KL MRT target cost to be known by 4Q 2012

PUTRAJAYA (Feb 10): The target cost of the MY Rapid Transit (MRT) project will be known by the fourth quarter of this year after all 90 tenders have been awarded, said Mass Rapid Transit Corp Sdn Bhd (MRT Corp) chief executive officer, Datuk Azhar Abdul Hamid said on Friday.

He said the target cost was the aggregate of all tenders plus reimbursable capped at RM2.8 billion and the contingency amount capped at six per cent of the total tender awarded.

"We will only know the full tender value of all jobs after they have been awarded.We will be on a better footing towards the end of this year," he told reporters at a press conference after the MRT Corp's signing ceremony here.

On the financing for the MRT project, Azhar said the project would be fully financed by the capital market.

"Yes, it is 100 per cent from the capital market... I think it will be Sukuk from what I know.

"As far as the financing is concerned, it has been finalised.But I am not going to give you the details because this is being arranged by the Ministry of Finance through its subsidiary, Dana Infra.

"The best people to give you the details for the project funding would be the Ministry of Finance," he added. - Bernama



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CSC Steel posts RM2.1m losses in 4Q

KUALA LUMPUR: CSC Steel Holdings Bhd recorded losses of RM2.06 million in the fourth quarter ended Dec 31, 2011, compared with net profit of RM8.56 million a year ago due to lower sales volume of its steel products.

It said on Friday, Feb 10, its revenue rose 7.0% to RM276.9 million from RM258.7 million a year ago. Loss per share was 0.55 sen compared with earnings per share of 2.29 sen.

Commenting on the financial performance, it said the increase in revenue was due to increase in both the overall selling prices and sales volume of steel products.

However, the significant decrease in its profits before tax was due to a write-down of inventories of RM6.4 million as a result of a comparatively lower selling price of its steel products in January and February of 2012.

When compared with the preceding quarter, it said its revenue fell 13.6%, from RM320.6 million to RM276.9 million primarily due to significantly lower sales volume of the steel products due to sluggish demand although selling prices were higher than the previous quarter.

“However, the group registered a profit before tax of RM300,00 million in the current quarter which represent an increase of RM2.3 million from a loss before tax of RM2.0 million in the previous quarter mainly due to lower distribution cost,” it said.

For the financial year ended Dec 31, 2011, its net profit fell 57.2% to RM29.55 million from RM69.18 million in FY2010. Its revenue rose 17.5% to RM1.206 billion from RM1.03 billion.

The board recommended a final single tier system of dividend of 5% or 5.0 sen per share and a special single tier system of dividend of 2% or 2.0 sen per share for the financial year ended 2011



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London Biscuits to raise RM29.3m from new share placement

KUALA LUMPUR (Feb 10): LONDON BISCUITS BHD [] (LonBisc) has proposed to place out 29.37 million new shares at an indicative issue price of RM1 per share to raise up to RM29.37 million, of which about 50% would be used to repay its borrowings.

LonBisc said on Friday the placement shares would represent up to 24.35% of its paid-up share capital and would be placed out to investors to be identified later.

Due to the size of the private placement, it would be implemented in several tranches within six months from the date of approval from Bursa Malaysia Securities Bhd.

LonBisc said the issue price would not be lower than the par value of the company’s share. As the five-day weighted average market price (WAMP) of the shares up to Feb 9 was 79 sen, the minimum issue price would be RM1, or 26.58% premium to the five-day WAMP up to Feb 9.

“The company proposes to utilise RM15 million of the gross proceeds from the proposed private placement for the repayment of the LonBisc group’s short term borrowings, including but not limited to, bank overdrafts, bankers’ acceptance, hire purchase and term loans which are due within the next 12 months,” it said.

It added the amount of annual savings in interest payments would be about RM900,000 per annum.

LonBisc said the other RM13.97 million would be used as working capital and the remaining RM400,000 as estimated expenses related to proposed private placement.



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MRT Corp appoints MMC Gamuda KVMRT for Sungai Buloh-Kajang MRT line

KUALA LUMPUR (Feb 10): Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) has appointed MMC Corp Bhd and GAMUDA BHD [] as the project delivery partner for the Sungai Buloh-Kajang MRT line.

The appointment of MMC Gamuda KVMRT (PDP) Sdn Bhd on Friday as a PDP was to ensure the completion of the MRT line within the agreed key performance indicators (KPI) target cost and set completion date. The target completion date for the entire project is July 31, 2017.

The appointment was also to ensure the MRT project was rolled out efficiently in phases as opposed to appointing a turnkey contractor under a design and build model, according to MRT Corp.

MMC Corp, in a separate statement, said the fee to be paid to MMC Gamuda KVMRT would be equivalent to 6% of the aggregate of all the awarded works contracts (excluding the value of the underground works package if the PDP wins the Swiss Challenge and is awarded the said package).

“In the event that the PDP (MMC Gamuda KVMRT) fails to complete the project by the agreed completion date, the PDP is liable to pay to the owner agreed liquidated damages of RM500,000 per day,” said MMC.

The signatories were MRT Corp chief executive officer Datuk Azhar Abdul Hamid while MMC Gamuda KVMRT was represented by its directors Datuk Hasni Harun and Datuk Azmi Mat Nor. Chief Secretary to the Government of Malaysia, Tan Sri Mohd Sidek Hassan witnessed the signing of the agreements

Azhar pointed out that since the MRT project of such a size and complexity carried with it significant risks such as delays and cost overruns.

“Appointing a turnkey contractor to build the MRT project might prove to be costly should there be any variation in plans or cost. The PDP model will prevent this from happening,” he said.

The PDP’s fee will be 6% of the total aggregate work package contracts award values. However, should the eventual total cost of the project be less than or equal to the target cost, the PDP shall be entitled to the full fee.

If the project cost is more than the target cost, the PDP fee shall be reduced in accordance with an agreed formula.

Azhar said the PDP provided a single point of accountability to deliver the whole project within agreed time and cost targets, and a failure to do so will incur financial penalties.

MMC Gamuda KVMRT would also have to develop the engineering design and technical specifications that met MRT Corp’s requirements and to ensure optimum performance of all other works packages contractors (WPCs) in terms of quality, safety and time.

The MMC Gamuda KVMRT will also be responsible for packaging the works, calling tenders on behalf of the government, evaluating bids, selecting works package contracts with the government and distributing the award to the contractors on the government’s behalf.

MMC Corp said that except for the underground works package, the PDP was not allowed to take part in any of the tender for the works comprised in the project.

The allowed contingency was agreed at 15% of the aggregate of the awarded works packages. Both MRT Corp and MMC Gamuda KVMRT were allowed to utilise the contingency.

“The reimbursables include the PDP’s overheads, fees for engineering consultancy, quantity surveyors and system integration works and fees for site investigations and topographical survey. The amount of the reimbursables is fixed at RM2.85 billion,” it said.



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The FBM KLCI index lost 3.66 points or 0.23% on Friday. The Finance Index increased 0.27% to 13859.41 points, the Properties Index up 0.63% to 1064.06 points and the Plantation Index down 0.52% to 8878.28 points. The market traded within a range of 5.35 points between an intra-day high of 1564.66 and a low of 1559.31 during the session.

Actively traded stocks include TEBRAU, MTRONIC, COMPUGT, KHSB, AGLOBAL, TMS, TIMECOM, EXTOL, WINSUN and DBE. Trading volume increased to 3354.88 mil shares worth RM2811.66 mil as compared to Thursday’s 3314.40 mil shares worth RM2974.84 mil.

Leading Movers were MAYBANK (+5 sen to RM8.52), GENM (+5 sen to RM3.90), PBBANK (+4 sen to RM14.00), AXIATA (+2 sen to RM4.99) and AIRASIA (+6 sen to RM3.78). Lagging Movers were TENAGA (-19 sen to RM6.11), IOICORP (-13 sen to RM5.47), GENTING (-16 sen to RM10.30), YTL (-3 sen to RM1.48) and SIME (-3 sen to RM9.67). Market breadth was positive with 566 gainers as compared to 371 losers. -- JF Apex Securities Bhd



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Hubline fixes 20m placement shares at 20c per share

KUALA LUMPUR (Feb 10): HUBLINE BHD [] has fixed the issue price for its private placement of 20 million new shares together with 30 million additional warrants at 20 sen per share.

“The issue price represents a premium of 100% to the five-days volume weighted average market price of Hubline shares up to and including Feb 9, 2012 of 10 sen per Hubline share,” it said on Friday.

The private placement represented 16.45% of the existing paid-up share capital on the basis of three additional warrants for every two placement shares subscribed.

Hubline closed 0.5 sen lower at 10 sen on Friday with 11.78 million shares transacted.



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MAS appoints AirAsia’s Rozman Omar as CFO

KUALA LUMPUR (Feb 10): MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) has appointed Rozman Omar as its chief financial officer with effect from next Tuesday, Feb 14.

Rozman, 50, will be stepping down as AIRASIA BHD []'s regional head of finance with effect from Feb 13 to assume the post at MAS.

MAS said that Rozman, prior to joining the national carrier, had served the AirAsia group for more than eight years initially as CFO for PT Indonesia AirAsia and since 2006, as AirAsia Bhd's regional head of finance.

Prior to joining AirAsia, he had accumulated substantial working experience in corporate finance and project advisory.



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KLCI snaps 2-day rally, Tenaga, Genting weigh

KUALA LUMPUR (Feb 10): The 30-stock FBM KLCI snapped its two-day run-up as investors decided to take profit and await the outcome of the long-awaited Greek debt deal which remained elusive, analysts said.

The profit taking was confined to Tenaga, Genting and IOI Corp, dragging the KLCI down 3.66 points to 1,561.66. Turnover was 3.35 billion shares valued at RM2.81 billion.

The broader market was firmer, underpinned by some nibbling of penny stocks and lower liners, enabling advancing counters to beat decliners 566 to 371 while 315 stocks were unchanged.

Reuters reported the FTSEurofirst 300 index of top European shares was down 0.55% at 1,067.63. The STOXX Europe 600 euro zone Banking Index, exposed to the euro zone's sovereign debt crisis, shed 1.4%.

Earlier, Asian stocks also lost ground, leaving global stocks as measured by the MSCI index down 0.6% at 326.04.

At Bursa Malaysia, Tenaga fell 19 sen to RM6.11 on rising concerns about further compensation for the power giant which is still facing a severe gas shortage. While Tenaga, Petroliam Nasional Bhd and the government had agreed to share the RM3 billion incurred between January 2010 and October 2011, there was no plan yet on how to absorb the additional cost of burning distillates after that period.

GENTING BHD [] fell 16 sen to RM10.30. DRB-Hicom, which had a strong run-up on its takeover of Khazanah Malaysia’s 42.7% stake of Proton, fell 16 sen to RM2.98.

Puncak Niaga fell the most, down 23 sen to RM1.66 after surging 44 sen on Thursday. KPS lost 15 sen to RM1.24 and KHSB 11.5 sen to 66.5 sen.

Tebrau Teguh rose 8.5 sen to 89 sen and it was the most active with 150.66 million shares done. The 89 sen closing price was a 13 sen premium over the takeover price of 76 sen offered by Iskandar Waterfront Holdings Sdn Bhd (IWH). IWH is buying a 33.15% stake in the company from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) for RM168.7 million.

Among PLANTATION []s, plantation player IOI Corp shed 13 sen to RM5.47. However, BLD Plantations was the top gainer, up 52 sen to RM9.67, Far East 30 sen to RM7.30 and United Plantations 20 sen higher at RM22.

Among consumer stocks, Dutch Lady added 50 sen to RM25.38 and Amway 14 sen to RM9.80.



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Bursa’s FY11 net profit up 29%

KUALA LUMPUR: Despite last year’s market uncertainties Bursa Malaysia Bhd’s FY11 ended Dec 31 profit rose 29% year-on-year (y-o-y) to RM146.2 million. Revenue was up 16% to RM420.1 million.

“Our securities and derivatives markets recorded improvements in trading volume as a result of increased participation by both foreign and local investors,” CEO Datuk Tajuddin Atan told a media briefing yesterday.

For its 4QFY11 Bursa’s net profit was up 5% to RM31.3 million while revenue dropped 6% to RM95.7 million.

Foreign participation in the market for FY11 rose 57% y-o-y while domestic participation grew by 30% y-o-y, leading to higher trading volume.

Average daily contracts traded for derivatives alone were up 39% to 34,474 and Bursa’s average daily trading value improved by 14.01% y-o-y to RM1.79 billion from RM1.57 billion. This resulted in trading revenue from derivatives increasing by 36% y-o-y to RM51.25 million from RM37.64 million in FY11.

Contracts traded for the FBM KLCI Futures increased by 24% to 2.48 million from 1.99 million in 2010; crude palm oil contracts jumped 45% to 5.87 million in FY11.

Tajuddin expects Bursa's FY12 results to at least mirror its FY11 results.

The total derivatives contracts traded grew 37% y-o-y to 8.45 million in FY11, compared with 6.15 million the previous year.

Tajuddin said Bursa believes in the potential of the derivatives market which currently contributes 12% to the group’s net profit. “Our derivatives business is poised to benefit from increased risk management brought about by the global economic uncertainty,” he said.

The derivatives market is one of the three key areas Bursa will focus on as a part of its strategic direction for 2012.

Last September marked the first anniversary of Bursa’s migration onto the Chicago Mercantile Exchange (CME) Globex trading platform, which helped contribute to the increase in derivatives contracts traded.

Tajuddin said Bursa will introduce various products and systems to facilitate the growth of the stock exchange in a competitive regional scene.

“The exchange landscape grows more competitive and presents more challenges, innovation, clearing [systems]...The current system is sufficient to cater for our current business needs and we will introduce new features to introduce greater flexibility and increase additional efficiency when placing orders, ”he noted, adding that the participation structure will be revamped to bring in new market entrants.

It will introduce a new derivative clearing system by the end of 1QFY12, which will have multi-asset class, time zone and currency capabilities. Bursa will also launch a high frequency trading system, which will allow for more liquidity in the markets.

Looking ahead, Tajuddin said the group expects its FY12 results to at least mirror its FY11 results.

He added that the divestment of assets by some government-linked companies will further contribute to the liquidity and vibrancy of the market. He cited the listing of Felda as among the companies that will positively contribute to the market.

The anticipated Asean exchange initiative, which includes Bursa, will also be launched by mid-year. The collaboration will see the exchanges of Malaysia, the Philippines, Singapore, Thailand and Vietnam joining forces to promote the growth of the Asean capital markets.

Bursa proposed a final dividend of 13 sen per share for FY11, subject to shareholders’ approval next month.

Its stock closed at a six-month high yesterday, up two sen to RM7.52 on a total trading volume of 1.29 million shares.


This article appeared in The Edge Financial Daily, February 10, 2012.



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DRB-Hicom yet to endorse anyone as Proton CEO

KUALA LUMPUR: DRB-Hicom Bhd group managing director Datuk Seri Mohd Khamil Jamil has quashed speculation that a new CEO has been endorsed to head Proton Holdings Bhd.

“I’ve got in my mind the formation of the new management [for Proton] but for the time being I can’t reveal [it],” he said.

Khamil said he was surprised when the media raised a certain name as the person to be appointed CEO and that he had been endorsed by DRB-Hicom.

“I’m not endorsing anybody as CEO yet,” he told reporters at the signing of an international collaborative agreement between Liverpool John Moores University and International College of Automotive yesterday.

Last month, DRB-Hicom announced the proposed acquisition of 42.74% equity interest in Proton from Khazanah Nasional Bhd for RM1.3 billion cash and a mandatory general offer for the remaining Proton shares for RM5.50 a piece.

Khamil said he had yet to see the Proton management officially to discuss the future of the national car manufacturer.

He said DRB-Hicom must complete the acquisition process before going into the details in terms of Proton’s future direction.

Asked whether the shareholders would respond positively to the deal, Khamil said they have been accommodating.

“They’ve expressed their support of our decision to take over Proton and I hope they will also endorse and agree with our decision at the upcoming EGM,” he said.

On whether DRB-Hicom will dispose of Proton’s loss-making unit Lotus Group, he said the company needs to have access and has to look at Lotus because it is an important element of Proton.

“We’ve to make calculations and make an evaluated decision,” he said, adding that he cannot move on Lotus Group without knowing the details of what Lotus is all about and how it can fit into DRB-Hicom’s future plans.

On DRB-Hicom’s plans for Proton’s under-utilised Tanjung Malim plant, Khamil said there must be a rationalisation instead of maximisation.

“It’s easy to maximise capacity as we did at our automotive plant in Pekan, Pahang. But as a car manufacturer, we must not only look into maximising capacity, but also at production and manufacturing cars to fit Proton’s DNA,” he said.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Water stocks rally

KUALA LUMPUR: Water stocks, in particular those related to Selangor, saw a rally yesterday, and Puncak Niaga Holdings Bhd became the latest company to be issued with an unusual market activity query after its share price saw a 44 sen spike in heavy trading.

Puncak Niaga opened at RM1.45 and shot up by 44 sen to close at RM1.89 with 30.9 million shares traded.

In its reply to Bursa Malaysia yesterday, the company said it was unaware of any rumours nor did it have any corporate developments that have not been announced.

On Tuesday, Selangor Menteri Besar Tan Sri Khalid Ibrahim said in a statement Bursa Malaysia has yet to explain satisfactorily why Puncak Niaga was given a waiver from being listed as a PN17 company.

Also on Tuesday, the Selangor government said in a statement that it would continue to push ahead for the restructuring of the water industry, claiming the water concessionaires will continue to fail the rakyat. It added that Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) should not be retained as the water services operator in the state.

Kumpulan Perangsang Selangor Bhd also saw heavy trading yesterday with 23.8 million shares traded. Its counter opened at RM1.12 to close at RM1.39, up 27 sen.

Another Selangor state-linked company Kumpulan Hartanah Selangor Bhd saw its share price climb to 78 sen from 51 sen yesterday with 113.89 million shares traded.

Pipe maker Jaks Resources Bhd, which is involved in the Selangor-Pahang water transfer project, also saw a spike in its share price. The counter gained 14 sen to close at 72 sen with 45.6 million shares traded.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Bursa cautions over Naim Indah’s shares

KUALA LUMPUR: Bursa Malaysia Securities Bhd (Bursa Securities) has cautioned investors over the unusual activity of Naim Indah Corp Bhd shares.

It advised investors to be cautious over the recent sharp rise and volume of the counter, notwithstanding Naim Indah’s response to the unusual market activity query issued by Bursa on Feb 3.

“...Bursa Securities would like to advise investors to exercise caution and to make informed decisions in the trading of Naim Indah Corp shares,” the local bourse said in a statement yesterday.

Naim Indah emerged at the top of the most active list yesterday after putting on some 37%, or 18 sen, to close at 67 sen with over 342 million shares done, which is half its share base of over 700 million. It was also in the top 10 gainers’ list for the day.

Year to date, the counter has gained some 1,016%. The counter on Wednesday hit limit up, rising from 30 sen to 48 sen on heavy trading volume.

The company recently announced six new shareholders, including Harvest Court Industries Bhd’s Datuk Raymond Chan Boon Siew. Chan, who is the managing director of Sagajuta (Sabah) Sdn Bhd, holds the largest stake of 12.11% or 85 million shares.

Sagajuta's 1Borneo mall in Kota Kinabalu, Sabah. Sagajuta's Chan recently emerged as a major shareholder in Naim Indah after snapping up a 12.11% stake.

Other shareholders include Ng Kian Huat with a 3.99% stake, Woo Sew Kew (2.56%), Leow Siew Kuan (2.28%), Khrishna Bhatt (0.98%) and Chong Kok Loong (0.88%).

The six shareholders bought up a 22.8% stake in Naim Indah from Crest Synergy Sdn Bhd.

Chan was thrusted into the limelight after he bought into Harvest Court late last year.

Since Chan’s entry, the value of his stake in Harvest has risen more than 16-fold as investors anticipate he may inject Sagajuta’s assets into Harvest Court.

Harvest Court shares and warrants were just uplifted from designated status by Bursa Malaysia Securities in January. This came almost two months after Bursa Malaysia designated Harvest Court’s stock due to “excessive speculation”.

Chan’s entry into Harvest follows the abortion of earlier plans to inject Sagajuta into Jerneh Asia Bhd.

Mohd Nazifuddin Najib, the son of Prime Minister Datuk Seri Najib Razak, also made a brief appearance on the board of Harvest Court where he joined as a director on Oct 28 but resigned from that post in November barely a month after. Nazifuddin is chairman of Sagajuta, best known as the developer of the 1Borneo mall in Kota Kinabalu, Sabah. Sagajuta has several ongoing projects including 1Sulaman and 1Likas in Kota Kinabalu, and 1Gateway in Klang.

On Oct 27, Harvest Court was awarded a contract from Sagajuta for the supply of door leaves for some RM7.03 million.

Harvest Court, which was lifted from its PN17 status in December 2009, posted a net loss of RM2.82 million in the year ended Dec 31, 2010 from a net profit of RM12.16 million previously.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Takeover offer for Mahajaya at 85 sen each

KUALA LUMPUR: Property developer Mahajaya Bhd has received a notice of conditional takeover from a group of joint-offerors, made up from its major shareholders, to acquire the remaining 75.56 million shares representing a 27.57% stake they do not own in the company at 85 sen each. The offer valued the whole of Mahajaya at RM232.9 million.

The joint-offerors are Waiban Corp Sdn Bhd (WCSB), Rancangan Impian Sdn Bhd (RISB), and Mahajaya managing director Tan Ming Wai and deputy managing director Tan Ming Ban. Together they own a 72.43% stake in Mahajaya as at yesterday.

Meanwhile, the persons acting in concert (PAC) with the joint-offerors, mainly the other members of the Tan family, hold total shareholdings of 2.53% in Mahajaya. The PAC had stated their acceptance of the offer.

The takeover offer at a cash price of 85 sen per share represents a 16.4% premium to the stock’s closing price of 73 sen yesterday, and is 9.68% higher than the highest closing market price of Mahajaya’s share of 77.5 sen — recorded on Jan 26 — over the past five years. However, the offer came in at 31.5% below the company’s net assets per share of RM1.24, as at June 30, 2011.

In a filing with Bursa yesterday, Mahajaya said the offer price represents a price-to-earnings ratio of 3.39 times the company’s net earnings per share for FY11 ended June 30 of 25.08 sen — which included a net gain after tax of about RM63.4 million from the disposal of three portions of land located in Petaling district, Selangor measuring approximately 51.38 acres (20.55ha).

Excluding net gain from the disposal, the offer price represents 43.81 times Mahajaya’s FY11 earnings per share of 1.94 sen.

As at June 30, 2011, Mahajaya had cash reserves of about RM41.43 million against total borrowings of about RM4.05 million, translating into a net cash position of RM37.38 million. With 274.014 million outstanding shares, Mahajaya’s net cash per share was 13.64 sen as at June 30, 2011.

For 1QFY12 ended Sept 30, 2011, Mahajaya posted a 21.2% decline in net profit to RM1.41 million from RM1.79 million a year ago, while its revenue decreased by 14.6% to RM29.85 million from RM34.96 million a year ago.

For FY11 ended June 30, the company’s net profit increased 24-fold to RM68.72 million compared to RM2.86 million in FY10, while revenue increased 108.5% to RM352.89 million from RM169.24 million previously.

Mahajaya attributed the improved performance to a more conducive market and the completion of the disposal of several parcel of lands in Taman Damai Utama in Puchong.

Mahajaya’s on-going development projects include Bandar Damai Perdana in Cheras.

The company will pay a first and final net dividend of one sen per share for FY11 which will go ex on Feb 24.

Mahajaya’s market capitalisation was RM200 million based on yesterday’s close. Its shares traded between a 52-week high of 79 sen in January 2012 and a low of 50 sen on Dec 22, 2011.


This article appeared in The Edge Financial Daily, February 10, 2012.



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BLand sells BToto stake for RM80m cash

KUALA LUMPUR: Berjaya Land Bhd (BLand) sold 18.301 million shares or a 1.37% stake in Berjaya Sports Toto Bhd (BToto) yesterday for a total cash consideration of RM79.61 million or RM4.35 per share.

In a statement to Bursa Malaysia, BLand said the net proceeds from the disposal will be utilised as working capital and repayment of bank borrowings of the BLand group.

With the disposal, BLand and its unlisted subsidiaries now hold a total of 533.61 million shares representing a 40% stake in BToto.

BLand’s parent, Berjaya Corp Bhd (BCorp) and its unlisted subsidiaries also hold 132.44 million shares representing a 9.93% stake in BToto. This means that the whole BCorp group still owns about a 49.93% stake in BToto.

Tan Sri Vincent Tan, being the major shareholder of BCorp, also personally holds a 1.13% stake in BToto. Thus, with all the shareholdings combined, Tan still effectively controls over 51% of BToto, the jewel of the BCorp group.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Jetson taps into China to free up local capacity

KUALA LUMPUR: Kumpulan Jetson Bhd’s venture to develop an integrated autoparts industrial plant in China will help free up its local capacity here to be utilised for its future export market expansion which may include countries such as India, Iran and Indonesia.

According to Jetson managing director Datuk Teh Kian An, its plants in Sungei Buloh and Port Klang are running at 90% capacity currently.

Jetson is venturing into the China market with the development of an integrated autoparts industrial park worth RM174.4 million in Yangzhou city. The local property development and autoparts manufacturing company will occupy three blocks of the industrial park to tap into China’s autoparts market.

Teh said the company’s move to enter the Chinese autoparts manufacturing industry is also because the country offers tremendous opportunity in the automotive sector and has an annual production output of more than 18 million vehicles compared with Malaysia’s 600,000 units.

The gross development cost of the project is estimated at RM124.6 million, according to Jetson’s chief financial officer Raymond Lee. To date, three factories have been built, with the entire project expected to be completed in the first quarter of 2014.

Jetson expects the project to have positive impact on the earnings of its construction and property development division for the financial years ending Dec 31, 2012 to 2014 while maiden earnings contribution from its manufacturing operation within the park is expected in FY14.

Teh says the move to localise the production of autoparts in China is to tap the local market.

“We are not doing this because we are shifting away our production facilities from Malaysia to China, but more to localise the production of autoparts in China to tap the local market. We have been exporting our anti-vibration system to China previously from our plants here but by localising production there, we get to leverage the economies of scale,” said Teh after the company EGM yesterday.

Jetson’s China project is undertaken through its acquisition of 100% of Asian Corp Ltd (ACL) for RM11 million. The purchase price works out to a 22.5% discount to ACL’s net assets of RM14.2 million.

ACL’s main asset is a 57,737 sq m industrial land in Weiyang Industrial Park in Yangzhou.

The integrated industrial park will house 10 detached factories, four blocks of four-storey commercial blocks, a six-storey hostel for the workers’ accommodation as well as a six-storey production centre, which will likely house the research and development activities of the tenants. Teh added that there will be an auto parts exchange centre, which will be the showroom to showcase the products and technologies built at the site.

“We are developing JIIP (Jetson Integrated Industrial Park) as an integrated automotive parts manufacturing park. Facilities are available for companies to carry out a complete chain of their operations, from research and development, manufacturing, staff accommodation to supporting services. We believe such approach is paramount for Jetson’s manufacturing operation to thrive in China,” said Teh.

He said the group will focus on its two geographical presence, namely Malaysia and China, to cater to the other markets in the region. The integrated park in Yangzhou will be developed as the group’s manufacturing base to cater to China’s domestic market, as well as other Asian countries which enjoy free trade agreements with China.

Jetson closed unchanged yesterday at RM1.24 on a thin volume of just 67,000 shares. Since a year ago, its share price has increased 12.9% from its RM1.08 close on Feb 9, 2011.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Sentoria sees good return from Bukit Gambang projects

PUTRAJAYA: Soon to be listed property developer Sentoria Group Bhd expects at least 30% return on its RM92 million investment in the Arabian Bay Resort, which forms part of its Bukit Gambang Resort City’s (BGRC) second phase development near Kuantan, according to the group’s joint managing director Datuk Gan Kim Leong.

The development of the second phase of BGRC, costing a total of RM140 million, will be facilitated by a RM6.9 million grant given by the government through its Public-Private Partnership Unit (PPPU) of which the agreement was signed by both parties yesterday. Other than the Arabian Bay Resort, the second phase development plan will include the Bukit Gambang Safari Park, which costs about RM48 million, according to Gan.

“On the investment return, there are two ways to look at it. One is for the Arabian Bay Resort where we expect to get a return of around 30%, based on the development cost. The other one is based on the entrance fee to the Safari Park, of which we project to receive about RM18 million a year in terms of revenue,” said Sentoria’s finance controller Thean Yain Peng.

The Arabian Bay Resort consists of studio and family suites built on the site of the BGRC. Sentoria will sell the units to interested investors and lease it back from them, and later rent it out to the visiting customers who stay at the resort city.

(From left) Bank Pembangunan CEO Jamaluddin Nor Mohamad, PPPU director-general Datuk Seri Dr Ali Hamsa, and Sentoria joint managing directors Datuk Jimmy Chan and Gan at the signing ceremony in Putrajaya.

On the RM6.9 million grant from the government, it will be channelled through Bank Pembangunan Malaysia Bhd, and will be utilised for access roads and utility-based infrastructure works. The grant is part of the facilitating fund provided by the government under the 10th Malaysia Plan, which is aimed to encourage private investments in the country.

BGRC, which sits on a 547-acre (221.4ha) site, was first developed in 2007, and since then 20% of its total development plan has been completed, according to Gan. Other than BGRC, Sentoria is also developing a budget hotel in Kuantan, as well as residential developments in Bandar Indera Mahkota, Kuantan, in Pajam, Negri Sembilan as well as Salak Tinggi in Selangor.

“BGRC is our flagship development. Once it is fully completed in 2018, it will be one of the largest resort cities in Malaysia.” said Gan. He said almost 90% of the Arabian Bay Resort’s units has been sold, while the Caribbean Bay Resort, which was developed earlier, has been fully sold.

Sentoria recently launched the prospectus for its planned IPO on the Main Market. It is expected to raise RM51.6 million from the IPO, of which RM27.7 million would be allocated for working capital, RM11.2 million for repayment of bank borrowings, RM9 million for purchase of property, plant and equipment and the balance RM3.7 million to defray listing expenses.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Tough times for local steel players

KUALA LUMPUR: Malaysian steel companies were not spared from plummeting steel prices in the last quarter of 2011.

“The prices will definitely affect the earnings during that period,” said a MIDF Research analyst, who covers the sector, when contacted by The Edge Financial Daily.

This could provide an insight into earnings announcements for the final quarter of last year that local steel players will be posting in the coming weeks.

According to MIDF, margins between steel billets and bars are likely to narrow, potentially causing steel producers to report a net loss in their upcoming quarterly results.

According to data from the London Metal Exchange, spot prices of steel billets last year peaked in mid-August at around US$700 (RM2,107) per tonne, but started on a downtrend soon after.

The price of steel billets, a semi-finished product used to make steel bars, was US$485 per tonne at press time, having fallen 11% from US$545 per tonne in the past month.

According to another analyst who tracks the property sector, local steel bar prices dipped from a high of RM2,500 per tonne during the year to around RM2,120 in 4Q. They are now trading at around RM2,120 per tonne, he added.

Several local steel companies have shown signs of slowing profits resulting from the increase in costs between 2Q and 3Q of 2011, when steel prices were declining.

An example is Ann Joo Resources Bhd. The group sank into the red with a net loss of RM24.54 million in 3QFY11 ended Sept 30 from a net profit of RM32.75 million in 2QFY11.

Lion Industries Corp Bhd also showed signs of slowing net profits over two of its quarters last year in its latest earnings announcement. It posted a net profit of RM27.62 million in 1QFY12 ended Sept 30, 2011 from RM45 million the previous quarter. Besides softening prices, MIDF also said global steel production and utilisation has slowed down.

“Latest numbers from the World Steel Association confirmed our worries about the global steel industry. Global steel production was 1.53 billion tonnes in 2011, up by only 6.8% compared with 15% year-on-year in 2010,” said the research house.

China’s steel production, which accounts for 45% of the world’s output, is the largest globally and has also showed signs of slowing.

In December, China’s steel production rose 4.6% to 52.5 million tonnes, which was 13% lower than its peak of 60.2 million tonnes in May 2011.

Global utilisation has also trended lower at 73.4% in November 2011. “[This was] the lowest since April 2011,” said the research house. China’s slowing production is an indicator of worrying times for the steel industry.

“This is because the steel industry depends heavily on the property market in China,” said the analyst from MIDF, adding that the reason for China’s slowdown is due to its government’s efforts to curb its property market.

Hence, he fears that there could be an oversupply of steel in China, resulting in cheap imports of steel into Malaysia, thus posing a threat to local millers.

Global steel demand is tempered by an economic slowdown in China, and a likely recession in Europe, where orders for steel products for construction, cars and machinery are slowing.

What could potentially help domestic players are local construction projects like the Economic Transformation Programme (ETP) and the 10th Malaysia Plan (MP). The local projects under these programmes include the Klang Valley MRT (the Sungai Buloh-Kajang line), the Gemas-Johor Baru double-tracking railway and the KL International Financial District.

Rather than a sudden surge in demand for steel from these projects, the analyst said “demand will gradually improve because the ETP and the 10th MP will be implemented in stages”.

The analyst also said the construction sector would have the choice of buying cheap imports from China or local players. The former would certainly put the local steel industry at a serious disadvantage.

Larger steel players like Lion Industries or Ann Joo could probably counter the import of steel, but smaller ones may have a tougher time, according to the analyst.

Prices of steel will continue to depend on China and the weakening demand is expected to continue into the rest of the year.


This article appeared in The Edge Financial Daily, February 10, 2012.



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DiGi: A steady long-term investment

DiGi.Com Bhd’s share price remained on a steady uptrend at the start of the new year, gaining 6.7% year-to-date. We believe the stock will carry on doing well, despite rising valuations. This is particularly so if investors take a slightly longer term view.

Earnings-wise, the company continues to surprise on the upside. Revenue was up 10.3% last year to RM5.96 billion. Coupled with efficiency gains, DiGi registered record high operating margins in its latest 4QFY11 results. Earnings were further boosted by the recently approved tax incentives for capital spending on mobile broadband network. As a result, net profit expanded by 6.5% to RM1.25 billion in 2011, despite sharply higher accelerated depreciation charges. The latter is due to the company’s network modernisation programme.

Profit growth on higher revenue and lower effective tax in 2012
The telco industry is domestic-centric. Thus, the business is less affected by the prevailing global uncertainties and is fairly defensive. Of course, should the global economy make a sustained downturn, it will eventually hurt consumer confidence. But at this point, domestic consumption is expected to remain resilient.

DiGi believes it can maintain a high single digit revenue growth this year. With the smallest subscriber base among the big three mobile telcos, DiGi has room to grow by expanding its geographical presence as well as tapping into market segments where it still has low market share. The company’s subscribers grew by more than 13% to 9.92 million at end-2011, up from 8.77 million in the previous year.

DiGi plans to focus on the tablet market to drive Arpu.

The average revenue per user (Arpu), meanwhile, appears to have stabilised with rising mobile Internet usage — including data packages bundled with smartphones — offsetting the gradual decline in voice revenue and competitive pricing pressures.

Uptake for smartphone packages is expected to keep rising, mirroring our changing lifestyle as well as increasing affordability of handsets. Roughly 20% of DiGi’s customers are smartphone users. In addition to the smartphone market segment, the company also plans to focus on the rapidly growing tablet market segment. Hence, data will continue to drive Arpu.

We forecast net profit will rise by 10% to RM1.33 billion this year, underpinned by the company’s top line growth as well as a low effective tax rate, which is estimated to stay around 22% to 23% for 2012/13. In addition, DiGi’s strengthening cash position will translate into lower financing costs. The company had net cash totalling RM370 million as at end-2011, a reversal from net debt of RM226 million at the end of the previous year.

Based on our forecast, DiGi shares are trading at more than 24 times 2012 earnings, which is higher than the broader market’s average valuations. However, we believe its stock price will be supported by attractive yields.

Attractive yields expected to support stock price
The company is in the process of finalising a capital repayment totalling RM509 million, a small portion of which is imputed in its final dividend of 6.5 sen per share. The stock will trade ex-entitlement on Feb 17. Assuming a 100% profit payout this year, dividends — including the balance of the capital repayment — are estimated to total some 22 sen per share. That will earn shareholders a net yield of 5.4% at the current price of RM4.14.

With a growing cash pile from a strong cash flow stream generated by operations, the management has hinted at another capital management exercise. If it materialises, yields could be even higher.

Cost savings to drive growth over longer term
Looking slightly further ahead, net profit in 2013 will turn sharply higher following the completion of the company’s accelerated depreciation programme — estimated at roughly RM1 billion combined for 2011/12. In addition, DiGi is looking to more operational cost savings once its network modernisation plan is completed by end-2012. It had already begun the physical swapping of a brand new, LTE-ready network for the existing one in 4Q11.

Thus, we forecast the price-earnings ratio will narrow to less than 18 times in 2013 — and will fall further with the incremental savings from its network collaboration with Celcom coming into fruition. The company estimates the annual savings will eventually ramp up to some RM150 million to RM250 million combined after 2015.

In short, we foresee consistent growth in DiGi’s earnings over the next few years that will continue to drive valuations lower, in addition to higher than market average yields over the period.


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, February 10, 2012.



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Pavilion REIT’s bigger Christmas gift

Pavilion REIT (Feb 9, RM1.16)
Maintain outperform with target price of RM1.27: At 107% of forecast, earnings for the short 25-day quarter post listing were within expectations as it is a seasonally strong quarter. We tweak our numbers for updated balance sheet items but maintain our dividend discount model-based target price and reiterate our “outperform” call.

Pavilion’s 4QFY11 was only a 25-day quarter as the stock was listed on Dec 7, 2011. December is a seasonally strong month as Christmas festivities and year-end school holidays typically boost retail sales.

Pavilion declared a dividend per unit of 0.44 sen. A positive surprise was the RM18 million revaluation gain for Pavilion KL, which helped raise Pavilion’s net asset value to RM2.87 billion or 96 sen per unit.

Another nice surprise was the 12.5% increase in retail sales from RM1.6 billion in 2010 to RM1.8 billion in 2011. As shopper traffic was flattish year-on-year (y-o-y) at 31 million, this implies higher retail sales per shopper.

This is a positive development as it suggests that the quality of the shopper traffic has improved. Higher retail sales is good news for Pavilion as turnover rent typically comprises about 4% of total rental revenues.

Pavilion enjoyed 5% to 6% rental reversion for the 7% of tenancies that expired in 2011. We believe that Pavilion Mall, which opened in 2007, is still at an early stage in its rental reversion cycle.

In its first cycle of rental reversions in 2010, rental rates were raised by 8% to 12.5%. We expect similarly strong rental reversions during its next major rental review in 2013 when 67% of net lettable area comes up for renewal. — CIMB IB Research, Feb 9


This article appeared in The Edge Financial Daily, February 10, 2012.



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Is Xingquan in for a re-rating?

Xingquan International (Feb 9, 96 sen)
Maintain outperform with target price of RM1.47: The 4Q11 listing of two small-cap casual wear stocks in Hong Kong could leave a footprint on Xingquan, which is well overdue for an upward re-rating given its huge valuation discount to the two stocks. The stock could also be catalysed by a resumption of dividends.

We still think Xingquan could be taken private in view of its depressed valuations. If its valuation discount to Hong Kong-listed comparables does not narrow, it may be only a matter of time before it is taken private and listed on other markets. Our target price basis remains one times price-to-book value (P/BV).

The two small-cap casual wear stocks that were listed in Hong Kong in 4Q11 — China Outfitters (COH) and Active Group Holdings (AGH) — are now trading at seven to eight times CY12 price-earnings ratio (PER).

This is much higher than the two times PER for Xingquan, which is also involved in casual wear in China. Xingquan is fairly similar in size to the two companies, with a CY12 net profit forecast in between AGH’s and COH’s.

Xingquan’s big valuation discount is unwarranted in our view. Ex-cash, its calendar year 2012 PER is less than one times. Most of the China shoe producers listed on Bursa Malaysia are trading at only two times PER.



In FY11 ended June, Xingquan did not announce a dividend, which hurt sentiment on this stock. The company indicated the funds were needed for working capital.

However, over the past few months, working capital needs have eased as raw material prices have fallen to more “normal” levels and there is less pressure for up-front payments to suppliers.

We, therefore, see no fundamental reason for Xingquan not to pay some dividends in FY12. We are hopeful that the company will surprise investors with an interim dividend announcement after releasing its 2QFY12 results at end-February. — CIMB IB Research, Feb 9


This article appeared in The Edge Financial Daily, February 10, 2012.



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MBSB’s 1Q headline income indicators could be in for a rebound

Malaysia Building Society Bhd (Feb 9, RM2.13)
Maintain market perform with revised fair value of RM1.95 from RM1.88: Management attributed the 22% quarter-on-quarter (q-o-q) drop in 4QFY11 pre-tax profit to: (i) loan securitisation leading to higher funding cost; (ii) lower processing fee from slower personal financing (PF-i) disbursements; and (iii) higher loan impairment allowances due to higher collective allowances for PF-i.

Management said 4QFY11 gross loans were flattish q-o-q, mainly due to slower PF-i disbursements during the quarter as MBSB had already met its full-year disbursement target in early 4QFY11.

MBSB targets PF-i disbursements of RM8 billion (2011: RM6.6 billion). Disbursements for 1QFY12 PF-i have been strong, partly reflecting the new products launched. Management’s plans to diversify the loan book to roughly equal contributions from the personal finance, mortgage and corporate/wholesale segments remain unchanged, but we suspect this will take a while longer than the 12- to 18-month time frame mentioned earlier.

Management’s guidance for net interest margin (NIM) of at least 4% and cost-to-income ratio to rise to 25% (2011: 21%) was unchanged. Management expects asset quality to improve further with the net impaired loan ratio declining to 5% as at end-2012, from 7.6% a year ago.

We think several 1QFY12 key income indicators could trend positively. First, q-o-q loan growth appears set to come in significantly better than 4QFY11’s.



Second, we think NIM could see some q-o-q expansion (4Q11: -55 basis points [bps] q-o-q) from the stronger PF-i disbursements and as the impact from the negative carry due to the securitisation of receivables wears out.

Third, non-interest income (NII) could rebound q-o-q due to higher processing fee income. The impact on bottom line will depend on how rapidly overheads start to rise and whether any asset quality issues crop up.

Notwithstanding the above, NIMs may start to come under pressure again beyond 1QFY12.

PF-i rates appear to be under pressure. We estimate the yields on one of MBSB’s new PF-i package are about 120 to 180 bps lower than last year’s packages.

In response, we understand that Bank Rakyat has also cut rates accordingly. Further securitisation of receivables would put pressure on NIMs ahead and also lead to more volatile NIM trends, as seen in the recent 4QFY11 results.

We have raised our FY12/FY13 earnings per share (EPS) projections by 4% to 4.8% largely after we lowered our FY12/FY13 credit cost projections to 91 to 99 bps (104 to 116 bps).

We raise our fair value to RM1.95 from RM1.88, based on unchanged target price-earnings ratio of eight times ascribed to MBSB’s fully-diluted 2012 EPS. We maintain our “market perform” call. — RHB Research Institute, Feb 9


This article appeared in The Edge Financial Daily, February 10, 2012.



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Dijaya moves on mixed projects

PETALING JAYA: Dijaya Corp Bhd plans to launch products in at least two of its new mixed development projects in the Klang Valley this year.

One of the mixed developments is Tropicana Gardens located in its 400-acre (161.8ha) Tropicana Indah development in Petaling Jaya, managing director Datuk Tong Kien Onn said.

Tropicana Gardens has a gross development value (GDV) of RM1.8 billion and will take up 14 acres of a total land area of 17 acres. Tong said the remaining three acres will be left for future development.

The product components of Tropicana Gardens will include serviced apartments, hotel, office and retail.

The developer is looking at having the first launch in the third quarter, Tong said on the sidelines of the group’s annual luncheon yesterday, where a total of RM225,000 was donated to 15 charities by the Dijaya Tropicana Foundation. Dijaya group CEO Tan Sri Danny Tan made the presentations.

Scheduled for launch in the second half of the year is a project in USJ 3, Subang Jaya called Tropicana Hills. Located close to the Federal Highway, it will be a mixed development with a GDV of RM3.5 billion on 88 acres.

From the Dijaya Tropicana Foundation board of trustees are Dickson Tan (4th from left), Diana Tan (5th from left), Puan Sri Ivy Tan (6th from left), Tan Sri Danny Tan (7th from left) and Datuk Tong Kien Onn (8th from left) with the representatives of 15 charities holding their mock cheques totalling RM225,000.

Tong said the project will include a school, hospital, hotel, condominiums and serviced apartments.

“At the moment, we are in the process of converting the land status from industrial to commercial,” he said.

“It is flat land and there is discussion with the authorities to build a ramp from the Federal Highway to Tropicana Hills for better accessibility.”

Meanwhile, Dijaya is launching exclusive zero-lot bungalows in the Tropicana Indah development dubbed Golf Villas by early March.

“There are only 12 units of 3-storey zero-lot bungalows. The Golf Villas are situated within Tropicana Indah project in Petaling Jaya,” Tong said.

The villas have a GDV of RM64 million. Prices start from RM4.8 million with average built-ups of over 7,000 sq ft.

In the past 1½ years, the group has been aggressively acquiring land. Pre-2010, the group only had 142 acres in its landbank but post-2010, Dijaya acquired 668 acres in Peninsular Malaysia for a current total of 810 acres. The total GDV of its landbank now amounts to about RM28 billion.

One recent purchase was 198 acres in Kajang, which Dijaya bought for RM228 million last September. It has a GDV of RM2 billion and Tong said the group is currently looking into rezoning the land from recreation to mixed-commercial and residential. The project is still in the planning stages.


This article appeared on the Property page, The Edge Financial Daily, February 10, 2012.



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CWT sees property market growing 10% in transaction value

KUALA LUMPUR (Feb 10): The property market is expected to see 10 per cent growth in transaction value this year from over RM40 billion last year, according to property consultant CH William Talhar & Wong Sdn Bhd.

Managing director Foo Gee Jen said on Friday the growth is slightly lower compared to 11 per cent last year, adding the appreciation in market value is mainly driven
by cost rather than demand.

"The higher land value, shortage of labour and rise in building material prices rather than buyers' demand prompted our forecast value," he said.

He said the property market would stay buoyant on the back of the strong housing property segment, with the growth mainly contributed by demand from the young population.

Speaking at a media briefing on the outlook for the property sector, he said office rentals would remain stagnant or decline for older buildings but there would be higher asking rentals for newly completed buildings with green certification and Multimedia Super Corridor status.

With over 0.74 million sq m of new office space expected to enter the market this year, there will be a very competitive office leasing environment, he said.

"Hence, older buildings will face pressure from declining occupancies as tenants seek newer, better quality offices," he added.

For the condominium sector, Foo said luxury condominiums could face the threat of oversupply in the future.

On new non-landed developments, he said a total of 13,716 units in 47 developments are currently under CONSTRUCTION [], with about 2,900 units to be completed this year.

"With the average occupancy rate at 68 per cent, this gives some pressure on the developers, whose current focus is more on smaller and more affordable unit sizes of 46.5 to 93.0 sq m," he said.

Selling prices range from RM9,136 to RM21,520 per sq m in the KLCC area, and RM7,532 to RM10,760 per sq m in the Mont' Kiara/Sri Hartamas and Kenny Hills areas, he added.

However, he said, sales of new housing developments are expected to be sustained this year due to the low interest and unemployment rates and attractive financing packages.

He said the take-up rate will be maintained at last year's rate, with the House Price Index at 11.4 per cent for Kuala Lumpur and 9.6 per cent for Selangor.

"Last year, the landed residential sector showed strong movement on the supply side while demand was correspondingly positive, with most new launches recording high sales rates of between 60 and 70 per cent," he added. - Bernama



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'Property mart to see 10pc growth in 2012'

The property market is expected to see 10 per cent growth in transaction value this year from over RM40 billion last year, according to property consultant CH William Talhar & Wong Sdn Bhd.

Managing director Foo Gee Jen said the growth is slightly lower compared to 11 per cent last year, adding the appreciation in market value is mainly driven by cost rather than demand.

"The higher land value, shortage of labour and rise in building material prices rather than buyers' demand prompted our forecast value," he said.

He said the property market would stay buoyant on the back of the strong housing property segment, with the growth mainly contributed by demand from the young population.

Speaking at a media briefing on the outlook for the property sector today, he said office rentals would remain stagnant or decline for older buildings but there would be higher asking rentals for newly completed buildings with green certification and Multimedia Super Corridor status.

With over 0.74 million sq m of new office space expected to enter the market this year, there will be a very competitive office leasing environment, he said. "Hence, older buildings will face pressure from declining occupancies as tenants seek newer, better quality offices," he added.

For the condominium sector, Foo said luxury condominiums could face the threat of oversupply in the future.

On new non-landed developments, he said a total of 13,716 units in 47 developments are currently under construction, with about 2,900 units to be completed this year.

"With the average occupancy rate at 68 per cent, this gives some pressure on the developers, whose current focus is more on smaller and more affordable unit sizes of 46.5 to 93.0 sq m," he said.

Selling prices range from RM9,136 to RM21,520 per sq m in the KLCC area, and RM7,532 to RM10,760 per sq m in the Mont' Kiara/Sri Hartamas and Kenny Hills areas, he added.

However, he said, sales of new housing developments are expected to be sustained this year due to the low interest and unemployment rates and attractive financing packages.

He said the take-up rate will be maintained at last year's rate, with the House Price Index at 11.4 per cent for Kuala Lumpur and 9.6 per cent for Selangor.

"Last year, the landed residential sector showed strong movement on the supply side while demand was correspondingly positive, with most new launches recording high sales rates of between 60 and 70 per cent," he added. -- Bernama



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KL shares mixed at mid-afternoon

Share prices on Bursa Malaysia were mixed at mid-afternoon today as investors remained cautious on progress over the Greece debt talks, dealers said.

At 3pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 3.1 points lower at 1,562.22. Gainers led losers 537 to 325 while 311 counters were unchanged, 313 untraded and 21 others suspended. A total of 2.25 billion shares worth RM1.62 billion were traded.

The Finance Index rose 40.37 points to 13,862.75 and the Industrial Index gained 1.39 points to 2,906.13 but the Plantation Index fell 31.23 points to 8,893.9.

The FBM Emas Index eased 3.12 points to 10,894.51, while the FBM Mid 70 Index improved 48.73 points to 12,513.45 and the FBM Ace Index added 57.85 points to 4,136.85.

Among active stocks, Metronic Global earned half-a-sen to eight sen, Tebrau Teguh advanced 10 sen to 90.5 sen while Compugates Holdings slipped half-a-sen to 11.5 sen.

For the heavyweights, Maybank increased five sen to RM8.52, while Sime Darby shed two sen to RM9.68 and Petronas Chemicals eased one sen to RM6.99. -- Bernama



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Market chases up Tebrau Teguh way above 76 sen takeover price

KUALA LUMPUR (Feb 10): TEBRAU TEGUH BHD [] share price rose to a high of 94 sen on Friday, chased up by market players hoping the takeover price of 76 sen could be increased.

Analysts had said the 76 sen offer price had undervalued Tebrau Teguh due to its large landbank in Iskandar Malaysia, the country’s latest property hotspot.

At 3.14pm, it was up 12.5 sen to 93 sen. There were 86.73 million shares transacted at prices ranging from 80 sen to 94 sen.

The FBM KLCI fell 2.7 points to 1,562.62. There were 2.38 billion shares transacted at RM1.73 billion. There were 533 gainers, 339 losers and 316 stocks unchanged.

Tebrau is being taken over by Iskandar Waterfront Holdings Sdn Bhd (IWH), which is buying a 33.15% stake in the company from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ) for RM168.7 million.

KPRJ, the Johor state investment arm, will remain a major shareholder of Tebrau as IWH is owned by KPRJ and Credence Resources Sdn Bhd, a company controlled by tycoon Datuk Lim Kang Hoo of EKOVEST BHD [].

With the collaboration between Lim and the state investment entity, analysts think Tebrau could potentially be a stock to watch for exposure to Johor.



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Malaysia Airlines’ travel fair takes off, offers 500,000 seats

KUALA LUMPUR (Feb 10): The Malaysia Airlines Travel Fair (MATF), which was launched on Friday, is offering up to 500,000 seats for travel.

MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) said the MATF, which is until Feb 17, was providing more special offers for economy and business class journeys on both domestic and international routes of the national carrier’s network.

“The offers are valid for travel from Feb 10 to July 31, July 2012, except specified peak periods. For some routes, the offers are also restricted to lean flights on both the international and Malaysian domestic network.

“For the convenience of customers, fares offered will be all-inclusive, incorporating air fare, fuel surcharges and airport taxes,” said MAS.

Elaborating on the domestic travel offers, it said that they covered 15 routes between KLIA and destinations in the states of Sabah and Sarawak and Peninsular Malaysia as well as six routes within Sabah and Sarawak.

For instance, the one-way economy class domestic travel fares start from as low as RM134 for Kuching-Sibu, RM 144 for Kuala Lumpur-Alor Star and RM224 for Kuching-Kuala Lumpur while the maximum is only RM 279 one way for Kota Kinabalu-Kuala Lumpur.

The domestic one-way business class fares start at RM359 for Kota Kinabalu-Labuan in East Malaysia and RM429 for Johor Bahru-KLIA in Peninsular Malaysia.

The international travel offers from Malaysia cover 13 Asean routes, seven routes each to China/Hong Kong and South Asia, six routes to Australia/New Zealand, five routes to Europe/Turkey and four routes to North Asia as well as to Los Angeles, USA.

MAS said the international one way economy class fares start from RM189 to Medan in the Asean region, RM389 to Hong Kong, RM500 to Taipei in the north Asian region, RM789 to Perth in Australia and RM1,349 to Amsterdam. The maximum one-way offer is RM 1,749 to Los Angeles.

It added that the one way international business class fare from Malaysia ranged from between RM335 to Medan and RM7,099 to Amsterdam.



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S P Setia: SC decision of joint offerors’ revised offer still pending

KUALA LUMPUR (Feb 10): S P Setia said the Securities Commission’s decision for a ruling on the joint offerors - - Permodalan Nasional Bhd (PNB) and S P Setia president and CEO Tan Sri Liew Kee Sin – is still pending.

The property developer said on Friday it had received a press notice from Maybank Investment Bank Bhd the application, for a ruling to the concert-party relationship of the joint offerors and various other persons, was submitted to th SC on Jan 25 for its approval.

“As at the date of the press release, the decision of the SC is still pending. In these circumstances, the offer document for the revised offer can only be despatched to the holders after the SC’s decision on the ruling application as well as the SC’s clearance of the offer document are obtained,” it said.

To recap on Jan 20, Liew and PNB would be the joint offerors in the revised takeover offer for S P Setia which would see both parties working together to grow the value of the company.

The offer price was also revised upwards by five sen each to RM3.95 for each S P Setia share and 96 sen for each S P Setia warrant.

The revised offer was agreed upon after the SC had reverted with its feedback on Dec 2 to their earlier proposal.

Under the revised offer, PNB, Liew and S P Setia would also ink a management agreement where Liew would remain as group president and CEO for three years following the close of the revised offer.

Liew would also hold on to his direct stake of 158.2 million shares or 8% of S P Setia and he had an option to see the stake to PNB progressively at RM3.95 each, should be desire to do so.



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Bursa shares rise on bullish ratings

Bursa Malaysia Bhd, the nation’s stock and derivatives exchange operator, rose to a six-month high after brokerages including Credit Suisse Group AG raised their share-price estimates to reflect better growth prospects.

The stock gained as much as 2.7 per cent to RM7.72 in Kuala Lumpur trading, the highest intraday level since July 29.

It traded at RM7.60 at 11.51 am local time. Fourth- quarter net income rose 5.2 per cent to RM31.3 million (US$10.3 million), bolstered by higher trading revenue on the derivatives market, it said in a statement yesterday.

“Bursa’s earnings are highly leveraged to improving market activity, with January 2012 volumes boding well,” Arjan van Veen, an analyst at Credit Suisse, wrote in a report today.

“Bursa has capacity to lift pricing as well as utilize the current excess capital on its balance sheet.”

He raised his price estimate to RM7.50 from RM6.94 and kept his “neutral” rating.

The average daily trading volume on the Southeast Asian nation’s stock exchange jumped 20 per cent to 1.8 billion shares in the past three months compared with the same period a year earlier, according to data compiled by Bloomberg.

Trading volume surged to 4.4 billion shares at the close on Feb 8, the highest since February 2007. Derivatives trading also surged, led by palm oil futures.

CIMB Group Holdings Bhd increased its price estimate for Bursa to RM7.65 from RM7.18, while Kenanga Investment Bank Bhd raised its target price to RM8 from RM7.40, they said in separate reports today.

Chan Ken Yew, an analyst at Kenanga, increased his 2012 earnings estimates by 5.3 per cent and 13 per cent for 2013.

The stock exchange operator’s 2012 profit may be similar to last year’s “if not better,” Bursa Chief Executive Officer Tajuddin Atan told reporters in Kuala Lumpur yesterday.

The bourse is open to strategic alliances to boost market access and improve efficiency, he said, without giving details.

Shares of Bursa have gained 13 per cent this year, outpacing a 2.1 per cent increase in the benchmark FTSE Bursa Malaysia KLCI Index. - Bloomberg



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Penny stocks see heavy trade, broader market firm

KUALA LUMPUR (Feb 10): The two-day rally on Bursa Malaysia took a breather on Friday, with the FBM KLCI slightly in the red but the broader market displayed some resilience, with heavy trading in penny stocks.

At 12.30pm, the KLCI was down 1.96 points or 0.13% to 1,563.36, which was line with the cautious key regional markets. Turnover was 1.96 billion shares valued at RM1.30 billion. Advancers led decliners 503 to 297 while 344 stocks were unchanged.

All the major regional markets fell, except Shanghai’s Composite Index which edged up 0.36% to 2,357.98.

Japan’s Nikkei 225fell 0.22% to 8,982, Hong Kong’s Hang Seng Index 0.58% to 10,888.60, Taiwan’s Taiex 0.6% to 7,863.49, South Korea’s Kospi 0.88% to 1,996.87 and Singapore’s Straits Times Index 0.27% to 2,973.

US light crude oil fell 33 cents to US$99.51. Brent crude slipped from a six-month high towards US$118 a barrel.

Market sentiment could have been affected by investors’ concerned about prospects of restructuring Greece's debt and global lenders demanded more steps even after it struck a long-awaited deal on fiscal reforms.

Reuters reported that Greek political leaders clinched a deal on severe austerity measures and reforms indispensable for a second international bailout in two years, but the country's lenders sought a parliamentary seal of approval before providing any aid.

At Bursa Malaysia, traders were quick to cash out the Selangor related counters after the rally petered out in the absence of any significant news. Puncak Niaga fell 17 sen to RM1.72 with 15.63 million shares done, KPS 11 sen to RM1.28, KHSB nine sen to 69 sen and JAKS 5.5 sen lower at 66.5 sen.

Among the index-linked stocks, Genting fell 16 sen to RM10.30, IOI Corp 12 sen to RM5.48, Tenaga 11 sen to RM6.19, HL Bank eight sen to RM11.50 and Sime Darby two sen to RM9.68.

The top 10 most active counters were penny stocks. Metronic Global was the most active, with 82.74 million shares done, up 0.5 sen to eight sen.

Maybank rose four sen to RM8.51, Public Bank two sen to RM13.98 while MMHE was the top performer among the index stocks, registering a 13 sen gain to RM5.50.



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Mara Inc. ups stake in mobile operator XOX to 6.29%

KUALA LUMPUR (Feb 10): Mara Incorporated Sdn Bhd raised its shareholding to mobile phone operator XOX Bhd to 19 million shares or 6.29% after three recent acquisitions from the open market.

A filing with Bursa Malaysia showed Mara Inc acquired 1.61 million over three days, from Jan 25 to Feb 3. The share price traded between 25 sen and 26 sen.

XOX offers mobile phone services by tapping into the infrastructure of its established partner, Celcom Axiata Bhd.

XOX mainly targets the prepaid market with a niche in the value-conscious segment, providing comprehensive content and value-added mobile services primarily to blue collar workers, business owners, youth and students.

Mara Inc. (formerly known as Tooltronic Sdn Bhd) is a unit of Majlis Amanah Rakyat. According to its website, Mara Inc. was formed to create and strengthen Bumiputera entrepreneurs and enterprises in order to streamline the efficiency of Mara activities and strategic investment in niche sectors of the economy.



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Extol at 3-month high, 10.3% stake crossed off-market

KUALA LUMPUR (Feb 10): Shares of ACE Market listed EXTOL MSC BHD [] rose in very active trade while 10.3% of its shares issued were traded in several off-market deals on Friday.

Stock market data showed that 10.81 million shares were transacted at an average price of 19 sen each.

At 11.45, shares of Extol rose to a near three-month high of 23.5 sen, up 2.5 sen.

Extol provides anti-virus applications software and ICT security solutions.



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OSK upgrades CIMB to 'buy'

OSK Research Sdn Bhd is more optimistic on the outlook of CIMB Group Holdings Bhd although its share price has lagged both the market and its peers over the past months.

In a research note today, OSK said there was scope for CIMB's earnings to beat relatively conservative consensus earnings growth forecast of 4 per cent for financial year 2012.

OSK said CIMB was scheduled to release its fourth quarter 2011 (4Q11) results where earnings were expected to reflect a 8 per cent year-on-year (yoy) growth but a 5 per cent quarter-on-quarter decline owing to an upward normalisation in 4Q11 loan loss provisioning.

"This is a rather commendable performance, taking into account the fact that the 4Q10's non-interest income included the recognition of the lumpy investment banking fee income arising from the Petronas Chemicals' initial public offering.

"On a pre-provision operating line, we expect a high single-digit yoy growth from stronger foreign exchange income flows and stabilisation in the net interest margins," it said.

OSK has upgraded CIMB shares to a 'buy' with a higher fair value of RM8.05 from RM7.62 previously.

CIMB shares on Bursa Malaysia rose three sen to RM7.23 as at 10.48am today. -- Bernama



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KL shares easier at midmorning

At 10.30 am today, there were 424 gainers, 238 losers and 318 counters traded unchanged on the Bursa Malaysia.

The FBM-KLCI was at 1,563.77 down 1.55 points, the FBMACE was at 4,690.22 up 11.22 points, and the FBMEmas was at 10,901.05 up 3.42 points.

Turnover was at 1.133 billion shares valued at RM598.962 million. -- Bernama



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Water stocks rally dry up after one day, Puncak falls

KUALA LUMPUR (Feb 10): Water stocks, especially those related to Selangor, saw the rally dry up on Friday morning, with Puncak Niaga leading the decliners.

At 10.51am, the FBM KLCI fell 1.17 points to 1,564.15. Turnover was 1.23 billion shares valued at RM688.83 million. There were 439 gainers, 260 losers and 314 stocks unchanged.

Puncak fell 15 sen to RM1.74 with 12.77 million shares done. KPS lost 10 sen to RM1.29 and KHSB eight sen lower to 70 sen.

The Edge Financial Daily reported on Friday that Selangor Menteri Besar Tan Sri Khalid Ibrahim, had on Tuesday, said in a statement Bursa Malaysia has yet to explain satisfactorily why Puncak Niaga was given a waiver from being listed as a PN17 company.

Also on Tuesday, the Selangor government said in a statement that it would continue to push ahead for the restructuring of the water industry, claiming the water concessionaires will continue to fail the rakyat. It added that Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) should not be retained as the water services operator in the state.



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Naim Indah suspended on Friday for announcement

KUALA LUMPUR (Feb 10): Shares of Naim Indah Coproration Bhd, which had surged in very active trade this week, requested for trading suspension of its securities.

It said on Friday that it had requested for the suspension from 9am to 5pm to release details of a material transaction.

On Thursday, Bursa Malaysia Securities Bhd advised investors to be cautious following the recent sharp rise in the price and volume of Naim Indah shares.

The regulator said investors should exercise caution and make informed decisions in the trading of those shares.



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MMC Corp climbs on MRT job news

MMC Corp, a construction, power and ports group, rose 1.3 per cent to RM3.02,headed for its highest close since January 13, 2011.

MMC’s joint venture with Gamuda Bhd will be appointed project delivery partner for the Kuala Lumpur mass rail network project, according to an e-mailed statement by MRT Corp.

Gamuda added 0.3 per cent to RM3.90. - Bloomberg



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Puncak slides after Bursa query

Puncak Niaga Holdings Bhd, a water-treatment company, slid 5.8 per cent to RM1.78, bound for its steepest decline since Sept 22.

The company isn’t aware of the reason for the 30 per cent surge in its shares yesterday, it said in a statement in response to a query by the stock exchange. - Bloomberg



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Mahajaya jumps on buyout offer

Mahajaya Bhd jumped 13 per cent to 82.5 sen, on course for its highest close since February 2006.

The property developer received a buyout offer at 85 sen a share from a group already owning 72 per cent of the company, according to a stock exchange filing. - Bloomberg



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OSK Research sees upside for Metronic Global’s share price

KUALA LUMPUR (Feb 10): OSK Retail Research said it sees more upside for METRONIC GLOBAL BHD [] ‘s share price and it eyeing the 10 sen psychological mark as the first upside target, followed by the 11.5 sen level as the next target

“We could detect a clearer buy signal from Metronic’s weekly chart. The stock has violated the 200-week MAV line marginally yesterday, which could end the consolidation phase at below the long-term moving average line,” it said.

OSK Research said prior to Thursday’s price action, it was actually consolidating the 3.0 sen to 6.0 sen rally since mid-Nov last year.

The research house said traders could take advantage of the current situation and accumulate the shares at above the 200-week MAV line, which now lies at the 6.0 sen level.

“We are eyeing the 10 sen psychological mark as the first upside target, followed by the 11.5 sen level as the next target. Our cut-loss level is pegged at below the 200-week MAV line,” it said.



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HDBSVR: KLCI could open lower before staging recovery

KUALA LUMPUR (Feb 10): HwangDBS Vickers Research said the key FBM KLCI – which saw a surge in the last few minutes of trading on Thursday – could gap down at the opening bell before staging a subsequent recovery on Friday.

“Against a fairly resilient market backdrop, the benchmark index will likely tread above the resistance-turned-support level of 1,555 in the near term,” it said in its market outlook report.

As for external events, it said major U.S. equity indices were up slightly on Thursdayl night – rising between 0.1% and 0.4% – after Greek political leaders agreed to impose austerity measures in exchange for international bailout funds.

“After the recent sharp market rally, investors may be keen to look for laggards amid the prevailing positive sentiment. Despite the absence of visible fundamental catalysts, rotational plays will likely persist ahead.

“Hence, following the increased interest in water-related counters yesterday, laggard stocks within the sector like EngTex and Weida may also come into the limelight. Separately, Mahajaya’s share price should see action due to a takeover exercise at a cash offer price of 85 sen per share (versus its last done price of 73 sen),” said HDBSVR.



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