JTI’s 3Q net profit increases 13%

KUALA LUMPUR: Tobacco company JT International Bhd (JTI) saw net profit for 3QFY11 ended Sept 30 increased 13.1% year-on-year (y-o-y) to RM39.8 million or 15.2 sen a share, from RM35.1 million reported in the previous year’s corresponding quarter.

Revenue for the third quarter likewise rose to RM334.9 million from RM315.9 million previously.

According to the notes accompanying the announcement, the increase in revenue was attributed primarily to higher cigarette prices, offset partially by lower sales volume. Legal tobacco industry volume fell by 3% in the first nine months of this year, according to data by the Confederation of Malaysian Tobacco Manufacturers (CMTM).

On a cumulative basis however, JTI’s net profit declined slightly to RM104.7 million or 40.05 sen a share, compared with RM106.5 million reported in 9MFY10.

This was despite revenue for the period increasing to RM932.2 million from RM927.6 million.

“Profit before tax [for 9M] was marginally lower at RM140.6 million compared with RM142.9 million for the corresponding period in 2010. The drop was attributed to lower sales volume offset partially by higher net margins and lower marketing expenditure,” said JTI.

The tobacco players got a respite this year when they were spared an increase in excise tax when the government unveiled its budget for the upcoming year.
Local tobacco players have been open about how the steep hikes in excise duties contribute to the increase in illicit cigarette activity.

In a study commissioned by CMTM, illicit cigarette trade in Malaysia has increased to 37.3% from March to May 2011, compared with an average of 36.3% in 2010.

“Amid the challenging environment, JTI managed to maintain its market share at 19.8% in the first nine months of 2011, compared with 19.7% during the same period last year,” said JTI in a statement.

Despite managing to maintain its market share, JTI is cautious on its prospects going forward, saying, “JTI is committed to maintain its competitiveness through continued effective investment behind its flagship brands. However, it is very unlikely that the company will be able to maintain last year’s strong performance.”

For 9MFY11, dividends proposed/declared by JTI were at 30 sen per share, same as last year’s corresponding period.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Eversendai wins RM132m job

KUALA LUMPUR: Eversendai Corp Bhd’s subsidiary Shin Eversendai Engineering (M) Sdn Bhd has been awarded a RM132 million contract for work on the Manjung Power Plant.

In a statement to Bursa Malaysia yesterday, Eversendai said the work is related to the provision of “mechanical erection for boiler and auxiliary equipment for the Manjung Unit No 4”, for client Alstom Services Sdn Bhd.

There are several other packages within this project for which Shin Eversendai and Alstom are in negotiations, it added, citing more projects in the pipeline.

“With a sturdy order book of RM1.6 billion after the inclusion of this new project, we expect to exit FY11 in a firmer position and have growth visibility into FY12 and beyond,” said Datuk AK Nathan, Eversendai group managing director.

The group is presently executing the structural steel works for contact piers, sky bridge and satellite building for KLIA2 and fabrication of pipe racks structures for Sabah oil and gas terminal (SOGT) projects.

For the quarter ended Sept 30, Eversendai reported a group revenue and profit after tax of RM254.4 million and RM30.7 million, respectively. Revenue and profit after tax for the nine-month period was RM720.4 million and RM97 million, respectively. The company was listed in July this year.

“With the diverse and strong order book, the group is strategically positioned to perform well in FY11 and going forward. The wide geographical spread, number of projects and large client base of the current order book sees the group grow substantially as it is not dependent solely on any specific sector and or client,” said Nathan.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Mah Sing surpasses FY11 sales target of RM2b

KUALA LUMPUR: Mah Sing Group Bhd’s profits for 3QFY11ended Sept 30 surged 45.64% to RM43.22 million or 5.2 sen a share, up from RM29.68 million in the corresponding period last year.

Profit was driven by stronger revenue which rose 48.41% to RM420.7 million up from RM283.46 million in the same quarter last year.

For the cumulative nine-month period ended Sept 30, the group has racked up RM1.15 billion in revenue, a 41.65% improvement from the same period in 2010. Profit has likewise increased 47.05% to RM127.52 million or 15.34 sen a share up, from RM86.72 million previously.

“We have surpassed our FY11 full-year sales target of RM2 billion by achieving approximately RM2.04 billion sales as at Nov 15, 2011,” said Tan Sri Leong Hoy Kum group managing director and chief executive of Mah Sing.

“We also have very strong earnings visibility, with unbilled sales of approximately RM2.14 billion as at Sept 30, 2011. This is more than twice the revenue we recognised from property development for the whole of FY10,” he said.

The group reports unbilled locked in sales plus remaining gross development value (GDV) of an estimated RM15 billion which should last five to seven years.

Mah Sing said it expects an increase in demand for affordable properties next year and the group’s launch pipeline in 2012 will include several projects offering residential and commercial properties in the range of RM500,000 onwards.

The projects will include new phases in existing projects like Icon City (Petaling Jaya), M City (Jalan Ampang, Kuala Lumpur), and Garden Plaza (Cyberjaya) as well as new projects like M Sentral (Kuala Lumpur) and M Residence@Rawang.

Mah Sing’s net assets per share have risen to RM1.24 as at Sept 30 up from RM1.10 as at the end of the last year. It reported a cash pile of almost RM600 million, a healthy war chest which will allow the group to continue its aggressive expansion strategy. As at Sept 30, Mah Sing’s total borrowings included a term loan of RM725.46 million and redeemable convertible bonds of RM269.04 million.

Thus far in 2011, Mah Sing has embarked on three land deals that will contribute additional combined GDV of RM2.46 billion. The most recent proposed acquisition was in October, the purchase of 226 acres of freehold land in Rawang for the M Residence@Rawang project that will contribute RM948 million in estimated GDV to the group.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Boustead 3Q earnings up 31.6%

KUALA LUMPUR: Boustead Holdings Bhd’s third quarter (3Q) net profit ended Sept 30 rose 31.6% to RM120.9 million or 12.86 sen a share, from RM91.9 million in the same period last year. The group’s 3Q revenue rose 44.6% to RM2.19 billion up from RM1.51 billion in the corresponding period last year.

“We are pleased with our results particularly on a year-on-year comparison for the third quarter under review as well as for the full nine-month period. On this basis, we look to close the financial year on a positive note as we intend to work harder and channel our resources and energies to improve our bottom line and business prospects particularly from organic growth,” said Tan Sri Lodin Wok Kamaruddin, deputy chairman/group managing director of Boustead.

For the nine-month period, group net profit rose 27.3% to RM418.3 million or 44.49 sen a share, while revenue gained 33.6% to RM6 billion. The bulk of earnings were contributed by the plantation division, with an operating profit of RM267.1 million, up 101.89% compared with RM132.3 million from a year ago.

The jump in plantation profits could be attributed to the division achieving an average crude palm oil (CPO) selling price of RM3,350 per tonne against last year’s corresponding period’s average of RM2,514 per tonne, marking a significant 33% increase. Cumulatively, fresh fruit bunch (FFB) crop improved to 854,006 tonnes.

The manufacturing and trading division produced a nine-month profit of RM75.9 million, up 41.34% from the previous year corresponding period’s RM54 million.

The division was boosted by strong results in BHPetrol, which saw higher sales volume and stockholding gains.

“We will maintain our dividend policy payout for the financial year. This will be all the more possible given our diversified nature where we are not solely dependent on one income stream and as such contributions from multiple streams of businesses will have a positive impact on the group’s bottom line,” said Lodin.

Boustead has declared dividends of 22 sen per unit in 3Q, making nine-month total gross dividends at 30 sen per unit, against 27 sen in the same period last year. Net assets per share rose to RM4.63 as at Sept 30 from RM4.50 as at the end of last year.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Builders want govt to expedite award and implementation of projects

KUALA LUMPUR: The Malaysian construction fraternity hopes the government will expedite the award and implementation of public projects to sustain the growth of the local sector.

In a statement yesterday, Master Builders Association Malaysia (MBAM) president Kwan Foh Kwai said by virtue of the construction industry having a multiplying impact on over 140 other sectors, MBAM hopes policymakers will speed up the award of new projects, especially initiatives with a high impact on the economy.

“For projects involving foreign direct investment and domestic investors, the timely issue of construction permits will further improve investor confidence,” he said.

He said while MBAM applauded the government’s decision to spur the growth of the construction sector for a targeted growth of 7% in 2012, much has to be done now to meet this challenging target.

The economy expanded at a faster pace of 5.8% in 3Q but whether the growth momentum could continue in the 4Q is still uncertain, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said last Friday during the announcement of the country’s economic performance.

She said the stronger 3Q growth was due to robust domestic demand, driven by the expansion in both household and business spending as well as higher public sector expenditure. However, for 4Q, there would be uncertainties due negative developments in the external economic environment.

On the supply side, the construction component industry expanded 3% year-on-year in 3Q, higher than the 0.6% y-o-y growth recorded in 2Q. In 1Q, the sector expanded 3.8%. The domestic construction industry grew 5.3% in 2010.

Kwan said by virtue of the growth rates for the construction sector so far in 2011, MBAM is concerned that the sector might not reach its intended growth targets if 4Q numbers do not improve substantially.

According to Kwan, timely awards and implementation of projects under the 10th Malaysia Plan and Economic Transformation Programme will contribute positively to the growth of the local building sector in 2012 as the projects require a gestation period to generate a positive impact on the economy.

“This planned and progressive award of projects will reduce any abrupt increase in demand for building materials and manpower which may jeopardise the targeted growth due to temporary shortages in supply. This will also prevent unnecessary price increases which will add a burden to contractors,” Kwan said.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Axis REIT unit placement oversubscribed

KUALA LUMPUR: Axis Real Estate Investment Trust (Axis REIT) saw a good response to its shares placement exercise.

In a statement to Bursa Malaysia yesterday, Axis REIT said the 75.18 million units were placed out at RM2.45 each. Acquirers of the new shares are expected to make payment within five market days from the price fixing date of Nov 18 while trading of the new units is expected to begin on Dec 7. The property trust did not specify who the investors are, and the oversubscription quantum for its latest placement which raised RM184.2 million. Axis REIT closed at RM2.57 yesterday.

In a separate statement, Stewart LaBrooy, CEO and executive director of Axis REIT Managers Bhd, which manages Axis REIT, said investors’ continuing interest in the property trust underlined the efforts of the manager to improve the stock’s liquidity, deliver higher income distribution, and expand the property trust via yield-accretive acquisitions.

Upon completion of the exercise, Axis REIT’s issued share capital will expand to 451.08 million units. This translates into a market capitalisation of RM1.16 billion based on the unit’s closing price yesterday.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

United Plantations 3Q profit up 33% to RM105m

KUALA LUMPUR: United Plantations Bhd’s net profit for 3QFY11 ended Sept 30 jumped 32.6% to RM105.15 million from RM79.27 million a year earlier, driven mainly by significant improvement in the selling prices of crude palm oil (CPO) and palm kernel (PK).

The company said yesterday its revenue for 3Q surged 59.3% to RM439 million from RM275.54 million a year ago.

Earnings per share was 50.52 sen compared with 38.08 sen previously, while net assets per share was RM9.55.

The company declared an interim dividend of 18.75 sen net per share for the year ending Dec 31, 2011, and a special dividend 11.25 sen net per share, to be paid on Dec 21.

For the nine months ended Sept 30, United Plantations’ net profit surged 64.9% to RM300.83 million from RM182.43 million in the previous corresponding period, on the back of a 60% jump in revenue to RM1.11 billion from RM692.27 million. Reviewing its performance, United Plantations said among the factors that drove its earnings were rising production from newly matured fields from its estates in Indonesia for the period under review compared with the corresponding period in 2010.

It said the production from its estates in Malaysia during the review period was at about the same level as the corresponding period in 2010.

On its prospects, the company said palm oil production in Malaysia and Indonesia is expected to decline seasonally from November 2011 to March 2012, and that the current above average rainfall will affect palm oil production for November 2011.

“These two factors will support prices in the near future,” it said.

United Plantations said it was replanting a large area in Malaysia in 2011 in accordance with its replanting policy, adding that some areas in its Indonesian operations came into maturity in 2010 and more areas had been progressively maturing in 2011.

“The Indonesian production will more than compensate for the crop loss from the replanted areas in Malaysia and, as such, the total production for the group for 2011 is expected to be above that in 2010.

“The directors are of the opinion that the group’s results for the current financial year ending Dec 31 should be better than last year primarily due to better selling prices,” it said.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

PPB down after downgrades on Wilmar, but decent 3Q seen

KUALA LUMPUR: PPB Group Bhd, which is still working on acquiring a 20% stake in the flour-related business of its associate Wilmar International Ltd, is expected to show decent year-on-year (y-o-y) growth in third quarter earnings slated for release sometime this week, analysts said.

But concerns over challenging operating conditions and several downgrades at Wilmar, its largest earnings contributor, dampened sentiments for both PPB and its 18%-owned associate. Wilmar’s 3QFY11 ended Sept 30 numbers fell short of street estimates due to exceptional losses, while showing strong y-o-y growth.

Closing at RM16.06 and S$5.09 (RM12.43) yesterday, PPB slipped 6% while Wilmar is down close to 9% over the past nine market days following Wilmar’s 3Q earnings release the morning of Nov 9.

Wilmar’s net profit for the quarter would have jumped 157% to US$442.4 million (RM1.4 trillion) from US$172.4 million in 3QFY10 had it not been for exceptional items like foreign exchange losses which resulted from a stronger greenback against the Aussie dollar due to loans provided to its sugar unit, as well as fair value losses on the group’s convertible bonds. Instead, on the morning of Nov 9, Wilmar said net profit for 3QFY11 rose 24% to US$321 million on the back of a 69% jump in revenue to US$13.1 billion. Earnings were also short of 2QFY11’s US$393 million.

Has enough value emerged following the recent price weakness?

KAF Seagroatt & Campbell values PPB at RM18.80, while AmResearch is even more bullish at RM19.35, according to Bloomberg data. Both have a “buy” on PPB while HwangDBS Vickers Research thinks the stock “fully valued” at RM16.30.

Wilmar, which is more widely tracked, has 13 “buy” calls, eight “holds” and four “sells” following downgrades by Kim Eng Securities and HSBC post the 3Q release.

Kim Eng cut Wilmar to “sell” after slashing its fair value from S$5.31 to S$4.50, after factoring in lower margins as well as the possibility of more one-off items eating into earnings.

“For FY12 and FY13, we slash our forecasts by a substantial 25% and 3% respectively,” Kim Eng wrote in a note dated Nov 10. The brokerage house’s bearishness was also due to near-term pessimism on China’s economy, given that Wilmar is seen as a proxy to China’s growing affluence. Wilmar, which had previously been hit by unfavourable trading positions, could again be hit if volatility on global commodity prices again rises significantly, it added.

Little wonder then that PPB’s stock price has slid in tandem, given that contributions from Wilmar — its largest earnings contributor following the disposal of its sugar business to what is now MSM Malaysia Bhd — is expected to continue to be sizeable until PPB’s other consumer businesses catch up in size.

One potential boost for PPB could come from the completion of the purchase of a 20% stake in Wilmar’s flour business in China. That is hoped to help make up for some of the earnings contributions lost from PPB selling a 20% stake in its Malaysian flour unit — FFM Bhd — to Wilmar earlier this year. At its 2Q briefing, PPB’s key management would only say paperwork for the transaction is being prepared and that plants in China will beat the size of those in Malaysia, given the difference in addressable market, without specific numbers.

Whatever the case, analysts who are less bearish on China’s economy and Wilmar’s growth prospects pointed out that the company had hitherto demonstrated the ability to build on its core competencies.

“Wilmar has shown strong underlying operational strength in its results which will continue to benefit PPB in the long run,” one analyst said, pointing out that Wilmar would be a beneficiary of the recent export tax changes for palm oil products in Indonesia.

CIMB Research reckons investors should accumulate Wilmar shares on any price weakness. “The stock has [fallen] after it reported lower earnings due to exceptional losses as well as amid concerns over its portfolio investments, but we remain positive on mid-term earnings prospects,” CIMB wrote in a note dated Nov 10, valuing Wilmar at S$5.60 apiece.

PPB is also expected to benefit from Wilmar’s on-going expansion into the sugar business in the longer run, analysts said.

In the near term, PPB’s earnings won’t see much of a boost from the recent purchase of Porserpine Cooperative Sugar Milling Association’s (PCSMA) assets for a headline price of A$120 million (RM377 million) by Wilmar’s wholly-owned Australian sugar unit, Sucrogen Ltd, given its size. The purchase, however, is expected to boost Sucrogen’s milling capacity and raw sugar production by about a 10th.


This article appeared in The Edge Financial Daily, November 22, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.