affin hwang 20200114 construction su · 14 february 2020 affin hwang investment bank bhd (14389-u)...
TRANSCRIPT
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 1 of 9
Focus on execution
The Malaysian government is drawing up an economic stimulus package
to counter the negative impact of the Covid-19 coronavirus outbreak on
the domestic economy. We believe government spending will likely focus
on helping the SME, manufacturing and tourism sectors affected by the
outbreak. The government will likely accelerate the implementation of
construction projects in 2H20 to support economic growth in view of
external headwinds. We remain OVERWEIGHT the Construction Sector.
Top BUYs are Gamuda, SunCon, AQRS and HSS.
Stimulus unlikely to focus on construction projects
The Ministry of Finance is getting feedback from various industries to
determine the impact of the novel Covid-19 coronavirus outbreak on the
domestic economy before initiating an economic stimulus package to boost
growth. We believe the package will likely focus on helping the SME,
manufacturing and tourism sectors that are most affected by the outbreak.
The RM7.3bn economic stimulus announced in May 2003 to mitigate the
adverse impact of the Severe Acute Respiratory Syndrome (SARS)
outbreak focused on supporting private consumption, assisting SMEs and
tourism-linked businesses. We believe there is limited scope to increase
construction spending given the government’s fiscal deficit constraint.
Infrastructure spending to accelerate
Nevertheless, the increase in development expenditure allocation by 4% yoy to
RM56bn in Budget 2020 and the revival of large-scale infrastructure projects
are sufficient to stimulate the construction sector. We expect government
development spending to accelerate in 2H20 instead of 1H20 as there have
been delays in the award of public-sector contracts. The award of East Coast
Rail Link (ECRL) works to Malaysian contractors has been delayed. We
believe the government will accelerate infrastructure spending in 2020 to
support economic growth, similar to prior years with economic stimulus
packages to mitigate downturns in 2001, 2003, 2008 and 2009.
Large-scale infrastructure projects to be revived
The Johor Bus Rapid Transit (BRT), Rail Transit System (RTS) and Pan
Borneo Highway Sabah projects will likely kick off this year. Other large-
scale projects such as the Klang Valley MRT Line 3 (MRT3), Penang
Transport Master Plan (PTMP) and KL-Singapore High Speed Rail (HSR)
could see news flow on potential revival in 2020.
Remain Overweight the Construction Sector
We believe the positive news flow on the resumption in government
infrastructure spending and stronger 4Q19 and 2020E sector core earnings
growth will support an upward re-rating of the Construction Sector. We
maintain our OVERWEIGHT call. Top BUYs are Gamuda, SunCon, AQRS
and HSS. Other sector BUYs are AME Elite Consortium, Pintaras Jaya and
Taliworks.
Construction peer comparison
Source: Bloomberg, Affin Hwang forecasts Note: Pricing as of close on 13 February 2020
Share
Pr
TP Mkt
Cap RNAV/
Sh Pr
discount
(RM) (RM) (RMbn) CY19E CY20E CY19E CY20E CY19E CY19E CY19E CY19E share to RNAV
GAMUDA GAM MK BUY 4.05 4.30 10.1 15.7 15.8 (8.3) (7.6) 12.6 1.3 8.4 3.0 4.34 7 0
IJM CORP IJM MK HOLD 2.29 2.20 8.3 23.3 21.7 (6.7) 7.4 11.9 0.8 3.2 2.4 2.75 17 0
MRCB MRC MK SELL 0.69 0.58 3.0 (82.6) 80.3 (175.3) (202.9) 113.7 0.6 (0.8) 2.5 0.97 29 40
WCT WCTHG MK HOLD 0.76 0.96 1.1 12.8 9.8 (17.7) 26.7 14.8 0.3 2.5 2.3 1.92 61 50
SUNWAY CONSTRUCTION SCGB MK BUY 2.00 2.25 2.6 19.8 15.9 (13.7) 25.0 11.1 4.1 20.5 3.5 2.50 20 10
AME ELITE AME MK BUY 1.93 2.28 0.8 15.6 12.9 53.4 20.8 9.6 1.4 9.2 1.2 3.24 40 30
GABUNGAN AQRS AQRS MK BUY 1.11 1.62 0.5 10.9 7.9 (31.8) 39.1 8.3 1.8 9.5 3.6 2.02 45 30
PINTARAS PINT MK BUY 2.96 4.04 0.5 10.3 8.7 84.5 18.0 4.9 1.5 14.6 6.8 NA NA NA
TALIWORKS TWK MK BUY 0.86 1.18 1.7 28.7 20.9 70.4 37.6 10.6 1.6 5.7 6.3 1.30 34 10
HSS ENGINEERING HSS MK BUY 0.82 1.18 0.4 101.2 17.8 (81.9) 467.7 22.4 1.9 1.8 0.0 NA NA NA
Average 29.1 20.2 17.9 (11.4) 12.8 13.2 1.5 5.1 3.1 2.4 32 21
Avg ex Gamuda, MRCB, IJM 7.6 17.8 13.5 (2.9) 31.6 11.7 1.8 6.5 3.4
Company Name Ticker Rating TP
Discount
to RNAV
Div Yield
(%)
Core EPS grow th (%) ROE
(%)
Core PE
(x) EV/EBITDA (x)
P/BV
(x)
Sector Update
Construction OVERWEIGHT (maintain) Absolute Performance (%)
1M 3M 12M AQRS (4.3) (11.2) 9.9 Gamuda 1.5 7.7 47.3 HSS Eng 1.2 (1.8) (18.5) IJM Corp 2.7 7.0 25.1 MRCB (6.8) (10.4) (5.5) Pintaras (4.5) (10.3) 28.7 SunCon 10.5 1.5 27.4 WCT (8.5) (15.6) (4.9) AME 3.8 9.0 N/A Taliworks 10.5 1.5 27.4 Relative Performance to KLCI – Gamuda, SunCon, AQRS, HSS (%)
Source: Affin Hwang, Bloomberg
Loong Chee Wei, CFA (603) 2146 7548
60.0
80.0
100.0
120.0
140.0
160.0
180.0
Ja
n 1
9
Ja
n 1
9
Fe
b 1
9
Fe
b 1
9
Ma
r 1
9
Ma
r 1
9
Ap
r 1
9
Ap
r 1
9
Ap
r 1
9
Ma
y 1
9
Ma
y 1
9
Ju
n 1
9
Ju
n 1
9
Ju
l 19
Ju
l 19
Au
g 1
9
Au
g 1
9
Se
p 1
9
Se
p 1
9
Oct
19
Oct
19
Oct
19
Nov 1
9
Nov 1
9
Dec 1
9
Dec 1
9
Ja
n 2
0
Ja
n 2
0
Fe
b 2
0
GAMUDA HSS AQRS SUNWAY CONSTRUCTION
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 2 of 9
Key focus charts Fig 1: Construction order book at end-3Q19
Source: Company, Affin Hwang estimates
Fig 2: Order book/revenue at end-3Q19
Source: Company, Affin Hwang estimates
Fig 3: Government gross development expenditure
Source: Ministry of Finance
Fig 4: Infrastructure works to be awarded in 2019 onwards Project
Estimated cost (RMbn)
Penang Transport Master Plan (PTMP) 32
Bandar Malaysia infrastructure 21
Klang Valley MRT Line 3 - Circle Line (MRT3) 21
KL-Singapore High Speed Rail - Fast Train 20
Pan Borneo Highway Sabah (PBH) 13
East Coast Rail Link subcontracts 8
Sarawak Water Grid Phase 1 8
Sarawak Coastal Highway 5
Sarawak Second Trunk Road 6
Labuan Bridge 4
Johor Bahru-Singapore Rapid Transit System 3
Others 10
Total 146 Source: Affin Hwang estimates, various media, eg, The Star and The Edge Financial Daily
Fig 5: Aggregate construction core net profit and yoy change
Source: Companies, Affin Hwang forecasts
Fig 6: KL Construction Index 12-month forward PER
Source: Bloomberg, Affin Hwang forecasts
0.4
0.5
1.8
5.1
5.4
5.6
9.2
22.3
0.0 5.0 10.0 15.0 20.0 25.0
AME
HSS
AQRS
IJM
WCT
Suncon
Gamuda
MRCB
(RMbn)
1.7
2.0
2.2
2.6
2.8
2.8
2.9
21.4
0.0 5.0 10.0 15.0 20.0 25.0
AME
Suncon
Gamuda
IJM
AQRS
HSS
WCT
MRCB
(x)
-100
-50
0
50
100
150
200
250
300
0.000
5.000
10.000
15.000
20.000
25.000
30.000
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
Gross Development Expenditure Gross DE growth (RHS)(RMbn) (%)
-15
-10
-5
0
5
10
15
20
25
30
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2012 2013 2014 2015 2016 2017 2018 2019E 2020E
(RM m) Core net profit (LHS) yoy growth (RHS) (%)
Mean PE, 13.3x
+1SD PE, 15.3x
-1SD PE, 11.3x
6
8
10
12
14
16
18
Ja
n-0
9M
ay-0
9S
ep
-09
Ja
n-1
0M
ay-1
0
Se
p-1
0Ja
n-1
1M
ay-1
1
Se
p-1
1Ja
n-1
2M
ay-1
2S
ep
-12
Ja
n-1
3M
ay-1
3
Se
p-1
3Ja
n-1
4M
ay-1
4
Se
p-1
4Ja
n-1
5M
ay-1
5
Se
p-1
5Ja
n-1
6M
ay-1
6S
ep
-16
Ja
n-1
7M
ay-1
7
Se
p-1
7Ja
n-1
8M
ay-1
8
Se
p-1
8Ja
n-1
9M
ay-1
9
Se
p-1
9Ja
n-2
0
(x)(x)(x)(x)
Latest PE. 13.9x
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 3 of 9
Stimulus focused on services sector in 2003
Economic stimulus packages in the past introduced measures to mitigate
economic downturns and uncertainties caused by major events such as the
global financial crisis (GFC), viral outbreaks and terrorist attacks. We believe
the current situation is more akin to the SARS outbreak in 2003 that adversely
impacted consumer and property-market sentiment, SMEs and tourism-linked
businesses. The government introduced measures to stimulate private
consumption, setting up relief funds to assist SMEs and tourism-linked
businesses, waived stamp duties and real property-gains tax for low and
medium-cost housing. We believe the upcoming economic stimulus could
introduce some of these measures and also provide some tax relief for the
manufacturing sector, which is adversely impacted by the reduced exports to
China due to the Covid-19 coronavirus outbreak and US-China trade war.
Fig 7: Key measures and value of economic stimulus package in 2003
Date RMbn Key Measures Reason
May 2003
7.3
RM1bn relief fund and tax breaks for tourism sector
To mitigate adverse impact
of SARS
Liberalisation of foreign investment rules and new funds to help traders
Cut in workers' contribution to Employees Provident Fund from 11% to 9%
Half-month bonus for civil servants
Hotels' monthly electricity bills cut by 5%
Road tax for taxis halved
Exemption of service tax for hotels and restaurants
RM400 special monthly bonus for doctors and RM200 for other medical staff until SARS epidemic is wiped out
Additional allocation to various funds and set up of micro credit schemes to enhance SMEs’ accessibility to financing
Real property-gains tax exemption
Waiver of stamp duties on S&P agreements, loan and transfer documents for houses costing RM180k and below.
Source: Affin Hwang, Ministry of Finance
Accelerating infrastructure spending
We do not expect a major increase in development expenditure in the
upcoming economic stimulus package due to the federal government’s deficit
constraint. There could be additional spending to upgrade or build new
healthcare and education facilities to mitigate the impact of viral outbreaks.
Nevertheless, the government has increased the development expenditure
allocation by 4% yoy to RM56bn in Budget 2020 and revived mega projects
such as the RM44bn ECRL and RM140bn Bandar Malaysia last year. We
believe the government will accelerate the implementation of the public-sector
projects in 2020 to support economic growth in view of external headwinds.
Development expenditure increased in prior years with economic stimulus
packages to mitigate downturns in 2001 (+26% yoy), 2003 (+9% yoy), 2008
(+6% yoy) and 2009 (+16% yoy).
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 4 of 9
Fig 8: Federal government balance as a percentage of GDP
Source: Bank Negara Malaysia
Ipoh-Padang Besar Double Tracking awarded during stimulus years Large-scale infrastructure projects also kicked off in the stimulus years such as
the Ipoh-Padang Besar Electrified Double Tracking (EDT) project. The project
was awarded to MMC Gamuda Joint Venture (JV) in 2003 amidst the
economic downturn concerns arising from the SARS outbreak. However, the
implementation of the EDT project was postponed in 2004 due to the
government’s austerity drive. Nevertheless, the implementation of the RM2bn
Stormwater Management and Road Tunnel (SMART) project started in 2003
on a public-private partnership model. The EDT project was revived and
awarded to MMC Gamuda JV at a contract value of RM12.5bn in 2008 to
pump-prime the economy during GFC.
Fig 9: Development expenditure and major projects during stimulus years
Source: Affin Hwang, Bank Negara Malaysia
More large-scale infrastructure projects to be revived in 2020 We expect the revival of more large-scale infrastructure projects in 2020 to
drive economic growth, higher productivity and spur private investment. We
believe the government will focus on improving the public transportation
networks in Penang, Klang Valley and Johor. We expect the PTMP, Johor
BRT and RTS projects to kick off by end-2020 or early-2021 as plans are
being drawn up for the implementation of these projects. HSS is involved in
the plans for the Bayan Lepas LRT under PTMP and was appointed as the
engineering design consultant for the Johor BRT project.
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 5 of 9
MRT3 and HSR projects could be revived
We believe the MRT3 Circle Line project will likely be revived at a lower cost of
RM21bn to integrate the public transportation network in Klang Valley. There
is a possibility that the HSR project will also be revived as the Malaysian
government has to make a decision by 31 May 2020 or face hefty penalties to
be paid to the Singapore government if the project is cancelled. The
implementation of the HSR could be deferred and implemented on a
staggered basis to reduce the financial burden of the Malaysian government.
Fig 10: Potential large-scale infrastructure projects to kick off in 2020-21 Project
Cost (RMbn)
Potential beneficiaries
Penang Transport Master Plan (PTMP)
32 Gamuda, IJM, HSS, SunCon
Bandar Malaysia infrastructure 21 Ekovest, WCT, SunCon, Econpile
Klang Valley MRT Line 3 - Circle Line (MRT3)
21 Gamuda, MMC, HSS, IJM, SunCon, WCT
KL-Singapore High Speed Rail - Fast Train
20 Gamuda, HSS, MRCB, YTL
Pan Borneo Highway Sabah (PBH) 13 Gamuda, AQRS-Suria Capital, WCT
East Coast Rail Link subcontracts 8 AQRS, IJM, MRCB, WCT, WZ Satu, HSS, Lafarge
Sarawak Water Grid Phase 1 8 KKB, HSL, PPB (Chemquest), Taliworks
Sarawak Coastal Highway 5 CMS, HSL, Naim, Gamuda, WCT, TRC, Advancecon
Sarawak Second Trunk Road 6 CMS, HSL, Naim, Gamuda, WCT, TRC, Advancecon
Labuan Bridge 4 WCT
Joho Bahru-Singapore Rapid Transit System
3 HSS, YTL, Gamuda, IJM
Johor BRT 3 HSS, Kimlun, SunCon
Papar Dam, Sabah 2 Vizione
Total 146 Source: Affin Hwang, various media sources
Higher construction work done in 2019 driven by rising civil works
Total value of construction works done in Malaysia was up 0.6% yoy to
RM146.4bn in 2019, mainly driven by civil engineering works (+8.3% yoy) that
offset the contraction in the residential (-2.3% yoy) and non-residential
property (-8.8% yoy) construction works due to the property market downturn.
As a result, civil engineering works contributed 45% of the total value of
work done in 2019 compared to 42% in 2018. Following the renegotiation
of the Klang Valley Light Rail Transit Line 3 (LRT3) project job scope and
contract value for some of the subcontractors, works resumed in 2H19 to
boost civil works done. Fig 11: Construction work done
Source: Malaysian Department of Statistics
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 6 of 9
ECRL implementation delayed
The award of ECRL contracts to Malaysian contractors has been delayed. We
gather that no tenders have been called yet after a pre-qualification exercise
was completed in 4Q19. We understand that the main contractor, China
Communication Construction Co. Ltd (CCCC), is trying to reduce construction
costs by dividing the packages by trade, eg, piling and earthworks, rather than
awarding entire civil work packages by section.
AQRS is negotiating for ECRL work packages
However, some contractors such as Gabungan AQRS are negotiating for civil
works packages directly from CCCC due to its established relationship and
existing construction presence in Pahang. Most of ECRL Section B (Dungun-
Mentakab stretch) will pass through the state and this section will be
implemented first. Section A (Kota Bahru-Dungun) and Section C (Mentakab-
Port Klang) are still in the planning and gathering public feedback stages. The
award of ECRL construction works to Malaysian contractors could be delayed
to 2H20 due to delays in calling for tenders.
Expect better 4Q19 construction company results
We expect better 4Q19 results (on both a qoq and yoy basis) for the
construction sector as works on major projects such as the LRT3 have
picked up and progress billing payments have resumed. As an indicator,
construction work done grew 1.3% yoy and 2.5% qoq to RM37bn in 4Q19,
compared to a 0.6% yoy contraction and slower 0.6% qoq growth in 3Q19.
In addition, construction real GDP growth grew 1.0% yoy in 4Q19,
following a contraction of 1.5% yoy in 3Q19. Sector core earnings growth
contracted by 39% yoy in 4Q18. Hence, providing a low base for strong
yoy growth in 4Q19. We believe better sales in 4Q19, before the Home
Ownership Campaign ended at year-end, should lift property earnings for
the companies with property divisions.
Fig 12: Quarterly core net profit growth
Source: Affin Hwang estimates, company
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 7 of 9
Fig 13: Quarterly construction work done
Source: Department of Statistics
Fig 14: GDP breakdown by economic activity (at constant 2015 prices)
1Q19 2Q19 3Q19 4Q19 1Q19 2Q19 3Q19 4Q19 1Q19 2Q19 3Q19 4Q19
%yoy %qoq % pts to GDP growth
GDP By Kind of Economic Activity
Agriculture, Forestry & Fishing (AF) 5.6 4.2 3.7 -5.7 -5.2 -1.6 15.9 -12.7 0.4 0.3 0.3 -0.4
Mining & Quarrying -2.1 2.9 -4.3 -2.5 -3.7 -0.4 -11.6 14.9 -0.2 0.2 -0.3 -0.2
Manufacturing (Mfg) 4.1 4.3 3.6 3.0 -4.6 4.4 1.2 2.3 0.9 1.0 0.8 0.7
Construction 0.3 0.5 -1.5 1.0 1.4 -3.6 5.5 -2.2 0.0 0.0 -0.1 0.0
Services 6.4 6.1 5.9 6.1 -4.6 2.4 4.3 4.1 3.6 3.5 3.3 3.5
GDP (2015 real prices) 4.5 4.9 4.4 3.6 -4.3 2.1 3.3 2.7 4.5 4.9 4.4 3.6
Source: Bank Negara Malaysia Sector earnings to rebound in 2020E
Nevertheless, sector core earnings may still contract 11% yoy in 2019E
due to weak 1H19 results. We expect sector earnings to rebound to a
growth of 13% yoy in 2020E, driven by higher progress billings for the
MRT3 and LRT3 projects and higher new contract awards. This ties in with
our economist’s expectation that construction real GDP growth will
accelerate to 3.0% yoy in 2020E from 0.1% yoy in 2019E.
Fig 15: GDP breakdown by economic activity (at constant 2015 prices)
2018 2019 2020F 2018 2019 2020F 2018 2019 2020F
%yoy % of GDP % contribution point to GDP growth
GDP By Kind of Economic Activity
Agriculture, Forestry and Fishing 0.1 1.8 2.0 7.3 7.1 7.0 0.0 0.1 0.1
Mining and Quarrying -2.6 -1.5 1.0 7.6 7.1 6.9 -0.2 -0.1 0.1
Manufacturing 5.0 3.8 4.2 22.4 22.3 22.2 1.1 0.8 0.9
Construction 4.2 0.1 3.0 4.9 4.7 4.6 0.2 0.0 0.1
Services 6.8 6.1 5.6 56.7 57.7 58.3 3.8 3.5 3.2
Import duties -11.5 -1.2 2.7 1.2 1.1 1.1 -0.2 0.0 0.0
GDP (2015 real prices) 4.7 4.3 4.5 100.0 100.0 100.0 4.7 4.3 4.5
Source: Affin Hwang estimates, Bank Negara Malaysia
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
1Q
18
3Q
18
1Q
19
3Q
19
Residential Non residential Civil engineering Trades(RMbn)
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 8 of 9
Stronger earnings growth for small-cap construction companies
Excluding the large-caps (Gamuda, IJM and MRCB), we expect sector
earnings to contract 3% yoy in 2019E and rebound by a stronger 32% yoy
in 2020E. This is mainly due to lower Gamuda earnings following the
disposal of its SPLASH water concession in 2019 and the agreed disposal
of its stakes in 4 toll highway concessions to the government. We believe
the small-cap construction companies under coverage should see stronger
earnings rebounds than the large-cap ones in 2020E.
Remain OVERWEIGHT on Construction Sector
We maintain our OVERWEIGHT call on the Construction Sector. Contract
awards were slow in 2019 due to the government review of major
infrastructure projects to reduce costs. This process is mostly completed
and works have resumed for some while others are in the process of being
re-tendered. We believe the government will focus of reviving
infrastructure projects that have not started construction work in 2020. We
expect the positive news flow on potential roll-out of new or revived
projects will sustain the positive re-rating of the construction sector. Our
top BUYs are Gamuda (large cap), SunCon (mid cap), AQRS and HSS
(small cap).
Fig 16: Construction sector peer comparisons
Source: Affin Hwang estimates, Bloomberg Note: prices as of close on 13 February 2020 Key risks
Key downside risks to our positive view on the sector are (1) delays in the
award of government projects; (2) major infrastructure projects are not
revived; and (3) earnings forecast risks due to profit margin squeeze or
slow replenishment of order books.
Share
Pr
TP Mkt
Cap RNAV/
Sh Pr
discount
(RM) (RM) (RMbn) CY19E CY20E CY19E CY20E CY19E CY19E CY19E CY19E share to RNAV
GAMUDA GAM MK BUY 4.05 4.30 10.1 15.7 15.8 (8.3) (7.6) 12.6 1.3 8.4 3.0 4.34 7 0
IJM CORP IJM MK HOLD 2.29 2.20 8.3 23.3 21.7 (6.7) 7.4 11.9 0.8 3.2 2.4 2.75 17 0
MRCB MRC MK SELL 0.69 0.58 3.0 (82.6) 80.3 (175.3) (202.9) 113.7 0.6 (0.8) 2.5 0.97 29 40
WCT WCTHG MK HOLD 0.76 0.96 1.1 12.8 9.8 (17.7) 26.7 14.8 0.3 2.5 2.3 1.92 61 50
SUNWAY CONSTRUCTION SCGB MK BUY 2.00 2.25 2.6 19.8 15.9 (13.7) 25.0 11.1 4.1 20.5 3.5 2.50 20 10
AME ELITE AME MK BUY 1.93 2.28 0.8 15.6 12.9 53.4 20.8 9.6 1.4 9.2 1.2 3.24 40 30
GABUNGAN AQRS AQRS MK BUY 1.11 1.62 0.5 10.9 7.9 (31.8) 39.1 8.3 1.8 9.5 3.6 2.02 45 30
PINTARAS PINT MK BUY 2.96 4.04 0.5 10.3 8.7 84.5 18.0 4.9 1.5 14.6 6.8 NA NA NA
TALIWORKS TWK MK BUY 0.86 1.18 1.7 28.7 20.9 70.4 37.6 10.6 1.6 5.7 6.3 1.30 34 10
HSS ENGINEERING HSS MK BUY 0.82 1.18 0.4 101.2 17.8 (81.9) 467.7 22.4 1.9 1.8 0.0 NA NA NA
Average 29.1 20.2 17.9 (11.4) 12.8 13.2 1.5 5.1 3.1 2.4 32 21
Avg ex Gamuda, MRCB, IJM 7.6 17.8 13.5 (2.9) 31.6 11.7 1.8 6.5 3.4
Company Name Ticker Rating TP
Discount
to RNAV
Div Yield
(%)
Core EPS growth (%) ROE
(%)
Core PE
(x) EV/EBITDA (x)
P/BV
(x)
14 February 2020
Affin Hwang Investment Bank Bhd (14389-U)
Page 9 of 9
Important Disclosures and Disclaimer
Equity Rating Structure and Definitions
BUY Total return is expected to exceed +10% over a 12-month period
HOLD Total return is expected to be between -5% and +10% over a 12-month period
SELL Total return is expected to be below -5% over a 12-month period
NOT RATED Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information only and not as a
recommendation
The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.
OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months
NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months
UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months
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