The Star Online: Business
The Star Online: Business |
- Positive outlook for O&G firms
- Fears of CPO prices being dragged down further
- MBSB to focus on asset quality
| Positive outlook for O&G firms Posted: 10 May 2013 04:33 PM PDT PETALING JAYA: Buoyed by the bullish sentiment in the oil and gas (O&G) sector, small and mid-caps are seeing a further share price rally on anticipation of more aggressive contract flows, going forward. In a report, Kenanga Research said: "Our bullish outlook for the (O&G) companies is premised on clearer contract flows, as the sector goes full throttle on the back of Petroliam Nasional Bhd's (Petronas) continued aggressive capital expenditure spending, and the Government's resumption of plans under the Economic Transformation Programme to encourage domestic economic activities." To recap, RM2.1bil worth of contracts were awarded to locally-listed O&G companies in April, putting the total value of contracts awarded for the first four months of 2013 to over RM11bil, according to a separate report by MIDF Research. Among those that made it to the top gainers yesterday were Wah Seong Corp Bhd, which jumped 25 sen or 15.06% to RM1.91, and Deleum Bhd, which rose 19 sen or 6.76% to RM3.00. Petra Energy Bhd, in which Wah Seong Corp has a 26.9% stake, was last done at RM2.07, 20 sen or 10.7% higher than the closing price a day ago, with 9.7 million shares changing hands. Petra Energy, an integrated brownfield services provider, also announced that its wholly-owned subsidiary, Petra Resources Sdn Bhd, had accepted a contract from Sarawak Shell Bhd/Sabah Shell Petroleum Co Ltd (SSB/SSPC) to provide offshore crane operations and maintenance services to the latter from May 1, 2013 to April 30, 2016, with an extension option of one year subject to the approval of SSB/SSPC's management and Petronas. Hook-up, commissioning and topside major maintenance services provider Dayang Enterprise Holdings Bhd, meanwhile, added 21 sen or 5.02% to RM4.39, with 5.1 million shares traded. Kenanga Research preferred Alam Maritim Resources Bhd among small-to-mid-caps, with a target price of RM1.39 on the back of its better vessel utilisation and improving prospects of other divisions. The stock closed unchanged at RM1.16, with 4.9 million shares done. The research house also pointed out that counters like Coastal Contracts Bhd and Pantech Group Holdings Bhd seemed to be laggards in the current bull market, pegging their target prices at RM2.90 and RM1.18, respectively, with "outperform" ratings. Coastal Contracts was up one sen to RM2.19, while Pantech rose 11 sen to 91.5 sen. |
| Fears of CPO prices being dragged down further Posted: 10 May 2013 04:28 PM PDT PETALING JAYA: Malaysia's palm oil inventory finally eased to 1.93 million tonnes in April after staying above the 2 million-tonne threshold for the past 10 months, which had led to concerns that crude palm oil (CPO) prices would likely be dragged down further. Palm oil stocks fell by 11.4% in April from 2.17 million tonnes in March, said the Malaysian Palm Oil Board (MPOB) in its latest monthly release. As at end-December 2012, local palm oil stocks had soared to an all-time high of 2.63 million tonnes. A trader told StarBizWeek that the imposition of the Government's new CPO export tax structure early this year, which saw a tax cut in the range of between 4.5% and 8.5% from 23% previously (unchanged since 1970s), was a good measure to curb the rising record palm oil stocks. In January and February, zero duty was imposed on local palm oil exports, but this was raised to 4.5% in March and April. The CPO export duty for June is expected to be announced on Wednesday. On another note, MPOB said exports declined 5.6% to 1.45 million tonnes in April from 1.54 million tonnes a month earlier. "The April export figure is one of the lowest monthly figures this year and is likely to remain weak in the following months, as the stronger ringgit makes local CPO pricier, especially to price-sensitive major export markets like China and India," said the trader. Bloomberg reported yesterday that China Cereals & Oils Business Net said palm oil inventories in China, the second-biggest importer, rose to a record, as inbound shipments outpaced consumption. Stockpiles at coastal ports exceeded 1.5 million tonnes, compared with 1.46 million tonnes a month ago. High inventories may begin to slow China's purchases and weigh down prices, which have fallen 4.8% on Bursa Malaysia Derivatives this year, after slumping 23% in 2012. Industry observers opined that the latest high palm oil inventories in China and India may put pressure on both CPO prices and exports in the coming months. CPO production for the month under review, meanwhile, increased marginally by 3.12% to 1.37 million tonnes from 1.33 million tonnes in March. "The higher production in April is within expectations, following the end of the low CPO production season in the first quarter and the start of the traditional high production season in the second quarter," said analysts. JF Apex Securities in its latest plantation sector report said positive news on the lower palm oil inventory in April had failed to excite the palm oil market, as concerns over lower soybean prices continued to cloud the pricing for the oil. "Yet, data of the palm oil inventory falling below the 2 million-tonne threshold and stronger demand in the month of Ramadan (in July) shall provide momentum to CPO prices," it added. Plantation companies, incidentally, are due to report their quarterly results by the end of this month. The research unit expects weaker earnings on a sequential quarterly basis, as "planters are suffering from weaker CPO production in the first quarter of 2013". It said planters could also report slightly negative results on a year-on-year (y-o-y) basis, as the significant lower CPO price, down by 27% y-o-y, may more than offset the recovery in CPO production. |
| MBSB to focus on asset quality Posted: 10 May 2013 07:08 PM PDT KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) will train its attention this year on managing asset quality and delinquent loans, which are higher than in traditional banks, according to president and chief executive officer Datuk Ahmad Zaini Othman. While he did not reveal the non-bank lender's target for reducing non-performing loans (NPL), Zaini said MBSB would focus on booking quality receivables, and not just on enlarging its loan base. This means the firm would actively manage its impaired loans by strengthening actual collections, and not "lend for the sake of lending," Zaini explained after its AGM yesterday. "We are coming out with very specific programmes to collect retail NPLs, for instance, by increasing our agents. We will mobilise our resources, especially on defaulted property loans," he said, adding that these efforts had led to the writebacks seen in its first-quarter results. For the three months to March, the civil servant financier doubled its net profit to RM166mil against the same period a year ago, due to lower impairment losses and robust growth in Islamic personal loans. In terms of asset quality, MBSB's gross and net NPLs improved to 10.3% and 3.5%, respectively, while loan loss coverage inched up to a more comfortable 92.2%. Zaini also said MBSB was in discussions with its advisers on an RM3bil to RM4bil capital-raising plan to address its relatively low core capital ratio, which stood at 6.3% as at end-December. The exercise may involve a dividend reinvestment plan as well as a bonds and rights issue. While the firm had yet to decide on when to carry out the proposals, they had been earmarked for this and next year, said Zaini. Analysts had indicated that the lender, which has shareholder's funds in excess of RM2bil at present, needed some RM500mil in additional capital to meet the minimum requirements under Basel III. Zaini did not comment on this figure when asked. "The timing of the exercises would depend on our numbers. We cannot confirm these plans until we know exactly the components of our capital structure. We also do not wish to be overcapitalised," he said. An analyst who spoke to StarBizWeek suggested that MBSB might also be keen on raising funds so that it could ramp up lending activities, given that its loans had already exceeded deposits at 107.3%. For 2013, MBSB aims to bring its loan-to-deposit ratio down to 95%, while a 20% target has been set for loan and deposit growth. The lender beat expectations when it posted a 33% annualised growth in loans for the first quarter. Its return on equity of 38% was above the industry average, which Zaini believes is sustainable. On its personal loans segment, Zaini said the exempt finance company was targeting at least RM1bil a month in gross receivables, with a net conversion rate of 70%. "The momentum is there. We have put in a strategy to attract new applicants as opposed to getting existing customers to refinance their portfolios. "I think we can achieve the numbers we are projecting," he said, adding that MBSB had more than 200,000 clients. Asked about the possibility of mergers and acquisitions (M&As), Zaini replied: "As a steward of the company, I'm trying to build value, that's all. Of course, we realise that we have to operate as a bank at some point. "By virtue of the (soon-to-be-gazetted) Financial Services Act, we would have no choice but to operate like a bank. Our aspiration to become a full-fledged bank has always been there. "But how we get there is at the discretion of the shareholders. It can be on a standalone basis, a merger with RHB, or even acquisitions on both sides either RHB buys MBSB, or MBSB buys RHB. It can take many forms. "This is best left to the shareholders. Whatever the exercise, the important thing is for us to create value for shareholders." |
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