Malaysia Business News From Newspapers, Blogs, Broker House.

Monday, June 30, 2014

CSL: China has sought further extension for the issuance of its audited financial statements for the financial year ended Dec 31 2013 to July 31 2014. It is now pending the decision of Bursa. Should Bursa reject the company’s application to extend the issuance statements, the suspension of trading in the securities of CSL would be effected on July 8 2014.
Symphony: It expects to obtain the SC’s approval of the proposed RTO by Ranhill Energy Services over the next three to four months from July 2014 ... possibly obtaining all approvals by Nov or Dec 2014 and then the relisting of the new entity probably by Feb 2015.

Under the RTO exercise, Symphony will become a unit of newly incorporated SPV Ranhill Holdings Sdb Bhd which will be listed in its place on Bursa.

Ranhill Holdings will facilitate the injection of RanHill Energy’s water and power assets with issuance of new shares worth rm800 million at rm1.60 each plus paying another USD26 million cash. In addition it will also acquire a 51% equity interest in oil and gas outfit Ranhill Worley Parsons Sdn Bhd from Ranhill Energy, at a call option price to be determined upon the RTO exercise.

On top of Syarikat Air Johor Sdn Bhd, which is the biggest contributor to Ranhill Energy, Ranhill Energy have expanded into China and have about small concessions there. They have also have about five to six concessions in Thailand and are expanding into Vietnam.

Symphony House would have the opportunity to enter into the O&G sector via Ranhill Worley Parsons.

Leading to the exercise, Symphony has divested its existing businesses with only corporate services which would be taking private.

Azman has volunteered to a three year moratorium in respect of his eventual shareholdings in the new firm. His direct and indirect stakes stood at 37.22% as at May 2014 which will eventually result in a 4% to 5% stake in Ranhill Holdings.

Faber: It is currently in the midst of negotiating the extension of its current HSS contract with the government. The contract is due to expire at end 2014. Faber will continue to provide HSS to government hospitals for the next six to nine months from July 2014 until the new contract is awarded.
 
Yinson: It is liked Yinson’s long-term contracts and sound management judgement in making bids. It is believed the market had priced in (01 July 2014) at least one to two contract wins which would contribute only from 2016.

Additionally, the stock was now (01 July 2014) trading at a steep premium to its larger peer Bumi Armada, which trades at 2014-15 price-to-earnings ratio of 19.1-16.2 times.

On Yinson’s outlook, it had just completed a rights issuance and share-split exercise, which raised RM568mil and increased its share base to 1.03 billion from 258.6 million previously.

Additionally, market talk had it that Yinson was bidding for at least three projects and management guided that any new wins would likely be later 2014.

Thursday, June 26, 2014

It is diversifying into furniture and electronics stores.

The company operates shopping centres, department stores and pharmacies.

Its first mega store that will house both department store cum supermarket operator AEON Co Bhd and AEON Big Sdn Bhd’s hypermarket chain could be ready in two years from June 2014.

The maiden megastore will be outside Klang Valley.

Both retailers are looking to collaborate and open large scale shopping centres that are able to capture a bigger market segment. AEON Bis is wholly owned by Japan’s AEON Co Ltd, which has a 51% stake in AEON Co (M).

Meanwhile expects AEON Co (M)’s retail space to increase by over 2.5 million sq ft by end of 2015 from 11 million sq ft. The store openings will be in Bukit Mertajam, Taiping and Quill City Mall in 2014. In 2015, the retailer is expected to open in Shah Alam and possibly Kota Baru.

A total of rm1.4 billion in 2014 to 2015 has been set aside as capex for store openings, renovation and land acquisition.

In five from 2014, it could expand into Terengganu, Pahang and Sarawak.

It has no plans to set up a REIT now (June 2014).

Going forward, growth will be spurred by both existing stores and new store openings.

AEON Malaysia formed a joint venture with Thailand’s furniture retailer Index Living Mall Co in Sept 2014 to set up shops in Malaysia.



Tuesday, June 24, 2014



After staying sideways in the past one month prior to 24 June 2014, the KLCI finally break above the immediate resistance level at 1880 points. The breakout indicates that market confidence has strengthened as investors take higher risks. The short term target is at 1910 points. The KLCI has stayed above the short term 30 day MA.
 
The momentum indicators are now starting to show strength. After being directionless for the past few weeks, momentum indicators like the RSI and Momentum Oscillator are now rising higher without being overbought. The MACD indicator has crossed above its MA after staying below it in the past one month. Furthermore, the close above the top band of the Bollinger Bands indicator indicates a strong breakout of a sideways trend.

A weakening USD may continue to make Asian markets more attractive. This may continue until there are signs of a USD rebound.

Technically, the bullish trend is getting stronger and there is potential upside as the Oscillator indicators do not show that KLCI is overbought. Henceforth, expect the market to remain bullish at least until the end of June 2014 with the KLCI testing the next target of 1910 points.

Support level of the bullish trend is currently (25 June 2014) at 1880 points.

Thursday, June 19, 2014

PJDev: It has entered into a put and call option deed with Dynasty Falls Pty Ltd for the option to purchase land in Melbourne, Australia for a five acre land for rm440 million cash.

PJD had net borrowings of rm328 million as at March 31 2013.

Nevetheless, there has been speculation that PJD may embark on a corporate exercsie to raise funds or to be merged with OSK Property to form a bigger entity. Both are controlled by Tan Sri Ong.

MAS: Etihad said it was not negotiating with MAS for a potential stake in MAS.

Meanwhile Prime Minister Datuk Seri Najib Razak said MAS will not be closed down for now (June 2014).

Najib said although MAS was incurring losses, the direction of the company is still being reconsidered and any financial implication to the government would depend on the outcome of the due diligence being undertaken by the main shareholder, Khazanah Nasional Bhd.

The government has discussed MAS' dismal financial performance and has asked that the due diligence be carried out soon to identify the reasons behind the losses and the best options to solve them.

The findings of the study will be presented to the Khazanah board as soon as it is finalised in order to decide on the future direction of the company.

Gamuda: It has inked a deal to buy PNB 20% stake in highway owner and operator Kesas Holdings under a higher revised deal.

It had entered into a share purchase agreement with PNB to buy the latter's entire 20% stake at RM3.08 a share, compared with RM2.973 earlier.

It would seek an exemption from undertaking the revised offer under the Malaysian Code of Take-Overs and Mergers, 2010 from the Securities Commission. Upon completion of the purchase from PNB, it would directly hold 3.50 million Kesas Holdings shares and 326.14 million non-cumulative redeemable preference shares, representing 70%.

Perbadanan Kemajuan Negeri Selangor would also be paid in full for its stake in Keseas Holdings should it accept the revised offer.

TGOFFs: It says talks with several parties, including a unit of O&G giant Bourbon SA, for a RTO of the company is still on-going.

It was reported that the RTO is being opposed by a group of minority shareholders who want the option of being able to sell their shares to the new owners.
There could be a possibility of the RTO hitting a snag as it needs the nod from Ekuiti Nasional Bhd (Ekuinas).

Tanjung Offshore had entered into a non-compete clause with Ekuinas in 2012 when the latter bought its marine vessel services arm Tanjung Kapal Services Sdn Bhd (TKS), for RM220 million. A three-year restriction was imposed whereby Tanjung Offshore is not allowed to be involved in any business similar to TKS for at least another year. The RTO, meanwhile, would see Tanjung Offshore getting back into the very same business as TKS.

Tanjung Offshore has sent a request to Ekuinas for a waiver of the clause.

UMW: It has allocated rm400 million in capex for its auto division in 2014. This forms part of the group’s rm2.7 billion total capex for the financial year ending Dec 31 2014.

The bulk of rm1.9 billion has been set aside for its oil and gas unit, while another rm250 million for its equipment segment.

UMW Holdings expect the O&G division to contribute a little more in net profit in 2014.

UMW Holdings holds a 51% stake in UMW Toyota Motor Sdn Bhd and 38% stake in Perodua.

PentaMaster: Semi equipment maker expects a positive financial year ending Dec 31 2014. Its performance would be driven by better revenue contribution from three main business segments … semi-conductor, surgical gloves and LED.
 

Wednesday, June 18, 2014


WestPorts: The stumbling block to its long-term outlook was removed when China rejected the formation of a global shipping alliance.

China’s Ministry of Commerce (CMC) had rejected the formation of a global shipping alliance by Europe’s three biggest container alliance under the proposed P3 grouping on the basis that it will “restrict competition”.

P3 has been seen as a stumbling block to Westports’ longer term outlook as it could potentially grow in size.

Is CEO said that the latest decision in some ways would not change anything because he did not expect the route realignment of the P3 shipping alliance to have any impact on WestPorts.

He expects volume to grow at between 5% and 10% for 2014. CMA CGM has been its largest client for some time.

Industry observers opine further increases in WestPorts’ container volume for 2014 following the latest news. The scrapping of the P3 shipping alliance should be good news for WestPorts.

MAS: News report that MAS might form a partnership with Etihad Airways. Its major shareholder Khazanah Nasional Bhd had also reaffirmed commitment to restructure the ailing airline.

Observers pointed out that the news of partnership with Etihad was no big deal as it would not support MAS fundamentally. MAS has an existing partnership with Etihad and the news could be an extension of that relationship. Nevertheless a partnership with Etihad could help boost its revenue and would see an upward re rating.

Khazanah Nasional’s director Tan Sri Azman said the government is committed to formulating a revival plan within a year from June 2014 because MAS’ operating cash flow are on the course to run out by then.

TRIPLC: It is said to have clinched a government concession to build, operate and lease UITM new Puncak Niaga Alam campus in Selangor.

The government has agreed to sign a 23 year concession agreement with six companies to build the campuses.

Tan Sri Rozali Ismail owns a 43% stake in TRIPLC.

Sunsuria: It is not going ahead with the proposed purchase of real estate development assets in Selangor and Johor worth some rm10 billion from companies linked to its new chairman and major shareholder Datuk Ter. It had decided to allow the heads of agreement for the acquisition to lapse.

However despite shelving the plan to acquire assets from Ter, Sunsuria said it would continue with the proposed rights issue to raise fresh proceeds for the group.

The group would continue to seek potential landbank, property investment and property development for acquisition, in line with its plan to grow its business and enhance its prospects.

Ter currently (June 2014) controls 50.12% stake in SUnsuria.

Pelikan: It is confident of returning to the black this financial year ending Dec 31 2014. The company has been making losses in the past three financial years.

The group will now focus on driving core profitable businesses and to rationalize its loss making units. The integration of Herlitz Germany into Pelikan is expected to be completed in the next three months from June 2014.

For FY2013, Europe contributed 52% to the group revenue, America contributed 13% while Asia contributed 4.2%.

It had announced a private placement of up to 10% of its issued and paid up capital. The funds will be used for working capital.

Taliwork: It controls a 55% stake in Cheras-Kajang highway concessionaire Grand Saga Sdn Bhd is not planning to sell the highway operator anytime soon.

Meanwhile it is looking at making strategic investments in both domestic and foreign markets.

It will continue to be driven by the water segment which contributed 57% to its revenue and 65% of the overall pre tax profit in FY2013.

The group manages six water treatment plants with a combined capacity of 1.04 billion litres per day.

AS at end FY2013, its gross receivables from SPLASH which is its main client rose to rm260 million. SPLASH is a 40% own by GAmuda.

Taliworks appointed Tan Sri Ong Ka Ting as its chairman. Ong is the former president of MCA until 2008.

Vijay Virendran Sethu is a major shareholder with a 10% stake.

Ho Hup: Details of the 50 acres development in Bukit Jalil dubbed Pavilion 2 to be co developed by Ho Hup and Malton will be out by third quarter of 2014.

The project will be the growth driver for Ho Hup.

While the 50 acre piece is for the JV with Malton, Ho Hup has actually started development an adjacent 10 acre on its own, with a GDV of rm10 billion.

On its construction arm, the gorup’s order book stood at rm400 million.

The group is looking to replenish its land bank.

It had ventured into property and construction projects in Myanmar.

Golsta: Tan Sri Hii who is a major shareholder with a 52.21% stake has plans to enter the property market in the near future.

Golsta is involved in heavy machine manufacturing.

Earlier news report that Hii was looking at injecting his privately owned property business into the listed company.

Hii’s HCK capital group has a property development arm with several major projects in the Klang Valley and Perak. The group has secured projects worth rm3.8 billion in GDV within three years of establishing its property division.

He has already began injecting part of HCK Capital Group’s business into Golsta by incorporating its hospitality and hotel management arm.

Tuesday, June 17, 2014





The KLCI was traded sideways within the support and resistance levels of 1860 points and 1880 points. Technically the index had turned into an uptrend as it broke and stayed above the short term 30 day MA. However, the short term 30 day MA has been whipsawed for the past one month and this can continue to happen when the market lacks direction.
Momentum was flat in the past few weeks but generally do not see any selling strength after past one week’s performance. Momentum indicators like the RSI and Momentum Oscillator continued to whipsaw as the mid level and did not show any clear direction.

Furthermore, the Bollinger Bands remained firm while the MACD indicator was below its MA or trigger line. These momentum indicators show that the market is probably going to stay sideways.

With interest rates remaining low in Europe, we may see some hot money coming into Asia. However the Malaysian market has always been defensive and we may only see some benefit from the strong regional market performance.

Going forward, the KLCI to remain in a sideways correction with a bullish bias. The index may test the historical high at 1887 points if it can break above the immediate resistance level at 1880 points. Support level remains at the 1860 points.

Monday, June 16, 2014

Tun Dr Mahathir Mohamad said MAS should be privatised and be run by those who can work with the unions to revive its fortunes.

Privatisation, he said, would be the best option as the airline needed to undergo radical restructuring from top to bottom.

He said its major shareholder, Khazanah Nasional Bhd, should also exit MAS upon privatisation because it had neither the expertise nor energy to focus on the airline.

Khazanah may hold some shares but is unnecessary. They are having too many companies in its stable, thus the focus cannot be 100% on MAS.

MAS requires very intensive examination to look into where the holes are and how to correct them.

(Dr Mahathir was a former Khazanah chairman.)

Dr Mahathir’s proposal to privatise MAS is not new. During his tenure as prime minister, Dr Mahathir brokered a deal that saw Tan Sri Tajuddin Ramli take out a RM1.79 billion loan in 1994 to buy a 32% majority stake in MAS.

Tajudin, a former MAS executive chairman, was badly affected by the 1997 Asian financial crisis and ended up selling his stake in the ailing airline to the government for RM1.79 billion – or RM8 a share –  the same he paid in 2001; the company’s closing share price at the time was RM3.68.

But MAS’ problems did not end there. In the years since, MAS has undergone three business turnarounds at an estimated cost of nearly RM20 billion to the government.

On May 16 2014, Maseu urged Prime Minister Datuk Seri Najib Razak to carry out a restructuring programme of the airline’s top management, just hours after Najib said that it might be too late to save the struggling national flag carrier.

Dr Mahathir said once privatised, the airline could attract fresh talent, who might be able to deal with Maseu) had told him that they would agree to such a proposal. He had met with the union and that they are quite willing to be privatised. They are not against privatisation because they think the airline cannot go on like this.

The MAS management also needed to adopt a less confrontational approach towards its unions. They make you a success or a failure, so have to consult them, take into consideration their views. Not necessarily 100% but they have some good ideas.

Despite a 25% raise, the unions were still unhappy, indicating that “something (must be) wrong”.

MAS reported losses of RM443.4 million in the first quarter of the year, from a net loss of RM278.8 million in the same period last year. Losses in 2013 amounted to RM1.17 billion. MAS said Q1 loss was due to missing flight MH370, where it saw high numbers of cancellations and a decline in long-haul travel after March 8 2014 incident.

Acting Transport Minister Datuk Seri Hishammuddin Hussein also said that Putrajaya would not rescue MAS following the airline’s dismal performance.

Dr Mahathir suggested that MAS follow the path of ANA Japan, Japan Airlines and Garuda Indonesia, which were privatised following years of bleeding taxpayer funds.

He also rejected the idea of selling its profit-making engineering and cargo businesses, as the divorce would hurt MAS financially. Those are the profit centres and removing the profit centres, MAS will go deeper down.
 
Privatisation of Malaysia Airlines would cost Khazanah about RM1.18 billion, but it could get back RM1.25 billion if those assets were spun off and listed.

Sunday, June 15, 2014

It is now (June 2014) conducting technical and financial feasibility studies on several projects under Petronas’s USD16 billion RAPID projects.

PetChem is expected to play a major role in the project, given its status as Petronas’ only petrochemical business unit. Nonetheless, it is understood that PetChem has yet to conduct detailed studies on the prospects and management may only make its final investment decision by end 2014 or 2015.

In addition, Petchem’s future earnings growth may be driven by the USD1.5 billion Sabah ammonia and urea project, and the USD500 million aroma Chemcial project in Kuantan, Pahang.

Notwithstanding the high future capex requirement, management has committed to maintaining its dividend payout policy of around 50% of net profit. PetChem had rm9.4 billion of net cash as at end March 2014. The strong cash position, strong operating cash flow of over rm4 billion per annum and substantial headroom to gear up should enable Petchem to maintain its 50% dividend payout, translating into a net dividend yield of 3% to 3.5% per annum.

Broadly industry observers are expecting its product prices to remain stable for the second half of 2014.

MKLAND


The group is still working on launching a few projects in Damansara Damai and Damansara Perdana with a combined GDV of more than rm1 billion. Unbilled sales remain at rm300 million.
 
It is understood that the land sales of its 9.6 acres land in Damansara Perdana in April 2013 will be recognized in the fourth quarter of the financial year 2014 ending June (FY2014).

New projects in the pipeline include two condominium projects in Damansara Damai and another two in Damansara Perdana.

Meanwhile near term earnings will be driven by selling the remaining semi detached units at Rafflesia.

MK Land is still looking to dispose of non strategic assets and the next asset to be sold is the Setiawangsa land valued at circa rm96 million. The sale is taking longer than expected because approvals for the land have lapsed and MK Land wants to sell the land outright without securing new approvals.

LAD from Armanee Terrace is still haunting MK Land despite earlier guidance that the issues have been resolved with the engagement of a new contractor. The project is now (June 2014) in the seventh year and the LAD booked already more than rm100 million. The management is hopeful that the structural works will be completed by end 2014 and the architectural works should then move fast and target to handover by 2015.

All told, the additional rm20 million LAD is expected that will be recognized in the next few quarters.

Its realizable bet asset value estimated at rm1.67 after updating the balance sheet items and its land disposals.
 
 

Thursday, June 12, 2014


IDEAL: An engineering outfit involved in the oil and gas business is believed to be undertaking a RTO of label manufacturer IDEAL. The company is said to be making an offer of not less than 45 sen per share.
 
It will make an announcement in the next few days.

IDEAL’s cash and cash equivalents stood at rm9.07 million as at March 31 2014 while its borrowings stood at rm4.42 million.

Major shareholders of IDEAL are Andrew Conrad Jacobs with a 30.38% stake. Company’s CEO Foo and spouse owns a 14.53% stake while s executive director Khairul Azwan and Foo Chong Ming have 6% and 5.87% respectively as of May 8 2014.


Menang/Crest Buildder: Both are likely to be main beneficiaries of the rm635 million sought by the Education Ministry in a supplementary budget to cover concession costs at six UITM campuses.

The government has sought an extra rm4.112 billion under the Supplementary Bill (2014) Bill 2014 table for first reading in the Dewan Rakyat on June 9 2014.

Menang Corp, one of the main concession holders of UITM is likely to get a major share of the proposed rm635 million allocation as the company is embarking on several UITM campus projects in Seremban and in Puncak Alam, and will likely be awarded more cleaning and safety service contracts.

On May 2012, Menang Corp was reported to have entered into a concession agreement with the higher Education Ministry and UITM to build the UITM Campus Satelit C at Puncak Alam. It is estimated currently (May 2014) to be about 25% completed. On completion, the campus will be leased to UITM for 20 years with Menang corp maintaining the facilities and infra of the campus for 20 years.

Crest Builder secured its first concession project – UITM Tapah Campus II – in 2010. The project was completed and delivered to UITM in Jan 2014.

This concession project with the Ministry of Education and UITM secured Crest Builder a recurring cashflow of about rm45.2 million per annum until 2034.

Wednesday, June 11, 2014

Harvest: Datuk Kenneth Vun has denied holding any shares in Harvest Court.
 
Scomies: Scomi Energy Services Bhd and its Australian partner Octanex Pte Ltd have won their first RSC for the Ophir oilfield. The development first is estimated to cost USD135 million and first oil is expected to be produced in 18 months. It was reported that the Ophir oilfield has an estimated development contract value of USD510 million.

The RSC now makes Scomi Energy an exploration and production services provider in addition to its current core drilling fluid and drilling waste management products.


MSM: It has warned that its profit margin in 2014 will be lower than that in 2013 due to an influx of lower priced foreign sugar into the domestic market and higher sugar prices with the removal of sugar subsidy of 34 sen.

The removal of sugar subsidy has led sugar prices to increase to levels higher than Thailand, prompting Malaysian wholesalers and the industry to import. Also MITI approved permits had given to industries increased from 13 in 2013 to 16 currently (June 2014) of sugar imported to 150000 tones.

Meanwhile Malaysia is giving import permits to industries with zero import duty.

MSM is also looking at new streams on income. It will go downstream into the trading business and involved in the chartering business.

Exports accounted for 21% of the group revenue un 2013.

The group will also be exploring foreign markets via M&As and towards revising its upstream activities.

As at March 2014 it sits on net cash of rm397 million.

On its partnership with Al Khaleej Intl, MSM had applied for a new refinery license in Johor and hopes to sign the JV agreement by July 2014. The refinery is the solely for the export market.


SONA: It will take a USD140 million loan to part fund the planned purchase of a stake in two Thai oil and gas blocks owned by London’s Salamander Energy plc.

SONA agreed to buy 40% of the UK oil explorer’s assets in the Gulf of Thailand for USD280 million. Sona would not need more funds for further development because cash flow from the producing Bualuang oil field is enough to cover capex.

BNP Paribas SA will provide the loan facility.


TTHeavy: It is allocating RM90 million for capex for its yard operations and between US$230 million and US$250 million for its floating production and storage offloading (FPSO) segment.

The group would finance the capex through fund raising in the capital market. It would go through the Islamic instrument first.

The company has an order book of close to RM300 million that would last the group until mid-2015.

The company is currently (June 2014) bidding for six upstream projects worth RM3 billion.

TH Heavy’s unit, THHE Fabricators Sdn Bhd, is one of the few Petronas-licensed major fabricators in Malaysia.

Tuesday, June 10, 2014

KLCI - Index Turned BULLISH After Close Above 1870 points The KLC has broken out from its sideways correction mode. The trend is technically bullish as the index is above the increasing short term 30 day MA. The index is also above the up trend line support level. This shows that market confidence is increasing as it is able to move higher from the average/support level. The close above 1870 points indicates that the market is geared to take higher risks. The breakout on 10 June 2014 indicates that the weak momentum is turning strong. Indicators like the RSI and Momentum Oscillator are starting to increase. Furthermore, the index has also climbed above the mid band of the Bollinger Bands but does not show strong buying strength unless the index breaks above the top band at 1887 points. The technical indicators are still indicating a sideways correction for the KLCI as there is still a resistance at 1880 points but the bias has turned bullish. The breakout above the resistance level at 1870 points indicates that the index is set to test the historical high at 1887 points. However the breakout was on low volume and this may not create a strong momentum. Therefore, if the KLCI fails to stay above the 1870 points then expect further sideways correction.

UZMA: An oil and gas upstream services provider is looking to acquire two or three more companies in 2014 to strengthen its foothold in the crude oil and natural gas production industry, following its successful acquisition of Thai based MMSVS Group Holdings Co Ltd.

The acquisitions will be financed via a combination of internal funds and bank borrowings. It will affect the group’s gearing ratio which currently (June 2014) stands at 0.2%.

It had also proposed a rights issue to raise up to rm100 million.

The newly acquired MMSVS will contribute USD18 million to the group’s revenue in 2014. The acquisition is USD29.7 million.

UZMA’s order book stands at rm1.8 billion which will be able to sustain its earnings till 2017.

In March 2014 it had bagged a risk service contract from Petronas Nasional Bhd for the development and production of petroleum at Tanjung Baram field in Sarawak.


Brahims: It would be impacted at most by -22.5% assuming MAS cuts its capacity by 30%. However this is unlikely given that travelers would opt for other airlines, which are likely Brahims’ existing customers.

Concern on sugar venture. Despite MSM’s announcement on its JV with Al Khaleei Intl Ltd to build a plant in Tanjung Pelepas, Johor, Barhim’s sugar venture in Sarawak is still intact. At this juncture, it is still in the early days to determine whether Brahim’s would be disadvantaged by the new venture.

However the construction of the refinery plant in Demak Laut, Sarawak is still ongoing. Contribution from the venture will only kick in in financial year 2016.

Going forward, its venture in Mecca will start to contribute significantly in FY2015 to FY2016 with circa rm4 million and rm7 million and rm8 million respectively.


SKPetro: The gas discoveries are positive for SKPetro as they ensure continuous recurring income from their upstream investments. Estimate a 24 to 36 months time from June 2014 lag or more before production from these new discoveries can commence.

Its outlook remains positive with its earnings trajectory backed by rm27 billion order book and recurring income from its upstream assets. More contract flow is to be expected in coming months from June 2014.

Monday, June 9, 2014

 Update

MAS - Revival Plan Within 6 - 12 Months From June 2014


Khazanah Nasional has reiterated its commitment to continue with its shareholders’ role in MAS in the near term.

Khazanah Nasional was reviewing all options for MAS. It also dismiss the possibility of selling the company.

Khazanah Nasional owns 69% of MAS.
 
Meanwhile the Malaysian government will announce a plan to revive MAS within 6 to 12 months. MAS had enough cash to operate for the next 12 months from June 2014, beyond which it needs to have a sustainable business model in place.
 

Markets

Sime Darby (SIME MK, Outperform, TP: RM10.10): Plans to double market capitalisation to RM100bn. Sime Darby plans to almost double its market capitalisation to RM100bn by 2016 from RM57.7bn recorded to date. In line with its five-year strategy blueprint for financial years 2012 until 2016, Sime Darby would continue to expand and strengthen its position in diversified business activities such as plantation, industrial, motor, property, and energy and utilities. (StarBiz)
SapuraKencana: Makes four non-associated natural gas well discoveries. SapuraKencana Petroleum’s unit, SapuraKencana Energy Sarawak Inc (SKE), has made four significant discoveries of non-associated natural gas in the SK408 production-sharing contract (PSC) area, offshore Sarawak. SapuraKencana Petroleum said the four-well discovery, from the first four exploration wells, was within the primary target of the Late Miocene Carbonate reservoirs. SK408 Block is located in shallow waters about 120km offshore Sarawak covering an area of about 4,480 sq km. “These are the first four wells of a 10-well commitment in the SK408 PSC,” it said. (StarBiz)
Mah Sing: Expects building costs to go up regardless of GST. When GST is implemented next year, prices are expected to rise by 4% for residential and 6% for commercial properties on the back of higher construction costs, according to Mah Sing Group. The price hike was particularly for projects which developers have not factored in the GST impact. Corporate and investment ED Datuk Steven Ng Poh Seng said that even without the GST, material costs were already expected to go up. The effect on Mah Sing’s property prices, he added, would be a 2.25% increase. (StarBiz)
Amcorp Properties: Inks PPA with TNB. Amcorp Properties has completed and commissioned a 10.25MW solar power plant in Gemas, Johor, with the capacity to generate 1.2m kWh of electricity per month. The company has also secured a 21-year power purchase agreement (PPA) with Tenaga Nasional (TNB) to pay a feed-in tariff (FiT) rate of 87.4sen per kWh. “The plant is capable of producing 41,000 kWh of electricity a day, or 1.2m kWh a month, to fulfil peak-hour demand,’’ Chairman Tan Sri Azman Hashim said. (StarBiz)
RHBCap: To finalise Bank Mestika move in two weeks. RHB Capital (RHB Cap) will make a decision on its proposed acquisition of a 40% stake in PT Bank Mestika Dharma in Indonesia in two weeks, according to group MD Kellee Kam. Kam said the bank and PT Mestika Benua Mas were in discussions and would make the necessary decision on the exercise. The conditional agreement between both parties for RHB Cap to acquire the stake in the Indonesian bank will expire this month. (StarBiz)
KLCCP: Banks on organic growth, cost reduction. KLCC Property Holdings (KLCCP) expects organic growth and cost reduction to keep its revenue stream steady, said CEO Datuk Hashim Wahir. “In the short term, there will be no new space coming out. Our last was the KLCC Tower 3. Therefore, we are not expecting any big jump in revenue. Our revenue growth has always been steady at 3% to 4%, with profit growth at 7% to 8%,” he said. To reduce costs, KLCCP will practise economies of scale and harness the group’s strengths. (Business Times)

Sunday, June 8, 2014

UPdate

Eng Kah - Substantial Shareholder Emerged



Tan Thiam Hock emerged as a substantial shareholder in Eng Kah Corp, has dismissed any potential alliance between the manufacturer of personal care and household products and privately held Alliance Cosmetics Group which Tan founded.
 
He emerged with a 5.03% stake in Eng Kah Corp.

ACG owns the Silky Girl, Stage and SG Men Brands and distributes. ACG is currently (June 2014) a customer of Eng Kah, contributing several % to its revenue. Private equity funds Ekuiti Nasional Bhd and Navis Capital Partners own an 80% stake in ACG. While Tan is no longer the head of ACG which he has a seat on the board.

Its revenue in FY2013 was the lowest in the past five years while profit also came in second lowest slightly above FY2009’s.

At current price (June 2014), it is trading at a 21.48 times to FY2013 earnings.

As at March 2013, it had zero borrowings and had a net cash of rm17.8 million.

It had a 30:70 JV with Cosway China Co Ltd. Cosway Malaysia is currently (June 2014) its major customer.

Other major shareholders of Eng Kah include CAM-GTF Ltd and Raffles-Asia Investment Co, which held a 9.59% stake and 5.31% stake respectively as at May 5 2014. Ewe Eng Kah and Neoh Lay Hwa holds 39.55% stake in the company.


Update:

Trader Corner - AMPROP



A clear breakout of rm1.13 resistance would signal an uptrend continuation, targeting rm1.32 followed by rm1.55-rm1.58 level. Support is at RM1.02 followed by em0.965.


PMI: PN17 outfit PMI may be looking to sell its past property – a vacant land in Jalan Mayang near KLCC for some rm32 million cash.

PMI is left without a business and its only property asset left is the Jalan Mayang land.

MUI and PMI are controlled by Tan Sri Khoo Say Peng, who owns a 47.67% stake in the former and 68.27% in the latter. PMI owns a 13.23% stake in MUI.

On May 0 2014, PMI submitted to Bursa Malaysia to seek an extension of time to submit its regularization plan after being slapped with PN17 by the authority in May 2013. It was still awaiting the decision from Bursa with regard to the application.

PMI was bleeding for five consecutive quarters with hefty borrowings of rm86.62 million as at March 31 2014.


Yinson: An offshore production and support services provider announced that its latest floating production storage and offloading vessel (FPSO), PSTC land Son has produced its first oil in 06 June 2014.

The achievement follows its earlier accomplishment in Aug 2013 when the group’s first floating FSO produced its first condensate within the schedule of client.

The Lam Son project is a 49:51 JV between Yinson and PetroVietnam Technical Services Corp for the provision and chatering of the FPSO with a total contract value of up to USD738 million.

On May 2014, the group proposed a rights issue that will raise rm568 million. The group will utilize the rights issue proceeds for expansion activities and repayment of borrowings to reduce their current net gearing.


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