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Author: MalaccaSecurities   |   Latest post: Tue, 22 Jun 2021, 9:54 AM


Mplus Market Pulse - 22 Jun 2021

Author: MalaccaSecurities   |  Publish date: Tue, 22 Jun 2021, 9:54 AM

Market Review

Malaysia:. The FBM KLCI (-1.1%) pullback alongside regional markets amid the ongoing concern over the interest rate normalisation in US. The lower liners fell, while the telecommunications & media sector (+0.7%) outperformed the broader market as both the DIGI and AXIATA took a step forward firming up the deal.

Global markets:. The US stockmarkets rebounded as the Dow gained 1.8% as investors perceived that the US Federal Reserve will take on a less hawkish stance when inflation rate normalised. European stockmarkets also rebounded, but Asia stockmarkets were mostly downbeat.

The Day Ahead

The FBM KLCI surrendered its gains amid hawkish comments from the Feds, alongside its regional peers. However, with the strong rebound overnight on Wall Street, coupled with the gradual subsiding in Covid-19 daily cases, bargain hunting may lift the sentiment on the local bourse. Also, we believe market participants should focus on recovery theme stocks given the vaccination rate is improving in Malaysia. Meanwhile, the oil price climbed near the USD75 on the back of weaker USD; while the CPO price continued its downtrend move.

Sector focus:. Tracking the upward move on Nasdaq, investors may continue to look out for technology stocks on the local front. Besides, the oil & gas sector may attract some buying interest on the back of firmer oil prices.

The FBM KLCI resumed its downtrend, closing again below the SMA200 level as investors’ sentiment remained tepid. Technical indicators turned negative as the MACD Histogram has turned into a red bar, while the RSI crossed below 50 level. We expect the key index to trade below its resistance level at 1,600 with some bargain hunting activities taking shape, while the support level is located around 1,555-1,565.

Company Brief

Axiata Group Bhd, Telenor Asia Pte Ltd and Digi.com Bhd have signed the transaction agreements for the proposed merger of Celcom Axiata Bhd and Digi. The parties have concluded the due-diligence exercise and confirmed their intent to converge the Malaysian mobile operations to establish a more more-resilient and leading local telco. Upon successful completion of the transaction, the merged entity will have an estimated 19.0m customers with revenue of RM12.40bn, Ebitda of RM5.70bn, profit after tax of RM1.90bn and fresh cash flow of RM4.00bn. The proposed transaction remains subject to shareholder and regulatory approvals and is expected to be completed by 2Q22. (The Star)

Serba Dinamik Holdings Bhd has denied there was any element of related party transaction (RPT) in the undertaking of Block 7 Investments LLC when the Abu Dhabi project win was first announced in April 2021. The company also clarified that Block 7 was incorporated in Abu Dhabi, United Arab Emirates (UAE), and not in the United States as reported in The Edge Weekly on 17th June 2021. Block 7’s ownership is EFIRE Capital Holdings Ltd, which is owned by LIWA Investment Holding and Serba Dinamik International Ltd with 99.0% and 1.0% ownership, respectively. (The Star)

Nestle (M) Bhd has appointed Dr Tunku Alina Raja Muhd Alias as an independent non-executive director. She will also be appointed as a member of the group's governance, nomination and compensation committee. (The Edge)

Cahya Mata Sarawak Bhd (CMS) has reported that Datuk Seri Yam Kong Choy and Ho Heng Chuan have resigned as directors of the group, effective yesterday. Yam, 67, had served as a non-independent and non-executive director, while Ho, 64, was an independent and non-executive director. Both resigned citing to pursue personal commitments. (The Edge)

Comfort Gloves Bhd's 1QFY22 net profit surged 13.4x YoY to RM219.1m, on higher sales volume and average selling prices (ASPs), as well as better economies of scale. Revenue for the quarter rose 254.0% YoY to RM541.2m. The group declared an interim dividend of 4.0 sen, payable on 22nd July 2021. (The Edge)

George Kent (Malaysia) Bhd’s achieved a net profit of RM11.3m for the two months ended 31st March 2021, on revenue of RM34.6m, after changing their financial year end from 31st January 2021. A third dividend of one sen per share, payable on 28th July 2021 was declared. (The Edge)

Rubberex Corp (M) Bhd has proposed a private placement of up to 83.2m shares or 10.0% of its share capital to raise RM78.7m, to acquire 28 double-formers nitrile disposable glove production lines as part of its expansion in Perak, as well as for its working capital. (The Edge)

LTKM Bhd has also proposed to undertake a private placement to raise up to RM11.7m for its working capital. (The Edge)

Focus Dynamics Group Bhd has subscribed to 138.1m rights issue shares of Saudee Group Bhd, equivalent to a 19.4% stake in the latter’s share capital. The share subscription was pursuant to the memorandum of understanding inked by the two companies in relation to the rolling out of a robotics-based manufacturing facility and the development of robotic burger kiosks. (The Edge)

Source: Mplus Research - 22 Jun 2021

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Jaks Resources Bhd - Power plant running full steam ahead

Author: MalaccaSecurities   |  Publish date: Mon, 21 Jun 2021, 11:46 AM

  • JAKS is primed for charting new heights, supported by the diversification into the long-term recurring income from the power generation concession in Vietnam, coupled with the on-going efforts to improve tenancy ratio under the property development segment.
  • Whilst the concession segment will generate earnings sustainability, current construction orderbook of RM281.3m is able to provide earnings visibility till 2022.
  • We assigned a P/E multiple of 9.0x to all, but the concession segment that is valued on a discounted cash flow approach, arriving at a fair value of RM0.72.

Investment Highlights

  • Diversification into long-term sustainable income. JAKS has successfully repositioned itself as one of the major players in the power plant industry following the commencement of 25-year Build-Operate-Transfer (BOT) 2x600MW coal-fired power plant project in Hai Duong, northern Vietnam. We reckon that the mid-teens IRR and positive cash flow will be a key driver to the turnaround prospects for JAKS.
  • Venturing into long term renewable energy. Being one of the 30 shortlisted bidders of the LSS4, JAKS is currently undertaking a private placement to fund the 50MW project. Construction of the plant is expected to commence in 1Q22 and be completed in 1Q23.
  • Backed by steady orderbook. We see the construction sector to be supported by existing contracts with outstanding value of approximately RM283.1m. The aforementioned figure represents 1.1x of orderbook-to-cover ratio against FY20 construction revenue of RM263.2m that may provide earnings visibility till 2022.

Source: Mplus Research - 21 Jun 2021

Labels: JAKS
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Mplus Market Pulse - 21 Jun 2021

Author: MalaccaSecurities   |  Publish date: Mon, 21 Jun 2021, 11:46 AM

Market Review

Malaysia:. The FBM KLCI (+1.2%) snapped a three-day losing streak as indexes constituent changes take effect at the close of the trading bell on last Friday. The lower liners rebounded, while the transportation & logistics (-1.1%) and energy (- 0.5%) sectors underperformed the positive broader market.

Global markets:. The US stockmarkets trended lower as the Dow sank 1.6%. as concern over the inflationary pressure re-surfaced. European stockmarkets were downbeat, while Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI snapped the three consecutive sessions of losses on the back of bargain hunting activities after recent selldown, bucking the downtrend in the regional markets. Investors may continue to stay defensive amid the ongoing battle of the Covid-19 health pandemic and the recent political developments, but the downside risks may be cushioned by the rising daily vaccination rate as the government target to achieve 80% herd immunity by the third quarter of this year. Meanwhile, the constituents changes following the semi-annual review of the FTSE Bursa Malaysia Index Series will be taking effect today.

Sector focus:. Following the positive development on the daily vaccination rate in the country, investors may look out for stocks under the recovery theme sectors, such as consumers, financial services, property and shipping industries Besides, we may see some buying interest in the energy sector following recent decline. Also, we expect buying momentum to sustain in selected technology stocks.

The FBM KLCI snapped the three-session losing streak and trended higher, but still slightly below the EMA60. Technical indicators turned positive as the MACD Histogram has turned green and the RSI is above 50 level. We expect the key index to trade range bound below its resistance level at 1,600, while the support level is envisaged around 1,555-1,565.

Company Brief

Bermaz Auto Bhd’s (BAuto) 4QFY21 net profit surged 27.2x YoY to RM66.8m, driven by higher sales volume from its domestic operations, though this was partly offset by the lower sales volume from the Philippines operations. Revenue for the quarter jumped 11.42% YoY to RM641.2m. A fourth interim dividend of 1.5 sen single-tier dividend per share and a special dividend of 1.75 sen single-tier dividend per share was declared. (The Star)

Ipmuda Bhd, whose shares have been suspended since noon on 17th June 2021, has announced that it has signed a slew of Heads of Agreement to acquire several renewable energy (RE) plants and healthcare assets totalling RM192.4m, in line with the group's growth plan. Ipmuda is acquiring a 70.0% equity interest in Telekosang Hydro One Sdn Bhd and Telekosang Hydro Two Sdn Bhd (collectively, Telekosang), as well as 100.0% of Telekosang Hydro One ASEAN Green Junior Sukuk for a total consideration of RM163.3m, to be satisfied by way of issuance of new ordinary shares in Ipmuda. Besides that, Ipmuda is acquiring 100% equity interest in Jentayu Solar Sdn Bhd for RM11.1m, also to be satisfied by way of issuance of new Ipmuda ordinary shares. (The Edge)

FGV Holdings Bhd will appoint an independent auditor to conduct an assessment of FGV's operations against the 11 indicators of forced labour provided by the International Labour Organization (ILO), as advised by the US Customs and Border Protection (CBP). The appointment is part of the group's commitment to taking all necessary steps towards the lifting of the Withhold Release Order (WRO) issued by the CBP on 30th September 2020 against palm oil and palm oil products made by the group and its subsidiaries and joint ventures. (The Edge)

The Indonesian authorities have revoked the plantation business licence (IUP) issued to TDM Bhd's Indonesian subsidiary PT Sawit Rezki Abadi (PTSRA) for its 10,000-ha land located in the municipality of Melawi, West Kalimantan, which is expected to result in a financial impact amounting to RM3.5m on the group. The decision to revoke the IUP was made on the basis that the property has not been developed since 2015. PTSRA is currently consulting its legal counsel and in the process of making an appeal to Indonesian authorities. (The Edge)

A joint venture (JV) between Petra Energy Bhd and Uzma Bhd has secured a contract from Petroleum Sarawak Bhd (Petros) for the exploration, development and production of petroleum in Block SK433, onshore Sarawak. The 29-year contract was secured by Petra Energy Development Sdn Bhd (PEDSB) and Uzma Engineering Sdn Bhd (UESB) JV, however, is not determinable as it is based on the production of the asset. (The Edge)

Apollo Food Holdings Bhd’s Johor Bahru manufacturing facility has resumed operations after a thorough disinfection was carried out on the premises. Its subsidiary had received notice from the Ministry of Health (MoH) to resume operations at the premises, which was suspended on 15th June 2021. (The Edge)

Opcom Holdings Bhd plans to raise RM22.6m via a private placement involving 30.0% of its share base to fund its existing and future contracts, and for working capital. This marks its second cash call this year, after it completed in April 2021 a private placement involving up to 10.0% of its issued shares. Opcom is also undertaking an employees’ share option scheme (ESOS) with the number of new shares allotted not exceeding 30.0% of its total issued shares. The proposals are expected to be completed in 2H21. (The Edge)

Kerjaya Prospek Property Bhd is buying a piece of leasehold land in Petaling Jaya, Selangor for RM82.0m. Its wholly-owned subsidiary Pixel Valley Sdn Bhd had entered into a sale and purchase agreement with Roset-BLG Sdn Bhd. The exact use of the land has not been determined at this juncture, which serves landbank for Pixel Valley’s property development activities. (The Edge)

Source: Mplus Research - 21 Jun 2021

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Mplus Market Pulse - 18 Jun 2021

Author: MalaccaSecurities   |  Publish date: Fri, 18 Jun 2021, 10:03 AM

Market Review

Malaysia:. The FBM KLCI (-0.5%) was under pressured for the third straight session after languishing in the negative territory for the entire trading session, mirroring the weakness on Wall Street overnight. The lower liners extended their losses, while the broader market ended mostly lower.

Global markets:. The US stockmarkets closed mostly lower as the Dow and S&P 500 shed 0.8% and 0.04% respectively, but the Nasdaq added 0.9% after investors shifted their focus away from cyclical stocks. European stockmarkets closed mixed, while Asia stockmarkets finished mostly lower.

The Day Ahead

Taking cues from most of the regional markets, the FBM KLCI was firmly lower in the negative territory after the US Federal Reserve brought forward its outlook for the interest rate hike. The market may continue to trade sideways to negative bias tone with mild bargain hunting activities as investors mulled on the four-phase National Recovery plan. However, we believe the positive performance on Nasdaq may spillover to tech stocks on the local front. Commodities wise, oil price slipped as the USD strengthened, while the CPO price extended its losses.

Sector focus:. Investors may see trading interest in some recovery theme stocks such as consumer, property and construction as well as shipping companies. Meanwhile, traders may put green energy related stocks on radar as the market may expect more foreign investment on the sector moving forward. Also, tech stocks could be focused, taking cues from Nasdaq overnight performance.

The FBM KLCI logged a third session decline as the key index once again closed below the SMA200 level. Technical indicators turned negative as the MACD Histogram has turned into a red bar, while the RSI hovered below the 50 level. We believe the key index may trade just sideways or in a negative tone without fresh catalysts. The resistance is set at 1,600-1,615, while the next support level is located around 1,555 if the key index closed below the 1,565 level.

Company Brief

Euro Holdings Bhd has terminated a bonus issue plan following recent sell-off. In March 2021, the furniture maker has proposed to issue four new free shares for every one share held by shareholders. Earlier this week, the stock hit limit for two consecutive days, on Tuesday and Wednesday. (The Star)

Advancecon Holdings Bhd has announced a deal to a acquire majority stake in a loss making quarry operator for RM30.4m. Under the deal, Advancecon will pay RM15.2m cash and issue 33.0m new shares to Fook Hua Holdings Sdn Bhd for a 51.0% stake in Spring Energy Resources Bhd (SERB). The new shares will be issued at 46 sen each. In the long run, the proposed acquisition is expected to improve the earnings of the enlarged Advancecon Group given that the Board and management of SERB have outlined a turnaround plan. (The Star)

Malaysia Building Society Bhd (MBSB) expects to increase its revenue by 3-4% this year, driven by selective bright spots in the consumer retail and trade financing segment. There was also a steady outlook in personal financing to civil servants amid the continued uncertainties due to the Covid-19 pandemic. (The Star)

MSM Malaysia Holdings Bhd will remain as a listed entity even if the Federal Land Development Authority (FELDA) takes over its 51.0% parent FGV Holdings Bhd as reported at the virtual press conference of the sugar refiner’s annual general meeting (AGM). The group is also upbeat on its profitability path this year, despite expecting to miss its full-year production target of 1.3m tonnes by a small margin. (The Edge)

NPC Resources Bhd will have no suspension of trading of the group’s shares on 23rd June 2021 as the group has submitted its annual report for the financial year ended 31st December 2020 to Bursa Malaysia for public release. Meanwhile, the external auditor of the group has issued a qualified opinion with material uncertainty on NPC's ability to continue as a going concern. (The Edge)

Ipmuda Bhd’s share trade has been suspended since 12:21pm yesterday pending a material announcement. Prior to the suspension, shares in Ipmuda were traded 18 sen or 10.7% higher at RM1.87, which values the company at about RM153.5m. (The Edge)

Genetec Technology Bhd has secured new orders worth approximately RM47.9m from existing customers who are global players in the segments of electric vehicle and battery and hard disk drive, electronics and semiconductor. (The Edge)

MQ Technology Bhd has proposed a private placement of up to 182.8m new shares, representing not more than 20.0% of its share capital. Based on an indicative issue price of 6.0 sen, the placement is expected to raise gross proceeds of up to RM8.9m and RM11.0m under the minimum scenario and maximum scenario, respectively. The proceeds from the placement will be used to renovate its factory, repay unsecured loan, and for working capital. (The Edge)

LKL International Bhd has decided to conduct its private placement of 30.0% of its issued share capital before its one-for-one bonus issue. This means the placement will now entail the issuance of up to 177.5m shares. LKL wanted to raise RM56.8 m from the placement, of which RM54.2m will be used to set up a new business in trading of rubber gloves and personal protective equipment. (The Edge)

Apollo Food Holdings Bhd has announced a temporary manufacturing stoppage for the second time this month to prevent the spread of Covid-19. The affected manufacturing facility this time is run by wholly-owned subsidiary Apollo Food Industries (M) Sdn Bhd, which was ordered by the Ministry of Health (MoH) yesterday to close for seven days until 22nd June 2021 to disinfect its premises. (The Edge)


Source: Mplus Research - 18 Jun 2021

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Mplus Market Pulse - 17 Jun 2021

Author: MalaccaSecurities   |  Publish date: Thu, 17 Jun 2021, 12:51 PM

Market Review

Malaysia:. The FBM KLCI (-0.2%) continues to trade on a cautious tone with half of the key index components in the red prior to the two-day US FOMC policy meeting. The lower liners closed in the red, while the utilities sector (+0.3%) was the sole outperformer on the negative broader market.

Global markets:. The US stockmarkets extended their losses as the Dow declined 0.8% after the US Federal Reserve is in plan to scale back the bond purchases and anticipates two interest rate hikes by end-2023. European stockmarkets ended mildly higher, but Asia stockmarkets closed mostly downbeat.

The Day Ahead

The FBM KLCI sank into the negative territory as investors were concern on the outcome of the FOMC meeting. Despite the tepid sentiment, downside risks on the local bourse might be capped by declining Covid-19 cases trend, coupled the acceleration in vaccination rate following the implementation of Public-Private Partnership Industrial Covid-19 Immunisation Programme (PIKAS) yesterday. Meanwhile, selected commodities prices dropped following China’s announcement on its campaign to control raw material prices by expanding its oversight of commodities trading and pledging to release the nation’s reserves of base metals.

Sector focus:. Following a pullback in commodities prices, investors may refocus on the sectors such as essential consumer stocks and packaging counters. In the meantime, traders may look out for recovery theme play on the back of the clearer National Recovery Plan unveiled by our PM; recovery theme sectors include consumer, property and construction.

The FBM KLCI extended losses for the second session as the key index struggled to rebound. Technical indicators is slightly negative as the MACD Histogram has turned into a red bar, while the RSI is still below 50. The key index may continue to trade below the resistance level at 1,600, while the support level is envisaged around 1,555-1,565.

Company Brief

Yinson Holdings Bhd's green technologies division has invested in Singapore startup Oyika Pte Ltd to accelerate the adoption of electric vehicles (EV) in Southeast Asia. The investment, together with its recent investment into autonomous driverless solution company MooVita represents the group's first step towards building an integrated green logistics solution. Oyika is a provider of a battery swap service bundled with an electric motorbike, made available through affordable subscription plans. (The Star)

Cypark Resources Bhd has proposed to undertake a private placement of up to 105.0m new ordinary shares, representing up to 20.0% of the total number of issued share in the company. The issue price would be determined and announced later. The proceeds will be used to complete the construction of the solar PV (photovoltaic) energy generating facility with 173 MWp (megawatt peak) LSS3 project in Marang, Terengganu. (The Star)

Euro Holdings Bhd was not aware of the reasons behind a sharp drop in the share price of the office furniture manufacturer and property developer even as the stock hit limit down for the second consecutive day yesterday. Bursa Malaysia Securities Bhd has frozen the lower limit price for the stock at RM1.21. (The Edge)

Pharmaniaga Bhd is expected to complete its contractual obligation of supplying 12.0m Sinovac Covid-19 vaccine doses to the Federal Government by next month, sufficient to cover some 18.0% of Malaysia’s population. The vaccine had been approved by the World Health Organization (WHO) and the recognition is a boost of confidence in the battle against the pandemic. (The Edge)

Dutch Lady Milk Industries Bhd (DLMI) has announced the appointment of Ramjeet Kaur Virik as its managing director effective 2nd July 2021. She will succeed Tarang Gupta, who will be appointed managing director for Alaska Milk Corp in the Philippines, which like DLMI is a subsidiary of Dutch multinational Royal FrieslandCampina NV. (The Edge)

CAB Cakaran Corp Bhd has suspended operations at one of its wholly-owned subsidiary's factories after 162 Covid-19 infections were found among its workers. The Covid-19-positive cases were confirmed between 10th & 11th June 2021. Subsequently, the affected factory received a notice from the Ministry of Health, with instructions to suspend its operations from 11th June 2021 until further notice. (The Edge)

MSM Malaysia Holdings Bhd has received the nod from the Ministry of Health to resume its Penang operations on 15th June 2021 after a temporary shutdown from 8th June 2021 due to Covid-19 cases recorded on-site. The suspension involving its unit MSM Prai Bhd was lifted two days early from the initial date of 17th June 2021. (The Edge)

NPC Resources Bhd faces a suspension of the trading of its shares on Bursa Malaysia with effect from 23rd June 2021 if it is unable to submit its 2020 annual report by 22nd June 2021. The Sabah-based oil palm plantation company had failed to issue the annual report by the extended deadline of 15th June 2021. (The Edge)

Source: Mplus Research - 17 Jun 2021

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Astino Berhad - Riding the commodity supercycle and economic recovery

Author: MalaccaSecurities   |  Publish date: Wed, 16 Jun 2021, 11:14 AM

  • Astino is likely to expand its capacity, in line with the broad economic recovery trend following the Covid-19 pandemic, as well as the recent commodity supercycle trend, which may translate to firmer earnings going forward.
  • Also, Astino’s AHMS should see growing demand from the poultry sector within the region as poultry consumption is still relatively low as compared to Malaysia.
  • We project the net income could grow by 3-125% to RM50.5-52.2m in FY21-22f.
  • Astino could justify by pegging its FY22f EPS of 19.76 sen to 11x P/E (c.28% discount vs. peers average of 15.2x), arriving at a fair value of RM2.17.

Company background

  • One of the leading building material manufacturers. Astino Berhad was incorporated in 2000 and was listed in Bursa Malaysia in 2003, has established itself as one of the leading industrial enterprises in the field of building products under the brand name of Astino® with 10 manufacturing plants located in Sungai Bakap, Bukit Beruntung, Melaka and Temerloh to provide services for customers in different locations.
  • International presence with solid relationship. With more than 21 years of experience in the steel industry, Astino Berhad has exported its products internationally, which include regional countries such as Thailand, Indonesia, Philippines, Bangladesh, Nepal and Vietnam; thus contributing c.10% (average) to its revenue over the past 10 years.
  • Wide range of clientele. Astino’s customer base ranges from construction, infrastructure, manufacturing, agricultural, poultry industries, hardware, wholesalers and retailers, forming more than 5,000 customers. This allows them to have an upper hand to deliver specific requests as they have in-house facilities to undertake activities such as cutting, levelling, shearing, bending and welded steel pipe.
  • Comprehensive variety of building materials. Products that are offered by Astino include metal roofing, c-purlin, small c-purlin, truss and batten, piping, scaffolding, slitting and levelling coil, agro facilities and its related products.
  • Agro-House Multi System (AHMS). Developed in 2009, Astino AHMS is an advanced economical and environment friendly solution to the construction of various types of poultry houses such as pullet, breeder, broiler, layer houses. AHMS is designed and constructed with a clear span light gauge steel structure system to eliminate the need for interior column support for a wider poultry house. The steel structure is able to withstand the weight load of other systems such as ventilation and temperature control, watering and feeding systems.
  • Key advantages of AHMS include (i) strong and heavy-duty yet lightweight unit that complies with international standards of safety (ii) easy and fast installation within a short period of 7 days, (iii) requires minimal maintenance and hygienic, (iv) pest and termite proof and (v) good insulation which translate to lower mortality rate.

Key highlights

  • On point execution, resulting in uninterrupted profits since 2003. Astino registered RM6.7m net profit in FY03 and continues to grow to RM22.4m in FY20, suggesting it has been growing at a CAGR of 7.4% over the past 17 years. We believe in the commodity supercycle recently, Astino may anticipate stronger earnings in FY21. Do note that besides FY03, FY09 was the only other financial year that recorded net profit of below RM10m. With the strong track record since listing, it suggests that the management execution is on point despite the cyclical nature of steel prices.
  • Expansion plans on track… Currently, Astino’s production capacity stands at 170,000 tonnes and its average utilisation rate is c.71% over the past 5 years. Based on our conversation with the management, Astino is looking to expand another 30,000 tonnes to its current production capacity by FY24.
  • …in line with the global recovery tone. We believe the expansion plan is timely underpinned by the broad economic recovery mode following the Covid-19 pandemic as well as the bullish steel sector. We believe the ASP will remain firm on the back of strong demand in metal products as well as supply controls in China.


  • Broad economic recovery may focus on infrastructure spending. After enduring the Covid-19 induced recession in 2020, we expect the broad based recovery to take place in 2021. Given construction and infrastructure spending may have a bigger multiplier effect towards the economy that should be the direction for governments around the world to boost their respective economy going forward. Hence, that should lift the demand for steel related products that are manufactured by Astino.
  • Growing population and rising income per capita. The demand for poultry products, which include poultry, eggs and livestock feed, is mainly driven by growing populations and the rising income per capita, while the growth rate of the poultry sector will depend on the maturity of the sector in different countries.
  • Higher growth rate in regional countries. The poultry sector is expected to grow at a higher rate in countries where poultry consumption per capita is still low such as Indonesia (7.9kg in 2020), Vietnam (13.6kg in 2020), Philippines (13.7kg in 2020), and Cambodia (2.5kg in 2018) as compared to Malaysia, where the poultry consumption per capita is 49.3kg in 2020, according to statista website.
  • AHMS to benefit from the growing poultry sector. Given the poultry outlook is on a growing trend regionally, we believe Astino that has served these regions such as Southeast Asia, South Asia, Oceania and Middle East should be having sustainable growth in the coming years.


  • Given the continuous effort by the management throughout the years achieving 18 consecutive years of profits, we believe Astino will be able to register decent profits in the coming years. Moreover, with the commodity supercycle that saw an increase in its average selling prices for their products, we could safely derive a record earnings year in FY21f.
  • For FY21f-22f, we opine that the revenue will expand 10%-24% to RM646.0-708.1m, respectively on the back of firmer local market demand following the broad market recovery after the Covid-19 pandemic. Meanwhile, we believe the increase in steel price may reflect in their net income, rising by 3.4-125% to RM50.5-52.2m, respectively for FY21f-22f.


  • At this market capitalisation of RM424.9m, Astino is trading at FY21f-22f of 8.4- 8.1sx, respectively. We think Astino’s valuation can be justified using a P/E multiple of 11x, pegging to the FY22f EPS of 19.76 sen, arriving at a fair value of RM2.17.
  • Although Astino has no dividend payout policy, we believe the management will reward its shareholders. Based on the past track records, Astino has been dishing out 1.0-2.9 sen per share per year over the past 10 years, translating to dividend yield ranging from 0.6-1.8%. Based on our forecast, we expect Astino will reward roughly 1.8-1.9sen in FY21f-22f, translating to dividend yield of 1.2%.

Source: Mplus Research - 16 Jun 2021

Labels: ASTINO
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