Friday, 28 October 2011

Price set for Parkson Asia IPO, but size smaller

KUALA LUMPUR: Parkson Holdings Bhd has priced its regional retail arm Parkson Retail Asia Pte Ltd (PRA) at an IPO price of S$0.94 (RM2.33) per share.

The IPO valued the whole of PRA at S$636.7 million, which is a decent 18.2 times its net profit of S$35 million for FY11 ended June 30. However, the size of the IPO that will comprise the issuance of 80 million new shares is smaller than previously anticipated.

In a statement to Bursa Malaysia, Parkson Holdings said PRA’s listing on the Singapore Exchange (SGX) will involve an offering of 147 million shares — 80 million new shares to be issued by PRA and 67 million existing shares by the vendors Parkson Holdings and its Indonesian partner PT Mitra Samaya.

Note that in a circular to shareholders recently, Parkson Holdings had said PRA would issue new shares representing up to 18.9% of the company’s enlarged capital. But now with only 80 million new shares to be issued, as announced yesterday, this works out to only 11.8% of PRA’s enlarged capital of 677.3 million shares. PRA’s shares base before IPO was 597.3 million.

PRA — 90.1% owned by Parkson Holdings and 9.9% by Mitra before the IPO — is a department store operator with operations in Malaysia, Vietnam and Indonesia.

According to Parkson Holdings, 136.15 million or 92.6% of the PRA IPO shares will be offered by way of an international placement to investors, which includes institutional and other investors in Singapore. The remaining 10.85 million shares, excluding up to 3.5 million shares reserved for the directors, management and employees of the Parkson Asia group, will be offered to the public.

Parkson Holdings said the IPO is expected to raise total gross proceeds of S$138.2 million. Based on the 80:67 ratio of the new shares and offer for sale shares, S$75.2 million of the total proceeds will go towards PRA for business expansion with the rest going to Parkson Holdings and Mitra.

PRA proposes to utilise a total of S$69.2 million in net proceeds to open new stores in Malaysia, Indonesia, Vietnam and Cambodia (S$60 million), information technology investment (S$5 million), and part of maintenance capital expenditure in Malaysia, Vietnam and Indonesia (S$4.2 million).

Parkson Holdings, which stand to receive S$56.7 million from the IPO proceeds, has yet to announce how it would utilise the money. The company said it would inform shareholders at a latter date.

In a Bloomberg report yesterday, it said PRA plans to pay dividends of between 40% and 50% of its distributable profits, according to the IPO prospectus.

PRA posted a S$35 million net profit in the 12 months through June, up from S$22.4 million a year earlier.

This article appeared in The Edge Financial Daily, October 28, 2011.

Ramunia awarded RM13m contract

KUALA LUMPUR: Ramunia Holdings Bhd has received a letter of award from Petrofac (Malaysia) Sdn Bhd for the supply of driven piles for the Cendor Phase 2 Development Project worth RM13.13 million.

In a filing with Bursa Malaysia yesterday, Ramunia said the letter of award was given to its wholly- owned subsidiary Ramunia Fabricators Sdn Bhd on Oct 20 and accepted yesterday.

“The letter of award shall be subject to a formal contract being executed within 90 calendar days from the effective date Oct 20 or such extended period as may be mutually agreed by the parties,” said the statement.

The duration of the contract is 23 weeks from Oct 20 while the project is expected to contribute positively to the group’s earnings for the financial period of 2011/12

The statement also announced that Ramunia Fabricators has successfully completed the contract to supply mooring piles for Berantai in September. The contract, which was valued at about RM 2.7 million, was also from Petrofac.

This article appeared in The Edge Financial Daily, October 28, 2011.

MBM Resources to take over Hirotako

KUALA LUMPUR: MBM Resources Bhd has proposed to take over Hirotako Holdings Bhd to expand its automotive manufacturing division, at a cost of RM412.5 million.

MBM which has stakes in Perusahaan Otomobil Nasional Kedua Sdn Bhd (Perodua) and Daihatsu (M) Sdn Bhd among others, had offered 97 sen per Hirotaka share and five sen per Hirotako warrant.

The offer was at a premium of nine sen or 10.23% above Hirotako’s pre-suspension price of 88 sen on Oct 25.

Hirotako is principally involved in the manufacture and sale of automative components which includes airbag modules, seat belts, steering wheels, noise and heat reduction materials as well as insulator parts.

According to an MBM statement to Bursa Malaysia yesterday, the company had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd to accept the offer in respect of its entire holding of 99,871,112 shares, representing 23.8% of the total voting shares in Hirotako.

Assuming full acceptance of all offer securities, the acquisition would cost MBM approximately RM412.5 million. MBM is expected to fund the acquisition through internally generated funds and borrowings, and has obtained sufficient credit facilities.

MBM Resources says Hirotako's business will complement its existing auto manufacturing division and subsidiaries.

Explaining its rationale for the acquisition, MBM said it is continually looking for opportunities to expand its automotive manufacturing division. “The proposed offer is in line with the company’s business expansion plan and is undertaken with the objective to enable MBM to expand its automotive manufacturing division.

“The proposed offer is also expected to enable the company to fast track its business expansion by acquiring an existing matured business rather than via organic growth,” said MBM, adding that Hirotako’s group business will complement its existing automotive manufacturing division and subsidiaries.

It is also expected to enable the sharing of common resources between the MBM group and Hirotako group to have better co-ordination of business planning and resources deployment, MBM added.

“As a result, it may give rise to potential operational cost efficiency and cost savings. This in turn is expected to contribute positively to MBM’s financial performance in the future,” said the statement.

MBM also owns Precision Press Industries Sdn Bhd which manufactures precision metal stamped parts and components and the design and fabrication of tool and die for the metal stamping industry. Its other company is Tekun Asas Sdn Bhd which manufactures loud speaker grilles and hard board panelling.

An analyst said Hirotako is a well managed company that would provide integration synergy for MBM.

For the financial year ended Dec 31, 2010, Hirotako posted a net profit of RM36.4 million and had net assets of RM195.1 million. At RM412.5 million, he noted that MBM would be paying 2.1 times book and a trailing price-to-earnings ratio of 11.3 times, which he thinks is fair, although not particularly cheap.

MBM shares closed three sen higher at RM3.10 yesterday. Hirotako shares were suspended yesterday and will resume trading today.

They were last traded at 88 sen on Tuesday and have gained 57% since hitting a 12-month low of 56 sen on Sept 26.

This article appeared in The Edge Financial Daily, October 28, 2011.

TNB unit gets concession for KLIA2 power, water project

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) and Tenaga Nasional Bhd (TNB) have inked a privatisation concession agreement to the tune of RM399 million for a project at the new low-cost carrier terminal at the Kuala Lumpur International Airport.

The concession is for the privatisation of the development of a 132kV sub-station and a district cooling plant for the supply of chilled water and electricity and associated works at the new low-cost carrier terminal.

TNB’s wholly-owned subsidiary TNB Engineering Corp Sdn Bhd (TNEC) had executed the concession agreement via its wholly-owned subsidiary Airport Cooling Energy Supply Sdn Bhd with MAHB.

The agreement is based on a build-operate-transfer model for a concession period of up to 20 years.

In a filing with Bursa Malaysia, MAHB said the project known as the KLIA2 Generation Plant project will cost approximately RM388 million and will be funded through external borrowings by Airport Cooling Energy (which amounts to approximately 80% of the total project cost) while the balance will be funded by shareholders equity.

Apart from the concession agreement, Airport Cooling Energy, TNEC and MAHB had also executed a shareholders agreement, whereby MAHB will take up a 23% stake in Airport Cooling Energy and TNB 77%.

“The objective of the joint venture is for TNEC and MAHB to jointly undertake the KLIA2 generation plant project through Airport Cooling Energy for the tenure of concession of 20 years,” said MAHB.

This article appeared in The Edge Financial Daily, October 28, 2011.

CIH eyes RM568m payout

KUALA LUMPUR: CI Holdings Bhd (CIH) will distribute a minimum of RM4 per share to its shareholders from the RM820 million in proceeds it will receive from the sale of its subsidiary Permanis Sdn Bhd (Permanis) to Asahi Group Holdings Ltd (Asahi), according to its managing director Datuk Johari Abdul Ghani.

At RM4 per share, this will work out to a total payout of RM568 million for the 142 million shares and a balance of about RM252 million, which the group could utilise for acquisitions. CIH closed 11 sen higher to RM5 yesterday.

“At this moment, we have the tap and sanitary ware business and cash. That’s all. So we have to look for new businesses,” said Johari after the company’s AGM and EGM yesterday.

Johari said that the group is currently looking at several possibilities but refused to comment further. The group’s tap and sanitary ware business is under its subsidiary Doe Holdings Sdn Bhd (Doe).

When asked if the group is looking at companies within a particular industry, Johari said: “We are turnaround specialists. We don’t have to look at one industry. I like to take over companies that I know I can do something [with] and give value added [to it].”

CIH will not be entering into the beverage industry for the next three years as part of the deal made when selling Permanis to Asahi.

Johari: If the group is unable to find an acquisition, it will distribute the rest of the proceeds.

However, if the group is unable to find a suitable acquisition, Johari said that it will distribute the remainder of the sale proceeds back to its shareholders.

CIH is hoping for its deal with Asahi to be finalised within the next two weeks, according to Johari. “PepsiCo already gave the approval. In fact all the conditions are already done, we’re just waiting on one or two third-party consents,” he said.

Without Permanis in its portfolio, CIH will concentrate on Doe. The tap and sanitary division contributed 7.25% of the group’s total revenue in FY11 ended June 30.

The division has seen an increase in its net profit and revenue over the past year. In FY11, Doe saw a 20.57% year-on-year (y-o-y) increase in revenue to RM43.49 million from RM36.07 million in FY10. Its net profit increased to RM6.28 million in FY11 from RM2.38 million in FY10.

CIH’s net profit for FY11 rose 5.26% y-o-y to RM40.04 million in FY11 from RM38.04 million in FY10. The FY10 net profit was 82.19% higher than the group’s recorded net profit of RM20.88 million in FY09.

The group’s revenue for FY11 rose to RM580.74 million from RM516.4 million in FY10, a 12.46% y-o-y increase, which was lower than the y-o-y increase for revenue between FY10 and FY09 when revenue was RM362.98 million.

Johari attributed to the slowdown in FY11 revenue and net profit to the increase of raw materials prices, particularly for Permanis.

“We were also subject to commodity pressure [on] sugar, resin and [there were] also some fluctuations in terms of aluminium,” said Johari.

This article appeared in The Edge Financial Daily, October 28, 2011.

Pharmaniaga assessing Saudi Arabia pharmaceutical factory JV

KUALA LUMPUR: Pharmaniaga Bhd, controlled by conglomerate Boustead Holdings Bhd, has roped in two potential foreign partners to assess the feasibility of building and operating a pharmaceutical factory in Saudi Arabia.

In a statement to Bursa Malaysia, Pharmaniaga said it had signed a memorandum of collaboration (MoC) with Saudi Arabia-based Modern Industrial Investment Holding Group Co Ltd and US-based E*Healthline as initial arrangements for a potential joint venture.

The collaboration will see these companies using Saudi Arabia as a distribution hub from which the pharmaceutical goods would be exported to other Middle Eastern and North African markets.

“The MoC shall be valid for 30 days or any extended period to be mutually agreed upon in writing between the parties.

“In contemplation of entering into a definitive agreement within 30 days from the date of this MoC or any extended period to be mutually agreed upon in writing, the parties agree to specifically negotiate and finalise terms and conditions which will form the basis of the definitive agreement, including but not limited to, the scope and obligations of the parties in connection to the project,” Pharmaniaga said.

Modern Industrial is involved in the business of constructing, owning and operating manufacturing facilities in Saudi Arabia. E*Healthline is involved in integrated healthcare information management systems.

Pharmaniaga said the proposed collaboration required the approval of the Saudi Arabian General Investment Authority, Health Ministry, and Saudi Food & Drug Administration.

Pharmaniaga’s overseas ventures are deemed crucial to sustain the company’s growth. According to Pharmaniaga’s annual report, stiff competition in the generic drug market has resulted in a reduction in profit margins for manufacturers. As such, Pharmaniaga said it is on the lookout for potential acquisition targets abroad which would generate higher returns for the company.

The company has indicated that it is planning to enter into more Southeast Asian markets and expand its portfolio of generic drugs in the next five years. Abroad, Pharmaniaga already has pharmaceutical distribution operations in Vietnam and Indonesia, and the firm does not discount the possibility of setting up pharmaceutical factories in these markets.

However, the immediate concern is strengthening the company’s Malaysian government concession operations which account for 60% of Pharmaniaga’s business.

The Health Ministry here renewed a pharmaceutical supply concession with Pharmaniaga for 10 years from December 2009 to December 2019. The renewal followed the expiry of Pharmaniaga’s previous concession term of 15 years in November 2009.

The concession involves the right to purchase, store, supply and distribute medical products to government hospitals.

State investment arm Khazanah Nasional Bhd’s wholly owned subsidiary UEM Group Bhd had sold its entire stake of 86.81% in Pharmaniga to Boustead for some RM534 million or RM5.75 a share in June 2010.

This article appeared in The Edge Financial Daily, October 28, 2011.

Faber gets 6-month concession extension

KUALA LUMPUR: Investors chased shares of Faber Group Bhd yesterday, helping the stock close at its highest in over nine years, in anticipation the hospital support services (HSS) provider’s concession with the government will be extended.

The stock had earlier traded at an intraday low of RM1.83 before closing at its intraday high of RM1.87, up four sen, valuing the company at RM678.81 million. The stock has gained 34% this year, significantly outperforming the FBM KLCI’s 3% decline.

In a statement to Bursa Malaysia yesterday, Faber said it would continue to offer support services to government hospitals under a six-month interim extension. This follows the expiry of the company’s 15-year concession today.

Faber said its wholly-owned subsidiary Faber Medi-Serve Sdn Bhd had received a letter from the public private partnership unit of the prime minister’s department on the extension. Faber’s contract covers 79 hospitals in Perlis, Kedah, Penang and Perak, besides Sabah and Sarawak.

According to the company, the six-month extension is subject to prevailing terms and conditions commencing today or until the signing of a new concession agreement for the privatisation of HSS with the health ministry, whichever is earlier.

“The six months’ interim extension is not to be considered as binding on the government of Malaysia. A further announcement will be made concerning the privatisation of HSS on conclusion of negotiations,” Faber said.

Faber is one of the three government HSS concessionaires in the country. The other two are Pantai Medivest Sdn Bhd which covers 22 hospitals in the southern region of Peninsular Malaysia, and Radicare which serves 44 entities in the central and east coast region of the peninsula.

According to analysts, all three concession holders have been asked to submit their request for proposal (RFP) to the health ministry and Economic Planning Unit for the renewal of their concessions. The deadline was Oct 3 this year.

Although analysts are confident that Faber will retain its concession in Peninsular Malaysia by virtue of the company’s 15-year track record, they are also mindful of speculation that the concession for Sabah and Sarawak may go to local companies there.

Even if the contract in Sabah and Sarawak goes to other HSS players, analysts said there is a chance that Faber will still be a sub-contractor to undertake the concession. This is in anticipation that the new players may not have the necessary expertise and experience to undertake the project.

“As such, east Malaysia would still contribute to Faber’s earnings although the margins may be lower. However, with Faber being asked to submit its RFP based on its current geographical coverage comprising the northern region of Peninsular Malaysia and east Malaysia, we believe this indicates a high possibility of Faber being able to maintain its existing geographical coverage,” OSK Research Sdn Bhd wrote in a note dated Oct 6.

RHB Research said should Faber enter into a joint venture (JV) with new parties in Sabah and Sarawak, the group is likely to seek a controlling stake in the JV.

“Moreover, we recall previous discussions with management about the risk — Faber Medi-Serve’s service infrastructure is already established in Sabah and Sarawak, and therefore the company would likely stand a good chance of remaining a subcontractor to each JV,” RHB wrote in note dated Oct 5.

This article appeared in The Edge Financial Daily, October 28, 2011.

Candy maker Khee San stirs

KUALA LUMPUR: Could something sweet be stirring in Khee San Bhd? The stock has attracted trading interest in recent weeks after a protracted lull.

The catalysts appear to be two unrelated events that market observers speculate could herald some developments for the low-profile firm, including the possibility of its controlling shareholder London Biscuits Bhd (Lonbisco) raising its stake in the candy and sweets manufacturer.

Earlier this month, Lonbisco sold a 33.65% stake in egg and poultry player TPC Plus Bhd to Huat Lai Resources Bhd for RM8.08 million cash, and Permodalan Nasional Bhd (PNB) ceased to be a substantial shareholder of Khee San on Oct 17.

In the past week, Khee San’s shares have seen a significant pickup in trading volume, with an average of over 500,000 shares transacted daily. Last Friday, the stock gained 1.5 sen to 45.5 sen (with a market cap of RM27.3 million) on a volume of 437,500 shares after rebounding from its one-year low of 44 sen on Oct 20.

The jump in trading activity, though somewhat subsided over the past few days, could have been attributed to PNB speeding up the disposal of Khee San shares during the period.

The state-owned fund manager has been paring down its interest in Khee San since May 2009, about 15 months after buying into the candy maker. PNB first emerged as a substantial shareholder of Khee San after acquiring a 26.62% block (15.97 million shares) on Feb 21, 2008. It is not known how much PNB paid for the block but Khee San’s shares on that day closed at 79 sen.

Prior to taking up the sizeable block, PNB only held a 0.5% stake (298,200 shares) in Khee San as at November 2007, according to Khee San’s 2007 annual report.

Now with PNB out of the picture, Lonbisco remains Khee San’s single largest shareholder with its 32.87% shareholding.

Lonbisco surfaced in Khee San four years ago after acquiring a 30.7% stake via a direct business transaction on Oct 24, 2007, before growing its stake to the current 32.87% (19.72 million shares).

When Lonbisco bought into Khee San, it drew criticism for buying at about RM1.50 per share, a steep premium to the latter’s then share price of about RM1. Note that Khee San’s current share price of about 45 sen is now less than a third of Lonbisco’s purchase price.

Investors will be now watching Lonbisco’s next move on Khee San since the former has disposed of its interest in TPC Plus this year for RM8.08 million, and stake in poultry player Lay Hong Bhd last year for RM11.87 million.

A Lonbisco spokesman had earlier told The Edge Financial Daily that the group had no intention of selling Khee San and its wholly-owned subsidiary Kinos Food Industries (M) Sdn Bhd.

An analyst said Khee San appears to be a suitable fit with Lonbisco’s core business of manufacturing cake-based products as the latter expands its product offerings and brands.

“By comparison, the two disposed poultry and egg companies (Lay Hong and TPC Plus) provided less synergy to Lonbisco. While eggs are used in cakes, the poultry companies do not contribute a substantial portion of Lonbisco’s ingredient base”, he said.

“Egg production needs large economies of scale to be profitable as the margin is only about one sen per egg. It is more worthwhile for Lonbisco to buy eggs than to produce them,” he added.

With eggs and vertical integration out of the way, could Lonbisco set its sights on growing its brands and products?

If that is the case, would it aim to grab a bigger slice of Khee San, now that its shares are trading at around one-third of Lonbisco’s earlier entry price and the book value?

A market observer pointed out that at current share prices, Lonbisco (market capitalisation of RM79.5 million) could make an offer for the remaining 40.24 million shares (67.08%) it does not own in Khee San (market capitalisation of about RM27 million at 45 sen a share) for a total of about RM18.1 million. Minus off an amount of RM12.82 million that Lonbisco owes to Khee San, the net outlay could be just about RM5.3 million.

Khee San shares are currently trading at one-third of their net assets per share of RM1.27 per share in FY11.

Its operations have been churning a cash flow even though its net profit for FY11 ended June 30 fell 18.24% to RM3.65 million from RM4.47 million previously.

Khee San attributed the lower net profit to the release of allowances of deferred tax liabilities. For FY11, Khee San’s pre-tax profit soared 58.13% year-on-year to RM3.67 million on revenue growth of 14.32% to RM82.14. Its group operating profit before working capital changes had increased 23.34% to RM8.1 million from RM6.56 million a year ago.

The candy and sweets manufacturer has borrowings of RM36.89 million and cash of RM2.22 million. Its net debt of RM34.67 million translates into a net gearing ratio of 45.4%. There is a sum of RM12.82 million due from Lonbisco which after repayment would pare Khee San’s net debt to RM21.85 million and net gearing to 28.6%.

In the group’s latest annual report, Khee San chairman Datuk Seri Liew Kuek Hin warned of tougher operating environment for the candy maker in the coming year.

“With the ever-rising cost of production, constant pressure from competitive pricing and an expected advent of another round of economic recession, it shall be a strong challenge for us to maintain our current market position and profit record achieved thus far,” Liew said.

However, he said Khee San will endeavour to weather the expected challenges via a host of measures such as cost-cutting initiatives, boosting operational efficiencies and introducing new product offerings.

This article appeared in The Edge Financial Daily, October 28, 2011.

LBI Capital arm buys land for RM13.76m

LBI Capital Bhd's (LBI Capital) wholly-owned subsidiary, Triple Equity Sdn Bhd (TESB), has entered into a sales and purchase agreement with LBS Bina Holdings Sdn Bhd for the acquisition of a parcel of land known as Phase 2A in Kuala Langat, Selangor for RM13.76 million in cash.

In a filing to Bursa Malaysia, LBI Capital said the acquisition was to enhance the group's property development activities.

"TESB plans to develop the said property into 157 units of double-storey houses which will be marketed as mid-priced residential houses," it added.

LBI Capital said the acquisition will increase the group's development land and will contribute higher earnings in the near future. -- Bernama

Cycle & Carriage posts lower Q3 pre-tax profit of RM11.18m

Cycle & Carriage Bintang (C&C) Bhd posted a lower pre-tax profit of RM11.18 million in the third quarter ended Sept 30, 2011 as against the RM12.44 million recorded in the same quarter of last year.

In a filing to Bursa Malaysia today, C&C said its revenue, however, increased to RM188.21 million from RM156.03 million previously.

C&C said the group did well to increase unit sales in a very competitive market, although margins came under severe pressure.

On prospects, C&C said while the impact of the deteriorating global economy on Malaysia is still unclear, the intense competition in the local automotive market is expected to continue putting pressure on sales and margins. -- Bernama

Sinaria Corp Q1 pre-tax profit rises to RM1.11m

Sinaria Corporation Bhd's pre-tax profit rose to RM1.11 million in the first quarter ended Aug 31, 2011 from RM949,000 in the same quarter last year.

The company's revenue for the quarter increased slightly to RM28.68 million from RM28.51 million in the same quarter last year, it said in a filing to Bursa Malaysia today.

Sinaria said the group's performance for the current financial year will be satisfactory. -- Bernama

NWP Hldgs posts lower Q4 pre-tax profit

NWP Holdings Bhd's pre-tax loss for the fourth quarter ended Aug 31, 2011 increased to RM1.8 million from the RM771,000 recorded in the same period last year. Revenue decreased to RM4.61 million from RM7.06 million previously due to the decline in the group's sales, NWP Holdings said in a filing to Bursa Malaysia today.

For the whole financial year, the company's pre-tax loss rose to RM6.83 million from RM6.25 million previously while revenue slipped to RM8.45 million from RM23.5 million previously.

NWP Holdings said it expects to generate better financial results in the next financial year after the commencement of production with its associate company in the Lao People's Democratic Republic.

"It would provide us the opportunity to source lower-price raw materials for the export market," it added.

NWP Holdings said the group will continue to seek new opportunities, both local and abroad, including diversifying into new businesses to further enhance group revenue. -- Bernama

ETI Tech Corp Q4 pre-tax profit rises to RM1.42m

ETI Tech Corporation Bhd's pre-tax profit for the fourth quarter ended Aug 31, 2011 rose to RM1.42 million from the RM393,000 recorded in the same period last year.

Revenue increased to RM16.28 million from RM15.18 million previously due to higher sales to the group's existing customers, the company said in a filing to Bursa Malaysia today.

For the whole financial year, its pre-tax profit declined to RM4.20 million from RM9.89 million previously while revenue decreased slightly to RM57.99 million from RM74.03 million previously.

It said the group expects to achieve satisfactory performance for the year ending Aug 31, 2012 with its continuous efforts to undertake more new business negotiations, upgrade its engineering capabilities and technical know-how as well as provide more enhanced and value-added services and innovative solutions to its customers.

ETI Tech will also focus on collaborating with system integrators to implement projects that utilise its green technology batteries.

"As the world's demand for energy grows, along with concerns over depleting energy sources and global warming, the group, which provides innovative energy solutions, foresees an increase in demand for its products," it added. -- Bernama

Riverview Rubber posts lower Q3 pre-tax profit

Riverview Rubber Estates Bhd's pre-tax profit for the third quarter ended Sept 30, 2011 decreased to RM5.64 million from RM6.75 million in the same quarter last year.

Revenue slipped to RM6.85 million from RM7.16 million previously due to
lower production of fresh fruit bunches , it said in a filing to Bursa Malaysia here today.

Going forward, Riverview Rubber Estates said, it remained positive of the group's prospects. -- Bernama

Tasek Corp posts lower Q3 pre-tax of RM27.5m

Tasek Corporation Bhd achieved a lower profit before tax of RM27.5 million for the third quarter ended Sept 30, 2011 compared to RM40.6 million in the same quarter of the previous year.

This is due to a lower profit margin and lower volume in current sales, the company said in its filing to Bursa Malaysia.

For the nine months ended Sept 30, 2011, the profit before tax decreased to RM87.687 million from RM96.383 million previously.

Revenue for the nine months ended Sept 30, 2011 was lower at RM398.949 million from RM413.088 million.

The Group's sales margin for the domestic market was affected by competitive pricing in the market as well as higher production costs during the reporting quarter.

Tasek Corporation said the demand and pricing for cement and ready-mixed concrete is expected to remain positive for the next quarter. -- Bernama

Milux recorded lower Q4 pre-tax profit of RM9.55m

Milux Corp Bhd recorded a pre-tax profit of RM9.55 million for the fourth quarter ended Aug 31, 2011 compared to a pre-tax loss of RM14.08 million in the same period last year. Revenue declined to RM19.07 million from RM24.7 million previously.

In a filing to Bursa Malaysia today, Milux said this was attributed to the
drop in sales due to product line transition as well as discontinued operations
and product.

For financial year ended Aug 31, 2011, Milux recorded a pre-tax profit of
RM8.15 million compared to a pre-tax loss of RM12.69 millon previously. Revenue fell to RM79.84 million from RM88.86 million previously.

Milux said with the decision to discontinue its overseas operations which
had been suffering losses since commencement and the discontinuation of a
certain product line, the group was confident of a turnaround in the current
financial year ending Aug 31, 2012.

"The management will now be able to focus on growing the operations of its
local units and reposition certain product line," it said. -- Bernama

Luxchem Q3 pre-tax profit rises to RM7.66m

Luxchem Corp Bhd's pre-tax profit for the third quarter ended Sept 30, 2011 rose to RM7.66 million from RM6.48 million in the same quarter last year.

Revenue increased to RM127.33 million from RM100.58 million previously, it
said in a filing to Bursa Malaysia here today.

Going forward, Luxchem said, it remained positive of the group's prospects. -- Bernama

Zelan gets letter of intent for power plant job

Zelan Bhd, a Malaysian builder, received a letter of intent for subcontract works for a power plant valued at as much as RM300 million.

Mudajaya Corp will subcontract the works to Zelan should its group be appointed as the main contractor for the power project in Johor state, Zelan said in a statement in Kuala Lumpur today. -- Bloomberg

Market Commentary

The FBM KLCI index gained 10.89 points or 0.74% on Friday. The Finance Index increased 0.97% to 13420.59 points, the Properties Index up 0.46% to 966.84 points and the Plantation Index rose 0.03% to 7494.68 points. The market traded within a range of 10.05 points between an intra-day high of 1488.20 and a low of 1478.15 during the session.

Actively traded stocks include HIRO-WA, HARVEST-WA, GPRO, HARVEST, MBFHLDG-WA, TIMECOM, HIRO, HUBLINE, SAAG and RAMUNIA-WA. Trading volume increased to 1877.90 mil shares worth RM2295.28 mil as compared to Thursday’s 1877.17 mil shares worth RM2413.17 mil.

Leading Movers were CIMB (+18 sen to RM7.46), GENTING (+30 sen to RM10.60), MAYBANK (+6 sen to RM8.35), PETCHEM (+10 sen to RM6.41) and SIME (+5 sen to RM8.90). Lagging Movers were IOICORP (-12 sen to RM5.14), UMW (-7 sen to RM6.59), DIGI (-10 sen to RM31.50) and YTL (-1 sen to RM1.51). Market breadth was positive with 470 gainers as compared to 338 losers. -- JF Apex Securities Bhd

Tenaga posts Q4 loss on higher fuel costs

Malaysia’s national power producer Tenaga Nasional Bhd posted a fourth quarter loss after a disruption in the supply of natural gas forced the company to buy more expensive alternative fuels for generation.

Tenaga posted a net loss of RM453.9 million (US$146.3 million ringgit compared to a Thomson Reuters I/B/E/S estimate of a RM100.63 million loss. The estimate was provided by a single undisclosed broker.

Tenaga recorded a net profit of RM388.4 million for the same period last year.

Tenaga has been forced into the market to purchase fuel oil and distillates regularly since the second quarter of this year owing to a disruption in its supply of gas from state oil firm Petronas. -- Reuters

MAHB’s numbers holding up well

Malaysia Airports Holdings Bhd (Oct 27, RM5.88)
Maintain buy with target price of RM7.36: MAHB reported commendable earnings, with its cumulative core net profit coming in line with our estimates but ahead of consensus. Top line growth was fuelled by higher passenger spending while its bottom line got a boost from a higher utilisation rate and economies of scale.

Under the operating agreement signed in 2009, MAHB is entitled to compensation from the government should an overdue hike in tariffs be put on hold. As such, the government’s recent move to freeze MAHB’s proposed tariff hikes on aircraft landing and parking, due for an increase effective 2012, could see MAHB reducing the payment of user fees.

In the pipeline are two more joint venture (JV) initiatives and a 50-acre development of a factory outlet.

Save for a net exceptional loss item of RM2.2 million (after associates’ FRS 139 impact and a RM22 million dividend income gain), MAHB’s 3QFY11 core net profit stood at RM110.4 million or 17.3% quarter-on-quarter (q-o-q —16.6% year-on-year [y-o-y]; 12.1% year-to-date [YTD]) on the back of revenue of RM483.7 million or 2.4% q-o-q or 2.4% (8.4% y-o-y; 7% YTD). On a cumulative basis, the results were in line with our forecasts as revenue and core net profit accounted for 72% and 78% of our full-year forecasts, but beat consensus estimates. The y-o-y revenue growth was driven by resilient passenger growth (-0.3% q-o-q; 10.8% y-o-y; 12% YTD) although we note that q-o-q passenger growth was seasonally weaker owing to the lull during Ramadan. This was offset by higher non-aeronautical contribution boosted by more robust passenger spending on maximising rental space at the low-cost terminal.

MAHB managed to cut costs further during the nine-month period, with earnings before interest, tax, depreciation and amortisation (Ebitda) margin improving by 0.7 percentage points to 37.6% against 36.9% last year. Costs came down due to higher staff productivity as it achieved better economies of scale.

The management said KLIA2 may not be completed in time for commencement in 2012. Should the terminal be completed only in early 2013, the impact on our FY12 forecasts would be small as this may give rise to only a small 3.5% reduction in earnings. Valuation-wise, a delay would carry little weight in lowering our fair value for MAHB over the longer term. The management will be holding a briefing in the near future to update the investment community on the progress of KLIA2.

The management indicated that it is tendering for two more private JV initiatives with a utilities provider (likely to be Tenaga Nasional Bhd) and a hotelier. The JV will be structured like the recently announced JV partnership with WCT Bhd, in which MAHB is allocated free equity interest participation in exchange for the use of airport land by the JV partner. In addition, the government is developing a 50-acre (20ha) piece of land for a factory outlet to attract more visitors to the airport and boost non-aeronautical revenue.

With the 9MFY11 earnings in line with our estimates, we make no changes to our earnings at this juncture. We reaffirm our “buy” call, with a discounted cash flow-derived target price of RM7.36, based on 9% weighted average cost of capital. MAHB is a defensive aviation play which will do well in both good and bad times owing to resilient air travel demand and its large base of budget travellers. — OSK Research, Oct 27

This article appeared in The Edge Financial Daily, October 28, 2011.

Green Packet staying the course

Green Packet Bhd (63 sen) believes it is on track to achieve operating breakeven in the last month of 2011. Although the company will remain in the red both at the operating and net levels for the full year, this achievement will nevertheless be a key milestone.

The company had previously pushed back its target date for operating breakeven in favour of more aggressive network rollout and drive for subscriber acquisition — which translates into higher depreciation and interest charges as well as marketing and promotional expenses for P1, its broadband arm.

The decision was based on expectations that growth, especially in the nomadic broadband segment, would peak in 2011-2012.

Thereafter, the cost of subscriber acquisition is expected to rise steeply as the market segment becomes increasingly saturated.

P1 intends to complete the planned RM1 billion capital expenditure programme — to install 2,500 RFS sites for a 65% population coverage — by end-2012.

So far, it has spent RM679 million for roughly 43% of the planned number of sites. The wider coverage will boost the company’s addressable market, especially in the nomadic broadband segment.

Targets 450,000 subscribers and operating breakeven by end-2011
For the first six months of 2011, P1 added 64,000 subscribers, bringing the total to 338,000. This was slightly short of the target of 70,000 net adds but the company is sanguine that it will make up the difference in 2H11 — in step with the faster network rollout.

Similarly, some 133 RFS were added in 1H11, slower than the target of 191 sites. Nevertheless, the current work in progress indicates that the pace will pick up strongly with an additional 517 sites by end-2011.

P1 has already intensified its marketing and promotional campaign, including reseller incentive programmes and on-ground sales acquisition activities, to boost subscriber acquisition for 2H11.

Total subscriber base is targeted to hit 450,000 by the end of this year and 650,000 by end-2012. As at June this year, the nomadic broadband segment accounted for just about 35% of total subscribers. This percentage is expected to rise to about 50% based on its push into the nomadic broadband segment.

Target turnaround in 2013 but much depends on P1
Green Packet’s solutions arm is already profitable. The company’s sales of software licences and customer premises equipment totalled RM87.8 million in 1H11, more than double the RM37.2 million in 1H10. Earnings before interest and taxes (Ebit) improved to RM8.7 million in 1H11, up from RM4.8 million in the previous corresponding period.

Turning the company around will still depend on P1’s performance. Revenue for the broadband arm grew 27% year-on-year (y-o-y) in 1H11 to RM124.7 million but was in the red with loss before interest and tax totalling RM73.6 million.

As a result, Green Packet remained loss-making in 2Q11. Pre-tax loss narrowed slightly to RM36.6 million from RM37.5 million in 1Q11. We expect the company to stay in the red for the full year and 2012.

The company is upbeat that if all goes to plan, it could turn a profit in 2013. Investors, however, may be more cautious. At this point, the business risks remain high given the very competitive operating environment.

The nomadic broadband market segment is already very competitive with all the mobile operators and YTL Communications jostling for a share.

The fixed home broadband segment too is starting to get crowded. Previously dominated by Streamyx, and to a lesser extent P1, this segment will see intensifying competition with Maxis and Celcom entering the fray.

Telekom’s UniFi service has already taken a good slice of this market since its launch last year — accounting for almost half of the net adds in this segment in 1H11 — and is expected to do increasingly well with our growing demand for bandwidth.

Wholesale agreement with Telekom to protect customer base
Cognisant of this trend, P1 recently signed a wholesale agreement with Telekom Malaysia Bhd for the use of the latter’s high-speed broadband (HSBB) fibre network. This way, it hopes to retain high bandwidth users who would otherwise be switching to rival operators — even though margins will be squeezed. The fibre network is currently the most efficient and cost-effective option for high-speed broadband.

Longer-term outlook still hazy
The longer-term outlook for Green Packet is still somewhat hazy. Much depends on how the next generation of services, the LTE, plays out in the country.

At the moment, nine players, including P1, are vying for the frequency spectrum blocks to be given out by the government. Given the size of our population, this could be a very congested market but one that remains very much in Green Packet’s plans.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

This article appeared in The Edge Financial Daily, October 28, 2011.

Dialog to grow earnings despite global concerns

Dialog Group (Oct 27, RM2.44)
Maintain outperform with fair value of RM3.51: Management appears confident that the Balai Cluster risk service contract (RSC) will be a success. In any case, the RSC is structured such that capital expenditure for both the pre-development and development phases is fully reimbursed by Petroliam Nasional Bhd regardless of success rate, and Dialog only bears the financing risk.

Once commercial production begins, payment from Petronas will be based on the rate of actual production and include the agreed return over the project costs. It is therefore in the company’s best interests to begin producing as early as possible and at a higher production rate.

Management has guided average project internal rates of return (IRR) of 15% to 16%. We note that Dialog’s RSC appears to be different from the SapuraCrest Petroleum Bhd/Kencana Petroleum Bhd RSC, as each is negotiated individually. The Balai Cluster appears to be more gas-based.

We understand Petronas is in the process of pre-qualifying foreign oil and gas companies for 20 marginal fields, and the process is expected to close by end-CY11/early CY12.

Thereafter, the foreign companies will choose the local parties they would like to work with. Dialog is keen to participate in the next round of marginal fields, and its proposed fundraising exercise (involving a rights and warrants issue) will provide sufficient funding for the Balai Cluster and others.

Risks include the delay or cancellation of projects and higher than expected cost of development. We have lowered our weighted average cost of capital (WACC) assumptions for Kertih and Tanjung Langsat terminals to 7.2% (from 10.1% previously) after removing the risk premium ascribed to the two terminals.

Our estimated revenue per cu m assumption is reduced to RM399 (from RM479 previously) for crude oil storage at Pengerang as we had previously assumed similar storage rates against petroleum products (at Tanjung Langsat terminal). We raise our net present value (NPV) per share estimate for the Balai cluster to be in line with the company’s guided 15% IRR. Overall, there is no change to our sum-of-parts fair value estimate of RM3.51 per share.

Our meeting with Dialog gave us comfort that the company’s long-term earnings fundamentals and visibility are intact and that conservative risk management remains paramount.

In our view, the company is well-positioned for the significant growth opportunities in the tank terminal business in the region, and capacity expansion plans both in Tanjung Langsat Port and Pengerang Deepwater Oil Terminal will support near- and long-term earnings growth in spite of global economic concerns. Moreover, Dialog’s local projects secured thus far appear to be indicative of its strong link to Petronas. Maintain “outperform”. — RHB Research, Oct 27

This article appeared in The Edge Financial Daily, October 28, 2011.

Tasek 3Q earnings dn 32.9% to RM22.10m

KUALA LUMPUR: TASEK CORPORATION BHD []'s earnings fell 32.9% to RM22.10 million in the third quarter ended Sept 30, 2011 (3QFY11) from RM32.90 million a year ago, due to lower sales.

It said on Friday, Oct 28, revenue fell 7.5% to RM132.99 million from RM143.78 million. Earnings per share were 17.82 sen compared with 20.63 sen.

Tasek Corporation said the lower earnings were attributed to the lower volume in domestic cement sales following the Hari Raya holidays during the quarter. Competitive pricing in the market coupled with higher production costs also contributed to the lower results, it added.

However, the group said 3Q11 results had benefited from higher interest income it received during the reporting quarter.

Moving forward, the group is confident that demand and pricing for cement and ready-mixed concrete will remain positive for the next quarter.

For the first nine months ended Sept 30, 2011, profit fell 8.5% to RM69.72 million from RM76.18 million a year ago. Revenue fell 3.4% to RM398.95 million from RM413.08 million.

SILK Holdings to be profitable in ‘couple of years’

KUALA LUMPUR: SILK Holdings Bhd is confident the company will be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

Chairman Datuk Mohd Azlan Hashim said on Friday, Oct 28 that "we expect with the continued increase in traffic flow in that area, these losses will eventually be wiped out and there will be a turnaround in profitability".

The highway division’s loss of RM26 million for the financial year ended July 31, 2010 was reduced to RM19 million in FY11, he told reporters after the AGM.

He said the decline in losses, coupled with a continued increase in traffic flow in the Kajang area, SILK Holdings would be able to make a profit in the next couple of years.

"We've been experiencing traffic flow rates of 17% per annum for two years running now. There is tremendous growth potential and as development happens in that area, traffic is generated," he said. Currently, the area is low density, he added.

On their marine support services division, he said group was expanding its fleet and renewing with more modern vessels. Currently, they own 14 vessels and expect to acquire a few more vessels in the next few months.

Azlan said that the oil and gas sector in Malaysia is an exciting area to be in as it was one of the national key economic areas to be developed under the Economic Transformation Programme.

"We are positioning ourselves to serve that need. At the moment, a quarter of the group's revenues are contributed by the highway side and the remaining is by the marine support services arm," said Azlan.

"Having said that, the highway business takes time to build up as the concession is for 36 years and we are only in the early part now," he added.

"In the highway business, there is heavy capital outlay and a long gestation period," he said. "You have to be patient. The initial years will show losses but once you hit your critical mass in terms of traffic, then you will be out of the woods."

For the financial year ended July 31, 2011, SILK recorded net loss of RM11.24 million compared with net loss of RM10.03 million in FY10.

Supermax has plans to deal with overcapacity

Supermax Corp (Oct 27, RM3.56)
Maintain outperform with target price of RM4.38: A strengthening distribution platform will ensure that the world’s second largest glovemaker emerges unscathed from the next one to three years of overcapacity. In addition, We gather that a bonus issue may be in the works.

Supermax’s results briefing left us feeling more positive about its prospects as it is beefing up its distribution platform. We maintain our “outperform” call and target a forward price-earnings ratio (PER) of 9.8 times. The stock would be catalysed by better earnings from easing costs and widening margins.

During the briefing, Supermax talked about initiatives that will take the company through the next one to three years of overcapacity. These include enhancing its distribution in Germany and North America while cautiously expanding into China. Supermax said it has exceeded internal sales targets in Germany and has qualified as a preferred supplier for some multinational companies. In the US, Supermax is purchasing warehouses as it expands into the US hospital market in 2012. Also in 2012, Supermax intends to start its distribution network in China.

Supermax indicated that the demand for nitrile gloves is declining due to the narrowing cost of production between nitrile and natural rubber. Even so, it is prepared to sell both types of gloves as 70% of its production lines are interchangeable. Without elaborating, it also said that it intends to make an announcement on an exercise to enhance shareholder value in the next few months.

Despite Supermax’s comments that demand for nitrile gloves is on the wane, we believe that demand for nitrile remains strong. Our analysis suggests that the cost of producing nitrile gloves is 20% lower than natural rubber gloves, which we believe will incentivise distributors and hospitals to use nitrile gloves.

We gather that Supermax’s announcement may be a bonus issue. While this is a positive surprise, for a company as liquid as Supermax the impact of the exercise will be less.

Investors should accumulate Supermax shares. At just 8.7 times FY12 PER, the stock trades at half the valuation of Top Glove Bhd, making it a cheaper play on the sector where earnings have bottomed out on the back of more stable rubber prices. — CIMB IB Research, Oct 27

This article appeared in The Edge Financial Daily, October 28, 2011.

Setia City Mall secures more fashion outlets

SHAH ALAM: Setia City Mall has secured over 50,000 sq ft of international fashion brands, bringing its tenancy take-up rate to over 95% of its net lettable area of 740,000 sq ft. The brands include Zara, MNG, Guess, Esprit, La Senza, G2000, Rip Curl, Aldo, Timberland, Cache Cache and Cotton On.

Setia City Mall, a joint venture between S P Setia Bhd and the Asian Retail Investment Fund (ARIF), is located in S P Setia’s 4,000-acre Setia Alam township. ARIF is a fund managed by the international investment arm of international property developer, Lend Lease.

“As we edge closer to opening, we’re very pleased at the confidence shown by the international fashion community. Offering these brands to our future customers will allow us to deliver on our promise to provide the Klang Valley with an exceptional shopping destination,” said Robert Spinks, development director of Setia City Mall in a statement yesterday.

With the new leases, the mall is on target to be 100% occupied for its opening in mid-2012. Other tenants include FOS and Padini, Parkson department store, a nine-screen Golden Screen Cinemas, Fitness First, Courts, Harvey Norman, Wangsa Bowl and Urbanfresh supermarket.

According to a spokesperson of RSH Malaysia, the owner of the Zara franchise in Malaysia, the expansion into Setia City Mall will help progress its regional growth strategy. The new outlet will be the brand’s seventh in Malaysia.

An artist's impression of Setia City Mall and its surroundings.

“Setia City Mall boasts an attractive design, excellent customer potential and a clear vision to deliver an exceptional retail asset. We are very pleased to be involved,” said the spokeperson.

The Zara store will be located on the upper ground floor and houses over 16,000 sq ft of the latest men’s and women’s fashion.

This article appeared on the Property page, The Edge Financial Daily, October 28, 2011.

'Passenger service charge to benefit MAHB'

The new international passenger service charge from Nov 15 will benefit Malaysia Airports Holdings Bhd (MAHB) as it will raise the airport operator's overall revenue, with no extra cost, says an investment bank.

Hong Leong Investment Bank, however, said there will be a minor negative impact for MAS and AirAsia as they are directly impacted from the higher aircraft parking and landing charges.

"Again, we reckon that MAS and AirAsia are likely to pass on the additional cost to their customers. Additional cost for AirAsia's passengers is at 45 sen per person and MAS at 64 sen per person," it said in a statement today.

Although there might be concerns on the potential impact to the overall air travel demand, the research firm reckoned the additional cost of between RM8 and RM15 per trip, was very marginal and unlikely to have significant impact on demand.

This view was also shared by MIDF Research, which said the international charge upward revision brings non-low cost carrier terminal's (LCCT) passenger to the benchmark level of RM65 as per the operating agreement signed between MAHB and the government in February 2009.

In a saperate note, MIDF said despite the rate hikes, MAHB's new charge and aircraft landing and parking charges are still comparatively lower than most airports globally and in even neighbouring countries.

Meanwhile, OSK Research Sdn Bhd said the hike was a surprise as the research house had earlier anticipated that it has been put on hold by relevant ministries subsequent to the recent collaboration formalised between MAS and AirAsia.

"Nevertheless, we opin that the hike for aircraft parking and landing is timely, noting that these rates have not changed for 17 years and are one of the lowest in the world," it said in a research note today.

Another research firm, HwangDBS Vickers Research, said it saw the new charges as a pleasant surprise.

"We continue to like MAHB for its long-term earnings potential from its cash-rich airport concessions, land developments and overseas investments," it added. All four research houses maintained their "buy" call on MAHB. -- Bernama

EMS Malaysia not affiliated: Pos

Pos Malaysia Bhd has clarified that a company known as EMS Malaysia is not affiliated or linked with it or any of its business units, departments and subsidiaries.

Pos Malaysia said in a statement today it did not assign any business operating rights to EMS Malaysia to operate any postal services despite the latter's reference to Pos Malaysia's former Call Centre address in its website ( as its Customer Service Address.

"Pos Malaysia would like to clarify that Expedited Mall Services (EMS) is an international courier service, for documents and merchandise, offered by the network of postal operators under the Universal Postal Union (UPU).

"As a member of the UPU and the sole Malaysia representative, Pos Malaysia is the only postal operator designated to operate, manage and handle the EMS service through PosLaju as well as utilise the EMS brand name," it said.

Pos Malaysia is a full member in the EMS Cooperative, the statement added.

It said the address of EMS Malaysia, as published on the website, is that of Pos Malaysia's former call centre at Subang Jaya Post Office.

But while the post office still occupies and runs its operations on the ground floor, Pos Malaysia said it has never leased the currently vacant level one of its Subang Jaya office to EMS Malaysia.

"Those who have fallen victim to the claims made by the website are advised to lodge a police report or contact Pos Malaysia's call centre through PosLine at 1-300-300-300," it added. -- Bernama

Airod eyes greater MAE partnership

Airod, Malaysia’s leading Maintenance, Repair and Overhaul (MRO) company, is eyeing greater collaboration with Malaysian Aerospace Engineering (MAE) in line with its aspiration to be the world’s largest airframe MRO. Malaysian Aerospace Engineering (MAE) is a subsidiary of Malaysia Airlines (MAS).

Tan Sri Ahmad Johan, Executive chairman of National Aerospace & Defence Industries Sdn Bhd (NADI), the holding company of Airod, said worldwide MRO players are consolidating to maximise capacity utilisation as only large players will survive.

He emphasised that the combined resources of both MAE and Airod, will position the combined entity into high growth markets as China and India and propel Malaysia as a leading MRO player.

"By combining the strength of MAE’s presence in the MRO market in India as well as Airod’s recent footprint in China, it will position Malaysia as a formidable player in the large MRO market," Ahmad said in an interview with Bernama.

The Asia Pacific, China and India combined, according to recent industry reports, will be a MRO market larger than Europe and North America in 2019. It will have a market size of US$17.1 billion.

MAE is the third largest global MRO player in terms of total airframe man-hours. It has forged a joint venture with GMR Hyderabad International Airport Ltd, a subsidiary of GMR Infrastructure Ltd from India, to set up a MRO facility at Hyderabad, India, which is expected to be launched soon.

"We are focusing now on our plans to move aggressively into commercial MRO and China is on our agenda," he said. Ahmad is confident that Airod can compete effectively in the booming MRO market in China.

Currently, China’s major MRO is on the eastern part of the country with ST Aerospace, a Singapore-based aviation company, having two MRO's in Shanghai and Guangzhou.

Airod's move into China’s western part, he said, will provide an opportunity for the company to tap into the high growth area for MRO jobs.

"The new airport, set to start operations in January 2013, will be the fourth-largest aviation hub in China and attract a large number of budget and smaller domestic airlines," he said.

Ahmad also said the government of Yunnan has given the concession for Airod to set up third party MRO facilities at the Kunming International Airport.

He said the development is in stages to provide MRO services for narrow body and wide-bodied aircraft as well as cargo conversion and upgrades at the Kunming International Airport by end 2012.

Kunming, he said is a new business hub and destination for investors, due to its strategic location and very competitive cost structure.

"We are targeting RM1 billion revenue from the MRO facility in Kunming International Airport by year 2015," he added.

Ahmad said Airod’s investment in China which will start at US$200 million initially, will be a major step for it to diversify into commercial MRO, especially as military jobs are declining with less maintenance intensive and newer military aircraft in the market.

"Declining global military spending compels Airod to re-examine the MRO business model and initiate the Airod and MAS collaboration to share resources and grow the commercial MRO business," he added.

MAS and Airod signed the general terms agreement (GTA) on July 20, 2011 to optimise use of skilled manpower and resources.

Ahmad said Airod is also embarking on a smart partnership programme with the Royal Malaysian Airforce (RMAF). The partnership is to upgrade the skills of the RMAF's human resource through training with Airod and also give retired air force personnel an opportunity to work with it.

"This enable us to scale up the global MRO market in meeting the human capital needed for it," he said. -- Bernama

KL shares bullish at midafternoon

Share prices on Bursa Malaysia were higher at midafternoon today, tracking the positive movements on the Asian bourses, dealers said.

As at 2.46pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) index advanced 11.10 points to 1,482.03. It opened 9.29 points better at 1,480.22.

The Finance Index rose 107.13 points to 13,398.46, Industrial Index was up by 1.37 points to 2,702.71 and the Plantation Index increased 23.40 points to 7,515.86.

The FBM Emas rose 76.73 points to 10,125.87 and the FBM 70 Index improved by 107.561 points to 10,993.87.

The FBMT100 increased by 79.341 points to 9,943.69 and the FBM Ace Index added 6.39 points to 4,069.36.

Gainers thumped losers by 450 to 271 while 311 counters were unchanged, 444 untraded and 25 others suspended.

Volume amounted to 1.283 billion shares worth RM1.217 billion.

Of the active counters, Hubline gained half sen to 10 sen, GPRO Technologies added 1.5 sen to 21 sen and Compugates added one sen to seven sen.

Pan Malaysia Capital, however, was flat at 8.5 sen.

Among heavyweights, Maybank added five sen to RM8.34, CIMB rose 13 sen to RM7.41, Petronas Chemicals earned eight sen to RM6.39 and Maxis jumped four sen to RM5.33.

Sime Darby, however, declined three sen to RM8.82. -- Bernama

Raja Teh Maimunah appointed Hong Leong Islamic Bank CEO

KUALA LUMPUR: Veteran banker Raja Teh Maimunah Raja Abdul Aziz has been appointed managing director/chief executive officer of Hong Leong Islamic Bank (HLISB), a unit of HONG LEONG BANK BHD [], with effect from Friday, Oct 28.

Raja Teh Maimunah, with over 18 years of experience in the financial industry focusing on investment banking and Islamic finance, was the global head of Islamic markets at Bursa Malaysia prior to her appointment in HLISB.

Hong Leong Bank group managing director Yvonne Chia said: “We have much to look forward to as a strong and united Hong Leong Islamic Bank with the new leadership.

“I am confident with Raja Teh’s leadership, HLISB will continue to innovate to be a preeminent player in the Islamic financial services industry.”

Raja Teh Maimunah was also the chief corporate officer and head of international Business at Kuwait Finance House Malaysia and CEO of Bank AlKhair Malaysia (previously Unicorn Investment Bank).

She also served in CIMB Investment Bank covering the debt and equity origination and equity sales and was responsible for the establishment of the investment banking division in RHB Investment bank in 2004.

She is also the adviser on Islamic banking and finance to the World Islamic Economic Forum Foundation and holds an LLB (Hons) from the University of East London.

Harvest Court appoints Chan, Nazifuddin to the board

KUALA LUMPUR: HARVEST COURT INDUSTRIES BHD [] has appointed two officials of Sagajuta group of companies, Datuk Raymond Chan Boon Siew and Mohd Nazifuffin Najib to the board with effect from Friday, Oct 28.

The timber manufacturing company said on Friday that Chan, 39, was appointed as a non-independent, non-executive director of the company and Nazifuffin, 28, as an independent and non-executive director.

Chan owns 23.808 million shares or 13.85% in Harvest Court which he had acquired in several off-market trades at 20 sen each on Oct 18.

He is also the managing director of the Sagajuta group of company – a post he held since 1995. Chan was appointed managing director of 1Green Enviro Sdn Bhd in 2011.

Meanwhile, Nazifuffin is the chairman of 1Green Enviro Sdn Bhd, Magna Healthcare Sdn Bhd, Cahaya Pedoman Sdn Bhd, Tribus Sdn Bhd and Sagajuta (Sabah) Sdn Bhd.

He also a director of Kingtime International Limited and Dynac Sdn Bhd.

AirAsia Thai unit IPO on target for Q4: CEO

AirAsia Bhd’s Thai unit remains on target to sell shares in the fourth quarter through an initial public offering as the plan hasn’t been affected by the flooding, said Chief Executive Officer Tan Sri Tony Fernandes.

The share sale plan is progressing well and Thai AirAsia’s earnings are “strong,” he said in an interview in Kuala Lumpur today.

“Our fourth-quarter may be affected a little bit by this, but the tendency to rebound is very strong.” - Bloomberg

CIMB: Thai floods to have small impact on earnings

KUALA LUMPUR: Floods in Bangkok will likely have only a small impact on the earnings of CIMB Group Holdings Bhd, its chief, Datuk Seri Nazir Razak, said.

The regional banking group, Malaysia's second largest, has operations in Thailand through CIMB Thai Bank.

"The Thai contribution to CIMB is quite small. Secondly, the government numbers (show) that banking sector lending that is exposed to the flood situation is actually quite small, about one per cent of total loans, and that is not too different from our estimate. But things are quite fluid, so we have to see."

Nazir spoke to reporters on the sidelines of the inaugural CIMB Asean Conference here yesterday, amid news that thousands of Bangkok residents were evacuating as a mass of floodwater advanced towards the Thai capital city.

He said the group, which had some 300 employees in Bangkok, was considering shifting its headquarters to Pattaya as the situation looked quite severe.

He said if the situation in Bangkok persisted, there would also be some delay in the implementation of its 1Platform initiative that was announced last year and on which it expected to invest RM1.1 billion over five years.

This is a regional core banking platform that would have spanned its four main markets, starting with Thailand.

"It (the delay) could be a bit disruptive, but that's more of a long-term issue," he remarked.

On another matter, Nazir said CIMB Group was making "good progress" in its talks with San Miguel Corp to take a stake in the Philippines' Bank of Commerce, an unlisted bank.

He later told Reuters in an interview that an announcement on the status of the talks would be announced in the next few weeks.

CI Holdings on the prowl for bargains

KUALA LUMPUR: Cash-rich CI Holdings Bhd (CIH) is still looking for a new business to buy after selling its beverage-making unit Permanis Sdn Bhd for RM820 million.

In the meantime, it will focus on its tapware and sanitary ware business through its holding in Doe and Potex. For the year to June 30 2011, the division reported some RM43.49 million in revenue.

Permanis, which is PepsiCo Inc's bottler in Malaysia, contributes up to 90 per cent of CIH's net profit with the remainder coming from its tap and sanitary ware division.

Under an exclusive franchise, Permanis produces world-renowned brands such as Pepsi, Mirinda, 7-Up, Gatorade, Lipton, Tropicana and Evervess.

CIH will conclude the sale to Japan's Asahi Group Holdings Ltd within the next two weeks. It will keep some RM200 million in cash for acquisitions once it has paid special dividend to shareholders.

Managing director Datuk Johari Abd Ghani said CIH is keen on buying low-profile companies with big potential.

"My expertise is in turning around troubled companies or companies that have the potential to grow, but with weak management. (However) at this moment, we are not in a rush," he told a media briefing after the group's annual general meeting yesterday.

Following the sale, CIH will have a year to look for a new core business or return the cash to shareholders.

"I think it is better for us to give back to shareholders if we can't conclude a suitable company to acquire, and in future, when we find something good, we can call for rights issue," said Johari.

According to its circular, CIH will distribute at least RM568 million, or RM4 per share, to its shareholders. If it couldn't find a suitable asset to buy in six months, it would consider paying back the entire proceeds of RM820 million, which works out to about RM5.77 per share to shareholders.

Johari declined to elaborate which sector he plans to venture next, but in earlier reports, CIH had ruled out the oil and gas sector as well as the property business, citing the lack of technical expertise.

CIH is also barred from the ready-to-drink beverages business in Malaysia over the next three years based on conditions set in the Permanis deal.

MAHB gets go-ahead for new airport rates

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) has received approval from the Ministry of Transport to impose new airport rates.

MAHB yesterday said it will impose new international passenger service charge (PSC) and aircraft landing and parking charges as early as mid-November 2011.

The new PSC will take effect on November 15 and will be applicable to tickets purchased from that day onwards.

The aircraft landing and parking charges will be increased in three stages effective in January 2012, January 2013 and January 2014, MAHB said in a statement.

Departing international passengers at relevant airports will now be charged RM65 from RM51. Those departing from LCCT KLIA and Terminal 2 Kota Kinabalu will now have to pay RM32, up from RM25.

All other PSC charges remain the same.

For aircraft landing and parking charges, the gazetted increase is at 30 per cent for landing and 64 per cent for parking.

Increases in landing charges will be made in three stages by nine per cent per annum in January 2012, January 2013 and January 2014.

Aircraft parking charges will also be raised in three stages by 18 per cent per annum on January 2012, January 2013 and January 2014.

MAHB manages and operates 39 airports nationwide.

IOI maintains stand on deal turned sour

KUALA LUMPUR: IOI Corp Bhd, which stands to lose an RM83 million deposit to Dutaland Bhd from a deal turned sour, yesterday insisted that the latter had breached their sale and purchase agreement (SPA).

Dutaland, however, maintained that it had not acted in breach of the SPA relating to a piece of plantation land.

IOI previously announced that it had terminated the SPA to buy 11,977.91ha of oil palm plantation land in Sabah from Dutaland for RM830 million.

IOI then said the cancellation was "due to non-compliance of certain terms and conditions".

On July 28 this year, IOI's unit Sri Mayvin Plantation Sdn Bhd had signed the deal with Dutaland's unit Pertama Land and Development Sdn Bhd.

Yesterday in a filing to Bursa Malaysia, IOI maintained that Dutaland, among others, had failed to continue upkeeping and maintaining the properties. It also claimed that there were discrepancies in the particulars relating to the properties, and that Sri Mayvin had communicated the alleged breaches to Pertama Land.

Dutaland, in its latest filing to the stock exchange, said Pertama Land had consistently maintained that it was not in breach of the SPA as alleged.

There had also "been non-compliance on the part of Pertama Land under the SPA as alleged or at all by Sri Mayvin", it added.

Meanwhile, analysts said there will be a minimal impact on IOI's overall earnings if it loses its RM83 million deposit from the deal inked with Dutaland Bhd a few months ago. This is because IOI is a cash-rich company with profits of close to RM2 billion to RM3 billion a year.

Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.

"It's too early to say (if the deposit will not be returned) but if they can prove that it is non-compliance, then they should be able to get their money back.

"But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much," said one analyst.

It will not be the first time IOI will lose its deposit. In 2008, the company had forfeited its deposit of RM73.4 million after it walked away from buying Menara Citibank.

Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.

Dutaland earlier said it was seeking legal advice and had notified OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10 per cent deposit paid by Sri Mayvin under the SPA and any interest accrued.

Plenitude to boost size of landbank

Property developer, Plenitude Bhd, is on the lookout for more land in Malaysia as well as other countries within the Asean region to boost its landbank size, Executive Chairman Elsie Chua said.

Currently, the company has about 720 hectares (1,800 acres) of undeveloped land in Penang, Kedah, the Klang Valley and Johor, that will last for 10 years, she said.

"We will start with Malaysia but if there is any other land available within Asean and the price is right as well as strategic, we won't close the door on it," she told reporters after the company's annual general meting here today. - Bernama

FBMKLCI rises 0.8pc at midday

Share prices ended the morning session higher today in line with the positive movement on regional markets, prompted by Europe's decision to boost the region's rescue fund and ease the debt crisis, dealers said.

At 12.30pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 11.47 points to 1,482.40, after opening 9.29 points higher at 1,480.22.

The benchmark index moved between a high of 1,488.20 and fell to a low of 1,480.22.

Hong Leong Investment Bank said riding on the overnight bullish Wall Street and Europe markets, the FBM KLCI is expected to continue its uptrend towards the 1,500 psychological barrier after a mild profit taking consolidation.

The Finance Index rose 103.08 points to 13,394.41, the Industrial Index added 4.88 points to 2,706.22 and the Plantation Index advanced 35.65 points to 7,528.11.

The FBM Emas gained 79.58 points to 10,128.72, the FBMT100 increased 81.971 points to 9,946.32 and the FBM Ace Index added 21.23 points to 4,084.20, while the FBM 70 Index increased 110.90 points to 10,997.21.

Advancers led decliners by 456 to 260 while 303 counters were unchanged, 457 untraded and 25 others suspended.

Trading was firm with a total volume of 1.215 billion shares worth RM1.126 billion.

Of the active counters, Hubline and Compugates added half-a-sen each to 10 sen and 6.5 sen respectively, while GPRO Technologies and Time DotCom gained 1.5 sen each to 21 sen and 64 sen.

Among heavyweights, Maybank increased five sen to RM8.34, CIMB jumped 11 sen to RM7.39, Sime Darby was down three sen to RM8.82 and Petronas Chemicals earned nine sen to RM6.40. -- Bernama

SILK sees double-digit highway traffic growth

SILK Holdings Bhd expects traffic flow on its Kajang SILK Highway to experience a double-digit growth in the next few years.

SILK Holdings chairman Datuk Mohd Azlan Hashim said: "For the time being, we are counting a loss in our highway infrastructure division, but we see it reducing organically as the traffic flow into the highway increases.

"This division experienced a loss reduction from RM26 million last year, to RM19 million this year," he told reporters after the company's annual general meeting today.

The concession operated by Sistem Lingkaran Lebuhraya Kajang Sdn Bhd recorded a total traffic volume of 45.4 million vehicles from January to December 2010, a 17 per cent increase over the total traffic volume of 38.8 million recorded the previous year.

"In the first nine months of this year, there has been a further marked increase in traffic performance with the average daily traffic volume in excess of 140,000 vehicles daily," Mohd Azlan said.

Meanwhile, the group's oil and gas support services division continues to be the biggest contributor to revenue.

Mohd Azlan said the division recorded an improved revenue of RM182.69 million for the year ended July 31, 2011 from the RM181.32 million recorded in the previous corresponding year.

"This represents a marginal improvement of 0.76 per cent over the previous recorded performance," he added.

He said during the financial year ended July 31, 2011 the division managed to secure six new long-term charters and had three existing ones renewed.

Mohd Azlan said the company currently owned 14 vessels and plans to purchase two more next year.

"The addition of the new vessels to the fleet and the company's established track record provides the division with the ability to remain competitive.

"The division is expected to continue to contribute positively to the group in the current financial year," he added. --Bernama

Trading of Capitamalls Malaysia Trust suspended Friday afternoon

KUALA LUMPUR: Trading in the units of Capitamalls Malaysia Trust (CMMT) will be voluntarily suspended from 2.30pm on Friday, Oct 28.

A Bursa Malaysia Securities circular said on Friday the suspension was at the request of the management company of CMMT “pending an announcement”.

CMMT was unchanged at RM1.31 at midday.

Can the KLCI test the 1,500?

KUALA LUMPUR: Key regional markets extended their gains in the morning session on Friday, Oct 28, as investors bet that equities could continue to rise after European leaders put together a one trillion euro rescue package.

The question on investors’ minds is whether the run-up is sustainable and if so, can the FBM KLCI test the formidable 1,500 level in the short term.

At midday, the 30-stock index was up 11.64 points or 0.78% to 1,482.57. However, year-to-date, it is down 2.40%. Turnover was heavy with 1.22 billion shares done valued at RM1.127 billion. There were 456 gainers, 260 losers and 303 stocks unchanged.

Among the regional markets, Japan’s Nikkei 225 rose 0.98% to 9,014.22, Hong Kong’s Hang Seng Index added 1.89% to 20,061.44, Shanghai’s Composite Index rose 1.10% to 2,462.38 and South Korea’s Kospi 0.43% to 1,930.26. Singapore’s Straits Times Index added 1.45% to 2,888.89.

Reuters reported the head of Europe's bailout fund as saying on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus-rich country will continue to buy bonds issued by the fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), also said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.

Reuters said The EFSF, set up last year and so far used to bail out Portugal and Ireland, is a 440 billion euro fund based on guarantees from all euro zone member states, raising capital on international markets by selling bonds.

Investors want to know how the 440 billion euro EFSF rescue fund will be leverage to 1 trillion euros to put a safety net under bigger euro zone states, such as Spain and Italy and prevent them from being swept up by the crisis.

Meanwhile, the ringgit strengthened against the US dollar to 3.0750 while crude palm oil third-month futures fell RM6 to RM2,974 per tonne. US light crude oil fell 34 cents to US$93.62.

At Bursa, GENTING BHD []’s 36 sen jump to RM10.66 pushed the KLCI up 3.08 points while CIMB’s 11 sen gain to RM7.39, gave the index a 1.89 point increase.

Among the consumer stocks, BAT was the top gainer, up 70 sen to RM46, Nestle 54 sen to RM50, Dutch Lady 40 sen to RM20.36, F&N 26 sen to RM16.66 and GAB 14 sen to RM10.70.

KLK rose 44 sen to RM21.04, MMHE 25 sen to RM6.37 while MAHB added 34 sen to RM6.22.

Hirotako warrants were the most active with 66.51 million units done. It fell 8.5 sen to 15 sen as investors reacted to the 5.0 sen offered by MBM Resources in the takeover offer. Hirotako shares added six sen to 94 sen.

The decliners were Tong Herr and Atlan, down 14 sen each to RM2 and RM3.02 while BLD PLANTATION []s gave up 10 sen to RM6.80 and CI Holdings shed 10 sen to RM4.90.

Hirotako board not seeking alternative takeover offer

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []’s board of directors does not intend to see an alternative party to make a takeover offer for the securities of the company.

It said on Friday, Oct 28 under the Malaysian Code on Take-Overs and Mergers, 1998, the board will appoint an independent adviser for purposes of the offer.

“The notice will be posted to the shareholders of Hirotako Holdings within seven days of its receipt,” it said.

On Thursday, MBM RESOURCES BHD [] offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant in its takeover offer.

OSK Research said at 97 sen, this was 14% above Hirotako’s five-day market average closing prices of 85 sen a share and 5% above the warrant’s exercise price of 92 sen a share.

At 12.30pm, Hirotako share price rose six sen to 94 sen with 23.54 million shares done while the warrants fell 8.5 sen to 15 sen with 66.51 million units done.

Closing date for DXN takeover extended to Nov 14

KUALA LUMPUR: The closing date for the takeover offer for DXN HOLDINGS BHD [] shares has been extended from Monday, Oct 31 to Nov 14.

The joint offerors -- Deras Capital Sdn Bhd, DXN Group Sdn Bhd, Temasek Sejati Sdn Bhd, Lim Boon Yee and Lim Yew Lin – issued the statement about the extension of the deadline via Hong Leong Investment Bank Bhd on Friday, Oct 28.

The offerors had made a voluntary conditional take-over offer to acquire all the remaining shares of 25 sen each for RM1.75 per share.

'Glove sector on downtrend over longer term'

Malaysia's glove sector in the longer-term will see a downtrend and industry players need to look out for selling at the coming resistance levels.

The mid and small-cap stocks have rebounded well since their September lows, probably owing to the heavy sell-off which took place last year, OSK Retail Research said in a statement today.

"Supermax Corp Bhd's report yesterday, highlighted that the worst may be over, for the natural rubber gloves industry.

"The share prices of rubber glove makers over the longer-term will still see a downtrend. The exception however, is Hartalega Holdings Bhd," the research house said.

Hartalega is clearly outperforming the benchmark from its relative strength chart, making higher lows since December last year, largely due to its sideway market performance during that period.

On the other hand, Supermax is currently on the short-term uptrend, having performed very well since the benchmark FTSE Bursa Malaysia KLCI rebounded in late September. -- Bernama

KL shares bullish at midmorning

Share prices on Bursa Malaysia rallied at at midmorning today, leveraged by strong gains in selected bluechip counters, dealers said.

At 11.02 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) was up 9.63 points to 1,480.56, after opening 9.29 points higher at 1,480.22 which was in line with the bullish movement on regional markets.

The market was also lifted today by MBM Resources Bhd's plan to undertake a conditional takeover offer, to acquire all shares and warrants in Hirotako Holdings Bhd at 97 sen per share and half-a-sen per warrant.

MBM's share price rose one sen to RM3.11, while Hirotako gained six sen to 94 sen.

The Finance Index rose 112.01 points to 13,403.34, the Industrial Index added 2.82 points to 2,704.16 and the Plantation Index increased 32.97 points to 7,525.43.

The FBM Emas was up 73.21 points to 10,122.35, the FBMT100 gained 73.67 points to 9,938.02 and the FBM Ace added 43.60 points to 4,106.57 while the FBM70 improved 118.32 points to 11,004.63.

Gainers led losers by 464 to 201 while 281 counters were unchanged, 530 untraded and 24 others suspended.

Trading volume stood at 945.691 million shares worth RM787.843 million.

Of the active counters, Compugates rose one sen to seven sen, Tiger Synergy added half-a-sen to 12 sen, Time DotCom rose two sen to 64.5 sen, while SAAG Consolidated was flat at 7.5 sen.

Among heavyweights, Maybank advanced five sen to RM8.34, CIMB rose 11 sen RM7.39, Sime Darby fell five sen to RM8.80, Petronas Chemicals gained eight sen to RM6.39 and Axiata rose two sen to RM4.88. - Bernama

KL shares steadier in opening trade

Share prices on Bursa Malaysia opened higher following a rally in the global equities market, prompted by progress in Europe's plan to contain the region's debt saga, dealers said.

They said the healthy US third quarter gross domestic product data to 2.5 per cent also leveraged on market sentiments.

At 9.11am, the key index rose 13.3 points to 1,484.23, after opening 9.29 points higher at 1,480.22.

"The plan to recapitalise European lenders and leverage on the region's rescue fund to give it firepower at US$1.4 trillion boosted market sentiments, but players remain cautious as the global economic outlook was still uncertain," a dealer said.

The Finance Index rose 161.29 points to 13,452.62 while the Plantation Index gained 68.97 points to 7,561.43.

The FBM Emas improved 100.04 points to 10,149.18, the FBMT100 added 97.75 points to 9,962.10 and the FBM70 was up by 142.48 points to 11,028.79 while the FBM Ace advanced 42.53 points to 4,105.50.

Gainers led losers by 403 to 25 while 98 counters were unchanged.

Volume stood at 248.459 million lots valued at RM157.841 million.

Among the active counters, Pan Malaysia Capital was flat at 8.5 sen, Hubline earned half-a-sen to 10 sen, Hirotako added six sen to 94 sen and Minetech Resources gained two sen to 18 sen.

Among the heavyweights, Maybank and CIMB gained nine sen each to RM8.38 and RM7.37, respectively, Sime Darby added three sen to RM8.88, while Petronas Chemicals increased eight sen to RM6.39.
-- Bernama

TAS Offshore rises on 17% income hike

TAS Offshore Bhd, a shipbuilder, added 2.7 percent to 37.5 sen, bound for its highest close since Aug. 18.

TAS said net income for the quarter ended Aug. 31 rose 17 percent from a year earlier to RM1.28 million, according to a company statement. -- Bloomberg

Kejuruteraan falls on Bursa rejection

Kejuruteraan Samudra Timur Bhd, a Malaysian oil and gas services provider, fell in Kuala Lumpur trading after the stock exchange rejected its request for more time to submit its earnings report.

The stock fell 4.4 percent to 11 sen at 9:13 a.m. local time, set for its lowest close since Oct. 18. -- Bloomberg

MAHB gains on nod for new charges

Malaysia Airports Holdings Bhd advanced to the highest level in more than a month in Kuala Lumpur trading after winning approval to increase international passenger service fees and aircraft landing and parking charges.

The stock gained 2.4 percent to RM6.02 at 9:04 a.m. local time, set for the highest close since Sept. 21. -- Bloomberg

Hirotako jumps on MBM buyout offer

Hirotako Holdings Bhd, a Malaysian manufacturer of safety belts and air-bags for vehicles, rose to a record in Kuala Lumpur trading after MBM Resources Bhd made a buyout offer for the company at 97 sen a share.

The stock jumped 7.4 percent to 94.5 sen at 9:02 a.m. local time. MBM gained 0.7 percent to RM3.12. -- Bloomberg

Hirotako shares up on MBM Resources takeover

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []’s shares rose on Friday, Oct 28 after MBM RESOURCES BHD [] (MBM) launched a takeover to expand its automotive manufacturing division, at a cost of RM412.5 million.

At 9.14am, Hirotako share price was up 6.5 sen to 94.5 sen with 7.27 million shares done. However, the warrants fell six sen to 17.5 sen with 26.49 million units transacted.

The FBM KLCI rallies 12.54 points to 1,483.47. Turnover was 298.17 million shares valued at RM186.47 million. There were 417 gainers to 31 losers.

MBM offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant.

OSK Research said at 97 sen, this was 14% above Hirotako’s five-day market average closing prices of 85 sen a share and 5% above the warrant’s exercise price of 92 sen a share.

OSK Research said the acquisition price tag is not cheap, valuing Hirotako at 11 times FY11 price-to-earnings, which is at the high end of its historical trading band (slightly above +2 SD for PE and P/BV).

OSK Research downgrades Tenaga to Neutral, sees losses ahead

KUALA LUMPUR: OSK Research has downgraded Tenaga Nasional to a Neutral and it still sees the company reporting losses for 4QFY11 and 1QFY12.

It said on Friday, Oct 28 it is maintaining its profit forecasts pending the announcement of compensation or a fuel cost pass through. It is maintaining its fair value of RM6.24.

“Even with a potential write-back and the announcement of a new district cooling plant at KLIA2, we are unlikely to raise our FV substantially in the absence of a fuel cost pass through mechanism. As such, we maintain our DCF based FV for now, and downgrade the counter to a NEUTRAL given the limited upside after the recent price rally,” it said.

Tenaga will release its fourth quarter results on Friday evening.

“We maintain our estimates pending this evening’s results release although we note that without compensation from Petronas, a disappointment is still likely. Given the limited upside to our RM6.24 DCF derived fair value, we downgrade our call on Tenaga Nasional to Neutral. A clear fuel cost pass through would have to be in place before we upgrade our FV substantially,” it said.

HDBSVR maintains buy on MAHB, ups TP to RM8.10

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Malaysia Airports Holdings Bhd (MAHB) and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

It said on Friday, Oct 28 that at the current share price, this implies 38% upside.

“We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,” it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32. And it will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014. This is positive as we expect minimal incremental costs for MAHB.

“After imputing the resulting changes to airport rates and lower growth rates for passenger and aircraft movements, we nudged up FY11F-FY13F earnings by 1%-8%.

“Besides that, MAHB also signed an agreement with Tenaga Nasional (TNB) for the latter to supply cooling energy to KLIA2 for 20-years. Apart from securing operational requirement for KLIA2, MAHB will also receive royalties from the structured agreement,” it said.

CIMB Research has technical sell on Axiata

KUALA LUMPUR: CIMB Equities Research has a technical sell on Axiata Group at RM4.86 at which it is trading at a FY12 price-to-earnings of 14.3 times and price-to-book value of 2.2 times.

It said on Friday, Oct 28 that the rebound from its RM4.43 low reached the 61.8% FR of the July-August correction, suggesting that this upleg is probably coming to a temporary halt.

“Looking at the chart, prices also face strong resistance at the 200-day SMA. Indicators are showing signs of exhaustion. MACD histogram bars are losing pace while RSI has also flattened out,” it said.

CIMB Research said if prices fail to push above the RM5.01 level soon, expect selling pressure to intensify. This should drag prices back towards RM4.61 and RM4.43 next. Always put a buy stop at RM5.05, just in case.
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