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Casper Koo Member Star
Total Cumulative Posts 13
Joined Dec 2018
Country MALAYSIA
Gender Male


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CorporateSTOCK: IOICORP (1961)
Blog 22 Feb 2019, 11:38:54 AM
  • Prospects. Management expects to see favourable results from upstream plantation segment in the following quarter given the strong recovery in CPO prices despite seeing a seasonal drop in FFB production. Meanwhile, the palm kernel oil price, which is a key raw material for its oleochemical business, has not rebounded in line with the CPO price, which will bode well for its oleochemical sub-segment business. Lastly, its associate company, Bunge Loders Croklaan is also expected to perform well with higher sales volume in the confectionery and nutrition categories.
CorporateSTOCK: IOICORP (1961)
Blog 22 Feb 2019, 11:38:47 AM
  • 2QFY19 revenue (QoQ: +0.3%, YoY: -6.4%). Group revenue slipped 6.4% YoY to RM1.9bn, dragged by a decline in plantation and resource based manufacturing sales. Upstream plantation sales tumbled 49.8% YoY to RM41.5m, dragged by a decline in both FFB production and CPO selling prices. Average CPO price recorded in 2QFY19 was down from RM2,644/mt to RM1,932/mt, a sharp decline of 26.9% YoY. Meanwhile, FFB production dropped 3.3% YoY to 983,147mt. Resource-based manufacturing sales saw declined 4.7% YoY to RM1.8bn.
  • 2QFY19 core net profit (QoQ: +14.7%, YoY: -26.1%). Core earnings dipped 26.1% YoY to RM200.6m. The weaker results were due to softer earnings contribution from upstream plantation segment, which was partly cushioned by stronger resource-based manufacturing sales. Plantation earnings tumbled 63.9% YoY to RM127.3m, attributed to higher cost of production and weaker CPO selling prices. On the other hand, resource-based manufacturing earnings surged 95.3% to RM121.5m on higher sales volume and margins from oleochemical and refining sub-segments. Earnings contribution from its 30%-owned Bunge Loders Croklaan jumped 48% YoY to RM45.7m.
CorporateSTOCK: IOICORP (1961)
Blog 22 Feb 2019, 11:38:36 AM

IOI Corp posted a core net profit of RM382.7m for 1HFY19, making up only 44% and 39% of our and consensus expectations after stripping out i) total net foreign currency translation of RM83.9m on foreign currency denominated borrowings and deposits and ii) fair value gain on derivative financial instruments from the resource-based manufacturing segment amounting to RM38m. A lower DPS of 3.5sen (-22.2% YoY) was declared for the quarter. Despite the lower-than-expected results due to a sharp decline in CPO prices during Oct-Dec period, we keep our numbers unchanged as we see a potential catch-up in 2H following the recent strong recovery in CPO prices. Maintain Neutral call with an unchanged TP of RM4.04.

CorporateSTOCK: EUPE (6815)
Blog 22 Feb 2019, 11:38:15 AM

  • Target Price: RM0.660
  • Last closing price: RM0.600
  • Potential return: 10.0%
  • Support: RM0.575
  • Stop Loss: RM0.555

Possible for bottom fishing. EUPE is showing signs of recovery from its consolidation phase. RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.620 be broken, it may continue to lift price higher to subsequent resistance levels of RM0.660.

However, failure to hold on to support level of RM0.575 may indicate weakness in the share price and hence, a cut-loss signal.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:37:30 AM

No changes in FY19E core PATAMI as prospects remain intact, while introducing FY20E core PATAMI of RM69.4m, premised on automotivedriven revenue growth 26% and a GP margin of 28%.

Maintain MARKET PERFORM with an unchanged TP of RM0.750 based on an unchanged FY19E PER of 18.0x, in line with the valuation of its German competitor – OSRAM. While D&O offers exciting growth prospects, we believe valuation is stretched at current price levels.

Risks to our call include: (i) disruption of dies supply, (ii) replacement/obsolescence of LED technology, (iii) sharp currency fluctuations, and (iv) adverse foreign labour policy.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:37:21 AM

Expansionary plan is intact. D&O’s 5-year expansion plan with its new 2.41 hectare land-cum-factory building (additional 2x land area, which could house 3x additional capacity), is still ongoing. Currently, we are conservatively assuming an additional 25-30% capacity through FY20, which supports our 26-28% growth forecasts for the Automotive segment in FY19-20. In terms of product mix, the higher-margin exterior lightings only constituted c.35% of total Automotive revenue in FY18. The contribution is expected to progressively increase to 50% in 2-3 years, anchored by new supply wins from Tier 1 Automotive LED customers, especially in the headlamps space, alongside existing orders of Day Running Lights, Side signals, Position Lamps, and Rear Combination Lamps, which are still seeing rapid deployment in new vehicles. Meanwhile, on interior lightings, the group is currently working on its smart RGB products and targets commercialisation by 2020. We note that the smart RGB products could see an ASP that is at least 3-4x higher than existing interior LED lightings.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:37:13 AM

QoQ, 4Q18 revenue rose 14% on seasonality. Traditionally, 4Q is the strongest quarter as customers increase orders to prepare for higher year-end and Chinese New Year demands. Meanwhile, core PATAMI jumped by a larger quantum (+40%) due to a 1.3-ppt improvement in GP margin as well as relatively stagnant R&D expenses and lower overheads.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:37:06 AM

YoY, 4Q18 revenue climbed 6% on the back of higher automotive LED sales. The segment’s revenue contribution continued to inch up further to 97% from 95% in 4Q17, which is consistent with the group’s strategy to shun cut-throat competition facing the general LED market (general lighting and LED TV), while switching focus to the higher-margin Automotive segment. The effort, alongside better operating efficiency, led to a 3.6-ppt expansion in GP margin to 29.7%. Coupled with lower minority interests arising from additional acquired stake in Dominant, core PATAMI more than doubled to RM14.2m.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:36:58 AM

Within consensus but missed our estimate. FY18 core PATAMI surged 75% YoY to RM38.2m, which is within consensus estimate at 98%, but 7% shy of ours. We attribute the slight earnings miss to the Chinese imposition of tariffs on US vehicles and the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emission regulation, both of which have affected vehicle sales in the regions during 4Q18. As a result, FY18 revenue came in short at RM491m, vs. our forecast of RM537m. No dividend was announced during the quarter, as expected.

CorporateSTOCK: D&O (7204)
Blog 22 Feb 2019, 11:36:49 AM

FY18 core PATAMI surged 75% YoY to RM38.2m, within consensus estimate at 98%, but 7% shy of ours as sales were affected by trade war and WLTP. YoY, 4Q18 core PATAMI more than doubled on higher automotive LED sales, GP margin and stake in Dominant. QoQ, core PATAMI jumped 40% on seasonality and better cost management. No dividend was announced, as expected. Maintain FY19E core PATAMI and introduce FY20E PATAMI of RM69.4m. Maintain MP with an unchanged TP of RM0.750.

CorporateSTOCK: GENTING (3182)
Blog 22 Feb 2019, 10:26:49 AM

GENS reported satisfactory FY18 results. Although 4Q18 earnings were weaker QoQ likely due to provisioning, the resilient business volume indicated that the recovery is sustainable. Going forth, the sustainability of business volume remains the key in the midst of an uncertain economic condition. For now, we keep GENTING’s call unchanged pending its 4Q18 results release next week.

GENS’ FY18 matched expectations. At 97% of consensus’ FY18 estimates, Genting Singapore Ltd (GENS, Not Rated)’s FY18 core profit of SGD766.7m came in within expectations. At the adjusted EBITDA level, FY18 earnings of SGD1.23b accounted for 102%/99% of house/street’s FY18 EBITDA estimates. It declared a final NDPS of SG0.02 in 4Q18, which is the same amount paid in 4Q17. FY18 NDPS totalled to SGD0.035, which is also the same as that of FY17.

Weaker sequential result despite stronger top-line. 4Q18 core earnings contracted 28% to SGD152.3m, although revenue rose 4%, due to higher opex which we believe was due to provisioning. The top- line growth was largely due to higher VIP volume by 17% with market share improving to 47% from 42% as well as better luck of rolling chip win improving to 3.4% from 2.9% previously. As such, 4Q18 adjusted EBITDA fell 10% to SGD286.0m from SGD318.8n previously. Meanwhile, impairment on trade receivable jumped to SGD35.6m from SGD12.9m in 3Q18.

Business volume recovery looked sustainable. 4Q18 core profit rose 3% from SGD148.6m which was on the back of 10% hike in VIP volume to c.SGD6.05b with its market share expanding to 47% from 41% while rolling chip win improved to 3.4% from 2.7% previously. YTD, FY18 core profit leapt 18% from SGD648.1m on the back of 6% hike in revenue. At adjusted EBITDA level, FY18 earnings rose 7% to SGD1.23b from SGD1.15b. This was attributable to significant improvement in business volume with rolling chip volume rising c.20% over the year.

All eyes on Japan. Since the Japanese Diet enacted the Integrated Resorts (IR) Implementation Bill last July, so far three prefectures, namely Osaka, Wakayama and Nagasaki have plans to apply to host casino resorts. GENS has registered companies in Osaka and Yokohama and raised JPY20b of Samurai Bond in October 2017. According to news reports, there are 17 international IR operators indicating their interest to bid for one of the three IR license in Japan. For now, it is still too early to gauge the potential outcome of the bidding process which expected to take place in 2H19. Meanwhile, management is cautious over the Singaporean market in 2019 given the uncertainty of economic environment, although business volume has seen improvement for nearly two years and should be sustainable.

Maintain GENTING’s call for now. We are keeping our OUTPERFORM call, price target of RM7.55/share, which is based on 3-year mean discount of 38.5% to SoP of RM12.24, and earnings estimates for GENTING unchanged for now, pending the release of its 4Q18 results next week. Risks to our call include weak business volume and poorer luck factor.

CorporateSTOCK: AIRASIA (5099)
Blog 22 Feb 2019, 10:26:25 AM

The share price of Malaysian low-cost airline AirAsia (AAGB) continued on its strong upward momentum since dipping in October 2018.  Year-to-date, the share price is up 10.8%, largely from gains in the past two days, pushing the share price to close at RM3.29.  Ahead of AAGB’s 4Q18 results due on 27 February 2019, Macquarie Equities Research (MQ Research) released a report, reiterating its Outperform recommendation with an unchanged target price of RM5.00.

Key Points:

  • Outperform (OP) reiterated ahead of 4Q18 results
  • Early indicators look good: Spot Jet prices fell 24% quarter-on-quarter (QoQ) in 4Q18 (85% unhedged) which Revenue Passenger Kilometres (RPK) rose +11% year-on-year (YoY)

Conclusion

  • MQ Research reiterates their OP rating on AAGB with an unchanged target price of RM5.00 ahead of 4Q18 results, due 27 February 2019. MQ Research expects a sequential improvement in profitability on easing fuel prices (-24%), higher RPK (+11%) and higher load factor (+2ppts to 84%).

Impact

Earnings and Target Price Revision

  • No change.

Price Catalyst

  • 12-month price target: RM5.00 based on EV/EBITDAR methodology.
  • Catalyst: 4Q18 results due 27 February.

Action and Recommendation

  • Outperform maintained.
CorporateSTOCK: AMBANK (1015)
Blog 22 Feb 2019, 10:25:40 AM

In line with expectations. The Group posted 9MFY19 earnings which was in line with our and consensus’ expectations. It came in at 76.6% and 74.9% of respective full year estimates.

Earnings growth contributed by lower OPEX. The 3QFY19 and 9MFY19 OPEX fell -11.1%yoy and -9.5%yoy respectively as the benefit from the Group cost rationalisation initiatives continue to bear fruit. Personnel cost for 9MFY19 contracted -4.3%yoy to RM895.4m. The management expects that CI will be kept at below 55% level for FY19.

Weak NOII moderated by NII growth. NOII continue to be affected by the volatile market conditions, falling -2.7%yoy in 9MFY19. Main contributors for the drop were lower fee income and trading income. These contracted -5.1%yoy to RM390.9m and -35.4%yoy to RM111.6m respectively. However, the NOII weakness was moderated by NII increase of +5.0%yoy. This was despite NIM compression.

Recoveries also boosted earnings. The Group registered a lumpy recovery from several of its large corporate accounts in 3QFY19 which resulted in write backs. There were recoveries amounting to RM215.4m vs. RM97.4m in 3QFY18. We understand these were from legacy accounts.

Robust loans growth driven by targeted segments. Gross loans as at 3QFY19 grew +6.0%yoy to RM100.4b. The gross loans growth were led by mortgage which expanded +17.0%yoy to RM29.8b and SMEs

which grew +20.1%yoy to RM18.8b.

Building up buffer. Meanwhile, deposits grew at faster pace at +6.9%yoy to RM106.8b. We understand that this is to build up a liquidity buffer. CASA rose +10.5%yoy to RM22.1b coming from nonretail segment which grew +17.0%yoy to RM10.3%. Fixed deposits (FD) grew +6.0%yoy supported by the +14.8%yoy rise to RM41.0b in retail FD.

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