Stocks To Watch Coastal Contracts, Malton, Signature, Tune Insurance and Karex

Business & Markets 2013
Written by Ho Wah Foon of   
Wednesday, 11 December 2013 19:28

KUALA LUMPUR (Dec 11): Based on limited news flow and corporate announcements today, the stocks that may warrant some investor attention tomorrow could include the following:

Coastal Contracts Bhd announced that two wholly-owned subsidiaries have collectively secured contracts for the sale of one unit subsea support maintenance vessel (SSMV) and two units low-end vessels for a total of RM148 million.

Apart from the one unit SSMV and one unit low-end vessel which were sold to repeat customers, the other one unit low-end vessel was sold to a new customer, the company told Bursa Malaysia.

“This is the fifth batch of vessel sales order secured by the group in FY2013. With the securing of these latest sales, the total value of the group’s vessel sales order book stood at approximately RM1.34 billion,” it added.

All of these vessels are expected to be delivered in 2013 and 2014.

The revenue from the sale of these vessels is expected to contribute positively to revenue and earnings of the group for the financial years ending 31 December 2013 and 31 December 2014, it added.

Malton Bhd announced that the legal tussle involving a claim by companies linked to Malton and counter-claim made by companies linked to Johor Corporation Bhd has ended today.

The claim by Malton’s units Impian Ekspresi Sdn Bhd, Khuan Choo Property Management Sdn Bhd and Pembinaan Gapadu Sdn Bhd against Johor Corp’s Bukit Damansara Development Sdn Bhd and Damansara Assets Sdn Bhd and counterclaim by the latter were discontinued today.

In a filing to Bursa Malaysia, Malton said: “The High Court of Malaya at Kuala Lumpur today recorded that the main claim in the suit and the counter-claim filed by the defendants against the plaintiffs have both been discontinued with no liberty to file afresh and no order as to costs.”

This announcement could clear the obstacle for the development of Pusat Bukit Damansara by Malton.

Signature International Bhd, Tune Insurance Holdings Bd and Karex Bhd have been featured as the top 3 picks for the small cap segment in CIMB’s “Navigating Malaysia” yearbook.

Signature International is the country’s largest modular kitchen player. With an order book of RM200 million, CIMB expects more jobs in the pipeline for the company over the next few years.

CIMB Research has given an “add” rating on the stock with a target price (TP) of RM2.63, with a very high upside potential. The stock rose 7 sen to RM1.30 at market close today.

Riding on the industry trend of built-in kitchens, the company is favoured primarily due to its ease of scaling up and debt free balance sheet.

CIMB sees Tune Insurance as a niche player in the fast-growing travel insurance segment with an exposure to 16 markets.

Being tied up with AirAsia Bhd, the research house feels that this is a significant strength as it would not be easily replicated by its competitors.

Placing an “add” rating on the stock, CIMB has set the TP for the company at RM2.55 with a potential upside of 34.9%. The stock closed flat at RM1.89 today.

The key catalysts for the company would be swift expansion in travel insurance, EPS accretive mergers & acquisitions (M&A) in Indonesia and the improving underwriting margins for the non-life business in Malaysia.

On Karex, CIMB said it is the world largest condom maker with an annual capacity of 3 billion pieces per annum and an estimated 10% share of global output.

Incorporated in 1988 in Johor, Malaysia, the group’s market sales cover more than 110 countries across the major regions of Africa, Asia, Europe and America.

The target price for the stock was RM4.54 representing a 20% upside with an add rating by CIMB. The stock closed up 5 sen at RM3.65 today.