Analyst calls for May 3
KUALA LUMPUR, May 3 ― This is a selection of morning calls by local research houses for the day.
From RHB Research
Gamuda has set its sights on local jobs worth about RM10 billion over the immediate term comprising: (1) The Langat 2 water treatment plant (RM1.5 billion); (2) The tunneling package for Line 2 of the Klang Valley MRT project (RM4.5 billion); and (3) The Southern (Gemas – Johor Bahru) Double Tracking project (RM4 billion).
Gamuda is currently working on a proposal on the KL-Singapore high-speed rail, to be submitted to the Government. Gamuda is mindful that unlike the Klang Valley MRT project, it does not have an edge over rivals as the KL-Singapore high-speed rail is not its brainchild and the project does not require massive tunneling where Gamuda’s key strength lies.
Gamuda said that it does not have any more outstanding material contract dispute with any client/supplier.
Gamuda already achieved property sales of about RM950m in the first eight months of FY13 (vis-à-vis its full-year target of RM1.35 billion), driven predominantly by RM550m sales from Horizon Hills in Iskandar.
Fair value is RM4.49. Maintain Buy.
While Sime Darby’s earnings will most definitely be negatively affected by the prevailing low CPO prices (as plantation makes up 50-55 per cent of earnings), this will be partially offset by the still growing earnings at its motor division (comprising 12-15 per cent of earnings) and stable earnings at the industrial (comprising 20-25 per cent of earnings) and property (6-8 per cent of earnings) divisions. In addition, Sime’s valuations, which are at an unjustified 2-3x PE discount to its peers, are undemanding.
Key highlights: (1) CPO price for 9MFY13 likely to be in the RM2,400-2,500/tonne range; (2) Potential new landbank acquisition and subsequent listing in Indonesia; (3) Property division the weak link, but pressure is on to perform; (4) No significant weakness seen at industrial division, despite weak 1QCY13 Caterpillar results; (5) Motor division to be best performer in FY06/13; and (6) Healthcare division to expand footprint with Ramsay JV.
Forecasts unchanged at this juncture, pending CPO price review.
We are leaving our Buy recommendation unchanged at this juncture. We are, however, rolling forward our valuation base to CY14 (from CY13), which has resulted in an upward revision to our SOP-based target price to RM10.60 (from RM10.20).
Genting Singapore’s 1QFY13 core earnings of S$104.6 million came in below both our and consensus forecasts.
This is despite its VIP rolling chip volume surging over 38.0 per cent year-on-year as its premium win rates averaged at a subpar 2.12 per cent in 1QFY13.
Management is now turning more risk-averse on expanding its VIP segment in view of the slowing China’s macros.
Its receivables inched up by a relatively marginal 9.6 per cent quarter-on-quarter to S$968.7 million vis-à-vis the mid-teens growth in its VIP rolling chip over the period. 1QFY13’s bad debt provisions stayed flattish at S$45.2 million.
Taking into account of the lower win rates incurred, we are lowering our FY13f core earnings estimate by 15.0 per cent at S$663.1m. Our FY14f and FY15f numbers are left unchanged.
Our FV is now slightly tweaked to S$1.46 (from S$1.47 previously) due to our FY13f earnings revision. Maintain NEUTRAL.
From HwangDBS Vickers
XL’s 1Q13 revenue declined 5 per cent quarter-on-quarter, after falling 7 per cent quarter-on-quarter in 4Q12 as XL lowered its price points sharply in November 2012 to rebuild its image as an affordable brand.
EBITDA margin dropped to 40.1 per cent versus 43.5 per cent in 4Q12 as infrastructure costs continued to increase due to network roll out. 1Q13 EBITDA of Rp2025 billion was 12 per cent below our estimate due to the sharply lower price points.
Net profit (excl EI and forex) tumbled 41 per cent quarter-on-quarter due to a rise in depreciation and amortisation costs.
Results below expectations, management wary on VIP growth and visitor arrivals. Wildcard: Front-runner to win potential Japan IR license but bidding process may take 1-2 years.
Downgrade to HOLD with revised S$1.71, recent strong rally likely to attract profit taking.
* 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.