We maintain HOLD on Unisem with a revised fair value of
RM2.85/share (previously RM3.32/share), pegged to an
unchanged PE of 13x. We have rolled forward our
earnings base from FY18F to FY19F.

 We have trimmed our FY17F net profit forecast by 6%
after revising our 2017 USD/MYR assumption from 4.35 to
4.30. In addition, FY18F-FY19F net profit forecasts are
slashed by 15-18% mainly on account of a change in our
USD/MYR assumption from 4.12 to 3.95 for both years.

 Currently, the majority of Unisem's revenue is
denominated in USD, whereas only ~40% of total costs is
USD-based. Our sensitivity analysis shows that for every
1% depreciation in the USD/MYR, Unisem's earnings
would decline by 5%.

 Taking Malaysian Pacific Industries' results as a
bellwether, we believe the group is adversely affected by
both rising commodity prices and the weak USD in
4QFY17F. To put it into perspective, the USD vs. MYR has
depreciated 5.6% from 4.30 at the beginning of 3QFY17 to
4.05 at the end of 4QFY17F. In addition, copper and gold
prices have risen by 22% and 6% respectively during the
same period.

 Recall that management has guided the group would
register a flattish QoQ revenue growth (in USD terms)
owing to a decline in wafer-level chip-scale packages
(WLCSP) production. Coupled with the unfavourable
factors above, we believe Unisem will register a QoQ
decline in 4QFY17F net profit — hence our earnings
revision.

4) The market has priced in steep risk premium with
regards to IWCity acquisition
We believe the market has over-reacted negatively to
Ekovest’s proposed acquisition of IWCity. This is reflected
in its current shares which are trading at a steep ~50%
discount to our base case SOP valuation.
We also believe that Ekovest has the financial strength to
acquire IWCity. While Ekovest’s non-recourse net debt and
gearing will increase up to RM1.3bil and 0.56x, its nonrecourse
net gearing should moderate to 0.50x and 0.44x
in FY19F and FY20F respectively, thanks to Ekovest’s
strong operating cash flow.
As we are confident that Ekovest has the holding power for
IWCity, we are not too concerned even if the downturn in
the property market in Johor is to last longer than
expected.

3) Poised for upcycle in property market
Ekovest owns premium land banks in Klang Valley, which
are strategically located along the proposed KL River City.
The company plans to launch another two property projects
in 2018 with a combined GDV of RM2.8bil. These two new
projects would be mixed development projects comprising
offices, serviced apartment and a shopping mall.

2) Strong earnings visibility
Earnings visibility remains upbeat with its strong
outstanding order book of RM14bil, which will keep
Ekovest busy for the next 3–5 years. Furthermore, the
company is confident of securing additional job wins of at
least RM1bil in FY18 which we believe to be related to
infrastructure projects, i.e. highways

1) Sturdy recurring income from toll concession
activities

An urban road builder with toll concessionaire business,
Ekovest’s earnings are expected to remain solid on the
back of DUKE 1 and 2 concession period which last till
year 2059 with an option to extend for another 10 years.
Throughout the concession period, we believe earnings are
expected to grow healthily largely due to the growth of
traffic volume in addition to toll revision every five years.
Meanwhile, upon the completion of SPE (DUKE 3), it will
further boost the overall company earnings from year 2020.
We understand that the indicative toll rate would be slightly
higher than DUKE 1 and 2 at RM3.50.
Additionally, Ekovest would also receive more recurring
income (apart from DUKE 1 & 2 and SPE) upon the
completion of the proposed privatisation of the 75.2km
Kampung Baru Link, Istana Link and Kapar Link
Expressway (DUKE 2A). The company had received a
letter from the government for the principal approval of the
proposed privatisation. The estimated project cost for the
highway concession is RM6.32bil.

SUM-OF-PARTS VALUATION
Source: Company, AmInvestment Bank Bhd
Division Methodology Basis RM (mil)

Construction PE 13x RM1,927.8mil
Duke 1 & 2 Equity value 60% stake RM1,695.0mil
SPE (Duke 3) Equity value of WIP ~20% WIP RM146.1mil

Land banks
Ekovest RNAV 40% discount RM491.4m
IWCity RNAV 40% discount RM1,370.5m
Proceeds from warrants conversion 304.5mil units @ RM0.48 RM146.4m
Proceeds from ESOS 120.3mil units @ RM1.30 RM156.4
Less: Net Debt (exluding non-recourse debt) (RM1,322.3m)
4,611.3
SOP (RM/share)* 1.80
Less: Discount 25% (0.45)
Total 1.35

TG

Market cap = 469mil
EV/EBIT <7x
Net cash = 46sen
Ex-cash PER = 7x
ROE = 12%++


Liihen

Market cap = 540mil
EV/EBIT <5x
Net cash = 45sen
Ex-cash PER = 6x
ROE = 27%++

True, Lii Hen valuation is cheaper. But TG has more interesting growth story.

At current price,
Lii Hen's dividend yield is extremely high, very good defensively for portfolio. whereas for TG, it is also inexpensive to pay for its future growth prospect.

Anyway, i am invested in both. Thinking which co to average down or perhaps i should do both equally. Still strategising....

investors probably freaked out by the RM149mil cash purchase wiping out their cash holding substantially

be patient with Insas

it depends on ur investment objective dictating your strategies and horizon.

property market is at downcycle, u would not see big contribution at this moment, or even next 1-2 years.

u can buy some for long term exposure, but if ur strategy to buy for immediate catalyst that will crystalise say 1 year, then that's a different story

i'm considering to add more of Liihen or Thong Guan

wow 52 week low!

If you check the previous results, contribution from the China and Tawau concessions are quite small to the overall bottomline

i prefer exposure to MFCB for power play

icon8888 may come up with another written piece?

probably too much expectations had built in on sepcial dividends.

Maybank:

Initiate with BUY and MYR4.15 SOP-DCF based TP
We like MFCB for its: i) potential returns from Don Sahong hydropower
project in Laos; and ii) strong growth prospect from its Resources
segment. Also, its net cash position as of end-2016 reinforces its balance
sheet strength to take on the construction cost of Don Sahong. We value
MFCB using the SOP method to derive our TP of MYR4.15 (+12%) with Don
Sahong and its Resources segment making up the majority of its value.

Property market as a whole still in a downcycle. Market is merely discounting the future earnings prospect.

always remember mr.market is extremely emotional.

in the past 2 years when mr.market is overly bullish, tech stocks have their biggest run up in their lifetime

right now, mr.market emotion has just turned the opposite....how long may that be? no one knows...he can be emotional for short term or could be long term

always buy when u feel risk reward turns to ur favour...protect ur downside

anyway, looking at PIE carefully.

i have some doubts they will record 6++ EPS in Q4. so if comparing y-o-y, if EPS registers a drop, market may readjust further downwards.

trailing 12 months EPS is 12.45sen including last year q4 of 6.15sen but 3 months annualised yield only 6.30 sen.

even at 12.45sen eps, P/E is 13.25x which is inexpensive or neither it is cheap

all tech stocks are experiencing downwards adjustment

read today's the Edge Daily..reversal of fortune for semiconductor stocks

EBIDTA drop so much y-o-y

Inari management has rewarded their shareholders handsomely with increasing dividend payout, 3 bonus issues and increasing capital appreciation.

hahahaha, if only Insas and Inari swap management

all exporters are experiencing sell down

semiconductor stocks
furniture stocks

wait further and buy on weakness as u see fit

Liihen is now selling at absolute bargain.

The weakness in share price is due to the strengtheing of the ringgit against US dollar contributing to current weak predicament.

What investors need to distinguish is whether current "problem" is a temporary problem or a permanent problem that will diminish the return the company generates for its investors.

Insas is currently at NEGATIVE enterprise valuation.

There is much room for management to act in the best interest of shareholders, one way is to return some cash. Otherwise, any catalytic event would have to imposed by shareholders in the form of activism. Benjamin Graham does that very well.

4) Those who buy at 2015 will be those complaining, those brought at 2016 will be satisfied. The psychology of the investors are affected by what PRICE did they buy in. It is human nature that if as your investment goes down, you have a tendency to think about exiting because you will be more inclined to think that you are wrong. The literal opposite is true too. However, to avoid this mentality, having a firm valuation can help you to overcome this period and an investment philosophy that you hold firmly.


I am sitting on above 40% unrealised gain.my average cost is 68 sen.
My first purchase was 77 sen in August 2015.

I know why i bought into Insas and i have a firm valuation as to how much Insas is worth. And that's the main reason my frustration lies because the big wide gap is there.

I believe management could have done better to create value situation for the shareholders.

Why those bought in 2015 should be complaining? and why those bought in 2016 should be satisfied?

my first purchase was in AUgust 2015 at 77 sen.
of course 2016 it went down further and any decent investor would have averaged down.

the very least the management can do is to create a form of value situation for its investors which i belive increasing dividend payout is the easiest to do considering the healthy CF generation.

the reasons i would stay invested in Insas simply because the company has been growing its BV per share every year consistently. that;s the more appropriate way of looking at Insas.

each quarter, i would monitor the gap between its share price and its net-net assets per share.

let's try to have some constructive discussions on investing, shall we.

i am invested because Insas qualifies as Ben Graham's net-net investments. back then it was above 50% discount to its liquidation value. now i believe its widen even further if one to take into account the potential unrealised MTM gain in the their investments.

i never expected Insas to be a RED CHIP company. and Insas will never be one.

By the way, do try to avoid telling ppl do dump their stock.

i have been holding since 2015. at that point i was thinking maybe Inari can be a game changer for insas

well, inari has indeed become one of the best performing stock but sadly not Insas

dunspace...u can check the past 10 years record. the disparity has always been there

we all can talk how much Insas own this...own that....unrealised gain in this...but end of day Insas remains severely underperformed...the gap between the share price and intrinsic value remains a wide gap...a gap that in a foreseeable future would remain as that

steadily moving up. and doing it quietly too.

good job, maybank

so yesterday run up was a cheat?

yesterday up 2 sen, today down 1.5sen.

the story of TA as usual

texchem is a growth stock. it;s a good entry point for any prospective investors to enter before the company starts to make increasing profit

at current price, PE is slightly below 15x which is the upcycle market valuation

such low volume can manipulate meh?

probably so, market is adjusting downwards its earnings expectation

still cant break above 1....need to add some oil

No worries, Jon. Just sharing for the benefit of everyone in i3.

I'm ex auditor too but have been working in the banking industry for close to 10 years now.

Market is pricing in 25bps hike, prob in Jan or March. At most, consensus view is 2 rate hikes max this year to 3.5%.

btw, Jon, which accounting firm r u working with?

Current OPR is at 3%. With major central banks around the world embarking on synchronized normalisation of interest rates given the synchronized growth in global economy, our local bank has to hike to maintain the interest differential.

MFRS 9 is not the main factor why banks are competing so aggresively for deposits. It is the LCR and NSFR that they need to comply with, to maintain the regulatory expectations in regards to liquidity and funding structure. Moreover, there will be added capital buffer requirements in the form of capital conservation and countercylical capital buffer that the banks need to provide in their capital ratios.

ur statement goreng till 10 will bring many uninformed investors with u to HOLLAND