bursa edge

Benalec & Wah Seong

2013-11-14T18:25:00.000-08:00

Buy Benalec & Wah Seong for Rebound

Further weakness on Benalec towards RM1.10 (6/9/12 low) would be attractive to bargain
for oversold rebound towards RM1.22 (76.4%FR), matching the upper Bollinger band, with
next resistance seen at RM1.28 (61.8%FR). Meanwhile, a daily stochastics and DMI buy
signal on Wah Seong enhances breakout potential above the upper Bollinger band (RM1.72)
to target RM1.80 (38.2%FR), RM1.87 (50%FR) and RM1.94 (61.8%FR) going forward.
Immediate support will be at the lower band (RM1.67).

Counters in the News

2013-11-13T22:22:00.000-08:00

Corporate

Felda Global Ventures Holdings Bhd continues its foray into the development of
innovative products, with the extraction of palm-based vitamin E (also known as
tocotrienol) through a joint venture with Lipid Venture Sdn Bhd. The possible 40:60 joint
venture between Felda Global Ventures Downstream Sdn Bhd and Lipid Venture Sdn Bhd to
produce and market tocotrienol, has successfully secured a seed grant from the
government's Performance and Management Delivery Unit. (The Edge)

Khazanah Nasional Bhd has completed the purchase of a 90% stake in Turkey’s health and
life insurer, Acıbadem Saglık ve Hayat Sigorta AS (Acıbadem Sigorta) in a USD252mn
(RM810mn). (StarBiz)

Haisan Resources Bhd may see the launch of a mandatory general offer (MGO) by Tengku
Makram Tengku Ariff after the completion of its rights issue, if his stake exceeds 33%. The
right issue is part of the Practice Note 17 (PN17) firm's regularization plan. (Bursa Malaysia
/ The Edge)

MAA Group Bhd (MAA) is selling its entire stake in 55%-owned fund management
subsidiary MAAKL Mutual Bhd for RM53.1mn. MAA said the buyer is Manulife Holdings Bhd
which intends to acquire 100% of MAAKL from other shareholders of the MAAKL. The
proposed deal values the entire stake in MAAKL at RM96.48mn. (Bursa Malaysia / The Edge)

KUB Malaysia Bhd, the holding company of the country's first and oldest fast-food chain,
A&W (M) Sdn Bhd, is no longer looking to divest 40% of its equity stake in the latter as
initially announced. KUB group managing director Datuk Wan Mohd Nor Wan Ahmad
explained that the company's decision to close down 26 loss-making outlets has helped
increase the company's provision positively. (Business Times)

Perisai Petroleum Teknologi Bhd’s profit increased by 12.9% YoY to RM23.4mn for the 3Q
financial year ended Sept 30, 2013 (3QFY13) from RM20.7mn in the same corresponding
period last year. The increase in profit was on the back of higher revenue of RM34.1mn,
which was up by 4.8% against RM32.6mn in previous year’s similar quarter. The increase in
revenue was mainly due to higher foreign currency conversion for the current financial
quarter under review, the company said. (Bursa Malaysia / The Edge)

Wing Tai Malaysia Bhd’s earnings fell 14.4% to RM15.7mn in the 1Q ended Sept 30, 2013
from RM18.3mn a year ago on lower contribution from the property development division.
It said lower revenue from the property development division was mainly attributable to the
lower revenue recognition from the Verticas Residensi project in the current quarter. (Bursa
Malaysia / StarBiz)

Berjaya Assets Bhd’s earnings fell 25.6% YoY to RM17.0mn from RM22.9mn in the 1Q of
the financial period ended Sept 30, 2013. It explained that the lower pre-tax profit for the
current quarter under review was mainly due to the "lower gain registered on disposal of
investment properties" as compared to the corresponding quarter in the previous year.
(Bursa Malaysia / StarBiz)

Sersol Bhd, which was in the news in recent weeks over the volatile share price changes,
reported narrower net loss of RM51,000 in the 3Q ended Sept 30, 2013 from RM634,000 a
year ago. It said the narrower losses was due to an improved performance in Thailand and
Malaysia Coating manufacturing subsidiaries. (Bursa Malaysia / StarBiz)

Hup Seng Industries Bhd’s net profit rose 12% YoY to RM7.8mn in the 3Q ended Sept 30,
2013, from RM6.9mn a year ago. The biscuit, confectionery and foodstuff manufacturer said
its profit rise was due to higher sales recorded. (Bursa Malaysia / The Edge)

Alam Maritim & AZRB

2013-11-13T18:31:00.003-08:00

Buy on Weakness Alam Maritim & AZRB

A further selloff on Alam Maritim shares towards RM1.28 (61.8%FR) or RM1.16 (50%FR)
would be very attractive to bargain for oversold rebound profits towards RM1.67 (17/7/13
peak), matching the upper Bollinger band. Similarly, any selling dips on AZRB towards 90sen
(50%FR) should encourage buying for technical rebound profits towards RM1.03
(76.4%FR), with stronger profit-taking resistance likely at RM1.14 (19/7/13 peak). Strong
retracement support is seen at 85sen (38.2%FR).

Pantech Group & Perisai Petroleum

2013-11-12T17:24:00.003-08:00

Buy on Weakness Pantech Group & Perisai Petroleum

Nevertheless, any price weakness on Pantech Group towards the 30-day moving average
(RM1.00) or lower Bollinger band (98sen) will be attractive to buy for rebound towards the
upper band (RM1.06), with a breakout to re-visit RM1.16 (19/7/13 peak) ahead. Good
retracement support is at 97sen (61.8%FR). Likewise, dips on Perisai Petroleum towards the
lower Bollinger band (RM1.34) should attract buyers looking for rebound profits at RM1.52
(76.4%FR), with RM1.70 (29/5/13 peak) as a tougher hurdle.

Tgoff and THHeavy

2013-11-12T01:55:00.002-08:00

BUY Tanjung Offshore & TH Heavy Engineering

Bullish momentum on Tanjung Offshore should enhance breakout potential above 77.5sen
(29/5/13 peak) to target 90sen (123.6%FP), 97sen (138.2%FP) and RM1.03 (150%FP)
ahead. Important retracement support is at 65sen (23.6%FR). Similarly, TH Heavy
Engineering is ready for bullish breakout above 96.5sen (19/7/13 peak) and aim for RM1.09
(123.6%FP), RM1.17 (138.2%FP) and RM1.24 (150%FP) going forward, while key
retracement support is at 84sen (23.6%FR).

Counters in the News

2013-11-12T01:49:00.001-08:00

Scientex Bhd is expanding its portfolio of consumer packaging products to include biaxially
oriented polypropylene (BOPP) films, with the proposed acquisition of Seacera Polyfilms
Sdn Bhd, a wholly-owned subsidiary of Seacera Group Bhd, for RM40mn cash. (Bursa
Malaysia / The Sun Daily)

Bina Puri Holdings Bhd has entered into a joint venture with a Thailand-based developer
and a Chinese businessman to develop the Bangkok Marina Resort and Spa, a project with a
gross development value of RM200mn. (StarBiz)

Time Engineering Bhd’s (TEB) non-interested directors have advised the minority
shareholders to reject the offer of 20sen a share from Censof Holdings Bhd. It said the fair
value of TEB was between RM110.1mn and RM181.6mn, which translated to 14sen and
23sen per share. (Bursa Malaysia / The Edge)

Salcon Bhd plans to earmark up to RM30mn as special dividend or capital repayment for
shareholders. This RM30mn will come from the proceeds of its planned disposal of six
foreign operating units in China. The proposed distribution is conditional upon the
completion of the proposed disposals and subject to obtaining all the requisite approvals.
(Bursa Malaysia / The Edge)

Boustead Holdings Bhd has awarded a contract for the second generation patrol vessels/
littoral combat ships torpedo launching system to Boustead Heavy Industries Corporation
Bhd’s subsidiary Contraves Advanced Devices Sdn Bhd. (Bursa Malaysia / StarBiz)
IOI Corporation Bhd’s unit IOI Plantations Bhd now has 76.64% stake in Unico-Desa
Plantations Bhd and the takeover offer has now become unconditional. IOI Corp said on
Monday IOI Plantation had received valid acceptances for 310.9mn offer shares or 36.28%
and raised its entire stake to 76.64% or 656.9mn shares. The takeover offer was RM1.17 per
share. (Bursa Malaysia / StarBiz)

Mah Sing Group Bhd has posted a pre-tax profit of RM92.1mn for its 3Q ended September
30 2013 compared with RM76.1mn a year earlier. Mah Sing said it had unbilled sales of
about RM4.185 billion as at September 30, which was 2.7 times the revenue recognised from
the property development division in 2012. (Bursa Malaysia / Business Times)

Westports Holdings Bhd’s net profit rose 19% YOY to RM106mn in the 3Q ended Sept 30,
2013, from RM89mn a year ago. The group attributed the improved profit to increase in
container throughput and savings of the management fee arising from termination of
management services agreement. (Bursa Malaysia / The Edge)

Huat Lai Resources Bhd reported RM11.23mn in net profit for the 3Q ended Sept 30, 2013,
from a net loss of RM10.34mn in similar quarter a year earlier. The better pretax profit is
due to higher selling prices of poultry products and higher sales, the company said. (Bursa
Malaysia / The Edge)

Bina Puri

2013-11-12T01:41:00.003-08:00

Bina Puri in JV to develop Bangkok Marina

The Malaysian Reserve | November 12, 2013

The developer will be involved in building high-end residential bungalows in Bangkok, Thailand, estimated at a gross development value of RM200 million.

by John Gilbert
PETALING JAYA: Construction and property developer Bina Puri Holdings Bhd has signed a joint venture (JV) agreement to build high-end residential bungalows in Bangkok, Thailand, estimated at a gross development value (GDV) of RM200 million.
Its chairman James Foong Cheng Yuen said the project called Bangkok Marina Resort & Spa will begin construction in the first-quarter (1Q) of 2014. The development is expected to be completed and ready for occupancy by the 1Q of 2017.
“Bangkok Marina will be executed by our subsidiary Bina Puri (Thailand) Ltd (BPTL), together with two other JV partners, Thai-based UFUN Group Ltd and Tang Cong Shun, an independent investor from China.
“BPTL, UFUN and Tang will form a JV company, Bangkok Property Co Ltd, whereby BPTL will be the main contractor for the project with UFUN managing the sales and investment coming from China,” he told reporters at the signing ceremony in Kuala Lumpur yesterday.
He said the project is expected to contribute about 20% in profit margin for Bina Puri in 2015 and 2016.
Located in the city of Bangkok and close to Suvarnabhumi Airport, the city’s international airport, Bangkok Marina will comprise 817 single-storey, double-storey semi-detached, double-storey duplex and resort suites along with residential buildings, as well as leisure and entertainment outlets and also a seafood restaurant.
“We anticipate 100 units of the high-end residence to be taken up by UFUN members in the first three months, after which we will then open the sales for the units to buyers from China and Asean,” Tang said.
Investors will stand to enjoy total returns of between 20% and 30% from the estimated GDV of RM200 million from the first phase.
This content is provided by FMT content provider The Malaysian Reserve

AZRB

2013-10-27T22:31:00.002-07:00

	AZRB		Price Target	:	1.20	\|	Price Call	:	BUY
				Last Price	:	1.01	\|	Upside/Downside	:	+0.19 (18.81%

Adding more to its bag
Ahmad Zaki Resources (AZRB) was awarded a RM163m contract for the new Air Police Base, bringing its orderbook to a sizable RM3.8bn (6.3x construction revenue). We expect AZRB to clinch more jobs going forward. Potential jobs include the Langat 2 water treatment plant and Angkasapuri redevelopment. AZRB is also a potential beneficiary from Bumiputra carved out projects under the recently announced Bumiputra Economic Empowerment plan. No changes to estimates. We maintain BUY with RM1.20 TP.
What’s in the news
 AZRB announced that it was awarded a RM163m contract to build the new Air Police Base in Jln Lapangan Terbang Subang, Shah Alam.
 Management said that the new base is to replace the existing one at the Sg Besi Airfield which has new been earmarked for development by 1MDB. The scope of works for the contract involves a hangar and a 5-storey office block.
 Works are scheduled for completion within 96 weeks (1.8 years) from site possession.
Our comments
 With this recent award, AZRB’s YTD job wins stand at RM1.89bn vis-à-vis our full year assumption of RM1.8bn. We estimate AZRB’s orderbook balance to now stand at RM3.76bn, implying a very strong orderbook to construction revenue ratio of 6.3x.
 This contract win vindicates our view on AZRB’s ability to continue securing government related contracts. We estimate that total contact wins from the government, its related entities and GLCs make up 89.4% of AZRB total job wins of RM6.5bn since 2005.
 While the slowing of government related projects is a concern given fiscal tightening, wenot expect any of its outstanding tenders to materialise for the remainder of the year, we deem our assumption to be inline. Our earnings forecast are unchanged.
 For FY14-15, we have assumed RM400m in new job wins. This is lower than the RM1.89bn secured this year which was largely mainly contributed by the sizable East Klang Valley Expressway (RM1.55bn).
Valuation and recommendation
 Maintain BUY with unchanged TP of RM1.20 based on sum of parts (SOP) valuation which comprises (i) 10x FY14 earnings (RM0.86/share) and (ii) RM20k per ha for its 4,750 ha of planted plantation land (RM0.34).
 Our TP implies FY13 P/E of 26.6x but this will decline to 14x and 8.4x in FY14-15 once earnings kick in from the execution of its sizable orderbook. expect this to mostly impact mega projects. Mid to small scale projects (i.e. those below the RM300m range), in which AZRB focuses on, should be less impacted.
 Contracts in the pipeline include the Langat 2 water treatment plan where the Salcon-MMC-AZRB JV is understood to have submitted a RM1bn bid. AZRB’s 30% stake in the JV will land itself with RM300m worth of works if the bid is successful. We expect the outcome to be known in 1Q14 when the Selangor water consolidation exercise is expected to be resolved.
 AZRB is also bidding for is the building works for the Angkasapuri redevelopment. The concessionaire for the project has been selected and it has called for tenders. Management guides that the package that it has bid for is worth RM300-400m.
 Last month, Prime Minister Dato’ Sri Najib Tun Razak unveiled the Bumiputra Economic Empowerment plan which involves carving out projects specifically for qualified Bumiputra contractors. These projects explicitly allocate a certain portion (30-40%) solely for Bumiputra participation. We reckon that entrepreneur-driven Bumiputra contractors such as AZRB stand the best chance to benefit from these projects.
Impact on estimates
 YTD job wins of RM1.89bn has marginally surpassed our full year target by 4.8%. As we do

Hiaptek

2013-10-27T22:09:00.002-07:00

Hiap Teck Venture - Catalysts In Store

Date: 23/10/2013

Source	:	RHB
Stock	:	HIAPTEK	Price Target	:	0.97	\|	Price Call	:	BUY
			Last Price	:	0.655	\|	Upside/Downside	:	+0.315 (48.09%)

We revisited HTVB’s fundamentals and discovered several positive drivers that may further lift its bottomline. As its current utilisation rate is just 50-60%, any improvement in its operations (from increased production) will directly boost earnings. Eastern Steel SB is a long-term investment, while its Bukit Besi iron ore mine remains a bonus. We upgrade HTVB to BUY, with a MYR0.97 FV.

- A fresh look at its fundamentals. After reporting weak FY12 earnings due to a sluggish operating environment, Hiap Teck Venture (HTVB) has recovered strongly in FY13 with a healthy 47.3% y-o-y earnings growth. We believe that HTVB’s operation has stabilised and this is now an appropriate time to revisit the group’s fundamentals and potential growth prospects.

- Positive drivers. Some positive factors that may propel HTVB’s earnings include: i) an increase in demand for water pipes, should water pipe replacement projects kick off, ii) the US’ anti-dumping duties against nine oil and gas pipe-exporting countries may open a window of opportunity for HTVB, iii) its trading arm’s margin is expected to recover, and iv) contributions from its 55%-owned Eastern Steel SB upon commencement of commercial production may boost earnings further.

- Sensitivity analysis shows positive outcome. With HTVB’s current utilisation rate at just 50-60%, the company is already profitable. Our sensitivity analysis suggests that a 10% increase in the utilisation rate will further improve its profitability by 12.0% and 9.9% in FY14F and FY15F respectively, due to operating leverage effects.

- Risks. The steel industry, being extremely competitive, is characterised by volatile prices. The expected increase in water pipe demand may not materialise, with trading margins continue to come under pressure.

- Upgrade to BUY, MYR0.97 FV. We valued HTVB at 0.5x FY14F P/BV previously. In view of its stable operations and improving earnings visibility, we raise our valuation to 0.72x FY14F P/BV, which is -0.5 STD from the mean of its 5-year historical trading band (from -1.0 STD), to derive a new FV of MYR0.97 (from MYR0.66). We also upgrade our recommendation on the stock to BUY from Trading Buy.

Source: RHB

AZRB did hit target RM1.15 posting in may11

2013-08-18T16:13:00.002-07:00

May

AZRB immediate resistance RM0.91, target RM1.15

EKVE will boost AZRB's order book

RHB Research was more sanguine in its assessment, saying the contract offered AZRB “two bites on the same cherry” from construction profits over the medium term and recurring toll profits over the longer term.
“However, to be prudent, we will only include the project in our earnings forecasts and valuations as and when the last hurdle is crossed, i.e. achievement of financial close (that would take another six to nine months)," it noted.
The EKVE would provide a by-pass route and enable motorists from the southern part of the Klang Valley such as from Cheras, Bangi and Subang to travel to Selayang and Gombak and vice versa without having to go through the city centre.
It would serve as a bypass route around Kuala Lumpur for inter-regional traffic from the Karak Highway, according to past reports.
There would be six interchanges Sungai Long, Bukit Mahkota Cheras, Hulu Langat, Ampang, Ukay Perdana and IIUM (International Islamic University Malaysia).
Under the deal, AZRB's scope of works involves the design and construction of the expressway, the upgrading works and the widening of the existing road, and the supply and installation of tolling and other equipment (including telecommunications equipment) at the toll plaza, and managing, operating, and maintaining the same on the expressway during the concession period.
The concession also grants AZRB the right to demand, collect, and retain the toll for its own benefit from all vehicles liable to pay toll using the expressway during the operating period.
The company added that the concession allowed AZRB to operate, manage and maintain (including, without limitation, utility charges incurred thereby) the expressway, to design, construct, operate, manage, and maintain the administrative offices, and undertake all other activities incidental to the performance of the works referred to in the concession agreement.

Posted 11th May by edge daily

MAS cheap sale?

2013-08-17T02:21:00.002-07:00

Why are MAS shares on cheap sale? - Koon Yew Yin

August 17, 2013
Latest Update: August 17, 2013 09:13 am

As a long term serious investor, I have taken a closer look at the cheap share price of Malaysia Airlines (MAS). Why is it selling at 33 sen, about one third of its par value?
Many market analysts have already covered MAS and Idris Jala has said that the company should be sold off as soon as possible.
My intention for writing this piece is to help the government decide on putting in the final nail to bury MAS to save taxpayers’ money.

Obviously, the government did not see my previous article “Why MAS is still flying” which I published about a year ago. It is important and worthwhile to include some of the points I mentioned earlier in my previous article.

The latest 1st quarter 2013 ending March results shows that MAS lost RM279 million. In 2012, 2011 and 2010 the company lost RM433 million, RM2.424 billion and RM234 million, respectively.
As usual, there are the incorrigibly optimistic cheerleaders for the airline who are unable to see the writing on the wall. These "experts" are still touting that the company is in recovery mode and will soon be returning to profitability.
The market, however, sees the prospects for the airline differently. During the past few days the airline's shares have been trading at around the 35-sen level. This is about the lowest share price that the airline's shares has recorded in many years. Without the support of government-linked funds and left to market forces alone, it is possible that the share price of MAS will drop even more.
The recurring losses of MAS are a great mystery especially when they are compared with the performance of Singapore Airlines (SIA). In 1972, Malaysia-Singapore Airlines (MSA) broke up to become MAS and SIA. In the last 10 years, from 2002- 2011, SIA reported a total pre-tax profit of Singapore $13,992 million, averaging S$1.4 billion per year.
Should the government continue to bail out MAS?
The most recent losses bring the total losses of MAS to at least over RM3 billion. In any normal business, any company incurring large and sustained losses would have closed down or gone into bankruptcy. This has not happened to MAS yet, but I think the time is right – many observers will say, long overdue – for the government to withdraw the open cheque book extended to MAS.
When planning the future of MAS, it is important that the government avoids not only the past mistakes but also takes a rational approach based on economic fundamentals. One line of simplistic thinking is that there is a bright and profitable future for MAS since the number of air travelers continues to increase by about 5-7% per year.
But if you look at the history of airline industry profitability, this is not the case for airlines worldwide. The fact is the airline industry requires huge capital and produces poor returns on capital employed. Hence, year after year, many airlines produce poor profit margins or outright losses.
Why is it that an industry with year-on-year rises in sales cannot generate good returns to shareholders?
It all comes down to the economic structure of the industry. One of the forces that limit profitability is the intensity of the rivalry between the leading airlines. There is over-supply leading to pressure on prices. This is exacerbated by a high degree of freedom for new competitors to enter the industries.
If, say, an airline route between two destinations is found to be reasonably profitable it is not long before new entrants move in or current airlines simply move their planes to this profitable route.
It is truly an industry governed by the principle of “survival of the fittest”.
The ego and elections factor
It would seem that every developing nation wanting to show off to the world its progress MUST have its own airline, regardless of the impact on an industry already grossly over-supplied, and regardless of whether they have the ability to manage efficiently. So, there is a regular stream of announcements of new airline ventures.
The next logical question to ask is why doesn’t the Malaysian government allow MAS to fold up or go under?
There are two main reasons: Firstly, the perennial optimism of managers and shareholders.
“Just one more chunk of money will see us break through into profitability as we rout the opposition!” seems to be the credo of these parties based on their self and not national interest.
Secondly, there is government interference. This factor, however, is less found now as many governments have learnt not to come to the rescue of their airlines.
Malaysia has not learnt these lessons – initially for reasons of national pride tied to the ego of leaders but now increasingly apparently to save jobs and to prevent the retrenched employees from voting for the opposition. This may make sense politically but it is poor economics.
Let MAS fly or crash without further interference or delay is the only way forward in the national interest especially since Idris Jala has said that the company should be sold off as soon as possible! - August 17, 2013.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

KUB

2013-08-01T16:05:00.002-07:00

KUB on track for a better showing

July 31, 2013

KUALA LUMPUR: KUB Malaysia Bhd remains confident of being profitable for the rest of its financial year 2013, driven by consolidation and cost optimisation of its core businesses.
The company declared a RM589,000 net profit for the 1Q ended March 31, 2013, compared to a RM4.12 million net loss a year ago while revenue for the period rose 8% to RM224 million from the RM207 million declared previously.
“We are on the right track, we are moving ahead, we are showing profit. It is a small profit but we are there in the 1Q and we will improve further in the 2Q,” said group Managing Director Wan Mohd Nor Wan Ahmad to the media after the company’s Annual General Meeting in Selangor yesterday.
The company has revamped its food operations that is spearheaded by its subsidiaries A&W (M) Sdn Bhd and A&W Restaurants (Thailand) Ltd Co with the closure of non-performing outlets and disposal of its Thailand operations.
“We have improved that business segment and we are in the final stage of divesting A&W Thailand to Malaysian investor in Thailand,” said Mohd Nor, adding that they are still in negotiation and not at liberty to say how much the price is for the stake.
“No new outlets are planned this year but we will open three to four outlets in 2014 and we will go to Sabah and Sarawak though we will still focus on the Klang Valley due to the many benefits,” said Mohd Nor on the future direction of the A&W food franchise.
Mohd Nor said KUB might look for a partner who is willing to inject cash to drive growth and is looking at local partners or government-linked companies.
He said KUB has RM144 million cash for its working capital to participate in several forthcoming construction projects, which he is not at liberty to disclose.
Mohd Nor said the company is on track to acquire land to expand its agro business through its subsidiary KUB Agro Holdings Sdn Bhd and KUB Sepadu Sdn Bhd.
“Our ultimate target is 28,328ha by 2017 and we have 7,284ha now and are in the process of acquiring 20,234ha in Sarawak,” said Mohd Nor.
KUB plans to strengthen its ICT businesses following its recent joint venture with Datacom Systems (Asia) Sdn Bhd and is confident of delivering ICT service especially in the area of cloud computing.

SYCAL

2013-07-28T02:18:00.003-07:00

Sycal Ventures Berhad is a Malaysia-based investment holding company. The Company, through its subsidiaries, operates in three segments: construction, which includes civil and construction works; property development, which includes housing development, and manufacturing and others, which include manufacturing and trading of ready-mix concrete, trading in building materials, leasing of aircraft parts and equipment, provision of hotel management services and investment holding. Its subsidiaries are Sycal Berhad, Sycal Properties Sdn. Bhd. and Sycal Resorts Sdn. Bhd. In addition, the Company has 13 indirect subsidiaries. Operations are carried out in Malaysia and Hong Kong.

Quarter Result:

F.Y.	Quarter	Revenue ('000)	Profit before Tax ('000)	Profit ('000)	Profit Attb. to SH ('000)	EPS (Cent)	DPS (Cent)	NAPS
2013-12-31	2013-03-31	53,901	3,425	2,866	2,694	0.84	-	0.5468
2012-12-31	2012-12-31	49,740	2,151	1,881	1,924	0.60	-	0.5402
2012-12-31	2012-09-30	85,169	3,231	2,996	3,037	0.95	-	0.5343
2012-12-31	2012-06-30	29,886	3,167	2,696	2,680	0.84	-	0.5250
2012-12-31	2012-03-31	31,282	2,874	2,293	2,187	0.87	-	0.5166
2011-12-31	2011-12-31	28,922	-956	-1,102	-1,037	-0.34	-	-
2011-12-31	2011-09-30	25,800	3,980	3,154	2,960	1.17	-	0.5134
2011-12-31	2011-06-30	24,972	3,632	2,809	2,625	1.04	-	0.5035
2011-12-31	2011-03-31	20,437	407	339	210	0.08	-	0.4947

KEuro and TRINITY and IJM

2013-07-24T15:53:00.002-07:00

Europlus may sell assets to fulfil concession requirements

By WONG WEI-SHEN
weishen.wong@thestar.com.my

CHERAS: Kumpulan Europlus Bhd is looking into several options, including disposing of some of its assets to satisfy the financial requirements under the 60-year concession agreement for the West Coast Expressway (WCE), in which it has an 80% stake.
Chairman Datuk Abdul Hamid Mustapha said the concession company would need to have RM200mil in capital to meet the requirements set by the Government for the highway.
“We have to borrow more. Our equity injection will come from raising further money from shareholders as well as disposal of some of our assets,” he said after the company AGM yesterday.
The capital for the concession company currently stands RM30mil.
IJM Corp holds the remainder 20% stake in the WCE concession company.
The other options the company have to raise additional funds are to increase its borrowings from the bank, or get more funding from its shareholders.
It recently proposed to undertake a placement exercise to raise up to RM57.83mil to finance the highway.
Abdul Hamid said the company has only three assets: the WCE project, the Bandar Rimbayu development with IJM Corp, and a 30% stake in associate company Trinity Corp Bhd, which will soon change its name to Talam Transform Bhd.
KEuro has a 50% stake in the Bandar Rimbayu project via Radiant Pillar Sdn Bhd. The development has a gross development value of over RM10bil, which will be spread out over the next 10 years.
Should the company decided to sell its Bandar Rimbayu asset, it would only sell part of it, Abdul Hamid said.
The first phase of the 1,878 acre development was launched in early March 2013 and is already generating profits for the company.
“If we can afford it, we won’t want to sell it. Why sell if it is making money now?” he asked.
The second phase of the development is set to be launched in the third quarter of this year while the third phase will be launched in early 2014.
He said that the company would make an announcement on how it would raise additional funds in the next few weeks.
Meanwhile, the company is currently finalising the Government support loan of RM2.24bil, as well as the commercial loan it is taking.
Abdul Hamid said he was confident the company could achieve the September deadline for the concession company.
However, he added that the company could ask for a three month extension if need be.

TRINITY

2013-07-24T15:50:00.003-07:00

Trinity to start build-then-sell projects

By WONG WEI-SHEN
weishen.wong@thestar.com.my

CHERAS: Formerly known as Talam Corp Bhd, Trinity Corp Bhd plans to embark on build-then-sell developments on a smaller scale in Puchong by next year.
At the company AGM yesterday, executive director Chua Kim Lan said the company was currently in the planning stage to venture into build-then-sell projects.
“This is so we can prove to people that we can deliver,” said chairman Adrian Tsen Keng Yam.
“We are accumulating enough cashflow to do that, but not in a big scale anymore,” Chua added.
Tsen highlighted that the company would not go into mass production developments anymore.
Chua added that the company would need about RM20mil to RM30mil to kick start its first build-then-sell project.
“It will be pockets of land there that are left, maybe some affordable apartments and some landed properties. It will be on land where we don’t need to spend on infrastructure costs,” she said.
Trinity is also working on layout changes in Bukit Beruntung as there is a lot of demand for industrial land, Chua said. “From then on, we would be able to sell industrial land. It is in good demand now,” she said.
The process to convert the existing land to industrial land status, which was originally under housing status, would take about 18 months, Tsen said.
Moving forward, he expects the industrial land business to be one of the major revenue streams for the company.
Trinity had some 2,000 acres in land bank, which would keep it busy in the next 10 to 15 years, Tsen added. “We have land near Cyberjaya, Selayang, Ulu Klang and Bukit Beruntung, which is the biggest parcel,” said Chua.
On its abandoned project, Chua said the last phase was ready to be handed over, awaiting clearance from the authorities.
Tsen hopes for the company to return to the black in the next two to three years.
For the first quarter ended April 30, 2013, the company recorded a net loss of RM900,000 on revenue of RM21.78mil.
“The reason for our losses is that our finance costs are quite high. We are currently negotiating for some settlement, so we hope we will be able to turn around,” said Chua.
Its current borrowings stand at about RM400mil, of which around half of it is owed to a single lender.
Meanwhile, the company has managed to reduced its total liabilities within five years to RM1.3bil from RM2bil previously.
The company aims to dispose more of its assets as well as participate in more joint-venture developments in order to pare down its debts. However, it is in no rush to sell.
Following shareholders’ approval, Chua said the company would soon submit an application to the Companies Commission of Malaysia to change its name to Talam Transform Bhd.
In November last year, boutique developer Trinity Group won the rights to stop Trinity Corp from using the name “Trinity”.

Hiap Teck Venture - Above Expectations

2013-07-20T21:58:00.001-07:00

Hiaptek expected to retest RM0.61 again by end of July and then to TP at RM0.75

Hiap Teck Venture (HTVB) made a strong come back in 3QFY13 with a net profit of MYR9.1m (+>100% q-o-q), exceeding our and street estimates. The company has yet to book in earnings from its blast furnace plant, which it expects to complete by end-2013. We have revised our earnings model following the internal reallocation of coverage resources. Maintain Trading BUY, with our new MYR0.66 FV derived from a 0.5x FY14F P/E.

- Strong comeback in 3Q. HTVB reported 3QFY13 net profit of MYR9.1m (+>100% q-o-q, -27.2% y-o-y), a strong comeback after having posted sluggish net earnings of MYR1.7m in the preceding quarter. Its EBITDA margin improved by 3.4%-pts q-o-q despite the flattish revenue sequentially, mainly attributed to lower production cost on more effective controls and higher production efficiency.

- Blast furnace plant yet to generate earnings. As the company targets to complete its blast furnace plant by end-2013, it has yet to realize any contribution from this segment. Nonetheless, we believe that once the plant starts operation, it should contribute positively to the Group’s bottomline.

- Change of analyst and valuation method. Due to our internal resource reallocation, there had been a switch in the analyst covering HTVB as well as a change in our valuation methodology on the stock. We are now valuing HTVB using a P/B multiple, given that earnings growth may not be too significant before its blast furnace plant is completed. Therefore, we believe that the P/B valuation method should be more reflective of the company’s true value.

SALCON shortlisted for Langat 2

2013-07-09T04:16:00.001-07:00

Three companies shortlisted for Langat 2 water project

July 9, 2013

The three firms are undergoing final negotiations with the Ministry of Finance

KUALA LUMPUR: Three companies — Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) — are believed to have been shortlisted out of the 13 companies that are bidding for the RM1.2 billion Langat 2 water treatment plant project.

It is understood that the three firms are now undergoing final negotiations with the Ministry of Finance (MoF), a source familiar with the deal said.

The source said Salcon, with its technical expertise, is expected to be the lead partner in the Langat 2 project with a 38% stake, which is estimated to be worth between RM380 million and RM400 million.

Earlier, it was reported that five companies were shortlisted by Pengurusan Asset Air Bhd for the 1,130 million litres per day water treatment plant, which is part of the larger Langat 2 water treatment facility.

Salcon is a water and waste water engineering company. Apart from Malaysia, Salcon operations are also located in China, Vietnam and Sri Lanka.

MMC Corp operates as a utility and infrastructure company primarily in Malaysia while AZRB operates as a contractor of civil and structural construction works.

The Langat 2 plant was planned way back in 2000 based on experts findings that it would be the best remedy to treat raw water from Pahang to meet demand due to rising population and industrial development in Putrajaya, Kuala Lumpur and Selangor.

SALCON Tendered for RM1.8 Billion Jobs

2013-07-09T04:11:00.003-07:00

Salcon targets ‘big jump’ in revenue on various contracts from 2014

July 9, 2013

KUALA LUMPUR: Salcon Bhd is expecting a “big jump” in its turnover starting 2014 and onwards from increase contribution from its newly entered property development business and new substantial jobs in its water and sewerage division, said ED Leong Kok Wah.

Salcon posted RM341 million in revenue last year, as compared to RM472.5 million in 2011 and the net profit was at RM31.5 million in 2012, a slight increase from RM25.4 million in the previous year.

Leong said a total of RM1.8 billion worth of various contracts in water and waste water concession were tendered and the company is expecting a hit rate of up to 30% that will likely to bear fruits from next year.

“This year is very exciting for us as we are actively tendering and signing contracts. For the first four months of this year alone we secured RM300 million worth of projects and signed for RM260 million out of the contracts in water and wastewater concession,” Leong said after Salcon’s 10th AGM in Subang Jaya, Selangor, yesterday.

Leong, meanwhile, said last year the water and waste water business was quiet and that this year it is picking up.

However, he expects the growth in revenue to be flat as of 2013.

Talking about their property development business, Leong said Salcon views the sector as a potential earnings contributor for the company in future, given the rising demand for properties in Malaysia.

He said Salcon will not be surprised if their property development business has the ability to overtake the water and waste water concession business as Salcon’s primary earnings contributor.

“But we will still be pursuing contracts in water and waste water concession. We are very confident to excel in property business as we have the expertise in it,” said Leong, a former independent director of SP Setia Bhd.

Apart from Leong, Salcon’s independent ED Datuk Choong Moh Khen is also helping out the company in property division as he has served at PPC Glomac Sdn Bhd as MD prior to joining Salcon.

As the first step, Salcon initiated two development projects namely in Selayang, Selangor, and Johore with a total gross domestic value of RM1.2 billion.

“We just did the soft launch for the Selayang housing project and 40% out of the 280 units were signed off. It is a two-room affordable apartment project which is expected to be completed in three years time,” he said.

It is a 21-storey commercial building in Selayang comprising 12 units of two-storey shops and offices with a combined net saleable area (NSA) of 40,600 sq ft and 280 SOHO units with a total NSA of 244,460 sq ft.

“The one in Johor is planned for a mix development and is targeted to be completed in five years times. We are still in negotiations to acquire the lands,” he said.

Leong said the shift to property business is part of Salcon’s diversifying effort as going forward it is not easy to continuously get concession contracts.

Bullish Reversal signal counter--UPDATED

2013-07-08T05:13:00.000-07:00

Name	Reversal signal Date	Reversal signal Price RM	1^st Target RM	2^nd Target RM	Comment
TRC	5/7/13	0.61	0.63	0.675	Hit 0.675 on 17/7/13
BinaPuri	8/7/13	0.705	0.765	0.84	Hit 0.765 on 16/7/13
Mulpha	8/7/13	0.40	0.415	0.425	Hit 0.425 on 18/7/13
Silkhld	8/7/13	0.425	0.45	0.495

Sumatec sees RM1b revenue by 2015

2013-06-20T22:14:00.003-07:00

Sumatec sees RM1b revenue by 2015

By Sharen Kaur

Published: 2013/06/22

ON TRACK TO PROFIT: Company banking on oil and gas field in Kazakhstan

Sumatec Resources Bhd should be debt-free by August and achieve its RM1 billion revenue target within three years, says its major shareholder Tan Sri Halim Saad.

The company is banking on its Rakushechnoye oil and gas field in Mangystau, Kazakhstan, to put it on a solid profit path.

It has a Joint Investment Agreement with Markmore Energy (Labuan) Ltd and CaspiOilGas LLP for the commercial development and production of the Rakushechnoye field.

Markmore Energy and CaspiOilGas, the company that holds the concession for the field up to 2025, are controlled by Halim.

Sumatec will be investing US$95 million (RM304 million) initially to develop the field, starting on October 1.

It expects to recoup the investment after production hits two million barrels of oil by the third quarter of 2015, Halim said after the company’s extraordinary general meeting (EGM) here yesterday.

The company is projecting a net profit of RM86 million this year and RM69 million in fiscal year 2014. Net profit will be lower next year as it makes more investments.

Halim, who owns 25 per cent of Sumatec, said the next step for the company, following the completion of its restructuring exercise, is to grow its assets and income base.

With the restructuring, Sumatec will transform from an exploration service provider and shipping company into an exploration and production operator.

It is also raising RM452 milion in cash and through a new share and rights issue to pay of debt and for use as working capital.

The company’s shareholders yesterday approved all the resolutions tabled at the EGM.

Sumatec, which expects to exit Practice Note 17 status by mid-2014, will focus on acquiring mature oil and gas assets in Kazakhstan, Halim said.

“Malaysia is all offshore when it comes to oil and gas. In Kazakhstan, there is much lower capital and operating expenditure while earnings are higher.

“The net profit margin for a barrel of oil in Kazakhstan is around US$40 while in Malaysia, it’s about three to four times less,” he added.

Halim, who does not want to be dubbed a white knight, said he bought into Sumatec because of its potential upside.

“This is a good vehicle to expand in the sector.

The company has been involved in O&G (oil and gas) and shipping. They have also done constructionin O&G,” he said.

Halim Saad: Sumatec looking to exit PN17 by Q2 of 2014

By Ng Bei Shan

KUALA LUMPUR: Sumatec Resources Bhd is looking forward to exit PN17 status in the second quarter of 2014.
This came about as shareholders passed the resolutions at its EGM on Friday.
Major shareholder Tan Sri Halim Saad told reporters after its EGM that the company would be debt free following the completion of its restructuring exercise.
Its CEO Christopher Layton Dalton said: "Our vision is to be a leading oil and gas counter in Malaysia in the next five years."
Follow, the restructuring, the company would move from a exploration service provider to an exploration and production operator.
"Our strategy is to explore and produce oil from mature onshore assets as the method is less risky," he added.

Sumatec

2013-06-20T04:24:00.000-07:00

Sumatec shareholders to vote on Kazakhstan oil and gas asset buy

By NG BEI SHAN
beishan@thestar.com.my

Halim had signed an agreement with Sumatec to develop and extract fuel in the Shelly Oil Field

PETALING JAYA: Sumatec Resources Bhd's shareholders will vote on its regularisation plan involving the acquisition of oil and gas (O&G) assets in Kazakhstan on Friday, close to one year upon submission.
News of tycoon Tan Sri Halim Saad injecting his O&G assets into the debt-laden company first emerged in November 2011. Halim, via his vehicle Markmore Energy (Labuan) Ltd and CaspiOilGas LLP (a subsidiary of Markmore Energy Sdn Bhd), had signed an agreement with Sumatec to develop and extract fuel in the Shelly Oil Field.
Through the deal, CaspiOilGas would award a production sharing contract to Sumatec, which, in turn, would place new shares to new third-party investors agreed by both companies.
A circular to shareholders showed that 335 million shares at an issue price of 17.5 sen had been placed to Halim, Tan Sri Chua Ma Yu, Corston-Smith Asset Management and Tekad Mulia Sdn Bhd, raising some RM58.6mil.
Tekad Mulia, owned by Wan Kamaruddin Biji Sura and Chan Yok Peng, has a 26.97% stake in the company.
Corston-Smith Asset Management, meanwhile, was founded by Datuk Shireen Ann Zaharah Muhiudeen.
Wan Kamaruddin, Chan and Shireen sit on the board of the company.
In a company document, the PN17 company said new directors were appointed to lead it upon the completion of its regularisation plan.
Other directors include former Attorney-General Tan Sri Abu Talib Othman, the brother of the Prime Minister Datuk Ahmad Johari Abdul Razak, Datuk Mohd Nasir Ahmad, Christopher Layton Dalton, Datuk Che Mokhtar Che Ali, Mohamad Ismail and Michael Lim Hee Kiang.
It had also proposed a renounceable rights issue of up to 2.72 billion new shares with 680.56 million free detachable warrants at 17.5 sen per rights share on the basis of 41 rights shares for every ten shares held. Every four rights shares subscribed would be entitled to one free warrant.
According to the company, it would raise at least RM452mil in cash from the new share issuance and rights issue, which would then be used for the joint investment agreement as well as for working capital.
Besides raising funds and bringing in new blood to its board, the company had also disposed of debt-laden assets.
It had announced the sale of its 51% stake in Semua International Sdn Bhd to Hoe Leong Corp Ltd and Setinggi Holdings Ltd to make inroads into the upstream segment of the industry.
“With the disposable of Semua, combined with the completion of the regularisation plan, all Sumatec's debts would be eliminated from its balance sheet, enabling it to start afresh on the upstream O&G business without any legacy issues,” it said.
It had also proposed to implement a settlement share scheme in regards to the amount of RM114mil owing to its creditors by issuing up to 261 million new shares.
On top of that, it had proposed a capital reduction, which saw its par value per ordinary share being reduced from 35 sen to 14 sen. The regularisation plan was approved by Bursa Malaysia in January.

MRCB

2013-06-20T01:46:00.001-07:00

MRCB shareholders agree to Nusa Gapurna buyout despite PKNS suit

By Trinna Leong

June 20, 2013

Malaysia Resources Corporation Berhad (MRCB) shareholders overwhelmingly agreed to acquire developer Nusa Gapurna Development (NGD) today despite being sued to stop the deal by Selangor state developer PKNS.
NGD had also rejected a bid by PKNS to buy the former's 70 per cent share in PJ Sentral, a project to revitalise the city next to Malaysia's capital Kuala Lumpur.
In today's EGM, 92 per cent of MRCB's shareholders voted to keep its offer of RM814 million for NGD including its stake in PJ Sentral development. The deal will increase the KL Sentral developer's land bank for future development.
"PKNS had earlier offered to buy NGD's shares (in PJ Sentral) at a higher price but it was rejected," said Wong Muh Rong from Astramina Advisory, the transaction adviser for the deal. NGD was reported to have declined the offer by PKNS on the basis that the latter doesn't have enforceable pre-emption rights.
"As far as NGD is concerned, they're just monetising their shares from PJ Sentral to MRCB," added Wong.
Both MRCB and NGD share a common shareholder, Malaysia's largest pension fund, the Employees' Provident Fund (EPF). PKNS had filed suit yesterday against MRCB and NGD on grounds that NGD has breached a shareholders’ agreement between the two companies with PJ Sentral and that the public-listed MRCB had "intentionally or recklessly procured a breach of the Shareholders’ Agreement".
Both defendants have yet to decide on the next course of action.
Meanwhile PKNS is keeping to its decision to have full ownership of PJ Sentral, a prime asset that's expected to fetch RM2.9 billion from its PJ Sentral Garden City project alone.
"We will exercise our pre-emptive right which is by obtaining 70 per cent shares in NGD. At the same time we are maintaining our 30 per cent shares," PKNS Holdings general manager, Noor Hisham Mohd Ghouth said in an email to The Malaysian Insider. - June 20, 2013.

LUSTER

2013-06-19T02:25:00.000-07:00

Three parties linked to Kedah jetty takeover

Three parties that placed a bid to takeover the Kuala Kedah Jetty, which links the state's mainland to Langkawi island via a sea route, is believed to be in talks to takeover control of Luster Industries Bhd, according to sources.
Luster has been heavily traded over the past four days with well over 100 million shares exchanging hands per day.
The company recently returned to the black, registering a profit of RM501,000 for the quarter ended March 31, 2013, versus a loss of more than RM3 million in the same time last year.
It also saw the emergence of two major shareholders, namely Wee Siew Heng and Ling Siew Luan.
Wee took up 70 million shares, representing a 5.11 per cent stake, while Ling Siew Luan purchased 133.83 million shares or 9.77 per cent on May 30, according to a filing to Bursa Malaysia.
They emerged as part of Lusters' fund raising exercise.
Luster's corporate exercise involved the private placement of 270 million new shares or 24.8 per cent of its paid-up capital together with 216 million free warrants on the basis of four placement warrants for every five placement shares.
The sources said it is understood the three parties are talking to a group led by Lim See Chea and Wilson Wee Song Hee.
Parties aligned to Lim, who is also the Managing Director, controlled 19 per cent of the company, while those led by Wee, who is Executive Director, controlled some 17 per cent of the equity.
The parties collectively seeking ownership of Luster are Puncak Semangat Sdn Bhd, Manfield Development Sdn Bhd and Jalinan Muhibah Sdn Bhd.
Puncak Semangat is a company linked to Tan Sri Syed Mokhtar Al Bukhary while Manfield and Jalinan Muhibah last emerged in the corporate scene as shareholders of Northern Utility Resources Sdn Bhd (NUR).
NUR operates an in-situ independent power utility (IPU) within the Kulim Hi-Tech Park in Kedah and is the first IPU awarded a 30-year concession in 1997 to build a power plant and distribute electricity within the hi-tech park.
- Bernama

Which mid-cap companies targeted by EPF -- Najib

2013-06-17T05:51:00.000-07:00

Najib : Time for GLCs and EPF to trade more in mid-cap stocks

KUALA LUMPUR (June 13): The time has come for government-linked investment companies, especially the Employees Provident Fund, ...

Companies that have high percentage of Bumi shareholding like TRC, AZRB, Kfima, KUB, MKLand, Terbau, Silk Holding, and many more.will benefit most from this recommendation from Najib

PM urges EPF, other GLCs to step up involvement in smaller companies

By RAZAK AHMAD
razak@thestar.com.my

A man watches stock share index movement on digital display screens in Kuala Lumpur. Efforts to make the capital market more inclusive are underway to ensure better access by start-ups, aspiring entrepreneurs and small to medium-sized companies, say Najib.— AFP

KUALA LUMPUR: The Employees Provident Fund (EPF) and other Government-linked investment companies should step up their involvement particularly in high quality mid-cap stocks, said Datuk Seri Najib Tun Razak.
The Prime Minister said the fund management industry, including public sector funds, should set specific objectives to increase the velocity of trades in the shares of such companies.
“It is time for government-linked investment companies, especially the EPF, to step up and play a more prominent role, increasing market vibrancy particularly in good quality mid-cap stocks.
“Their participation would provide another avenue for companies to access primary and secondary funding to bring their businesses to the next stage of development,” Najib said in his keynote address at the 2013 Invest Malaysia conference.
Najib said the fund management industry was a major mobiliser of capital, with Malaysia’s collective savings pool currently in excess of RM1 trillion.
Smaller companies, however, found access to financing a challenge, with the top 10% of firms in the Malaysian equity market capturing an average of 82% of the capital raised over the last five years.
Najib said efforts to make the capital market more inclusive were underway to ensure better access by start-ups, aspiring entrepreneurs and small to medium-sized companies.
So far, they include the introduction of alternative financing structures such as business trusts as well as the upcoming “myULM”, an online platform for unlisted securities and alternative investment products that will be rolled out next year.
On the country’s investment outlook, the Prime Minister said there were indications that interest in Malaysia would be sustained, with foreign participation in Bursa Malaysia topping US$1bil (RM3.14bil) for the first time this year.
In addition, companies listed on the FTSE Bursa Malaysia KLCI Index now generate 45% of their revenue from overseas.

Analyst calls for June 14

2013-06-13T20:17:00.001-07:00

Analyst calls for June 14

June 14, 2013

KUALA LUMPUR, June 14 ― This is a selection of morning calls by local research houses for the day.
RHB Research
Faber Group
− We met up with Faber Group’s management for an update on its operations following the release of its 1QFY13 results.
− Management highlighted that the new concession agreement will be inked soon upon the blessing of the Minister of Health Datuk Seri Dr Subramaniam Sathasivam.
− While this would likely translate into a loss of income in the long run, Faber is looking to take up the subcontractor role for an interim period of six-12 months.
− Management is looking to expand its non-concession facilities management services, possibly by 20-30 per cent pa., with an eye on the O&G segment in particular.
− We are forecasting its non-concession segment to chalk in revenues of RM65 million-RM70 million pa. Upgrades to our estimates are likely should there be any major contract wins in the near term.
− Maintain our BUY call with our FV upgraded to RM2.34 (from RM1.94 previously) rolling forward our valuation to FY14. Its sturdy cash pile of RM312.5 million with minimal borrowings as of 1QFY13 translates into net cash per share of RM0.85.
Gamuda
− Gamuda has won a tender for 724.3 acres of leasehold agricultural land in Kg Sg Serai, Kuang (11 km south of Rawang Town), Selangor, for RM620 million cash, translating to about RM20 per sq ft (psf).
− Conservatively, assuming an efficiency of 60 per cent, the net price works out to be about RM33 psf that falls well within the asking price range of RM30-50 psf for comparable land plots for sale in the same area.
− Gamuda intends to develop on the land a RM5 billion integrated township over 16 years. This will help to sustain its property development profits over the long term.
− No change to our forecasts as we do not expect contribution to kick in within our forecast period.
− Ceteris paribus, the RM620 million cash outlay will raise Gamuda’s net debt and gearing of RM969 million and 0.23x as at 31 Jan 2013 to RM1.6 billion and 0.38x that are still manageable.
− Fair value is RM5.45. Maintain BUY.
Telecommunications
We remain NEUTRAL on regional telecoms on concerns over a stumbling yield compression theme and on valuation grounds. Thai telcos offer superior long-term growth via the 3G single licensing framework, which underpins our only OVERWEIGHT call. In Singapore, the improved take-up of tiered data plans is positive but the sector lacks outright catalysts. Meanwhile, easing competition and M&A vibes will revive interest in Indonesian telcos, while Malaysian telcos should continue to lag on a beta-led play. Telkom replaces Axiata and joins Advanc as our top regional picks.
Regional Banks
We view the recent sharp selloff in Asean banking stocks as an opportunity to accumulate on weakness, as the growth outlook relative to developed nations’ remains compelling. The sector’s liquidity and NPL outlook is intact owing to resilient domestic consumption and investment growth. Our top country banking picks are Thailand and Malaysia, while we remain NEUTRAL on Indonesia and Singapore.
HwangDBS Vickers
Today’s Market Preview
A relief rebound is in store for Asian equities today. This follows an overnight bounce on Wall Street, which saw its leading indices jumping between 1.2 per cent and 1.5 per cent amid expectations that the Federal Reserve might not be tapering its quantitative easing program anytime soon.
Back home, the key FBM KLCI is set to stage a technical rebound too. After losing 44.9-point or 2.5 per cent in three days, the benchmark index could recover to overcome its immediate support-turned-resistance line of 1,750 ahead.
Probably giving a lift in the FBM KLCI today are beaten-down index components such as UEM Land (-8.5 per cent in four days), Genting Bhd (-6.2 per cent in one day), Maybank (-4.2 per cent in two days), IOI Corp (-4.1 per cent in two days) and Axiata (-3.6 per cent in two days). In addition, investors may see action in MISC and SapuraKencana, which will be replacing YTL Power and Bumi Armada as the index constituents effective 24 June. There may also be interest in Gamuda on the back of its plans to acquire 724 acres of leasehold land in Rawang, Selangor for RM620 million.
Top Glove Corporation
Dragged by forex losses. 3QFY13 net profit fell 20 per cent q-o-q or 25 per cent y-o-y due to RM10.9 million unrealised forex losses arising from the fair value accounting of its USD foreign exchange forward contracts and AUD fixed income investments. Excluding this, 9MFY13 net profit is 74 per cent of our full year forecast. Effective tax rate was lower in 3QFY13 due to the reversal of RM4.7 million tax overprovided in FY12 as export incentives were claimed.
Volume growth remained strong. Revenue grew 5 per cent q-o-q as total sales volume increased by 7 per cent q-o-q (latex powder-free gloves +11 per cent, nitrile gloves +13 per cent). Glove ASPs (average selling prices) fell by 3-7 per cent q-o-q due to lower raw material costs and possibly competition. As such, EBIT margin weakened to 9 per cent (excluding RM10.9 million forex losses) from 11 per cent in 2QFY13.
Declared 7sen net DPS. Top Glove declared a 1st interim net DPS of 7sen, with ex-date on 27 June. As of 31 May, the group was in RM81 million net cash position.
Our View
Short-term margin pressure, but demand is intact. Despite ASP and margin pressure, healthy sales will support earnings growth and margin should recover in the coming quarters.
No change to forecasts. The reversal of tax overprovided and recognition of unutilised tax allowances has prompted management to expect a lower effective tax rate of 16 per cent for FY13 vs our assumption of 23 per cent. This could offset forex losses in 3QFY13.
Recommendation
Maintain Buy and RM7.20 TP based on 18x CY14 EPS. Resilient sales of both latex and nitrile gloves support our view that demand will continue to drive earnings growth.
Kinsteel
Kinsteel’s 37 per cent-owned subsidiary Perwaja Steel has been ordered by the court to settle RM146m in debt to Petronas for payment over the supply of dry gas. Petronas claimed that Perwaja failed to make payment for the supply of dry gas for seven months, while Perwaja disputed that Petronas had already suspended the gas supply during that period. In its Bursa quarterly announcement, Perwaja disclosed that it has made sufficient provision in the balance sheet to meet this claim.
We have yet to see signs of earnings recovery for Kinsteel in 1H2013 given the still volatile iron ore prices, weak steel prices and sales volume. Although local steel demand will be supported by government infrastructure projects, the positive effects will take a longer time to filter though. We have a HOLD rating on Kinsteel with a TP of RM0.30 (based on FY13 P/BV of 0.6x).

bursa edge

Benalec & Wah Seong

Counters in the News

Alam Maritim & AZRB

Pantech Group & Perisai Petroleum

Tgoff and THHeavy

Counters in the News

Bina Puri

Bina Puri in JV to develop Bangkok Marina

AZRB

Hiaptek

Hiap Teck Venture - Catalysts In Store

AZRB did hit target RM1.15 posting in may11

AZRB immediate resistance RM0.91, target RM1.15

EKVE will boost AZRB's order book

MAS cheap sale?

Why are MAS shares on cheap sale? - Koon Yew Yin

KUB

KUB on track for a better showing

SYCAL

KEuro and TRINITY and IJM

Europlus may sell assets to fulfil concession requirements

TRINITY

Trinity to start build-then-sell projects

Hiap Teck Venture - Above Expectations

SALCON shortlisted for Langat 2

SALCON Tendered for RM1.8 Billion Jobs

Bullish Reversal signal counter--UPDATED

Sumatec sees RM1b revenue by 2015

Sumatec sees RM1b revenue by 2015

Halim Saad: Sumatec looking to exit PN17 by Q2 of 2014

By Ng Bei Shan

Sumatec

Sumatec shareholders to vote on Kazakhstan oil and gas asset buy

By NG BEI SHAN beishan@thestar.com.my

MRCB

MRCB shareholders agree to Nusa Gapurna buyout despite PKNS suit

LUSTER

Three parties linked to Kedah jetty takeover

Which mid-cap companies targeted by EPF -- Najib

Najib : Time for GLCs and EPF to trade more in mid-cap stocks

PM urges EPF, other GLCs to step up involvement in smaller companies

Analyst calls for June 14

Analyst calls for June 14

By NG BEI SHAN
beishan@thestar.com.my