Stocks to watch Fajarbaru, Pharmaniaga, Tasco, Quill Capita, New Hoong Fatt, APFT, MAS, AirAsia

KUALA LUMPUR (May 3): The FBM KLCI could face a struggle to eke out some gains on Friday, as investor sentiment could take a hit by external factors that have plagued global equity markets over the week.

European stocks slipped into negative territory on Thursday after a weaker-than-expected U.S. service sector data cast doubts over the strength of the recovery in the world's biggest economy, according to Reuters.

Most global equity markets trended lower on Thursday after the S&P 500 and the Dow edged lower on Wednesday as data showed that private sector hiring fell far more than expected in April, sparking concerns that Friday's U.S. jobs report will also disappoint investors, according to Reuters.

Among the stocks that could be in focus on Bursa Malaysia on Friday are Fajarbaru, Pharmaniaga, Tasco, Quill Capita, New Hoong Fatt, APFT, MAS and AirAsia.

Fajarbaru Builder Group Bhd has secured a sub-contract worth RM299.84 million to build a power substation from MALAYSIAN RESOURCES CORP []oration Bhd .

The company said on Thursday that its unit Fajarbaru Builder Sdn. Bhd had received a letter of acceptance to build the Kg Kuala Sungai Baru substation and other associated works for the Ampang (AMG) Line Extension project.

PHARMANIAGA BHD [] says first quarter net profit rose 85% from a year earlier as revenue growth mitigated the impact of higher operating cost, besides finance and tax expenses.

In a statement to the exchange, Pharmaniaga said net profit came to RM28.69 million in the quarter ended March 31, 2012 versus RM15.48 million previously as revenue grew 16% to RM446.75 million from RM385.33 million.

The firm said it plans to pay a first interim single-tier dividend of 7.5 sen a share for financial year ending December 31, 2012. Conglomerate BOUSTEAD HOLDINGS BHD [] owns some 72% in Pharmaniaga.

Tasco Bhd net profit for the first quarter ended March 31, 2012 rose 4.6% to RM6.76 million from RM6.46 million a year earlier, due to better margins from its air freight forwarding division arising from urgent export shipments.

The company said on Thursday that its revenue for the quarter edged lower to RM117.89 million from RM118.36 million in 2011.

QUILL CAPITA TRUST [], a commercial and industrial-based real estate investment trust says first quarter net profit rose 5% from a year earlier, helped by higher revenue and lower operating expenses.

In a statement to the exchange, Quill said net profit came to RM8.07 million in the quarter to March 31, 2012 from RM7.68 million previously while revenue was up 2% to RM17.78 million from RM17.51 million.

NEW HOONG FATT HOLDINGS BHD [] net profit for the first quarter ended march 31, 2012 fell 42.1% to RM4.1 million from RM7.08 million a year earlier, due mainly to increased in manufacturing and operating costs as well as higher foreign exchange loss.

The company said on Thursday that its revenue for the quarter edged up 0.6% to RM54.02 million from RM53.71 million in 2011 due to higher demand for export sales.

APFT Bhd’s unit Asia Pacific Flight Training Sdn Bhd (APFTSB), has signed a five-year MPL Services Agreement with Canada-based CAE Inc (CAE) on the Multi-crew Pilot License (MPL) training for AirAsia cadets.

In a statement to Bursa Malaysia on Thursday, A PFT said this was the first and only MPL training in Malaysia.

it said that previous batches of AirAsia CAE MPL cadets were trained in Canada.

Meanwhile, shares of MALAYSIAN AIRLINE SYSTEM BHD [] and AIRASIA BHD [] could extend their gains from Thursday after the airlines said they had entered into a Supplemental Agreement to vary the terms and scope of the original collaboration agreement inked last August.

The share-swap last August saw AirAsia’s Tan Sri Tony Fernandes and his partner Datuk Kamarudin Meranun taking up a 20.5% interest in MAS and two board positions, in exchange for Khazanah owning a 10% stake in the regional budget airline.

The airlines said on Wednesday that pursuant to the Supplemental Agreement, they had separately entered into memorandums of understanding (MoU) in respect of firstly, to jointly explore the setting up of the joint-venture company by MAS, AirAsia and AAX to provide aircraft component maintenance support and repair services.



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Quill 1Q profit up 5% on higher rental, lower operating cost

KUALA LUMPUR (May 3) : QUILL CAPITA TRUST [], a commercial and industrial-based real estate investment trust says first quarter net profit rose 5% from a year earlier, helped by higher revenue and lower operating expenses.

In a statement to the exchange, Quill said net profit came to RM8.07 million in the quarter to March 31, 2012 from RM7.68 million previously while revenue was up 2% to RM17.78 million from RM17.51 million.

The property trust said revenue had increased due to higher rentals for its PROPERTIES []. Looking ahead, Quill which has nine properties under its portfolio, said it plans to acquire more properties to grow its income.

The company said this comes against expectations of weaker commercial property prices due to fresh office space supply in the market.



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Quill Capita Trust advances to RM1.13

Quill Capita Trust rose 1.8 per cent to RM1.13, set for its highest close since Feb 8. The property trust’s 2011 net income grew 5.4 per cent to RM34.3 million from a year earlier, according to a stock exchange filing. -- Bloomberg



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Quill Capita posts 8.3% jump in profits

KUALA LUMPUR: Quill Capita Trust (QCT), which is managed by Quill Capita Management Sdn Bhd (QCM), posted RM9.4 million net profit for its 3QFY11 ended Sept 30. This is an increase of 8.3% from RM8.6 million a year ago due to higher rental income contribution from properties and lower property expenses.

Its revenue also saw a slight increase to RM17.6 million from RM17.3 million in the same period last year while its earnings per unit is at 2.41 sen, up 8.6% from 2.22 sen.

QCT’s year-to-date nine-month net profit stood at RM26.2 million compared with RM25 million in the same consolidated period last year. Revenue also rose by 1.6% to RM52.7 million from RM51.9 million.

“Our active asset management strategies have ensured income stability through securing lease renewals. To date, we have secured renewals as well as signed new tenants for our leases due in 2011.

“Looking ahead, we are confident that despite current market uncertainties, QCT will be able to continue to deliver stable returns to its unit holders in 2011,” said QCM chairman Datuk Mohammed Hussein in a statement to Bursa Malaysia yesterday.

Hussein also said the government’s decision to grant a five-year extension on the concessionary withholding tax rate of 10% on dividends for non-corporate institutions and individual unit holders is expected to aid the development and maintain the attractiveness of the Malaysian REIT industry.

The statement also said QCT has secured commitments for its new commercial paper (CP) of RM118 million to refinance its existing CP of a similar amount, due on Nov 30, 2011, which completes all its financing requirements in 2011 and 2012. This new debt will expire on Sept 5, 2016.

“For the remaining months of the year, QCM will continue to focus on proactive asset management strategies to improve tenant relations and to continue its effort to enhance the quality of its properties.

“QCM will also continue to adopt prudent capital management strategies, as well as to look out for potential yield accretive acquisition opportunities,” noted its announcement to Bursa Malaysia.


This article appeared in The Edge Financial Daily, November 4, 2011.

RHB Research maintains market perform on Quill Capita

KUALA LUMPUR (Nov 4): RHB Research Institute is maintaining its market perform on Quill Capita. The indicative fair value is maintained at RM1.25 based on weighted average target yield of 6.9% on its FY12 dividend per unit forecast of 8.7 sen.

It said on Friday Quill Capita’s 3Q11 realised net income of RM9.4 million (+8.3% on-year; +2.5% on-quarter) came in within its and consensus estimates.

Sequential gross revenue growth was flattish, and interest expense was higher (+16.1% on-year; +15.4% on-quarter) during the period mainly due to the write-off of balance of the amortisation cost relating to its RM80 million term loan facilities.

“However, the lower operating expenses in 3Q11 have offset the higher finance costs, leading to an overall increase in the realised net profit margins. As expected, no DPU was declared during the period as Quill Capita declares its dividends semi-annually,” it said.

Quill 3Q earnings slightly higher

KUALA LUMPUR (Nov 3): QUILL CAPITA TRUST [] earnings rose nearly 1.4% to RM9.39 million for the period ended Sept 30, 2011 from RM8.68 million a year ago, due to rental rates of certain PROPERTIES [].

It said on Thursday revenues increased 8.2% to RM17.63 million from RM17.39 million. Earnings per share were 2.41 sen compared to 2.22 sen.

Quill Capita said that the increase in profits were due to increases in rental rates of certain properties as well as lower property operating expenses.

For the first nine months ended Sept 30, 2011, profit rose 1.6% to RM26.25 million from RM24.45 million a year ago. Revenue rose 7.3% to RM52.76 million from RM51.93 million.

InsiderAsia’s model portfolio

Global stock rebounded strongly last week on the back of positive developments in the eurozone and better- than-expected economic data in the US. The closely monitored Dow Jones Industrial Average added almost 400 points in the first four trading days of the week.

Bellwether indices in key Asian markets too closed sharply higher. The Hang Seng Index surged 11.1% while benchmark indices in Singapore and Japan closed 7.1% and 4.3% higher, respectively.

Reflecting the renewed investor confidence in riskier assets, stocks on the local bourse too traded on a stronger footing. The FBM KLCI finished in positive territory for four straight trading days. The benchmark index ended 43 points higher for the week at 1,481.8.

Trading volume also inched slightly higher, picking up strongly in the last two trading days for the week. The daily trading volume on the local bourse rose to nearly 1.49 billion shares, on average, up from the daily average of just under 1.48 billion shares in the immediate preceding week.
Positive momentum from last week may spill over into this week.

The rescue plan agreed by the eurozone members last week may not carry much details but it is widely seen as a step in the right direction — and will provide the framework for officials to work on in the comings weeks and, likely, months.

Representatives of the private bondholders have agreed to a voluntary 50% haircut, much deeper than the earlier proposed 21% reduction. This is projected to cut Greece’s debt to GDP ratio to about 120% by 2020, instead of more than 160% under the July proposal. The lower debt service costs will alleviate some of the country’s financial strain and buy more time for the government to implement the necessary structural reforms.

Investors also cheered plans to leverage on the remaining funds available in the European Financial Stability Facility (EFSF). Officials estimate that the firepower of the EFSF can be boosted up to €1 trillion (RM4.3 trillion) under the two suggested options. The first will see a first-loss guarantee on new bonds issued and under the second option, its resources will be used to seed special purpose vehicles that will attract private and sovereign wealth funds.

Lastly, European banks are required to boost their holdings of safe assets to 9% of total capital, to buffer against debt provisions and losses in the debt crisis fallout. It is estimated that some €106 billion will be needed for the recapitalisation exercise, although details are sketchy as to where the money will come from.

Indeed, leaders of the eurozone have put no additional money on the table. The proposed boost to the EFSF depends on the region’s ability to attract private investors and sovereign wealth funds, of which there is currently no indication of success. It also remains to be seen if the initial loss insurance will be sufficient to bring down borrowing costs for troubled countries like Italy and Spain.

Even if all goes to plan, it will take years to pare debt levels and repair government fiscal positions. Meanwhile, economic activities in the eurozone have slowed considerably in recent months and will likely stay weak for sometime with the ongoing austerity programmes.

In the other key development, US’ GDP grew 2.5% in 3Q11, much better than the anemic 0.4% in 1Q11 and 1.3% in 2Q11. The improved figure allayed concerns that the world’s largest economy will fall back into recession, at the least for now.

The biggest question is whether the growth is sustainable amid high unemployment and stagnate income growth. Market observers remain divided on the issue.

For the moment, stock markets are rallying on the premise that the global situation is not as bad as it could be. Nevertheless, with the outlook still hazy, a healthy dose of caution is warranted. There is a good chance that we may not have seen the last of market volatility.

Portfolio review
Stocks in our model portfolio underperformed the benchmark index last week. Total market value for our basket of 17 stocks was up by 2.11% to RM376,310, compared with the FBM KLCI’s 2.99% gain.

Fifteen stocks in our portfolio closed with gains last week while two ended lower and one traded unchanged. Some of the notable gainers include Media Chinese International (+8%), Genting (+8.7%), Pantech (+4.3%) and Quill Capita Trust (+3.9%). At the other end, DiGi (-0.3%) and BSDREIT (-1.4%) were the only two losers for the week.

Including our cash holdings, for which no interest income is imputed, our total portfolio value was up by a lesser 1.2% to RM655,523. Last week’s gains boosted our model portfolio’s cumulative returns since inception to 309.7% on our initial capital of just RM160,000. We continue to outperform the FBM KLCI, which was up by about 129.1% over the same period, by some distance.

Our cash holdings remain substantial, accounting for 43% of our total portfolio value. The relatively high percentage is, primarily, for prudence sake. Despite the strong rebound so far this month, we are still cautious on the market outlook.

Our total profits are very substantial at RM495,523, of which RM399,053 has already been realised from previous shares sales. We kept our portfolio unchanged last week.


Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.


This article appeared in The Edge Financial Daily, October 31, 2011.