However, PRG only delivered a subdued performance, suggesting a tougher market condition ahead.
As such, we cut our FY16-18F estimates by 38-42% to factor in the weaker outlook, and hence reduced our call to Neutral with a lower TP of RM0.88, premised on 14x our FY17F EPS.
Genting: A Mixed Bag (GENT MK, Outperform, TP: RM9.40)
Genting Bhd
(GENT) reported FY15 net profit of RM1,388m (-7.2% YoY). Excluding non-operating items, GENT’s adjusted EBITDA accounted for 94% of our full estimates.
Its leisure & hospitality and plantation segments registered lower revenue while power and oil & gas delivered positive growth.
Adjusted EBITDA was down 5% YoY mainly due to lower contribution from its Singaporean operations.
We maintain our Outperform rating on Genting with a revised TP of RM9.40 (RM9.22 previously), after factoring in the changes to our valuations for Genting Malaysia (GENM) and Genting Plantation (GENP). GENT proposed a final single-tier dividend of 3.5 sen a share (FY14: 4 sen), translating to a payout ratio of 9.4%.
Kossan: Plans Altered, Growth Still Assured (KRI MK, Outperform, TP: RM9.70)
Kossan’s full year FY15 results were commendable, registering revenue of RM1.6bn (+25.9% YoY) and earnings of RM203.3 (+41.4% YoY).
The results exceeded our expectations meeting >100% and 99% of ours and consensus’ earnings estimates respectively.
EBIT and PBT margin improved to 18.5% and 17.9% in 4QFY15 respectively (3QFY15: EBIT: 16.6%, PBT: 16.0%), mainly due to higher contribution from the Technical Rubber Product and Glove divisions amid enhanced operational efficiencies.
We maintain our Outperform call on Kossan but with a revised TP of RM9.70 (previously RM10.07) due to the change in its expansion plans.
IGB Corp: Below Expectations (IGB MK, Outperform, TP: RM4.80)
IGB Corporation’s 4Q earnings came in weaker than expected due to higher interest costs and lower contribution from property development.
Its 4QFY15 net profit of RM74.5m (-13.6% YoY, +13.8% QoQ) was below our and consensus expectations.
In FY15, the Group’s net profit was down marginally to RM216.9m (-0.6% YoY) and constituted only 87% of our and consensus estimates.
Property development profit contribution was down by c.60% YoY but other divisions performed within expectations, led by investment assets.
All told, FY16-17 earnings are adjusted by -25% and -31% respectively to factor in weaker property sales and higher interest costs.
An interim dividend of 5 sen was announced, bringing ytd dividends to 10sen which was higher than expected.
Maintain Outperform and RM4.80 TP, which is based on 30% discount to our RNAV estimate.
Petra Energy: Poised Amidst The Downturn (PENB MK, Outperform, TP: RM1.46)
Petra Energy (PE)’s full year FY15 performance is enhanced by the RSC remuneration fee contribution of RM47.7m.
Revenue recorded RM652.9m (+4.6% YoY), with earnings increasing to RM51.2m (+47.7% YoY).
Revenue was marginally higher, attributed to the timing difference of approvals from client invoices.
Subsequently the costs for these job scopes have been accounted for despite the delay of the revenue.
This is a reconciliation scenario which will normalise and bode well for the Group’s 2016 performance.
Earnings were boosted by higher contributions from its KBM-cluster RSC.
We do foresee 2016 to continue to be a challenging year as awarding of contracts is expected to remain sluggish.
We are therefore adjusting our revenue and earnings estimates for FY16F onwards, resulting in a revision of our TP to RM1.46 pegged to FY17F EPS of 18.3sen and a 8.0x P/E multiple.
We are maintaining an Outperform recommendation on PE considering their net debt-to-equity ratio to stand at c.0.23x to be able to weather out the current market conditions.
These would be supported by long-term services contracts in the areas of brownfield maintenance coupled with new contract replenishments anticipated.
A single tier interim dividend of 2.0sen and special dividend of 2.0sen has been declared, bringing the total DPS of PE to 10.0sen for FY15 translating to a 7.7% yield.
Genting Malaysia: Broadly in line (GENM MK, Neutral, TP: RM4.05)
Genting Malaysia (GENM) reported FY15 net profit of RM1,257.9m (+5.8% YoY).
Stripping out forex impact, impairment losses and write-offs, normalized net profit would have been RM1,155.7m, posting a 13.7% YoY decline mainly due to lower contribution from its UK operations and higher depreciation cost.
The results were in line with market expectation but slightly below our forecast.
We adjusted our FY16-17F earnings by -2% after taking into account additional capex to be incurred for the GITP project.
For FY16F, we are projecting a slow recovery in its UK operations while growth for its Malaysian operations is likely to be muted due to weak consumer sentiments.
GENM proposed a final single-tier dividend of 4.3 sen per share, bringing a total DPS of 7.1 sen for FY15.
This translated into a payout of 32% (31% in FY14). Maintain Neutral with a revised TP of RM4.05.
Kian Joo: Steady Performance (KJC MK, Neutral, TP: RM3.30)
Kian Joo’s (KJC) FY15 net profit of RM131.3m (+8.6% YoY) was in line with expectations while revenue exceeded, aided in part by the appreciation of the Vietnamese Dong and US Dollar against the Ringgit.
Foreign exchange gains of RM35.3m were recorded for the year, though the Group also suffered a loss of RM10.4m through the usage of derivative financial instruments (cross currency swap contracts, forward hedging of aluminium, forward USD contracts) to manage the currency volatility.
We continue to look like the strong cash flow generative abilities of the Group, but see share price performances continuing to be weighed by the planned but still-unconcluded takeover by Aspire Insight which has now exceeded two years.
Our Neutral call on the stock is maintained with an unchanged target price of RM3.30, which remains the current offer price on the table.
Of some cheer however is the surprise declaration of a single-tier 2sen per share dividend for the financial year ending December 2015.
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