KLSE Malaysia blog

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com   

Friday, 18 April 2014 19:38

KUALA LUMPUR (April 18): Based on news flow and corporate announcements today (Friday), the following stocks may be in focus on Monday (April 21):

Malaysia Airports Holdings Bhd (MAHB) may grab analysts' interest after klia2, the new terminal for low-cost carriers, obtained the Certificate of Completion and Compliance (CCC) from UEMC-Bina Puri JV, the main contractors.

The issuance of the CCC not only certifies the safety of the project but is also a go-ahead for all relevant authorities to occupy the terminal building. This also means airlines can start operating from the airport.

"We obtained the CCC on April 17," MAHB Senior General Manager (Operations Services) Datuk Azmi Murad told Bernama on Friday.

MAHB conducted a mock run of the Operational Readiness and Airport Transfer (ORAT), a trial on functionality and operational aspects, in early February.The final ORAT will take place on April 30.

Flight operations at klia2 will begin on May 2 and the current low-cost carrier terminal (LCCT) is scheduled to close on May 9. However, many analysts believed there would be a delay.

Malindo Air, Cebu Pacific Air, Tiger Airways Singapore, Lion Air, Mandala Airlines and AirAsia have announced they will move to klia2 by May 9.

Datasonic Group Bhd has clinched two contracts with a combined value of RM292.2 million from the Home Ministry. The contracts involve the supply of 14 million Malaysian identity cards or MyKad to the government.

The first contract, valued at RM72 million, will see Datasonic supplying four million new raw MyKad with 100% polycarbonate material and new security features to the national registration department (NRD). The six-month contract which began on January 1 this year expires on June 30.

The second contract, which is worth RM220.2 million, involves the supply of 10 million similar cards, and an equal number (10 million) of consumables to the NRD. The two-year contract starts from July 1, 2014 and ends on June 30, 2016.

"The contracts are expected to contribute positively towards the future earnings and net assets per share of Datasonic group for the financial period ending 31 March 2015 and the financial periods thereafter."

Datasonic share price had risen sharply ahead of this announcement.

Kian Joo Can Factory Bhd (KJFC) announced that its executive director Datuk Anthony See Teow Guan had purchased KJFC shares on the open market on April 14, 15 and 16, totalling 376,000 units.  

Yesterday, KJCF announced that Datuk See had changed his mind and was against the proposed disposal of KJFC to Aspire Insight “in light of the letter of interest that was received from Toyota Tsusho Corporation (TTC)”

TTC’s offer is at a tentative maximum price of RM3.74 per share, versus Aspire Insight’s RM3.30 per share. The EGM to decide on Aspire Insight’s offer falls on May 23.

At market close today, KJFC’s share price rose 10 sen or 3% to end at RM3.39.

CIMB Group Holdings Bhd's Thailand unit CIMB Thai Bank PCL's net profit rose 41% to 440.7 million baht (RM44 million) in the first quarter ended March 31, 2014. This compares to 313.1 million baht a year earlier.

CIMB Group said CIMB Thai's interest income climbed to 3.35 billion baht from 2.8 billion baht.

CIMB Thai President and CEO Subhak Siwaraksa said "the increase in income was mainly attributed to a growth in other income, net interest income and net fee and service income of 106.0%, 27.1%, and 23.1% respectively. Operating expenses grew at 21.4% whilst there was a 120.2% year-on-year increase in provisions."

UEM Sunrise Bhd is planning on expanding its property development activities to Indonesia, said its Chief Marketing Officer Siti Mariam Mohd Desa.

According to Siti, the plan is part of the property developer's diversification, stating that the company cannot depend on the Malaysian market for future growth.

Apart from Malaysia, UEM Sunrise has existing property development projects in Vancouver, Canada and Melbourne, Australia.

C.I Holdings Bhd has received its shareholders' nod for the acquisition of Continental Resources Sdn Bhd (CRSB), said group Managing Director Datuk Johari Abdul Ghani after the company's Extraordinary General Meeting held today.

"The shareholders have waited for almost a year to see when CI Holdings will acquire a new business. Today, we have concluded the deal and with the acquisition of CRSB, we are looking at expanding our business capacity," he said.

Johari also said CRSB, which is mainly involved in packaging and blending of edible oil products, has recorded a turnover of RM200 million and net profit of RM6 million.

"We see the acquisition as an opportunity to expand our business. Currently, global consumption of edible oils stood at about 185 million metric tonnes, while for local consumption, it is at 2.5 million metric tonnes," he added. CRSB's capacity of producing edible oil is 120,000 metric tonnes.

He noted the company was in the midst of building a new plant to double CRSB's capacity in the production of edible oil.

"We are investing a total of RM30 million for land, building and machinery for the new plant, which is situated next to our existing plant in Port Klang. It will be completed in a year," he added.

The new plant would double the current capacity of CRSB, said Johari, adding that the company would also maximise the capacity of its existing plant, from 85 per cent or 120,000 metric tonnes currently to full production capacity, estimated at about 300,000 metric tonnes.

On its future prospect, he said the company was considering to tap into a similar line of business such as peanut oil, corn oil, canola oil, soya bean oil and coconut oil as part of its third phase expansion.

Engtex Group Bhd is seen as a frontrunner for the RM200 million pipe contract following the award of the Langat 2 water treatment plant contract to the joint venture (JV) entity of Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd, according to CIMB Investment Bank.

Yesterday, the JV received the letter of acceptance from Pengurusan Aset Air Bhd for the RM993.9 million Langat 2 water treatment plant and reticulation contract.

Following this, CIMB said the JV company might put out a pipe contracts tender estimated at 20% (RM200 million) of the project value. This is seen happening within the next three months.

“Engtex should command a good chance of winning,” CIMB analyst Sharizan Rosely wrote in a note. Engtex is the only listed firm, which has been a supplier to all three winning contractors.

Formosa Prosonic Industries Bhd’s first quarter (1QFY14) net profit fell 39% y-o-y to RM1.1 million from RM1.8 million.

Revenue declined by 6% to RM98.4 million during the quarter, from RM105.0 million in the previous year’s same quarter.

Going forward, the group expects the remainder of its financial year to be challenging.

Will SALCON up up up tomorrow???

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com   

Thursday, 17 April 2014 18:52

KUALA LUMPUR (April 17): Based on corporate events and announcements today, the companies that may be in focus tomorrow are:

Nestle (Malaysia) Bhd’s net profit was negatively flat at RM183.5 million in the first quarter ended Mar 31, 2014, compared to RM184.4 million in the first quarter of the previous financial year.

Revenue rose 3.7% year-on-year to RM1.27 billion from RM1.23 billion.

The manufacturer of cereal, milk products and beverages noted there were investments in marketing and promotional activities linked to the Nestlé "Lebih Kebaikan, Lebih Nilai" campaign.

But a lower tax expense, however, offset the shortfall, thus resulting in a flat net profit for the quarter against the same quarter last year.

“We remain cautiously optimistic for the remaining of 2014. The external environment is showing some signs of recovery in the developed world while the emerging markets economies are still experiencing volatility,” said Nestle.

Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) announced that their joint venture company has received the letter of acceptance from official body Pengurusan Aset Air Bhd for the Langat 2 water-treatment plant and reticulation contract worth RM993.9 million.

Separate statements by Salcon, MMC and AZRB said, Salcon Engineering Bhd, a subsidiary of Salcon, holds a 36% stake in the JV, while MMC takes up 34%. Ahmad Zaki Sdn Bhd, which is a subsidiary of AZRB, owns a 30% stake.

The contract, for a duration of 36 months, entails the construction and completion of phase one of the Langat 2 water-treatment plant and reticulation system in Selangor and Kuala Lumpur.

Salcon, MMC and AZRB said the project is expected to contribute positively to their earnings.

Bursa Malaysia Bhd reported an 18% rise in first quarter net profit on higher equity-trading income.

Bursa said group net profit rose to RM45.1 million in the first quarter ended March 31, 2014 from RM38.2 million a year earlier. Revenue was higher at RM123.2 million versus RM110.4 million.

"The higher profit was mainly due to higher trading value on securities market in 1Q14 compared to 1Q13," Bursa said.

According to Bursa, securities-market revenue rose 21% "mainly due to trading revenue, and listing and issuer services".

Kian Joo Can Factory Bhd and Box-Pak (M) Bhd, a subsidiary of Kian Joo, may see trading interest after Datuk Anthony See, executive director of Kian Joo Can Factory Bhd (KJCF), declared he has changed his mind and is now against the sale of KJCF to Aspire Insight.

KJCF announced: “Datuk Anthony See Teow Guan has declared that he is now against the proposed disposal. Datuk Anthony See’s reason for the change of decision is in light of the letter of interest that was received from Toyota Tsusho Corporation (TTC).”

KJCF has yet to receive a reply from TTC on the proof of funds and other documents, other than a letter of intent.

TTC’s offer is at a tentative maximum price of RM3.74 per share versus Aspire Insight’s RM3.30 per share.

The EGM for the proposed takeover, pricing the entire assets and liabilities of KJCF at RM1.47 billion or RM3.30 per KJCF share, will be held in May. Aspire will need 75% approval from those present and voting to seal the deal.

Edaran Bhd has secured a two-year RM23.8 million contract to undertake maintenance work for the Royal Malaysian Customs Department.

The firm said its wholly-owned subsidiary Edaran IT Services Sdn Bhd was awarded the contract by Customs.

“Proceeds from the contract shall contribute towards the earnings of the group for the financial years ending Jun 30, 2015 and Jun 30, 2016,” said Edaran.

Asia Bioenergy Technologies Bhd rose in active trades after the company announced that an associate company is selling biofuels to Concord Energy Pte Ltd.

At market close today, Asia Bioenergy rose one sen or 10% to 10.5 sen per share on trades of 136.5 million shares. It was the second most actively traded counter.

Nexfuel Ltd has signed an agreement to sell all biofuels products produced using the technology developed by Cool Planet Energy Systems Inc to Concord Energy Pte Ltd of Singapore, the company said in a statement to Bursa Malaysia today.

Nexfuel is 20%-owned by Asia Bioenergy.

Asia Bioenergy said the agreement followed a plant construction agreement, previously signed between Nexfuel and Cool Planet on Feb 20. It granted Nexfuel the licensing rights to Cool Planet's technology to develop fuel production plants in Malaysia.

Asia Bioenergy said the offtake agreement is effective immediately and will endure until the sixth anniversary of the first delivery from the first facility.

The agreement is expected to contribute positively to the future earnings of the company.

KLCC Property Holdings Bhd (KLCCP) is able to fund the purchase of assets worth up to RM1 billion, according to its group CEO Datuk Hashim Wahir.

At a press conference today following the company’s annual general meeting, Hashim said: “There is capacity for us to fund a single asset of up to RM 1 billion.”

He added that the group is looking to expand into development that are yield accretive and will provide value to the shareholders in terms of distribution.

When asked the whereabouts of the assets to be acquired, Hashim replied that they would be around the KLCC area.

He added that announcements would be made when it acquired the right target. “We hope that there will be one this year,” he replied.

BToto’s dividend yield remains attractive

Business & Markets 2014

Written by PublicInvest Research   

Thursday, 17 April 2014 10:14

Berjaya Sports Toto Bhd

(April 16, RM3.83)

Maintain neutral with target price of RM4.12: We met up with the management of BToto for updates recently. With inflationary pressures eroding individual spending power, the local number forecasting operator (NFO) industry’s outlook remains challenging.

We are also unexcited by the prospects of Berjaya Philippines’ (BPI) recent acquisitions of HR Owen and RBW Holdings in the United Kingdom, as we do not see significant value accretion to the group by either company.

We understand from management that the group, together with other gaming companies, is still in negotiations with the government over the implementation of the GST in April 2015.

It has been proposed that the GST implementation be accompanied by a reduction in the gaming tax or betting duties, similar to the replacement of the sales and services tax. In the event of an unfavourable outcome (partial or no reduction of other taxes), the group will likely need to pass on the additional cost to punters, which will not help in the struggle to gain market share from illegal operators.

Due to the ongoing arbitration against the Philippines Charity Sweepstake Office (PCSO) for breaching its exclusivity clause to BPI’s wholly-owned subsidiary Philippine Gaming Management Corp (PGMC) in the Luzon area, installation of new terminals has been temporarily suspended.

On the bright side however, its rival Pacific Online has also stopped expanding in Luzon, maintaining a 16% market share in the area.

To recap, BPI acquired a 51% stake in London-based property company RBW Holdings for a cash consideration of £50,001 (RM272,552) in March. BPI also subscribed to loan stocks amounting to £300,000. We understand that RBW Holdings is currently a dormant company, and there are no clear plans for it in the near term. 

TOTO 

As for HR Owen, the group plans to take a more active role in managing the company, but the focus will continue to be in the existing UK market for now.

While dividend yield remains attractive at current price levels (around 6%), we maintain “neutral” on BToto with unchanged target price of RM4.12 based on dividend discount model valuations, as we believe there is a lack of catalysts amid the challenging outlook for the local NFO industry and the group’s overseas ventures. — PublicInvest Research, April 16

I am sad.

I am sad.

Our nation loss a STRONG MAN.

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com   

Thursday, 10 April 2014 19:35

KUALAL LUMPUR (Apr 10): Based on news flow and corporate announcements today, the stocks that may be in focus tomorrow could include the following:

Malaysian Resources Corporation Bhd (MRCB) announced the sale of Platinum Sentral to Quill Capita Trust (QCT) for RM750 million.

MRCB stands to gain RM240 million from the disposal of the property. MRCB said the gain represents 15 sen earning per share for MRCB for this financial year.

The RM750 million sale will be satisfied via cash of RM486 million and the issuance of 206.25 million new QCT units at RM1.28 per unit.

Simultaneously, MRCB had entered into share sale agreements with CapitaLand RECM Pte Ltd and Coast Capital Sdn Bhd to acquire their respective 40% and 1% stakes in Quill Capita Management, the management company of QCT, for RM6 million.

With the acquisition of the 41% stake, MRCB will be a significant shareholder in Quill Capita Management.

“We will use QCT as the platform for further injection of other prime assets in the pipeline,” said MRCB, whose share closed 2 sen up to end at RM1.64.

Protasco Bhd is eyeing 15% profit growth in its current financial year ending December 31 2014.

Group managing director Datuk Seri Chong Ket Pen said profit growth would be underpinned by growth from the company's construction segment, besides engineering and infrastructure operations.

Speaking at a talk today, Chong said Protasco's total orderbook at its construction and infrastructure divisions is expected to increase 42.9% to RM1 billion from RM700 million at the moment.

He said the company had unbilled real estate sales of about RM196 million.

"We are in the process of unlocking the value of the 40ha (100-acre) land next to Putrajaya," he said.

Chong said the development had a RM10 billion GDV (gross development value).

He said the group was planning to roll out soon, its Phase 2A university apartment which is situated on the same piece of land. "It will take about 15 years to complete the whole project," Chong said.

Plantation stocks may be reacting to Malaysia's March palm oil data. Official figures today show that end-stocks rose in March, higher than market estimates.

Stocks in March rose nearly 2 percent to 1.69 million tonnes, the Malaysian Palm Oil Board (MPOB) said in a monthly report today, against forecasts for a drop to 1.58 million tonnes.

Crude palm oil production in March jumped 17.4 percent from a month ago to 1.5 million tonnes, beating market forecasts for a 9 percent rise to 1.39 million tonnes, Reuters reported.

Lagging demand from major buyers also added to the higher stockpiles. Malaysia exported 1.24 million tonnes of palm oil products in March, down 8 percent from a month earlier and weaker than forecasts for 1.30 million tonnes of shipments.

Malaysian Airline System Bhd (MAS) has instructed its solicitors to lodge an appeal to the Competition Appeal Tribunal against the finding of infringement maintained by the Malaysia Competition Commission (MyCC).

In a statement to Bursa Malaysia, the national carrier said today it received a notice of finding of infringement from MyCC that maintains its decision in finding of infringement and the fine of RM10 million.

AirAsia Bhd, which is also facing similar situation, said it is also appealing against MyCC decision.

On September 6 last year, the MyCC ruled MAS and AirAsia Bhd’s 2011 collaboration agreement as violating the Competition Act 2010 and fined each airline RM10 million.

My E.G. Services Bhd (MyEG) may be in focus after The Royal Malaysian Customs clarified the role of My MyEG in relation to the goods and services tax (GST) effective April 2015.

“The government did not elect MyEG to collect the goods and services tax on behalf of the government,” said Datuk Sri Khazali Ahmad, director-general of customs, in a statement.

Khazali explained that MyEG will only receive remuneration if the implementation of the new system generates a year-on-year improvement in tax contribution of more than 14% from select sectors.

“The company will not receive any form of payment if the improvement in payment is below 14%.”

KLCC Real Estate Investment Trust (KLCC REIT) announced that the Securities Commission Malaysia has approved the establishment of its sukuk murabahah programmes, with value up to RM3 billion.

The programmes comprise an Islamic medium term notes programme and Islamic commercial papers programme, with tenure of 30 years and seven years respectively from the date of first issuance.

Both programmes have a combined limit of RM3.0 billion in nominal value, with a sub-limit of RM500.0 million for the Islamic commercial papers programme.

“The proceeds shall be utilised for Shariah-compliant purposes by the issuer and KLCC REIT to finance, amongst others, redemption and/or payment of existing and future financings, capital expenditure,  acquisitions and working capital requirements.”

Perisai Petroleum Teknologi Bhd has successfully completed a private placement, which raised proceeds of RM165.9 million.

Managing Director Zainol Izzet Mohamed Ishak said the funds raised in the exercise will be used to repay borrowings, capital investments, as well as working capital for the company.

The placement, at RM1.53 per share, was oversubscribed.

Smartag Solutions Bhd announced that it has entered into a partnership with Ningxia Salimy Muslim Commodity Trading Co. Ltd to develop China International Halal Online Trade and Traceability Ecosystem.

“The partnership agreement provides a good platform for Smartag to commercialise its traceability on an international level whereby the market potential is huge.

The agreement is expected to contribute positively to the future earnings of the company,” said Smartag in its filing with Bursa Malaysia.

Smartag said this partnership will provide a platform to allow companies from all over the world to display halal food, Muslim supplies in international trade.

Ningxia is the sole Muslim province in China. Its population is 6.4 million with Muslims accounting for 36% of the people. In 2013, the total trade of Ningxia rose 45% to US$3.22 billion.