Yinson 3Q net profit jumps to RM8.07m

KUALA LUMPUR (Dec 23): YINSON HOLDINGS BHD [] net profit for the third quarter ended Oct 31, 2011 jumped to RM8.07 million from RM2.5 million a year earlier, due mainly from its marine transport business and gain on disposals of subsidiary and PROPERTIES [].

The company said on Friday that its revenue for the quarter rose to RM194.48 million from RM156.19 million in 2010.

Earnings per share for the quarter rose to 11.14 sen from 3.66 sen a year earlier, while net assets per share was RM 2.02.

For the nine months ended Oct 31, Yinson’s net profit rose to RM20.69 million from RM11.72 million in 2010, on the back of revenue RM549.91 million.

Reviewing its performance, Yinson said that the increase in revenue for the quarter was due mainly to increase in sales volume from its trading and marine transport business.

On its prospects, Yinson said the outlook of the global economy for the rest of 2011 had become significantly more uncertain following heightened downside risks in the advanced economies which could undermine continued global growth.

“Barring unforeseen circumstances, the group shall strive to sustain a satisfactory performance for the rest of the current financial year,” it said.



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TA Enterprise 3Q net profit dips 26.57% to RM11.73m on higher forex loss

KUALA LUMPUR (Dec 23): TA ENTERPRISE BHD [] net profit for the third quarter ended Oct 31, 2011 fell 26.57% to RM11.73 million from RM15.98 million a year earlier, weighed mainly by the increase in foreign exchange translation losses recorded in TA Global Group on financing activities.

The company said on Friday that its revenue for the quarter rose 12.9% to RM173.1 million from RM153.29 million in 2010.

Earnings per share for the quarter fell to 0.69 sen from 0.93 sen, while net assets per share was 92 sen.

For the nine months ended Oct 31, TA Enterprise posted net profit RM71.69 million compared to RM49.1 million while revenue rose to RM503.82 million from RM439.19 million in 2010.

Reviewing its performance, TA Enterprise said it recorded lower contributions from both the stockbroking arm and TA Global Group in the current quarter, as compared to the previous year’s corresponding period.

Although TA Global Group enjoyed higher interest income from financial receivables, and higher hotel profits in line with the increase in the number of hotels in operation subsequent to the group’s hotel acquisition exercises, the group recorded lower contribution from the property development arm, and high foreign exchange translation losses, it said.

On its prospects, TA Enterprise said global economic risk continued to weigh on regional growth prospects given the slow economic recovery in the US and sovereign-debt woes in Europe.

“Our local stock market activities have slowed down in the past few months but we anticipate market sentiments to moderately improve in the last quarter.

“Contributions from the group’s property divisions will continue to be positive despite growing uncertainties in the global economic landscape,” it said.

The company said domestic economy was expected to be resilient supported by accelerated government spending under the Economic Transformation Programme.

“Barring any unforeseen circumstances, the group is expected to show satisfactory performance in the current financial year,” it said.



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Market Commentary

The FBM KLCI index gained 4.69 points or 0.31% on Friday. The Finance Index fell 0.04% to 13364.57 points, the Properties Index dropped 0.06% to 981.49 points and the Plantation Index rose 0.56% to 7967.39 points. The market traded within a range of 6.08 points between an intra-day high of 1496.25 and a low of 1490.17 during the session.

Actively traded stocks include WIJAYA-WA, TMCLIFE-WA, SANICHI, UEMLAND, PERISAI, UTOPIA, ASUPREM, CYBERT, ENVAIR and BIMB-CB. Trading volume decreased to 942.51 mil shares worth RM886.66 mil as compared to Thursday’s 1204.40 mil shares worth RM1016.97 mil.

Leading Movers were CIMB (+9 sen to RM7.09), DIGI (+6 sen to RM3.74), GENTING (+12 sen to RM10.88), IOICORP (+5 sen to RM5.19) and TENAGA (+5 sen to RM5.84). Lagging Movers were MAYBANK (-10 sen to RM8.35), PBBANK (-8 sen to RM13.18), YTL (-2 sen to RM1.49), PPB (-12 sen to RM16.98) and AXIATA (-1 sen to RM4.98). Market breadth was positive with 413 gainers as compared to 292 losers. -- JF Apex Securities Bhd



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Sunway unit gets RM27.57m job from Hap Seng Land

KUALA LUMPUR (Dec 23): SUNWAY HOLDINGS BHD []’s unit has secured a contract worth RM27.57 million from Hap Seng Land Development (JTR) Sdn Bhd for the CONSTRUCTION [] of pilings, basement and ground floor for one block of 43-storey service apartment at Jalan Tun Razak, KL.

Sunway said on Friday that its wholly-owned subsidiary Sunway Construction Sdn Bhd’s unit Sunway Geotechnics (M) Sdn Bhd had been awarded the contract.

The company said the project was targeted for completion by Dec 12, 2012, and was expected to contribute positively to its earnings for the financial year ending Dec 31, 2012 onwards.



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Ingress Corp gets Proton contract worth RM84.8m over 5 years

KUALA LUMPUR (Dec 23): INGRESS CORPORATION BHD [] has received a letter of acceptance from Perusahaan Otomobil Nasional Sdn Bhd (Proton) with a total value of RM84.8 million over a period of five years to supply parts for new Proton models.

The company said on Friday its 90%-owned subsidiary Ingress Precision Sdn Bhd had been contracted to supply door sash.

Meanwhile, its wholly owned unit Ingress Engineering Sdn Bhd (IESB) would supply roof drip moulding and beltline moulding, it said.

Ingress said the supply door sash would start by the end of second quarter financial year (FY) ending Jan 31, 2014 with project duration of five years.

“The project is forecasted to generate total revenue for IPSB of approximately RM70.9 million whilst the total investment in tooling and equipment is expected to cost RM13.8 million,” it said.

It said the supply for the roof moulding project would commence by the beginning of the first quarter of the FY ending Jan 31, 2014, and was expected to generate total revenue for IESB of RM2.3 million.

Total investment for the project was estimated to be RM100,000 in tooling, it said.

Meanwhile, supply for beltline job would start by the end of first quarter of FY ending Jan 31, 2014.

“The project is forecasted to generate total revenue for IESB of approximately RM11.6 million whilst the total investment in tooling and equipment is expected to cost RM800,000,” it said.

Ingress said the projects were expected to contribute positively to its earnings.



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KLCI closes higher ahead of extended weekend

KUALA LUMPUR (Dec 23): The FBM KLCI closed higher on Friday, in line with the generally positive sentiment at key Asian markets spurred by signals of some strengthening in the US economy as new claims for unemployment benefit dropped to their lowest in 3-1/2 years.

The 30-stock FBM KLCI rose 4.69 points to 1,496.15.

Gainers led losers by 413 to 292, while 343 counters traded unchanged. Volume was 942.51 million shares valued at RM886.66 million.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.37% to 18,629.17, Taiwan’s Taiex added 2.07% to 7,110.73, South Korea’s Kospi gained 1.07% to 1,867.22, the Shanghai Composite Index was up 0.85% to 2,204.78 and the Singapore Straits Times Index edged up 0.44% to 2,676.47.

Meanwhile, European stocks rose in early trade on Friday, extending the week's thin-volume, pre-holiday rally after reassuring US economic data in the previous session gave a short-term fillip to a market still overshadowed by the euro zone debt crisis, according to Reuters.

On Bursa Malaysia, BAT was the top gainer and rose RM1.32 to RM49.20; Lafarge Malayan Cement added 30 sen to RM6.90, Petronas Dagangan and Batu Kawan were up 28 sen each to RM17.30 and RM17.28, KLK 20 sen to RM22.20, Advanced Packaging 17 sen to RM1.35 and IJM Corp gained 16 sen to RM5.58.

Among the decliners, PPB fell 12 sen to RM16.98, Shell 11 sen to RM9.19, Tasco, Maybank and Kretam lost 10 sen each to RM1.55, RM8.35 and RM2.40 respectively, while SCGM, HELP, Sarawak Oil Palm fell nine sen each to 45 sen, RM1.62 and RM5.36 respectively, while JobStreet was down eight sen to RM2.22.

The actives included Sanichi, UEM Land, Perisai, Utopia, Astral Supreme and Envair.



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Proton sale will involve a general offer

KUALA LUMPUR: The sale of Proton Holdings Bhd would be subjected to a general offer as Khazanah Nasional Bhd is looking at selling its entire 42.7% equity stake in the national carmaker.

Khazanah managing director Tan Sri Azman Mokhtar said in written replies to The Edge weekly that they have been receiving offers for various forms of collaboration, including acquiring its controlling stake in Proton but have not arrived at any decision to sell to any particular offeror.

He said Khazanah would have to take into account how the divestment would help upgrade the national car manufacturer and also the domestic automotive industry as Proton was an integral part of the national industrial policy.

“For minority shareholders, we can confirm that Khazanah views any sale to be done on the full 42.7% of its stake and that would mean that it would therefore, under the takeover code, be subjected to a general offer,” he said.

In written replies to a special focus on public private partnerships featured in The Edge weekly’s year-end issue, Azman touched on reasons why Khazanah was disposing its stake in Proton.

The national car manufacturer has been in the news of late as it was reported that several parties were eyeing Khazanah’s stake. Among the more serious bidders are DRB-Hicom Bhd and the Naza group.

Azman has confirmed that the sale of Khazanah's 42.7% stake in national carmarker Proton would, under the takeover code, be subjected to a general offer.

It has also been reported that Sime Darby Bhd’s automotive division and US-based General Motors may also be interested in Proton.

However, it is learnt that the bidders, especially the local automotive groups, are not keen on undertaking a general offer for the rest of the shares in Proton as it would strain their financial resources.

An official close to one of the local bidders said that if the takeover of Proton involved a general offer, then the offeror might not have enough resources to inject more capital to revive Proton.

“Proton needs cash to develop new models. If the takeover involves a general offer, it will be difficult for the offeror to develop Proton,” said an official.

At RM4.46 per share, Proton has a market capitalisation of RM2.45 billion. However Proton’s net asset per share is RM9.81 as at Nov 29, 2011, indicating that the company has a lot of assets. Among the prime assets in Proton is its land where the Shah Alam plant is currently located.

One way to unlock value is to shift the Shah Alam plant to Tanjong Malim where Proton has built a huge manufacturing plant that is under-utilised. In fact in 2007, Sime Darby had expressed interest to take over Proton mainly to capitalise on its land bank that is next to its successful township in Subang Jaya.

Apart from Proton, Azman also talked about why Khazanah went into a share swap with the Tune Air group, in which it ended up with a 10% equity stake in AirAsia. In return, Tune Air has a 20.1% stake in MAS.

The deal has come under fire from critics who questioned why Khazanah went into the share swap exercise at the time when the share price of MAS was weak while AirAsia was flying high.

Azman had said that Khazanah did extensive due diligence and any proper analysis would show that the swap was done at proper valuations and prices. He said that most analysts had a buy call on AirAsia and sell call on MAS.

“Even so, the correct or rather complete way to view the swap in financial terms is actually to anticipate what would be the value of holdings had we not done such a swap,” he said.

He said that it was clear the situation in MAS was rapidly deteriorating and additional efforts were needed to reverse the situation.

“But overall, yes, we do agree that we and especially MAS have a lot on our plate to ensure that we execute and communicate this well. The year 2012 will be critical,” he said.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Time to shorten disclosure time frame?

In the past few months, Bursa Malaysia has seen some interesting shareholding changes in some penny stock companies.

Companies such as Envair Holdings Bhd, Sanichi Technology Bhd and DVM Technology Bhd have seen quick enter-and-exit shareholders. The three are listed on the ACE Market whose market capitalisations are below RM50 million.

The roller coaster rides of the share prices that coincide with substantial shareholding changes raise the question whether the existing time frame for disclosures on changes in substantial holdings should be tightened further.

According to the Companies Act 1965, substantial shareholders need to notify the listed company within seven days of the shareholding transaction. This also applies to emerging and ceasing substantial shareholders.

Under Bursa Malaysia’s ACE Market Listing Requirements, the listed companies are required to make an immediate announcement to the stock exchange upon receipt of notifications from substantial shareholders.

But, is seven days too long considering the significant impact insider moves could have on share price movement?

This is because while these new substantial shareholders had immediately notified the companies of their emerging substantial stakes, it took some of them awhile to notify the companies when paring down their stakes.

Take Envair Holding Bhd for example.

Carpet Raya Sdn Bhd director Deepak Jaikishan emerged as a substantial shareholder in Enviar on Dec 2 with a stake of 5.06%. He then sold the entire stake less than two weeks later on Dec 14.

The announcement of Deepak becoming a substantial shareholder was made to the stock exchange on the very same day he acquired the shares. However, the announcement of his exit was made seven days later, although that was within the regulated time frame.

Before Deepak’s entry and exit, the Envair also saw the entry and exit of two Chinese nationals.




On Nov 1, Chinese national Jiang Chuan Yi emerged as a substantial shareholder when he bought a 6.75% stake in a direct deal on Nov 1. He then sold the same stake on Nov 23, and announced to the exchange on the same day. Envair rallied 277% to 41.5 sen on Nov 1 from 11 sen a month earlier.

It had pared down since to close at 32 sen yesterday. Prior to that, Envair was trading quietly between eight sen and 14.5 sen.

Last month, Envair announced that it was entering the oil and gas business by supplying two million barrels of light crude oil monthly to a Chinese company for a five-year duration.

Another Chinese national, Zhang LiYing bought 10.8 million Envair shares or a 9.11% stake in a direct deal on Oct 13 but it was only notified on Nov 2.

Zhang then sold off the 10.8 million shares on Dec 14 on the open market, and notified Bursa Malaysia on Dec 16. It is not known if Jiang and Zhang are linked to the Chinese company.

Another company that saw quick entry-and-exit shareholding changes is Sanichi.

On Aug 3, Mohd Wira Abdul Daim, the son of former finance minister Tun Daim Zainuddin, emerged as a substantial shareholder in Sanichi after he bought a 6.12% equity stake.

The transaction was immediately notified to Sanichi and Bursa Malaysia on the same day the shares were bought. Wira only held the stake for two days before he sold all 10 million shares on Aug 5. However, the notification was only filed with Bursa Malaysia six days later on Aug 11.

Sanichi rose to an earlier 15-month high of 10.5 sen on the next day after the announcement that Mohd Wira bought into the company. Prior to that, Sanichi was only trading in the range of 3.5 sen and six sen.

Trading of Sanichi shares were halted on Aug 4 at 4.05 pm due to an announcement that a Germany firm Projektarbelt Technische Beratung Venretung International (Protev) is commencing due-diligence process on the company.

Sanichi and Protev had earlier signed a memorandum of understanding (MoU) to form an alliance to set up a one-stop plastic injection mould fabrication solution centre. After Mohd Wira’s entry-and-exit, Sanichi’s shares slumped back to as low as four sen on Aug 29, down 62% from the peak of 10.5 sen.

Its shares later saw another spike that could be linked to an agreement with an Indonesian company to market and distribute three million metric tonnes of coal annually in China.

Sanichi had triggered two unusual market activity (UMA) queries from Bursa Malaysia — on Nov 8 and Dec 12. Sanichi closed at 13 sen yesterday.

Until today, it is not known why Mohd Wira had emerged as substantial shareholder in Sanichi for barely three days.

Meanwhile, DVM Tech also saw a quick entry-and-exit shareholder.

On Aug 2, Raymond Yip Wai Man bought 12.98 million shares or a 7.4% stake on the open market in DVM Tech. He then bought another 1.43 million and 3.95 million shares in two separate open market transactions on Aug 4 and 12 respectively, bumping his stake to 10.43%.

However, he ceased to be a substantial shareholder when he disposed 9.8 million shares on Aug 15. The disposal was only filed on Aug 18 while the acquisitions were filed on the days they were purchased.

On Aug 2, Danish citizen Christian Kwok-Leun Yan Heilesen bought 12.05 million DVM Tech shares, or a 6.85% stake on the open market. DVM Tech had closed at 25 sen that day. The transaction was notified to the company and Bursa Malaysia on Aug 4.

On Aug 12, he acquired an additional 4.6 million shares, bumping his shareholding to 9.46%. The notice was filed on the same day.

On Aug 15, Heilesen ceased to be a substantial shareholder when he sold 8.35 million shares. DVM Tech closed at 15 sen on Aug 15. The notice was only filed with Bursa Malaysia three days later.

DVM Tech saw its share price surge 233% to 25 sen on Aug 2, from 7.5 sen a month earlier. It had since fallen to close at 8.5 sen yesterday.

What is interesting about these three companies is that they have seen their share price increase prior to the emergence of the shareholders, and then on a declining trend after that.

In some instances, the substantial shareholders had taken some time (although all within the seven days time frame) before notifying their shareholding changes to the companies.

As such, there could be instances where retail investors bought shares in a company due to the entry of new shareholders, only to see the same shareholders exit the company at the same time.

While it is not known why these shareholders had quickly entered and exited these companies, perhaps it is time for regulators to consider shortening the disclosure period from seven days.

This is in line with how fast information is disseminated these days via the Internet and mobile services, and how efficient and sensitive markets are to news.

After all, the present seven-day disclosure rule was shortened from 14 days earlier. With current technology and reduced dependence on snail mail, perhaps a shorter period is now warranted?

A shorter period would be good to prevent any instances of speculation due to the emergence of new shareholders.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Deepak exits Envair

KUALA LUMPUR: According to a Bursa Malaysia announcement on Wednesday, Deepak Jaikishan had sold off his six million shares or a 5.06% stake in ACE-market listed Envair Holdings Bhd in the open market on Dec 14.

Envair’s share price has collapsed by a total of 25.35% in two days, closing at 26.5 sen yesterday since the news of Deepak’s divestment was made public on Wednesday. The stock has slumped 36.1% since hitting a peak of 41.5 sen on Dec 19.

The news contradicts a press release purportedly issued by Deepak on Dec 6 that claimed he had no intention of selling down his stake and was in fact looking to steadily increase his holdings in the coming weeks to 10% from his current 5.06%.

To recap, Deepak, Carpet Raya Sdn Bhd’s director, had emerged as a substantial shareholder of Envair on Dec 2 with a stake of 5.06% or six million shares at 22 sen.

Four days later, a letter purportedly from Deepak was sent to several newspapers with a press release claiming Deepak was looking to increase his stake in Envair to 10%.

Another national daily carried the contents of the letter on the front page of its business section the following day.

The Edge Financial Daily did not carry the contents, but responded on Dec 8, highlighting the unusual circumstances of the press release, which did not carry a letterhead, address or signature.

Whatever the case may be, Deepak’s sudden departure from Envair left him none the poorer.

The Edge Financial Daily estimates that Deepak’s one-and-a-half week venture could have netted him a gain of about 65% on his initial investment of RM1.32 million.

In the announcement on Wednesday to Bursa Malaysia, no price was stated for the shares, which were sold on the open market on Dec 14.

On that day, Envair’s shares were traded between 34.5 sen and 38 sen, with 62.55 million shares changing hands.

Based on the average intraday price of around 36.3 sen, Deepak could have made around 14.3 sen a share or about RM858,000.

Envair closed 10.9% higher at 35.5 sen on Dec 14 compared with 32 sen the previous day.

It continued to climb for three days to an intra-day high of 41.5 sen last Friday and Monday, before falling for the last four days.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Boustead expects record profit for FY11

KUALA LUMPUR: Boustead Holdings Bhd expects its highest profit this year as earnings are backed by strong crude palm oil (CPO) prices.

“We are looking at a record profit for this year,” said deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin after the company EGM yesterday.

He said palm oil contributes about 40% of the company’s bottom line earnings.

Lodin added that CPO prices had remained strong in the past few years though they recently moderated to a level below RM3,000 per tonne.

For the nine months ended Sept 30, Boustead’s plantation segment contributed 12.6% or RM754.1 million of the company’s total revenue.

This was an improvement of 26% year-on-year for the segment as the average CPO price rose 33% to RM3,350 from RM2,514 per tonne a year ago.

For the 9MFY11, net profit rose 27.3% to RM418.3 million from RM328.6 million a year ago, while revenue increased 33.6% to RM6 billion from RM4.49 billion.

Boustead achieved its best performance in FY08 with net profit and revenue at RM579 million and RM7.03 billion respectively.

Lodin says presently Boustead has no intention to take BHIC private.

The company will spend a third of its RM1.4 billion capital expenditure next year on its plantation segment. It will also spend about RM32 million to expand its pharmaceutical segment, which is expected to contribute up to 15% in the next two to three years following the 10% expected in 2012.

Although a relatively recent addition to Boustead, the pharmaceutical division, now in its inaugural nine months, is a major contributor to the group’s top line growth.

The company is present in six key areas, which are plantation, heavy industries, property, finance and investment, trading and manufacturing, and pharmaceutical.

For its third quarter ended Sept 30, Boustead’s net profit increased 31.6% to RM120.9 million from RM91.9 million in the previous corresponding quarter mainly due to higher sales volume and firmer palm product prices. Revenue rose 44.6% to RM2.19 billion from RM1.51 billion a year ago.

On a separate note, Boustead once again refuted a news report that it was proposing to take its 65%-unit Boustead Heavy Industries Corp Bhd (BHIC) private.

“As we have announced before, we have no intention presently to take BHIC private,” said Lodin.

It was previously reported by a local media that Boustead was considering taking BHIC private, as earnings from a RM9 billion project from the ministry of defence were expected to come earlier.

To recap, BHIC’s associate Boustead Naval Shipyard was awarded a contract with a ceiling amount of RM9 billion to design and construct six combat ships for the defence ministry.

“We would like to clarify that Boustead is currently not considering any proposal to privatise BHIC,” the company had earlier said to Bursa Malaysia.

Boustead is the largest shareholder of BHIC, followed by Lembaga Tabung Angkatan Tentera (LTAT) with a 8.15% stake.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Muhibbah Australian JV secures RM1.05b contract

KUALA LUMPUR: Muhibbah Engineering (M) Bhd has announced that its 50:50 joint venture with Australia’s Monadelphous Group Ltd has won a A$330 million (RM1.06 billion) contract for the construction of an approach jetty and ship berth in Queensland, Australia.

The facilities will be constructed for a project by Wiggins Island Coal Export Terminal Pty Ltd (Wicet), which is privately owned and funded by a group of Queensland coal exporters.

“This marks another new era for Muhibbah group’s expansion of marine-related business into advanced countries such as Australia,” the company said in an announcement to Bursa Malaysia yesterday.

The contract, which involves the first stage of the project by Wicet, was awarded to the Monadelphous Muhibbah Marine JV.

“The joint venture brings together Muhibbah’s global expertise in the delivery of marine and port construction works and Monadelphous’ expertise in the civil construction of large-scale projects for Australian resources customers,” it said.

The JV will start work on the project immediately and to be completed by the first quarter of 2014.

The contract involves the construction of an offshore plant and infrastructure comprising a 1.8km approach jetty and transfer tower platform, wharf, wharf conveyor, berthing and mooring dolphins, ship access platforms, jetty conveyor and transfer tower. It will increase the company’s order book to RM3.84 billion from RM2.79 billion recorded as at Nov 18, which comprised RM1.98 billion from its infrastructure construction division, RM609 million from the crane division and RM200 million from shipyard.

Wicet aims to build the export facility to meet global demand for thermal and metallurgical coal.

Stage one of the project carries an annual coal export capacity of 27 million tonnes, which will grow to 80 million tonnes once the terminal is fully developed.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Perisai to see earnings from Garuda Energy in FY12

KUALA LUMPUR: Perisai Petroleum Teknologi Bhd will see earnings contribution from its investment in Garuda Energy (L) Inc next year for its FY12.

The acquisition will be finalised by year-end, and everything should be finalised in the next 10 days, said Perisai managing director Izzet Ishak after the company’s EGM yesterday.

“In the circular to shareholders we stated that there is a profit after tax guarantee of approximately US$16.67 million (RM53 million), and we expect to see the full impact from this acquisition by FY12,” he added.

He added that the acquisition comes with an annual profit after tax (PAT) guarantee of US$16.67 million for the first two years of its operation as an asset belonging to Perisai.

Izzet noted over the duration of the fixed two years of the deployment, the mobile offshore production unit (Mopu) is expected to contribute approximately US$50 million to Perisai’s turnover.

The acquisition of Garuda Energy for US$70 million allowed the group to tap into its Mopu which is valued between US$105 million to US$110 million.

Currently, the Mopu is contracted to work off the coast of Terengganu, for a fixed duration of two years at a charter rate of US$70,800 a day, noted Perisai in its press statement.

Perisai held an EGM yesterday to seek shareholders’ approval on the proposed acquisition of 100% equity interest in Garuda Energy from Nagendran Nadarajah and the proposed acquisition of the fuel and gas conditioning system and oil and gas (O&G) separation system by Garuda Energy from Hummingbird Energy (L) Inc for a purchase consideration of US$3 million. Majority of the shareholders voted to pass the proposals.

The US$70 million purchase price of Garuda Energy will be satisfied with US$50 million payable in cash, with the remaining US$20 million to be satisfied by the issuance of 97 million shares of Perisai at a valuation of 65 sen each to the vendor, Nagendran.

It was worth noting that back in 2009, Nagendran was a substantial shareholder of Perisai with almost 9% of shareholdings and was also the group’s managing director, before ceasing to become a substantial shareholder in April 2010.

Now with the issuance of 97 million Perisai shares to Nagendran, he will become the second largest shareholder with 12.87% stake in the group after HCM Logistics Ltd with 17.5% shareholdings.

“It was a vote of confidence from the vendor that he wanted to be a part of the group’s growth story,” said Izzet.

On the industry’s outlook next year, Izzet commented that it will remain exciting as the government via Petroliam Nasional Bhd (Petronas) and other O&G companies are finding more oil fields especially in the deep water and marginal oil fields of which will continue to sustain demand for O&G services.

“The oil and gas industry is very much an international industry, which means we can operate almost anywhere in the world. At the moment we are only operating on Malaysian waters but we are interested to look outside of Malaysia, especially in the Asia-Pacific region,” said Izzet.

However, he said that the group doesn’t have any plan to move into the downstream sector of the O&G industry, citing that there are companies of different sizes and specialties, and at the moment Perisai’s niche is in the upstream sector with the deployment of its Mopu.

Aside from Perisai, Izzet said there are only two other companies operating Mopu in Malaysian O&G industry.

For the nine-month period ended Sept 30, Perisai made a RM10 million net profit compared with RM3.3 million in the same period last year. Revenue was down marginally to RM54.5 million from last year’s RM55 million.


This article appeared in The Edge Financial Daily, December 23, 2011.



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2012 CEO Outlook Series - HLBB banks on disciplined expansion

TEFD: What are your expectations for 2012, for your bank and the industry?
Chia: With the turmoil in Europe, the market is increasingly cautious. Growth will be somewhat muted in this region. With that, Malaysia’s exports will invariably moderate, especially as China slows down as well. Increasingly there will be heightened regulatory standards on personal borrowings and a focus on responsible financing. Clarity and simplicity will be the emphasis for banks moving forward. At Hong Leong Bank, I want to ensure continuous dialogue with our customers and communities in which we operate, providing advice and superior service, and maintaining the consistency in our relationship with the people in the business.

What impact, if any, do you expect from the euro crisis?
With the euro crisis, US dollar liquidity is getting tighter. Malaysia’s exports to Europe is about 12% of our total exports. Exporters in Malaysia should be vigilant with the European counter-party risks, settlement risks and tight cash flows in the eurozone.

Will Bank Negara Malaysia’s recent tightening of consumer borrowings have an impact?
Over the last decade, banks have been increasing lending to customers, and as a result, per capita debt has escalated. That is expected — as economic wealth increases, individual borrowings are also augmented to enjoy better standards of living. Over the last few years, excess liquidity and fund flows into the region, combined with the low interest rate environment have brought down the pricing of debt to very low levels. As a result, the price of real estate has increased. However, sentiment has turned cautious in the region coupled with the ongoing European debt crisis. China’s real estate is also slowing and the recent Singapore tightening measures reflect the cautious stance of the regulators. I think the overall mood is cautiously opportunistic for long-term players and the speculators, they will slow down.

Chia says clarity and simplicity will be the emphasis for banks moving forward.

What is your banking group’s plans and focus for the coming year?
Optimising efficiency and risk reward dynamics will be high on the agenda. And with the excess liquidity in the system, wealth management products and offerings will be important. Sound underwriting and disciplined expansion are key focus. With a tight nexus between stability, growth and value creation, our role in wealth creation, and generating optimal growth continues to be important.

What is your wish list for 2012?
For more responsible and bold leadership globally — to do the right things, to avoid catastrophes for the global financial markets. Also, a commitment to long-term positioning of the global banking system to sustain growth from the US and Europe to Asia.


The 2012 CEO Outlook series started on Dec 19 and will run every day into January next year. The Edge Financial Daily has so far interviewed Geoffrey Briscoe of BMW Malaysia, Tan Sri Teh Hong Piow of Public Bank Bhd, Jeffrey Chew of OCBC Bank (M) Bhd and Osman Morad of Standard Chartered Bank Malaysia Bhd. If you’ve missed them, please read our back issues on iPad for free.


This article appeared in The Edge Financial Daily, December 23, 2011.



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Jaya Tiasa profit broadly in line with expectations

Jaya Tiasa Holdings Bhd (Dec 22, RM6.81)
Maintain “buy” at RM6.99 with target price of RM9.30; Jaya Tiasa recorded a 1H12 net profit of RM97.1 million (+84.8% year-on-year [y-o-y]) on a 32.2% growth in revenue of RM499.5 million. Net profit is broadly in line with our expectations, accounting for 56% and 57% of our and consensus full-year FY12 forecasts. Earnings before interest and tax (Ebit) margin improved to 29.3% (versus 20.3% from 1H11), largely underpinned by: 1) higher log average selling price (ASP) (about +21% y-o-y) coupled with increases in log production volume to 493,251m3 (about +9% y-o-y), 2) higher ASPs for fresh fruit bunch (FFB) (about +17% y-o-y) supported by growth in FFB production and sales volume by +17% y-o-y and +45% y-o-y respectively; and 3) +80% growth y-o-y in CPO sales volume coupled with higher CPO ASPs (about +23% y-o-y). We believe that the improvement in the production of logs and FFB output was a result of better weather conditions compared with 1HFY04/11.

On a sequential basis, Jaya Tiasa reported a slowdown in revenue to RM239.5 million (-7.9% quarter-on-quarter [q-o-q]; +24.6% y-o-y) and this trickled down to its bottom line to RM41.2 million (-26.4% q-o-q; +36.8% y-o-y). This is largely due to: 1) lower log ASPs (about -11% q-o-q) coupled with lower log production output to 240,252 cu m (about -5% q-o-q; +2.0% y-o-y), 2) decline in plywood ASPs (-7% q-o-q; +31.0% y-o-y); and 3) a fall in average FFB price by 10% q-o-q. We are not entirely worried of the slippage within the timber segment as we expect demand for plywood to pick up in 1QCY12 via reconstruction efforts in Japan. Nevertheless, the group’s oil palm segment remains as Jaya Tiasa’s largest earnings contributor, up to 63% of 1HFY04/12 profit before tax. No interim dividend was declared for the current quarter.


In a separate announcement, Jaya Tiasa has declared a change in financial year-end from April 30 to June 30. Therefore, the subsequent full-year results will comprise 14 months from May 1, 2011 to June 30, 2012. We will reflect the new full year FY06/12 forecast for the adjusted financial year in our next report.

We maintain our “buy” rating and an unchanged RNAV derived target price of RM9.30. At current price level, the company is trading at 10.8x CY12 PE, a 41.3% discount to its historical average PE of 18.4 times, which is highly attractive. We continue to like Jaya Tiasa for: 1) its exposure to recovering timber prices on the back of reconstruction demand from Japan as well as infrastructure demand from India and China; and 2) diversification into palm oil coupled with increasing matured acreage (about +49.0% y-o-y in FY12E). — Affin IB Research, Dec 22


This article appeared in The Edge Financial Daily, December 23, 2011.



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Risk-averse investors look for yields

Shares for consumer stocks such as Nestle, Dutch Lady Milk Industries, British American Tobacco (BAT), Guinness Anchor and Carlsberg Brewery have all being doing well of late, out-performing the benchmark FBM KLCI. We believe one of the key reasons behind increased investor interest in these stocks is the persistent volatility in the global financial market as well as uncertainties over the economic outlook for 2012.

News of a generous special interim dividend from Guinness would have reinforced the attraction for these traditionally defensive, high-yielding stocks. With the market outlook still hazy and bank deposit rates unlikely to see any major upward movements in the near to medium term, stocks with higher than market average yields will understandably be more appealing.

Special dividend spurs Guinness’ share price
Guinness announced a special net interim dividend of 60 sen per share this month. The company is sitting on a fairly big pile of cash — totaling some RM164 million at end-September. Distributing some of this money back to shareholders is not unexpected, particularly in view of the limited options for fresh acquisitions and the relatively cheap borrowing costs currently.

Indeed, companies with strong balance sheet and steady cash flow from operations, such as DiGi and BAT, have, in recent years, been actively shrinking their shareholders’ funds, optimising their debt-equity ratios and boosting returns to equity. Guinness shares will trade ex-entitlement for the special dividend on Jan 9, 2012.

Operationally, the company has also been doing well. Turnover was up 9.6% to RM1.49 billion while net profit increased by an outsized 18.8% to RM181.4 million in FYJune11. And in the latest 1QFY12, turnover grew a strong 21.3% over the previous corresponding quarter while net profit rose 42.7% to RM55.2 million over the same period.




Guinness attributed the strong topline growth to higher industry volumes sales, selling prices as well as market share gains. Sales may also have been boosted by speculative activities in the run up to the Budget 2012. The brewery industry was spared from any tax hikes this year, which bodes well for sales growth going forward.

The company’s stable of brand names, including Tiger, Guinness and Heineken, registered double-digit growth. It is estimated to have roughly 60% share of the local beer and stout market, up from roughly 46% a decade back, and the company believes that Tiger is now the largest beer brand in the country in terms of both volume and value sales. Margins were also boosted by improved efficiency and cost savings measures, including moves to restructure its distribution channels in 4QFY11.

We estimate earnings to total roughly RM190.8 million and RM200.9 million in FY12 and FY13, respectively. Over the past five years, Guinness’ dividend payout has averaged at a high 88%. Assuming a similar payout going forward, the company’s “regular” dividends are estimated at roughly 56 sen to 60 sen per share in FY12-FY13, respectively, based on our earnings forecast. That translates into net yields of 8.8% (including the 60 sen per share special dividend) and 4.6% for the two years at the prevailing share price of RM13.10.

On the other hand, valuations are on the high side. Following the recent price surge, Guinness’ shares are now trading at roughly 20.7 and 19.7 times our estimated earnings for FY12-FY13. Thus, whilst yields should provide support to its share price, further upside may be more limited in the near term.

Carlsberg shares rose in tandem
News of Guinness’ special dividend and share price gains have also sent prices for Carlsberg Brewery Malaysia sharply higher.

Like Guinness, Carlsberg too reported a good set of earnings for the latest quarter ended September 2011. Turnover grew 21.9% year-on-year (y-o-y) to RM401.7 million, with double-digit growth registered for both the domestic and Singapore operations. For the nine-month period, turnover was up 10.8% over the previous corresponding period.

Net profit, meanwhile, was up a stronger 43.3% y-o-y to RM48.8 million in 3Q11 and 25.4% y-o-y to RM128.8 million for the first nine months of the year. Margins rebounded in the latest quarter following higher-than-usual advertising and promotional expenses as well as additional costs for the new bottle packaging related to the company’s global rebranding exercise in 2Q11. The better margins this year may also be attributed, in part, to synergies from the company’s acquisition of Carlsberg Singapore.

Aside from growth of its flagship Carlsberg beer brand, the company also expects strong demand for its wide range of premium brands, such as Hoegaarden and Kronenbourg, to be a key driver for future growth.

We estimate net profit to total some RM156.1 million this year, up 17% from a year ago, equivalent to 51 sen per share. Looking ahead, we expect profit to grow further to about RM158.3 million in 2012.

The more modest growth expectations for next year is based on the assumption of higher raw material prices such as malt barley, and weaker ringgit exchange rate, which would be partly offset by the 3% to 4% increase in selling prices since April 2011.

At the prevailing price of RM8.40, Carlsberg’s shares are trading at lower valuations than Guinness — at roughly 16.5 and 16.2 times 2011-2012, respectively.

Although Carlsberg’s balance sheet is not as strong as that of Guinness’ — it had net debt totalling RM11.5 million at end-September — gearing is only a marginal 2%. In the absence of major capex going forward and steady cash flow from operations, the company is well able to afford a high dividend payout ratio.

Carlsberg paid out all of its earnings in 2010. But assuming a lower 70% payout ratio for 2011-2012, gross dividends are estimated to total 47.6 sen to 48.3 sen per share for the two years. That would still earn shareholders decent net yields of about 4.3% at the current share price.

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, December 23, 2011.



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Carlsberg brewing Asahi Super Dry locally

Carlsberg Brewery Malaysia Bhd (Dec 22, RM8.40)
Maintain market perform at RM8.40 with fair value of RM8.05: Carlsberg has recently been awarded the rights to locally manufacture, sell and distribute Asahi Super Dry after a recent agreement with the brand’s owner, Asahi Breweries.

Through Carlsberg’s subsidiary, Luen Heng (LHFB), Carlsberg started the local distribution of Asahi Super Dry since July 2010. Now, Carlsberg will be manufacturing Asahi Super Dry locally. We had previously highlighted Carlsberg’s plans to locally manufacture one or two of the beers that are distributed by LHFB, although, we had initially speculated that one of the beers was going to be Stella Artois.

Asahi Super Dry was previously an imported premium beer. As such, its pricing was also at the high end of the local beer market at about 50% higher than the mainstream Carlsberg Green Label and Tiger Beer. However, now that Carlsberg is manufacturing Asahi Super Dry locally, we believe its price levels would go down to more competitive locally brewed premium beer levels, which are currently priced at a 20% premium to the mainstream brands. As such, Asahi Super Dry would now compete directly in the premium beer segment which is currently dominated by Heineken.

Given that Asahi Super Dry would be manufactured locally, we believe its margins would also be better given that Carlsberg does not need to pay import duty on the beer. However, we highlight that Asahi Super Dry was previously in the imported premium beer segment, together with the likes of Hoegaarden and Stella Artois etc, which combined, accounts for less than 5% of the overall beer market. As such, despite Asahi Super Dry’s more competitive pricing, we do not expect the beer to provide any significant earnings impact for Carlsberg in the near-term.


Risks to our view. 1) Sharp drop in TIV (total industry volume); 2) Continued decline in Carlsberg’s market share (as opposed to our flat market share assumption); and 3) possibility of excise duty hike going forward.

No change to our earnings forecast.

Our DCF-derived (discounted cash flow) fair value remains unchanged at RM8.05. Although we remain positive on Carlsberg’s earnings growth outlook for 2012, underpinned mainly by the Euro 2012 which would provide a sales boost in 2Q and 3Q, we believe its share price has fully reflected this. We reiterate our “market perform” call. — RHB Research, Dec 22


This article appeared in The Edge Financial Daily, December 23, 2011.



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Basel III for Malaysian banks

Banking sector
Bank Negara Malaysia (BNM) will raise the minimum Tier-1 capital ratio to 6% (from 4% currently under Basel II requirement) and common equity Tier-1 capital ratio to 4.5% (from 2% currently under Basel II), while maintaining total CAR (capital adequacy ratio) at 8%. In addition, banks are required to keep 2.5% capital conservation buffer overand- above the regulatory minimum.

Separately, BNM will also consider introducing a countercyclical capital buffer (between 0% to 2.5% of risk-weighted assets to be held in common equity) in line with Basel III, which is over and above the conservation buffer. The higher capital requirements will be implemented gradually beginning 2013 through 2015, and the capital conservation buffer between 2016 and 2019.

Banks will be required to report their leverage ratio positions calculated according to Basel III rules from June 2012. BNM will consider enhancing the liquidity coverage ratio and implement a net stable funding ratio (an incentive for banks to fund activities with more stable sources). The rules will likely be implemented from 2015 and 2018, respectively. All banks are expected to comfortably meet the 3% leverage level.

Malaysian banks are relatively small and have less complex activities compared with global banks. However, as Malaysian banks evolve to be regional players (as in the case of Maybank and CIMB), it will be crucial for them to be able to absorb external shocks and contagion risks. As such, BNM will assess at a later date the need for additional loss-absorbency requirements as required under Basel III (ranging from 1% to 3.5% comprising common equity, depending on the bank’s systemic importance).

We like AFG (Buy, TP:RM4.30) for its scalable domestic franchise and non-interest income traction, which ensures sustainable earnings and ROE. Among large caps, we prefer Maybank (Buy, TP:RM10.60) for its resilient transactional banking income and dividend yields. We also like HLB (Buy, TP:RM16.00) for merger synergies. — HwangDBS Vickers Research, Dec 22


This article appeared in The Edge Financial Daily, December 23, 2011.



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RAM sees moderate performance for banks

The performance of the Malaysian banking industry is likely to be moderate next year in line with the economy, says RAM Holdings' Group chief economist Dr Yeah Kim Leng.

He said loan growth is expected to ease to nine per cent next year after expanding at 12-13 per cent annually in 2010 and 2011.

Yeah said deposit growth is projected to ease slightly to eight per cent in 2012 from an estimated 11.6 per cent rise in 2011.

"Although the banks' interest margin and non-interest income are expected to come under pressure due to a more challenging economic and business environment, we do not expect any severe erosion of their profitability and asset quality," he told Bernama today.

However, Yeah said, the strategies outlined for the banking industry in the Financial Sector Blueprint 2011-2020 will provide firmer indications of the sector in the long run and position the industry on a stronger footing.

He said Malaysia's banking and financial services are largely driven by domestic demand and monetary conditions. However, these drivers are partly influenced by the external economy and the extent to which consumer confidence and investor sentiments are affected by uncertainties in the global economy.

"As demonstrated by its resilience during the recession in 2009 and given its enhanced balanced sheet strength and ample liquidity in the economy, the banking industry is well-placed to weather any global credit crunch, liquidity shock and financial market turbulence that may intensify in 2012," he said.

Yeah said banks could face major challenges relating to uncertainties in the external environment, especially the increased risk of a double-dip in the eurozone economies and its knock-on effects on the domestic economy.

"A more pronounced slowdown in the domestic economy may increase financial distress among highly-indebted companies and households, leading to a rise in loan delinquencies.

"However, we do not expect a full blown global recession in 2012 and the Malaysian economy in general and the banking industry in particular are well-placed to ride through the turbulence next year," he said.

He said among the key factors supporting the local economy and the banking industry are several positive factors buttressing domestic consumption and investment that in turn underpin banking activities in the country.

"These include steady employment and income increases, rising private investment, moderately strong commodity prices, high private sector savings and liquidity, increasing number of middle- and upper-income households and growth-accommodative fiscal and monetary policies," he said.

Yeah said the continuing deleveraging in the advanced economies together with the ongoing eurozone debt crisis have increased the attractiveness of Islamic finance.

On the risks of Malaysian banks' exposure abroad, Yeah said the current volatile global economic conditions should not pose a danger to well-managed and well-capitalised entities.

On concerns Maybank and CIMB in Indonesia may be forced to sell down their stakes, Yeah said, if that does not result in losses, then there is little negative financial impact on them.

"They would have to re-strategise on how to operate within the new equity and regulatory framework and perhaps look at other more welcoming countries to execute their regionalisation or internationalisation plans," he said.

On whether interest rate direction would affect banks' incomes, he said it would not be too adversely affected as the interest margin, or the spread between lending and deposit rates, is usually maintained regardless of the direction of change in the official policy rate.

"The impact also depends on the relative amount of fixed versus floating lending rate and the extent to which the banks' portfolio are shielded against interest rate risks," he said.

Meanwhile, an analyst from investment house, who declined to be named, said the local banking industry development next year will depend much on external environment.

"Economic growth for Malaysia is likely to moderate and we expect loan growth to moderate alongside. "Competition for funds remains stiff and margin pressure is likely to remain," he said.

He said positively, the Malaysian economy is largely domestic-driven so it is likely to be more sheltered from the external effects, adding, project take- off under the Economic Transformation Programme will provide support to the banking system.

On further liberalisation of the banking industry, he said, competition will increase but Malaysian banks are well-capitalised and more than ready to cope any competition that arises.

He expects interest rates to remain stable at least for first half 2012. -- BERNAMA



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RAM Ratings reaffirms Maybank IB’s AAA/P1 ratings

KUALA LUMPUR (Dec 23): RAM Ratings has reaffirmed Maybank Investment Bank Bhd’s (Maybank IB) respective long- and short-term financial institution ratings at AAA and P1.

It said on Friday that the long-term rating had a stable outlook.

Maybank IB is the main investment-banking arm of the MALAYAN BANKING BHD [] universal-banking group (Maybank).

RSM Ratings said Maybank IB’s ratings mirrored its parent’s AAA/Stable/P1 ratings from RAM Ratings.

Maybank is Malaysia’s largest financial-services group that commands the lion’s share of loans and deposits in the domestic banking system, it said.

The rating agency said Maybank IB was expected to gradually derive synergistic benefits from Maybank’s recent acquisition of Kim Eng Holdings Limited (Kim Eng) - a Singapore-based regional securities and investment-banking group.

“Given Kim Eng’s established presence in several markets in ASEAN, Maybank IB stands to gain access to a wider distribution network, along with a regional platform to expand its investment-banking services.

“Maybank IB is a key component of the Group’s Global Wholesale Banking strategy that targets the cross-selling of innovative products and services among its corporate/commercial clients,” it said.

RAM Ratings said Maybank would readily extend its support to Maybank IB should the need arise.

It also said Maybank IB’s position in the domestic investment-banking arena strengthened year-on-year in the first 8 months of 2011.

The bank came in second in the league table for the domestic debt-capital market, with 26.1% of total deals by value; this represents an improvement over its fourth position last year, it said.

Lifted by higher corporate-advisory fees, the bank achieved respective pre-tax profits of RM153.8 million and RM85.1 million for FYE 30 June 2011 and the 3 months ended 30 September 2011, it said.

“As an investment bank, however, Maybank IB’s financial performance is susceptible to the vagaries of the capital markets.

“On a separate note, the Bank is entirely supported by tier-1 capital, which provides the strongest loss-absorption capacity; its tier-1 risk-weighted capital-adequacy ratio stood at a strong 22.6% as at end-September 2011,” it said.



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Greenyield posts net profit RM2.19m in 1Q

KUALA LUMPUR (Dec 23): GREENYIELD BHD [] net profit for the first quarter ended Oct 31, 2011 rose to RM2.19 million from RM786,000 a year earlier, due mainly to higher revenue.

It said on Friday that its revenue for the quarter rose to RM13.58 million from RM8.02 million in 2010.

Earnings per share rose to 1.32 sen from 0.48 sen, while net assets per share was 29.17 sen.

Reviewing its performance, Greenyield said the increase in revenue was due mainly to strong demand of PLANTATION [] related products and services from overseas market.

On its outlook, Greenyield described its financial prospects as challenging.

“The group will source and implement logical and available measures to minimise the impact of all known factors affecting the profit margin,” it said.



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KL shares firmer at midday

Share prices on Bursa Malaysia ended the morning session firmer, despite regional markets winding down ahead of the festive holidays, dealers said.

Window dressing activities dominated trade as investors sought after quality stocks for their portfolio ahead of the year-end.

At 12.30pm, the FBM KLCI ended at 1,494.94, up 3.48 points.

The Finance Index rose 21.89 points to 13,391.85, the Plantation Index increased 25.53 points to 7,948.78 but the Industrial Index softened by 1.93 points to 2,664.75. The FBM Emas Index added 23.96 points to 10,238.89, FBM Mid 70 Index gained
21.511 points to 11,257.98 but the FBM ACE Index declined 4.410 points to 4,023.39.

Gainers led losers 304 to 279 while 320 counters were unchanged. Turnover stood at 451.738 million shares worth RM363.868 million.

Among actives, Astral Supreme Bhd added one sen to 19.5 sen, Perisai Petroleum Teknologi rose 4.0 sen to 72.5 sen and TMC Life Sciences Bhd-Warr increased 2.5 sen to 14 sen.

In heavyweights, Maybank declined one sen to RM8.44, Sime Darby eased two sen to RM8.98 and CIMB firmed nine sen to RM7.09. -- BERNAMA



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Malaysian Resources buoyed by EPF deal

Malaysian Resources Corp, a property and construction group, rose 1 per cent to RM2.09, set for its highest close since Aug. 24.

The company won a RM.9 million contract to upgrade the Employees Provident Fund’s building in eastern Sabah state, it said in a statement. -- Bloomberg



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Pelikan disposes of associate company

Pelikan Holding AG (PHAG) has signed a heads of agreement with Columbia Products Pty Ltd to dispose of its associate company, Columbia Pelikan Pty Ltd (Pelikan Australia), for A$15 million (RM48.17 million) cash.

In a statement today, Pelikan International Corp Bhd (Pelikan) said the disposal was in line with the group's plan to divest non-core assets and the monetise such type of investments.

"Pelikan Australia is an associate of PHAG and the management does not participate in the day-to-day operations and strategic direction of the company," it said.

Pelikan president/chief executive officer, Loo Hooi Keat, said the focus of Pelikan was on capitalising on distribution, branding, research and development.

"In addition to this, it will pursue divestments strategies of non-core assets to unlock the cash values and keep the group asset light," he said.

Pelikan was suspended from trading for about an hour this morning. Trading was resumed at 10am.

As at 12.18pm, the shares slipped half sen to 75.5 sen with 70,400 units traded.

PHAG is 96.45 per cent-owned unit of Pelikan.

Pelikan Australia is principally engaged in the production and distribution of stationery and office products. -- BERNAMA



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KLCI extends gains at mid-day as Asian markets rise

KUALA LUMPUR (Dec 23): The FBM KLCI extended its gains at the mid-day break on Friday, in line with its regional peers ahead of more economic data coming out from the US later today, as most global markets head for an extended weekend with the Christmas break.

At 12.30pm, the FBM KLCI was up 3.30 points to 1,494.76.

Gainers led losers by 304 to 279, while 320 counters traded unchanged. Volume was 451.74 million shares valued at RM363.87 million.

The ringgit strengthened 0.30% to 3.1565 versus the US dollar; crude palm oil futures for the third month delivery rose RM32 per tonne to RM3,129, crude oil was up 20 cents per barrel to US$99.73 and gold added US$4.75 an ounce to US$1,610.30.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.08% to 18.576.06, the Shanghai Composite Index gained 1.45% to 2,218.01, Taiwan’s Taiex added 2.14% to 7,115.13, South Korea’s Kospi rose 1.19% to 1,869.45 and Singapore’s Straits Times Index edged up 0.35% to 2,674.11.

On Bursa Malaysia, Nestle and BAT rose 30 sen each to RM56.90 and RM48.18, AIC was up 15 sen to RM1.30, MAHB 13 sen to RM5.59, while KLK, UMW, Esso, Genting and IJM rose 10 sen each to RM22.10, RM6.55, RM3.51, RM10.86 and RM5.52 respectively.

Among the decliners, Tasco, Shell and PPB fell 10 sen each to RM1.55, RM9.20 and RM17 respectively; HELP and Public Bank lost six sen each to RM1.65 and RM13.20, Huat Lai and WCT fell five sen each to RM2.30 and RM2.25, while Bina Goodyear was down 4.5 sen to 60 sen.

The actives included Perisai, Astral Supreme, Sanichi, UEM Land, Envair, KNM and Utopia.



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Chin Well expects to sustain overseas revenue stream, says MD

KUALA LUMPUR (Dec 23): CHIN WELL HOLDINGS BHD [] expects to sustain overseas revenue contribution going forward, and focus on expanding its market share in Europe as well as emerging Asia and North America, said its managing director Tsai Yung Chuan.

He said whilst the company would take advantage of the European Union’s (EU) listing of Chin Well as one of the 8 Malaysian companies exempted from import duty, it will not ignore markets in emerging Asia as well as North America.

The manufacturer of carbon steel fasteners exports its screws, bolts, and nuts to 39 countries in 5 continents.

Tsai said that over the years, the company had exported to an increasing number of countries in Europe, Asia, and North America, and more than doubled its overseas revenues to about RM400 million in just 5 years.

“Our market development strategy has indeed solidified the group’s position as the leading player in Malaysia and South East Asia,” he said in a statement Friday.

Tsai said Chin Well’s export revenues contributed about 78% to the Group’s revenue of RM502.6 million in FY2011, versus 56% in FY2006.

He said the company intended to increase our man-hour capacity, in addition to improving our cost efficiency to maintain price competitive as part of developing its new markets.

Chin Well’s total workforce currently stands at 1,080 in both facilities in Bukit Mertajam, Penang, and Nhon Trach District, Vietnam.

Tsai said the company plans to increase the workforce by 10% in the current financial year in order to cope with the increased demand for fasteners.

He said the company did not expect heavy investment in capital expenditure in the near term, since it had ample production capacity in both facilities in Penang and Vietnam, both of which were operating at about 60% utilisation rates.

In July 2011, the EU listed Chin Well as one of eight Malaysian fastener manufacturers exempt from the 85% anti-dumping duty for exports to Europe, in an attempt to circumvent transhipment of China-made fasteners through Malaysia-based fastener producers.

The EU had earlier in January 2009 imposed a five-year tariff of up to 87.5% on imports of China-made fasteners to Europe, in an attempt to reinstate fair competition in global market.



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FBM KLCI up at mid-morning, but stays shy of 1,500-level

KUALA LUMPUR (Dec 23): The FBM KLCI rose on Friday and stayed in positive territory in line with regional markets and the overnight gains at Wall Street, but stayed shy of the crucial 1,500-level in thin trade.

The FBM KLCI was up 2.77 points to 1,494.23 at 10am, lifted by gains at select blue chips.

Gainers led losers by 223 to 126, while 213 counters traded unchanged. Volume was 198.4 million shares valued at RM105.92 million.

Asian stocks edged up on Friday, as signs of a strengthening economy in the United States encouraged a modest year-end rally in riskier assets, according to Reuters.

Wall Street stocks had risen for a third straight day on Thursday, leaving the S&P 500 index virtually flat for the year, after data showed new claims for unemployment benefit dropped to their lowest in 3-1/2 years, it said.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.11% to 18,582.37, Taiwan’s Taiex gained 1.62% to 7,079.36, South Korea’s Kospi added 1.15% to 1,868.69, Singapore’s Straits Times Index was up 0.38% to 2,674.83 and the Shanghai Composite Index edged up 0.14% to 2,189.33.

Meanwhile, Japan’s stock markets were closed for a national holiday.

BIMB Securities Research in a note Dec 22 said better than expected job data in the US and higher than expected injection of funds by the ECB had positive cumulative impact on the equity markets all round.

Consequently European bourses registered an all round gain of around 1% whilst the Dow Jones Industrial Average climbed 62 points to remain above the 12,000 mark, it said.

The research house said it looked like focus on the Eurozone had been diverted temporarily in light of the tension in the middle-east where crude prices were again pushed nearer to the US$100/barrel again.

In Asia, regional markets closed on a mixed note from the lack of fresh leads, it said.

“As for Malaysia, the FBM KLCI is inching ever closer to the psychological 1,500 mark with a 6.5 point gain. Although we believe selective buying on blue chips to continue, the extended weekend may thwart any aggressive push on the upside.

“Nonetheless, we remain sanguine that the index to breach the 1,500 level,” it said.

Among the gainers, Nestle was up 30 sen to RM56.90, BAT added 26 sen to RM48.14, AIC 15 sen to RM1.30, Dutch Lady and CIMB 10 sen each to RM23.40 and RM7.10, KLK and Hai-O up eight sen each to RM22.08 and RM1.90, while CCM and Muhibbah rose seven sen each to RM1.49 and RM1.15.

Perisai was the most actively traded counter with 9.53 million shares done. The stock added 4.5 sen to 73 sen.

Other actives included Astral Supreme, Sanichi, Envair, Utopia, UEM Land, LFE Corp and KNM.

Decliners included Y&G, Bina Goodyear, HELP, Kretam, Scomi Engineering, MESB, WCT and Bernas.



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KL shares open slightly steadier

Share prices on Bursa Malaysia opened slightly higher in early trade prompted by window dressing activities as investors sought after quality stocks for their portfolio, dealers said.

Four minutes after the market opened, the FTSE Bursa Malaysia KLCI (FBM KLCI) was 3.11 points higher at 1,494.57, pushed by gains seen in selected heavyweights.

The Finance Index improved 37.03 points to 13,406.99, the Plantation Index edged up 0.84 of a point to 7,924.09 while the Industrial Index slipped 1.3 points to 2,665.38.

The FBM Emas Index rose 11.73 points to 10,226.66, the FBM Mid 70 Index added 10.76 points to 11,427.23, the FBMT100 increased 18.67 points to 10,059.20 while the FBM ACE Index declined 9.22 points to 4,018.58.

Gainers led losers 80 to 35 while 93 counters were unchanged.

Turnover amounted to 259,601 lots worth RM13.449 million.

Among the active counters, Perisai added 4.5 sen to 73 sen but AsiaEP eased half-a-sen to 6.5 sen and Envair shed 2.5 sen to 24 sen.

Among the heavyweights, Maybank rose three sen to RM8.48, Sime Darby perked one sen to RM9.01 and CIMB increased seven sen to RM7.07. -- Bernama



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MQ jumps after Thai factory resumes ops

MQ Technology Bhd, a Malaysian maker of high-precision moulds and hard-disk drive components, rose to the highest level in almost two weeks in Kuala Lumpur trading after saying its Thai factories resumed operations after flooding.

The stock jumped 12 per cent to 9.5 sen at 9:30 a.m. local time, set for its highest close since Dec. 12. -- Bloomberg



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Perisai Petroleum rises on profit report

Perisai Petroleum Teknologi Bhd, a Malaysian oil and gas services provider, rose to a four-month high in Kuala Lumpur trading after the Edge reported that the company expects to see annual profit contributions of at least US$16.7 million from its acquisition of Garuda Energy (L) Ltd.

The stock gained 5.1 per cent to 72 sen at 9:29 a.m. local time, set for its highest close since Aug. 5 -- Bloomberg



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RHB Research downgrades construction sector to Neutral from Overweight

KUALA LUMPUR (Dec 23): RHB Research Institute Sdn Bhd has downgraded its recommendation for the CONSTRUCTION [] sector to Neutral from Overweight.

In a note Friday, the research house said investors’ confidence and comfort level that the Klang Valley MRT project would start work soon was being chipped away by further delays in the roll-out of certain already long-overdue large-scale projects.

Even if the Klang Valley MRT project is to start work as scheduled, initial progress is likely to be painfully slow due to bureaucratic hurdles, it said.

There is generally a lack of credible new large-scale projects in the pipeline, it said.

“Gamuda and Fajarbaru are downgraded to Market Perform from Outperform.

“No changes in Outperform for TRC, HSL and Eversendai, Trading Buy for MRCB, Market Perform for WCT and Underperform for IJM,” said RHB Research.



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JCY International up after upgrade by OSK Research

KUALA LUMPUR (Dec 23): JCY International Bhd shares rose on Friday after OSK Investment Research raised its recommendation on JCY Trading Buy from Sell.

At 9.35am, JCY added half a sen to 91.5 sen with 844,400 shares traded.

OSK Research on Thursday upgraded the TECHNOLOGY [] sector to Neutral and said that better HDD pricing could help mitigate losses from the Thailand flood.

It said that against the backdrop of the massive works in progress to restore operations following Thailand’s crippling floods, the worst could well be over.

The research said it had become less bearish on the hard-hit HDD components sector given the ongoing accelerated restoration as well as potential price hike over the immediate term, which could mitigate the earnings pressure from forgone capacity in the short term.

“As for JCY, we are raising our earnings forecast by more than 100% as their equipment was unscathed. Valuation switched from 0.9x PBV to 8x FY12 PER.

“Call upgraded to Trading Buy with Fair Value of RM1.30. Understand that there are rumours of a strong price push over the next 1 month,” it said.



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HELP International dips to 1-week low

HELP International Corp, a provider of higher education, fell to the lowest level in a week in Kuala Lumpur trading after fourth-quarter net income slid 45 per cent to RM3.6 million from a year earlier.

The stock declined 2.9 per cent to RM1.66 at 9:17 a.m. local time, set for its lowest close since Dec. 14. -- Bloomberg



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HELP retreats on weaker 4Q earnings

KUALA LUMPUR (Dec 23): HELP INTERNATIONAL CORPORATION [] Bhd shares retreated in early trade on Friday after its net profit for the fourth quarter ended Oct 31, 2011 fell 44.6% to RM3.59 million from RM6.47 million a year earlier, due to new student recruitment affected by delays in obtaining licences and approvals for operations.

At 9.20am, HELP fell five sen to RM1.66 with 2,000 shares traded.

Revenue for the quarter rose to RM28.44 million from RM27.33 million in 2010.

HELP had proposed a final gross dividend of two sen per share of 50 sen each, amounting to RM2.13 million for the financial year ending Oct 31, 2011.



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MRCB shares rise on Sabah EPF building upgrade contract

KUALA LUMPUR (Dec 23): MALAYSIAN RESOURCES CORPORATION BHD shares edged up on Friday after its unit MRCB Engineering Sdn Bhd has been awarded a RM13.93 million contract to upgrade the Sabah Employees Provident Fund (EPF) building.

At 9.26am, MRCB gained two sen to RM2.09 with 191,300 shares done.

MRCB said on Thursday that the project involved renovating and upgrading the EPF Building in Kota Kinabalu, Sabah of approximately 400,000 square feet.

MRCB said the project would be financed via internally generated funds and/or borrowings, and completed within 18 months from Jan 16, 2012.



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TSM Global falls on RM21m net loss

TSM Global Bhd., a Malaysian automotive-parts manufacturer, dropped to the lowest level in a week in Kuala Lumpur trading after posting third-quarter net loss of RM21.1 million, compared with a RM8.1 million profit a year earlier.

The stock lost 1.8 per cent to RM1.10 at 9:06 a.m. local time, set for its lowest close since Dec 15. -- Bloomberg



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Muhibbah surges after winning Aussie jobs

Muhibbah Engineering (M) Bhd, a Malaysian builder, gained the most in two months in Kuala Lumpur trading after its joint venture with Australia’s Monadelphous Group Ltd won a A$330 million (US$334 million) contract to construct a coal jetty and ship berth in Queensland.

The stock surged 6.5 per cent to RM1.15 at 9:02 a.m. local time, set for its steepest increase since Oct 19. -- Bloomberg



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KLCI rises in tandem with regional markets

KUALA LUMPUR (Dec 23): The FBM KLCI rose in early trade on Friday, in line with the gains at regional markets and the firmer overnight close at Wall Street.

At 9.10am, the FBM KLCFI was up 3.84 points to 1,495.30.

Gainers led losers 111 by 44, while 126 counters traded unchanged. Volume was 49.64 million shares valued at RM29.61 million.

Among the early gainers were BAT, CCM, KLK, CIMB, Muhibbah, Genting, IGB, PacificMas, Perisai and Supermax.



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Perisai advances on better 2012 outlook

KUALA LUMPUR (Dec 23): PERISAI PETROLEUM TEKNOLOGI [] Bhd share rose in active trade on Friday after the company said it expects contribution from its mobile offshore production unit (MOPU), which it acquired through Garuda Energy (L) Ltd to be realised by FY12.

At 9.08am, Perisai was up 4.5 sen to 73 sen with 4.4 million shares done.

Its managing director Zainol Izzet Ishak said on Thursday that the acquisition would be finalised by the end of this year and will start contributing to the group's bottom line from the first day of its operation as the group's asset.



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Muhibbah active, up on RM1.05b Aussie job

KUALA LUMPUR (Dec 23): Muhibbah Engineering Bhd shares rose in early trade on Friday after the company and its Australian joint venture partner Monadelphous Group Limited landed a RM1.05 billion (AUD330 million) job to build an approach jetty and ship berth in Queensland.

At 9.05am, Muhibbah rose six sen to RM1.14 with 1.17 million shares done.

Muhibbah said on Thursday that Monadelphous Muhibbah Marine JV (MMM) had secured the contract to build the jetty and ship berth associated with the Wiggins Island Coal Export Terminal Pty Ltd’s (WICET) Project at Gladstone in Queensland.

MMM is a 50:50 joint venture between Muhibbah CONSTRUCTION [] Pty Ltd, a wholly owned subsidiary of Muhibbah in Australia and Monadelphous Engineering Pty Ltd, a wholly owned subsidiary of Monadelphous Group Ltd.



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LTAT does not dismiss prospect of privatising BHIC

KUALA LUMPUR: The possibility of the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) being the vehicle to privatise Boustead Heavy Industries Corp Bhd (BHIC) is increasing.

Tan Sri Lodin Wok Kamaruddin, who is LTAT chief executive, did not dismiss the prospect of LTAT privatising BHIC.

Lodin, however, denied that BHIC's parent, Boustead Holdings Bhd, planned to privatise BHIC.

"Once again, we confirm that Boustead does not have any intention to privatise BHIC. We can't comment on what LTAT is going to do about BHIC," said Lodin, who is also Boustead deputy chairman and group managing director.

"That you would have to ask LTAT. It is for LTAT's board of directors to collectively deliberate upon," he told reporters after Boustead's shareholders meeting here yesterday.

A research house highlighted that a privatisation made sense given that BHIC's earnings visibility looked secure for the next 10 years after being awarded a RM9 billion contract from the Defence Ministry to design, build and deliver six second-generation patrol vessels.

It could also be advantageous for LTAT to privatise BHIC to avoid public disclosure and scrutiny, given the sensitivity of such government defence contracts.

LTAT owns 61 per cent of Boustead and 8.15 per cent of BHIC.

When pressed on what he thought of such suggestion, Lodin said: "Anyone can air their views in the newspapers."

On whether LTAT is considering loosening its grip on Boustead to increase share liquidity, he said: "It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way."



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Envair stock plunges on Deepak share sale news

KUALA LUMPUR: Envair Holding Bhd's shares suffered their steepest decline in more than a month after a substantial shareholder Deepak Jaikishan sold his entire stake, almost three weeks after buying it.

Envair, a manufacturer of air and water filters, saw its shares fell by over 15 per cent to an intraday low of 26.5 sen yesterday.

It was its fourth consecutive day of decline. It was traded 39.5 sen early this week.

Its trading volume has also reduced significantly. This week, its average trading volume was about 12.5 million shares, more than 60 per cent lower than the average of 31.44 million shares previously.

Filings to Bursa Malaysia on Wednesday showed that Deepak had sold six million shares on December 14 in the open market. On the day of the disposal, Envair shares were traded between 34.5 sen and 38 sen.

He bought the six million shares on December 2 for RM1.32 million or 22 sen each. This means Deepak could have make at least 56 per cent return on investment (ROI), or a minimum of RM750,000.

Deepak did not inform Bursa Malaysia on why he sold the stakes. He had earlier told the media that he was "taking a long-term view" of his investment and would soon raise his stake to over 10 per cent.

He had also reiterated that he "will not be selling down" his stakes in the future.

"A major shareholder's exit could be driven by many factors - it may be due to the relationship between itself and the board and the management, or maybe the shareholder sees better investment opportunities elsewhere.

"Nevertheless, a stellar ROI during a period of volatility and uncertainty is always a good reason for an investors to take profit," said a research head from a local brokerage.

The research head added that Deepak may have seen that Envair's plan to venture into the oil and gas business to be more challenging than anticipated.

Two months ago, the company said it would supply two million barrels of light crude oil monthly for 60 months to An Hong Shenzhen.

Deepak is not the first investor who bought a substantial stake in Envair, only to dispose of it shortly after.

On November 1, Chinese national Jiang Chuan Yi bought 6.75 per cent in the company, only to dispose of the entire stake three weeks later.



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