Stocks To Watch MBSB, KLK, Maxis, Puncak, Astro, MHB and Public Bank

Business & Markets 2013
Written by Ho Wah Foon of   
Tuesday, 22 October 2013 19:28

KUALA LUMPUR (Oct 22): Based on news flow and corporate announcements, the stocks that deserve some attention tomorrow could include MBSB, KLK, Maxis, Puncak, Astro, MHB and Public Bank.

Malaysia Building Society Bhd (MBSB) announced that for the nine months period ended Sept 30, 2013, it achieved a pre-tax profit of RM680.934 million, an increase of 65.9% or RM270.454 million from RM410.480 million for the same period last year.

On a quarterly basis, the group achieved a pre-tax profit of RM196.235 million, a decline of 20.7% from the 2nd quarter pre-tax profit of RM247.589 million.

The decline in pre-tax profit was mainly due to higher collective impairment allowance following increase in collective allowance made for personal financing and mortgage portfolios, the company said.

Datuk Ahmad Zaini Othman, MBSB’s President and Chief Executive Officer, commented, “The financial results remain contributed mainly by retail business although the retail portfolio registered slower growth, which reflected the measures announced by Bank Negara Malaysia in early July this year to further promote a sound and sustainable household sector.

The non-bank financial institution has declared an interim dividend of 5 sen per share.

Kuala Lumpur Kepong Bhd (KLK), which is in talks with London-listed Equatorial Palm Oil Plc (EPO), announced that if there is a takeover offer for EPO it will be a cash offer.

EPO had revealed earlier this month that it was in discussions with KLK regarding the funding of its joint venture, Liberian Palm Developments (LPD), and said these discussions may or may not include an offer for all or part of EPO.

In a statement to the London Stock Exchange, KLK confirmed discussions are on-going but said “there can be no certainty that any offer for EPO will be made, nor as to any other terms…as a results of these discussions.”  

Equatorial Palm Oil PLC, listed on the AIM market, is a loss-making palm oil development company with operations in Liberia.

Maxis Bhd is eyeing to capture at least 50 per cent of Malaysia's prepaid mobile Internet market through its #Hotlink plan, said Consumer Business Head Dushyan Vaithiyanathan.

He said the target was set based on the projected development of their infrastructure to accommodate the plan, the first of its kind in Malaysia, to offer customers with continuous free basic Internet, Bernama reported.

"We see a huge momentum in growth coming from people who are going to start using mobile Internet (in Malaysia) in the near future," he said at a media presentation on #Hotlink here today.

He said mobile Internet penetration in the country was only between 20 per cent and 25 per cent.

With the #Hotlink plan, he said customers could now enjoy free basic Internet at 64 Kilobytes per second which can be upgraded to high-speed Internet for just RM1 per day.

Puncak Niaga Holdings Bhd has secured RM151 milion worth of loans from the Finance Ministry. The loans will finance the replacement of water pipes, and maintenance of water facilities in the Klang Valley.

Puncak, which owns local water concessions, said the loans secured by its 70%-owned subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), come in portions of RM75 million and RM76 million respectively.

"The government loans will enable Syabas to finance and undertake the implementation of critical projects for old pipes and critical pipes replacement projects, and reduce non-revenue water losses in Selangor, Kuala Lumpur and Putrajaya," Puncak said.

The 20-year loans come with an annual 3% interest.

Astro Malaysia Holdings Bhd may attract some interest after JP Morgan has upgraded its rating for Astro to “overweight” from “neutral”, and raised its June 2014 price target to RM3.70 from RM3.00 a share.

The research house, in a report today, said Astro’s near-term earnings growth will drive the stock up.

The stock has been flat since listing as significant increase in opex related to STB swaps pared earnings growth. At market close, Astro ended at RM2.97, up 3 sen.

“Near-term earnings acceleration to drive stock performance…Earnings acceleration post conclusion of HD STB swaps should reverse stock underperformance,” said JP Morgan.

The research house noted Astro has strong breadth of content, backed by in-house channels. Of the 171 channels offered by Astro, 69 are its own.

“In our view, breadth of content as well as access to exclusive content have been key drivers for Asian pay TV operators,” said JP Morgan.

JP Morgan also sees potential upside to ARPU (average revenue per user). It said Astro has been successfully driving subscriber uptake of HD content and it estimates subscribers for HD content to increase from 1.5 million currently to 2.4 million by FY16E.

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) reported a 352% jump in third quarter net profit from a year earlier as revenue fell substantially. The profit rise came on higher income from its offshore oil and gas structure construction unit.

MHB said net profit rose to RM36.43 million from RM8.06 million. Revenue fell substantially to RM449.67 million from RM841.78 million.

"The group produced a higher profit before tax of RM41.1 million for the current quarter against RM10.2 million in the corresponding quarter resulted from higher operating profit from offshore segment as mentioned above.

"Revenue for offshore is lower as projects in hand, except for those awarded in the current year, are nearing completion with relatively lower value of progress claims remaining," MHB said.

MHB's cumulative nine-month net profit declined to RM134.58 million from RM141.65 million. Revenue dropped to RM2.16 billion from RM2.47 billion.

Looking ahead, MHB said it may encounter "major change orders" which could have a substantial positive impact on its financials. 

Public Bank Bhd posted a net profit of RM1.047 billion for the third quarter to end-Sept 2013, up 7.7% year on year.

Its revenue for the quarter also rose to RM3.870 billion, from RM3.589 billion in the third quarter of 2012.

For the cumulative nine months to September 2013, net profit totalled RM3.039 billion, compared with RM2.845 billion in 2012’s nine-month period.

Revenue for the nine months rose to RM11.346 billion, from RM10.428 billion.

Reviewing its results, the major financial group said: “For the 3rd quarter, the improved earnings was mainly due to higher net interest income, higher net fee and commission income and higher investment income, partially offset by higher loan impairment allowances.”

Public Bank recorded a healthy growth in both loans and deposits at an annualised rate of 12.0% and 13.2% respectively in the nine months ended September 2013.

On outlook, the bank said the group is expected to sustain its strong market position in the domestic retail operations segment, supported by continuing growth in consumer credit and SMEs lending. “For the remaining months of 2013, the Public Bank Group is expected to maintain its earnings momentum and record satisfactory performance,” it said.