News Bites · SapuraKencana Petroleum Berhads9MFY15 core net profit of RM1.03bn (+54% YoY) was within our expectations and consensus, accounting for 70% and 73% of full-year forecasts respectively. · IJM has secured its third construction job in FY15 after it has accepted 2 Letters of Award from Sime Darby Sunrise Development Sdn Bhd for a total contract amount of RM435.4mn. · Felda Global Ventures Holdings Bhd aims to be the worlds leader in biodiesel by tripling its production capacity to 350,000 tonnes a year by 2016. · REDtone International Bhd, via its wholly-owned subsidiary, received a RM88.6mn contract from the Malaysian Communications and Multimedia Commission for projects in Sarawak and Johor. · Malaysia Airports Holdings Bhd has priced its proposed rights issue shares at RM6.13 each. · Boustead Heavy Industries Corp Bhds unit BHIC Defence Techservices Sdn Bhd has received RM3.7 million maintenance and supply contract from Ministry of Defence. · Only World Group Holdings Bhd has been oversubscribed by 6.91 times in its initial public offering yesterday. · The US labour market continued to show traction in October as job openings held near the highest level in almost 14 years and the number of people quitting and getting hired remained elevated. · Germanys exports decreased marginally by 0.5%MoM in October reversing a 5.5% MoM rise in September, while imports posted a marked decline of 3.1% MoM after increasing 5.2% MoM a month ago. Results Update SapuraKencana Petroleum Berhad Target Price: RM4.05 (Buy) SapuraKencana Petroleum Berhad’s (SAKP) 9MFY15 core net profit of RM1.03bn (+54% YoY) was within our expectations and consensus, accounting for 70% and 73% of full-year forecasts respectively. Overall, the results were decent with no significant surprises save for:- 1) higher than expected JCE contribution, and 2) topline disappointment at OCSS although margin improved (due to decreased usage of 3rd party vessels), and 3) dividend surprise. Sequential weakness in core earnings (-3% QoQ) was primarily due to lower OCSS sales coupled with weaker margin from the other divisions. All of SAKP’s rigs were chartered out in 3QFY15 with the exception of Teknik Berkat (TB). TB is expected to secure a job by 1QFY16, which is a delay from management’s earlier guidance of a new contract by 2HFY15. This is an improvement compared to the previous quarter whereby 4 rigs were idle. SAKP declared a 2nd interim DPS of 2 sen (3QFY14: nil) bringing total DPS to 3.35 sen and implying a 34% payout in 3QFY15 (2QFY15: 24%). Maintain Buy on SAKP with TP of RM4.05 based on 15x CY15 P/E. Company Update IJM Corporation Berhad Target Price : 6.61 (Sell) IJM has accepted 2 Letters of Award from Sime Darby Sunrise Development Sdn Bhd for the construction of superstructure, infrastructure and landscaping works for the proposed mixed development known as “RADIA” at Bukit Jelutong, Selangor Darul Ehsan, for a total contract amount of RM435.4mn. The works are to be completed by August 2017. With this job win, the group has officially secured about RM1187mn of new construction job in FY15. This brings the outstanding construction order book to about RM2.4bn. Assuming EBIT margin of 8%, the project is expected to enhance the earnings by about RM20.8mn or 1.4sen per IJM share. However, we keep our earnings forecasts unchanged as the job win is within our order book replenishment assumption of RM5.5b for FY15. No change to our target price of RM6.61/share. Maintain SELL call on IJM. Sector Update Gaming Sector – Overweight We believe the gaming sector has much to look forward to during the next 6 to 12 months. In 1H15, we expect the award of four casino licenses in upstate New York, which Genting Malaysia (GENM) is eyeing. Then, there will be the implementation of GST in April which casino and NFO players are hopeful to offset it with lowering gaming tax. In 2H15, we expect news flow on Genting Singapore’s (GENS) investment in Resorts World Jeju to dominate over the delay in passing the casino bill in Japan. However, along the way, noises on corruption crackdown and the economic slowdown in China will continue affecting VIP volumes. We maintain our overweight stance on the gaming sector. Top pick is Genting Berhad (Buy, TP: RM11.88) as the stock provide opportunities to position for casino license awards in upstate New York and Jeju Island via its subsidiaries, GENM (Hold, TP: RM4.57) and GENS. We also like BJToto (Buy, TP: RM4.51) as we strongly believe the company would increase its dividend payout after optimizing its capital structure via increased borrowing in FY14. TA Research
Posted on: Wed, 10 Dec 2014 02:40:56 +0000