Highlights

JF Apex Research Highlights

Author: kltrader   |   Latest post: Fri, 28 May 2021, 5:57 PM

 

AME Consortium Berhad - Better Year Ahead

Author: kltrader   |  Publish date: Fri, 28 May 2021, 5:57 PM


Results

  • AME recorded 4QFY21 core earnings of RM21.1m (after excluding its fair value gain on investment properties net of tax and MI of RM1.7m), which surged strongly by 115.3% yoy and 80.3% qoq.
  • FY21 exceeding our expectation. The Group chalked up RM49.5m core net profit for its full year FY21 result (-7.5% yoy), exceeding our estimate by 14.6%. The better-than expected result was due to faster-than-expected progress billings for its Property Development segment, mainly contributed by its EMS client in Johor.

Comment

  • Stellar 4Q results underpinned by Construction, Property Development and Engineering segments. AME achieved commendable 4QFY21 thanks to better showings posted by its Construction (segmental revenue: +31.0% yoy and +11.0% qoq; segmental profit: +114.3% yoy and +106.9% qoq), Property Development (segmental revenue: +272.6% yoy and 75.4% qoq; segmental profit: +93.0% yoy and +38.4% qoq) as well as turnaround of its Engineering division (4QFY21 segmental profit of RM2.5m vs loss of RM0.1m in a year ago and further strengthened 38.9% qoq).
  • Softer FY21. However, the Group’s full year FY21 result was weaker yoy as impacted by the MCO which caused temporary disruption on its projects progress especially for its Construction (segmental profit slid 39.1% yoy) and Engineering (segmental profit tumbled 75.5% yoy) divisions, coupled with lower project margin and lower share of JV profit, -34.0% yoy (i.e. i-Park@Indahpura, Phase 3 project). Also, the higher effective tax rate (FY21: 27.3% vs FY20: 22.5%) weighed on AME’s overall yearly performance.
  • Resilient orderbook….. AME has an outstanding orderbook of RM147.6m of construction and engineering works as of 4QFY21. The Group has successfully clinched RM65.2m worth of jobs during FY21, falling short of its target orderbook of RM136m for FY21. However, the Group envisages to clinch RM44.3m worth of construction and engineering works in the near future.
  • ……and unbilled sales. Property development wise, AME has chalked up RM140.3m new sales for its industrial properties in FY21. Still, management is sanguine on its sales prospects as it has secured RM107.8m bookings in 4QFY21 (FY21 sales target of RM200m). Meanwhile, the Group boasts RM64.3m unbilled sales as of 4QFY21 which render earnings visibility for the next 6 months.
  • Anticipating better FY22F. AME has secured substantial investments from several multinational companies with local presence at the beginning of FY22 to build their industrial facilities in its i-Parks, and the Group continues to receive inquiries about its i-Park industrial properties from several prospective customers. Moving forward, the Group will continue developing i-Park@Senai Airport City (Phase 3) and expanding its construction and property development segments to improve the Group’s bottom line.
  • Interim dividend of 4.0 sen/share. The Group has declared an interim dividend of 4.0 sen/share for its FY21 with ex-date on 16 June. This translates into a dividend yield of 1.7% based on last closing price.
  • Proposed bonus issue and free warrant. On a separate announcement, AME has proposed 1-for-2 bonus issue together with 1-for-3 free warrants. This is to reward its shareholders and further improve its share liquidity.

Earnings Outlook/Revision

  • We lift our FY22F core net earnings marginally by 4.9% to RM58.3m from RM55.6m after increasing our progress billings for Property Development and Engineering margin. We also take this opportunity to introduce our FY23F core profit of RM71.9m. Our FY22F and FY23F core earnings estimates represent yoy growth of 17.8% and 19.2% respectively.

Valuation & Recommendation

  • Maintain BUY on AME with a higher target price of RM2.53 (previously RM2.41) after our earnings upgrade. Our revised target price is pegged at PE of 18.5x FY22F core EPS which is in line with upcycle valuations of large-cap construction players.
  • We like the stock for its: 1) potential landbanking in Klang Valley, 2) potential listing of industrial REIT in the medium term with asset size of around RM500- 600m which includes i-Park (leasing of industrial properties) and i-Stay (worker dormitories); and 3) unique busines model which is relatively unfazed by prevailing pandemic and economic downturn.

Source: JF Apex Securities Research - 28 May 2021

Labels: AME
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Telekom Malaysia Bhd - Stellar Performance

Author: kltrader   |  Publish date: Fri, 28 May 2021, 5:56 PM


Results

  • Stellar earnings – TM’s 1Q21 reported net profit more than doubled YoY to RM325.5m while normalized PATAMI surged 38% YoY to RM331.5m due to lower operating costs which saw EBITDA margin lifted to 40% from 36% a year ago.
  • Revenue grew – 1Q21 revenue rose 10% YoY to RM2.8b due YoY growth in all business segments: Voice (+2.2% to RM556m), Data (+26% to RM800m), Internet (+4% to RM974m and Others (+9% to RM480m).
  • Higher QoQ earnings – TM’s normalised PATAMI of RM331.5m surged 71% QoQ despite lower revenue (-6% QoQ to RM2.8b) as operating costs declined. Revenue from Voice (-10% QoQ) and Other (-26% QoQ) declined while Internet (+2.6% QoQ) and Data (+1.7% QoQ) posted growth. Direct cost decreased 23% QoQ to RM687m while other opex dropped 36% QoQ to RM313m.
  • Subscriber growth momentum – Total broadband subscribers increased 12% YoY and 5% QoQ to 2.44m as UniFi subscribers grew 31% YoY and 10% QoQ to 1.95m to cushion the decline in Streamyx subs which decreased 29% YoY and 12% QoQ to 0.49m.
  • Stable ARPUs – TM’s Average Revenue Per User (ARPU) for Streamyx broadband declined was stable QoQ at RM91 vs RM92 in 4Q20 while ARPU for UniFi declined to RM144 vs RM153 in 4Q20.
  • Steady gearing – Net debt/EBITDA was flat at 1.42x (from 1.41x in 4Q20) while cash reserves declined to RM1.84b vs RM4.15b in 4Q20 following early redemption of RM2b sukuk.

Earnings Outlook/Revision

  • Above expectation – 1Q21 normalized PATAMI achieved 29% of our full year estimate three months’ revenue accounted for 26% of our FY21 forecast.
  • Estimates maintained – We are keeping our forecasts for FY21 with caution of potential negative impact of the latest MCO. Earnings momentum will be sustained by strong demand for fixed broadband and ongoing cost optimisation.
  • Key beneficiary – TM is a key beneficiary of MyDIGITAL given its infrastructure of fibre network and submarine cables as well demand for data centres and 5G rollout.

Valuation & Recommendation

  • Upgrade to BUY from HOLD with an unchanged target price of RM6.64 due to the recent selldown in share price which sees its values re-emerge. The fair value is based on DCF with assumption of 1.5% terminal growth and 9% discount rate.

Source: JF Apex Securities Research - 28 May 2021

Labels: TM
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Tambun Indah Land Berhad - A Stellar Start

Author: kltrader   |  Publish date: Fri, 28 May 2021, 5:55 PM


Result

  • Results above expectations. Tambun Indah Land (TIL) posted a net profit of RM10.1m in its 1Q21 results, soaring 1162.5% yoy but tumbled 25.7% qoq. This accounts for 30%/33% of our/consensus’ full year 2021 net profit estimates. The stronger-than-expected results were mainly due to significantly higher recognition of progress billings.

Comment

  • Stronger yoy but weaker qoq. TIL posted better yoy results for 1Q21 mainly driven by higher revenue, +236.9% yoy and stronger margin (PBT margin: +22.2pts). This was mainly attributable to higher new sales during this quarter as compared to 1Q20 coupled with higher construction progress (construction works at project sites were temporarily closed from mid of March 20 due to MCO 1.0). However, on qoq performance, the Group recorded lackluster earnings on the back of lower revenue, -22.4% no thanks to lower new sales achieved against 4Q20.
  • Steady sales. TIL chalked up RM32.1m new sales during 1Q21, declining from RM66.3m sales achieved in 4Q20 but significantly higher than 1Q20’s RM9.1m, which was the onset of Covid-19 pandemic and nationwide lockdown. We expect the Group to achieve RM160-170m news sales for this year 2021 which is on par with its last year sales performance of RM168m. The Group will continue to benefit from the House Ownership Campaign (HOC) 2020 scheme which lasts till mid-2021. On the other hand, TIL’s unbilled sales decreased to RM76.1m as of 1Q21 from RM92.9m in 4Q20. Nevertheless, this renders earnings visibility to the Group for the next 2-3 years. Currently, the Group has six on-going projects with a total GDV of RM453.8m (average take-up rate of 60.5%).
  • Planned launches in 2021. Amid prevailing spike in Covid-19 cases and MCO 3.0, the Group will continue to exercise prudence in new project launches, focusing on affordable and mid-market landed residential projects. TIL targets to launch a total GDV of RM244m worth of housing projects this year. These are: 1) Aster Villa – a gated and guarded residential development comprising 255 units of double storey terrace houses, semi-detached houses and bungalow in Pearl City, and 2) Ambay Garden - a landed residential development comprising 178 units of double storey terrace houses and semi-detached houses in Pearl City.

Earnings Outlook/Revision

  • We lift our 2021F and 2022F net earnings estimates by respective 7.6% and 10.4% to RM36.8m and RM39.4m after raising our progress billings.

Valuation & Recommendation

  • Maintain BUY on TIL with an unchanged target price of RM0.75 as we believe worst is over for TIL and sales continue to improve. Our valuation is based at 9x 2021F PE multiple, which is in line with other large and mid-cap property counters’ current valuations. Shareholders could expect decent dividend yield of 3-4% for 2021F. This is assuming DPS of 3.4sen to be declared for 2021 with minimum dividend payout of 40%. We believe the Group will commit its dividend payments to reward long-term investors amid current economic uncertainty.

Source: JF Apex Securities Research - 28 May 2021

Labels: TAMBUN
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Boilermech Holdings Berhad - Solar Energy to Drive Earnings

Author: kltrader   |  Publish date: Thu, 27 May 2021, 5:21 PM


Result

  • Boilermech Holdings Berhad (Boilermech) registered a net profit of RM6.5m during 4QFY21 which dropped 13.5% qoq but escalated 7.2% yoy. Meanwhile, revenue stood at RM76m, which elevated 16.9% qoq and 27% yoy.
  • As for full year FY21, Boilermech posted net profit and revenue of RM22.5m and RM 237.3m which were down 3.4% yoy but up 3.1% yoy respectively. The slight tepid earnings were dented by higher cost expenses from Bio-energy segment while revenue was spurred by higher orderbook from solar energy business.
  • Above expectation. The Group’s 12MFY21 net profit of RM22.5m was above our expectation, accounting for 112.5% of our full year forecast in view of contribution of its newly acquired business, solar energy business which was consolidated in May’20.

Comment

  • Higher cost incurred from Bio-energy segment which dragged down QoQ earnings despite better showings from Water treatment and Solar energy segments. Boilermech’s revenue improved 16.9% qoq given higher orderbook delivery from Water treatment segment (revenue: +39.8% qoq) and Solar energy segment (revenue: +500% qoq) despite sluggish delivery from Bio-energy segment (revenue: -41.3% qoq). Nevertheless, the Group’s PBT margin was lower which was down by 4.1ppts qoq following higher project cost, manpower and administration expenses, as well as the impact from the reversal of doubtful debts which pulled down Bio-energy segment’s PBT, -78.2% qoq. However, Water treatment segment’s PBT jumped 103% qoq given better cost control, we believe.
     
  • Stronger YoY growth banking on commendable contribution from Solar energy segment. The Group’s revenue and PBT soared 27% yoy and 8.9% yoy respectively, thanks to higher contribution from Solar energy segment which was acquired in May’20. Meanwhile, revenue/PBT for Bio-energy segment tumbled 30% yoy/70.1% yoy and Water treatment segment depleted 12.8% yoy/21% yoy due to lower earnings resulting from the movement restriction imposed by the Government.
     
  • Solar energy segment spurred FY21 results. FY21 revenue/PBT increased 3.1% yoy/4.1% yoy following higher orderbook from Solar energy segment despite sluggish Bio energy segment revenue/PBT, down 10.4% yoy/17.8% yoy. Meanwhile, Water treatment segment’s revenue declined 13.8% yoy but PBT surged 19.9% yoy.
  • Solar energy to drive earnings. Looking forward, Management remains cautious with resurgence of Covid-19 cases as well as extension of movement control order that might halt the project execution. Nevertheless, Boilermech believes to deliver satisfactory results ahead underpinned by hefty demand from solar energy business as well as positive outlook of CPO price. Overall, we believe its new business venture into solar energy will boost its recurring earnings in the near term and thus reducing reliance on its traditional businesses. Moreover, we are positive on its business outlook upon higher efficacy rate on vaccination that could help to ease current business restriction pursuant to Covid-19 outbreak as well as benefiting from current spike in CPO prices.

Earnings Outlook

  • No changes on our FY22F net profit forecast. Also, we would like to introduce our FY23F net earnings forecast of RM29.3m with 9.9% yoy growth.

Valuation/Recommendation

  • Maintain BUY on Boilermech with a higher target price of RM1.50 (RM1.10 previously) as we ascribe higher PE of 28.8x (21.2x previously) FY22F EPS of 5.2 sen. Target P/E ratio assigned is slightly higher than +2 standard deviation of its 3-year mean P/E of 27.2x.

Source: JF Apex Securities Research - 27 May 2021

Labels: BOILERM
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Wellcall Holdings Berhad - Earnings Boosted by Exports Sales

Author: kltrader   |  Publish date: Thu, 27 May 2021, 5:21 PM


Result

  • Wellcall Holdings Berhad (Wellcall) registered a net profit of RM8.8m during 2QFY21, which soared 6.8% qoq and 20% yoy on the back of encouraging revenue which jumped 7.6% qoq and 19.7% yoy to RM38.2m.
  • Within expectations. The Group’s 6MFY21 net profit of RM17m was within our in-house (42.7%) and market estimates (47.1%). The commendable result was spurred by higher sales from exports market despite sluggish contribution in local market.
  • Dividend declared. Wellcall has declared a second single-tier dividend of 1.40sen/share. This brings total dividend payout of 2.8sen/share which makes up 43.8% of our full year dividend forecast.

Comment

  • Sturdy export sales boosted QoQ performance despite subdued local sales. Wellcall’s revenue and profit before tax (PBT) jumped 7.6% qoq and 10% qoq respectively during 2QFY21. Stellar results were underpinned by recovery from the global industrial rubber hose market which instilled higher sales from exports market (+10.5% qoq), mainly driven by USA/Canada (+22.8% qoq), Middle East (+18.6% qoq), Australia/New Zealand (+14.1% qoq), South America (+59% qoq) and Africa (+58.3% qoq). Nevertheless, export sales to Asia (- 0.5% qoq), Europe (-26.6% qoq) as well as local market (- 18.2% qoq) were sluggish during this period.
  • Better YoY also dominated by exports market. On a same note, revenue and PBT escalated 19.7% yoy and 28% yoy respectively given Wellcall’s efforts on strengthening its customer base globally through prompt delivery to its customers. During this period, exports sales made up 92% to the Group’s revenue. Additionally, PBT margin also inched up higher which rose 2ppts yoy. Besides, PBT for exports market grew double digit growth to +31% yoy despite minor contraction in PBT from local market (-0.1% yoy).
  • Stronger 1HFY21. Cumulatively, revenue and PBT improved 3.4% yoy and 8.8% yoy respectively during this period, mainly driven by exports market. Export sales contributed approximately contribute c.91% during 1HFY21 as compared to 87% in 1HFY20. Also, PBT improved by 1.5ppts yoy during 1HFY21.
  • Steady outlook. Looking forward, the Group remains optimistic on the business prospect for the rest of the year given recovery in global demand for industrial rubber hose smid current challenging situation as affected by pandemic. Although current economic uncertainty might disturb business performance such as impact on supply and demand mechanism of raw materials, disruption to global supply chains, limited cargo capacity as well as fluctuation of currency exchange sentiment, we deem the Group is well poised to benefit from economic recovery upon mass vaccination roll-out as well as gradual reopening of business activities. We believe the Group’s business performance to resume to the pre Covid-19 level in the near term, spurred by steady demand of its industrial rubber hose, on top of better contribution from its joint venture with Swedish partner, Trelleborg on manufacturing marketing, and selling of composite hose.

Earnings Outlook/Revision

  • No change to our earnings forecasts for FY21F and FY22F.

Valuation/Recommendation

  • Maintain BUY call on Wellcall with an unchanged target price of RM1.33. Our valuation is pegged at PE of 16.6x FY21F EPS of 8 sen, slightly higher than 5-years average mean PE of 16.4x.
  • We favour the stock for its: 1) strong margins and healthy cash position; 2) hose is widely used in different industries; 3) favourable cost/sales perspective in which costs are mostly denominated in local currency, MYR whilst export proceeds are in USD. Wellcall is a fundamentally strong company which renders golden opportunity for investors to ride on cyclical stock play as the Group is well poised to benefit from economic recovery upon reaching ideal vaccination rates in local as well as its export markets.

Source: JF Apex Securities Research - 27 May 2021

Labels: WELLCAL
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Padini Holdings Berhad - Challenging Outlook Ahead

Author: kltrader   |  Publish date: Thu, 27 May 2021, 5:17 PM


Result

  • Padini Holdings Berhad (Padini) posted a core net profit of RM11.2m during 3QFY21 which slid 5.8% qoq and 25.8% yoy. Meanwhile, revenue soared 6.9% qoq but depleted 24.3% yoy.
  • As for 9MFY21, the Group’s core net profit of RM45.6m declined 49.7% yoy on the back of sluggish revenue, - 30.6% yoy. The dismal results were dented by re implementation of movement control order pursuant to resurgence of Covid-19 cases which bogged down overall Padini’s performance.
  • Within our expectations. Padini’s 9MFY20 core net profit of RM45.6m is within our in-house estimate which accounts for 71.9% full year core net profit forecasts but substantially below market expectation (55.8%).
  • Dividend declared. The Group has declared a first interim dividend of 2.5sen/share (single-tier dividend) for FY21 which makes up 50% of our full year FY21F dividend per share.

Comment

  • Lunar new year festive season boosted QoQ results. Padini’s revenue increased 6.9% qoq, thanks to improved sales generated during Chinese New Year festive season. Meanwhile, profit before tax (PBT) grew 5.7% qoq during this period buoyed by better sales mix, we believed. Stellar sales were managed to capture although outlets were only able to open two days before Chinese New Year festive season. Also, we expect the Group extended its sales campaign post Chinese New Year to clear the stockpiles thus resulting greater performance on quarterly basis.
     
  • Reinstated control movement order bogged down YoY growth. On yearly basis, revenue and PBT tumbled 24.3% yoy and 30.3% yoy respectively resulted from imposition of movement controls by the Government arising from spike of Covid-19 cases. All Padini outlets had to close in all states except Sarawak from 13th Jan 2021 until 9th Feb 2021. Thereafter, outlets were allowed to open started 10th Feb 2021 with strict standard operating procedure (SOP) to adhere.
     
  • Dismal 9MFY21, gloomy FY21F expected. 9MFY21’s PBT margin was down 3.3ppts yoy on the back of slumbering revenue which tumbled 30.6% yoy, bogged down by Covid-19 pandemic. As for the following quarter, we expect the business operation will remain struggle as Covid-19 cases were showing uptrend recently. Additionally, after government revealed Hotspots Identification for Dynamic Engagement (HIDE) Covid-19 hotspot list which mainly focuses on numerous shopping malls and supermarkets, the Group has closed down 43 outlets for three days. Although the outlets has resumed operation, we expect consumer footfall will remain weak at this juncture given concern on recent Covid-19 cases as well as stringent SOP applied during MCO 3.0 which was started on 25th May 2021 thus affecting its brick-and mortar sales.
     
  • Challenging environment in the near term. We deem the Group’s business operation to remain challenging in the near term amid current pandemic situation albeit recent commencement of vaccination programme. We expect the Group to experience disappointing operating margin arising from higher cost amid lower rental rebate from landlords. Although stock inventory is at satisfactory level currently, we expect lower consumer footfall to hamper the business performance amid marginal contribution from e-commerce sales (less than 1% revenue contribution to Group level).
     
  • Downside risks include: (a) Stiff retail competition especially in apparel and footwear industry, (b) Strengthening of Chinese Renminbi against Ringgit Malaysia, (c) Higher operation costs, and (d) Prolonged Covid-19 outbreaks.

Earnings Outlook/Revision

  • No changes on our FY21F and FY22F core earnings forecast.

Valuation & Recommendation

  • Maintained SELL with an unchanged target price of RM2.40. Our valuation is pegged at 20x FY22F PE with an EPS of 12sen, slightly above to its +1SD of 5-year historical PE of 19.2x.

Source: JF Apex Securities Research - 27 May 2021

Labels: PADINI
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