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M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Fri, 22 Nov 2019, 3:09 PM

 

OCK Group Bhd - On Par Results Recommendat

Author: MalaccaSecurities   |  Publish date: Fri, 22 Nov 2019, 3:09 PM


Results Highlights

OCK’s 3Q2019 net profit rose 9.0% Y.o.Y to RM8.5 mln, boosted by: (i) improved earnings from the green energy & power solution, mechanical & electrical engineering services and trading segment, (ii) lower tax expenses, and (iii) lower non-controlling interests. Revenue for the quarter increased 19.4% Y.o.Y to RM131.1 mln. For 9M2019, cumulative net profit grew 21.5% Y.o.Y to RM20.8 mln. Revenue for the period improved 8.5% Y.o.Y to RM350.4 mln.

The reported earnings make up to 73.0% of our net profit forecast of RM28.5 mln for 2019. The reported revenue amounted to 70.2% of our estimated 2019 revenue of RM499.2 mln. We deem the results to be in line as we expect a stronger performance in the final quarter of the financial year, as traditionally displayed over the past years.

In 9M2019, the telecommunication network services segment’s pretax profit fell 37.1% Y.o.Y to RM9.0 mln. However, both the green energy & power solution and trading segment pretax profit gained 80.2% Y.o.Y and 41.3% Y.o.Y to RM0.7 mln and RM1.1 mln respectively on lower operational expense. The mechanical & electrical engineering segment’s pretax profit surged 5.9x Y.o.Y to RM0.6 mln on improved topline contribution.

Meanwhile, 3Q2019 net gearing has reduced to 0.8x (from 0.9x in 2Q2019), in line with the group’s target of staying below the 1.0x level.


Prospects

Todate, OCK has built over 4,200 towers across the ASEAN region. OCK owns and manages over 420 telco sites in Malaysia that will provide stream of recurring income over the long term. Overseas, the group’s long-term recurring income will be boosted by the roll-out its outstanding built-to-suit telecommunication sites in Myanmar. Already, OCK has delivered close to 1,000 telecommunication sites. Elsewhere, the group plans to undertake brownfield acquisitions, targeting additional 1,000 telecommunication sites in Vietnam. Apart from ramping up the number of telecommunication sites, OCK targets to improve the tenancy ratio to 1.6x, from 1.4x and 1.3x in Myanmar and Vietnam respectively by increasing the number of co-location contracts with the respective telecommunication operators. As of 3Q2019, OCK operates eleven solar farms with a combined capacity of 5.9 MW in West Malaysia. We also note that OCK will be able to capitalise on the extension of the green tax exemptions to 2023 that was announced in Budget 2020. We reckon that the group is on track to becoming one of the key telecommunication infrastructure players in the ASEAN region as OCK looks to in increase its geographical presence in neighbouring countries such as the Philippines, Bangladesh and China. In the meantime, OCK will also be able to leverage on the recent announcement of the National Fiberisation Connectivity Program (NCFP), given its expertise in the segment.

Valuation And Recommendation

Although both the reported earnings and revenue came slightly below the 75.0% threshold, we deem the figures to be in line as the final quarter numbers are seasonally stronger. Consequently, we maintain our BUY recommendation on OCK with an unchanged target price of RM0.75. We continue to like OCK for its position as one of the leading telecommunication network services provider in the ASEAN region, where its business model would provide a stream of recurring earnings over the next decade.

We adopt a sum-of-parts (SOP) approach as we valued its telecommunication network services and green energy & power solutions business segments on a discounted cash flow approach (key assumptions include a WACC of 9.5%, terminal growth rate of 1.5%) to reflect its ability to generate recurring revenues and steady earnings growth over the longer term. Meanwhile, we ascribed an unchanged target PER of 13.0x to both its fullydiluted trading and mechanical & electrical engineering services businesses, based on their potential earnings contribution in 2020.

Risks to our recommendation include rising raw material costs. OCK’s business is heavily dependent on steel that accounts for slightly below 40.0% of the group’s costs of construction in 2017. Any fluctuation in steel prices could dampen its margins growth going forward. Any project delay could also impact its income growth and cash flow as the group is operating in a capital intensive industry. Delays in project completion will result in cost overrun and penalties.


 

Source: Mplus Research - 22 Nov 2019

Labels: OCK
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Teo Seng Capital Bhd - Looking At The Long Term

Author: MalaccaSecurities   |  Publish date: Fri, 22 Nov 2019, 2:58 PM


Company Update

  • Teo Seng Capital Bhd (TSCB) has signed a Memorandum of Agreement (MoA) with Solarvest Holdings Berhad to install solar PV panel across TSCB’s chicken farms and factories located in the state of Johor, Malaysia. TSCB has earmarked a capital expenditure of approximately RM13.0 mln for installing of about 4,000 kWp (kilowattpeak) rooftop solar projects.
  • We reckon that the move bodes well for TSCB as it could potentially result in costing saving of approximately 1%-2% per annum in operational expenses over the long run. In the meantime, the move is also in line with the government’s initiative to encourage the adoption of green energy, outlined in Budget 2020.
  • The investment will be funded by internal fund. As of 3Q2019, TSCB’s cash & bank balances stood at RM41.7 mln. In the meantime, 50.0 mln of warrants will be expiring at end-January 2020. Should all warrants be exercised, this will give a raise of another RM67.5 mln boost to TSCB’s war chest. Hence, we do not see any funding issue for the aforementioned investment.
  • We also note that TSCB has completed the acquisition of Professional Vet Enterprise Sdn Bhd for RM1.8 mln towards end-3Q2019. The acquisition marks TSCB’s successful penetration of animal healthcare products into East Malaysia. Although the move may generate higher income for the trading segment, we believe that the poultry farming business which constitutes to 88.3% of total revenue in 9M2019 will continue to anchor TSCB’s total revenue, moving forward.

    Valuation and Recommendation

We continue to like TSCB as one of the largest vertically integrated chicken egg player, having key presence in Malaysia, Singapore and Hong Kong. We reckon that the recent recovery in chicken eggs prices may be sustainable, premised to the rising demand. Budget 2020 announcement that announced slew of subsidies also bodes well to improve the spending power amongst consumers and corresponding demand for its eggs.

As the agreement has yet to take effect until the completion over the next 12 months, we made no changes to our earnings forecast for now. We maintain our BUY recommendation on TSCB with an unchanged target price of RM1.65. We arrive our target price by ascribing an unchanged target PER of 8.0x to its 2020 EPS of 20.6 sen. The ascribed target PER is at a 25% discount to its peers average valuation of 10.7x, due to TSCB’s smaller market capitalisation against poultry giants like Leong Hup International Bhd and QL Resources Bhd.

Risks to our recommendation include avian influenza outbreak – a viral infection that can infect not only birds, but also humans and other animals. Chicken feed (mainly soybean and maize) makes up 70% of its feed cost. Stronger commodity prices (soybean and maize) will negatively impact its margins and vice versa. A firmer Ringgit against the U.S. Dollar could also affect the group’s bottom line as a recovery in the local currency against the Greenback will have a positive impact on the group’s earnings and vice versa, as the commodity purchases are denominated in U.S. Dollars.  

Source: Mplus Research - 22 Nov 2019

Labels: TEOSENG, LHI, QL
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Mplus Market Pulse - 22 Nov 2019

Author: MalaccaSecurities   |  Publish date: Fri, 22 Nov 2019, 9:01 AM


Downside Bias Remains

  • The FBM KLCI (-0.6%) took another beating as the key index slipped below the 1,600 psychological level, taking cue from the weakness on Wall Street overnight. The lower liners – the FBM Small Cap (-0.2%), FBM Fledgling (- 0.1%) and FBM ACE (-1.2% all retreated, while the broader market closed mostly lower with the exception of Plantation (+0.8) and transportation & logistics (+0.1%) sectors.
  • Market breadth turned negative as decliners outshone advancers on a ratio of 552-to-320 stocks, while 381 stocks traded unchanged. Traded volumes gained 0.8% to 2.93 bln shares as selling activities escalated.
  • Petronas Dagangan (-58.0 sen) led the local bourse decliners list, followed by Nestle (-40.0 sen), Petronas Gas (-32.0 sen), Petronas Chemicals (-20.0 sen) and Tenaga (-18.0 sen). Notable losers on the broader market include Dutch Lady (-42.0 sen), Hong Leong Industries (-20.0 sen), MBM Resources (-20.0 sen), Panasonic (-18.0 sen) and Fraser & Neave (-16.0 sen).
  • Among the biggest winners on the broader market include plantation stocks like Sarawak Oil Palm (+36.0 sen), Genting Plantations (+32.0 sen), Ta Ann (+32.0 sen) and Hap Seng Plantation (+8.0 sen), while Heineken added 40.0 sen. On the local bourse, KLK (+10.0 sen), IOI Corporation (+4.0 sen), PBB Group (+4.0 sen), DIGI (+2.0 sen) and Press Metal (+2.0 sen) advanced.
  • Asia’s benchmark indices extended their losses, dragged down by the renewed trade uncertainty between the U.S. and China. The Nikkei (-0.5%) trended lower for the third straight session, while the Hang Seng Index and Shanghai Composite fell 1.6% and 0.3% respectively. ASEAN stockmarkets, meanwhile, were painted in red on Thursday.
  • U.S. stockmarkets trended lower for the third straight session on the lingering uncertainties over the Sino-U.S. trade progress as the Dow declined 0.2%. On the broader market, both the S&P 500 and Nasdaq fell 0.2% each after lingering in the negative territory for the entire trading session.
  • Major European indices – the FTSE (- 0.3%), CAC (-0.2%) and DAX (-0.2%) all extended their losses, taking cue from the weakness across global equities. Market sentiment continues to be dampened by the uncertainties over the U.S.-China trade progress.

    THE DAY AHEAD
  • Although the key index remains within our expected range of between the 1,590 and 1,610 levels, conditions are turning weaker amid the increased selling activities over the past two sessions that has left the key index’s technical indicators tipping down and looking to retreat further from its toppish condition.
  • We continue to think that the pullback is healthy as it would allow the key index to take a breather from its recent gains from the mild portfolio reshuffling activities. At the same time, it also appears that the 1,600-1,620 levels are becoming a hurdle for the key index to clear due to the lack of sustainable following.
  • The conflicting progress reports on a preliminary U.S-China trade deal is also leaving the market directionless that looks to continue for now. As a consequence, we see the downside risk persisting for now that may even see the key index breaching the 1,590 support to end the week. If so, the FBM KLCI could head back to the 1,585-1,587 support, before the 1,580 support comes into play. The resistances, meanwhile, remain at the 1,600 and 1,610 levels.
  • The lower liners and broader market shares, although many have weakened yesterday, remain mostly in a sideway consolidation trend. With the selling still controlled, coupled with few leads, we think that the broadly sideway trend is likely to continue, albeit there are still pockets of downside bias remaining for now.

    COMPANY UPDATE
  • OCK Group Bhd’s 3Q2019 net profit rose 9.0% Y.o.Y to RM8.5 mln, boosted by: (i) improved earnings from the green energy & power solution, mechanical & electrical engineering services and trading segment, (ii) lower tax expenses, and (iii) lower non-controlling interests. Revenue for the quarter increased 19.4% Y.o.Y to RM131.1 mln.
  • For 9M2019, cumulative net profit grew 21.5% Y.o.Y to RM20.8 mln. Revenue for the period improved 8.5% Y.o.Y to RM350.4 mln.

    Comments
  • The reported earnings make up to 73.0% of our net profit forecast of RM28.5 mln for 2019. The reported revenue amounted to 70.2% of our estimated 2019 revenue of RM499.2 mln.
  • Although both the reported earnings and revenue came slightly below the 75.0% threshold, we deem the figures to be in line as the final quarter numbers are seasonally stronger. Consequently, we maintain our BUY recommendation on OCK with an unchanged target price of RM0.75.
  • We adopt a sum-of-parts (SOP) approach to arrive at our target price as we valued its telecommunication network services and green energy & power solutions business segments on a discounted cash flow approach (key assumptions include a WACC of 9.5%, terminal growth rate of 1.5%) to reflect its ability to generate recurring revenues and steady earnings growth over the longer term.
  • Meanwhile, we ascribed an unchanged target PER of 13.0x to both its fullydiluted trading and mechanical & electrical engineering services businesses, based on their potential earnings contribution in 2020.
  • Teo Seng Capital Bhd (TSCB) has signed a Memorandum of Agreement (MoA) with Solarvest Holdings Berhad to install solar PV panel across TSCB chicken farms and factories located in the state of Johor, Malaysia. Teo Seng has earmarked a capital expenditure of approximately RM13.0 mln for installing of about 4,000 kWp (kilowattpeak) rooftop solar projects.

    Comments
  • We reckon that the move bodes well for TSCB that would potentially result in costing saving of approximately 1%-2% per annum in operational expenses over the long run. In the meantime, the move is also in line with the government’s initiative to encourage the adoption of green energy, outlined under Budget 2020.
  • As the agreement has yet to take effect until the completion over the next 12 months, we made no changes to our earnings forecast for now. We maintain our BUY recommendation on Teo Seng with an unchanged target price of RM1.65. We arrive our target price by ascribing an unchanged target PER of 8.0x to its 2020 EPS of 20.6 sen. The ascribed target PER is at a 25% discount to its peers average valuation of 10.7x, due to due to Teo Seng’s smaller market capitalisation against poultry giants like Leong Hup International Bhd and QL Resources Bhd.

    COMPANY BRIEF
  • Sunway Bhd’s 3Q2019 net profit climbed 27.0% Y.o.Y to RM183.4 mln, compare to RM144.9 mln last year, on the back of higher contributions from its property development, property investment and quarry segments. Revenue, however, fell 13.0% Y.o.Y to RM1.23 bln, from RM1.42 bln in the preivous corresponding period.
  • Subsequently, 9M2019 net profit rose 22.0% Y.o.Y to RM566.3 mln, despite revenue falling 13.0% Y.o.Y to RM3.43 bln in 9M2018. (The Star Online)
  • Hap Seng Consolidated Bhd’s 3Q2019 net profit inched higher by 1.3% Y.o.Y to RM193.1 mln, from RM190.7 mln earlier, in-line with the stronger revenue performance of RM1.83 bln (+3.6% Y.o.Y), from RM1.76 bln last year. The group also declared a second interim dividend of 20.0 sen per share, payable on 18th December 2019.
  • For its nine-month period, however, net profit halved to RM480.9 mln, from RM989.4 mln a year ago, even as revenue grew 10.4% Y.o.Y to RM5.32 bln, from RM4.82 bln previously. (The Edge Daily)
  • Boustead Plantations Bhd sank deeper into the red in 3Q2019 with a net loss of RM34.3 mln (- 56.6% Y.o.Y), from RM21.9 mln previously, mainly due to higher amortisation and finance costs, despite stronger revenue (+6.0% Y.o.Y) of RM139.2 mln, from RM131.1 mln previously.
  • On a cumulative basis, however, the group made a turnaround with a 9M2019 net profit of RM28.7 mln compared to a net loss of RM38.9 mln a year ago, although revenue fell 7.0% Y.o.Y to RM398.1 mln, from RM427.5 mln last year. (The Star Online)
  • Malaysian Resources Corp Bhd’s (MRCB) 3Q2019 net profit plunged 87.3% Y.o.Y to RM2.5 mln, from RM19.8 mln last year, largely due to the delay in the Light Rail Transit (LRT) 3 project and the inclusion of a one-off divestment gain in the previous corresponding period. Revenue also fell 43.8% Y.o.Y to RM372.7 mln, from RM663.8 mln in the last corresponding year.
  • Consequently, cumulative 9M2019 net profit plummeted 76.3% Y.o.Y to RM17.7 mln, from RM74.8 mln, while revenue weakened to RM847.8 mln (- 43.4% Y.o.Y), from RM1.50 bln earlier. (The Edge Daily)
  • Kossan Rubber Industries Bhd’s 3Q2019 net profit slipped 9.2% Y.o.Y to RM49.2 mln, compared to RM54.2 mln last year, weighed down by lower ASPs and higher natural gas costs. Revenue for the quarter also dipped 7.4% Y.o.Y to RM531.3 mln, from RM573.9 mln earlier.
  • Cumulative 9M2019 net profit, however, rose 15.9% Y.o.Y to RM163.8 mln, from RM141.3 mln a year ago, while revenue was 5.7% Y.o.Y higher at RM1.64 bln, from RM1.55 bln in 9MFY18. (The Edge Daily)
  • Wah Seong Corporation Bhd’s 3Q2019 net profit narrowed 38.0% Y.o.Y to RM15.3 mln, from RM24.5 mln in the third quarter of 2018, as revenue fell 8.0% Y.o.Y to RM644.5 mln, from RM701.9 mln previously.
  • Its cumulative nine-month net profit also saw a 27.0% Y.o.Y decline to RM54.7 mln, from RM74.8 mln a year ago, as revenue lost 7.5% Y.o.Y to RM2.09 bln, from RM2.25 bln in the previous corresponding period. (The Star Online)
  • Revenue Group Bhd's 1QFY20 net profit jumped 54.0% Y.o.Y to RM3.0 mln, in comparison to RM1.9 mln previously, boosted by higher income from the rental of its electronic data capture or EDC terminals, higher electronic transaction processing income and the inclusion of revenue contribution from two newly acquired subsidiaries, Anypay Sdn Bhd and Buymall Services Sdn Bhd.
  • Quarterly revenue also expanded 12.0% Y.o.Y to RM16.7 mln, from RM14.8 mln in the previous year. (The Edge Daily)
  • Hibiscus Petroleum Bhd's 1QFY20 net profit was down by 83.8% Y.o.Y to RM16.2 mln, from RM100.0 mln last year, following lower contributions across all three of its operations in Sabah, North Sea's Anasuria Cluster, and Australia. Revenue also shed more than 50.0% Y.o.Y to RM159.3 mln, from RM356.0 mln in the same period in FY19.
  • Southern Steel Bhd posted a 1QFY20 net loss of RM45.6 mln, dragged by lower sales volume and selling prices, while revenue tanked 30.0% Y.o.Y to RM653.7 mln, from RM929.0 mln earlier.

Source: Mplus Research - 22 Nov 2019

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Teo Seng Capital Bhd - Climbed Another Level

Author: MalaccaSecurities   |  Publish date: Thu, 21 Nov 2019, 10:25 AM


Results Highlights

  • Teo Seng’s 3Q2019 net profit surged 157.2% Y.o.Y to RM18.0 mln, lifted by higher production and sale of chicken eggs, higher average selling prices (ASP) of chicken eggs and improved demand for animal health products. Revenue for the quarter gained 10.5% Y.o.Y to RM138.4 mln.
  • For 9M2019, cumulative net profit soared 245.2% Y.o.Y to RM45.2 mln. Revenue for the period added 19.6% Y.o.Y to RM410.1 mln. The reported results already make up to 96.9% of our previous net profit estimate of RM46.6 mln. The reported revenue, however, came in slightly below our expectations, amounting to 73.3% of our fullyear forecast of RM559.8 mln. The variance in the bottom line is mainly due to the stronger-than-expected recovery in average selling prices of chicken eggs.
  • Segment wise in 3Q2019, the poultry farming segment’s pretax profit stood soared 217.0% Y.o.Y to RM21.1 mln, boosted by improved chicken egg ASPs and higher sales quantity. The trading segment’s pretax profit grew 27.3% Y.o.Y to RM2.5 mln on improved demand for animal healthcare products.
  • As of 3Q2019, Teo Seng’s gearing is reduced to 54.7% (from 58.0% recorded in 2Q2019). Moving forward, we expect Teo Seng’s gearing level to remain above the 50.0% level as the group continues to hinge on external funding for its long-term expansion plans, targeting production of 5.0 mln eggs per day by end-2022. An interim dividend of 2.0 sen was declared.

Source: Mplus Research - 21 Nov 2019

Labels: TEOSENG
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Mplus Market Pulse - 21 Nov 2019

Author: MalaccaSecurities   |  Publish date: Thu, 21 Nov 2019, 9:12 AM


  • Despite recovering most of its intraday losses, the FBM KLCI (-0.3%) turned lower after lingering in the negative territory for the entire trading session on Wednesday. The lower liners closed mostly higher as the FBM Small Cap (+0.3%) and FBM Fledgling (+0.3%) and FBM ACE gained ground, while the broader market closed mostly higher.
  • Market breadth turned higher as advancers overtook decliners on a ratio of 426-to-411 stocks, while 409 stocks traded unchanged. Traded volumes gained 8.3% to 2.90 bln.
  • Key losers on the FBM KLCI were Petronas Gas (-24.0 sen), Petronas Chemicals (-15.0 sen), Hong Leong Financial Group (-14.0 sen), Malaysia Airport Holdings (-10.0 sen) and Tenaga (-10.0 sen). Notable decliners on the broader market were G3 Global (-20.0 sen), Pharmaniaga (-19.0 sen), Bintulu Port (-15.0 sen), Petron Malaysia (-11.0 sen) and Yinson Holdings (-11.0 sen).
  • Amongst the biggest gainers on the broader market were Guan Chong (+28.0 sen), Dayang (+18.0 sen), TSH (+17.5 sen), YSP South East Asia (+17.0 sen) and Allianz (+12.0 sen). Meanwhile, Nestle (+RM1.80), MISC (+4.0 sen), PBB Group (+4.0 sen), and IOI Corporation (+2.0 sen) advanced on the local bourse. KLK surged RM1.10 after delivering a strong set of quarterly earnings.
  • Asia’s benchmark indices closed in the red as investors turned cautious on the latest Sino-U.S. trade developments. The Nikkei (-0.6%) extended its losses after exports data fell for the 11th consecutive month in October 2019, falling 9.2% Y.o.Y. The Shanghai Composite slipped 0.8%, while the Hang Seng Index (-0.7%) finished below the 27,000 psychological level. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.
  • U.S. stockmarkets extended their losses as the Dow declined 0.4% on reports that U.S. and China may not be able to reach a partial trade agreement this year. On the broader market, the S&P 500 slipped 0.4%, but the Nasdaq closed 0.5% lower.
  • Earlier, European benchmark indices – the FTSE (-0.8%), CAC (-0.3%) and DAX (- 0.5%) all retreated. The weakness was due to renewed trade war concerns after U.S. lawmakers passed legislation to support Hong Kong civil rights.

    THE DAY AHEAD
  • The generally mixed market conditions looks to persist as market players now seek fresh leads for a new direction after the recent gains have left Malaysian equities overbought. Despite yesterday’s pullback, conditions are still largely on the toppish side as the consolidation has been mild, even as the optimism over the U.S-China trade talks has ebbed and geopolitical concerns have risen with the U.S. siding with the Hong Kong protestors that is drawing the ire of China.
  • This leads us to think that the sideway consolidation is still unfolding with the key index attempting to build up a base around the 1,590-1,610 levels. The ongoing corporate results reporting season continues to see mixed earnings performance and these results are the near term market leads.
  • Meanwhile, the downside risk has also risen over the near term which could send the key index lower to the 1,590-1,596 levels which we consider as still a holding pattern for now. Apart from the 1,610 resistance, the other resistance is at the 1,620 level.
  • The lower liners and broader market shares, however, appears to be firming up as following on these stocks are picking up on rotational plays. Nevertheless, with their conditions also toppish, we think that the near term upsides will be limited amid increased profit taking activities.

    MACRO BRIEF
  • Malaysia’s October 2019 inflation rate, measured by the Consumer Price Index (CPI) increased 1.1% Y.o.Y to 122.0, driven by a 2.2% Y.o.Y increase in the index of alcoholic beverages & tobacco and miscellaneous goods & services (+2.2% Y.o.Y). The inflation rate was slightly higher than the 1.0% Y.o.Y increase forecast by economists in a Reuters poll and exceeded RAM Ratings' forecast of 0.9% Y.o.Y.
  • On a monthly basis, CPI rose by 0.2% Y.o.Y. The CPI for the period of January to October 2019 increased 0.6% Y.o.Y. (The Star Online)

    COMPANY UPDATE
  • Teo Seng Capital Bhd’s 3Q2019 net profit surged 157.2% Y.o.Y to RM18.0 mln, lifted by higher production and sale of chicken eggs, higher average selling prices (ASP) of chicken eggs and improved demand for animal health products. Revenue for the quarter gained 10.5% Y.o.Y to RM138.4 mln.
  • For 9M2019, cumulative net profit soared 245.2% Y.o.Y to RM45.2 mln. Revenue for the period added 19.6% Y.o.Y to RM410.1 mln.

Comments

  • The reported results already make up to 96.9% of our previous net profit estimate of RM46.6 mln. The reported revenue, however, came in slightly below our expectations, amounting to 73.3% of our full-year forecast of RM559.8 mln.
  • Following the stronger-than-expected results, we raised our earnings forecast by 24.1% and 17.9% to RM57.9 mln and RM61.8 mln for 2019 and 2020 respectively to account for the recovery in chicken eggs prices.
  • Consequently, we also upgrade our recommendation on Teo Seng to BUY (from Hold), with a higher target price of RM1.65 (from RM1.40). We arrive at our target price by ascribing an unchanged target PER of 8.0x to its revised 2020 EPS of 20.6 sen. The ascribed target PER is at a 25% discount to its peers average valuation of 10.7x.

    COMPANY BRIEF
  • Oriental Interest Bhd is planning to buy a plot of land in Sepang, Selangor, for RM46.8 mln for a development to complement its existing project. (The Star Online)
  • AE Multi Holdings Bhd has proposed to raise up to RM9.9 mln via a private placement to fund a palm oil mill construction job. The RM30.9 mln project is located in Sabah and was secured last month. (The Edge Daily)
  • Nova MSC Bhd has aborted its proposed private placement to issue up to 30.0% of its share capital, to raise RM35.2 mln. (The Edge Daily)
  • Pharmaniaga Bhd’s 3Q2019 net profit plunged 97.0% Y.o.Y to a mere RM0.5 mln, from RM15.1 mln last year, amid inflated operating expenses. Revenue, however, rose 22.0% Y.o.Y to RM716.9 mln, from RM587.7 mln a year ago, on the back of stronger demand from the concession and non-concession businesses.
  • Cumulative 9M2019 net profit also fell to RM29.4 mln (-22.6% Y.o.Y), from RM38.0 mln in the previous corresponding period, despite stronger revenue growth to RM2.1 bln, from RM1.79 bln previously. (The Star Online)
  • MSM Malaysia Holdings Bhd‘s 3Q2019 net loss has hit a new quarterly high of RM185.1 mln, from a net profit of RM15.9 mln a year ago, due to continuously weak average sugar selling prices coupled with massive impairment. Revenue also fell 5.0% Y.o.Y to RM531.4 mln, from RM561.7 mln earlier.
  • Subsequently, cumulative 9M2019 net loss swelled to RM259.5 mln, from a net profit of RM46.0 mln last year, while revenue shed 11.0% Y.o.Y to RM1.49 bln, from RM1.68 bln in the same period last year. (The Star Online)
  • Amway (Malaysia) Holdings Bhd’s 3Q2019 net profit decreased 38.1% Y.o.Y to RM10.6 mln compared to RM17.2 mln a year ago, following weaker revenue contribution of RM235.1 mln (-9.7% Y.o.Y) vs. RM260.2 mln in 3Q2018. Even so, the group declared a dividend of five sen per share, payable on 20th December 2019.
  • Cumulative 9M2019 net profit, however, grew 21.9% Y.o.Y to RM39.7 mln, from RM32.6 mln last year, mainly due to lower cost of sales, although revenue was marginally lower at RM713.3 mln (-1.4% Y.o.Y), from RM723.3 mln previously. (The Edge Daily)
  • Boustead Heavy Industries Corp Bhd’s 3Q2019 net profit plummeted 72.4% Y.o.Y to RM3.3 mln, from RM11.9 mln in the previous corresponding period, following the 40.7% Y.o.Y fall in revenue to RM36.4 mln, from RM61.4 mln a year earlier.
  • On a cumulative basis, 9M2019 net profit tumbled 91.9% Y.o.Y to RM1.9 mln, from RM23.6 mln previously, while revenue fell 15.7% Y.o.Y to RM126.6 mln, from RM150.3 mln a year ago. (The Edge Daily)
  • KESM Industries Bhd’s 1QFY20 net profit jumped 71.5% Y.o.Y to RM4.5 mln in comparison with RM2.6 mln last year, boosted by lower expenses and higher other income. Revenue, however, fell 11.2% Y.o.Y to RM72.4 mln, from RM81.6 mln before. (The Star Online)
  • Thong Guan Industries Bhd’s 3Q2019 net profit spiked 72.6% Y.o.Y to RM17.3 mln, from RM10.1 mln in the last corresponding year, on the back of higher sales and profitability of its stretch film, industrial film and bags, garbage bags and courier bags. Revenue also improved 15.8% Y.o.Y to RM256.6 mln, from RM221.6 mln.
  • Subsequently, 9M2019 net profit rose 62.2% Y.o.Y to RM44.0 mln, from RM27.2 mln last year, while revenue gained 9.5% Y.o.Y to RM703.5 mln, from RM642.5 mln during the same period last year. (The Edge Daily)

Source: Mplus Research - 21 Nov 2019

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M+ Online Technical Focus - 20 Nov 2019

Author: MalaccaSecurities   |  Publish date: Wed, 20 Nov 2019, 9:00 AM


The FBM KLCI managed to recover all its intraday losses to remain above the 1,600 psychological level as the key index closed at around the 1,605.31 level yesterday. The MACD Histogram has extended another green bar, while the RSI remains above 50. Resistance will be pegged around the 1,620-1,630 levels. Support will be set around the 1,590 level.

DUFU has rebounded to re-test the EMA20 level on improved volumes. The MACD Histogram has extended another green bar, but the RSI remains below 50. Monitor for a trendline breakout above the RM2.90 level, targeting the RM3.08-RM3.20 levels. Support will be located around the RM2.78 level.

LEWEKO has experienced a flag-formation breakout above the RM0.215 level with rising volumes. The MACD Histogram has turned green, but the RSI is slightly overbought. Price may trend higher, targeting the RM0.24-RM0.255 levels. Support will be located around the RM0.195 level.

DAYANG has formed a bullish candle to close above the EMA20 level with improved volumes. The MACD Histogram has extended another green bar, while the RSI has risen above 50. Price may advance, targeting the RM2.20-RM2.35 levels. Support will be located around the RM1.85 level.

Source: Mplus Research - 20 Nov 2019

Labels: DUFU, LEWEKO, DAYANG
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