IJM appointed main contractor for WCE

IJM Corp Bhd
(Dec 15, RM6.42)
Upgrade to “buy” with an unchanged target price of RM7.20. The IJM Construction Sdn Bhd (IJMC)-Kumpulan Europlus Bhd (KEB) joint venture (JV) recently accepted the letter of award (LoA) from West Coast Expressway Sdn Bhd, appointing the JV the engineering, procurement and construction contractor to undertake and complete the construction works for the West Coast Expressway (WCE) from Taiping to Banting for a fixed sum not exceeding RM5 billion.

Pursuant to the LoA, the JV shall award to IJMC the WCE construction works for packages 3,4,5,8 and 9 at a cost not exceeding RM2.83 billion.

The construction period is five years. We are not surprised with the JV appointment as a main contractor as it was announced by KEB that the government had given the nod for the appointment in May this year.

We opine the above appointment could lead to an open tender stage for the remaining RM2.2 billion packages of the WCE project in the coming weeks and the contract award stage in the following months. We do not rule out the possibility of IJM Corp participating in the other work packages. Winning the other work packages could provide an earnings surprise for IJM Corp in terms of higher construction job replenishment and more demand for its industry products.

We make no changes to our earnings forecasts. Going forward, we expect to hear more positive news flow on the WCE development. On its recent share price weakness, we upgrade IJM Corp to “buy” with an unchanged target price of RM7.20. We advise investors to take opportunity to accumulate this stock. — MIDF Research, Dec 15

This article first appeared in The Edge Financial Daily, on December 16, 2014.

KLCI falls as eurozone woes grip global markets

KUALA LUMPUR (May 9): The FBM KLCI fell on Wednesday as concerns over the economic and political direction of several eurozone countries kept regional and global investors on tenterhooks.

The FBM KLCI lost 5.70 points to close at 1,584.90, weighed down by losses at blue chips.

Losers outpaced gainers by 450 to 273, while 313 counters traded unchanged. Volume was 1.28 billion shares valued at RM1.42 billion.

Asian bourses were mired in the red as Greece struggled to form a government two days after an election, heightening the risk that a hard-won bailout deal could be scrapped, according to Reuters.

Meanwhile, European shares edged lower on Wednesday as a technical rebound from four-month lows was offset by falls among Spanish banks, which were dragged by fears they would be forced to raise money to cover their property assets, said Reuters.

Technical momentum was supportive after key indexes in the US and Europe closed above support levels on Tuesday, sending a bullish short-term signal despite still-depressed market sentiment as a political impasse in Greece threatened to deepen the eurozone crisis, it said.

At the regional markets, the Shanghai Composite Index lost 1.65% to 2,408.59, Japan's Nikkei 225 lost 1.49% to 9,045.06, Taiwan’s Taiex fell 0.93% to 7,475.71, South Korea’s Kospi lost 0.85% to 1,950.29, Hong Kong’s Hang Seng Index shed 0.75% to 20,330.64 and Singapore’s Straits Times Index fell 1.06% to 2,900.91.

On Bursa Malaysia, BAT fell 64 sen to RM55.04, Petronas Dagangan and HLFG lost 24 sen each to RM19.70 and RM11.94, MISC 13 sen to RM4.46, PPB, MMHE and Aeon 12 sen each to RM16.60, RM4.88 and RM9.75 respectively, MSM 11 sen to RM5.20, IJM Corp 10 sen to RM5.44 and BLD PLANTATION []s fell nine sen to RM8.81.

Naim Indah Corp was the most actively traded counter with 80.2 million shares done. The stock was unchanged at 49 sen.

Other actives included Ingenuity Solutions, Metronic, Permaju, Harvest Court, Focus, Ariantec, Astral Supreme and CBSA.

Gainers included Tahps, GCE, GAB, Panasonic, Nadayu, YHS, KGB, Ajinomoto, Tasek and Sunway.



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KLCI remains in the red at mid-day as Asian markets slide

KUALA LUMPUR (May 9): The FBM KLCI remained in the red at the mid-day break on Wednesday in line with the slump at key regional markets, following the overnight fall at Wall Street.

At 12.30pm, the FBM KLCI was down 3.04 points to 1,587.56, weighed by select blue chips.

Losers beat gainers by 386 to 207, while 286 counters traded unchanged. Volume was 692.41 million shares valued at RM558.87 million.

The ringgit weakened by 0.34% to 3.0675 versus the greenback, crude palm oil futures fell RM6 per tonne to RM3,334, crude oil fell 35 cents per barrel to US$96.66 while gold lost US$14 an ounce to US$1,591.48.

Shares, gold and oil fell and the euro remained pressured on Wednesday as Greece struggled to form a government two days after an election, heightening the risk that a hard-won bailout deal could be scrapped, according to Reuters.

Radical leftist Alexis Tsipras meets the leaders of Greece's mainstream parties on Wednesday to try to form a coalition government, an effort seen as doomed after he demanded that pledges made in exchange for an European Union/International Monetary Fund rescue package be torn up, it said.

Officials estimate Greece could run out of money as soon as next month if it does not stick to the aid package terms, which kept the country solvent and in the single currency bloc, said Reuters.

At the regional markets, Japan’s Nikkei 225 lost 1.62% to 9,032.78, Hong Kong’s Hang Seng Index fell 0.94% to 20,292.00, the Shanghai Composite Index fell 1.33% to 2,416.28, Taiwan’s Taiex shed 0.86% to 7,480.85, South Korea’s Kospi fell 1.10% to 1,945.31 and Singapore’s Straits Times Index shd 0.65% to 2,912.84.

On Bursa Malaysia, BAT fell 48 sen to RM55.20, F&N down 16 sen to RM18.88, Petronas Dagangan 14 sen to RM19.80, Sarawak PLANTATION []s and MSM lost 11 sen each to RM2.92 and RM5.20, Sarawak Oil Palms and Iretex down 10 sen each to RM6.56 and RM1.20, while BLD Plantations and IJM Corp fell nine sen each to RM8.81 and RM5.45.

Harvest Court was the most actively traded counter with 48.1 million shares done. The stock fell half a sen to 70.5 sen.

Other actives included Permaju, Metronic, Ingenuity Solutions, Naim Indah Corp, Ariantec, Focus, CBSA and Perisai.

Gainers in the morning session on Wednesday included GAB, KGB, Cybertowers, MTD ACPI, Rubberex, United Plantations, Sunway, Ajinomoto, Mercury and Kawan Food.



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KLCI hovers in negative territory at mid-morning

KUALA LUMPUR (May 9): The FBM KLCI hovered in negative territory at mid-morning on Wednesday in line with the overnight fall at Wall Street and weaker sentiment at regional markets, underpinned by global economic and political worries.

At 10.01am, the FBM KLCI fell 3.03 points to 1,587.57, weighed by select blue chips.

Gainers trailed losers by 132 to 234, while 219 counters traded unchanged. Volume was 237.19 million shares valued at RM17908 million.

Asian shares fell and the euro stayed pressured on Wednesday, as Greece struggled to form a government two days after elections, raising the risk that a hard-won bailout could be nullified, according to Reuters.

BIMB Securities Research in a note Wednesday said the conditions in Europe was ripe for traders to create some volatility in the equity markets and yesterday could be the beginning of the trend.

With the initial focus on Spain and now the political issues in France and Greece, investors may be in for a roller coaster ride this month, it said.

Reacting to the European uncertainty, the Dow Jones Industrial Average sank 76.44 points to 12,932 but off its intra-day low of 12,810, it said.

“Needless to say, European bourses took the brunt of yesterday’s selling as all ended up in a sea of red,” it said.

The research house said regional markets had a mixed session possibly from the weak opening in Europe amid the ongoing consolidation mode.

“Locally, the FBM KLCI rebounded by 5.73 points to just above the immediate 1,590 resistance at 1,590.60.

“For today, it will be interesting to gauge the resilience of investors whether they will all jump into the selling bandwagon. For us, we believe there will be some broad based knee jerk reaction and should pressure the FBM KLCI on the downside,” it said.

On Bursa Malaysia at mid-morning, F&N Fell and Petronas Dagangan fell 14 sen each to RM18.90 and RM19.80, Hong Leong Bank and Genting down 12 sen each to RM12.12 and RM10.54, Sarawak PLANTATION []s 11 sen to RM2.92, Rapid and IJM Corp 10 sen each to RM2.57 and RM5.44, while NPC, MAHB and Ajiya lost eight sen each to RM2.60, RM5.71 and RM1.60 respectively.

Permaju was the most actively traded counter with 25.7 million shares done. The stock rose 3.5 sen to 91 sen.

Other actives included Harvest Court, Naim Inda Corp,Perisai, Sanbumi, Metronic, Compugates, JCY and Komark.

Gainers included KGB, Tasek, Komark, KLK, Mercury, CIMB, SKB Shutters, Multico, Perisai and Permaju.



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Asian markets mired in red as Europe stumbles

KUALA LUMPUR (May7): The FBM KLCI fell on Monday as Asian markets were mired in the red as European markets stumbled following election outcomes in France, Greece and Italy that raised concerns on whether euro zone economies will continue to pursue austerity measures.

Meanwhile, European equities slumped to 4-1/2 month lows on Monday after elections in France and Greece that reflected deep public discontent over austerity measures and cast doubt over the euro zone's ability to fix its debt crisis, according to Reuters.

Greece's benchmark stock index fell by more than 7 percent in early morning trading on Monday, after the country's main parties failed to win enough votes to form a ruling coalition following elections on Sunday, it said.

Royal Bank of Scotland strategists in a note Monday said the results of a number of elections across Europe that took place over the weekend were likely to keep the market squarely focused on politics this week, and on the results implications for the European policy response devised to address the debt crisis so far.

The FBM KLCI fell 6.71 points to 1,584.87 at 5pm, weighed by losses at select blue chips.

Market breadth was negative with 540 losers, 208 gainers and 305 counters trading unchanged. Volume was 963.02 million shares valued at RM1.19 billion.

At the regional markets, Japan’s Nikkei 225 lost 2.78% to 9,119.14, Hong Kong’s Hang Seng Index lost 2.61% to 20,536.65, Taiwan’s Taiex fell 2.11% to 7,538.08, South Korea’s Kospi was down 1.64% to 1,956.44 and Singapore’s Straits Times Index lost 2.08% to 2,928.34.

On Bursa Malaysia, Dutch Lady was the top loser and fell 34 sen to RM33.04, Tradewinds PLANTATION []s lost 23 sen to RM5.75, Tradewinds down 22 sen to RM9.82, SAM Engineering 19 sen to RM3.01, Hong Leong Bank, Genting Plantations and IJM Corp lost 16 sen each to RM12.20, RM9.44 and RM5.42 respectively, Allianz and Tahps down 15 sen each to RM4.60 and RM4.65, while Atlan fell 14 sen to RM4.26.

SAAG was the most actively traded counter with 48.97 million shares done. The stock gaindd half a sen to 7 sen.

Other actives included Ariantec, Time, Maybulk, Benalec, KFCH, Metronic, permaju, Naim Indah Corp and JCY.

Meanwhile, the gainers on Monday included Permaju, Country View, PMB Tech, Tasek, GAB, Lafarge Malayan Cement, MKH, KESM, Nestle and HLFG.



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IJM buying 20% of West Coast Expressway for RM6.75m

KUALA LUMPUR (March 13): IJM CORPORATION BHD []’s unit is buying a 20% stake in West Coast Expressway Sdn Bhd for RM6.75 million cash to ensure a share in the proposed west coast expressway project.

IJM said on Tuesday, its unit Road Builder (M) Holdings Bhd had signed a sale and purchase agreement to acquire the stake, comprising of 5.809 million shares, from Prominent Xtreme Sdn Bhd.

To recap, on Jan 26, WCE had received an approval letter from the Public Private Partnership Unit of the Prime Minister’s Department for WCE to undertake the proposed privatisation of the CONSTRUCTION [] of the expressway.

The expressway will be constructed on a build-operate-transfer with a concession period of 60 years.

WCE is an 80% subsidiary of KUMPULAN EUROPLUS BHD [], in which IJM has a 22.72% stake.



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AZRB: RM764.9m viaduct works for MRT to start end-March

KUALA LUMPUR (March 9): AHMAD ZAKI RESOURCES BHD [] (AZRB) says work on the viaduct stretching from Plaza Phoenix to Bandar Tun Hussein Onn station for the Klang Valley MRT would start end-March and be completed in June 2016.

AZRB said the project with a contract value of RM764.90 million was awarded to its unit Ahmad Zaki Sdn Bhd as part of the MRT package V6.

It involves the CONSTRUCTION [] and completion of viaduct guide-way and other associated works. However, the alignment will make full use of elevated structures with a total distance 5.24km along the Cheras-Kajang Highway.

AZRB managing director Datuk Wan Zakariah Wan Muda said on Friday that the proper project implementation plans were already in place.

The plans, he said were not only to meet the requirements of Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) as the project owner and project delivery partner (PDP) but also to address the various concerns raised by the public particularly on traffic diversions, environmental impacts such as noise and vibration and disruptions to the supply of public utilities and services.

MMC Gamuda KVMRT (PD) Sdn Bhd is the project delivery partner for the MRTproject. IJM Bhd’s unit IJM Construction Sdn Bhd was awarded the adjoining package, Package V5.



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CIMB Research expects strong project pipeline in construction margins

KUALA LUMPUR (March 7): CIMB Research expects a strong project pipeline in the coming months and a gradual recovery in CONSTRUCTION [] margins.

In a note Wednesday, the research house said 4Q was seasonally a strong quarter for contractors but timing of jobs led to some underperformance in results.

“We expect a strong project pipeline in the coming months and a gradual recovery in construction margins.

“The results season also ended with optimism among contractors that project flows will intensify.

“This will be driven by the awards of the MRT SBK line and the potential award of the Gemas-JB double-tracking job. Maintain Trading Buy with IJM Corp and Gamuda as our top pick,” it said.



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Stocks to watch: Sentoria, AirAsia, Hartalega, WCT, Kencana, TSH, MISC, KLK, Perisai

KUALA LUMPUR (Feb 23): Property developer Sentoria Group Bhd will be the stock to watch on Thursday, when it makes its debut on the Main Board of Bursa Malaysia.

The property developer is the first company to list in 2012.Its offer of 20 million new shares at an 85 sen each to the public was oversubscribed by 5.4 times.

RHB Research Institute had accorded a fair value of 92 sen based on a 30% discount to its sum-of-parts valuation.

Other stocks which could see trading interest following fresh corporate developments and financial results include AIRASIA BHD [], HARTALEGA HOLDINGS BHD [], WCT BHD [], KENCANA PETROLEUM BHD [], TSH RESOURCES BHD [], MISC BHD [], KUALA LUMPUR KEPONG BHD [] (KLK) and PERISAI PETROLEUM TEKNOLOGI [] Bhd and IJM CORPORATION BHD [].

AirAsia’searnings fell 56.3% to RM135.66 million in the fourth quarter ended Dec 31, 2011 when compared with RM311.08 million a year ago as it was impacted by aircraft fuel expenses, which rose to RM475.07 million from RM292.44 million on-year.

It recorded foreign exchange losses of RM137.38 million compared with forex gain of RM44.29 million a year ago.

For the financial year ended Dec 31, 2011, its net profit fell 46.8% to RM564.14 million from RM1.06 billion in FY10.

Nitrile latex glove maker Hartalega’s earnings rose 3% to RM50.70 million in the third quarter ended Dec 31, 2011 from RM49.20 million a year ago. For the nine months ended Dec 31, 2011, net profit increased 10% to RM151.60 million from RM137.76 million.

It proposed a bonus issue of up to 371.65 million 50 sen shares on a one-for-one basis and free warrants issue of up to 74.331 million free warrants on the basis of one free warrant for every five existing shares held on the entitlement date.

WCT secured a RM331 million contract for a mixed commercial project with a medical centre in Kota Kinabalu.

Kencana secured a RM101 million contract from Murphy Sarawak Oil Co. Ltd for two offshore platforms in Sarawak.

TSH Resources Bhd posted record net profit of RM120.54 million in the financial year ended Dec 31, 2011, an increase of 43% from the RM84.28 million a year ago and its expects the Indonesian oil palm estates to boost future earnings.

As for the fourth quarter ended Dec 31, 2011, net profit fell 39.8% to RM26.15 million from RM43.45 million. TSH said the reduction was primarily due to a foreign exchange loss of RM10.962 million and a RM7.291 million reduction in contributions from jointly controlled entities

MISC suffered net loss of RM1.74 billion in the third quarter ended Dec 31, 2011 compared with net profit of RM1.38 billion a year ago due to recognition of one-off provisions totalling RM1.45 billion.

For the nine-month period, MISC recorded a net loss of RM1.481 billion due to the recognition of one-off provisions totalling RM1.452 billion following its recent decision to exit from the liner business.

Kuala Lumpur Kepong recorded a 12.1% increase in earnings to RM340.98 million in the first quarter ended Dec 31, 2011, boosted mainly by its PLANTATION []s business, when compared with RM304.18 million a year ago.

Perisai’s net profits soared 106.8% to RM21.28 million for the financial year ended Dec 31, 2011 from RM10.25 million a year ago, boosted by profit contributed by the Intan Group, which it acquired in August last year. For the year ended Dec 31, 2011, its revenue was up 9.6% to RM82.41 million from RM75.21 million a year ago.

For the fourth quarter ended Dec 31, 2011, Perisai’s earnings 62.3% to RM11.21 million from RM6.93 million.

IJM Corporation’s earnings rose 5.7% to RM135.23 million in the third quarter ended Dec 31, 2011 from RM127.96 million a year ago. Its revenue chalked up 30.1% increase to RM1.172 billion from RM901.34 million. Earnings per share were 9.81 sen compared with 9.47 sen.

IJM Corp said for the nine-month period, its net profit was 1.1% higher at RM325.04 million from RM328.83 million. Its revenue rose at a stronger pace of 23.6% to RM3.303 billion from RM2.672 billion.



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IJM Corp 3Q earnings up 5.7% to RM135.2m, 9-month at RM325m

KUALA LUMPUR (Feb 22): IJM CORPORATION BHD []’s earnings rose 5.7% to RM135.23 million in the third quarter ended Dec 31, 2011 from RM127.96 million a year ago.

It said on Wednesday its revenue chalked up 30.1% increase to RM1.172 billion from RM901.34 million. Earnings per share were 9.81 sen compared with 9.47 sen.

“The group’s pre-tax profit increased by 12.7% to RM247.7 million compared to the corresponding quarter of the preceding year with all operating divisions except property achieving profit growth,” it said.

IJM Corp said for the nine-month period, its net profit was 1.1% higher at RM325.04 million from RM328.83 million. Its revenue rose at a stronger pace of 23.6% to RM3.303 billion from RM2.672 billion.

On the outlook, it said the group’s CONSTRUCTION [] division’s performance was expected to improve as many of the sroup’s local projects are expected to gain momentum in the current financial year.

“Order book has been boosted by the recent procurement of Package V5 of the Sungei Buloh-Kajang My Rapid Transit (MRT) line and replenishment prospects remain encouraging with potential contract spin-offs from the West Coast Expressway project,” it said.

As for the group’s property division, it expected it to sustain its performance in the current financial year on the back of strong unbilled sales of about RM1 billion.

“Assuming the current level of palm product prices maintain, the Group’s PLANTATION [] division expects a satisfactory level of profitability,” it said.

Malaysian tolling and port operations are expected to continue to provide steady revenue streams to the group’s Infrastructure division. Initial expensing of higher finance costs and amortisation of new toll concessions in India are however expected to dampen its divisional results.



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Market higher in early trade, external boost

KUALA LUMPUR (Feb 20): Blue chips climbed in early trade on Monday, in line with the firmer regional markets, as sentiment was boosted by China’s policy easing and prospects for Greece to clinch a second bailout fund

At 9.14am, the FBM KLCI was up 4.62 points to 1,561.77. Turnover was 164.34 million shares valued at RM78.67 million. There were 230 gainers, 84 losers and 166 counters unchanged.

CIMB Equities Research said in its market report that prices has last week continued to linger near the key resistance band of 1,560-1,565, where sellers have been strong.

“The KLCI tested the wedge resistance twice but it failed to breakout on both occasions. It is still too early to call for a reversal but a close below 1,550 would tip the scale in favour of the bears.

“If prices fail to take out the 1,566 high soon, then there is a good chance that the strong run-up in trading volume over the couple of weeks could potentially be deemed as a buying climax. A close below the 1,550 levels would likely send the index back towards 1,525 and 1,500 next. Breaking 1,525 would likely signal a weaker trend in the weeks ahead,” CIMB Research said.

Among the gainers on Bursa were Aeon, up 38 sen to RM8.08, BAT 16 sen to RM52.68 and Petronas Dagangan 16 sen to RM18.18.

Mudajaya rose 10 sen to RM3.05, IJM nine sen to RM5.99 and UMW eight sen to RM6.98.



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Funding scenarios for West Coast Expressway

IJM Corp Bhd (Feb 14, RM5.95)
Maintain buy with unchanged sum-of-parts-derived fair value of RM7.23 per share: In this report, we examine three possible funding scenarios for the West Coast Expressway (WCE).

A key focus of the WCE is on its funding requirements after IJM’s 23%-owned associate Kumpulan Europlus (KEuro) received approval-in-principle to privatise the highway via the latter’s 64%-owned unit West Coast Expressway Sdn Bhd just last month.

Assuming a debt/equity ratio of 70:30, we estimate that the equity portion for the WCE may reach RM2 billion.

Its equity needs may appear huge compared to KEuro’s market capitalisation of only about RM669 million.

Furthermore, KEuro remains relatively highly leveraged with a net gearing ratio of around 1.1 times as at Oct 31 last year compared with 3.4 times a year ago.

By extension, this has given rise to market postulation of the potential involvement of other parties to help bridge the funding gap of WCE, including IJM.



Three possible financing scenarios are: (i) IJM increases its current stake of 23% in KEuro; (ii) IJM owns a direct stake in the highway itself; and (iii) the entry of select cornerstone investors in the project, including government-related entities.

In our view, scenario one is unlikely to materialise as such a move would likely trigger a general offer on KEuro and may undermine IJM’s balance sheet if the former’s debts are subsequently consolidated at IJM group level.

We believe option two and/or three could emerge as realistic choices. Under the first, IJM would help lend credence to the WCE and further solidify its bid for up to RM7 billion worth of associated construction works without the need to consolidate KEuro into its books.

The presence of strategic government-backed investors under scenario three would help plug the funding gap, possibly through the balance 36% share of WCE Sdn Bhd, where the identity of the stakeholder remains unknown at this juncture.

We expect the formalisation of a concession agreement for the WCE in a matter of weeks to boost IJM’s rising order book prospects, where the highway could present over RM4 billion of job opportunities to underpin the group’s RM8 billion to RM9 billion new contract target in 2012.

We also like IJM for its diversified earnings base. IJM Plantations (28% of FY12F group earnings) is on track to double its Indonesian plantation landbank to 40,000ha in three years. — AmResearch, Feb 14


This article appeared in The Edge Financial Daily, February 15, 2012.



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Stable outlook for IJM's RM1b notes

KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has affirmed its MARC-1/AA- ratings on IJM Corp Bhd’s RM1.0 billion Commercial Paper/Medium Term Notes Programme with a stable outlook.

In a statement today, MARC said the ratings action incorporated the satisfactory operating performance of its plantation, property and infrastructure segments, as well as the holding company’s broadly adequate liquidity and favourable financial flexibility.

"The higher year-on-year pre-tax profits posted by the three segments in the financial year ended March 31, 2011 have helped to offset the losses of its construction segment and weaker performance at its industrial segment," it said.

MARC noted that there was an easing of the pressure on the holding company’s cash flow and liquidity in financial year 2011 on account of higher dividends received from subsidiaries, the repayment of advances by subsidiaries and lower investment outflows.

It added constraining the ratings was the cyclicality of its construction and property development businesses, the heavy capital spending required for its Indonesia-based oil palm plantation operations, and the drag on profitability exerted by IJM’s construction and toll road operations in India. - BERNAMA



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Ahmad Zaki, IJM jump on MRT job

Ahmad Zaki Resources Bhd. (AZR MK) jumped 4 percent to 91.5 sen, on course for its highest close since April 18. IJM Corp. (IJM MK) advanced 3.5 percent to 5.94 ringgit. The two companies received contracts from Mass Rapid Transit Corp. to build parts of a mass-rail network, according to stock- exchange filings. IJM’s contract is valued at 974.8 million ringgit ($323 million) and Ahmad Zaki’s at 764.9 million ringgit, the companies said. -- Bloomberg



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KLCI stays in the black at mid-day, lifted by select blue chips

KUALA LUMPUR (Feb 2): The FBM KLCI remained in positive territory at the mid-day break on Thursday, tracking the gains at key regional markets, but struggled to climb above the 1,530-level.

At 12.30pm, the index added 7.94 points to 1,529.23, lifted by gains at select blue chips.

Gainers led losers by 504 to 272, while 338 counters traded unchanged. Volume was 1.46 billion shares valued at RM1.31 billion.

The ringgit strengthened 0.81% to 3.0208 versus the US dollar; crude palm oil futures for third month delivery fell RM10 per tonne to RM3,065, crude oil slipped eight sen to US$97.53 while gold rose US$4.35 an ounce to US$1,747.75.

At the regional markets, Japan’s Nikkei 225 rose 0.91% to 8,889.85, Hong Kong’s Hang Seng Index added 1.46% to 20,629.60, the Shanghai Composite Index up 0.31% to 2,275.04, Taiwan’s Taiex gained 0.75% to 7,605.84, South Korea’s Kospi rose 1.29% to 1,984.55 while Singapore’s Straits Times Index was up 0.48% to 2,918.82.

On Bursa Malaysia, Hartalega was the top gainer this morning and was up 42 sen to RM7.64; BAT added 40 sen to RM49.80, Petronas Gas 38 sen to RM16.06, KAF, Malayan Flour Mills, IJM Corp and Petronas Dagangan added 20 sen each to RM1.95, RM4.53, RM5.94 and RM18.20 respectively, United PLANTATION []s 18 sen to RM20.52 while SOP added 15 sen to RM6.30.

Tebrau Teguh was the most actively traded counter after a takeover offer made by Iskandar Waterfront Holdings Sdn Bhd (IWH), which is offering 76 sen per share – or just one sen above Tebrau’s pre-suspension price of 75 sen.

The stock rose 8.5 sen to 83.5 sen with 52.6 million shares done.

Other actives included DBE Gurney, Petronas Chemicals, Coastal Contracts, DRB-Hicom, Karyon, UEM Land and Benalec.

Decliners included Glenealy, RHB Capital, Southern Steel, Mintye, Dutch Lady, KLK, TDM, Tenaga, Melewar and SHL.



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IJM Corp, AZRB extend gains on confirming MRT job

KUALA LUMPUR (Feb 2): IJM CORPORATION BHD [] and AHMAD ZAKI RESOURCES BHD [] shares extended their gains on Thursday after the two companies confirmed on Tuesday they had officially received the letters of acceptance Sungai Buloh-Kajang phase mass rapid transit project.

At 9.20am, IJM Corp rose 10 sen to RM5.84 with 512,500 shares done while AZRB added five sen to 93 sen with 967,600 shares traded.

IJM’s phase is for package V5 of the Mass Rapid Transit costing RM974.78 million while AZRB’s contract includes the completion of viaduct guideway and other works from Plaza Phoenix to Bandar Tun Hussein Onn station valued at RM764.91 million.



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HDBSVR sees Malaysian market rebounding on Thursday

KUALA LUMPUR (Feb 2): Hwang DBS Vickers Research said most Asian indices registering positive gains on Wednesday, the FBM KLCI should be raring to go after a one-day break, with the immediate resistance of 1,530 within its sight.

It said on Thursday that major US stock indices rose between 0.7% and 0.9% overnight due to positive outlook from manufacturing data released in the US, UK, China and Germany.

“We believe investors would be keenly following news on Greece’s expected completion of a debt writedown with private investors and an accord on a US$171bn eurozone bailout by the end of this week,” it added.

As for stocks on Bursa Malaysia, HDBSVR said on counters that should attract interest include:

(a) Tebrau Teguh, which was appointed to develop 413 acres of land in Pengerang, Johor, despite an offer of only 76 sen for a 33% stake which would trigger a mandatory takeover offer;

(b) IJM and AZRB, after confirming that they had officially received the letters of acceptance from MRT Corp; and

(c) Southern Steel, after reporting a net loss of RM5 million in the Oct-Dec quarter, which was below consensus expectations.



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Stocks to watch: Tebrau Teguh, MIG, Southern Steel, IJM, AZRB

KUALA LUMPUR (Feb 1): TEBRAU TEGUH BHD [] will be the stock to watch when the Malaysia market resumes trading after a one-day break for the Federal Territory holidays on Wednesday.

Other stocks which could also see trading interest are MELEWAR INDUSTRIAL GROUP BHD [] (MIG), SOUTHERN STEEL BHD [], IJM CORPORATION BHD [] and AHMAD ZAKI RESOURCES BHD [] (AZRB) following the latest corporate developments.

In a surprising turn of events, Tebrau Teguh is being taken over by Iskandar Waterfront Holdings Sdn Bhd (IWH), which is offering 76 sen per share – or just one sen above the pre-suspension price of 75 sen. Its net asset per share was 75 sen as at Sept 30, 2011 while it had RM44.52 million in cash and bank balances.

IWH is buying a 33.15% stake in Tebrau Teguh Bhd, comprising of 22 million shares, from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ). The proposed acquisition would trigger a mandatory take-over offer by IWH for the remaining shares.

While the one sen premium is insignificant, the upside for the low-key Tebrau Teguh is that it has been appointed to develop 413 acres of land in Pengerang, Kota Tinggi, Johor.

The Johor government has appointed Tebrau Teguh to develop the site for a comprehensive mixed development project. The land, belonging to the state government, is within the Johor oil & gas Industry hub.

Meanwhile, MIG has proposed a corporate exercise involving a share capital reduction and a renounceable rights issue of up to 150.348 million new shares.

The rights issue, at an indicative price of 40 sen per rights share, the rights share would enable it to raise between RM21.97 million and RM60.14 million.

Southern Steel Bhd swung into the red with losses of RM5.52 million in the second quarter ended Dec 31, 2011 due to lower margins and foreign exchange translation losses. Its revenue and loss before tax were RM928.84 million and RM6.40 million respectively as compared with the preceding quarter’s revenue and profit before taxation of RM734.0 million and RM17.3 million.

IJM and AZRB, whose shares had rallied after the announcement by Mass Rapid Transit Corporation Sdn Bhd for the Sungai Buloh-Kajang phase, confirmed on Tuesday they had officially received the letters of acceptance.

IJM’s phase is for package V5 of the Mass Rapid Transit costing RM974.78 million while AZRB’s contract includes the completion of viaduct guideway and other works from Plaza Phoenix to Bandar Tun Hussein Onn station valued at RM764.91 million.



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IJM Corp confirms letter of acceptance for RM974m MRT project

KUALA LUMPUR (Jan 31): IJM CORPORATION BHD [] confirmed that its unit had received the letter of acceptance from the Mass Rapid Transit Corporation Sdn Bhd for the Sungai Buloh-Kajang phase costing RM974.78 million.

IJM Corp said on Tuesday its unit IJM CONSTRUCTION [] Sdn Bhd had received the letter, dated Jan 31, for package V5 of the Mass Rapid Transit,

“The project involves the construction and completion of viaduct guideway and other associated works from Maluri portal to Plaza Phoenix station. The date of practical completion of the works is June 30, 2016,” it said.

IJM said the project would not have any significant effect on the earnings or net assets per share of the company for the financial year ending March 31, 2012, but is expected to contribute positively to the group’s future earnings.



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IJM Corp to raise stake in KEuro?

KUALA LUMPUR: The potentially huge contracts spin-off from the RM7.07 billion West Coast Expressway (WCE) project has spearheaded IJM Corp Bhd into the spotlight. But not to be forgotten is Kumpulan Europlus Bhd (KEuro), which could see more corporate exercises.

“For a bigger exposure to the WCE concession, IJM Corp is likely to increase its stake in KEuro, which is now only 22.72%. It may not want to privatise KEuro, but certainly it may want to have bigger shareholdings in the company,” said a market observer.

He added that a bigger shareholding commitment from IJM Corp is also crucial for KEuro to raise the necessary funding for the equity portion of the project that is said to be about RM1.5 billion.

After a long wait of more than 15 years, KEuro’s 64.2%-owned subsidiary, West Coast Expressway Sdn Bhd, last week secured the approval in principle from the government for the privatisation of the construction of WCE under a built-operate-transfer model and for a concession tenure of 60 years. The highway stretches for 316km from Banting, Selangor to Taiping, Perak.

With WCE now in the bag and that KEuro also owns 50% of the 1,900-acre (760ha) Canal City development near Kota Kemuning in Shah Alam could be another reason why IJM Corp may be looking to increase its stake in KEuro. The Canal City project, which has a total gross development value of more than RM10 billion over 10 years, is slated to commence in August.

IJM Corp’s listed property arm IJM Land Bhd owns the remaining 50% of the Canal City project and is the lead project manager. The development could be lucrative given the land cost of merely RM5 per sq ft, according to management.

“KEuro will see more activities from 2012 onwards. With the commencement of WCE and Canal City developments, the stock may attract more interest,” said a market observer.

KEuro posted a net profit of only RM5.01 million for the nine months ended Oct 31, 2011 on revenue of RM14.81 million. The company lacked major business activities for the past few years, pending the government approval for the WCE project and the commencement of the Canal City development. KEuro’s total net borrowings amounted to RM146 million as at Oct 31, 2011.

Nonetheless, a bigger shareholding by IJM Corp in KEuro could mean a dilution in stake for KEuro president and chief executive Tan Sri Chan Ah Chye, whose family owns a 27.58% stake. The stake is now worth about RM190 million based on KEuro’s market capitalisation of RM688 million yesterday.

Closing at RM1.32 yesterday, KEuro’s share price has recovered from below 93 sen last August but still trades under its 52-week high of RM1.62 at the beginning of 2011. The stock is not covered by analysts.

IJM Corp’s involvement in KEuro began in 2005 when it acquired a 25% stake in KEuro (now diluted to a 22.72% stake following a shares placement exercise). The shares were purchased from several KEuro shareholders, including the KEuro group, Intelbest Corp Sdn Bhd, Pengurusan Bersistem Sdn Bhd, Ambang Sepakat Sdn Bhd and Chan.

The stake comprised 118.37 million shares and were purchased at 28 sen apiece for RM33.1 million. IJM Corp said at the time the purchase was influenced by its interest in KEuro’s concessions for both WCE and Canal City.

IJM Corp said it purposely did not buy out completely Chan’s stake in KEuro then, as the group saw KEuro president’s presence and his business connections too valuable to lose.

Since the purchase six years ago, IJM Corp has kept its holdings in KEuro intact. It did not even exercise an option to acquire another 5% stake that had lapsed within one year after the initial block, probably because of the uncertainty of KEuro securing WCE. But now that the government has given its approval for the highway concession, IJM Corp may now want to review its holdings in KEuro.

“The fact that IJM Corp bought its current 22.72% stake in KEuro cheap also means that it could afford to acquire more shares now and yet still keep its average cost at a reasonable level,” said a market observer.


This article appeared in The Edge Financial Daily, January 31, 2012.



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