Telekom Malaysia (T MK, BUY, TP: MYR7.80)
1Q22 Holding Up; Keep BUY
The research analyst has maintained ‘BUY’ call on this telco counter, with higher DCF Target Price (TP) of MYR7.80 from MYR7.65, with 66% upside and 3.4% yield. Telekom Malaysia’s 1Q22 results marked the typical revenue seasonality with sustained EBITDA YoY, thanks to good cost restrain. The research house continues to see the internet and wholesale segments as key growth drivers, underpinned by the expansion of its fiber footprint, 5G backhaul leasing, and broadband access deals. TM remains our preferred telco pick with a revised parity ESG score imputed in our TP.
IOI Properties (IOIPG MK, BUY, TP: MYR1.38)
Promising Office Leasing For Central Boulevard
‘BUY’ call is being maintained by the research house and a target price (TP) of MYR1.38, with 37% upside and 3% FY22F (Jun) yield. IOI Properties’ 3QFY22 results missed expectations, largely due to the MYR111m write-off for the XiangAn project in China. 9M property sales reached MYR1.3bn, and management expects to hit MYR2bn property sales by end FY22. The analyst remains positive on the leasing prospects for the company’s Central Boulevard office in Singapore. The property, which is scheduled to be completed in 2HCY23, is expected to lift IOIPG’s earnings for the investment property division significantly.
Bumi Armada (BAB MK, BUY, TP: MYR0.58)
Lower Finance And Depreciation Costs; Keep BUY
Keeping ‘BUY’ call on this counter, new SOP-based target price (TP) of MYR0.58 from MYR0.65, with 32% upside. Bumi Armada’s 1Q22 results outperformed analysts’ expectations, with core profit surging 21% YoY on lower depreciation and finance costs. Apart from bidding for new FPSO projects, it is also exploring new opportunities such as floating LNG (FLNG) and carbon capture projects in the longer run. BAB remains Top Pick for this sector for its undemanding valuation (3.8x FY23F P/E) and strengthening balance sheet, led by stable FPSO operations and continuous asset monetisation.
Sunway Construction (SCGB MK, BUY, TP: MYR1.93)
Margins Still Decent Despite Cost Pressures
‘BUY’ call being maintained and with a target price (TP) of MYR1.93, 22% upside with c.4% yield. Sunway Construction’s 1Q22 core net profit met the Street’s expectations – accounting for 25% and 26% of full-year forecasts. Looking ahead, the research house expects it to be a frontrunner for the job involving the elevated works portion of Mass Rapid Transit 3, as its lean balance sheet still allows it to take on large projects. Aside from that, its listed parent should continue to support earnings visibility – 48% of its orderbook comes from internal building contracts from its parent company.
Matrix Concepts (MCH MK, BUY, TP: MYR2.66)
Bonus Issue And Dividend To Support Valuations
Maintain BUY and MYR2.66 TP, 13% upside and c.6% yield. Matrix Concepts’ 4QFY22 (Mar) results missed expectations, due mainly to slower construction progress as a result of labour shortage that is affecting many sectors. The company ended FY22 with property sales totalling MYR1.34bn, exceeding the initial target of MYR1.2bn. Also, Matrix announced a 1-for-2 bonus issue. Coupled with the 3.75 sen final dividend (full year 12.5 sen), investors’ interest on this stock should remain strong.
Gabungan AQRS (AQRS MK, BUY, TP: MYR0.54)
Still Upbeat Despite 1Q22 Underperformance; BUY
Maintain BUY, new MYR0.54 TP from MYR0.60, 64% upside with c.6% FY22F yield. Gabungan AQRS’ 1Q22 results missed our and Street expectations, with numbers that made up only 18% and 19% of full-year estimates. The negative deviation was mainly due to the slower-than-expected performance of the construction segment. Nevertheless, higher intensity of construction projects ahead, combined with substantial unbilled sales, should support the group’s earnings moving forward.
