Astro Malaysia (ASTRO MK)
Expect Improved Earnings Outlook With Stabilised TV ARPU And Churn
We expect Astro’s upcoming 4QFY22 earnings to grow stronger sequentially with the improvement in business sentiment, stabilised TV ARPU, and lower content cost. We also expect Astro to deliver a final dividend of 2.5-3 sen/share, which translates to a yield of around 3% for the quarter. Maintain BUY and a target price of RM1.08. Expect earnings outlook to improve with stabilised TV churn and ARPU via its content enriching initiatives. The stock offers an attractive yield of 8-9% for FY23-24.
Inari Amertron (INRI MK)
Decent Visibility In FY22; Gearing Up For Next Growth Engine
Despite material constraints and softer seasonality, Inari’s key segments are expected to remain resilient in FY22. Besides modules assembly services, the group is also exploring new trade-diversion opportunities in LED packaging and substrate level. We increase our earnings forecasts by 8-11% for FY23-24. Further earnings accretive M&A activities would uplift its market cap to strengthen its position as an FBMKLCI constituent. Maintain BUY. Target price increased to RM4.30.
CIMB Group (CIMB MK/BUY/RM5.29/ Target: RM5.95)
RESULTS
- CIMB Niaga reported 4Q21 net profit of Rp992m (-6.2% qoq, +678% yoy) bringing FY21 core earnings to Rp4,215b (+109% yoy). CIMB Niaga’s 2021 earnings were broadly in line, comprising 103% of consensus and our full-year estimates. 4Q21 earnings rose seven-fold on the back of positive Jaws (total income grew 4% against flattish opex) and lower provisions (-39%). Revenue growth was underpinned by non-interest income which grew 20.1% with broad based growth across most segments (fee income, wealth management, trading income and recoveries). Net interest income was flattish as a pickup in loans growth momentum was offset by a 25bp yoy dip in NIM. 4Q21 NIM was impacted by lumpy reversal of accrued interest income. We expect NIM to recover sequentially as such lumpy reversal is expected to taper off significantly. On a qoq comparison, earnings dipped 6% qoq due to a 13% qoq increase in provisions and weaker net-interest income (-5% qoq) due to lower NIM.
- CIMB Niaga’s loans growth recovery improving. Loans growth momentum continues to gain traction with overall loans expanding 2.6% qoq, bringing 2021 loans growth to 3.9% yoy vs 2.3% yoy contraction in 9M21. The improved qoq growth momentum was underpinned by: a) mortgages, b) auto loans, and c) corporate loans. However, commercial banking loans remain relatively weak contracting, 2.8% qoq and 11% yoy. That said, 70% of the group’s loans base comprises of consumer and corporate loans combined, which are showing promising signs of growth recovery.
- CIMB Niaga’s credit cost continues to improve. Gross NPL ratio edged up 10bp qoq to 3.5% as the group gradually unwinds its loans repayment scheme which declined further to 11.9% in 4Q21 vs 13.3% in 3Q21 of CIMB Niaga’s overall loans base. Management expects it to decline further to below 5% over the subsequent quarters. As such, management opines that despite the expected rise in NPL ratio, the worst is likely over in terms of provisions. Net credit cost came in at 210bp in 4Q21 (3Q21: 210bp) while LLC remains at a healthy 212%.
- CIMB Group: Maintain BUY and target price of RM5.95 (0.90x 2022F P/B, 8.1% ROE). Given its strong earnings growth off a low base, attractive valuations, large cap and liquid high-beta nature, we continue to believe that the group remains well-positioned to benefit from the economic recovery and reopening theme.