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Wednesday, December 10, 2014

The O&G Stocks ... Can Load Up Now?


As oil prices continue to slide, industry observers foresee that the selling pressure on Malaysia oil and gas counters will not abating yet.

There could be another round of selling pressure among investors with short to medium term view of up to six months from Dec 2014 especially on financially weaker O&G companies.

The rationale behind this that we have only seen about two months (Nov – Dec 2014) price deterioration of oil, but in terms of business deterioration, it is only starting now (Dec 2014). Financial results going forward will be severe for those exposed to the vagaries of oil price and O&G capex.

This is a naturally high geared industry. The access to funding now (Dec 2014) will be challenging from an equity, bond and loan perspective, even if oil stays at the USD65 level. Even among O&G companies, some will start worrying about counterparty risk.

Investors will need to sit via some large swing in share prices given and the changing nature of the industry and have at least a one year time horizon to see through the down cycle.

The call on oil price which will still determine the sector in the near term has been very unreliable and difficult due to the many moving parts along the O&G chain.

One needs to predict government policy, global supply and demand, financial speculation and currency movements to come to a conclusion on oil price. The fact that 99% of the industry got its forecast wrong on oil price less than six months ago tells you how hard it is to predict the point where oil price will bottom out.

There could be at least another month of selldown in the near term as crude oil has not really found its stabilizing point.

Even if oil price fall to USD40, it will be hard to stay there for long as there will be a lot of supply disruptions at that level and that the market will adjust itself within a year.

Thursday, November 27, 2014

IPO - EATech


EATech: A shipping and marine services provider plans to diversify its business into upstream oil and gas (O&G) and bid for risk sharing contracts (RSCs) to develop marginal oilfelds.
 
EA Technique is now deciding on the right partners to form a joint-venture company, in which it prefers to hold a majority stake, to bid for RSC projects. It is one of 42 companies under Johor Corp’s Intrapreneur Development Scheme. It is controlled by Kulim (Malaysia) Bhd which has a 65.4% indirect stake held through Sindora Bhd.
 
Abdul Hak currently owns a 24.6% stake, while his wife Datin Hamidah Omar has the remaining 10% interest. These shareholdings will be diluted once the group is listed.
 
It hopes to raise RM68.4 million through the issuance of 114 million shares, equivalent to 25.6% of its enlarged, issued and paid-up capital. The amount is based on the assumption of 60 sen per share, translating into a market capital- isation of RM302.4 million.
 
43.9% of the listing proceeds will be used to pay bank borrowings, 42.7% for capi-tal expenditure, and 6.7% each for working capital and listing expenses.
 
EA Technique currently operates 32 marine vessels, of which it owns 23, with nine chartered from external parties.
 
Proceeds from the listing will be used to gradually increase its vessels from 23 to 38. It (the increase of vessels) will be through acquisition and construction of new ones at our facility in Perak.
 
The group’s order book currently stands at RM1 billion, including optional contract extensions of some RM297 million, which will keep the group busy until 2025.
 
For the financial year ended Dec 31, 2013 (FY13), EA Technique’s net profit tripled to RM56.9 million from RM18.91 million from FY12, while revenue grew 18% to RM121.12 million from RM102.72 million, on strong performance of port services and minor fabrication.
 
On a segmental basis, EA Technique’s marine transportation business contributed 59.3% to total revenue, followed by port services (37.2%) and minor fabrication (3.5%).
 
EA Technique’s main customers — Petronas Trading Corp Sdn Bhd and Petronas Maritime Ser-vices Sdn Bhd — formed the bulk of its revenue of 63% in FY13.
 
To limit the group’s reliance on a single customer for its businesses, it secured a RM260 million contract in July 2013 to build, operate and charter out six units of Z-Peller harbour tugboats to Northport (Malaysia) Bhd over a period of 10 years.
 
EA Technique is currently the largest local harbour tugboat operator in the country, providing services to five ports.

IPO- OWG

OWG: It plans to raise RM50mil from its initial public offering (IPO).
 
The IPO would entail 56.41 million new shares priced at 88 sen per share.
 
Of the RM50mil from the IPO ,RM30mil will be earmarked for Penang's Komtar Tower refurbishment, RM13mil for business expansion, RM2mil working expenses and the balance for expenses relating to the IPO.

Meanwhile, on the Komtar Tower development, the company is undertaking the refurbishment of five specific levels within it at a total cost of RM6mil. The project is currently about 40% complete and expected to be fully completed between July and August 2015.

Established in 1973, Only World Group is a leisure and hospitality services provider that incorporates the operations of food and service outlets, water amusement parks and family attractions.

The largest revenue and profit contributors to the company was food service operations, with the company operating 16 of its own brands and one third party brand.
 
The company operates three water amusement parks under the Wet World brand as well as two family attractions – Ripley's Believe It Or Not and Haunted Adventure.
 

Wednesday, October 15, 2014

TMCLife ... WIll Lim Consolidate His Healthcare Projects Under TMC?

It operates its flagship hospital and fertility centre, Tropicana Medical Centre in Kota Damansara and the TMC Fertility Centre in Damansara Utama, with branches located in Kepong, Puchong, Penang and JB.

In Aug 2010 Peter Lim first acquired a 29.6% stake in the company. On Aug 7 2014 he launched a mandatory takeover offer with offer price at rm0.48 per share for the remaining 40.76% stake that he does not own. To date (Oct 2014) he owns 76.57% of shares in TMC. Though he does not comply with Bursa’s listing requirement of having at least 25% public shareholding spread, Lim has expressed his intention to keep TMC listed and would rectify the public shareholding spread.

With Lim owning other hospitals in the region, most notably Singapore’s leading healthcare provider – Thomson Medical Centre, it would be interesting to see whether Lim would consolidate some of his Malaysian healthcare projects under TMC. Thomson Medical Centre Ltd was previously listed in Singapore but privatized by Lim in 2010.

Notably Lim is teaming up with the Johor royal family to build a USD1.6 billion medical themed integrated complex in JB with supporting medical infra, apartments and entertainment outlets.

Its book value stood at rm0.169. TMC Life has net cash of rm30.6 million.

Wednesday, October 8, 2014

NEXT For KLCI ... Remain Bearish As Long Below 1855-1860 Level


Technically the KLCI remained bearish below both the short and long term 30 day and 200 day MAs. These averages were at 1852 points (200 day average) – 1855 (30 day average) points. The index failed to climb above the long term MA after testing it last week and this indicates that market confidence was still weak.

Momentum indicators like the RSI, Momentum Oscillator continued to indicate that the bears are still in control as the indicator were below their mid levels. After rebounding last week, these indicators started to decline after failing to climb above their mid levels. The MACD indicator remained below its MA and this also indicates that the trend was bearish. Furthermore, the KLCI was still below the middle band of the Bollinger Bands and near the bottom band.

The indicators show that the KLCI is set to trend lower. The USD may start trending upwards again after the correction end and this will not be in favor of the ringgit and equity market. It has also test the support level at 1840 points once again and closed below it on 07 Oct 2014.

Expect bearish momentum to continue this week and the index to decline to support level at 1820 points based on the bottom band of the Bollinger Bands indicator.

The market is expected to bearish as long as it stays below the immediate resistance level of 1855 and 1860 points.

Tuesday, September 23, 2014

Just-Too-Late - TMCLife, ChinWell, PriceWorth, IRIS


TMCLife: Speculation that TMC Life Sciences Bhd may be involved in a corporate exercise.
 
Singapore billionaire Peter Lim Eng Hock is rumoured to be thinking of parking all his healthcare services assets in Malaysia and Singapore under TMC Life.

Lim is a major shareholder of the company with a 76.57% stake.

Its mandatory general offer (MGO) is priced at 48 sen that Lim had offered in August 2014.

The corporate exercise, sources said, would see two hospital assets – Tropicana Medical Centre in Petaling Jaya and Thomson Medical Centre in Singapore – being parked under Bursa Malaysia-listed TMC Life.

A stronger control of TMC Life would allow Lim to inject his Singapore assets under one entity. This would see Lim indirectly re-floating the Thomson Medical Centre on the Malaysian stock market at a higher premium.

Lim wholly-owns Thomson Medical Centre Pte Ltd, which was once listed on the Singapore Stock exchange. It was privatised in 2011 by Lim via his vehicle Sasteria Pte Ltd in a deal that valued it at S$513mil (RM1.31bil) or S$1.75 per share. It was then reported that the privatisation had valued Thomson Medical Centre at up to 30 times estimated street earnings in its financial year 2011.

It was reported that Thomson Medical could easily fetch premiums of anywhere between 40-50 times forward earnings.

In early August 2014, Lim acquired an additional 26.6% in TMC Life from tycoon Tan Sri Vincent Tan Chee Yioun for 48 sen per share, raising his stake in the company to 59.2% and triggering an MGO for the rest of the shares he did not already own. When the MGO closed on Sept 18 2014, Lim had increased his stake in the company to the current 76.57% stake.

TMC Life was planning to address the non-compliance with the public shareholding spread requirement, which stated that a company must ensure that at least 25% of its total listed shares were in the hands of public shareholders.

Lim intended to retain the listing status of the company, which would explore various options or proposals to rectify the public shareholding spread.

ChinWell: Its MD Tsai Yung Chuan has bought a total 21.53 million shares in the company, equivalent to a 7.9% stake. After the acquisition, Tsai has a 58.12% stake, or 158.41 million shares, in the company. Chin Well makes screws, nuts, bolts and other fastening products.

PriceWorth: Priceworth International Bhd saw 4.3% of its shares traded in an off-market deal sharply below its current traded price on 22 Sept 2014. 17 million shares of the Sabah-based timber company were transacted at an average price of 20 sen a share.

On Sept 15 2014, Priceworth announced its unit Maxland Dockyard & Engineering Sdn Bhd had teamed up with Semaring Enterprise Sdn Bhd to take part in the onshore and offshore oil and gas works. Semaring Enterprise is a supplier for Petroliam Nasional Bhd and Petronas’ contracted profit sharing contractors.

IRIS: Iris Corporation Bhd has been appointed as the "approved refund agent" for the Goods and Services Tax (GST) refund services to foreign tourists, under the Tourist Refund Scheme.

The job was awarded by the Royal Malaysia Customs via its the group's unit Iris Information Technology Systems Sdn Bhd.

Investment of the tender is RM155mil but Iris will be paid an fee of 15% from the GST Refund Services.

The appointment is for a term of three years, where it will be financed through internally generated funds and bank borrowings.

Iris expects the job to contribute positively to the financial results of the group in the long run.
 

Tuesday, September 9, 2014

Shareholder Changes - BHS, GOB

BHS: FGV has emerged as a substantial shareholder in the company with an 11.1% stale.
  
BHS prints magazines, textbooks, general publications, directories and company annual reports.

GOB: Datuk Choo Chua Siang emerging as a substantial shareholder after acquiring a 6.55% or 14.9 million shares in GOB.

Datuk Choo is a non executive director in Pavilion REIT.

Goh Chee Keen, GAn Wei Pin and How Wee Teck have ceased to be a substantial shareholders in GOB, after the trio ceased to have interest in Indera Muhibbah Sdn Bhd on Sept 03 2014.

Choo had acquired the stake on the same day.

Meanwhile Othman Mohammed remains the single largest shareholder of GOB, with indirect stake of 12.05%.

GOB is deemed to have business ties with Tan Sri Ta Kin Yan and Tan Sri Desmond Lim who is one of the major shareholders of Pavilion REIT.

It was reported that GOB is planning to kickstart over rm2 billion worth of developments in 2015.
 

Monday, September 8, 2014

Ireka ... Entitle To RM200 million Divestment Procees !!!

Its net assets per share stood at rm1.09 as at June 30 2014.

Its first feather in its cap is the 23.07% stake it holds in London listed Aseana Properties Ltd, which has a portfolio of properties worth more than USD200 million.

Also Ireka has managed to replenish its order book with contracts worth rm1.2 billion which can last it for at least two years from Sept 2014.

The rm1.2 billion order book is expected to give Ireka an average annual turnover of rm500 million from its construction division over the next two to three years from Sept 2014.

The ASPL is structured like a development fund with a shelf life seven years which will come to an end in the middle of 2015. Any extension of this period will be subject to the decision of a continuation vote at the company’s 2015 AGM.

ASPL will no longer invest in any new property development projects .. and it had stopped doing it. All the projects in the portfolio will be realized over time and the money will be returned to the shareholders.

The divestment of all of ASPL’s assets from 2015 is already being planned. ASPL has an estimated realizable net asset value of USD270.82 or USD1.27 per share compared with its current market price of USD0.44 per share.

Ireka will be entitled to 23.07% or about rm200 million of the divestment proceeds – which is almost double the company’s market cap of rm113 million.

About 74% of ASPL’s funds are invested in property development projects in Malaysia. It has four operating assets namely Aloft KL Sentral Hotel, 1 Mont Kiara, Harbour Mall Sandakan and Four Points by Sheraton Sandakan Hotel.

The losses in some of ASPL’s operating assets have dragged down Ireka’s earnings in the past.

With an order book of rm1.2 billion in hand, Ireka will be profitable going forward.

The major jobs in the order book are high rise residential developments for SP Setia’s KL Ecocity in KL, UEM Sunrise Bhd’s Imperia Puteri harbor in Johor, OSK Property Holdings Bhd’s Solstice in Cyberjaya as well as MRT package.

An increase in the size of the order book is generally positive for a construction company’s stock valuation. If Ireka can convert what is in its order book to its bottom line, the company’s stock may be able to garner the valuation that its peers have.

Ireka is mainly involved in the construction of high end and high quality buildings higher than 40 storeys and a limited amount of civil engineering works for infra construction.

With ASPL preparing to exit the market, Ireka has stepped up its property development efforts since 2012. It has also increased its land bank and has 65 acres in the Klang Valley and Nilai.

The gross development of its land bank is rm2 billion over the next five to six years from Sept 2014.

On that note, the volatility in Ireka’s financial results and its lackluster share performance could soon be history as the rest of FY2015 unfolds. The building blocks are in place and Ireka’s finer years are ahead from Sept 2014.

The Lai family collectively holds a 56.54% stake in Ireka.


Wednesday, September 3, 2014

Sumatec ... Rights Issue Coming !

Its major shareholder Tan Sri Halim Saad says he will increase his stake in Sumatec to 32% from 22.06% currently as he is in the company for the long term.



This will be done through the subscription of new shares arising from Sumatec’s acquisition of the Buzachi Neft oil field that is estimated to cost the company US$350mil (RM1.12bil).



In the proposed acquisition, Sumatec would undertake a rights issue which Halim would subscribe for his portion. Halim will accrue the additional shares by purchasing a block that will be put up for sale by a vendor of the Buzachi asset.



Halim, who has about 22% stake in Sumatec, estimated that it would cost him some RM550mil to increase his interest in the company.



Sumatec was looking to acquire the Buzachi Neft oil field from Borneo Energy Oil and Gas Ltd that has a proven and probable oil reserves of 68.86 million barrels.



The US$350mil consideration will be paid via US$225mil (RM720mil) cash and US$125mil (RM400mil) worth of Sumatec shares.



To fund this, Sumatec announced a proposed renounceable rights issue of up to 2.3 billion new Sumatec shares together with up to 2.3 billion free warrants at an indicative issue price of 40 sen per rights share. Sumatec shareholders with two shares will be entitled to subscribe for one rights and the warrant is thrown in free.



In the deal, a vendor of the Buzachi Neft oil field – Abu Talib Abdul Rahman – is offering for sale up to 727.27 million Sumatec shares, which Halim has agreed to take up.


Tuesday, September 2, 2014

GOB ... Undervalued, Link To Desmond Lim & Ta Kin Yan

It was reported to have ties with Tan Sri Desmond Lim and Tan Sri Ta Kin Yan.



The firm will develop 106 acres in Batu Kawan, Penang in the immediate term with an estimated GDV of rm662 million. In addition, a joint venture with Lembaga Getah Malaysia in Ampang, KL with a GDV of rm1.2 billion will also kick off in 2015.



In Batu Kawan, GOB started with a total of about 460 acres. One hundred acres were developed with the units fully sold while the balance 365 acres have a total expected GDV of about rm1.7 billion.



For the next phase of 106 acres the firm is targeting to obtain approval from the Penang authorities by end of 2014 so that it can launch the units in 2015. Increasing activities in the Batu Kawan project, where GOB had acquired the land long ago at low prices.



Current (Aug 2014) market value for land parcels in Batu Kawan has reached rm45 to rm55 psf. That makes GOB’s land in Penang worth some rm700 million at least. That is 80% higher than the firm’s market cap of rm234 million and net debt of rm155 million put together, indicating that the stock is undervalued.



GOB is an attractive alternative Penang mainland play and encouraging take up rate in Batu Kawan will spur the re rating of the stock.



Apart from Batu Kawan, in the Klang Valley, GOB has a total available land bank of 98 acres with a potential estimated GDV of rm2.93 billion. This includes 66 acres in Taman Equine in Seri Kembangan worth about rm1.52 billion in GDV, six acres in Jalan Ampang via the joint development agreement with LGM worth about rm1.2 billion and the 26 acres of land in Sungai Long (to be developed in 2015) that GOB purchased earlier from Malton that has an estimated GDV of rm200 million.



The JV with LGM is significant as it will be GOB’s first project in the city centre. These project contribution will be reflected in its financial year ending March 31 2016.



GOB has two projects planned for launch by end 2014 worth rm401 million.



To beef up its coffers, GOB has proposed the rights issue exercise which will raise rm113.7 million in fresh proceeds. Half of the proceeds of rm58.7 million will be used to repay GOB’s borrowings and bring down its gearing to about 0.4 times.



Othman Mohammed, an executive director is the largest shareholder with indirect holdings of 12.05% as at June 30 25014. Meanwhile the top 50 shareholders comprising individuals and fund houses hold about 42% of GOB.



It is also worth noting that GOB has ventured into the consumer retail and F&B to diversify its revenue stream by acquiring a 65% stake in PNT for rm50 million.



In the next three years from Aug 2014, property will still be its major focus contributing 70% to its revenue. But it is projecting retail and F&B to contribute up to 30% then.

 

Friday, August 22, 2014

Brem ... Cheaper Entry For Property Development In Segambut.

A property and construction player expects strong demand for its properties especially in prime locations like Segambut Dalam in KL to boost its financial performance in the new fiscal year ending March 31 2015.
 
Property development will underpin its growth for 2014 to 2015.

Brem has a total of 13.56ha of freehold land in Segambut Dalam as of March 31 2013 for the development of Bukit Prima Pelangi, which could generate a GDV of rm2.56 billion. This development is expected to sustain its operations for six to eight years from 2014.

It had also bought a parcel of land in Segambut to replenish its landbank. The latest purchase raises its land reserves in the area to almost 15ha.

In total, it has 30.1ha in KL and PJ, including in Ulu Klang. These land are under the purview of its 75% owned subsidiary.

The property segment made up almost 60% of the group’s revenue in FY2014.

Brem will focus on condominium and apartment development after having complted its terrace components for its Bukit Prima Pelangi development.

Brem is also involved in construction, water concessions as well as property investment and holding activities. All divisions are profitable.

Its construction division has an order book of rm260 million as of March 31 2013. As for property investment, it owns and operates Kepong Brem Mall.

Brem participated in a water concession business in Papua New Guinea some 17 years ago prior to 2014. It has a 22 year agreement with PNG’s government to supply water to the Pacific island nation. The concession will expire in June 2019.

Its net asset value per share stood at rm2.79. It was earlier reported its real net asset could be worth about three times its NAV.

Brem acquired most of the Segambut Dalam land at an average price of rm65 psf from 1995 to 2005. This is substantially lower than the purchase price of rm185 psf Brem paid for its latest transaction in July 2014.

The company will be a cheaper entry to property development than other property players like Keladi which had land near Bukit Prima Pelangi.

Aside from the prime land in KL and PJ, it owns 182.02ha of development land in the Klang Valley including Bukit Raja and in Kedah. They are earmarked for long term development. These parcels were purchased at low prices … like the 1.88ha in Mukim Bukit Raja which has low book value of rm3000 as of March 31 2013.

Brem does not adopt a policy of regular revaluation for its landed properties.

It had disposed of its 32.89% stake in Bertam Alliance Bhd in July 2014 for rm80.24 million. It will channel the sale proceeds into other, more attractive and higher yield investments when opportunity arise.



Friday, August 15, 2014

IPO - Reach Energy ('Well-Known' Cornerstone Investors)


Lembaga Tabung Haji (LTH), Koperasi Permodalan Felda Malaysia Bhd and Pelaburan Mara Bhd have taken stakes In Reach Energy Bhd.

Prior to this, GLICs do not have the mandate to invest in Spacs. Spacs are shell companies with no operations or income-generating business at its point of listing.

Spacs undertake the listing for the purpose of raising funds to acquire businesses or assets, otherwise known as the qualifying acquisition (QA).

It appears that LTH, Felda and Mara obtained the mandate to invest in Reach, an oil and gas Spac, after the new guidelines were released earlier 2014, as they took comfort mainly in the investor protection clause.

Malaysian oil and gas services firm Daya Material Bhd is only an initial investor in Reach Energy. Daya’s ownership will be only 1.74% after the IPO.

Some of the other cornerstone investors include tycoon Tan Sri Chua Mah Yu’s son Chua Sai Men, Lembaga Tabung Haji, fund managers CIMB-Principal Asset Management Bhd and Hong Leong Asset Management Bhd, MKW Jaya Sdn Bhd, MTD Capital Bhd and Paul Poh, a close associate of Hong Leong Group chairman Tan Sri Quek Leng Chan.

The investors, who are not subject to a lock-up period, will take up a combined 210 million shares and warrants, or 16.45% of Reach’s enlarged share base.

Poh is a lieutenant of banking tycoon Tan Sri Quek Leng Chan. Quek and Poh have been heavily investing in oil and gas companies. Meanwhile, Sai Men is the son of tycoon and savvy investor Tan Sri Chua Ma Yu.

MTD Capital is a listed bumiputra investment holding company with interests in infrastructure development.

As for state-owned Pelaburan Mara, it came into the limelight in April 2014 when it bought a 27% stake in shipping firm PDZ Holdings Bhd for RM41mil.

The cornerstones make up some 20% of Reach Energy’s share base while institutions make up some 15%. The remainder shareholders are made up of corporate and individuals.

Other asset managers that have taken up stakes in Reach Energy include Kenanga Investors, Norway’s sovereign fund Norges, Areca Asset Management and Allianz Investment.

What attracted the bumi funds was the investor protection. Reach was putting in 94.75% of its funds into the trust fund, instead of the stipulated 90%. Should a QA not be executed in 3 years time, the 75 sen per share put in by the investors actually becomes 76 sen, based on the existing interest rate.

The fact that Reach was a syariah-compliant company, also helps the investing case.  Certainly, Reach is the first Spac to be listed under the Securities Commission’s new strict guidelines, with many people touting it to be the safest Spac.

The management of Reach, led by Shahul Hamid Mohd Ismail has put in a significantly higher amount of money than the three previous Spacs – Hibiscus Petroleum Bhd, Cliq Energy Bhd and Sona Petroleum Bhd.

Under the new guidelines, it is stipulated that the management team’s shares should be issued at no less than 10% of the IPO price. The subscription price per share for the management of Hibiscus, Cliq and Sona was 1 sen, while Reach had to put in 7.5 sen based on the IPO price of 75 sen.

The management of Reach ended up putting in a total of RM20mil for its management shares. The management of the other Spacs put in between RM1mil and RM3mil, while is significantly lesser. With the kind of money the management of Reach was putting in, there is certainly a greater urgency to make the business work.

Furthermore, Shahul and team will not be able to cash out their shares even after they make their QA. Another new guideline of the SC is that Reach Energy’s moratorium on the shares held by management will be in place up to one full year of audited operating revenue. Following that, the management will be allowed to dispose its shares up to a maximum of 50% per annum on a straight line basis.

Reach’s IPO comprises 1 billion shares at an issue price of 75 sen each. The offer comes with 1 billion free detachable warrants on the basis of one warrant for one share subscribed.

SPACs are shell companies with no operations or income-generating business at the point of listing.

SPACs undertake an IPO to raise funds to acquire businesses or assets, otherwise known as QA.

Reach Energy aims to clinch a brownfield asset in the Asia-Pacific region with the ability to generate early revenue within two years of acquisition.

Reach Energy can raise a further RM958mil when the warrants are exercised in full. The free warrants are issued on a one-for-one basis per Reach Energy share.

Thursday, August 14, 2014

Trader Corner - GMutual


GMutual: Strong resistance at rm0.55 of which a successful breakout would the stock price targeting rm0.74 resistance. Support is at rm0.49 and rm0.46.
 
Gromutual Bhd, a Johor-based property developer, aims to launch projects with a gross development value (GDV) of RM700 million in the next few years from 2013 in Johor Baharu.
It plans is to further tap into opportunities in the vibrant property market of the Iskandar Malaysia region.
To date, Gromutual has completed RM600 million in residential and commercial properties in Johor and Melaka, since its incorporation in 2003.
It is undertaking residential and commercial property projects with RM376 million GDV in Melaka and Johor.
Gromutual has also invested RM45 million in land acquisition over the past two years (2012-2013).

Friday, August 8, 2014

MAS To Privatize at rm0.27 per share

Khazanah Nasional will offer 27 sen for each share in the company it does not own, amounting to nearly 1.4 billion ringgit ($435 million) to take the troubled airline private.

Wednesday, August 6, 2014

NEXT For KLCI ... Still Bearish Trend But Lower Liners Continue In Play


The KLCI continued to stay below the short term 30 day MA despite the rebound in the past two days, indicating that market sentiment is still bearish. The immediate support is at 1862 pints while the next support level is at 1840 points which is where the long term 200 day MA currently (06 Aug 2014) is.
 
Momentum indicators like the RSI and Momentum Oscillator rebounded towards the mid level, indicating a weak bearish trend. The index broke below the bottom band of the Bollinger Bands indicator last week and remained below the middle band. This indicated that the momentum was still bearish in the short term. All these are indications that the market is currently (early Aug 2014) at a trend reversal.

The KLCI is not out of the short term bearish trend. The market may continue to be bearish this week if the rebound fails to break above the immediate resistance level of 1880 points. The short term 30 day MA is at 1882 points.

However low and mid cap stocks may continue to be in play but a bearish sentiment could limit gains.

The KLCI is expected to trade at between 1860 points and 1880 points coming week.

Friday, August 1, 2014

NEXT For Barakah, Harrisons

Barakah: In 2009, only 10% of Barakah’s revenue came from installation and construction work with the bulk coming from pipeline and commissioning works. The balance of its order book has shifted over the years as the projects grow in size and complexity, with installation and construction works making up 41% of its revenue.
 
As at May 2014, its order book stands at rm2.38 billion with the majority of its projects to be undertaken over the next three to five years from 2014 in installation and construction.

Pipeline and commissioning works are the foundation of what it does. That segment will continue to bring in a small and steady stream of income. It will take on more pipeline and commissioning works as well.

A niche segment under installation and commissioning which it entered into is the design and development of biodiesel tanks. Petronas continues its efforts to revive Malaysia’s carbon footprint, it is taking advantage of the fact it is already licensed in the area and is ready to take up into opportunities.

It had secured a rm29 million job from Petronas Dag for the EPCC of biodiesel storage and blending facilities and its associated accessories.

Its installation and construction segment is ripe for the picking having undergone the transition phase.

In April 2014 it had bagged a rm260 million contract for the RAPID project. The Pengerang pipeline project is also expected to open up new opportunities for Barakah involving both onshore and offshore projects once the trunk line is set.

Its borrowings are relatively small and its capex requirement is low. Its short and long term borrowings amount to rm244 million.

It will need to only replenish capex at rm15 million unless big project comes the way.

Its prospects will be bright if Barakah paired down its debts and a lean balance sheet.


Harrisons: It has the distinction of being one of the oldest and largest sales, marketing, warehousing, distribution and services companies in Malaysia.

The company is now on a growth path as it continues to expand its distribution business while actively seeking for new growth areas.

Its share price has been weighed down by a tax payment issue with the Royal Malaysian Customs Department since Feb 2012. It posted a net loss of rm25.18 million in 1QFY2014 ended March 31 compared with a net gain of rm6.36 million in the same period a year ago, following the payment of rm31.5 million as an amicable settlement between its unit and Customs for alleged unpaid import duty, excise duty and sales tax.

Industry observes points out that competition among trading houses has intensified and margins are narrowing and players are facing the risk of a termination of contracts when consumer spending slows.

The 1Q loss was due to the one off tax payment. Excluding the tax it would have made a pre tax profit of rm8.36 million.

There are only three agency houses listed on Bursa dealing in products from MNCs in Malaysia – Harrisons, DKSH and Yee Lee Corp. Their common denominators are steady financial performance, consistent dividends and a generally stable share price.

Following a settlement of the tax issue, its share price reached a year’s high of rm3.72 on 01 July 2014.

However, its profit margins has been trending down since 2010.

The company had formed a JV with Watts Japan and a potential expansion to other SEA countries.

Distribution is still its core business and dominates 80% of its revenue.

It had established a JV to open Komonoya shops, a chain which sells discount goods from Japan, with Osaka based Watts. Harrisons holds a 30% stake.

Following the tie up with Watts, its focus now is Japanese products.

Major shareholder Bumu Raya Intl Holding Company Ltd holds close to 41% stake in Harrisons Holdings Bhd.

The company has its roots in Indonesia. Previous news reports had linked the company to the Bumi Raya Utama Group as well as ex president Suharto’s daughters including Silti Hediati Haryadi.

Bumi Raya has tried to take the company private in 2008 but failed. So could there be another attempt to take the company private? Harrisons MD Chan said it is always a possibility but this has to depend on the major shareholder.

Chan feels there is room for corporate exercises to improve the liquidity such as bonus issues, new share, finding a solid investor or asset injection!

As at end of FY2013 the company was holding rm111 million in cash.

Wednesday, July 30, 2014

JIT News - Zelan, AEON Credit, Genting Bhd

Zelan: Sources say it is expected to bag a rm250 million contract from ECER for the construction of a drawbridge connecting Muara North and Muara South in Kuala Terengannu. It is partnering an engineering company. They have a 70% and a 30% equity stake in the JV respectively.
 
AEON Credit: Non bank financial institution may consider making a bonus issue which will help to improve the stock’s liquidity.

It focus remains on enhancing its financial products for SMEs especially in the area of commercial vehicle and equipment financing. It will leverage its card member databases.

In 1QFY2015, it raked in rm51.28 million from its SME business, which contributed 1.3% to total financing receivables.

In addition, it is keen to introduce its E-Money card – a cashless shopping solution in Malaysia.

AEON Credit’s capital adequacy ratio stood at 18.9% (above BNM’s 16% minimum requirement) as at May 2014 post issuance of perpetual notes. The programme allows for an issuance of up to rm400 million of which the group has issued rm246 million.

Genting Bhd: Its big investment in Las Vegas may be facing a challenging gaming market with tough competition and possible shrinking interest.

Against such backdrop of a continued US gaming market slowdown, the success of Genting’s proposed Las Vegas casino would largely depend on its positioning among rivals in the city.

The gaming market there is already saturated, but if Genting could pull off a Chinese themed casino there, it would be able to win niche gamblers, especially those from China.

When completed, Genting’s proposed USD4 billion Asian themed resort in the Las Vegas Strip in Paradise would contribute 5% to 10% to the group’s revenue.

Construction of Phase 1 will begin in second half of 2014. The casino will start operating two or three tears later from 2014.

Friday, July 18, 2014

Breaking News : Malaysia Airlines has lost contact of flight MH17

[#MASalert] - Malaysia Airlines has lost contact of flight MH17 operating from Amsterdam to Kuala Lumpur on 17 July 2014. The last known position was over Ukrainian airspace. For latest update, please follow our Twitter account @MAS.

Parts of MH17?
More News :

http://www.bbc.co.uk/news/world-28354787

 Malaysian airliner 'shot down' Ukrainian rebels shot down a Malaysian jet carrying 295 people over eastern Ukraine near its border with Russia, a Ukrainian Interior Ministry official said. (AFP photo)

Thursday, July 17, 2014

AHB ... Apply To Uplift PN17, Profit On Recovery Road !!!


It will be submitting its application to Bursa to regularize its PN17 status in Sept 2014 after its shareholders approved a proposed rights issue at an EGM to raise funds for its working capital requirements.

The proposed rights issue is expected to bring in proceeds ranging from rm15 million to rm21 million.

The premium office furniture manufacturer slipped into PN1 status when it defaulted on the repayments of its bank borrowings amounting to rm4.83 million.

The company had been making loss in its financial year ended June 30 2013, is on the road to recovery and a healthier financial performance can be expected for FY2014.

It is expecting its bank debts level with regard to bank debts to be less than rm5 million in FY2014.

For its third quarter ended March 31 2014 the company recorded a profit of rm605000 on the back of rm11.15 million in revenue.
More than 85% of its revenue is generated from export sales to SEA, the Middle East, Americas and India which is due to cash flow constraints and export markets value its high quality furniture better.

The company has secured contracts to provide furniture to several well known companies like PBB, Petronas Carigali Sdn Bhd and BASF Global.

The company is not planning to go upstream in India by setting up a manufacturing facility there in 2015.

Saturday, July 12, 2014

'Like' - KGB (Turnaround & Diversify)

An ultra high purity gas and chemical delivery solutions provider, is ready to become a major EPCC contractor.

It had bagged a sizeable EPCC contract from BASF Petronas Chemicals Sdn Bhd for Package 1 of its rm1.6 billion aromas production facility in Gebeng, Kuantan. The job has given Kelington access to the chemical processing sector.

It has pinned its hopes on also securing Packages 2 and 3, which are larger contracts.

The group has also set its sights on EPCC works in the RAPID project.

It is poised to report strong earnings in FY2014 having benefited from a recovery in its core semiconductor business and diversification efforts over the last two years (2012-2013), which saw it increasing its exposure to the healthcare, oil and gas and palm oil industries.

Following the diversification, it can now better respond to market fluctuations in the semiconductor industry.

The group went through hard times in FY2012 and Fy2013 when the semiconductor industry slowed, causing its order book to drop and its earnings to dip.

It diversified into other industries while still maintaining the semiconductor market as one of its main contributors.


KGB’s existing relationship with IHC to land more projects as the healthcare service provider has another two hospital projects in Malaysia in KLCC and Iskandar Malaysia.


It had secured a LOI for the hospital project in KLCC worth rm77 million.


The group is also intent on making renewable energy a major source of profit in the long term. It has set up a subsidiary in Papua New Guinea to provide RE services as solar which has also similar plans in Indonesia.


Its order book stood at rm188 million.


KGB is 47% owned by Palace Star Sdn Bhd. The remaining 40% is owned by others include LTH with a 12.36% stake and Sun Lead International Ltd with a 9.19%.
 

Wednesday, July 2, 2014

Breaking News-Road Collapsed near Berjaya Times Square

ATTENTION: Road collapsed (sinkhole) at the traffic light junction in front of Berjaya Times Square a few minutes ago.

Road collapsed near Jalan Imbi due to MRT tunnel construction. (MalaysiaKini)

Malaysia Boleh?

Please drive safely.
More images of the collapsed road near Berjaya Times Square.








KLCI ... The Index Is Still Bullish Despite Recent Pull Back.


 
The market decline last week was not an indication of selling pressure. Rather it was a correction of the uptrend because the KLCI is still above the short term 30 day MA. The index is now (01 July 2014) near the short term MA of 1876 points and the uptrend line support level.


Momentum indicators such as the RSI and Momentum Oscillator are showing signs of weakness after gaining strength two weeks ago. Nevertheless, the indicators are still above the mid levels which indicate that the momentum is still bullish.

The MACD indicator crossed below its nine day MA trigger line after climbing above it two weeks ago. Furthermore, the KLCI has pulled back the middle band of the Bollinger Bands after trading above the top band two weeks ago.

Technically the KLCI is still in bullish trend but the pull back last week caused the bullish momentum to weaken. The index is now at the short term uptrend support levels and therefore a rebound is expected. A rebound is likely to happen as the ringgit is expected to appreciate against the weakening USD.

The index may test the target of 1910 points as long as it stays above the support level of 1880 points. Now that the index is at the support level, expect a rebound. Further decline however may cause the market to move further into correction and next support level is at 1850 – 1860 points.

Tuesday, July 1, 2014

Seacera - Aim To Be A Big Construction Cum Property Player

It had entered into a MOU with intelligent Fence Sdn Bhd to bid for a project to build and operate an electric security fence along Malaysia Thai border.

It has also ventured into the construction , property development and building material industries as well.

In Jan 2014, it acquired a 60% stake in SPAZ Sdn Bhd for rm3 million to make inroads into the construction sector. It had bagged a road construction project in Kelantan worth rm20.3 million.

It has also 500 acres in Sungai Long, Cheras with an estimated GDV of rm3 billion waiting to be developed.

The company had partnered two of China’s largest construction companies – Sinohydro Corp Ltd and Shanghai Construction Group Co Ltd – to bid for the 118 storey Warisan Merdeka.

SPZA has been in the construction for more than 20 years and has projects in hand that are worth rm350 million.

On June 2014, it had entered into a MOU with SPAZ, Sinohydro and Shanghai Construction to bid for the construction of Warisan Merdeka.

The pre qualified parties for the rm3 billion project are expected to be announced as early as July 2014. The tower is due for completion in 2018.

Seacera is bidding for the super structure of the project, not all of it, which is estimated to cost about rm1 billion to rm1.5 billion. The four parties will forms a JV or consortium if they get past the pre qualification stage.

International players will hold a dominant stake of 60% in the project while the local contractors will hold 40%.

In terms of funding of the mega projects, Seacera will not have a problem because it had completed two private placements and a rights issue.

Seacera is also looking at making property development a major part of its business, seeing that has a total of 570 acres in Cheras, Perak and Melaka.

Seacera bought the 250 acres in 2007. The value of the tract had doubled since Seacera had bought it. Once this development begins, expect a contribution of about rm300 million per annum for the next 10 years.

The group aims to be a big property developer.

Seacera has proposed to buy a 37 acre tract in Sri Alai, Meleka for m32.7 million and has 33 acre tract in Kamunting, Perak, where it plans to relocate its tile operation from Selayang.

On the company building material division, its tile business will remain the chief contributor to earnings. It had invested rm15 million in capex.

Its CEO sees Seacera becoming a property cum construction company in the next five years from 2014.

Friday, June 20, 2014

Ho Hup (Undervalued)

*Updated chart



Ho Hup is currently (19 June 2014) trading at only 4.2 times implied forward PER, cheaper than that of its peers’ average PER of 7.1 times.


Its stock price is undervalued judging from its bright prospects driven by its property division’s crown jewel project in Bukit Jalil.

Its property division will recognize a portion of its JV project on a 50 acre tract in 1QFY2014. Nonetheless, due to the timing of approvals for the project’s new plan and design, ti will only start to contribute from 2QFY2014 onwards.

However a shortfall will definitely be made up in 2015.

Ho Hup’s Bukit Jalil City project with Malton Bhd comprises shop offices, serviced apartments, and shopping mall. It will be officially launched by end of 2014. The group is currently (June 2014) revising the design and plan of the project which will result in a higher GDV to rm4.5 billion.

Assuming the project’s GDV is rm4 billion and based on agreement that Ho Hup is entitled to 18% of the GDV, on average estimate that the project will contribute about rm45 million per annum in net profit throughout the 10 years period of development.

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.

After rejuvenated, the company is back in business.

Going forward, observers see clarity in Ho Hup’s earnings visibility as the group is on a clean state to expand and focus on its property development business. A healthy balance sheet following its restructuring exercise puts Ho Hup in a favourable position to build a portfolio of development projects for future growth.

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