Analyst calls for July 27
KUALA LUMPUR, July 27 — This is a selection of morning calls by local research houses for the day.
From RHB Research
AirAsia
AirAsia is raising its bet on the low-cost air travel market in Indonesia with the joint acquisition with its Indonesia AirAsia’s local partner, i.e. PT Fersindo Nusaperkasa (Fersindo), of the entire stake in rival Batavia Air for US$80 million (RM240 million) cash. The acquisition enables AirAsia’s fleet size in Indonesia to triple from 18 to 55 overnight, domestic capacity share to also triple from 3 per cent to 10 per cent, domestic route network in terms of destination number to increase by 5x from eight to 41, coupled with a significant expansion in domestic distribution channels.
Based on a net profit of US$5 million, the historical acquisition PER works out to be 16x that is not excessive. Assuming Batavia Air is to sustain US$5 million net profit, the acquisition will boost AirAsia’s FY12/13 net profit by RM1.5 million or 0.2 per cent.
Fair value is RM3.87. Maintain Market Perform.
Daibochi
Daibochi 6MFY12 net profit came in within expectations. Daibochi declared an interim tax-exempt DPS of 6 sen. In the same vein, the company announced that it will now commit to a 60 per cent dividend payout (from 50 per cent). We are adjusting our forecast accordingly. This translates into an attractive net dividend yield of 5.6-6.1 per cent.
2Q12 revenue grew 2.6 per cent q-o-q mainly due to contribution from the property segment of RM1.6 million while the packaging segment remained flat. EBIT margins improved by 1.8 per cent-pts to 12.8 per cent on the back of better product mix and efficient waste management. Coupled with lower finance costs and lower effective tax rate of 25.6 per cent, net earnings grew 24.8 per cent q-o-q.
No change in our earnings forecasts. Maintain Market Perform. Fair value is RM3.05/share (9x FY13 EPS).
Parkson Holdings Bhd
Parkson’s 70.5 per cent-owned subsidiary, Parkson Retail Asia (PRA), announced that it is proposing to acquire 60.6 million shares (translating into a 41.82 per cent stake) in Odel Plc, a Sri Lanka-listed fashion retailer, for a total purchase consideration of LKR1.4 billion (RM33.2 million). We are positive on this news, as the acquisition of the Odel stake is in line with PRA’s plans to increase its footprint in Asia. We believe that PRA will grow the Odel brand in a similar manner to its Indonesian brand, Centro, as it plans to nurture and develop the exclusive brand “Odel” to a more established level.
No changes to our forecasts, pending more guidance from the management. Maintain Market Perform with unchanged fair value of RM5.00.
From HwangDBS Vickers
Lifted by a simple remark from the European Central Bank’s chief – who said that the policymakers would do whatever it takes to preserve the euro – leading US stock indices soared between 1.4 per cent and 1.7 per cent overnight.
This could set the stage for our local bourse to make a technical rebound today. After losing 19.1-point or 1.2 per cent so far this week, the benchmark FBM KLCI is expected to climb towards the immediate resistance level of 1,635 ahead.
Hoping to ride on our stock market recovery today are stocks such as: (a) AirAsia, which has entered into an agreement to acquire an Indonesian airline for RM253 million; (b) SapuraKencana, after bagging an EPCC oil & gas contract with an estimated value of between RM250 million and RM300 million; and (c) Malaysia Airports, as it is scheduled to announce its latest quarterly financial results during lunch hours.
From Am Research
SapuraKencana Petroleum
We maintain our BUY call on SapuraKencana Petroleum (SapuraKencana), with an unchanged fair value of RM2.68/share, pegged to a rolled forward FY14F PE of 18x- close to the average for oil & gas stocks with a market capitalisation of over RM1bil. We maintain SapuraKencana’s FY13F-15F earnings as the new contracts from Murphy are within our expectations, which incorporate new order assumptions of RM5 billion-RM7 billion annually. The group has been awarded two contracts, estimated to be worth RM250 million to RM300 million, from Murphy Sarawak Oil Co Ltd to engineer, procure, construct and commission topsides for the Patricia Satellite-A and Serendah Accommodation-A platforms. We expect fresh contracts to materialise this year. Beginning this year, we estimate that the group has secured fresh order contracts worth RM2.6 billion (including the RM1.3 billion extension of the Pan-Malaysian contract to install pipelines and facilities), vs. our FY12F new order assumption of RM5 billion. We continue to be positive on SapuraKencana as its estimated tender book of RM10 billion will continue to drive the group’s earnings momentum, underpinned by asset expansions from the delivery of two deepwater-capable construction vessels with DP 3 capability in late-2013 to early-2014 together three flexible pipe-lay Petrobras vessels, one tender rig and semi-tender rig at end-2014. SapuraKencana’s valuations are compelling at an FY14F PE of 16x compared with SapuraCrest’s peak of 29x back in 2007.The likely inclusion of the stock in the FBMKLCI later this year could draw further foreign institutional support.
* 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.
