Stocks To Watch Tenaga, cement/steel/auto/glove stocks, UEM, Glomac, Bumi Armada, Supermax

Business & Markets 2013
Written by Ho Wah Foon of   
Tuesday, 03 December 2013 20:02

KUALA LUMPUR (Dec 3): Based on news flow and corporate announcements today, the stocks that may lure attention tomorrow could include the following:

Tenaga Nasional Bhd, which saw its share price soaring today after it announced it will raise electricity prices by about 15% on average next year, could either attract more investors or succumb to profit-taking.

Shares of the state-controlled utilities company rose to a high of RM12.60, a jump of RM2.17 or 27.4%, after  upgrades by analysts who expect Tenaga’s earnings to be raised in current financial year and future years.

But after hitting the all-time high of RM12.60 in heavy trades, the stock attracted profit taking. It closed at RM10.72, which was lower than the revised target prices of most analysts. For example, Alliance Research is giving it a “buy call”, with a raised target of RM13.00 over a 12-month period.

Steel, cement, auto, glove stocks may face selling pressure as they are the heavy users of electricity. The new hike in tariffs will hit them, according to analysts.

Lafarge, Ann Joo, Southern Steel, Lion Industries, Top Glove are some notable names that have been mentioned as being affected.

But if these companies are able to pass on their cost to consumers, the negative impact on their earnings may be reduced.

UEM Sunrise Berhad announced that its managing director/chief executive officer Datuk Wan Abdullah Wan Ibrahim has taken a medical leave of absence effective today.

The property group said it “will continue its business as usual”. In the interim, the company has re-designated Datuk Izzaddin Idris, the group MD/CEO of UEM Group Bhd, as executive director of UEM-Sunrise to perform the duties and functions of Wan Abdullah.

Glomac Bhd’s net profit jumped 64% year-on-year (y-o-y) to RM39 million in the second financial quarter ended Oct 31, 2013.

Revenue also increased 25% y-o-y to RM156 million.

In a statement to Bursa Malaysia, the property developer said its higher profit and revenue were due to continued contribution from projects in Puchong Lakeside Residences, Glomac Rawang, Glomac Centro and Cyberjaya 2.

Glomac said the profit attributable to owners increased mainly due to higher share of profit from gain on disposal of investment properties recorded at an associated company.

For the half-year period to October, profit earned was RM63 million, up from RM45 million a year earlier, while revenue generated was RM318 million versus RM285 million in the previous corresponding period.

Looking ahead, Glomac said the group’s performance is expected to improve for the financial year ending April 30, 2014, based on the on-going development projects barring any unforeseen circumstances.

Bumi Armada Bhd will lease six marine vessels to Russia-based oil and gas (O&G) firm Lukoil-Nizhnevolzhskneft. The charter contracts have a combined value of US$280 million.

In a statement to Bursa Malaysia today, Bumi Armada said the vessels will support  Lukoil Nizhnevolzhsknef's O&G operations within the Filanovsky field at the Caspian Sea.

The Bumi Armada-Lukoil-Nizhnevolzhskneft deal comes in two segments. The first involves three charter contracts comprising two new support vessels and a new multi-purpose duty-rescue entity.

According to Bumi Armada, the "Ice-Class" contracts have a collective value of USD262 million (RM844 million). This is for a fixed 10-year charter.

These vessels are due for delivery in November 2015.

"Each of the Ice-Class contracts is for a fixed period of ten (10) years with the possibility of further extensions of up to another 20 years (extension options)," Bumi Armada said.  

Bumi Armada and Lukoil-Nizhnevolzhskneft have also signed interim contracts. These involve two support vessels and one rescue unit.

The interim contracts have a combined value of US$18 million (RM59 million).

Vessels under the interim deal are scheduled for delivery in November 2014, pending delivery of the Ice-Class entities.

Supermax Corp Bhd is expected to register capital expenditure (capex) of RM1.3 billion within the next nine to twelve years. 

The capex will finance expansion of its nitrile glove production capacity, said executive chairman and group managing director Datuk Seri Stanley Thai.

In a media briefing today on its third-quarter results, Thai said Supermax is planning to allocate RM550 million for its proposed six large plants under the firm's planned Glove City in Klang, Selangor.

He also said that a capex of up to RM750 million will be utilised for Supermax's integrated glove manufacturing complex within the proposed 40ha (100-acre) Supermax Business Park in Serendah, Selangor.

Supermax Business Park will be developed in two phases over the period of nine years. The first phase is expected to commence in 2014, said Thai.

Supermax had earlier indicated that its higher production capacity will result in nitrile gloves forming 53% of the group's total installed capacity. And natural rubber gloves will account for the remaining 47%.