Muhibbah active, up on RM1.05b Aussie job

KUALA LUMPUR (Dec 23): Muhibbah Engineering Bhd shares rose in early trade on Friday after the company and its Australian joint venture partner Monadelphous Group Limited landed a RM1.05 billion (AUD330 million) job to build an approach jetty and ship berth in Queensland.

At 9.05am, Muhibbah rose six sen to RM1.14 with 1.17 million shares done.

Muhibbah said on Thursday that Monadelphous Muhibbah Marine JV (MMM) had secured the contract to build the jetty and ship berth associated with the Wiggins Island Coal Export Terminal Pty Ltd’s (WICET) Project at Gladstone in Queensland.

MMM is a 50:50 joint venture between Muhibbah CONSTRUCTION [] Pty Ltd, a wholly owned subsidiary of Muhibbah in Australia and Monadelphous Engineering Pty Ltd, a wholly owned subsidiary of Monadelphous Group Ltd.



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LTAT does not dismiss prospect of privatising BHIC

KUALA LUMPUR: The possibility of the Armed Forces Pension Fund or Lembaga Tabung Angkatan Tentera (LTAT) being the vehicle to privatise Boustead Heavy Industries Corp Bhd (BHIC) is increasing.

Tan Sri Lodin Wok Kamaruddin, who is LTAT chief executive, did not dismiss the prospect of LTAT privatising BHIC.

Lodin, however, denied that BHIC's parent, Boustead Holdings Bhd, planned to privatise BHIC.

"Once again, we confirm that Boustead does not have any intention to privatise BHIC. We can't comment on what LTAT is going to do about BHIC," said Lodin, who is also Boustead deputy chairman and group managing director.

"That you would have to ask LTAT. It is for LTAT's board of directors to collectively deliberate upon," he told reporters after Boustead's shareholders meeting here yesterday.

A research house highlighted that a privatisation made sense given that BHIC's earnings visibility looked secure for the next 10 years after being awarded a RM9 billion contract from the Defence Ministry to design, build and deliver six second-generation patrol vessels.

It could also be advantageous for LTAT to privatise BHIC to avoid public disclosure and scrutiny, given the sensitivity of such government defence contracts.

LTAT owns 61 per cent of Boustead and 8.15 per cent of BHIC.

When pressed on what he thought of such suggestion, Lodin said: "Anyone can air their views in the newspapers."

On whether LTAT is considering loosening its grip on Boustead to increase share liquidity, he said: "It is good to have liquidity. LTAT will do so at the right time and right price and make some capital gains along the way."



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Envair stock plunges on Deepak share sale news

KUALA LUMPUR: Envair Holding Bhd's shares suffered their steepest decline in more than a month after a substantial shareholder Deepak Jaikishan sold his entire stake, almost three weeks after buying it.

Envair, a manufacturer of air and water filters, saw its shares fell by over 15 per cent to an intraday low of 26.5 sen yesterday.

It was its fourth consecutive day of decline. It was traded 39.5 sen early this week.

Its trading volume has also reduced significantly. This week, its average trading volume was about 12.5 million shares, more than 60 per cent lower than the average of 31.44 million shares previously.

Filings to Bursa Malaysia on Wednesday showed that Deepak had sold six million shares on December 14 in the open market. On the day of the disposal, Envair shares were traded between 34.5 sen and 38 sen.

He bought the six million shares on December 2 for RM1.32 million or 22 sen each. This means Deepak could have make at least 56 per cent return on investment (ROI), or a minimum of RM750,000.

Deepak did not inform Bursa Malaysia on why he sold the stakes. He had earlier told the media that he was "taking a long-term view" of his investment and would soon raise his stake to over 10 per cent.

He had also reiterated that he "will not be selling down" his stakes in the future.

"A major shareholder's exit could be driven by many factors - it may be due to the relationship between itself and the board and the management, or maybe the shareholder sees better investment opportunities elsewhere.

"Nevertheless, a stellar ROI during a period of volatility and uncertainty is always a good reason for an investors to take profit," said a research head from a local brokerage.

The research head added that Deepak may have seen that Envair's plan to venture into the oil and gas business to be more challenging than anticipated.

Two months ago, the company said it would supply two million barrels of light crude oil monthly for 60 months to An Hong Shenzhen.

Deepak is not the first investor who bought a substantial stake in Envair, only to dispose of it shortly after.

On November 1, Chinese national Jiang Chuan Yi bought 6.75 per cent in the company, only to dispose of the entire stake three weeks later.



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Muhibbah wins RM1b Aussie job

Muhibbah Engineering (M) Bhd says its 50:50 joint venture with Monadelphous Group Ltd has won a RM1.05 billion contract in Australia.

Monadelphous Muhibbah Marine JV will build approach jetty and ship berth associated with the Wiggins Island Coal Export Terminal Pty Ltd (WICET)'s project at Gladstone in Queensland.

"The MMM joint venture brings together Muhibbah's global expertise in the delivery of marine and port construction works and Monadelphous's expertise in the civil construction of large-scale projects for Australian resources customers.

"This also marks another new era for Muhibbah Group' sexpansion of marine-related business into advanced countries such as Australia," it said in a filing to Bursa Malaysia yesterday.

The job includes building offshore plant and infrastructure such as a 1.8km approach jetty and transfer tower platform, wharf, berthing and mooring dolphins, ship access platforms and jetty conveyor.

The work, which is part of stage one of the WICET project, is scheduled to start immediately and be completed by early 2014.

WICET is privately owned and funded by a group of Queensland coal exporters to build an export facility for thermal and metallurgical coal.

The new terminal will be at Golding Point, to the west of the existing RG Tanna terminal in Gladstone. It will be built in stages to match forecast coal export demand and operated by Gladstone Ports Corp.

Stage one has a contracted annual coal export capacity of 27 million tonnes. Once fully developed, the terminal will have an annual capacity of more than 80 million tonnes.



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Boustead sees bountiful year amid high CPO prices

OPTIMISTIC: Plantation unit contributes RM267.1 million in three quarters

BOUSTEAD Holdings Bhd expects to rake in record profit this year as palm oil prices continue to trade at buoyant levels of around RM3,000 per tonne.

Out of its six core businesses, plantation is the biggest earnings contributor, followed by shipbuilding and property development.

In the three quarters ended September 2011, Boustead's plantation division contributed RM267.1 million or 45.5 per cent to the group's RM585.9 million pre-tax profits.

So far, Boustead makes an annual profit of between RM450 million and RM700 million.


Although palm oil prices have been settling from its high of RM3,800 per tonne nine months ago, the third-month benchmark palm oil futures contract on the Malaysia Derivatives Exchange is averaging at around RM3,100 per tonne.

Yesterday, the contract closed RM25 higher at RM3,097 per tonne.

"We're looking at record profits this year as palm oil prices are still strong," said Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

The group has an agriculture land bank of 97,648ha and so far, three quarters of that are already planted with oil palms.

"Our tree profile is at a favourable phase, of which 46 per cent of our oil palms are of prime ages. We expect to harvest about 1.1 million tonnes of fresh fruit bunches this year," he said.

With promising results, Boustead is setting aside RM1.4 billion in capital expenditure for next year.

"About 30 per cent of the money will go to plantation," said Lodin.

Yesterday, both Boustead and Pharmaniaga Bhd shareholders approved all resolutions to have Boustead's entire pharmaceutical division placed under Pharmaniaga.

Lodin said the corporate move will allow Pharmaniaga to expand its manufacturing capacity in Kedah and Perak.

"Our total capital expenditure for the pharmaceutical division amounts to RM95 million, of which a third will go to the information system," he added.

Pharmaniaga is in the business of making generic drugs and supply, trade and install hospital equipment. It also stores and distributes medicine to government hospitals and clinics.

"We have a 10-year supply concession to all 3,750 healthcare outlets under the Health Ministry throughout the country. The book value is worth some RM900 million," said Pharmaniaga managing director Datuk Farshila Emran.

Lodin said Boustead is still interested in buying ExxonMobil Corp's oil and gas assets in Malaysia, if the latter's deal with San Miguel Corp does not materialise.

"We first had a discussion with Esso in August last year. If there is a review with whomever they have made an agreement with, we are open and prepared to talk to anyone," he said.

San Miguel, in August, agreed to buy Exxon's entire 65 per cent stake in Esso Malaysia for about US$206 million (RM655 million), or RM3.50 per share.

This will give it control over a chain of petrol stations and one refinery with a capacity of 88,000 barrels a day.

Although the deal won the government approval last month, it has yet to be concluded.



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Kulim gets shareholder nod for RM700m land buy

For JCorp, the RM700 million it will get from the sale means it will have cash to meet its obligations on a bond maturing end of July next year.

Johor Baru: Kulim (Malaysia) Bhd shareholders yesterday gave the go-ahead for the company to buy six parcels of oil palm plantation land in Johor for RM700 million cash from Johor Corporation (JCorp).

While the shareholders’ approval indicate their optimism of the purchase and of Kulim’s outlook, for JCorp, the RM700 million it will get from the sale means it will have cash to meet its obligations on a bond maturing end of July next year.

The sale is a major component of the JCorp group’s rationalisation exercise.

The RM700 million cash accruing from the estates’ disposal is the first out of the expected RM1 billion cash to be generated before July 31 2012. The balance of RM300 million will come from internally generated funds.

JCorp president and chief executive officer Kamaruzzaman Abu Kassim said in a statement yesterday that the group is finalising a plan for repayment of its remaining debts.

As part of the exercise, CIMB Bank which is also its adviser, and Maybank will act as joint lead managers for the issuance of new bonds in 2012.

The purchase approved by Kulim shareholders at an extraordinary general meeting yesterday comprise six parcels of oil palm plantation land with total land area of 13,687 hectares and two palm oil mills.

Meanwhile, Massive Equity Sdn Bhd (MESB), a special purpose vehicle jointly owned by JCorp and CVC Capital Partners (CVC), welcome the acceptance KFC Holdings Bhd and QSR Brands Bhd of its offer to buy the two fast food companies.

The privatisation of QSR will not result in JCorp itself incurring additional debt, as funding for the transaction will be done via MESB on the strength of the future cash flow of the two businesses. Following completion of the disposal to MESB, the proceeds therefrom will be returned to all shareholders of QSR and KFC.

The move will also present Kulim, which is currently the controlling shareholder of QSR, an opportunity to dispose of its stake in food retail businesses and focus on its core plantation business.

Kamaruzzaman said the acquisition will enable JCorp to gain direct controlling interest in both companies it considers as having good fundamentals and long-term value.



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MAS suspends 4 more routes

MALAYSIA Airlines (MAS) yesterday announced four more routes suspension, following up on the rationalisation involving eight routes of its international network announced last week.

The routes on its regional network that will be suspended early next year include twice-weekly Kota Kinabalu-Osaka return flight, thrice-weekly Kota Kinabalu-Perth return, four times weekly Kota Kinabalu-Haneda (Tokyo) return and four times weekly Kota Kinabalu-Seoul return.

All of these routes are served by Boeing B737 aircraft.

The Kota Kinabalu-Osaka route will be suspended from January 6 2012, Kota Kinabalu-Perth from January 31, the Kota Kinabalu-Haneda from February 1 and the Kota Kinabalu-Seoul from February 21.

"This suspension is until further notice and is part of our regional network consolidation involving single-aisle aircraft operations. We will be reviewing this situation in about three months, from the date of the first route suspension and will be deciding further by early April 2012," MAS group chief executive officer Ahmad Jauhari Yahya said in a statement.

Ahmad Jauhari said during the suspension, the national carrier will take advantage of its existing code-share operations with Korean Air to provide direct connectivity between Sabah and South Korea using the Korean carrier's Seoul-Kota Kinabalu return direct flights.

MAS will also also continue offering direct international connectivity to Kota Kinabalu through its existing daily B737 flights from Hong Kong and Taipei.

"In addition, we will also use our existing 86 weekly flights between Sabah and KL International Airport (KLIA) to provide immediate connections for passengers who prefer full service flights between Sabah and the cities of Perth, Tokyo and Osaka," he added.

MAS assures passengers that it will honour all forward bookings ticketed to date on the affected routes. It said where necessary, the company will make alternative carrier arrangements, at its own cost, to ensure minimum discomfort to passengers.

As for the Sandakan-Kuala Lumpur operations, MAS will continue to offer the connectivity via Kota Kinabalu, 22 times weekly from Sandakan and 25 times weekly from Kuala Lumpur, using both its daily B737 flights and daily MASwings ATR services, currently operating between Sandakan and Kota Kinabalu.

On December 14, MAS announced a major route rationalisation to stem losses expected this year and in 2012.

The rationalisation takes effect early next year and involves the withdrawal of loss-making flights from Kuala Lumpur to cities that include Surabaya, Karachi, Johannesburg, Cape Town, Rome and Buenos Aires.



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Stocks to watch: Muhibbah, Perisai Petroleum, MRCB, HELP, technology-related stocks

KUALA LUMPUR (Dec 22): Trading on Bursa Malaysia on Friday ahead of the extended weekend is likely to be cautious, given the muted reaction of regional markets on Thursday following the take-up of nearly 490 billion euros from the European Central Bank at its first-ever offer of three-year loans on Wednesday.

Although the FBM KLCI closed higher on Thursday, the broader market remained weaker with losers edging gainers, a trend that will likely be repeated on Friday.

Among the stocks that could be in focus today are Muhibbah Engineering Bhd, PERISAI PETROLEUM TEKNOLOGI BHD, MALAYSIAN RESOURCES CORPORATION BHD, HELP INTERNATIONAL CORPORATION BHD and TECHNOLOGY-related stocks.

Muhibbah Engineering Bhd and its Australian joint venture partner Monadelphous Group Limited have landed a RM1.05 billion (AUD330 million) job to build an approach jetty and ship berth in Queensland.

Muhibbah said on Thursday that Monadelphous Muhibbah Marine JV (MMM) had secured the contract to build the jetty and ship berth associated with the Wiggins Island Coal Export Terminal Pty Ltd’s (WICET) Project at Gladstone in Queensland.

MMM is a 50:50 joint venture between Muhibbah CONSTRUCTION [] Pty Ltd, a wholly owned subsidiary of Muhibbah in Australia and Monadelphous Engineering Pty Ltd, a wholly owned subsidiary of Monadelphous Group Ltd.

Perisai expects contribution from its mobile offshore production unit (MOPU), which it acquired through Garuda Energy (L) Ltd to be realised by FY12.

Its managing director Zainol Izzet Ishak said on Thursday that the acquisition would be finalised by the end of this year and will start contributing to the group's bottom line from the first day of its operation as the group's asset.

MRCB’s unit MRCB Engineering Sdn Bhd was awarded a RM13.93 million contract to upgrade the Sabah Employees Provident Fund (EPF) building in Kota Kinabalu.

HELP’s net profit for the fourth quarter ended Oct 31, 2011 fell 44.6% to RM3.59 million from RM6.47 million a year earlier, due to new student recruitment affected by delays in obtaining licences and approvals for operations.

Revenue for the quarter rose to RM28.44 million from RM27.33 million in 2010.

HELP proposed a final gross dividend of two sen per share of 50 sen each, amounting to RM2.13 million for the financial year ending Oct 31, 2011.

For the financial year ended Oct 31, HELP’s net profit fell 31.6% to RM13.06 million from RM19.1 million in 2010, on the back of increased revenue of RM108.06 million from RM105.2 million a year earlier.

Meanwhile, OSK Investment Research on Thursday upgraded the technology sector to Neutral and said that better HDD pricing could help mitigate losses from the Thailand flood.

It said that against the backdrop of the massive works in progress to restore operations following Thailand’s crippling floods, the worst could well be over.

The research said it had become less bearish on the hard-hit HDD components sector given the ongoing accelerated restoration as well as potential price hike over the immediate term, which could mitigate the earnings pressure from forgone capacity in the short term.

The research house upgraded Eng Teknologi and Notion Vtec from Sell to Neutral, and upped its recommendation on JCY International to Trading Buy from Sell.



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