KLCI stays in the black at mid-day, blue chips lead

KUALA LUMPUR (May 4): The FBM KLCI rose higher at the mid-day break on Friday, going against the general trend at most global markets, which remained tepid U.S. stocks fell on Thursday as economic data sent mixed signals on the recovery a day before the April payrolls report.

The FBM KLCI rose 6.48 points to 1,589.65 at 12.3pm, lifted by gains at select blue chips including BAT, AirAsia, Petronas Dagangan and Hong Leong bank.

Gainers outpaced losers by 383 to 216, while 334 counters traded unchanged. Volume was 694.69 million shares valued at RM644.21 million.

The ringgit weakened 0.17% to 3.0378, crude palm oil futures for the third month delivery rose RM24 per tonne to RM3,376, crude oil added 13 cents per barrel to US$102.67 while godl fell 66 cents an ounce to US$1,635.32.

Asian shares fell for a second successive day on Friday as another batch of lacklustre U.S. data stoked concerns that the recovery in the world's biggest economy is faltering, according to Reuters.

The euro was steady after a bumpy session on Thursday, when European Central Bank chief Mario Draghi gave a more upbeat assessment of the region's battered economy, reducing hopes of further monetary stimulus measures in the pipeline, it said.

At the regional markets, Hong Kong’s Hang Seng Index fell 0.73% to 21,094.10, the Shanghai Composite Index shed 0.10% to 2,442.56, Taiwan’s taiex lost 0.48% to 7,696.07, south Korea’s Kospi was down 0.41% to 1,986.90 and singapore’s Straits Times Index fell 0.23% to 2,993.93.

Japan’s Nikkei 225 was closed for a national holiday.

On Bursa Malaysia, BAT jumped RM1.74 to RM56.98, Panasonic gaine 28 sen to RM23.30, Petronas Dagangan and Aeon 20 sen each to RM19.50 and RM10, Hong Leong Bank 18 sen to RM12.44, Maybulk 14 sen to RM1.79, Coastal Contracts 13 sen to RM2.07, whiel MPHB, Hartalega and Orient added 10 sen each to RM2.96, RM7.95 and RM6.78 respectively.

Menwhile, AirAsia, which was among the most actively traded counters, gained seven sen to RM3.67.

Other actives included Ariantec, Maybulk, Astral Supreme, Naim Indah Corp and Benalec.

Decliners this morning included Dutch Lady, Knusford, SAB, Asia File, Takaful, Hoover, LPI Capital, Cepco and Ireka.



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Select blue chips lift KLCI marginally higher

KUALA LUMPUR (May 3): The FBM KLCI closed higher on Thursday, erasing its earlier losse, lifted by gains at select blue chips including AirAsia, Telekom, AMMB and CIMB.

The stock index added 0.78 of a point to 1,583.17.

Gainers trailed losers by 344 to 390, whiel 325 counters traded unchanged. Volume was 1.29 billion shares valued at RM1.21 billion.

Meanwhile, Asian shares slipped on Thursday and the euro languished near a two-week low after disappointing economic data from both sides of the Atlantic rekindled concerns about the strength of global growth, according to Reuters.

But European stock markets were seen opening stronger, fueled by hopes that a European Central Bank policy meeting later in the session will prepare the ground for further stimulus measures, it said.

At the regional markets, the Shanghai Composite Index edged up 0.07% to 2,440.08, Hong Kong’s Hang Seng index fell 0.28% to 21,249.53, Taiwan’s Taiex lost 0.23% to 7,659.53, South Korea’s Kospi shed 0.20% to 1,995.11 and Singapore’s Straits Times Index down to 3,000.94. Japan’s Nikkei 225 was closed for a national holiday.

On Bursa Malaysia, Knusford was the top gainer and rose 34 sen to RM2.28, Airasia added 27 sen to RM3.60, Panasonic up 22 sen to RM22.92, BAT 20 sen to RM55.24, Country View 19.5 sen to 84 sen, MPHB, Tradewinds PLANTATION []s and Tradewinds added 14 sen each to RM2.86, RM6 and RM9.99 respectively, MBM Resources was up 13 sen to RM5.09 and Permaju was up 12.5 sen to 55.5 sen.

Utopia was the most actively traded counter with 84.11 million shares done. The stock was unchanged at 8 sen.

Other actives included Ariantec, Naim Indah Corp, AirAsia, Metronic, Astral Supreme, Compugates and DayaMaterials.

Meanwhile, the decliners included Genting, BLD Plantations, MAHB, PPB Bank, Shell, Pasdec,Eng Kah and Rexit.



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Multi-Purpose up on higher Q4 income

Multi-Purpose Holdings Bhd, a property and gaming group, added 1.8 per cent to RM2.85, bound for its biggest gain since Jan 31.

Fourth-quarter net income surged to RM260.1 million from RM85.2 million a year earlier, it said in an exchange filing. - Bloomberg



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Stocks to watch: TM, Maxis, DRB-Hicom, SOP, MPHB

KUALA LUMPUR (Feb 25): Oil and gas and PLANTATION []s stocks could remain in focus following the high oil prices, providing some support for the local stock market and there could be some dividend-driven investors’ interest in stocks like Telekom Malaysia and Maxis Bhd.

The FBM KLCI, which had trailed its regional peers, saw analysts divided on the outlook for the week ahead.

A senior analyst with a bank-backed research house said the Malaysian stock market was expected to trade sideways with downside bias in the week ahead as the local performance pales in comparison with the regional markets.

He did not see any big surprises in the current October-December quarterly corporate results.

Among the companies to announce their results are PROTON HOLDINGS BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] and SIME DARBY BHD [].

However, the head of retail research at Affin Investment Bank Dr Nazri Khan was a tad more upbeat for the local market.

“Going forward next week, we believe FBMKLCI is likely to have an upside bias on local market relative strength (holding up well despite the volatile February results season),” he said.

He cited external factors such as strong Germany resilience following the painful Greece’s bail-out deal, strong US equities, improved commodities price (crude palm oil, soybean, wheat, corn, gold start to track equities) and rising risk appetite in the global forex market (strong gains in emerging market currency including ringgit).

On Wall Street, the S&P 500 had on Friday closed at the highest level since before the collapse of Lehman Brothers in 2008, continuing a pattern of steady gains on signs of US economic recovery.

However, the continued high oil prices had also cast a pall of gloom over the flagging Euro zone economies with a recession seemed imminent for some weaker economies.

At Bursa Malaysia, Telekom Malaysia and Maxis Bhd would be among the top two stocks to watch on Monday after they announced dividends payouts last Friday while other stocks to watch include DRB-HICOM BHD [], SARAWAK OIL PALMS BHD [] and MULTI-PURPOSE HOLDINGS BHD [] (MPHB).

In a pleasant surprise, TM proposed a capital repayment to its shareholders of about RM1.073 billion or 30 sen per share and a final single tier dividend of 9.8 sen per share.

In terms of earnings, TM’s 49% increase to RM598.30 million in the fourth quarter ended Dec 31, 2011 was largely due to the recognition of deferred tax income on unutilised tax incentives in the current year quarter.

Maxis declared a fourth interim single-tier tax exempt dividend of 8.0 sen per share and also proposed a final single-tier tax exempt dividend of 8.0 sen per share for FY11. Its earnings increased 47.5% to RM900 million in the fourth quarter ended Dec 31, 2011 from RM610 million a year ago.

For FY11, it recorded 10% growth in net profit of RM2.527 billion versus RM2.295 billion in FY10. However, its revenue dipped to RM8.800 billion versus RM8.869 billion in FY10.

DRB-Hicom saw its earnings falling 27.6% for the third quarter ended Dec 31, 2011, to RM79.57 million from RM110.10 million as its automotive division was impacted by the severe floods in Thailand. Its revenue rose 5.6% to RM1.69 billion from RM1.60 billion a year ago.

Sarawak Oil Palms Bhd recorded a 60.35% increase in earnings to RM242.95 million in the financial year ended Dec 31, 2011 from RM151.51 million last year, boosted by higher sales and production of crude palm oil (CPO) and palm kernel. It said FY11 revenue increased by 60.7% to RM1.17 billion from RM728.16 million a year ago.

MPHB’s earnings more than doubled jumped to RM260.14 million in the fourth quarter ended Dec 31, 2011 (4Q2011) from RM85.21 million a year ago, boosted by an exceptional gain derived from the sale of PROPERTIES [] within the group. However, its revenue increased by 2.1% to RM913.91 million from RM894.45 million.



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MPHB profit soars in Q4 on exceptional gains

PETALING JAYA: Multi-Purpose Holdings Bhd (MPHB) net profit increased 205.29% to RM260.14mil for the fourth quarter to Dec 31, 2011 on the back of a 2.18% increase in revenue to RM913.91mil.

The company has declared an interim dividend of 5 sen less income tax, which will be paid on March 30 to shareholders registered as at March 15.

The exceptional net profit for the period was due to exceptional gains derived from the sale of properties within the group.

Segmentally, gaming contributed almost 90% of MPHB revenue for the quarter at RM800.42mil. This was followed by financial services at RM62.79mil, corporate and others at RM47.59mil and stockbroking, at RM6.24mil.

However, on a pre-tax basis, the corporate segment and others was the biggest profit contributor at RM192.98mil due to exceptional gains. Gaming contributed RM84.07mil while the financial services and stockbroking divisions contributed RM12.48mil and RM4.05mil respectively.

For the full year, MPHB net profit increased 60.65% to RM482.03mil on the back of a 1.64% rise in revenue to RM3.54bil. So far, it has paid 10 sen in dividends.

As of the period, the company has RM1.04bil cash. It has short-term borrowings of RM53.9mil and long-term borrowings of RM2.11bil.



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MPHB 4Q earnings double to RM260m, boosted by property sales

KUALA LUMPUR (Feb 24): MULTI-PURPOSE HOLDINGS BHD []’s (MPHB) earnings jumped 205% to RM260.14 million in the fourth quarter ended Dec 31, 2011 (4Q2011) from RM85.21 million a year ago, boosted by an exceptional gain derived from the sale of PROPERTIES [] within the group.

It said on Friday its revenue increased by 2.1% to RM913.91 million from RM894.45 million. Its earnings per share were 20.40 sen compared with 7.90 sen. It declared an interim dividend of 5.0 sen a share.

MPHB said its gaming division recorded a profit before tax of RM84.1 million in 4Q2011, down 6.5% from the profit before tax of RM90.0 million in 4Q10.

The division reported fair value gain on the valuation of derivative of RM1.8 million in 4Q10 compared to a loss of RM1.1 million in 4Q11. Higher operating expenses in 4Q11 had adversely affected the results.

Write back of doubtful debts of RM1.0 million in 4Q10 resulted in higher profit before tax of the stockbroking division at RM5.0 million compared to RM4.0 million recorded in 4Q11.

As for the financial services division, it reported a profit before tax of RM12.5 million which was 30.9% lower than RM18.1 million in 4Q10 due to lower fair value gain from the quoted investments.

For FY11, its earnings rose 60.6% to RM482.02 million from RM300.04 million mainly due to the gain from disposal of properties, higher dividend income from investments and better performances from all divisions. Its revenue dipped 1.6% to RM3.535 billion from RM3.594 billion.



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Stocks to watch: Ramunia, Scomi Engineering, MPHB, Silver Bird

KUALA LUMPUR (Jan 23): Stocks on Bursa Malaysia will have to take their cue from the European and US markets in the holiday-shortened trading week, starting on Wednesday.

Trading activity is expected to see lower trading volume as most traders and investors take leave for the Chinese New Year holidays.

In Europe on Monday, fresh signs that a deal may be reached on a Greek debt restructuring, as euro zone finance ministers prepared to decide on acceptable terms for approving further bailout funds.

Reuters reported demand picked up after French Finance Minister Francois Baroin told journalists in Paris that a deal with private sector investors about resolving Greece's debt crisis was taking shape.

However, German Finance Minister Wolfgang Schaeuble, at the same event, said he wanted a second bailout programme for Greece to be in place by March.

Nonetheless, with Bursa Malaysia only reopening on Wednesday, investors would be watching closely the developments unfolding, mainly in Europe on Tuesday.

At Bursa Malaysia, among the stocks to watch include RAMUNIA HOLDINGS BHD [], SCOMI ENGINEERING BHD [], MULTI-PURPOSE HOLDINGS BHD [] (MPHB) and SILVER BIRD GROUP BHD []

Ramunia was given a new lease of life following Bursa Malaysia Securities Bhd’s approval for its proposed regularisation plan which includes a rights issue. The regulator had agreed to the cancellation of 25 sen of the par value of the existing shares of 50 sen each.

Last Friday, the company announced Bursa Securities also agreed to the proposed renounceable rights issue of up to 391.44 million shares of 25 sen each at an indicative price of 40 sen per share on the basis of two for five shares held after the change in par value.

Ramunia said Bursa Securities agreed to the business rejuvenation plan which involved business strategies to build up the group’s order book in relation to major offshore fabrication works as well as other oil and gas related business activities.

Scomi Engineering Bhd’s consortium partners have officially sealed the contract with Brazil’s Amazonas state for the RM2.56 billion monorail system.

The Manaus monorail system will include 20 km of monorail line from Largo da Matriz to Jorge Teixeira, nine stations and 10 train sets of six cars each.

The total award is valued at Brazilian Real 1.46 billion (RM2.56 billion) of which Scomi Engineering’s share is Real 339.9 million (RM597.2 million). The project is expected to be completed in 40 months from the date of the signing of the contract.

The Edge weekly reported in its Jan 23 issue that MPHB is in talks to sell a hotel in Kuala Lumpur for about RM50 million as part of its asset rationalization scheme. MPHB’s unit owns hotels in Penang and in Kuala Lumpur.

Analysts’ expectations are that it could transform into a higher-yielding company. UOB Kay Hian Malaysia Research said MPHB could re-rate in the second half of 2012 as investors start to price in significant divestment and monetisation of its non-gaming assets.

It said MPHB was trading at a steep discount to consensus RNAV of RM3.40 and at a prospective price-to-earnings multiple of 9.9 times on consensus’ forecast.

The Edge also reported that Silver Bird targets to be a global player in the food business as it hopes to leverage on its major shareholder Koperasi Permodalan Felda Malaysia Bhd. Plans are afoot to include other basic food products in various countries, according to Silver Bird group managing director Datuk Jackson Tan.

Positive news from a “win-win” situation for S P Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB) should provide some interest in the property developer.

Under the revised offer announced last Friday, PNB, Liew and S P Setia would also ink a management agreement where Liew would remain as group president and CEO for three years following the close of the revised offer.

S P Setia said PNB agreed, in the three years following the close of the takeover offer, Liew would be given a put option giving him the right to sell his 8% stake to PNB progressively in tranches at the same price of RM3.95 for each S P Setia share, should he desire to do so.

However, trading upside would be capped by the five sen increase in the share and warrants offer prices to RM3.96 and 96 sen under the revised offer.

UMW HOLDINGS BHD [] could see some trading interest after Perodua, in which it holds a substantial stake, allocated RM200.5 million for capital expenditure this year, which includes building its new flagship 3S centres.

Perodua would invest RM30 million to RM40 million for the centre at Section 19, Petaling Jaya, as a model of its future sales and service centre nationwide.



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KLCI pares down losses at mid-day

KUALA LUMPUR (Jan 18): The FBM KLCI pared down some of its losses at the mid-day break on Wednesday as key regional markets steadied on favourable economic data from China a day earlier.

However, cautioned reigned as focus returned to Europe with Portugal testing investor confidence in a debt sale and Greece resuming talks on its debt restructuring.

The FBM KLCI shed 0.14 of a point to 1,519.22 at the mid-day break on Wednesday. It had earlier fallen to its intra-morning low of 1,514.39.

Gainers trailed losers by 288 to 316, while 316 counters traded unchanged. Volume was 733.89 million shares valued at RM584.19 million.

The ringgit strengthened 0.25% to 3,1175 versus the US dollar; crude palm oil futures for the third month delivery fell RM8 per tonne to RM3,156, crude oil added 62 cents per barrel to US$101.33 while gold gained US$1.97 an ounce to US$1,654.02.

At the regional markets, Japan’s Nikkei 225 rose 1.42% to 8,586.73, Hong Kong’s Hang Seng Index gained 0.30% to 19,685.80, South Korea’s Kospi was up 0.29% to 1,898.18, Taiwan’s Taiex rose 0.20% to 7,235.27 and Singapore’s Straits Times Index gained 0.19% to 2,821.27.

Meanwhile, the Shanghai Composite Index fell 0.33% to 2,290.81.

On Bursa Malaysia, Eupe fell 14.5 sen to 48.5 sen, Ibraco and MMHE lost 14 sen each to RM1.30 and RM5.30, Ireka lost 13 sen to 66 sen, Petronas Gas 12 sen to RM15.26, Tenaga 11 sen to RM6.12, Metrod 10 sen to RM2, Perduren down 7.5 sen to 75 sen, while Fututec and Maybank fell seven sen each to 72 sen and RM8.22.

Among the gainers, GAB added 40 sen to RM12.20, KLK 24 sen to RM24.88, Far East 20 sen to RM7.20, MPHB 14 sen to RM2.86, Sungei Bagan and Petronas Chemicals up 12 sen each to RM2.94 and RM6.63, Degem 10.5 sen to RM1.05, while Batu Kawan and BAT added 10 sen each to RM18.66 and RM49.90.

DBE Gurney was the most actively traded counter with 70.3 million shares done. The stock gained one sen to 10 sen.

Other actives included Compugates, Wijaya, XDL, E&O, BIMB and MPHB.



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More upside for MPHB as it transforms into higher-yielding company

KUALA LUMPUR (Jan 13): Shares of MULTI-PURPOSE HOLDINGS BHD [] (MPHB) rose on Friday on analysts’ expectations that it could transform into a higher-yielding company.

At 3.10pm, it was up four sen to RM2.74. There were 923,900 shares done at prices ranging from RM2.70 to RM2.74.

UOB Kay Hian Malaysia Research said MPHB could re-rate in the second half of 2012 as investors start to price in significant divestment and monetisation of its non-gaming assets.

It said MPHB was trading at a steep discount to consensus RNAV of RM3.40 and at a prospective price-to-earnings multiple of 9.9 times on consensus’ forecast.

“Its discount to RNAV should narrow over time as it works towards monetising its non-core assets en route to becoming a purer gaming company, and as it reduces its net gearing that would allow it to raise dividend payout in the medium term,” it said.

UOB Kay Hian Malaysia Research said the expected developments include MPHB selling its Hotel Flamingo in Kuala Lumpur in the first quarter of 2012 and the securing of joint venture partners or buyers for its other hotels and other property assets.

It said there were expectations from the launch of its sizeable Rawang property development by 2H12, and by 1H12, the spinoff of its insurance arm and listing of U-Mobile (where it has invested RM180 million to date).

“Collectively, these exercises could release at least RM5 billion worth of market value,” it said.



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Resilient bets in sector

Gaming sector
Singapore is expected to surpass Las Vegas as the world’s second largest gaming market with US$7 billion (RM22 billion) gross gambling revenue (GGR) in 2012 (2011E: US$6 billion). Marina Bay Sands (MBS) is leading now, but Resorts World Singapore should catch up as it ramps up slot operations (+33% to 2,470 machines, comparable to MBS), and gradually opens the Western Zone (targeting higher-end VIPs).


Genting Singapore could be an early beneficiary of junkets (if licences are approved) given Genting Group’s long relationship with Asean junkets. Malaysia GGR should remain resilient driven by locals (70% of visitors are day trippers) as Singapore novelty factor recedes.

Genting Malaysia Bhd will have a new growth engine in Resorts World New York (16% of 2012F earnings), but Miami remains a long-shot for now (complicated legislature amendments, competing bids from global casino operators).

Rising credit risk amid heightened economic uncertainties could see higher receivables provision/impairment and deleveraging. Singapore is more vulnerable as the VIP segment constitutes 50% of GGR (purely direct VIPs), while Malaysia’s exposure is only 35% (via junkets).

Singapore Integrated Resorts may also be affected by slower discretionary spending given higher reliance on tourist arrivals (two-thirds of visitors are foreigners).

Sales have proven to be resilient irrespective of economic cycles, being a small-ticket item. We estimate 2012F revenue growth at 5% (1x GDP growth) driven by rising 4D Jackpot sales, which should also lower average prize payout.

Berjaya Sports Toto Bhd’s (BToto) revenue market share will likely inch up to 42% (Multi-Purpose Holdings Bhd: 34%) as its 4D Jackpot game launched in June 11 gains ground (advantage of more outlets, including in Sabah).

Our top picks for Malaysia are Genting Bhd (cheapest gaming stock in the region, multi-prong re-rating from Genting Singapore, Genting Malaysia, Genting Plantations Bhd and disposal of non-core assets) and BToto (resilient cash flows, attractive yields). We also like MPHB (cheaper exposure to numbers forecast operators, capital management opportunities from disposal of non-core assets). — HwangDBS Vickers Research, Jan 5



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CIMB Research has technical buy on MPHB at RM2.74

KUALA LUMPUR (Jan 4): CIMB Equities Research has a technical buy on MULTI-PURPOSE HOLDINGS BHD [] (MPHB) at RM2.74 at which it is trading at a price-to-book value of 1.4 times.

It said on Wednesday MPHB broke out of its downtrend channel few weeks ago and prices have been consolidating sideways since then.

“Looking at the chart, we think the stock is ripe for a stronger rebound. A break above its 200-day SMA (now at RM2.78) would catalyse its share price performance,” it said.

CIMB Research said once this level is taken out, prices are likely to charge towards the RM2.87-RM2.94 gap and RM3.03. Only a break below RM2.63 would trigger its stop.

“Technical landscape is improving. MACD signal line remains in the positive territory while RSI has hooked upward,” it said.



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RHB Research: MPHB top pick for NFO sub-sector

KUALA LUMPUR (Dec 30): RHB Research Institute’s top pick for the numbers forecast operations (NFO) sub-sector is MPHB.

“We believe that MPHB is a deep value stock at current prices. We highlight that even at our fair value of RM3.10, this implies a PE of only 12.3 times CY12, which is still at a discount to BToto,” it said on Friday.

Its top pick for the casino sub-sector is Genting Malaysia, for the positive news flow on its global expansion plans and the earnings kicker from its New York racino project, whose full potential may not have been factored into consensus’ forecasts.



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MPHB all-in on gaming

Multi-Purpose Holdings Bhd (Nov 30, RM2.59)
New coverage, outperform with fair value of RM3.10: With 100%-ownership in Magnum since June, gaming is now MPHB’s main core business. We estimate that in FY12, gaming will contribute about 80% to 85% of net profit, up from about 60% in FY10.

As for its other businesses — financial services, stockbroking and property investment and hotels — MPHB is in the process of selling these off, first to pare down debt, and secondly to concentrate its attention on gaming.

The response to Magnum’s 4D jackpot game has been phenomenal, with average sales/draw spiking to as high as RM4 million to RM5 million during periods when the jackpot figure has accumulated to a large amount.

Even after the launch of Berjaya Sports Toto’s competing 4D jackpot game in June, Magnum has not seen any significant downturn in its lotto sales, which indicates that the market has actually expanded.

In FY11, Magnum’s 4D jackpot game was averaging about RM2.5 million to RM3 million per draw in gross revenue, compared with BToto’s RM1.5 million to RM2 million.

Although there are new punters who have started buying lotto as a result of this new game, management believes that a significant amount of the market expansion came from the illegal market, as it is unable to match this kind of payout scale.

We project Magnum’s 4D jackpot game to contribute close to 20% of gross revenue by FY13 (from 16% in 1HFY11).

The risks include: (i) poor luck factor; (ii) regulatory changes for the numbers forecast operators (NFO) industry to discourage gambling or to allow competitors more outlets and more game variations; and (iii) a hike in gaming taxes.

We project MPHB will deliver a three-year earnings compound annual growth rate of 10.8%, with earnings driven by the gaming division, as well as lower interest expense after the partial repayment of its outstanding debt from the RM375 million proceeds of the sale of Menara Multi-Purpose.

We value MPHB at RM3.10 per share, based on sum-of-parts valuation. Our fair value indicates an upside potential of 20.7% from the current price.

We believe MPHB is a deep value stock at current prices. We highlight that even at our fair value of RM3.10, this implies a price-earnings ratio of only 12.3 times CY12, which is still at a discount to BToto.

At the current market price, after deducting our estimated value of all of MPHB’s other assets, we estimate that the market is pricing the gaming business at only seven times CY12.

We believe one of the main re-rating catalysts for the stock would be the disposal of more of its non-core assets, which will put MPHB on a more even footing with BToto. — RHB Research, Nov 30


This article appeared in The Edge Financial Daily, December 1, 2011.




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Ambang Sehati mulls raising BRDB stake

KUALA LUMPUR: Ambang Sehati Sdn Bhd, the major shareholder of Bandar Raya Developments Bhd (BRDB), is exploring the possibility of increasing its stake in the company, an exercise that may or may not result in a general offer for the rest of the shares it does not own.

In an announcement to Bursa Malaysia yesterday, BRDB said a representative of Ambang Sehati emphasised that the exercise to possibly raise its stake in the company is still at an evaluation stage.

“The board will issue further announcements to update on the developments, if any, as and when they occur,” BRDB said.

The announcement by BRDB comes hot on the heels of a report in The Edge weekly which touched on Ambang Sehati possibly taking the company private following its offer to acquire some of the assets in September met with resistance from minority shareholders.

The assets that Ambang Sehati had offered to acquire from BRDB are the Bangsar Shopping Centre and the Menara BRDB office block located next to it in Bangsar, the CapSquare Retail Centre and the Permas Jusco Mall in Johor Baru for a total of RM914 million.

Following an outcry from minorities, the board had decided to undertake an open tender for the disposal of the assets on Sept 26.

In respect of the assets sale via tender, the board has decided to defer the tender exercise to the first quarter of next year after having considered the year-end holidays and also taking into account the intention of Ambang Sehati to increase its interest in BRDB.

Ambang Sehati is the second largest shareholder of BRDB with 18.92% while the largest block is held by Credit Suisse with 23.57%. However, the Credit Suisse block is an omnibus account where the shares of a multiple of investors are held under one account.

Ambang Sehati is a vehicle controlled by Akhbar Khan Mohamed Khan and Mohamed Moiz JM Ali Moiz who took over the company that was sold during the restructuring of Multi-Purpose Holdings Bhd (MPHB) in 1999.

The owner of MPHB then was Datuk Lim Thian Kiat and some within the investment banking circles do not discount the possibility of the Credit Suisse block being linked to him.

The latest development confirms speculation is rife among property industry officials who were of the view that the sale of the assets by tender will be delayed because an international valuer has yet to be appointed to evaluate the assets.

BRDB, whose prime properties were recently revalued, has net assets per share of RM3.57 while its share price is trading only at RM2.13. BRDB also has a 56.76% stake in particleboard manufacturer Mieco Chipboard Bhd.

Yesterday, the property developer announced results for the third quarter ended Sept 30, where it registered a profit of RM28.4 million on a turnover of RM142.3 million. It is a vast improvement compared with the loss of RM745,000 last year on a turnover of RM127.6 million.

For the nine months, BRDB’s net profit was RM49.8 million on a turnover of RM478.4 million. Last year, it recorded RM105.6 million on a turnover of RM468.8 million, supported by a gain from the adjustment to the fair value of Bangsar Shopping Complex.


This article appeared in The Edge Financial Daily, November 23, 2011.



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MPHB’s market share rebounds after 4D Jackpot launch

Multi-Purpose Holdings Bhd (Nov 10, RM 2.63)
Initiate coverage with buy at target price RM3.50: Since the launch of 4D Jackpot in 2009, MPHB’s market share has rebounded to 37% in 1H11, almost back to 2002 levels when it was the market leader. With Berjaya Sports Toto (BToto) launching its 4D Jackpot game recently, the overall 4D Jackpot market size grew with a minimal dent seen in MPHB’s sales. 4D Jackpot is still in its infancy (at just 13% of MPHB’s gaming revenue) and should benefit from rising awareness and absence of illegal betting.

MPHB has first-mover advantage and stands to benefit from a lower blended prize payout (4D Jackpot: 55% against traditional 4D: 64.5%). Being a small-ticket item, numbers forecast operators (NFO) are less vulnerable to an economic slowdown and may benefit from the introduction of a minimum wage policy in Malaysia by end-2011.

MPHB is transforming into a purer gaming play post acquisition of a 49% stake in Magnum 4D from CVC Funds for a reasonable RM1.6 billion. With strong three-year earnings compound annual growth rate of 24%, MPHB offers a cheaper exposure to the resilient NFO segment (8.6 times CY12F price-earnings ratio against BST’s 13.5 times).

MPHB’s stockbroking, insurance and hotel units are up for sale. Including recently sold Menara Multi-Purpose, these could fetch RM1.6 billion which it could use to pare down debt (net gearing would drop to 40% from 66%, leading to RM96 million interest savings) and pay special dividends (up to 56 sen per share). Dividend payout could better 2010’s 32% (BToto: more than 75%) given stronger operating cash flows and minimal capital expenditure.


MPHB’s crown jewel is the RM3 billion gross development value (GDV) mixed development in Jalan Imbi, Kuala Lumpur, adjacent to the KL International Financial District (future MRT stop). Its JV with Bandar Raya Development in the Klang Valley and Penang could see RM65 million cash up front plus RM86 million earnings per year from 2014. Its other landbank in Pengerang, Johor (4,641 acres [1,878 ha]), and Balik Pulau, Penang, (208 acres), also have long-term appreciation potential. There could be upside to earnings and revised net asset value if we include contribution from property development and future disposal of non-core assets. — Hwang DBS Vickers, Nov 10


This article appeared in The Edge Financial Daily, November 11, 2011.