*Maybank Kim Eng Kopi-O (22 Oct 2021)*
Nikkei 28708.6 -1.87%
Kospi 3007.3 -0.19%
SSE 3594.8 0.22%
HSI 26017.5 -0.45%
TWSE 16889.5 0.01%
SET 1643.4 0.36%
JCI 6633.0 -0.35%
STI 3188.5 -0.30%
KLCI 1591.6 -0.92%
*MKE Key Calls*
*Kossan Rubber Industries (KRI MK) - Profit starting to normalize*
Kossan’s 3Q21 net profit of MYR528m (-50% QoQ, +52% YoY) was above our and consensus full-year estimates. The QoQ decline in 3Q21 earnings performance was dragged by lower ASP and utilisation rate on stricter SOPs and EMCO in early July 21. We however raise our FY21 earnings forecasts by 6% to factor in lower raw material prices. Our TP is largely unchanged at MYR1.87 TP (+1sen; on 17.7x CY23 PER or -1SD of historical mean). Maintain SELL.
*MY*
o Expect KLCI to stay choppy on the last trading day of the week. Sentiment will remain cautious ahead of PMI data in the US while concerns over debt woes in China’s property sector as well as the mixed performances in overnight Wall Street could also push investors into risk-off mode. Technically, we expect the benchmark index to range between 1,577 and 1,610, with supports at 1,577 and 1,555.
o *Willowglen (WLW MK)*: Its wholly-owned subsidiary Willowglen Services Pte Ltd was awarded a contract valued equivalent to approximately MYR5.8m by China Communications Construction Company Limited (Singapore Branch). With the latest award, WLW has secured approximately MYR117m worth of projects YTD, equivalent to about 80% of FY20 revenue. Stock trades at 21x annualised 1H21 EPS. WLW is sitting on a net cash of MYR72.3m at end-Jun 2021 (or MYR0.15/sh which is equivalent to about 36% of share price).
o *Kumpulan Perangsang Selangor (KUPS MK)*: Its 51%-owned subsidiary Aqua-Flo S/B had entered into a framework agreement with Pengurusan Air Selangor S/B to supply chemicals to the latter’s water treatment plants for a period of 14 months, from 1 Nov 2021 to 31 Dec 2022. The contract is worth an estimated MYR91.6m. Note that this is deemed a related party transaction. The latest contract award, which was secured via an open tender, reflects well on the group’s capabilities in the supply of water treatment chemicals in the country. Stock trades at 8x FY22 consensus EPS.
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