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Brian9818
moving up ?
Several positive developments this year that are value enhancing are pending completion.

BUY maintained, SOP-based TP raised to MYR2.54 (+12sen) after updating valuations – upside 21%.

Revaluing MPI lifts SOP to MYR2.80 (+33% upside). If Ampang land is sold at MYR500psf, SOP rises to MYR3.07 (+46%).

What’s New
There are several positive developments pending completion. These include the impending sale of a 49% stake in MPI, and the recent Court of Appeal’s ruling in favour of MPHB with regards to the Bukit Bintang land acquisition. The sale of the Ampang land, if it materializes, would also be a positive for the group. On the flip side, its joint-venture developments have been slow to take off.

What’s Our View
It has been a busy year on the whole for MPHB and we await finalization of the various deals in the pipeline. Our SOP-based TP is raised to MYR2.54 from MYR2.42, on updating the book value for Multi-Purpose Insurans (MPI) while applying an unchanged P/BV valuation of 1.6x.

Assuming the sale of its 49% stake in Multi-Purpose Insurans (MPI) at a P/BV of 2.2x, its revaluation would lift our SOP/shr by 26sen. And, if it does sell its Ampang land, as speculated in the press, for MYR500 psf, this would lift our SOP/shr by another 27sen to MYR3.07.

Inability to pay its FY13 final DPS of 5sen undoubtedly raises concerns over future distributions. Much depends on how Bank Negara’s financial holding company (FHC) guidelines impact the computation of group capital requirements. Nevertheless, MPI is well-capitalized and the MPHB group as a whole is cash rich. We therefore think this is just a temporary setback.

Source: Maybank Research - 30 Jun 2014
30 Jun 2014, 10:52 AM
Brian9818
momentum is picking up !drool
25 Jul 2014, 04:49 PM
Brian9818
Period 2Q14/1H14

Actual vs. Expectations 1H14 realised net income (RNI) of RM116.2m came in within expectations, making up 53% of street and our estimates.

Dividends 1H14 GDPU of 3.89 sen (+13% YoY) was declared, which includes a 0.08 sen non-taxable portion. It is on track as it made up 53% of our FY14E GDPU of 7.34 sen (5.8% yield).

Key Results Highlights QoQ, topline growth was unexciting (+1%) on minimal rental reversions in 1H14, which resulted in marginally higher RNI (+1%) due to flattish cost.

YoY, topline growth was strong, increasing by 8% to RM115.5m due to the double-digit rental reversions in FY13 on 27% and 54% of occupied NLA for MV and TGM. NPI margins improved by 2.2ppt on better cost management efforts which allowed NPI to increase by 11% to RM78.7m. The strong topline growth was sufficient to offset the increase in expenditure (+6%), allowing RNI to increase by 15%.

YoY-YTD, topline growth was strong, increasing by 10% to RM229.6m due to similar reasons mentioned above. The slight increase in interest income (+27%), and marginal decrease in financing cost (-1%) was sufficient to negate the increase in expenditure (+7%) in 1H14. As a result, RNI increase by 16%, while RNI margins also improved by 2.6ppt.

Note that the company no longer provides MV and TGM segmental breakdown.

Outlook Previously, management was guiding strong reversions of 10%-15% on leases up for expiry in FY14E, which is substantial as 37% and 31% of NLA for MV and TGM will be expiring. We expect the bulk of FY14 rental reversions to be felt in 2H14.

The asset acquisition environment remains challenging due to the low cap rate environment of 5%-6% at present while we believe IGBREIT is unlikely to make any acquisitions in the near-term, albeit their low gearing level of 0.24x.

Change to Forecasts We make no changes to our FY14E and FY15E RNI.

Rating Maintain OUTPERFORM

Valuation Our call is sector-driven as we expect MREITs to benefit from near term compression in the 10-yr MGS which has been gradually declining from 4.00% to 3.89% since early July-14 in anticipation of a potential European QE. We like IGBREIT for its strong rental reversion opportunities. No changes to our TP of RM1.35 based on FY15E target gross dividend yield of 5.6% (net: 5.0%) or a +1.8ppt spread to the 10-yr MGS of 3.80%.drool

Risks to Our Call Bond yield expansion or compression vs. our target 10-yr MGS. Weaker-than-expected rental reversions.

Source: Kenanga
25 Jul 2014, 04:55 PM


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