Stocks to Watch Rubber glove manufacturers, Sarawak Cable, Fajarbaru, Kretam, GST software providers

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 07 July 2014 20:44

KUALA LUMPUR (July 7): Based on news flow and corporate announcements today, stocks that may draw market interest tomorrow (July 8) could include:

Export-based rubber glove manufacturers like Top Glove Corp Bhd and Supermax Corp Bhd may be in the spotlight, amidst the continued appreciation of the ringgit against the US dollar, that would not augur well for them.

The ringgit strengthened to RM3.1900 against the greenback today, according to Bloomberg data, up 4.8% from RM3.3511 seen in February this year.

As Top Glove and Supermax's global sales are denominated in US dollars, a firmer ringgit will translate into lower income, when their earnings are converted into the Malaysian currency.

Last Friday (July 4), Bloomberg reported that the ringgit climbed to its highest level since November, on bets Malaysian policy makers will raise interest rates for the first time in three years.

The currency was Asia’s best performer after Indonesia’s rupiah this week, on speculation that Bank Negara Malaysia will increase benchmark borrowing costs from 3%, coming Thursday.

Sarawak Cable Bhd announced that its wholly-owned subsidiary, Trenergy Infrastructure Sdn Bhd, has received the letter of acceptance for a power transmission line project from Tenaga Nasional Bhd (TNB).

In an announcement to Bursa Malaysia, Sarawak Cable said the project, which had a contract value of RM14.67 million, is for a proposed 132kV single circuit loop in/out PMU 132/33kV Enstek, from KLIA-Salak Tinggi transmission line.

It will commence immediately and shall be completed within 448 days from today (July 7).

“The project is expected to contribute positively to the earnings and net assets of Sarawak Cable Group, for the financial years ending Dec 31, 2014 and Dec 31, 2015,” said Sarawak Cable.

Construction outfit Fajarbaru Builder Group Bhd is buying three pieces of land in Australian for A$6.9 million (RM20.6 million) cash, through its indirect unit, Fajarbaru-Beulah Melbourne Pty Ltd.

“The properties development to be undertaken on the said land, is expected to provide FBG with a new source of income,” said the construction outfit in the announcement to Bursa Malaysia.

Fajarbaru said that the acquisition was expected to be completed by the third quarter of 2014.

On the financial effects, it said the acquisition would not have any material impact on the earnings and earnings per share or net assets of the group.

Kretam Holdings Bhd’s subsidiary, Usaha Dimega Sdn Bhd, has entered into a conditional bulking joint venture (JV) agreement with Rikaworth Sdn Bhd and Sawit Bulkers Sdn Bhd, to venture into the business of common bulking installations for palm oil and related products.

The JV will purchase a parcel 469,942 sq ft of land in Sandakan, Sabah, for RM8.46 million from Sandakan Bulkers Sdn Bhd, for the setting up and operation of the common bulking installations.

The cost for the proposed JV is estimated at RM40.46 million.

“The logistics of the proposed bulking installations will cater to the conveyance of oil palm products to ships, more economically, efficiently and expeditiously.

“Thus, it will be of mutual benefit to the JV Company, to UDSB and to GEOSB's business, as well as to other users of the proposed bulking installations,” said Kretam.

Software providers such as IFCA MSC Bhd, Edaran Bhd, Censof Holdings Bhd and Goodway Integrated Industries Bhd, may also be of interest, after their endorsement as certified vendors for accounting software for good & service tax compliance.

Recently, the Customs Department released a list of companies that it has endorsed as certified vendors for accounting software, to small and medium enterprises (SMEs), which is furnished on its GST dedicated website.

Fifty-six companies have made the list, with four being local public-listed companies — Edaran Bhd, IFCA MSC Bhd, Censof Holding Bhd and Goodway Integrated Industries Bhd.

While it is not compulsory for local enterprises to convert to the accounting software endorsed by the government, having the certification could be a big boost to the software providers.