Ahmad Zaki Resources Bhd (AZRB) has secured a RM125 million contract to construct and complete 1,002 units of flats in three blocks of 17-storeys buildings and related works for public housing at Chabang Tiga, Kuala Terengganu, Terengganu.
In a filing to Bursa Malaysia today, the company said work on the project, which was awarded by the Ministry of Housing and Local Government, would commence on Feb 16, 2011 until Aug 15, 2013.
-- BERNAMA
Monday, January 31, 2011
Latexx Partners gets RM852m offer
Latexx Partners Bhd today received a RM852 million acquisition proposal to acquire its entire business and undertakings.
In a filing to Bursa Malaysia, it said the proposed acquisition from Navis Asia VI Management Company Ltd in association with Mettiz Capital Limited, translates to an offer of RM3.10 per share, exclusive of treasury shares and assuming all outstanding warrants are converted as at Jan 27, 2011.
The company had also resolved to accept the proposal and granted Navis an exclusivity period up to April 1, 2011 to facilitate the conduct of the due diligence and discussions in relation to the structure of the transaction and negotiations.
Navis is a Cayman Island incorporated fund management company, which in turn is wholly-owned by Navis Capital Partners Limited, founded to make private and public equity investments in South and Southeast Asia.
To date, Navis Capital has made about 40 acquisitions and currently manages over US$3 billion in capital.
BERNAMA
In a filing to Bursa Malaysia, it said the proposed acquisition from Navis Asia VI Management Company Ltd in association with Mettiz Capital Limited, translates to an offer of RM3.10 per share, exclusive of treasury shares and assuming all outstanding warrants are converted as at Jan 27, 2011.
The company had also resolved to accept the proposal and granted Navis an exclusivity period up to April 1, 2011 to facilitate the conduct of the due diligence and discussions in relation to the structure of the transaction and negotiations.
Navis is a Cayman Island incorporated fund management company, which in turn is wholly-owned by Navis Capital Partners Limited, founded to make private and public equity investments in South and Southeast Asia.
To date, Navis Capital has made about 40 acquisitions and currently manages over US$3 billion in capital.
BERNAMA
GCB's Q4 pretax rises to RM32.2m
Guan Chong Bhd's (GCB) pre-tax profit for the fourth quarter ended Dec 31, 2010 rose to RM32.2 million from RM9.4 million in the same quarter of 2009.
Revenue increased to RM332.3 million from RM217.8 million previously, it said in a filing to Bursa Malaysia today.
GCB said the increase in revenue was mainly due to a higher sales volume and market price of cocoa products.
It also said the higher pre-tax profit recorded was mainly due to the higher revenue generated, net gains arising from foreign exchange due to appreciation of the ringgit, gains on commodity futures contracts and net fair value gains on foreign exchange derivatives.
The group was optimistic about its performance in the FY11 since the new cocoa processing plant located in Batam, Indonesia, is going to commence production in the first quarter 2011.
GCB is a manufacturer of cocoa-derived food ingredients. -- BERNAMA
Revenue increased to RM332.3 million from RM217.8 million previously, it said in a filing to Bursa Malaysia today.
GCB said the increase in revenue was mainly due to a higher sales volume and market price of cocoa products.
It also said the higher pre-tax profit recorded was mainly due to the higher revenue generated, net gains arising from foreign exchange due to appreciation of the ringgit, gains on commodity futures contracts and net fair value gains on foreign exchange derivatives.
The group was optimistic about its performance in the FY11 since the new cocoa processing plant located in Batam, Indonesia, is going to commence production in the first quarter 2011.
GCB is a manufacturer of cocoa-derived food ingredients. -- BERNAMA
'Toll move may hit bond ratings of operators'
By halting or lowering toll rates, some concessions, particularly those in their infancy stage may find it hard to meet their debt obligations and this could trigger a downgrade in bond ratings, says OSK Research.
Prime Minister Datuk Seri Najib Tun Razak had last week announced that toll along the East-West Link Highway from the Salak Interchange to Taman Connaught is expected to be abolished as early as May.
He also made a bold call in asking toll concessions to retain, reduce or abolish the existing tolls without the government providing compensation.
'The construction of most tolls is financed largely by debt-corporate bonds.
'The coupon and repayment schedule for these bonds are usually structured to match the cash flow from the toll collection, which in turn, is dependent on the stipulated toll rates in the Concession Agreement (CA),' it said in a research note today.
OSK said the restructuring of the CAs may result in a negative perception of Malaysia's regulatory risks and make it more expensive to raise bonds for future projects.
The latest announcement also comes on the heels of the proposed privatisation of PLUS.
'We maintain a neutral call on the sector but highlight the potential regulatory risks involved,' OSK added.-- Bernama
Prime Minister Datuk Seri Najib Tun Razak had last week announced that toll along the East-West Link Highway from the Salak Interchange to Taman Connaught is expected to be abolished as early as May.
He also made a bold call in asking toll concessions to retain, reduce or abolish the existing tolls without the government providing compensation.
'The construction of most tolls is financed largely by debt-corporate bonds.
'The coupon and repayment schedule for these bonds are usually structured to match the cash flow from the toll collection, which in turn, is dependent on the stipulated toll rates in the Concession Agreement (CA),' it said in a research note today.
OSK said the restructuring of the CAs may result in a negative perception of Malaysia's regulatory risks and make it more expensive to raise bonds for future projects.
The latest announcement also comes on the heels of the proposed privatisation of PLUS.
'We maintain a neutral call on the sector but highlight the potential regulatory risks involved,' OSK added.-- Bernama
ECM 'neutral' on Selangor water sector
ECM Libra Investment Research maintains a 'neutral' call on the Selangor water sector as the water consolidation exercise may be a long journey while the various parties involved strive to create a 'win-win' scenario for all amid a complex situation.
Last Friday, Kumpulan perangsang Selangor Bhd announced that the Selangor State Government's RM9.39 offer per share to acquire all the equities of Konsortium Abbas Sdn Bhd had been accepted on certain conditions.
'Unfortunately, this is the only good news to come out of the latest attempt at consolidating Selangor's fragmented water industry,' said ECM Libra in a research note today.
On the same day, Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) shareholders said the company was unable to accept the offer to acquire 100 per cent equity in Splash valued at RM5.95 per share.
Meanwhile, Puncak Niaga Holdings had on Jan 26 announced that Puncak Niaga (M) Sdn Bhd and Syabas are unable to table any proposal to shareholders until a clear and unambiguous offer was received.
The research house said Splash had put forth that the main stumbling block thus far had been the inability to bridge the gap between the commercial value sought after by the water players and the amount the government was willing to pay.
'It appears there may not be a speedy resolution to the consolidation as the media had quoted Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim as saying that the state will not raise the present RM9.3 billion offer,' it added. -- Bernama
Last Friday, Kumpulan perangsang Selangor Bhd announced that the Selangor State Government's RM9.39 offer per share to acquire all the equities of Konsortium Abbas Sdn Bhd had been accepted on certain conditions.
'Unfortunately, this is the only good news to come out of the latest attempt at consolidating Selangor's fragmented water industry,' said ECM Libra in a research note today.
On the same day, Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) shareholders said the company was unable to accept the offer to acquire 100 per cent equity in Splash valued at RM5.95 per share.
Meanwhile, Puncak Niaga Holdings had on Jan 26 announced that Puncak Niaga (M) Sdn Bhd and Syabas are unable to table any proposal to shareholders until a clear and unambiguous offer was received.
The research house said Splash had put forth that the main stumbling block thus far had been the inability to bridge the gap between the commercial value sought after by the water players and the amount the government was willing to pay.
'It appears there may not be a speedy resolution to the consolidation as the media had quoted Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim as saying that the state will not raise the present RM9.3 billion offer,' it added. -- Bernama
Plantations sector a 'trading buy' at CIMB
Crude palm oil prices may fall in the short term on concern that unrest in Egypt may weaken import demand and prompt traders to liquidate their speculative positions, CIMB Investment Bank Bhd said in report today.
The plantations sector was maintained as a 'trading buy' because the impact is expected to be temporary, according to the report. -- Bloomberg
The plantations sector was maintained as a 'trading buy' because the impact is expected to be temporary, according to the report. -- Bloomberg
DiGi upgraded on hope of dividend payout
DiGi.Com Bhd, a Malaysian mobile phone operator, was upgraded to 'buy' at OSK Research Sdn Bhd to reflect expectations of a dividend 'windfall payout' in its financial year 2011.
The share estimate was increased to RM27.90 from RM24.40, Jeffrey Tan, an analyst at OSK, said in a report today.
His previous rating for the stock was 'neutral,' according to data compiled by Bloomberg. -- Bloomberg
The share estimate was increased to RM27.90 from RM24.40, Jeffrey Tan, an analyst at OSK, said in a report today.
His previous rating for the stock was 'neutral,' according to data compiled by Bloomberg. -- Bloomberg
Friday, January 28, 2011
Chin Teck records higher Q1 pre-tax profit
Chin Teck Plantations Bhd posted a higher pre-tax profit of RM20.786 million for the first quarter ended Nov 30, 2010 compared with RM18.149 million in the same period of 2009.
The company's revenue also improved to RM30.996 million from RM29.650 million previously.
In a filing to Bursa Malaysia, Chin Teck Plantations said during the first quarter, the average selling price of fresh fruit bunches (FFB), crude palm oil and palm kernel were substantially higher than those in the previous corresponding financial quarter and period.
However, the company said the production of FFB, crude palm oil and palm kernel were significantly lower, resulting in reduced sales volume.
It said other income was substantially higher due mainly to an increase in gain on foreign exchange and an amount of replanting incentive received. -- Bernama
The company's revenue also improved to RM30.996 million from RM29.650 million previously.
In a filing to Bursa Malaysia, Chin Teck Plantations said during the first quarter, the average selling price of fresh fruit bunches (FFB), crude palm oil and palm kernel were substantially higher than those in the previous corresponding financial quarter and period.
However, the company said the production of FFB, crude palm oil and palm kernel were significantly lower, resulting in reduced sales volume.
It said other income was substantially higher due mainly to an increase in gain on foreign exchange and an amount of replanting incentive received. -- Bernama
Fajarbaru registers higher Q2 pre-tax profit
Fajarbaru Builder Group Bhd chalked up a higher pre-tax profit of RM7.19 million for the second-quarter ended Dec 31, 2010 from RM6.95 million registered the same period in 2009.
Revenue rose to RM58.16 million, during the period under review, from RM37.81 million registered in the 2009 corresponding quarter.
In a filing to Bursa Malaysia, the company attributed the higher profits to contributions from its construction unit.
Optimistic of its outlook, Fajarbaru is confident of securing several contracts, tenders for which, have already been submitted. -- Bernama
Revenue rose to RM58.16 million, during the period under review, from RM37.81 million registered in the 2009 corresponding quarter.
In a filing to Bursa Malaysia, the company attributed the higher profits to contributions from its construction unit.
Optimistic of its outlook, Fajarbaru is confident of securing several contracts, tenders for which, have already been submitted. -- Bernama
Thursday, January 27, 2011
Spritzer's Q2 pre-tax profit falls to RM2.8m
Spritzer Bhd's pre-tax profit for the second quarter ended Nov 30, 2010 fell to RM2.778 million from RM3.423 million in the same quarter of 2009.
Revenue, however, increased to RM35.828 million from the RM29.543 million in 2009.
Pre-tax profit for the six-month period slipped to RM6.056 million from RM6.982 million in 2009. Revenue increased to RM70.639 million from RM60.785 million previously.
In a filing to Bursa Malaysia today, Spritzer said the higher revenue was mainly contributed by higher sales of various bottled water products.
The company said it would increase the product range to cater to the needs of the various market segments.
Looking forward, Spritzer said, it expects to perform satisfactorily in the financial year ending May 31,2011. -- Bernama
Revenue, however, increased to RM35.828 million from the RM29.543 million in 2009.
Pre-tax profit for the six-month period slipped to RM6.056 million from RM6.982 million in 2009. Revenue increased to RM70.639 million from RM60.785 million previously.
In a filing to Bursa Malaysia today, Spritzer said the higher revenue was mainly contributed by higher sales of various bottled water products.
The company said it would increase the product range to cater to the needs of the various market segments.
Looking forward, Spritzer said, it expects to perform satisfactorily in the financial year ending May 31,2011. -- Bernama
Zhulian Q4 pre-tax profit falls to RM30m
Zhulian Corp Bhd's pre-tax profit for the fourth quarter ended Nov 30, 2011 fell to RM29.8 million from RM31.15 million in the same quarter of 2009.
Revenue fell to RM84.9 million from RM87.2 previously.
Looking forward, Zhulian said it expected performance for this year to be satisfactory. -- Bernama
Revenue fell to RM84.9 million from RM87.2 previously.
Looking forward, Zhulian said it expected performance for this year to be satisfactory. -- Bernama
PLB Engr Q1 profit rises to RM3.15m
PLB Engineering Bhd's pre-tax profit for the first quarter ended Nov 30, 2010 rose to RM3.147 million from RM575,000 in the same quarter of 2009.
Its revenue, however, declined to RM14.01 million from RM25.34 million previously.
In a filing to Bursa Malaysia today, PLB said the lower revenue was because the majority of the property development projects were at the end of the construction stage.
It said reserve on consolidation arising upon acquisition of a new subsidiary contributed to the higher pre-tax profit.
PLB said going forward, it remained positive with the operating performance for the remaining quarters of the financial year ending Aug 31, 2011 as it expected to expedite and intensify launches of coming property development projects. -- Bernama
Its revenue, however, declined to RM14.01 million from RM25.34 million previously.
In a filing to Bursa Malaysia today, PLB said the lower revenue was because the majority of the property development projects were at the end of the construction stage.
It said reserve on consolidation arising upon acquisition of a new subsidiary contributed to the higher pre-tax profit.
PLB said going forward, it remained positive with the operating performance for the remaining quarters of the financial year ending Aug 31, 2011 as it expected to expedite and intensify launches of coming property development projects. -- Bernama
C.I. Hldgs Q2 profit up 32pc
C.I. Holdings Bhd has reported a profit after tax of RM11.27 million for the second quarter ended Dec 31,2010, an improvement of 43 per cent from the RM7.87 million in the previous corresponding period.
The higher profit after tax was mainly attributable to further economies of scale and prudent cost management, C.I. Holdings said in its filing to Bursa.
The group's revenue for the current financial quarter increased to RM146.650 million from RM114.5 million previously, due mainly to the beverages division's continued growth in its non-carbonated portfolio, strong growth in isotonic beverages, successful promotional campaigns and an aggressive distribution drive.
Its historic base of carbonated brands also contributed positively.
For the six months ended Dec 31, 2010, profit before tax for the group increased to RM30.285 million from RM21.595 million previously. -- Bernama
The higher profit after tax was mainly attributable to further economies of scale and prudent cost management, C.I. Holdings said in its filing to Bursa.
The group's revenue for the current financial quarter increased to RM146.650 million from RM114.5 million previously, due mainly to the beverages division's continued growth in its non-carbonated portfolio, strong growth in isotonic beverages, successful promotional campaigns and an aggressive distribution drive.
Its historic base of carbonated brands also contributed positively.
For the six months ended Dec 31, 2010, profit before tax for the group increased to RM30.285 million from RM21.595 million previously. -- Bernama
Sunway REIT posts RM356m interim profit
Sunway Real Estate Investment Trust posted RM355.9 million pre-tax profit for the six months ended Dec 31, 2010, on the back of RM157.778 million revenue.
For the second quarter, the company registered RM45.2 million pre-tax profit on the back of RM85.333 million revenue.
In a filing to Bursa Malaysia, it said the better performance for the current quarter was contributed by the commencement of new tenancy terms pursuant to renewals at the Sunway Pyramid Shopping Mall about one million square feet of net lettable area achieved an average increase in rental rates of 17.1 per cent for the three-year term.
The stronger performance at Sunway Resort Hotel and Spa and Pyramid Tower Hotel during year-end holiday season further contributed to improved results for the current quarter.
On the prospect, it said, visitorships to Sunway Pyramid Shopping Mall registered strong quarter-on-quarter growth of 9.7 per cent, whilst Sunway Carnival Shopping Mall recorded moderate growth of 2.9 per cent due to the year-end mega sales campaign and festive and school holidays.
It said occupancy remain strong with Sunway Pyramid at 98 per cent, Sunway Carnival at 93 per cent and Suncity Ipoh Hypermarket at 100 per cent.
The Sunway REIT Management Sdn Bhd believes the Sunway REIT retail properties, especially Sunway Pyramid Shopping Mall, will be able to enjoy another year of solid performance in tandem with the expectation of continued robust domestic consumption, pursuit of lifestyle trends and thriving Sunway Integrated Resort City.
As for the hotel market, it said the Sunway REIT's hotel properties would continue to perform well in line with the positive outlook for the industry.
In the quarter under review, the Sunway Resort Hotel and Spa and Pyramid Tower Hotel enjoyed strong occupancy (Sunway Resort Hotel and Spa: 70.8 per cent; Pyramid Tower Hotel: 86.3 per cent) and average daily rates (Sunway Resort Hotel and Spa: RM407; Pyramid Tower Hotel: RM258) in conjunction with the year-end school holidays and MICE (meetings, incentives, conferences and exhibitions).
Meanwhile, Sunway Hotel Seberang Jaya, a four-star corporate hotel, enjoyed steady performance as the domestic and global economy recover.
The office market, occupancy at both the Sunway REIT's office properties, has been stable at 99.5 per cent for Menara Sunway and 97.0 per cent at Sunway Tower.
The occupancy for Menara Sunway and Sunway Tower is expected to remain stable and the rental rates are expected to increase moderately for the renewals in 2011. -- Bernama
For the second quarter, the company registered RM45.2 million pre-tax profit on the back of RM85.333 million revenue.
In a filing to Bursa Malaysia, it said the better performance for the current quarter was contributed by the commencement of new tenancy terms pursuant to renewals at the Sunway Pyramid Shopping Mall about one million square feet of net lettable area achieved an average increase in rental rates of 17.1 per cent for the three-year term.
The stronger performance at Sunway Resort Hotel and Spa and Pyramid Tower Hotel during year-end holiday season further contributed to improved results for the current quarter.
On the prospect, it said, visitorships to Sunway Pyramid Shopping Mall registered strong quarter-on-quarter growth of 9.7 per cent, whilst Sunway Carnival Shopping Mall recorded moderate growth of 2.9 per cent due to the year-end mega sales campaign and festive and school holidays.
It said occupancy remain strong with Sunway Pyramid at 98 per cent, Sunway Carnival at 93 per cent and Suncity Ipoh Hypermarket at 100 per cent.
The Sunway REIT Management Sdn Bhd believes the Sunway REIT retail properties, especially Sunway Pyramid Shopping Mall, will be able to enjoy another year of solid performance in tandem with the expectation of continued robust domestic consumption, pursuit of lifestyle trends and thriving Sunway Integrated Resort City.
As for the hotel market, it said the Sunway REIT's hotel properties would continue to perform well in line with the positive outlook for the industry.
In the quarter under review, the Sunway Resort Hotel and Spa and Pyramid Tower Hotel enjoyed strong occupancy (Sunway Resort Hotel and Spa: 70.8 per cent; Pyramid Tower Hotel: 86.3 per cent) and average daily rates (Sunway Resort Hotel and Spa: RM407; Pyramid Tower Hotel: RM258) in conjunction with the year-end school holidays and MICE (meetings, incentives, conferences and exhibitions).
Meanwhile, Sunway Hotel Seberang Jaya, a four-star corporate hotel, enjoyed steady performance as the domestic and global economy recover.
The office market, occupancy at both the Sunway REIT's office properties, has been stable at 99.5 per cent for Menara Sunway and 97.0 per cent at Sunway Tower.
The occupancy for Menara Sunway and Sunway Tower is expected to remain stable and the rental rates are expected to increase moderately for the renewals in 2011. -- Bernama
Wah Seong to sell stake in Arabian-Yadong
Wah Seong Corp Bhd's wholly-owned indirect subsidiary, Yadong Anti-Corrosion (Int) Co Ltd (YAC), is proposing to dispose of all its shares in Arabian-Yadong.
In a filing to Bursa Malaysia, the company said it also proposed to dispose machinery and equipment for the external coating of steel pipes, including auxiliary equipment, industrial utilities, attachments, tooling, spare parts, all designs and drawings, plans, manufacturing data, technical publications and other documents related thereto Riyadh Assets.
YAC entered into two separate agreements with Arabian Pipes Co (APC) to effect the sale of shares and assets at USS$3.452 million (equivalent to RM10.536 million).
Arabian-Yadong, set up as a 50:50 joint venture company by YAC and APC, mutually agreed to terminate the venture and entered into the sale and purchase of the shares and assets as part of the termination process.
Upon the proposed disposal of shares, YAC will cease to be a shareholder of Arabian-Yadong. -- Bernama
In a filing to Bursa Malaysia, the company said it also proposed to dispose machinery and equipment for the external coating of steel pipes, including auxiliary equipment, industrial utilities, attachments, tooling, spare parts, all designs and drawings, plans, manufacturing data, technical publications and other documents related thereto Riyadh Assets.
YAC entered into two separate agreements with Arabian Pipes Co (APC) to effect the sale of shares and assets at USS$3.452 million (equivalent to RM10.536 million).
Arabian-Yadong, set up as a 50:50 joint venture company by YAC and APC, mutually agreed to terminate the venture and entered into the sale and purchase of the shares and assets as part of the termination process.
Upon the proposed disposal of shares, YAC will cease to be a shareholder of Arabian-Yadong. -- Bernama
Monday, January 24, 2011
AirAsia tumbles most in 21 months
AirAsia Bhd, Southeast Asia's biggest budget carrier, tumbled the most in almost 21 months in Kuala Lumpur trading amid speculation overseas investors are selling the shares.
AirAsia slid 6.5 per cent to RM2.75 at 3:15 p.m. local time, set for its steepest drop since April 27, 2009. The 10-day implied volatility on the stock rose to 63, the highest level since Aug. 17.
Shares of Kuala Lumpur-based AirAsia have more than doubled in the past year, with foreign investors owning 51.6 per cent of the company as of December, a gain from 48.1 per cent in June, the carrier said Jan. 14. AirAsia's 'fundamentals are very, very good' and there is 'no major concern' over today's share slump, chief executive officer Tony Fernandes said in an e- mailed response to a Bloomberg News query.
'The more prominent reason would be foreign selling; it's a reallocation of portfolio funds, not so much a stock-specific issue,' Joshua Ng, an analyst at RHB Research Institute Sdn Bhd in Kuala Lumpur, said by telephone. 'When you have a high foreign ownership, and when the stock goes up it can be dramatic, the same way will happen when it falls.'
The FTSE Bursa Malaysia KLCI Index lost 0.4 per cent, mirroring declines in Southeast Asian markets including Indonesia, the Philippines and Thailand. The Malaysian benchmark, which climbed 19 percent last year, is headed for its lowest close since Jan. 3.
More Travelers
AirAsia carried 13 per cent more passengers in 2010 than a year earlier, the company said in a statement today. Its load factor rose to 78 per cent from 75 per cent in 2009, with 25.7 million passengers carried, the airline said.
The selloff in AirAsia was 'sentiment-driven' and may have come from foreign investors who last week sold shares in European rivals such as EasyJet Plc and Ryanair Holdings Plc, Mohshin Aziz, an analyst at Maybank Investment Bank Bhd, wrote in a report today.
EasyJet, Europe's second-biggest discount airline, tumbled 16 per cent on Jan. 20 after the Luton, England-based company said its first-half loss may double as fuel costs rise and icy weather and strikes cause flights to be canceled. Shares of Dublin-based Ryanair dropped 6.5 per cent the same day.
Some of AirAsia's foreign investors may also be EasyJet and Ryanair stockholders, who decided to 'realize profits' in the Malaysian company after the European carriers' share declines, Mohshin wrote.
The slump in AirAsia represents a 'wonderful opportunity' to buy the stock given the company's prospects and cheaper valuation, Mohshin said. AirAsia trades at a discount of 40 percent to 47 per cent against its peers based on their price- earnings ratios, he said. - Bloomberg
AirAsia slid 6.5 per cent to RM2.75 at 3:15 p.m. local time, set for its steepest drop since April 27, 2009. The 10-day implied volatility on the stock rose to 63, the highest level since Aug. 17.
Shares of Kuala Lumpur-based AirAsia have more than doubled in the past year, with foreign investors owning 51.6 per cent of the company as of December, a gain from 48.1 per cent in June, the carrier said Jan. 14. AirAsia's 'fundamentals are very, very good' and there is 'no major concern' over today's share slump, chief executive officer Tony Fernandes said in an e- mailed response to a Bloomberg News query.
'The more prominent reason would be foreign selling; it's a reallocation of portfolio funds, not so much a stock-specific issue,' Joshua Ng, an analyst at RHB Research Institute Sdn Bhd in Kuala Lumpur, said by telephone. 'When you have a high foreign ownership, and when the stock goes up it can be dramatic, the same way will happen when it falls.'
The FTSE Bursa Malaysia KLCI Index lost 0.4 per cent, mirroring declines in Southeast Asian markets including Indonesia, the Philippines and Thailand. The Malaysian benchmark, which climbed 19 percent last year, is headed for its lowest close since Jan. 3.
More Travelers
AirAsia carried 13 per cent more passengers in 2010 than a year earlier, the company said in a statement today. Its load factor rose to 78 per cent from 75 per cent in 2009, with 25.7 million passengers carried, the airline said.
The selloff in AirAsia was 'sentiment-driven' and may have come from foreign investors who last week sold shares in European rivals such as EasyJet Plc and Ryanair Holdings Plc, Mohshin Aziz, an analyst at Maybank Investment Bank Bhd, wrote in a report today.
EasyJet, Europe's second-biggest discount airline, tumbled 16 per cent on Jan. 20 after the Luton, England-based company said its first-half loss may double as fuel costs rise and icy weather and strikes cause flights to be canceled. Shares of Dublin-based Ryanair dropped 6.5 per cent the same day.
Some of AirAsia's foreign investors may also be EasyJet and Ryanair stockholders, who decided to 'realize profits' in the Malaysian company after the European carriers' share declines, Mohshin wrote.
The slump in AirAsia represents a 'wonderful opportunity' to buy the stock given the company's prospects and cheaper valuation, Mohshin said. AirAsia trades at a discount of 40 percent to 47 per cent against its peers based on their price- earnings ratios, he said. - Bloomberg
Friday, January 21, 2011
Naim to develop Batu Lintang land
Sarawak-based Naim Holdings Berhad (Naim), a property developer and construction group, will develop prime land in Batu Lintang, Kuching, into the state's biggest comprehensive mixed development project, costing more than RM300 million.
Managing Director Datuk Hasmi Hasnan said the proposed development would be sprawled over 13.597 hectares and be completed over 20 years. - Bernama
Managing Director Datuk Hasmi Hasnan said the proposed development would be sprawled over 13.597 hectares and be completed over 20 years. - Bernama
Wednesday, January 19, 2011
DiGi gets 'neutral' call
OSK Research has maintained its 'buy' call on Celcom Axiata Bhd and 'neutral' call on DiGi Telecommunications Sdn Bhd.
In a research note today, OSK said the calls were based on the target prices for Celcom Axiata at RM5.80 and RM24.40 for DiGi.
OSK said it expected the network collaboration agreement (NCA) between the two companies to result in cash savings of about RM2.2 billion over 10 years, with incremental savings as early as 2012.
It said given the progressive ramp-up of sites over 10 years, it would imply that the bulk of capital expenditure/operational expenditure (opex) savings would be back-loaded.
'We believe the savings in terms of opex would be more apparent for DiGi given that network cost constitutes 12 per cent of its revenue versus 10 per cent for Celcom Axiata,' it said.
OSK said Celcom Axiata remained its top pick for domestic and regional telecommunications exposure given the strong prospects accorded by its regional mobile assets.
Celcom Axiata and DiGi signed a three-year NCA yesterday to explore the viability of long-term collaboration on network infrastructure sharing.
Under the NCA, both parties will collaborate on sites, access transmission (microwave links), aggregate transmission and trunk fibre transmission, which will cover 218 sites under Phase 1.
The number of sites for consolidation and upgrading will increase to over 4,000 by 2015. -- Bernama
In a research note today, OSK said the calls were based on the target prices for Celcom Axiata at RM5.80 and RM24.40 for DiGi.
OSK said it expected the network collaboration agreement (NCA) between the two companies to result in cash savings of about RM2.2 billion over 10 years, with incremental savings as early as 2012.
It said given the progressive ramp-up of sites over 10 years, it would imply that the bulk of capital expenditure/operational expenditure (opex) savings would be back-loaded.
'We believe the savings in terms of opex would be more apparent for DiGi given that network cost constitutes 12 per cent of its revenue versus 10 per cent for Celcom Axiata,' it said.
OSK said Celcom Axiata remained its top pick for domestic and regional telecommunications exposure given the strong prospects accorded by its regional mobile assets.
Celcom Axiata and DiGi signed a three-year NCA yesterday to explore the viability of long-term collaboration on network infrastructure sharing.
Under the NCA, both parties will collaborate on sites, access transmission (microwave links), aggregate transmission and trunk fibre transmission, which will cover 218 sites under Phase 1.
The number of sites for consolidation and upgrading will increase to over 4,000 by 2015. -- Bernama
Tenaga posts RM712.9m Q1 net income
Tenaga Nasional Bhd, Malaysia's biggest power producer, said it had a first-quarter net income of RM712.9 million, or 16.3 sen per share, according to a statement given to reporters in Kuala Lumpur today.
Revenue in the three months ended Nov. 30 was RM7.7 billion, the statement said.
Operating expenses rose 6.1 percent in the first quarter on higher coal prices, which averaged $95.5 per metric tonne, it said.
TNB said profit could fall as much as 20 percent this financial year as the cost of coal used in power stations surges.
Coal has climbed as China and India burn more of the fuel to meet rising energy demand while floods have disrupted mining in Australia, the world's biggest coal exporter.
'Coal prices have gone up quite substantially over the past two months as a result of the flooding in Queensland as well as some parts of Kalimantan,' Tenaga Chief Executive Officer Che Khalib Mohamad Nor told reporters in Kuala Lumpur. 'Demand from the Northern Hemisphere has also gone up because of the cold winter.'
For every $10 a ton increase in coal prices, Tenaga's profitability will be cut by 18 percent, Che Khalib said.
Coal prices may peak at $140 a ton and start easing after February, Che Khalib said.
'Tenaga procures about 8 percent of its coal supply from flood-hit coal mines in Queensland,' Lim Tee Yang, an analyst at RHB Research Institute, wrote in a Jan. 6 report. 'This could force it to seek alternative sources of coal at higher prices.'
Tenaga shares have fallen 3.1 percent this year, compared with the 3 percent increase in the benchmark FTSE Bursa Malaysia KLCI Index. The stock closed unchanged at RM6.49 before the earnings release.
Agencies
Revenue in the three months ended Nov. 30 was RM7.7 billion, the statement said.
Operating expenses rose 6.1 percent in the first quarter on higher coal prices, which averaged $95.5 per metric tonne, it said.
TNB said profit could fall as much as 20 percent this financial year as the cost of coal used in power stations surges.
Coal has climbed as China and India burn more of the fuel to meet rising energy demand while floods have disrupted mining in Australia, the world's biggest coal exporter.
'Coal prices have gone up quite substantially over the past two months as a result of the flooding in Queensland as well as some parts of Kalimantan,' Tenaga Chief Executive Officer Che Khalib Mohamad Nor told reporters in Kuala Lumpur. 'Demand from the Northern Hemisphere has also gone up because of the cold winter.'
For every $10 a ton increase in coal prices, Tenaga's profitability will be cut by 18 percent, Che Khalib said.
Coal prices may peak at $140 a ton and start easing after February, Che Khalib said.
'Tenaga procures about 8 percent of its coal supply from flood-hit coal mines in Queensland,' Lim Tee Yang, an analyst at RHB Research Institute, wrote in a Jan. 6 report. 'This could force it to seek alternative sources of coal at higher prices.'
Tenaga shares have fallen 3.1 percent this year, compared with the 3 percent increase in the benchmark FTSE Bursa Malaysia KLCI Index. The stock closed unchanged at RM6.49 before the earnings release.
Agencies
Tuesday, January 18, 2011
Axis-REIT to reposition assets
Axis Real Estate Investment Trust (Axis-REIT) aims to enhance and reposition its assets to increase performance, said Axis REIT Managers Bhd chief executive officer Stewardt Labrooy.
Axis REIT Managers is the manager of Axis-REIT.
'The aim of the asset enhancement is to assess the REIT's portfolio from a property player's perspective. It will increase the occupancy rate, rental as well as valuation of the properties,' Labrooy told a media briefing today.
He said asset enhancement was currently being undertaken for Menara Axis, Crystal Plaza, Fuji Xerox Asia Pacific and Infinity Centre.
'We are upgrading the facade and giving a facelift to common areas so as to add value to these assets,' he said.
Major enhancements would also be undertaken this year on Kayangan Depot in Shah Alam and the Cycle and Carriage complex in Petaling Jaya, he said.
He said the Kayangan Depot building would be repositioned to face Section 15 Shah Alam roundabout while building cladding systems and power supply would be improved and upgraded.
As for the Cycle and Carriage complex, Labrooy said refurbishment of the existing building would include enhancing the exterior and adding new space for optimium use.
He said Axis-REIT, which currently owned a portfolio of 26 commercial, office and industrial real estate in Malaysia, managed total assets worth RM1.3 billion.
Last year, Axis REIT Managers acquired Tesco Hypermarket, Axis PDI Centre and Axis Technology Centre and concluded the purchase of two warehouses from IDS Logistics Services (M) Sdn Bhd in Seberang Prai, Penang.
Axis-REIT recorded a higher pre-tax profit of RM101.401 million for the financial year ended December 31, 2010, compared with RM61.976 million recorded in 2009.
Revenue increased 25 per cent to RM89.851 million from RM71.870 million previously.
The realised income before taxation and available for distribution amounted to RM52.598 million, for the year under review, bringing the total distribution in 2010 to 16 per cent per unit. -- Bernama
Axis REIT Managers is the manager of Axis-REIT.
'The aim of the asset enhancement is to assess the REIT's portfolio from a property player's perspective. It will increase the occupancy rate, rental as well as valuation of the properties,' Labrooy told a media briefing today.
He said asset enhancement was currently being undertaken for Menara Axis, Crystal Plaza, Fuji Xerox Asia Pacific and Infinity Centre.
'We are upgrading the facade and giving a facelift to common areas so as to add value to these assets,' he said.
Major enhancements would also be undertaken this year on Kayangan Depot in Shah Alam and the Cycle and Carriage complex in Petaling Jaya, he said.
He said the Kayangan Depot building would be repositioned to face Section 15 Shah Alam roundabout while building cladding systems and power supply would be improved and upgraded.
As for the Cycle and Carriage complex, Labrooy said refurbishment of the existing building would include enhancing the exterior and adding new space for optimium use.
He said Axis-REIT, which currently owned a portfolio of 26 commercial, office and industrial real estate in Malaysia, managed total assets worth RM1.3 billion.
Last year, Axis REIT Managers acquired Tesco Hypermarket, Axis PDI Centre and Axis Technology Centre and concluded the purchase of two warehouses from IDS Logistics Services (M) Sdn Bhd in Seberang Prai, Penang.
Axis-REIT recorded a higher pre-tax profit of RM101.401 million for the financial year ended December 31, 2010, compared with RM61.976 million recorded in 2009.
Revenue increased 25 per cent to RM89.851 million from RM71.870 million previously.
The realised income before taxation and available for distribution amounted to RM52.598 million, for the year under review, bringing the total distribution in 2010 to 16 per cent per unit. -- Bernama
AmResearch 'overweight' on construction
AmResearch Sdn Bhd has maintained the overweight stance on the construction sector as there is greater illumination on new contract visibility.
The Klang Valley Mass Rapid Transit (MRT) project is one of the anchor projects under the government's Economic Transformation Program (ETP) and 10th Malaysia Plan, that is likely to be fast-tracked and with more to come.
This comes on the heels of news reports over the weekend that the National Economic Action Council (NEAC) has approved the West Coast Expressway, AmResearch said in its sector report today.
'Our channel checks indicate that some members of the business community want the MRT stations to be located close to the centre of commercial activities.
'This would include select developers who own shopping malls and commercial developments that are lobbying for the lines and stations to be located at/or at least within close proximity to their commercial properties,' it added.
On the other hand, residents who live near or adjacent to the proposed lines, are against the MRT tracks being built above the ground, and prefer to have it underground to avoid congestion and noise pollution issues.
The entire MRT line is estimated to run a total length of 150km and costing RM36 billion.
Tenders for the 60km Sg Buloh-Kajang line will be out by April, with 9.5km of the system to run underground.
More importantly, an increasing shift towards having more underground portions for the MRT line, would naturally increase its overall budget.
According to the Land Public Transport Commission chief executive officer Mohd Nur Ismal Kamal, the cost of the MRT would be five to ten times higher on a per km basis, if the line was to go underground subject to geological conditions.
'More importantly, an expanded capital works programme for the MRT line would imply greater scope of works for the contractors.
'This would bode well for the Gamuda-MMC joint venture which is vying for the tunnelling portion, estimated at RM11 billion based on the original MRT proposal,' AmResearch said.
Other likely beneficiaries would be steel players such as Ann Joo Resources Bhd and Lion Industries Bhd, as demand for construction steel would increase in tandem with more tunnelling works for the MRT line. -- Bernama
The Klang Valley Mass Rapid Transit (MRT) project is one of the anchor projects under the government's Economic Transformation Program (ETP) and 10th Malaysia Plan, that is likely to be fast-tracked and with more to come.
This comes on the heels of news reports over the weekend that the National Economic Action Council (NEAC) has approved the West Coast Expressway, AmResearch said in its sector report today.
'Our channel checks indicate that some members of the business community want the MRT stations to be located close to the centre of commercial activities.
'This would include select developers who own shopping malls and commercial developments that are lobbying for the lines and stations to be located at/or at least within close proximity to their commercial properties,' it added.
On the other hand, residents who live near or adjacent to the proposed lines, are against the MRT tracks being built above the ground, and prefer to have it underground to avoid congestion and noise pollution issues.
The entire MRT line is estimated to run a total length of 150km and costing RM36 billion.
Tenders for the 60km Sg Buloh-Kajang line will be out by April, with 9.5km of the system to run underground.
More importantly, an increasing shift towards having more underground portions for the MRT line, would naturally increase its overall budget.
According to the Land Public Transport Commission chief executive officer Mohd Nur Ismal Kamal, the cost of the MRT would be five to ten times higher on a per km basis, if the line was to go underground subject to geological conditions.
'More importantly, an expanded capital works programme for the MRT line would imply greater scope of works for the contractors.
'This would bode well for the Gamuda-MMC joint venture which is vying for the tunnelling portion, estimated at RM11 billion based on the original MRT proposal,' AmResearch said.
Other likely beneficiaries would be steel players such as Ann Joo Resources Bhd and Lion Industries Bhd, as demand for construction steel would increase in tandem with more tunnelling works for the MRT line. -- Bernama
Southern Steel climbs to one-month high
Southern Steel Bhd, a Malaysian steel producer, rose to a one-month high in Kuala Lumpur trading after its substantial shareholders may place out stock to help meet public shareholding spread requirements.
The stock climbed 1.8 per cent to RM2.25 at 9:15 a.m. local time, headed for its highest close since Dec. 15. -- Bloomberg
The stock climbed 1.8 per cent to RM2.25 at 9:15 a.m. local time, headed for its highest close since Dec. 15. -- Bloomberg
Monday, January 17, 2011
SP Setia plans placement, bonus issue
SP Setia Bhd is proposing a placement of up to 15 per cent of its issued and paid-up share capital to finance some of its
existing projects, future expansion plans as well as working capital requirements.
The proposed placement will involve the issuance of up to 152.52 million new shares, the company said in a filing to Bursa Malaysia today.
It said part of the proceeds would be used for existing projects such as the KL Eco City project, Setia City project in Setia Alam, Selangor, and Fulton Lane project in Melbourne, Australia.
'The future expansion plans include the proposal to develop and construct the 1National Institute of Health (1NIH) Complex in Setia Alam and to redevelop the 40.22 acres of government land along Jalan Bangsar,' it explained.
The company is looking at redeveloping the government land into an integrated mixed residential and commercial project where the government would have a 20 per cent share of the net profits from the redevelopment.
SP Setia is also proposing a bonus issue of its new shares on the basis of one bonus share, for every two SP Setia shares held, after the proposed placement.
The company is also proposing to increase its authorised share capital to RM2.25 billion, comprising three billion shares, from RM1.20 billion comprising 1.6 billion shares. - Bernama
existing projects, future expansion plans as well as working capital requirements.
The proposed placement will involve the issuance of up to 152.52 million new shares, the company said in a filing to Bursa Malaysia today.
It said part of the proceeds would be used for existing projects such as the KL Eco City project, Setia City project in Setia Alam, Selangor, and Fulton Lane project in Melbourne, Australia.
'The future expansion plans include the proposal to develop and construct the 1National Institute of Health (1NIH) Complex in Setia Alam and to redevelop the 40.22 acres of government land along Jalan Bangsar,' it explained.
The company is looking at redeveloping the government land into an integrated mixed residential and commercial project where the government would have a 20 per cent share of the net profits from the redevelopment.
SP Setia is also proposing a bonus issue of its new shares on the basis of one bonus share, for every two SP Setia shares held, after the proposed placement.
The company is also proposing to increase its authorised share capital to RM2.25 billion, comprising three billion shares, from RM1.20 billion comprising 1.6 billion shares. - Bernama
Benalec debuts with 36 sen premium
Benalec Holdings Bhd, an integrated marine construction and vessel chartering services provider, made its debut on the Main Market of Bursa Malaysia with a 36 sen premium over its offer price of RM1 per share. A total of 8.6 million shares were traded.
'We are happy with the share price of RM1.36 and feel quite confident of doing much better in future,' said managing director, Vincent Leaw Seng Hai here today. Upon listing, Benalec is expected to have a market capitalisation, of approximately RM730 million.
Benalec's initial public offering (IPO) will raise RM100 million in total from local and foreign institutional investors as well as local retail investors.
The company has also determined that its investors would get dividends of 15 per cent and 30 per cent net profit for the financial year 2011 and financial year 2012 respectively.
Leaw said Benalec was in the midst of procuring the Building and Construction Authority (BCA) licence from the Singapore government, to enable the company to bid for land reclamation projects.
'Hopefully, can we get the licence within the next one to two months, and secure all the contracts, under our branch office in Singapore.
'We are concentrating now more on our markets in Penang, Melaka, Johor and Singapore, for the future.We also plan to explore more overseas prospects,' he added.
He also said, according to independent market researchers, the South East Asian market for the next 10 years, has about RM170 billion projects available, and offers good prospects for Benalec to invest and expand its operations beyond domestic borders.
The company currently has an order book of RM855 million, of which RM664 million is in unbilled orders and will last until 2016.
Meanwhile, OSK Research in a research note today said, it views Benalec as the main beneficiary of more marine construction jobs, given its 17.9 per cent marketshare in the industry.
'Apart from the domestic front, we envisage some wins from Singapore, where its sister company Oceanlec, has won a building material supply contract,' the research house said.
Oceanlec has signed an undertaking to not compete for jobs that Benalec bids for.
Oceanlec has also agreed to give Benalec, the first right of refusal, as sub-contractor for jobs that it is not licensed to directly bid for. -- Bernama
'We are happy with the share price of RM1.36 and feel quite confident of doing much better in future,' said managing director, Vincent Leaw Seng Hai here today. Upon listing, Benalec is expected to have a market capitalisation, of approximately RM730 million.
Benalec's initial public offering (IPO) will raise RM100 million in total from local and foreign institutional investors as well as local retail investors.
The company has also determined that its investors would get dividends of 15 per cent and 30 per cent net profit for the financial year 2011 and financial year 2012 respectively.
Leaw said Benalec was in the midst of procuring the Building and Construction Authority (BCA) licence from the Singapore government, to enable the company to bid for land reclamation projects.
'Hopefully, can we get the licence within the next one to two months, and secure all the contracts, under our branch office in Singapore.
'We are concentrating now more on our markets in Penang, Melaka, Johor and Singapore, for the future.We also plan to explore more overseas prospects,' he added.
He also said, according to independent market researchers, the South East Asian market for the next 10 years, has about RM170 billion projects available, and offers good prospects for Benalec to invest and expand its operations beyond domestic borders.
The company currently has an order book of RM855 million, of which RM664 million is in unbilled orders and will last until 2016.
Meanwhile, OSK Research in a research note today said, it views Benalec as the main beneficiary of more marine construction jobs, given its 17.9 per cent marketshare in the industry.
'Apart from the domestic front, we envisage some wins from Singapore, where its sister company Oceanlec, has won a building material supply contract,' the research house said.
Oceanlec has signed an undertaking to not compete for jobs that Benalec bids for.
Oceanlec has also agreed to give Benalec, the first right of refusal, as sub-contractor for jobs that it is not licensed to directly bid for. -- Bernama
ECM to review 'hold' call on SP Setia
SP Setia Bhd, a Malaysian property developer, had its 'hold' stock rating and price estimate under review at ECM Libra Capital Sdn Bhd following a newspaper report of a potential land purchase in Kuala Lumpur.
The Edge weekly newspaper reported on January 15 that SP Setia probably won a bid to purchase a prime land in Bangsar after the company agreed to build a government health institute in Shah Alam, outside of Kuala Lumpur, citing an undisclosed news report in September.
ECM will review the rating and share price estimate of RM5.20 pending the announcement of the said land deal, it said in its research note today. -- Bloomberg
The Edge weekly newspaper reported on January 15 that SP Setia probably won a bid to purchase a prime land in Bangsar after the company agreed to build a government health institute in Shah Alam, outside of Kuala Lumpur, citing an undisclosed news report in September.
ECM will review the rating and share price estimate of RM5.20 pending the announcement of the said land deal, it said in its research note today. -- Bloomberg
Friday, January 14, 2011
UOA REIT post lower pre-tax profit
UOA Real Estate Investment Trust (UOA REIT) posted a lower pre-tax profit of RM25.078 million in the financial year ended Dec 31, 2010, compared to RM58.009 million in 2009.
Revenue fell to RM42.805 million from RM44.636 million in the previous year, said UOA REIT in a filing to Bursa Malaysia today.
Despite a challenging year, the existing properties continue to enjoy an occupancy rate of at least 85 per cent.
With the improving economic conditions and outlook, the manager expects the occupancy and rental rates to further improve, it said. -- Bernama
Revenue fell to RM42.805 million from RM44.636 million in the previous year, said UOA REIT in a filing to Bursa Malaysia today.
Despite a challenging year, the existing properties continue to enjoy an occupancy rate of at least 85 per cent.
With the improving economic conditions and outlook, the manager expects the occupancy and rental rates to further improve, it said. -- Bernama
Ajiya records lower pre-tax profit
Ajiya Bhd recorded a lower pre-tax profit of RM34.07 million in the financial year ended Nov 30, 2010, as compared to RM37.05 million in the same quarter of 2009.
Revenue, however, increased to RM329.81 million from RM312.39 million in the previous year.
Ajiya in a filing to Bursa Malaysia today said, for the next financial year prospects, the uncertainties in the global economy will pose a greater challenge to the group to maintain its performance.
Nevertheless, it said, the group will continue efforts to enhance its position and performance in both the domestic and overseas markets. -- Bernama
Revenue, however, increased to RM329.81 million from RM312.39 million in the previous year.
Ajiya in a filing to Bursa Malaysia today said, for the next financial year prospects, the uncertainties in the global economy will pose a greater challenge to the group to maintain its performance.
Nevertheless, it said, the group will continue efforts to enhance its position and performance in both the domestic and overseas markets. -- Bernama
Thursday, January 13, 2011
Buy AirAsia as proxy to Garuda: UOB
AirAsia Bhd would be revalued to RM3.80 a share if its Indonesian unit is listed on the Jakarta Stock Exchange at 20 times forward price earnings multiple, according to UOB Kay Hian.
AirAsia's shares rose 2.8 per cent to RM2.94 at 9:56 a.m. in Kuala Lumpur.
The 20 times multiple estimate comes as PT Garuda Indonesia plans an initial stock sale whose shares could trade at 19.2 to 28.2 times based on indicative share pricing range of 750-1,100 rupiah per share, UOB Kay Hian said in a report today. - Bloomberg
AirAsia's shares rose 2.8 per cent to RM2.94 at 9:56 a.m. in Kuala Lumpur.
The 20 times multiple estimate comes as PT Garuda Indonesia plans an initial stock sale whose shares could trade at 19.2 to 28.2 times based on indicative share pricing range of 750-1,100 rupiah per share, UOB Kay Hian said in a report today. - Bloomberg
Wednesday, January 12, 2011
LPI Capital gains on Q4 income rise
LPI Capital Bhd, a Malaysian insurer, rose the most in a week in Kuala Lumpur trading after fourth-quarter net income climbed 5.6 per cent from a year earlier.
The stock gained 1 per cent to RM14.04 at 9:07 a.m. local time, set for its biggest increase since Jan. 5. -- Bloomberg
The stock gained 1 per cent to RM14.04 at 9:07 a.m. local time, set for its biggest increase since Jan. 5. -- Bloomberg
Sunway Hldgs hits decade-high
Sunway Holdings Bhd, a Malaysian developer, rose to a decade-high in Kuala Lumpur trading after saying its joint venture won a S$131.6 million tender for a public housing project in Singapore.
The stock gained 1.3 per cent to RM2.40 at 9:06 a.m. local time, set for its highest close since March 2000. -- Bloomberg
The stock gained 1.3 per cent to RM2.40 at 9:06 a.m. local time, set for its highest close since March 2000. -- Bloomberg
Olympia surges on lottery pact
Olympia Industries Bhd, a Malaysian gaming company, rose to a 27-month high in Kuala Lumpur trading after signing an agreement with Taiwan Lottery Co to cooperate in the sales of lottery games in Taiwan.
The stock surged 16 per cent to 35.5 sen at 9:04 a.m. local time, set for its highest close since Oct. 14, 2008. -- Bloomberg
The stock surged 16 per cent to 35.5 sen at 9:04 a.m. local time, set for its highest close since Oct. 14, 2008. -- Bloomberg
Tuesday, January 11, 2011
MMCCORP - MMC Corp an election play
Stock Name: MMCCORP
Company Name: MMC CORPORATION BHD
Research House: OSK
MMC Corporation Bhd
(Jan 10, RM3.07)
Downgrade to trading buy at RM3.10 with target price of RM3.52: Regardless of fresh rumours of MMC making a new bid for PLUS, we see the company as an excellent proxy for an election play, given its exposure to various infrastructure developments under the Economic Transformation Programme. With sentiment being positive on anticipation of the listing of Gas Malaysia and the KL MRT, we cast aside our previous conservatism on the company's valuation.
Specifically, we attribute 70% of PTP's (Port of Tanjung Pelepas) ownership and increase the valuation for its Senai and Tanjung Bin landbank. While our sum of parts fair value is increased to RM3.52, our call is downgraded from buy to trading buy as the new valuation incorporates some risk in the form of a higher landbank value, where MMC's track record is still not proven.
Local media also reported that MMC may put in another bid for PLUS before the Jan 10 deadline of 5pm. While we are uncertain of the validity of these rumours, we note that MMC has plenty of near-term catalysts, with or without the bid.
During the OSK Asean Corporate Day on Jan 6 in Singapore, MMC revealed that it hopes to list Gas Malaysia in 2011. Gas Malaysia, the sole distributor and retailer of natural gas in Malaysia to customers who consume less than 2 million mmBTU per day, sells its gas to parties including rubber glove manufacturers, steelmakers and food and beverage players.
MMC currently owns 41.8% of Gas Malaysia but effectively controls it as a subsidiary. We believe the company would be willing to pare down its stake to 20% as long as it can still equity account Gas Malaysia's earnings as an associate.
With the Cabinet having agreed to the first line of the KL MRT system, we believe a contract will be awarded by July. The value of the line could potentially be slightly more than 30% of the total RM36 billion for the MRT system. The Gamuda-MMC JV remains focused on its project development partner (PDP) role and is also hoping to secure the MRT's tunnelling portion. Both the PDP and the tunneling portion have been somewhat factored into our valuation.
MMC remains hopeful that it can secure the 1,000MW power plant extension at its Tanjung Bin site. With ready land and infrastructure in the form of a switchyard next to the expansion site, MMC should be able to put in a good pitch for the RFP, which may be out soon. We have however, yet to factor this into our valuation.
While our fair value has been raised to RM3.52, we are downgrading MMC to a trading buy due to several reasons, including the fact that 30 sen of the RM3.52 is attributed to the increase in land valuation in south Johor. As MMC's track record of selling/leasing the land there is still patchy, investors will have to bear some risks associated with this 30 sen of value.
Fundamentally, the company's earnings may still disappoint in 4QFY10, for which the results will be announced next month as there may still be provisions for Zelan and losses at Kapar. We also believe that short-term excitement may boost interest but in the longer term, the company has to prove itself from the fundamental angle. ' OSK Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
Company Name: MMC CORPORATION BHD
Research House: OSK
MMC Corporation Bhd
(Jan 10, RM3.07)
Downgrade to trading buy at RM3.10 with target price of RM3.52: Regardless of fresh rumours of MMC making a new bid for PLUS, we see the company as an excellent proxy for an election play, given its exposure to various infrastructure developments under the Economic Transformation Programme. With sentiment being positive on anticipation of the listing of Gas Malaysia and the KL MRT, we cast aside our previous conservatism on the company's valuation.
Specifically, we attribute 70% of PTP's (Port of Tanjung Pelepas) ownership and increase the valuation for its Senai and Tanjung Bin landbank. While our sum of parts fair value is increased to RM3.52, our call is downgraded from buy to trading buy as the new valuation incorporates some risk in the form of a higher landbank value, where MMC's track record is still not proven.
Local media also reported that MMC may put in another bid for PLUS before the Jan 10 deadline of 5pm. While we are uncertain of the validity of these rumours, we note that MMC has plenty of near-term catalysts, with or without the bid.
During the OSK Asean Corporate Day on Jan 6 in Singapore, MMC revealed that it hopes to list Gas Malaysia in 2011. Gas Malaysia, the sole distributor and retailer of natural gas in Malaysia to customers who consume less than 2 million mmBTU per day, sells its gas to parties including rubber glove manufacturers, steelmakers and food and beverage players.
MMC currently owns 41.8% of Gas Malaysia but effectively controls it as a subsidiary. We believe the company would be willing to pare down its stake to 20% as long as it can still equity account Gas Malaysia's earnings as an associate.
With the Cabinet having agreed to the first line of the KL MRT system, we believe a contract will be awarded by July. The value of the line could potentially be slightly more than 30% of the total RM36 billion for the MRT system. The Gamuda-MMC JV remains focused on its project development partner (PDP) role and is also hoping to secure the MRT's tunnelling portion. Both the PDP and the tunneling portion have been somewhat factored into our valuation.
MMC remains hopeful that it can secure the 1,000MW power plant extension at its Tanjung Bin site. With ready land and infrastructure in the form of a switchyard next to the expansion site, MMC should be able to put in a good pitch for the RFP, which may be out soon. We have however, yet to factor this into our valuation.
While our fair value has been raised to RM3.52, we are downgrading MMC to a trading buy due to several reasons, including the fact that 30 sen of the RM3.52 is attributed to the increase in land valuation in south Johor. As MMC's track record of selling/leasing the land there is still patchy, investors will have to bear some risks associated with this 30 sen of value.
Fundamentally, the company's earnings may still disappoint in 4QFY10, for which the results will be announced next month as there may still be provisions for Zelan and losses at Kapar. We also believe that short-term excitement may boost interest but in the longer term, the company has to prove itself from the fundamental angle. ' OSK Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
PROTON - A solid ride ahead for the automotive sector
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS
Automotive Sector
We are positive on the sector as TIV (total industry volume) growth is expected to hit a new record this year as well. We project TIV to register 622,210-unit sales (+5.4% year-on-year versus 2010's estimated 9.8% growth).
This would be supported by four factors, namely more than 20 new model launches, strong consumer sentiment to underpin consumption of big tickets items, competitive financing rates despite expectation of 50 basis point'' interest rate hike in 1H11 and a resilient secondary car market.
We expect more foreign collaborations and investments to come this year following the revised NAP (National Automotive Policy) to allow 100% foreign ownership in the luxury car segment ( more than 1,800cc and priced more than RM150,000). For example, DRB-Volkwagen and Tan Chong-Nissan have facilities for local assembly in place.
Increased local assembly of CKD (completely-knocked-down) vehicles could potentially increase local content and hence local manufacturers' competitiveness against global players. We think prices of CKD vehicles could be reduced as a result of lower import duty on CKD vehicles and no duty for local component applications.
However, the quantum of the decrease is likely to be smaller as manufacturers are keen to maintain the branding and image of the vehicle and utilise the additional margin to pay more incentives to dealers to boost sales. This should benefit names like APM Automotive (fully valued; target price RM4.60), DRB-Hicom (buy; TP RM3.55), Hirotako (not rated), and Delloyd Ventures (not rated).
Our top pick is UMW (buy; TP RM8.90) for laggard play and potential re-rating from unlocking of value for its oil and gas division. It is also a beneficiary of ringgit appreciation vs US dollar given its net US dollar cost exposure.
We also like MBM Resources (buy; TP RM4.15) for its attractive valuation and potential expansion of its commercial segment. We downgraded Proton to hold (from buy) with RM4.70 TP given flattish earnings outlook arising from the heavy capex plan for Group Lotus and thinner margins on higher import cost. ' HwangDBS Vickers Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS
Automotive Sector
We are positive on the sector as TIV (total industry volume) growth is expected to hit a new record this year as well. We project TIV to register 622,210-unit sales (+5.4% year-on-year versus 2010's estimated 9.8% growth).
This would be supported by four factors, namely more than 20 new model launches, strong consumer sentiment to underpin consumption of big tickets items, competitive financing rates despite expectation of 50 basis point'' interest rate hike in 1H11 and a resilient secondary car market.
We expect more foreign collaborations and investments to come this year following the revised NAP (National Automotive Policy) to allow 100% foreign ownership in the luxury car segment ( more than 1,800cc and priced more than RM150,000). For example, DRB-Volkwagen and Tan Chong-Nissan have facilities for local assembly in place.
Increased local assembly of CKD (completely-knocked-down) vehicles could potentially increase local content and hence local manufacturers' competitiveness against global players. We think prices of CKD vehicles could be reduced as a result of lower import duty on CKD vehicles and no duty for local component applications.
However, the quantum of the decrease is likely to be smaller as manufacturers are keen to maintain the branding and image of the vehicle and utilise the additional margin to pay more incentives to dealers to boost sales. This should benefit names like APM Automotive (fully valued; target price RM4.60), DRB-Hicom (buy; TP RM3.55), Hirotako (not rated), and Delloyd Ventures (not rated).
Our top pick is UMW (buy; TP RM8.90) for laggard play and potential re-rating from unlocking of value for its oil and gas division. It is also a beneficiary of ringgit appreciation vs US dollar given its net US dollar cost exposure.
We also like MBM Resources (buy; TP RM4.15) for its attractive valuation and potential expansion of its commercial segment. We downgraded Proton to hold (from buy) with RM4.70 TP given flattish earnings outlook arising from the heavy capex plan for Group Lotus and thinner margins on higher import cost. ' HwangDBS Vickers Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
MBMR - A solid ride ahead for the automotive sector
Stock Name: MBMR
Company Name: MBM RESOURCES BHD
Research House: HWANGDBS
Automotive Sector
We are positive on the sector as TIV (total industry volume) growth is expected to hit a new record this year as well. We project TIV to register 622,210-unit sales (+5.4% year-on-year versus 2010's estimated 9.8% growth).
This would be supported by four factors, namely more than 20 new model launches, strong consumer sentiment to underpin consumption of big tickets items, competitive financing rates despite expectation of 50 basis point'' interest rate hike in 1H11 and a resilient secondary car market.
We expect more foreign collaborations and investments to come this year following the revised NAP (National Automotive Policy) to allow 100% foreign ownership in the luxury car segment ( more than 1,800cc and priced more than RM150,000). For example, DRB-Volkwagen and Tan Chong-Nissan have facilities for local assembly in place.
Increased local assembly of CKD (completely-knocked-down) vehicles could potentially increase local content and hence local manufacturers' competitiveness against global players. We think prices of CKD vehicles could be reduced as a result of lower import duty on CKD vehicles and no duty for local component applications.
However, the quantum of the decrease is likely to be smaller as manufacturers are keen to maintain the branding and image of the vehicle and utilise the additional margin to pay more incentives to dealers to boost sales. This should benefit names like APM Automotive (fully valued; target price RM4.60), DRB-Hicom (buy; TP RM3.55), Hirotako (not rated), and Delloyd Ventures (not rated).
Our top pick is UMW (buy; TP RM8.90) for laggard play and potential re-rating from unlocking of value for its oil and gas division. It is also a beneficiary of ringgit appreciation vs US dollar given its net US dollar cost exposure.
We also like MBM Resources (buy; TP RM4.15) for its attractive valuation and potential expansion of its commercial segment. We downgraded Proton to hold (from buy) with RM4.70 TP given flattish earnings outlook arising from the heavy capex plan for Group Lotus and thinner margins on higher import cost. ' HwangDBS Vickers Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
Company Name: MBM RESOURCES BHD
Research House: HWANGDBS
Automotive Sector
We are positive on the sector as TIV (total industry volume) growth is expected to hit a new record this year as well. We project TIV to register 622,210-unit sales (+5.4% year-on-year versus 2010's estimated 9.8% growth).
This would be supported by four factors, namely more than 20 new model launches, strong consumer sentiment to underpin consumption of big tickets items, competitive financing rates despite expectation of 50 basis point'' interest rate hike in 1H11 and a resilient secondary car market.
We expect more foreign collaborations and investments to come this year following the revised NAP (National Automotive Policy) to allow 100% foreign ownership in the luxury car segment ( more than 1,800cc and priced more than RM150,000). For example, DRB-Volkwagen and Tan Chong-Nissan have facilities for local assembly in place.
Increased local assembly of CKD (completely-knocked-down) vehicles could potentially increase local content and hence local manufacturers' competitiveness against global players. We think prices of CKD vehicles could be reduced as a result of lower import duty on CKD vehicles and no duty for local component applications.
However, the quantum of the decrease is likely to be smaller as manufacturers are keen to maintain the branding and image of the vehicle and utilise the additional margin to pay more incentives to dealers to boost sales. This should benefit names like APM Automotive (fully valued; target price RM4.60), DRB-Hicom (buy; TP RM3.55), Hirotako (not rated), and Delloyd Ventures (not rated).
Our top pick is UMW (buy; TP RM8.90) for laggard play and potential re-rating from unlocking of value for its oil and gas division. It is also a beneficiary of ringgit appreciation vs US dollar given its net US dollar cost exposure.
We also like MBM Resources (buy; TP RM4.15) for its attractive valuation and potential expansion of its commercial segment. We downgraded Proton to hold (from buy) with RM4.70 TP given flattish earnings outlook arising from the heavy capex plan for Group Lotus and thinner margins on higher import cost. ' HwangDBS Vickers Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
PSIPTEK - Building blocks for Prinsiptek's earnings recovery put in place
Stock Name: PSIPTEK
Company Name: PRINSIPTEK CORPORATION BHD
Research House: RHB
Prinsiptek Corp Bhd
(Jan 10, 27.5 sen)
Fair value of 58 sen: Having laid low over the last two to three years against a backdrop of a slowdown in the local construction and property sectors, Prinsiptek's earnings are back on the growth path again, underpinned by (1) an expected improved job flow in the construction sector; and (2) its five new property launches.
At present, Prinsiptek's outstanding construction orderbook stands at RM171.5 million that will sustain its construction profits at least over the next two years. Over the next 24 months, Prinsiptek is hopeful about securing RM150 million to RM200 million worth of new contracts comprising largely building and infrastructure jobs.
The second earnings recovery catalyst for Prinsiptek will come from its five new property launches, four in Malaysia and one in Bangkok, Thailand, with a total gross development value (GDV) of RM489 million.
One common feature of Prinsiptek's four new property launches in Malaysia is that they are all in established and mature areas, that is along Jalan Pahang in the heart of Kuala Lumpur, Shah Alam, Bangi and Gombak.
The execution risk of its mixed development project in Thailand is low given Prinsiptek's familiarity with the market arising from its previous construction job in the same locality.
Risks to its view include: (1) new contracts secured in FY11 to FY12 to come in below our target of RM80 million per annum; (2) rising input costs; and (3) delays in new property launches.
We believe the construction sector prospects will be bright in 2011, underpinned by rising demand for contracting services on the back of a better job flow and tightening supply for contracting services.
We have arrived at an indicative fair value of 58 sen for Prinsiptek, valuing: (1) its construction business at 10 times one-year forward earnings, in line with our one-year forward benchmark target price earnings ratio of 10 to 16 times for the construction sector; and (2) its property business by discounting back project cash flows at the 10% property benchmark discount rate. ' RHB Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
Company Name: PRINSIPTEK CORPORATION BHD
Research House: RHB
Prinsiptek Corp Bhd
(Jan 10, 27.5 sen)
Fair value of 58 sen: Having laid low over the last two to three years against a backdrop of a slowdown in the local construction and property sectors, Prinsiptek's earnings are back on the growth path again, underpinned by (1) an expected improved job flow in the construction sector; and (2) its five new property launches.
At present, Prinsiptek's outstanding construction orderbook stands at RM171.5 million that will sustain its construction profits at least over the next two years. Over the next 24 months, Prinsiptek is hopeful about securing RM150 million to RM200 million worth of new contracts comprising largely building and infrastructure jobs.
The second earnings recovery catalyst for Prinsiptek will come from its five new property launches, four in Malaysia and one in Bangkok, Thailand, with a total gross development value (GDV) of RM489 million.
One common feature of Prinsiptek's four new property launches in Malaysia is that they are all in established and mature areas, that is along Jalan Pahang in the heart of Kuala Lumpur, Shah Alam, Bangi and Gombak.
The execution risk of its mixed development project in Thailand is low given Prinsiptek's familiarity with the market arising from its previous construction job in the same locality.
Risks to its view include: (1) new contracts secured in FY11 to FY12 to come in below our target of RM80 million per annum; (2) rising input costs; and (3) delays in new property launches.
We believe the construction sector prospects will be bright in 2011, underpinned by rising demand for contracting services on the back of a better job flow and tightening supply for contracting services.
We have arrived at an indicative fair value of 58 sen for Prinsiptek, valuing: (1) its construction business at 10 times one-year forward earnings, in line with our one-year forward benchmark target price earnings ratio of 10 to 16 times for the construction sector; and (2) its property business by discounting back project cash flows at the 10% property benchmark discount rate. ' RHB Research, Jan 10
This article appeared in The Edge Financial Daily, January 11, 2011.
ECM maintains 'neutral' call on water industry
ECM Libra Investment Research has maintained its 'neutral' call on the water industry as it doubts a resolution to the restructuring deadlock could be achieved by Jan 30, 2011 despite the Selangor state government's offer.
We are not overly optimistic on the latest attempt at consolidating Selangor's water industry taking into account the lower valuations for Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH) as success of the offer would require acceptance by all four players, it said in its research note today.
It said in SPLASH's case, the difference of some RM500 million as compared to the previous offer was significant, whereas the current valuation for Abass' equity was lower than the previous two offers, the first of which was rejected.
ECM Libra said it was also unclear if the water players would secure the operations and maintenance role subsequent to the restructuring exercise.
This could prove to be a deal-breaker for Gamuda's SPLASH, it said.
In a filing to Bursa Malaysia yesterday, Kumpulan Perangsang Selangor Bhd and Gamuda Bhd announced that their subsidiary and associate companies, Abass and SPLASH, had received an offer from the Selangor government to acquire 100 per cent of the equity in the said companies for RM9.39 per share and RM5.95 a share respectively. -- Bernama
We are not overly optimistic on the latest attempt at consolidating Selangor's water industry taking into account the lower valuations for Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH) as success of the offer would require acceptance by all four players, it said in its research note today.
It said in SPLASH's case, the difference of some RM500 million as compared to the previous offer was significant, whereas the current valuation for Abass' equity was lower than the previous two offers, the first of which was rejected.
ECM Libra said it was also unclear if the water players would secure the operations and maintenance role subsequent to the restructuring exercise.
This could prove to be a deal-breaker for Gamuda's SPLASH, it said.
In a filing to Bursa Malaysia yesterday, Kumpulan Perangsang Selangor Bhd and Gamuda Bhd announced that their subsidiary and associate companies, Abass and SPLASH, had received an offer from the Selangor government to acquire 100 per cent of the equity in the said companies for RM9.39 per share and RM5.95 a share respectively. -- Bernama
AmResearch positive on O sector
AmResearch remains positive on the oil and gas sector given the gathering pace of domestic news flow momentum from Petroliam Nasional Bhd's mandate to maintain its crude oil production.
In its research note released here today, AmResearch said it would maintain its 'overweight' view on the sector with 'buy' calls on Kencana Petroleum Bhd, SapuraCrest Petroleum Bhd, KNM Group Bhd and Petronas Gas Bhd.
It said according to a newspaper report, Prime Minister Datuk Seri Najib Razak announced new contracts for the development of marginal oil fields during a briefing on the progress of the Economic Transformation Programme today.
It said SapuraCrest Petroleum and Kencana Petroleum are likely to secure major awards, it said.
The research firm said it would retain its 'hold' call on Tanjung Offshore Bhd, Coastal Contracts Bhd and Scomi Group Bhd and Wah Seong Corp Bhd a 'sell'. -- Bernama
In its research note released here today, AmResearch said it would maintain its 'overweight' view on the sector with 'buy' calls on Kencana Petroleum Bhd, SapuraCrest Petroleum Bhd, KNM Group Bhd and Petronas Gas Bhd.
It said according to a newspaper report, Prime Minister Datuk Seri Najib Razak announced new contracts for the development of marginal oil fields during a briefing on the progress of the Economic Transformation Programme today.
It said SapuraCrest Petroleum and Kencana Petroleum are likely to secure major awards, it said.
The research firm said it would retain its 'hold' call on Tanjung Offshore Bhd, Coastal Contracts Bhd and Scomi Group Bhd and Wah Seong Corp Bhd a 'sell'. -- Bernama
Monday, January 10, 2011
PCHEM - Petronas Chems gains on CIMB upgrade
Stock Name: PCHEM
Company Name: PETRONAS CHEMICALS GROUP BHD
Research House: CIMB
Petronas Chemicals Group Bhd, a unit of Malaysia's state oil and gas company, rose to a record after the stock was rated "outperform" at CIMB Investment Bank Bhd, which cited its strong earnings outlook.
The stock gained 1.2 per cent to RM6.03 at 11:25 a.m. in Kuala Lumpur trading, extending its gain to the highest level since its listing debut on Nov. 26.
CIMB has a share price estimate of RM7.25 for Petronas Chemicals, it said in a report today. -- Bloomberg
Company Name: PETRONAS CHEMICALS GROUP BHD
Research House: CIMB
Petronas Chemicals Group Bhd, a unit of Malaysia's state oil and gas company, rose to a record after the stock was rated "outperform" at CIMB Investment Bank Bhd, which cited its strong earnings outlook.
The stock gained 1.2 per cent to RM6.03 at 11:25 a.m. in Kuala Lumpur trading, extending its gain to the highest level since its listing debut on Nov. 26.
CIMB has a share price estimate of RM7.25 for Petronas Chemicals, it said in a report today. -- Bloomberg
MMCCORP - MMC cut to 'trading buy' at OSK
Stock Name: MMCCORP
Company Name: MMC CORPORATION BHD
Research House: OSK
MMC Corp, a Malaysian builder and power producer, was downgraded to "trading buy" from "buy" at OSK Research Sdn Bhd.
Its fair value was increased to RM3.52 from RM3.14, OSK said in a report today. -- Bloomberg
Company Name: MMC CORPORATION BHD
Research House: OSK
MMC Corp, a Malaysian builder and power producer, was downgraded to "trading buy" from "buy" at OSK Research Sdn Bhd.
Its fair value was increased to RM3.52 from RM3.14, OSK said in a report today. -- Bloomberg
NOTION - Notion VTEC up on Maybank upgrade
Stock Name: NOTION
Company Name: NOTION VTEC BHD
Research House: MAYBANK
Notion VTEC Bhd, a metal processor and tools maker, climbed to a five-month high in Kuala Lumpur trading after Malayan Banking Bhd (Maybank) raised its share forecast to RM2.40.
The stock gained 3.5 per cent to RM2.07 at 10.03 am local time, set for its highest close since August 5. - Bloomberg
Company Name: NOTION VTEC BHD
Research House: MAYBANK
Notion VTEC Bhd, a metal processor and tools maker, climbed to a five-month high in Kuala Lumpur trading after Malayan Banking Bhd (Maybank) raised its share forecast to RM2.40.
The stock gained 3.5 per cent to RM2.07 at 10.03 am local time, set for its highest close since August 5. - Bloomberg
Friday, January 7, 2011
KENCANA - Kencana - Marginal marvels
Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: MAYBANK
Kencana Petroleum Bhd
(Jan 6, RM2.57)
Initiating coverage with a buy call at RM2.52 and RM3.10 target price: We foresee that Kencana will feature prominently in Petronas' domestic agenda. Enhanced oil recovery (EOR) and marginal field development under the government's Economic Transformation Programme (ETP) are areas of growth for Kencana. We see Kencana: (i) expanding its yard space; (ii) growing its offshore units; and (iii) seeking strategic tie-ups to grow its income base while remodelling its business model to capture new opportunities. Evidently, Kencana has the balance sheet and management drive to gain from all this.
Prospects are bright for Kencana to ride on Petronas' domestic E&P programme. With 25 marginal fields identified and 10 fields ready for development, we expect Kencana to profit from these programmes from 2011 via stronger offshore engineering (E&C) and marine engineering works. Kencana's order book visibility is strong and sustainable, with opportunities in the shallow, marginal and JDA fields.
With projects picking up, we see Kencana expanding its yard space to capture growing opportunities in the offshore and marine engineering segment.This means Kencana could sustain a high RM2 billion job win per year for FY11/12. In addition, we also see Kencana: (i) seeking tactical tie-ups; (ii) prospecting for strategic assets; and (iii) remodelling its business into a hybrid service provider as it further develops in marginal field areas.
We project a three-year net profit compound annual growth rate of 26%, fuelled by a strong outstanding order book (RM1.9 billion as at December 2010) and tender pipeline visibility. The proposed corporate exercises: (i) a 10% private placement of new shares; and (ii) RM350 million Islamic securities to raise RM700 million to RM800 million denote growth; and position Kencana to capture increasing domestic opportunities in the EOR and marginal fields whilst keeping net gearing level at less than 1 time.
We tactically value Kencana at RM3.10, based on 20 times CY12 earnings per share. Our valuations appear aggressive, being at the higher-end, but are not excessive in a capex-fuelled, order book-driven environment. The sector has hit 26 times in the previous upcycle and we reckon it is just at the beginning of another cycle. ' Maybank Investment Bank Bhd Research, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
Company Name: KENCANA PETROLEUM BHD
Research House: MAYBANK
Kencana Petroleum Bhd
(Jan 6, RM2.57)
Initiating coverage with a buy call at RM2.52 and RM3.10 target price: We foresee that Kencana will feature prominently in Petronas' domestic agenda. Enhanced oil recovery (EOR) and marginal field development under the government's Economic Transformation Programme (ETP) are areas of growth for Kencana. We see Kencana: (i) expanding its yard space; (ii) growing its offshore units; and (iii) seeking strategic tie-ups to grow its income base while remodelling its business model to capture new opportunities. Evidently, Kencana has the balance sheet and management drive to gain from all this.
Prospects are bright for Kencana to ride on Petronas' domestic E&P programme. With 25 marginal fields identified and 10 fields ready for development, we expect Kencana to profit from these programmes from 2011 via stronger offshore engineering (E&C) and marine engineering works. Kencana's order book visibility is strong and sustainable, with opportunities in the shallow, marginal and JDA fields.
With projects picking up, we see Kencana expanding its yard space to capture growing opportunities in the offshore and marine engineering segment.This means Kencana could sustain a high RM2 billion job win per year for FY11/12. In addition, we also see Kencana: (i) seeking tactical tie-ups; (ii) prospecting for strategic assets; and (iii) remodelling its business into a hybrid service provider as it further develops in marginal field areas.
We project a three-year net profit compound annual growth rate of 26%, fuelled by a strong outstanding order book (RM1.9 billion as at December 2010) and tender pipeline visibility. The proposed corporate exercises: (i) a 10% private placement of new shares; and (ii) RM350 million Islamic securities to raise RM700 million to RM800 million denote growth; and position Kencana to capture increasing domestic opportunities in the EOR and marginal fields whilst keeping net gearing level at less than 1 time.
We tactically value Kencana at RM3.10, based on 20 times CY12 earnings per share. Our valuations appear aggressive, being at the higher-end, but are not excessive in a capex-fuelled, order book-driven environment. The sector has hit 26 times in the previous upcycle and we reckon it is just at the beginning of another cycle. ' Maybank Investment Bank Bhd Research, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
COCOLND - Positive developments at Cocoaland, but higher costs a drag
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
Cocoaland Holdings Bhd
(Jan 6, RM2.76)
Maintain Buy at RM2.62 with lower fair value RM3.30 (previously RM3.70): We maintain our 'buy' recommendation on Cocoaland Holdings Bhd, but with a lower fair value of RM3.30 (previously RM3.70) as we fine-tuned our earnings forecasts after incorporating lower margin assumptions from higher raw material costs.
We have trimmed our FY10F/12F earnings by 13% to 15%, post upward adjustments in sugar and packaging material costs which constitute close to 45% of the group's cost structure. Recall, the government raised the sugar price by 21% to RM2.10 per kg on Dec 6, 2010, while packaging materials have surged 10% to 35% in the last three to four months, in tandem with higher crude oil prices.
While the unfavourable cost structure would result in weak earnings in the next few quarters, FY11F earnings would be well cushioned by eventful earnings contribution from its maiden 'hot-filling' PET production line.
Recently, the group, through its wholly owned subsidiary Cocoaland Industry Sdn Bhd, entered into separate contract packing agreements with F&N Beverages Manufacturing Sdn Bhd and F&N Foods Pte Ltd as a non-exclusive contract packer for the preparation, packaging, packing and delivery of their products.
We are positive about these developments. The formalisation of the contract packing agreements will underpin Cocoaland's robust earnings growth going forward, as secured high off-take rates by Fraser & Neave Holdings (F&N) will serve to truncate idle capacity.
Recall, the group plans to accelerate expansion plans for the installation of four PET production lines by end-FY12F, from just one currently. This would effectively bring total installed capacity from 120 million bottles to 480 million bottles.
We believe Cocoaland will be contract packing F&N's 'FruitTree' and 'Sunkist' range of juices, given the latter's intention to rival C.I. Holdings' 'Tropicana' juice for a broader market share. In the long term, we see good potential for venture opportunities between the group and F&N in non-beverage segments, in line with the latter's intention to build its third pillar within the food business.
Valuation is attractive, with the stock currently trading at 13 times FY11F earnings. Our fair value of RM3.30 is based on an unchanged target price-earnings ratio of 16 times FY11F earnings, or a 10% discount to F&N's target PER of 18 times. ' AmResearch Sdn Bhd, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
Cocoaland Holdings Bhd
(Jan 6, RM2.76)
Maintain Buy at RM2.62 with lower fair value RM3.30 (previously RM3.70): We maintain our 'buy' recommendation on Cocoaland Holdings Bhd, but with a lower fair value of RM3.30 (previously RM3.70) as we fine-tuned our earnings forecasts after incorporating lower margin assumptions from higher raw material costs.
We have trimmed our FY10F/12F earnings by 13% to 15%, post upward adjustments in sugar and packaging material costs which constitute close to 45% of the group's cost structure. Recall, the government raised the sugar price by 21% to RM2.10 per kg on Dec 6, 2010, while packaging materials have surged 10% to 35% in the last three to four months, in tandem with higher crude oil prices.
While the unfavourable cost structure would result in weak earnings in the next few quarters, FY11F earnings would be well cushioned by eventful earnings contribution from its maiden 'hot-filling' PET production line.
Recently, the group, through its wholly owned subsidiary Cocoaland Industry Sdn Bhd, entered into separate contract packing agreements with F&N Beverages Manufacturing Sdn Bhd and F&N Foods Pte Ltd as a non-exclusive contract packer for the preparation, packaging, packing and delivery of their products.
We are positive about these developments. The formalisation of the contract packing agreements will underpin Cocoaland's robust earnings growth going forward, as secured high off-take rates by Fraser & Neave Holdings (F&N) will serve to truncate idle capacity.
Recall, the group plans to accelerate expansion plans for the installation of four PET production lines by end-FY12F, from just one currently. This would effectively bring total installed capacity from 120 million bottles to 480 million bottles.
We believe Cocoaland will be contract packing F&N's 'FruitTree' and 'Sunkist' range of juices, given the latter's intention to rival C.I. Holdings' 'Tropicana' juice for a broader market share. In the long term, we see good potential for venture opportunities between the group and F&N in non-beverage segments, in line with the latter's intention to build its third pillar within the food business.
Valuation is attractive, with the stock currently trading at 13 times FY11F earnings. Our fair value of RM3.30 is based on an unchanged target price-earnings ratio of 16 times FY11F earnings, or a 10% discount to F&N's target PER of 18 times. ' AmResearch Sdn Bhd, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
AXIATA - Telecommunications sector chasing demand for broadband
Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: HWANGDBS
Telecommunications sector
Low broadband penetration in the country and the shift away from desktops to laptops and smartphones, as well as increasing use of the internet for social interaction, are expected to drive demand for data. We expect major mobile telcos' (Maxis Bhd, DiGi.Com Bhd and Celcom Axiata Bhd) share of mobile broadband revenue to grow from 3% to 6% in FY09 to 10% to 18% this year, driven by the continued growth of broadband subscribers. Green Packet's revenue is projected to jump 35% year-on-year in 2011on the back of a 46% increase in broadband revenue, while TM's share of internet revenue (against total retail revenue) is projected to inch up to 24% from 23% in FY09.
This is premised on the abundant broadband demand opportunities for all players. We expect telcos' profits and cash flows to be sustained this year, as a growing broadband subscriber base should drive broadband revenue and offset weak voice ARPUs. In turn, this should support dividend yields.
We have a 'buy' call and sum-of-parts-derived RM5.10 target price for Axiata. The group is set to record strong 48% FY09F/12F earnings compound annual growth rate. Its Malaysian unit (Celcom) continues to do well especially in the broadband segment, and it has exposure in fast-growing overseas markets including Indonesia, Sri Lanka and Bangladesh. We expect XL in Indonesia to continue to gain market share while keeping costs under control. The Bangladesh unit should continue to grow supported by the customer reactivation and retention exercises, while the Sri Lankan unit should improve further, riding on the country's economic recovery and an enhanced operating cost structure. ' HwangDBS Vickers Research, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
Company Name: AXIATA GROUP BERHAD
Research House: HWANGDBS
Telecommunications sector
Low broadband penetration in the country and the shift away from desktops to laptops and smartphones, as well as increasing use of the internet for social interaction, are expected to drive demand for data. We expect major mobile telcos' (Maxis Bhd, DiGi.Com Bhd and Celcom Axiata Bhd) share of mobile broadband revenue to grow from 3% to 6% in FY09 to 10% to 18% this year, driven by the continued growth of broadband subscribers. Green Packet's revenue is projected to jump 35% year-on-year in 2011on the back of a 46% increase in broadband revenue, while TM's share of internet revenue (against total retail revenue) is projected to inch up to 24% from 23% in FY09.
This is premised on the abundant broadband demand opportunities for all players. We expect telcos' profits and cash flows to be sustained this year, as a growing broadband subscriber base should drive broadband revenue and offset weak voice ARPUs. In turn, this should support dividend yields.
We have a 'buy' call and sum-of-parts-derived RM5.10 target price for Axiata. The group is set to record strong 48% FY09F/12F earnings compound annual growth rate. Its Malaysian unit (Celcom) continues to do well especially in the broadband segment, and it has exposure in fast-growing overseas markets including Indonesia, Sri Lanka and Bangladesh. We expect XL in Indonesia to continue to gain market share while keeping costs under control. The Bangladesh unit should continue to grow supported by the customer reactivation and retention exercises, while the Sri Lankan unit should improve further, riding on the country's economic recovery and an enhanced operating cost structure. ' HwangDBS Vickers Research, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
AEON - Further margin expansion unlikely for Aeon Co
Stock Name: AEON
Company Name: AEON CO. (M) BHD
Research House: RHB
Aeon Co (M) Bhd
(Jan 6, RM6.21)
Maintain market perform at RM6.16 with fair value RM6.47: We understand that for the 9MFY10, Aeon's same store sales (SSS) growth remained relatively weak at less than 1%, brought down by a few poor performing stores such as its Melaka and Cheras Selatan stores. The poor performance of the stores was due to cannibalisation from its own stores in nearby locations. For Cheras, its Cheras Selatan store was competing against its own Bandar Mahkota Cheras (opened in 2008) store in terms of customer traffic, thus affecting sales.
As we highlighted in our results note dated Dec 1, 2010, Aeon's retail earnings before interest and tax (Ebit) margin expanded strongly by 2.8 percentage points (ppts) year-on-year in the 9MFY10 to 6.3%. Management attributed the margin expansion to the cost-cutting measures Aeon has taken since end-2009. The measures involve the streamlining of separate departments, thus allocating resources more efficiently, and other cost-saving initiatives such as reducing the usage of plastic bags and electricity consumption. For FY10, management expects the retail margin to rise to circa 7% to 8%, in line with our forecast of 7% with improvement in 4Q10 coming from festive season spending. However, we understand that going forward, there will be little room for further margin improvement, thus we are leaving our FY11/12 retail margin at 7%.
Aeon is now in arbitration with the 1Utama management over the management of the shopping mall's old wing. We believe that it is already well known that Aeon will not retain the management contract which we have already removed from our forecasts. However, we understand that Aeon is negotiating for a bigger retail space in the shopping mall in exchange for losing the management contract. Aeon is now negotiating for the new tenancy and the issues relating to rental, location, layout and size.
After adjusting our FY10 SSS growth assumptions, our earnings were revised downwards by less than 1% per year for FY10/12.
The risks include: (i) eroding market share due to intensifying competition; and (ii) weakening of domestic economic conditions which could lead to a decline in consumer sentiment. Our fair value is maintained at RM6.47 based on unchanged 12 times FY11 target price-earnings ratio. Maintain 'market perform'. ' RHB Research Institute Sdn Bhd, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
Company Name: AEON CO. (M) BHD
Research House: RHB
Aeon Co (M) Bhd
(Jan 6, RM6.21)
Maintain market perform at RM6.16 with fair value RM6.47: We understand that for the 9MFY10, Aeon's same store sales (SSS) growth remained relatively weak at less than 1%, brought down by a few poor performing stores such as its Melaka and Cheras Selatan stores. The poor performance of the stores was due to cannibalisation from its own stores in nearby locations. For Cheras, its Cheras Selatan store was competing against its own Bandar Mahkota Cheras (opened in 2008) store in terms of customer traffic, thus affecting sales.
As we highlighted in our results note dated Dec 1, 2010, Aeon's retail earnings before interest and tax (Ebit) margin expanded strongly by 2.8 percentage points (ppts) year-on-year in the 9MFY10 to 6.3%. Management attributed the margin expansion to the cost-cutting measures Aeon has taken since end-2009. The measures involve the streamlining of separate departments, thus allocating resources more efficiently, and other cost-saving initiatives such as reducing the usage of plastic bags and electricity consumption. For FY10, management expects the retail margin to rise to circa 7% to 8%, in line with our forecast of 7% with improvement in 4Q10 coming from festive season spending. However, we understand that going forward, there will be little room for further margin improvement, thus we are leaving our FY11/12 retail margin at 7%.
Aeon is now in arbitration with the 1Utama management over the management of the shopping mall's old wing. We believe that it is already well known that Aeon will not retain the management contract which we have already removed from our forecasts. However, we understand that Aeon is negotiating for a bigger retail space in the shopping mall in exchange for losing the management contract. Aeon is now negotiating for the new tenancy and the issues relating to rental, location, layout and size.
After adjusting our FY10 SSS growth assumptions, our earnings were revised downwards by less than 1% per year for FY10/12.
The risks include: (i) eroding market share due to intensifying competition; and (ii) weakening of domestic economic conditions which could lead to a decline in consumer sentiment. Our fair value is maintained at RM6.47 based on unchanged 12 times FY11 target price-earnings ratio. Maintain 'market perform'. ' RHB Research Institute Sdn Bhd, Jan 6
This article appeared in The Edge Financial Daily, January 7, 2011.
Selangor RM9b offer less attractive: OSK
OSK Research views the latest offer of over RM9 billion for the acquisition of the four state water concessionaires as being less attractive.
Media reports said Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim has made a fresh offer to acquire all four concessionaires.
The concessionaires are Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass).
The proposal is to acquire 100 per cent of the shares of these companies at a price of RM64.62 for each PNSB share, RM20.78 for Syabas, RM5.95 for Splash and RM9.39 for Abass.
'Gauging from the offer price of over RM9 billion, this pricing comes close but is still lower than the previous offer by Splash to consolidate the state's water assets at RM10.75 billon.
'This makes the latest offer price less attractive,' OSK Research explained.
'Although the offer did not detail the state government's valuation approach, we reckon that it is likely to have been based on book value,' the research house elaborated further.
OSK Research said however, the offer bodes well for the sector in that a fresh offer reflects some progress, in respect of Selangor's state water asset consolidation.
'However, we are of the view, that this offer is somewhat lacking.
'For one, we are unsure as to whether the offer had addressed the question of the future of the water concessionaires involved in the takeover.
'This includes the loss of future earnings stemming from the loss of the concession and/or the appointment of a new licence holder to take over the state's water operation, post consolidation,' it added.
The loss of future earnings in particular, OSK Research said, had been raised earlier by one of the water concessionaires as a key issue that needed ironing out.
It also noted that there was no mention of the status of compensation payable by Selangor to Syabas - PNSB's 70 per cent-owned water distribution arm - arising from the delay in implementing the 37 per cent water tariff hike scheduled for Jan 1, 2009.
'Although the offer is intended for the water concessionaires, we are mindful that the golden share held by the Federal Government in Syabas means, that its approval on the matter is required,' OSK Research said.
Despite claims that the offer has been made, it said there were no official announcements on Bursa Malaysia yet.
'Nonetheless, should an offer be based on the above-mentioned points, we reckon that water concessionaires are likely to reject it on the grounds that the crucial issues are not being addressed,' it highlighted.
OSK Research is maintaining its 'overweight' recommendation on the water sector as well as PNSB's target price at RM3.85, for exposure to the Selangor state water asset consolidation.
AmResearch in its report on the water sector said the issue of control over water distribution rights and#8211; now under Syabas and#8211; remains a niggling problem.
'The state government has made it abundantly clear that it intends to lead consolidation in a holistic manner, that is, treatment and distribution under one roof as per the new water framework.
'After all, the state government still holds considerable bargaining clout, through the ownership of around 80 per cent of the state's water assets, including raw water,' it added.
Another issue pertains to the still lingering issue over Syabas'' proposed tariff hike, according to AmResearch.
AmResearch is maintaining its 'neutral' weighting on the water sector. -- Bernama
Media reports said Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim has made a fresh offer to acquire all four concessionaires.
The concessionaires are Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass).
The proposal is to acquire 100 per cent of the shares of these companies at a price of RM64.62 for each PNSB share, RM20.78 for Syabas, RM5.95 for Splash and RM9.39 for Abass.
'Gauging from the offer price of over RM9 billion, this pricing comes close but is still lower than the previous offer by Splash to consolidate the state's water assets at RM10.75 billon.
'This makes the latest offer price less attractive,' OSK Research explained.
'Although the offer did not detail the state government's valuation approach, we reckon that it is likely to have been based on book value,' the research house elaborated further.
OSK Research said however, the offer bodes well for the sector in that a fresh offer reflects some progress, in respect of Selangor's state water asset consolidation.
'However, we are of the view, that this offer is somewhat lacking.
'For one, we are unsure as to whether the offer had addressed the question of the future of the water concessionaires involved in the takeover.
'This includes the loss of future earnings stemming from the loss of the concession and/or the appointment of a new licence holder to take over the state's water operation, post consolidation,' it added.
The loss of future earnings in particular, OSK Research said, had been raised earlier by one of the water concessionaires as a key issue that needed ironing out.
It also noted that there was no mention of the status of compensation payable by Selangor to Syabas - PNSB's 70 per cent-owned water distribution arm - arising from the delay in implementing the 37 per cent water tariff hike scheduled for Jan 1, 2009.
'Although the offer is intended for the water concessionaires, we are mindful that the golden share held by the Federal Government in Syabas means, that its approval on the matter is required,' OSK Research said.
Despite claims that the offer has been made, it said there were no official announcements on Bursa Malaysia yet.
'Nonetheless, should an offer be based on the above-mentioned points, we reckon that water concessionaires are likely to reject it on the grounds that the crucial issues are not being addressed,' it highlighted.
OSK Research is maintaining its 'overweight' recommendation on the water sector as well as PNSB's target price at RM3.85, for exposure to the Selangor state water asset consolidation.
AmResearch in its report on the water sector said the issue of control over water distribution rights and#8211; now under Syabas and#8211; remains a niggling problem.
'The state government has made it abundantly clear that it intends to lead consolidation in a holistic manner, that is, treatment and distribution under one roof as per the new water framework.
'After all, the state government still holds considerable bargaining clout, through the ownership of around 80 per cent of the state's water assets, including raw water,' it added.
Another issue pertains to the still lingering issue over Syabas'' proposed tariff hike, according to AmResearch.
AmResearch is maintaining its 'neutral' weighting on the water sector. -- Bernama
Selangor RM9b offer less attractive: OSK
OSK Research views the latest offer of over RM9 billion for the acquisition of the four state water concessionaires as being less attractive.
Media reports said Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim has made a fresh offer to acquire all four concessionaires.
The concessionaires are Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass).
The proposal is to acquire 100 per cent of the shares of these companies at a price of RM64.62 for each PNSB share, RM20.78 for Syabas, RM5.95 for Splash and RM9.39 for Abass.
'Gauging from the offer price of over RM9 billion, this pricing comes close but is still lower than the previous offer by Splash to consolidate the state's water assets at RM10.75 billon.
'This makes the latest offer price less attractive,' OSK Research explained.
'Although the offer did not detail the state government's valuation approach, we reckon that it is likely to have been based on book value,' the research house elaborated further.
OSK Research said however, the offer bodes well for the sector in that a fresh offer reflects some progress, in respect of Selangor's state water asset consolidation.
'However, we are of the view, that this offer is somewhat lacking.
'For one, we are unsure as to whether the offer had addressed the question of the future of the water concessionaires involved in the takeover.
'This includes the loss of future earnings stemming from the loss of the concession and/or the appointment of a new licence holder to take over the state's water operation, post consolidation,' it added.
The loss of future earnings in particular, OSK Research said, had been raised earlier by one of the water concessionaires as a key issue that needed ironing out.
It also noted that there was no mention of the status of compensation payable by Selangor to Syabas - PNSB's 70 per cent-owned water distribution arm - arising from the delay in implementing the 37 per cent water tariff hike scheduled for Jan 1, 2009.
'Although the offer is intended for the water concessionaires, we are mindful that the golden share held by the Federal Government in Syabas means, that its approval on the matter is required,' OSK Research said.
Despite claims that the offer has been made, it said there were no official announcements on Bursa Malaysia yet.
'Nonetheless, should an offer be based on the above-mentioned points, we reckon that water concessionaires are likely to reject it on the grounds that the crucial issues are not being addressed,' it highlighted.
OSK Research is maintaining its 'overweight' recommendation on the water sector as well as PNSB's target price at RM3.85, for exposure to the Selangor state water asset consolidation.
AmResearch in its report on the water sector said the issue of control over water distribution rights and#8211; now under Syabas and#8211; remains a niggling problem.
'The state government has made it abundantly clear that it intends to lead consolidation in a holistic manner, that is, treatment and distribution under one roof as per the new water framework.
'After all, the state government still holds considerable bargaining clout, through the ownership of around 80 per cent of the state's water assets, including raw water,' it added.
Another issue pertains to the still lingering issue over Syabas'' proposed tariff hike, according to AmResearch.
AmResearch is maintaining its 'neutral' weighting on the water sector. -- Bernama
Media reports said Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim has made a fresh offer to acquire all four concessionaires.
The concessionaires are Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor (Syabas), Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS Sdn Bhd (Abass).
The proposal is to acquire 100 per cent of the shares of these companies at a price of RM64.62 for each PNSB share, RM20.78 for Syabas, RM5.95 for Splash and RM9.39 for Abass.
'Gauging from the offer price of over RM9 billion, this pricing comes close but is still lower than the previous offer by Splash to consolidate the state's water assets at RM10.75 billon.
'This makes the latest offer price less attractive,' OSK Research explained.
'Although the offer did not detail the state government's valuation approach, we reckon that it is likely to have been based on book value,' the research house elaborated further.
OSK Research said however, the offer bodes well for the sector in that a fresh offer reflects some progress, in respect of Selangor's state water asset consolidation.
'However, we are of the view, that this offer is somewhat lacking.
'For one, we are unsure as to whether the offer had addressed the question of the future of the water concessionaires involved in the takeover.
'This includes the loss of future earnings stemming from the loss of the concession and/or the appointment of a new licence holder to take over the state's water operation, post consolidation,' it added.
The loss of future earnings in particular, OSK Research said, had been raised earlier by one of the water concessionaires as a key issue that needed ironing out.
It also noted that there was no mention of the status of compensation payable by Selangor to Syabas - PNSB's 70 per cent-owned water distribution arm - arising from the delay in implementing the 37 per cent water tariff hike scheduled for Jan 1, 2009.
'Although the offer is intended for the water concessionaires, we are mindful that the golden share held by the Federal Government in Syabas means, that its approval on the matter is required,' OSK Research said.
Despite claims that the offer has been made, it said there were no official announcements on Bursa Malaysia yet.
'Nonetheless, should an offer be based on the above-mentioned points, we reckon that water concessionaires are likely to reject it on the grounds that the crucial issues are not being addressed,' it highlighted.
OSK Research is maintaining its 'overweight' recommendation on the water sector as well as PNSB's target price at RM3.85, for exposure to the Selangor state water asset consolidation.
AmResearch in its report on the water sector said the issue of control over water distribution rights and#8211; now under Syabas and#8211; remains a niggling problem.
'The state government has made it abundantly clear that it intends to lead consolidation in a holistic manner, that is, treatment and distribution under one roof as per the new water framework.
'After all, the state government still holds considerable bargaining clout, through the ownership of around 80 per cent of the state's water assets, including raw water,' it added.
Another issue pertains to the still lingering issue over Syabas'' proposed tariff hike, according to AmResearch.
AmResearch is maintaining its 'neutral' weighting on the water sector. -- Bernama
TM - TM at 2-year high on 'dividend surprise'
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: AMMB
Telekom Malaysia Bhd rose the most in almost two years after AmResearch Sdn Bhd said the company may announce a "dividend surprise" and investors should buy the stock as it has lagged behind its peers.
The stock gained 5.3 per cent to RM3.75 at the 12:30 p.m. local time break, set for its steepest gain since Feb. 25, 2009. Its fair value was raised to RM4 from RM3.90, AmResearch said in a report today. -- Bloomberg
Company Name: TELEKOM MALAYSIA BHD
Research House: AMMB
Telekom Malaysia Bhd rose the most in almost two years after AmResearch Sdn Bhd said the company may announce a "dividend surprise" and investors should buy the stock as it has lagged behind its peers.
The stock gained 5.3 per cent to RM3.75 at the 12:30 p.m. local time break, set for its steepest gain since Feb. 25, 2009. Its fair value was raised to RM4 from RM3.90, AmResearch said in a report today. -- Bloomberg
CPO price seen beating RM4,000 in Q1
The crude palm oil (CPO) price has been revised upwards by 13 per cent to RM3,400 per tonne for this year from RM3,000 per tonne previously, says MIDF Research.
The research house also expects the CPO price to break the RM4,000 per tonne level in the first quarter, due to strong demand for the coming Chinese New Year.
'However, the high price may not be enough to dampen demand for CPO and this would further provide a short-term potential upside for the price,' MIDF Research said in an equity note today.
It said demand of edible oils from China appears to be price inelastic and a higher import is expected, in order to replenish the inventory level for the coming Chinese New Year, which falls on Feb 3.
In November, although the CPO price reached its first yearly high, Malaysian and Indonesian CPO exports to China increased by US$149 million and US$454 million month-on-month, respectively.
Consumption in China is expected to increase by eight per cent this year.
Demand from India is also strong with consumption growing at 21 per cent per annum for the last five years and the uptrend is expected to continue.
'Growing incomes in emerging middle class countries like India and China are expected to drive the global demand for vegetable oils,' MIDF Research said.
Malaysian exports to India was up by US$28.7 million or 52 per cent month-on-month in November last year.
Consumption is expected to grow at 10 per cent this year
MIDF Research said it was also revising the forward earnings of companies under its coverage by an average of 7.5 per cent.
'We are bullish on the agriculture commodity sector especially CPO, on the back of weak global production, and high demand in addition to the weakening US dollar,' it said.
Plantation stocks have been rallying with the CPO price. The KL Plantation Index rose 26 per cent last year with a 48 per cent increase in the CPO price.
The CPO price also rose to its 33-month high of RM3,913 per tonne on Tuesday while the Plantation Index has gained 2.1 per cent year-to-date.
'We expect the CPO price to continue its upcycle given the demand-supply mismatch. That will be positive for plantation stocks,' MIDF Research said. --Bernama
The research house also expects the CPO price to break the RM4,000 per tonne level in the first quarter, due to strong demand for the coming Chinese New Year.
'However, the high price may not be enough to dampen demand for CPO and this would further provide a short-term potential upside for the price,' MIDF Research said in an equity note today.
It said demand of edible oils from China appears to be price inelastic and a higher import is expected, in order to replenish the inventory level for the coming Chinese New Year, which falls on Feb 3.
In November, although the CPO price reached its first yearly high, Malaysian and Indonesian CPO exports to China increased by US$149 million and US$454 million month-on-month, respectively.
Consumption in China is expected to increase by eight per cent this year.
Demand from India is also strong with consumption growing at 21 per cent per annum for the last five years and the uptrend is expected to continue.
'Growing incomes in emerging middle class countries like India and China are expected to drive the global demand for vegetable oils,' MIDF Research said.
Malaysian exports to India was up by US$28.7 million or 52 per cent month-on-month in November last year.
Consumption is expected to grow at 10 per cent this year
MIDF Research said it was also revising the forward earnings of companies under its coverage by an average of 7.5 per cent.
'We are bullish on the agriculture commodity sector especially CPO, on the back of weak global production, and high demand in addition to the weakening US dollar,' it said.
Plantation stocks have been rallying with the CPO price. The KL Plantation Index rose 26 per cent last year with a 48 per cent increase in the CPO price.
The CPO price also rose to its 33-month high of RM3,913 per tonne on Tuesday while the Plantation Index has gained 2.1 per cent year-to-date.
'We expect the CPO price to continue its upcycle given the demand-supply mismatch. That will be positive for plantation stocks,' MIDF Research said. --Bernama
Malaysia 2011 GDP to grow 5.5pc: HwangDBS
HwangDBS Vickers Research Sdn Bhd expects Malaysia's Gross Domestic Product (GDP) to grow 5.5 per cent this year.
Its head of research cum director Wong Ming Tek said the expectation is based on the opinion that the country's economy this year will be at a normalised growth compared to the recovery growth last year.
He was speaking to reporters at the Market Strategy and Banking Sector Outlook for 2011 media session today.
He also said the growth would be supported by the execution of the 2010 initiatives such as Economic Transformation Plan (ETP) and the National Key Economic Areas (NKEAs) that will drive more capital market activities this year. -- Bernama
Its head of research cum director Wong Ming Tek said the expectation is based on the opinion that the country's economy this year will be at a normalised growth compared to the recovery growth last year.
He was speaking to reporters at the Market Strategy and Banking Sector Outlook for 2011 media session today.
He also said the growth would be supported by the execution of the 2010 initiatives such as Economic Transformation Plan (ETP) and the National Key Economic Areas (NKEAs) that will drive more capital market activities this year. -- Bernama
SP Setia's share set to surpass target
SP Setia's share price is set to surpass OSK Research's current target price of RM6.58 and test its post-Asian crisis high, it said today.
In a previous report, the research house said there will be a coming super cycle with 1970s subtle baby boomers quest to buy trade-up homes, coinciding with the 1950s baby boomers eager search for real estate investment opportunities.
'Fuelled by the twin demand from these two groups of baby boomers, the upcoming boom in mid to high-end residential properties, particularly landed ones, promises to be more than just an ordinary upcycle,' it said.
It said banks have been eager to fund and fuel the boom by encouraging the society and the financial system to leverage further and switch from traditional financing to more speculative financing.
'This has in turn created a sense of euphoria, which is fuelling the country's biggest residential real estate boom since the Asian financial crisis between 2009/2010 and 2012/2013,' it said.
OSK Research had also revised its target price of RM6.58 to RM7.23 on the premise of an impending boom bigger than the 2007 upcycle, and has maintained its 'Buy' call on the company.
Meanwhile, it said there may be inflows of foreign hot money to ride on the super cycle.
'While the stock's current valuation is nearing our target and is about to test the post-Asian crisis high of 3.1 times Price/Net Tangible Assets.
'Its latest foreign shareholding is a mere 25 per cent, which is a far cry from more than 40 per cent during the 2007 boom.
'Hence, there is a high possibility that the next wave of foreign hot money pouring into Malaysia to ride on the residential property 'super cycle' may shove SP Setia's valuation to surpass even the peak level it attained in 2007,' it added. -- Bernama
In a previous report, the research house said there will be a coming super cycle with 1970s subtle baby boomers quest to buy trade-up homes, coinciding with the 1950s baby boomers eager search for real estate investment opportunities.
'Fuelled by the twin demand from these two groups of baby boomers, the upcoming boom in mid to high-end residential properties, particularly landed ones, promises to be more than just an ordinary upcycle,' it said.
It said banks have been eager to fund and fuel the boom by encouraging the society and the financial system to leverage further and switch from traditional financing to more speculative financing.
'This has in turn created a sense of euphoria, which is fuelling the country's biggest residential real estate boom since the Asian financial crisis between 2009/2010 and 2012/2013,' it said.
OSK Research had also revised its target price of RM6.58 to RM7.23 on the premise of an impending boom bigger than the 2007 upcycle, and has maintained its 'Buy' call on the company.
Meanwhile, it said there may be inflows of foreign hot money to ride on the super cycle.
'While the stock's current valuation is nearing our target and is about to test the post-Asian crisis high of 3.1 times Price/Net Tangible Assets.
'Its latest foreign shareholding is a mere 25 per cent, which is a far cry from more than 40 per cent during the 2007 boom.
'Hence, there is a high possibility that the next wave of foreign hot money pouring into Malaysia to ride on the residential property 'super cycle' may shove SP Setia's valuation to surpass even the peak level it attained in 2007,' it added. -- Bernama
Citi: FBMKLCI may hit 1,650 by year-end
Malaysia's KLCI index may reach 1,650 by the end of 2011 on increased liquidity, Citigroup Inc said.
The government is 'likely to provide liquidity' to the stock market ahead of the Sarawak state election and possible national general election, according to the report led by analyst Yong Yin Ng. -- Bloomberg
The government is 'likely to provide liquidity' to the stock market ahead of the Sarawak state election and possible national general election, according to the report led by analyst Yong Yin Ng. -- Bloomberg
NAIM - Construction jobs flow tracker for 4Q10
Stock Name: NAIM
Company Name: NAIM HOLDINGS BHD
Research House: OSK
Construction sector
Maintain overweight: During 4Q10, RM6.3 billion worth of construction contracts were awarded, of which 75.1% were for domestic jobs. Domestic contract flows from October to December remained robust at RM4.7 billion (+48.5% year-on-year) as various packages of the LRT project extension were dished out. On a quarter-on-quarter basis, the value of domestic job flows was 16.2% lower, mainly due to the high base effect in 3Q as a result of the sizeable RM2.4 billion Sabah O&G Terminal (SOGT) award. For FY10, domestic contracts totalled RM15.6 billion, representing a strong 55.8% y-o-y jump and exceeding our RM13 billion target.
We believe the momentum of domestic job flow will be sustained this year and set our 2011 target at RM18 billion. This is expected to be fuelled by: (i) the possibility of an early general election; (ii) projects under the Economic Transformation Programme (ETP); and (iii) more private sector developments.
Overseas jobs for the quarter stood at RM1.6 billion, which was significantly higher y-o-y and q-o-q. The bulk was attributed to the RM1.4 billion administrative building in Qatar secured by WCT. However, for FY10, overseas contracts fell by 21.2% as the proportion of foreign-based contracts fell from 37.3% in 2009 to 23.1% in 2010. We find this unsurprising as many contractors had previously stated that they are refocusing their resources on Malaysia given the increasing number of domestic jobs. For 2011, we expect overseas awards to increase y-o-y, driven by more jobs from India and the Middle East.
The strong 55.8% y-o-y increase in domestic contract flows validates our 'overweight' call on the construction sector. We believe that our RM18 billion domestic jobs win target for 2011 could be breached should the various projects under the ETP kick off faster than expected. Given the likelihood of an early general election this year, we expect the momentum of news flow within the sector to accelerate. The KL Construction Index currently trades at 13.4 times forward earnings, equivalent to its long-term mean. Amid the more positive news flow, we expect valuations to re-rate to one standard deviation above mean at 16.4 times.
Our top sector pick is Gamuda ('buy', target price: RM4.78) for its MRT exposure with its Vietnam property launches and resolution of the water assets consolidation as the wild card. For the small caps, we like Ahmad Zaki ('buy', TP: RM1.55), which has a three-year earnings compound annual growth rate forecast 30.8%. In view of the state elections which must be held by May, we continue to like the Sarawak theme and highlight sector laggard Naim Holdings ('buy', TP: RM5.10). Investors may also consider looking at Iskandar construction plays, with Kim Lun (NR) as a key proxy. ' OSK Investment Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: NAIM HOLDINGS BHD
Research House: OSK
Construction sector
Maintain overweight: During 4Q10, RM6.3 billion worth of construction contracts were awarded, of which 75.1% were for domestic jobs. Domestic contract flows from October to December remained robust at RM4.7 billion (+48.5% year-on-year) as various packages of the LRT project extension were dished out. On a quarter-on-quarter basis, the value of domestic job flows was 16.2% lower, mainly due to the high base effect in 3Q as a result of the sizeable RM2.4 billion Sabah O&G Terminal (SOGT) award. For FY10, domestic contracts totalled RM15.6 billion, representing a strong 55.8% y-o-y jump and exceeding our RM13 billion target.
We believe the momentum of domestic job flow will be sustained this year and set our 2011 target at RM18 billion. This is expected to be fuelled by: (i) the possibility of an early general election; (ii) projects under the Economic Transformation Programme (ETP); and (iii) more private sector developments.
Overseas jobs for the quarter stood at RM1.6 billion, which was significantly higher y-o-y and q-o-q. The bulk was attributed to the RM1.4 billion administrative building in Qatar secured by WCT. However, for FY10, overseas contracts fell by 21.2% as the proportion of foreign-based contracts fell from 37.3% in 2009 to 23.1% in 2010. We find this unsurprising as many contractors had previously stated that they are refocusing their resources on Malaysia given the increasing number of domestic jobs. For 2011, we expect overseas awards to increase y-o-y, driven by more jobs from India and the Middle East.
The strong 55.8% y-o-y increase in domestic contract flows validates our 'overweight' call on the construction sector. We believe that our RM18 billion domestic jobs win target for 2011 could be breached should the various projects under the ETP kick off faster than expected. Given the likelihood of an early general election this year, we expect the momentum of news flow within the sector to accelerate. The KL Construction Index currently trades at 13.4 times forward earnings, equivalent to its long-term mean. Amid the more positive news flow, we expect valuations to re-rate to one standard deviation above mean at 16.4 times.
Our top sector pick is Gamuda ('buy', target price: RM4.78) for its MRT exposure with its Vietnam property launches and resolution of the water assets consolidation as the wild card. For the small caps, we like Ahmad Zaki ('buy', TP: RM1.55), which has a three-year earnings compound annual growth rate forecast 30.8%. In view of the state elections which must be held by May, we continue to like the Sarawak theme and highlight sector laggard Naim Holdings ('buy', TP: RM5.10). Investors may also consider looking at Iskandar construction plays, with Kim Lun (NR) as a key proxy. ' OSK Investment Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
IJMLAND - Changing property industry dynamics point to interesting times ahead
Stock Name: IJMLAND
Company Name: IJM LAND BERHAD
Research House: RHB
Property sector
Maintain overweight: Despite having a good run-up in 2H10, the sector still has legs for further upside. After the major change in the industry dynamics in November last year, we believe the following three factors will continue to support the performance of the sector: (i) better liquidity for the sector post mega-mergers ' market cap of the top four property companies (UEM Land-Sunrise, Suncity-Sunway, S P Setia and IJM Land) would amount to more than RM20 billion (a 15% to 20% increase), and the share base would also be much larger; (ii) M&A activities will continue ' there will be continued speculation on PNB merging its property assets given the buoyant market environment; and (iii) privatisation of government land will drive news flow for the year as the drafting of plans is expected to be completed in 1H11.
We were correct to advise investors to take positiona in large-cap developer stocks in 4Q10. Going forward, before the completion of the mergers, which normally take about six months, we expect small mid-cap developers to catch up to narrow the valuations gap, as share prices of some companies with M&A are likely to be capped by their offer price. On average in 4Q10, price-earnings ratios for the bigger cap stocks (S P Setia, IJM Land, Sunrise and Suncity) have expanded by five to seven times, mainly accelerated by the M&A announcements (except for S P Setia and IJM Land recently). Smaller caps' PERs, on the other hand, are largely unchanged over the same period of time. Based on the current undemanding valuations, we see good value in some of the quality small mid-caps, such as Mah Sing Bhd, KSL Holdings Bhd and Glomac Bhd.
Apart from the catalysts mentioned above, the fundamentals are still supportive for the property sector as a whole. These include: (i) demand growth led by young population growth, which we expect to taper off only in 2012/13; (ii) expectation of a delay in interest rate hike by Bank Negara Malaysia in 2011; and (iii) offering of incentives by developers that help lower the entry cost for a property. The possibility of another round of regulatory measures is low for now, after the of 70% loan-to-value cap took effect from Nov 3 last year.
Key risks are regulatory risks and country risks.
We rate the property sector 'overweight'. Our picks for the year are S P Setia ('outperform', fair value = RM6.95) and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small mid-caps. ' RHB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: IJM LAND BERHAD
Research House: RHB
Property sector
Maintain overweight: Despite having a good run-up in 2H10, the sector still has legs for further upside. After the major change in the industry dynamics in November last year, we believe the following three factors will continue to support the performance of the sector: (i) better liquidity for the sector post mega-mergers ' market cap of the top four property companies (UEM Land-Sunrise, Suncity-Sunway, S P Setia and IJM Land) would amount to more than RM20 billion (a 15% to 20% increase), and the share base would also be much larger; (ii) M&A activities will continue ' there will be continued speculation on PNB merging its property assets given the buoyant market environment; and (iii) privatisation of government land will drive news flow for the year as the drafting of plans is expected to be completed in 1H11.
We were correct to advise investors to take positiona in large-cap developer stocks in 4Q10. Going forward, before the completion of the mergers, which normally take about six months, we expect small mid-cap developers to catch up to narrow the valuations gap, as share prices of some companies with M&A are likely to be capped by their offer price. On average in 4Q10, price-earnings ratios for the bigger cap stocks (S P Setia, IJM Land, Sunrise and Suncity) have expanded by five to seven times, mainly accelerated by the M&A announcements (except for S P Setia and IJM Land recently). Smaller caps' PERs, on the other hand, are largely unchanged over the same period of time. Based on the current undemanding valuations, we see good value in some of the quality small mid-caps, such as Mah Sing Bhd, KSL Holdings Bhd and Glomac Bhd.
Apart from the catalysts mentioned above, the fundamentals are still supportive for the property sector as a whole. These include: (i) demand growth led by young population growth, which we expect to taper off only in 2012/13; (ii) expectation of a delay in interest rate hike by Bank Negara Malaysia in 2011; and (iii) offering of incentives by developers that help lower the entry cost for a property. The possibility of another round of regulatory measures is low for now, after the of 70% loan-to-value cap took effect from Nov 3 last year.
Key risks are regulatory risks and country risks.
We rate the property sector 'overweight'. Our picks for the year are S P Setia ('outperform', fair value = RM6.95) and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small mid-caps. ' RHB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
MAHSING - Changing property industry dynamics point to interesting times ahead
Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: RHB
Property sector
Maintain overweight: Despite having a good run-up in 2H10, the sector still has legs for further upside. After the major change in the industry dynamics in November last year, we believe the following three factors will continue to support the performance of the sector: (i) better liquidity for the sector post mega-mergers ' market cap of the top four property companies (UEM Land-Sunrise, Suncity-Sunway, S P Setia and IJM Land) would amount to more than RM20 billion (a 15% to 20% increase), and the share base would also be much larger; (ii) M&A activities will continue ' there will be continued speculation on PNB merging its property assets given the buoyant market environment; and (iii) privatisation of government land will drive news flow for the year as the drafting of plans is expected to be completed in 1H11.
We were correct to advise investors to take positiona in large-cap developer stocks in 4Q10. Going forward, before the completion of the mergers, which normally take about six months, we expect small mid-cap developers to catch up to narrow the valuations gap, as share prices of some companies with M&A are likely to be capped by their offer price. On average in 4Q10, price-earnings ratios for the bigger cap stocks (S P Setia, IJM Land, Sunrise and Suncity) have expanded by five to seven times, mainly accelerated by the M&A announcements (except for S P Setia and IJM Land recently). Smaller caps' PERs, on the other hand, are largely unchanged over the same period of time. Based on the current undemanding valuations, we see good value in some of the quality small mid-caps, such as Mah Sing Bhd, KSL Holdings Bhd and Glomac Bhd.
Apart from the catalysts mentioned above, the fundamentals are still supportive for the property sector as a whole. These include: (i) demand growth led by young population growth, which we expect to taper off only in 2012/13; (ii) expectation of a delay in interest rate hike by Bank Negara Malaysia in 2011; and (iii) offering of incentives by developers that help lower the entry cost for a property. The possibility of another round of regulatory measures is low for now, after the of 70% loan-to-value cap took effect from Nov 3 last year.
Key risks are regulatory risks and country risks.
We rate the property sector 'overweight'. Our picks for the year are S P Setia ('outperform', fair value = RM6.95) and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small mid-caps. ' RHB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: MAH SING GROUP BHD
Research House: RHB
Property sector
Maintain overweight: Despite having a good run-up in 2H10, the sector still has legs for further upside. After the major change in the industry dynamics in November last year, we believe the following three factors will continue to support the performance of the sector: (i) better liquidity for the sector post mega-mergers ' market cap of the top four property companies (UEM Land-Sunrise, Suncity-Sunway, S P Setia and IJM Land) would amount to more than RM20 billion (a 15% to 20% increase), and the share base would also be much larger; (ii) M&A activities will continue ' there will be continued speculation on PNB merging its property assets given the buoyant market environment; and (iii) privatisation of government land will drive news flow for the year as the drafting of plans is expected to be completed in 1H11.
We were correct to advise investors to take positiona in large-cap developer stocks in 4Q10. Going forward, before the completion of the mergers, which normally take about six months, we expect small mid-cap developers to catch up to narrow the valuations gap, as share prices of some companies with M&A are likely to be capped by their offer price. On average in 4Q10, price-earnings ratios for the bigger cap stocks (S P Setia, IJM Land, Sunrise and Suncity) have expanded by five to seven times, mainly accelerated by the M&A announcements (except for S P Setia and IJM Land recently). Smaller caps' PERs, on the other hand, are largely unchanged over the same period of time. Based on the current undemanding valuations, we see good value in some of the quality small mid-caps, such as Mah Sing Bhd, KSL Holdings Bhd and Glomac Bhd.
Apart from the catalysts mentioned above, the fundamentals are still supportive for the property sector as a whole. These include: (i) demand growth led by young population growth, which we expect to taper off only in 2012/13; (ii) expectation of a delay in interest rate hike by Bank Negara Malaysia in 2011; and (iii) offering of incentives by developers that help lower the entry cost for a property. The possibility of another round of regulatory measures is low for now, after the of 70% loan-to-value cap took effect from Nov 3 last year.
Key risks are regulatory risks and country risks.
We rate the property sector 'overweight'. Our picks for the year are S P Setia ('outperform', fair value = RM6.95) and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small mid-caps. ' RHB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
MEDIA - Media Prima - Slight growth in TV, newspaper adex in 2011
Stock Name: MEDIA
Company Name: MEDIA PRIMA BHD
Research House: ECMLIBRA
Media Prima Bhd
(Jan 5, RM2.70)
Recommend buy at RM2.70 with revised target price RM3 (from RM2.72): Media Prima's share price hit a 23-month high of RM2.70 on Jan 4. We believe that it is beginning to dawn on investors how robust its 2010 earnings will be. We understand 2010 TV and newspaper adex growth will end in the mid teens year-on-year against our assumption of 10% y-o-y for TV adex growth and a mere 5% y-o-y for newspaper adex growth. This implies 4Q10 TV and newspaper adex will remain relatively unchanged quarter-on-quarter despite a dearth of adex-friendly events.
While newspaper adex growth has been encouraging, this is surprising in light of declining circulation for Berita Harian and New Straits Times. We understand that increasing circulation for Harian Metro encouraged existing advertisers to shuffle more of their budget to Harian Metro from Berita Harian and New Straits Times instead of advertising in newspapers outside the NSTP group.
We understand from the company, and have verified with media buyers, that 1Q11 TV adex is poised to grow by low double digits y-o-y. This is very respectable given the lack of adex-friendly events this year, save for maybe the 14th general election. We note that gross total adex growth during quarters with general elections surged by more than 20% y-o-y.
Our revised estimates account for higher 2010 TV and newspaper adex growth of 15% tempered by revised newspaper circulation (assumes no circulation growth post-2010) and widening losses at New Media due to start-up costs for TonTon. We continue to conservatively assume 5% TV adex growth (one time real GDP growth) and 2.5% ('' time real GDP growth) newspaper adex for 2011 and beyond despite early indicators to the contrary.
Ascribing an unchanged 18 times one-year forward price-earnings ratio, we upgrade our target price on Media Prima from RM2.72 to RM3. We estimate that should Media Prima employ a net dividend payout per share of 75%, investors can expect another eight sen net dividend per share, or 3% net dividend yield (3Q10: 4 sen net DPS). Recall that Media Prima revised its net DPS policy from 25% to 50% to 25% to 75% in 3Q10. ' ECM Libra Investment Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: MEDIA PRIMA BHD
Research House: ECMLIBRA
Media Prima Bhd
(Jan 5, RM2.70)
Recommend buy at RM2.70 with revised target price RM3 (from RM2.72): Media Prima's share price hit a 23-month high of RM2.70 on Jan 4. We believe that it is beginning to dawn on investors how robust its 2010 earnings will be. We understand 2010 TV and newspaper adex growth will end in the mid teens year-on-year against our assumption of 10% y-o-y for TV adex growth and a mere 5% y-o-y for newspaper adex growth. This implies 4Q10 TV and newspaper adex will remain relatively unchanged quarter-on-quarter despite a dearth of adex-friendly events.
While newspaper adex growth has been encouraging, this is surprising in light of declining circulation for Berita Harian and New Straits Times. We understand that increasing circulation for Harian Metro encouraged existing advertisers to shuffle more of their budget to Harian Metro from Berita Harian and New Straits Times instead of advertising in newspapers outside the NSTP group.
We understand from the company, and have verified with media buyers, that 1Q11 TV adex is poised to grow by low double digits y-o-y. This is very respectable given the lack of adex-friendly events this year, save for maybe the 14th general election. We note that gross total adex growth during quarters with general elections surged by more than 20% y-o-y.
Our revised estimates account for higher 2010 TV and newspaper adex growth of 15% tempered by revised newspaper circulation (assumes no circulation growth post-2010) and widening losses at New Media due to start-up costs for TonTon. We continue to conservatively assume 5% TV adex growth (one time real GDP growth) and 2.5% ('' time real GDP growth) newspaper adex for 2011 and beyond despite early indicators to the contrary.
Ascribing an unchanged 18 times one-year forward price-earnings ratio, we upgrade our target price on Media Prima from RM2.72 to RM3. We estimate that should Media Prima employ a net dividend payout per share of 75%, investors can expect another eight sen net dividend per share, or 3% net dividend yield (3Q10: 4 sen net DPS). Recall that Media Prima revised its net DPS policy from 25% to 50% to 25% to 75% in 3Q10. ' ECM Libra Investment Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
SPSETIA - S P Setia is a goliath with a proven track record
Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 5, RM6.35)
Maintain buy at RM6.30 with target price RM6.90: We like S P Setia Bhd for its proven track record and hands-on management. We expect a strong 36% earnings per share compound annual growth rate over the next three years, riding on the current positive property demand and overseas expansion. Also, we are increasingly positive because we expect S P Setia to gain further traction in government land development. With its significant size, it could turn acquisitive soon. We reiterate our 'buy' call with unchanged RM6.90 target price (10% premium to RM6.28 realisable net asset value).
We are excited over the RM6 billion KL Eco City development given its excellent connectivity (one station integrating KTM, LRT and MRT lines) and accessibility (mid-point between KL-PJ-Bangsar-Cheras-Sunway), supported by 30 million visitors per year from Mid Valley City. A 10% increase in the estimated RM6 billion gross development value would add two sen to its RNAV per share. S P Setia is now finalising a few office en bloc sales (close to RM1 billion) and we expect it to seal the deals soon.
Management has indicated its intention to grow the company organically or via M&As. This could spark another round of M&As in the property sector, involving assets held by its major shareholder, PNB (31% stake). This will boost S P Setia's asset size which has descended to No 2 post the UEM Land Holdings Bhd-Sunrise Bhd merger. However, we believe possible moves within this space at this juncture will be mostly direct land acquisitions.
We are expecting a 36% EPS CAGR between FY11 and FY13, driven by: (i) flagship residential projects, for example, Setia Alam and Setia Eco Park; (ii) RM11 billion worth of commercial project launches at KL Eco City and Setia City; (iii) overseas expansion, to Melbourne, Australia, and Vietnam; and (iv) RM1.8 billion unbilled sales as at Oct'' 2010, or one time our FY11 forecast.
We value S P Setia at RM6.90, based on a 10% premium to our RM6.28 RNAV, for its proven track record and hands-on management. The company traded at a 10% to 20% premium to its RNAV during the previous bull market. At RM6.90, S P Setia will trade at 27 times 2011 price earnings ratio. ' Maybank IB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 5, RM6.35)
Maintain buy at RM6.30 with target price RM6.90: We like S P Setia Bhd for its proven track record and hands-on management. We expect a strong 36% earnings per share compound annual growth rate over the next three years, riding on the current positive property demand and overseas expansion. Also, we are increasingly positive because we expect S P Setia to gain further traction in government land development. With its significant size, it could turn acquisitive soon. We reiterate our 'buy' call with unchanged RM6.90 target price (10% premium to RM6.28 realisable net asset value).
We are excited over the RM6 billion KL Eco City development given its excellent connectivity (one station integrating KTM, LRT and MRT lines) and accessibility (mid-point between KL-PJ-Bangsar-Cheras-Sunway), supported by 30 million visitors per year from Mid Valley City. A 10% increase in the estimated RM6 billion gross development value would add two sen to its RNAV per share. S P Setia is now finalising a few office en bloc sales (close to RM1 billion) and we expect it to seal the deals soon.
Management has indicated its intention to grow the company organically or via M&As. This could spark another round of M&As in the property sector, involving assets held by its major shareholder, PNB (31% stake). This will boost S P Setia's asset size which has descended to No 2 post the UEM Land Holdings Bhd-Sunrise Bhd merger. However, we believe possible moves within this space at this juncture will be mostly direct land acquisitions.
We are expecting a 36% EPS CAGR between FY11 and FY13, driven by: (i) flagship residential projects, for example, Setia Alam and Setia Eco Park; (ii) RM11 billion worth of commercial project launches at KL Eco City and Setia City; (iii) overseas expansion, to Melbourne, Australia, and Vietnam; and (iv) RM1.8 billion unbilled sales as at Oct'' 2010, or one time our FY11 forecast.
We value S P Setia at RM6.90, based on a 10% premium to our RM6.28 RNAV, for its proven track record and hands-on management. The company traded at a 10% to 20% premium to its RNAV during the previous bull market. At RM6.90, S P Setia will trade at 27 times 2011 price earnings ratio. ' Maybank IB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Thursday, January 6, 2011
PROTON - AmResearch keeps 'buy' call on Proton
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: AMMB
AmResearch has reaffirmed its "buy" call on Proton Holdings Bhd with an unchanged fair value of RM6.10 per share.
It said the national car manufacturer was in discussions to set up a contract assembly operation in India to be finalised by the end of the first-quarter.
"We believe Mahindra is a likely candidate given its existing joint-venture manufacturing operations with Renault and ready-sales network in India," the research house said in a statement today.
It said India opened up another huge Asian market for Proton, after China, and increased exports would help improve Proton''s plant utilisation which currently stood around 50 per cent and subsequently make a structural shift in its earnings trend.
Furthermore, it added the Indian venture would be an asset light, low-risk model given that a local partner undertook the asset investment and ownership.
"Besides offering the Saga, Persona and Exora models in India, Proton also plans to co-develop diesel-engine models for the market with a European carmaker," it said.
AmResearch also said Renault was renowned for its diesel-powered passenger models and it did not rule out a more comprehensive collaboration with the company in regards to Proton's global markets, forming in essence, a strategic alliance.
Proton recently completed a stake purchase in Renault's F1 team and this served as branding for its Lotus brand.
"We bear in mind that the technological advancement should trickle down to Proton models too," it said.
With the India venture adding up to the positive newsflow expected for Proton over the next 12 months, AmResearch said the newsflow should act as a strong share price catalyst amid low expectations on the stock. -- Bernama
Company Name: PROTON HOLDINGS BHD
Research House: AMMB
AmResearch has reaffirmed its "buy" call on Proton Holdings Bhd with an unchanged fair value of RM6.10 per share.
It said the national car manufacturer was in discussions to set up a contract assembly operation in India to be finalised by the end of the first-quarter.
"We believe Mahindra is a likely candidate given its existing joint-venture manufacturing operations with Renault and ready-sales network in India," the research house said in a statement today.
It said India opened up another huge Asian market for Proton, after China, and increased exports would help improve Proton''s plant utilisation which currently stood around 50 per cent and subsequently make a structural shift in its earnings trend.
Furthermore, it added the Indian venture would be an asset light, low-risk model given that a local partner undertook the asset investment and ownership.
"Besides offering the Saga, Persona and Exora models in India, Proton also plans to co-develop diesel-engine models for the market with a European carmaker," it said.
AmResearch also said Renault was renowned for its diesel-powered passenger models and it did not rule out a more comprehensive collaboration with the company in regards to Proton's global markets, forming in essence, a strategic alliance.
Proton recently completed a stake purchase in Renault's F1 team and this served as branding for its Lotus brand.
"We bear in mind that the technological advancement should trickle down to Proton models too," it said.
With the India venture adding up to the positive newsflow expected for Proton over the next 12 months, AmResearch said the newsflow should act as a strong share price catalyst amid low expectations on the stock. -- Bernama
COCOLND - Cocoaland remains a 'buy': AmResearch
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
AmResearch has maintained its "Buy" recommendation on Cocoaland Holdings Bhd, but with a lower fair value of RM3.30 per share from RM3.70 per share previously.
The price was derived after incorporating lower margin assumptions from the higher cost of raw material.
In a research note today, AmResearch also trimmed the company's earnings forecast for the financial years from 2010 to 2012 by 13 per cent to 15 per cent, taking into account upward adjustments in sugar and packaging material costs.
These raw materials constitute close to 45 per cent of the group's cost structure.
"The Malaysian government raised sugar price by 21 per cent to RM2.10 per kg on December 6, 2010, while packaging materials have surged 10 per cent in the last 3-4 months, in tandem with higher crude oil prices," AmResearch explained.
"While the unfavourable cost structure would result in weak earnings in the next few quarters, FY11F earnings would be well cushioned by eventful earnings contribution from its maiden 'hot-filling' PET production line," AmResearch elaborated.
Recently, the group through its wholly-owned subsidiary, Cocoaland Industry Sdn Bhd (CISB), entered into separate contract packing agreements with F&N Beverages Manufacturing Sdn Bhd (F&NBM) and F&N Foods Pte Ltd (F&NF), as a non-exclusive contract packer for the preparation, packaging, packing and delivery of their respective products.
"We are positive about these developments. The formalisation of the contract packing agreements will underpin Cocoaland's robust earnings growth going forward, as secured high off-take rates by Fraser & Neave Holdings (F&N) will serve to truncate idle capacity," AmResearch said.
At 3.00pm, Cocoaland share was up 13 sen at RM2.75. -- Bernama
Company Name: COCOALAND HOLDINGS BHD
Research House: AMMB
AmResearch has maintained its "Buy" recommendation on Cocoaland Holdings Bhd, but with a lower fair value of RM3.30 per share from RM3.70 per share previously.
The price was derived after incorporating lower margin assumptions from the higher cost of raw material.
In a research note today, AmResearch also trimmed the company's earnings forecast for the financial years from 2010 to 2012 by 13 per cent to 15 per cent, taking into account upward adjustments in sugar and packaging material costs.
These raw materials constitute close to 45 per cent of the group's cost structure.
"The Malaysian government raised sugar price by 21 per cent to RM2.10 per kg on December 6, 2010, while packaging materials have surged 10 per cent in the last 3-4 months, in tandem with higher crude oil prices," AmResearch explained.
"While the unfavourable cost structure would result in weak earnings in the next few quarters, FY11F earnings would be well cushioned by eventful earnings contribution from its maiden 'hot-filling' PET production line," AmResearch elaborated.
Recently, the group through its wholly-owned subsidiary, Cocoaland Industry Sdn Bhd (CISB), entered into separate contract packing agreements with F&N Beverages Manufacturing Sdn Bhd (F&NBM) and F&N Foods Pte Ltd (F&NF), as a non-exclusive contract packer for the preparation, packaging, packing and delivery of their respective products.
"We are positive about these developments. The formalisation of the contract packing agreements will underpin Cocoaland's robust earnings growth going forward, as secured high off-take rates by Fraser & Neave Holdings (F&N) will serve to truncate idle capacity," AmResearch said.
At 3.00pm, Cocoaland share was up 13 sen at RM2.75. -- Bernama
SIME - Nomura bullish on Sime, keeps 'buy' call
Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: NOMURA
Nomura Securities Malaysia Sdn Bhd is bullish on Sime Darby Bhd and has maintained its 'buy' rating on the company with the target price of RM11.10.
Nomura said this was based on an improved outlook for the palm oil sector as well as improving sentiment surrounding the group's restructuring.
"The tighter vegetable oils outlook, stronger crude oil prices and a weaker US dollar lead us to expect higher crude palm oil (CPO) prices for financial year 2011," it said in its Asean Equity Strategy Outlook Report 2011 here today.
It said the new chief executive officer, Datuk Bakke Salleh, at the financial year 2010 results briefing, has reassured investors there would be no more write-downs stemming from the four infamous projects. - Bernama
Company Name: SIME DARBY BHD
Research House: NOMURA
Nomura Securities Malaysia Sdn Bhd is bullish on Sime Darby Bhd and has maintained its 'buy' rating on the company with the target price of RM11.10.
Nomura said this was based on an improved outlook for the palm oil sector as well as improving sentiment surrounding the group's restructuring.
"The tighter vegetable oils outlook, stronger crude oil prices and a weaker US dollar lead us to expect higher crude palm oil (CPO) prices for financial year 2011," it said in its Asean Equity Strategy Outlook Report 2011 here today.
It said the new chief executive officer, Datuk Bakke Salleh, at the financial year 2010 results briefing, has reassured investors there would be no more write-downs stemming from the four infamous projects. - Bernama
Nomura: FBMKLCI to hit 1,700 this year
The FTSE Bursa Malaysia KLCI (FBM KLCI) will rise a further 13 per cent to 1,700 by year-end, sparked by a series of merger and acquisitions (MandA) activities in the consumer and property sectors, says Nomura Securities Malaysia Sdn Bhd.
We believe 2011 will be another good year for the Malaysian market after surging over 30 per cent last year, it added.
The buoyant stock market in 2010 is likely to be sustained into 2011, Nomura said in its ASEAN Equity Strategy Outlook Report for 2011 here today.
According to Nomura, the increase in MandA activities for the past few weeks in the property, construction and consumer sectors, is creating more excitement and momentum for the market, Nomura added.
We continue to be bullish on residential property on the unlocking of latent demand from an incrementally higher income earning population, favourable demographics and positive government policies, it said.
Commenting on the banking segment, Nomura said it believed, fairly robust economic conditions would continue to underpin loan growth for 2011.
We expect both consumer and capital markets to drive top-line growth, it highlighted.
Nomura sees the plantation sector as being bullish on its higher crude palm oil (CPO) price assumptions.
We think tighter supply and demand fundamentals for the vegetable oil complex, higher crude oil prices and increased flows into the commodities space, provide support for higher CPO prices and our more positive view on the plantations sector, the securities company said.
Among the stocks it believed, will be prime beneficiaries of the consumption boom in Malaysia, are Maybank, AMMB, Media Prima, SP Setia and Genting Malaysia. -- Bernama
We believe 2011 will be another good year for the Malaysian market after surging over 30 per cent last year, it added.
The buoyant stock market in 2010 is likely to be sustained into 2011, Nomura said in its ASEAN Equity Strategy Outlook Report for 2011 here today.
According to Nomura, the increase in MandA activities for the past few weeks in the property, construction and consumer sectors, is creating more excitement and momentum for the market, Nomura added.
We continue to be bullish on residential property on the unlocking of latent demand from an incrementally higher income earning population, favourable demographics and positive government policies, it said.
Commenting on the banking segment, Nomura said it believed, fairly robust economic conditions would continue to underpin loan growth for 2011.
We expect both consumer and capital markets to drive top-line growth, it highlighted.
Nomura sees the plantation sector as being bullish on its higher crude palm oil (CPO) price assumptions.
We think tighter supply and demand fundamentals for the vegetable oil complex, higher crude oil prices and increased flows into the commodities space, provide support for higher CPO prices and our more positive view on the plantations sector, the securities company said.
Among the stocks it believed, will be prime beneficiaries of the consumption boom in Malaysia, are Maybank, AMMB, Media Prima, SP Setia and Genting Malaysia. -- Bernama
PCHEM - Petronas Chems a 'buy': Deutsche Bank
Stock Name: PCHEM
Company Name: PETRONAS CHEMICALS GROUP BHD
Research House: DEUTSCHE
Petronas Chemicals Group Bhd, a unit of Malaysia's state oil and gas company, was rated new "buy" at Deutsche Bank AG with a share price estimate of RM6.33.
The company's earnings are likely to rise from the financial year March 31, 2011 after a two-year decline, bolstered by higher product prices and volumes, Deutsche said in a report today. -- Bloomberg
Company Name: PETRONAS CHEMICALS GROUP BHD
Research House: DEUTSCHE
Petronas Chemicals Group Bhd, a unit of Malaysia's state oil and gas company, was rated new "buy" at Deutsche Bank AG with a share price estimate of RM6.33.
The company's earnings are likely to rise from the financial year March 31, 2011 after a two-year decline, bolstered by higher product prices and volumes, Deutsche said in a report today. -- Bloomberg
UEM Land an ‘emerging blue chip’ proxy
UEM Land Holdings Bhd, a Malaysian property developer which made a takeover offer for rival Sunrise Bhd, is an 'emerging blue chip' proxy for improving Singapore-Malaysia ties, Credit Suisse Group AG said in a report today.
Investors are expected to make UEM Land a 'core holding,' Stephen Hagger, an analyst at Credit Suisse, said in a report today. -- Bloomberg
Investors are expected to make UEM Land a 'core holding,' Stephen Hagger, an analyst at Credit Suisse, said in a report today. -- Bloomberg
Maybank to acquire 44.6pc in Kim Eng
Maybank through its wholly-owned subsidiary, Aseam Credit Sdn Bhd (ACSB), has proposed to acquire a 44.6 per cent stake in Kim Eng Holdings Ltd today at S$3.10 per share, amounting to S$798 million (approximately RM1.90 billion).
It entered into conditional sale and purchase agreements with Ronald Anthony Ooi Thean Yat and Yuanta Securities Asia Financial Services Ltd for the acquisition of 15.4 per cent and 29.2 per cent stakes respectively in Kim Eng.
Kim Eng is a leading stock broker in ASEAN with a top five position in Singapore, Thailand, Indonesia and the Philippines.
It also has a presence in global financial centres, including Hong Kong, London and New York.
As of Sept 30, 2010, Kim Eng's total assets and shareholders' equity amounted to S$2.697 billion and S$938 million, respectively.
Upon completion of the acquisition, Maybank will be required to make a mandatory general offer for the remaining 55.4 per cent shares in Kim Eng, with an intention to privatise the company.
The total consideration for the acquisition of 100 per cent of Kim Eng would amount to S$1.79 billion (RM4.26 billion).
The proposed transaction represents an acceleration of Maybank's investment banking and equities platform in ASEAN, addressing an important gap in Maybank's footprint, said Maybank Chairman Tan Sri Megat Zaharuddin Megat Mohd Nor in a statement today.
'Kim Eng gives us the immediate platform to aggressively build up our global wholesale banking capabilities in Asean and beyond.
'Immediately, Kim Eng, gives us an entry into Thailand,'he said. -- Bernama
It entered into conditional sale and purchase agreements with Ronald Anthony Ooi Thean Yat and Yuanta Securities Asia Financial Services Ltd for the acquisition of 15.4 per cent and 29.2 per cent stakes respectively in Kim Eng.
Kim Eng is a leading stock broker in ASEAN with a top five position in Singapore, Thailand, Indonesia and the Philippines.
It also has a presence in global financial centres, including Hong Kong, London and New York.
As of Sept 30, 2010, Kim Eng's total assets and shareholders' equity amounted to S$2.697 billion and S$938 million, respectively.
Upon completion of the acquisition, Maybank will be required to make a mandatory general offer for the remaining 55.4 per cent shares in Kim Eng, with an intention to privatise the company.
The total consideration for the acquisition of 100 per cent of Kim Eng would amount to S$1.79 billion (RM4.26 billion).
The proposed transaction represents an acceleration of Maybank's investment banking and equities platform in ASEAN, addressing an important gap in Maybank's footprint, said Maybank Chairman Tan Sri Megat Zaharuddin Megat Mohd Nor in a statement today.
'Kim Eng gives us the immediate platform to aggressively build up our global wholesale banking capabilities in Asean and beyond.
'Immediately, Kim Eng, gives us an entry into Thailand,'he said. -- Bernama
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