Malaysia Business News

It is also gaining interest among institutional investors, which CIMB Equities Research believes hold a combined 15%-20% stake.

A potential re-rating catalyst is strong 1QFY15 results.
Its Chinese customer base is growing at a rate of 40-50% per annum and HAVE is likely to reduce its allocation for E1 boards in favour of much higher-margin E0/super E0 boards for supply to China. It is also mulling a pressing line extension or new pressing line to increase capacity to meet the strong demand from China.

Overall performance has been led down by losses due to lack of scale in RK and SK projects.

This was attributed to a slow award of projects by both the state government and FELDA.

However it displayed narrowing losses from the segment.

For FY2014, the group has secured a combination of five RK and SK projects. This should contribute positively as it looks to turn around the segment.

Potential gross development value of Gerehu Heights estimated at rm300 million. Positive contributions are expected in financial year 2016.

Also expect a ramp up in production for its food waste to fertilizer plant in China. Now (Feb 2015) incurring losses, it operates at only one third of its capacity.

It had received a permit from the local government to secure waste from other regions in the area. The move will allow the plant to achieve the scale necessary to generate positive contributions.

RGB: It is planning to venture into the business of selling parts –for the electronic gaming machines it manufactures – to its existing clients in order to grow its revenue stream for the financial year ending Dec 31 2015.

It had tied up with a business partner – a company that provides turnkey technical support and parts.

This venture will allow RGB to be a complete solutions provider

It is aiming to grow both its profit and revenue by 5% in FY2015 driven by the sale of 1500 gaming machines, the placement of an additional 500 Bingo machines in the Philippines and its 7000 machine concessions across Asia.

The casinos will need to replace or add to their gaming machines when they undergo a replacement or floor expansion.

It is also planning to expand its footprint in new markets in Asia – both for supplying its gaming machines as well as acquisition minority stakes in clubs which host such machines.

Currently (March 2015) its income is coming from the technical support and management division. Moving forward, it wants to buy equity in clubs which operate these gaming machines. It is looking at a minority stake of 20% to 30% to have another stream of recurring income.

RGB is already in the process of completing the first such acquisition, with its subsidiary RGB acquiring a 30% stake in Timor Holding. Lda. It has currently 90 gaming machines operating there which it is reaping revenue via concession agreements based on a profit sharing scheme with its customer.

Internal generated funds and possibly a corporate exercise will be used for fundraising.

PPB: It expects its revenue growth for FY2015 to be driven by its core segment of flour, feed milling and grains.

The flour, feed milling and grains segment has always been the largest contributor of its core segments.

PPB is the single largest shareholder in Wilmar with an 18.3% stake.

Wilmar contribution to PPB had declined in FY2014 to 67% or rm695 million compared with 72% in FY2013 due to lower CPO prices.

This coupled with lower income from its investment in equities and losses in the packaging business, had impacted PPB’s profit in FY2014.

The environmental and engineering segment is expected to achieve a higher revenue in 2015 as the contracts progress to the construction phase. The group’s current construction order book stands at rm413 million.

It will also be committing rm283 million to expand and upgrade the stable of cinemas under GSC.

For its property division, it is banking its Puteri Harbour project in Nusajaya, Johor with a GDV of rm1.5 billion.

This is on top of SKPetro’s risks of more than one time high net gearing.

In the environment now (March 2015), observers fear for its long term pipelay contracts stability as Petroleo Brasileiro SA has cancelled/negotiated various service contracts (Brazil: 47% of order book). It is unsure how protected the service contractors are from termination clauses.

Also 40% of its 17 operational rigs are also up for renewal (Three by FY2016m three to four by Fy2017). Weaker E&P earnings and asset impairment possibilities could arise in the earning quarters.

The latest foreign shareholding fell to 20% (From 23%, ex-Seadrill Ltd) and Tan Sri Mokhzani.

Datuk Mokhzani Mahathir’s resignation from the board could provide uncertainty on Kencana Capital’s holdings (over 10%).

It is facing substantial risks on LNG. The over three trillion cu ft gas reserves for SK408 and SK310 are sizeable in total oil and gas future production profile estimates.

Industry observers cannot predict exactly when it will sign a GSA with Petronas. Expectations for Asia demand for LNG are now (March 2015) bearish.

LNG producers are facing difficulty in locking in long term GSAs with Asian buyers.

Industry experts think LNG, which tracks oil price on a half year lagged basis, will fall by another 30% in 2015.

Note that SKPetro paid rm2.9 billion for Newfield Intl Holdings Inc’s assets. While it is believed that the GSA (to be signed per well) will likely be long term tenures, another uncertainty is the offtake level negotiated between the signing parties.

 

It is trading at a price to book of 1.26 times and trailing 12 month PER of 6.0 times.

 

Its net cash stood at rm110 million plus some rm68 million in quoted shares at end June 2014.

Its strong balance sheet and recurring income from the power generation business should support its future dividends.

About 69% of its pre tax earnings were derived from power generation. It partially owns and operates a 83MW coal fired heat and power plant in Shaoxing, China as well as a 36MW diesel plant in Tawau, Sabah. The PPAs for these projects are set to expire in 2017 to 2018.

The resources arm accounted for roughly 14% of pre tax profit in 2013. This encompasses quarrying of limestone, manufacturing and trading of calcium carbonate powder, lime based products and bricks.

It is one of Malaysia’s largest producers of lime products.

It owns investment properties, primarily PJ8 in PJ, worth come rm121 million from which the company earns recurring rental income. It has also diversified into property development.

Its major re rating is the greenlight given by the Laos government to hold the concession for a 260MW run-of-river hydropower plant in the country, five years after signing a memorandum of understanding (MoU) with the state-owned energy company to develop the plant.

The project will be handled by Don Sahong Power Co Ltd, which Mega First said will eventually sign a concession agreement with the Laotian government, to develop, build and operate the hydropower plant. No timeline for the agreement was given, nor the expected timeframe for the project.

The Don Sahong Hydropower project is a run-of-river hydropower project, located at the Hou Sahong channel of the Mekong River in Khong District, Champassak Province, Lao People’s Democratic Republic. It will have a capacity of 260MW and capable of generating about 2000 GWh of electricity per year.

Concessionaire Don Sahong Power is owned by Ground Roses (with a 79% stake), Silver Acreage (1%) and EDL (20%).

The project estimated to cost rm1.5 billion is slated for completion in 2019. It would replace the loss of income from the above mentioned projects a(if their concessions are not extended) and more ...