Stocks In Focus MY (Petronas Chemical, Unisem, Westports Hldgs) – 23/02/15
PCHEM (5183), UNISEM (5005), WPRTS (5246)
Petronas Chemical FY14 Core Earnings Below Forecast
CIMB Equities Research said Petronas Chemical Group’s FY14 core earnings were 22 percent below its forecast and 11 percent below consensus due to weaker-than-expected olefins earnings and lower-than-expected utilisation rates from multiple shutdowns.
Elaborating on the financials, the research house noted that the firm’s 4Q14 core earnings of RM692 million missed expectations due to weaker-than-expected olefins margins from the sharp decline in oil prices.
CIMB Research has thus lowered FY15 to FY16 forecasts to account for the weaker olefins margins. However, the research house believes the group’s earnings should recover in FY15 to 16, on the back of rising volumes and improved supplies of gas feedstock and utilities.
Significance: With the lowered forecast, CIMB Research has lowered its target price of the stock to RM6 and added that despite weaker outlook, the firm remains an attractive olefins play due to the industry margin upcycle which should continue in 2015 to 2016.
Unisem To Perform Better In 2015
Semiconductor firm Unisem (M), is likely to perform better this year than in 2014, riding on the recovery of the US economy (where it derives a significant number of its orders), a stronger greenback and healthier China operations, according to group managing director John Chia Sin Tet.
Chia noted that the company is also in a much stronger financial position having pared its borrowings substantially over the last two years. Additionally, the firm has also transitioned to higher technologies and processes where demand is stronger.
Supported by optimism towards the semiconductor industry, Unisem shares have gained some 20 percent year-to-date to RM2.10 (as at February 13). Last August, Chia has also mentioned that that the worst was over for Unisem, which is the maker of microchips used in electronics products, which had long been bogged down by a couple of its overseas subsidiaries.
Significance: Chia added that higher dividend payout would follow with better earnings. Notably, the group has consistently paid dividends to shareholders, even during its loss-making years. Analysts have predicted that dividend yields from Unisem could go up to 3 percent to 4 percent from around 1 percent in 2013.
Westports Eyes M&A In Asean Region
Westports Holdings is eyeing a suitable merger and acquisition (M&A) target particularly in the Asean region that would be able to chart good growth to the benefit of terminal operators here.
The firm cleared rumours that it was already in talks with external parties, stating that it has yet to find a terminal in the region that could join the group. However, it sees South-East Asia as its strongest market, as the countries there are still bullish on the economic outlook and noted that Asean’s potential is amazing in the next 20 to 30 years.
On its strength to undertake an M&A, Westports has close to RM1 billion left out of its RM2 billion sukuk programme that was available for issuance and has a net debt to equity of 0.4 times at end 2014. Capital expenditure for 2015 is estimated to be around RM400 million and mainly to support its container terminal (CT8) expansion plan.
Significance: While the group sees growth potential in the Asean region, which raised its interest for M&A, it notes that this does not undermine the company’s organic growth where it is poised to add more volume via terminal expansion and new network calling at the port. Westports has estimated a 5 percent to 10 percent increase in volume for 2015.
http://www.sharesinv.com
PCHEM (5183), UNISEM (5005), WPRTS (5246)
Petronas Chemical FY14 Core Earnings Below Forecast
CIMB Equities Research said Petronas Chemical Group’s FY14 core earnings were 22 percent below its forecast and 11 percent below consensus due to weaker-than-expected olefins earnings and lower-than-expected utilisation rates from multiple shutdowns.
Elaborating on the financials, the research house noted that the firm’s 4Q14 core earnings of RM692 million missed expectations due to weaker-than-expected olefins margins from the sharp decline in oil prices.
CIMB Research has thus lowered FY15 to FY16 forecasts to account for the weaker olefins margins. However, the research house believes the group’s earnings should recover in FY15 to 16, on the back of rising volumes and improved supplies of gas feedstock and utilities.
Significance: With the lowered forecast, CIMB Research has lowered its target price of the stock to RM6 and added that despite weaker outlook, the firm remains an attractive olefins play due to the industry margin upcycle which should continue in 2015 to 2016.
Unisem To Perform Better In 2015
Semiconductor firm Unisem (M), is likely to perform better this year than in 2014, riding on the recovery of the US economy (where it derives a significant number of its orders), a stronger greenback and healthier China operations, according to group managing director John Chia Sin Tet.
Chia noted that the company is also in a much stronger financial position having pared its borrowings substantially over the last two years. Additionally, the firm has also transitioned to higher technologies and processes where demand is stronger.
Supported by optimism towards the semiconductor industry, Unisem shares have gained some 20 percent year-to-date to RM2.10 (as at February 13). Last August, Chia has also mentioned that that the worst was over for Unisem, which is the maker of microchips used in electronics products, which had long been bogged down by a couple of its overseas subsidiaries.
Significance: Chia added that higher dividend payout would follow with better earnings. Notably, the group has consistently paid dividends to shareholders, even during its loss-making years. Analysts have predicted that dividend yields from Unisem could go up to 3 percent to 4 percent from around 1 percent in 2013.
Westports Eyes M&A In Asean Region
Westports Holdings is eyeing a suitable merger and acquisition (M&A) target particularly in the Asean region that would be able to chart good growth to the benefit of terminal operators here.
The firm cleared rumours that it was already in talks with external parties, stating that it has yet to find a terminal in the region that could join the group. However, it sees South-East Asia as its strongest market, as the countries there are still bullish on the economic outlook and noted that Asean’s potential is amazing in the next 20 to 30 years.
On its strength to undertake an M&A, Westports has close to RM1 billion left out of its RM2 billion sukuk programme that was available for issuance and has a net debt to equity of 0.4 times at end 2014. Capital expenditure for 2015 is estimated to be around RM400 million and mainly to support its container terminal (CT8) expansion plan.
Significance: While the group sees growth potential in the Asean region, which raised its interest for M&A, it notes that this does not undermine the company’s organic growth where it is poised to add more volume via terminal expansion and new network calling at the port. Westports has estimated a 5 percent to 10 percent increase in volume for 2015.
http://www.sharesinv.com
