Regional Daily Ideas Troika Top Stories
Transcription
Regional Daily Ideas Troika Top Stories
Regional Daily, 14 October 2014 5 Regional Daily Ideas Troika Top Stories Agile Property (3383 HK) Property - Real Estate BUY HKD3.95 TP: HKD4.80 Mkt Cap : USD2,127m Pg2 The government investigation on Agile’s chairman would affect its operations and investor confidence. After the price correction yesterday, we think the valuation is distressed but the bankruptcy risk is low. Maintain BUY and cut TP to HKD4.80. Analyst: John So (john.so@rhbgroup.com) Pg3 Real Estate & Construction Across Malaysia, Singapore & Thailand Other Key Stories Regional Weekly Spices Analyst: Leng Seng Choon CFA (sengchoon.leng@sg.oskgroup.com) Malaysia OldTown (OTB MK) Consumer Cyclical – Retail BUY MYR1.71 TP: MYR2.15 See important disclosures at the end of this report Pg4 Sowing The Seeds Of Long-Term Growth Analyst: Fong Kah Yan (fong.kah.yan@rhbgroup.com) Powered by EFATM Platform 1 Company Update, 14 October 2014 Agile Property (3383 HK) Buy (Maintained) Property - Real Estate Market Cap: USD2,127m Target Price: Price: HKD4.80 HKD3.95 Macro Risks Time Needed To Regain Investor Confidence Growth Value Agile Property Holdings (3383 HK) Price Close Relative to Hang Seng Index (RHS) 10.40 104 9.40 95 8.40 87 7.40 78 6.40 70 5.40 61 4.40 53 3.40 250 44 Aug-14 Jun-14 Dec-13 Feb-14 Apr-14 50 Oct-13 Vol m 100 Source: Bloomberg Avg Turnover (HKD/USD) Cons. Upside (%) Upside (%) 52-wk Price low/high (HKD) Free float (%) Share outstanding (m) Shareholders (%) 68.5m/7.13m 47.6 21.5 3.95 - 9.35 37 4,178 Chan family 63.0 Share Performance (%) YTD 1m 3m 6m 12m Absolute (52.5) (35.5) (29.9) (42.3) (57.7) Relative (53.5) (31.2) (31.2) (44.6) (59.1) Major shareholder to inject cash. Agile Property (Agile) said that a change in chairman would not result in a breach of any of its loan facilities. As at end-June, Agile had CNY13.9bn total cash, including CNY7.7bn in unrestricted cash vs CNY14.5bn in short-term borrowings. Its major shareholder, the Chan family, plans to inject cash to support the company. Note that a major loan is due in 4Q including a CNY2.9bn bridging facility and a CNY2.5bn trust loan and Agile is confident of being able to repay upon maturity. Contracted sales likely to recover in October. Agile announced September contracted sales of CNY2.05bn, a fall of 18% m-o-m and 40% y-o-y. However, its 9M14 contracted sales amounted to CNY28.6bn, a 15% y-o-y rise. Although a change in chairman would affect some business operations, we expect some sales recovery in 4Q14 on better market sentiment. Agile said that its October contracted sales reached CNY2bn in the first 10 days of the month and it sees improvements in the presales of large-sized units. Overall, we estimate FY14 contracted sales at CNY40bn, ie as flat as last year’s. We revise down our FY14/FY15 earnings estimates by 15%/23% respectively to reflect lower contracted sales estimates and higher interest cost. It will take time for investors to regain confidence. Agile should be tight in cash but we believe the bankruptcy risk is low. The incident is expected to hurt investor confidence and affect its normal business operations in the short term. As a result, the company will most probably continue to trade at a bigger valuation discount against peers. Our new TP of HKD4.80 (from HKD7.40), is based on a 65% discount (previously 50%) to its new end-FY14F ENAV of HKD13.80/share (previously HKD14.80/share), which implies a 2SD below 5-year mean. Maintain BUY. Forecasts and Valuations Dec-11 Dec-12 Dec-13 Total turnover (CNYm) 22,944 29,892 35,436 37,012 40,511 Reported net profit (CNYm) 4,105 5,000 4,827 3,865 3,422 Recurring net profit (CNYm) 3,364 4,635 3,843 3,561 3,422 Recurring net profit growth (%) (4.6) 37.8 (17.1) (7.3) (3.9) Recurring EPS (CNY) 0.97 1.34 1.11 1.02 0.98 John So +852 2103 5888 DPS (CNY) 0.28 0.31 0.38 0.19 0.15 john.so@rhbgroup.com Recurring P/E (x) 3.22 2.32 2.80 3.05 3.18 P/B (x) 0.50 0.42 0.37 0.34 0.31 9.0 9.9 12.1 6.2 4.7 20.3 21.1 17.6 12.6 10.2 Dividend Yield (%) Return on average equity (%) Return on average assets (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) Dec-14F Dec-15F 5.4 5.8 4.7 3.3 2.8 65.5 64.7 97.6 117.7 110.7 (19.2) (24.7) Source: Company data, RHB See important disclosures at the end of this report 3 . 3 0 . 2 0 0 . 3 0 0 The requirement by the Kunming City People’s Procuratorate for . 0 chairman Chan Zhou Lin to stay at a designated residence since 30 Sep 0 has unavoidably affected Agile’s operations. Yet, while we cut TP by 0 35% to HKD4.80 (from HKD7.40), based on a higher 65% discount to ENAV, we maintain our BUY call. After the price correction, we think the company will most probably continue to trade at a significant valuation discount against peers but the bankruptcy risk is low. 200 150 Powered by EFATM Platform 2 Regional Weekly, 13 October 2014 Weekly Spices Real Estate & Construction Across Malaysia, Singapore & Thailand Quality Houses is a large-cap Thai developer with expected high 2015 earnings growth Source: Bloomberg Gamuda will benefit from the large scale Malaysian infrastructure projects Source: Bloomberg Leng Seng Choon, CFA +65 6232 3890 sengchoon.leng@sg.oskgroup.com Hong Kong Research Indonesia Research Malaysia Research Singapore Research Thailand Research See important disclosures at the end of this report We like Thailand’s real estate sector and expect double-digit 2015 presales. The S-REITs space could see more pros from the MAS’ recent paper and the Malaysian Budget, announced last Friday, points to gains for the construction sector. Homebuyer sentiment in Thailand, which has improved since May, boosted q-o-q presales of the seven major listed developers by 58% in 2Q14 and 9% in 3Q14. Developers that launched new condominium (condo) projects in 3Q14 like Supalai (SPALI TB, NEUTRAL, TP: THB27.00), AP Thailand (AP TB, NEUTRAL, TP: THB8.00), Land & Houses (LH TB, BUY, TP: THB12.50) and Pruksa Real Estate (Pruksa) (PS TB, BUY, TP: THB43.00) recorded strong y-o-y presales growth. Companies with no new launches in 3Q14 like LPN Development (LPN) (LPN TB, BUY, TP: THB27.00) and Sansiri (SIRI TB, TRADING BUY, TP: THB2.34) booked presale declines. Quarterly new launches may peak in 4Q14 as LPN and Sansiri resume their launches valued at THB20bn-25bn in total. We think 2014 sectoral presales could contract by 10% y-o-y. Next year, we expect double-digit presales growth to resume. Sectoral 5-year presales CAGR (2009-2013) was at 20%. Top Buys are Quality Houses (QH TB, BUY, TP: THB5.50), Pruksa and LPN – the top three large-cap developers with the highest 2015F earnings growth. Ananda Development (ANAN TB, BUY, TP: THB3.70) is our small-cap Top Pick. Last Thursday, the Monetary Authority of Singapore (MAS) published a consultation paper to strengthen the S-REIT market. The key changes are: i) the increase in the development limit to 25% of the deposited property (from 10%), and ii) the increase in the aggregate leverage limit to 45% from 35% (single-tier limit without a credit rating requirement) as well as removing the option to leverage up to 60% by obtaining a credit rating. We think there are more pros than cons to the proposed changes. This would incentivise REITs with ageing properties to carry out redevelopment works of their own without assistance from their sponsors. Examples include: i) CapitaCommercial Trust (CCT SP, BUY TP: SGD1.83)’s Golden Shoe Car Park, and ii) CapitaMall Trust (CT SP, BUY TP: SGD2.30)’s Funan Digital Mall and Plaza Singapura. Entities contemplating listing or were listed as business trusts may now find the REIT structure more favourable. However, higher development and gearing limits imply increased risk, and some REITs may become more like developers. This, in turn, may turn away some "safe haven" investors such as insurance and pension funds. Malaysia’s 2015 Budget was well balanced, combining commitments for greater fiscal prudence but mindful of higher costs of living for the people. Important elements include the implementation of the goods and services tax (GST) in April 2015 and a commitment to a petroleum subsidy mechanism. The property and sin sectors were unscathed, while infrastructure projects were strongly featured. The budget mentioned seven large-scale infrastructure projects with a >MYR48bn value. Notably, these include MRT Line 2 and LRT Line 3 (to be implemented in 2015) and the MYR27bn PanBorneo Highway. While these projects will have long gestation periods, it reaffirms our expectation of a strong momentum of construction activity. Preferred sectors include construction, basic materials, technology and property. Some of our Top Picks include Gamuda (GAM MK, BUY, TP: MYR5.61), SapuraKencana Petroleum (SAKP MK, BUY, TP: MYR5.33), Malaysia Airports (MAHB MK, BUY, TP: MYR8.51), Unisem (UNI MK, BUY, TP: MYR2.16) and Press Metal (PRESS MK, BUY, TP: MYR 8.30). Powered by Enhanced Datasystems’ EFATM Platform 3 Company Update, 14 October 2014 OldTown (OTB MK) Buy (Maintained) Consumer Cyclical - Retail Market Cap: USD234m Target Price: Price: MYR2.15 MYR1.71 Macro Risks Sowing The Seeds Of Long-Term Growth Growth Value OldTown (OTB MK) Relative to FTSE Bursa Malaysia KLCI Index (RHS) 2.30 108 2.20 104 2.10 99 2.00 95 1.90 91 1.80 87 1.70 82 1.60 4 4 3 3 2 2 1 1 78 0 0 . 2 0 0 OldTown’s share price has corrected >20% from its high of MYR2.22 in . 0 the past three months. Although we expect growth to remain muted for 0 the remaining three quarters after its weak 1QFY15 performance, we 0 believe its growth momentum will gain pace thereafter. Maintain BUY with a revised TP of MYR2.15 (from MYR2.30), implying a 25.7% upside. The stock is currently trading at an undemanding FY16 P/E of 12.8x. Aug-14 Jun-14 Apr-14 Feb-14 Dec-13 Oct-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 Franklin Resources Mawer Investment Management 1.28m/0.40m 29.2 25.7 1.71 - 2.26 49 447 42.8 6.4 6.7 Recent share price retracement. OldTown’s share price has corrected by >20% from its high of MYR2.22 in the past three months. We believe the retracement was due to a combination of: i) weak 1QFY15 (Mar) results, ii) the weak performance of its food and beverage (F&B) arm, which reflects the current challenging operating environment, and ii) slower-than-expected growth in its key earnings catalyst, ie its fastmoving consumer goods (FMCG) arm. Counting on its FMCG arm. Moving forward, we expect growth from its F&B arm to remain soft amid stiff competition and consumers’ cautious discretionary spending. Its FMCG arm, on the other hand, should recover and underpin growth ahead. The weak performance of its FMCG arm in 1QFY15 was due to seasonal factors as well as higher-thanexpected selling and distribution spending. We note that sales have picked up in the subsequent quarters after the delay in promotions of its FMCG products in China in 1QFY15. Hence, we expect earnings from its FMCG arm to normalise in the second half. In the medium to long term, we expect earnings for its FMCG arm to grow by double digits, driven by: i) growth in local sales from improving consumer sentiment, and ii) growth in its export markets, particularly in Asean. Risks. Key risks include: 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 MYR2.15. We trim our TP to MYR2.15 (from MYR2.30), based on a revised FY16 P/E of 16x (from 18x) to reflect the challenging operating environment for its F&B division. However, we remain optimistic that its FMCG arm should start to reap the fruits from an expanding regional distribution network next year. The stock is currently trading at an undemanding FY16 P/E of 12.8x relative to its peer target valuations of 19-22x. Forecasts and Valuations Share Performance (%) YTD 1m 3m 6m 12m Absolute (17.8) (11.4) (21.2) (14.1) (16.8) Relative (14.7) (8.9) (17.2) (11.7) (18.1) Shariah compliant Fong Kah Yan +603 9207 7668 fong.kah.yan@rhbgroup.com 2 . 2 0 . 2 Mar-12 Mar-13 Mar-14 Mar-15F 299 337 382 417 484 Reported net profit (MYRm) 41.4 44.4 49.0 49.2 59.9 Recurring net profit (MYRm) 34.5 44.4 49.0 49.2 59.9 Recurring net profit growth (%) 23.2 28.8 10.2 0.5 21.7 Recurring EPS (MYR) 0.10 0.12 0.11 0.11 0.13 DPS (MYR) 0.06 0.07 0.06 0.06 0.07 Recurring P/E (x) 16.9 14.0 15.8 15.5 12.8 P/B (x) 2.46 2.04 2.36 2.24 2.06 P/CF (x) 12.7 11.0 11.6 9.6 8.7 3.7 4.2 3.5 3.2 3.9 7.72 5.86 8.27 7.19 5.57 24.8 17.0 15.4 14.7 16.8 Total turnover (MYRm) Dividend Yield (%) EV/EBITDA (x) Return on average equity (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) Mar-16F net cash net cash net cash net cash net cash (7.5) 1.5 Source: Company data, RHB See important disclosures at the end of this report Powered by EFATM Platform 4 RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. 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