Post on 18-May-2018
transcript
Malaysia Market Strategy PM Najib for ever
March 2017
+603 2723 2088; stephen.hagger@credit-suisse.com
S.J.W. Hagger, Country Head of Malaysia
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION ™
Client-Driven Solutions, Insights, and Access
CREDIT SUISSE SECURITIES MALAYSIA
Sales commentary
Malaysia post 1MDB
Investment thesis: Maximum bullish
1MDB is in the price
PM Najib does whatever it takes to stay in power for a very long time
Three-consecutive years of foreign selling has turned
Three-consecutive years of earnings decline has bottomed
Rising commodity prices (oil, CPO & rubber)
MYR has stabilised
Valuations less stretched
China the new BFF
PNB reforms
Animal spirits rekindled
Country’s long term picture remains grim
2 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
PM Najib stays PM for a very long time
GE likely to be a three-way fight with opposition split
1MDB fatigue
Greed & Feudal Loyalty
Police
Royalty
MACC
Judiciary
Cabinet & parliamentary speaker
FEAR
Press
Opposition harassment
National Security Council Act (aka Dictator Act)
PM Najib’s 187-strong special forces unit
3 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
China, the new BFF
1. 1MDB power assets sold to CGN
2. CRG to develop Bandar Malaysia
3. 1,500-acre Malaysia-China Kuantan Industrial
Park
4. Ports
5. MGS
6. KL-Singapore HSR
7. East Coast Rail, RM55 bn
8. RM144 bn investments signed
9. Solves ST political funding
10. Creates LT problem
East Coast Rail Link
Source: SPAD
4 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Geopolitics of the South China Seas
China has successfully split the ASEAN block when the US distracted:
Cambodia has sold 20% of its coast line to China
Duterte’s U-turn
Thailand warming up to China
Indonesia, Vietnam, Singapore & Japan holding firm
Malaysia has shifted away from the US to China:
− Silent on China incursion
− Buying arms from China
− Port in the Straits of Malacca
− Land bridge (East-West)
− Other ports
One road, one belt
Source: Star
5 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Stable MYR for now
+ves
− Oil, CPO & Rubber
− China
− Portfolio inflows
− Bond maturity risk has passed
− Fear of capital controls over
-ves
− LT capital flight
− BNM unpredictable
− Low forex reserves
− BNM’s use of forwards
− High foreign bond ownership
Credit Suisse FX forecast:
− 3M: USDMYR 4.35
− 12M: USDMYR 4.50
Oil price vs USDMYR
2.0
2.5
3.0
3.5
4.0
4.5
5.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Jan-0
6
Aug-0
6
Mar-
07
Oct
-07
May-
08
Dec-
08
Jul-0
9
Feb-1
0
Sep-1
0
Apr-
11
Nov-
11
Jun-1
2
Jan-1
3
Aug-1
3
Mar-
14
Oct
-14
May-
15
Dec-
15
Jul-1
6
Feb-1
7
LHS - Brent in USD RHS - USDMYR
6 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Source: the BLOOMBERG PROFESSIONAL™ service
Foreign shareholding
High foreign bond ownership Foreign equity ownership
23.1
24.4
24.0
24.3
24.1
24.0
24.1
24.1
23.7
23.4
23.3
23.1
22.8
22.8
22.5
22.3
22.3
22.5
23.0
23.0
23.0
22.8
23.0
23.0
22.8
22.8
22.6
22.3
22.3
22.3
21.0
21.5
22.0
22.5
23.0
23.5
24.0
24.5
25.0
2011
2012
2013
2014
Jan-
15
Feb
-15
Mar
-15
Apr
-15
May
-15
Jun-
15
Jul-1
5
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Feb
-16
Mar
-16
Apr
-16
May
-16
Jun-
16
Jul-1
6
Aug
-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Feb
-17
%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Jan
-05
Au
g-0
5
Ma
r-0
6
Oct-
06
Ma
y-0
7
Dec-0
7
Jul-
08
Fe
b-0
9
Se
p-0
9
Ap
r-10
Nov-1
0
Jun
-11
Jan
-12
Au
g-1
2
Ma
r-1
3
Oct-
13
Ma
y-1
4
Dec-1
4
Jul-
15
Fe
b-1
6
Se
p-1
6
% Foreign Holdings Government Bonds
ID KR MA TH
Source: Bursa Source: CEIC
7 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
EM funds are very underweight Malaysia
Source: EPRA
8 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Stock ideas & themes
Crony & concept: Bursa
Special situations: AirAsia, Bumi Armada, Sime Darby
Telco bloodbath: Time
Recovery: CIMB, Bumi Armada
PNB restructuring: Sime Darby, Maybank
Chinese tourism: Gentings, AirAsia
Construction: Gamuda, IJM, Ann Joo, Ekovest, Econpile,
Small caps: Padini, Scientex, Sasbadi
Top 5 BUYs:
− Sime Darby
− CIMB
− GENM
− Gamuda
− Time
9 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Appendix
Stock ideas & themes
Companies Reuters ticker Rating Market cap (US$mn) 6M ADV (US$mn) 2017 P/E (x) 2018 P/E (x) 2017 P/B (x) 2017 ROE (%) 2017 Div yield (%)
Maybank MBBM.KL N 20,723 17.1 12.6 11.2 1.3 10.3 6.0
Tenaga TENA.KL U 17,518 35.7 10.9 10.7 1.2 10.9 2.7
Sime Darby SIME.KL O 14,594 16.8 24.6 23.9 1.7 0.1 2.8
CIMB CIMB.KL O 11,218 16.9 11.0 9.6 1.1 9.4 3.5
Genting Bhd GENT.KL O 8,208 6.1 16.4 14.7 1.0 6.0 0.9
Genting Malaysia GENM.KL O 7,310 7.0 16.2 14.2 1.5 9.0 1.5
Gamuda GAMU.KL O 2,877 4.7 15.4 12.9 1.4 11.4 2.3
IJM IJMS.KL O 2,855 3.7 16.7 14.3 1.3 7.7 2.4
Air Asia AIRA.KL O 2,174 8.7 7.1 8.4 0.9 15.3 3.2
Time TCOM.KL O 1,130 0.6 22.3 18.7 2.1 0.1 1.1
Bumi Armada BUAB.KL O 994 3.1 10.7 9.5 0.7 6.8 0.0
Karex KARE.KL O 482 0.6 32.5 23.6 3.9 11.9 1.2
Padini PDNI.KL O 440 0.9 12.2 11.0 3.3 27.3 4.1
Bursa BMYS.KL NOT COVERED 1,208 1.7 25.4 24.3 6.3 25.0 3.9
Scientex STIK.KL NOT COVERED 763 0.4 10.3 9.0 2.2 23.0 3.0
Ekovest EKOV.KL NOT COVERED 652 2.5 n/a 17.1 n/a 10.3 n/a
Taliworks TWRK.KL NOT COVERED 454 0.3 26.8 24.1 1.6 6.1 4.8
Ann Joo ANNJ.KL NOT COVERED 300 0.5 8.0 7.5 1.1 16.3 2.9
Econpile ECOH.KL NOT COVERED 266 0.5 13.7 12.5 3.5 27.1 2.1
Destini DEST.KL NOT COVERED 209 0.6 14.3 11.6 1.7 15.9 n/a
Sasbadi SAHO.KL NOT COVERED 101 0.3 15.3 9.7 2.6 17.4 3.4
Tadmax TADM.KL NOT COVERED 51 0.1 n/a n/a n/a n/a n/a
Source: IBES for not covered companies, CS estimates for covered companies
11 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Yield
High-yielding stocks (2017E) under CS coverage
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
May
bank
Mal
akof
f
Car
lsbe
rg
Hei
neke
n
BA
T M
alay
sia
Ast
ro
DiG
i
Pad
ini
Mah
Sin
g
Alli
ance
FG
Source: CS estimates, the BLOOMBERG PROFESSIONAL™ service
12 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Stock performance in 2016
Which sectors have underperformed in 2016? O&G, telco, property.
Which have outperformed in 2016? Airlines, banks, CPO, gaming.
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Bum
i Arm
ada
Axi
ata
Mal
akof
f
BA
T M
alay
sia
SA
KP
RH
B C
ap
Icon
Offs
hore
Uzm
a
Tel
ekom
Max
is
Dig
i
Fel
da
MM
HE
IOI P
rop
UE
M S
unris
e
Ast
ro
IJM
Pet
Che
m
Dia
log
KLC
I
May
bank
Mah
Sin
g
IOI C
orp
HL
Ban
k
CIM
B
HLF
G
Gen
t Pla
nt
Tim
e
Ten
aga
Wes
tpor
ts
Alli
ance
FG
Gen
ting
Msi
a
Gam
uda
MyE
G
KL
Kep
ong
Pub
lic B
ank
Gen
ting
Tun
e In
s
CM
MT
Pad
ini
AirA
sia
AirA
sia
X
Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates
13 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Stock performance in 2017 YTD
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Mal
akof
f
Wes
tpor
ts
Top
Glo
ve
Axi
ata
Ten
aga
Nas
iona
l
Kos
san
Kar
ex
Hon
g Le
ong
Ban
k
KL
Kep
ong
IOI P
rop
Pub
lic B
ank
Gam
uda
Mal
ayan
Ban
king
Tel
ekom
Mal
aysi
a
KLC
I
Uzm
a
Dia
log
Mah
Sin
g
IOI C
orp
Gen
ting
Pla
ntat
ions
DIG
I
RH
BC
Pet
rona
s C
hem
ical
s
Alli
ance
Fin
anci
al G
roup
Tim
e do
tCom IJ
M
MyE
G
Max
is
HLF
G
Mal
aysi
a A
irpor
ts
Ast
ro
BA
T M
sia
AirA
sia
X
CIM
B G
roup
Sim
e D
arby
Gen
ting
Pad
ini
SA
KP
Fel
da G
loba
l Ven
ture
s
Gen
ting
Mal
aysi
a
AirA
sia
Icon
Bum
i Arm
ada
Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates
14 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Valuations are attractive relative to history
KLCI P/E is in the middle of the pack KLCI P/B is in the middle of the pack
0
5
10
15
20
25
Sin
gapo
re
Hon
g K
ong
NJA
Tai
wan
Tha
iland
Mal
aysi
a
Chi
na
Japa
n
Phi
lippi
nes
Kor
ea
Indi
a
Indo
nesi
a
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Kor
ea
Sin
gapo
re
Hon
g K
ong
Japa
n
NJA
Tai
wan
Mal
aysi
a
Chi
na
Tha
iland
Indo
nesi
a
Phi
lippi
nes
Indi
a
Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
15 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Valuation Malaysia forward P/E Malaysia forward P/B
Mean = 1.9x
+1 Std = 2.2x
-1 Std = 1.7x
1.20
1.40
1.60
1.80
2.00
2.20
2.40
Dec-07 Apr-09 Aug-10 Dec-11 Apr-13 Aug-14 Dec-15
Mean = 15.9x
+1 Std =
17.7x
-1 Std =
14.0x
10.00
12.00
14.00
16.00
18.00
20.00
22.00
Dec-07 Jan-09 Feb-10 Mar-11 Apr-12 May-13 Jun-14 Jul-15 Aug-16
Malaysia valuations (CS coverage only) Calenderised 2011 2012 2013 2014 2015 2016 2017E 2018E
Core Market PE (x) 20.0 18.9 17.7 18.3 18.4 17.4 16.2 14.7
Core Market EPS grow th (%) 30.6 12.0 12.2 2.6 -1.5 7.1 3.1 9.6
Market PB (x) 3.6 3.4 2.8 2.2 1.9 1.8 1.7 1.6
Dividend yield (%) 3.9 3.7 4.2 3.6 3.0 2.9 3.0 3.3
Market ROE (%) 15.5 15.1 14.3 11.9 10.5 10.3 10.3 10.7
Market CF yield (%) 7.7 7.5 8.5 9.0 9.7 10.1 10.3 11.4
Market net gearing (%) 18.4 14.6 19.6 22.3 24.2 23.0 21.4 19.0
EV/EBITDA (x) 11.1 10.7 10.4 10.1 9.9 9.5 8.7 8.1
Source: CS estimates
Source for all: CS estimates
16 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
CS Research Top ideas Tourism (GENM, GENT, AIRA)
Construction (Gamuda, IJM Corp)
Small caps (Padini, Karex, TDC, BAB)
PNB restructuring (Sime)
Others (CIMB)
Top Outperforms Year Price TP Upside Mkt Cap ADV P/B
Name Ticker end (RM) Rating (RM) (%) (RM mn) (RM mn) t t+1 t+2 t+1
SIME SIME MK Jun 9.50 O 11.20 18% 64,608 87.7 25.0 25.1 24.1 1.8
CIMB CIMB MK Dec 5.60 O 5.90 5% 49,663 87.4 13.7 11.0 9.6 1.1
Genting GENT MK Dec 9.69 O 10.60 9% 36,338 30.6 16.8 16.4 14.7 1.0
Genting Msia GENM MK Dec 5.45 O 6.28 15% 32,362 37.6 16.2 16.2 14.2 1.5
IJM IJM MK Mar 3.50 O 4.00 14% 12,638 18.0 15.8 20.5 15.8 1.3
Gamuda GAM MK Jul 5.25 O 5.90 12% 12,737 25.4 20.9 16.7 14.0 1.5
AirAsia AIRA MK Dec 2.88 O 3.10 8% 9,625 47.0 5.3 7.1 8.4 0.9
TIME dotCom TDC MK Dec 8.65 O 10.20 18% 5,002 3.3 25.6 22.3 18.7 2.1
Bumi Armada BAB MK Dec 0.75 O 0.95 27% 4,400 19.2 -30.7 10.7 9.5 0.7
Karex KAREX MK Jun 2.13 O 2.72 27% 2,135 3.6 32.0 43.9 25.9 4.1
Padini PAD MK Jun 2.96 O 3.70 25% 1,947 5.6 14.2 13.0 11.6 3.6
P/E
Top Outperforms Year Price TP Upside Mkt Cap ADV P/B
Name Ticker end (RM) Rating (RM) (%) (RM mn) (RM mn) t t+1 t+2 t+1
Tenaga TNB MK Aug 13.72 U 12.50 -9% 77,550 131.5 10.0 11.1 10.7 1.2
Public Bank PBK MK Dec 19.96 U 18.90 -5% 77,487 111.6 14.9 15.1 14.4 2.1
Maxis MAXIS MK Dec 6.37 U 5.60 -12% 47,841 18.8 23.7 26.4 26.6 9.5
P/E
Source: the BLOOMBERG PROFESSIONAL™ service Credit Suisse estimates Note: priced as of 23 Mar 2017
17 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Sime Darby (SIME MK, RM9.50, O, TP RM11.20)
Target price of RM11.20 = SoTP of its five core business units, valued at its respective sector P/B average.
PNB’s new captains - Wahid as Chairman and Rahman as the CEO. Good track records in execution.
Enhancing Sime’s value:
− Low lying fruits - who is swimming “naked”?
− Reaping market values – HSR and Carey island. Sime’s value lies in the undervalued landbank which has been accumulated over its 106-year history.
− Under-owned and under-valued—Sime’s current P/B is 1.7x vs IOI’s 3.6x, KLK’s 2.9x, and GENP’s 1.9x. Sime’s foreign shareholding of14.3% is close to GFC.
Bbg/RIC SIME MK / SIME.KL Rating (prev. rating) O (O) Shares outstanding (mn) 6,800.84 Daily trad vol - 6m avg (mn) 8.7 Daily trad val - 6m avg (US$ mn) 16.8 Free float (%) 39.1 Major shareholders PNB (47.5%)
Price (23 Mar 17 , RM) 9.50 TP (prev. TP RM) 11.20 (11.20) Est. pot. % chg. to TP 18 52-wk range (RM) 9.50 - 7.26 Mkt cap (RM/US$ bn) 64.6/ 14.6
Performance 1M 3M 12M
Absolute (%) 4.1 18.3 18.8 Relative (%) 1.8 10.3 16.9
Year 06/15A 06/16A 06/17E 06/18E 06/19E
Revenue (RM mn) 43,729 43,963 45,018 45,981 46,855 EBITDA (RM mn) 4,352 4,238 5,400 5,798 5,965 Net profit (RM mn) 2,313 2,409 2,513 2,624 2,648 EPS (CS adj. RM) 0.37 0.38 0.38 0.39 0.40 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.35 0.40 0.42 EPS growth (%) (32.6) 2.2 (0.7) 4.4 0.9 P/E (x) 25.5 25.0 25.1 24.1 23.8 Dividend yield (%) 2.6 2.8 2.8 2.9 2.9 EV/EBITDA (x) 18.2 18.1 13.5 12.6 12.3 P/B (x) 1.9 1.9 1.8 1.7 1.7 ROE (%) 7.8 7.7 7.4 7.3 7.2 Net debt(cash)/equity (%) 46.0 34.5 21.6 21.1 20.8
Note 1: Sime Darby Berhad is a Malaysia-based investment holding company. Its six business segments are plantation, property, industrial, motors, energy and utilities, and others.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
18 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Genting Malaysia (GENM MK, RM5.45, O, TP RM6.28)
GENM is investing RM10 bn (capex can be used to offset tax expenses too) to revamp Genting Highlands.
New product mix can retain visitors for a longer period of time (previously, 85% of visitors were day-trippers). Bodes well for GGR as there is scope for higher visitations to the casino.
A tourism play, supported by: (1) weak MYR; (2) improving relationship with China (Malaysia’s new BFF); (3) new product mix in Genting Highlands.
UK and US business should no longer be a drag in 2017.
Prefer GENM to GENT.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC GENM MK / GENM.KL Rating (prev. rating) O (O) Shares outstanding (mn) 5,938.04 Daily trad vol - 6m avg (mn) 6.3 Daily trad val - 6m avg (US$ mn) 6.9 Free float (%) 48.2 Major shareholders Genting Berhad
49.3%
Price (23 Mar 17 , RM) 5.45 TP (prev. TP RM) 6.28 (6.28) Est. pot. % chg. to TP 15 52-wk range (RM) 5.68 - 4.19 Mkt cap (RM/US$ mn) 32,362.3/ 7,310.2
Performance 1M 3M 12M
Absolute (%) 2.3 21.7 24.1 Relative (%) 0.0 13.6 22.3
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Revenue (RM mn) 8,396 8,932 10,204 11,121 12,141 EBITDA (RM mn) 2,306 2,433 3,025 3,508 4,008 Net profit (RM mn) 1,189 1,910 1,908 2,171 2,576 EPS (CS adj. RM) 0.21 0.34 0.34 0.38 0.45 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.30 0.36 0.41 EPS growth (%) (12.2) 60.1 (0.1) 13.8 18.7 P/E (x) 25.9 16.2 16.2 14.2 12.0 Dividend yield (%) 1.3 3.0 1.5 1.8 2.1 EV/EBITDA (x) 14.0 13.0 10.8 8.9 7.9 P/B (x) 1.7 1.6 1.5 1.4 1.2 ROE (%) 6.7 9.8 9.3 9.8 10.8 Net debt(cash)/equity (%) (0.4) (3.4) 1.3 (4.9) (3.4)
Note 1: ORD/ADR=25.00. Note 2: Genting Malaysia Berhad, formerly Resorts World Bhd, is involved in a tourist resort business at Genting Highlands, and its activities cover leisure and hospitality services, which comprise gaming, hotel, entertainment and amusement.
19 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Genting Bhd (GENT MK, RM9.69, O, TP RM10.60)
Suitable for deep value investors, in our view, as the stock is trading at a significant 37% discount to RNAV vs the long-term average of 22%.
Most of the negatives (sluggish prospects in Genting Singapore and flattish earnings growth in Genting Malaysia) have already been factored into the share price in 2016.
A laggard.
Key performance drivers:
(1) Full opening of new facilities in Genting Highlands
(2) Genting Singapore obtaining a spot in Japan’s gaming market.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC GENT MK / GENT.KL Rating (prev. rating) O (O) Shares outstanding (mn) 3,750.03 Daily trad vol - 6m avg (mn) 3.3 Daily trad val - 6m avg (US$ mn) 6.1 Free float (%) 58.1 Major shareholders Kien Huat Realty
39.8%
Price (23 Mar 17 , RM) 9.69 TP (prev. TP RM) 10.60 (10.60) Est. pot. % chg. to TP 9 52-wk range (RM) 9.85 - 7.50 Mkt cap (RM/US$ mn) 36,337.8/ 8,208.2
Performance 1M 3M 12M
Absolute (%) 9.1 26.4 2.7 Relative (%) 6.9 18.4 0.9
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Revenue (RM mn) 18,100 18,366 20,836 22,087 23,077 EBITDA (RM mn) 6,289 6,125 7,091 7,757 8,460 Net profit (RM mn) 1,388 2,146 2,198 2,451 2,720 EPS (CS adj. RM) 0.37 0.58 0.59 0.66 0.73 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.55 0.63 0.67 EPS growth (%) (8.8) 56.9 2.4 11.5 11.0 P/E (x) 26.4 16.8 16.4 14.7 13.3 Dividend yield (%) 0.4 1.3 0.9 1.0 1.1 EV/EBITDA (x) 9.8 9.8 9.4 9.3 9.2 P/B (x) 1.1 1.0 1.0 0.9 0.9 ROE (%) 4.7 6.4 6.1 6.5 6.8 Net debt(cash)/equity (%) (8.1) (11.2) (3.6) 1.8 5.5
Note 1: ORD/ADR=5.00. Note 2: Genting Berhad is an investment holding & management Co. having subsidiaries engaged in leisure & hospitality, plantation, the generation & supply of electric power, property dvlpt & management, genomics R&D, investments & oil & gas exploration, etc
20 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Air Asia (AIRA MK, RM2.88, O, TP RM3.10)
The cycle for regional airlines likely peaked in 2016 when oil bottomed; the corollaries of higher jet fuel prices are lower aggregate demand and/or thinner margins.
At the same time, competitive pressures have probably troughed, as even MAS will start expanding its fleet by end of 4Q17. In mitigation, AIRA has hedged ~75% of its fuel requirements, and delivery timings point to capacity pressure only starting from 3Q17 onwards.
The key remaining positive catalyst is the leasing arm sale, which should complete by 2Q17; crystallization of substantial USD-equity means that AIRA will be a beneficiary of a weaker MYR.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC AIRA MK / AIRA.KL Rating (prev. rating) O (O) [V] Shares outstanding (mn) 3,341.97 Daily trad vol - 6m avg (mn) 14.7 Daily trad val - 6m avg (US$ mn) 8.7 Free float (%) 64.5 Major shareholders Tune Air Sdn Bhd
(Tan Sri Anthony Francis Fernandes,
Datuk Kamarudin bin Meranun)
Price (23 Mar 17 , RM) 2.88 TP (prev. TP RM) 3.10 (3.10) Est. pot. % chg. to TP 8 52-wk range (RM) 3.25 - 1.77 Mkt cap (RM/US$ mn) 9,624.9/ 2,174.1
Performance 1M 3M 12M
Absolute (%) 1.8 24.7 56.5 Relative (%) (0.5) 16.6 54.7
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Revenue (RM mn) 5,948 6,924 8,195 9,092 9,482 EBITDAR 2,136.6 2,924.0 2,957.2 2,978.0 2,832.0 Net profit (RM mn) 730 1,520 1,349 1,151 930 EPS (CS adj. RM) 0.26 0.55 0.41 0.34 0.28 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.39 0.37 0.35 EPS growth (%) 94.5 108.2 (25.3) (15.7) (19.2) P/E (x) 11.0 5.3 7.1 8.4 10.4 Dividend yield (%) 1.0 1.4 3.2 2.9 2.4 EV/EBITDAR (x) 10.4 7.5 7.5 7.6 7.9 P/B (x) 1.6 1.2 0.9 1.0 0.9 ROE (%) 15.7 25.9 17.2 12.4 9.3 Net debt(cash)/equity (%) 228.9 133.6 91.5 78.5 69.9
Note 1: AirAsia Bhd is a short-haul, low cost carrier operating in Malaysia, with stakes in and operational control of affiliates in Thailand, Indonesia, Philippines, India and Japan. Its sister airline group, AirAsia X, focuses on long-haul routes.
21 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Gamuda (GAM MK, RM5.25, O, TP RM5.90)
Potential near-to-medium-term order-book expansion, as it is targeting RM3-4 bn new jobs (LRT 3, Pan Borneo Sabah and
Southern Double Track).
Possible upside to 2017 new order target should govt speed up ECRL implementation
Healthy pipeline of new orders; good visibility.
Well positioned to clinch >RM40-50 bn; Penang Transport Masterplan (RM32 bn), MRT 3 (RM30 bn), KL-Sg HSR
(>RM40 bn), East Coast Railink (RM55 bn).
Potential sale of its water assets could raise >RM1 bn cash and
be distributed as special dividends.
Net profit could grow >20% pa over next three years.
Foreign ownership of 23%, close to 15-yr low and well below the GFC low of 28%.
Trading at 16x 2017 P/E (vs historical average of 17x and
ASEAN peers at 19-28x)
Assuming Gamuda secures 10% of ECRL and KL-Sin HSR, TP could be raised to RM6.40/share.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC GAM MK / GAMU.KL Rating (prev. rating) O (O) Shares outstanding (mn) 2,426.11 Daily trad vol - 6m avg (mn) 4.2 Daily trad val - 6m avg (US$ mn) 4.6 Free float (%) 74.0 Major shareholders Generasi Setia 6.9%;
EPF 6.0%
Price (23 Mar 17 , RM) 5.25 TP (prev. TP RM) 5.90 (5.90) Est. pot. % chg. to TP 12 52-wk range (RM) 5.25 - 4.65 Mkt cap (RM/US$ mn) 12,737.1/ 2,877.1
Performance 1M 3M 12M
Absolute (%) 7.1 9.4 9.1 Relative (%) 4.9 1.3 7.3
Year 07/15A 07/16A 07/17E 07/18E 07/19E
Revenue (RM mn) 4,760 4,171 4,621 6,982 9,628 EBITDA (RM mn) 787 845 783 932 1,152 Net profit (RM mn) 682 626 805 974 1,182 EPS (CS adj. RM) 0.27 0.25 0.31 0.38 0.45 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.28 0.32 0.36 EPS growth (%) (4.7) (7.3) 25.3 19.2 19.7 P/E (x) 19.4 20.9 16.7 14.0 11.7 Dividend yield (%) 2.3 2.3 2.3 2.3 2.3 EV/EBITDA (x) 19.6 19.0 19.8 16.8 14.0 P/B (x) 1.7 1.6 1.5 1.3 1.2 ROE (%) 11.6 9.5 11.3 12.6 13.6 Net debt(cash)/equity (%) 40.3 46.2 34.8 33.8 33.6
Note 1: Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the company provides earthwork construction, manufactures and supplies road-surfacing materials, and operates quarry and road-laying projects.
22 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
IJM (IJM MK, RM3.50, O, TP RM4.00)
Orderbook = RM9 bn out of which >20% awarded in FY2017. Potential wins include MRT 2 elevated works, LRT 3, NPE
extension , Light 2, ECRL.
CPO price strength will drive plantation earnings; RM100 increase in CPO price = +RM20 mn PBT.
Property sales expected to be flat in FY17. Will focus on landed property where demand is resilient
To complete the sale of its stake in a few Indian tollways to
raise another US$72 mn in FY17.
Port earnings should have bottomed as throughput set to
rebound by end-2017.
Positive catalyst : (1) orderbook expansion, (2) dividend surprise.
Assuming IJM secures 10% of works on ECRL and KL-Sin HSR, TP could be RM4.70/sh (FYMar19 net profit could have
12% upside)
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC IJM MK / IJMS.KL Rating (prev. rating) O (O) Shares outstanding (mn) 3,610.87 Daily trad vol - 6m avg (mn) 4.9 Daily trad val - 6m avg (US$ mn) 3.7 Free float (%) 61.9 Major shareholders EPF (14%); PNB
(11%)
Price (23 Mar 17 , RM) 3.50 TP (prev. TP RM) 4.00 (4.00) Est. pot. % chg. to TP 14 52-wk range (RM) 3.61 - 3.10 Mkt cap (RM/US$ mn) 12,638.1/ 2,854.8
Performance 1M 3M 12M
Absolute (%) 3.2 10.1 1.2 Relative (%) 1.0 2.0 (0.7)
Year 03/15A 03/16A 03/17E 03/18E 03/19E
Revenue (RM mn) 5,448 5,128 7,573 8,220 8,068 EBITDA (RM mn) 1,543 1,639 1,388 1,710 1,866 Net profit (RM mn) 480.9 793.6 612.0 794.4 902.6 EPS (CS adj. RM) 0.32 0.22 0.17 0.22 0.25 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.17 0.19 0.22 EPS growth (%) (41.7) (31.0) (22.9) 29.8 13.6 P/E (x) 10.9 15.8 20.5 15.8 13.9 Dividend yield (%) 4.3 2.5 2.0 2.5 2.9 EV/EBITDA (x) 11.0 10.2 12.9 10.5 9.2 P/B (x) 0.6 1.4 1.3 1.3 1.2 ROE (%) 6.3 9.1 6.6 8.2 8.9 Net debt(cash)/equity (%) 45.2 40.4 49.7 48.4 38.2
Note 1: IJM Corporation Berhad operates in the construction, property development and investment holding activities. Through its subsidiaries, the company also operates in the construction, quarrying, plantation and educational businesses.
23 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
TIME dotCom (TDC MK, RM8.65, O, TP RM10.20)
We believe the company offers the best growth prospects among Malaysia-listed telecommunication companies (we
project FY15-18E top-line and bottom-line growth of 15-16%).
Retail segment an avenue for growth: capex has already been sunk in (registered 300k homes passed and penetration at
merely ~30%, suggesting room for growth).
Taking delivery of three new submarine cables: to cater to
demand for data within ASEAN.
Solid balance sheet with room for higher DPS; FCF turning +ve in 2017E.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC TDC MK / TCOM.KL Rating (prev. rating) O (O) Shares outstanding (mn) 578.29 Daily trad vol - 6m avg (mn) 0.3 Daily trad val - 6m avg (US$ mn) 0.6 Free float (%) 66.1 Major shareholders Khazanah Nasional
Berhad (31.4)
Price (23 Mar 17 , RM) 8.65 TP (prev. TP RM) 10.20 (10.20) Est. pot. % chg. to TP 18 52-wk range (RM) 8.70 - 6.94 Mkt cap (RM/US$ mn) 5,002.2/ 1,129.9
Performance 1M 3M 12M
Absolute (%) 6.6 12.4 17.6 Relative (%) 4.3 4.4 15.7
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Revenue (RM mn) 682 767 897 1,065 1,156 EBITDA (RM mn) 263.9 292.6 353.2 418.7 467.2 Net profit (RM mn) 164.0 195.7 224.8 268.2 304.7 EPS (CS adj. RM) 0.29 0.34 0.39 0.46 0.53 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.40 0.46 0.52 EPS growth (%) 20.1 18.1 14.9 19.3 13.6 P/E (x) 30.2 25.6 22.3 18.7 16.4 Dividend yield (%) 9.3 3.5 1.1 1.3 1.5 EV/EBITDA (x) 18.6 16.0 13.3 11.1 9.7 P/B (x) 2.4 2.3 2.1 2.0 1.8 ROE (%) 7.4 9.2 9.9 10.9 11.4 Net debt(cash)/equity (%) (4.5) (15.2) (12.4) (13.6) (17.1)
Note 1: Time is a fixed line telecommunications provider in Malaysia. The company offers a full suite of domestic and international connectivity, and data centre solutions to the Wholesale, Enterprise and SME & Consumer markets in Malaysia.
24 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Padini (PAD MK, RM2.96, O, TP RM3.70)
Consumer downtrading remains a key trend in 2017. Padini is one of the best retail proxies given its affordable price points
and reasonable quality clothing offerings. SSSG in FY16 was 23%; we expect FY17 to grow by 7%.
Targeting 15 new stores in FY17. While the group has grown
volumes through its bundling offers, the co has started to unbundle the “higher range products” thus allowing for some
margin improvement.
Stock is trading at a 13x FY17E P/E offering ~4% yield. Given its net cash position and strong free cash flow, we see room for
active capital management.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC PAD MK / PDNI.KL Rating (prev. rating) O (O) Shares outstanding (mn) 657.91 Daily trad vol - 6m avg (mn) 1.5 Daily trad val - 6m avg (US$ mn) 0.9 Free float (%) 48.5 Major shareholders Yong family (45%)
Price (23 Mar 17 , RM) 2.96 TP (prev. TP RM) 3.70 (3.70) Est. pot. % chg. to TP 25 52-wk range (RM) 3.06 - 1.93 Mkt cap (RM/US$ mn) 1,947.4/ 439.9
Performance 1M 3M 12M
Absolute (%) 8.4 14.3 41.9 Relative (%) 6.1 6.3 40.0
Year 06/15A 06/16A 06/17E 06/18E 06/19E
Revenue (RM mn) 978 1,301 1,489 1,679 1,900 EBITDA (RM mn) 144.3 224.0 242.6 268.9 295.6 Net profit (RM mn) 80.1 137.4 150.7 168.4 186.0 EPS (CS adj. RM) 0.12 0.21 0.23 0.26 0.28 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.23 0.26 0.27 EPS growth (%) (11.7) 71.4 9.7 11.7 10.4 P/E (x) 24.4 14.2 13.0 11.6 10.5 Dividend yield (%) 3.4 3.9 3.9 4.3 4.7 EV/EBITDA (x) 12.8 7.9 7.2 6.3 5.5 P/B (x) 4.8 4.2 3.6 3.1 2.7 ROE (%) 20.2 31.4 29.8 28.8 27.6 Net debt(cash)/equity (%) (24.2) (35.7) (34.8) (39.3) (42.9)
Note 1: A leading retailer in Malaysia that sells garments, shoes, accessories through its 9 labels. Most prominent brands are Padini and Vincci. Also exports mainly to Middle East and ASEAN countries.
25 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Karex (KAREX MK, RM2.13, O, TP RM2.72)
Tender market is expected to rebound following a lull period. Karex with the largest production capacity put it in a sweet spot
to benefit from large emergency tender orders.
Its own brand condoms are gaining good traction, with the group aiming to launch in the UK, Singapore and Thailand in
the next 1-2 years. If successfully executed, margins should improve over time.
Latex prices have been on a rise, and this is likely to weed out smaller players without the ability to pass on costs. Karex will inevitably be hurt by the higher raw material cost as well, but is
optimistic that ASPs and utilisation rates will improve given the
better outlook for all tender, commercial and branded condoms market.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC KAREX MK / KARE.KL Rating (prev. rating) O (O) Shares outstanding (mn) 1,002.38 Daily trad vol - 6m avg (mn) 1.2 Daily trad val - 6m avg (US$ mn) 0.6 Free float (%) 39.8 Major shareholders Goh family (32%)
Price (23 Mar 17 , RM) 2.13 TP (prev. TP RM) 2.72 (2.72) Est. pot. % chg. to TP 27 52-wk range (RM) 2.70 - 1.98 Mkt cap (RM/US$ mn) 2,135.1/ 482.3
Performance 1M 3M 12M
Absolute (%) (9.7) (13.8) (15.3) Relative (%) (12.0) (21.8) (17.1)
Year 06/15A 06/16A 06/17E 06/18E 06/19E
Revenue (RM mn) 298.1 343.6 464.1 560.2 601.2 EBITDA (RM mn) 78.8 83.6 66.5 111.4 132.4 Net profit (RM mn) 59.6 66.7 48.6 82.6 98.4 EPS (CS adj. RM) 0.06 0.07 0.05 0.08 0.10 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.05 0.08 0.10 EPS growth (%) 56.5 12.0 (27.1) 69.8 19.2 P/E (x) 35.9 32.0 43.9 25.9 21.7 Dividend yield (%) 1.1 1.2 0.9 1.5 1.8 EV/EBITDA (x) 24.8 24.1 30.7 18.2 15.0 P/B (x) 4.9 4.5 4.1 3.7 3.3 ROE (%) 18.2 14.6 9.8 15.1 16.1 Net debt(cash)/equity (%) (42.7) (24.7) (17.7) (17.9) (23.8)
Note 1: One of the world's largest rubber condom manufacturer; a global market leader since 2011.
26 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
CIMB (CIMB MK, RM5.60, O, TP RM5.90)
Cash call risk has eased and mgt aims to raise CET 1 ratio to >11.5% by end-2017 (from 11.3% in 2016) and 12% by
2018.
Management believes credit cost in Thailand and Indo should have peaked in 2016 and Malaysia asset quality likely to remain
healthy.
Management intends to further reduce CIR to <53% in 2017
and 50% IN 2018 (from 54% in 2016).
Management has set 2017 ROE target of 9.5% (vs 8.3% in 2016) and indicated 2018 target should be closer to 12-13% (instead of 15%).
Foreign ownership well below GFC levels.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC CIMB MK / CIMB.KL Rating (prev. rating) O (O) Shares outstanding (mn) 8,868.38 Daily trad vol - 6m avg (mn) 15.1 Daily trad val - 6m avg (US$ mn) 17.0 Free float (%) 58.5 Major shareholders Khazanah 28.6%,
EPF 12.9%
Price (23 Mar 17 , RM) 5.60 TP (prev. TP RM) 5.90 (5.90) Est. pot. % chg. to TP 5 52-wk range (RM) 5.65 - 4.13 Mkt cap (RM/US$ bn) 49.7/ 11.2
Performance 1M 3M 12M
Absolute (%) 10.2 22.3 18.3 Relative (%) 8.0 14.2 16.4
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Pre-prov Op profit (RM mn) 6,146.8 7,413.6 8,043.2 9,286.0 10,544.5 Net profit (RM mn) 2,850 3,564 4,726 5,822 6,693 EPS (CS adj. RM) 0.34 0.41 0.51 0.58 0.62 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.48 0.53 0.59 EPS growth (%) (12.5) 21.8 24.4 13.9 7.1 P/E (x) 16.6 13.7 11.0 9.6 9.0 Dividend yield (%) 2.4 2.9 3.5 4.0 4.3 BVPS (CS adj. RM) 4.84 5.13 5.21 5.33 5.46 P/B (x) 1.16 1.09 1.07 1.05 1.03 ROE (%) 7.2 8.2 9.9 11.0 11.5 ROA (%) 0.7 0.8 0.9 1.1 1.2 Tier 1 ratio (%) 13.3 13.7 18.2 17.8 17.6
Note 1: CIMB Group Holdings Berhad, formerly known as Bumiputra-Commerce Holdings Berhad, is an investment holding company whose subsidiaries provide commercial and merchant banking as well as stockbroking, fund management, investment consultancy.
27 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Bumi Armada (BAB MK, RM0.75, O, TP RM0.95)
One major FPSO has achieved first oil, the other is close to it. By 2Q17, announced in Aug, full-quarter impact should see
FCFF and earnings rebound extensively.
OSV weakest link but still slightly cash positive and offers some exposure to cyclical recovery.
Definite prospects pointing to double-digit FCFE yield once major FPSOs kick in, and indicating RM0.95 FV but potential
reversal of previous credit risks (Claire, Perdana, Perkasa) could yield another ~RM0.33/shr. Downside risk: further penalties on Kraken.
Source: Credit Suisse Research Analyst estimates, Company data, Thomson Analytics
Bbg/RIC BAB MK / BUAB.KL Rating (prev. rating) O (O) Shares outstanding (mn) 5,866.27 Daily trad vol - 6m avg (mn) 20.1 Daily trad val - 6m avg (US$ mn) 3.1 Free float (%) 70.5 Major shareholders Tan Sri Ananda
Krishnan
Price (23 Mar 17 , RM) 0.75 TP (prev. TP RM) 0.95 (0.95) Est. pot. % chg. to TP 27 52-wk range (RM) 0.81 - 0.51 Mkt cap (RM/US$ mn) 4,399.7/ 993.8
Performance 1M 3M 12M
Absolute (%) (5.1) 25.0 (5.1) Relative (%) (7.3) 17.0 (6.9)
Year 12/15A 12/16A 12/17E 12/18E 12/19E
Revenue (RM mn) 2,180 1,417 3,197 3,478 3,174 EBITDA (RM mn) 1,013 398 1,409 1,539 1,650 Net profit (RM mn) 344.1 (143.4) 412.5 464.0 593.9 EPS (CS adj. RM) 0.06 (0.02) 0.07 0.08 0.10 - Change from prev. EPS (%) n.a. n.a. 0 0 0 - Consensus EPS (RM) n.a. n.a. 0.05 0.07 0.08 EPS growth (%) (23.2) n.m. n.m. 12.5 28.0 P/E (x) 12.8 n.m. 10.7 9.5 7.5 Dividend yield (%) 2.2 1.1 0 1.9 2.1 EV/EBITDA (x) 10.8 36.3 9.7 8.0 6.8 P/B (x) 0.6 0.8 0.7 0.7 0.6 ROE (%) 4.9 (2.2) 7.0 7.4 8.8 Net debt(cash)/equity (%) 89.1 176.3 151.6 121.2 98.0
Note 1: Bumi Armada leases out FPSOs (Floating Production Storage & Offloading), charters out OSVs (Offshore Support Vessels) and provides T&I (transportation and installation) services.
28 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Economic summary 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F
National accounts, population and unemploymentReal GDP grow th (%)
(1) 5.4 5.8 6.8 5.3 5.6 6.3 4.8 -1.5 7.4 5.3 5.5 4.7 6.0 5.0 4.2 4.5 4.2
Grow th in real priv ate consumption (%) 3.9 8.1 9.8 9.1 6.6 10.4 8.7 0.6 6.9 6.9 8.3 7.2 7.0 6.0 6.1 6.0 6.0
Grow th in real fix ed inv estment (%) 0.7 2.9 3.5 4.9 6.3 10.3 2.4 -2.8 11.9 6.4 19.0 8.1 4.8 3.7 2.7 5.5 3.5
Fix ed inv estment (% of GDP) 22.8 22.1 21.5 21.4 21.5 22.3 21.8 21.5 22.4 22.7 25.6 26.4 26.1 25.8 25.4 25.6 25.5
Nominal GDP ($bn) 108.1 118.1 133.7 147.9 167.7 199.5 238.1 208.5 255.2 298.2 314.4 323.4 338.1 285.0 296.7 297.1 311.7
Population (mn) 24.9 25.5 26.0 26.4 26.9 27.4 27.8 28.3 28.7 29.2 29.6 30.1 30.1 30.9 31.4 31.8 32.3
GDP per capita ($) 4111.7 4399.6 4876.7 5252.3 6234.8 7292.6 8559.3 7373.8 8882.8 10218.7 10612.2 10752.4 11241.5 9209.0 9453.4 9341.6 9665.1
Prices, interest rates and exchange ratesCPI inflation (% y ear-on-y ear change, December ov er December) 1.7 1.2 2.1 3.3 3.1 2.3 4.5 1.0 2.1 3.0 1.3 3.0 2.8 2.7 1.6 3.4 2.4
CPI inflation (% change in av erage index for the y ear) 1.8 1.1 1.5 3.1 3.6 2.0 5.4 0.6 1.7 3.2 1.7 2.1 3.1 2.1 2.1 3.8 2.4
Ex change rate (MYR per USD, end-y ear) 3.8 3.8 3.8 3.8 3.5 3.3 3.5 3.4 3.1 3.2 3.1 3.3 3.5 4.29 4.49 4.45 4.50
Ex change rate (MYR per USD, av erage) 3.8 3.8 3.8 3.8 3.7 3.4 3.3 3.5 3.2 3.1 3.1 3.2 3.3 4.06 4.14 4.41 4.50
REER (% y ear-on-y ear change, December ov er December) (2) -0.7 -4.9 -0.1 0.0 2.0 0.2 -1.3 -1.6 5.7 -2.1 1.7 -1.4 0.0 -12.1 -2.0 -1.0 0.0
Nominal w age grow th (% y ear-on-y ear change) (3) 5.0 3.9 3.5 3.1 2.1 4.2 4.7 2.5 8.5 3.8 6.5 7.8 4.7 5.9 5.0 5.0 4.0
Ov ernight policy rate (%, end-y ear) (4) 5.0 4.5 2.7 3.0 3.5 3.5 3.3 2.0 2.8 3.0 3.0 3.0 3.3 3.3 3.0 3.0 3.0
Fiscal data (5)
General gov ernment fiscal balance (% of GDP) -4.9 -4.7 -3.8 -3.3 -3.1 -3.0 -4.5 -6.5 -5.3 -4.7 -4.3 -3.8 -3.4 -3.2 -3.1 -3.0 -2.7
General gov ernment primary fiscal balance (% of GDP) -2.6 -2.3 -1.7 -1.3 -1.1 -1.1 -2.9 -4.5 -3.4 -2.7 -2.3 -1.7 -1.3 -1.1 -1.0 -0.8 -0.5
General gov ernment ex penditure (% of GDP) 25.3 25.3 23.4 22.3 23.2 23.4 24.6 28.1 24.7 25.0 25.7 24.7 23.3 22.1 20.4 19.9 19.9
General gov ernment rev enue (% of GDP) 20.3 20.6 19.6 19.0 20.1 20.4 20.1 21.6 19.4 20.3 21.4 20.9 19.9 18.9 17.3 16.9 17.2
Gross general gov ernment debt (% of GDP, end-y ear) 40.2 42.1 42.6 40.8 39.4 38.9 38.6 49.3 49.6 50.0 51.6 53.0 52.7 54.5 52.7 51.9 51.6
Money supply and creditBroad money supply (M3, % of GDP) 93.6 95.1 105.2 110.3 117.7 115.6 113.2 133.9 128.3 132.6 136.5 141.0 139.5 137.3 133.1 127.8 124.2
Broad money supply (M3, % y ear-on-y ear change) 11.1 25.2 15.6 17.1 9.5 13.4 9.5 7.2 14.7 9.7 8.4 7.5 2.9 3.0 4.0 3.5
Domestic credit (% of GDP) 129.8 128.6 116.3 112.5 109.5 105.9 107.6 126.6 122.6 123.5 128.8 136.6 139.5 143.0 143.3 141.6 140.9
Domestic credit (% y ear-on-y ear change) 8.3 2.4 6.6 6.8 7.8 17.6 9.0 8.2 11.8 11.1 11.3 10.9 7.2 6.5 7.0 6.0
Domestic credit to the priv ate sector (% of GDP) 130.0 125.9 117.2 114.3 109.7 106.2 103.6 118.9 116.6 117.8 123.7 129.7 130.1 134.8 134.1 131.9 130.6
Domestic credit to the priv ate sector (% y ear-on-y ear change) 5.8 5.4 7.5 5.4 7.9 12.9 6.2 9.7 12.1 11.9 9.9 8.9 8.4 5.7 6.5 5.5
Balance of paymentsEx ports (goods and non-factor serv ices, % of GDP) 104.1 102.8 110.9 109.6 108.9 103.1 96.6 88.7 86.9 85.3 79.3 75.6 73.8 70.9 67.2 70.0 69.1
Imports (goods and non-factor serv ices, % of GDP) 87.5 83.9 91.3 88.3 87.7 83.8 74.9 69.1 71.0 69.7 68.5 67.1 64.5 63.3 60.8 63.2 62.6
Ex ports (goods and non-factor serv ices, % y ear-on-y ear change in $ v alue) 6.6 7.9 22.1 12.6 12.7 12.6 11.9 -19.6 19.9 14.6 -1.9 -1.9 2.0 -19.0 -1.3 4.3 3.5
Imports (goods and non-factor serv ices, % y ear-on-y ear change in $ v alue) 6.5 4.7 23.3 10.2 12.7 13.6 6.7 -19.3 25.9 14.7 3.7 0.7 0.5 -17.3 0.1 4.0 4.0
Current account balance ($bn) 8.0 13.3 15.1 20.7 26.2 29.7 39.4 31.4 25.7 32.5 16.2 11.3 14.8 8.5 6.1 7.4 7.2
Current account balance (% of GDP) 7.6 11.6 11.6 14.4 15.6 14.9 16.6 15.1 10.1 10.9 5.2 3.5 4.4 3.0 2.0 2.5 2.3
Net FDI inflow s ($bn) 1.3 1.1 2.6 1.0 0.0 -2.7 -7.8 -6.3 -4.3 -3.1 -7.9 -2.0 -5.5 1.2 4.3 2.0 2.0
Scheduled ex ternal debt amortization ($bn) 4.6 5.8 4.8 4.6 4.3 5.2 6.2 6.2 6.8 7.4 7.7 7.5 7.0 7.0 7.0 7.0 7.0
Foreign debt and reservesForeign debt ($bn) 48.9 49.1 52.8 52.3 50.9 55.9 66.6 68.3 138.8 170.1 197.2 214.4 215.0 194.3 190.0 190.0 190.0
Public ($bn) 26.5 25.5 25.5 22.8 21.2 18.4 25.2 26.3 52.6 60.4 72.2 73.4 69.9 70.9 70.9 70.9 70.9
Priv ate ($bn) 22.4 23.7 27.3 29.5 29.7 37.4 41.4 41.9 86.2 109.7 125.0 141.0 145.1 123.4 119.1 119.1 119.1
Foreign debt (% of GDP) 45.2 41.6 39.5 35.4 30.4 28.0 28.0 32.7 54.4 57.1 62.7 66.3 63.6 68.2 64.0 63.9 60.9
Foreign debt (% of ex ports of goods and serv ices) 43.4 40.5 35.6 32.3 27.9 27.2 28.9 36.9 62.6 66.9 79.1 87.7 86.2 96.1 95.2 91.3 88.2
Central bank gross FX reserv es ($bn) 33.7 44.2 66.2 70.2 82.5 101.3 91.5 96.7 106.5 133.6 139.7 134.9 115.9 95.3 98.0 98.0 98.0
Central bank gross FX reserv es, including forw ard FX transactions ($bn) 33.7 44.8 74.3 70.2 85.1 115.1 91.5 97.3 114.3 140.2 147.0 138.1 115.9 95.3 98.0 98.0 98.0
Central bank gross non-gold FX reserv es ($bn) (6) 33.4 43.9 65.9 69.9 82.2 101.1 91.2 95.4 104.9 131.8 137.8 133.5 114.6 94.0 96.7 96.7 96.7
(1) Real GDP from 2001 has been rebased to 2000=100. (2) Real ef fect ive exchange rate, increase indicates appreciat ion. (3) Salaries and wages in the manufacturing sector. (4) BNM changed the policy rate from the intervent ion rate
to the overnight rate in
Source Bank Negara Malaysia, CEIC, Credit Suisse
29 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
Which stocks could be vulnerable? Foreign ownership as a % of share capital Foreign ownership as a % of total foreign holdings
High foreign ownership (as a % of share cap) – AirAsia, GENT,
GENM, Public Bank, IJM.
High foreign ownership (as a % of total foreign holdings) –
Public Bank, Tenaga, GENT, Maybank, GENM
0% 10% 20% 30% 40% 50% 60%
MMHEStar Media
Pavillion REITMaxis
SP SetiaGenting Plantations
CMMTUEM Sunrise
YTL PowerHong Leong Bank
RHB BankPetronas Chemicals
DiGiFelda
WestportsMISCHLFG
Bumi ArmadaAxiata Group
Telekom MalaysiaSunway REIT
Sime DarbyKL Kepong
AstroIOI Properties
Mah SingPOS Malaysia
Malayan BankingBAT Malaysia
IOI CorpMalaysia Airports
IHHGamuda
BursaCIMB
AMMBTenaga Nasional
AllianceIJM
Public BankGenting Msia
GentingAir Asia
0 50 100 150 200 250 300
MMHEStar Media
Pavillion REITCMMT
Bumi ArmadaUEM Sunrise
POS MalaysiaMah Sing
Genting PlantationsSunway REIT
SP SetiaFeldaBursa
YTL PowerIOI Properties
WestportsAlliance
HLFGRHB Bank
BAT MalaysiaAstro
Malaysia AirportsGamuda
Hong Leong BankTelekom Malaysia
MaxisAMMB
KL KepongMISC
IJMDiGi
Air AsiaIOI Corp
Axiata GroupPetronas Chemicals
Sime DarbyCIMB
IHHGenting Msia
Malayan BankingGenting
Tenaga NasionalPublic Bank
30 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
P/E valuations FY17E P/E FY18 P/E
-10 0 10 20 30 40
Felda
MyEG
IOI Corp
Dialog
Maxis
Digi
Gent Plant
Kossan
Top Glove
Gamuda
Genting Msia
Icon Offshore
Padini
HLFG
Uzma
CIMB
AirAsia X
AirAsia
>40x >40x >40x
Loss-making Loss-making
0 5 10 15 20 25 30
Felda
MyEG
IOI Corp
Karex
KL Kepong
Digi
Astro
Top Glove
Pet Chem
Genting
AirAsia X
Gamuda
Padini
Maybank
Alliance FG
Uzma
Bumi Armada
AirAsia
>30x >30x >30x
Source for all: CS estimates, the BLOOMBERG PROFESSIONAL™ service
31 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
CS Malaysia Team
32 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary
33 CREDIT SUISSE SECURITIES MALAYSIA Sales commentary