*Maybank Kim Eng Kopi-O (30 Nov 2021)*
Nikkei 28283.9 -1.63%
Kospi 2909.3 -0.92%
SSE 3562.7 -0.04%
HSI 23852.2 -0.95%
TWSE 17328.1 -0.24%
SET 1589.7 -1.30%
JCI 6608.3 0.71%
STI 3120.6 -1.44%
KLCI 1510.6 -0.11%
*MKE Key Calls*
*Hong Leong Bank - Lower-than-expected provisions in 1QFY22*
HL Bank’s 1QFY22 core net profit of MYR890m (+22% YoY, +29% QoQ) was above expectations at 27%/28% of our full-year forecast/consensus respectively. The two main variances were better-than-expected NIM and lower-than-expected credit cost. HL Bank’s fundamentals remain impeccable, with strong asset quality. Factoring in Cukai Makmur, we lower FY22E earnings by 6%, but raise FY23/24E earnings by 2% respectively on lower credit cost assumptions. We upgrade to BUY with a higher TP of MYR20.80.
*MY*
o As earnings season comes to an end, investors will likely switch attention to macro headlines, which include slower economic growth and inflation. Glove makers will remain in the limelight but expect trading to be choppy. Technically, we expect the benchmark index to range between 1,500 and 1,530, with supports at 1,500 and 1,483.
o *IHH Healthcare (IHH MK)*: IHH’s 3Q21 core earnings were up 48% yoy on stronger operational metrics across its operations. 9M earnings came in slightly ahead of expectations, making up 79% and 81% of ours and consensus’ full-year forecast, as the sequential moderation in 3Q21 revenue intensity and Covid-19 related revenues were not as severe as we initially expected. We raise FY21-23E earnings by +3% to account for this better-than-expected operational performances. Our SOP-derived TP is also raised to RM7.48. Maintain BUY.
o *Sime Darby Bhd (SIME MK)*: 1QFY6/22 core net profit of MYR236m (-13% YoY) accounted for 19% of our FY estimate and should grow in subsequent quarters. Our estimates are unchanged. Its industrial and motor ops will readily leverage on the commodity cycle, infrastructure capex spending and consumer recovery plays. It is also ready to ride on the EV agenda. Sime remains appealing, for it offers earnings growth and dividend yield upside. Maintain BUY and MYR2.70 SOP-based TP.
o *Crest Builder (CBH MK)*: Its wholly-owned subsidiary Crest Builder Holdings S/B was awarded a contract by Sime Darby Property (Ara Damansara) S/B to construct one block of service apartment in Damansara, Selangor. The contract, which is worth MYR107.5m, is for a period of 33 months, from 22 Oct 2021 to 21 July 2024. This is CBH’s second contract win of the year; lifting YTD win to MYR299.6m (1x its FY20 revenue).Stock is trading at a P/B of 0.2x.
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