RHB Research Corporate Results Review: Maybank on Recovery Play, IHH’s Resilience and Growth Potentials; Telekom Poised for Earnings Milestone; MPI Bouyed by Structural Demand Growth

Malayan Banking (MAY MK, BUY, TP: MYR10.40) – Keeping An Eye On Macro Developments; BUY

The research house has maintained ‘BUY’ and set a TP of MYR10.40 on this counter, with 16% upside with c.6% FY22F yield. Malayan Banking’s 1Q22 results are within expectations, with lending tracking expectations but fee income weaker on volatile markets. Management is keeping its credit cost guidance, as it stays cautious on outlook and asset quality. Stay BUY, given the bank’s steady operations, strong capital and attractive dividend yield.

IHH Healthcare (IHH MK, BUY, TP: MYR7.60) – Recovery Remains Intact; Keep BUY

‘BUY’ call is maintained for this healthcare group with a higher SOP-derived MYR7.60 TP from MYR7.50, which translates to a 17% potential upside with c.1% yield. IHH Healthcare’s 1Q22 earnings exceeded expectations, due to the better-than-expected performance mainly from the market in Malaysia, while its other markets remained resilient. The research house believes that its recovery remains on track, complemented by its appetite for growth via strategic acquisitions to develop its high-margin diagnostics business. 

Telekom Malaysia (T MK, BUY, TP: MYR7.80) – On Track For Another Earnings Milestone

The house has reiterated ‘BUY’ call on Telekom, DCF-derived TP of MYR7.80, 57% upside and 3.2% dividend yield. Telekom Malaysia’s 1Q22 results call yesterday reaffirmed the strong execution narrative under its Transformation Programme. This should see the group achieve another earnings milestone in FY22F. TM remains our preferred telco sector pick. The TP has been factored in parity ESG score, in line with the country median. Key risks are competition, earnings setback, and adverse regulatory developments.

Sunway (SWB MK, BUY, TP: MYR2.06) – Steady Recovery Post Re-opening Of Economy; Keep BUY

‘BUY’ call on this counter. Target price is set at MYR2.06, with 18% upside and c.2% yield. Sunway’s 1Q22 results came above expectations. Property sales were decent at MYR447m and Ki Residences in Singapore was the major contributor. Thus far, most business divisions showed successful recovery post re-opening of economy. Given Sunway’s diversified business model, it is believed the continued improvement in other segments will help to mitigate the potential downside in property development given the prevailing industry-wide issues including labour shortage and disruption in supply chain.

Malaysian Pacific Industries (MPI MK, BUY, TP: MYR43.30) – Solid Growth Momentum; Stay BUY

This tech stock commands a ‘BUY’ call from the research house and with target price of MYR43.30, that is a handsome 39% upside. 9MFY22 (Jun) PATAMI of MYR239.6m (+24.9% YoY) met expectations, buoyed by robust growth in all products loadings and margins expansion amid strong demand within the OSAT space. It is believed that the coming quarter will continue to stage healthy YoY growth on sustained demand in semiconductor integrated circuits. The current share price weakness presents a BUY into Malaysian Pacific Industries with a rock solid balance sheet and structural demand growth story in the semiconductors space.

Malayan Cement (LMC MK, BUY, TP: MYR3.30) – Near-Term Earnings Hit; Maintain BUY

The house has reiterated ‘BUY’ call on Malayan Cement, new MYR3.30 TP from MYR3.65, 26% upside. 9MFY22 (Jun) results came in far below our expectations. The negative surprise was due to margin compression from rising material costs – the house had initially assumed Malayan Cement had enough coal inventory to maintain its margins. Despite the setback, the house continues to like the stock as we expect a gradual recovery in cement demand, in tandem with a pick-up in construction activities. 

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