 potentially bring about capacity synergies or a restructuring that could
Avg Daily Value (RMmil) 0.7
lead to further capacity gain for SYF.
Price performance 3mth 6mth 12mth We like SYF’s vertically-integrated positioning which includes an upstream
Absolute (%) 2.8 (1.8) (11.1)
division, which would give it better control of margins by keeping input
Relative (%) 3.8 (1.1) (7.7) costs low. Its exposure across upstream, boards and furniture segments
would diversify earnings risk in the event there is a negative turn in market
dynamics for any of the segments.
More in store for property division. SYF property development at
Bandar Sungai Long and Semenyih are strategic catchment areas due to
its proximity to Universiti Tunku Abdul Rahman (UTAR) and University of
Nottingham local campuses respectively. While its current unbilled sales
and remaining GDV may only help anchor property earnings for the next
few years, we gather that SYF is already looking at potential new JV
developments, which could add a future GDV of over RM1bn, for the next
five years. Future launches would continue to harness the same strategy
of building in strategic locations, which would serve as hotbed for student
owners and buyers interested in renting out properties to students.
Valuation
We value SYF at a fully-diluted TP of RM0.72, valuing its manufacturing
Source: AmInvestment Bank Bhd
division at 10x CY17F EPS and its property division based on a 30%
discount to RNAV.
Technical View
SYF Resources had triangular breakout at the end of December 2016 and
managed to break multiple levels of resistance levels. SYF has crossed its
short, medium and long term moving average to show signs of
bullishness.
29
TAMBUN INDAH
(TILB MK Equity, TAMB.KL)
Price RM1.39
Fair Value RM1.68 Company Profile
52-week High/Low RM1.58/RM1.20
Tambun Indah Land (Tambun) is a property developer based in
Mainland Penang. Listed on the Main Board of Bursa Malaysia in
YE to Dec FY15 FY16F FY17F 2011, its flagship Pearl City township project is located at Seberang
Perai Selatan, 15 minutes away from Batu Kawan and Penang
Revenue (RMmil) 367.7 379.4 386.5
Core net profit (RMmil) 101.1 98.6 99.3 Second Bridge.
Core EPS (Sen) 23.9 23.0 23.1
Core EPS growth (%) (5.1) (3.8) 0.4 Highlights
DPS (Sen) 9.0 9.2 9.3
Sales momentum sustained. Tambun recorded new sales of
PE (x) 5.8 6.0 6.0
Div yield (%) 6.5 6.6 6.7 RM211.4mil for 9MFY16, enjoying on average 81.9% take up rate for
all its ongoing projects, with a total GDV of RM1.7bn. Its total unbilled
Stock and Financial Data sales stood at RM259.6m, which should contribute positively to the
group’s earnings for the next three years. Its Pearl City flagship
Shares Outstanding (million) 424.1 township project continues to be the main driver to the group's sales,
Market Cap (RMmil) 593.9
Book value (RM/share) 1.20 making up 70% its total unbilled sales.
P/BV (x) 1.2
Net cash position. As at end-3Q16, Tambun’s balance sheet
ROE (%) 22.9
Net Gearing (%) Net cash remained healthy with a net cash position. This positions it well for
future landbanking and for it to tap into any opportunity that the
Major Shareholders Siram Permai (33.3%) current sector slowdown presents. We also expect this to enable it to
Amal Pintas (8.5%)
Kiak Seng Teh (5.9%)
sustain its historical dividend payout ratio of between 40% and 60%
in the upcoming years.
Free Float 30.3
Avg Daily Value (RMmil) 0.4 Strong earnings visibility. Tambun currently has 405 acres of
remaining landbank, with an estimated RM3.1bil of future GDV to be
Price performance 3mth 6mth 12mth launched until 2022. It is also a good proxy to the rapid development
in Mainland Penang and the Second Penang Bridge’s economic
Absolute (%) (5.4) 3.5 5.1
Relative (%) (4.4) 4.1 8.5 impact, through its Pearl City township. We expect the demand for
residential properties at Mainland Penang to remain resilient due to a
sustained economic growth in Penang and the relative affordability of
properties on the mainland compared to the island.
Valuation
30
THONG GUAN
(TGI MK Equity, TGIB.KL)
Company Profile
Price RM4.27
Fair Value RM5.44 Thong Guan Industries (TGI) is one of the leading stretch film
52-week High/Low RM4.55/RM2.72 manufacturers in Malaysia and a major exporter of plastic packaging
materials such as garbage bags, industrial bags and PVC food wraps.
Keeping alive its origins as a F&B player, the company also manufactures
YE to Dec FY15 FY16F FY17F
and trades tea, coffee and noodle products. TGI was listed on the Main
Board in 1997 and is helmed by Dato' Ang Poon Chuan who brings over
Revenue (RMmil) 712.5 792.8 930.3
Core net profit (RMmil) 38.9 51.4 64.9
51 years of experience in plastic, paper, food, beverages and trading
Core EPS (Sen) 36.9 48.9 61.7 business.
Core EPS growth (%) 122.2 32.4 26.1
Highlights
DPS (Sen) 9.0 13.6 17.1
PE (x) 12.5 8.7 7.2 Stretching for more. Over the past few years, TGI has focused on
Div yield (%) 2.1 3.2 4.0 building capacity for its plastic divisions and growing margins by offering
higher value-add products. The company commissioned its first 33-layer
Stock and Financial Data
nano technology stretch film line in early-2016, which found encouraging
market reception. On the back of this success, management is looking to
Shares Outstanding (million) 118.5 bring in another 33-layer nano stretch film line in 3QFY17.
Market Cap (RMmil) 505.2
Book value (RM/share) 3.97 Larger PVC food wrap capacity to reinforce market leader position.
P/BV (x) 1.1
Already the largest PVC food wrap supplier in Malaysia and among the
ROE (%) 14.7
Net Gearing (%) (13.8) three largest in South-East Asia, TGI is seeing robust orders for PVC
wrap. It recently took delivery of its seventh PVC wrap line and has plans
Major Shareholders Foremost Equals SdnBhd(35.4%) to grow current output by over 70% by FY18F. PVC food wrap business is
Aminvestment BankBerhad(2.3%) the highest margin-yielding business and we expect the company's
Koon Yew Yin (1.7%) margin to grow as this division contributes a bigger share of the TGI's
revenue over the next few years.
Free Float 47.7
Avg Daily Value (RMmil) 1.1 Growing its F&B division. With the acquisition of a 60% stake in
Everprosper Food Industries Sdn Bhd in Aug 2015, Thong Guan has
Price performance 3mth 6mth 12mth expanded its F&B portfolio to now include noodle manufacturing. Its
noodle products are sold under private labels worldwide and under its
Absolute (%) 4.1 6.1 40.5
own brand names such as Golden Noodle and Vitame. TGI newly set-up
Relative (%) 5.2 6.8 43.8
factory Sungai Petani has recently received organic certifications from
authorities in Australia, Japan, China which would allow it to supply
noodles to chain retailers in these markets. While revenue share from the
noodle business is expected to be less than 10% in the near term, the
company expects this division to grow on the back of rising consumption
of organic noodles for infants and organic instant noodles in China.
31
TRC SYNERGY
(TRC MK Equity, TRCG.KL)
Price RM0.39
Fair Value RM0.66 Company Profile
52-week High/Low RM0.52/RM0.33
Listed on the Main Board in 2002, TRC is a seasoned contractor
which stands out from its peers of comparable size by virtue of its
YE to Dec FY15 FY16F FY17F involvement in several high-profile mega infrastructure projects in
recent years including LRT2, MRT1, MRT2, Pan Borneo Highway
Revenue (RMmil) 768.0 730.0 839.5
Core net profit (RMmil) 30.4 27.6 31.7 and Brunei International Airport modernisation. It has also
Core EPS (Sen) 6.3 5.7 6.6 expanded into property development, with the newest project being
Core EPS growth (%) 765.8 (9.5) 15.8 an integrated Transit Oriented Development (TOD) on a 12.3-acre
DPS (Sen) 0.0 0.0 0.0
site in Ara Damansara, Selangor, witha GDV of about RM1bil. For
PE (x) 6.2 6.8 5.9
Div yield (%) 0.0 0.0 0.0 9MFY16, construction contributed about 90% of total PBT, with the
balance 10% coming from property development. At the helm of the
Stock and Financial Data company is managing directorTan Sri Dato' Sri Sufri bin Haji Mohd
Zin.
Shares Outstanding (million) 480.5
Market Cap (RMmil) 187.4 Highlights
Book value (RM/share) 0.78
P/BV (x) 0.5 A sizeable construction orderbook. TRC’s near-term earnings will
ROE (%) 8.3 be well supported by its construction order backlog estimated at
Net Gearing (%) (1.5) RM1.2bil, which will keep it busy at least for the next two years.
Major Shareholders TRC Capital Sdn Bhd (12.4%) Among the more notable projects are Pan Borneo Sarawak highway
Kolektif Aman Sdn Bhd (12.2%) (a substantial part of a RM1.3bil package secured with two Sarawak-
Leong Kam Heng (10.0%) based partners) and Eco City in KL (RM170mil outstanding).
Free Float 51.9 Strength in rail jobs.TRC is well positioned to capitalise on various
Avg Daily Value (RMmil) 0.2 mega rail projects in the pipeline including LRT3 (RM9bil), East
Price performance 3mth 6mth 12mth Coast Rail Link (RM55bil) and KL-Singapore high-speed rail (RM50-
60bil), given its experience in the construction of LRT2, MRT1 and
Absolute (%) (6.0) (3.7) 7.0 MRT2, and the specialised equipment it has invested in, particularly,
Relative (%) (5.0) (3.1) 10.3 launchers for the construction of elevated viaducts.
TOD in Ara Damansara, Selangor. Despite the soft property
market, we believe TRC's integrated TOD in Ara Damansara
comprising apartments, offices, retail outlets and hotels, should be
well received, given its highly sought after Ara Damansara address
and direct LRT connectivity. The maiden launch - an apartment block
- is scheduled in 2Q2017.
Valuation
We value TRC at RM0.66 based on 10x FY17F EPS, in line with
our benchmark 1-year forward target P/E of 10-12x for small-cap
construction stocks.
Technical View
TRC has broken its multiple support lines since November 2016 and
Source: AmInvestment Bank Bhd is currently hovering at the strong support level of RM0.38. It is likely
to be stay on range bound levels – RM0.37 to RM0.41 in the
absence of catalysts.
32
TROPICANA
(TRCB MK Equity, TROP.KL)
Price RM1.00
Fair Value RM1.28 Company Profile
52-week High/Low RM1.15/RM0.92
Founded in 1979, Tropicana Corporation Bhd (Tropicana) is mainly
a property development company with diversified business interests
YE to Dec FY15 FY16F FY17F including property and resort development, property investment,
resort operations and investment holding. It was listed on Bursa
Revenue (RMmil) 1252.7 1307.2 1331.8
Core net profit (RMmil) 223.3 151.9 155.4 Malaysia in 1992. Today, property development contributes 90% of
Core EPS (Sen) 15.5 10.6 10.8 its total revenue.
Core EPS growth (%) (42.5) (31.6) 1.9
DPS (Sen) 4.0 5.0 5.0 Highlights
PE (x) 6.4 9.4 9.3
Div yield (%) 4.0 5.0 5.0 RM821m new sales in 9M16. Tropicana recorded RM821m of new
sales in 9MFY16, contributed mainly by its projects in the Klang
Stock and Financial Data Valley region, which made up 78% of its total new sales. Tropicana
Aman, Shah Alam recorded the highest sales at RM253m, followed
Shares Outstanding (million) 1439.7 by Tropicana Heights, Kajang (RM131m) and The Residences,
Market Cap (RMmil) 1427.4
Book value (RM/share) 2.20 KLCC (RM108m). For FY16, it is launching projects with a total GDV
P/BV (x) 0.5 of around RM1.9bil, made up of residential and commercial
ROE (%) 3.6 properties.
Net Gearing (%) 27.3
RM2.67bn of unbilled sales. Tropicana’s unbilled sales remained
Major Shareholders Chee Sing Tan (30.3%) healthy at RM2.67bil as at end-Sep 2016, with projects in the Klang
AliranFirasatSdnBhd (21.2%)
Golden Diversity SdnBhd (11.8%)
Valley making up 75% of the total amount. The highest outstanding
unbilled sales as at end-Sep 2016 were Tropicana Aman, Shah Alam
Free Float 24.6 (RM620m), Tropicana Gardens, Kota Damansara (RM508m) and
Avg Daily Value (RMmil) 0.6 Tropicana Metropark, Subang Jaya (RM431m).
Price performance 3mth 6mth 12mth Positive long-term outlook. We believe Tropicana’s long-term
outlook is positive. As of end-Sep 2016, it had in total 1,283 acres of
Absolute (%) (2.9) (2.9) 1.8
Relative (%) (1.9) (2.3) 5.2 remaining land bank, with total available GDV of approximately
RM52.0bil. These projects will take up to 20 years to be completed,
providing Tropicana with a sustained income stream for foreseeable
future.
Valuation
33
TUNE PROTECT
(TIH MK EQUITY, TUNE.KL)
Healthy combined ratio with low net commission ratio. TPG has
a healthy combined ratio of 79.2% as at end of 3Q16. With TIMB
operating with a small size of around 1,200 agents while relying on
strategic partners for travel reinsurance business, the Group has a
low net commission ratio of 17.1%. Claims ratio to travel insurance
has been low at stable of circa 7.0%.
Valuation
Our fair value of RM1.70/share is derived by pegging FY17F
BV/share to a P/BV of 2.0x (circa 1 standard deviation below its 3
year historical average P/BV of 3.1x). The forward P/BV multiple is
Source: AmInvestment Bank Bhd line with the P/BV of recent M&As of general insurance companies.
Technical View
34
UCHI TECHNOLOGIES
(UCHI MK Equity, UCHI.KL)
Valuation
The company is currently trading at a fair 13.7x FY17 PE, which is
in line with the Malaysia’s Technology peers average of 13.6x.
We assign the stock with a fair value of RM1.73 or 14x FY17 PE.
The valuation is at a marginal premium compared to its peers due
to UCHI’s attractive dividend yield at 6.2% vs. peers’ average of
4.7%.
Technical View
UCHI is in a mildly bullish uptrend with limited momentum. Hence, it
could continue to trade below the channel line with the next
resistance at RM1.85 and the support is at RM1.75. UCHI is likely
to trade within this range in the mid-term.
Source: AmInvestment Bank Bhd
35
UNISEM
(UNI MK Equity, UNSM.KL)
Company Profile
Price RM2.38
Fair Value RM2.97 Unisem is a leading semiconductor assembly and test services
52-week High/Low RM2.69/RM1.85
provider in Malaysia. Unisem offers turnkey solutions such as wafer
bumping, wafer probing, wafer grinding, a wide range of leadframe
YE to Dec FY15 FY16F FY17F and substrate integrated circuits packaging, wafer-level chip-scale
packaging (WLCSP), flip chip and radio frequency, analog, digital
Revenue (RMmil) 1260.4 1289.5 1398.7
Core net profit (RMmil) 155.5 148.9 167.8 and mixed-signal testing services.
Core EPS (Sen) 22.0 20.3 22.9
Highlights
Core EPS growth (%) 117.1 (7.7) 12.7
DPS (Sen) 10.0 10.0 10.0 Remain focused on wafer bumping & WLCSP. Unisem's USD-
PE (x) 10.8 11.7 10.4
Div yield (%) 4.2 4.2 4.2 denominated revenue has been underpinned by wafer bumping and
(WLCSP) services in recent years due to robust smartphone
Stock and Financial Data demand. Moving forward, most market research companies project
the segment to record low single-digit growth through 2019F.
Shares Outstanding (million) 733.8 However, we understand that Unisem is committed to winning more
Market Cap (RMmil) 1746.4
jobs for its wafer bumping & WLCSP services. We are positive on
Book value (RM/share) 1.85
P/BV (x) 1.3 this because such services offer higher margins than those of
ROE (%) 12.7 traditional leaded and leadless packages.
Net Gearing (%) 4.6
Automotive and industrial segments drive growth. According to
Major Shareholders Jayvest Holdings SdnBhd(8.9%) PwC, global light vehicle assembly is expected to grow at a CAGR of
Bandar RasahSdnBhd(7.0%)
3.6% for 2015-2021F. Although the vehicle volume growth itself
Sin Tet Chia (5.6%)
appears unexciting, we expect stronger growth in semiconductor
Free Float 69.8 content within automobiles to boost sales in this sub-segment. In the
Avg Daily Value (RMmil) 4.3 industrial segment, growth is expected to be driven by the global
transition to "Industrie 4.0" to promote full automation and
Price performance 3mth 6mth 12mth
interactions between connected devices. This would require large-
Absolute (%) (1.7) 0.0 9.1 scale replacements of both software and hardware, which benefits
Relative (%) (2.1) (1.6) 8.3 semiconductor players.
36
UZMA
(UZMA MK Equity, UZMA.KL)
Staying resilient
Company report
AmInvestment Bank
www.amesecurities.com
(03-2036 2025)
Price RM1.70
Fair Value RM1.87 Company Profile
52-week High/Low RM2.04/RM1.30
Founded on 19 May 2000 by Dato’ Kamarul Redzuan Muhamed
and Datin Rozita Mat Shah, Uzma Berhad (Uzma) started out as a
YE to Dec FY15 FY16F FY17F provider of drilling project management and geoscience and
reservoir engineering software services. Today, the group has
Revenue (RMmil) 510.8 455.8 552.7
Core net profit (RMmil) 5.3 26.3 39.2 grown to become an agile geoscience, production and well-service
Core EPS (Sen) 1.9 9.03 13.5 company. Its operations consist of three core businesses:
Core EPS growth (%) (89.8) 375.2 49.5 geoscience and petroleum engineering, drilling and well services,
DPS (Sen) 3.8 0.0 0.0
and project oilfield and optimisation services.
PE (x) 89.9 18.8 12.6
Div yield (%) 2.2 0.0 0.0 Highlights
Stock and Financial Data D18 Water Injection Facility commenced operations in 2H16.
Uzma’s D18 WIF project is progressing well. It commenced
Shares Outstanding (million) 1.3 operations in 2H16, with a RM200,000 daily rate for the next five
Market Cap (RMmil) 494.6
Book value (RM/share) 1.28 years. The development costs are within budget at circa US$65m.
P/BV (x) 1.3 We expect the project to contribute positively to Uzma’s revenue and
ROE (%) 10.3 earnings despite the weaker ringgit against the US dollar.
Net Gearing (%) 65.1
Tanjung Baram marginal oilfield in full production. Oil production
Major Shareholders MuhamedKamarulRedzua (28.4%) from the Tanjong Baram field commenced on 18 Aug 2015. We
Shah Rozita (12.6%)
LTH (9.6%)
believe that this field is producing on average 1,000-2,000 barrels of
oil per day, as per its development plan. We believe at the current
Free Float 29.6 crude oil price of around US$50 per barrel, this project is still cash
Avg Daily Value (RMmil) 0.5 flow positive, but there is a risk of the project not being viable if oil
Price performance 3mth 6mth 12mth price drops to below US$20 per barrel.
Expected to perform relatively better than the industry. We
Absolute (%) (0.6) (10.5) (15.0)
Relative (%) 0.4 (9.9) (11.6) believe that Uzma is better positioned than most of its peers to
weather the industry slowdown. Only 10-15% of its revenue is
directly exposed to the exploration stage via its geoscience and
petroleum engineering (GPE) division. Most of its exposure is to
brownfield oilfield production and maintenance services through its
project oilfield and optimisation services (POOS), which contributes
around 50% of total revenue.
Valuation
We value Uzma at RM1.87 based on 13.9x CY17 P/E, a 20%
discount to our oil & gas average CY17 sector P/E.
Technical View
37
VS INDUSTRY
(VSI MK Equity, VSID.KL)
Price RM2.37
Fair Value RM2.80 Company Profile
52-week High/Low RM2.45/RM1.95
Yee Lee Corporation (Yee Lee) is a fully integrated manufacturer
and distributor of FMCG products. Its core business is the
YE to Dec FY15 FY16F FY17F production of the “Red Eagle” brand of cooking oil. Its associates
include a 33% stake in Spritzer Bhd, a producer of natural mineral
Revenue (RMmil) 799.2 1013 1053
Core net profit (RMmil) 31.9 43 46 water and carbonated flavour water.
Core EPS (Sen) 17.5 24.0 25.6
Core EPS growth (%) 16.5 30.4 6.7 Highlights
DPS (Sen) 3.5 4.3 4.8
Extremely resilient growth supercharged. Yee Lee’s business has
PE (x) 13.5 10.4 9.8
Div yield (%) 1.5 1.7 1.9 been extremely resilient, posting positive YoY growth over the past
14 years largely thanks to its distribution and manufacturing
Stock and Financial Data segments. It has grown at a 14-year CAGR of 9.3% between FY01-
FY15. Throughout the same period, margins have remained trended
Shares Outstanding (million) 183.9 upward to 4% from 2% as it maintains its competitive position within
Market Cap (RMmil) 447.1
Book value (RM/share) 2.97 each segment. We expect Yee Lee to see similar growth and
P/BV (x) 0.8 margins from its existing segments going forward barring the entry of
ROE (%) 9.3 Red Bull.
Net Gearing (%) 8.4
Stable growth supercharged. Its stable outlook has found a new
Major Shareholders Yee Lee Organisation Bhd (51.6%) avenue of growth with the 5-year exclusive distributorship rights of
A Heng Lim (2.9%)
Public Strategic Smallcap (2.7%)
Red Bull products. Thus far, the full year impact from the Red Bull
contract has supplemented both topline and bottomline, with
Free Float 37.8 9MFY16 already outpacing FY15’s by 26%% and 37% respectively.
Avg Daily Value (RMmil) 0.7
Part exposure to Spritzer a boon. Yee Lee’s 33% associate stake
Price performance 3mth 6mth 12mth in Spritzer exposes it to the latter's product expansion into China.
Spritzer has launched flavoured beverages under the brand Tinge.
Absolute (%) 4.9 5.8 13.6
Relative (%) 5.9 6.5 16.9 Distribution is expected to be gradually ramped up through the
modern trade channel in tandem with advertising and promotional
(A&P) initiatives. Earnings impact is not expected to be significant
within the next 1-2 years, as 50% more A&P is ploughed to generate
brand awareness.
Valuation
Our fair value of MYR2.80 is based on a P/E peg of 11.0x FY17F,
which is the 3-year average of its historical PE trading band. The
stock offers an estimated dividend yield of 1.9% as well.
Technical View
Yee Lee has been moving in a broad bull channel since early 2016
and could continue to advance within this channel. Trading volume
has been generally consistent throughout the past one year, which
shows a reasonable market interest on the stock.
39
YTL HOSPITALITY REIT
(YTLREIT MK EQUITY, YTLR.KL)
Price RM1.09
Fair Value RM1.32 Company Profile
52-week High/Low RM1.22/RM0.94
YTLREIT provides investors a gateway to the Australian hospitality
market, which sees an attractive combination of solid demand and
YE to Dec FY16 FY17F FY18F relatively constrained new supply growth. The REIT's main assets are
the Pangkor Laut, Tanjong Jara and Cameron Highlands resorts, The
Revenue (RMmil) 429.7 428.0 436.0
Core net profit (RMmil) (5.8) 108.1 129.3 Ritz-Carlton, Kuala Lumpur, and the remainder of The Residences at
Core EPS (Sen) (0.4) 7.1 7.6 The Ritz-Carlton, Kuala Lumpur, the Vistana chain of hotels in Kuala
Core EPS growth (%) 28.9 (22.3) 6.2 Lumpur, Penang and Kuantan, and Hilton Niseko Village in Japan,
DPS (Sen) 7.9 7.4 7.8
Sydney Harbour, Brisbane and Melbourne Marriott hotels in Australia in
PE (x) (247.7) 14.2 14.0
Div yield (%) 7.2 6.8 7.2 November 2013.
40
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individual financial circumstances and objectives. Nothing in this report shall constitute an offer to sell, warranty, representation,
recommendation, legal, accounting or tax advice, solicitation or expression of views to influence any one to buy or sell any real estate, securities,
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The information in this report was obtained or derived from sources that AmInvestment believes are reliable and correct at the time of issue.
While all reasonable care has been taken to ensure that the stated facts are accurate and views are fair and reasonable, AmInvestment has not
independently verified the information and does not warrant or represent that they are accurate, adequate, complete or up‐to‐date and they
should not be relied upon as such. All information included in this report constituteAmInvestment’s views as of this date and are subject to
change without notice. Notwithstanding that, AmInvestment has no obligation to update its opinion or information in this report. Facts and views
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