The Star Online: Business

Maybank Research cautiously optimistic of aviation sector
OM Sarawak gets full funding for ferro alloy smelting project
CEO wants to raise TdC stake

Maybank Research cautiously optimistic of aviation sector

Posted: 04 Apr 2013 06:26 PM PDT

Published: Friday April 5, 2013 MYT 9:27:00 AM

KUALA LUMPUR: Maybank KE Research said the aviation sector had underperformed the FBM KLCI in 2012 due to depressed earnings, escalating fuel prices and regulatory uncertainty.

The research house said the sector had de-rated with an average decline of 27.6% in 2012.

But year-to-date for 2013, its top pick, MAHB gained 15% while the airlines were both up modestly with 6% rise in share prices.

"We are now Overweight on the sector as traffic growth will accelerate and profits will rise, in our view. Furthermore, valuations are undemanding and exhibit value.

"Volatile fuel price is the primary risk factor. Our top picks in order of preference are MAHB, MAS and AirAsia," it said.

Maybank Research believe there will be modest profit growth stemming from economies of scale benefits and from cost saving initiatives. Revenue growth will continue at healthy levels supported by stable GDP growth (+5.3% in 2013) and it expects the yield environment to be benign.

"MAS to turnaround in 2013 and deliver a profit of RM385.6mil (versus a loss of RM566.1m in 2012), we estimate. This is driven by its multitude of business turnaround initiatives and the benefits of new aircraft in its fleet," it said.

OM Sarawak gets full funding for ferro alloy smelting project

Posted: 04 Apr 2013 06:26 PM PDT

starbiz@thestar.com.my

KUCHING: OM Materials (Sarawak) Sdn Bhd (OM Sarawak) has secured full funding for its ferro alloy smelting project (Phase I) in Samalaju Industrial Park, Bintulu, with the sealing of a financing facility amounting to US$315mil (RM970.36mil) with four local an d foreign lenders.

The lenders are Export-Import Bank of Malaysia Bhd, RHB Bank Bhd, Standard Chartered Bank Malaysia and Malayan Banking Bhd.

StandChart is OM Sarawak's financial advisor in the smelting project.

OM Holdings Ltd (OMH), which owns an 80% equity interest in OM Sarawak through wholly owned unit OM Materials (S) Pte Ltd, said the successful execution of the project financing facility agreement (FA) and corresponding project support agreement (PSA) represented a significant milestone in the project development.

"Together with committed equity from OM Sarawak's shareholders, Phase I of the project is now fully-funded," it added in an annoucement with the Australian Stock Exchange on Tuesday. Phase I's capital expenditure, according to OMH chief executive officer Peter Toth, is estimated at US$397mil.

OMH's partner in the joint-venture project is Cahya Mata Sarawak Bhd (CMSB) via wholly owned subsidiary Samalaju Industries Sdn Bhd, which holds the remaining 20% stake in OM Sarawak.

"The FA is comprised of limited recourse senior project finance debt facilities totalling US$215mil and RM310mil for the total capital cost of the project's Phase I ferrosilicon production facility, and another RM126mil credit line for the issuance of performance and payment guarantee to the power provider, Syarikat Sesco Bhd, as part of OM Sarawak's obligations under the power purchase agreement.

"Syarikat Ses co, a unit of Sarawak Energy Bhd, will supply 500 MW for 20 years to OM Sarawak.

"As is customary for a project finance facility, the project is backed by OM Sarawak's shareholders OM Materials (S) Pte Ltd and Samalaju Industries Sdn Bhd and its sponsors OMH and CMSB, as set out in the PSA.

"The PSA governs the rights and obligations of the project's shareholders and sponsors. The obligations and liabilities of the OMH Group and CMSB Group under the PSA are serveral and pro-rata to their respective 80% and 20% shareholdings in OM Sarawak," added OMH. OMH said the PSA would lapse and the project would become nonrecourse 18 months after the satisfaction of pre-agreed project completion tests.

Toth said during his presentation at the Metal Bulletin 14th Ferro Alloy Conference in Hong Kong last week that OM Sarawak was expected to sign the project's engineering, procurement and construction (EPC) contract agreement in the current quarter.

CEO wants to raise TdC stake

Posted: 04 Apr 2013 06:16 PM PDT

PETALING JAYA: Time dotCom Bhd (TdC) chief executive officer Afzal Abdul Rahim says he will continue buying TdC shares to raise his stake in the company.

But unlike other shareholders who bought big blocks in other companies, he said he was merely nibbling in the open market, and that even raising his stake by 1% could take a long time.

"I have every intention of continuing to accumulate more shares in TdC. I have been doing so and will continue to do so," he told StarBiz.

However, he was quick to err on the side of caution by sayin g that "it is my own personal long-term view, and as always, I would advise investors to trade based on fundamentals and not sentiments. "

Added Afzal: "The buying is not significant. I have just picked up 0.34% over the past weeks. As long as I have the means, I will continue to do so."

When asked how many more shares he intended to add, he answered: "I have not thought of that."

Afzal and his partner Gan Te-Shen own a 36.24% equity stake in TdC, above the 32.8% threshold that would require them to make a mandatory general offer.

Afzal, however, pointed out that he had obtained a waiver.

Afzal and Gan's stake in TdC is held via Pulau Kapas Ventures, in which he holds a 75% equity stake, while Gan, his long-time friendturned- partner, holds the remaining 25%.

Other than Pulau Kapa Khazanah Nasional Bhd has an 11% equity stake in TdC.

Afzal first emerged in the then ailing TdC in October 2008 when the shares of the company were trading at 20 sen.

The share price has gone up significantly after he overhauled the business, and in yesterday's trading, the shares closed eight sen higher at RM4.15 a share.

In a bid to give the company a lifeline, he has injected some of his prized assets into it. The stock was once shunned by the investing and analyst fraternity, but has since popped up on the radar screens of analysts.

Among the assets Afzal had injected into TdC were the AIMS Group, Global Transit Communications (GTC) and Global Transit Ltd (GTL).

The company's financial performance has improved since Afzal took over, and for full-year 2012, the company reported a profit of RM193mil on the back of RM419mil in revenue compared with RM117mil and RM313mil, respectively, a year ago.

Kredit: www.thestar.com.my

Khamis, 4 April 2013