Bimb Research Highlights

Author: kltrader   |   Latest post: Fri, 20 Nov 2020, 5:02 PM


SKP Resources - A record high quarter

Author: kltrader   |  Publish date: Fri, 20 Nov 2020, 5:02 PM

  • Overview. SKP reported a record breaking quarterly net profit of RM44.1m (+77% yoy) for 2QFY21 mainly due to substantial orders from existing key customers. On qoq basis, net profit spiked by 339% owing to higher revenue, different product mix, and better cost management. Overall, profit margin improved to 6.1% (+3.6 ppts qoq, 1 ppts yoy).
  • Key highlights. Printed circuit board (PCB) segment contributed positively during the quarter and the company also utilized capacity productively by working on new products. SKP expects to expand Printed Circuit Board Assembly (PCBA), injection moulding and engineering capabilities to cope with additional orders from existing and new customers.
  • Against estimates: Inline. The 1HFY21 net profit of RM54.1m (+25% yoy) made up 45% of consensus full year forecast.
  • Outlook. We believe demand for EMS products will grow on better prospect from the change in brand-owner to hire-contract manufacturer and only focusing on product design, development, and marketer; widely adapted by Western brands. SKP’s multiple capacity expansions are expected to materialize from a widened product portfolio and expectation of securing more orders from key customers in the near-term. SKP continued to command solid fundamentals with a better net cash position of RM39.8m or 3 sen net cash/ share as at 1HFY21

Source: BIMB Securities Research - 20 Nov 2020

Labels: SKPRES
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GHL System- Strong recovery

Author: kltrader   |  Publish date: Fri, 20 Nov 2020, 5:01 PM

  • Overview. 3Q20 core profit surged 70% yoy and over 100% qoq to RM12.7m. This was attributable to strong recovery in all business segments across regional markets (Table 2 & Table 3) coupled with lower net opex during the quarter.
  • Key highlights. Transaction processing value (TPV) for e-pay and card payment services recorded the highest value in 3Q20 at RM1.1bn and RM4.7bn respectively (Table 4). Still, gross profit per transaction value was relatively low due to product mix but improving as more merchants are starting to reopen.
  • Against estimates: Below. 9MFY20 core profit trailed ours but inline with consensus’ estimate at 53% and 75% respectively. We revised our 2020F/2021F/2022F earnings by -25%/-17%/8% (Table 5) as we see slower merchants acquiring activity and weaker gross profit for TPA business may continue in 2021 mainly due to Covid-19 pandemic.
  • Outlook. We remain positive on GHL’s long-term business prospects amidst continuous efforts from the government to adopt digital payment as well as rise in contactless payment trend. Also, by assuming Covid-19 vaccine to be widely available by end-2021, we foresee stronger earnings growth in 2022 underpinned by recovery in consumer consumption and tourism, in our view. We expect GHL’s earnings to grow at a CAGR of 31% over 2019-2022F.
  • Our call. Maintain BUY with higher DCF-derived TP of RM2.15 (from RM1.43; ex-bonus) (WACC: 8.7%, g: 3%) (Table 6). Our valuation implies 2021F/2022F PE of 58x/37x

Source: BIMB Securities Research - 20 Nov 2020

Labels: GHLSYS
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Sunway Construction- Earnings normalized

Author: kltrader   |  Publish date: Fri, 20 Nov 2020, 5:00 PM

  • Overview. SunCon’s 3Q20 revenue advance advanced 4.2% YoY to RM419.4m and core earnings of RM31.8m (-21.8% YoY), bringing 9MFY20 core earnings to RM53.8m (-46.6% YoY) on the back of lower construction segment contribution. On qoq basis, both revenue and core earnings recovered due to the resumption of on-site activities from MCO impact.
  • Key highlights. Despite higher construction contribution, blended margin fell amid the completion of key projects. On the other hand precast segment registered a profit due to recognition of higher margin projects.
  • Against estimates: Below. Suncon’s 9MFY20 came in behind both our and consensus’ forecast at 61.8% and 70% respectively. The key setback was mainly from lower both construction and precast contribution during 2QFY20 due to MCO impact.
  • Outlook. Despite the earnings shortfall, we maintain our FY20 earnings forecast as we expect construction contribution to escalate in 4Q20. Meanwhile, precast segment in Singapore was given green light to commence work by the Singapore government starting September 2020.
  • Maintained our TP on SunCon at RM1.67 based on SOP valuation, tagged to FY21 earnings. We reckon SunCon will continue to be backed by its parent company and this could provide continuous earnings visibility to the group. Maintained HOLD rating.

Source: BIMB Securities Research - 20 Nov 2020

Labels: SUNCON
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Petronas Chemicals - Slower ASP recovery than expected

Author: kltrader   |  Publish date: Thu, 19 Nov 2020, 4:49 PM

  • Overview. PChem 3Q20 core profits declined 10% yoy to RM556m due to weaker average selling price (ASP), partially offset by higher sales volume on higher plant utilisation (PU). Our core profits exclude unrealised FX loss worth RM85m from revaluation of USDdenominated shareholders’ loan. On qoq basis, earnings more than doubled (2Q20: RM159m) as ASP recovered.
  • Key highlights. 3Q20 plant utilisation (PU) was higher at 90% (3Q19: 81%) on lower maintenance activities.
  • Against estimates: Below. 9M20 core profit of RM1.1bn (-44% yoy) came in behind both our and consensus’ forecast at 56% and 61% respectively. The main deviation against our forecast was due to slower ASP recovery than we expected. We cut FY20/21/22F earnings by 17%/12%/10% (Table 4) as we assumed lower ASP.
  • Outlook. Product prices are expected to remain weak despite initial signs that they could have bottomed out in 2Q20.
  • Our call. Downgrade to TRADING SELL (from HOLD) with lower DCF derived TP of RM5.50 (from RM6.60). While we continue to favor the stock on a longer term perspective for growth potential in specialty chemical space as well as its strong net cash balance of RM10.7bn (or RM1.34/share), we believe the stock price has ran ahead of fundamentals amid downcycle in petrochemicals. Look to accumulate at lower level.

Source: BIMB Securities Research - 19 Nov 2020

Labels: PCHEM
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Kuala Lumpur Kepong - Positive outlook ahead

Author: kltrader   |  Publish date: Thu, 19 Nov 2020, 4:49 PM

  • Overview. KLK’s 4Q20 core PBT increased 38% yoy to RM336.3m mainly due to higher profit contribution from plantation segments as margin rose to 11.5% from 7.5% in 4Q19 on higher average selling price realised of palm products. Higher contribution from Manufacturing and Property segments also contributed to the impressive results. On quarterly basis, core PBT increased 11% mainly due to 1) better margins from plantation segment on higher ASP realized of CPO and PK, and lower CPO production cost, and 2) higher margin and profit contribution from manufacturing segment due to better profits recorded in Malaysia and China operations.
  • Against estimates: Inline. FY20 core PBT was within our estimates. Higher ASP realised of PO achieved and better contributions from processing and trading operations negated the lower FFB and CPO production achieved during the period (Table 2 and 3) – hence, improving plantation margin to 10.4% from 6.2% in FY19. Higher contribution from Manufacturing and Property Development segments, and share of results from associate also contributed to the encouraging results.
  • Dividend. The board will recommend the payment of a final dividend at a later date. The total declared DPS year-to-date for FY20 is 15sen (FY19: 15sen interim dividend and 35sen final dividend). At the current market price, this would translate into DY of 0.64%.
  • Outlook. We remain optimistic on KLK’s long-term earnings growth prospect although weak production and higher costs are expected to continue to be a risk to KLK’s earnings in the near term.
  • Our call. Maintain HOLD with unchanged TP of RM23.10 based on P/B of 2.23x and historical 3-years average BV/share of RM10.36. Given the current prospect of improved palm product prices and recovery in demand, we maintain our earnings forecast for FY21 and FY22.

Source: BIMB Securities Research - 19 Nov 2020

Labels: KLK
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TSH Resources - Riding on higher CPO price

Author: kltrader   |  Publish date: Thu, 19 Nov 2020, 4:49 PM

  • Overview. TSH’s 3Q20 earnings came-in higher yoy at RM24.1m as revenue increased 7% to RM194.2m on account of higher ASP realised of CPO, aided by lower finance costs and higher share from associate. On nine-month period, the strong profit was a result of higher contribution from palm product segment as revenue increased significantly on higher ASP realised of palm products coupled with higher share of contribution from associate and lower operating expenses.
  • Key highlights. 1H20 FFB increased 5.2% yoy to 426.8k tonnes, nonetheless, for the 10-month period 2020, the Group achieved FFB production growth of 0.1% yoy to 745k tonnes of which Indonesian estates registered growth of 0.3% yoy to c. 680k tonnes whilst Malaysian estates recorded a drop of 16.7% to c. 65k tonnes – indicating that 2H20 production will possibly be lower or grow at minimal or flat than 2H19. Given the scenario, we tweaked our FY20 earnings forecast to RM60m from RM63m previously to reflect our adjustment on lower FFB and CPO production assumption and 2% increase in ASP of palm products.
  • Against estimates: Inline. TSH’s 9M20 core profit was within our estimates, making up 73% of full year forecast.
  • Outlook. We expect performance of Palm Product segment in the coming quarter to sustain given that current CPO prices are trading at multi-year high of RM3,511.50/MT as of yesterday quote, 17th Nov 20. We believe earnings growth would be driven by production from Indonesian estates, as more planted areas come into maturity and harvesting due to better age profile (Indonesia: 9.0 years; Malaysian: 13.2 years; and Group: 9.8 years).
  • Our call. Maintain BUY with unchanged TP of RM1.23 based on P/B of 1.1x and FY21 BV/share of RM1.12. We are expecting a better performance in subsequent quarters banking on higher ASP of palm productsthat has risen to multi-year high and trading above RM3,000/MT.

Source: BIMB Securities Research - 19 Nov 2020

Labels: TSH
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