KUALA LUMPUR: Maxis Bhd posted net profit of RM532 million in the second quarter ended June 30, 2010 and it expects higher revenue growth momentum, underpinned by the encouraging demand for broadband and mobile Internet access.
It said on Monday, Aug 30 while it continued to focus on achieving an efficient cost structure, it was increasing its investments while also incurring subsidies and additional operating expenses to support its broadband and data business which will provide significant additional revenue in the future.
Maxis’ operating profit was RM720 million while earnings per share were 7.10 sen. It declared an interim dividend of 8.0 sen per share.
Revenue recorded a quarter-on-quarter revenue growth of 2% or RM39 million, underpinned by an increase in revenue from advance data services (ADS), wireless broadband and hubbing business.
“ADS revenue has increased by 9% with the continued growth in mobile internet usage aided by the wide usage of smartphones and the additional products and services launched.
“Wireless broadband revenue grew by 32% due to an increase in the number of subscriptions from 313,000 as at March 31, 2010 to 448,000 as at June 30, 2010,” it said.
Maxis said the increase in ADS revenue contributed to the increase in the monthly postpaid average revenue per users (ARPU). However, the monthly prepaid ARPU was impacted by the higher take up of lower priced plans. It said despite competition, the wireless broadband maintained its ARPU at RM69.
The group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) and EBITDA margin were impacted by the cost incurred for the 2010 FIFA World Cup sponsorship and the increased interconnect costs on higher hubbing traffic in the quarter, partly offset by cost savings from cost management initiatives.
As a result of the lower EBITDA and higher finance costs partly offset by lower depreciation charge, pre-tax profit of RM720 million was RM45 million or 6% lower than the preceding quarter. Consequently, profit for the period was lower at RM532 million compared to RM552 million in the preceding quarter.
For the six months ended June 30, 2010, there was a 2% increase or RM99 million over the corresponding period last year due to increased non-voice revenue generated from the mobile services.
It said the growth in non-voice revenue was primarily due to increased usage of mobile internet and wireless broadband services.
“Mobile subscriptions grew 14% with prepaid and wireless broadband growing by 1,312,000 and 277,000 subscriptions respectively,” it said.
However, both the ARPU for prepaid and wireless broadband were impacted by the higher take up of lower priced plans with postpaid maintaining its monthly ARPU at RM103.
The average monthly blended MOU per subscription remained relatively flat at 173 minutes as a result of increase from the prepaid segment that was partially offset by a decline in the postpaid segment.
As a result of the lower EBITDA and higher finance costs partly offset by lower depreciation charge, PBT at RM1.485 billion was RM47 million or 3% lower than the corresponding period last year. Consequently, profit for the period was lower at RM1.084 billion compared to RM1.141 billion in the corresponding period last year.
On the outlook, Maxis said the group expected higher revenue growth momentum with the encouraging demand for broadband and mobile internet access.
“The recent regulatory changes on termination rates are not expected to have a material impact on the Group’s results, based on current forecast of traffic pattern.
“The group will continue to fortify its market leadership by providing more innovative new products and services to satisfy customer needs, investing in the network including increasing the high speed wireless broadband coverage and deploying new capabilities via its information technology transformation,” it said.
Monday, August 30, 2010
MAHSING - Mah Sing's earnings on track
Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: MIDF
Mah Sing Group Bhd
(Aug 27, RM1.81)
Maintain buy at RM1.84 with target price RM1.94: Mah Sing Group's (MSGB) 1HFY10 earnings met both our and consensus expectation, accounting for 53.6% and 57% of full-year numbers respectively. ''
Development rollout accelerated growth. The launch of the Residence series and commercial developments (iParc and Southgate) drove earnings growth. We'' believe the present momentum of project launches will continue through 2H10 given the positive sector sentiment.
Cumulative earnings before interest and tax (Ebit) and operating margins declined 2.77 percentage points (pps) and 5pps. Decline can be attributed to ongoing sales and marketing'' expenses (SME), such as interest payments'' to banks during construction and marketing promotions. Nevertheless, 1HFY10 operating profit rose 37.1% year-on-year on the back of further launches from projects in the pipeline. Continue to expect SME to rise as the group gears up for new'' launches with other promotions. However, we believe SME will remain within manageable levels.'' ''
The group's impressive year-to-date (YTD) sales stand at RM1.02 billion, beating its RM1 billion target for 2010. We remain confident MSGB will surpass its new 2010 target of RM1.5 billion. Sales growth will come on the back of up to RM28 million in new launches in the Klang Valley, Penang and Johor. ''
We maintain our forecasts unchanged at this'' juncture as we await further confirmation on the reception of the recent launches of Kinrara'' Residence, Hijaun'' Residence, One Lagenda and M-Suites. We are confident of strong-take-up rates which will warrant an upward revision of our present estimates.
Maintain 'buy' with unchanged target price (TP) of RM1.94. Our TP is derived from the group's RNAV parity. We believe MSGB's landbank replenishment momentum will taper off after its recent RM1.1 billion acquisition of Kinrara (Puchong), Subang-Damansara (Sungai Buloh) and Bukit Jelutong (Shah Alam) land parcels. Present jobs on-hand provide strong earnings visibility through 2013 and should outsee the possible lumpy effect of IFRIC15. At'' present, MSGB has'' a combined GDV balance and unbilled sales of RM7.44 billion. We believe earnings growth prospects to be positive for the group. ''
MGSB remains our top pick for the sector given'' its (i)'' proven 'quick turnaround' model; (ii) commendable GDV balance and proven achievable sales target; (iii) healthy balance sheet; (iv) steady historical dividend yield'' (4%to 6%) with a consistent mid-teens ROE (five-year average 15.7%) and (v) it is one of the few developers with exposure to all product ranges (residential, commercial and industrial). ' MIDF Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
Company Name: MAH SING GROUP BHD
Research House: MIDF
Mah Sing Group Bhd
(Aug 27, RM1.81)
Maintain buy at RM1.84 with target price RM1.94: Mah Sing Group's (MSGB) 1HFY10 earnings met both our and consensus expectation, accounting for 53.6% and 57% of full-year numbers respectively. ''
Development rollout accelerated growth. The launch of the Residence series and commercial developments (iParc and Southgate) drove earnings growth. We'' believe the present momentum of project launches will continue through 2H10 given the positive sector sentiment.
Cumulative earnings before interest and tax (Ebit) and operating margins declined 2.77 percentage points (pps) and 5pps. Decline can be attributed to ongoing sales and marketing'' expenses (SME), such as interest payments'' to banks during construction and marketing promotions. Nevertheless, 1HFY10 operating profit rose 37.1% year-on-year on the back of further launches from projects in the pipeline. Continue to expect SME to rise as the group gears up for new'' launches with other promotions. However, we believe SME will remain within manageable levels.'' ''
The group's impressive year-to-date (YTD) sales stand at RM1.02 billion, beating its RM1 billion target for 2010. We remain confident MSGB will surpass its new 2010 target of RM1.5 billion. Sales growth will come on the back of up to RM28 million in new launches in the Klang Valley, Penang and Johor. ''
We maintain our forecasts unchanged at this'' juncture as we await further confirmation on the reception of the recent launches of Kinrara'' Residence, Hijaun'' Residence, One Lagenda and M-Suites. We are confident of strong-take-up rates which will warrant an upward revision of our present estimates.
Maintain 'buy' with unchanged target price (TP) of RM1.94. Our TP is derived from the group's RNAV parity. We believe MSGB's landbank replenishment momentum will taper off after its recent RM1.1 billion acquisition of Kinrara (Puchong), Subang-Damansara (Sungai Buloh) and Bukit Jelutong (Shah Alam) land parcels. Present jobs on-hand provide strong earnings visibility through 2013 and should outsee the possible lumpy effect of IFRIC15. At'' present, MSGB has'' a combined GDV balance and unbilled sales of RM7.44 billion. We believe earnings growth prospects to be positive for the group. ''
MGSB remains our top pick for the sector given'' its (i)'' proven 'quick turnaround' model; (ii) commendable GDV balance and proven achievable sales target; (iii) healthy balance sheet; (iv) steady historical dividend yield'' (4%to 6%) with a consistent mid-teens ROE (five-year average 15.7%) and (v) it is one of the few developers with exposure to all product ranges (residential, commercial and industrial). ' MIDF Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
ALAM - Alam Maritim - Weak contribution by OSV and underwater services
Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: INTER PACIFIC
Alam Maritim Resources Bhd
(Aug 27, RM1.13)
Maintain outperform at RM1.17 with revised target price RM1.70 (from RM2.40): We have tweaked downwards our FY10F/11F earnings by 2% to 4%. Rolling over our valuation to FY11F, we have trimmed our target price to RM1.70 (previously RM2.40) based on FY11 EPS of 16.4 sen and PER of 10.3 times. Nonetheless, we reiterate our 'outperform' recommendation. We like Alam Maritim (AMRB) due to its strong operating track record and strategy in venturing into new businesses, such as its pipe lay barge and the Middle East and India markets, with its solid financial strategy of using the JV option to finance its new vessels.
AMRB's annualised 1HFY10 net profit came below both our forecast and market consensus, which accounted for 64.8% and 68.7% of FY10 forecast respectively. The reason being lower earnings contribution from the offshore support vessels (OSV) services and underwater services segment. AMRB declared a final dividend of 75 sen during the quarter under review, translating into a gross yield of 0.6%.
In 2QFY10, net profit deteriorated by 33.7% year-on-year (y-o-y) on the back of 16.4% y-o-y drop in revenue. The weak performance was due to lower sales in the OSV services segment (-17.8% y-o-y) and underwater services segment (-71.6% y-o-y). Additionally, its share of profit from jointly controlled entities shrank by 28.1% to RM6.3 million, about 38.1% of its bottom line. Its earnings before interest and tax (Ebit) margin slipped by 13.5pps to 24.4% y-o-y due to higher operating expenses, up 14.4% y-o-y for 2QFY10.
AMRB's key driver over the next two years is underpinned by the delivery of an estimated seven new vessels and contribution from its JV partners. We understand that about 60% to 70% of its current fleet of 33 vessels is chartered to Petronas and its PSC contractors, mostly on two to three-year terms. This will benefit AMRB by providing a recurring income and constant cash flow as well as an expansion of its business via vertical integration into new businesses such as pipe laying. ' Inter-Pacific Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
Company Name: ALAM MARITIM RESOURCES BHD
Research House: INTER PACIFIC
Alam Maritim Resources Bhd
(Aug 27, RM1.13)
Maintain outperform at RM1.17 with revised target price RM1.70 (from RM2.40): We have tweaked downwards our FY10F/11F earnings by 2% to 4%. Rolling over our valuation to FY11F, we have trimmed our target price to RM1.70 (previously RM2.40) based on FY11 EPS of 16.4 sen and PER of 10.3 times. Nonetheless, we reiterate our 'outperform' recommendation. We like Alam Maritim (AMRB) due to its strong operating track record and strategy in venturing into new businesses, such as its pipe lay barge and the Middle East and India markets, with its solid financial strategy of using the JV option to finance its new vessels.
AMRB's annualised 1HFY10 net profit came below both our forecast and market consensus, which accounted for 64.8% and 68.7% of FY10 forecast respectively. The reason being lower earnings contribution from the offshore support vessels (OSV) services and underwater services segment. AMRB declared a final dividend of 75 sen during the quarter under review, translating into a gross yield of 0.6%.
In 2QFY10, net profit deteriorated by 33.7% year-on-year (y-o-y) on the back of 16.4% y-o-y drop in revenue. The weak performance was due to lower sales in the OSV services segment (-17.8% y-o-y) and underwater services segment (-71.6% y-o-y). Additionally, its share of profit from jointly controlled entities shrank by 28.1% to RM6.3 million, about 38.1% of its bottom line. Its earnings before interest and tax (Ebit) margin slipped by 13.5pps to 24.4% y-o-y due to higher operating expenses, up 14.4% y-o-y for 2QFY10.
AMRB's key driver over the next two years is underpinned by the delivery of an estimated seven new vessels and contribution from its JV partners. We understand that about 60% to 70% of its current fleet of 33 vessels is chartered to Petronas and its PSC contractors, mostly on two to three-year terms. This will benefit AMRB by providing a recurring income and constant cash flow as well as an expansion of its business via vertical integration into new businesses such as pipe laying. ' Inter-Pacific Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
ALAM - Profit forecast for Alam Maritim cut by 6pc
Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: KENANGA
Kenanga Research has revised downwards its net profit forecast for Alam Maritim Resources Bhd by six per cent for financial year 2010 to RM105 million from RM111.5 million and by four per cent for financial year 2011 to RM108 million from RM112 million.
The revised target was factored by softer earnings from offshore marine vessels and lower contribution from underwater division due to the idling delivery time of the pipe-lay barge expected to be in September 2010, it said in a research note today.
Upon revising Alam Maritim's net profit forecast, Kenanga Research also downgraded its recommendation for Alam Maritim shares to "hold" with a revised target price of RM1.06, saying that it is being cautious at this juncture until contracts are secured.
The research house, however, remained positive on Alam Maritim's prospects in view of upcoming new builds (anchor handling tug and supply vessel and pipe-lay barge).
Alam Maritim's first half financial year 2010 recorded a net profit of RM38.1 million, a 25.6 per cent drop from the previous year net profit of RM51.2 million on declining revenue of RM134.3 million from RM152 million previously.
The net profit recorded was 34 per cent lower than Kenanga Research and consensus expectations with quarter-on-quarter net profit declining by 24.5 per cent to RM16.4 million from RM21.7 million in the preceding year, despite the
marginal increase of revenue. -- Bernama
Company Name: ALAM MARITIM RESOURCES BHD
Research House: KENANGA
Kenanga Research has revised downwards its net profit forecast for Alam Maritim Resources Bhd by six per cent for financial year 2010 to RM105 million from RM111.5 million and by four per cent for financial year 2011 to RM108 million from RM112 million.
The revised target was factored by softer earnings from offshore marine vessels and lower contribution from underwater division due to the idling delivery time of the pipe-lay barge expected to be in September 2010, it said in a research note today.
Upon revising Alam Maritim's net profit forecast, Kenanga Research also downgraded its recommendation for Alam Maritim shares to "hold" with a revised target price of RM1.06, saying that it is being cautious at this juncture until contracts are secured.
The research house, however, remained positive on Alam Maritim's prospects in view of upcoming new builds (anchor handling tug and supply vessel and pipe-lay barge).
Alam Maritim's first half financial year 2010 recorded a net profit of RM38.1 million, a 25.6 per cent drop from the previous year net profit of RM51.2 million on declining revenue of RM134.3 million from RM152 million previously.
The net profit recorded was 34 per cent lower than Kenanga Research and consensus expectations with quarter-on-quarter net profit declining by 24.5 per cent to RM16.4 million from RM21.7 million in the preceding year, despite the
marginal increase of revenue. -- Bernama
COCOLND - Cocoaland's cocoa-licious with F&N on board
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
Cocoaland Holdings Bhd
(Aug 27, RM2.76)
Maintain buy at RM 2.87 with fair value RM3.60: We re-affirm our 'buy' rating on Cocoaland Holdings (Cocoaland) with higher fair value of RM3.60 per share, post a 14% to 43% upward revision to our earnings forecasts and pegging FY11F revised earnings to target PER of 16 times (previously 12 times).
Cocoaland announced the entry of Fraser & Neave (F&N) as a strategic partner, with the latter buying 39.6 million new shares via a private placement for RM54.6 million, or RM1.38 per share. Post the placement exercise, F&N will hold 23.08% equity interest in Cocoaland.
We are excited by this latest development. The entry of F&N lends credence to Cocoaland's shareholding structure and its growth trajectory. F&N plans to partner the group in accelerating existing hot-filled PET bottling operations in a bid to advance its competitive advantage through rapid market share expansion within the juices category.
F&N is a good fit for Cocoaland by virtue of its established distribution network and niche in product development. For instance, F&N's homegrown 100Plus is synonymous with isotonic drinks. On the other hand, Cocoaland offers F&N a ready platform to leverage on its existing bottling facilities capable of 'hotfilling' PET bottles. Hotfilling PET bottles allows for pasteurised liquids to be filled hot into the bottle, effectively extending the beverage shelf life by six to 12 months.
To recap, Cocoaland is set to see an eventful maiden earnings contribution from its PET bottling operations in FY10F. With commercialisation by end-September, earnings contribution from this division is poised to increase significantly from less than 5% to an estimated 44% in FY11F, on a par with the group's core production of fruit gummies.
Most significantly, we see robust earnings growth with three-year CAGR of 39% on the back of accelerated capex spending. We have raised our FY11F and FY12F earnings by 15% to RM38 million (y-o-y: +88%) and 43% to RM53 million (y-o-y:+40%), respectively, after incorporating our latest assumptions of higher off-take rates and product expansion by F&N.
Valuation-wise, we are not unduly worried. Stock is trading at forward PER of 13 times. Our target PER of 16 times is at a 10% discount to F&N's target PER multiple of 18 times. Much like the entry of Wilmar International Ltd resulting in an upward rerating by nine or 10 times for Three-A Resources, the institutionalisation of shareholding structure coupled with earnings accretion warrants a higher PER for Cocoaland. ' AmResearch Sdn Bhd
This article appeared in The Edge Financial Daily, August 30 2010.
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
Cocoaland Holdings Bhd
(Aug 27, RM2.76)
Maintain buy at RM 2.87 with fair value RM3.60: We re-affirm our 'buy' rating on Cocoaland Holdings (Cocoaland) with higher fair value of RM3.60 per share, post a 14% to 43% upward revision to our earnings forecasts and pegging FY11F revised earnings to target PER of 16 times (previously 12 times).
Cocoaland announced the entry of Fraser & Neave (F&N) as a strategic partner, with the latter buying 39.6 million new shares via a private placement for RM54.6 million, or RM1.38 per share. Post the placement exercise, F&N will hold 23.08% equity interest in Cocoaland.
We are excited by this latest development. The entry of F&N lends credence to Cocoaland's shareholding structure and its growth trajectory. F&N plans to partner the group in accelerating existing hot-filled PET bottling operations in a bid to advance its competitive advantage through rapid market share expansion within the juices category.
F&N is a good fit for Cocoaland by virtue of its established distribution network and niche in product development. For instance, F&N's homegrown 100Plus is synonymous with isotonic drinks. On the other hand, Cocoaland offers F&N a ready platform to leverage on its existing bottling facilities capable of 'hotfilling' PET bottles. Hotfilling PET bottles allows for pasteurised liquids to be filled hot into the bottle, effectively extending the beverage shelf life by six to 12 months.
To recap, Cocoaland is set to see an eventful maiden earnings contribution from its PET bottling operations in FY10F. With commercialisation by end-September, earnings contribution from this division is poised to increase significantly from less than 5% to an estimated 44% in FY11F, on a par with the group's core production of fruit gummies.
Most significantly, we see robust earnings growth with three-year CAGR of 39% on the back of accelerated capex spending. We have raised our FY11F and FY12F earnings by 15% to RM38 million (y-o-y: +88%) and 43% to RM53 million (y-o-y:+40%), respectively, after incorporating our latest assumptions of higher off-take rates and product expansion by F&N.
Valuation-wise, we are not unduly worried. Stock is trading at forward PER of 13 times. Our target PER of 16 times is at a 10% discount to F&N's target PER multiple of 18 times. Much like the entry of Wilmar International Ltd resulting in an upward rerating by nine or 10 times for Three-A Resources, the institutionalisation of shareholding structure coupled with earnings accretion warrants a higher PER for Cocoaland. ' AmResearch Sdn Bhd
This article appeared in The Edge Financial Daily, August 30 2010.
SUNRISE - Sunrise venturing into serviced apartments
Stock Name: SUNRISE
Company Name: SUNRISE BHD
Research House: ECMLIBRA
Sunrise Bhd
(Augt 27, RM2)
Maintain buy at RM2.05 with target price RM3.58: FY10 results came in within house and market expectations as net profit of RM134 million achieved 101% and 97% of house and consensus estimates respectively.
A first and final net dividend per share (DPS) of 3.75 sen was declared which was in line with our expectation. Revenue declined 26.5% to RM590.7 million due to completion of certain projects while net profit fell 14.2% to RM134 million.
However, stripping out one-off gain of RM19.4 million in FY09, net profit only fell 2.1%. Earnings before interest and tax margin on the other hand improved from 26.2% to 31.4% due to more projects with higher margin.
Sunrise achieved property sales of RM637.9 million in FY10 which was a two-year high amid decent take-up for its MK28 project (50% sold).
Although unbilled sales were lower at RM861.3 million, it is on a rising trend after bottoming out at RM714 million in 2QFY10. Despite the decent numbers, sales of MK28 have stagnated of late and management attributed that to more stringent credit evaluation by end-financiers.
To better manage capital values and yields of properties post completion, management has ventured into the business of operating serviced apartments. No meaningful contribution is expected in the near term and immediate focus is to differentiate and improve marketability of Sunrise products.
Management informed that implementation of IFRIC 15 has been deferred to January 2012 from July 2010. This is a huge relief to investors who are concerned with volatility of developers' earnings post IFRIC 15 although our view is that fundamentally it changes nothing.
Sunrise will be launching two new projects outside Mont Kiara in September or October 2010. The first is Menara Solaris (GDV RM508 million) where there are currently interested en bloc purchasers.
However, if negotiation falls through, the project will be launched on strata basis. The second project is the first phase of Quintet (GDV CAD$400 million or RM1.2 billion), Sunrise's Canadian project, which will be developed on build-then-sell basis. Management is confident of these projects and has set a RM1.25 billion sales target in FY11.
Sunrise is undervalued (5.7 times P/E and 43% discount to RNAV) and we believe improving sales and resumption of project launches will narrow the valuation gap. We reiterate our 'buy' call and maintain target price of RM3.58 based on average P/E of 10 times. RNAV remains unchanged at RM3.58. ' ECM Libra Investment Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
Company Name: SUNRISE BHD
Research House: ECMLIBRA
Sunrise Bhd
(Augt 27, RM2)
Maintain buy at RM2.05 with target price RM3.58: FY10 results came in within house and market expectations as net profit of RM134 million achieved 101% and 97% of house and consensus estimates respectively.
A first and final net dividend per share (DPS) of 3.75 sen was declared which was in line with our expectation. Revenue declined 26.5% to RM590.7 million due to completion of certain projects while net profit fell 14.2% to RM134 million.
However, stripping out one-off gain of RM19.4 million in FY09, net profit only fell 2.1%. Earnings before interest and tax margin on the other hand improved from 26.2% to 31.4% due to more projects with higher margin.
Sunrise achieved property sales of RM637.9 million in FY10 which was a two-year high amid decent take-up for its MK28 project (50% sold).
Although unbilled sales were lower at RM861.3 million, it is on a rising trend after bottoming out at RM714 million in 2QFY10. Despite the decent numbers, sales of MK28 have stagnated of late and management attributed that to more stringent credit evaluation by end-financiers.
To better manage capital values and yields of properties post completion, management has ventured into the business of operating serviced apartments. No meaningful contribution is expected in the near term and immediate focus is to differentiate and improve marketability of Sunrise products.
Management informed that implementation of IFRIC 15 has been deferred to January 2012 from July 2010. This is a huge relief to investors who are concerned with volatility of developers' earnings post IFRIC 15 although our view is that fundamentally it changes nothing.
Sunrise will be launching two new projects outside Mont Kiara in September or October 2010. The first is Menara Solaris (GDV RM508 million) where there are currently interested en bloc purchasers.
However, if negotiation falls through, the project will be launched on strata basis. The second project is the first phase of Quintet (GDV CAD$400 million or RM1.2 billion), Sunrise's Canadian project, which will be developed on build-then-sell basis. Management is confident of these projects and has set a RM1.25 billion sales target in FY11.
Sunrise is undervalued (5.7 times P/E and 43% discount to RNAV) and we believe improving sales and resumption of project launches will narrow the valuation gap. We reiterate our 'buy' call and maintain target price of RM3.58 based on average P/E of 10 times. RNAV remains unchanged at RM3.58. ' ECM Libra Investment Research, Aug 27
This article appeared in The Edge Financial Daily, August 30 2010.
Hold on to Bintulu Port shares: Kenanga
Kenanga Research has recommended that investors hold on to shares of Bintulu Port Holdings, due to its high valuation, with the counter offering an attractive yield of 5.5 per cent.
'The fair value is based on a discounted cashflow valuation with a weighted average cost of capital of 9.4 per cent,' Kenanga said in its research note today.
It said Bintulu Port, Malaysia's second largest port in terms of cargo volume, had reported a strong rebound of 72 per cent in its second quarter 2010 net profit.
This brought its first half 2010 net profit to RM74.1 million, which was within Kenanga's expectations.
As expected, the company had announced a second interim single tier dividend of 7.5 sen per share.
Kenanga said Bintulu Port would still be the main port of call for liquefied natural gas (LNG) vessels and it did not expect any material impact to its earnings, should the government decide to reduce the tariff for LNG vessel handling as this would be cushioned by the lower lease rental.-- Bernama
'The fair value is based on a discounted cashflow valuation with a weighted average cost of capital of 9.4 per cent,' Kenanga said in its research note today.
It said Bintulu Port, Malaysia's second largest port in terms of cargo volume, had reported a strong rebound of 72 per cent in its second quarter 2010 net profit.
This brought its first half 2010 net profit to RM74.1 million, which was within Kenanga's expectations.
As expected, the company had announced a second interim single tier dividend of 7.5 sen per share.
Kenanga said Bintulu Port would still be the main port of call for liquefied natural gas (LNG) vessels and it did not expect any material impact to its earnings, should the government decide to reduce the tariff for LNG vessel handling as this would be cushioned by the lower lease rental.-- Bernama
Stock to Watch - Mon, 30 August 2010
* Lion Industries Corporation (RM1.58, SELL) – Broken below flag support.
* Axiata Group (RM4.45, SELL) – Approaching key resistance?
* APM Automotive Holdings (RM4.39, SELL) – The trend is now down.
______________________________________________________________________
1. Lion Industries Corporation (RM1.58, SELL)
____________________________________________________________________
2. Axiata Group (RM4.45, SELL)
____________________________________________________________________
3. APM Automotive Holdings (RM4.39, SELL)
* Axiata Group (RM4.45, SELL) – Approaching key resistance?
* APM Automotive Holdings (RM4.39, SELL) – The trend is now down.
______________________________________________________________________
1. Lion Industries Corporation (RM1.58, SELL)
____________________________________________________________________
2. Axiata Group (RM4.45, SELL)
____________________________________________________________________
3. APM Automotive Holdings (RM4.39, SELL)
FREIGHT ... Aug10
Mercury Securities Sdn Bhd Research House:-
PERFORMANCE
Freight’s (FMH) latest FY10 results revealed steady revenues and profits that were within, but at the higher-end of our earlier expectations for full year FY10.
“FMH reports strong FY10 results”
FMH had recorded a strong y-o-y revenue growth of 38.7% or RM20.8 million to RM74.6 million during its 4Q/FY10 (4Q/FY09: RM53.8 million), contributed by the strong demand for seafreight and airfreight services. The group’s strong seafreight volumes (in TEUs) resulted in segment revenues that were more than 10% above our earlier expectations.
“Seafreight volumes higher than expected”
During 4Q/FY10, revenue from the group’s core business segment - Seafreight services had increased by 56.8% or RM16.8 million. Its Airfreight segment similarly enjoyed a healthy y-o-y growth of 76.7% or RM3.3 million during 4Q/FY10. Meanwhile, FMH’s support services segments such as Warehouse & Distribution, Haulage and Landfreight grew by 23.1%, 35.0% and 85.7% y-o-y respectively during 4Q/FY10.
The group’s Land Transport service which was launched in FY09 to transport loose and full-truck cargoes between Malaysia and Thailand had gained popularity among its existing customers. The expansion in demand for the group’s international freight services had provided further impetus for growth in its domestic logistics services, such as Warehouse & Distribution, Custom Brokerage and Haulage services.
During 4Q/FY10, the group’s profit before tax (PBT) had expanded by RM0.9 million or 15.6% to RM6.6 million (4Q/FY09: RM5.7 million), while the group’s net profit after tax after minority interest (NPATMI) had increased by RM0.7 million to RM4.7 million (4Q/FY09: RM4.0 million). For FY10 ending 30th June 2010, the group had recorded PBT of RM21.8 million against RM19.3 million, a growth of 12.9% y-o-y. The group achieved a growth of 21.2% in NPATMI, an increase of RM2.8 million to RM16.4 million (FY09: RM13.6 million).
OUTLOOK/CORP. UPDATES
FMH’s management remains very focused on its core business in the provision of freight services. Additionally, the group continues to seek opportunities to grow its businesses through potential acquisition within the industry both in domestic and regional markets. FMH’s freight (sea and air) volumes (TEUs) had recovered well in its FY10. The steady performance across most of FMH’s business segments in FY10 and the general improvement in both global and domestic business sentiments augurs well for FMH’s overall performance during its FY11 ending 30th June 2011.
“Bright prospects during FMH’s FY11”
In April 2010, The International Monetary Fund (IMF) stated that the global economy will grow at a faster-than-expected rate this year as it continues to rebound from the crippling financial crisis. In its World Economic Outlook report, the IMF had forecast global economic growth of 4.2% for 2010 and 4.3% for 2011.
The growth in Malaysia’s foreign trade (exports/imports), IPI (Industrial Production Index) and Manufacturing Sales in recent quarters – would augur well for FMH’s freight volumes and FY11 results. The latest available Malaysian economic data (June 2010) revealed slowing growth rates in y-o-y percentage terms but still very strong numbers nevertheless, for instance - IPI (+9.4 y-o-y), and Manufacturing Sales (+13.8% y-o-y), Exports (+17.2% y-o-y) and Imports (+30.1% y-o-y). Malaysia had reported a strong 2Q/2010 GDP growth of +8.9% while Bank Negara Malaysia (BNM) had increased its overnight policy rate (OPR) to 2.75% to stifle inflationary pressures, given that overall economic conditions have improved.
“Asia to drive global growth”
FMH’s traditional focus on intra-Asian trade, with less exposure to the US and Europe trade markets, has enabled the group to recover faster (compared to some competitors) from the lower trade volumes during the global recession last year. Furthermore, global economic growth in the next few years would be led by Asian countries, such as China and India.
During FY10, 22.7% of FMH’s revenues were derived from its overseas operations in Singapore, Australia, Indonesia and Thailand. FMH is getting a steady contribution from its newer subsidiaries in Indonesia and Thailand. FMH’s management is also exploring JV opportunities in other ASEAN countries. FMH’s low-entry-cost and asset light business model has so far proved successful in Indonesia and Thailand.
“Latest venture – Vietnam”
In March 2010, Icon Line (M) SB, a wholly owned subsidiary of FMH had entered into a MOU with Mr Dang Anh Binh to form a JV company for the purpose of starting a freight forwarding business in Vietnam. In April 2010, Icon Line had entered into a JV agreement with Mr Dang to incorporated a JV company in Ho Chi Minh City, Vietnam known as Icon Freight Services Company Ltd.
In July 2010, Icon Line (Malaysia) SB had subscribed VND255 million in Icon Freight Services Co Ltd, representing 51% of total issued and paid-up capital of Icon Freight Services Co Ltd. Thereafter, Icon Freight Services Company Ltd will be a 51% owned subsidiary of Icon Line (M) SB. Currently, FMH is working on setting-up its freight operations in Ho Chi Minh City, Vietnam.
To grow organically, FMH also continually seeks to expand its customer and agent base and to explore new destinations. Additionally, FMH has intensive marketing programmes to meet customers’ demands and also continue to provide value-added services to them. FMH’s management closely monitors its business volumes, receivables collection, industry trends and economic conditions.
PERFORMANCE
Freight’s (FMH) latest FY10 results revealed steady revenues and profits that were within, but at the higher-end of our earlier expectations for full year FY10.
“FMH reports strong FY10 results”
FMH had recorded a strong y-o-y revenue growth of 38.7% or RM20.8 million to RM74.6 million during its 4Q/FY10 (4Q/FY09: RM53.8 million), contributed by the strong demand for seafreight and airfreight services. The group’s strong seafreight volumes (in TEUs) resulted in segment revenues that were more than 10% above our earlier expectations.
“Seafreight volumes higher than expected”
During 4Q/FY10, revenue from the group’s core business segment - Seafreight services had increased by 56.8% or RM16.8 million. Its Airfreight segment similarly enjoyed a healthy y-o-y growth of 76.7% or RM3.3 million during 4Q/FY10. Meanwhile, FMH’s support services segments such as Warehouse & Distribution, Haulage and Landfreight grew by 23.1%, 35.0% and 85.7% y-o-y respectively during 4Q/FY10.
The group’s Land Transport service which was launched in FY09 to transport loose and full-truck cargoes between Malaysia and Thailand had gained popularity among its existing customers. The expansion in demand for the group’s international freight services had provided further impetus for growth in its domestic logistics services, such as Warehouse & Distribution, Custom Brokerage and Haulage services.
During 4Q/FY10, the group’s profit before tax (PBT) had expanded by RM0.9 million or 15.6% to RM6.6 million (4Q/FY09: RM5.7 million), while the group’s net profit after tax after minority interest (NPATMI) had increased by RM0.7 million to RM4.7 million (4Q/FY09: RM4.0 million). For FY10 ending 30th June 2010, the group had recorded PBT of RM21.8 million against RM19.3 million, a growth of 12.9% y-o-y. The group achieved a growth of 21.2% in NPATMI, an increase of RM2.8 million to RM16.4 million (FY09: RM13.6 million).
OUTLOOK/CORP. UPDATES
FMH’s management remains very focused on its core business in the provision of freight services. Additionally, the group continues to seek opportunities to grow its businesses through potential acquisition within the industry both in domestic and regional markets. FMH’s freight (sea and air) volumes (TEUs) had recovered well in its FY10. The steady performance across most of FMH’s business segments in FY10 and the general improvement in both global and domestic business sentiments augurs well for FMH’s overall performance during its FY11 ending 30th June 2011.
“Bright prospects during FMH’s FY11”
In April 2010, The International Monetary Fund (IMF) stated that the global economy will grow at a faster-than-expected rate this year as it continues to rebound from the crippling financial crisis. In its World Economic Outlook report, the IMF had forecast global economic growth of 4.2% for 2010 and 4.3% for 2011.
The growth in Malaysia’s foreign trade (exports/imports), IPI (Industrial Production Index) and Manufacturing Sales in recent quarters – would augur well for FMH’s freight volumes and FY11 results. The latest available Malaysian economic data (June 2010) revealed slowing growth rates in y-o-y percentage terms but still very strong numbers nevertheless, for instance - IPI (+9.4 y-o-y), and Manufacturing Sales (+13.8% y-o-y), Exports (+17.2% y-o-y) and Imports (+30.1% y-o-y). Malaysia had reported a strong 2Q/2010 GDP growth of +8.9% while Bank Negara Malaysia (BNM) had increased its overnight policy rate (OPR) to 2.75% to stifle inflationary pressures, given that overall economic conditions have improved.
“Asia to drive global growth”
FMH’s traditional focus on intra-Asian trade, with less exposure to the US and Europe trade markets, has enabled the group to recover faster (compared to some competitors) from the lower trade volumes during the global recession last year. Furthermore, global economic growth in the next few years would be led by Asian countries, such as China and India.
During FY10, 22.7% of FMH’s revenues were derived from its overseas operations in Singapore, Australia, Indonesia and Thailand. FMH is getting a steady contribution from its newer subsidiaries in Indonesia and Thailand. FMH’s management is also exploring JV opportunities in other ASEAN countries. FMH’s low-entry-cost and asset light business model has so far proved successful in Indonesia and Thailand.
“Latest venture – Vietnam”
In March 2010, Icon Line (M) SB, a wholly owned subsidiary of FMH had entered into a MOU with Mr Dang Anh Binh to form a JV company for the purpose of starting a freight forwarding business in Vietnam. In April 2010, Icon Line had entered into a JV agreement with Mr Dang to incorporated a JV company in Ho Chi Minh City, Vietnam known as Icon Freight Services Company Ltd.
In July 2010, Icon Line (Malaysia) SB had subscribed VND255 million in Icon Freight Services Co Ltd, representing 51% of total issued and paid-up capital of Icon Freight Services Co Ltd. Thereafter, Icon Freight Services Company Ltd will be a 51% owned subsidiary of Icon Line (M) SB. Currently, FMH is working on setting-up its freight operations in Ho Chi Minh City, Vietnam.
To grow organically, FMH also continually seeks to expand its customer and agent base and to explore new destinations. Additionally, FMH has intensive marketing programmes to meet customers’ demands and also continue to provide value-added services to them. FMH’s management closely monitors its business volumes, receivables collection, industry trends and economic conditions.
Kurnia's non-motor biz grows 23pc in H1
Motor insurer Kurnia Insurans (Malaysia) Bhd (KIMB) achieved a 23 per cent growth in its non-motor business for the first six months of 2010.
Its executive chairman, Tan Sri Kua Sian Kooi, said that the non-motor business was growing according to the set target, which was to achieve 30 per cent of overall gross premiums by 2012.
The non-motor underwriting profit totalled RM24 million for the reviewed period.
The company launched three non-motor products in the first half of this year namely Perfect 10 Plus, Pet Insurance and Student Personal Accident insurance.
It plans to launch another three new products, including medical and personal accident insurance in the second half of this year.
KIMB is also deploying various distribution channels to grow its non-motor business.
'We are developing our 2,000 non-motor agency force and are on track to recruit another 200 by the end of 2010,' Kua said.
Meanwhile, KIMB's parent company, Kurnia Asia Bhd posted a lower pre-tax profit of RM5.97 million in its second financial quarter ended June 30, 2010, compared to RM24.57 million in the same period last year.
The group's revenue, however, rose to RM289.47 million from RM264.65 million previously.--Bernama
Its executive chairman, Tan Sri Kua Sian Kooi, said that the non-motor business was growing according to the set target, which was to achieve 30 per cent of overall gross premiums by 2012.
The non-motor underwriting profit totalled RM24 million for the reviewed period.
The company launched three non-motor products in the first half of this year namely Perfect 10 Plus, Pet Insurance and Student Personal Accident insurance.
It plans to launch another three new products, including medical and personal accident insurance in the second half of this year.
KIMB is also deploying various distribution channels to grow its non-motor business.
'We are developing our 2,000 non-motor agency force and are on track to recruit another 200 by the end of 2010,' Kua said.
Meanwhile, KIMB's parent company, Kurnia Asia Bhd posted a lower pre-tax profit of RM5.97 million in its second financial quarter ended June 30, 2010, compared to RM24.57 million in the same period last year.
The group's revenue, however, rose to RM289.47 million from RM264.65 million previously.--Bernama
BIMB posts RM377.66m profit this year
BIMB Holdings Bhd (BIMB)reported RM377.66 cumulative 12-month profit before zakat and tax this year compared with RM299.13 million in the same period last year.
The group's revenue rose 8.9 per cent to RM1.623 billion from 1.490 billion last year.
In a filing to Bursa Malaysia today, BIMB Holdings said higher profit before zakat and tax was due to strong performance by Bank Islam Malaysia Bhd and Syarikat Takaful Malaysia Bhd.
It said Bank Islam achieved RM313 million profit before zakat and tax, exceeding the previous financial year by 34.3 per cent or RM79.9 million.
The group said Takaful Malaysia also registered a higher surplus transfer from its family and general takaful fund of RM162.7 million compared with RM147.7 million previously. -- Bernama
The group's revenue rose 8.9 per cent to RM1.623 billion from 1.490 billion last year.
In a filing to Bursa Malaysia today, BIMB Holdings said higher profit before zakat and tax was due to strong performance by Bank Islam Malaysia Bhd and Syarikat Takaful Malaysia Bhd.
It said Bank Islam achieved RM313 million profit before zakat and tax, exceeding the previous financial year by 34.3 per cent or RM79.9 million.
The group said Takaful Malaysia also registered a higher surplus transfer from its family and general takaful fund of RM162.7 million compared with RM147.7 million previously. -- Bernama
KPJ Healthcare 2Q net profit up 17.2% to RM29.1m
KUALA LUMPUR: KPJ Healthcare Bhd posted a stronger set of earnings, with net profit of RM29.86 million in the second quarter ended June 30, an increase of 17.2% from RM24.86 million a year ago, underpinned higher revenue from its hospitals.
It said on Monday, Aug 30 that revenue rose 10.6% to RM410.24 million from RM370.78 million. Operating profit was RM41.30 million compared with RM35.81 million.
“The profit before taxation for the current quarter has increased by 15.4% to RM41.3 million from RM35.8 million in the corresponding quarter 2009. The increase is in line with the increase in revenue of the hospitals,” it said.
Earnings per share were 5.54 sen while it declared an interim dividend of 3.25 sen.
On the outlook, KPJ said it expected the group’s financial performance to continue to be encouraging and better than the previous year as the economy improves.
It said on Monday, Aug 30 that revenue rose 10.6% to RM410.24 million from RM370.78 million. Operating profit was RM41.30 million compared with RM35.81 million.
“The profit before taxation for the current quarter has increased by 15.4% to RM41.3 million from RM35.8 million in the corresponding quarter 2009. The increase is in line with the increase in revenue of the hospitals,” it said.
Earnings per share were 5.54 sen while it declared an interim dividend of 3.25 sen.
On the outlook, KPJ said it expected the group’s financial performance to continue to be encouraging and better than the previous year as the economy improves.
Kulim 2Q net profit halved on higher taxes
KUALA LUMPUR: Kulim (Malaysia) Bhd’s profit attributable to equity holders of the parent company fell 52% to RM14.6 million from RM30.89 million a year ago as it was impacted by higher taxes though it posted stronger operating profit.
It said on Monday, Aug 30 revenue was up 12.5% at RM1.673 billion from RM1.487 billion. Operating profit was RM123.05 million compared with RM99.55 million while profit was RM83.26 million versus RM73.50 million.
Earnings per share were 4.69 sen compared with 10.01 sen. Its net asset per share was RM10.69 sen versus RM10.58.
It said on Monday, Aug 30 revenue was up 12.5% at RM1.673 billion from RM1.487 billion. Operating profit was RM123.05 million compared with RM99.55 million while profit was RM83.26 million versus RM73.50 million.
Earnings per share were 4.69 sen compared with 10.01 sen. Its net asset per share was RM10.69 sen versus RM10.58.
NESTLE - Nestle Malaysia raised to 'buy'
Stock Name: NESTLE
Company Name: NESTLE (M) BHD
Research House: MAYBANK
Nestle (Malaysia) Bhd, a unit of the world's biggest food company, was raised to "buy" from "hold" at Maybank Investment Bank Bhd to reflect its growth prospects and better margins.
The share-price estimate was increased to RM43.86 from RM29.50, Maybank analyst Khair Mirza said in a report today. -- Bloomberg
Company Name: NESTLE (M) BHD
Research House: MAYBANK
Nestle (Malaysia) Bhd, a unit of the world's biggest food company, was raised to "buy" from "hold" at Maybank Investment Bank Bhd to reflect its growth prospects and better margins.
The share-price estimate was increased to RM43.86 from RM29.50, Maybank analyst Khair Mirza said in a report today. -- Bloomberg
OSK upbeat on Proton, keeps 'buy' call
OSK Research Sdn Bhd expects Proton Holdings Bhd to post favourable results in the shorter term on the back of its new model pipeline going forward in addition of the much improved operating landscape.
It is maintaining its 'buy' on Proton being the cheapest auto stock under its coverage which is only trading at forward price-per-earning of 7.2 times versus the sector average of 10 times.
Proton shares are hovering five sen higher to RM4.56 as at 10.20am on Bursa Malaysia.
'We make no changes to our earnings estimates for Proton pending more clarification from the management on how the injection to Lotus will be structured (whether a new issuance of shares will be involved),' it said in a research note today.
On Proton's foray into the Indian market, OSK Research said: 'We believe it is too early to tell how this would contribute to earnings although we are still generally positive on whatever the outcome given the market potential.' -- Bernama
It is maintaining its 'buy' on Proton being the cheapest auto stock under its coverage which is only trading at forward price-per-earning of 7.2 times versus the sector average of 10 times.
Proton shares are hovering five sen higher to RM4.56 as at 10.20am on Bursa Malaysia.
'We make no changes to our earnings estimates for Proton pending more clarification from the management on how the injection to Lotus will be structured (whether a new issuance of shares will be involved),' it said in a research note today.
On Proton's foray into the Indian market, OSK Research said: 'We believe it is too early to tell how this would contribute to earnings although we are still generally positive on whatever the outcome given the market potential.' -- Bernama
PETGAS - Petronas Gas upgraded, at 33-month high
Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Research House: RHB
Petronas Gas Bhd, a Malaysian natural gas distributor, had its stock upgraded to "outperform" from "market perform" at RHB Research Institute Sdn Bhd after posting higher first-quarter net income.
Its fair value was raised to RM11.63 from RM10.71, RHB said in a report today.
The stock rose to a 33-month high in Kuala Lumpur trading after fiscal first-quarter net income climbed 42 per cent from a year earlier.
The stock gained 1.4 per cent to RM10.54 at 9:31 am local time, bound for its highest close since February 5, 2008. -- Bloomberg
Company Name: PETRONAS GAS BHD
Research House: RHB
Petronas Gas Bhd, a Malaysian natural gas distributor, had its stock upgraded to "outperform" from "market perform" at RHB Research Institute Sdn Bhd after posting higher first-quarter net income.
Its fair value was raised to RM11.63 from RM10.71, RHB said in a report today.
The stock rose to a 33-month high in Kuala Lumpur trading after fiscal first-quarter net income climbed 42 per cent from a year earlier.
The stock gained 1.4 per cent to RM10.54 at 9:31 am local time, bound for its highest close since February 5, 2008. -- Bloomberg
PROTON - OSK Research maintains Buy on Proton
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy call on PROTON HOLDINGS BHD [] at RM4.53 being the cheapest auto stock under its coverage which is only trading at forward PE of 7.2 times versus the sector average of 10 times.
The research house said on Monday, Aug 30 that it is not making any changes to its earnings estimates for Proton pending more clarification from management on how the injection to Lotus will be structured (whether a new issuance of shares will be involved).
'On its foray into the India market, we believe it is too early to tell how this would contribute to earnings (which we have not factored in yet) although we are still generally positive on whatever the outcome given the market potential,' it said.
OSK Research also said in the shorter term, Proton is expected to post favourable results on the back of its new model pipeline going forward in addition of the much improved operating landscape.
Company Name: PROTON HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy call on PROTON HOLDINGS BHD [] at RM4.53 being the cheapest auto stock under its coverage which is only trading at forward PE of 7.2 times versus the sector average of 10 times.
The research house said on Monday, Aug 30 that it is not making any changes to its earnings estimates for Proton pending more clarification from management on how the injection to Lotus will be structured (whether a new issuance of shares will be involved).
'On its foray into the India market, we believe it is too early to tell how this would contribute to earnings (which we have not factored in yet) although we are still generally positive on whatever the outcome given the market potential,' it said.
OSK Research also said in the shorter term, Proton is expected to post favourable results on the back of its new model pipeline going forward in addition of the much improved operating landscape.
PERWAJA - OSK Research downgrades Perwaja to Sell
Stock Name: PERWAJA
Company Name: PERWAJA HOLDINGS BERHAD
Research House: OSK
KUALA LUMPUR: OSK Research said while Perwaja's 2Q net profit improved 49.9% q-o-q, the cumulative 1HFY10 net profit of RM33.1 million was way below of its and street estimates.
It said on Monday, Aug 30 that other than the untimely procurement and selling which translated into only flat margin q-o-q, 'we also suspect its conversion costs came in higher than expected'.
'While the company's earnings are unimpressive, we have incorporated 0.75x NTA/share to capture its plant and machinery valuation, besides retaining our 6x PER on FY10 numbers. Our new target price of RM0.92 warrants a downgrade to SELL,' it said.
Company Name: PERWAJA HOLDINGS BERHAD
Research House: OSK
KUALA LUMPUR: OSK Research said while Perwaja's 2Q net profit improved 49.9% q-o-q, the cumulative 1HFY10 net profit of RM33.1 million was way below of its and street estimates.
It said on Monday, Aug 30 that other than the untimely procurement and selling which translated into only flat margin q-o-q, 'we also suspect its conversion costs came in higher than expected'.
'While the company's earnings are unimpressive, we have incorporated 0.75x NTA/share to capture its plant and machinery valuation, besides retaining our 6x PER on FY10 numbers. Our new target price of RM0.92 warrants a downgrade to SELL,' it said.
Friday, August 27, 2010
Results: Kinsteel swings to profit in H1
# KINSTEEL BHD has reported a pre-tax profit of RM49.6 million in its first half ended June 30, 2010, as against a loss of RM167.33 million in same period a year ago.
Revenue, however, declined to RM915.1 million from RM1.08 billion previously.
# BANDAR RAYA DEVELOPMENTS BHD has posted a higher pre-tax profit of RM127.4 million in its first half ended June 30, 2010, compared to RM71.3 million in same period last year.
Revenue, however, decreased to RM341.16 million from RM435.4 million previously.
# PERISAI PETROLEUM TEKNOLOGI BHD has posted a lower pre-tax profit of RM12.01 million in its first half ended June 30, 2010, compared to RM35.522 million in same period last year.
Revenue declined to RM37.3 million from RM66.97 million previously.
# AJINOMOTO (MALAYSIA) BHD has recorded a higher pre-tax profit of RM11.44 million in its first quarter ended June 30, 2010, compared to RM8.845 million in same quarter last year.
Revenue rose to RM82.13 million from RM71.28 million previously.
# SARAWAK OIL PALMS BHD has recorded a higher pre-tax profit of RM79.47 million in its first half ended June 30, 2010, compared to RM53.94 million in same period last year.
Revenue increased to RM302.57 million from RM259.38 million previously.
# MEASAT GLOBAL BHD has registered a higher pre-tax profit of RM80.38 million in its first half ended June 30, 2010, compared to RM6.1 million in same period a year before.
Revenue rose to RM140.38 million from RM109 million previously.
Revenue, however, declined to RM915.1 million from RM1.08 billion previously.
# BANDAR RAYA DEVELOPMENTS BHD has posted a higher pre-tax profit of RM127.4 million in its first half ended June 30, 2010, compared to RM71.3 million in same period last year.
Revenue, however, decreased to RM341.16 million from RM435.4 million previously.
# PERISAI PETROLEUM TEKNOLOGI BHD has posted a lower pre-tax profit of RM12.01 million in its first half ended June 30, 2010, compared to RM35.522 million in same period last year.
Revenue declined to RM37.3 million from RM66.97 million previously.
# AJINOMOTO (MALAYSIA) BHD has recorded a higher pre-tax profit of RM11.44 million in its first quarter ended June 30, 2010, compared to RM8.845 million in same quarter last year.
Revenue rose to RM82.13 million from RM71.28 million previously.
# SARAWAK OIL PALMS BHD has recorded a higher pre-tax profit of RM79.47 million in its first half ended June 30, 2010, compared to RM53.94 million in same period last year.
Revenue increased to RM302.57 million from RM259.38 million previously.
# MEASAT GLOBAL BHD has registered a higher pre-tax profit of RM80.38 million in its first half ended June 30, 2010, compared to RM6.1 million in same period a year before.
Revenue rose to RM140.38 million from RM109 million previously.
DELLOYD - A commendable 1H by Delloyd Ventures
Stock Name: DELLOYD
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(Aug 26, RM3)
Maintain buy at RM3.30 with target price of RM3.90: Delloyd Ventures (DV) posted a strong quarter with a net profit of RM10.2 million (quarter-on-quarter: 25%, year-on-year: 4%, year-to-date: 31%) on the back of revenue of RM90 million (q-o-q: 12%, y-o-y: 30%, YTD: 26%). For 1H, numbers were well within our estimates (but above consensus) although revenue slipped by 9% when annualised, partly due to the lower output and yield fetched for 1H. Revenue from the auto side remained strong q-o-q, y-o-y and YTD while contributions from the plantation side were only weaker y-o-y as the heavy rainfall in Indonesia put pressure on output and yields despite better fresh fruit bunch (FFB) prices. The associate side saw a q-o-q jump of 323% thanks to the higher number of lamps and mirrors produced ahead of the rush in festive season orders.
Overall, margins have continued to improve, notably on the auto side given the improved production efficiencies thanks to the higher output, while vehicle distribution has been able to break even since 1Q. For the quarter under review, however, the plantation segment saw margins dropping due to the initial setup costs of its crude palm oil (CPO) mill. However, we expect this to reverse over 2H as yields are expected to increase and the setup of the mill will facilitate DV in the sale of CPO (earlier FFB only) which will command a higher margin.
We expect the automotive division from the Malaysia side to be relatively weaker into 2H but this will be well compensated by the higher contribution from the plantation segment as yields rise. DV is also expected to see more contributions from the bus segment as more buses are due for delivery over 2H. It was also reported that DV is bringing a lower decked version of its Komodo buses to Malaysia for a trial run. If this is successful, chances are that more buses will be secured. We opine that manufacturing will likely stay in Indonesia as setting up a new production line here may not be deemed feasible. ' OSK Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Company Name: DELLOYD VENTURES BHD
Research House: OSK
Delloyd Ventures Bhd
(Aug 26, RM3)
Maintain buy at RM3.30 with target price of RM3.90: Delloyd Ventures (DV) posted a strong quarter with a net profit of RM10.2 million (quarter-on-quarter: 25%, year-on-year: 4%, year-to-date: 31%) on the back of revenue of RM90 million (q-o-q: 12%, y-o-y: 30%, YTD: 26%). For 1H, numbers were well within our estimates (but above consensus) although revenue slipped by 9% when annualised, partly due to the lower output and yield fetched for 1H. Revenue from the auto side remained strong q-o-q, y-o-y and YTD while contributions from the plantation side were only weaker y-o-y as the heavy rainfall in Indonesia put pressure on output and yields despite better fresh fruit bunch (FFB) prices. The associate side saw a q-o-q jump of 323% thanks to the higher number of lamps and mirrors produced ahead of the rush in festive season orders.
Overall, margins have continued to improve, notably on the auto side given the improved production efficiencies thanks to the higher output, while vehicle distribution has been able to break even since 1Q. For the quarter under review, however, the plantation segment saw margins dropping due to the initial setup costs of its crude palm oil (CPO) mill. However, we expect this to reverse over 2H as yields are expected to increase and the setup of the mill will facilitate DV in the sale of CPO (earlier FFB only) which will command a higher margin.
We expect the automotive division from the Malaysia side to be relatively weaker into 2H but this will be well compensated by the higher contribution from the plantation segment as yields rise. DV is also expected to see more contributions from the bus segment as more buses are due for delivery over 2H. It was also reported that DV is bringing a lower decked version of its Komodo buses to Malaysia for a trial run. If this is successful, chances are that more buses will be secured. We opine that manufacturing will likely stay in Indonesia as setting up a new production line here may not be deemed feasible. ' OSK Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
LMCEMNT - Lafarge - caution, wet cement
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: CIMB
Lafarge Malayan Cement Bhd
(Aug 26, RM7.09)
Maintain underperform at RM6.95 with revised target price of RM5.90 (from RM6): Lafarge's 2Q2010 results were largely in line with expectations. Annualised 1H net profit made up 71% of our full-year forecast and 62% of consensus. We expect 2H to be stronger as there should be an uptick in cement demand and 2H is usually a stronger period for Lafarge than 1H. The second interim dividend per share (DPS) of eight sen was also largely in line with expectations, taking year-to-date DPS to 16 sen (1H2009: 15 sen). Although the results are broadly in line, we have made some minor adjustments to our borrowing cost assumptions, resulting in 2% to 5% earnings cuts for FY2010-12. This trims our target price from RM6 to RM5.90 as we continue to use a blend of 15 times PER and 1.1 P/BV. While we acknowledge that stronger demand could come through in 2H, we continue to rate Lafarge an 'underperform' as we see limited short-term catalysts for the stock given the subdued demand and competitive pricing in the cement industry. For a play on pump-priming, we prefer direct exposure to the contractors.
Demand for cement remained soft in 2Q, leading to relatively flat 1H2010 domestic cement demand. Clinker utilisation rates were still running at about 85% to 90% as output from the spare capacity could be exported at lower prices. However, the 4% weakening of the US dollar during the quarter dragged down export earnings which account for about 30% of sales. Nevertheless, a 10% increase in domestic prices on May 1 allowed the company to pass on rising costs and report higher earnings before interest, tax, depreciation and amortisation (Ebitda) margins of 21.9% in 2Q2010 (1Q2010:17.7%). This helped push its bottom line growth to 57% quarter-on-quarter.
Domestic cement demand remains muted at the beginning of 3Q. However, Lafarge remains optimistic that demand will continue to improve in 2H2010 given the implementation of ongoing and new infrastructure projects. The company still expects growth in cement demand this year, albeit less than 5%. We are cautious about this as we expect demand to stay soft in 2H given the absence of major construction projects. The lull could also create price competition, which could pose a threat to cement players' market share and earnings.
Although Lafarge's results were largely in line with our expectations, we may have underestimated our borrowing cost assumptions. We have, therefore, made some minor adjustments to our assumptions and now project average interest costs of 4.8% (2.4% previously), leading to FY2010-12 earnings cuts of 2%-5%. ' CIMB Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: CIMB
Lafarge Malayan Cement Bhd
(Aug 26, RM7.09)
Maintain underperform at RM6.95 with revised target price of RM5.90 (from RM6): Lafarge's 2Q2010 results were largely in line with expectations. Annualised 1H net profit made up 71% of our full-year forecast and 62% of consensus. We expect 2H to be stronger as there should be an uptick in cement demand and 2H is usually a stronger period for Lafarge than 1H. The second interim dividend per share (DPS) of eight sen was also largely in line with expectations, taking year-to-date DPS to 16 sen (1H2009: 15 sen). Although the results are broadly in line, we have made some minor adjustments to our borrowing cost assumptions, resulting in 2% to 5% earnings cuts for FY2010-12. This trims our target price from RM6 to RM5.90 as we continue to use a blend of 15 times PER and 1.1 P/BV. While we acknowledge that stronger demand could come through in 2H, we continue to rate Lafarge an 'underperform' as we see limited short-term catalysts for the stock given the subdued demand and competitive pricing in the cement industry. For a play on pump-priming, we prefer direct exposure to the contractors.
Demand for cement remained soft in 2Q, leading to relatively flat 1H2010 domestic cement demand. Clinker utilisation rates were still running at about 85% to 90% as output from the spare capacity could be exported at lower prices. However, the 4% weakening of the US dollar during the quarter dragged down export earnings which account for about 30% of sales. Nevertheless, a 10% increase in domestic prices on May 1 allowed the company to pass on rising costs and report higher earnings before interest, tax, depreciation and amortisation (Ebitda) margins of 21.9% in 2Q2010 (1Q2010:17.7%). This helped push its bottom line growth to 57% quarter-on-quarter.
Domestic cement demand remains muted at the beginning of 3Q. However, Lafarge remains optimistic that demand will continue to improve in 2H2010 given the implementation of ongoing and new infrastructure projects. The company still expects growth in cement demand this year, albeit less than 5%. We are cautious about this as we expect demand to stay soft in 2H given the absence of major construction projects. The lull could also create price competition, which could pose a threat to cement players' market share and earnings.
Although Lafarge's results were largely in line with our expectations, we may have underestimated our borrowing cost assumptions. We have, therefore, made some minor adjustments to our assumptions and now project average interest costs of 4.8% (2.4% previously), leading to FY2010-12 earnings cuts of 2%-5%. ' CIMB Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
AXIATA - Axiata's 2Q figures surpassing headline KPIs
Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: ECMLIBRA
Axiata Group Bhd
(Aug 26, RM4.47)
Maintain buy at RM4.42 with revised target price of RM4.95 (from RM4.77): Axiata's 6MFY2010 revenue was in line with expectations while adjusted net profit was above house and consensus estimates. Adjusted net profit was higher after adjustments for forex losses and impairments, partially offset by a gain from the XL stake disposal. Axiata's revenue growth was driven by strong year-on-year performance from all major operating companies (opcos) comprising Celcom, XL, Dialog and Robi. Net profit was driven higher by improvements in margins from all opcos except Robi.
Main revenue drivers Celcom and XL (both contributing 83% of group revenue) experienced strong double-digit growth both in terms of revenue and profitability for 6MFY2010 due to continuous lean cost management. For 2QFY2010, earnings before interest, tax, depreciation and amortisation (Ebitda) margins for Celcom and XL were at record highs of 47.9% and 53% respectively.
The smaller opcos, Dialog and Robi (both contributing 16% of group revenue), saw a sustained turnaround quarter-on-quarter. Dialog is expected to benefit from a more stable environment with floor pricing, while Robi continues to see strong subs growth through improving distribution strategies.
We continue to like Axiata for steady single-digit growth in Celcom and high-teens growth in XL going forward. Meanwhile, Dialog and Robi have shown positive results in maintaining their turnaround. With Axiata for 6MFY2010 showing 25% revenue growth (KPI: 12.1%) and 45% Ebitda growth (KPI: 14.1%), it appears that management is well on track to exceed their 2010 headline KPIs.
With stronger free cash flow, Axiata unveiled its dividend policy for FY2011, aiming to achieve a payout of 30%, quite close to our forecast of 25%.
We are pleasantly surprised by Celcom's strong Ebitda margins, and with management hinting of stable margins going forward, we have revised our earnings estimates by 7% to 8% for FY2010-12. The agreement to be signed by year-end between Celcom and DiGi.Com Bhd on a potential active collaboration also bodes well for further upside in margins for Celcom. Hence, we maintain our 'buy' call while revising our sum-of-parts target price from RM4.77 to RM4.95. ' ECM Libra Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Company Name: AXIATA GROUP BERHAD
Research House: ECMLIBRA
Axiata Group Bhd
(Aug 26, RM4.47)
Maintain buy at RM4.42 with revised target price of RM4.95 (from RM4.77): Axiata's 6MFY2010 revenue was in line with expectations while adjusted net profit was above house and consensus estimates. Adjusted net profit was higher after adjustments for forex losses and impairments, partially offset by a gain from the XL stake disposal. Axiata's revenue growth was driven by strong year-on-year performance from all major operating companies (opcos) comprising Celcom, XL, Dialog and Robi. Net profit was driven higher by improvements in margins from all opcos except Robi.
Main revenue drivers Celcom and XL (both contributing 83% of group revenue) experienced strong double-digit growth both in terms of revenue and profitability for 6MFY2010 due to continuous lean cost management. For 2QFY2010, earnings before interest, tax, depreciation and amortisation (Ebitda) margins for Celcom and XL were at record highs of 47.9% and 53% respectively.
The smaller opcos, Dialog and Robi (both contributing 16% of group revenue), saw a sustained turnaround quarter-on-quarter. Dialog is expected to benefit from a more stable environment with floor pricing, while Robi continues to see strong subs growth through improving distribution strategies.
We continue to like Axiata for steady single-digit growth in Celcom and high-teens growth in XL going forward. Meanwhile, Dialog and Robi have shown positive results in maintaining their turnaround. With Axiata for 6MFY2010 showing 25% revenue growth (KPI: 12.1%) and 45% Ebitda growth (KPI: 14.1%), it appears that management is well on track to exceed their 2010 headline KPIs.
With stronger free cash flow, Axiata unveiled its dividend policy for FY2011, aiming to achieve a payout of 30%, quite close to our forecast of 25%.
We are pleasantly surprised by Celcom's strong Ebitda margins, and with management hinting of stable margins going forward, we have revised our earnings estimates by 7% to 8% for FY2010-12. The agreement to be signed by year-end between Celcom and DiGi.Com Bhd on a potential active collaboration also bodes well for further upside in margins for Celcom. Hence, we maintain our 'buy' call while revising our sum-of-parts target price from RM4.77 to RM4.95. ' ECM Libra Investment Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
WASEONG - Wah Seong results still below expectations
Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Research House: INTER PACIFIC
Wah Seong Corporation Bhd
(Aug 26, RM2.10)
Maintain outperform at RM2.30 with revised target price of RM2.90 (from RM3.10): We have tweaked downwards our FY2010F/11F earnings by 5% to 8% and trimmed our target price to RM2.90 (previously RM3.10) based on FY2010 EPS of 18.1 sen and PER of 16 times. Nonetheless, we reiterate our 'outperform' recommendation. Our optimism is due to Wah Seong's (i) vast experience in pipe coating; (ii) new contracts to pour in by 2HFY2010 with mergers and acquisitions (M&A); and (iii) sizeable cash pile of RM214.4 million as at end-June.
Wah Seong's annualised 1HFY2010 result came below both ours and consensus expectations at 26.4% and 28.4% of FY2010 forecast respectively. As expected, Wah Seong declared a first interim dividend of two sen per share for the quarter under review.
In 2QFY2010, net profit fell by 94.3% year-on-year on the back of lower revenue which fell by 33% y-o-y. The deteriorating performance was due to the huge drop in earnings contribution from the following core divisions: pipe coating (-137.7% y-o-y); pipe manufacturing (-144.8% y-o-y) and engineering (-101.3% y-o-y) given the sluggish demand for gas compressors, built by wholly-owned Gas Services International's yard in Singapore, as well as on the unexpected downtime on the Gorgon project. Production was stopped for a few weeks from late June. However, its trading gains will offset this (+100.7% y-o-y) as well as exploration and production (E&P) services (+10.4% y-o-y) respectively.
To recap, Wah Seong has secured the pipe coating job for the entire Gorgon project valued at about US$162.9 million (RM551.2 million). This will keep its Kuantan plant up and running until early FY2012. We learn that bulk of its revenue and profit will be recognised in FY2011. We believe the gross margin is healthy at 20% to 30% although the margins are not as attractive as the Gemusut deepwater pipe coating job executed in FY2009. ' Inter-Pacific Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
Company Name: WAH SEONG CORPORATION BHD
Research House: INTER PACIFIC
Wah Seong Corporation Bhd
(Aug 26, RM2.10)
Maintain outperform at RM2.30 with revised target price of RM2.90 (from RM3.10): We have tweaked downwards our FY2010F/11F earnings by 5% to 8% and trimmed our target price to RM2.90 (previously RM3.10) based on FY2010 EPS of 18.1 sen and PER of 16 times. Nonetheless, we reiterate our 'outperform' recommendation. Our optimism is due to Wah Seong's (i) vast experience in pipe coating; (ii) new contracts to pour in by 2HFY2010 with mergers and acquisitions (M&A); and (iii) sizeable cash pile of RM214.4 million as at end-June.
Wah Seong's annualised 1HFY2010 result came below both ours and consensus expectations at 26.4% and 28.4% of FY2010 forecast respectively. As expected, Wah Seong declared a first interim dividend of two sen per share for the quarter under review.
In 2QFY2010, net profit fell by 94.3% year-on-year on the back of lower revenue which fell by 33% y-o-y. The deteriorating performance was due to the huge drop in earnings contribution from the following core divisions: pipe coating (-137.7% y-o-y); pipe manufacturing (-144.8% y-o-y) and engineering (-101.3% y-o-y) given the sluggish demand for gas compressors, built by wholly-owned Gas Services International's yard in Singapore, as well as on the unexpected downtime on the Gorgon project. Production was stopped for a few weeks from late June. However, its trading gains will offset this (+100.7% y-o-y) as well as exploration and production (E&P) services (+10.4% y-o-y) respectively.
To recap, Wah Seong has secured the pipe coating job for the entire Gorgon project valued at about US$162.9 million (RM551.2 million). This will keep its Kuantan plant up and running until early FY2012. We learn that bulk of its revenue and profit will be recognised in FY2011. We believe the gross margin is healthy at 20% to 30% although the margins are not as attractive as the Gemusut deepwater pipe coating job executed in FY2009. ' Inter-Pacific Research, Aug 26
This article appeared in The Edge Financial Daily, August 27 2010.
FBM KLCI Close Up Positively
Most of the FDI investor in Malaysia market is from China, they not only invest into Malaysia share market but also in Property. Due to that Malaysia house price going up strongly and last time 10 years ago, we may need to pay installment for 20 years to buy a house but now we need 30 years or more. China investor is helping us to grow better or will made ours life more harder? FBM KLCI may likely to hits 1,420 very soon.
Stock to Watch - Fri, 27 August 2010
* Kumpulan Europlus (RM0.945, SELL) – Bearish divergences seen.
* SEG International (RM2.50, SELL) – Time to take profits?
* Mamee Double-Decker (RM3.38, SELL) – Broken below the wedge support.
_____________________________________________________________________
1. Kumpulan Europlus (RM0.945, SELL)
____________________________________________________________________
2. SEG International (RM2.50, SELL)
____________________________________________________________________
3. Mamee Double-Decker (RM3.38, SELL)
* SEG International (RM2.50, SELL) – Time to take profits?
* Mamee Double-Decker (RM3.38, SELL) – Broken below the wedge support.
_____________________________________________________________________
1. Kumpulan Europlus (RM0.945, SELL)
____________________________________________________________________
2. SEG International (RM2.50, SELL)
____________________________________________________________________
3. Mamee Double-Decker (RM3.38, SELL)
Perwaja returns to the black
Perwaja Holdings Bhd returned to the black with a pre-tax profit of RM10.3 million in the second quarter ended June 30, 2010 from a pre-tax loss of RM94.9 million in the same period last year.
The group's revenue increased 7.6 per cent to RM465.2 million from RM432.3 million previously.
For the first six months ended June 30, 2010, the revenue and pre-tax profit were higher at RM838.9 million and RM32.9 million respectively compared with a revenue of RM750.8 million and and pre-tax loss of RM168.2 million in the same period last year.
In a filing to Bursa Malaysia today, Perwaja said the group's financial performance for the first half year has been satisfactory, supported by the positive rise in steel prices and healthy domestic and regional demand, although tampered by the higher cost of raw materials.
'In view of the volatility in iron ore price, the group will adopt a prudent approach going forward and will monitor the price fluctuations closely while fine-tuning its inventory stocking strategy,' it added. -- Bernama
The group's revenue increased 7.6 per cent to RM465.2 million from RM432.3 million previously.
For the first six months ended June 30, 2010, the revenue and pre-tax profit were higher at RM838.9 million and RM32.9 million respectively compared with a revenue of RM750.8 million and and pre-tax loss of RM168.2 million in the same period last year.
In a filing to Bursa Malaysia today, Perwaja said the group's financial performance for the first half year has been satisfactory, supported by the positive rise in steel prices and healthy domestic and regional demand, although tampered by the higher cost of raw materials.
'In view of the volatility in iron ore price, the group will adopt a prudent approach going forward and will monitor the price fluctuations closely while fine-tuning its inventory stocking strategy,' it added. -- Bernama
Dayang unit to buy vessel for RM63m
Dayang Enterprise Holdings Bhd's subsidiary DESB Marine Services Sdn Bhd is acquiring a vessel from Shin Yang Shipyard Sdn Bhd for RM63.74 million.
Both companies entered into a shipbuilding contract today, in which the offshore accommodation workboat is scheduled to be delivered by end of 2011.
In a filing to Bursa Malaysia, Dayang said the acquisition was in line with its fleet expansion in providing marine support services to the offshore oil and gas facilities.
The acquisition, which will be funded internally, is expected to contribute positively to Dayang's future earnings and net assets for the financial year ending Dec 31, 2012, and beyond. -- Bernama
Both companies entered into a shipbuilding contract today, in which the offshore accommodation workboat is scheduled to be delivered by end of 2011.
In a filing to Bursa Malaysia, Dayang said the acquisition was in line with its fleet expansion in providing marine support services to the offshore oil and gas facilities.
The acquisition, which will be funded internally, is expected to contribute positively to Dayang's future earnings and net assets for the financial year ending Dec 31, 2012, and beyond. -- Bernama
KLCC Prop chalks up RM139.8m profit
KLCC Property Holdings Bhd posted a higher pre-tax profit of RM139.8 million for its first quarter ended June 30, compared to RM131 million recorded in the previous corresponding quarter.
Revenue rose to RM227 million from RM218.4 million previously.
The pre-tax profit was achieved through lower operating costs and finance cost during the period, the company said in a statement today.
It said the earnings were underpinned by long term office tenancies and a sustainable retail sector.
The company expects a satisfactory performance for the year. -- Bernama
Revenue rose to RM227 million from RM218.4 million previously.
The pre-tax profit was achieved through lower operating costs and finance cost during the period, the company said in a statement today.
It said the earnings were underpinned by long term office tenancies and a sustainable retail sector.
The company expects a satisfactory performance for the year. -- Bernama
Bintulu Port pretax profit rises to RM45m
Bintulu Port Holdings Bhd's pre-tax profit for the second quarter ended June 30, 2010 rose to RM44.97 million from RM26.33 million in the same quarter last year.
Revenue increased to RM107.55 million from RM103.0 million previously.
Pre-tax profit for the first six months increased to RM98.78 million from RM89.74 million previously.
Revenue widened to RM225.41 million from RM218.9 million last year.
In a filing to Bursa Malaysia, the company said, going forward, revenue from the handling of liquefied natural gas, vessel calls and cargoes would continue to be the main contributors to its earnings this year.
'A positive growth is also expected from the bulking services operations and from the handling of cargoes and vessel calls for palm oil, palm kernel, alumina, general cargo and container,' it said.
It said barring any unforeseen circumstances, the board expected the performance of the group for 2010 to be better than 2009. -- BERNAMA
Revenue increased to RM107.55 million from RM103.0 million previously.
Pre-tax profit for the first six months increased to RM98.78 million from RM89.74 million previously.
Revenue widened to RM225.41 million from RM218.9 million last year.
In a filing to Bursa Malaysia, the company said, going forward, revenue from the handling of liquefied natural gas, vessel calls and cargoes would continue to be the main contributors to its earnings this year.
'A positive growth is also expected from the bulking services operations and from the handling of cargoes and vessel calls for palm oil, palm kernel, alumina, general cargo and container,' it said.
It said barring any unforeseen circumstances, the board expected the performance of the group for 2010 to be better than 2009. -- BERNAMA
Kinsteel posts RM8.18m net profit in 2Q
KUALA LUMPUR: Kinsteel Bhd reported a net profit of RM8.18 million for its second quarter ended June 30, 2010 from a net loss of RM7.87 million a year ago.
Its revenue for the quarter, however, fell to RM374.69 million from RM639.12 million a year earlier. Earnings per share was 0.87 sen compared loss per share of 0.86 sen last year.
For the six months ended June 30, net profit was RM30.73 million versus net loss RM42.64 million in 2009. Revenue for the period, however, declined to RM915.09 million from RM1.08 billion.
In a filing to Bursa Malaysia on Friday, Aug 27, Kinsteel said the increase in its profits was due mainly to higher steel prices.
On its current year prospects, Kinsteel said its financial performance during the first half of the year had been satisfactory due to the healthy increase of steel prices and demand from local and surrounding region, though hampered by increasing cost of raw materials.
“The group however remains cautious of price volatility and will continue to be vigilant on its inventory stocking strategy to achieve reasonable margin for the year,” it said.
Its revenue for the quarter, however, fell to RM374.69 million from RM639.12 million a year earlier. Earnings per share was 0.87 sen compared loss per share of 0.86 sen last year.
For the six months ended June 30, net profit was RM30.73 million versus net loss RM42.64 million in 2009. Revenue for the period, however, declined to RM915.09 million from RM1.08 billion.
In a filing to Bursa Malaysia on Friday, Aug 27, Kinsteel said the increase in its profits was due mainly to higher steel prices.
On its current year prospects, Kinsteel said its financial performance during the first half of the year had been satisfactory due to the healthy increase of steel prices and demand from local and surrounding region, though hampered by increasing cost of raw materials.
“The group however remains cautious of price volatility and will continue to be vigilant on its inventory stocking strategy to achieve reasonable margin for the year,” it said.
UEM Land 2Q profit jumps 583% to RM40.3m
KUALA LUMPUR: UEM Land Holdings Bhd's net profit for the second quarter ended June 30, 2010, (2Q10) jumped an impressive 583% to RM40.34 million from RM5.90 million a year ago in line with higher revenue and gain of RM25.6 million on the disposal of an associate, Touch 'N Go Sdn Bhd to PLUS Expressway Bhd.
Its revenue for the quarter rose 28.1% to RM88 million from RM68.68 million previously due to higher revenue from sales of industrial land in Southern Industrial Logistics Clusters, developed land sales in Puteri Harbour and higher sales of development properties in Nusa Idaman.
Earnings per share was 1.23 sen in 1Q10 versus 0.21 sen in the same quarter last year, while net assets per share was 70 sen.
For the six months ended June 30, 2010 (1H10), UEM Land net profit was RM43.48 million versus RM8.53 million a year ago, on the back of a revenue of RM127.7 million.
On its prospect for the current financial year, UEM Land said it was confident that the property market would continue its recovery in line with the encouraging Gross Domestic Product (GDP) growth achieved by the country for the first half of 2010.
'The property market in Johor generally, and Iskandar Malaysia specifically is expected to further benefit from the recent increase in interest from Singapore,'' it said in a filing to Bursa Malaysia Securities on Friday, Aug 27.
The group said it would continue to launch new residential projects in Nusajaya as well as launch new phases of its existing residential projects in Nusajaya and Cyberjaya in the coming months.
'The group will continue to evaluate opportunities to acquire strategic land parcels outside Nusajaya to further expand and grow our business to create sustainable return on investment for our shareholders,' it said.
Its revenue for the quarter rose 28.1% to RM88 million from RM68.68 million previously due to higher revenue from sales of industrial land in Southern Industrial Logistics Clusters, developed land sales in Puteri Harbour and higher sales of development properties in Nusa Idaman.
Earnings per share was 1.23 sen in 1Q10 versus 0.21 sen in the same quarter last year, while net assets per share was 70 sen.
For the six months ended June 30, 2010 (1H10), UEM Land net profit was RM43.48 million versus RM8.53 million a year ago, on the back of a revenue of RM127.7 million.
On its prospect for the current financial year, UEM Land said it was confident that the property market would continue its recovery in line with the encouraging Gross Domestic Product (GDP) growth achieved by the country for the first half of 2010.
'The property market in Johor generally, and Iskandar Malaysia specifically is expected to further benefit from the recent increase in interest from Singapore,'' it said in a filing to Bursa Malaysia Securities on Friday, Aug 27.
The group said it would continue to launch new residential projects in Nusajaya as well as launch new phases of its existing residential projects in Nusajaya and Cyberjaya in the coming months.
'The group will continue to evaluate opportunities to acquire strategic land parcels outside Nusajaya to further expand and grow our business to create sustainable return on investment for our shareholders,' it said.
PetGas 1Q net profit up 43% to 382.79m
KUALA LUMPUR: Petronas Gas Bhd (PetGas) net profit for the first quarter (1Q) ended June 30, 2010 jumped 43% to RM382.79 million from RM268.94 million a year ago, on the back of an 11% increase in revenue to RM872.65 million.
The increase in revenue was attributed to higher gas processing and gas transportation revenue, while the jump in net profit was due mainly to higher revenue and lower cost of revenue.
Earnings per share was 19.35 sen, while net assets per share was RM4.24.On its prospects going forward, PetGas said revenue from the new fee structure under the Gas Processing and Transmission Agreement (GPTA) was dependent on the volume of the gas processed at the Gas Processing Plants as well as volume of gas delivered directly into the PGU pipeline network.
It said the performance based structure would continue to provide PetGas with earnings potential which is dependent on the level of production of by-products and its price. As internal gas consumption is provided by Petroliam Nasional Bhd, PetGas’s exposure to fuel gas price fluctuation is eliminated, it said.
'The revised terms do not introduce new operating risks to PetGas; it better defines the obligations of the parties to the GPTA.
'Prospects for the utilities business will depend on the pace of economic recovery. Any variation in gas price will be reflected in the pricing to customers,' it said.
The increase in revenue was attributed to higher gas processing and gas transportation revenue, while the jump in net profit was due mainly to higher revenue and lower cost of revenue.
Earnings per share was 19.35 sen, while net assets per share was RM4.24.On its prospects going forward, PetGas said revenue from the new fee structure under the Gas Processing and Transmission Agreement (GPTA) was dependent on the volume of the gas processed at the Gas Processing Plants as well as volume of gas delivered directly into the PGU pipeline network.
It said the performance based structure would continue to provide PetGas with earnings potential which is dependent on the level of production of by-products and its price. As internal gas consumption is provided by Petroliam Nasional Bhd, PetGas’s exposure to fuel gas price fluctuation is eliminated, it said.
'The revised terms do not introduce new operating risks to PetGas; it better defines the obligations of the parties to the GPTA.
'Prospects for the utilities business will depend on the pace of economic recovery. Any variation in gas price will be reflected in the pricing to customers,' it said.
Rubber glove sector- when the going gets tough...
I have appended below the tables of the last 8 quarterly results for Supermx, Kossan & Harta (plus the charts of their past quarterly results). We can see that all three companies suffered a drop in their net profit in QE30/6/2010 when compared to the immediate preceding quarter (QE31/3/2010). Is this a sign that the balance has swung from a seller's market to a buyer's market? This may explain the drop in their profit margin as cost increases cannot be fully passed onto the customers. In my opinion, the rubber glove sector has crossed the tipping point & their profit would likely to continue to decline, albeit at a gradual rate. If this scenario panned out, I believe we have seen a peak in the share prices for all the stocks in this sector.
Table 1: Supermx's 8 quarterly results (plus chart)
Table 2: Kossan's 8 quarterly results (plus chart)
Table 3: Harta's 8 quarterly results (plus chart)
As such, it may be advisable to avoid these stocks for a while.
Table 1: Supermx's 8 quarterly results (plus chart)
Table 2: Kossan's 8 quarterly results (plus chart)
Table 3: Harta's 8 quarterly results (plus chart)
As such, it may be advisable to avoid these stocks for a while.
LITRAK - Litrak may get to raise toll next year
Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS
Research House: MIDF
LINGKARAN Trans Kota Holdings Bhd (Litrak), the concessionaire of Damansara-Puchong Highway (LDP), is expected to obtain government approval for a toll increase next year, MIDF Research says.
The research house said the toll hike could affect traffic for the financial year ending March 2011 but the decrease was not expected to be drastic as LDP is still an important route for commuters especially with the lack of efficient public transportation.
"We also believe that the new toll rates should moderate any impact from traffic decrease," it said in a research note today.
In the financial year ended March 2010, traffic at LDP grew 2.0 per cent year-on-year to 470,000.
As for the impact of a fuel price hike, MIDF Research said: "Historically, there has been a knee-jerk reaction from any fuel price increase.
"However, a significant increase in fuel price may cause commuters to find alternative transportation, causing a lost in traffic."
The research house maintained a "buy" recommendation for Litrak with a target price of RM3.60.
"We continue to like Litrak as a strong defensive stock given that LDP still enjoys continuing support from its catchment area of Puchong, Kelana Jaya and Bandar Seri Damansara."
For the first quarter of the current financial year, Litrak registered a 26.1 per cent year-on-year growth in net profit to RM29.5 million which MIDF Research said was due to lower share of losses in Sprint Highway.
"The net profit was only 20 per cent of our full year estimate as we are expecting the scheduled toll rate hike in 2011," it said. - BERNAMA
Company Name: LINGKARAN TRANS KOTA HOLDINGS
Research House: MIDF
LINGKARAN Trans Kota Holdings Bhd (Litrak), the concessionaire of Damansara-Puchong Highway (LDP), is expected to obtain government approval for a toll increase next year, MIDF Research says.
The research house said the toll hike could affect traffic for the financial year ending March 2011 but the decrease was not expected to be drastic as LDP is still an important route for commuters especially with the lack of efficient public transportation.
"We also believe that the new toll rates should moderate any impact from traffic decrease," it said in a research note today.
In the financial year ended March 2010, traffic at LDP grew 2.0 per cent year-on-year to 470,000.
As for the impact of a fuel price hike, MIDF Research said: "Historically, there has been a knee-jerk reaction from any fuel price increase.
"However, a significant increase in fuel price may cause commuters to find alternative transportation, causing a lost in traffic."
The research house maintained a "buy" recommendation for Litrak with a target price of RM3.60.
"We continue to like Litrak as a strong defensive stock given that LDP still enjoys continuing support from its catchment area of Puchong, Kelana Jaya and Bandar Seri Damansara."
For the first quarter of the current financial year, Litrak registered a 26.1 per cent year-on-year growth in net profit to RM29.5 million which MIDF Research said was due to lower share of losses in Sprint Highway.
"The net profit was only 20 per cent of our full year estimate as we are expecting the scheduled toll rate hike in 2011," it said. - BERNAMA
KOSSAN - 'Buy' call on Kossan, Supermax maintained
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
OSK Research has maintained a buy decision on Supermax Corporation Bhd and Kossan Rubber Industries, saying their financial results were within expectations.
The research house maintained its target price for Supermax at RM9.11, saying the company's product mix with 70 per cent natural rubber gloves was targeting the right markets in developing countries.
"Going forward, the company is poised to be one of the biggest beneficiaries of rising hygiene standards in developing countries such as China and India as health awareness grows against a backdrop of reasonably good demand for medical examination gloves."
Kossan's target price was also retained at RM5.65 and the company was commended for having a good product mix comprising 60 per cent natural rubber gloves and 40 per cent nitrile gloves, allowing it to target all markets.--BERNAMA
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
OSK Research has maintained a buy decision on Supermax Corporation Bhd and Kossan Rubber Industries, saying their financial results were within expectations.
The research house maintained its target price for Supermax at RM9.11, saying the company's product mix with 70 per cent natural rubber gloves was targeting the right markets in developing countries.
"Going forward, the company is poised to be one of the biggest beneficiaries of rising hygiene standards in developing countries such as China and India as health awareness grows against a backdrop of reasonably good demand for medical examination gloves."
Kossan's target price was also retained at RM5.65 and the company was commended for having a good product mix comprising 60 per cent natural rubber gloves and 40 per cent nitrile gloves, allowing it to target all markets.--BERNAMA
ALAM - Target price for Alam Maritim cut
Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: OSK
OSK Research has maintained a "buy" recommendation for Alam Maritim Resources Bhd although it downgraded the offshore maritime transportation service provider's target price to RM1.63 from RM1.99 previously.
"We like the company's sound strategy in penetrating new businesses and new geographical markets (Middle East and India) as well as financial strategy using the joint venture option, which entails both parties sharing the risks and rewards," OSK said in a research note today.
OSK downgraded Alam Maritim's financial year 2010-2011 earnings projections by between 19 per cent and 22 per cent.
"Our downgrade is in line with the poorer-than-expected performance in second-quarter 2010, a sluggish outlook for the vessel market in terms of charter rates and new contract awards, and weakening of US dollar against the ringgit," OSK said.
Alam Maritim's pre-tax profit for the second quarter ended June 30, 2010, fell to RM17.91 million from RM33.49 million in the corresponding quarter last year while revenue also declined to RM67.42 million from RM80.67 million previously. --BERNAMA
Company Name: ALAM MARITIM RESOURCES BHD
Research House: OSK
OSK Research has maintained a "buy" recommendation for Alam Maritim Resources Bhd although it downgraded the offshore maritime transportation service provider's target price to RM1.63 from RM1.99 previously.
"We like the company's sound strategy in penetrating new businesses and new geographical markets (Middle East and India) as well as financial strategy using the joint venture option, which entails both parties sharing the risks and rewards," OSK said in a research note today.
OSK downgraded Alam Maritim's financial year 2010-2011 earnings projections by between 19 per cent and 22 per cent.
"Our downgrade is in line with the poorer-than-expected performance in second-quarter 2010, a sluggish outlook for the vessel market in terms of charter rates and new contract awards, and weakening of US dollar against the ringgit," OSK said.
Alam Maritim's pre-tax profit for the second quarter ended June 30, 2010, fell to RM17.91 million from RM33.49 million in the corresponding quarter last year while revenue also declined to RM67.42 million from RM80.67 million previously. --BERNAMA
Bintulu Port 2Q net profit surges 71.7% to RM33.34m
KUALA LUMPUR: Bintulu Port Holdings Bhd's net profit for the second quarter ended June 30, 2010 jumped 71.7% to RM33.34 million from RM19.42 million a year ago, on the back of lower expenditure during the period.Earnings per share was 8.34 sen, while net assets per share was RM2.07.
The company declared at second interim single tier dividend of 7.50 sen per share, amounting to RM30 million in respect of the financial year ending Dec 31, 2010.
For the six months ended June 30, Bintulu Port's net profit rose to RM74.08 million from RM67.48 million a year earlier, while revenue rose to RM225.42 million from RM218.99 million.
In a filing to Bursa Malaysia Securities, the company said revenue from the handling of LNG vessel calls and cargoes will continue to be the main contributor to its earnings in 2010.
'A positive growth is also expected from the bulking services operations and from the handling of cargoes and vessel calls for palm oil, palm kernel, alumina, general cargo and container.
'Barring unforeseen circumstances, the board expects the performance of the group for the year 2010 to be better than 2009,' it said.
The company declared at second interim single tier dividend of 7.50 sen per share, amounting to RM30 million in respect of the financial year ending Dec 31, 2010.
For the six months ended June 30, Bintulu Port's net profit rose to RM74.08 million from RM67.48 million a year earlier, while revenue rose to RM225.42 million from RM218.99 million.
In a filing to Bursa Malaysia Securities, the company said revenue from the handling of LNG vessel calls and cargoes will continue to be the main contributor to its earnings in 2010.
'A positive growth is also expected from the bulking services operations and from the handling of cargoes and vessel calls for palm oil, palm kernel, alumina, general cargo and container.
'Barring unforeseen circumstances, the board expects the performance of the group for the year 2010 to be better than 2009,' it said.
Mah Sing earnings prospects positive: MIDF
MIDF Research believes earnings growth prospects of Mah Sing Bhd to be positive for the group.
In a research note here today, MIDF said Mah Sing had a combined gross development value (GDV) balance and unbilled sales of RM7.44 billion.
The present jobs on-hand will provide the group strong earnings visibility through 2013, it said.
'The group's impressive year to date sales stands at RM1.02 billion,' it said, adding that it was confident that the group would surpass its new 2010 target of RM1.5 billion.
Sales growth will come on the back of up to RM28 million of new launches across developments in Klang Valley, Penang and Johor. -BERNAMA
In a research note here today, MIDF said Mah Sing had a combined gross development value (GDV) balance and unbilled sales of RM7.44 billion.
The present jobs on-hand will provide the group strong earnings visibility through 2013, it said.
'The group's impressive year to date sales stands at RM1.02 billion,' it said, adding that it was confident that the group would surpass its new 2010 target of RM1.5 billion.
Sales growth will come on the back of up to RM28 million of new launches across developments in Klang Valley, Penang and Johor. -BERNAMA
NESTLE - OSK Research ups target price for Nestle to RM38.53
Stock Name: NESTLE
Company Name: NESTLE (M) BHD
Research House: OSK
KUALA LUMPUR: OSK Research has raised its target price for NESTLE (M) BHD [] to RM38.53 from RM31.49 previously, and maintained its neutral recommendation on the stock.
In a note on Friday, Aug 27, OSK Research said Nestle's 1HFY10 earnings were above its own and consensus estimates, making up 61.8% of the research house's full-year forecast.
It said Nestle's year-on-year earnings swelled 28.6% on the back of improving export sales, mainly from its new coffee and non-dairy creamer lines in Shah Alam.
"Earnings before interest and tax margins rose from 12.9% to 14.5%. Meanwhile, quarter-on-quarter earnings declined 27.8% as marketing expenses rose during the quarter, with new products such as Nescaf'' Ipoh White Coffee and Maggi whole wheat noodles being launched.
"We revise upwards our earnings forecasts for FY11 and target price to RM38.53 from RM31.49. Maintain Neutral," it said.
Company Name: NESTLE (M) BHD
Research House: OSK
KUALA LUMPUR: OSK Research has raised its target price for NESTLE (M) BHD [] to RM38.53 from RM31.49 previously, and maintained its neutral recommendation on the stock.
In a note on Friday, Aug 27, OSK Research said Nestle's 1HFY10 earnings were above its own and consensus estimates, making up 61.8% of the research house's full-year forecast.
It said Nestle's year-on-year earnings swelled 28.6% on the back of improving export sales, mainly from its new coffee and non-dairy creamer lines in Shah Alam.
"Earnings before interest and tax margins rose from 12.9% to 14.5%. Meanwhile, quarter-on-quarter earnings declined 27.8% as marketing expenses rose during the quarter, with new products such as Nescaf'' Ipoh White Coffee and Maggi whole wheat noodles being launched.
"We revise upwards our earnings forecasts for FY11 and target price to RM38.53 from RM31.49. Maintain Neutral," it said.
SIME - Sime gains on brokerages' upgrade
Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: JP MORGAN CHASE
Sime Darby Bhd rose to a two-month high as brokerages including JPMorgan Chase & Co raised the stock on speculation the worst may be over for the world's biggest listed palm-oil producer after posting its latest loss.
The shares gained 1.4 per cent to RM7.99 at 11:34 am local time in Kuala Lumpur trading, the highest since June 30. The advance pared the decline this year to 11 per cent, the most on the Malaysian stock index. Chief executive officer Mohd Bakke Salleh said yesterday the company has "identified" problems it faced in the oil and gas business and expects a turnaround.
Simone Yeoh, an analyst at JPMorgan, upgraded Sime to "overweight" from "neutral," lifting her share forecast to RM9.40 from RM8.40. Hoe Lee Leng, an analyst at RHB Research Institute Sdn Bhd, raised the recommendation on the stock to "market perform" from "underperform," while AmResearch Sdn Bhd rated the stock a new "buy" with a RM9.20 target.
"Consistency in performance under leadership of the new CEO is key for a sustainable re-rating," Yeoh said in a report. "We see prospects for shorter term opportunity in Sime shares with the overhang from further provisions now behind us, stable to strong core profits from most divisions, and our recent more positive outlook on crude palm oil prices."
The Kuala Lumpur-based company posted a second consecutive quarterly loss yesterday after adding provisions of RM777.3 million (US$247 million) for oil and gas projects, largely in the Middle East. This brought its total provisions to RM2.1 billion for its fiscal year ended June 30, it said.
The 100-year-old Malaysian company reported a fourth- quarter net loss of RM77.4 million, a reversal from a RM984 million-ringgit rofit a year earlier.
"Sime is currently under-owned by institutional funds due to the losses across the group's energy and utilities operations," Alex Goh, an analyst at AmResearch, wrote in a report today. "We believe that the stock is at an inflection point for an upward re-rating." -- Bloomberg
Company Name: SIME DARBY BHD
Research House: JP MORGAN CHASE
Sime Darby Bhd rose to a two-month high as brokerages including JPMorgan Chase & Co raised the stock on speculation the worst may be over for the world's biggest listed palm-oil producer after posting its latest loss.
The shares gained 1.4 per cent to RM7.99 at 11:34 am local time in Kuala Lumpur trading, the highest since June 30. The advance pared the decline this year to 11 per cent, the most on the Malaysian stock index. Chief executive officer Mohd Bakke Salleh said yesterday the company has "identified" problems it faced in the oil and gas business and expects a turnaround.
Simone Yeoh, an analyst at JPMorgan, upgraded Sime to "overweight" from "neutral," lifting her share forecast to RM9.40 from RM8.40. Hoe Lee Leng, an analyst at RHB Research Institute Sdn Bhd, raised the recommendation on the stock to "market perform" from "underperform," while AmResearch Sdn Bhd rated the stock a new "buy" with a RM9.20 target.
"Consistency in performance under leadership of the new CEO is key for a sustainable re-rating," Yeoh said in a report. "We see prospects for shorter term opportunity in Sime shares with the overhang from further provisions now behind us, stable to strong core profits from most divisions, and our recent more positive outlook on crude palm oil prices."
The Kuala Lumpur-based company posted a second consecutive quarterly loss yesterday after adding provisions of RM777.3 million (US$247 million) for oil and gas projects, largely in the Middle East. This brought its total provisions to RM2.1 billion for its fiscal year ended June 30, it said.
The 100-year-old Malaysian company reported a fourth- quarter net loss of RM77.4 million, a reversal from a RM984 million-ringgit rofit a year earlier.
"Sime is currently under-owned by institutional funds due to the losses across the group's energy and utilities operations," Alex Goh, an analyst at AmResearch, wrote in a report today. "We believe that the stock is at an inflection point for an upward re-rating." -- Bloomberg
CIMB - MIDF downgrades CIMB to neutral, raises target price to RM8.50
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Research House: MIDF
KUALA LUMPUR: MIDF Research downgraded CIMB Group Holdings Bhd to neutral from buy previously after the banking group posted net profit RM889.5 million in its second quarter ended June 30, 2010 compared to RM838.1 million in 1Q.
MIDF Research said the higher net profit was contributed by i) higher net interest income from increase in NIM, ii) higher non interest income and iii) lower loan impairment expenses.
"We adjust our target price for the stock to RM8.50 (from RM8), based on 16 times PER on FY11 EPS.
"We continue to peg the stock to a forward PER of 16 times which is higher than its average 5 years historical PER due the Group's stronger position as a regional bank," it said on Friday, Aug 27.
MIDF Research said that as CIMB's share price had surged strongly (+23.4% YTD) beating the KLCI and KLFIN's gain of 10.6% YTD and 15.3% YTD respectively, total return expected (based on the revised target price and dividend yield) is less than 15%.
"Hence, we downgrade our call on the stock from Buy to Neutral," it said.
Company Name: CIMB GROUP HOLDINGS BERHAD
Research House: MIDF
KUALA LUMPUR: MIDF Research downgraded CIMB Group Holdings Bhd to neutral from buy previously after the banking group posted net profit RM889.5 million in its second quarter ended June 30, 2010 compared to RM838.1 million in 1Q.
MIDF Research said the higher net profit was contributed by i) higher net interest income from increase in NIM, ii) higher non interest income and iii) lower loan impairment expenses.
"We adjust our target price for the stock to RM8.50 (from RM8), based on 16 times PER on FY11 EPS.
"We continue to peg the stock to a forward PER of 16 times which is higher than its average 5 years historical PER due the Group's stronger position as a regional bank," it said on Friday, Aug 27.
MIDF Research said that as CIMB's share price had surged strongly (+23.4% YTD) beating the KLCI and KLFIN's gain of 10.6% YTD and 15.3% YTD respectively, total return expected (based on the revised target price and dividend yield) is less than 15%.
"Hence, we downgrade our call on the stock from Buy to Neutral," it said.
Integra's bottom-line improved
Results Update
Integra has just announced its results for QE30/6/2010. Its net profit increased by 54% q-o-q or 51% y-o-y to RM13.7 million while its turnover was up 2% q-o-q or 10% y-o-y to RM23.5 million. The improved performance was attributable to increased cargo throughput in its 2 ports off Lumut as well as its 20%-owned associate, PGMC due to higher shipment of nickel.
Table: Integra's 8 quarterly results
Chart 1: Integra's last 13 quarterly results
It's worth noting that PGMC's shipment of nickel ore jumped from 4 shipments of 128,363 DMT in QE31/3/2010 to 27 shipments of 873,739 DMT in QE30/6/2010. At this current rate, PGMC may ship out more nickel ore in 2010 as compared to total shipment of 1,227,221 DMT recorded in 2009. Prices of nickel is still way off its high of USD54,000 in 2007 but it has recovered substantially from the low of USD10,000 in early 2009.
Chart 2: Nickel's monthly prices
Valuation
Integra (closed at RM1.24 yesterday) is now trading at a PER of 8.8 times (based on the last 4 quarters' EPS of 14.12 sen). At this multiple, Integra is deemed attractive. It may trade up to a PER of 10 times, giving te stock a fair value of RM1.41.
Technical Outlook
Integra is in an uptrend line, with support at RM1.10. A parallel line can be drawn and it may mark the resistance level for the stock at RM1.40. See Chart 2 below.
Chart 3: Integra's daily chart as at Aug 26, 2010 (Source: Quickcharts)
From the monthly chart (plotted on logarithmic scale), we can see that Integra seems to move in cycles (or waves) . It may be on the crest of its present cycle, with limited upside.
Chart 3: Integra's monthly chart as at Aug 25, 2010 (Source: Tradesignum)
Conclusion
Based on improved financial performance & attractive valuation, Integra could be a good stock for long-term investment. However, the stock could be at the crest of its present cycle, with limited upside potential. To beat the cycle, Integra would depend on continued favorable return from its investment in PGMC. Would nickel ore continue to rise?
Integra has just announced its results for QE30/6/2010. Its net profit increased by 54% q-o-q or 51% y-o-y to RM13.7 million while its turnover was up 2% q-o-q or 10% y-o-y to RM23.5 million. The improved performance was attributable to increased cargo throughput in its 2 ports off Lumut as well as its 20%-owned associate, PGMC due to higher shipment of nickel.
Table: Integra's 8 quarterly results
Chart 1: Integra's last 13 quarterly results
It's worth noting that PGMC's shipment of nickel ore jumped from 4 shipments of 128,363 DMT in QE31/3/2010 to 27 shipments of 873,739 DMT in QE30/6/2010. At this current rate, PGMC may ship out more nickel ore in 2010 as compared to total shipment of 1,227,221 DMT recorded in 2009. Prices of nickel is still way off its high of USD54,000 in 2007 but it has recovered substantially from the low of USD10,000 in early 2009.
Chart 2: Nickel's monthly prices
Valuation
Integra (closed at RM1.24 yesterday) is now trading at a PER of 8.8 times (based on the last 4 quarters' EPS of 14.12 sen). At this multiple, Integra is deemed attractive. It may trade up to a PER of 10 times, giving te stock a fair value of RM1.41.
Technical Outlook
Integra is in an uptrend line, with support at RM1.10. A parallel line can be drawn and it may mark the resistance level for the stock at RM1.40. See Chart 2 below.
Chart 3: Integra's daily chart as at Aug 26, 2010 (Source: Quickcharts)
From the monthly chart (plotted on logarithmic scale), we can see that Integra seems to move in cycles (or waves) . It may be on the crest of its present cycle, with limited upside.
Chart 3: Integra's monthly chart as at Aug 25, 2010 (Source: Tradesignum)
Conclusion
Based on improved financial performance & attractive valuation, Integra could be a good stock for long-term investment. However, the stock could be at the crest of its present cycle, with limited upside potential. To beat the cycle, Integra would depend on continued favorable return from its investment in PGMC. Would nickel ore continue to rise?
Profit estimates for Puncak Niaga lowered
MIDF Research has revised downwards its financial year 2010 and 2011 profit projections for Puncak Niaga Holdings Bhd to 6.2 per cent and 9.2 per cent respectively amid weaker-than-expected second quarter performance.
'Margins recovery may not be significant as we expect interest expense to move up, underpinned by the rising interest rate environment,' it said in its equity note today.
MIDF Research has maintained 'trading buy' on Puncak Niaga.
It said speculations could persist over the issue of the transfer of its water assets, which may provide a near term catalyst for price appreciation.
'The prolonged saga to restructure the state water sector continues and we remain skeptical that it could be completed any time soon,' it said.
MIDF Research said political willpower is needed to resolve the current impasse between the state government and water concessionaires.
The research house said Puncak Niaga posted a 19 per cent year-on-year lower revenue in second quarter 2010 and it was due to lower compensation booked in the quarter.
Nonetheless, for the first half, revenue rose two per cent year-on-year on higher volume.
Gross margin in second quarter decreased by 11 percentage points from the same quarter last year to 33.7 per cent, while gross margin for first half was four percentage points lower to 34 per cent.
In addition, interest expenses increased significantly by almost nine per cent year-on-year that contributed to margins erosion. -- Bernama
'Margins recovery may not be significant as we expect interest expense to move up, underpinned by the rising interest rate environment,' it said in its equity note today.
MIDF Research has maintained 'trading buy' on Puncak Niaga.
It said speculations could persist over the issue of the transfer of its water assets, which may provide a near term catalyst for price appreciation.
'The prolonged saga to restructure the state water sector continues and we remain skeptical that it could be completed any time soon,' it said.
MIDF Research said political willpower is needed to resolve the current impasse between the state government and water concessionaires.
The research house said Puncak Niaga posted a 19 per cent year-on-year lower revenue in second quarter 2010 and it was due to lower compensation booked in the quarter.
Nonetheless, for the first half, revenue rose two per cent year-on-year on higher volume.
Gross margin in second quarter decreased by 11 percentage points from the same quarter last year to 33.7 per cent, while gross margin for first half was four percentage points lower to 34 per cent.
In addition, interest expenses increased significantly by almost nine per cent year-on-year that contributed to margins erosion. -- Bernama
Nestlé rises after OSK Research ups target price
KUALA LUMPUR: Nestlé (M) Bhd share price rose on Friday, Aug 27 after OSK Research raised its target price for the stock to RM38.53 from RM31.49 previously, and maintained its neutral recommendation on the stock.
At 9.15am, Nestlé was up 40 sen to RM39.88.In a note on Friday, Aug 27, OSK Research said Nestlé's 1HFY10 earnings were above its own and consensus estimates, making up 61.8% of the research house's full-year forecast.
It said Nestlé's year-on-year earnings swelled 28.6% on the back of improving export sales, mainly from its new coffee and non-dairy creamer lines in Shah Alam.
'Earnings before interest and tax margins rose from 12.9% to 14.5%. Meanwhile, quarter-on-quarter earnings declined 27.8% as marketing expenses rose during the quarter, with new products such as Nescafe Ipoh White Coffee and Maggi whole wheat noodles being launched.
'We revise upwards our earnings forecasts for FY11 and target price to RM38.53 from RM31.49. Maintain Neutral,' it said.
At 9.15am, Nestlé was up 40 sen to RM39.88.In a note on Friday, Aug 27, OSK Research said Nestlé's 1HFY10 earnings were above its own and consensus estimates, making up 61.8% of the research house's full-year forecast.
It said Nestlé's year-on-year earnings swelled 28.6% on the back of improving export sales, mainly from its new coffee and non-dairy creamer lines in Shah Alam.
'Earnings before interest and tax margins rose from 12.9% to 14.5%. Meanwhile, quarter-on-quarter earnings declined 27.8% as marketing expenses rose during the quarter, with new products such as Nescafe Ipoh White Coffee and Maggi whole wheat noodles being launched.
'We revise upwards our earnings forecasts for FY11 and target price to RM38.53 from RM31.49. Maintain Neutral,' it said.
Tenaga proposes 1-for-4 bonus issue of up to 1.12b shares
KUALA LUMPUR: Tenaga Nasional Bhd has proposed a one-for-four bonus issue of up to 1.12 billion shares of RM1 each with the entitlement date to be announced later.
As at May 31, 2010, its paid-up capital stood at RM4.35 billion, comprising 4.35 billion shares, while there were 129.85 million outstanding ESOS options.
In a statement to Bursa Malaysia Securities yesterday, Tenaga said the bonus issue would be carried out by capitalising up to RM1.12 billion from its share premium account, which amounted to RM5.27 billion as at Aug 31, 2009.
It said the proposal would reward existing shareholders and increase its capital base that would better reflect its size of operations, as well as improve the liquidity of its shares in the market. AmInvestment Bank Bhd has been appointed as the adviser to the proposal, which is expected to be completed by first quarter next year.
As at May 31, 2010, its paid-up capital stood at RM4.35 billion, comprising 4.35 billion shares, while there were 129.85 million outstanding ESOS options.
In a statement to Bursa Malaysia Securities yesterday, Tenaga said the bonus issue would be carried out by capitalising up to RM1.12 billion from its share premium account, which amounted to RM5.27 billion as at Aug 31, 2009.
It said the proposal would reward existing shareholders and increase its capital base that would better reflect its size of operations, as well as improve the liquidity of its shares in the market. AmInvestment Bank Bhd has been appointed as the adviser to the proposal, which is expected to be completed by first quarter next year.
Thursday, August 26, 2010
CIHLDG - CIMB, OSK keep 'buy' call on CI Hldgs
Stock Name: CIHLDG
Company Name: C.I. HOLDINGS BHD
Research House: OSK
CIMB Research and OSK Research have maintained a "buy" call on CI Holdings Bhd (CIH), driven by the group's strong results of its beverage division despite rising cost and competition.
"Our target price goes up from RM3.90 to RM4.20, pegged to an unchanged 20 per cent discount to 15-time target market price to earnings in view of the stock's relatively low liquidity," CIMB Research said in a report today.
Another contributing factor was CIH's aggressive distribution drive and additional production capacity, it said.
As at June 2010, CIH's beverages reached 42,000 outlets nationwide, an improvement on 36,595 outlets as at June 2009.
The group recorded a total revenue of RM516.40 million, an increase of 42 per cent from the previous year.
Much of the growth came from a strong response to non-carbonated drinks, especially Tropicana Twister which was showing no signs of slowing down, said CIMB Research.
It now holds 35 per cent of the market, followed by Marigold Peel Fresh at 30 per cent, and Fruit Tree and Sunkist at 13 per cent.
OSK Research said CIH's new non-carbonated line, which is scheduled to begin operations in the coming September/October period would allow the group to launch more non-carbonated products from the new Tropicana flavours and Lipton range.
"We see potential in this segment as more new drinks are launched. However, we have some concerns over the competition from Minute Maid and Marigold which may eat into Tropicana's market share as the brands are now engaging in aggressive promotional activities," it said. -- Bernama
Company Name: C.I. HOLDINGS BHD
Research House: OSK
CIMB Research and OSK Research have maintained a "buy" call on CI Holdings Bhd (CIH), driven by the group's strong results of its beverage division despite rising cost and competition.
"Our target price goes up from RM3.90 to RM4.20, pegged to an unchanged 20 per cent discount to 15-time target market price to earnings in view of the stock's relatively low liquidity," CIMB Research said in a report today.
Another contributing factor was CIH's aggressive distribution drive and additional production capacity, it said.
As at June 2010, CIH's beverages reached 42,000 outlets nationwide, an improvement on 36,595 outlets as at June 2009.
The group recorded a total revenue of RM516.40 million, an increase of 42 per cent from the previous year.
Much of the growth came from a strong response to non-carbonated drinks, especially Tropicana Twister which was showing no signs of slowing down, said CIMB Research.
It now holds 35 per cent of the market, followed by Marigold Peel Fresh at 30 per cent, and Fruit Tree and Sunkist at 13 per cent.
OSK Research said CIH's new non-carbonated line, which is scheduled to begin operations in the coming September/October period would allow the group to launch more non-carbonated products from the new Tropicana flavours and Lipton range.
"We see potential in this segment as more new drinks are launched. However, we have some concerns over the competition from Minute Maid and Marigold which may eat into Tropicana's market share as the brands are now engaging in aggressive promotional activities," it said. -- Bernama
TNB proposes 1-for-4 bonus share issue
TENAGA Nasional Bhd, Malaysia's biggest power producer, said it proposed to give shareholders one new share for every four held.
The bonus issue is to 'reward shareholders' as well as improve the liquidity of the company's shares in the market, Tenaga said in a statement in Kuala Lumpur today. - Bloomberg
The bonus issue is to 'reward shareholders' as well as improve the liquidity of the company's shares in the market, Tenaga said in a statement in Kuala Lumpur today. - Bloomberg
CIMB posts record quarterly profit of RM889m
Malaysian lender CIMB Group Holdings Bhd reported a record quarterly net profit today, helped by lower loan loss provisions and a strong performance in its Indonesian unit.
Malaysian banks are expected to see strong earnings expansion this year helped by the country's economic recovery, which saw second quarter GDP growth of 8.9 per cent, and a boost in corporate activity.
'The highlights were the strong rebound in corporate and investment banking, surge in contribution from CIMB Niaga and drop in loan loss provisions,' Nazir Razak, CIMB's chief executive officer, said.
Earlier this week, its Indonesian subsidiary CIMB Niaga posted 62 per cent rise in first-half net profit to 1.13 trillion rupiah (US$125.9 million).
Last month, its 93.15 per cent owned CIMB Thai Bank returned to a second quarter profit of 365.85 million baht (US$11.63 million) versus a loss of 246 million baht a year ago.
CIMB, valued at US$18.3 billion, said it expects full year return on equity (ROE) to be 16.5 per cent excluding any impact from the recent acquisition of 20 per cent of CIMB Niaga.
'However, we remain conservative on our capital position as we are migrating to Basel II and the international banking reform process has yet to land on some important details,' Razak said.
Analysts tracked by Thomson Reuters I/B/E/S forecast an average full-year net profit of RM3.5 billion for CIMB before the results announcement.
CIMB, Malaysia's top dealmaker and its second-largest bank, posted a 34 per cent increase in April-June net profit to RM889 million (US$282.7 million). Its first half net profit rose 35 per cent to RM1.7 billion.
The company also declared an interim dividend of 4.6 sen per share amounting to a net payment of RM339 million.
Last week, Malaysia's largest lender Malayan Banking (Maybank) posted record full year profits, driven by robust loans growth and said it expects to achieve better earnings in 2011.
Sixteen out of 23 analysts tracked by Thomson Reuters I/B/E/S have a 'buy' or 'strong buy' rating on CIMB, with six calling it a 'hold', and one other a 'sell.'
Shares of CIMB are up 22 per cent so far this year, outperforming top lender Maybank's 18.5 per cent rise and the 9.8 per cent gain in the broader market index. -- Reuters
Malaysian banks are expected to see strong earnings expansion this year helped by the country's economic recovery, which saw second quarter GDP growth of 8.9 per cent, and a boost in corporate activity.
'The highlights were the strong rebound in corporate and investment banking, surge in contribution from CIMB Niaga and drop in loan loss provisions,' Nazir Razak, CIMB's chief executive officer, said.
Earlier this week, its Indonesian subsidiary CIMB Niaga posted 62 per cent rise in first-half net profit to 1.13 trillion rupiah (US$125.9 million).
Last month, its 93.15 per cent owned CIMB Thai Bank returned to a second quarter profit of 365.85 million baht (US$11.63 million) versus a loss of 246 million baht a year ago.
CIMB, valued at US$18.3 billion, said it expects full year return on equity (ROE) to be 16.5 per cent excluding any impact from the recent acquisition of 20 per cent of CIMB Niaga.
'However, we remain conservative on our capital position as we are migrating to Basel II and the international banking reform process has yet to land on some important details,' Razak said.
Analysts tracked by Thomson Reuters I/B/E/S forecast an average full-year net profit of RM3.5 billion for CIMB before the results announcement.
CIMB, Malaysia's top dealmaker and its second-largest bank, posted a 34 per cent increase in April-June net profit to RM889 million (US$282.7 million). Its first half net profit rose 35 per cent to RM1.7 billion.
The company also declared an interim dividend of 4.6 sen per share amounting to a net payment of RM339 million.
Last week, Malaysia's largest lender Malayan Banking (Maybank) posted record full year profits, driven by robust loans growth and said it expects to achieve better earnings in 2011.
Sixteen out of 23 analysts tracked by Thomson Reuters I/B/E/S have a 'buy' or 'strong buy' rating on CIMB, with six calling it a 'hold', and one other a 'sell.'
Shares of CIMB are up 22 per cent so far this year, outperforming top lender Maybank's 18.5 per cent rise and the 9.8 per cent gain in the broader market index. -- Reuters
CIMB Research: Murky waters for marine support players?
Oil and gas sector
Maintain overweight: Slow order book replenishment appears to have taken a toll on marine support providers in 1HFY2010 ended June 30. This week, Petra Perdana Bhd and Alam Maritim Resources Bhd are likely to announce 2Q results that may be below both our forecasts and consensus estimates.
Maintain overweight: Slow order book replenishment appears to have taken a toll on marine support providers in 1HFY2010 ended June 30. This week, Petra Perdana Bhd and Alam Maritim Resources Bhd are likely to announce 2Q results that may be below both our forecasts and consensus estimates.
Petra Perdana is expected to release its results today and Alam tomorrow. The financial year ends on Dec 31 for both companies.
At Petra Perdana, management spent a large part of 1H fighting a boardroom tussle and lawsuits. The company has been hit by a low vessel utilisation rate of less than 60%.
This unfavourable setting may have contributed to another loss-making quarter after 1QFY2010's core net loss of RM4.7 million. It was also tough going for 29.6%-owned Petra Energy Bhd (not rated), which announced a 2Q2010 net loss of RM2.3 million on Aug 19, citing vessel refurbishment and lower margins from brownfield services.
While it is comforting that the squabbling between the former and current managements of Petra Perdana is finally at an end, the operating environment remains challenging. The loss of income from the work barge and two work boats which were sold by the former management to Petra Energy Bhd last year is now being felt, given the sluggish demand for AHTS vessels.
Marine support players are hopeful that contracts will be awarded from September onwards but execution may take some time.
Therefore, FY2010 is shaping up to be a washout for Petra Perdana. Against this backdrop, we view the company's recent move to cancel the purchase of a vessel as sensible.
Alam, meanwhile, was mired in legal troubles as well during 2QFY2010. MLC Barging Pte Ltd claimed ownership of two of Alam's vessels, Setia Ulung and Setia Aman, which were already fully paid for by Alam.
A full-blown courtroom battle was averted when Alam announced on July 22 that MLC Barging had discontinued its case, leading to the release of the two vessels to Alam.
In terms of operations, Alam faced a slowdown as well in 2Q2010 with three vessels out for maintenance and two (8,920HP Setia Jaguh and 5,150HP Setia Sakti) spending a large part of the quarter without contracts. Furthermore, the underwater services business continued to underperform.
We expect an earnings reduction as our forecasts are too bullish and overestimate the pace of contract awards.
Pending the release of the 2Q2010 results, we maintain our earnings forecasts, target prices and recommendations for Petra Perdana and Alam. However, we caution investors that we may trim our EPS forecasts and target prices for both stocks, potentially leading to a downgrade of our recommendation for Petra Perdana, though not for Alam.
Although the anticipated weak 2Q2010 results for Petra Perdana and Alam are a letdown, we remain "overweight" on the oil and gas sector. We understand that 4Q2010 is likely to see the award of contracts, including a RM1.5 billion offshore maintenance contract, which has attracted the interest of marine support players.
With the exceptions of Petra Perdana, Alam and Wah Seong Corp Bhd, O&G stocks in our coverage are not expected to disappoint with their 2QCY2010 results. Dialog Group Bhd ("underperform") sprang no negative surprises when it announced its quarterly results last week while Petronas Dagangan Bhd ("underperform") is likely to do the same today.
Sector favourites SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd ("outperform") will release their results next month. Kencana is poised to post a record annual net profit while SapuraCrest is set to hit an all-time high net profit for a six-month period. SapuraCrest remains our top O&G pick. — CIMB Research, Aug 24
This article appeared in The Edge Financial Daily, August 25 2010.
CIMB Research: Murky waters for marine support players?
Oil and gas sector
Maintain overweight: Slow order book replenishment appears to have taken a toll on marine support providers in 1HFY2010 ended June 30. This week, Petra Perdana Bhd and Alam Maritim Resources Bhd are likely to announce 2Q results that may be below both our forecasts and consensus estimates.
Maintain overweight: Slow order book replenishment appears to have taken a toll on marine support providers in 1HFY2010 ended June 30. This week, Petra Perdana Bhd and Alam Maritim Resources Bhd are likely to announce 2Q results that may be below both our forecasts and consensus estimates.
Petra Perdana is expected to release its results today and Alam tomorrow. The financial year ends on Dec 31 for both companies.
At Petra Perdana, management spent a large part of 1H fighting a boardroom tussle and lawsuits. The company has been hit by a low vessel utilisation rate of less than 60%.
This unfavourable setting may have contributed to another loss-making quarter after 1QFY2010's core net loss of RM4.7 million. It was also tough going for 29.6%-owned Petra Energy Bhd (not rated), which announced a 2Q2010 net loss of RM2.3 million on Aug 19, citing vessel refurbishment and lower margins from brownfield services.
While it is comforting that the squabbling between the former and current managements of Petra Perdana is finally at an end, the operating environment remains challenging. The loss of income from the work barge and two work boats which were sold by the former management to Petra Energy Bhd last year is now being felt, given the sluggish demand for AHTS vessels.
Marine support players are hopeful that contracts will be awarded from September onwards but execution may take some time.
Therefore, FY2010 is shaping up to be a washout for Petra Perdana. Against this backdrop, we view the company's recent move to cancel the purchase of a vessel as sensible.
Alam, meanwhile, was mired in legal troubles as well during 2QFY2010. MLC Barging Pte Ltd claimed ownership of two of Alam's vessels, Setia Ulung and Setia Aman, which were already fully paid for by Alam.
A full-blown courtroom battle was averted when Alam announced on July 22 that MLC Barging had discontinued its case, leading to the release of the two vessels to Alam.
In terms of operations, Alam faced a slowdown as well in 2Q2010 with three vessels out for maintenance and two (8,920HP Setia Jaguh and 5,150HP Setia Sakti) spending a large part of the quarter without contracts. Furthermore, the underwater services business continued to underperform.
We expect an earnings reduction as our forecasts are too bullish and overestimate the pace of contract awards.
Pending the release of the 2Q2010 results, we maintain our earnings forecasts, target prices and recommendations for Petra Perdana and Alam. However, we caution investors that we may trim our EPS forecasts and target prices for both stocks, potentially leading to a downgrade of our recommendation for Petra Perdana, though not for Alam.
Although the anticipated weak 2Q2010 results for Petra Perdana and Alam are a letdown, we remain "overweight" on the oil and gas sector. We understand that 4Q2010 is likely to see the award of contracts, including a RM1.5 billion offshore maintenance contract, which has attracted the interest of marine support players.
With the exceptions of Petra Perdana, Alam and Wah Seong Corp Bhd, O&G stocks in our coverage are not expected to disappoint with their 2QCY2010 results. Dialog Group Bhd ("underperform") sprang no negative surprises when it announced its quarterly results last week while Petronas Dagangan Bhd ("underperform") is likely to do the same today.
Sector favourites SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd ("outperform") will release their results next month. Kencana is poised to post a record annual net profit while SapuraCrest is set to hit an all-time high net profit for a six-month period. SapuraCrest remains our top O&G pick. — CIMB Research, Aug 24
This article appeared in The Edge Financial Daily, August 25 2010.
IJM - IJM Corp has good chance to secure bid: OSK
Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: OSK
IJM Corporation Bhd, which has tendered for jobs worth more than RM5 billion to date domestically and aboard, has a good chance of securing them given its track record,says OSK Research.
In a research note today, OSK Research said IJM has already identified several road project packages that it intends to bid for in India withindications that tenders would be out by year end.
"India intends to construct 54,000km of roads by 2012 and IJM has a trackrecord of completing 1,400km of roads in the country.
"Given India's local capacity constraint, some of these packages must beawarded to foreigners if the target is to be met," OSK Research noted. In the domestic market, IJM has managed to bag RM597 million worth of jobs.
It also added that the RM5 billion worth of projects that IJM had bid forthe year-to-date, does not include the LRT extension.
Some of the prospective jobs are the Putrajaya Hospital worth RM700 million,pipelines for the inter-state water transfer project (RM200 million - RM300million) in a joint venture with JAKS, the Kelau Dam (RM200 million -RM250million) and some Sarawak-based infrastructure project.
OSK Research also said it believes that IJM could potentially participate inthe West Coast Expressway, which was revived under the 10th Malaysia Plan. IJM is also eyeing the Islamic Teaching Hospital, a project worth RM300million to RM400 million via the private finance initiatives.
On the property side, OSK Research said IJM Land currently has unbilledsales of RM800 million and is looking to launch RM1.2 billion worth ofdevelopment for the 2011 financial year.
However, OSK Research has made a neutral call for IJM Corporation with atarget share price of RM5.32 amid a thin construction margin and limited upside. ECM Libra on the other hand, maintained a "hold" call on the shares with a target price of RM4.77. At 11am, IJM's share price perked five sen to RM4.95. -- Bernama
Company Name: IJM CORPORATION BHD
Research House: OSK
IJM Corporation Bhd, which has tendered for jobs worth more than RM5 billion to date domestically and aboard, has a good chance of securing them given its track record,says OSK Research.
In a research note today, OSK Research said IJM has already identified several road project packages that it intends to bid for in India withindications that tenders would be out by year end.
"India intends to construct 54,000km of roads by 2012 and IJM has a trackrecord of completing 1,400km of roads in the country.
"Given India's local capacity constraint, some of these packages must beawarded to foreigners if the target is to be met," OSK Research noted. In the domestic market, IJM has managed to bag RM597 million worth of jobs.
It also added that the RM5 billion worth of projects that IJM had bid forthe year-to-date, does not include the LRT extension.
Some of the prospective jobs are the Putrajaya Hospital worth RM700 million,pipelines for the inter-state water transfer project (RM200 million - RM300million) in a joint venture with JAKS, the Kelau Dam (RM200 million -RM250million) and some Sarawak-based infrastructure project.
OSK Research also said it believes that IJM could potentially participate inthe West Coast Expressway, which was revived under the 10th Malaysia Plan. IJM is also eyeing the Islamic Teaching Hospital, a project worth RM300million to RM400 million via the private finance initiatives.
On the property side, OSK Research said IJM Land currently has unbilledsales of RM800 million and is looking to launch RM1.2 billion worth ofdevelopment for the 2011 financial year.
However, OSK Research has made a neutral call for IJM Corporation with atarget share price of RM5.32 amid a thin construction margin and limited upside. ECM Libra on the other hand, maintained a "hold" call on the shares with a target price of RM4.77. At 11am, IJM's share price perked five sen to RM4.95. -- Bernama
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