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KUALA LUMPUR: Kenanga Research maintained its Underperform call on Scientex Bhd but raised its target price for the counter to RM7.80 from RM7.40 on increased earnings. It said on Friday that the target price was based on its sum-of-parts FY19 valuations with an unchanged price earnings ratio (PER) of 10.0x for the property segment and an unchanged 14.0x applied PER for the manufacturing segment. “Results have been weak in previous two quarters, missing expectations, while earnings improvements this quarter were mostly driven by the property sector of which we are not overlyRead More
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PETALING JAYA: AmInvestment Bank has lowered its financial year 2018-2020 earnings forecasts for Maxis Bhd by 6-7%, from a 5% cut in the group’s home fibre revenue assumptions.
This stems from Maxis repricing its fibre broadband plans for both consumers and businesses with unlimited data quotas and offering speeds of up to 100 Mbps at prices 36-65% lower than previous similar plans beginning from Sept 13, it said in a note.
AmInvestment said the telco’s 100 Mbps plan comes with unlimited voice calls and a free DECT phone, while customers who take up the 30 Mbps plan can choose to add this feature.
For consumers, the price of the 100 Mbps plan will be lowered to RM129 per month at RM1.29 per Mbps, and 30 Mbps for RM89 a month at RM2.97 per Mbps.
Currently, it said the 100Mbps plan is priced at RM299 a month and 30 Mbps plan at RM139 a month, while the more affordable package at RM119 a month, provides speeds of up to 10Mbps.
For business customers, AmInvestment said, Maxis will lower the price of the 100 Mbps plan to RM139 a month at RM1.39 per Mbps, and 30Mbps for RM99 a month at RM3.30 per Mbps.
Currently, the 100Mbps business package is priced at RM398 a month or RM3.98 per Mbps.
“As a comparison, Unifi aims to raise the speed of its RM139 a month package from 30 Mbps to 300 Mbps at RM0.46 per Mbps while the more affordable proposition at RM79 a month (with a quota of 60GB) at 30 Mbps for households earning below RM4,500 a month.
“Unifi meanwhile is raising its RM329 a month plan from 100 Mbps to 800 Mbps at RM0.41 per Mbps. As such, it appears that Unifi offers more attractive packages when its new plans come into effect,” it said.
Meanwhile, it said Time dotCom offers its 100Mbps package for RM149 a month or RM1.49 per Mbps for high-rise, commercial and dense population.
AmInvestment also noted that Maxis is offering this new deal even though the Mandatory Standard on Access Pricing structure, which will reduce the wholesale prices for third-party operators to access its high speed broadband network, has yet to be finalised.
“However, we understand that the negotiations are in the final stages and the parties have clarity on the final pricing, which should still be value accretive for Maxis’ home fibre segment, complementing the group’s core cellular business.
“Meanwhile, we expect higher down-trading activities as customers opt for the lower priced packages at these new higher speeds amid an increasingly competitive fixed broadband market,” it added.
Currently, the stock’s FY18F EV/ebitda of 11 times is almost at parity to its three-year average, while dividend yields are decent at 3%.
The research house maintained its “hold” recommendation on Maxis with a discounted cash flow derived fair value of RM5.65 per share from RM5.76 previously.
This was based on a weighted average cost of capital discount rate of 7% and a terminal growth rate assumption of 2%, implying an FY18F enterprise value (EV)/earnings before interest, taxes, depreciation and amortisation of 11 times.
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PETALING JAYA: Asian equities are seeing signs of a bear market or a correction judging from the current macroeconomic environment, according to Aggregate Asset Management (AAM).
“Intensifying trade rhetoric and policies from the US against the EU and China and vice versa have sent shockwaves throughout the markets. This has caused treasury curves to flatten over the last few months prompting some analysts to raise the alarm,” the Singapore-based fund management company's co-founder and executive director Wong Seak Eng told SunBiz via an email interview recently.
Asian stocks have nosedived in recent weeks, on heightened tensions between the US and China over tariff issues.
Wong pointed out that the probability of an economic contraction increases as the market is approaching the end of an economic cycle.
“However, how the future plays out still remains a big question mark. We can only say that given uncertainty in the market right now, there are a lot of opportunities and bargains stocks to capitalise on.”
Despite the continued fund outflows from the emerging markets, he said, the rate of outflows from its portfolio is not a major concern as it only equals to 0.56 times of the net tangible asset value. Dividend yield for its portfolio currently stands at 3.6%.
“When there is an inflow of cash, we go on a hunt for bargains. This only works for investors with a long-term investment horizon. We do not think it is easy to make big money if one just focuses on the short-term movements.”
Wong said the company sees opportunities in almost all market conditions, unless the valuations turn extremely high.
“We buy stocks that give a decent dividend yield and are selling at below their net asset value. We invest in companies with strong balance sheets. We are willing to buy and hold.
“We consider ourselves to be very patient. We think big money is made by investors who are willing to be contrarian, and willing to wait. Investors who act irrationally will usually end up with poor results.”
For Wong, Asia remains a good investment destination as it trades less than 15 times in terms of price-to-earnings ratio.
AAM, which has S$500 million (RM1.5 billion) assets under management, was founded by two Malaysians, Wong and Eric Kong, as well as Singaporean Kevin Tok five years ago. Its single flagship fund – Aggregate Value Fund – offers the zero management fee model, which means the company makes money from performance fees and the clients only pay when the fund is profitable.
“On the off chance that there is no performance, we pay our managers and staff through cash reserves that we have saved up over time. We believe that this compensation system puts the clients' interests first, as managers have to deliver performance to earn their keep.”
Based on its track record, the fund generates an average net return of 10.59% per year. It has about 600 stocks in its portfolio with presence in Asian markets such as Hong Kong, Malaysia and Singapore.