Dagang Nexchange (DNeX) (former Time Engineering)

[winston]

not vested

DAGANG NEXCHANGE BHD
Target Price: 74 sen

DAGANG Nexchange (DNeX) is expected to stage better performance in 2018 following its National Single Window (NSW) concession extension and better prospects for its oil unit OGPC Sdn Bhd and associate Ping Petroleum Ltd.

On that note, CIMB Research raised its earnings per share (EPS) forecast for DNeX for 2018-2019 by 2.9% to 4.4% to reflect the extension of its NSW concession.

Overall, CIMB projected DNeX to record a robust 2016-2019 net profit compounded annual growth rate of 18%.

It maintained add for DNeX, with an unchanged sum-of-parts-based target price of 74 sen.

Source: CIMB Research

[winston]

not vested

Better times ahead

We left our meeting with DNex upbeat; we see stronger 2018F growth following its NSW concession extension and better prospects for OGPC and Ping.

However, we are wary of near-term weakness given the lack of new drilling contract and delay in its second VEP & RC project at the Malaysia-Thailand border.

The recent extension of its NSW concession will help to remove near-term overhang on the stock, in our view.

We trim our FY17F EPS by 2.6%, but raise FY18-19F EPS by 2.9-4.4% to account for higher contribution from NSW amidst delay in the Thai VEP & RC project.

Maintain Add with an unchanged SOP-based TP of RM0.74.

Source: CIMB

https://brokingrfs.cimb.com/njwXo36J8EZ ... 0NQmA2.pdf

[winston]

not vested

Trading Buy: DNEX - 4456
(Last price: RM0.385, Potential upside +16.9%)

Company Profile
• Dagang NeXchange (DNEX), formerly known as TIME is involved in the provision of ICT services and oil and gas services.

Trading Catalyst

• We believe the 20.6% YTD correction in share prices is overdone and largely priced the expected National Single Window (NSW) earnings risks (post the expiry of its concession in Aug 2019), and potential MyCC penalty in July amid the Competition Act 2010 infringement (pending appeal).

• DNEX long term prospects are intact, driven by the growing contributions from energy segment coupled with its diversified and entrenched ICT businesses, with continued growth in trade facilitation services.

• Valuation is undemanding at 9.9x FY19 P/E (vs 10-year historical average 25x), supported by a resilient 7.3% earnings CAGR for FY17-20 and improving FY18-20 yields of 2.6-5.2%.

• Potential triangle breakout to spur prices towards RM0.425-0.45 levels.

Technical View
• Resistance: RM0.400 / RM0.425 / RM0.450
• Support: RM0.380 / RM0.370
• Cut loss: RM0.360

Key Financial Stats
• Trading at 9x PE19 (vs 10Y average 25x)
• Trading at 1.48x P/B (vs 10Y average 1.9x)

Source: HLIB

[winston]

not vested

DNex secures marine fibre optic cable repair contracts

KUALA LUMPUR: Dagang NeXchange Bhd's (DNeX) indirect 51%-owned subsidiary, DNeX Telco Services Sdn Bhd, has secured two marine fibre optic cable repair contracts worth US$2.8mil from PT Bina Nusantara Perkasa.

The first contract, worth US$1.4mil, is for the repair works on the SEA-US Cable System in Davao, the Philippines.

The second contract, also worth US$1.4mil, is for the repair works on the Indonesia Global Gateway Segment 13 off Palu, Makassar and Segment 15 off Manado, Indonesia.

In statement today, DNeX said both projects were expected to be completed within 29 days based on the approved plan of work, with an option for extension of up to 35 days.

In August this year, the company bagged its maiden fibre optic cable repair project - a marine fibre optic cable installation sub-contract for Telkom Infra in Indonesia worth US$6.3mil.

The project was awarded by Pt Bina Nusantara Perkasa, the consortium company that serves as the main contractor of the project.

Under the project, DNeX is responsible for the design, construction and installation of about 700 kilometres of fibre optic for two lines, Matanusa and SMPCS Patara, as part of the Indonesia Global Gateway Cable System.

DNeX will be working with Japan's Kokusai Cable Ship Co Ltd in the project.

Source: Bernama

https://www.thestar.com.my/business/bus ... PdV4fgV.99

[winston]

not vested

DNex secures marine fibre optic cable repair contracts

KUALA LUMPUR: Dagang NeXchange Bhd's (DNeX) indirect 51%-owned subsidiary, DNeX Telco Services Sdn Bhd, has secured two marine fibre optic cable repair contracts worth US$2.8mil from PT Bina Nusantara Perkasa.

The first contract, worth US$1.4mil, is for the repair works on the SEA-US Cable System in Davao, the Philippines.

The second contract, also worth US$1.4mil, is for the repair works on the Indonesia Global Gateway Segment 13 off Palu, Makassar and Segment 15 off Manado, Indonesia.

In statement today, DNeX said both projects were expected to be completed within 29 days based on the approved plan of work, with an option for extension of up to 35 days.

In August this year, the company bagged its maiden fibre optic cable repair project - a marine fibre optic cable installation sub-contract for Telkom Infra in Indonesia worth US$6.3mil.

The project was awarded by Pt Bina Nusantara Perkasa, the consortium company that serves as the main contractor of the project.

Under the project, DNeX is responsible for the design, construction and installation of about 700 kilometres of fibre optic for two lines, Matanusa and SMPCS Patara, as part of the Indonesia Global Gateway Cable System.

DNeX will be working with Japan's Kokusai Cable Ship Co Ltd in the project.

Source: Bernama

https://www.thestar.com.my/business/bus ... PdV4fgV.99

[winston]

Building blocks of growth with IAC

DNeX’s subsidiary, IAC, has received a RM59.4m one-year maintenance project, on top of an existing GFMAS contract that was awarded in Feb 18.

We raise FY18-20F EPS by 7-16%. We are positive on DNeX’s earnings diversification strategy to offset the weakness in the energy division.

Maintain Add with a higher fully-diluted SOP-based RM0.60 TP.

Source: CIMB

https://brokingrfs.cimb.com/EpIyy2lXzRP ... gtqJg2.pdf

[winston]

Targeting energy division recovery in FY19F

DNeX expects earnings to recover in FY19F, driven by higher PCS project completion and increase in crude oil production at Ping Petroleum.

It is exploring options to monetise and unlock the value of its energy assets.

Maintain Reduce, with an unchanged RM0.25 SOP-based target price.

Source: CIMB

https://brokingrfs.cimb.com/J5vPtn1sYRL ... u1AMg2.pdf

[winston]

not vested

Improving growth prospects ahead

We were surprised to learn that DNeX is optimistic of a potential NSW concession extension in 2H19 due to delays in uCustoms implementation.

DNeX also plans to divest its entire stake in Ping Petroleum, following which shareholders could potentially be rewarded with a special dividend.

Raise FY19-21F EPS by 5-21%. Upgrade to Hold with a higher RM0.30 TP.

Source: CIMB

https://brokingrfs.cimb.com/p9_i4Rek7SB ... JV2jw2.pdf

[winston]

not vested

Attractive risk-reward potential

1H19 results beat expectations at 58% of our FY19F profit but was in line with consensus due to higher-than-expected SIC earnings and lower tax rate.

We expect stronger net profit in 2H19, driven by robust contribution from IT services and maintenance project and higher production volume by Ping.

We raise FY19-21F EPS by 13-15%.

We upgrade DNeX to an Add on better earnings prospects and potential special dividend from Ping divestment.

Source: CIMB

https://brokingrfs.cimb.com/JWm6KccBjVp ... XJhYQ2.pdf

[winston]

not vested

IRB job for DNeX unit

KUALA LUMPUR: Dagang Nexchange Bhd

(DNeX), through its indirect 60%-owned subsidiary Innovation Associates Consulting Sdn Bhd (IAC), has secured a RM42.75mil contract from the Inland Revenue Board (IRB) to re-engineer the country’s tax self-assessment system.

Under the contract, IAC will be responsible for software and support services for the development of the application and software maintenance of the tax self-assessment system.

In a filing with Bursa Malaysia, DNeX said the contract was for three years starting from Dec 1,2019, to Nov 30,2022.

“This project further cements DNeX’s efforts to strengthen the company’s System Integration and Consultancy business to become a key lever of growth.

“We will continue to aggressively pursue new projects in the public and private sectors locally and overseas, ” said executive deputy chairman Datuk Samsul Husin. — Bernama

Source: The Star

https://www.thestar.com.my/business/bus ... IfkXHeA.99