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Brokers' take

This article is more than 12 months old

Compiled by Lynette Tan

TOP GLOVE | BUY

TARGET PRICE: RM6.43 (S$2.11)
DEC 18 CLOSE: S$1.95
Maybank Investment Bank, Dec 18

Stronger Q1 FY2019 core net profit of RM110 million (+8 per cent quarter-on-quarter, +9 per cent year-on-year) made up 22 per cent of our and street's full-year forecasts.

Key takeaways from Q1 FY2019 results: (i) Revenue grew slightly q-o-q (+4 per cent q-o-q, +35 per cent y-o-y) due to higher USD/RM (+3 per cent q-o-q, -1 per cent y-o-y) and marginally higher sales volume (+1 per cent q-o-q, +19 per cent y-o-y). Meanwhile, average selling price was flattish q-o-q (+14 per cent y-o-y); (ii) Ebitda (earnings before interest, taxes, depreciation and amortisation) margin dipped slightly to 16 per cent (-0.3 percentage point q-o-q, +0.7 percentage point y-o-y) owing to the weaker vinyl earnings.

The EBIT of its vinyl division weakened substantially to RM2 million (-70 per cent q-o-q, -77 per cent y-o-y).

In addition: (iii) Aspion registered a net loss of RM3 million to RM4 million (Q4 FY2018: RM4 million net profit) given the ongoing upgrading works at its plants; (iv) Group's effective tax rate was lower q-o-q at 21 per cent (-6.9 percentage points q-o-q, +8.1 per cent y-o-y) as there was additional provision for taxes in Q4 FY2018.

Earnings could be better ahead as we think its margins could improve on lower input costs.

Additionally, new capacity from F32 (phase 1) and F33 would commercialise in Q2 to Q3 FY2019 (+6 per cent to 63.9 billion pieces per annum), hence lifting its sales volume in the near-term.

Moreover, Aspion could turn profitable in 2H FY2019 upon the resumption of some of its production lines.


SINGAPORE REAL ESTATE | NEUTRAL

RHB Research Institute, Dec 18

Urban Redevelopment Authority data for November showed developers sold a total of 1,198 private homes (excluding executive condominiums), which was a 52 per cent y-o-y increase, and 146 per cent higher than units sold in October.

Year-to-date till November, developers have sold 9,192 units, 17 per cent lower than the number sold last year.

According to the data, the top three projects sold in November were Parc Esta (348 units), Whistler Grand (219 units) and Kent Ridge Hill Residences (126 units).

The healthy unit sales in November again reaffirm our view that there is still decent demand for new launches that are priced reasonably and have strong attributes.

Based on our observation, developers have lowered pricing expectations in new launches by 5 per cent to15 per cent post-cooling measures. Developers' margins are thus likely to be squeezed, and we expect that to be in mid-single digits moving into next year.

We maintain our "neutral" sector rating and expect residential prices to post a modest zero per cent to2 per cent growth next year.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.