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.

Genting 1Q net profit surges 361% on disposal gain

Genting Bhd saw its net profit surge 361% to RM603.06 million or 16.2 sen per share for the first quarter ended March 31, 2017 (1QFY17), from RM130.83 million or 3.52 sen per share in 1QFY16, helped by a gain on disposal.
 
Revenue for the quarter, however, grew a marginal 1% year-on-year to RM4.77 billion from RM4.71 billion.
In a statement, Genting said its performance for the quarter was boosted by a gain of RM302.2 million recognised from the completion of the sale of Genting Singapore Plc’s 50% interest in associate Landing Jeju Development Co Ltd.
The group said Resorts World Sentosa (RWS) benefited from the stronger Singapore dollar exchange rate to the ringgit during 1QFY17, translating to higher revenue for the quarter.

As for Resorts World Genting (RWG), it reported stronger revenue contribution due to better hold percentage from the mid to premium segment of the business, even though business volumes were lower. However, RWG pre-tax profit slid on higher costs related to the premium players business, and costs incurred for the new facilities under Genting Integrated Tourism Plan (GITP).

The group’s operations in UK also saw lower revenue and pre-tax profit, due to the weaker British pound against the ringgit.
As for its Resorts World Casino New York City (RWNYC), it saw better performance following an improved commission structure with the New York state authority, which, coupled with the stronger US dollar versus the ringgit, drove revenue and pre-tax profit higher for its US and Bahamas business.

"There was also a lower adjusted loss before interest, tax, depreciation and amortisation (LBITDA) from the Resorts World Bimini operations in Bahamas following the cessation of Bimini Superfast cruise ferry operations in 1QFY16," it said.
Meanwhile, its plantation business in Indonesia recorded higher revenue and profit amid higher palm product selling prices and higher fresh fruit bunch (FFB) production. But its plantation business in Malaysia, despite higher prices, posted lower performance amid lower sales.

The power division was impacted by lower construction revenue, due to lower percentage of completion for the 660MW coal-fired Banten plant in Indonesia, while the oil and gas division benefited from higher average oil prices.
Going forward, the group said it continues to focus on the development of GITP, which is expected to elevate RWG’s position as the destination of choice in the region, while RWS remains focused on growing the premium mass market.
For the plantation business, Genting said the movements in palm product prices and crop production trends will continue to have significant influence. It expects FFB production growth to be driven by the addition of newly-mature areas and the progression of existing mature areas into higher-yielding brackets at its Indonesian estates.

Genting closed down 21 sen or 2.11% at RM9.73, giving it a market capitalisation of RM37.03 billion.

Friday, May 26, 2017

M’sian Company To Subscribe RM1.87mil Shares In Chinese F&B Enterprise, Boosting E-Commerce Via Digital Free Trade Zone

NetX Holdings Berhad announced its subscription of shares in Flavours of Malaysia (FoM) on Thursday, May 25.
NetX’s subscription of FoM’s shares represent 51% of the issued and paid-up share capital, for a cash consideration sum of RMB 3 million (RM1.87 million).

FoM is a wholly-owned foreign enterprise company incorporated under the laws of China and has its business operations in Shenzhen, China and intends to expand by establishing fulfilment centres in HangZhou together with NetX.

As FoM offers Malaysian specialty Food & Beverage products in China, these fulfilment centres will conduct research and development on Chinese national acceptance of Malaysian products and to use the research findings to acclimatise the product to suit the local taste buds.

Together with NetX, the partnership also intends to develop a Halal-certified e-commerce market place for goods and services between Chinese and Malaysian consumers and will use NetX’s integrated Mobile Electronic Payment Exchange for the payment services of this eCommerce market place.

“According to a report online, Consumers in China spent $798 billion on food and beverage in 2014 and this is projected to grow by a Cumulative Annual Growth Rate (CAGR) of 11 per cent to reach $1.5 trillion by 2020.

“Of this aggregate, China’s estimated 26 million Muslims contributed around 0.1 percent, or $10 billion, estimates the State of the Global Islamic Economy 2015/16 report.

“To disregard this huge market group is foolhardy.

“NetX is always and will continue to be on the lookout for populous, profitable market penetration and our ultimate goal is to provide and ensure a seamless, e-commerce and e-payment experience,” said Steve Tan, Executive Director of NetX Holdings Berhad.

The decision to open the new fulfilment centres in HangZhou is based on Malaysia’s recent e-commerce roadmap for the Digital Free Trade Zone (DFTZ) and the establishment of regional e-fulfillment centres in Malaysia.

The DFTZ was launched by Prime Minister Datuk Seri Najib Razak and Alibaba founder Jack Ma on March 22, 2017 to provide physical and virtual zones to facilitate SMEs to capitalise on the convergence of exponential growth of the internet economy and cross-border e-commerce activities.

“DFTZ is a testament to Malaysia’s unwavering commitment to propel the growth of SMEs through e-commerce. It also marks a new phase of collaboration between Malaysian and Chinese businesses through the participation of Mr. Ma and Alibaba Group. I strongly believe that together, we can achieve a more prosperous economic landscape that benefits the industry and people,” Najib had commented.
The partnership between NetX and FoM could also be seen as a prelude to China’s One Belt, One Road (OBOR) initiative, which is poised to contribute to the local economic development.

Active Runner in Focus: DRB-HICOM BERHAD (1619.KL)

Shares of DRB-HICOM BERHAD (1619.KL) are moving on volatility today 2.38% or $0.04 from the open. The BM listed company saw a recent bid of $1.72 and 70695100 shares have traded hands in the session.
Investors might have been ready to throw in the towel as the rally stalled recently. However, the panic subsided and growth-hungry investors came searching for their favorite stocks in the wreckage. Keeping things in perspective, the economy seems good, and so does earnings growth. Investors may be wondering where the money will be flowing in the second half of the year. Many people may assume healthcare and tech would be the easy targets, primarily because that’s where the earnings growth is. Industrials and staples are no slouches for growth either, but they may be well fully-valued for their growth. Traders will most likely be honing their strategies that they created, trying to beat the market over the next couple of months. 
Digging deeping into the DRB-HICOM BERHAD (1619.KL) ‘s technical indicators, we note that the Williams Percent Range or 14 day Williams %R currently sits at -28.57. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. The Williams %R was developed by Larry Williams. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator.
DRB-HICOM BERHAD (1619.KL) currently has a 14-day Commodity Channel Index (CCI) of 78.66. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.
Currently, the 14-day ADX for DRB-HICOM BERHAD (1619.KL) is sitting at 37.26. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.
The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, the 14-day RSI for DRB-HICOM BERHAD is currently at 63.68, the 7-day stands at 62.14, and the 3-day is sitting at 60.68.

Monday, May 22, 2017

HLT Global suffers net loss in first quarter post-listing

HLT Global Bhd, which was listed on the ACE Market of Bursa Malaysia in January this year, suffered a net loss of RM206,000 for the first quarter ended March 31, 2017 (Q1 FY17).
 
This is the second consecutive quarter of net loss for the group, which reported a net loss of RM1.74 million in the fourth quarter ended Dec 31, 2016 (Q4 FY16). Prior to listing, the group reported a net profit of RM1.65 million in the third quarter ended Sept 30, 2016.

In a filing with Bursa Malaysia last friday, the group said the Q1 FY17 net loss was due to lower revenue and the listing expenses incurred. Revenue for the quarter stood at RM9.56 million, 38.9% lower than RM15.64 million in Q4 FY16.

"The decrease in revenue was mainly attributable to decline in revenue from sale of new lines. The revenue from sale of new lines was mainly contributed by five customers, made up of a combination of three local orders and two foreign orders," it said.
The group said it recorded lower revenue from sale of new lines as most of the orders are near completion. 

However, it said that it achieved higher gross profit margin of 12.89% during the quarter compared with 10.12% in the preceding quarter. It also secured a new foreign order from Vietnam which is expected to contribute positively to its revenue.

"The above, coupled with the incurrence of listing expenses of RM295,000 during the current financial quarter, has resulted in the group recording a pre-tax loss of RM197,000 for the current financial quarter," it said.

Singapore eDevelopment Ltd (SGX:40V) Cancer and Alzheimer’s Platform

Singapore eDevelopment Ltd (“SeD”), through its subsidiary Global BioLife Inc. (“Global BioLife”), has initiated advanced research of a new universal therapeutic drug platform, known as Linebacker, to combat a range of diseases including Alzheimer’s, diabetes and cancer. The research will be led by two-time Nobel Prize nominee, Mr Daryl Thompson.

Singapore Exchange-listed SeD said Mr Daryl Thompson will leverage on his expertise in organic and carbohydrate chemistry and the use of pandemic technology in combating the Ebola virus in the research and development of this universal therapeutic drug platform, known as Linebacker.

Unlike the traditional approach to cure individual diseases with specific drugs, the Linebacker platform seeks to offer a breakthrough option for multiple diseases to be cured. It can also potentially combat drug-resistant viruses and antibiotic-resistant bacteria.

Mr Daryl Thompson will lead the research to be conducted by Global BioLife in his capacity as Director of Scientific Initiatives. Global BioLife is an 80%-held subsidiary of SeD’s wholly-owned subsidiary, Global BioMedical Inc. The remaining stake of Global BioLife is held in equal proportions by Mr Daryl Thompson’s GRDG Sciences LLC and Australia Securities Exchange-listed Holista CollTech Limited.

Mr Daryl Thompson was nominated for a Nobel Prize in 2015 and 2016 for his research in cutting-edge organic and carbohydrate chemistry as well his research in pandemics technology to fight pandemics such as Ebola. He has used his expertise to initiate research regarding universal therapeutics to cure the world’s deadliest diseases. Mr Scott Truesdell, Research Coordinator and Special Projects Leader at Global BioLife, will execute the research on the Linebacker platform.