AirAsia X, automotive stocks, Alam Maritim, MHB, Talam Transform, Fajarbaru, IGB REIT, Jiankun, OWG, Perstima, Caring, SEGi and EcoFirst

By Gho Chee Yuan /   | July 28, 2015 : 10:02 PM MYT   

KUALA LUMPUR (July 28): Based on corporate announcements and news flow today, companies that may be in focus tomorrow (Wednesday, July 29) could include the following: AirAsia X, automotive stocks, Alam Maritim, MHB ( Financial Dashboard), Talam Transform, Fajarbaru, IGB REIT, Jiankun, Only World Group, Perstima, Caring, SEGi and EcoFirst.

Loss-making AirAsia X Bhd, which will fly four times a week from Kuala Lumpur to Sapporo, Japan, starting Oct 1, 2015, is banking on new routes to help it improve its revenue and turn itself around in the second half of this year, said its acting chief executive officer Benyamin Ismail.

The low-cost, long-haul affiliate of AirAsia Bhd ( Financial Dashboard) plans to next launch its first US flights to Hawaii in November, to fill a gap left by the axing of routes to Nagoya, Narita and Adelaide this year.

Benyamin said AirAsia X targets to carry close to 100,000 passengers on the Kuala Lumpur-Sapporo route in the first year of operations. The new route is in addition to its existing flights to Osaka and Tokyo.

"To make sure that we achieve good profitability (on the route), we have to make sure that we achieve 75% to 80% (of average load factor),” Benyamin told a press conference to announce its new flights from Kuala Lumpur to Sapporo today.

As part of its restructuring plan, the loss-making airline is dropping some of its unprofitable flights and slowing its aircraft deliveries.

“We will cut routes that are not performing and where the market is already oversupplied,” Ismail said.

“But that doesn’t stop us from investing into new routes. The message to the team is to look at routes that we think are profitable,” he added.

Automotive stocks such as Cycle & Carriage Bintang Bhd ( Financial Dashboard) and Berjaya Auto Bhd (BAuto) may come into focus tomorrow, after the Malaysia Automotive Association (MAA) trimmed this year's total industry volume (TIV) to 670,000 units from 680,000 units earlier amid a challenging economic outlook.

Its president Datuk Aishah Ahmad said the revision after considering many factors, include ongoing inflationary pressures, fluctuations in oil and commodity prices, foreign exchange rate volatility, subdued business optimism and moderation in consumer's spending due to economic uncertainties and increasing cost of living.

She added that more stringent lending practices such as hire purchase loans among financial institutions do not help the sentiment.

Nevertheless, she expects the sentiment to improve in the second half of 2015 as consumers adjust to the effect of the implementation of the goods and services tax (GST), which she said will return to "new spending normalcy".

In the first half of this year, sales volume declined 3.3% to 322,184 units from 333,156 units a year ago on falling sales in passenger and commercial vehicles, which dropped by 3.5% and 2% respectively.

For 2016, Aishah expects TIV to grow by 2% to 683,400 units.

Alam Maritim Resources Bhd ( Financial Dashboard)'s unit Alam Maritim (M) Sdn Bhd has bagged a RM6 million contract to provide splash zone structural repair and maintenance to Petronas Carigali Sdn Bhd.

Alam Maritim (fundamental: 1.6; valuation: 1.5) told Bursa Malaysia today that the contract is for a period of two years, effective from June 8, 2015 until June 7, 2017.

The contract also comes with an extension option of one year, to June 7, 2018.

The sub-sea engineering and offshore oil and gas (O&G) services provider expects the contract to contribute positively to its earnings and net tangible assets for the financial year ending Dec 31, 2015 and beyond.

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) saw its net profit for the second financial quarter ended June 30, 2015 (2QFY15) fall 55% to RM18.03 million from RM39.73 million a year ago, on lower income from its O&G structure construction unit.

MHB (fundamental: 1.4; valuation: 1.1) said its revenue was also down 40.65% to RM582.14 million versus RM980.92 million in 2QFY14.

The group noted its offshore segment registered lower revenue and operating profit, as most projects have been completed or sailed away while the newly-secured projects are still at the early stage of its project life cycle.

Its marine segment's revenue and operating profit is higher against corresponding quarter, mainly due to higher value of vessels repaired, especially from rigs/special vessels, FSU (floating storage unit) and general cargo categories.

For the six-month period (1HFY15), MHB's net profit fell to RM54.05 million from RM74.36 million a year earlier. Revenue was lower at RM1.3 billion compared with RM1.65 billion.

Looking ahead, MHB said it is mindful of uncertainties in the O&G industry, amid low crude oil prices.

The group said it had seen projects being deferred, due to the uncertainties.

Property developer Talam Transform Bhd ( Financial Dashboard) is targeting new launches in the financial year ending Jan 31, 2017 (FY17).

"We are in the midst of getting approvals from the authorities to be able to build again," its executive director Chua Kim Lan told reporters after the group's annual general meeting today.

Elaborating on the type of new launches, she said they would comprise landed and condominium projects in Ulu Klang and Selayang, Selangor, but declined to reveal the gross development value (GDV) of these launches.

Talam Transform (fundamental: 0.35; valuation: 0.9) currently has a total land bank of about 1,200 acres in Selangor, with a GDV of RM5 billion to RM6 billion.

Fajarbaru Builder Group ( Financial Dashboard) expects a double-digit growth in its earnings and revenue starting from the financial year ending June 30, 2017 (FY17), driven by upcoming property launches and strong unbilled order book from its construction segment.

Speaking at a press conference today, Fajarbaru's executive director Ooi Leng Chooi said the group intends to undertake three residential development projects in the country with a combined GDV of RM728 million.

The group has an unbilled order book of RM450 million, which will keep it busy for the next two years. It is also tendering some RM500 million worth of projects.

Ooi said the projects in the pipeline include a condominium in Bandar Kinrara, Puchong (RM400 million GDV); a serviced apartment in Sentul (RM250 million GDV); and serviced apartments in Pulau Melaka (RM78 million GDV).

"We will be launching our Puchong project by the end of this year, followed by Sentul and Pulau Melaka, which will be launched in the first quarter and third quarter of 2016, respectively," he added.

Fajarbaru (fundamental: 1.15; valuation: 1.8) is also expected to start recognising contributions from its maiden overseas property project, the "Gardenhill Condominium" in Melbourne, by end of next year or early 2017.

IGB Real Estate Investment Trust (IGB REIT), the manager of Mid Valley Megamall and The Gardens Mall in Kuala Lumpur, announced that its distributable income rose 11.7% to RM75.45 million in the second quarter ended June 30, 2015 (2QFY15) from RM67.54 million a year ago.

It said the distributable income, which translates to a distribution per unit (DPU) of 2.18 sen per unit, consists of realised profit of RM65.8 million and the non-cash adjustment arising mainly from manager fee payable in units of RM8.2 million.

This brings its half year (1HFY15) DPU to 4.47 sen per unit (1HFY14: 3.89 sen), which will be paid on Aug 28, and represents 100% of its RM155.05 million distributable income for the half year period, which is up 15.54% from 1HFY14's RM134.2 million.

Looking forward, IGB REIT (fundamental: 2.8; valuation: 0.65) is unfazed with the challenging operating environment in the retail sector.

"Given the current satisfactory performance of its existing business portfolio, the REIT's operational results for the financial year ending Dec 31, 2015 (FY15) are expected to be satisfactory," it added.

Jiankun International Bhd ( Financial Dashboard) plans a 377-unit serviced apartment with an estimated GDV of RM180 million on a piece of freehold land measuring approximately 0.81ha in Daerah Petaling, Selangor.

The development, Jiankun said, will be undertaken by its unit JKI Development Sdn Bhd together with the land owner Five Star Development (Puchong) Sdn Bhd.

In a filing with Bursa Malaysia today, Jiankun (fundamental: 0.6; valuation: 0.9) said Five Star agrees to grant JKI the exclusive right to develop and construct the proposed development in return for 20% of the GDV, estimated to be RM36 million.

Jiankun said the sole cost and expense of construction will be borne by JKI, which is estimated to be RM147.20 million, inclusive of Five Star's entitlement.

"The construction cost is to be funded via a combination of bank borrowings and proceeds from its rights issue on Dec 31, 2014," it added.

Only World Group Holdings Bhd (OWG) is acquiring a 60% stake in Escaperoom Holdings Sdn Bhd (EHSB) for RM5.4 million as part of its expansion strategy and long-term objectives of becoming a market leader in the leisure and hospitality industry.

OWG today signed a conditional share sale agreement (SSA) with EHSB shareholders Datuk Ong Kee Seng, Datuk Victor Lo Tung Ho and Datuk Leung Chak Sum Jason.

EHSB is principally engaged in real-life physical adventure games.

On funding, OWG said the acquisition would be funded entirely by its internal funds.

Under the SSA, EHSB would guarantee a RM4 million net profit for two financial years ending June 30, 2016 (FY16) and FY17.

Perusahaan Sadur Timah Malaysia Bhd ( Financial Dashboard)'s (Perstima) net profit for the first quarter ended June 30, 2015 (1QFY16) rise 62.8% to RM9.31 million or 9.38 sen per share from RM5.72 million or 5.76 sen per share a year ago, on higher profit margin coupled with higher sales volume.

The tin plate manufacturer said its revenue for the quarter increased 6.38% to RM158.35 million from RM148.85 million.

Going forward, Perstima said operating environment will become more challenging and competitive due to greater presence of imports from overseas and the weakening of the ringgit against the US dollar.

Despite this, it said it will continue with its cost saving measures and is confident that the profitability of the group for the financial year ending March 31, 2016 (FY16) will be satisfactory.

Caring Pharmacy Group Bhd ( Financial Dashboard)'s net profit more than doubled to RM2.63 million or 2 sen per share for its fourth financial quarter ended May 31, 2015 (4QFY15) from RM1.28 million or 0.59 sen per share a year earlier.

This was contributed by new store openings and revenue growth from existing outlets.

Revenue for 4QFY15 rose 8% to RM95.41 million from RM88.64 million in 4QFY14.

It also declared final dividend of 2 sen per share for the financial year ended May 31, 2015 (FY15), pending to shareholders' approval at the forthcoming annual general meeting.

Despite noting the implementation of the GST in April has dampened consumer sentiment, Caring remained cautiously optimistic of its performance for the next financial year.

Education service provider SEG International Bhd (SEGi) saw its net profit for the second quarter ended June 30, 2015 (2QFY15) grow 18.1% to RM7.96 million or 1.16 sen per share from RM6.74 or 1.05 sen per share a year ago, due to better product mix and demand for higher-end programmes.

It told Bursa Malaysia today that its revenue for the period was RM65.07 million, up 5.3% from RM61.81 million in 2QFY14.

For the first half period (6MFY15), SEGi's net profit expanded by 34.6% to RM18.78 million or 2.76 sen per share from RM13.95 million or 2.17 sen per share.

Revenue for 6MFY15 was at RM132.43 million, up 7.4% from RM123.33 million a year ago.

SEGi (fundamental: 1.8; valuation: 1.1) said it has launched a number of new initiatives in the last two years that have a strong foundation for growth.

"With this in place, the group expects its financial performance to improve further for this and the coming years," it added.

Property developer EcoFirst Consolidated Bhd ( Financial Dashboard) has return to profitability in its fourth financial quarter ended May 31, 2015 (4QFY15), with a net profit of RM4.68 million or 0.64 sen per share underpinned by higher income from its retail malls and its condominium development in Ipoh, Perak known as "Upper East @ Tiger Lane".

It posted a net loss of RM3.89 million or 0.6 sen per share in 4QFY14.

Revenue for 4QFY15 grew 560.64% to RM42.06 million, mainly from the recurring income from the two retail malls of the group and the Upper East @ Tiger Lane, in Ipoh, which is progressing according to schedule.

For the full year FY15, its net profit fell 79.63% to RM6.13 million or 0.87 sen per share from RM30.11 million or 4.63 sen per share in FY14.

Moving forward, EcoFirst (fundamental: 0; valuation: 0.3) said rental income from the two retail malls will continue to form a substantial source of recurring income for the group.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)