Analyst calls for November 22
KUALA LUMPUR, Nov 22 — This is a selection of morning calls by local research houses for the day.
From RHB Research
9MFY12/12 core PBT came in within our forecast but below market expectations.
AirAsia reiterated that low cost is its “key weapon”. It said that there is certain “over-reaction” by the market to the Malindo news, of which to a certain extent, has also been “blown out of proportion” by the media.
While both low-cost air travel markets in Asia and Europe are bracing for more players and hence competition, Asia is still experiencing tremendous growth vis-à-vis Europe that is mature and saturated. For that reason, AirAsia believes that its overall yields and hence margins may not necessarily drop with the entrance of Malindo.
Interestingly, AirAsia has just decided to deploy ten new aircraft to Malaysia for FY12/13 vis-à-vis only five according to its original plan as it expects robust demand growth in Malaysia thanks largely to international traffic brought into Malaysia by AirAsia X.
We are now beginning to find AirAsia’s valuations fundamentally attractive. Upgrade to Outperform from Trading Buy. Fair value is RM3.61.
AFG’s medium-term (FY12-15) targets were unchanged.
SME lending in 1H was strong despite management’s belief that the impact from the ETP has yet to be felt in the SME segment. Nevertheless, the ETP impact would serve as a further booster ahead when it trickles down to the segment.
Following AIA’s acquisition of ING’s Malaysian operations, AFG said they are now in search of a new partner to replace AIA. This search is estimated to take six to nine months but until then, management does not expect the change to materially affect earnings.
Earnings forecasts, fair value of RM4.35 (10 per cent premium to 11x CY13 EPS) and Market Perform call maintained.
Malaysian Pacific Industries
MPI management guided that 2QFY13 revenue and earnings will be similar to 1QFY3. Overall semiconductor market remains soft but smartphones & tablets segment is still robust and growing strongly. Nevertheless, management is hopeful of better performance in 2HFY13 on the back of a potential turnaround from 3QFY13
Management highlighted its US segment grew faster (+6 percentage points to 31 per cent of total revenue) due to orders from US clients on new products used in smartphones & tablets.
In 1QFY13, Carsem reported profit of RM5.1m but Dynacraft made a net loss of RM3.7m. 1QFY13 EBITDA margins for Carsem and Dynacraft were 19 per cent and 2 per cent respectively. Nearly all of MPI’s capex in the recent quarters had been committed to Carsem which focuses on high-growth MLP and testing.
We maintain our Market Perform call on MPI with an unchanged fair value of RM2.51.
9MFY12/12 net profit only grew 5 per cent year-on-year in the absence of substantial new contract wins in FY12/11. Lower construction profits were cushioned by higher property development and investment profits. UP, FV = RM2.17
No surprises for 9MFY12 earnings, which came in at 72-73 per cent of estimates. We tweaked our FY12 forecasts downwards by 1.6 per cent after making adjustments to our tax assumptions. OP, FV = RM1.47
The key variance was a wider-than-expected loss in Cityneon despite revenue rising 36.4 per cent year-on-year. FY12-14 earnings forecast cut by 10-13 per cent. MP, FV = RM3.25
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