News Bites · KL Kepong Berhads FY14 core net profit amounted to RM1.04bn (+15.7% YoY), which is at the lower end of our estimate and below consensus estimate. · AirAsia Berhads 9M14 adjusted core earnings of RM164mn came in within our expectation but below consensus estimates. · AMMB Holdings Berhads 1HFY15 results came within expectations as net profit of RM983mn, accounted for 47% and 49% of ours and consensus forecasts of around RM2,071mn and RM1,996mn respectively. · Star Publication (M) Berhads 9M14 net profit of RM89.9mn came in within expectations, accounted for 64.7% and 63.3% of our and streets estimates · Shell and Petronas Carigali, subsidiary of Petroliam Nasional Berhad, recently took the final investment decision to develop the E6 field, offshore Malaysia. · Press Metal Bhd has secured an additional 500MW of electricity for the proposed Phase III expansion of its aluminium smelter. · Bina Puri Holdings Bhd plans to list its Indonesian power assets, earliest by the second quarter of next year. · Axis REIT Managers Bhd has allocated between RM300mn and RM400mn for asset acquisitions next year. · Proton Holdings Bhd has denied that it has not paid its 200 vendors for supplies of automotive parts as rumours are rife that Proton is in financial trouble and has not paid its vendors. · Minetech Resources Bhd, whose core business is quarry mining, announced plans to pursue new mining projects, particularly gold mining in Indonesia. · MSM Malaysia Holdings Bhd is close to sealing deals soon with two sugar companies in Asia in its effort to become the largest sugar hub in the region by 2020. · Residential-construction permits in the U.S. climbed in October to a six-year high, pointing to a pickup in homebuilding after activity cooled because of a slowdown in multifamily projects. Results Update Star Publications (M) Berhad Target Price : RM2.52 (Sell) Star’s 9M14 net profit of RM89.9mn came in within expectations. YoY, the 9M net profit dropped 8.9% to RM89.9mn as revenue eased marginally by 0.4% to RM736.2mn. The lower net profit was mainly due to weaker performance of its print segment. QoQ, the 3Q net profit was 12.9% lower at RM34.3mn as revenue dropped 10.0% to RM247.2mn. 2014 is a challenging year for the media industry as advertisers cut down or postponed their sales and promotional campaigns, while the government bodies and corporate scaled down the Hari Raya and Merdeka celebrations as mark of respect after the MH370 and MH17 incidents. The increase in fuel price and interest hike further dampened the consumer sentiments and caused advertisers to tone down advertisements in 3Q14. No change to our earnings forecasts pending an analysts briefing scheduled on 21 November 2014. Maintain our SELL call on STAR with unchanged target price of RM2.52 AMMB Holdings Berhad Target Price : RM7.30 (Hold) 1HFY15 results came within expectations. AMMB reported net profit of RM983mn, accounting for 47% and 49% of ours and consensus forecasts of RM2,071mn and RM1,996mn respectively. Note the estimates include divestment gains from the part disposal of AmLife and AmFamilyTakaful. Net profit advanced by close to 9% YoY, underpinned by divestment gains. Excluding, the group’s sequential underlying performance was stronger, with net profit up 35.4% YoY on the back of better income growth and lower expenses. Compared to a year ago, results were dulled by overall weak market momentum and cautious credit risk appetite in selected segments in retail, thus impacting loans growth. An interim dividend of 12.0 sen representing c. 50% of FY15 expected payout has been proposed. This is higher than the 7.2 sen paid in the previous corresponding period. Incorporating softer-than-expected loans and deposit growth, we reduce our assumptions to 3/5/6% and 2/3/5% for FY15/16/17 respectively. As a result, core net profit estimates are adjusted to RM1,807/1,972/2,145mn from RM1,861/2,136/2,397mn previously. Including one-off gains from the disposal, FY15 net profit would be c. RM2,017mn. With that, TP is reduced to RM7.30 from RM7.80 on the back of reduced earnings. HOLD maintained. Kuala Lumpur Kepong Berhad Target Price: RM19.27 (Sell) KLK reported FY14 net profit of RM991.7mn (+8.1% YoY). Excluding non-core items, core net profit amounted to RM1.04bn (+15.7% YoY). A key highlight – the downstream manufacturing segment recorded operating loss of RM5.2mn in 4Q14, attributable to RM12.8mn unrealised loss from changes in fair value of derivative contracts, weak margin and stocks write-off. As a result, FY14 core earnings came in at the lower end of our estimate (95% of FY14) and below consensus estimate. The group declared final dividend of 40 sen/share, bringing total dividend for FY14 to 55 sen/share, in line with our expectations. FY15/16 earnings forecasts downgraded by 1.4%/1.5%, to take into account weak margin for refining and oleochemical sub-segments. We also introduce FY17 earnings forecasts of RM1.5bn (+22% YoY). Target price revised lower to RM19.27 in line with the downgrade in earnings forecasts. The stock remains a Sell given the earnings risk in the downstream segment and fair PER valuations. AirAsia Berhad Target Price : RM2.78 (Hold) AirAsia’s 9M14 adjusted core earnings of RM164mn came in within our expectation but below consensus estimates. In this quarter, MAA’s load factor dropped to 76.6% due to the decline in revenue passenger kilometres (RPK) declined. Yield (RASK) was flat as in 2Q14 but the spread (RASK-CASK) improved by 31% to 2.7sen as the company managed to reduced cost (CASK) by 4%. TAA suffered higher losses due to cost escalations, despite high load in in 3Q14. IAA has returned to profit after the company terminated all loss-making routes. We maintain our FY14 earnings projections. However, we raise our FY15-16 earnings by 5% and 2% respectively, after revising our jet fuel price, fuel surcharge, RMvsUSD, THBvsUSD, and IDRvsUSD assumptions. With the change in earnings, we raise our target price to RM2.78 (from RM2.64 previously), based on 12x CY15 EPS. Maintain Hold TA Research
Posted on: Thu, 20 Nov 2014 07:10:38 +0000
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