HAIO – Fundamental Analysis (25 Mar 2015)

HAIO Analysis:-

Excel – http://1drv.ms/19PyXRz

Notes – http://tinyurl.com/nr8hftv

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 2.67 (Fair value uncertainty: MEDIUM)
      • Base Scenario: 2.35 (Fair value uncertainty: HIGH)
      • Bad Scenario: 2.06 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 1.81 (Fair value uncertainty: EXTREME)
      • At current price (2.32), based on RDCF, assumption of FCFF growth rate in the next 5 years is 3.7%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.205) – Fair value 3.25 (Fair Value Uncertainty: LOW)
        • R4Q (EPS: 0.16) – Fair value 2.54 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.145) – Fair value 2.29 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.163) – Fair value 2.59 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (2.32): 0.146
    • Both models show that HAIO valuation is not attractive.
  • Despite the current slump in its earnings, coupled with the possibility of longer-than-expected effect from the strategy shift, HAIO’s attractive dividend will be the main catalyst for the stock.
  • Outlook remains challenging with biggest concern on the wholesales division due to the strong USD against MYR. With the USD still staying strong, the Group might face difficulty in sustaining the profitability in this division.
  • Low consumer spending sentiment is also a challenge, but I think this is short term. It is matter of time people get use to GST.
  • I will continue to hold HAIO as I believe that HAIO has the ability to overcome the challenges ahead.

Latest Financial – Q3 2015 Financial Report (24 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1911893

At the time of writing, I owned shares of HAIO.

SCIENTX – Fundamental Analysis (25 Mar 2015)

SCIENTX Analysis:-

Excel – http://1drv.ms/1xfXsBy

Notes – http://tinyurl.com/p6tgmrp

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 10.8 (Fair value uncertainty: LOW)
      • Base Scenario: 9.39 (Fair value uncertainty: MEDIUM)
      • Bad Scenario: 8.15 (Fair value uncertainty: MEDIUM)
      • Ugly Scenario: 7.05 (Fair value uncertainty: HIGH)
      • At current price (6.6), based on RDCF, assumption of FCFF growth rate in the next 5 years is 0.3%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.671) – Fair value 5.34 (Fair Value Uncertainty: VERY HIGH)
        • R4Q (EPS: 0.678) – Fair value 5.4 (Fair Value Uncertainty: VERY HIGH)
      • Forward:
        • FY15 (EPS: 0.729) – Fair value 5.8 (Fair Value Uncertainty: VERY HIGH)
        • FY16 (EPS: 0.822) – Fair value 6.54 (Fair Value Uncertainty: HIGH)
      • EPS applied to reach the current stock price (6.6): 0.829
  • The cast polypropylene (CPP) film (extensively used in flexible packaging of food and beverages) plant is expected to commence operations by end-2015. This new product should increase the production capacity in FY15 to sustain the group performance in this industry.
  • 24 Mar 2015 – SCIENTX will be less impacted by weakening of MYR after the company reduced their USD borrowings exposure to 58% as of 2Q15 (vs. 77% in 1Q15).
  • The implementation of GST in April 2015 will give short-term impact on demand for the group.
  • Valuation of SCIENTX is not attractive. In overall, uncertainty of fair values is from MEDIUM to VERY HIGH.

Latest Financial – Q2 2015 Financial Report (23 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1909681

At the time of writing, I did not own shares of SCIENTX.

SKPETRO – Fundamental Analysis (25 Mar 2015)

SKPETRO Analysis:-

Excel – http://1drv.ms/1brOckc

Notes – http://tinyurl.com/nagx3x2

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY15 (EPS: 0.193) – Fair value 4.43 (Fair Value Uncertainty: LOW)
        • R4Q (EPS: 0.239) – Fair value 5.49 (Fair Value Uncertainty: LOW)
      • Forward:
        • FY16 (EPS: 0.19) – Fair value 4.37 (Fair Value Uncertainty: LOW)
        • FY17 (EPS: 0.212) – Fair value 4.87 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (2.3): 0.1
    • As for DCF, as SKPETRO does not disclose details of Operating Cash Flow, I will calculate DCF after SKPETRO releases Annual Report 2015.
  • 25 Mar 2015 – Orderbook remains healthy at approximately RM25.7b, stretching up to year 2024, with approximately RM19b in extension options.
    • 25 Mar 2015 – At the end of FY15 (2.6x of FY15 revenue) with 28% (RM7.3 billion) and 21% (RM5.5 billion) would be burned-out in FY16 and FY17 respectively.
  • Valuation of SKPETRO is very attractive as the company’s locked-in order book remains solid and that its oil fields are still in the black.
  • In FY15, SKPETRO FY15 normalised earnings rose by 6% yoy to RM1,154m
  • The DES and Fab & HUC segments registered topline growth with the exception of OCSS segment. DES segment remains as the key contributor with almost equal PBT contribution from Energy and Drilling.
  • The company has locked-in approximately >RM7b worth of jobs to be executed for FY16. Including revenue contribution from the Energy segment (approximately RM2b per year) and excluding joint-venture project portions, SKPETRO will still need to replenish and execute >RM2b worth of jobs in FY16 to at least match the normalised earnings achieved in FY15.
  • The weak global crude oil price and coupled with Petronas’ capex cut are still the key risks in FY16.
  • Management remains confident to be included in the SC’s May 2015’s Shariah compliant list.
  • I will hold and continue to accumulate SKPETRO.

Latest Financial – Q4 2015 Financial Report (24 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1910805

At the time of writing, I owned shares of SKPETRO.

CARLSBG – Fundamental Analysis (24 Mar 2015)

*** In Annual Report 2014, CARLSBG made some changes to Balance Sheet and Cash Flow Statement. I have updated the figures. The impact is only very slight change to valuation.

CARLSBG Analysis:-

Excel – http://1drv.ms/1AG006N

Notes – http://tinyurl.com/kdtolbw

My View:-

  • Valuation:
    • 5-Y DCF:
      • Good Scenario: 10.95 (Fair value uncertainty: VERY HIGH)
      • Base Scenario: 9.57 (Fair value uncertainty: EXTREME)
      • Bad Scenario: 8.34 (Fair value uncertainty: EXTREME)
      • Ugly Scenario: 7.25 (Fair value uncertainty: EXTREME)
      • At current price (13.24), based on RDCF, assumption of FCFF growth rate in the next 5 years is 15.8%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.692) – Fair value 12.71 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.692) – Fair value 12.71 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (EPS: 0.712) – Fair value 13.09 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.754) – Fair value 13.86 (Fair Value Uncertainty: HIGH)
      • EPS applied to reach the current stock price (13.24): 0.721
  • Going forward, I remain conservative and skeptical above volume growth in the brewery sector as some reports show that the industry is saturated, coupled with several other external factors such as rising fuel costs, inflation as well as potential exposure to excise duty hike in the near future. However, earnings should be sustainable at current levels.
  • CARLSBG is determined to move away from a single star beer product company to become a star beer portfolio company. Over the past 10 years, CARLSBG has been trying to launch a couple of new products into the market. To date, however, its Carlsberg Green Label is still viewed as the group’s only crown jewel. As such, a reshuffle has been undertaken in its top management team over the last 2 to 3 years with the aim of bringing good changes to the group. Besides, it has also appointed a few brand managers to oversee the brand building efforts across a few main products, whereby premium brands are expected to form a larger proportion of its new product portfolio. While efforts are being made to build market share for its premium products, the Carlsberg Green Label will remain as the bread and butter of the group. Whether or not CARLSBG will be able to return to its former glory, it is still too early to tell, but the good efforts warrant CARLSBG a buy/hold call for the long term. There are downside risks if things do not turn out as expected.
  • Valuation wise, CARLSBG is fully or over valued, but its Dividend Yield is 5.3%. You basically pay premium to buy an outstanding dividend counter.

Latest Financial – Annual Report 2014 (23 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1909629

At the time of writing, I owned shares of CARLSBG.

PCHEM – Fundamental Analysis (24 Mar 2015)

*** In Annual Report 2014, PCHEM made a slight change to Cash Flow Statement. I have updated the figures. The impact is very slight change to valuation.

PCHEM Analysis:-

Excel – http://1drv.ms/1FNgAcR

Notes – http://tinyurl.com/mtrh67a

My View:-

  • Valuation:
    • 10-Y DCF:
      • Good Scenario: 5.05 (Fair value uncertainty: HIGH)
      • Base Scenario: 4.36 (Fair value uncertainty: VERY HIGH)
      • Bad Scenario: 3.79 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 3.33 (Fair value uncertainty: EXTREME)
      • At current price (5.12), based on RDCF, assumption of FCFF growth rate in the next 10 years is 12.4%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.341) – Fair value 6.15 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.308) – Fair value 5.56 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (EPS: 0.329) – Fair value 5.94 (Fair Value Uncertainty: MEDIUM)
        • FY16 (EPS: 0.373) – Fair value 6.73 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (5.12): 0.284
  • Valuation of PCHEM is quite attractive now.
  • Though revenue surged in 4Q14, it was unable to lift 12M14’s revenue as the latter fell by 4% y-o-y to RM14.59 billion vs. RM15.2 billion in 12M13, hampered by heavy maintenance including several statutory turnarounds coupled with softening in prices for both the olefins & derivates and fertilisers & methanol in 2Q14.
  • The Group recorded improving operational performance during the quarter with higher plant utilisation rate of 88% compared to 66% in 4Q14. The stronger performance was attributable to completion of heavy statutory turnaround and maintenance activities, improved methane gas supply and utilities supply as well as better plant reliability across both segments.

Latest Financial – Annual Report 2014 (19 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1908181

At the time of writing, my family member owned shares of PCHEM.

FBMKLCI – Technical Outlook (25 Mar 2015)

A picture is worth a thousand words

FBMKLCI - 23Mar2015

MAYBANK – Fundamental Analysis (17 Mar 2015)

*** I made some data mistakes in the analysis dated 4 Mar 2015. I have made the correction and updated some figures by referring Annual Report 2014. The impact is very slight change to valuation.

MAYBANK Analysis:-

Excel – http://1drv.ms/1GiyDb7

Notes – http://tinyurl.com/kkqt2c9

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.742) – Fair value 9.94 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.742) – Fair value 9.94 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (EPS: 0.731) – Fair value 9.8 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.778) – Fair value 10.43 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (9.1): 0.679
    • Dividend Discount Model
      • Base Scenario: 8.82 (Fair Value Uncertainty: HIGH)
      • Good Scenario: 9.00 (Fair Value Uncertainty: HIGH)
      • Bad Scenario: 8.65 (Fair Value Uncertainty: HIGH)
      • Ugly Scenario: 8.48 (Fair Value Uncertainty: HIGH)
    • Residual Income Model (This model is very defensive. I consider the derived price as the bare minimum price)
      • Base Scenario: 8.97
      • Good Scenario: 7.28
      • Bad Scenario: 5.74
      • Ugly Scenario: 4.33
  • In my opinion, MAYBANK is currently fully valued. Compare to my previous valuation, the fair values are reduced due to declining of ROE and stagnant dividend payout growth.
  • Despite Net profit is unexpectedly strong (+20.1%qoq; +11.5%yoy), MAYBANK’s ROE declined from 14.2% (FY13) to 12.7% (FY14).
    • Please note that my ROE calculation is slightly different from other analysts, but disregard formula variant, MAYBANK ROE has been declining in these few years.
    • I think this is a common issue in Malaysia banking
    • For latest Banking analysis, please refer: http://tinyurl.com/lv5yp9q
  • For FY15, management has guided an ROE of 13-14%, Group loan growth of 9-10% (Malaysia: 8-9%, Singapore: 8-9% and Indonesia: 13-15%), Group deposit growth of 9-10%, CI ratio of 47-48%, NIM contraction of 8-10bp and credit cost of not more than 0.30%.
  • Due to its strong dividend yield, healthy liquidity and strong capital position, I will continue to hold MAYBANK, and accumulate MAYBANK without increasing my average price too much.
  • I found that institutional shareholders in MAYBANK increased their stakes from 57% (as at 18 Feb) to 69% (as at 17 Mar). This is a huge increment in short period, especially for a bank. EPF and PNB are the main players. To be more precise, ownership of EPF and PNB in MAYBANK do not increase much, so it means other fund managers actively accumulating MAYBANK.

Latest Financial – Annual Report 2014 (13 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1902609

At the time of writing, I owned shares of MAYBANK.