Thursday, August 17, 2017

BIMB 'buy', YTL 'hold', Johor Tin 'outperform'

BIMB HOLDINGS BHD
Buy (maintained)
Target price: RM5.05
We has kept its “buy” call on BIMB Holdings Bhd with a target price of RM5.05.
The research firm said there was uncertainty regarding the potential corporate re-organisation of its financial holding company structure that could be a key stock overhang for now.
A swift resolution of this could spark a re-rating, it said.
A number of banks in Malaysia such as RHB Bank Bhd, Alliance Financial Group Bhd and Affin Hwang Investment Bank have recently announced corporate exercises that involved the collapsing of their respective financial holding company structure.
“This essentially entails the transferring of the listed entity from the financial holding company to the bank.
“Financial holding companies that have existing financial holding company debts would have to undertake a dilutive rights issue to repay such debts in the process,” the research house said.
In BIMB’s case, the group has an outstanding 10-year sukuk amounting to roughly RM1.2bil, which means it would have to either undertake a one-for-four rights issue or dispose of its stake in Syarikat Takaful to redeem the sukuk at an earlier-than-scheduled date.
Nevertheless, we said BIMB’s share price has priced in the dilution if such an exercise was to be carried out.
“Given the group’s relatively-high holding company fully-loaded CET1 of 12.6%, we believe that it should be sufficient to meet Bank Negara’s minimum capital adequacy ratio requirements for a financial holding company in 2019.
“As such, the group should have no issues maintaining its current financial holding company structure and to gradually pay off its sukuk without having to raise a dilutive rights issue.
“But it should carefully assess whether there is an urgency to carry out such a dilutive exercise that is punitive to shareholders if existing capital base is sufficient to meet Bank Negara’s capital adequacy ratio for financial holding company in 2019,” it said.
On its oil and gas (O&G) exposure, BIMB’s total O&G loans account for 8.7% of its total loans books (RM3.5bil), while sukuk exposure stood at about 2% of its total investment securities portfolio (about RM308mil).
Of the 8.7% O&G loan exposure, nearly 90% were consumer loans (personal and mortgages) to O&G employees in relatively large corporate firms.
YTL CORP BHD
Hold (maintained)
Target price: RM1.44
AFFIN Hwang Capital has maintained its “hold” call on YTL Corp Bhd, with a lower target price of RM1.44 from RM1.70 previously.
Despite forecasting an improvement in financial year 2018 (FY18) forecast earnings, Affin Hwang believed the current share price has priced in the earnings growth expectations.
The improvement was mainly due to the forecast low-base effect in FY17.
“We cut forecast dividend payment per share (DPS) to 7 sen in FY17-FY19, following the 30% to 34% cut in our forecasts earnings per share, due to weaker results from the cement operations,” the research house said.
Affin Hwang said there could also be more downside risks if YTL Power lowered its DPS below 10 sen, as a 0.5 sen decline in YTL Power’s DPS would lead to a 0.2 sen reduction in YTL Corp’s DPS.
In the meantime, the house said the cement business remained challenging in FY17 due to overcapacity and weak demand from the property segment.
Although the research house expects a higher demand from infrastructure and property in FY18, it believed the incremental demand is not sufficient to absorb the overcapacity, limiting the upside of recovery in earnings.
“Given that more than 30% of our realisable net asset value (RNAV) is derived from its cement operations, changes in the segment will have a significant impact on our realisable net asset value (RNAV).
Apart from the construction job for the Tanjung Jati “A” power plant project (which Affin Hwang expects YTL Power to achieve financial close by year-end), it also believed that YTL Corp could benefit from rail-related infrastructure projects in Malaysia, given its track record in delivering the Express Rail Link.
“We expect close to RM120bil worth of rail-related contracts will be awarded from the second half of 2017 onwards.
“However, the earnings upside from these contracts are unlikely to compensate for the weaker results overall,” it added.
JOHORE TIN BHD
Outperform
TargetpPrice: RM1.86
PUBLIC Investment Bank (PublicInvest) has initiated coverage on Johore Tin Bhd (JTB) with an “outperform” call and a target price of RM1.86, implying an upside of 36.8% from its last traded price.
“We like JTB for its growth opportunities in the milk powder segment, increasing food and beverage contributions from potential capacity expansion plans in the sweetened condensed and evaporated milk segments, and growth opportunity in the American continent from new ventures in Mexico as well as healthy balance sheet,” PublicInvest said.
As such, the research house believed that JTB deserved a higher price to reflect its underlying value.
On JTB’s milk powder segment, the management expects utilisation rate of its new milk powder packing factory to increase from 35% in FY17 up to 70% in FY19.
“At the current capacity utilisation of 15%-16%, we estimate this segment currently generates an operating profit of about RM2mil-RM3mil in the first quarter of FY17.
“If it manages to achieve a 75% utilisation, operating profits may grow exponentially to between RM50mil and RM55mil, although this will take a good three to four years to attain.
“We anticipate the addition from the profit of Able Food may potentially double the group’s bottom line (which was just RM35.6mil in FY16),” PublicInvest said.
In the next six to eight months, JTB plans to upgrade its machinery and production lines for the sweetened condensed and evaporated milk businesses.

ECONOMIC NEWS


· Press Metal’s 2Q net profit up slightly to RM150m, declares 1.5 sen dividend
· Dialog posts 33% increase in 4Q net profit on higher JV contributions
· Sunway acquires land in Wangsa Maju for RM51m
· Taliworks 2Q net profit plunges 92% on higher operating costs
· Pharmaniaga’s 2Q net profit down 36% on temporary closure of certain production lines
· Paramount’s 2Q net profit down 39% on lower property segment earnings
· Fed policymakers grow more worried about weak inflation
· As Nafta talks begin, Trump’s ‘America First’ agenda looms large
· US oil drillers keep pressure on OPEC with record shale output
· US housing starts, permits down sharply in July
· China regains spot as largest foreign US creditor
· China's Belt and Road acquisitions surge despite outbound capital crackdown

August 15 + 16 day performance express • Quarter report summary for 15/8 + 16/8

Friends who are interested can learn more about quarterly reports for more details! PM me or register - goo.gl/Pm187a
It's time for quarterly reports! Today we combine these two days with a good company. Many companies in this quarter are less than in the last quarter, and they are in line with the forecasts of analysts a few months ago, but there is a good surprise for companies. The author only focuses on the performance of a number of companies, and may ignore some details.

[Petgas]
- Market Cap: RM37.358 bil
- Turnover breakthroughs.
- net Qoq-8.18 %; yoy + 5.34 %
- it's a little bit higher than last year.
- it's a stable blue chip.
- the oversupply of natural gas is one of the hidden worries 


【PMETAL】
- Market Cap: Rm12. 284 billing
- Turnover and net breakthrough history.
- net Qoq + 1.43 %; yoy + 2.80 %
- profit from operation.
- Fy2017 1 H already earn 23.9 % MORE THAN QSI 1 H
- China's reduced production and metal prices.
- next company will be on fire.
- estimated fy2017 overall performance lasts better than qsi


【】 dialog
- Market Cap: Rm10. 888 bills
- Turnover and net breakthrough history.
- net Qoq + 9.69 %; yoy + 32.87 %
- Fy2017 Earns 25.67 % more than qsi
- the middle and Downstream Business of the big horse and gas industry is very positive.
- currently pe= 28, not cheap, but there's room for growth.
- management seems to have a lot of confidence in it.


【AHEALTH】
- Market Cap: RM555.3 mil
- Turnover breakthroughs.
- the net is the highest in six quarters.
- net Qoq + 2.04 %; yoy + 6.72 %
- net cash, net cash up to rm75. 5 MIL
- there's only 117 million shares in stock.


【I】
- Market Cap: RM196.2 mil
- Turnover breakthroughs.
- net Qoq + 3.08 %; yoy + 821.69 %
- profitability is starting to stabilize, for three consecutive quarterly net gains over rm2 mil
- main credit to the sales volume of metal-related products and to higher prices
- the company has also launched a comprehensive development project, which is expected to be launched.
- the review of performance and prospect has been written for two pages.
- management seems to be very optimistic about fy2017.


【ORNA】
- Market Cap: RM104.6 mil
- Turnover is historic.
- net Qoq + 54.59 %; yoy + 138.12 %
- cash flow is very positive, and cash is gradually increasing.
- although production costs increase, the sales increase or the net.
- there's only 75250 units in stock, low circulation.
- the stock price has risen almost 15 % today %, currently pe= 8.6


Planting Stocks, such as bkawan and klk, have declined, and the planting unit should not have too much to look at.

Monday, May 29, 2017

Oil trades below US$50 as market pessimism over OPEC deal lingers

Oil traded below US$50 a barrel after OPEC underwhelmed investors with its production-cut extension deal.
Futures fell 0.3 percent in New York. Prices closed 1.1 percent lower last week after OPEC agreed to extend limits on crude output through the first quarter of 2018. Saudi Arabia’s Energy Minister Khalid Al-Falih said the oil-cuts strategy is working and that global stockpiles will drop faster in the third quarter. US explorers added two rigs last week to 722, the highest level since April 2015, Baker Hughes Inc said Friday.

“It’s huge inventories around the globe that are really keeping a lid on prices, combined with the ability of those agile US producers who scramble back into action should the oil price rise,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. Trading volumes were comparatively low due to public holidays in the US and the UK.
Oil in New York clawed back from its tumble toward US$45 in the run-up to the meeting in Vienna as Saudi Arabia and Russia rallied support for the deal. Meanwhile, US inventories dropped seven weeks in a row, though they still remain above the five-year average and production rose to the highest since August 2015. Trading volumes were comparatively low due to public holidays in the US and the UK.

West Texas Intermediate for July delivery traded at US$49.67 a barrel on the New York Mercantile Exchange, down 13 cents, at 3.45pm in Dubai. Total volume traded was about 50 percent below the 100-day average. Prices rose 90 cents to close at US$49.80 on Friday.

US rigs
Brent for July settlement was 11 cents lower at US$52.04 a barrel on the London-based ICE Futures Europe exchange. The contract gained 69 cents, or 1.3 percent, to settle at US$52.15 on Friday. The global benchmark crude traded at a premium of US$2.36 to WTI.
“We believe the next big move for prices is up as oil inventories fall at an even faster pace in the coming weeks,” Giovanni Staunovo, a Zurich-based commodity analyst at UBS Group AG, said by email. While U.S. shale output is set for “robust growth” in the second half of the year, “we see the oil market tightening further in the coming quarters,” he said.

Rigs targeting crude in the US increased for a 19th straight week in the longest streak of gains since August 2011, according to Baker Hughes data. While the number of working rigs has more than doubled from last year’s low of 316, it was the smallest increase this year. Drillers in the D-J/Niobrara Basin in Colorado led the growth last week, adding four for a total of 27 oil rigs in the region.

Harn Len buys private company to get hands on Johor land

Loss-making oil palm planter and property developer Harn Len Corp Bhd announced today that it has bought a private company for RM24 million to gain access to a plot of land the latter owns in Johor Bahru. 
The target company is Midwest Equity Sdn Bhd and jointly owned by Datuk Azizi Yom Ahmad (35%), Datuk Abdul Gani Yusof (35%), and Piagam Wira Sdn Bhd (30%). However, Harn Len did not detail how big the land is.

“The basis of the Purchase Consideration was that the Land is located at a strategic and prime location and thus, there is expected capital appreciation and gain from future development,” Harn Len said in a filing with Bursa Malaysia today.

“The land is located in the heart of Johor Bahru City Centre and approximately opposite the state's most strategic development, comprising of six towers — a hotel, a hotel with residences, an office, high rise medical suites, two serviced apartment towers and a mall,” Harn Len added.
According to Harn Len, its purchase of Midwest Equity — done on the basis of willing-buyer, willing-seller — was funded via a combination of cash and borrowings. As at end-2016, Harn Len has cash and bank balances of RM3.12 million.

Harn Lern owns 16,901ha of oil palm plantations, mainly in Pahang and East Malaysia. It also operates a three-star hotel, Tropical Inn, which is part of the 25-storey office tower known as Johor Tower.

Listed on the main market since 2003, Harn Lern shares slid 1 sen or 1.22% to 81 sen today, for a market capitalisation of RM150.24 million.