CIMB Research maintains Outperform on Daibochi, target price RM3.25

KUALA LUMPUR (April 27): CIMB Research has maintained its Outperform rating on Daibochi Plastic & Packaging Industry Bhd with a target price of RM3.25 and said Daibochi’s 1Q12 results were within expectations.

The research house said on Friday that it expects Daibochi to secure maiden major orders from an Australian F&B player sometime this year.

“This could be the much-needed catalyst for the stock. Meanwhile, investors can get 6% return from dividends.

“Even though annualised 1Q12 net profit was 82% of our FY12 forecast, we consider this line with our and market expectations as we expect stronger earnings in the remaining quarters. We maintain our Outperform call and target price basis of 9x CY13 P/E, a 30% discount to our target market P/E,” it said.



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RHB Research remains positive on Daibochi, FV RM2.78

KUALA LUMPUR (Feb 21): RHB Research Institute remains positive about Daibochi’s long-term growth strategy and is maintaining its Market Perform call on the stock.

It said on Tuesday it had made some minor changes to the fair value estimate of RM2.78 a share (RM2.77 previously) based on 9.5 times FY12 EPS.

“We remain positive on Daibochi’s long-term growth strategy on the back of its emphasis in production innovation (including electronic packaging and medical), as well as its emphasis on Australia.

“Nevertheless, we remain cautious as there could still be risks of margin erosion due to the price volatility of raw material components (although raw material prices have recently stabilised),” said RHB Research.



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Daibochi 4Q earnings jump 42.3% to RM5.9m

KUALA LUMPUR (Feb 20): Diabochi Plastic and Packaging Industry Bhd’s earnings jumped 42.3% to RM5.91 million in the fourth quarter ended Dec 31, 2011 from RM4.15 million a year ago due to higher sales demand and favaourable sales mix for its packaging segment.

It said on Monday, its revenue was slightly higher at RM75.70 million compared with RM75.46 million. Its earnings per share were 8.08 sen compared with 5.50 sen. It proposed a dividend of 4.0 sen per share compared with 3.50 sen a year ago.

“Packaging segment revenue increased by 24.9% to RM73.57million in 4Q2011 (4Q10:RM58.92 million). The profit before tax in 4Q11 increased by 140.29% to RM6.51million (4Q10:RM2.71 million). The significant increase in profit before tax was mainly due to higher sales demand from existing customers and favourable sales mix in 2011,” it said.

A for the property segment, revenue fell 87.1% to RM2.14 million (4Q10: RM16.54 million) and pre-tax profit fell 72.3% to RM77,000 (4Q10: RM2.76 million). The reduction in the revenue and pre-tax profit for the property segment was in line with the lower percentage of completion recognised for the current reporting period as compared to a year ago.

For the financial year ended Dec 31, 2011, its earnings increased by 10.4% to RM20.07 million from RM18.18 million. Its revenue rose 6.1% to RM284.23 million from RM267.75 million.



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Daibochi targets customers in Australia

Daibochi Plastic and Packaging Industry Bhd continues to target potential customers in Australia, as well as multinational customers in the food and beverage (F&B) sector, said managing director Thomas Lim.

"We hope to begin supplying flexible packaging to them in the financial year 2012," he said in a statement today.

The flexible packaging solutions provider also eyes revenue contributions from new sectors, namely, medical gloves and the electronics sector in the current financial year ending Dec 31, 2012.

He said the Group had made significant progress in the past financial year, in testing and certifying its flexible packaging, with local medical gloves and electronics manufacturers abroad.

Lim said: "The Group's diversification into the non-F&B sector would be a strategic step towards enhancing our financial performance for the long term."

For the financial year ended Dec 31, 2011, Daibochi posted a 10.3 per cent increase in group net profit to RM20.1 million, compared with RM18.2 million previously.

Meanwhile, revenue increased 6.2 per cent to RM284.2 million, from RM267.7 million previously. The higher revenue was attributed to the packaging segment, which saw a 9.4 per cent increase to RM267.9 million in the 2011 financial year.

On prospects, Lim said, the company believed its entrenched premier position in the F&B and Fast Moving Consumer Goods (FMCG) sector would provide resilience in the ongoing global uncertainty.

"We intend to strengthen our collaboration with multinational corporations, to have stronger foothold in the flexible packaging industry," he added.

He also said raw material prices are largely anticipated to moderate in the current financial year, in view of the expected increase in global supply and need-based demand by manufacturers. -- Bernama



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KLCI kicks off year’s final trading week on tepid note

KUALA LUMPUR (Dec 27): The FBM KLCI started the final trading week of the year on a weaker note and fell 4.61 points to 1,491.54 at mid-morning, weighed by select blue chips.

Losers led gainers by 179 to 174, while 194 counters traded unchanged. Volume was 176.78 million shares valued at RM66.23 million.

Asian shares were steady on Tuesday in thin volume as investors took to the sidelines before U.S. markets reopen later in the day from a long weekend and data which could offer clues over growth prospects in the world's largest economy, according to Reuters.

European and some Asian markets, including Hong Kong and Australia, were closed on Tuesday, it said.

At the regional markets, Japan’s Nikkei 225 fell 0.52% to 8,435.63, the Shanghai Composite Index shed 0.06% to 2,188.82, Taiwan’s Taiex lost 0.52% to 7,055.82, South Korea’s Kospi fell 0.74% to 1,843.03 and Singapore’s Straits Times was down 0.26% to 1,492.21.

BIMB Securities Research in a note Dec 27 said the Eurozone enjoyed a temporary reprieve as traders and investors alike were in holiday mood ahead of Christmas and 2012, adding that global equities continued with their uptick as European bourses have all registered positive gains.

Buoyed by improved US economic outlook and absence of nasty news, the Dow Jones Industrial Average jumped 124 points to close at almost 12,300, it said.

However, the research house said that surprisingly, the feel good factor did not entirely cascade down to Asian bourses as the region markets ended rather mixed.

“As for Malaysia, the FBMKLCI continued with its uptrend and is within touching distant of the 1,500 mark.

“We reckon trading would be lacklustre over the next few days and will be interesting to see if the benchmark index is able to break the psychological 1,500 looking forward. We are sticking our necks out that it will,” it said.

On Bursa Malaysia, BAT was the top loser at mid-morning and was down 20 sen to RM49; PPB fell 18 sen to RM16.80, Genting PLANTATION []s down 16 sen to RM8.25, JT International 13 sen to RM6.86, Petra Energy and Hong Leong Bank fell eight sen each to RM1.05 and RM10.86, Harvest Court seven sen to RM1.06 while Daibochi and Shangri-La fell six sen each to RM2.58 and RM2.38.

Gainers included Nestle, HLFG, AIC, TDM, F&N. GAB, United Plantations, Kretam and Boustead, while the actives included Proton, Vastalux, Marco, Envair and Utopia.



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Stocks to watch: Decisive debt resolution crucial

KUALA LUMPUR: The performance of markets, including Bursa Malaysia, in the week ahead will hinge on a decisive debt resolution by European officials.

Markets are hoping that the European Council meeting will deliver a comprehensive programme of measures to address the European financial crisis.

Affin Investment Bank head of retail research Dr Nazri Khan expects the FBM KLCI to trend moderately higher this week, but the strength would be determined by the measures to resolve the European debt crisis.

“We notice that the global equities are moving beyond the stalled European debt talks and have shown a slight risk-on attitude late last week,” he said.

Nazri expects comments from France and Germany on the debt crisis resolution via leveraging bailout funds and recapitalising troubled banks to relieve investors.

“While there are scant specifics on the solution, we expect the details to be released in the EU summit to produce more equity strength. We therefore believe the reaction to the eurozone contagion threat may have been slightly exaggerated and that diminished risk concerns could be a positive factor this week,” he said.

As for Malaysia, he said the easing inflationary pressures and the signing of a five-year agreement on Malaysia-China joint development programme to be broadly supportive for local stocks.

“Further, we anticipate the strong floods in Thailand to divert some foreign investment to selective local sectors especially tourism, healthcare and automotive sectors. Finally, we expect the early corporate results to kickstart a mild year-end rally,” he added.

However, Nazri said he expects more volatile trading and he is still cautious on a longer term prospects as the underlying economic fundamentals for the US and Europe remain unchanged.

Over the last two weeks, local funds had been providing the direction for the market but he was concerned global economic conditions could enter into a double dip. Instead, he urged investors to wait to pick fundamentally strong, well-managed companies with strong defensive qualities at lower prices.

Among the stocks to watch are Tenaga Nasional Bhd (TNB), Maxis Bhd, Tanjung Offshore Bhd, Daibochi Plastic and Packaging Industry Bhd and SILK Holdings Bhd.

TNB will announce its financial results for the fourth quarter (4Q) ended Aug 31 but analysts expect it to record another quarter of losses as the shortage of gas supply from Petroliam Nasional Bhd (Petronas) forced it to burn the more expensive oil and distillate.

RHB Research Institute has maintained its “underperform” call on the power company with an unchanged indicative fair value of RM4.74 based on unchanged target CY12 price-to-earnings ratio of 12 times.

“Due to ongoing gas shortage from maintenance at Petronas’ liquefied natural gas plants and delays for the Bekok C bypass, TNB will likely record a loss in 4Q, possibly close to that seen in 3Q (net loss RM460 million),” it said.

TNB has proposed to issue RM5 billion in Islamic debt notes to finance the development of the 1,010MW coal-fired power plant in Manjung, Perak. The tenure is 28 years.

Meanwhile, Maxis expects significant gains from the provision of its 3G radio access network to U Mobile Sdn Bhd under the country’s first landmark network sharing and alliance agreement for an initial period of 10 years.

The arrangement also includes long-term evolution sharing, depending on the availability of the spectrum and technology.

Tanjung was awarded a RM27 million contract by Petronas Carigali Sdn Bhd to provide three offshore support vessels for up to two primary years. Tanjung said its unit Offshore Services Sdn Bhd was awarded the contract on Oct 20.

Daibochi’s net profit fell 5.8% to RM4.54 million in 3Q ended Sept 30 from RM4.82 million a year ago mainly due to a lower contribution from the property segment.

Its revenue declined 5.2% to RM67.66 million from RM71.42 million mainly due to lower sales in the packaging segment. Earnings per share was lower at 6.04 sen compared with 6.4 sen. It declared an interim dividend of three sen per share.

SILK’s unit Jasa Merin (M) Sdn Bhd was awarded a contract extension worth RM23.5 million by Petronas Carigali Sdn Bhd to provide an anchor handling tug supply vessel.

Melewar Industrial Group Bhd has proposed a two-call rights issue of up to 151.17 million rights shares to raise RM27.46 million.

It said the rights issue would be at an indicative issue price of RM1 per rights share on the basis of two rights shares for every three existing shares held on an entitlement date to be determined later.


This article appeared in The Edge Financial Daily, October 24, 2011.

Stocks to watch: Tenaga, Maxis, Tanjung, Daibochi

KUALA LUMPUR: Investors will sitting on their hands over the weekend as they focus on the summit of European leaders to resolve Europe’s debt crisis. A decisive framework to reach basic agreements over the weekend would bolster investor confidence.

On Wall Street, the S&P 500 posted its third straight week of gains on Friday Oct 21, lifted by optimism before this weekend's summit and strong earnings from blue-chip stocks.

The Dow Jones industrial average was up 267.01 points, or 2.31%, at 11,808.79. The Standard & Poor's 500 Index was up 22.86 points, or 1.88%, at 1,238.25. The Nasdaq Composite Index was up 38.84 points, or 1.49%, at 2,637.46.

Reuters reported important differences still separate major players France and Germany in solving Europe's debt crisis, but with two summits scheduled for next week, investors took an optimistic view that a resolution will soon be reached. Buying was also motivated by fear of missing a sharp move if basic agreements are reached over the weekend.

At Bursa Malaysia, stocks to watch are TENAGA NASIONAL BHD [], Maxis Bhd, TANJUNG OFFSHORE BHD [], Daibochi Plastic and Packaging Industry Bhd and SILK Holdings Bhd.

Tenaga will announce its financial results for the fourth quarter ended Aug 31, 2011 but analysts expect it to record another quarter of losses due to the shortage of gas supply from Petroliam Nasional Bhd, forcing it to burn the more expensive oil and distillate.

RHB Research Institute had maintained its Underperform call on the power company with an unchanged indicative fair value of RM4.74 based on unchanged target CY12 price-to-earnings ratio of 12 times.

“Due to ongoing gas shortage from maintenance at Petronas’ liquefied natural gas plants and delays for the Bekok C bypass, Tenaga will likely record a loss in 4Q, possibly close to that seen in 3Q (net loss RM460 million),” it said.

Tenaga, meanwhile, has proposed to issue RM5 billion in Islamic debt notes to finance the development of the 1,010 MW coal fired power plant in Manjung, Perak. The tenure is 28 years.

Meanwhile, Maxis expects significant gains from the provision of its 3G radio access network to U Mobile Sdn Bhd under the country’s first landmark network sharing and alliance agreement for an initial period of 10 years.

This arrangement also included long-term evolution (LTE) sharing, depending on the availability of the spectrum and TECHNOLOGY []. The collaboration was a milestone in the local telecommunications industry in the sharing of active telco systems and operating frequency spectrum.

Tanjung Offshore Bhd was awarded a RM27 million contract by Petronas Carigali Sdn Bhd to provide three offshore support vessels (OSVs) for up to two primary years.

Tanjung said its unit Offshore Services Sdn Bhd had been awarded the contract on Oct 20.

Daibochi Plastic and Packaging Industry Bhd’s net profit fell 5.8% to RM4.54 million in the third quarter ended Sept 30, 2011 from RM4.82 million a year ago mainly due to a lower contribution from the property segment.

Its revenue declined 5.2% to RM67.66 million from RM71.42 million mainly due to the reduction in the sales in the packaging segment. Earnings per share were lower at 6.04 sen compared with 6.40 sen. It declared an interim dividend of 3.0 sen per share.

SILK’s unit Jasa Merin (Malaysia) Sdn Bhd has been awarded a contract extension worth RM23.5 million by Petronas Carigali Sdn Bhd to provide one anchor handling tug supply vessel.

SILK said the primary three-year contract had been extended for another 12 months, which started on Oct 4. It expected the extension to contribute positively to its earnings for the financial year ending July 31, 2012.

PROTON HOLDINGS BHD [] plans to collaborate with China’s Hawtai Motor Group to set up a joint venture (JV) company there as part of Proton’s strategy to make China as one of its major manufacturing hub, especially for left-hand-drive vehicles.

MELEWAR INDUSTRIAL GROUP BHD [] has proposed a two-call rights issue of up to 151.17 million rights shares to raise RM27.46 million. The rights issue would be at an indicative issue price of RM1 per rights share on the basis of two rights shares for every three existing shares held on an entitlement date to be determined later.

Daibochi Plastic’s earnings dip 5.8%

KUALA LUMPUR: Daibochi Plastic and Packaging Industry Bhd’s net profit fell 5.8% to RM4.54 million in the third quarter ended Sept 30, 2011 from RM4.82 million a year ago mainly due to a lower contribution from the property segment.

It said on Friday, Oct 21 this was in line with the lower percentage of completion recognised for the current reporting period as compared to a year ago.

Daibochi said its revenue declined 5.2% to RM67.66 million from RM71.42 million mainly due to the reduction in the sales in the packaging segment. Earnings per share were lower at 6.04 sen compared with 6.40 sen. It declared an interim dividend of 3.0 sen per share.

For the nine-month period, earnings rose nearly 1% to RM14.16 million from RM14.03 million in the previous corresponding period.

However, the group’s profit before tax of RM18.00 million decreased by 1.9% from RM18.36 million due to a decline in the packaging segment. Profit from the property segment more than doubled to RM2.96 million from RM1.16 million.

Revenue rose 8.4% to RM208.52 million from RM192.28 million due to increased sales in both the packaging and property development segments.