www.dbsvickers.com ed: JS / sa: WMT KLCI KLCI KLCI KLCI : 1,817.13 1,817.13 1,817.13 1,817.13 Analyst Bernard CHING 603 2604 3918 [email protected]Malaysia Research Team 603 2604 3333 [email protected]TOP STOCK PICKS Source: AllianceDBS DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity DBS Group Research . Equity 3 Mar 2015 Malaysia Market Focus Results Roundup Refer to important disclosures at the end of this report Another uninspiring results season • Still uninspiring despite more corporates meeting earnings expectations • FBMKLCI’s 2014 earnings growth in negative territory; 2015 earnings cut by 1.5% • Valuation is rich amid dismal earnings outlook • Stay defensive and focus on bottom up stock picking More met expectations in 4Q14. 65% of stocks in our coverage universe met our expectations, as compared to 52% in 3Q14 while the percentage of stocks missing estimates declined from 45% to 21%. Despite the improvement, we still deem 4Q14 earnings season as uninspiring as we cut CY15F earnings by 1.5% while FBMKLCI’s CY14 earnings shrunk 4.0% y-o-y. Earnings risk moderated but not over yet. Despite our earnings cut, sectors that contributed to earnings downgrade such as banks and plantation still make up 46.4% of CY15 earnings growth. We expect earnings risk to remain high over the next 1-2 quarters given weak domestic growth drivers (dampened consumer sentiment, impending GST implementation) and normalization in the credit market (cyclical slowdown in loan growth, rising delinquencies). Rich valuation. We find it difficult to justify FBMKLCI’s CY15 PE valuation of 16.7x (mean 15.7x) in view of the earnings risk and macro headwinds ahead. We maintain our base case end-2015 KLCI target of 1,750 (14.5x 2016 PE) while the worst case target is 1,600 (13.3x PE at -1SD). We continue to advocate a defensive strategy and focus on a bottom-up stock selection strategy. Sector weightings. We continue to like construction (capex spending), technology (cyclical demand recovery and stronger USD) and utilities (resilient demand amid sector reform) sectors. We upgraded shipping to Overweight as lower bunker cost, following the recent crude oil price slump, will boost bottomline. We downgraded the gloves sector to Neutral as potential upside has narrowed following recent share price run up. Bottom-up stock picks have outperformed. Our top stock picks (refer to our strategy report dated 15 Dec 2014) have generally done well with a simple average return of 9.6% YTD, outperforming the FBMKLCI by 6.4%. We dropped Hartalega and Globetronics from our top buy list following the recent price run up which has narrowed potential upside. We replaced these stocks with Time dotCom Time dotCom Time dotCom Time dotCom and MISC MISC MISC MISC. Price Price Price Price Mkt Mkt Mkt Mkt Cap Cap Cap Cap Target Target Target Target Price Price Price Price Performance (%) Performance (%) Performance (%) Performance (%) RM RM RM RM US$m US$m US$m US$m RM RM RM RM 3 mth 3 mth 3 mth 3 mth 12 mth 12 mth 12 mth 12 mth Rating Rating Rating Rating Tenaga Nasional 14.72 22,973 16.00 3.2 23.3 BUY Petronas Gas Bhd 23.06 12,618 25.40 1.5 (2.0) BUY MISC 8.42 10,394 9.30 15.2 32.4 BUY Gamuda 5.26 3,416 6.00 (0.6) 18.7 BUY IJM Corp 7.18 2,969 7.75 5.9 24.7 BUY TIME dotCom Bhd 5.59 887 6.00 12.9 53.2 BUY Unisem 2.10 392 2.40 16.7 96.3 BUY Muhibbah Engineering 2.29 273 3.50 (1.3) (7.7) BUY Pantech Group 0.77 127 0.95 (13.5) (14.9) BUY Sasbadi Holdings 1.51 53 2.25 (3.2) N.A BUY
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3 Mar 2015
Malaysia Market Focus
Results Roundup Refer to important disclosures at the end of this report
Another uninspiring results season
• Still uninspiring despite more corporates meeting earnings expectations
• FBMKLCI’s 2014 earnings growth in negative territory; 2015 earnings cut by 1.5%
• Valuation is rich amid dismal earnings outlook
• Stay defensive and focus on bottom up stock picking
More met expectations in 4Q14. 65% of stocks in our coverage universe met our expectations, as compared to 52% in 3Q14 while the percentage of stocks missing estimates declined from 45% to 21%. Despite the improvement, we still deem 4Q14 earnings season as uninspiring as we cut CY15F earnings by 1.5% while FBMKLCI’s CY14 earnings shrunk 4.0% y-o-y.
Earnings risk moderated but not over yet. Despite our earnings cut, sectors that contributed to earnings downgrade such as banks and plantation still make up 46.4% of CY15 earnings growth. We expect earnings risk to remain high over the next 1-2 quarters given weak domestic growth drivers (dampened consumer sentiment, impending GST implementation) and normalization in the credit market (cyclical slowdown in loan growth, rising delinquencies).
Rich valuation. We find it difficult to justify FBMKLCI’s CY15 PE valuation of 16.7x (mean 15.7x) in view of the earnings risk and macro headwinds ahead. We maintain our base case end-2015 KLCI target of 1,750 (14.5x 2016 PE) while the worst case target is 1,600 (13.3x PE at -1SD). We continue to advocate a defensive strategy and focus on a bottom-up stock selection strategy.
Sector weightings. We continue to like construction (capex spending), technology (cyclical demand recovery and stronger USD) and utilities (resilient demand amid sector reform) sectors. We upgraded shipping to Overweight as lower bunker cost, following the recent crude oil price slump, will boost bottomline. We downgraded the gloves sector to Neutral as potential upside has narrowed following recent share price run up.
Bottom-up stock picks have outperformed. Our top stock picks (refer to our strategy report dated 15 Dec 2014) have generally done well with a simple average return of 9.6% YTD, outperforming the FBMKLCI by 6.4%. We dropped Hartalega and Globetronics from our top buy list following the recent price run up which has narrowed potential upside. We replaced these stocks with Time dotComTime dotComTime dotComTime dotCom and MISCMISCMISCMISC.
Despite improvement, 4Q14 results were still uninspiring
65% of stocks in our coverage universe reported 4Q14 results
which met our expectations, as compared to 52% in 3Q14
while the percentage of stocks missing estimates declined from
45% to 21%. Despite the improvement, we still deem 4Q14
earnings season to be uninspiring as there were 1.5
disappointments for every one that beat estimates, while
earnings downgrades were twice as many as upgrades.
4Q14 summary of financial performance
PerformancePerformancePerformancePerformance vs vs vs vs AAAAlliancelliancelliancellianceDBSDBSDBSDBS (%)(%)(%)(%) vs Consensus (%)vs Consensus (%)vs Consensus (%)vs Consensus (%)
Above 14 15
In line 65 54
Below 21 31
Source: AllianceDBS
Automotive (lower volume), building materials (intense
competition), consumer (weak sentiment), and plantation (low
ASP) sectors reported results that were below expectations,
while shipping (lower bunker cost) and utilities (lower fuel cost)
sectors exceeded expectations. Furthermore, oil & gas and
telco sectors reported a mixed set of results.
Among big caps (top 30 stocks), IOI (lower tax, higher
associates contribution), KLK (oleochemicals contribution not
as weak as expected), MISC (LNG segment not as weak as
expected), Telekom (higher ARPU for internet services), and
Tenaga (lower fuel cost and better generation mix) beat
expectations while notable disappointments came from CIMB
(higher provisions and opex), Petronas Dagangan (drop in
ASP), Astro (lower subscriber net adds and weaker ARPU
growth), Sime (lower FFB output and weaker industrial
contribution), FGV (loss making downstream business), Axiata
(consolidation of Axis, weaker IDR and weaker Celcom
revenues), Maxis (higher traffic related costs and sales &
marketing expenses), and UMW Holdings (lower contribution
from auto segment and derivative losses).
Sector performance
SectorSectorSectorSector 4444Q14Q14Q14Q14 (RM m)(RM m)(RM m)(RM m)
4444Q13Q13Q13Q13 (RM m)(RM m)(RM m)(RM m)
YYYY----oooo----y y y y change %change %change %change %
vs vs vs vs expectationexpectationexpectationexpectation
CommentsCommentsCommentsComments
AutomotiveAutomotiveAutomotiveAutomotive 116.62 141.99 (17.9%) Below UMW’s earnings declined due to lower volume and unfavourable product mix, though MBM saw higher Perodua contributions due to good sales of its Axia launch.
AviationAviationAviationAviation 73.94 95.61 (22.7%) In line Long-haul yields remain depressed, but there were signs of improvement for shorter-haul yields. Capacity management is the core strategy for AirAsia and AAX in 2015.
BankingBankingBankingBanking 5,395.47 5,822.54 (7.3%) In line Higher provisions and weak non-interest income were key drags on earnings.
Building MaterialsBuilding MaterialsBuilding MaterialsBuilding Materials 93.88 172.96 (45.7%) Below ASP and margins eroded as competition in Peninsular Malaysia cement market intensified due to new incoming supply.
ChemicalsChemicalsChemicalsChemicals 500.00 450.00 11.1% In line Weak quarter as expected. Improved plant utilisation and availability were offset by declining petrochemical prices.
ConglomerateConglomerateConglomerateConglomerate 480.59 321.65 49.4% In line MMC's earnings were lifted by a lower effective tax rate, while there was growth at its energy & utilities segment and throughput at PTP.
ConstructionConstructionConstructionConstruction 373.37 776.64 (51.9%) In line Results were largely in line barring lumpy items, though construction earnings were relatively soft. However, our top picks like IJM and Muhibbah continue to secure orders.
ConsumerConsumerConsumerConsumer 347.00 465.87 (25.5%) Below The weaker consumer sentiment was reflected in the largely soft quarter, and Petronas Dagangan’s performance was dragged by the steep decline in oil prices.
Financial nonFinancial nonFinancial nonFinancial non----bankbankbankbank 134.09 118.91 12.8% In line Growth was mainly from BURSA, where earnings were driven by equities revenue.
Market Focus
Results Roundup
Page 3
Sector performance (cont’d)
SectorSectorSectorSector 4444Q14Q14Q14Q14 (RM m)(RM m)(RM m)(RM m)
4444Q13Q13Q13Q13 (RM m)(RM m)(RM m)(RM m)
yyyy----oooo----y y y y change %change %change %change %
vs vs vs vs expectationexpectationexpectationexpectation
CommentsCommentsCommentsComments
GamingGamingGamingGaming 1,053.60 875.54 20.3% In line Genting counters benefited from foreign exchange gains and non-gaming segments, but NFOs and gaming operations felt the adverse impact of weaker consumer sentiment.
GloveGloveGloveGlove 160.40 170.32 (5.8%) In line The decline in unit profitability seems to have bottomed out this quarter, with some glove makers even reporting q-o-q increases in EBIT/k gloves. Capacity expansion is the core theme for this sector in 2015.
HealthcareHealthcareHealthcareHealthcare 267.66 252.68 5.9% In line Both KPJ and IHH reported improvements in operating margin during the results season.
MediaMediaMediaMedia 233.68 273.58 (14.6%) In line Adex sales remained weak for media companies amid poor consumer sentiment.
Oil & GasOil & GasOil & GasOil & Gas 549.25 649.18 (15.4%) Mixed Earnings from Bumi Armada and MMHE were weaker on allowances for trade receivables and depleting orderbook respectively. Other companies were in line, reporting weak results which were expected due to the monsoon season and also cut backs in workflow from the likes of PETRONAS.
PlantationPlantationPlantationPlantation 983.40 2,330.47 (57.8%) Below Upstream planters were affected by low CPO prices and production was plagued by bad weather. Refiners reported weak margins as the M'sian and Indonesian governments waived export taxes.
PortPortPortPort 9.88 11.41 (13.4%) Below Suria's earnings were dampened by higher port operation expenses; we are still awaiting the launch of the Jesselton Quay project as its re-rating catalyst.
PropertyPropertyPropertyProperty 450.69 448.20 0.6% In line Profit recognition driven by progressive milestone completions of unbilled sales.
REITREITREITREIT 427.02 410.98 3.9% In line Rental reversions were still positive at retail assets, though flattish for office due to oversupply conditions.
ShippingShippingShippingShipping 663.40 597.70 11.0% Above Petroleum shipping rates were on a firm uptrend, with average time-charter rates up by 44-77% y-o-y in the quarter. Chemical and LNG shipping rates remain lacklustre. Cheaper bunker prices could provide a respite to chemical shipping operations which mainly trade in the spot market.
TechnologyTechnologyTechnologyTechnology 65.46 (2.78) 2450.5% In line Apart from robust demand, the better performances for tech companies were also partly driven by the stronger USD.
TelecommunicationTelecommunicationTelecommunicationTelecommunication 1,845.75 2,103.51 (12.3%) Mixed Mobile operators suffered from weaker than expected margins amid tepid industry growth. Fixed-line operators fared better due to internet and data services.
UtilitiesUtilitiesUtilitiesUtilities 2,790.94 1,980.60 40.9% Above Lifted by TNB's strong earnings due to lower coal prices, more favourable fuel mix and lower effective tax rate.
Source: AllianceDBS
Market Focus
Results Roundup
Page 4
Earnings estimates cut
Following 4Q14 results season, we adjusted our FBMKLCI
earnings (free float adjusted) for CY14 and CY15F by -3.3%
and -1.5%, respectively. Key contributors to CY15F earnings
cut include CIMB, IOI, Genting and Maybank which more than
offset the earnings upgrades of Tenaga and MISC.
Following our earnings cut, earnings growth estimates for CY15
have been adjusted from 7.8% to 9.8%. That said, this comes
from a much lower base in CY14, as earnings declined 4% y-o-y.
• Strong earnings visibility. Strong earnings visibility. Strong earnings visibility. Strong earnings visibility. The full implementation of fuel cost pass through mechanism will be a strong re-rating catalyst
for TNB as the national utility will no longer bear the burden of volatile fuel cost
• Capacity expansion. Capacity expansion. Capacity expansion. Capacity expansion. TNB’s coal-fired Janamanjung 4 (1010 MW) plant will be commissioned by Mar15. All in, we
estimate TNB’s net generation capacity would increase by 15% by 2017. Ultimately, the new power plants will reduce
generation cost because of more efficient technology.
• Top pick. Top pick. Top pick. Top pick. We reiterate a BUY rating for TNB for its strong earnings visibility with the full implementation of the cost pass-
through mechanism. Valuation remains undemanding at 13x FY15 PE. .
Petronas GasPetronas GasPetronas GasPetronas Gas • Unrivalled asset. Unrivalled asset. Unrivalled asset. Unrivalled asset. The ownership of PGU pipeline will make it the prime beneficiary of growing gas demand, as additional
volume will have to be transported via its pipeline. It has high operating leverage with the PGU system which we
understand can transport up to 3,000 mmscfd, compared to only 2,300 mmscfd of gas sales transported in FY13
• Proxy to strong gas demand. Proxy to strong gas demand. Proxy to strong gas demand. Proxy to strong gas demand. PTG’s RM2.7bn Pengerang regasification terminal (65% stake) with 3.5m MT annual
capacity is expected to be operational by 4Q17. It will mainly supply to PETRONAS’ Pengerang Integrated Complex,
though 10% of the gas will be supplied to the PGU. We have pencilled in 7% earnings boost in FY18.
• Maintain BUY. Maintain BUY. Maintain BUY. Maintain BUY. We continue to like PTG for its promising outlook, resilient earnings, solid balance sheet and strong
parentage. Also, PTG is not affected by the recent plunge in crude oil prices as it merely provides throughput services
MISCMISCMISCMISC • Turnaround in the petroleum segment.Turnaround in the petroleum segment.Turnaround in the petroleum segment.Turnaround in the petroleum segment. Petroleum rates remain firmly on an uptrend, with average time charter rates up
by 44-77% y-o-y in 4Q14, driven by rising tonnage demand from long-haul trades, restocking activities, and contango
trade. We expect rates to continue rising in 2015, as tonnage demand is forecasted to continue outgrowing tonnage
supply (2.2% vs 1.2%).
• Renewing relationship with Petronas.Renewing relationship with Petronas.Renewing relationship with Petronas.Renewing relationship with Petronas. Petronas had novated its five incoming LNG carriers from Hyundai Heavy Industries
to MISC, and will lease these back from MISC on a long-term time charter (15 +5 years). In addition, Petronas has
extended the charter of MISC’s five Puteri class LNG vessels (originally due to expired in 2014-17) by another 10 years.
Together, these deals will provide support to MISC’s LNG earnings going forward. It also marks the return to its previous
relationship with Petronas, where MISC acts as the shipping arm for Petronas by acquiring LNG vessels and chartering
these to the latter
• Maintain BUY with RM9.30 TPMaintain BUY with RM9.30 TPMaintain BUY with RM9.30 TPMaintain BUY with RM9.30 TP based on SOP-valuation. Our TP implies 1.4x FY15F P/BV, which is slightly below its 10-
year mean P/BV. Its renewed relationship with Petronas could provide further upside to the group’s LNG earnings, if
Petronas exercises its option to purchase more LNG vessels from Hyundai Heavy Industries and novate them to MISC.
GamudaGamudaGamudaGamuda • Best proxy to MRT. Best proxy to MRT. Best proxy to MRT. Best proxy to MRT. After clinching the PDP role for MRT line 2, we think Gamuda will be a frontrunner for tunnelling
works for MRT line 2. The probability of the MRT project being delayed or shelved is low because it is deemed a high-
multiplier and top priority ETP project. We expect Gamuda to formalise the PDP agreement by 2Q15 with a similar fee
structure as Line 1, and for it to return as tunneling contractor (and add RM5bn of high-margin jobs to its orderbook).
• Penang Integrated Transport System Penang Integrated Transport System Penang Integrated Transport System Penang Integrated Transport System –––– swapping yield for growth. swapping yield for growth. swapping yield for growth. swapping yield for growth. Gamuda is actively pursuing the RM27bn project
through the PDP approach. The RFP will close in February while the PDP job would be awarded by 3QCY15. As payment
is via land reclamation rights, there will be a cash constraint but this will be partly mitigated by Gamuda’s ability to sell
the land rights to other developers when they are progressively paid.
• BUY, TP RM6.00. BUY, TP RM6.00. BUY, TP RM6.00. BUY, TP RM6.00. Gamuda’s earnings will peak in FY15. There could be a one year earnings gap in FY16F as MRT Line 1
will be largely completed and MRT Line 2 will only start to contribute meaningfully in FY17F. The longer term growth
story for Gamuda is intact with the MRT Circle Line coming in after Line 2.
IJM CorpIJM CorpIJM CorpIJM Corp • Construction division has never been stronger. Construction division has never been stronger. Construction division has never been stronger. Construction division has never been stronger. The current c.RM7bn orderbook has surpassed its peak of RM6.7bn in
2007, following the recent Kuantan Port Phase 1 award worth RM1.2bn. More importantly, the quality of its orderbook
is solid now with all local jobs, and anchored by the RM2.8bn West Coast Expressway project.
• Maintain BUY, RM7.75. Maintain BUY, RM7.75. Maintain BUY, RM7.75. Maintain BUY, RM7.75. IJM remains a strong defensive bet for the construction sector with its solid orderbook and
diversified nature. In the current prevailing environment where there are concerns on the government’s ability to finance
infrastructure projects, we think contractors with strong balance sheets such as IJM will do well. We maintain our BUY
rating and SOP-derived TP of RM7.75.
TIME dotComTIME dotComTIME dotComTIME dotCom • Leveraging on secular growth in dataLeveraging on secular growth in dataLeveraging on secular growth in dataLeveraging on secular growth in data. TIME is a prime beneficiary of the secular growth trend in data (>80% of revenue)
amid the rapid expansion of its global bandwidth and data centre business. Investment into 3 new submarine cable
systems (i.e. APG, FASTER, and AAE-1) will underpin near-term earnings growth once these start to come online in 2016-
2017.
• Domestic business still growing healthily. Domestic business still growing healthily. Domestic business still growing healthily. Domestic business still growing healthily. Demand for higher speed bandwidth services and fibre connectivity
requirements by Malaysia mobile operators for their LTE network rollout will drive further growth for TIME domestic
wholesale bandwidth business in 2015.
• Potential distribution of DiGi shares is a key catalyst. Potential distribution of DiGi shares is a key catalyst. Potential distribution of DiGi shares is a key catalyst. Potential distribution of DiGi shares is a key catalyst. TIME owns 137.5m DiGi shares, worth about RM880m or 28% of
its market capitalisation.
• Undemanding valuation. Undemanding valuation. Undemanding valuation. Undemanding valuation. Our SOP-based RM6.00 TP implies a FY15 valuation of 17.2x PE for TIME’s core business
(excluding dividend income and the value of DiGi stake), cheapest among the Malaysian telcos.
UnisemUnisemUnisemUnisem • Turning Turning Turning Turning around nicelyaround nicelyaround nicelyaround nicely. Unisem is now on better footing after its restructuring exercise to rationalise costs, i.e. the closure
of Europe operations and staff retrenchment at Batam plant. Overall plant utilisation rate has also improved to 70-75%
(vs. 60% previously), which helped to lift margins.
• WLCSP and wafer bumping a sweet spotWLCSP and wafer bumping a sweet spotWLCSP and wafer bumping a sweet spotWLCSP and wafer bumping a sweet spot. Strong demand from customers kept utilisation rate high at >80% even after
the 20% increase in capacity for wafer level chip-scale packaging (WLCSP) in 3Q14.Unisem plans to expand capacity of
its wafer bumping and WLCSP lines by another 25-35% in 1H15, which could raise contribution from this segment and
improve margins.
• Compelling valuationCompelling valuationCompelling valuationCompelling valuation. Our RM2.40 TP is pegged to 1.5x FY15 BV (with 11% ROE), consistent with global peers’
valuation in the OSAT industry.
Muhibbah Muhibbah Muhibbah Muhibbah
EngineeringEngineeringEngineeringEngineering
• Excessive selldown. Excessive selldown. Excessive selldown. Excessive selldown. Muhibbah's share price has been aggressively sold down along with other oil and gas stocks. We
think this is not justified given its exposure to various segments of infrastructure - marine-based, rail and expressways
and downstream oil and gas where it is able to capitalise on the strongest job flows. This is evident by its recent win of
the maiden RAPID contract from Tecnicas Reunidas, S.A. Group (TR) to design and build temporary construction facilities
and accommodation camp for Package III in RAPID for USD32m (RM116m).
• More More More More RAPID wins likely. RAPID wins likely. RAPID wins likely. RAPID wins likely. We expect Muhibbah to clinch up to RM1bn worth of RAPID contracts over time, including
projects other than Package 3. However, Muhibbah is now unlikely to clinch the sizeable >RM1bn Pengerang jetty works
– for which it is one of two contenders – because of pricing.
• BUY, BUY, BUY, BUY, bargain valuationbargain valuationbargain valuationbargain valuation. . . . Valuation remains a bargain at only 8x FY15 PE and 1.1x P/NTA. At this level, the market appears
to assign negligible value for the infrastructure and shipyard operations, and the Petronas fabrication license. We
reiterate our BUY rating and TP of RM3.50 based on 15x FY15F PE.
PantechPantechPantechPantech • Strong 3Strong 3Strong 3Strong 3----year earnings CAGR year earnings CAGR year earnings CAGR year earnings CAGR of 17% over FY15of 17% over FY15of 17% over FY15of 17% over FY15----FY17FY17FY17FY17, driven by demand at Pengerang Integrated Petrochemical
Complex (PIPC) starting FY16. Pantech is a market leader of pipes, valves and fittings in Malaysia with 40% market share,
and is positioned to secure up to RM1.7bn in new orders from the landmark downstream development.
• ReReReRe----rating once demand starts to emerge from PIPC.rating once demand starts to emerge from PIPC.rating once demand starts to emerge from PIPC.rating once demand starts to emerge from PIPC. The stock is currently trading at only 6x PE FY16F EPS, which is
unusually low for small cap oil & gas companies in Malaysia with solid growth prospects.
• Clean balaClean balaClean balaClean balance sheet with only 0.3x net gearing.nce sheet with only 0.3x net gearing.nce sheet with only 0.3x net gearing.nce sheet with only 0.3x net gearing. The group does not have a formal dividend policy, but should continue
with its >40% payout going forward. This translates into an attractive yield of >6% for FY16F. BUY with a TP of RM0.90
(10x PE FY16F).
SasbadiSasbadiSasbadiSasbadi
• Best proxy to the resilient preBest proxy to the resilient preBest proxy to the resilient preBest proxy to the resilient pre----university education industry. university education industry. university education industry. university education industry. Sasbadi is the largest domestic educational books publisher
in Malaysia with approximately 9% market share. As such, the group is the best proxy to the resilient pre-university
education industry.
• Major beneficiary of potential new policies suggested in Malaysia Education Blueprint 2013Major beneficiary of potential new policies suggested in Malaysia Education Blueprint 2013Major beneficiary of potential new policies suggested in Malaysia Education Blueprint 2013Major beneficiary of potential new policies suggested in Malaysia Education Blueprint 2013----2025. 2025. 2025. 2025. Sasbadi will be a
major beneficiary of Malaysia’s new education blueprint, which aims to increase compulsory schooling from 6 to 11 years
by 2020. Given its strong presence in national schools, Sasbadi is a good proxy to ride on the rising enrolment rates in
national schools over the next six years, especially secondary education which generated 50% of its publishing revenue in
FY13.
• AtAtAtAttractive valuation with compelling growth prospects. tractive valuation with compelling growth prospects. tractive valuation with compelling growth prospects. tractive valuation with compelling growth prospects. We forecast Sasbadi’s FY15-FY17 core PAT will expand at 3-year
CAGR of 22%, underpinned by earnings accretive M&As. Valuation is undemanding at 11x/9x/7x FY15-FY17 EPS, while
yields are attractive at 5-7%. We reiterate our BUY rating on Sasbadi, based on DCF-derived TP of RM2.25.
Market Focus
Results Roundup
Page 17
Appendix: 4Q14 Earnings Summary
FinancialFinancialFinancialFinancial EPSEPSEPSEPS vs Avs Avs Avs AlliancelliancelliancellianceDBSDBSDBSDBS vs consensusvs consensusvs consensusvs consensus
TIME dotCom Telecommunication 4QFY14 ▲ Above Above
TM Telecommunication 4QFY14 ▲ Above Above
Gas Malaysia Utilities 4QFY14 ▼ Below Below
Petronas Gas Utilities 4QFY14 ◄► Inline Inline
Tenaga Utilities 1QFY15 ▲ Above Above
Source: AllianceDBS
Market Focus
Results Roundup
Page 19
AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUYSTRONG BUYSTRONG BUYSTRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY BUY BUY BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLDHOLDHOLDHOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FFFFULLY VALUEDULLY VALUEDULLY VALUEDULLY VALUED (negative total return i.e.> -10% over the next 12 months)
SELL SELL SELL SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER GENERAL DISCLOSURE/DISCLAIMER This report is prepared by AllianceDBS Research Sdn Bhd (“ADBSR”) (formerly known as HwangDBS Vickers Research Sdn Bhd), a subsidiary of Alliance Investment Bank Berhad (“AIBB”) and an associate of DBS Vickers Securities Holdings Pte Ltd (“DBSVH”). This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of ADBSR. The research set out in this report is based on information obtained from sources believed to be reliable and ADBSR, its holding company AIBB, their respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “Alliance Bank Group”) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The Alliance Bank Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The Alliance Bank Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The Alliance Bank Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other banking services for these companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the Alliance Bank Group (and/or any persons associated with the aforesaid entities), that:
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Market Focus
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3.3.3.3.
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