Stocks To Watch TNB, Kossan, Sentoria, AirAsia, Scomi Energy, F&N, plantations, LBI, LBS, CMMT, Bumi Armada

Business & Markets 2014
Written by Ho Wah Foon of   
Thursday, 23 January 2014 20:09

KUALA LUMPUR (Jan 23): Based on news flow and corporate announcements today, the following companies may attract attention tomorrow:

Tenaga Nasional Bhd (TNB) reported a 22.6% rise in first quarter net profit from a year earlier due to higher electricity sales and lower tax payment.

Tenaga said net profit rose to RM1.73 billion in the first quarter ended November 30, 2013 (1QFY14) from RM1.42 billion. Revenue increased to RM9.59 billion from RM9.13 billion.

"The higher (net) profit is due to significant movement in taxation, being the result of reinvestment allowance incentive of RM201.7 million and the reversal of deferred taxation of RM188.7 million to reflect the change in the taxation rate from 25% to 24%.

"The current quarter recorded a lower (currency) translation gain of RM252.7 million as compared to RM397.4 million reported in previous first quarter.

Looking ahead, Tenaga said implementation of the incentive-based regulation this year may mitigate fuel-cost risks. As such, the company expects "better earnings predictability".

Kossan Rubber Industries Bhd said that its investors can expect higher dividends for 2014, as its earnings are expected to grow by 20% to 25% for the next 2 years.

"Dividend has been on the rise, looking at 2012 and 2013, the payout ratio increased from over 20% to over 30%, so maybe investors can expect something higher from this year onwards," said Edward Yip, general manager of Kossan.

He told a seminar in Bursa Malaysia: "If we earn more, we pay more (dividend)."

Kossan expects a 20% to 25% growth in earnings for 2014 and 2015, with Yip hinting that earnings growth may be higher as the forecasts do not reflect the group's potential expansion into Indonesia and Vietnam.

Sentoria Group Bhd announced that it plans to undertake a bonus issue of 88 million warrants on the basis of one warrant for every five existing shares of RM0.20 each in Sentoria and an increase in the authorised share capital of Sentoria from RM100 million to RM200 million.

It said in the event that the warrants are exercised into new Sentoria Shares during the FYE 30 September 2014, the EPS (earnings per share) of Sentoria will be diluted accordingly.

However, the proposed bonus issue of warrants is expected to contribute positively to earnings thereafter through the utilisation of the proceeds as additional working capital for the group’s business growth.

Sentoria also proposed a final single tier dividend of one sen per share for the financial year ended 30 September 2013.

AirAsia Bhd’s group CEO Tan Sri Tony Fernandes is optimistic his India venture will take off soon. He said he wants to change the travel mood of the country of 1.3 billion people.

He sees now as a good time to enter the Indian market, according to CNBC-TV18.

“We are the first foreign airline that has ever been allowed to have gotten thus far in India,” he said in an interview with the news channel on the sidelines of the World Economic Forum in Davos, Switzerland.

On AirAsia India, he said: “We have recently had the Directorate General of Civil Aviation (DGCA) approving all our training facilities. We are ready to go. I still believe we can launch in March-April time.”

AirAsia India is a 49:30:21 joint-venture between Air Asia, Tata Group and Arun Bhatia-led Telestra Teleservices.

Scomi Energy Services Bhd may see a foray into the offshore pedestal crane business via a planned collaboration with Handal Resources Bhd.

Scomi Energy CEO Shah Hakim Zain said the oil and gas support services provider has signed a memorandum of agreement (MOA) with Handal which manufactures cranes.

The MOA allows Scomi to explore opportunities for collaboration with Handal to supply modular workover rig, offshore pedestal cranes, repair services to oilfields in Africa and the Middle East.

Fraser & Neave Holdings Bhd (F&N) will start registering profits from its planned RM1.6 billion mixed property development in Section 13, Petaling Jaya, Selangor, within three years from the project's launch scheduled for the fourth quarter of 2014.

Chief Financial Officer Soon Wing Chong told a press conference today that the residential and commercial development covers a five ha (12.72-acre) leasehold site and is a joint venture with FCL Centrepoint Pte Ltd.

Soon said the project is expected to take "five to six years" to complete.

Plantation stocks could be excited by an official view on its palm oil fundamentals today.

Palm oil stocks in Malaysia could be lower and range between 1.6 million and 1.8 million tonnes at the end of this year, the Malaysian Palm Oil Board said, as growing demand for the oil outstrips bigger output.

These figures are lower than the 1.99 million tonnes piled up at the end of 2013.

Exports of Malaysian palm oil, seen at 18.5 million tonnes for the full 2014, are higher than 18.12 million tonnes exported in 2013.

"Exports are expected to be better as crude palm oil price stabilises and higher demand comes in from the biodiesel industry," said Choo Yuen May, MPOB's director-general, at a palm oil industry meet.

Kuala Lumpur Kepong Bhd became the top gainer today, rising RM1.20 or 5% to end at RM24.82 on trades of 1.42 million shares. The other top risers were Batu Kawan and Sarawk Oil Palm.

LBI Capital Bhd announced that its wholly owned unit Triple Equity Sdn Bhd (TESB) has entered into a joint venture agreement with Equal Sign Sdn Bhd (ESSB) to develop a Bentong leasehold land, with gross development value (GDV) of RM370 million.

ESSB, a unit of LBS Bina Group Bhd, is engaged in property development.

The development land is located within Gohtong Jaya Township, Pahang. It is 30 minutes drive from Kuala Lumpur.

The proposed development will comprise 610 units of service apartments in 3 blocks of various sizes and a hotel block with 186 rooms.

Under the agreement, the landowner (TESB) shall be entitled to 15% of the GDV of properties to be developed in the said development. ESSB will be the developer.

The proposed development shall be completed within five years with a further extension of two years.

“The joint venture is expected to contribute positively to the earnings and net tangible assets of the group for the near future.”

CapitaMalls Malaysia Trust (CMMT) achieved a distribution per unit (DPU) of 2.24 sen for the fourth quarter ended 31 December 2013 (4Q 2013), 6.2% higher than the 2.11 sen for the same quarter last year.

For 4Q 2013, CMMT posted a net property income (NPI) of RM54.8 million, a 10.8% increase over the RM49.5 million for 4Q 2012, according to CMMT’s press statement filed with Bursa Malaysia.

“The better performance was partly due to the completion of Phase 1 asset enhancement works at East Coast Mall in Kuantan.”

For the 2013 financial year, CMMT recorded DPU of 8.85 sen, 4.9% higher than the DPU of 8.44 sen for financial year in 2012.

“Unitholders can expect to receive the total DPU of 4.50 sen per unit for the period from 1 July 2013 to 31 December 2013 on 7 March 2014.

Bumi Armada Bhd, an offshore oilfield services provider, said its unit Armada Offshore OSV Limited and Bumi Armada (Labuan) Ltd has received an award from Interoil Angola Limitada for the charter of two Platform Supply Vessels (PSVs).

The contracts for both vessels are worth RM 52.6 million for an initial operation period of one year firm, with four options of six months each at an aggregate value of RM105.2 million, if the options are fully exercised by Interoil.

Both contracts are expected to contribute positively to the revenue and earnings of the Bumi Armada Group for the financial year ending Dec 2014, and the period thereafter for the duration of the contracts.