dividend yield


EC’s new base tariff raise ‘will not affect Tenaga’s profitability’

KUCHING: The Energy Commission’s (EC) new base tariff raise will not affect Tenaga Nasional Bhd’s (Tenaga) profitability, analysts observe. The research arm of Kenanga Investment Bank Bhd (Kenanga Research) was surprised that the new base tariff was raised to 39.45 sen per kWh in Regulatory Period 2 (RP2) from 38.53 sen per kWh previously for […]

GITP remains cornerstone for Malaysia’s gaming sector

KUCHING: The Genting Integrated Tourism Plan (GITP) remains the catch in 2018 in Malaysia’s gaming sector, analysts opine in an industry insight. The research arm of Hong Leong Investment Bank Bhd (HLIB Research) believed that in Malaysia, the multiyear growth story of GITP will continue to be the catch for Genting Malaysia Bhd (Genting Malaysia) […]

Expensive valuations keep consumer sector in ‘neutral’

PETALING JAYA: Despite consumer spending expected to be stimulated with BR1M (1Malaysia People’s Aid) payments, tax cuts, and other cash handouts this year, Hong Leong Investment Bank (HLIB) Research is retaining its “neutral” rating on the consumer sector for 2018 as the consumer stocks are already trading at historical highs.

The KL Consumer Index currently trading at 32 time price-earnings (P/E) or two standard deviations above its five-year average P/E of 23.5 times.

The research house said consumer sentiment rebounded slightly last year as consumer spending continued to normalise after the implementation of Goods and Services Tax in April 2015. However, the consumer sentiment index stayed below the threshold level due to a weaker ringgit, with concerns still revolving around the economy and job worries.

Alarmingly, 83% of Malaysians still believe the nation is in a recessionary state according to Nielsen, it noted.

HLIB Research expects consumer staples will benefit from improved consumer spending in 2018.

On the other hand, HLIB Research is of the view that Berjaya Food Bhd’s (BFood) Starbucks Malaysia operations will benefit from the stronger ringgit this year, as 40% of the Starbucks’s cost of goods sold (coffee beans, frappuccino mix) are denominated in US dollar.

Therefore, it advises investors to invest in companies that will benefit from the strengthening ringgit, which is projected to average between RM4.00 and RM4.20 against the US dollar this year against RM4.30 in 2017.

HLIB Research is also positive on the brewers sub-sector due to healthy dividend yields, the unlikelihood of an alcohol excise hike in 2018 and the occurrence of the World Cup, which would boost beer consumption.

HLIB Research’s top picks include BFood and Carlsberg, with a target price of RM2.12 and RM17.90 respectively.

Demand for semiconductor products remains robust

KUCHING: The worldwide sales of semiconductor does not display signs off cooling, and as such, analysts expect demand for semiconductor products to remain robust. However, MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that the growth rate may trend lower mainly due to the high base effect while the annual growth rate is […]

Investors sense opportunities in Big Oil — but mind the gap

LONDON, Jan 5 — Investors are gaining confidence — up to a point — that 2018 will be the year of oil stocks. While shares in top energy companies have risen since mid-2017, they have failed to keep step with recovering crude markets,…

Global semiconductor sales growth to moderate in 2018

KUALA LUMPUR: Global semiconductor sales growth is expected to moderate to seven per cent in 2018 as the demand-supply dynamics for memory products normalise. Citing the World Semiconductor Trade Statistics (WSTS), Alliance DBS Research said global semiconductor sales posted a phenomenal growth of 21 per cent in 2017, largely driven by strong gains in memory […]

Kenanga Research starts coverage of Sime Darby Plantation with ‘market perform’

PETALING JAYA: Kenanga Research has initiated coverage on Sime Darby Plantation Bhd with a “market perform” recommendation at a target price of RM5.50, on the account of the plantation giant’s market leadership position, emphasis on sustainable palm oil production, fresh fruit bunch (FFB) production recovery, research and development efforts and integrated operations.

The research house gave a 5% premium to Sime Darby Plantation’s forward price-to-earnings ratio (PER) at 26 times against the 25 times of average valuation given to its integrated peers, namely IOI Corp and Kuala Lumpur Kepong Bhd.

However, Kenanga Research said Sime Darby Plantation's high net gearing of 0.56 times may preclude mergers and acquisitions (M&As) and previous production setbacks have pushed up unit production cost.

With it being the largest plantation company (by planted area) and among top three in the world for milling capacity, FFB production and refining capacity as well as producing 4% of global palm oil production of which 98% is certified sustainable palm oil (CSPO), the research house said this affords the group a pricing premium of an estimated US$20/metric ton (MT) or more depending on oil grade.

In FY16-17, severe droughts had resulted in production being flat, which also led to slow earnings recovery and high production cost/MT.

However, going forward, yields are expected to improve in line with the industry of 8% for higher FY18-19 FFB production of 4%-7%.

Kenanga Research also highlighted that as an integrated planter with both upstream plantations and downstream manufacturing, Sime Darby Plantation’s earnings are less affected by crude palm oil (CPO) price movements as lower CPO prices lead to lower downstream feedstock cost, despite its CPO prices are expected to soften by 6%-10% to RM2,417-RM2,569 given sector wide production recovery.

Meanwhile, the research house said the group's “Mission 25:25” aim of producing FFB at 25MT/hectare and 25% oil extraction rate target by year 2025, is within reach with long-term productivity outlook looking positive, implying a compound annual growth rate (CAGR) of 6% per year based on its CPO production estimates.

“Our projections indicate the targets should be achievable, with estimated FFB yield of 24.6MT/ha and OER (oil extraction rate) of 24.8% by 2025 through the use of high-yield planting material and technological improvements.”

On dividend policy, Kenanga Research said Sime Darby Plantation's strong cash flow of between RM1.65 billion and RM1.7 billion for FY18-19 “should easily support” the management’s minimum dividend policy of 50%.

“Based on historical payout ratio (ex-FY17 which saw a large one-off land transaction boosting net profit) of 66%, we anticipate FY18-19E payout ratio at 65% for DPS (dividend per share) of 13.0-14.0 sen/share, which translates to a decent dividend yield of 2.4-2.6% (vs sector average of 2.6%).”

Sime Darby Plantation's share price gained 52 sen or 9.5% to close at RM6 last Friday on some 18.3 million shares done.

Hong Kong stocks end 2017 up 36pc

HONG KONG, Dec 29 — Hong Kong stocks closed higher for their fifth consecutive session today, bringing the Hang Seng’s gains this year to 36 per cent, the biggest annual percentage rise since 2009. The market’s stellar performance this…

Inter-Pacific Research values Binasat at 55 sen

KUALA LUMPUR (Dec 26): Inter-Pacific Research Sdn Bhd has recommended investors to subscribe for the initial public offering (IPO) of Binasat Communications Bhd, for its…

PNB declares seven sen dividend, 0.25 sen bonus, 1 sen special bonus for ASB

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) has declared an income distribution for Amanah Saham Bumiputera (ASB) comprising a dividend of seven sen a unit, bonus of 0.25 sen a unit and a special bonus of one sen a unit for balances of up to 10,000 units in conjunction with its 40th Anniversary in March 2018. […]