KUALA LUMPUR, Jan 31 ― This is a selection of morning calls by local research houses for the day.
From HwangDBS Vickers
FY12 earnings ex-revaluation gains within expectations, driven mainly by Mid Valley Megamall rentals. 1.83 sen DPU declared – 4.8 per cent distribution yield when annualised. Near-term earnings growth organic in nature; limited pipeline assets up for injection. Maintain HOLD with RM1.40 DCF-based TP.
Firmer steel prices will lift earnings sequentially. Government intervention to curb cheaper imports will be positive for the sector. Valuation is undemanding; upgrade to BUY with revised RM1.70 TP based on 0.9x FY13 NTA.
Strong rebound in rolling chip, mass picking up. RWS: May see similar recovery with RWS running at full steam, potential new ventures in 12-18 months. Raise 2013-14F earnings by 7-11 per cent; Maintain Hold but raise TP to S$1.60
From OSK Research
Krung Thai Bank
We continue to like KTB’s impressive growth and compelling valuations. Following the downward revision of provision estimates for FY13 and FY14, we are raising our FY13 and FY14 earnings forecasts by 5.1 per cent and 4.9 per cent respectively, which accordingly lift our ROE for FY13 to 17.1 per cent.
As we are also cutting our risk premium and COE assumptions due to the bank’s bright growth outlook, improving risk profile and turn around, this raises our FV from THB25.29 to THB32.75. Maintain BUY (2.23x FY13 P/BV, ROE: 17.1 per cent, COE: 11.0 per cent, Growth: 6.0 per cent).
XL Axiata (XL) is slated to announce its 4Q/FY12 results tomorrow. We expect a better showing q-o-q after the telco tweaked its product offerings following a dismal 3QFY12 characterized by revenue share erosion.
XL’s EBITDA margin should remain under pressure due to the upfront data investment and the interconnect charge levied on inter-operator SMS. We suspect capex will remain elevated in 2013 as the group continues on its node-B expansion spree.
Our forecast and NEUTRAL rating are maintained pending the release of its results. We prefer Malaysian-listed Axiata (NEUTRAL, FV: RM7.15) as an indirect exposure to XL.
From RHB Research
The Selangor mentri besar has written to the Energy, Green Technology and Water Minister to notify its proposal to take over the state water service concessionaire, SYABAS in two weeks following the green light from Deputy Prime Minister Tan Sri Muhyiddin Yassin.
Details are sketchy at this juncture thus we are unsure if the takeover mentioned in the statement refers to any potential new offer to take over SYABAS or pure action taken on SYABAS.
We are neutral on the latest development as do not expect any takeover without prior consent from Puncak Niaga’s shareholders and creditors including the Federal Government that owns one golden share in the company.
We maintain our Trading Buy call on Puncak Niaga on the back of undemanding valuations and increased contribution from its O&G division, our FV tagged at RM2.08 that imply 3x forward FY12 EPS.
udajaya is not overly concerned about coal shortage upon commercial operation dates (CODs) (beginning early 2H2013) of its power plant project in India held under 26 per cent-owned RKM Powergen, as it expects supply of local coal in India to exceed demand over the short term as many new power plant projects are failing to complete with banks having held back funding disbursement of late.
Mudajaya guided new construction contract wins of RM1 billion in FY12/13.
Its key strategies going forward are: (1) For its construction business, to focus on specialised (such as power plant engineering, procurement and construction) and design & build contracts that fetch better margins; and (2) To scout for new businesses that generate recurring incomes such as power plant concessions and private finance initiative (PFI) projects.
FY12/13-14 net profit forecasts are cut by 30-32 per cent, having updated the balance of works from the Indian power plant project and moderated our construction margin assumption.
Fair value is reduced to RM2.68 from RM3.13. Downgrade to Neutral from Trading Buy.
Faber received an approval-in-principle from the government of Malaysia to continue providing non-medical healthcare support services in its existing service areas for a period of 10 years from the expiry of its concession on 28 Oct 2011.
Under the new agreement, Faber will continue to provide its support services to the Northern States of Peninsular Malaysia (Perak, Penang, Kedah and Perlis). This comes with a 5.8 per cent increase in service fees and an additional RM16.6m p.a. for the Sustainability Programme.
As for East Malaysia, Faber would no longer retain its majority stake as the new concession will be granted to two consortiums where Faber will hold a 40 per cent stake in each.
Nevertheless, Faber intends to negotiate with the new parties to remain as a subcontractor.
FY12-14 net profit forecasts adjusted by 10.2 per cent/-3.3 per cent/-9.3 per cent after imputing an increase in service fees and excluding revenue from Sabah and Sarawak.
SOP fair value has been reduced to RM2.00 (from RM2.07). Maintain Buy.
* These recommendations are solely the opinion of the respective research firms and not endorsed by The Malaysian Insider. The Malaysian Insider shall not be liable for any loss arising from any investment based on any recommendation, forecast or other information contained here.