*Maybank Kim Eng Kopi-O (11 Nov 2021)*
Nikkei 29106.8 -0.61%
Kospi 2930.2 -1.09%
SSE 3492.5 -0.41%
HSI 24996.1 0.74%
TWSE 17559.7 0.10%
SET 1630.5 -0.07%
JCI 6683.1 0.20%
STI 3231.3 -0.37%
KLCI 1520.7 -0.22%
*MKE Key Calls*
*Regional Plantations - October stockpile rose slightly*
MPOB’s Oct 2021 stockpile rose MoM to 1.83mt (+4% MoM, +17% YoY), within street estimates of 1.82mt. CPO price will stay relatively lofty till 1Q22 on supply concerns. Given better-than-expected CPO ASP in recent months, we now raise our 2021 CPO ASP forecast to MYR4,300/t (from MYR3,500/t), and 2022 ASP to MYR3,200/t (from MYR2,800/t). Higher prices are needed to cover for rising cost pressures. Stay POSITIVE on the sector. Preferred BUYs are KLK, SOP and BPLANT.
*MY*
o The pullback in overnight US markets could keep investors at bay. Sentiment will stay cautious amid increasing worries over tighter monetary policy by Fed as well as the wait for Malaysia’s GDP data (which will be released on Friday). O&G stocks will likely see increasing selling pressure due to the sharp correction in oil price. Technically, we expect the KLCI to range between 1,515 and 1,535 today, with supports at 1,515 and 1,500.
o *Sentral REIT (SENTRAL MK)*: 3QFY21 and 9MFY21 earnings were within our expectations, but above consensus at 76%/85% of our/consensus FY21E estimates. We maintain our FY21-23E earnings and DDM-TP of MYR1.23 (Ke: 7.2%, LT: 1%). We continue to favour Sentral’s stable rental income from its long-term tenants. It also currently offers an attractive 7.2% FY21E net DPU yield. Maintain BUY.
o *Omesti (OMST MK)*: It is acquiring 70% equity interest each in nine companies for MYR15.8m cash. The proposed acquisition comes with an aggregate profit guarantee of MYR9m for three years (FY3/22-24). The proposed acquisitions aim to expand OMST footprint in the healthcare industry. Based on an average profit guarantee of MYR3m p.a., OMST is effectively valuing the targeted companies at an average P/E of 7.5x. The acquisitions could potentially help the group returns to profitability. OMST reported a loss after tax of about MYR3m and MYR1.4m in FY3/21 and 1QFY3/22 respectively. Stock trades at a P/B of 1.1x.
o *Luxchem (LUXC MK)*: 3Q21 PATMI grew 4% YoY to MYR14.7m, which brought 9M21 PATMI to MYR51.8m (+63% YoY). The stronger 9M21 results were mainly attributable to stronger contributions by both its trading and manufacturing divisions. With 9M21 revenue jumping 26% YoY coupled with lower operating costs, Luxchem’s PBT margin also expanded 2.8ppts to 11.2% in 9M21 (9M20: 8.4%). The group is set to end FY21 on a stronger footing as 9M21 net profit was already at 111% of FY20 PATMI. Stock is trading at 10.1x consensus FY22 EPS.
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