Engtex Group - Potential Beneficiary of Water Industry Restructuring

I have recently added Engtex to my portfoilio. The restructuring of Selangor's water industry is still dragging on. However, I think it will be resolved soon and the State Government will kick start the pipe replacement programme of closed to RM10 billion. Non revenue water is too high and the state is facing potential water shortage. We simply cannot afford to wait any longer.


1. Principal Business Activities

The Engtex group is principally involved in the following business activities :-

(a) distribution and wholesale of pipe, valve, fittings, building & construction materials and steel products. Specialised in water supply, sewerage system, telecommunication, construction and infrastructure industries.

(b) manufacturing of ductile pipes, valves, fittings, wire mesh, etc.

(c) property development - the group has amassed quite a good size of land bank. But contribution from this division is still small

(d) hospitality industry - the group recently ventured into ownership of hotels. Contribution not significant at this stage.


(Engtex share price)


(Engtex-Wa price)


2. Relevent Financial Information

Based on 198 mil shares outstanding and share price of RM1.94, market cap is approximately RM386 mil.

The group has net assets of RM399 mil, cash of RM61 mil and borrowings of RM438 mil. This translates into net gearing of closed to 1 time. At first look, gearing is relatively high. However, the bulk of it is trade related facilities (RM284 mil are bills payable), which is common for manufacturing companies that needs to purchase raw materials for processing. 

Based on FYE 31 December 2013 net profit of RM51 mil (EPS of 26 sen), PE multiple is at undemanding 7.6 times. Price to book ratio is approximately 0.97 times.


3. Historical Profitability

One of the reasons Engtex attracted my attention was its ability to deliver earnings consistently over the years, even during severe economic downturn in 2008. In my opinion, the Group must have positioned itself very well and have certain competitive advantages that insulate it from adversities. 

								6 months
(RM mil)	FY2007	FY2008	FY2009	FY2010	FY2011	FY2012	FY2013	June 2014
Revenue	566	752	600	680	794	920	1090	591
Net profit	18.4	30.4	22.8	34.2	34.8	29.2	51.8	25.4

4. Selangor Water Industry Restructuring

As we all know, the water restructuring saga has been dragging on for a long time. However, one week ago, the new Menteri Besar said that he is willing to endorse the restructuring scheme :

The Star, 23 Octopber 2014, Selangor Mentri Besar Azmin Ali wants to see an efficient and quality water supply in the state and has no intention of revoking the agreement between the federal and state governments.

“I am not going to revoke it. I want the exercise to be completed as soon as possible so the people can have enough water in the future,” he said.

I echo his sentiment that the State should conclude the deal as soon as possible. This issue has been allowed to drag on for too long and is starting to negatively affect the livelihood of ordinary people, manufacturing, property development and many other industries.  

The State needs to complete the acquisition of the assets of the various concessionaires and move on to the next stage - reducing non revenue water through replacement of old pipes and other old facilities. When that happens, companies that supply pipes and other components will benefit.

Engtex's Managing Director spoke to the press recently about the billion dollar opportunities associated with the restructuring of the industry :-

(The Sun, 3 March 2014) 

Water pipe manufacturer Engtex Group Bhd, seen as one of the major benefactors of a resolution in the water industry woes in Selangor, has allocated RM70 million as capital expenditure (capex) to expand its business operations in financial year ending Dec 31, 2014 (FY14), gearing up to go for mega infrastructure projects, said its founder and group managing director Datuk Ng Hook.

Ng said this will allow Engtex to better position itself to capture other mega infrastructure projects, be it Refinery and Petrochemical Integrated Development (RAPID) in Pengerang, Johor, Kuantan Port City, Rubber Research Institute of Malaysia (RRIM) and Mass Rapid Transit (MRT).

"We will (work) along with the turnkey contractors of these projects. However, with or without the mega infrastructure works, Engtex will continue to grow because business will operate as usual," he told SunBiz in an interview.

Currently, the factory utilisation rate of its ductile iron pipe plant in Gebeng Industrial Estate, Pahang stands at about 33% while its mild steel pipe plant at Serendah, Selangor reach about 60%.

The federal and state government signed a memorandum of understanding to facilitate the restructuring of the state's water industry and allow for the construction of Langat 2 water treatment plant last Thursday.

A one-stop centre to provide total supply-chain solution for water supply and sewerage system, Ng said, Engtex is poised to get a slice of pie in the Langat 2 water treatment plant project, as well as the long-overdue replacement of the aging water pipelines throughout the country.

"There is an urgency to solve this problem. I am optimistic that both the federal government and state government will be very kind to resolve it by this year," he said.

According to the Asian Green City Index, water system leakages in major Asian cities whereby Kuala Lumpur recorded 37% of leakage, far above the average of 22.2%.

Ng said treated water is lost through non-revenue water, from broken and leaking aged asbestos cement pipes, which should be replaced by ductile iron pipes and mild steel pipes.

Malaysia has 44,000 km of old asbestos cement pipes that require replacement, which would potentially fetch a value of about RM10 billion.

"Assuming that half of the asbestos cement pipes needs to be replaced by the mild steel pipes and ductile iron pipes, we are looking at RM5 billion market," said Ng.

The remaining RM5 billion, he said, may be allocated to other pipes such as high-density polyethylene (HDPE) pipe, polyvinyl chloride(PVC) pipe, UPVC (unplasticized PVC) pipe and clay pipe, which Engtex does not produce itself, but still can be involved in through its wholesale and distribution division

 

5. Bonus Issue
 
On 26 September 2014, Engtex announced a bonus issue. Shareholders will get one bonus share for every two shares held. The bonus issue is targeted to be completed by fourth quarter of 2014.

For illustration purpose, a shareholder who hold two shares at RM1.95 today will end up with three shares at RM1.30 post bonus issue.


6. Warrants

Engtex-Wa has exercise price of RM1.25 and expires in October 2017 (exactly three years from now).

Existing conversion premium is approximately 7.6%. Very reasonable for an instrument that still has three years to go.

Based on today's price of RM0.85, Engtex-Wa will trade at RM0.57 post bonus issue. Exercise price will be adjusted downwards to RM0.83 (does not contravene Company's Act as par value is RM0.50).

Warrant holders will be entitled to 1 warrant for every 2 warrants held.


7. Concluding Remarks

(a) I believe that the State government will very soon conclude the deal to restructure the State's water industry. The issue has been allowed to drag on for too long and is beginning to adversely affect economic development and people's livelihood. It is advisable to resolve the issue and move on.

(b) I chose Engtex for exposure to water industry because it is trading at low PE multiple of only 7.6 times despite consistent profit track record and good industry prospects. I think the company is well run. Even without the water industry restructuring, it deserves to trade at at least 10 times PE multiple. Based on historical EPS of 27 sen, fair value is easily RM2.70. With additional profit from pipe replacement, etc going forward, it is not inconceivable that it could one day touch RM3.00 or RM3.50. 

(c) Instead of mother share, I prefer Engtex-Wa. If Engtex indeed goes to RM2.70, Engtex-Wa should trade at at least RM1.45. An upside of 70%. The Warrants still has three more years to go and has low conversion premium. So it is quite safe.

(d) I believe the positive effect of the bonus issue has not been fully priced in. Engtex should attract more interest when the bonus issue is implemented in November 2014.

Have a nice day.
 

RPGT

I am a Malaysian citizen. I acquired a property in March 2010 and will be disposing of the property in 2014. The sale andpurchase agreement to effect the disposal has just been signed on Sept 21, 2014. What is my real property gains tax (RPGT) obligation and what else do I need to be aware of in view of the recent Budget 2015 announcement?
As the disposal is in the fifth year, the gain will be subject to RPGT at the rate of 15%. In addition, the buyer is required under law to retain 2% of the total value of the purchase price and pay it to the Government within 60 days.
Once the RPGT return is submitted, any underpayment or overpayment (between the 2% retained by the buyer and the actual RPGT payable) will be payable by you or refunded to you.
For example, if you acquired the property at RM350,000 and sold it for RM540,000 (assuming there are no other costs involved), the RPGT will be RM28,500 (15% of the gain of RM190,000). The buyer would have retained and paid RM10,800 (2% of the purchase price of RM540,000) to the Government. As such, you would need to pay the balance of RM17,700 (RM28,500 less RM10,800) once the Notice of Assessment is issued to you.
Following the recent Budget announcement, with effect from Jan 1, 2015, the buyer has to retain 3% (as opposed to 2% currently) of the total value of the purchase price and pay it to the Government. In addition, RPGT will come under the Self-Assessment System from the year 2016 onwards.
This means that under the Self-Assessment System, the seller will need to pay the balance RPGT, i.e. the difference between the RPGT liability and the 3% retained for remittance to the Government once the disposal is completed and not at the point when the Notice of Assessment is issued (which is the current practice).

券商：趁低買進 預算案潛在贏家股

吉隆坡5日訊）本週馬股重頭戲非2015財政預算案莫屬，市場除了將焦點投射在預算案，或協助富馬隆綜指在來週橫擺企穩。
　艾芬投資銀行副總裁兼零售研究主管納茲里甘博士指出，針對即將在10日公布的2015財政預算案，市場普遍相信，任何刺激財政的舉措，包括公司稅減稅，以及實施消費稅前，提供個人減免優惠或補貼，都可扶持股市。
　一旦富馬隆綜指衝破1840點，可考慮進場買進富馬隆綜指期貨，以期待更大漲幅觸及歷史新高1900點。
發展舉措中受惠
　他認為，預算案有望緩和科技、電訊以及建築領域的疲軟。這些領域將可能從消費稅和其他發展舉措中受惠。他因而建議趁低買進被視為預算案贏家的股項。
　“實施消費稅將對流動電訊業者及會計解決方案供應商有利。任何發展開支、房產盈利稅（RPGT），及援助計劃所帶來的驚喜都可成為催化劑，尤其是在建築、房地產及消費領域。”
　基于看好電訊、會計解決方案供應商及建築股項，他建議保守型投資者買進該投銀的20隻精選個股，如亞通（AXIATA，6888，主要板貿服）、 馬電訊（TM，4863，主要板貿服）、數碼電訊（DIGI，6947，主要板基建）、砂日光（CMSB，2852，主要板工業）、金群利集團 （MATRIX，5236，主要板房產）、鵬發（PTARAS，9598，主要板建築）、世紀軟件（CENSOF，5195，主要板科技），及森德公司 （SCIENTX，4731，主要板工業）。
 

Axis REIT - Smooth As SiLC

Axis REIT (Axis) yesterday announced the proposed acquisition of an industrial asset in the SiLC industrial area, Johor. We view this positively, as it may help to further drive its earnings growth. Axis is targeting to complete the injection by year-end. We lift our FY15F estimates by 5% after imputing the contribution from this acquisition.Our TP rises to MYR3.60 post earnings revision. Maintain NEUTRAL. 

New yield-accretive acquisition. Axis has announced the proposed sale-and-leaseback of a steel fabrication facility in the Southern Industrial and Logistics Clusters (SiLC) industrial area, Johor, for total consideration of MYR153.5m. The gross asset yield is decent, at about 7.6%. The asset has a total gross floor area (GFA) of 504k sq ft, and comprises six buildings. The asset will be funded entirely through debt.The REIT expects to ink the deal by year-end. Based on the announcement, the tenant will be signing a 15-year lease with a rent step-up of 10% every three years. 

Positive prospects ahead. Axis had previously guided that it could beinjecting more assets into its portfolio by year-end. Although there could be concerns on the assets’ location within the Nusajaya region, we believe that Axis will be insulated from any vacancy risks. This is due tothe assets’ long-term lease and that fact that industrial assets remain popular in Johor despite the property market slowdown. Post-acquisition, management expects its gearing to increase to 0.39x, which is still below the Securities Commission’s 0.5x gearing cap. That said, we expect gearing to be pared down to c.0.34x in FY15 once the Axis completes the placement of about 83.5m new units by early-2015. 

Earnings forecasts. We do not expect any major impact to our FY14 earnings forecasts. However, we lift our FY15F earnings by about 5% after imputing the contributions from this acquisition.

Maintain NEUTRAL. We maintain NEUTRAL on Axis, but raise our DDM-based TP to MYR3.60 (from MYR3.34) after we revised our earnings estimates and ascribe a lower COE of 7.38% (vs. 7.51%previously). We view its aggressive asset acquisitions in recent months positively and believe that more yield-accretive acquisitions could be in the cards going forward to further drive earnings growth.

 

 

 

 

 

 

 

 

 

 

 

Source: RHB

建材業4大利好加持

（吉隆坡7日訊）4大利好因素加持，建材業短期催化因素強勁，分析員認為該行業前景樂觀。

 

肯納格研究指出，2015年財政預算將頒發更多建築合約、消費稅實行前的囤積建材活動、明年首季可能實行反傾銷活動以及售價回穩令賺幅擴張，都會是行業主要催化因素。

 

該行認為，2015年財政預算案將令已表現不錯的建材業受益，到時料會宣佈大馬第十計劃和經濟轉型計劃下基建發展，以及吉隆坡和柔佛產業發展計劃。

 

此外，肯納格研究也預計，市場會在消費稅實行前一個月囤積建材，預計將會建材業帶來一次性的銷量暴增。但基於建材如洋灰及混凝土製品不能久藏，估計消費稅實行不會對銷量產生太大的影響。

 

在過去的兩年裡，因為中國的傾銷行動導致鋼鐵價格走低，肯納格認為，這情況將會在政府介入後改善。預計政府將對海外鋼鐵徵收5%反傾銷稅，而這將提高鋼鐵的售價，從而解決鋼鐵價格走弱的局勢。

 

下調至“中立”評級

但是，如果政府沒對傾銷做出反應，該行將把鋼鐵業下調至“中立”評級。

 

除此之外，原材料價格因為供過於求而走低，從而增加鋼鐵商的賺幅，從而令鋼鐵商受益。

 

肯納格研究表示，建材股今年次季業績表現大都在預期之內。

 

當中拉法基馬（LAFMSIA，3794，主板工業產品組）業績下滑，但這在預料之內，因上半年為傳統淡季和廠房維修。

 

肯納格研究保持對建材業“增持”評級，因為估值吸引、資產負債表強勁及擴展產能的緣故，馬來西亞鋼廠（MASTEEL，5098，主板工業產品組）為肯納 格在建材業里的首選，同時，也預計安裕資源（ANNJOO，6556，主板工業產品組）會跑贏大市，而拉法基馬和大市一致。（星洲日報／財經‧報道：陳林 德）

你不應該投資哪些公司? 這"4種"產業的公司 我一定不會買

巴菲特(1996)告訴，我們投資成功最重要的是能力圈原則

「投資人真正需要具備的是對所選擇的企業進行正確評估的能力，

請特別注意"所選擇"(selected)這個詞，

你並不需要成為一個通曉每一家或者許多家公司的專家。

你只需要能夠評估在你能力圈範圍之內的幾家公司就足夠了。

能力圈範圍的大小並不重要，重要的是你要很清楚自己的能力圈範圍」

 

因此，瞭解自己的「能力圈」且不去做 超過自己能力圈範圍的投資決定是相當重要的。

下面一些 產業類型 和 財務數據  是個人不會去投資的公司，僅供參考：

 

4種 我不會投資的產業類型

1.銀行金融業

雖然銀行業算是古老的行業，自然有其存在的價值，

甚至許多金融公司獲利也都相當不錯，

但是因為銀行金融業通常有很多轉投資或金融操作，這些部分一般投資人很難一窺究竟。

想想2008年的金融海嘯雷曼兄弟事件、2011年的歐債危機，

我們真的無法預估我們投資的公司會不會踩到這些地雷！

 

2.新藥研發公司

許多新藥公司在研發階段必須付出一堆費用，

而且新藥的推出需要經過好幾階段的試驗才有機會得到藥證的核可。

當然這中間只要有一個環節出錯，失敗的機率相當高！

投資人對這些新藥公司所描繪的願景往往有過度美好的想像，

進而推高了公司的股價，但是這樣的高股價卻是建立在沒有獲利的基礎上。

就我而言，我不會去投資這種獲利還在空中樓閣的公司，

因為我無從了解公司到底能不能成功。

 

3.電子代工業

電子代工行業需有龐大的訂單需求支撐才足以維持獲利，

一旦需求減緩，訂單隨之流失，其獲利的困難度就會增加。

 

4.營建產業

營建類股收益認列的時間投資人較無法掌握，

很可能一整年都沒有什麼案子入帳，也可能一入帳就貢獻很高的每股盈餘。

對於偏好穩定收益的長期投資人，營建類股可能並不是好的選擇。

 

 

小心！這4種 財務數據轉差 的股票 

1.毛利率低於5%

這種毛利率長期低於5%(俗稱毛三到四)的公司賺的是辛苦錢，

也許營收很高，但利潤很微薄，一旦營收不如預期，獲利也會跟著下滑甚至導致虧損。

對於毛利率不到5%的公司，個人會選擇避開。

 

2.營業利益率不穩定的公司

營業利益率看的是公司本業獲利的能力，

若是營業利益率經常性的起起伏伏，表示公司的本業競爭力不佳，這種公司應該避開。

 

3.股東權益報酬率(ROE)低於10%

股東權益報酬率衡量的，是公司能否妥善地利用股東權益創造獲利的能力。

一般而言，一家公司長期能夠維持股東權益報酬率在15%以上，就算是相當不錯的水準。

如果低於10%，表示公司為股東創造回報的能力不佳，買進這種公司的股票最好多多考慮。

 

4.長期負債過多的公司

長期負債過多的公司，

表示自身的營收獲利不足以支撐公司的營運，必須依靠借貸或發放公司債，

甚至是現金增資來取得資金，長期而言對公司都不是好事情。

 

5.現金流量長期為負的公司

企業透過營運取得現金用以支撐公司的各項開銷與成長，

如果公司不能創造正向的現金流量，這種燒錢公司投資人最好敬而遠之。

 

 

 

(原文轉載於小樂的生存之道，全文於此 參考工具：小樂倉儲股)

The Benefits and Risks of REITs - Scg8866t

Reits, in short for Real Estate Investment Trusts, are basically vehicles which investors can buy into to get themselves exposed to a myriad of professionally managed portfolios of real estate.

On the surface, many can see the attractiveness from this kind of investment. The requirement to distribute 90% of taxable income to investors, the affordability, the relatively higher average yield compared to stocks and the liquidity of the units, are just a few obvious benefits that Reits can offer.

However one has to know that reits are not low risk instruments. They are usually driven by high financing, managerial/trustees' fees, low cash, payment of interest on their existing loans, repayment of loans that are maturing and their inverse relation with interest rates. These risks are quite substantial and have to be recognised.

In my view, the requirement to distribute a huge portion of its cash flows from its operation to the unitholders may not be something beneficial. It removes the flexibility of capital allocation for debt repayment, forcing some to issue new loans to pay for their existing loans or to issue new shares via rights issue.

The common mistake people make is to equate Reits with "capital guaranteed" instruments like bonds, fix deposits and treat the distribution as extra passive income or interest. Reits, like stocks fall by the amount of the dividend on ex date and moves accordingly to market sentiments and interest rates. They are of a different paradigm to capital guaranteed investments. That is why I am not a fan of pure Reits/perpetual accumulation in a portfolio.

That being said, it does not imply that reits cannot outperform in a long time frame. Some can and have, but some have not. We just need to keep an eye on their fundamentals(gearing, debt to maturity, price to book, occupancy rate, net debt to equity, p/e ratio, sponsor and macro/forex risk) if we want to invest in them.

In my view, Reits make a good defensive growth hybrid, but we cannot judge its attractiveness by just its yield alone as I think that will be very dangerous. Hope this post will be of some help to you.
 

斤经济较：到底应不应该看ROE？- 夜月

在我上次公开了我的选股法则之后：

财报分析：Lesson 2出炉

有一个朋友来问我，
为什么我没有将ROE设成其中一个条件。
我反复研究了之后，
有了一些结果。

先说说什么是ROE？
ROE长名叫做Return on Equity,
所以是Return/Equity。
Return 是指Net Return，
Equity是Shareholder Equity。
Net Return可以从Income Statement的最下面得知，
Equity等于从IPO和Right Issue筹到的资金再加上过去几年累计赚到的钱（Retained Earnings）。
所以以普通话来说，
就是这家公司可以从自己手上拥有的资金，
每年变出多少钱出来。
ROE高的公司代表该公司很厉害利用所得资金。

为什么每家的公司的ROE会不同呢？
基本上有三个原因：
1 管理层管理公司有道
管理层很厉害省成本，
导致Net Income增加。

2 很利害用leverage来增加Income(Debt)
所谓Debt就是借钱，
借钱不管你赚多少，
只需要还固定的利息。
只要你赚的钱比需要换的利息还多，
就证明你用debt是赚到的。

3 行业竞争小
每个行业的竞争情况各不同，
详细可以看Porter写的Competitive Advantege系列。
一家在竞争小的行业，
能获得的盈利自然会比较高。
因为价格战会使到盈利缩减。

但是ROE有一个缺点，
就是表达的东西比较不直接，
只是显示管理层很厉害用资金，
但是却没有讲厉害在哪里，
公司的优势在哪里也无法知道。

总结：ROE确实是一个不错的公司筛选准则，因为一来很容易计算（很多网站都有），二来不管是什么3个当中的哪个原因，都是公司的优势。可以利用ROE来筛选公司，然后用其他方式来找出公司优势。 http://moonitez89.blogspot.com/2014/10/roe.html

券商买进心头好．3年复成长率高达50% 史葛米能源可买进

券商：丰隆证券研究 ◆目标价：1.23令吉
史葛米能源（SCOMIES ，7045，主要板贸服）订单额有潜能增至70亿令吉，加上拥有数项成长催化剂，看好3年复成长率高达50%，持续买进投资评级。
　随著该公司在区域的市占日益扩大，看好订单可从55亿令吉增加至70亿令吉、将墨烯纳米液（Graphene nanofluids）及微波技术产品商业化及潜在获得综合型计划管理（IPM）合约，都是我们看好该公司3年复成长率高达50%的成长催化剂。
　这是我们与该公司油田服务总裁史帝夫布拉格尔及综合型计划管理团队主管会面后，得出的结论。
　目前，史葛米能源正积极加强综合型计划管理团队，以应付更多边际油田、已开发油田及加强油复新的工程；大马、印尼及缅甸均是潜在市场。
　我们亦了解获得Ophir风险服务合约（RSC）只是一个开始，有信心该公司将陆续获得更多同类型合约。
　早前该公司建议发行可赎回可转换债券以发行附加股；简单来说，即投资者每持100股只需支付6令吉，并有权力可将其转换至8股母股（倘若转换价为每股75仙）。
　我们认为上述计划对现有股东非常具有吸引力，股东不但可赚到半年息票率（coupon rate）还可以折价转换成母股。
　我们维持该股买进评级，目标价不变，根据2015年本益比15倍，每股收益每股7.67仙。
　史葛米能源2日（周四）挂82.5仙，跌2仙，成交量102万2500股。

马股第四季度投资策略

马股第四季度投资策略

Kenanga：

虽然美元走强促使外资从马股出走以及股价缺乏催化剂（盈利增长无看头以及市场估值相对高），但目前综指（FBMKLCI）的水平仍处于市场平均预测 1945点的目标水平，出现将近5.1%的折价，并在有利的季节因素（强劲的第四季和第一季，以及本地资金支撑）之下，相信股市下跌的情况会受到抑制。因 此，建议“逢跌买进”（BUY ON WEAKNESS）。

2014年和2015年的综指目标水平分别为1910点和1980点，主要预测盈利增长在2014至2016财年分别可取得4.9%、11.3%和8.1%增长。

在第四季度的TOP PICKS股项，包括BARAKAH、COASTAL、GAMUDA、KSL、MBSB、MUHIBAH、RHBCAP、SIME、SUPERMX和VS。


RHB：

尽管近期内缺乏重新评估的催化剂，但马股下跌的情况将受到本地资金的支撑，而且外资持有马股的比率（相对本区域而言）依然偏低。我们预测FBMKLCI的 盈利增长在2015财年，可从2014财年的2.7%，增长至7.3%水平。2015年的FBMKLCI目标为2100点水平。
TOP PICKS股项包括SAPURAKENCANA、WESTPORTS、IOIPG、BIMB、CMS、PRESS METAL、KOSSAN、DAYANG、COASTAL、TUNE INSURANCE、TAMBUN INDAH、DATASONIC、PROTASCO。

 MIDF：

虽然马股当前的估值（以本益比计算）相对地高（16.8倍），但主要受到明年的盈利增长支撑。以明年的盈利计算，目前马股估值的本益比为15.3倍。

未来12至15个月的FBMKLCI目标，预计可上涨至1970点（也就是2015年的目标）。若企业的盈利表现比预期更为理想，马股具有潜能突破1970点的水平。

10大股项（选股方式涵盖良好的盈利增长潜能、优质的盈利表现，和/或诱人的估值水平）：PROTASCO、MRCB、TH PLANTATION、SAPURAKENCANA、DAYANG、GENTING PLANTATIONS、AIRASIA、MAYBANK、GTRONIC、TAKAFUL。

估值偏高‧訂單補充緩慢‧油氣股評級下調

吉隆坡1日訊）油氣領域缺乏短期催化因素料導致油氣工程期展延，分析員認為大馬油氣股向外拓展必須先擺脫高估值負擔，決定調低領域評級至“中和”。

 

興業研究對油氣股未來的執行風險趨向謹慎，相信目前領域業者高估值難以維持，因許多本地油氣業者已投資海外及向價值鏈上移，此舉料導致本地及海外業者估值差距收窄。 

 

過去兩個月，該行因訂單補充量緩慢、資產低使用率、低利而下調3個油氣股評級，從“買進”降至“中和”。

這些股包括貝利賽（PERISAI，0047，主板貿服組）、睦興旺工程（MUHIBAH，5703，主板建筑組）及達雅集團（DAYA，0091，主板貿服組），海事重工（MHB，5186，主板貿服組）更是從“中和”調低至“賣出”評級。

 

該行指出，未來領域向上動力受限，估計大馬及全球油氣工程期將進一步展延，尤其是在成本增加、工程複雜性、長期需求及原油價格不穩定利空陰霾籠罩之下，大型油氣公司資本開銷料持續受影響。

 

“大馬油氣業者向外拓展成為區域或全球性企業，主要是海外市場可提供豐益利潤及正面帶動領域，但是我們相信，一旦向外發展，大馬與區域及全球業者的估值差距也得收窄，有此必要擺脫溢價估值。”

 

溢價料難長久

目前，大馬油氣業者估值高於區域及全球同儕，盈收基礎及市佔率卻顯低落，興業研究認為此溢價料無法長久維持。

 

鑑於未來前景展望好壞參半，該行下調油氣5大業務的4項服務至“中和”，包括浮式生產儲油卸油設備（FPSO）、鑽井、服務製造及下游石化業務，僅維持探 勘及生產項目“加碼”評級，主要是認為國油有維持生產的需求，對該業務發展保持正面。（星洲日報／財經‧報道：郭曉芳）

MREITs - 2QCY14 Inline, Door Still Open For European

We downgrade MREITs to NEUTRAL. MREITs’ 2QCY14 results were mostly inline, with the exception of AXREIT. There was finally an asset acquisition as AXREIT proposed to acquire 5 office/industrial assets. However, we do not expect this trend to follow through with other MREITs as the asset acquisition environment remains challenging. Organic growth rate is at 3.0%-6.8% for MREITs (save for SUNREIT at 10.6% due to SPP) under our coverage after accounting for the indirect impact of GST and other cost pressures. Despite the delayed timeline of the European QE, we are still bullish on the possible implementation and maintain our 10-year MGS target at 3.80%; but we may review our sector call if it fails to materialise by CY14. We are also comfortable with our 10-yr MGS yield-spread valuations basis because we have previously assumed more conservative spreads, while sector risks have been priced in. Thus, we keep our valuations and earnings estimates largely unchanged, except for CMMT. We downgrade MREITs to NEUTRAL (from OVERWEIGHT) as most MREITs’ share prices have appreciated over 3QCY14 (save for CMMT). We have downgraded our calls for KLCC, SUNREIT, IGBREIT and PAVREIT to MP (from OP), and reduced our TP for CMMT due to weaknesses at SWP; despite that the stock remains an unwarranted laggard. Our TPs and CALLs are: KLCC (MP; TP: RM6.90), SUNREIT (MP; TP: RM1.56), CMMT (OP; TP: RM1.57), IGBREIT (MP; TP: RM1.35), AXREIT (MP; TP: RM3.53) and PAVREIT (MP; TP:RM1.41)
2Q14 results review. All MREITs’ results were within expectations save for AXREIT’s 1H14 results which came in slightly below our expectations at 41%, but within consensus due to higher-than-expected financing and operating cost. QoQ, topline growth was flattish to negative. Retail MREITs such as IGBREIT and SUNREIT (1% topline growth) saw flattish growth from minimal rental revisions, while other retail MREITs recorded negative growth due to lower occupancy rates and the seasonality factor (KLCC and PAVREIT) as 2Q is usually the weaker quarter for the hotel segment, and lower percentage rent for retail. AXREIT also saw negative topline growth from both lower occupancy and weak rental reversions at 0.65%, which is a historical low. This dragged down RNI as most MREITs, save for IGBREIT, recorded negative RNI QoQ (-2% to -10%), mainly due to higher utilities expenses. KLCC and AXREIT’s lower RNI was due to a one-off occurrence from higher refinancing cost for KLCC, and the absence of gains on disposal for AXREIT.
YoY, all retail MREIT’s recorded positive topline growth (3% to 10%) on the back of positive rental reversions, but industrial-based AXREIT saw no growth due to slower reversions, and one asset lesser than 1H13 after disposing Axis Plaza. Retail MREITs’ positive topline pushed earnings, as RNI increased (by 4% to 36%) with IGBREIT and
KLCC on the upper end of the spectrum at 16% and 36%, respectively. IGBREIT’s stronger growth was due to strong reversions and its ability to better manage cost, while KLCC’s REIT structure became effective in 2Q13 allowing for tax incentives. AXREIT increase in RNI (3%) was mainly due to the gains on disposal of Axis Plaza; excluding the gains, RNI actually decreased by 1%.
Source: Kenanga