Rio Tinto's decision won't affect Samalaju aluminium smelting project

KUCHING (March 28): The termination of agreement by Rio Tinto Aluminium (M) Sdn Bhd (RTA) and CAHYA MATA SARAWAK BHD [] (CMS) for the aluminium smelter project will not affect the original plan to develop the project in Samalaju Industrial Park (SIP).

Sarawak State Industrial Development Minister, Datuk Amar Awang Tengah Ali Hassan said to date there are 20 companies that have been shortlisted to invest in SIP, including a few companies involved in aluminium smelting projects.

"We are not worried (about the termination of the agreement). Our concern is whether we have sufficient power to supply to the heavy industries in Samalaju," he told reporters after the launch of Innovation and Integrity Day of Sarawak Land and Survey Department here.

Awang Tengah, who is also the Second Resource Planning and Environment Minister, said several interested investors especially from China and Arab countries have been identified to proceed with the project, which was expected to commence production in 2013.

In a statement yesterday, CMS said the termination involved heads of agreement between RTA and Samalaju Aluminium Industries Sdn Bhd, its wholly owned subsidiary, and the memorandum of understanding between the two companies and Sarawak Energy Bhd. - Bernama



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HDBSVR sees profit-taking pressure on Bursa Malaysia

KUALA LUMPUR (March 28): Hwang DBS Vickers Research said on Wednesday the presence of profit-taking pressures on Bursa Malaysia is expected to push the FBM KLCI lower in the near term.

“On the chart, the benchmark index may be on its way to test the immediate support level of 1,580,” it said.

Overnight on Wall Street, the key US indices, which hovered near their four-year highs, saw mild corrections of between 0.1% and 0.3% at the closing bell.

HDBSVR said it expected the spillover effects to be felt around the region on Wednesday.

The research house said stocks that may pull back include Cahya Mata Sarawak following the termination of its agreement with Rio Tinto Aluminium to build an aluminium smelter plant in Sarawak.

Also in focus could be Supercomnet, after announcing that Mohd Nazifuddin would not be pursuing the option to acquire an 18.7% stake in the company.

However, TDM was expected to see upside after it proposed a tax-exempt dividend per share of 18.5 sen, translating to a net yield of 3.9%.



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Stocks to watch: Plantations, Supercomnet, TDM, Poh Kong

KUALA LUMPUR (March 27) : PLANTATION [] stocks could be a highlight for Malaysian stocks on Wednesday as investors weigh the effects of pre-election sentiment in the country against world economic growth concerns.

Malaysian crude palm oil (CPO) futures rose to a fresh high of RM3,485 a tonne on Tuesday in anticipation of declining oil palm output against higher demand for the commodity.

As plantation firms make up about a fifth of the FBM KLCI’s weightage, improving sentiments on CPO prices could give a lift to the stock market gauge.

However, analysts said “shrinking volume and cautious sentiment” in the stock market ahead of the country’s general election may curb the FBM KLCI’s advance.

The FBM KLCI of 30 stocks rose 5.12 points to close at 1,588.1 on Tuesday.

Stocks to watch on Wednesday include plantation stocks, Supercomnet Technologies Bhd, TDM BHD [] and POH KONG HOLDINGS BHD []. Other counters which could see trading interest are UMW HOLDINGS BHD [], STAR PUBLICATIONS (M) BHD [] and CAHYA MATA SARAWAK BHD [] (CMSB).

Supercomnet Technologies Bhd, whose share price fell on Tuesday after surging on Monday, stated Mohd Nazifuddin Mohd Najib was not taking up the option to purchase an 18.66% stake in the company.

TDM Bhd has proposed a final dividend of 18.5 sen per share, tax exempt for the financial year ended Dec 31, 2011.

Poh Kong, a jeweller, said its net profit rose 31% to RM12.43 million in the second quarter ended Jan 31, 2012 from RM9.52 million a year earlier as the jeweller raked in higher sales against the backdrop of rising gold prices.

RHB Research Institute has revised upwards its earnings forecast for UMW by between 0.8% and 1% for financial years ending Dec 31, 2012 to 2014, besides raising its target price for the stock from RM6.70 to RM7.30.

Star Publications’ shares will go ex-dividend on Wednesday. The company dad declared a second interim dividend of nine sen a share for financial year ended Dec 31, 2011.

CMSB and Rio Tinto plc have called off plans to jointly establish an aluminium smelter in Sarawak as electricity-supply details for the project could not be finalised.



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Cahya Mata-Rio Tinto JV terminated

KUALA LUMPUR (March 27) : CAHYA MATA SARAWAK BHD [] (CMSB) and Rio Tinto plc have called off plans to jointly set up an aluminium smelting facility in Sarawak as electricity-supply details for the project could not be finalised.

In a statement to Bursa Malaysia on Tuesday, CMS group managing director Datuk Richard Curtis said both firms have not been able to obtain power supply from Sarawak Energy Bhd (SEB) at economically-feasible terms. As such the heads of agreement between CMS and Rio Tinto, apart from both companies’ memorandum of understanding with SEB were mutually terminated.

“As a result, Rio Tinto and CMS have agreed that they would cease to pursue plans to jointly develop an aluminium smelter at Samalaju in Sarawak but remain open to other future possible collaborations,” Curtis said.

He said CMS remains optimistic about investment opportunities within the Sarawak Corridor for Renewable Energy and is evaluating other investment opportunities there.



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KL shares close higher

Shares of the following companies had unusual moves in Malaysia trading. Stock symbols are in parentheses and prices are as of the close in Kuala Lumpur.

The FTSE Bursa Malaysia KLCI Index rose 0.8 per cent to 1,565.32, its fifth day of gains and the highest close since July 21.

Cahya Mata Sarawak Bhd climbed 3.2 per cent to RM2.28, its highest close since July 27. The construction company’s power-purchase talks with Sarawak Energy Bhd are ongoing and expected to be completed in coming months, Cahya Mata said in an exchange filing.

Compugates Holdings Bhd, a supplier of cellular phones, calculators and digital cameras, fell 4 per cent to 12 sen, the most since Jan. 30. The company isn’t aware of the reasons for the 39 per cent surge in its share price yesterday, it said in a response to a query by the stock exchange.

Malaysian Resources Corp, a property and construction group, dropped 2.2 per cent to RM2.19, its steepest decline since Jan. 12. Fourth-quarter net income slid 37 per cent from a year earlier to RM26.1 million, according to an exchange filing.

Naim Indah Corp, a property developer, surged 37 per cent to 67 sen, its highest close since October 2000. Its major shareholder Crest Energy Sdn Bhd sold a 22.8 per cent stake in the company to a group led by Raymond Chan, Naim Indah said in an exchange filing. The sharp rise in the price and volume prompted the stock exchange to advise investors today to “exercise caution” in trading the stock.

WCT Bhd, a construction group, jumped 7.8 per cent to RM2.78, its highest close since Aug. 17. The company won a RM300 million contract to build government buildings in Kuala Lumpur, WCT said in a statement. -- Bloomberg



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Cagamas MBS debt rating reaffirmed

RAM Ratings has reaffirmed the AAA rating (with a stable outlook) of Cagamas MBS Bhd’s RM2.41 billion residential mortgage-backed securities (2007/2027), known as CMBS 2007-2.

The reaffirmation is premised on the available overcollateralisation (OC) ratio of 34.38 per cent as at Feb 28, 2011, RAM Ratings said in a statement.

It is also premised on the overall performance of the collateral pool, and the structural support afforded by the transaction structure.

The stable outlook reflects RAM Ratings’ belief that the pattern of defaults and losses as well as prepayments on the government staff home loans (GSHLs) will continue to fall within its expectations. -- Bernama



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Cahya Mata Jan-Sept profit rises to RM140m

Cahya Mata Sarawak Bhd posted an increase in its pre-tax profit to RM140.185 million for the first nine-months of 2011, compared with RM68.611 million last year.

Revenue also rose to RM725.089 million from the RM659.431 million recorded in the corresponding period of 2010.

In a filing to Bursa Malaysia today, Cahya Mata Sarawak said: "The Group's earnings was mainly driven by the manufacturing division followed by construction and road maintenance as well as the construction materials division."



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Cahya Mata Sarawak 3Q net profit up 42.74% to RM38.17m

KUALA LUMPUR (Nov 25): CAHYA MATA SARAWAK BHD [] (CMSB) net profit for the third quarter ended Sept 30, 2011 rose 42.74% to RM38.17 million from RM26.74 million a year earlier, driven mainly by its manufacturing division.

The company said on Friday that its revenue for the quarter increased 3.57% to RM240.76 million from RM232.46 million in 2010.

Earnings per share for the quarter rose to 11.59 sen from 8.12 sen in 2010, while net assets per share was RM4.22.

CMSB’s net profit for the nine months ended Sept 30 rose to RM96.59 million from RM46.18 million in 2010, on the back of an increase in revenue to RM725.09 million from RM659.43 million.

Reviewing its performance, CMSB said its earnings continued to be mainly driven by its manufacturing division followed by the CONSTRUCTION [] & road maintenance and the construction materials divisions.

The manufacturing division, being the key driver and largest contributor to the group’s profitability, continued to achieve higher profit due to higher sales volume and an upward revision of prices, it said.

“All Divisions reported higher profits except for construction material and trading divisions which were affected by delay in projects.

“Whilst the operating environment faced by the group will remain challenging, the board expects that the group’s financial performance will continue to remain favourable and prospects for the year to be good,” it said.



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Cahya Mata plant cost up on additional investment

PETALING JAYA: Cahya Mata Sarawak Bhd (CMSB) yesterday said the US$50 million (RM156.5 million) increase in its estimated cost to build the manganese and ferro silicon smelting plant in Samalaju, Sarawak, is due to additional investments in certain aspects and criteria of the plant.

When the group signed the memorandum of understanding with OM Materials (S) Pte Ltd in July, the cost of building the smelting plant was estimated at US$450 million.

However, last Thursday, the group said the cost had increased to US$500 million.

CMSB clarified to Bursa Malaysia that the additional investments include investment in conveyor belt for US$35 million, additional engineering, procurement, construction management and indirect costs for US$9.2 million, last-mile electricity connection for US$3.8 million and insurance for US$2 million.

According to the breakdown information, the conveyor belt system, insurance and last-mile electricity connection are additional costs not included in the initial estimation.

The management did not provide the reason for the additional conveyor belt system.

On the supply of raw materials for the smelting plant, CMSB said it is currently negotiating with other parties, believed to be OM Holdings Ltd, the parent company of OM Materials, on terms of the raw material supply agreement including the duration.

CMSB said that barring any unforeseen circumstances, it expects the agreement to be concluded by the first quarter of next year.

The group added that negotiations with off-takers of its end products will be concluded by the second quarter.

The project is undertaken through a joint-venture company called OM Sarawak Sdn Bhd, which is 20%-owned by Samalaju Industries Sdn Bhd, a wholly-owned subsidiary of CMSB, together with OM Materials (S) Pte Ltd, a wholly-owned subsidiary of OM Holdings.


This article appeared in The Edge Financial Daily, October 25, 2011.

CMSB explains US$50m increase in smelting plant costs

KUALA LUMPUR: CAHYA MATA SARAWAK BHD [] the cost to build the manganese and ferro silicon smelting plant increased from US$450 million to US$50 million due to an increase in higher engineering and machinery costs.

In an announcement to Bursa Malaysia, Monday, Oct 24, it said the increase in costs was attributed to " additional engineering, procurement, CONSTRUCTION [] management and indirect costs (EPCM) of US$9.2 million, insurance of US$2 million, last mile electricity connection worth US$3.8 million and a conveyer belt worth US$35 million".

It was responding to a Bursa Malaysia Securities query over the higher costs for the project.

To recap, on Thursday, Oct 20, CMSB announced the signing of two MoUs between its unit Samalaju Industries Sdn Bhd and OM Materials (S) Pte Ltd, a unit of OM Holdings Limited for the plant with an annual capacity of about 600,000 tonnes in Samalaju, Sarawak.

CMSB also said the parties were still negotiating the terms of the raw material supply agreement, including the duration for the supply.

"Barring unforeseen circumstances, it is anticipated that the Raw Material Supply Agreement will be concluded by the first quarter of 2012,” it said.

CMSB anticipated that negotiations with the off-takers would be concluded by the second quarter of 2012.