Faber Group subsidiary faces RM11.2m suit from sub-contractor

KUALA LUMPUR (Jan 12): FABER GROUP BHD []’s subsidiary Faber Ltd Liability Company is facing a suit from a sub-contractor, Sweet Home Technical Works Ltd Liability Company, for services provided for housing projects in Abu Dhabi.

Faber said on Thursday that it had received a statement of claim dated Jan 10 for AED13.12 million (RM11.21 million), which Faber LLC is disputing.

“The Al Dhafra Court of First Instance, Justice Department, Emirate of Abu Dhabi had fixed the hearing of the statement of claim on Monday, Feb 6, 2012,” it said.

Sweet Home was a sub-contractor of Faber LLC for the contracts relating to the civil, mechanical and electrical maintenance services for low cost houses at Liwa and Madinat Zayed in Abu Dhabi.

“There is no financial and operational impact arising from the statement of claim as Faber Group has made provision for the contract costs in relation to the contracts amounting to AED4.50 million (RM3.84 million).



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Supermax’s 340m bonus shares to go ex on Jan 26

KUALA LUMPUR (Jan 12): SUPERMAX CORPORATION BHD []’s 340.07 million new bonus shares will go ex on Jan 26.

The company said the shares were issued on a one-for-one basis. The entitlement date is Jan 30.



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Atlan 3Q net profit dips 9.9% to RM8.33m

KUALA LUMPUR (Jan 12): ATLAN HOLDINGS BHD [] net profit for the third quarter ended Nov 30, 2011 fell 9.9% to RM8.33 million from RM9.25 million a year earlier, mainly due to lower revenue in the duty free segment.

The company said on Thursday that its revenue for the quarter dipped 5.35% to RM177.57 million from RM187.63 million in 2010.

Earnings per share fell to 3.31 sen from 3.67 sen a year earlier, while net assets per share was RM1.60.

Atlan said that its net profit for the nine months ended Nov 30 surged to RM109.61 million from RM49.31 million in 2010, due mainly to the gain on disposal of land by two wholly-owned subsidiaries of the company in the quarter ended May 31, 2011.

Revenue for the nine months dipped to RM527.39 million from RM539.15 million.

Reviewing its performance, Atlan said the drop in revenue for the current quarter and year-to- date was mainly due to the lower revenue from the duty free segment, as the prolonged flooding in Thailand had adversely affected the performance of the duty free outlets located in the northern region of Peninsular Malaysia.

On its prospects, Atlan said barring unforeseen circumstances, the company was expected to continue to perform positively.



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TAS Offshore’s earnings improve, RM2.2m net profit in 2Q

KUALA LUMPUR (Jan 12): TAS Offshore Bhd’s earnings continued to improve, with net profit of RM2.227 million in the second quarter ended Nov 30, 2011 compared with net loss of RM184,000 a year ago, boosted by sale of its tugboats under CONSTRUCTION [].

It said on Thursday its revenue was 27.7% higher at RM31.57 million compared with RM24.72 million a year ago. Its earnings per share were 1.26 sen compared with loss per share of 0.10 sen.

TAS’ second quarter net profit of RM2.227 million was higher by 75.3% compared with RM1.27 million in the first quarter while its revenue rose 79% or RM13.91 million from RM17.67 million.

It said the higher revenue in the second quarter when compared with the first quarter was due to contract revenue recognised on sale of nine units of tugboat under construction during the current quarter.

“Profit before tax increased by RM1.61 million, or 103% to RM3.175 million due to higher revenue being recognised and gain on foreign exchange due to strengthened US dollar,” it said.

For the first half, it posted net profit of RM3.50 million, up 287% from the RM905,000 in the previous corresponding period. It recorded revenue of RM49.25 million, up 3.9% from RM47.38 million a year ago.



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Bina Puri confirms talks with Pakistan over highway privatisation deal

KUALA LUMPUR (Jan 12): BINA PURI HOLDINGS BHD [] is negotiating the financial and legal aspects of a privatisation concession agreement with the National Highway Authority in Islamabad, Pakistan.

In confirming The Edge Financial Daily report on Thursday entitled “Bina Puri to bag Pakistan highway deal”, it confirmed that it had received the letter of intent dated Nov 11, 2011 from the highway authority.

It said the letter of intent was for the conversion of existing four-lane Karachi-Hyderabad super highway into a six-lane motorway (M-9) on build, operate and transfer (BOT) basis.

“We are currently negotiating the financial and legal aspects of the concession agreement with them. We will make further announcement on the progress of the concession,” it said.



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Tebrau Teguh’s land sale 143% above net book value of RM11.6m

KUALA LUMPUR (Jan 12): TEBRAU TEGUH BHD [] is disposing of two parcels of commercial land in Plentong, Johor for RM28.27 million, which is estimated to be RM16.67 million or 143.7% above the net book value of RM11.60 million as at Dec 31, 2010.

The company said on Thursday, the RM28.27 million was based on a valuation report by Messrs. Raine Horne International Zaki + Partners dated June 17, 2011.

“The total net book value as per audited financial statements for the year ended Dec 31, 2010 is RM11.60 million,” it said.

On Sept 30, 2011, Tebrau Teguh’s unit Bayou Bay Development Sdn Bhd had signed a sale and purchase agreement (SPA) with Delta Bestari Sdn Bhd to dispose of two plots of commercial land of 2.139 acres.

On Jan 6, 2012, it had also signed an SPA with Northstar Frontier Sdn Bhd to dispose of two plots of commercial land with total land area of 8.115 acres.

Tebrau Teguh said the updated market value, based on Raine Horne International Zaki + Partners’ valuation, was RM6.05 million for the 2.139 acres and RM20.75 million for the other 8.115 acres.

The justification was that the valuer had taken into consideration of the redevelopment potential of the PROPERTIES [].

The consideration was higher than the potential return from the development of the 5.674 acres of land based on the discounted cash flow method.

The DCF method was based on the assumption that 62 units of three-storey shop office would be built, expected total profit before tax of RM8.08 million, cash flow period of three years and a discount rate of 8%.



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KLCI advances in late trade, extends gains for fourth day

KUALA LUMPUR (Jan 12): The FBM KLCI extended its gains for the fourth consecutive day on Thursday as late buying of select blue chips, including Genting-related counters lifted the index.

At 5pm, the index rose 3.27 points to 1,525.56.

Market breadth however remained weak with losers leading gainers by 418 to 351, while 339 counters traded unchanged. Volume was 1.52 billion shares valued at RM1.58 billion.

Regional markets mostly ended lower, while European shares were flat on Thursday, pausing ahead of a Spanish debt auction that is the first test in the new year of demand for peripheral euro zone debt, the latest stage of a crisis that remains a key drag for equity market sentiment, according to Reuters.

At the regional markets, Japan’s Nikkei 225 fell 0.74% to 8,385.59, the Shanghai Composite Index lost 0.47% to 2,275.01, Hong Kong’s Hang Seng Index was down 0.30% to 19,095.38 and Taiwan’s Taiex shed 0.02% to 7,186.58 and Singapore’s Straits Times Index fell 0.13% to 2,743.66.

Meanwhile, South Korea’s Kospi rose 1.03% to 1,864.57.

On Bursa Malaysia, Genting PLANTATION []s gained 21 sen to RM9.10, Genting up 20 sen to RM10.96, Proton and Hartalega 18 sen each to RM5.46 and RM6.40, Bursa Malaysia 17 sen to RM7.03, Malayan Flour Mills 15 sen to RM7.55, Pos Malaysia and Can-One up 13 sen each to RM2.70 and RM1.78, Southern Acids 12 sen to RM2.29 while Allianz gained 11 sen to RM4.88.

Among the decliners, Carlsberg fell 33 sen to RM8.43, GAB down 26 sen to RM12.06, KLK 18 sen to RM24.52, New Hoong Fatt and BHIC 13 sen each to RM2.31 and RM3.68, Nestle and BAT 12 sen each to RM55.80 and RM49.84, Litrak 11 sen to RM3.74 and Dutch Lady 10 sen to RM26.10.

Ingenuity Solutions was the most actively traded counter with 41.32 million shares done. The stock added one sen to 8 sen.

Other actives included Proton, Nextnation, Pos Malaysia, Bursa Malaysia and OSK.



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Building materials: Cement preferred for better fundamentals

Building materials
Maintain neutral: We expect the construction sector to be buoyant on the whole in 2012, but the steel sector will be in a contraction mode.

The cement sector is expected to be more shielded through minimal import threat and falling coal cost. Lafarge Malayan Cement Bhd (“buy”, target price: RM7.60) is our top proxy to the construction sector.

We maintain our “sell” call on Ann Joo Resources Bhd (TP RM1.30) and “hold” call on Kinsteel Bhd (TP 49 sen).

Local building materials demand was subdued from 2009 to 2011 due to low government construction spending. But the momentum is expected to pick up in 2012 as large-scale Economic Transformation Programme (ETP) projects (the MRT, Kuala Lumpur International Financial District, Warisan Merdeka, Sungai Buloh Rubber Research Institute land) are expected to be awarded progressively from 1Q12 onwards.

On the flip side, the pick-up in demand from the ETP projects could be partially negated by a softer property market (which accounts for about 40% of the construction sector). As newly awarded projects take three to six months to hit the ground, we expect the building materials sector to only see meaningful demand growth in 2H12, at the earliest.

In our view, the cement sector offers better fundamentals due to its oligopolistic market structure. Though new capacity is expected to come onstream in early 2013 (+7% in Peninsular Malaysia’s capacity), we expect this to be well-absorbed by demand growth.


Additionally, there is earnings upside for cement players in view of falling coal costs (December 2011: -20% year-to-date). With energy accounting for about 40% of production cost, we estimate that every 1% decline in coal cost contributes to a 0.8% rise in earnings for Lafarge.

Despite expectations of stronger local demand growth in 2H12, we see downside to steelmakers’ earnings owing to a weaker export market (which accounts for 30% to 40% of sales volume).

We are of the opinion that local demand growth will not make up for the export loss in 2012 and margins may be squeezed by a surplus in global supply. We also see dumping risk from China steelmakers, resulting in industry-wide losses, similar to 2005.

We have a “buy” call for Lafarge and derive our TP of RM7.60 by pegging the stock at its peak 17 times 2013 price earnings ratio. The cement maker is also supported by a high net dividend yield of 5.6%. Ann Joo is a “sell” (TP RM1.30) while Kinsteel is a “hold” (TP 49 sen) as we peg the stocks to their trough cycle price to book value valuations of 0.6 times and 0.55 times. We think there is potential upside to Kinsteel’s share price if the official mining award comes through, potentially in 2012. — Maybank IB Research, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2012.



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