KLCI opens at fresh new high

KUALA LUMPUR (April4): The FBM opened at a fresh new all-time high on Wednesday, with its momentum still intact despite the retreat at most key regional markets following the weaker overnight close at Wall Street after the after the U.S. Federal Reserve said it was less inclined to provide more economic stimulus.

The FBMKLCI was up 0.91 of a point to 1,607.54 at 9am, lifted by gains at blue chips including Genting, Maybank and IOI Corp.

Gainersled losers by 17 to 11, while 38 counters traded unchanged. Volume was 4.09 million shares valued at RM2.74 million.

Meanwhile, Asian shares eased on Wednesday after the minutes from the U.S. Federal Reserve's March meeting suggested the bank was less likely to take further stimulus measures, leaving investors looking for more clues over global growth outlook, according to Reuters.

The minutes showed Fed policymakers, while noting signs of slightly stronger growth, remained focused on a still elevated jobless rate. But the minutes suggested the appetite for further quantitative easing, so-called QE3, has waned significantly in light of improving U.S. economy, it said.

Among the early gainers were BAT that rose 32 sen to RM56.54, Genting up four sen to RM11.08, Boustead two sen to RM5.48, while IOI Corp, Maybank, Telekom, Leader, MBSB, Muhibbah and Mudajaya added one sen each to RM5.37, RM8.96, RM5.39, RM1.07, RM2.29, RM1.35 and RM2.91, respectively.

Iris Corp was the most actively traded counter with 1.4 million shares done. The stock shed half a sen to 18 sen.

Other actives included Ariantec, TMS, IFCA MSC, Hubline, Voir and Telekom.



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New generation of IPPs to draw familiar names

KUALA LUMPUR: The Energy Commission’s notice for the pre-qualification of prospective bidders for the development of a combined cycle gas turbine (CCGT) power plant in Peninsular Malaysia, representing the start of the fourth generation independent power producers (IPPs), is expected to attract bids from familiar names along with some new players.

In a statement on its website, the commission is inviting applicants with previous experience in implementing power projects to submit their expressions of interest by Jan 12. The commission will then conduct a pre-qualification process, in accordance with the criteria in the request for proposal document, which will be sent out
later.

In line with government policy, foreign participation in a consortium is capped at 49%.

Analysts are expecting all the country’s current crop of IPPs to bid for these upcoming projects along with some of the smaller players.

“The first generation IPPs would undoubtedly participate in these projects. They currently have the option to re-use their existing equipment for these new plants, as long as it has been refurbished or after they have invested some additional capital expenditure,” said OSK Research head Chris Eng.

Hence, it is likely that the list of bidders for the new CCGT plant will include the usual suspects — YTL Power International Bhd, Malakoff Bhd and Tanjong plc. The only exceptions might be Genting Bhd and Sime Darby Bhd according to analysts. It has been reported previously that Genting was mulling over the disposal of its power operations.

Alongside the big boys, Eng said it is likely that smaller players might take their chances in bidding for the project. This might include the likes of Jaks Resources Bhd, which is in the business of pipes and has clinched a RM5.96 billion power plant project in Vietnam. Other possible names include Toyo Ink Group Bhd, which also has a power plant project in Vietnam, and Leader Universal Holdings Bhd, which was involved in a plant in Cambodia.

“However, you might not see Mudajaya [Group Bhd] take part as the company is still sorting out issues with its IPP in India,” said Eng.

Association of Water and Energy Research Malaysia president S Piarapakaran was quoted as saying that opening up the bidding to foreign parties would help increase the number of players which could invest in more efficient technology. Piarapakaran also urged the Energy Commission to blacklist first generation IPPS that did not renegotiate their power purchase agreements from this bid.

The Edge weekly has earlier reported that the government will call for tenders for eight gas-fired power plants, where the players would possibly pay market rates for the fuel.

According to the Energy Commission’s 2010 annual report, listed under electricity supply plan for West Malaysia are five CCGTs due to come onstream between 2017 and 2019. Each of the plants has a generation capacity of 750MW.

The only other new plant mentioned in the commission’s annual report is a 1,000MW capacity coal-fired plant that is scheduled to be commissioned by 2020, as well as Tenaga Nasional Bhd’s two hydropower plants in Hulu Terengganu and Ulu Jelai, due to come online in 2015 and 2016 respectively. TNB’s additional 1,000MW from its Janamanjung coal-fired plant is targeted to start contributing from 2015 onwards, while Malakoff’s Tanjung Bin 1,000MW extension will come onstream by
2016.

It has been previously stressed by a number of players that the country could face a power crunch if the planning doesn’t start now. The Energy Commission estimates that based on November 2010’s electricity demand, the country will require an additional 7,372MW between 2015 and 2020, with another 15,724MW needed from 2021 to 2030.



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Leader’s board accepts buyout offer from H’ng family

KUALA LUMPUR: The board of Leader Universal Bhd has accepted the offer from substantial shareholder HNG Capital Sdn Bhd to acquire the group’s entire business and undertakings including assets and liabilities for RM480.1 million.

In a filing with Bursa Malaysia yesterday, AmInvestment Bank Bhd said Leader’s board — excluding the interested directors — had decided to accept HNG Capital’s offer subject to the execution of a definitive conditional sale and purchase agreement.

“Accordingly, the board (other than the interested directors) does not intend to seek alternative bids,” AmInvestment Bank said.

To recap, HNG Capital had on Oct 17 offered to acquire Leader Universal’s business and undertakings, including assets and liabilities, for a total consideration of RM480.1 million, which will be settled by cash and debts. HNG Capital is to satisfy 85.6% of the total purchase consideration via RM410.94 million cash with the remaining 14.4% in the form of a RM69.16 million debt due to Leader.

HNG Capital is the vehicle of the H’ng family, that has a 14.4% stake in Leader, which is primarily involved in manufacturing wire and cables for the telecommunications and power industry.

The H’ng family will not be entitled to the cash distribution of RM410.94 million to be made to shareholders, who will receive RM1.10 cash per share.

The deal values Leader’s business at 8.6 times annualised earnings for FY11 ending Dec 31 of RM55.83 million.


The offer price of RM1.10 per share is lower than Leader’s net asset value of RM1.36 per share as at June 30 but is a 30.95% premium to its closing share price of 84 sen before the offer was announced.

Leader shares had chalked up gains a week before HNG Capital’s offer was announced, surging 18.3% over a week from 71 sen on Oct 7 to 84 sen on Oct 14.

Its shares surged 17.3% or 14.5 sen to 98.5 sen on Oct 18, a day after a suspension of the trading of the shares was sought, pending the offer announcement.

This was the steepest one-day gain for Leader shares in over 10 years.

The stock closed yesterday unchanged at 95.5 sen with 1.27 million shares traded.

The group’s board had appointed AmInvestment Bank and OCBC Advisers (Malaysia) Sdn Bhd its main adviser and financial adviser for the proposals, while Kenanga Investment Bank Bhd was appointed the independent adviser to advise the non-interested directors and Leader shareholders as to whether they should vote in favour of the proposals.


This article appeared in The Edge Financial Daily, November 3, 2011.

Leader Universal jumps as board accepts offer

Shares of Malaysian wire and cable manufacturer Leader Universal Holdings Bhd rose as much as 4.7 per cent in early trading today after the company’s board of directors accepted a takeover offer from HNG Capital Sdn Bhd.

HNG Capital, a vehicle of Leader Universal’s major shareholder Hng Bok San, has offered RM1.10 per share to buy up all outstanding shares in the company for a total consideration of RM480.1 million.

Leader Universal shares were up 2.6 per cent to 98 sen apiece as at 9.54 am compared to the broader market’s fall of 0.66 per cent. - Reuters