Petronas Gas becomes controlling shareholder of Dialog's PLNG-2 unit

KUALA LUMPUR (Dec 16): Petronas Gas Bhd (PetGas) is now the controlling shareholder in Pengerang LNG (Two) Sdn Bhd (PLNG-2), a special vehicle which used to be wholly owned by Dialog LNG Sdn Bhd, which is in turn a wholly owned unit of Dialog Group Bhd. 

In a Bursa Malaysia filing this afternoon, Dialog said PLNG-2 has ceased to be a subsidiary of Dialog Group following PetGas' subscription of 780,000 ordinary shares - representing a 72.22% stake in PLNG-2 - for RM780,000, cash. This means that Dialog LNG now only holds 27.78% in PLNG-2.

"The intended equity shareholding of PetGas of 65% and Dialog LNG of 25% in PLNG-2, as earlier announced, will be achieved upon subscription by State Secretary, Johor (Incorporated) (SSI) of its 10% shareholding, which is expected in 2015," said Dialog in its filing. 

According to the shareholders' agreement signed on Nov 14 this year, PLNG-2 will be restructured whereby PetGas will acquire 65%, Dialog LNG to hold 25% and the SSI to hold the remaining 10%.

PLNG-2 will develop the liquefied natural gas (LNG) regasification facilities comprising of a regasification unit and two units of 200,000 m3 LNG storage tanks with an initial send out capacity of 3.5 million tonnes per annum of natural gas at Pengerang, Southern Johor, for about RM2.7 billion. 

As at 3pm, Dialog shares were four sen lower at RM1.28 with a market capitalisation of RM6.34 billion. PetGas was four sen down at RM21.20, giving it a market capitalisation of RM42.07 billion. 

SP Setia Q4 earnings slightly higher at RM131.3m

KUALA LUMPUR: SP Setia Bhd’s earnings rose nearly 1.3% to RM131.31mil in the fourth quarter ended Oct 31, 2014 from RM129.64mil a year ago underpinned by the strong sales for its international projects.

“The group achieved RM922mil sales in Q4 of FY2014, bringing total sales for the group for the full financial year to RM4.62bil and total unbilled sales to RM11.10bil,” it said on Tuesday.

The property developer reported revenue rose 27.7% to RM1.233bil from RM965.68mil a year ago. Its earnings per share was 5.19 sen compared with 5.27 sen.

It rewarded shareholders with a dividend of 5.7 sen a share.

SP Setia said the international projects contributed RM1.80bil (39%) towards the group’s total sales for the current financial year. 

Sales contribution from the group’s international projects continue to be strong and further underscores the management’s deep conviction to venture into international projects in established global cities like London and Melbourne. 

On the Malaysian projects, it said despite the period of softness following the implementation of the property cooling measures implemented by Bank Negara Malaysia at the beginning of the financial year, the group posted a satisfactory result of RM2.82bil sales. 

SP Setia said there was strong support for its launches during the financial year focusing on land banks with ready infrastructure and amenities like Setia Alam and Setia Eco Park. 

“Projects such as Setia EcoHill and Setia Eco Glades will benefit from new infrastructure projects including the Klang Valley Mass Rapid Transit (KVMRT) project,” it said.

For the financial year ended Oct 31, 2014, its earnings were RM405.67mil, which was 3% lower when compared with RM418.35mil in the previous financial year. However, its revenue rose 16.8% to RM3.810bil from RM3.261bil a year ago.

SP Setia’s acting president and CEO Datuk Voon Tin Yow said its sales performed well due to the strong and loyal customers who continue to believe in our brand. 

“On the international front, S P Setia continues to obtain high brand acceptance among the locals in London, Melbourne and Singapore. 

“As for Malaysia, we are confident that once the market stabilises, aggressive demands for properties will return as Malaysia is a young nation with a growing population,” he said.

Top Glove 1Q net profit falls 3% on year to RM49m, revenue lower at RM568m

KUALA LUMPUR (Dec 16): Top Glove Corp Bhd reported a 3% drop in first quarter net profit from a year earlier as cheaper raw materials led to lower average selling prices (ASP) for its products.

Higher finance cost, and associate losses also curbed profit growth, Top Glove told the bourse today.
Top Glove said net profit fell to RM48.68 million in the first quarter ended November 30, 2014 (1QFY15) from RM50.28 million.

Revenue was lower at RM567.63 million compared to RM573.99 million, "largely owing to a lower ASP from decreasing raw material prices," Top Glove said.

"Intense competition in the nitrile glove segment also hampered cost past-through and resulted in weaker margins," Top Glove said.

Natural rubber, and synthetic rubber or nitrile are crucial raw materials for rubber glove production. Nitrile is derived from crude oil, prices of which, have fallen substantially.

Top Glove is expanding its nitrile glove production. The firm said the expansion included higher capacity at its factory in Lukut, Negeri Sembilan and another in Klang, Selangor.
According to Top Glove, the expansion will grow its total annual capacity to 44.6 billion pieces of gloves a year from 42.6 billion.

"The group expects the glove business environment to remain competitive and challenging.

"However, with better cost-discipline and cost-optimisation practices via continuous automation in place, coupled with an unwavering focus on quality across all aspects of its operations, the group is confident of navigating its way through this challenging time, to deliver an improved performance in the quarters ahead," Top Glove said.

Danajamin, OCBC guarantee Berjaya Land’s RM650m debt notes

KUALA LUMPUR: Danajamin Nasional Bhd and OCBC Bank (Malaysia) Bhd (OCBC) will guarantee Berjaya Land Bhd’s (BLand) RM650mil 10-year medium term notes (MTN) programme.

Danajamin, which is the country’s financial guarantee insurer, said on Tuesday it guaranteed the RM500mil tranche with a longer tenure of 10 years. 

OCBC Malaysia provided the guarantee for the remaining tranche of RM150mil with a tenure of up to six years.

Both tranches, rated at AAA(fg) and AAA(bg) rating respectively, were issued on Tuesday and were fully subscribed.

Proceeds raised from the bonds issuance will go towards BLand’s investments in its hospitality and integrated development businesses, and also the refinancing of its existing borrowings. 

B-Land is an intermediate investment holding company within the Berjaya group, and is mainly involved in hotel and recreation activities, property development, gaming and investments.

AmInvestment Bank Bhd is the sole principal adviser and lead arranger for the transaction. 

Danajamin said it has provided guarantees for RM7.6bil bond and Sukuk programmes, which included the latest guarantee for BLand.

SE Asia Stocks- Extend declines on emerging markets sell-off

JAKARTA (Dec 16): Southeast Asian stock markets slumped on Tuesday after emerging market currencies were hit by global risk aversion, triggered by a sharp decline in the Russian rouble.

"Conditions in Russia pushed investors to return to holding U.S. dollar, which hurt local currencies and stock markets in the region," said Muhamad Alfatih, an analyst with Samuel Sekuritas in Jakarta.

The Russian central bank on Tuesday sharply hiked interest rates to halt a collapse in the rouble. Before the hike, the currency hit a record low on plunging oil prices and sanctions linked to the Ukraine crisis.

Shares in Bangkok led the regional decline with a 2.4 percent loss led by energy and banking stocks. The index is down for the sixth consecutive session.

Thai stock exchange data shows foreign investors have been net sellers in the past four sessions to Monday with a total outflow of 14 billion baht ($424.50 million).

Thailand's central bank said it has not seen "unusual capital outflow" and is not planning to take measures to support the baht.

The Indonesian stock index fell as much as 2 percent to its lowest in five weeks after the rupiah hit 12,950 against the dollar earlier in the day, its lowest since August 1998. The index extended a 1 percent loss from the previous session.   

Philippine stocks fell 1.1 percent while Singapore's Straits Times Index lost nearly 2 percent. – Reuters

Mainly Ananda Krishnan owned Bumi Armada to be taken private again?

PETALING JAYA: Bumi Armada Bhd’s tumbling share price and the sudden departure of its chief executive officer on Dec 5 is fuelling talk that the company could be taken private again. 

The oil and gas services company’s main shareholder T Ananda Krishnan has a track record of de-listing companies when times are bad and taking it back to the market when conditions and valuations improve.

Ananda’s chief corporate lieutenant Ralph Marshall declined to comment on the matter when contacted by StarBiz.
“Sorry, I cannot comment. I don’t know anything about Bumi Armada,” he said.

But the prospect of a fresh corporate exercise is keeping its share price afloat above the RM1 level.
Maybank IB Research, in a recent report, did not rule out a potential privatisation for the stock, as it was trading at around one time book value.

Operationally, it said it liked Bumi Armada’s floating production, storage and offloading (FPSO) business model in light of the current weak/volatile oil market environment while valuation-wise, it was inexpensive to growth.

Another analyst agreed that the company’s fundamentals were doing well and that he also would not be surprised by a move to privatise the company.
“There is value in it, just that the share price is down for now,” he said.
Ananda had previously delisted and relisted companies under his stable including Astro Malaysia Holdings Bhd, Maxis Bhd and Bumi Armada.
“It has happened before and I don’t think anyone will be surprised if it happens again,” said an analyst, who declined to be quoted.
She noted that the company’s fundamentals seemed to be intact, with the recent hit to its share price most likely to be due to poor market conditions.

She said that Bumi Armada had a strong order book with quite a lot of new contracts as well as work-in-progress contracts.
“Everyone knows the earnings will not be immediate but the fundamentals are quite sound. Beside this, FPSO contracts are quite resilient,” she said.

She said another factor that could have affected the stock was CEO Hassan Basma’s resignation.

“We have also seen supposedly substantial shareholders actively selling over the past few months. But again, they seem to be nibbling back their stake,” she observed.

One of Bumi Armada’s shareholders, Ombak Damai Sdn Bhd, had a 7.17% stake on Sept 9 after disposing of 15 million Bumi Armada shares. It continued to pare its stake down to 6.97% in October via three transactions on Oct 1, 3, and 7 that saw it dispose of a total of 297,500 shares.

However, it then bought back some shares on Oct 9, raising its stake to 7.07% currently.

Bumi Armada was taken private by Ananda in 2003. The company, however, was re-listed on Bursa Malaysia in 2011 at an initial public offer price of RM3.03. The stock was last traded at RM1.01 yesterday.

Maybank KE Research maintains Hold on TM

KUALA LUMPUR: Maybank KE Research has maintained its Hold on Telekom Malaysia (TM) with a raised target price of RM7.20 on higher long-term growth assumption to reflect an improvement in TM’s longer-term prospects.

In a note on Tuesday, the research house said its FY14/15/16 net profit forecasts are consequently reduced by 2%/8%/11% respectively.

While the acquisition of a 57% stake in loss-making P1 was completed in Sep 2014, TM intends to only reveal its wireless strategy in 1Q15, it said.

"For now, we expect P1 to roll out its LTE network in 2015-17, with monetisation beginning in 2016. 


"We expect P1 to command 7% mobile data revenue share in 2017. By our estimates, P1 would only achieve break even (at the pre-tax level) closer to 2020," it said.

Maybank believed that a large part of TM’s 2014 share price rally was down to its impending entry into the wireless space (via the acquisition of a 57% stake in P1).

While the concept of convergence (between wireless and fixed) represents an attractive long-term proposition, there are near-term pains, which include the absorption of P1’s losses and additional capex for the LTE network rollout.

"This drag to TM’s P&L and cashflows would begin to manifest in 2015," it said.

Maybank Research retains Buy on Axiata, upgrades Maxis

KUALA LUMPUR: Maybank Investment Bank Research has retained its Buy call on Axiata and upgraded Maxis to a Buy as they would benefit from the implementation of the Goods and Services Tax (GST) when implement in April 2015.

“GST would allow wireless operators a chance to pass on the 6% service tax they currently absorb in the prepaid segment.

 “In reality, the benefits are likely less pronounced given elasticity and competition; we assume operators enjoy the equivalent of a 3% pass-through in service taxes for now,” it said.

Maybank Research said its sector picks are Axiata (maintain Buy, TP: RM7.80) and Maxis (upgrade to Buy, TP: RM7.40). 

"Consequently we raise net profit of Axiata/Digi/Maxis by 2.5%/4.1%/3.2% in 2015, and 3.1%/5.6%/4.3% in 2016 respectively.  

“For sensitivity purposes, every 1% pass-through in prepaid service tax raises net profit of Axiata/Digi/Maxis by 0.8%/1.4%/1.1% in 2015, and 1.0%/1.9%/1.4% in 2016 respectively,” it said. 
Maybank Research said the wireless operators have been absorbing the 6% service tax in the prepaid segment since 1998.

With GST, they can pass on the 6% service tax they currently absorb in the prepaid segment.  The theoretical impact of GST to operators is a direct flow-through of this previously-foregone revenue down to EBITDA. 

The research house explains that in reality, the benefits are likely less pronounced, given 1) the potential elasticity impact (prepaid is a price sensitive segment after all), and 2) possibility of increased competition, which effectively means part of the new-found revenue gets returned back to customers in the form of lower tariffs. 

Operators presently remain non-committal on their intentions with regards to GST treatment.
 “On the back of our earnings upgrades, we raise target prices of wireless operators under our coverage by 3%-7%. Consequently, we upgrade Maxis to BUY (from Hold). Our sector picks are Axiata and Maxis, on the back of their underperformance in 2014,” it added.