Analyst calls for June 1
KUALA LUMPUR, June 1 — This is a selection of morning calls by local research houses for the day.
From RHB Research
— MAHB highlighted that KLIA was 51.8% completed and thus the targets to be completed by January 2013 and operational by April 2013 are on track.
— MAHB expects to achieve 30 million passenger traffic p.a. for KLIA2 within five years of operation. This will be mainly driven by AirAsia’s capacity expansion in addition to the robust growth of other low-cost carriers with Asia.
— We understand that response for the commercial business has been overwhelming and MAHB indicated that rental space/sq m in KLIA2 may be equivalent to the current MTB rental rates of RM600-800/sqm (vs. LCCT of an average of RM500/sqm).
— Maintain Outperform. Fair value is RM6.79 based on SOP.
— Management sounded somewhat cautious in their FY13 outlook, citing uncertainties in the global economic outlook, which continues to dampen advertisers’ sentiment. Nonetheless, MCIL still expects to see mid-single digit growth in its domestic adex in FY13.
— Management downplayed the possibility of another special dividend for FY13, preferring to remain prudent by conserving cash. Hong Kong operations remained stable despite the entrance of two new free newspapers in mid-2011.
— FY13-15 DPS forecasts raised by 25-30% after raising our payout assumption from 50% to 60%.
— Maintain Market Perform call with revised fair value of RM1.29 (previously RM1.14) based on a required net dividend yield assumption of 5.5% on FY13 net DPS of 7.1 sen.
— 1Q core net profit of RM556 million (+1.5% q-o-q, +3.2% y-o-y) met our and consensus expectations.
— Maxis expects to launch IPTV for its home services in the coming months but we are surprised to learn that Astro is not the IPTV partner. On a more positive note, Maxis did mention that there has been real traction in the IDD segment among migrant workers.
— Management downplayed expectations of any special dividends after pointing out that although current gearing levels are comfortable, will unlikely be raised in 2012 or 2013.
— Maintain DCF-derived fair value of RM6.30 and Market Perform call.
— AJR disappointed with a net loss of RM1.1 million in 1QFY12, vs. our and consensus full-year forecasts. The key variance against our forecast was larger-than-expected start-up costs for its blast furnace as AJR was still unable to reach optimisation.
— AJR said that domestic sales are stable underpinned by key on-going construction and oil & gas related projects (for its trading division). On the other hand, it has turned more cautious on the export market due to the economic uncertainties surrounding China and Europe.
— FY12-14 forecasts cut by 1-31%, having reflected higher start-up costs from the blast furnace.
— Globally, the outlook for the steel sector in 2012 remains challenging due to the slowing demand growth in China and less robust construction activities in developed countries. Fair value is trimmed by 11% to RM1.49 based on 0.7x tangible book value of RM2.13, at a discount to its historical average of 0.8x during downcycles to reflect the risk of further delays in the optimisation of the blast furnace operation.
From OSK Research
Maxis reported 1QFY12 results that were in line with both our and market expectations when annualised. The key highlights were continued voice erosion and the q-o-q uptick in the EBITDA margin (+210bps), which is not sustainable as A&P cost is expected to accelerate in 2QFY12 with the promotional launch of its FTTH product and increased marketing spend ahead of Euro 2012. We are keeping our estimates for now but raise our FV to RM6.00 from RM5.50 after lowering our WACC assumption to 8.5% from 9%, incorporating the higher level of debt. Maintain NEUTRAL as Maxis trades on 21.2x FY12 EPS and 18.1x FY13 EPS.
April loans growth dipped 2 bps to 13.1% y-o-y from 13.3% in March due to weaker loans growth in the household segment (Apr: 13.1% vs Mar: 13.3%). Total deposits moderated to 13.8% y-o-y from 13.9% y-o-y in the preceding month. The banking system remained well-capitalised, with its risk-weighted capital ratio (RWCR) and core capital ratio (CCR) at 14.5% and 12.9% respectively. The level of net impaired loans inched up 10 bps to 1.8% of net loans, while the loan loss coverage contracted from 92.2% to 91.2%. We are staying NEUTRAL on the banking sector, with our top banking picks being Maybank (BUY, FV: RM9.85) and RHBCap (BUY, FV: RM9.90).
While KPJ’s 1QFY12 net profit accounted for about 22% of our and consensus FY12 forecast, we view the results as in line with our expectations due to seasonality factors. We maintain our forecast but we have enlarged our share base after taking into account the hefty warrant conversion that would result in a 5.6% and 8.3% dilution to our FY12 and FY13 EPS forecasts. We are raising our PER multiple from 23.1x to 25.1x on FY12 EPS in line with the regional sector PER rerating, which gives a higher FV of RM6.00 from RM5.84. However, due to the limited upside, we are downgrading our call on KPJ to Neutral from Buy.
Ahmad Zaki (AZRB)’s reported core earnings of RM5.5 million for 1QFY12 met our expectations. With RM1.9 billion worth of jobs in hand, the current outstanding orderbook could last them well into 1HFY14, assuming a run rate of RM200 million per quarter. While we make no changes to our core assumptions for now, we are upgrading our call from Neutral to TRADING BUY, following the recent weakness in its share price. Our FV now stands at RM0.88.
Wah Seong’s 1QFY12 results were below expectations. The poorer-than-expected results were due to the recognition of lower margin products and services, especially in the O&G segment. In FY11, the company had the benefits of higher margins from its Gorgon pipe coating job as well as higher contribution from its equipment division. We are downgrading our FY12-13 earnings by 12%-14% and at the same time downgrading our call from Buy to Neutral, with a lower fair value of RM2.06 (previously RM2.40).
TRC’s 1QFY12 topline and core earnings of RM94.7 million and RM1.3 million respectively were below both our and consensus estimates. The numbers were again undermined by slower-than-expected progress at its RM950 million LRT extension, similar to what happened in 4QFY11. That said, we expect the momentum to pick up progressively in 2HFY12 as all the relevant approvals on the LRT job were secured in April. We maintain our TRADING BUY call, with our FV at a slightly lower RM0.75.
* 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.