Stocks to Watch Sarawak counters, index stocks, MAS, UWM- OG, Hektar REIT

Business & Markets 2014
Written by Ho Wah Foon of   
Wednesday, 12 February 2014 19:45

KUALA LUMPUR (Feb 12): Based on news flow and corporate announcements up to 7.00 pm today, the following stocks may be in focus tomorrow:

Sarawak counters may attract interest following news that Sarawak Chief Minister Tan Sri Abdul Taib Mahmud will step down as chief minister effective Feb 28 and will be succeeded by Tan Sri Adenan Satem.

Adenan is Special Functions Minister at the Chief Minister's Office and Parti Pesaka Bumiputera Bersatu (PBB) Supreme Council member.

Taib said he had handed over his resignation letter to the Yang di-Pertua Negeri Sarawak Tun Abang Muhammad Salahuddin Abang Barieng today, according to Bernama News Agency.

"When I informed him (Tun Salahuddin) of my intention (to resign as the Chief Minister), he had no objection," he told reporters after an audience with the Sarawak Head of State at the Astana Negeri here.

Taib said Adenan's name was recommended to Salahuddin, and the latter agreed.

He added that the swearing-in ceremony for the new Sarawak chief minister was also scheduled for Feb 28.

Index-linked stocks may react to the positive news that the Malaysian economy expanded 5.1% year-on-year (y-o-y) in the fourth quarter of 2013, above market expectations.

For the full-year of 2013, the economy grew 4.7% after expanding 5.6% in 2012. The 2013 full-year GDP growth also surpassed market expectations.  

In a statement, the central bank BNM said the major economic sectors grew further, supported by both domestic and trade activities.

During the fourth quarter, the services sector rose 6.4% y-o-y, manufacturing climbed 5.1% y-o-y but mining came in 1.5% lower y-o-y. The agriculture and construction segments expanded 0.2% y-o-y and 9.7% y-o-y respectively.

Another heartening news is that Malaysia's fourth-quarter current account surplus widened to 16.2 billion ringgit from 9.8 billion ringgit in the third quarter.

For the whole of 2013, the country's current account recorded a RM37.3 billion surplus, down from 2012's RM57.3 billion.

Net direct investment in the fourth quarter posted an inflow of RM4.0 billion, from a RM2.0 billion outflow in the previous quarter.

The net portfolio investment outflow was RM700 million, from a RM9.7 billion outflow in the third quarter.

Malaysia Airlines System Bhd (MAS) announced that it has awarded a service contract worth US$510 million (RM1.7 billion) to a US company to manage its fleet for 10 years.

The national airline said it signed an “exclusive, 10-year fleet management programme (FMP) agreement with Pratt & Whitney to maintain the airline’s fleet of 43 PW4170 installed engines and spare engines”.

The agreement, which includes an option to extend the contract for up to five (5) additional years, is valued at about US$510 million.

According to MAS, Pratt & Whitney, a United Technologies Corp. company, is a world leader in the design, manufacture and service of aircraft engines, auxiliary and ground power units, and small turbojet propulsion products. 

“The FMP is a risk transfer programme that benefits MAS for uncertainty in the performance of the engines,” said MAS in the filing. It added the transaction “will not have any significant effect on the net asset and gearing of the company.”

UMW Oil & Gas Corp Bhd is buying two jack-up drilling rigs from China-based Tianjin Haiheng Shipbuilding & Offshore Engineering Service Co Ltd for US$434 million (RM1.44b) cash. The drilling rigs are priced at US$ 217 million each.

"The agreement for the purchase of the two (2) jack-up drilling rigs is in line with UMWOG's (UMW Oil & Gas) plan to enhance the asset fleet for expansion in Malaysia and Asia Pacific region as well as to improve financial performance over the coming years.

"The rigs acquisition is expected to contribute positively to the earnings and net assets of the company for the financial years 2014 and thereafter," UMW Oil & Gas said.

The company, which already owned four drilling rigs, said it hoped to own more to capitalise on strong demand for these items.

"The purchase price will be funded partially from the proceeds of the recently completed initial public offering and the balance by borrowings," the firm said.

UMW Oil & Gas said it expected to receive both rigs from Tianjin Haiheng by this December.

Hektar Real Estate Investment Trust's net profit fell 13% to RM25.78 million in the fourth quarter ended December 31, 2013, from RM29.52 million a year earlier.

Hektar said revenue however rose to RM30.43 million from RM29.06 million.

Hektar's full-year net profit climbed to RM58.77 million from RM58.47 million. Revenue was higher at RM120.24 million compared with RM103.23 million.

The group plans to pay a dividend of 2.7 sen a share for the quarter-in-review. This brings its full-year dividends to 10.5 sen a share.

The full-year dividends translate into a 7% yield based on Hektar shares' closing price of RM1.51 today.