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Kenanga Today

COMPANY UPDATE 

BAUTO (OP↔; TP: RM3.22↑). Charging Ahead. BAUTO’s 1QFY24 results beat expectations on strong demand for the refreshed CX-30 CKD model. Its 1QFY24 core net profit doubled YoY, driven by robust sales of Mazda, Peugeot and Kia vehicles, and higher margins. It raised its FY24F sales guidance by 1k units to 24k units from 23k units three months ago. We increase our FY24-25F net profit by 4% each, lift our TP by 4% to RM3.22 (from RM3.10) and reiterate our OUTPERFORM call.

Trade at your own risk. All the information made available here is generally provided to serve as an example only, without obligation and without specific recommendations for action.

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When you reach the end of your rope, tie a knot in it and hang on.

SECTOR UPDATE Banking (OW↔). June 2023 Statistics: Easing Numbers. Jun 2023 system loans grew 4.4% YoY, within our 4.0%-4.5% target in anticipation of modest economic activities in 2HCY23. This could also be reflected in moderating applications reported. Gross impaired loans (GIL) is stabilising at 1.76% following some pressures in early months, probably due to festive-instilled missed payments. Deposits continue to grow with CASA ratios showing hints of a return, possibly signalling the softening of fixed deposit competition. We do not anticipate further OPR hikes in CY23 which may disrupt product margin optimisation analysis for the banks. We maintain our OVERWEIGHT call on the sector. Sector-wide weakness may lead to investors seeking more tactical opportunities than fundamental ones, proven right by recent share price performances. We recommend names such as: 

(i) CIMB (OP; TP: RM6.00) for its highest potential writeback gains amongst large cap banks, 

(ii) PBBANK (OP; TP: RM4.40) for possible resurgence of interest from clarity in its shareholdings, 

and (iii) AMBANK (OP; TP: RM4.80) as we revisit its consolidation prospects.RESULTS NOTEBURSA (MP↔; TP: RM6.25↔). Better 2H Performance Expected. 1HFY23 core net profit of RM104.8m (-18% YoY) and 15.0 sen interim dividend declared were within expectations. 

We believe 2HFY23’s trading climate could be more vibrant as macro conditions improve with price weakness possibly weighing more favourable risk-reward to investors. Cheaper stamp duties and possible fractional share trading may also widen participation. 

Maintain MARKET PERFORM and TP of RM6.25 as positives appear to be fairly priced in.CIMB (OP↔; TP: RM6.00↔). CIMB Niaga: Record Earnings Report. CIMB Niaga’s 1HFY23 net profits were stronger-than-expected as its continued to sustain growth in both fund and fee-based income streams. Its encouraging performance led the group to improve its targets, confident that they are fundamentally well equipped to hold its market position and outshine its peers. We maintain our forecasts, GGM-derived TP of RM6.00 and OUTPERFORM call for CIMB. The stock is one of our 3QCY23 Top Picks.COMPANY UPDATEGAMUDA (OP↔; TP: RM5.15↔). 

Metro West a Storm in a Teacup? We view the sell-down on GAMUDA shares yesterday - triggered by the news on the potential cancellation of the Metro West project in Australia - as a good buying opportunity. We believe GAMUDA’s tunnelling package for the project has passed the point of no return at 40% completion. We maintain our forecasts, TP of RM5.15 and OUTPERFORM rating.OMH (OP↔; TP: RM2.07↓). Higher Production Offset by Weaker ASP. OMH guided for higher FY23 production volume due to shorter maintenance periods for a few furnaces. However, its ASP will remain weak on subdued demand from the steel sector. We cut FY23−24F earnings forecasts by 56%/22%, lower our TP by 30% to RM2.07 (from RM2.95) but maintain OUTPERFORM.   

- KENANGA

Trade at your own risk. All the information made available here is generally provided to serve as an example only, without obligation and without specific recommendations for action.