Rhb buy call

Today RHB *BUY* call based on Result review :
*Malayan Banking* (MAY MK, BUY, TP: MYR10.40)
*Kossan Rubber Industries* (KRI MK, BUY, TP: MYR7.50)
*Tong Herr Resources* (THR MK, BUY, TP: MYR4.86)
*Lion Industries Corp* (LLB MK, BUY, TP: MYR1.47)
*Datasonic Group* (DSON MK, BUY, TP: MYR2.07)
*AEON Co M* (AEONMK, BUY, TP: MYR2.97)
*OCK Group* (OCK MK, BUY, TP: MYR1.05)

Top Story

*Telekom Malaysia* (T MK, BUY, TP: MYR7.70)
1Q17 results were slightly ahead, at 27-28% of our/consensus estimates, but expect opex to increase in subsequent quarters from new services. The new leadership/management team (all home-grown) has its work cut out for them, with investors likely to keep a close tab on execution. We expect Telekom Malaysia’s (TM) core earnings to grow at a steady FY17-19 CAGR of 3%, supported by the continued growth of its internet/data segments (55% of revenue). Maintain BUY with revised DCF TP of MYR7.70 (from MYR7.50, 20% upside).

*UMW Holdings* (UMWH MK, NEUTRAL, TP: MYR5.56)
UMW Holding’s (UMW) 1Q17 results were slightly below expectations, dragged by higher-than-expected losses at UMW Oil & Gas (UMWOG). Its core businesses performed within expectations although there were still some residual losses at its non-core oil & gas businesses – this is despite having taken impairments in 2016. Pending approvals from the High Court, we expect the distribution of UMWOG shares to be completed by July. We tweak our SOP-derived TP to MYR5.56 (from MYR5.48, 6% downside) and reiterate our NEUTRAL call on the stock. UMW looks close to being fairly valued, with the core business trading slightly above the peer average.
 

*IOI Properties*(IOIPG MK, BUY, TP: MYR2.57)
Expect Stronger Earnings In 4Q
IOI Properties’ 3QFY17 (Jun) earnings were hit by the additional buyer stamp duty with interest (ABSD) charges arising from the Trilinq project. We expect 4QFY17 results to be stronger, as the remaining unsold units would have a full impact on earnings once they are sold. The project was completed in April. Full-year sales are to likely reach around MYR2.3-2.5bn. We maintain our BUY rating and MYR2.57 TP (24% upside)
 

*Eastern & Oriental* (EAST MK, TRADING BUY, TP: MYR2.37)
Eastern & Oriental’s (E&O) 4QFY17 (Mar) results were above expectations, mainly due to the sale of retail area in London. While new property sales in FY18 are likely to be flat, Seri Tanjung Pinang 2 (STP2) would continue to be the potential driver for share price. As the reclamation at STP2A is on track to be completed by Jun 2018, E&O would be able to recognise the bulk of the land sale in FY19, thereby boosting its earnings. A second investor is also likely to enter in mid-2018. We maintain our TRADING BUY call and MYR2.37 TP (29% upside).

*Ta Ann Holdings* (TAH MK, NEUTRAL, TP: MYR3.67)

Ta Ann Holdings’ (Ta Ann) 1Q17 results were in-line with our and consensus’ expectations. While the plantation segment continues to be the group’s largest earnings contributor, we see downside risks in the form of down-trending CPO prices in 2H17F. On the log front, although log prices are holding up, the group is in the midst of appealing for an increase in export quota to 40% in order to offset the expected sharp decline in log production volumes going forward. The group’s plywood segment saw a large improvement, with reported segmental PBT of MYR5.8m vs MYR2m in the previous quarter. Maintain our NEUTRAL call and TP of MYR3.67 (5% upside).

Source : RHB RESEARCH INSTITUTE