Stocks to watch: Silver Bird, Perwaja, CIMB, K. Jetson

KUALA LUMPUR (March 2): SILVER BIRD GROUP BHD [] could continue to be in focus with the latest move by RAM Rating Services Bhd to downgrade the outlook for its debt notes.

The ratings agency placed the group on Rating Watch, with a negative outlook. It also lowered the respective long- and short-term ratings of the group’s RM30 million Commercial Papers/Medium-Term Notes Programme (2005/2012) (CP/MTN), from A2 (negative outlook) and P2 to C3 and NP.

Perwaja’s 280 million warrants will be listed and quoted on Friday. The warrants were issued on the basis of one free warrant for every two shares held as at Feb 24. The tenure of the warrants is 10 years and the strike price is RM1.

CIMB Group moved a closer to the proposed acquisition of certain assets of The Royal Bank of Scotland in Asia Pacific. The assets are cash equities, equity capital markets and corporate finance businesses.

KUMPULAN JETSON BHD []’s unit has secured a RM14.98 million contract from the Shah Alam City Council to undertake renovation for the Wisma MBSA.

TENAGA NASIONAL BHD [] withdrew its suit against INTEGRAX BHD [] and seven other defendants with no order as to costs for Integrax. Integrax said following the withdrawal of the suit, all past disagreements between the company’s major shareholders have been fully settled.

Malaysian Building Society Bhd (MBSB) targets gross loan growth of 20% this year, according to its chief executive officer Datuk Ahmad Zaini Othman. MBSB's gross loans in the personal financing sector totalled RM7 billion and they were expected to increase to RM9 billion this year.



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Kumpulan Jetson secures RM14.98m contract from Shah Alam City Council

KUALA LUMPUR (March 1): KUMPULAN JETSON BHD []’s unit has secured a RM14.98 million contract from the Shah Alam City Council to undertake renovation for the Wisma MBSA.

It said on Thursday its unit Jetson CONSTRUCTION [] Sdn Bhd had accepted the contract which involved renovating part of the ceiling of the tower block, auditorium and podium.

Kumpulan Jetson said the contract was from 48 weeks, starting March 15 and it expected the project to contribute positively to the earnings of the group.



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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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Kumpulan Jetson buys China's Asian Corp

Property developer and automotive parts manufacturer, Kumpulan Jetson Bhd, has acquired a 100 per cent stake in China-based Asian Corp Ltd (ACL) for RM11 million.

The purchase price was a 22.5 per cent discount to ACL's net assets of RM14.2 million, and its main asset is a 57,737 square metre industrial land in Yangzhou City, China.

Its group managing director Datuk Teh Kian An said: "We are developing the land into the Jetson Integrated Industrial Park (JIIP), the first industrial park in Yangzhou and is scheduled for completion in the first quarter of 2014.

"The estimated gross development value and estimated gross development cost are RM174.4 million and RM124.6 million respectively."

He was speaking at a press briefing after the Group's Extraordinary General Meeting in Kuala Lumpur today.

Teh also said that the company currently exports between 25-30 per cent of its manufactured products overseas, with China being a major market.

"We have to be in China to further improve our manufactured items, mainly the anti-vibration system business," he added.

Kumpulan Jetson Bhd's executive director Lee Chee Hoe said the company was also in talks with auto parts firms and government international trade agencies to participate in the JIIP project and take advantage of the China market.

"We believe this will be an easier platform for them to move into China.

"To date, we have completed three units of factories in the JIIP, and will start production of the anti-vibration system in the second quarter of this year.

"We will be occupying three factories and move some of our production there. Initially, we will serve the Chinese domestic market, eventually using China as an export base serving Asian markets.

"We foresee this to be a huge potential for us as China is the world's largest vehicle market, with 18.5 million units sold in 2011, compared with 600,000 in Malaysia," he added.

He also said that Jetson's plant in China will free up some capacity in Malaysia, thus providing more opportunities to start looking into other markets, like India and Iran.

"We foresee the construction development division of this project to contribute positively to our earnings between 2012-2014, and the manufacturing division in 2014," he added.

The JIIP consists of 10 units of factories, four blocks of four-storey exchange centres, a six-storey hostel and six-storey production centre. -- BERNAMA



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Kumpulan Jetson expands into China automotive market

KUALA LUMPUR (Feb 9): KUMPULAN JETSON BHD [] entered into the Chinese automotive market with the development of an integrated auto parts industrial park in Yangzhou in eastern China with a gross development value of RM174.4 million.

The integrated industrial park is expected to be completed in the first quarter of 2014.



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A new chapter for Jetson

Kumpulan Jetson Bhd (Jan 25, RM1.23)

Not rated at RM1.24 with target price of RM1.71: It was once a hopeful thought that Kumpulan Jetson would be linked to Naza group to undertake the multi-billion Matrade Centre development for the International Trade and Industry Ministry.

Its share price soared to a high of RM2.99 in November 2009 when a formal shareholders’ agreement was inked between Jetson and Naza to formalise the relationship in the joint venture company, TTDI Jetson, and to carry out the development of Matrade Centre as well as the exchange land at Jalan Duta.

However, this euphoria was short-lived with a termination of JV agreement in September 2010, leading to a sharp drop in share price to a low of 87 sen in late 2010.

The repercussions of the termination of the JV agreement were felt in both the top and bottom lines. Year-to-date 9MFY11 earnings slipped into losses underpinned by 65.8% contraction in construction revenue.

According to management, the lacklustre performance was largely due to a lack of new construction job wins in 2009/10. The group did not actively bid for external jobs as it had planned and allocated substantial resources to the development of the Matrade Centre.

Moreover, the adoption of a new accounting standard, IC12, on the treatment of amortisation of concession assets, has resulted in a surge in amortisation cost of its concession asset.

If we exclude the IC12 impact, the 9MFY11 earnings would have otherwise shown a profit of RM1.9 million. Nonetheless, Jetson is expected to bounce back with its management team pulling up its socks and ardently exploring new opportunities. The results can be seen in new projects secured in 2011, which would add to the bottom line over the immediate term.

In addition, the impact of IC12 will be muted in FY12 earnings. All in, the group is expected to close this difficult chapter in Jetson’s history in FY11 and move on to a new chapter of life with increasing contribution from all divisions.

Earnings for FY12 are expected to stage a strong rebound if all projects and plans kick start this year. Based on our conservative assumptions (base-case), we expect earnings to increase to RM13.1 million in FY12 and RM15.1 million in FY13 from an estimated net loss of RM4.8 million in FY11.

In our best-case scenario, our FY12/FY13 earnings projections could grow to as high as RM21.4 million to RM21.7 million if the group were to secure additional new contracts and lock in higher sales of property in FY12/FY13. However, if the group fails to secure any new orders and the take-up rates on its Penang and China projects are low, FY12/FY13’s earnings recovery would be mild (worst-case scenario).

In terms of balance sheet quality, the group’s net gearing stood at 0.4 times as at September 2011. We believe much of the borrowings are draw-down for financing the concession assets, thus we see minimal liquidity risks.

However, for the group to take on new projects or landbanking, new funding in the form of borrowing or equity would have to come to support this. Having said that, we understand that the group is actively scouting for land in Penang and the Klang Valley for future development.

For valuation purposes, we draw a direct comparison with TRC Synergy under our coverage. Based on our base-case projections, Jetson is currently trading at a discount to TRC.

Although Jetson’s earnings and balance sheet quality are inferior to TRC’s, we consider the discount of up to six times TRC’s current trading price-earnings ratio (PER) as excessive. We value Jetson at RM1.71 per share with a potential upside of 38% after pegging a PER of eight times CY12 earnings.

In the valuation, we believe a turnaround in FY12 earnings is in the making and the disappointment over the Matrade deal is now behind us. Not rated. — TA Securities Research, Jan 20



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Jetson subsidiary awards RM20.9m sub-contract to Lucksoon

KUALA LUMPUR (Jan 10): KUMPULAN JETSON BHD []’s subsidiary has awarded a RM20.90 million sub-contract job for the Ritz Corporate Suites in Kuala Lumpur to Lucksoon Metal Works Sdn Bhd (LMWSB).

Jetson said the sub-contract would involve the internal glazing and façade works for package one which includes the carparks, lobby and one block of 38 level of offices. The overall completion date is Aug 15, 2013.

Jetson said the 70% owned sub-subsidiary, Jetson Lucksoon Sdn Bhd had awarded the contract to LMWSB. LMWSB holds 30% of Jetson Lucksoon. Cha Ti @ Cheah Tai, a director and major shareholder of LMWSB, is also a director of Jetson Lucksoon.

Explaining the rationale in awarding the contract, Jetson said LMWSB is an aluminium specialist and experienced in façade works and it had the factory facilities and equipment to undertake the project.

“By virtue of 30% shareholdings of LMWSB in Jetson Lucksoon, LMWSB will ensure the quality of the works and timely completion of the job,” it said.



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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 advanced 0.6 per cent to 1,489.64, rising for a third day.

Cuscapi, a Malaysian software provider, fell 2.2 per cent to 44.5 sen after pricing its private placement at 43 sen a share, below the two-week average share price of 44.7 sen.

Hibiscus Petroleum Bhd, a Malaysian oil and gas industry investor, rose 2 per cent to 78 sen. The company was asked by the Kuala Lumpur stock exchange to explain a recent jump in its share price and trading volume. The stock increased 18 per cent yesterday. Hibiscus last month agreed to buy a 35 per cent stake in Lime Petroleum Plc for US$55 million.

KPS Consortium, which makes and trades paper products, rose 6.8 per cent to 31.5 sen as it plans to buy an office and a warehouse for RM9.8 million (US$3.15 million).

Kumpulan Jetson, a Malaysian builder, jumped 8.8 per cent to RM1.36, the most since March 23. The company plans to pay RM11 million to buy Asian Corporation Ltd, which owns Jetson Yangzhou, a maker of anti-vibration products for China’s car market.

Sanichi Technology Bhd, a Malaysian precision moulds and toolings company, increased 5.6 per cent to 9.5 sen, the highest close since Aug. 4. Sanichi confirmed that a German company called Protev had completed the first phase of a due diligence before buying a stake in the group.

Yung Kong Galvanising Industries Bhd, a manufacturer of steel products, dropped 4.6 per cent to 41.5 sen after reporting a net loss in the third quarter of RM4.7 million (US$1.5 million), compared with a profit of RM1.8 million a year earlier. -- Bloomberg