Stocks To Watch Coastal Contracts, PetGas, PetChem, plantation firms, S. Steel, F&N, PDZ

Business & Markets 2014
Written by Ho Wah Foon of   
Monday, 10 February 2014 19:49

KUALA LUMPUR (Feb 10): Based on news flow and corporate announcements as at 7.15 pm today, the following stocks may attract attention tomorrow:

Coastal Contracts Berhad announced that its wholly-owned subsidiary, Thaumas Marine Ltd, had secured a charter contract for the provision of a jack-up service with gas compression capabilities.

The contract is worth RM1.24 billion.

The company stated that the contract was awarded by a group of Mexican upstream contractors.

The charter contract is for a period of eight years with an extension option of up to 12 years. It is expected to commence by the second half of 2015.

The contract is expected to contribute positively to the revenue, earnings and net assets of Coastal Group for the financial years ending 31 December 2015 and periods thereafter for the duration of the charter contract, said the company.

Petronas Gas Bhd (PetGas)’s net profit jumped 33% year-on-year (y-o-y) to RM394 million in the fourth quarter ended Dec 31, 2013, from RM295 million.

Revenue also rose 13% y-o-y to RM1.028 billion from RM909 million.

The company proposed a final dividend of 40 sen per ordinary share under a single tier system for the financial year ended Dec 31, 2013.

For the full-year period, net profit earned was RM2.1 billion, up from RM1.4 billion in the previous corresponding period. Revenue raked in was RM3.9 billion, up from RM3.6 billion a year ago.

“Looking ahead, the group’s earnings are expected to remain stable as the structure of the new gas processing and transmission agreements are expected to be not significantly different from the existing structure,” said PetGas.

Petronas Chemicals Group Bhd reported a 50% fall in its fourth quarter net profit from a year earlier. Profit fell on lower sales volume of petrochemical products and higher maintenance expenses for facilities.

Petronas Chemicals said net profit fell to RM450 million in the fourth quarter ended December 31, 2013 from RM902 million. Revenue declined to RM3.35 billion from RM4.38 billion.

Petronas Chemicals' full-year net profit also dropped to RM3.15 billion from RM3.52 billion a year earlier. Revenue was lower at RM15.2 billion compared to RM16.6 billion.

Petronas Chemicals plans to pay a dividend of 12 sen a share.

Looking ahead, Petronas Chemicals said its performance would hinge on world petrochemical prices, global economic conditions, and the utilisation rates of the company's production facilities.

Plantation stocks may come under focus after the release of January palm oil statistics by two groups today. Crude palm oil futures jumped at close today.

Exports of Malaysian palm oil products for Feb 1-10 rose 8.4 per cent to 308,485 tonnes from 284,693 tonnes shipped during Jan 1-10,  cargo surveyor Societe Generale de Surveillance was quoted by Reuters as saying today.

In a separate report, Reuters said Malaysia's palm oil stocks at the end of January fell more than expected, as seasonally slowing output helped offset sluggish global demand for the tropical oil.

Data from industry regulator the Malaysian Palm Oil Board showed that Malaysia’s crude palm oil output fell to 1.51 million tonnes in January, a 9.6 percent drop from December. A Reuters poll of planters and traders had forecast production to fall to 1.52 million tonnes.

Official data also showed Malaysia exported 1.37 million tonnes in January, down 9.9 percent on a month earlier, but above forecasts for a 10.5 percent decline.

That brought January end-stocks to 1.93 million tonnes, a 2.6 per cent fall from December, steeper than market expectations for inventories to ease 0.3 per cent.

"Fundamentals (for palm oil sector) are looking a bit friendlier," said a trader with a foreign commodities brokerage in Malaysia.

Fraser & Neave Holdings Bhd (F&N) reported a 21% y-o-y jump in its first quarter (1QFY14) net profit to RM68.77 million, from RM56.82 million a year ago.

The group also saw higher revenue of RM947.76 million for the first quarter, up 11% from RM854.21 million in the previous year same quarter.

No dividend was declared.

The rise in profit and revenue for the quarter was attributed to better performance of its soft drinks units, Dairies Malaysia and Dairies Thailand segments.

Southern Steel Bhd posted a net profit of RM2.26 million in the second quarter ended December 31, 2013 versus a net loss of RM7.4 million a year earlier.

Southern Steel said revenue rose to RM705.78 million from RM692.54 million.

Cumulative first-half net loss widened to RM1.91 million from a net loss of RM302,000 a year earlier. Revenue fell to RM1.38 billion from RM1.4 billion.

Looking ahead, Southern Steel said the hike in electricity rates would have impact on the steel sector, but it is undertaking energy-saving and efficiency programmes to mitigate the impact.

"On balance, the board expects to see better performance in the second half of the FY2014," Southern Steel said.

PDZ Holdings Berhad confirmed news reports that it was holding preliminary talks with some parties to explore potential business dealings.

In a statement to Bursa Malaysia today, the company said: “We confirm that the major shareholder has held preliminary talks with some parties to explore potential business dealing, but we have not, at this present time, deliberated the matter at board level as negotiations are still preliminary.”

The Edge Weekly said that the company is currently in talks with a China-based oil and gas player as well as a contractor with Petroliam Nasional Bhd for an asset acquisition exercise.

At market close today, PDZ was the most actively traded counter. It ended at an unchanged share price of 12 sen, with 191.7 million shares traded.