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Friday, August 17, 2018

Tasco - Finance Costs Remain a Drag

Author: sectoranalyst | Publish date: Fri, 17 Aug 2018, 09:57 AM

  • 1QFY19 results below estimates
  • International segment PBT dented loss in ocean freight forwarding
  • Domestic segment revenue supported by cold chain logistics
  • Revise earnings downwards due to higher finance costs
  • Maintain BUY with reduced TP of RM2.21 per share

1QFY19 normalised PATAMI below estimates. Tasco recorded 1QFY18 normalised PATAMI of RM5.2m (-25.2%yoy), the lowest since 4QFY17. This was below ours and consensus’ estimates by a variance of more than -10%. The deviation is attributed to higher finance costs for the cold supply chain (CSC) business which is fully financed by bank borrowings.

International segment revenue decreased by -56.4%yoy in 1QFY19. PBT of Tasco’s air freight forwarding segment surged by +68.9%yoy as the drop in shipments for electrical and electronic (E&E), colour pigment and printing customers were offset by shipments for customers involved in telecommunications and aerospace. However, the PBT of the international segment was dragged by the ocean freight forwarding business which recorded a loss before tax of -RM0.7m as existing clients opted for direct sea shipment booking.

Domestic segment buttressed by CSC business. PBT of the domestic business segment rose by +43.6%yoy in 2QFY18. The main driver for the segment was the CSC business which now comprises of (i) Gold Cold Integrated Logistics Sdn Bhd (GCIL) (formerly known as MILS Cold Chain Logistics Sdn Bhd) after being completely acquired by Tasco on 1 June 2018, and (ii) Gold Cold Transport Sdn Bhd (GCT). As a result, the CSC business recorded a post-acquisition revenue and PBT of RM21.1m and RM3.1m respectively, translating into a reasonable PBT margin of 14.6%. The trucking segment recorded black ink for the second quarter amidst cost-cutting measures. Meanwhile, other sub-segments such as the contract logistics business experienced a -26%yoy decline in PBT as the company incurred pre-operating expenses for the new retail business via the joint venture with Yee Lee Berhad, combined with lower revenue from the regional distribution centre in KLIA.

Earnings estimates. Although we note that Malaysia is a potential beneficiary if U.S and Chinese companies were to relocate their operations in the wake of the global trade friction, any reduction in global trade would pose a risk to the industry. Henceforth, we are lowering our revenue growth estimates for the international business segment to exercise conservatism. Moreover, Tasco will continue to bear markedly higher financing costs related to the acquisition of the CSC business. Taking all of these into consideration, we are revising down our earnings estimates for FY19 and FY20 to RM34.6m and RM40.2m respectively.

Maintain BUY with a reduced target price (TP) of RM2.21 per share (previously RM2.50 per share) with forward price-earnings (PE) ratio of 11.0x pegged to FY20 EPS of 20.1sen. Our revised valuation target, i.e. forward PE ratio of 11.0x (previously 12.0x), equates to the average forward PE of its peers of 11.0x as we maintain our conservatism in our valuation amidst increasing competition and global concerns. We believe that Tasco’s niche in the CSC business combined with its retail logistics business to be supported by an expected +5.3%yoy growth in the retail industry in CY2018, according to Retail Group Malaysia. Fundamentals of TASCO remain intact, trading at a forward PE ratio of 8.6x and a manageable net debt to equity ratio below 1.0x despite increased financing costs.

Source: MIDF Research - 17 Aug 2018

Carlsberg Brewery Malaysia - 1H18 Within Estimates

Author: kiasutrader | Publish date: Fri, 17 Aug 2018, 09:52 AM

1H18 core PATAMI of RM140.0m (+9%) and interim dividend of 15.7 sen are within expectations. Malaysian sales were better with the 2018 World Cup season and higher spending during the “tax-holiday”. However, pending price increases post-SST implementation and growing competition in Singapore are mid-term hurdles. Sustained earnings from Sri Lankan operations is a welcomed change. Maintain MARKET PERFORM and TP of RM18.25.

1H18 within. 1H18 core PATAMI of RM140.0m is within our/consensus estimates, making up for 54%/53% of respective full-year expectations. An interim dividend of 15.7 sen is also within expectations. Recall that the group had formalised a dividend policy where at least 75% of profit will be paid out per quarter with a 100% payment by the full-year.

YoY, 1H18 registered sales of RM963.9m (+5%) arising from stronger Malaysian sales (+15%) amidst poorer performance in Singapore (-13%). Aside from a later CNY period, the Malaysian market is thought to have benefited from a growing proportion of premium offerings which could be supported by the “tax-holiday” in June 2018 in addition to the World Cup football season. The Singapore market could have been dragged by stronger Ringgit affecting returns and poorer spending sentiment. The above translated into better operating margins in Malaysia at 20.3% (+1.5ppt) but weaker for Singapore at 14.5% (-5.9ppt) which could also be dragged by poorer operating synergies. The group’s associate, Lion Brewery sustained profitability with RM11.0m contributions, albeit RM4.7m of which were returns from insurance claims. Core PATAMI in 1H18 registered at RM140.0m (+9%) thanks to the abovementioned better returns from Malaysia and a lower ETR of 20.9% (-0.5ppt).

QoQ, 2Q18 revenue of RM415.5m declined by 24%, mainly due to a seasonally stronger 1Q18 from CNY festivities. Group EBIT only declined by 21% as better product mixes during the quarter supported margins. Further backed by the RM5.3m associate gains from Lion Brewery, core earnings during the quarter registered at RM63.9m (-16%).

Great short-term, cloudy mid-term. The coming quarters are set to see stronger sales, particularly in Malaysia. This is driven by higher consumption backed by: (i) the 2018 World Cup season (till mid-Jul 2018), and (ii) lower prices from the zero-rated GST. Regarding the coming SST implementation, management commented on the intention to pass down the chargeable tax quantum to consumers.

This could further undermine on-trade sales as establishments (i.e. restaurants, pubs) with an annual turnover of RM1.0m/outlet and above are subject to another layer of tax. On the Singapore market, management also highlights that the introduction of the European Free Trade Agreement by end 2018 could open up to highly aggressive price competition from duty free competitors. We believe the emphasis on premium offerings would lead the group as they command higher margins and enjoy stickier demand in niche markets against higher prices. Additionally, the now stabilised operations in Sri Lanka’s Lion Brewery and its positive contribution are a timely blessing amid the challenging times ahead.

Post-results, we leave our assumptions unchanged for FY18/FY19.

Maintain MARKET PERFORM and target price of RM18.25. Our target price is based on an unchanged 19.0x FY19E PER (which is also within the stock’s 5-year Fwd. average PER). CARLSBG is valued lower than its peer HEIM (OP, TP: RM23.30) which we valued at 20.0x FY19E PER, owing to the latter’s leading domestic market position and decent dividend yields. Still, CARLSBG may provide dividend-seeking investors better visibility from its formalised dividend policy.

Risks to our call include: (i) lower-than-expected sales from both markets, and (ii) poorer demand for premium products.

Source: Kenanga Research - 17 Aug 2018

Why Lion Industry Share Price is Continuously Going Higher? Koon Yew Yin

Author: Koon Yew Yin | Publish date: Fri, 17 Aug 2018, 09:03 AM

One of the subjects I studied in my civil engineering course is metallurgy, the study of making metals which includes iron, steel, copper and other metals.

China has been producing more than 50% of the total production of steel in the world and China was the biggest exporter of steel.

China bought iron ore from Australia and coal from Indonesia. The iron ore can be changed to iron by burning coal. By adding carbon the iron can be changed to steel. Adding carbon to iron to make steel stronger and tougher, up to a point. Then it will get stronger but less tough, like cast iron which is tough but brittle. That means it will crack if it is bend. Carbon strengthens iron by distorting its crystal lattice.

You can make steel stronger by tempering. If you heat up a piece of steel and deep it in water, it become stronger. If you heat up a piece of steel and deep it in oil, it becomes stronger and tougher.

In the process of burning coal, a lot of carbon dioxide and other impurities are produced into the atmosphere. As a result, the sky over Beijing, Shanghai and other cities is always dark and the air is always polluted.

Since almost all the steel factories are State own, the Government has terminated most of the steel factories.

Currently, China uses scrap iron and imported iron baguettes to make steel for its own use. China does not export any more steel.

Malaysia used to import steel from China and to protect the local steel manufacturers, the Government imposed an import duty.

That is why Lion Industry has been making increasing profit in last few quarters. Its 1st Q EPS 4.08 sen, 2nd Q EPS 8.20 sen and 3rd Q ending March 2018 EPS 8.91 sen. The total EPS for 3 quarters is 21.19 sen. Assuming its 4h Q is the same as its 3rd Q, its total EPS for the full year will be about 30 sen.

Based on the last traded share price of Rm 1.25, its P/E ratio is about 4. It should be considered very cheap especially it has very good profit growth prospect which is following my share selection golden rule. I expect its 4th Q will be better than its 3rd Q.

The above chart shows that the price has gone up from 63 sen to close at Rm 1.23, an increase of 60 sen, nearly 100% increase in less than 2 months.

Many of my friends have asked me if they should sell to take profit or continue to buy.

My selling rule is I will start to sell as soon as I see the company is showing reduced profit. That is how to maximise profit.

Many of my friend have also asked me if they should buy back at higher price if they have sold earlier. Of course, many shareholders would have sold too early and regret. A few smart one will dare to admit their mistake and buy back at higher price. In view of its good increasing profit growth, if you have sold, you should buy back.

Many of my friend have asked if they have some more buying facilities, should they take the risk to buy some more.

This question is a bit tricky for me to answer. It really depends on your risk appetite. Can you afford to lose some money? Or are you willing to take the risk of earning less money in case the price falls lower instead of going higher.

I am obliged to inform you that Lion Industry is one of my major investment. I am posting this is to share my knowledge and I am not encouraging readers to buy or to sell this counter.

Matrix Concepts planning RM1.6bil residential property launches

Friday, 17 Aug 2018
by sarban singh

SEREMBAN: Matrix Concepts Holdings Bhd
image: is targeting RM1.6bil worth of residential property launches in FY2019 as it continues to leverage on the strength of its townships and good demand from house buyers.

Group chairman Datuk Mohamad Haslah Mohamad Amin said the new launches would be developed mostly in its township developments, which are Bandar Sri Sendayan in Negeri Sembilan and Bandar Seri Impian in Johor.

The property developer would also be launching its first high-rise serviced apartment project in Kuala Lumpur to be known as Chambers in the second half of this year.

“We are looking forward to another good year as the take-up rates at our Bandar Seri Sendayan project near here and Bandar Seri Impian in Kluang remains good.

“Despite some uncertainties in the property sector, the sale of 404 single and double storey houses under phase one of the Tiara Sendayan project was sold within a day.

“The take up rate for second phase has also been impressive with some 80% of units sold,” Mohamad Haslah said, adding that some 2,000 units would be built in phases in Tiara Sendayan.

Asked if the government’s decision to defer the high speed rail project would affect its launches in Bandar Seri Sendayan, he said it would be minimal.

“Even if the project is cancelled, it will not affect us much as we are still doing good business .

“But if the HSR goes ahead, then the property prices will surely boom,” he said after the company’s AGM at the d’Tempat Country Club.

Mohamad Haslah said Matrix will also launch its second project in Melbourne, Australia after the success of its boutique low-rise apartments in the Australian city.

“The first project has been a success as we managed to sell all but three of the 52 apartments.

“We have now acquired a parcel of land for A$10mil and will subdivide and sell the empty lots,” he said.

He added some 60 bungalows could be built on the plot.

In FY 2018, the company posted a net profit of RM213.3mil, which is its best performance since listing in 2012.

Revenue stood at RM815.5mil.

For the second consecutive year, its property sales exceeded RM1bil with RM1.1bil in unbilled sales.

“That has to be the highlight for our last financial year as we have never gone beyond RM200mil.

“We are proud that this once Bukit Pelanduk-based developer is today one of the country’s top players,” he said.





仍在消化這一大堆信息,讓我梳理一下這些事情的發展和關係。先從基本面出發,正進入美國業績高峰期,確有不少個別股票,如facebook,Netflix,GM,Whirlpool,Alcoa等,業績遜預期,股價馬上暴跌。但整體業績超好,平均盈利增長超過20%,連收入都增長超過8%,證明並非純粹倚靠減稅,納指不斷創新高,連標普都逼近歷史高位。那麼多股票暴跌,指數怎可能創新高?這現象證明美股實力深不可測(英文叫做very deep bench),就算facebook,Netflix休息,仍有很多其他公司、板塊接力而上。明顯資金開始流出FANG,分散至金融、運輸和能源等。就算科技股,差異性都非常大,Google和尤其微軟的業績都超好,連AMD業績都比預期好,硬件股未必那麼差。全球MLCC股的強勢就更加犀利。

資金流出美科網股 分散至金融運輸能源



Netflix的情况有點不同。雖然上季新增用戶只5百多萬,比預期少了1百萬,但大部分人仍相信這只是偶爾失手,全球用戶仍只有1.3億多,仍有大把增長空間。之前幾季增長都遠勝預期,第二季缺乏重頭新劇,且受世界盃影響,下半年應有反彈。另一重要區別就是我指出過的業務策略,Netflix沒有新聞,所以沒有fake news問題(facebook為此而請了數千個網路警察),連廣告都沒有,也減少出賣個人數據,侵犯私隱的問題。




昨天墨西哥總統Enrique Pena Nieto也說經近一年的談判,《北美自由貿易協議》(NAFTA)的重新談判已完成了三分之二,希望盡快完成,但願如此。我認為墨加和墨美的談判較容易,但美加談判,反而較難;主因是特朗普、Navarro和Kudlow等人在上月G7峰會,多番侮辱加拿大總理杜魯多,這口氣實在難吞。可能因此,墨國總統就說三分之二談判成功。


除貿易上,中國減了一些農產品關稅,也努力開放汽車、金融和醫療等行業,吸引外資來中國投資。我留意到3個較特別關於美資的消息,第一個是Tesla準備在上海建廠,傳了很久,Elon Musk早前終於親自來上海簽MOU,然後去了北京。據聞受到極高規格接待,住在釣魚台國賓館,且開着兩輛紅色Tesla,進了中南海,獲國家副主席王岐山接見,車還有特權泊在紫光閣門口。Tesla財政緊絀是公開的秘密,亦很需要打進最大的中國市場。中國當然也很想引進最新電動車和無人駕駛技術,可能願意提供資金和其他資源,亦可算是外交上的一場勝利吧。

facebook杭州設子公司 或想伙拍阿里

連在本來守得很緊的互聯網領域,都有一些意外小發展。Google在2010年高調「離開」中國,但原來一直沒有真正完全離開。雖然在大陸不可使用Google的大部分服務,但很多中國企業仍是Google的廣告客戶。在CEO Sundar Pichai的領導下,更想積極重回中國。近日小試牛刀,在微信小程序上推出了一個叫「猜畫小歌」的AI遊戲,極簡單,如「跳一跳」一樣,是個消磨時間的小玩意。據聞推出不到一周已火速爆紅,雖不收費,但對收集用戶數據有極大幫助。另外當然見到新聞,facebook在杭州本成立了一家子公司,業務範圍似乎包括創投和提供科技顧問服務等,但一天內,登記網頁就刪除掉。內情我不知道,但我估計這事情不可能就此終結,必會繼續發展。明顯多年來Zuckerberg對中國極感興趣,如今可能更極需要打進中國。成立在杭州,當然令人懷疑是否將會和阿里合作,也非常合理(Google就配騰訊(0700))。我估計這些發展都非偶然,都是有迹可尋的,值得跟蹤。





今天剛跟大摩極負盛名的印度策略師Ridham Desai通電話,他解釋今年印度股市的優秀表現(Nifty剛創歷史新高),主要原因是過去一年極為正確的貨幣和財政政策。貨幣上保持相對緊縮,財政上反而更積極,也有不少基建項目(因印度不夠),但最重要的是大幅削減類似增值稅的GST(General Services Tax)。

中國人一般都瞧不起印度,在整體社會發展上,中國的確遠遠領先,但在某些板塊上如藥業和軟件服務,其實印度比中國更進步。石油提煉業為主的Reliance 老闆Mukesh Ambani,近日更超越了馬雲,成為了亞洲首富。美國印裔的CEO也愈來愈多,例如微軟的Satya Nadella、Google的Sundar Pichai、Micron的Sanjay Mehrotra、百事的Indra Nooyi,和很可能成為巴菲特接班人的Abhijit Jain等(連政界都有)。假疫苗事件令人髮指,再加上近日賣座電影《我不是藥神》,藥物安全和開放行業成為熱門話題。中國取消癌症等重病藥物進口稅,亦可能加速開放generic drugs(通用名藥物)市場,對領先全球的印度藥廠如 Sun、 Dr. Reddy's和Cipla等是好消息,但反而可能對中國低質藥廠構成壓力。印度更可說是智能手機最後一個高增長的龐大巿場(最近一季,三星又再超越小米的銷售)。




[譚新強 中環新譚]

Thursday, August 16, 2018

Layhong 1Q19 profit to be up by 7% to RM12mil

Author: HerbertChua | Publish date: Thu, 16 Aug 2018, 08:54 AM

Herbert have convinced large private investors to sialang Layhong shares.

Over the past week, I took a tour with these private investors to Tuaran to view Layhong's farm. It is operating as usual with no birds culled. We interviewed retailers in that area and most of them are only fearful of live chickens. They have strong believe in the Nutriplus brand.

For chicken nuggets and processed foods, Layhong's plant in Johor was completed. It will scheduled to run production in September 2019.

For 2Q19, profit is expected to be in the range of RM15 - RM20mil per month, depending on potential increase further from exports to Japan.

I will sialang Layhong shares and will not hesitate to become a substantial shareholder to serve a check and balance to the board so they will not do anything that will harm minority shareholders.

Thank you,


亚航集团 续售非核心资产









我们预测,亚航接下来可能会脱售其他资产,包括Santan和Red Cargo。