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Mplus Market Pulse - 12 Apr 2017

MalaccaSecurities
Publish date: Wed, 12 Apr 2017, 02:16 PM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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  • The local bourse continues to decline for a second-straight day as the FBM KLCI lost 0.2% owing to negative sentiments spilled over from the U.S and European stockmarkets overnight. The lower liners meanwhile, were splashed in red – led by the FBM ACE (+0.5%), amid an equally bearish broader market.
  • Market breadth was stable as decliners edged advancers on a ratio of 468-to-430 stocks. Traded volumes recovered 15.5% to 4.23 bln - led by selling-pressure in the small cap stocks.
  • Underperformers like Hong Leong Financial Group (-16.0 sen), KLCC Properties & REITs (-16.0 sen) and Petronas Chemicals (-10.0 sen) weighed on the key-index on Tuesday. Meanwhile, other decliners include plantation-related giants like PPB Group (-10.0 sen) and IOI Corporation (-9.0 sen) amid the burgeoning palm oil inventory. Broader market losers were Far East Holdings (- 31.0 sen), KESM Industries (-28.0 sen), Ajinomoto (-26.0 sen) Apex Healthcare (- 16.0 sen) and Hong Leong Financial Group (-16.0 sen).
  • Meanwhile, gainers on the broader market were underpinned by Scientex (+25.0 sen), HCK Capital Group (+20.0 sen), IWCity (+20.0 sen), Rev Asia (+16.0 sen) and TAHPS (+15.0 sen). Major movers of the Main Board were Genting (+5.0 sen), Hong Leong Bank (+4.0 sen) Petronas Dagangan (+4.0 sen), Maxis (+3.0 sen) and MISC (+2.0 sen).
  • Major regional benchmark indices closed mostly lower as safe-haven assets like gold and Yen soared amid mounting geopolitical tensions in the Middle East and in North Asia. Toshiba Corp (-2.7%) continue to weighed on the Nikkei (- 0.3%), amid concerns of its ability to stay afloat, while the Hang Seng (-0.6%) declined after the government tighten property rules for the second time. The Shanghai Composite however, defied the general downward trend to finished 0.6% higher. ASEAN stockmarkets were mixed on Tuesday’s close.
  • U.S. stockmarkets finished well off its intraday low, albeit still closing in the red as major banks prepares to kick off the quarterly corporate earnings season. The Dow (-0.03%) was flattish, while techheavy S&P 500 fell 0.1%. The Nasdaq also follow suit, ending down by 0.2% to 5,866.8 points.
  • Earlier, European equities ended mixed – with sentiments curbed by rising geopolitical risks in the Korean Peninsula and the Middle East. Although the FTSE rose 0.2% to 7,365.5 points, the DAX and the CAC declined by 0.5% and 0.1% respectively.

The Day Ahead

  • There is no change to our near term view that the market is devoid of fresh leads to provide buying impetus and the market is likely to continue its consolidation trend. In addition, the insipid environment in most global stocks indices will also see the local bourse remaining on the low gear.
  • In the absence of fresh buying and its inability to stay above the 1,740 level, we expect the key index to continue dipping to its next support level at the 1,730 level over the near term as part of its consolidation exercise.
  • Away from the key index, however, we continue to think that the interest on the lower liners and broader market shares should remain firm as there is still pentup interest from retail players, judging by the strong traded volumes. This will help to sustain market breadth and depth – ingredients that are crucial for to sustain the ongoing firm market trend. MACRO BRIEF
  • Malaysia's Industrial Production Index (IPI) rose 4.7% Y.o.Y in February 2017, underpinned by the positive expansion in manufacturing (+6.5% Y.o.Y), mining (+0.4% Y.o.Y) and electricity (+1.5% Y.o.Y) sub-indices, but the growth was below economists’ forecast of a 7.3% Y.o.Y growth.
  • Powering the growth in the manufacturing sector were the major sub-sectors including electrical and electronics products (+8.1% Y.o.Y), food, beverages and tobacco (+15.9% Y.o.Y), and petroleum, chemical, rubber and plastic products (+3.7% Y.o.Y). (The Star Online)

Company Update

  • Protasco Bhd has bagged a five-year contract worth RM49.9 mln to maintain minor roads in Terengganu. The contract was secured via its subsidiary, Permint Granite-HCM Sdn Bhd, from the Public Works Department. (Bernama)

Comments

  • The abovementioned contract marks the second concession project secured by Protasco in 2017, bringing its concession orderbook replenishment to RM140.0 mln YTD. With the incorporation of the aforementioned project, Protasco’s outstanding concession orderbook now stands at approximately RM4.55 bln to provide earnings visibility till 2026 Similar with the previous construction contracts secured, we expect the project to command an EBITDA margin of 13%- 15%.
  • Given that the concession contract falls within our orderbook replenishment rate of RM300.0 mln in 2017, we made no changes to our earnings forecast and we maintain our BUY recommendation on Protasco with an unchanged target price RM1.45.
  • Our target price is derived from ascribing an unchanged target PER of 11.0x to its 2017 construction earnings, a target PER of 8.0x to its concession and engineering services’ earnings, while its education and trading earnings remain pegged at target PERs of 6.0x respectively due to their smaller scale businesses. Its property development division’s valuation remains unchanged at 0.6x of its BV over the next two years.

Company Briefs

  • Ahmad Zaki Resources Bhd's (AZRB) subsidiary, TB Supply Base Sdn Bhd (TBSB) will provide support services including crew to Carigali Hess Operating Company Sdn Bhd (Carigali Hess) at the Tok ali supply base in Kelantan. TBSB had signed a two-year service contract for an undisclosed value which would last until February 2019.
  • The Tok Bali Supply Base is a full-service oil and gas supply base, providing services such as fuel and water supply, mechanical handling and equipment, bonded warehouses, customs, immigration and quarantine (CIQ) services, as well as office spaces. (The Star Online)
  • Tenaga Nasional Bhd (TNB) has signed a 21-year power purchase agreement (PPA) with Edra Energy Sdn Bhd to offtake electricity from a gas-fired combined cycle electricity generating facility that the latter will construct in Alor Gajah, Melaka.
  • Edra Energy will own, operate and maintain the facility, which will have three generating blocks with a combined nominal capacity of 2,242 MW, or 747.4 MW each. (The Edge Daily)
  • Thriven Global Bhd’s subsidiary is planning to sell a plot of freehold land to a real estate firm for RM27.5 mln, which will result in a loss of some RM11.4 mln for the company.
  • The land belongs to its 51.0%-owned unit, Mulpha Argyle Property Sdn Bhd which has inked a sale and purchase agreement with the purchaser Mount Well Sdn Bhd today for the sale of the plot which measures 10,226 sq.m.
  • No valuation was carried out in relation to the proposed sale, though it explained that the price was arrived at after taking into consideration the market value of the land given prevailing property market conditions. (The Edge Daily)
  • Mulpha International Bhd’s resort on the Great Barrier Reef in Australia will be closed until mid-2018 for rectification works following extensive damage caused by Cyclone Debbie on 28th March 2017.
  • The Hayman Island resort is covered under a property insurance policy subject to a deductible of up to A$10.0 mln (RM33.3 mln) and business interruption cover to protect the impact on trading results for up to 24 months. (The Edge Daily)
  • Vsolar Group Bhd has teamed up with Universiti Teknologi Malaysia (UTM) to build a solar power generation plant, with a capacity of up to 30 MW at the university. Vsolar will hold an 80.0% stake in the JV company and UTM will have the remaining 20.0% equity interest.
  • Under the JV, UTM will identify and provide a suitable parcel of land of 20 ac. for every 10MW to build the solar power generation plant. (The Edge Daily)
  • mTouche Technology Bhd has been invited by G.I.S. Park (Thailand) Co Ltd to be a solution and technology partner to jointly develop and operate the SMART4 public phone and wi-fi hub terminal for Thai state-owned telecommunications company, TOT PCL.
  • mTouche’s subsidiary mTouche (Thailand) Co Ltd, has signed a Memorandum of Understanding (MoU) with G.I.S. effective for a period of 18 months. (The Edge Daily)
  • Globetronics Technology Bhd has proposed a final dividend of two sen per share and a special dividend of three sen per share for the year ended 31st December 2016, despite suffering a 64.0% fall in its net profit. The dividends, which are subject to shareholders approval at its annual general meeting on 4th May 2017, are expected to be paid on 4th July 2017. (The Edge Daily)
  • PUC Founder (Msc) Bhd has proposed to acquire Singapore-based information technology firm, Enovax Pte Ltd for S$2.0 mln (RM6.3 mln). The company has signed a Memorandum of Understanding with Enovax’s sole shareholder, Foo Yong Jio is to negotiate the terms for the acquisition. (The Edge Daily)
  • One of Ire-Tex Corp Bhd’s substantial shareholders is calling for an extraordinary general meeting (EGM) on 27th April 2017 for the removal of seven directors and the appointment of new board members.
  • Singapore-based Elite Cosmo Group Ltd, which holds a 14.3% stake in the group, called for the EGM for shareholders to consider nine resolutions. (The Edge Daily)  

Source: Mplus Research - 12 Apr 2017

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Be the first to like this. Showing 1 of 1 comments

shinichi1412

I heard there is one broker house will be issuing out "Top 20 small cap stocks" report next week.

Interestingly, one of the stocks is SYF Resources. It is not-rated recommendation with TP of 86sen. It is similar to Malton report.

TP is based on 12x PER of peg to FY17 EPS 7.16sen. I checked its latest 6MFY17 EPS, annualised FY17 EPS about 7.24sen. So, i think the difference could be due to stabilise in ringgit for its 2HFY17.

But for me, it is still superb upside. Below all time high of 90sen. I really hope speculators go in this stock goreng sampai hangit to RM1.00. Lol

Unfortunately, for speculators, DNEX, Censof, PWORTH are not in the report. Lol.

2017-04-13 13:33

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