Stocks To Watch Karex, Barakah, Genting, Tebrau, TA, Unico-Desa, AmCorp, Gamuda, Mudajaya

Business & Markets 2013
Written by Ho Wah Foon of   
Monday, 04 November 2013 19:33

KUALA LUMPUR (Nov 4): Based on news flow and announcements today, stocks that could be in focus on Wednesday (Nov 6) may include  Karex, Barakah, Genting, Tebrau, TA, Unico-Desa, AmCorp, Gamuda and Mudajaya.

Karex Bhd, the world’s biggest original equipment manufacturer condom maker in terms of capacity, is heading for maiden listing on Wednesday (Nov 6) with IPO price at RM1.85 per share.

Karex has raised RM74.9 million from its IPO.

The pricing of its initial public offering (IPO) at a price-earnings ratio (PER) of 17.2 times is believed to be rather high by some analysts.

Its PER in the high-teens is on a par with the larger rubber glove manufacturers that have established a good track record, which justifies their premium. 

For FY2013 ended June 30, Karex posted a pre-tax profit of RM36.14 million, more than eight times the RM4.28 million profit that its closest peer Sagami Manufacturers Sdn Bhd made in FY2012 ended Dec 31.

Barakah Offshore Petroleum Bhd, which is taking over the listing status of PN17 company Vastalux Energy Bhd, is set to attract interest.

Although it is a reverse takeover of Vastalux, Barakah group president and CEO Syed Abdul Rahim Syed Jaafar assured that Barakah will not assume any of the beleaguered company’s assets or liabilities.

“We are only assuming the stock code of Vastalux and will not be taking over any of its assets or liabilities. We will sell Vastalux back to its shareholders,” he said in an interview with The Edge weekly.

Every Barakah share is valued at 65 sen each.

Barakah hopes to secure more transport and installation (T&I) jobs in the near future to boost its earnings, although the group is largely involved in the pre-commissioning and commissioning of pipes now.

In FY2012, the group recorded a net profit of RM33.2 million on revenue of RM202 million. The company was established in 2000 by Nik Hamdan Daud and Azman Shah Mohd Zakaria.

Genting Bhd shares may spur some excitement after Genting Singapore PLC said its core earnings in the third quarter rose 20 percent from a year earlier, as both gaming and non-gaming businesses improved.

The company, which is controlled by Malaysia's Genting Bhd, said its earnings before interest, tax, depreciation and amortisation (EBITDA) rose to S$335 million from S$322 million in the previous quarter, Reuters reported.

Gaming revenue climbed 15 percent on increased visits and new VIP business, and non-gaming revenue posted a 27 percent gain from a year earlier, the company said.

Tebrau Teguh Bhd may be impacted by the news that Iskandar Waterfront Holdings, a sister property company, has postponed an up to $300 million IPO (more than RM900 million) to the last quarter of 2014 due to property cooling measures.

Reuters, citing two sources, said the IPO is a casualty of the government's plan to raise real property gains taxes next year and double the minimum price at which foreigners can buy property as it seeks to cool prices.

Iskandar Waterfront, tasked with developing a metropolis in Johor, had previously deferred the listing to early 2014 from an initial target to sell shares in this current quarter.

"The assets have to be revalued now with the changes in real property gains tax," said one of the sources. The sources declined to be identified.

Tebrau share price had run up in the past due to news on the proposed listing of Iskandar Waterfront.

TA Enterprise Bhd announced that its substantial shareholder Datuk Tiah Thee Kian had bought a total of three million shares in TA today and the past two trading days.

It said Tiah now holds a 29.73% stake in the company after purchasing 1.269 million shares at 76 sen per unit today, 731,000 shares at 73 sen last Friday and one million shares at 73 sen on Thursday.

TA, which was traded actively with transactions of some 23 million shares today, closed at 77 sen, up 3 sen or 4%, after hitting a high of 78 sen.

Since early this year, Tiah has been buying TA shares from around 50 sen per unit.

TA share price has started to pick up from 58 sen since early September following speculations that it was a takeover target of other major stockbroking firms.

The net asset per share of TA stood at RM1.75 as at end-July 2013, according to the company.

Unico-Desa Plantations Bhd shares may be in focus again after Hong Leong Investment Bank Bhd advised shareholders of Unico-Desa to accept the RM1.17 per share offer by IOI Corporation Bhd for all the shares.

Saying that the offer is “fair and reasonable”, the independent advisor gave several reasons for its recommendation.

Among the reasons were: the offer price is at a premium to the RNAV of RM1.13 per share, the 3-year average dividend yield of Unico-Desa at 3.49%  was lower than the  3.91% yield of comparable companies, the future of Unico-Desa is dependent on the price of palm oil.

On Oct 2, IOI Corp Bhd launched a takeover of Unico-Desa at RM1.17 a share after it had acquired close to 40% in Unico-Desa from companies linked to Teoh Hock Chai for RM396.63 million, which worked out to be RM1.17 per share.

AmCorp Properties bhd announced the company has received an offer from Gamuda Bhd to buy over AmCorp’s 20% equity interest in Kesas Holdings Bhd for RM250 million.

Gamuda now holds 30% equity interest in Kesas Holdings Bhd.

“The Board will deliberate on the terms of the offer and decide on the next course of action,” said AmCorp in its announcement.

Simulaneously, Gamuda is also extending offers to Selangor’s Perbadanan Kemajuan Negri Selangor to buy its 30% stake in Kesas and to Permodalan Nasional Bhd (PNB) to take over its 20% stake.

Mudajaya Group Bhd stated that neither the company nor its 26%-owned RKM Powergen Private Ltd are under investigation by the Indian authorities over its coal-fired power plant project in Chhattisgarh.

It said this when rebutting an online news report (not from and Australian news report that Mudajaya was under probe over coal supply agreements to its Indian coal plant.