1. business and industrial
2. company
3. earnings

Regional Daily, 27 November 2014
5
Regional Daily
Ideas Troika
Top Stories
Malayan Banking (MAY MK)
Financial Services - Banks
NEUTRAL MYR9.67 TP: MYR10.20
Mkt Cap : USD26,877m
Pg4
0D\EDQN¶V 0 UHVXOWV ZHUH EHORZ HVWLPDWHV DV QRQ-interest income was
soft. FY14/FY15 net profit projections cut by 5%/9% respectively.
Recommendation downgraded to Neutral from Buy with a revised MYR10.20
TP. The sector is facing headwinds that will likely extend into 2015..
Analyst: David Chong, CFA ([email protected])
Cahya Mata Sarawak (CMS MK)
Basic Materials - Building Materials
BUY MYR4.39 TP: MYR5.00
Mkt Cap : USD1,380m
Pg5
CMS reported 9M14 core net profit of MYR161.8m, representing
78.6%/79.2% of our/street estimates.
All eyes are now on the
commissioning of the OMS smelter. Its huge cash pile also opens doors for
many business opportunities in Sarawak.
Analyst: Ng Sem Guan, CFA ([email protected])
Other Key Stories
Malaysia
Padini (PAD MK)
Consumer Cyclical - Retail
BUY MYR1.77 TP: MYR1.90
Pg6
Analyst: Alexander Chia ([email protected])
Media Chinese International (MCIL MK)
Communications - Media
NEUTRAL MYR0.85 TP: MYR0.90
Pg7
SHL Consolidated (SHLC MK)
Property - Real Estate
BUY MYR3.63 TP: MYR5.00
Pg8
APM Automotive (APM MK)
Consumer Cyclical - Auto & Autoparts
SELL MYR5.36 TP: MYR4.75
Pg9
OKA Corp (OKAC MK)
Malaysia - Small & Mid-Caps
BUY MYR0.87 TP: MYR1.13
Pg10
Malaysian Bulk (MBC MK)
Transport - Shipping
NEUTRAL MYR1.40 TP: MYR1.30
Pg11
Dayang Enterprise (DEHB MK)
Energy & Petrochemicals - Offshore & Marine
BUY MYR2.88 TP: MYR3.73
Pg12
UMW (UMWH MK)
Consumer Cyclical - Auto & Autoparts
NEUTRAL MYR11.30 TP: MYR11.00
Pg13
Pestech International (PEST MK)
Malaysia - Small & Mid-Caps
NEUTRAL MYR3.88 TP: MYR4.16
Pg14
..1
See important disclosures at the end of this report
Cautious Outlook Ahead
Broadly Within Expectation
Analyst: Jerry Lee ([email protected])
Strong Take-up Rates With Improved Margins
Analyst: Chaw Sook Ting ([email protected])
Structural Margin Compression
Analyst: Alexander Chia ([email protected])
Solid Sales And Better Margins
Analyst: Chaw Sook Ting ([email protected])
Drowning In Weak Rates
Analyst: Ahmad Maghfur Usman ([email protected])
Slightly Below Expectations
Analyst: The Research Team ([email protected])
Few Re-rating Catalysts
Analyst: Alexander Chia ([email protected])
Higher Profit Recognition From Projects
Analyst: Chaw Sook Ting ([email protected])
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1
Regional Daily, 27 November 2014
IQ Group (IQGH MK)
Malaysia - Small & Mid-Caps
BUY MYR1.70 TP: MYR2.51
..1
Telekom Malaysia (T MK)
Communications - Telecommunications
NEUTRAL MYR7.24 TP: MYR7.00
..1
Integrax (INTEG MK)
Transport - Logistics
NEUTRAL MYR2.37 TP: MYR2.28
..1
OldTown (OTB MK)
Consumer Cyclical - Retail
BUY MYR1.65 TP: MYR2.00
..1
OCK Group (OCK MK)
Communications-Telecommunications
Infrastructure
BUY MYR0.96 TP: MYR1.06
..1
UEM Sunrise (UEMS MK)
Property- Real Estate
TRADING BUY MYR1.80 TP: MYR2.16
..1
Tan Chong (TCM MK)
Consumer Cyclical - Auto & Autoparts
SELL MYR4.10 TP: MYR3.55
..1
Alliance Financial Group (AFG MK)
Financial Services - Banks
NEUTRAL MYR4.80 TP: MYR4.90
..1
Ann Joo (AJR MK)
Basic Materials - Metals
TRADING BUY MYR1.15 TP: MYR1.37
..1
Time dotCom (TDC MK)
Communications - Telecommunications
NEUTRAL MYR5.25 TP: MYR5.20
..1
Quill Capita Trust (QUIL MK)
Property - REITS
NEUTRAL MYR1.19 TP: MYR1.25
..1
Prestariang (PRES MK)
Technology - Technology
NEUTRAL MYR1.58 TP: MYR1.57
..1
Paramount Corp (PAR MK)
Property- Real Estate
BUY MYR1.52 TP: MYR1.71
..1
Lion Industries Corp (LLB MK)
Basic Materials - Metals
NEUTRAL MYR0.56 TP: MYR0.52
..1
Singapore
IPS Securex Holdings (IPSS SP)
Technology - Technology
BUY SGD0.68 TP: SGD1.26
See important disclosures at the end of this report
Pg15
Strong Exports Support Growth
Analyst: Chaw Sook Ting ([email protected])
Pg16
Still Waiting With Bated Breath
Analyst: Alia Arwina ([email protected])
Pg17
Stronger Volume Expected In 4Q14 Onwards
Analyst: Ahmad Maghfur Usman ([email protected])
Pg18
FMCG Arm The Saving Grace
Analyst: Fong Kah Yan ([email protected])
Pg18
Moving Up The Ranks
Analyst: Malaysia Research ([email protected])
Pg20
Melbourne Project To Raise Sales In 4Q
Analyst: Loong Kok Wen, CFA ([email protected])
Pg21
Another Washout Quarter
Analyst: Alexander Chia ([email protected])
Pg22
As Good As It Gets, For Now
Analyst: David Chong, CFA ([email protected])
Pg23
Blast Furnace Investment Finally Paying Off?
Analyst: Ng Sem Guan, CFA ([email protected])
Pg24
Competitive Headwinds
Analyst: Alia Arwina ([email protected])
Pg25
Awaiting Catalysts
Analyst: Alia Arwina ([email protected])
Pg26
Dragged Down By Slowing Contract Flows
Analyst: Kong Heng Siong ([email protected])
Pg27
Within Expectations
Analyst: Loong Kok Wen, CFA ([email protected])
Pg28
³6WHHO´,Q7KH'ROGUXPV
Analyst: Ng Sem Guan, CFA ([email protected])
Pg29
Unique Gem Banking On Political Instability
Analyst: Jarick Seet ([email protected])
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2
Regional Daily, 27 November 2014
Thailand
Construction
OVERWEIGHT
Pg30
9M14 Operating Profit Rises 5.25% YoY
Analyst: Veena Naidu License No. 24418, ([email protected])
See important disclosures at the end of this report
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3
Results Review, 27 November 2014
Malayan Banking (MAY MK)
Neutral (from Buy)
Financial Services - Banks
Market Cap: USD26,877m
Target Price:
Price:
MYR10.20
MYR9.67
Macro
Risks
No Relief From OPR Hike
Growth
Value
Malayan Banking (MAY MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
102
9.9
101
9.8
100
9.7
99
9.6
98
9.5
98
9.4
97
9.3
20
18
16
14
12
10
8
6
4
2
96
Jun-14
0
0
.
2
0
0
Maybank’s 9M14 results missed our and consensus estimates as NIM .
0
stayed flat QoQ despite the OPR hike, while non-interest income had 0
another soft quarter. Downgrade to NEUTRAL with a revised TP of 0
MYR10.20 (5.5% upside). We lower our FY14/FY15 net profit projections
by 5%/9% respectively. The sector is facing headwinds (eg tightening
liquidity, weak capital markets) which may extend into 2015.


Oct-14
102
10.0
Aug-14
103
10.1
Apr-14
104
10.2
Jan-14
10.3
Nov-13
Vol m
Price Close
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
70.4m/21.6m
14.8
5.5
9.45 - 10.2
43
9,319
Skim Amanah Saham B'putera
EPF
PNB
39.2
12.3
5.5
Share Performance (%)
YTD
1m
3m
6m
Absolute
(2.7)
(0.3)
(3.7)
(2.1)
12m
0.8
Relative
(1.2)
(1.4)
(2.4)
(0.8)
(1.4)
Shariah compliant
David Chong, CFA +603 9207 7618
[email protected]



3Q14 net profit of MYR1.6bn (-8% YoY, +2% QoQ) was below our and
consensus expectations, with 9M14 net profit of MYR4.8bn (-1% YoY)
accounting for 71% of our and consensus full-year estimates. This was
principally due to a lack of pickup in 3Q non-interest income (-3% QoQ, 28% YoY), partly cushioned by lower-than-expected 9M credit cost of
16bps (annualised) vs our earlier 30bps forecast.
Results highlights. 3Q14 positives were: i) net interest income chalked
up healthy growth (+3% QoQ, +6% YoY) as loan growth picked up pace,
and ii) credit cost stayed low at 7bps (annualised) despite the
deterioration in asset quality. Otherwise: i) 3Q14 net interest margin
(NIM) was flat QoQ (-13bps YoY) as higher average funding cost offset a
mild expansion in asset yield, ii) non-interest income remained soft (-3%
QoQ, -28% YoY) due to unrealised marked-to-market losses and lower
forex income, iii) cost-to-income ratio deteriorated to 50.3% (2Q14:
46.6%; 3Q13: 46.1%) post-cost compression in 2Q14, and iv) absolute
gross impaired loans jumped 14% QoQ (+3% YoY) due to a chunky
corporate loan related to the construction sector. However, as the loan
was collateralised, credit charge for the quarter stayed low. Thus, the
gross impaired loan ratio rose 15bps QoQ to 1.65% while loan loss
coverage dropped to 95.4% from 107.7% at end-2Q14.
Loan and deposit growth. Loan growth picked up pace (3Q14: +3%
QoQ vs 2Q14: +2% QoQ), thanks to domestic corporate and
international - other markets. Annualised loan growth of 10% was still
below the 14% target. Deposit growth was 3% QoQ (11% annualised).
Capital. As at end-September, fully-loaded group and bank common
equity tier 1 (CET-1) ratios were 10.6% (June: 10.7%) and 9.5% (June:
9.6%) respectively.
Forecasts and investment case. We reduce our FY14/FY15 net profit
projections by 5%/9% respectively, mainly on account of lower noninterest income projections. Our FY14F ROE of 13.2% is in line with the
revised 2014 ROE target of 13-14%. We lower our GGM-derived TP by
8% to MYR10.20 (from MYR11.00). Downgrade to NEUTRAL from Buy.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Net interest income (MYRm)
11,493
12,395
13,260
14,157
15,058
Reported net profit (MYRm)
5,746
6,552
6,384
6,884
7,509
Net profit growth (%)
122.4
14.0
(2.6)
7.8
9.1
Recurring net profit (MYRm)
5,746
6,552
6,384
6,884
7,509
Recurring EPS (MYR)
0.73
0.76
0.72
0.74
0.78
DPS (MYR)
0.50
0.52
0.49
0.51
0.53
Recurring P/E (x)
13.3
12.7
13.5
13.0
12.4
P/B (x)
1.94
1.86
1.73
1.62
1.52
5.2
5.4
5.0
5.3
5.5
Return on average equity (%)
15.0
14.9
13.2
12.8
12.5
Return on average assets (%)
1.2
1.2
Dividend Yield (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
2
0
.
2




Source: Company data, RHB
1.1
1.1
1.1
(5.4)
(6.3)
(7.0)
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4
Results Review, 27 November 2014
Cahya Mata Sarawak (CMS MK)
Buy (Maintained)
Basic Materials - Building Materials
Market Cap: USD1,380m
Target Price:
Price:
MYR5.00
MYR4.39
Macro
Risks
On Track For Another Record Year
Growth
Value


3

.
1
0
.
3
4.60
239
4.10
214
0
0
.
2
0
0
CMS continues to churn out decent results with 9M14 core net profit of .
0
MYR161.8m, representing 78.6%/79.2% of our/street estimates. We 0
maintain our BUY call and earnings estimates. Our SOP-based TP is 0
also unchanged at MYR5.00 (12.4% upside). All eyes are now on the
commissioning of the OMS smelter. Its huge cash pile also opens doors
for many business opportunities in Sarawak.
3.60
188

3.10
162
2.60
136
2.10
111
1.60
10
9
8
7
6
5
4
3
2
1
85
Cahya Mata Sarawak (CMS MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)

Oct-14
Aug-14
Jun-14
Apr-14
Nov-13
Jan-14
5.10
Vol m




Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Majaharta Sdn Bhd
Lejla Taib
Dato Sri Sulaiman A. Taib
6.28m/1.93m
-9.7
12.4
1.93 - 4.70
32
1,039


13.6
11.2
8.9
Another decent quarter. After excluding non-recurring profit from the
liquidation of CMS Steel Bhd, Cahya Mata Sarawak (CMS) achieved
3Q14 core profit of MYR56.8m, -14.1% QoQ but +38.5% YoY. We deem
its results to be largely in line with our DQG PDUNHW¶V expectation. 9M14
core profit of MYR161.8m represented 78.6%/ 79.2% of our/street
estimates, thus we make no changes to our original projection.
All set to SCORE. Sarawak Corridor of Renewable Energy¶VSCORE)
key advantage is the availability of power at attractive tariff rates. The
Phase 1 power-LQWHQVLYH VPHOWHU E\ &06¶ -owned OM Materials
(Sarawak) SB (OMS) was just commissioned with full operation
expected by end-47KHJURXS¶V0DOD\VLDQ3KRVSKDWH$GGLWLYHV6%
(MPA) project is also progressing well, while its 51%-owned Samalaju
Property Development SB (SPD) business may offer some upside. We
EHOLHYHWKHHDUQLQJVGURSDWWKHODWWHU¶VZRUNHUV¶ORGJHPD\EHPLWLJDted
by its property developments in Samalaju, which we expect to reach a
larger scale and progress faster than originally expected.
Cement unit still an immediate catalyst. &06¶ ORJLVWLFV SURZHVV
DOORZV LW WR PDLQWDLQ D WLJKW JULS RQ 6DUDZDN¶V FHPHQW PDUNHt. The
JURXS¶V FHPHQW GLYLVLRQ LV VHW WR SRVW VWURQJ SHUIRUPDQFHs this year,
especially since it raised selling prices in mid-February. CMS is in the
midst of installing a brownfield 1m tonne per annum (tpa) grinding plant
next to its clinker facility, thus raising profitability from FY16.
BUY, with a SOP-based MYR5.00 TP. We believe investors are now
PRUH UHFHSWLYH WR &06¶ EXVLQHVVes after it continues to deliver decent
resultV &06¶ KXJH FDVK pile also allows it to take on projects with
attractive returns that may arise from SCORE or others. Therefore, we
keep our BUY call with our SOP-based TP maintained at MYR5.00.
Share Performance (%)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,203
1,418
1,605
1,739
1,752
Reported net profit (MYRm)
137
175
206
271
321
Recurring net profit (MYRm)
137
175
206
271
321
Recurring net profit growth (%)
4.3
28.3
17.4
31.5
18.4
Recurring EPS (MYR)
0.14
0.17
0.20
0.26
0.31
DPS (MYR)
0.04
0.06
0.06
0.08
0.09
Ng Sem Guan, CFA +603 9207 7678
Recurring P/E (x)
32.3
25.6
22.2
17.1
14.4
[email protected]
P/B (x)
3.00
2.74
2.56
2.31
2.08
P/CF (x)
20.2
18.3
19.8
14.7
14.0
1.0
1.3
1.3
1.8
2.1
12.5
9.3
9.5
8.4
7.6
9.4
11.2
11.9
14.2
15.2
YTD
1m
3m
6m
12m
Absolute
94.3
7.2
7.2
38.5
129.0
Relative
95.8
6.1
8.5
39.8
126.8
Shariah compliant
Forecasts and Valuations
Total turnover (MYRm)
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
net cash net cash net cash net cash net cash
0.0
4.2
23.4
Source: Company data, RHB
See important disclosures at the end of this report
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5
Results Review, 27 November 2014
Padini (PAD MK)
Neutral (Maintained)
Consumer Cyclical - Retail
Market Cap: USD347m
Target Price:
Price:
MYR1.90
MYR1.77
Macro
Risks
Cautious Outlook Ahead
Growth
Value
Padini (PAD MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.20
121
2.10
116
2.00
111
1.90
106
1.80
101
1.70
96
1.60
91
1.50
10
9
8
7
6
5
4
3
2
1
86
0
0
.
2
0
0
Padini’s 1QFY15 (Jun) core earnings of MYR19.2m missed .
0
expectations, at 19.5%/18.7% of our/consensus estimates. Maintain 0
NEUTRAL with a revised TP of MYR1.90 (7.3% upside). We attribute the 0
earnings miss to its rising operating expenses and aggressive sales
campaigns during 1QFY15. We reduce our FY15 earnings forecast by
6.5%, as we turn cautious over rising competition within the industry.

Oct-14
Aug-14
Jun-14
Apr-14
Jan-14

Nov-13
Vol m
Price Close
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
1.57m/0.48m
15.8
7.3
1.59 - 2.09
50
658
Yong Pang Chaun
Skim Amanah Saham
43.7
5.0


1

.
1
0
.
1






Better sales but margin affected. Padini Holdings¶ (Padini) 1QFY15
sales improved slightly by 4.4% YoY, as better sales from both Padini
Concept Stores (PCS) and Brands Outlet (BO) stores were partly offset
by declines in other sales channels (ie consignment and wholesale).
Meanwhile, EBITDA decreased 24% YoY to MYR34.0m as its overall
margin came in lower at 12.0% (-610bps YoY), mainly due to higher
operating expenses and aggressive promotions and discounts. Overall,
1QFY15 net profit fell 30.5% YoY due to the weaker margin. Compared
to 4QFY14, 1QFY15 revenue and core earnings improved by 15.7% and
40.9% respectively due to Hari Raya festivities in July.
Declares interim dividend. The company declared its second interim
DPS of 2.5 sen for FYE2015, bringing its total DPS declared YTD to 5.0
sen. This is in line with our estimates, as we expect Padini to continue to
reward its shareholders via dividends. Moving forward, we forecast a
dividend payout of 65-70%, translating into a net dividend yield of 5.46.4%.
Forecasts and risks. We believe the retail industry may continue to face
challenges from weak consumer sentiment. Hence, we revise down our
FY15 earnings forecast by 6.5%. We also take the opportunity to
introduce our FY17 numbers. Key risks include weaker consumer
sentiment and the emergence of new competitors within the retail
landscape.
Maintain NEUTRAL. Although we continue to like Padini for its attractive
dividend yield, we are turning cautious in view of the earnings
disappointment and the somber retail landscape. Hence we maintain
NEUTRAL on the stock, with our TP trimmed to MYR1.90 (from
MYR2.03), based on 14x FY15 EPS.
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(2.2)
2.9
(6.9)
(12.4)
(0.6)
Relative
(0.7)
1.8
(5.6)
(11.1)
(2.8)
Forecasts and Valuations
Jun-13
Jun-14
Jun-15F
Jun-16F
Jun-17F
790
866
950
1,041
1,139
Reported net profit (MYRm)
85
91
92
101
111
Recurring net profit (MYRm)
85
91
92
101
111
(11.3)
6.5
1.2
9.5
9.8
Recurring EPS (MYR)
0.13
0.13
0.14
0.15
0.16
Total turnover (MYRm)
Recurring net profit growth (%)
Shariah compliant
DPS (MYR)
0.08
0.10
0.10
0.10
0.11
Alexander Chia +603 9207 7621
Recurring P/E (x)
14.0
13.2
13.0
11.9
10.9
[email protected]
P/B (x)
3.21
3.09
2.88
2.68
2.49
P/CF (x)
7.5
22.0
4.4
9.4
8.6
Malaysia Research +603 9207 7660
Dividend Yield (%)
4.5
5.6
5.4
5.9
6.4
[email protected]
EV/EBITDA (x)
7.08
7.09
5.89
5.05
4.40
24.0
23.9
22.9
23.3
23.8
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
net cash net cash net cash net cash net cash
(12.2)
(12.5)
(9.4)
Source: Company data, RHB
See important disclosures at the end of this report
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6
Results Review, 27 November 2014
Media Chinese International (MCIL MK)
Communications - Media
Market Cap: USD425m
Neutral (Maintained)
Target Price:
Price:
MYR0.90
MYR0.85
Macro
Risks
Broadly Within Expectation
Growth
Value


3

.
2
0
.
2
1.10
105
1.05
101
1.00
98
0.95
94
0
0
.
2
0
0
Media Chinese’s 2QFY15 (Mar) net profit of MYR33m came in within .
0
expectations. We maintain our NEUTRAL rating with a higher TP of 0
MYR0.90 (10x FY16F P/E, 6.5% upside). Media Chinese’s operations in 0
Malaysia and North America were still facing challenges, offsetting the
recovery in Hong Kong’s operations. The local market sentiment
remained weak due to rising living costs and two Malaysia Airline
tragedies.
0.90
90

0.85
86
0.80
83
0.75
79
0.70
10
9
8
7
6
5
4
3
2
1
75
Media Chinese International (MCIL MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14

Nov-13
Vol m




Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
0.38m/0.12m
8.2
6.5
0.81 - 1.04
32
1,687
Progresif Growth SB
Conch Co Ltd
Tan Sri Tiong
19.4
15.0
5.2
Share Performance (%)

Within expectations. 0HGLD &KLQHVH¶V 4)< 0DU QHW SURILW of
MYR33m (-17% YoY) came in within expectation. Its 1HFY15 earnings
met 41% and 43% of our and FRQVHQVXV¶IXOO-year forecast respectively.
We believe 3Q numbers will likely be stronger due to seasonal factors.
)RUWKHTXDUWHUXQGHUUHYLHZ0DOD\VLD¶VRSHrations reported a decline of
21% YoY on the pre-tax level while Hong Kong reported a growth of 47%
YoY. Its North America segment reported a wider 13% YoY pre-tax loss,
while its tour segment also reported a decline in pretax profit of 22%
YoY.
Business overview. The Malaysia and North America operations
FRQWLQXHG WR IDFH FKDOOHQJHV 0DOD\VLD¶V SXEOLVKLQJ DQG SULQWLQJ
operations were generally affected by negative market sentiments,
LQFOXGLQJ ZHDN FRQVXPHU VHQWLPHQW GXH WR WKH *RYHUQPHQW¶V VXEVLG\
rationalisation program and the impending implementation of the goods
and services tax (GST) in Apr 2015. Many advertising campaigns were
also held back or cancelled due to the MH370 missing flight incident, and
the impact was compounded by the MH17 incident. Management claims
that its operations in North America were tough mainly due to the
negative currency impact from the weakening CAD. Its tour business
was mainly impacted by intensified competition in Hong Kong, offsetting
the stronger contribution from North America. On a brighter note, thanks
to the pick-XS LQ +RQJ .RQJ¶V SURSHUW\ PDUNHW WKH SXEOLVKLQJ DQG
printing operations in Hong Kong saw a recovery in earnings
contribution. Moving forward, we learn that Media Chinese would focus
on expanding its footprint in the digital space to increase its market share
and expand its reach to a wider range of readers.
Maintain NEUTRAL with a new TP of MYR0.90 (from MYR0.88) pegged
to 10x FY16F P/E. We make no changes to our earnings forecast and
believe that its 3Q would report a healthier set of numbers due to
seasonality.
YTD
1m
3m
6m
12m
Absolute
(13.3)
(6.1)
(8.2)
(12.4)
(17.2)
Forecasts and Valuations
Relative
(11.8)
(7.2)
(6.9)
(11.1)
(19.4)
Total turnover (MYRm)
Shariah compliant
Jerry Lee 603 9207 7622
[email protected]
Mar-13
Mar-14
Mar-15F
Mar-16F
Mar-17F
1,478
1,531
1,527
1,596
1,621
Reported net profit (MYRm)
176
158
148
152
159
Recurring net profit (MYRm)
176
158
148
152
159
Recurring net profit growth (%)
(9.0)
(10.6)
(5.9)
2.7
4.1
Recurring EPS (MYR)
0.10
0.09
0.08
0.09
0.09
DPS (MYR)
0.49
0.05
0.06
0.06
0.06
Recurring P/E (x)
8.16
9.26
9.97
9.58
9.20
P/B (x)
2.22
2.11
2.17
2.03
1.90
5.9
7.8
10.2
7.9
7.6
Dividend Yield (%)
57.6
5.5
7.1
7.3
7.6
EV/EBITDA (x)
5.96
4.30
5.04
4.64
4.28
Return on average equity (%)
18.5
23.3
Net debt to equity (%)
32.1
net cash
P/CF (x)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report
Source: Company data, RHB
21.4
21.9
21.3
net cash
net cash
net cash
(0.3)
(4.1)
(2.2)
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7
Results Review, 27 November 2014
SHL Consolidated (SHLC MK)
Buy (Maintained)
Property - Real Estate
Market Cap: USD259m
Target Price:
Price:
MYR5.00
MYR3.63
Macro
Risks
Strong Take-up Rates With Improved Margins
Growth
Value
SHL Consolidated (SHLC MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
4.30
182
3.80
162
3.30
142
2.80
122
2.30
102
1.80
4
82
0
0
.
2
0
0
SHL’s 1HFY15 net profit of MYR37m (+52% YoY) accounted for 61% of .
0
our full-year estimate. Maintain BUY with an unchanged MYR5.00 TP 0
(38% upside), pegged to a FY15F P/E of 20x. Good response to its 0
projects and higher profit contribution from its associate helped
improve its results. With a total net cash of MYR267m in hand, we
believe SHL justifies our valuation of FY15F ex-net cash P/E of 10x.

3
3

2
2

Sep-14
Jul-14
May-14
Mar-14
Jan-14
1
Nov-13
Vol m
1
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
0.51m/0.16m
39.3
38.0
2.01 - 3.83
14
242
'DWR¶,U<DS&KRQJ/HH
'DWR¶<DS7HLRQJ&KRRQ
39.0
26.0


2

.
1
0
.
2




Above expectation. 6+/ &RQVROLGDWHG¶V 6+/ +)< QHW SURILW RI
MYR37m (+52% YoY) accounted for 61% of our full-year estimate. The
better results were mainly due to the encouraging response to its
projects in Rawang Corporate Industrial Park and Phase 1 of the
Goodview Heights (Cassia East) that have >90% take-up rates, coupled
with higher profit contribution from its associate. Its 1HFY15 EBIT margin
also improved to 40% from 26% in 1HFY14.
Interim single-tier dividend of 7 sen. The company has proposed an
interim single-tier dividend of 7 sen (1HFY14: 5.25 sen per share) to
reward its shareholders.
Maintain BUY with TP of MYR5.00. We continue to like SHL for its: i)
prudent management, ii) greater earnings visibility, with the MYR1.5bn
GDV Goodview Heights project set to be its next earnings driver, iii)
higher margins arising from lower land cost and better cost control, as it
supplies its own clay bricks and granites, and iv) strong balance sheet
with total net cash of MYR267m as at end-Sep 2014 ± which allows it to
adopt the build-then-sell (BTS) model. We expect a strong 3-year net
earnings CAGR of 31.7% for FY13-15F. We are maintaining our BUY
call on SHL with an unchanged TP of MYR5.00, pegged to a FY15F P/E
of 20x. With total net cash of MYR267m in hand, equivalent to 30% of its
total market capitalisation of MYR879m, we believe the company justifies
our valuation of FY15F ex-net cash P/E of 10x. At the current share
price, SHL still offers a decent FY15F net dividend yield of 5.6%.
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
73.4
7.5
15.8
61.0
69.3
Relative
76.5
8.0
19.1
64.2
68.5
Shariah compliant
Forecasts and Valuations
Mar-13
Mar-14
Mar-15F
Mar-16F
182
205
206
224
245
Reported net profit (MYRm)
35.8
59.3
61.5
66.2
71.0
Recurring net profit (MYRm)
35.8
59.3
61.5
66.2
71.0
Recurring net profit growth (%)
84.2
65.8
3.6
7.7
7.3
Recurring EPS (MYR)
0.15
0.24
0.25
0.27
0.29
Total turnover (MYRm)
Mar-17F
DPS (MYR)
0.09
0.17
0.20
0.22
0.22
Chaw Sook Ting +603 9207 7604
Recurring P/E (x)
24.3
14.7
14.1
13.1
12.2
[email protected]
P/B (x)
1.51
1.46
1.43
1.40
1.37
Dividend Yield (%)
2.5
4.8
5.6
6.1
6.1
Return on average equity (%)
6.3
10.1
10.2
10.8
11.3
Return on average assets (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
5.5
8.3
8.0
8.3
8.7
(32.0)
(49.6)
(52.8)
(53.0)
(53.4)
0.0
0.0
0.0
Source: Company data, RHB
See important disclosures at the end of this report
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8
Results Review, 27 November 2014
APM Automotive (APM MK)
Sell (from Neutral)
Consumer Cyclical - Auto & Autoparts
Market Cap: USD313m
Target Price:
Price:
MYR4.75
MYR5.36
Macro
Risks
Structural Margin Compression
Growth
Value
APM Automotive (APM MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
6.20
106
6.00
102
5.80
99
5.60
95
5.40
92
5.20
1000
900
800
700
600
500
400
300
200
100
88
Jun-14


Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
0.29m/0.09m
25.4
-11.4
5.36 - 6.40
52
196
Tan Chong Consolidated SB
Wealthmark Holdings SB
Mondrian Investment
39.9
7.8
5.1
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(7.4)
(6.0)
(12.6)
(14.7)
(7.6)
Relative
(5.9)
(7.1)
(11.3)
(13.4)
(9.8)


Another disappointing quarter. APM $XWRPRWLYH¶V (APM) earnings
disappointed for a third consecutive quarter. 9M14 earnings of
MYR73.7m only reached 62% and 59% of our and street estimates
respectively. Recurring net profit declined 17% YoY excluding a nonrecurring gain in 3Q13 arising from the divestment of a 25% stake in an
overseas associate. The deviation in earnings is due to weaker margins
on the back of lower revenue. No dividend was declared for the quarter.
Price pressure and lower volumes hit revenue. 9M14 revenue of
MYR940.0m was flat YoY. 3Q14 revenue, however, declined 14.1%
QoQ and 11.3% YoY due to lower original equipment manufacturing
(OEM) sales volumes. Total industry production (TIP) for the quarter
contracted 17.7% QoQ and 8.3% YoY, while cumulatively TIP rose 2.5%
YoY. This was exacerbated by the slow production ramp-up of the
Proton Iriz in addition to the 17.6% YoY decline in Nissan sales at sister
company Tan Chong (TCM MK, SELL, TP: MYR3.55). Other than
improved revenue (+3.8% YoY) from suspension products, APM
recorded weaker sales across other product lines. Overseas sales
improved during the quarter, likely due to the maiden consolidation of the
newly-acquired McConnell Seats Australia on 1 Aug.
Risks and forecasts. Risks include higher industry sales and production
volumes, a quicker breakthrough into overseas markets and higher
margins from a weaker JPY. We lower our earnings estimates by 13.2%
and 13.5% for 2014 and 2015 respectively after updating our margin
assumptions. We also introduce our 2016 forecasts.
Downgrade to SELL. We downgrade our call on the stock to SELL
(from Neutral) and cut our TP to MYR4.75 (from MYR5.80) after
ascribing a lower 8.5x target P/E (from 9x) to 2015 earnings. APM trades
at a prospective 2015 P/E of 9.6x despite pedestrian earnings growth of
6.1%. The 3.3% dividend yield is not compelling. The intense pricing
pressure means FX-derived gains from a weaker JPY will likely be
passed through to customers.
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,123
1,259
1,264
1,314
1,361
Reported net profit (MYRm)
114
114
103
109
115
Recurring net profit (MYRm)
114
114
103
109
115
Recurring net profit growth (%)
(5.2)
0.2
(9.7)
6.1
5.8
Alexander Chia +603 9207 7621
Recurring EPS (MYR)
0.58
0.58
0.53
0.56
0.59
[email protected]
DPS (MYR)
0.24
0.42
0.18
0.22
0.00
9.2
9.2
10.2
9.6
9.1
1.18
1.14
1.06
1.00
0.93
P/CF (x)
7.4
27.2
5.2
7.6
7.4
Dividend Yield (%)
4.5
7.8
3.3
4.1
0.0
3.69
3.86
4.10
3.85
3.68
13.3
12.6
10.8
10.7
10.6
Shariah compliant
Forecasts and Valuations
Total turnover (MYRm)
Recurring P/E (x)
P/B (x)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
3
0
.
1
0
0
.
2
0
0
APM’s 9M14 results disappointed, reaching just 62%/59% of our/ .
0
consensus estimates. Downgrade to SELL with a lower TP of MYR4.75 0
(11.4% downside). Earnings were hurt by a combination of weaker sales 0
volumes and price pressure contributing to weaker margins. Mediumterm growth prospects look unexciting given tepid domestic industry
volume growth and slow progress venturing into overseas markets.
Oct-14
109
Aug-14
6.40
Apr-14
113
Jan-14
6.60
Nov-13
Vol th
Price Close




Source: Company data, RHB
net cash net cash net cash net cash net cash
(17.6)
(21.4)
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(28.4)
9
Results Review, 27 November 2014
OKA Corp (OKAC MK)
Buy
Malaysia - Small & Mid-Caps
Market Cap: USD40.0m
Target Price:
Price:
MYR1.13
MYR0.87
Macro
Risks
Solid Sales And Better Margins
Growth
Value
OKA Corp (OKAC MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
1.18
1.08
298
0.98
270
0.88
243
0.78
215
0.68
187
0.58
159
0.48
132
0.38
104
0.28
12
76
0
0
.
2
0
0
Due to higher volume and better margin, 1HFY15 revenue and net .
0
earnings of MYR81m (+14% YoY) and MYR8m (+45% YoY) accounted for 0
about 51% and 53% of our full-year estimates respectively. We maintain 0
our earnings forecasts and BUY rating. Pegged to an unchanged FY16F
P/E of 10x, our TP of MYR1.13, a 29.9% upside, is still below the stock’s
15.6x 10-year average P/E.

10
8

6
Sep-14
Jul-14
May-14
Mar-14
Jan-14
2
Nov-13
Vol m
4
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Ong Koon Ann
Quah Seok Keng
0.37m/0.11m
28.4
29.9
0.35 - 1.06
33
152
51.3
4.3


2

.
1
0
.
2





Within expectation. 2.$&RUS¶V2.$+)< (Mar) revenue and net
earnings of MYR81m (+14% YoY) and MYR8m (+45% YoY) accounted
for about 51% and 53% of our full-year estimates respectively. The
better results were attributable to higher volume and better margin.
2QFY15 net earnings of MYR5m (+84% YoY, +65% QoQ), were on the
back of 16%/6% YoY/QoQ increase in revenue to MYR42m respectively,
supported by higher sales, improved margin and lower operating
expenses.
Demand remains intact amid the higher-cost environment. The
outlook of the construction sector remains promising as projects with
long-gestation periods, such as the mass rapid transit (MRT) project and
various highways and other infrastructure developments, would likely
continue to support the demand for all its related materials. We expect
OKA to continue to do well. In the meantime, the company is trying to
diversify its products, introduce product differentiation, improve on its
existing products and implement cost-saving exercises to maintain its
competitiveness in the industry.
Maintain BUY, with a MYR1.13 TP. The fundamentals of the company
remain intact. We like OKA for its strong presence in Peninsular
Malaysia and better earnings visibility as it can ride on rising
infrastructure developments in Malaysia. We are maintaining our BUY
recommendation on OKA with a TP of MYR1.13, pegged to an
unchanged FY16F P/E of 10x ± VWLOOEHORZ WKHVWRFN¶V -year average
P/E of 15.6x. Our valuation is justifiable with a low 3-year average PEG
of 0.18x. With total cash of MYR2.6m and total borrowings at MYR1.6m,
WKH FRPSDQ\¶V JHDULQJ UDWLR ZDV close to zero as at end-September,
which implies an improvement from 0.05x in FY14.
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
105.6
0.9
(12.7)
35.8
212.1
Relative
108.7
1.4
(9.4)
39.0
211.3
Shariah compliant
Forecasts and Valuations
Mar-13
Mar-14
Mar-15F
Mar-16F
Total turnover (MYRm)
133
145
158
179
185
Reported net profit (MYRm)
5.7
13.4
15.3
17.3
18.1
18.1
Recurring net profit (MYRm)
Mar-17F
5.7
13.4
15.3
17.3
Recurring net profit growth (%)
14.8
135.8
14.3
12.8
4.8
Recurring EPS (MYR)
0.09
0.15
0.11
0.11
0.12
DPS (MYR)
0.04
0.03
0.04
0.04
0.04
Chaw Sook Ting +603 9207 7604
Recurring P/E (x)
9.31
5.98
7.88
7.77
7.41
[email protected]
P/B (x)
0.54
0.98
1.13
1.03
0.94
P/CF (x)
4.43
4.16
6.03
7.85
5.78
4.0
3.4
4.5
4.5
4.5
4.76
3.37
4.33
4.17
3.62
5.9
12.9
16.3
4.6
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
13.4
net cash
0.0
13.9
net cash
0.0
13.3
net cash
0.0
Source: Company data, RHB
See important disclosures at the end of this report
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10
Results Review, 27 November 2014
Malaysian Bulk (MBC MK)
Neutral (from Buy)
Transport - Shipping
Market Cap: USD418m
Target Price:
Price:
MYR1.30
MYR1.40
Macro
Risks
Drowning In Weak Rates
Growth
Value
Malaysian Bulk (MBC MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.40
134
2.20
124
2.00
114
1.80
104
1.60
94
1.40
84
1.20
10
9
8
7
6
5
4
3
2
1
74
0
0
.
1
0
0
Earnings came in below our estimates on the weak freight rate .
0
environment. We downgrade to NEUTRAL with a lower RNAV-based 0
MYR1.30 TP (7.1% downside). Freight rate volatility will continue to 0
persist on fading demand and renewed concerns of an oversupply, as
reflected by the drop in asset prices. FY14/FY15/FY16 earnings trimmed
by 44%/37%/35% as we cut our freight rate assumptions.
Oct-14
Jul-14
May-14
Mar-14
Jan-14

Nov-13
Vol m

Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Kuok (Singapore) Ltd
Minister of Finance Inc
PPB Group
1.26m/0.39m
50.0
-7.1
1.33 - 2.21
29
1,000
34.5
18.4
14.0
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(20.9)
(4.1)
(19.6)
(20.0)
(18.1)
Relative
(19.4)
(5.2)
(18.3)
(18.7)
(20.3)


Drowned in weak rates. Malaysian Bulk¶VHDUQLQJVFDPHLQEHORZRXU
and consensus estimates, reporting 9M14 core earnings of only
MYR11.2m (YTD: -54.5%) vs our full-year forecast of MYR57m. Of this,
MYR46.9m (YTD: +5.2%) alone was contributed by joint-ventures (JVs)
and associates, notably PACC Offshore (POSH SP, NR). Malaysian
Bulk¶V FKDUWHU UDWHs remained weak QoQ (-27.6%) and YoY (-28%).
Aside from its weak topline, the added capacity (as hiring days increased
by 9.4% YTD and 6.3% QoQ) also incurred upfront cost of deployment in
3Q14. This dragged its dry bulk and tanker division into losses in the
quarter under review after briefly turning profitable in 2Q14.
A tough outlook ahead. The current seasonal pick-up reflected in the
Baltic Dry Index in 4Q14 is expected to improve earnings briefly for the
company, but we caution that the volatility in freight rates will continue to
persist and could likely repeat another set of underperformance as it did
in 1H14. Dry bulk vessel asset prices are starting to come off from their
peak this year (seen in mid-2014) on concerns of oversupply building up
again as demolition activities dissipate. This may be on the market being
over-optimistic on the dry bulk outlook earlier. Increased Brazil to China
exports and higher coal import demand from India (after cancellations of
local mining licenses created coal shortage) should still underpin the
near-term demand for dry bulk shipping activities.
Forecasts. FY14/FY15/FY16 earnings trimmed by 44%/37%/35% as we
cut topline by 8%/16%/16% respectively on the lower freight rate
assumptions. We now forecast for Malaysian BXON¶V FY14/FY15/FY16
dry bulk charter rates to increase by 1%/10%/5% from 15%/25%/5%
earlier respectively.
Downgrade to NEUTRAL (from Buy). As now we expect the shipping
division to remain in losses next year, we therefore shift our valuation
methodology from an SOP-based TP of MYR2.00 to RNAV, which would
reflect its fleet value and the market cap share it owns in PACC
Offshore. Our RNAV-derived TP is MYR1.30 and, with a 7.1% downside,
we downgrade our call to NEUTRAL.
Forecasts and Valuations
Total turnover (MYRm)
Shariah compliant
Reported net profit (MYRm)
Recurring net profit (MYRm)
Ahmad Maghfur Usman 603 9207 7654
[email protected]
Dec-12
Dec-13
157
162
Dec-14F
198
Dec-15F
258
Dec-16F
284
66.0
44.5
54.7
80.7
99.7
35.2
26.9
31.8
80.7
99.7
(65.6)
(23.4)
17.9
154.1
23.6
Recurring EPS (MYR)
0.04
0.03
0.03
0.08
0.10
DPS (MYR)
0.03
0.03
0.00
0.04
0.04
Recurring P/E (x)
39.8
52.0
44.1
17.3
14.0
P/B (x)
0.82
0.75
0.72
0.69
0.65
52.3
16.8
11.4
7.8
2.1
2.1
0.0
2.6
3.2
22.9
64.4
81.0
11.2
7.9
3.8
2.5
2.9
4.1
4.8
5.7
8.0
5.1
(57.1)
(27.3)
(20.2)
Recurring net profit growth (%)
P/CF (x)
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


1

.
2
0
.
2




Source: Company data, RHB
na
net cash
net cash
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11
Results Review, 27 November 2014
Dayang Enterprise (DEHB MK)
Buy (Maintained)
Energy & Petrochemicals - Offshore & Marine
Market Cap: USD753m
Target Price:
Price:
MYR3.73
MYR2.88
Macro
Risks
Slightly Below Expectations
Growth
Value
Dayang Enterprise (DEHB MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
4.00
115
3.80
109
3.60
104
3.40
98
3.20
92
3.00
86
2.80
81
2.60
16
14
12
10
8
6
4
2
75

Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Naim Cendera Holdings
Ling Suk Kiong
Ahmad Shahruddin
4.22m/1.31m
52.4
29.5
2.75 - 3.86
29
877
30.9
9.3
8.0

9M14 core earnings of MYR147.3m, Dayang Enterprise (Dayang)
registered 9M14 revenue of MYR635.3m (+71.3% YoY) on the back of
higher work orders from its hook-up, construction and commissioning
(HuCC) as well as topside structural maintenance (TSM) contract. Core
earnings came in at MYR147.3m (+58.7% YoY), below our expectation
but in line with consensus, at 70% and 74% of full year estimates
respectively, as we had overestimated the amount of work orders that it
would receive this year.
Outstanding orderbook of MYR4.2bn. Dayang currently has call-out
contracts from its HuCC/TSM contracts worth MYR4.2bn, which will keep
the company busy until 2018. It has an outstanding tenderbook of
MYR800m which we believe is related to an enhanced oil recovery off
the coast of Sarawak. Recall that Dayang did a private placement which
raised MYR175.6m, the proceeds of which were utilised to increase its
stake in Perdana Petroleum (PETR MK, BUY, TP: MYR1.62), which
currently stands at 28.6%, and also to ramp up its capacity for
engineering, procurement, construction and commissioning (EPCC) jobs.
Maintain BUY with a lower TP of MYR3.73. In light of its results coming
in below our expectation, we downgrade our FY14 earnings estimate by
6% but leave our FY15 numbers unchanged. Going fRUZDUG 'D\DQJ¶V
growth will be from increased work orders from its current HuCC/TMM
contract. We also apply a 13x (from 16x) FY15F P/E to the stock, which
is at the higher end of our 8x-13x P/Es for service players under our
coverage, to derive a new TP of MYR3.73 (from MYR4.52). Dayang
deserves a premium valuation as we believe it is the premier local oil
and gas player with an excellent track record. The stock is currently
trading at a 9.4x FY15F P/E.
Share Performance (%)
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total turnover (MYRm)
401
553
876
1,104
1,432
Reported net profit (MYRm)
101
149
199
252
341
Recurring net profit (MYRm)
101
120
199
252
341
Recurring net profit growth (%)
21.8
19.0
64.9
26.6
35.6
Recurring EPS (MYR)
0.12
0.15
0.24
0.30
0.41
DPS (MYR)
0.07
0.07
0.12
0.15
0.21
The Research Team +603 9207 7680
Recurring P/E (x)
23.5
19.7
12.0
9.4
7.0
[email protected]
P/B (x)
3.98
3.57
2.45
2.17
1.88
P/CF (x)
24.3
15.2
15.6
10.7
8.1
2.3
2.4
4.2
5.3
7.2
YTD
1m
3m
6m
12m
Absolute
(25.4)
(6.2)
(23.4)
(16.5)
(17.3)
Relative
(23.9)
(7.3)
(22.1)
(15.2)
(19.5)
Shariah compliant
Forecasts and Valuations
Kong Ho Meng +603 9207 7620
Dividend Yield (%)
[email protected]
EV/EBITDA (x)
12.9
9.7
7.2
5.7
4.2
Return on average equity (%)
18.1
23.6
24.3
24.4
28.9
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
net cash
3.1
net cash
net cash
(5.2)
5.2
net cash
42.6
Source: Company data, RHB
See important disclosures at the end of this report


1

.
2
0
.
3
0
0
.
3
0
0
Dayang Enterprise reported 9M14 core earnings of MYR147.3m, slightly .
0
below our/in line with consensus full-year estimates, at 70%/74% 0
respectively. Maintain BUY on the premier local service player, with our 0
lower TP of MYR3.73 (from MYR4.52) pegged to a 13x FY15F P/E (from
16x) and offering a 30% upside. We also trim our FY14F earnings by 6%
but maintain our FY15 forecasts.

Nov-13
Vol m
Price Close




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12
Results Review, 27 November 2014
UMW (UMWH MK)
Neutral (Maintained)
Consumer Cyclical - Auto & Autoparts
Market Cap: USD3,938m
Target Price:
Price:
MYR11.00
MYR11.30
Macro
Risks
Few Re-rating Catalysts
Growth
Value
UMW Holdings (UMWH MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
13.0
106
12.5
102
12.0
98
11.5
94
11.0
89
10.5
85
10.0
8
7
6
5
4
3
2
1
81

Oct-14
Jul-14
May-14
Mar-14
Jan-14

Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
PNB Funds
13.6m/4.17m
13.3
-2.7
10.6 - 12.5
35
1,168

50.1

Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(6.3)
(3.4)
(9.3)
4.6
(9.0)
Relative
(4.8)
(4.5)
(8.0)
5.9
(11.2)
Shariah compliant
A softer 3Q14. UMW reported a relatively weak 3Q14. While O&G
earnings were broadly in line, the other three main divisions all
disappointed. The non-core division reported a stable pre-tax loss of
MYR32.4m for the quarter. Cumulative 9M14 earnings only reached 62%
of our and consensus estimates respectively. No significant nonrecurring charges were incurred during the quarter. A second interim
DPS of 15 sen was declared, bringing the cumulative DPS to 25 sen.
UMWOG in line. 80:2LO*DV80:2*¶V0UHYHQXHJUHZ
on the back of higher rig utilisation and rates for NAGA-2, higher
utilisation for NAGA-3, full contributions from NAGA-4 anGDIXOOTXDUWHU¶V
contribution from MAGA-5 which commenced operations in May 2014.
Other business divisions were weaker. Toyota sales for the quarter
fell 12.6% sequentially owing to competition from new Honda models
although cumulative Toyota sales are still 16.8% higher YoY from the
introduction of the new Altis and Vios models in early 2014. The
equipment business was flat as the ban on jade mining activities was
only lifted on 1 Sep, while softer commodity prices adversely affected
sales in Papua New Guinea. The mechanical and engineering unit
reported a small cumulative profit compared with a loss in 9M13 from
asset impairment charges.
Risks and forecasts. The main risks are unfavourable exchange rates
and weaker auto sales. After updating our assumptions, we trim our
2014-2015 earnings estimates by 4.9% and 4.3% respectively. We also
introduce our 2016 forecasts.
Maintain NEUTRAL We maintain our NEUTRAL call on the stock but
cut our SOP-derived TP to MYR11.00 (from MYR12.40) mainly to reflect
the recent de-rating of the O&G sector after the plunge in crude oil prices
(see Figure 5). We see few re-rating catalysts for the stock, with modest
growth expected at its key automotive division.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Total turnover (MYRm)
15,817
14,207
15,095
15,938
14,207
Reported net profit (MYRm)
994
681
877
999
1,064
Recurring net profit (MYRm)
994
881
877
999
1,064
172.5
(11.4)
(0.5)
13.9
6.6
Alexander Chia +603 9207 7621
Recurring net profit growth (%)
[email protected]
Recurring EPS (MYR)
0.85
0.75
0.75
0.85
0.91
Recurring P/E (x)
13.3
15.0
15.1
13.2
12.4
P/B (x)
2.72
2.07
2.17
2.23
2.31
P/CF (x)
11.2
14.7
9.3
7.3
7.3
EV/EBITDA (x)
5.76
9.52
8.82
8.60
8.85
Return on average equity (%)
21.9
12.2
14.1
16.6
18.3
2.5
4.6
15.4
17.0
20.7
(4.1)
(4.6)
(7.8)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
Source: Company data, RHB
See important disclosures at the end of this report


3

.
2
0
.
1
0
0
.
1
0
0
We maintain our NEUTRAL rating on the stock but trim our TP to .
0
MYR11.00 (2.7% downside) after UMW reported relatively soft 3Q14 0
earnings that fell below expectations. UMWOG’s earnings are expected 0
to grow in tandem with the deployment of new drilling assets while
hopes are high for higher equipment sales to Myanmar. The stock looks
close to being fairly valued given the recent de-rating of its O&G assets.

Nov-13
Vol m
Price Close




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13
Results Review, 27 November 2014
Pestech International (PEST MK)
Neutral (Maintained)
Malaysia - Small & Mid-Caps
Market Cap: USD193m
Target Price:
Price:
MYR4.16
MYR3.88
Macro
Risks
Higher Profit Recognition From Projects
Growth
Value
Pestech International (PEST MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
331
4.10
295
3.60
260
3.10
224
2.60
188
2.10
152
1.60
117
1.102
1
1
1
1
1
81
0
0
.
1
0
0
Pestech’s 9M14 net earnings of MYR17m (+24% YoY) reached c.54% of .
0
our full-year forecast. Maintain NEUTRAL with a revised TP of MYR4.16 0
(7.2% upside), pegged to a FY15F target P/E of 15x, after adjusting for 0
its higher share capital. 9M14 PBT rose 23% YoY to MYR23m, supported
by higher billings from its Sarawak and Laos projects. Its orderbook
remained strong at MYR530m as at end-Sep 2014.


Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
Nov-13
Vol m
4.60
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Lim Ah Hock
Lim Pay Chuan
0.37m/0.12m
16.0
7.2
1.65 - 4.28
30
167
41.6
25.4


2

.
2
0
.
2





9M14 earnings up 24% YoY to MYR17m. 3HVWHFK ,QWHUQDWLRQDO¶V
(Pestech) 9M14 net profit of MYR17m (+24% YoY) accounted for 54% of
our full-year target, but we deem the results in line as its profitability
WHQGV WR IOXFWXDWH LQ WDQGHP ZLWK LWV SURMHFWV¶ SURJUHVV ELOOLQJV 0
revenue jumped 48% YoY to MYR172m, while PBT rose 23% YoY to
MYR23m. This was mainly due to higher billings from its Sarawak and
Laos projects (+51% YoY), which were partly mitigated by higher
operating expenses of MYR129m (+48% YoY) and finance costs of
MYR3m (+50% YoY). 9M14 EPS of 15 sen was 11% lower YoY
compared with 17 sen in 9M13 arising from higher share outstanding
upon the completion of its corporate exercises.
First IMS job from SEB opens door to opportunities. Pestech has
received MYR0.9m jobs from Sejingkat Power Corporation SB and
Power Generation SB, both are subsidiaries of Sarawak Energy Bhd
(SEB). The 9-month projects involve the supply, installation, testing and
commissioning of Information Management System (IMS) as part of the
expansion plan for the control system. Despite the small contract value,
this is the first breakthrough IMS project from SEB. Management is
hopeful that the company could secure more IMS projects in the future.
Maintain NEUTRAL with a revised TP of MYR4.16. 3HVWHFK¶VFXUUHQW
orderbook of about MYR530m secures its earnings visibility for the
coming two years. We maintain our NEUTRAL stance on the stock, with
a revised TP of MYR4.16 (from MYR4.33), after adjusting our per share
data based on its enlarged share capital. The company had a net
gearing ratio of 0.47x as at end-Sep 2014.
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
112.0
1.3
0.3
33.9
165.0
Relative
113.5
0.2
1.6
35.2
162.8
Shariah compliant
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
136
182
247
360
372
Reported net profit (MYRm)
16.5
20.7
23.9
45.5
47.6
Recurring net profit (MYRm)
16.5
20.7
23.9
45.5
47.6
Recurring net profit growth (%)
30.3
25.5
15.5
90.2
4.6
Recurring EPS (MYR)
0.22
0.25
0.19
0.28
0.29
Total turnover (MYRm)
Dec-16F
DPS (MYR)
0.08
0.10
0.12
0.12
0.12
Chaw Sook Ting +603 9207 7604
Recurring P/E (x)
18.0
15.6
20.3
14.0
13.4
[email protected]
P/B (x)
4.78
3.61
4.94
4.11
3.49
5.3
18.5
11.7
3.1
P/CF (x)
Dividend Yield (%)
na
na
2.0
2.6
3.1
3.1
EV/EBITDA (x)
11.7
10.5
10.6
8.5
7.8
Return on average equity (%)
31.7
26.3
21.6
32.1
28.2
6.0
48.1
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
net cash
0.0
net cash
0.0
net cash
0.0
Source: Company data, RHB
See important disclosures at the end of this report
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14
Results Review, 27 November 2014
IQ Group (IQGH MK)
Buy (Maintained)
Malaysia - Small & Mid-Caps
Market Cap: USD43.7m
Target Price:
Price:
MYR2.51
MYR1.70
Macro
Risks
Strong Exports Support Growth
Growth
Value
IQ Group (IQGH MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.30
2.10
334
1.90
304
1.70
274
1.50
244
1.30
214
1.10
184
0.90
154
0.70
124
0.50
94
0.304
64
0
0
.
2
0
0
IQ’s 1HFY15 (Mar) results beat our estimates, with MYR109m revenue .
0
(+21% YoY) and MYR14m net profit (+67% YoY) reaching 59% and 99% 0
of our respective full-year estimates, driven by strong overseas sales 0
and favourable foreign exchange rates. Maintain BUY with a higher TP
of MYR2.51 (47.6% upside), pegged to a FY15F P/E of 12x. We raise our
FY15 earnings estimate by 29% and introduce our FY16-17 forecasts.

3
3

2
2
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
1
Nov-13
Vol m
1

Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Sensorlite Ltd
Chen Wen-Chin
Nestek Electronics
0.44m/0.14m
47.6
47.6
0.53 - 2.03
11
86.1


2

.
2
0
.
2




Above expectations. ,4 *URXS¶V ,4 +)< UHVXOWV ZHUH DERYH RXU
expectations, with revenue of MYR109m (+21% YoY) and net profit of
MYR14m (+67% YoY) accounting for 59% and 99% of our respective
full-year estimates. By segment, both manufacturing and trading
divisions recorded higher sales contributions in 1HFY15, up 26% and
20% YoY respectively. The better results were driven by higher export
sales and favourable foreign exchange rates.
Interim DPS of 4 sen. IQ proposed an interim dividend of 4 sen per
share to reward its shareholders. This is the first dividend payout since
FY07 (4 sen per share), suggesWLQJWKDWWKHFRPSDQ\¶VSHUIRUPDQFHKDV
improved and it would like to resume its policy of paying dividends
annually.
Maintain BUY with a higher MYR2.51 TP. We believe IQ could do well
in FY15 as exports to the US, Europe and Japan markets remain
encouraging. We have tweaked our FY15F revenue and net profit
forecasts higher by 10% and 29% respectively, to reflect its better
performance, and introduce our FY16-17 forecasts. We maintain our
BUY call on IQ, with a higher TP of MYR2.51 (from MYR2.03), pegged to
a FY15F P/E of 12x ± which is within the range of 10-15x P/Es of the
consumer stocks (excluding consumer staples) under the coverage of
our consumer analyst. As at end-Sep 2014, IQ had MYR18m cash in
hand with zero borrowings.
42.0
19.6
5.0
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
111.2
(8.1)
41.7
33.9
195.7
Relative
112.7
(9.2)
43.0
35.2
193.5
Forecasts and Valuations
Mar-13
Mar-14
Mar-15F
Mar-16F
Total turnover (MYRm)
141
171
201
216
232
Reported net profit (MYRm)
0.6
10.7
17.8
18.9
19.2
19.2
Recurring net profit (MYRm)
Recurring net profit growth (%)
Shariah compliant
Recurring EPS (MYR)
DPS (MYR)
Mar-17F
0.6
10.7
17.8
18.9
(90.1)
1614.6
65.8
6.2
1.7
0.01
0.13
0.21
0.22
0.23
0.000
0.000
0.000
0.000
0.000
231
13
8
8
8
1.09
0.95
Chaw Sook Ting +603 9207 7604
Recurring P/E (x)
[email protected]
P/B (x)
1.71
1.50
1.27
P/CF (x)
12.2
11.7
9.3
0.0
0.0
0.0
0.0
12.1
6.2
3.7
3.6
3.1
0.7
11.8
16.8
15.2
13.4
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
na
6.8
0.0
net cash net cash net cash net cash net cash
0.0
0.0
0.0
Source: Company data, RHB
See important disclosures at the end of this report
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15
Results Review, 27 November 2014
Telekom Malaysia (T MK)
Neutral (Maintained)
Communications - Telecommunications
Market Cap: USD8,032m
Target Price:
Price:
MYR7.00
MYR7.24
Macro
Risks
Still Waiting With Bated Breath
Growth
Value
Telekom Malaysia (T MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
7.80
155
7.30
145
6.80
135
6.30
125
5.80
115
5.30
105
4.80
25
95


2

.
2
0
.
1




0
0
.
1
0
0
TM’s 9MFY14 was broadly in line. Maintain NEUTRAL, with a revised .
0
DCF-based TP of MYR7.00 (3.3% downside) in line with our house’s 0
revised key valuation assumptions. TM offered little insights on its 0
mobile broadband aspirations or its plans for P1 pending the
finalisation of its go-to-market strategy and roadmap. The strong share
price re-rating has more than priced in the upside from P1, in our view.

A better 4Q14. :KLOH70¶V0results fell short of our and consensus
forecasts by 9-10% when annualised, we expect the slack to be made up
for in 4Q14- its typical seasonal peak. 9M14 revenue grew 5.6% YoY on
the back of stronger contribution from its internet (+10.1% YoY) and
other telco revenues (+30.1% YoY). Nonetheless, EBIT margin narrowed
to 11.7% (9MFY13: 12.8%) from higher opex and the accelerated
depreciation of its USP assets.
20

15
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
5
Nov-13
Vol m
10
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Khazanah Nasional
Permodalan Nasional Berhad
Employees Provident Fund
40.6m/12.4m
-22.2
-3.3
5.11 - 7.50
48
3,719
28.7
12.5
11.3
Share Performance (%)


No sneak peak. Disappointingly, TM did not offer any insights on its
mobile broadband aspirations or plans for 55.3%-owned P1, despite
KDYLQJUHIOHFWHG3¶VFRQWULEXWLRQLQLWVERRNVIURP2FWREHUDFTXLVLWLRQ
was completed on 30 Sep). Management said it would be in a better
position to share more detaiOV RQ 3¶V JDPH SODQ DIWHU WKH QHZ
management team has finalised its go-to market strategy and product
roadmap in 1Q15. TM is still awaiting the letter of award (LOA) from the
Government on the high speed broadband Phase 2 project (HSBB2).
Forecasts. Our FY14/15 earnings forecasts are unchanged for now as
we await further clarity and guidance from management on P1, which
has been consolidated effective 4Q14. We have introduced our FY16
figures.
Maintain NEUTRAL. 70¶V VKDUH SULFH KDV UH-rated strongly in recent
months and we believe it has more than priced in the upside from the
acquisition of P1. We maintain our NEUTRAL recommendation with our
DCF-based TP revised to MYR7.00 (from MYR6.10) after adjusting our
:$&& WR IURP WR DOLJQ ZLWK 5+%¶V UHYLsed key valuation
SDUDPHWHUV :KLOH 70¶V )< HDUQLQJV JURZWK DSSHDUV ODFNLQJ GXH WR
the expiry of tax incentives, we expect the award of HSBB2 and the
contributions from P1 to drive stronger growth in the longer term.
YTD
1m
3m
6m
12m
Absolute
30.5
5.2
15.8
14.7
42.0
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Relative
32.0
4.1
17.1
16.0
39.8
Total turnover (MYRm)
9,994
10,629
11,213
11,819
12,382
Reported net profit (MYRm)
1,264
1,012
863
917
1,000
Recurring net profit (MYRm)
881
1,171
863
917
1,000
Recurring net profit growth (%)
38.7
32.9
(26.3)
6.2
9.1
Recurring EPS (MYR)
0.25
0.33
0.24
0.26
0.28
DPS (MYR)
0.22
0.29
0.22
0.23
0.25
Recurring P/E (x)
29.4
22.1
30.0
28.3
25.9
P/B (x)
3.76
3.63
3.93
3.80
3.64
P/CF (x)
9.51
9.39
8.14
7.55
7.54
3.0
4.1
3.0
3.2
3.5
EV/EBITDA (x)
9.40
8.51
8.55
8.11
7.90
Return on average equity (%)
17.7
14.4
12.6
13.7
14.4
Net debt to equity (%)
40.7
44.5
58.4
52.6
41.2
(5.4)
11.4
21.5
Shariah compliant
Alia Arwina +603 9207 7608
[email protected]
Jeffrey Tan +603 9207 7633
[email protected]
Dividend Yield (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report
Source: Company data, RHB
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16
Results Review, 27 November 2014
Integrax (INTEG MK)
Neutral (Maintained)
Transport - Logistics
Market Cap: USD213m
Target Price:
Price:
MYR2.28
MYR2.37
Macro
Risks
Stronger Volume Expected In 4Q14 Onwards
Growth
Value
Integrax (INTEG MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.50
115
2.40
111
2.30
108
2.20
104
2.10
101
2.00
97
1.90
94
1.80
3
90
3
0
0
.
1
0
0
Despite only 65% of FY14 earnings estimates, Integrax’s 9M14 core .
0
earnings came within our forecast, as we expect volume picking up into 0
4Q14 to make up the shortfall. Maintain NEUTRAL and DCF-derived 0
MYR2.28 TP (4.0% downside). Volume handled started to pick up at the
Lekir Bulk Terminal (up 20.6% QoQ) and is expected to see a further
44% boost in FY15 as the M4 power plant commences in Mar 2015.


2
2

Oct-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Vol m
1
1
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
0.34m/0.11m
-2.1
-4.0
1.90 - 2.39
38
301
Tenaga Nasional
Perbadanan Kemajuan Negeri
Perak
22.1
15.7
Golden Initiative SB
13.6
Share Performance (%)


Within. Coming at only 65% of full-year earnings estimates, IntHJUD[¶V
9M14 core earnings of MYR25.5m (QoQ: +11%, YoY: -17%, YTD:
-15.2%) came within our forecasts but below consensus. This is because
we expect volume to pick up coming into 4Q14 to make up the 9M14
shortfall. Higher-than-expected depreciation was also incurred in 3Q14,
likely from the recent completion of its newly-installed unloaders.
Outlook. Volume handled has started to pick up at the Lekir Bulk
Terminal, ie up 20.6% QoQ and 12.7% YoY, and is expected to see a
further boost as the M4 power plant commences in Mar 2015. We expect
throughputs to grow by 44% in FY15.
Forecasts. On the higher-than-expected depreciation incurred for 9M14,
we have adjusted upwards our deprecation forecasts. But we have also
raised our throughput handled slightly, as we expect 4Q14 to see a
stronger pick-up. This impact ought to offset the upward adjustments on
depreciation. All in, there is only a marginal change on our earnings
estimates.
Developments. Negotiations with potential new customers remain
ongoing. As it is, Integrax has only one customer, Tenaga Nasional (TNB
MK, BUY, TP: MYR15.50). We have only factored in the national utility
firm as the only customer in our estimates. Any additional customers
would be a boost to earnings.
Maintain NEUTRAL. We maintain our NEUTRAL call with our DCFderived TP unchanged at MYR2.28, based on a cost of equity of 10.5%
on its projected free cash flow to equity. Our TP gives an implied FY15F
P/E of 12x.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
91
93
96
138
144
41.7
41.2
39.0
56.8
59.9
41.2
39.0
56.8
59.9
(1.1)
(5.4)
45.7
5.4
0.14
0.13
0.19
0.20
0.03
0.05
0.04
0.06
0.06
17.1
17.3
18.3
12.5
11.9
P/B (x)
1.21
1.15
1.10
1.04
0.98
P/CF (x)
14.3
18.2
17.6
11.8
11.6
1.3
1.9
1.8
2.6
2.7
10.4
10.3
8.9
5.3
4.7
7.2
6.8
6.2
8.5
8.5
YTD
1m
3m
6m
12m
Total turnover (MYRm)
Absolute
14.5
9.7
5.3
7.7
15.0
Reported net profit (MYRm)
Relative
16.0
8.6
6.6
9.0
12.8
Recurring net profit (MYRm)
41.7
Recurring net profit growth (%)
(4.9)
Recurring EPS (MYR)
0.14
DPS (MYR)
Recurring P/E (x)
Shariah compliant
Ahmad Maghfur Usman 603 9207 7654
[email protected]


2

.
2
0
.
2




Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
Dec-16F
net cash net cash net cash net cash net cash
(16.3)
(16.0)
(11.5)
Source: Company data, RHB
See important disclosures at the end of this report
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17
Results Review, 27 November 2014
OldTown (OTB MK)
Buy (Maintained)
Consumer Cyclical - Retail
Market Cap: USD219m
Target Price:
Price:
MYR2.00
MYR1.65
Macro
Risks
FMCG Arm The Saving Grace
Growth
Value
OldTown (OTB MK)
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.30
114
2.20
110
2.10
105
2.00
101
1.90
97
1.80
92
1.70
88
1.60
83
1.504
4
3
3
2
2
1
1
79
0
0
.
2
0
0
OldTown’s 1HFY15 earnings of MYR23m (-2.6% YoY) were within our .
0
full-year net profit forecast. Maintain BUY with a revised TP of MYR2.00 0
(FY16 P/E of 16x, a 21.2% upside) after we trim our FY16 earnings 0
forecast. Its FMCG arm was the saving grace for the quarter under
review, with PBT up 36.1% QoQ, mitigating the 34.2% QoQ PBT decline
at the F&B division.

Oct-14
Aug-14
Jun-14
Apr-14
Jan-14

Nov-13
Vol m
Price Close
Source: Bloomberg

Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
OldTown International SB
Franklin Resources Inc
Mawer Investment
Management Ltd
1.14m/0.35m
33.9
21.2
1.64 - 2.26
48
445
43.6
6.4
7.5
Share Performance (%)


2

.
2
0
.
2





In line. 2OG7RZQ¶V+)< (Mar) earnings of MYR23m were within our
but below consensus estimates, reaching 46.7% and 42.9% of the
respective FY15 earnings forecasts. 1HFY15 earnings slipped 2.6% YoY
on the back of flattish sales from both its food and beverage (F&B) and
fast-moving consumer goods (FMCG) divisions as well as higher
operating costs. Although 2QFY15 revenue fell 6.3% QoQ, earnings slid
by a lower quantum of 3.8%, as higher earnings contributions from its
FMCG arm mitigated the decline in earnings contribution from its F&B
division. No dividend was declared for the quarter under review.
Counting on its FMCG arm. Although 2QFY15 sales from its F&B arm
GHFOLQHG E\ 4R4 WKH GLYLVLRQ¶V 3%7 FRQWUDFWHG 4R4 GXH WR
negative operating leverage from lower sales. Its FMCG arm was the
saving grace for the quarter under review with segment PBT up 36.1%
QoQ despite a 5.3% drop in sales, driven by lower selling and
distribution expenses incurred vs the preceding quarter.
Forecasts. As the results were in line, we make no changes to our FY15
earnings forecast. In view of intensified competition among the F&B
operators as well as in the FMCG market, we trim our FY16 earnings
forecast by 6.3% after updating our sales and margin assumptions. We
also take the opportunity to introduce our FY17 projection. Key risks to
our recommendation are: i) weaker-than-expected consumer sentiment,
ii) a change in consumer preference, and iii) rising raw material prices.
Maintain BUY with a revised TP of MYR2.00. We trim our TP to
MYR2.00 (from MYR2.15) by pegging its revised FY16 EPS to an
unchanged P/E of 16x. However, we are positive that OldTown will be
able to reap the fruits of its efforts in regional distribution network
expansion next year. The stock is currently trading at an undemanding
FY16 P/E of 13.1x relative to its peer target valuations of 19-22x.
Mar-13
Mar-14
Mar-15F
Mar-16F
338
382
417
455
496
Reported net profit (MYRm)
44.0
49.1
49.2
56.1
62.5
Recurring net profit (MYRm)
44.4
48.9
49.2
56.1
62.5
Recurring net profit growth (%)
38.2
(11.9)
0.5
14.0
11.4
Recurring EPS (MYR)
0.13
0.12
0.11
0.13
0.14
DPS (MYR)
0.07
0.06
0.06
0.07
0.08
Fong Kah Yan +603 9207 7668
Recurring P/E (x)
12.9
13.8
15.1
13.1
11.8
[email protected]
P/B (x)
1.96
2.26
2.13
1.99
1.85
P/CF (x)
10.0
10.0
11.2
8.8
8.5
4.1
3.6
3.7
4.2
4.7
5.60
6.85
7.17
6.13
5.31
21.1
15.4
14.6
15.7
16.3
YTD
1m
3m
6m
12m
Absolute
(20.7)
(3.5)
(18.3)
(22.9)
(15.8)
Relative
(18.9)
(4.3)
(16.8)
(21.3)
(17.8)
Shariah compliant
Forecasts and Valuations
Total turnover (MYRm)
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
Mar-17F
net cash net cash net cash net cash net cash
(8.0)
(4.6)
0.2
Source: Company data, RHB
See important disclosures at the end of this report
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18
Results Review, 27 November 2014
OCK Group (OCK MK)
Buy (Maintained)
Communications - Telecommunications Infrastructure
Market Cap: USD151m
Target Price:
Price:
MYR1.06
MYR0.96
Macro
Risks
Moving Up The Ranks
Growth
Value
OCK Group (OCK MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
1.10
1.00
184
0.90
167
0.80
150
0.70
132
0.60
115
0.50
98
0.40
25
81
20


Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
5
Nov-13
Vol m
10

Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Aliran Armada SB
Lembaga Tabung Angkatan
Tentera
1.25m/0.38m
10.4
10.4
0.50 - 1.05
42
528
41.0
14.5
Low Hock Keong
2.1
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
80.1
(1.3)
0.7
3.6
76.8
Relative
81.6
(2.4)
2.0
4.9
74.6


Broadly within expectations2&.*URXS¶V2&.0FRUHHDUQLQJV
of MYR9.1m (+8.8% YoY) were expectedly short of our full-year forecast
as the acquisition of PT Mulia Telecommunication (PMT) was only
reflected in 4Q14. While 3Q14 revenue grew a commendable 10% QoQ,
EBITDA fell 7% from higher staff cost for managed services works
locally.
Awaiting the USP award. Despite the close of the tender exercise in
2Q14, the Malaysian Communications and Multimedia Commission
(MCMC) has yet to award the first phase of the Timeline 3 (T3) Universal
Service Provisioning (USP) contract for the construction of 1,000 telco
sites in rural areas. We expect OCK to clinch a portion of the USP
contract, being a front-runner for the project and its good execution track
record in tower construction.
LTE contract. We gather from management that it recently bagged a
sizeable frame contract from a local telco for the installation of 1,000 LTE
sites, commencing in 1Q15. The contract is expected to drive the strong
FY14-16 revenue CAGR of 43% anticipated from telco network services.
Forecast. Our earnings forecast remains unchanged. We recently
downgrade FY14 earnings forecast by 28.4% to reflect: i) the delay in the
863 SURMHFW DQG LL WKHFRQVROLGDWLRQ RI 307¶V HDUQLQJV LQ 4 from
the previously assumed 3Q13). Key downside risks to earnings are: i)
continued delays in the award of the USP project, and ii) weaker-thanexpected margins.
Maintain BUY. We like OCK for its strong earnings growth prospects,
the focus on growing its recurring revenue base, and its exposure to less
mature but high-growth emerging markets. Our TP is unchanged at
MYR1.06, the TP prior to the MYR1.59 ex-bonus, which is pegged to
18.5x FY15F EPS. This still offers a more than 10% upside from the
current level.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
139
152
180
312
338
Reported net profit (MYRm)
13.1
13.6
15.0
30.2
34.4
Recurring net profit (MYRm)
13.1
13.6
15.0
30.2
34.4
Recurring net profit growth (%)
54.3
3.3
10.2
101.9
14.0
Recurring EPS (MYR)
0.02
0.03
0.03
0.06
0.07
Recurring P/E (x)
38.6
37.3
33.9
16.8
14.7
P/B (x)
9.08
6.36
2.89
2.48
2.12
35.0
64.0
Total turnover (MYRm)
Shariah compliant
Malaysia Research +603 9207 7688
[email protected]
Dec-16F
Jeffrey Tan +603 9207 7633
P/CF (x)
[email protected]
EV/EBITDA (x)
26.2
23.7
17.1
10.5
9.0
Return on average equity (%)
35.3
20.0
11.7
15.9
15.5
Net debt to equity (%)
54.9
52.3
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
1
0
.
3
0
0
.
3
0
0
OCK’s results were broadly in line. Maintain BUY and a MYR1.06 TP (a .
0
10.4% upside). 9M14 core profit accounted for only 61% of our full-year 0
forecast but we expect the shortfall to be made up for in 4Q14 from 0
PMT’s maiden contribution and higher capex spending by telcos. We
like OCK for: i) its strong earnings prospects, ii) the focus on growing
its recurring revenue base and iii) its emerging market exposure.
15
Source: Bloomberg




Source: Company data, RHB
na
net cash
0.0
na
net cash
0.0
Powered by EFATM Platform
18.7
net cash
0.0
19
Results Review, 27 November 2014
UEM Sunrise (UEMS MK)
Trading Buy (Maintained)
Property- Real Estate
Market Cap: USD2,436m
Target Price:
Price:
MYR2.16
MYR1.80
Macro
Risks
Melbourne Project To Raise Sales In 4Q
Growth
Value
UEM Sunrise (UEMS MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.50
105
2.40
102
2.30
98
2.20
95
2.10
91
2.00
88
1.90
84
1.80
81
1.70
77
1.60
74
1.50
14
70


10
8
4
Sep-14
Jul-14
May-14
Mar-14
Jan-14
2
Nov-13
Vol m
6
Source: Bloomberg
3.83m/1.19m
21.1
20.0
1.65 - 2.41
30
4,537
66.1
5.5
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(23.7)
(2.2)
(7.2)
(19.3)
(21.7)
Relative
(21.9)
(3.0)
(5.7)
(17.7)
(23.7)


Below expectations. 8(0 6XQULVH¶V 8(0S) 3Q14 results missed our
and market expectations again. The YoY decline in earnings was mainly
attributed to the lack of developed land sales in 9M14. Finance cost
during the quarter was also higher due to the uncapitalised sukuk
interest.
3Q sales still sluggish. New property sales achieved MYR202m in 3Q,
down from MYR316m in 2Q, mainly contributed by Residensi 22 and
Arcoris. Although 9M total was only MYR641m, we believe the company
will be able to hit its MYR2bn sales target. The Aurora Melbourne
Central project (GDV: MYR2.2bn) was very well received with 95%
booking out of the 941 units launched. This should rake in close to
MYR1.5bn sales in 4Q14-1Q15, as the signing of sales and purchase
agreements are now taking place. The remaining portion that has not
been launched, comprising some retail and a block of serviced
apartment, is planned for en bloc sale. Management is currently
negotiating with interested parties.
Forecasts. We maintain our earnings forecasts. We think numbers will
likely come in stronger in 4Q, potentially making up half of full-year
earnings, as management expects the land sales to KL Kepong (KLK
MK, NEUTRAL, TP:MYR20.70), and Fastrack Iskandar SB (for
Motorsport City land) to be completed in December, and hence net gain
of about MYR250m can be recognised in 4Q. Meanwhile, unbilled sales
stayed resilient at MYR4bn in 3Q14 (vs MYR4.22bn in 2Q14).
Maintain TRADING BUY. As we expect the operating environment to be
more challenging next year with the kicking in of GST in 2Q15, we lower
our TP to MYR2.16 (from MYR2.52) with a larger 40% (from 30%)
discount to RNAV. However, we will not discount the possibilities that
over the medium term, the State Government may look to loosen up
some cooling measures to help revive the sentiment on the Iskandar
housing market. We thus retain our TRADING BUY call.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
1,940
2,425
2,527
2,677
2,112
Reported net profit (MYRm)
448
579
551
552
480
Recurring net profit (MYRm)
448
579
551
552
480
Recurring net profit growth (%)
48.6
29.2
(4.8)
0.2
(13.0)
Recurring EPS (MYR)
0.11
0.14
0.13
0.13
0.11
DPS (MYR)
0.03
0.04
0.04
0.05
0.04
Recurring P/E (x)
16.3
13.0
14.1
14.1
16.2
P/B (x)
1.38
1.29
1.21
1.14
1.08
Dividend Yield (%)
1.7
2.2
2.2
2.8
2.2
Return on average equity (%)
8.8
10.2
8.8
8.3
6.9
Return on average assets (%)
5.3
6.1
5.5
5.3
4.5
15.8
8.5
13.6
12.5
5.0
10.2
21.9
(10.9)
Total turnover (MYRm)
Shariah compliant
Loong Kok Wen, CFA +603 9207 7614
[email protected]
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


3

.
3
0
.
2
0
0
.
2
0
0
UEMS’ 3Q14 results came in below expectations. Maintain TRADING .
0
BUY with a lower TP of MYR2.16 from MYR2.52 (20% upside). Although 0
9M new sales only amounted to MYR641m, the Aurora project in 0
Melbourne will likely be able to help the company hit its MYR2bn sales
target for FY14. Also, management expects some land sales to be
concluded in December. We hence maintain our earnings forecasts.
12
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Khazanah Nasional Bhd
EPF




Source: Company data, RHB
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20
Results Review, 27 November 2014
Tan Chong (TCM MK)
Sell (Maintained)
Consumer Cyclical - Auto & Autoparts
Market Cap: USD798m
Target Price:
Price:
MYR3.55
MYR4.10
Macro
Risks
Another Washout Quarter
Growth
Value
Tan Chong Motor (TCM MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
6.80
106
6.30
98
5.80
89
5.30
81
4.80
73
4.30
64
3.803
56
0
0
.
1
0
0
Tan Chong’s (TCM) 3Q14 earnings were decimated by another NVL- .
0
related inventory provision. Maintain SELL with a lower MYR3.55 TP 0
(13% downside), after trimming our earnings estimates. 3Q14 earnings 0
were also dragged by the belated resolution of its Vietnam customs
dispute in August. The absence of compelling new Nissan models in
2015 means TCM may be hard pressed to maintain its market share.

2

2
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
1
Nov-13
Vol m
1
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Tan Chong Consolidated SB
Nissan Motor Co Ltd
Employees Provident Fund
Board
0.60m/0.19m
5.1
-13.4
4.10 - 6.55
46
653
40.4
5.7
7.8
Share Performance (%)
YTD
1m
3m
6m
12m
Absolute
(33.8)
(5.8)
(16.8)
(21.0)
(37.2)
Relative
(32.3)
(6.9)
(15.5)
(19.7)
(39.4)
Shariah compliant


2

.
2
0
.
1






3Q14 earnings decimated by inventory provision. 7&0¶V 4
earnings collapsed to just MYR1.9m, bringing 9M14 net profit to
MYR97.2m (-46.9% YoY). A weak quarter had been anticipated due to
the belated resolution of its Vietnam customs dispute in August, resulting
in additional time needed for its Danang plant to resume production and
for channel inventories to be restocked. Furthermore, losses were
compounded by another inventory provision of USD4.55m at its 74%owned Nissan Vietnam (NVL).
Domestic sales stabilise. Sales of Nissan vehicles stabilised during the
quarter with a modest 3.7% QoQ improvement, although cumulative
sales for 9M14 were still down 17.6% YoY. This was achieved after
margins were sacrificed to sustain market share and to trim inventory
levels. 4Q14 earnings should see sequential improvements from higher
Nissan sales volume helped by the recently-launched complete knockdown (CKD) Nissan Serena Hybrid, although margins will likely remain
under pressure in a competitive market place.
Risks and forecasts. The main risks are stronger sales and better
margins from a weaker JPY. We trim our recurring earnings estimates by
9.7% and 8.5% for 2014 and 2015 respectively after updating our
assumptions. We also introduce our 2016 earnings forecasts.
2015 likely to remain challenging. We expect another tough year for
TCM in 2015. The impending launch of the new X-Trail SUV will be a
boost, but Nissan may continue to lag behind in the market due to the
absence of a fresh and competitive volume seller in the B-segment. TCM
will also have to re-build the Indo-China business. With forward P/Es still
looking stretched, we maintain our SELL call with a lower TP of
MYR3.55 (from MYR3.90), derived from applying an unchanged 11.5x
target P/E to 2015 earnings.
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
4,088
5,198
4,528
5,195
5,552
Reported net profit (MYRm)
166
251
119
202
224
Recurring net profit (MYRm)
166
251
77
202
224
(23.3)
51.4
(69.3)
161.9
10.9
Total turnover (MYRm)
Recurring net profit growth (%)
Recurring EPS (MYR)
0.25
0.38
0.12
0.31
0.34
Alexander Chia +603 9207 7621
DPS (MYR)
0.09
0.16
0.07
0.13
0.14
[email protected]
Recurring P/E (x)
16.1
10.7
34.8
13.3
12.0
P/B (x)
1.36
0.99
0.97
0.93
0.89
5
9
11
3.8
1.8
3.1
3.4
10.6
8.0
12.3
9.4
8.9
8.7
10.7
4.3
7.2
7.6
39.7
42.2
43.9
45.2
47.6
(58.0)
(16.6)
(23.7)
P/CF (x)
199
Dividend Yield (%)
2.2
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report
Source: Company data, RHB
na
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21
Results Review, 27 November 2014
Alliance Financial Group (AFG MK)
Neutral (Maintained)
Financial Services - Banks
Market Cap: USD2,216m
Target Price:
Price:
MYR4.90
MYR4.80
Macro
Risks
As Good As It Gets, For Now
Growth
Value
Alliance Financial Group (AFG MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
5.40
106
5.20
102
5.00
99
4.80
95
4.60
92
4.40
88
4.20
85
4.00
14
81
12
0
0
.
2
0
0
AFG’s 2QFY15 (Mar) results were in line. Maintain NEUTRAL with a .
0
lower TP of MYR4.90 (from MYR4.95), implying a 2% upside. Sequential 0
underlying trends contained positives such as NIM expansion, stronger 0
fee income and improvement in asset quality. That said, quarterly
profits for FY15 have likely peaked and we expect a softer 2HFY15 due
to the repricing of deposits following July’s OPR hike.


10
8
6
Oct-14
Aug-14
Jun-14
Jan-14
Apr-14
2
Nov-13
Vol m
4

Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
7.29m/2.24m
7.3
2.1
4.18 - 5.16
56
1,548
Vertical Theme
EPF
29.1
15.4
YTD



Share Performance (%)
1m
3m
6m
12m
Absolute
0.8
0.0
(2.8)
2.1
(2.4)
Relative
2.3
(1.1)
(1.5)
3.4
(4.6)
2QFY15 results in line. Alliance Financial Group¶V (AFG) 2QFY15 net
profit of MYR180m (+37-38% YoY and QoQ) brought 1HFY15 net profit
to MYR311m (+16% YoY), ie 52- RI RXU DQG FRQVHQVXV¶ IXOO-year
estimates. We consider the results to be within expectations as 2Q net
profit was OLIWHGE\1,0H[SDQVLRQIURP-XO\¶V235KLNHLPSDFWWRWDSHU
off ahead), a one-off MYR22m gain from land sale and loan impairment
writebacks. AFG declared an interim net DPS of 9 sen.
Results highlights. The positives are: i) above-industry loans growth, ii)
net interest margin (NIM) expanded by an estimated 12bps QoQ (1bp
YoY) with average asset yield up 17bps QoQ (+11bps YoY) following the
OPR hike, iii) non-interest income (ex-disposal gain) rose 12% QoQ/33%
YoY on the back of stronger fee income, and iv) more loan impairment
writebacks due to higher recoveries. On the flipside, overheads rose 7%
QoQ/11% YoY with staff costs exerting upward pressure.
Loan and deposit growth. Gross loans expanded 3.8% QoQ/14.9%
YoY while annualised growth of 14% was ahead of the 10-11% target.
Loan growth was driven by residential (+15% YoY) and commercial
(+37% YoY) mortgages, as well as SME (+24% YoY) loans. Customer
deposits rose 3% QoQ/11% YoY (8% annualised) as part of the NIM and
balance sheet management efforts, while current and savings account
(CASA) deposits rose 4% YoY (15% annualised). Thus, loan-to-deposit
(LDR) ratio climbed 80bps QoQ to 83.7% while the CASA ratio rose
50bps QoQ to 35.2%.
Asset quality. Absolute gross impaired loans fell 9% QoQ (-21% YoY)
due to higher writeoffs during the quarter and a lower impaired loan
formation rate of 83bps (1QFY15: 92bps).
Capital. Group common equity tier-1 (CET-1) and double leverage ratios
were 10.1% and 98.2% respectively as at end-Sep.
Forecasts and investment case. FY15-16 net profit projections
trimmed by 3-5% on the back of lower non-interest income expectations.
GGM-derived TP tweaked down to MYR4.90 (from MYR4.95) but our
NEUTRAL call is unchanged.
Forecasts and Valuations
Shariah compliant
David Chong, CFA +603 9207 7618
[email protected]
Mar-13
Mar-14
Mar-15F
Mar-16F
Mar-17F
Net interest income (MYRm)
973
990
1,046
1,110
1,166
Reported net profit (MYRm)
538
564
576
611
675
Net profit growth (%)
7.0
4.7
2.2
6.2
10.4
Recurring net profit (MYRm)
538
564
576
611
675
Recurring EPS (MYR)
0.35
0.37
0.38
0.40
0.45
DPS (MYR)
0.17
0.30
0.23
0.24
0.24
Recurring P/E (x)
13.6
12.9
12.6
11.9
10.8
P/B (x)
1.84
1.78
1.76
1.66
1.56
3.5
6.1
4.7
4.9
5.0
Return on average equity (%)
13.8
13.8
13.7
14.0
14.6
Return on average assets (%)
1.3
1.2
Dividend Yield (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


2

.
2
0
.
2




Source: Company data, RHB
1.2
1.1
1.2
(2.9)
(6.6)
(5.4)
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22
Results Review, 27 November 2014
Ann Joo (AJR MK)
Trading Buy (from Sell)
Basic Materials - Metals
Market Cap: USD172m
Target Price:
Price:
MYR1.37
MYR1.15
Macro
Risks
Blast Furnace Investment Finally Paying Off?
Growth
Value
Ann Joo (AJR MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
1.50
123
1.40
116
1.30
108
1.20
101
1.10
93
1.00
86
0.90
4
78

3
2

Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
Nov-13
Vol m
2
1
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Ann Joo Corp SB
0.22m/0.07m
11.3
19.0
1.03 - 1.47
25
501
66.5
Share Performance (%)

Above expectations. ([FOXGLQJ DQ XQUHDOLVHG IRUH[ JDLQ $QQ -RR¶V
9M14 core net profit of MYR30.1m was above our and street estimates.
Although local steel mills continue to compete with intensified dumping of
steel bars and wire rods from China, the company managed to raise its
sales tonnage, which resulted in the 22.0% YoY rise of its YTD revenue.
The drop in iron ore prices to around USD80 a tonne and lower coke
prices in 3Q also translated into cheaper hot metal production cost.
Coupled with its trading division delivering stable profit and its blast
furnace (BF) resuming a normal operation after an abnormal breakdown
in 2Q, all these factors have helped to enhance its EBIT margin in 3Q14
to 6.9% vs 1.4% in 2Q14.
BF cost advantage is here to stay? Post the breakdown in 2Q, Ann
-RR¶V %) KDV UHDFKHG WKH RSWLPXP HIILFLHQF\ HDUOLHU WKDQ RXU LQLWLDO
H[SHFWDWLRQ$QQ-RR¶V%)PDy enjoy better cost advantage over electric
arc furnace (EAF) operation, at least for the short to medium term with
the recent plunge of iron ore prices to just under USD70 a tonne,
together with depressed coke prices, in our opinion. Apart from that, we
expect the implementation of various infrastructure and PRIMA housing
projects by the Government to help sustain the demand for building
materials, including steel.
Upgrade to TRADING BUY. With better-than-expected results and the
BF advantage in terms of production costing, we decide to revisit our
ILQDQFLDO PRGHO :H LQFUHDVH $QQ -RR¶V )< HVWLPDWHV E\
75.7%/37.6% for FY14/FY15 respectively and introduce our FY16
projection. That said, we upgrade the company only to TRADING BUY
(from Sell) as we expect stiff competition from imported steel to still
persist until the Government takes the appropriate action to curb those
dumping activities. Meanwhile, our TP is raised to MYR1.37 (from
MYR1.07) on the back of higher earnings and a higher 0.62x FY15F
P/BV, or -0.5SD from -6'RIWKHVWRFN¶VKLVWRULFDOWUDGLQJUDQJH
YTD
1m
3m
6m
12m
Absolute
9.5
1.8
(13.5)
0.0
(4.2)
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Relative
11.0
0.7
(12.2)
1.3
(6.4)
Total turnover (MYRm)
2,080
2,118
2,300
2,392
2,446
Reported net profit (MYRm)
(19.5)
12.3
44.4
60.2
70.3
Recurring net profit (MYRm)
(22.3)
23.2
44.4
60.2
70.3
91.3
35.6
16.8
0.04
0.08
0.12
0.13
25.9
13.5
10.0
8.5
0.57
0.55
0.52
0.49
3.96
Shariah compliant
Recurring net profit growth (%)
Ng Sem Guan, CFA +603 9207 7678
[email protected]
Recurring EPS (MYR)
Recurring P/E (x)
P/B (x)
P/CF (x)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
(129.0)
(0.04)
na
0.58
na
na
1.54
5.00
977
21
na
14
12
11
(1.8)
1.2
4.1
5.4
5.9
154.9
168.7
133.4
122.8
109.8
21.4
10.8
19.1
Source: Company data, RHB
See important disclosures at the end of this report


2

.
2
0
.
3
0
0
.
3
0
0
Ann Joo’s 9M14 core net profit of MYR30.1m was above our/street .
0
estimates, thanks to cheaper hot metal production cost via BF route 0
following declining iron ore and coke prices in 3Q. Ann Joo is upgraded 0
to TRADING BUY (from Sell), with its TP lifted to MYR1.37 (from
MYR1.07) (19% upside). As we expect both raw material prices to stay
low for the medium term, we raise our FY14/15 earnings estimates.
3
1




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23
Results Review, 26 November 2014
Time dotCom (TDC MK)
Neutral (Maintained)
Communications - Telecommunications
Market Cap: USD899m
Target Price:
Price:
MYR5.20
MYR5.25
Macro
Risks
Perfect Timing
Growth
Value
Time dotCom (TDC MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
5.70
143
5.20
131
4.70
119
4.20
107
3.70
95
3.207
83

5
4
3

Oct-14
Aug-14
Jun-14
Mar-14
Jan-14
1
Nov-13
Vol m
2
Source: Bloomberg
1.90m/0.58m
-25.9
-1.0
3.46 - 5.25
41
574
26.4
15.3
10.9
Share Performance (%)


Results in line. 7LPHGRW&RP¶V7LPH 9M14 core PBT of MYR101.5m
(+15.5% YoY), excluding dividend income from DiGi (DIGI MK, BUY, TP:
MYR6.60) and a one-off reversal of a MYR11.0m provision made
pursuant to the settlement of a dispute with a supplier, came in line at
75% of our/consensus full-year estimates respectively. 9M revenue rose
9.8% YoY on the back of higher global bandwidth sales as well as higher
revenue from data (+12.7% YoY) and data centre business (+12.8%
YoY). Nonetheless, we note that revenue declined 3% sequentially due
to the lumpy recognition of global bandwidth sales (2Q14: MYR21m vs
3Q14: MYR13.6m). 3Q14 EBITDA margin improved to 42.3% (2Q14:
37.4%) due to the higher revenue and reversal. Excluding the reversal,
3Q14 normalised EBITDA would be 35.1%, slightly lower QoQ.
Expanding its presence. On 18 Nov, Time announced that it is
proposing to purchase a 3.1-acre land parcel in Dengkil, Sepang. Total
consideration for the land is MYR15.0m, which will be funded internally.
The land will provide Time with the ability to build a new data centre.
Given its proximity to Cyberjaya, we are positive on the prospects of the
new data centre. However, we believe that it will be some time before
the new data centre is operational, and as such it is unlikely to have an
impact on our present earnings forecasts.
Forecasts. We make no changes to our FY14-15 earnings forecasts,
pending a briefing later. However, we take this opportunity to introduce
our FY16 figures.
Maintain NEUTRAL. We maintain our DCF-derived TP of MYR5.20. We
still like Time as a direct play to strong demand for international
bandwidth. We see M&As as a potential re-rating catalyst that
management is still exploring, but there is a lack of clarity on when this
may materialise. This report marks transfer of coverage to Alia Arwina.
YTD
1m
3m
6m
12m
Absolute
47.9
7.1
10.3
18.0
35.3
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
Dec-16F
Relative
49.7
6.3
11.8
19.9
33.3
Total turnover (MYRm)
419
548
639
724
804
Reported net profit (MYRm)
194
717
373
420
459
Recurring net profit (MYRm)
69
107
121
131
162
Recurring net profit growth (%)
62.8
56.7
12.8
7.9
23.8
Recurring EPS (MYR)
0.13
0.19
0.21
0.23
0.28
DPS (MYR)
0.00
0.00
0.04
0.06
0.00
Recurring P/E (x)
41.2
27.1
24.8
23.0
18.6
P/B (x)
1.14
0.96
0.92
0.89
0.84
P/CF (x)
19.9
7.0
6.6
5.8
5.3
0.0
0.0
0.8
1.1
0.0
9.20
3.82
2.76
2.43
2.11
9.1
25.6
11.7
12.7
13.2
Shariah compliant
Alia Arwina +603 9207 7608
[email protected]
Jeffrey Tan +603 9207 7633
[email protected]
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report


1

.
2
0
.
2
0
0
.
3
0
0
Time’s 9M14 results were broadly in line as 9M revenue grew strongly .
0
on the back of higher global bandwidth sales and better contribution 0
from its data and data centre business. Maintain NEUTRAL and a DCF- 0
based TP of MYR5.20 (1% downside). Time announced its land
acquisition for a new data centre last week, in line with its future
expansion plans. We keep our earnings forecasts unchanged for now.
6
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Khazanah Nasional
Afzal Abdul Rahim
UEM Group




Source: Company data, RHB
net cash net cash net cash net cash net cash
0.7
(19.4)
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(10.9)
24
Results Review, 27 November 2014
Quill Capita Trust (QUIL MK)
Neutral (Maintained)
Property - REITS
Market Cap: USD138m
Target Price:
Price:
MYR1.25
MYR1.19
Macro
Risks
Awaiting Catalysts
Growth
Value
Quill Capita Trust (QUIL MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
1.25
106
1.20
102
1.15
99
1.10
95
1.05
92
1.00
88
0.95
85
0.906
81
0
0
.
1
0
0
QCT’s 9M14 results were in line with expectations. Maintain NEUTRAL .
0
and DDM-derived TP of MYR1.25 (5% upside). Although the acquisition 0
of Platinum Sentral has hit a slight bump due to delays in obtaining 0
some approvals, we believe the exercise will still likely be completed by
1Q15. Organic growth continues to be sluggish, in line with the industry
trend of a persistently soft office rental market.

In line. 4XLOO &DSLWD 7UXVW¶V 4&7 4 QHW SURILW of MYR8.9m was in
line at 72%/71% of our/consensus full-year forecasts. 9M earnings
growth continued to remain flattish due to the persistently soft office
rental market, while higher repair and maintenance costs squeezed net
property income margins slightly to 76.7% (9M13: 77.7%). No dividends
were announced in 3Q14, given its semi-annual distribution policy.
Renewals remained decent, as 13% of the 31% total NLA due for expiry
this year has been renewed. The remainder will likely be renewed in 4Q.
However, we note that more than 80% of its NLA is single-tenanted, thus
making QCT somewhat vulnerable to future vacancy risks. Its gearing
ratio remained at 36%.

Slight delay in Platinum Sentral’s (PS) acquisition. The acquisition of
PS from Malaysian Resources Corp (MRCB) (MRC MK, BUY, TP:
MYR2.05), which was initially targeted to be completed in 3Q14, is now
likely to be delayed into early 1Q15. This is mainly due to some delays in
obtaining approvals from the Securities Commission. Nonetheless, both
4&7DQG05&%¶VPDQDJHPHQWVVWLOOH[SHFWWKHGHDOWRJRWKURXJKZLWK
05&%OLNHO\WRHPHUJHDV4&7¶VODUJHVWXQLWKROGHUSRVW-acquisition.
5
4
3
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
1
Nov-13
Vol m
2
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
CapitaCommercial Trust
Quill Group
0.13m/0.04m
5.9
5.0
1.01 - 1.21
40
390
30.0
30.0
Share Performance (%)
YTD
1m
3m
6m
Absolute
0.8
0.8
0.8
4.4
0.8
Relative
2.3
(0.3)
2.1
5.7
(1.4)


1

.
2
0
.
1






Forecasts. We revise our FY14 earnings per unit (EPU) forecast by less
than 5%, as we now expect the earnings contribution from PS to only
start in 1Q15. We make no changes to our FY15 numbers for now, and
introduce our FY16 numbers.
Maintain NEUTRAL. We reiterate that QCT may face some underlying
risks over the short term. These include: i) the office space oversupply
situation, ii) high post-acquisition gearing, and iii) uncertainties arising
from changes in management. Hence, we maintain our NEUTRAL call
and DDM-based TP of MYR1.25 for now.
12m
Forecasts and Valuations
Dec-12
Dec-13
Dec-14F
Dec-15F
69
69
70
121
123
Net property income (MYRm)
54.2
53.2
54.9
94.8
96.8
Reported net profit (MYRm)
34.5
34.5
35.9
60.6
62.1
Total distributable income (MYRm)
34.5
34.5
35.9
60.6
62.1
DPS (MYR)
0.08
0.08
0.09
0.09
0.09
DPS growth (%)
1.0
0.0
1.5
0.3
2.6
Recurring P/E (x)
13.5
13.4
12.9
10.5
13.0
P/B (x)
Total turnover (MYRm)
Shariah compliant
Alia Arwina +603 9207 7608
[email protected]
0.88
0.87
0.58
1.01
1.01
Dividend Yield (%)
7.0
7.0
7.1
7.2
7.4
Return on average equity (%)
6.6
6.5
5.4
7.6
7.8
Return on average assets (%)
4.0
4.0
3.0
4.0
4.1
3.42
3.47
3.57
3.09
3.15
(3.2)
15.4
(17.1)
Interest coverage ratio (x)
Our vs consensus EPS (adjusted) (%)
See important disclosures at the end of this report
Dec-16F
Source: Company data, RHB
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25
Results Review, 27 November 2014
Prestariang (PRES MK)
Neutral (Maintained)
Technology - Technology
Market Cap: USD228m
Target Price:
Price:
MYR1.57
MYR1.58
Macro
Risks
Dragged Down By Slowing Contract Flows
Growth
Value
Prestariang (PRES MK)
Price Close
Relative to FTSE Bursa Malaysia KLCI Index (RHS)
2.50
2.30
176
2.10
161
1.90
147
1.70
133
1.50
119
1.30
104
1.10
12
90
0
0
.
1
0
Prestariang’s 9M14 net profit of MYR18.5m missed expectations, 0
.
making up only 64.5%/65.6% of our/consensus full-year estimates due 0
0
to continued weakness in contract flows. Maintain NEUTRAL with our 0
TP fine-tuned to MYR1.57 (16.0x CY15F P/E, 0.6% downside) following
our earnings revision. We expect the group to firm up its collaboration
with MARA over the near term to help reduce losses at its UniMy.

10
8

6
Oct-14
Aug-14
Jun-14
Apr-14
Jan-14
2
Nov-13
Vol m
4
Source: Bloomberg
Avg Turnover (MYR/USD)
Cons. Upside (%)
Upside (%)
52-wk Price low/high (MYR)
Free float (%)
Share outstanding (m)
Shareholders (%)
Dr Abu Hasan Ismail
KWAP
3.18m/0.97m
29.7
-0.6
1.27 - 2.36
61
484
30.1
8.8
Share Performance (%)


Results review. 9M14 revenue dived 25.3% YoY to MYR66.5m as
contribution from its training and software licensing segment sank 26.6%
YoY due to the deferment of renewal of its IC CITIZEN programme and
following the completion of Projek Komputer 1Malaysia. EBIT plunged
41.0% YoY to MYR18.6m as margin dipped 650bps to 29.8%. All in,
9M14 core earnings slipped 41.1% YoY to MYR18.5m, falling short of
expectations. 3Q14 numbers were generally weaker both QoQ and YoY.
That said, management declared a generous third interim DPS of 1.0
sen, which translates into a payout ratio of close to 100% for the quarter.
9M14 DPS totalled 3.7 sen at an implied payout ratio of 96.6%.
Other highlights. On a brighter note, management announced that it
has received a Letter of Intent from Majlis Amanah Rakyat (MARA) to
potentially acquire a 30% interest in Prestariang Education SB, which
owns University Malaysia of Computer Science & Engineering (UniMy).
We laud the potential partnership, which we deem crucial to boost its
enrollment numbers (estimated 80 students currently) in order to help the
university to return to the black by 2015. We note that UniMy incurred
losses of MYR5.0m for 9M14 and MYR1.6m for 3Q14.
Forecasts and risks. Taking into account the earnings disappointment,
we cut our FY14 EPS by 19.6%. We also revise down our FY15-16 EPS
by 0.2-1.5% as we update our model for housekeeping purposes. Our
forecasts are premised on the assumption that the group would soon
replenish its training and certification orderbook by 1Q15.
Maintain NEUTRAL. All in, we maintain our NEUTRAL stance with our
TP fine-tuned to MYR1.57 (from MYR1.60) based on a 16.0x CY15F
P/E. Although FY14 has thus far been disappointing, we believe the
near-term share price would likely be supported by improved sentiment
RYHUWKHILUPLQJXSRIWKHJURXS¶VSDUWQHUVKLS with MARA to operate its
UniMY. Over the medium term, we expect management to unveil a new
recurring earnings stream, making use of the MYR70m net proceeds
which the group raised from the private placement recently.
YTD
1m
3m
6m
12m
Forecasts and Valuations
Absolute
9.7
(6.0)
(25.1)
(14.6)
23.9
Total turnover (MYRm)
Relative
11.2
(7.1)
(23.8)
(13.3)
21.7
Shariah compliant
Kong Heng Siong +603 9207 7666
[email protected]


1

.
2
0
.
2




Dec-12
Dec-13
Dec-14F
Dec-15F
110
119
90
131
142
Reported net profit (MYRm)
37.3
42.1
23.1
47.6
48.7
Recurring net profit (MYRm)
37.3
42.1
23.1
47.6
48.7
Recurring net profit growth (%)
10.9
12.9
(45.1)
106.2
2.4
Recurring EPS (MYR)
0.08
0.10
0.05
0.10
0.10
DPS (MYR)
0.05
0.06
0.06
0.07
0.07
Recurring P/E (x)
18.7
16.5
33.1
16.1
15.7
P/B (x)
8.72
7.17
8.40
7.30
6.40
P/CF (x)
16.2
19.6
26.0
17.8
15.7
3.2
3.8
3.8
4.4
4.4
16.5
14.2
27.5
13.9
13.4
50.9
47.6
24.6
48.6
43.4
Dividend Yield (%)
EV/EBITDA (x)
Return on average equity (%)
Net debt to equity (%)
Our vs consensus EPS (adjusted) (%)
Dec-16F
net cash net cash net cash net cash net cash
(18.1)
(8.3)
(13.5)
Source: Company data, RHB
See important disclosures at the end of this report
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26
Results Review, 27 November 2014
Paramount Corp (PAR MK)
Property- Real Estate
Market Cap: USD191m
See important disclosures at the end of this report
Buy (Maintained)
Target Price:
Price:
MYR1.71
MYR1.52
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