The Star Online: Business
The Star Online: Business |
- VEGOILS/PALM OIL-Market Factors To Watch Aug 14(Wednesday)
- RHB Research maintains Neutral on Kulim, FV RM3.53
- RHB Research "Neutral" on Genting, lower fair value
| VEGOILS/PALM OIL-Market Factors To Watch Aug 14(Wednesday) Posted: KUALA LUMPUR: The following factors are likely to influence Malaysian palm oil futures and other vegetable oil markets. FUNDAMENTALS * Malaysian palm oil futures hit a one-month high on Tuesday after the U.S. government made deeper-than-expected cuts to its forecasts for soybean yields and stocks, while strong exports of the tropical oil also helped prop up prices. * U.S. corn futures slid more than 3 percent on Tuesday, surrendering all of the prior day's gains as investors shifted their focus from Monday's low U.S. government corn yield estimate to its forecast for a record-large harvest and plentiful stockpile next season. * Oil prices on both sides of the Atlantic rose for a third straight session on Tuesday because of worries over supplies from OPEC nations Libya and Iraq. MARKET NEWS * U.S. Treasury debt yields approached two-year highs and the dollar rallied broadly on Tuesday after a gauge of U.S. consumer spending rose at its fastest pace in seven months. * Copper hit nine-week highs on Tuesday on signs of tighter-than-expected stockpiles in China, and cotton rallied on supply concerns, but declines in other markets slowed the wider commodities complex after four days of gains. RELATED NEWS > Malaysia's Aug 1-10 palm oil exports up 25.8 pct -SGS > Argentine soy-crushing workers to strike on Wed - union > K+S says potash price in Brazil at $400 but could change > Corn plunges 3.6 pct as record-large U.S. harvest looms > ICE arabica coffee tumbles, raw sugar hits seven-week high > Outlook improving for West Europe wheat crop > US crop yields may ease a bit due to dry August weather DATA/EVENTS > Industry regulator the Malaysian Palm Oil Board will issue July stocks and output data on Aug 14. > Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance to release Aug. 1-15 exports data on Thursday. - Reuters |
| RHB Research maintains Neutral on Kulim, FV RM3.53 Posted: KUALA LUMPUR: RHB Research is maintaining its Neutral recommendation on Kulim Malaysia while the fair value is unchanged at RM3.53. It said on Wednesday that based on the sharply better results from associate company New Britain Palm Oil (NBPO) and its own stronger fresh fruit bunches (FFB) production, it expects Kulim's 2QFY13 results to be significantly better on-quarter. "While its inability to secure additional stakes in NBPO is a negative, it goes to show that the group has an undervalued asset in NBPO. We maintain our NEUTRAL call on Kulim, with our FV unchanged at RM3.53," it said. RHB Research pointed out that NBPO's 2QFY13 profit before tax (PBT) shot up 93.8% on-quarter to US$9.3mil as weather in Papua New Guinea normalised in April. In 1QFY13, NBPO's earnings were adversely affected by heavy rainfall amounting to 2.23 metres in a single quarter. Given that NBPO makes up a significant proportion of Kulim's earnings (28% in 1Q), the improvement in its 2Q earnings should see a corresponding surge in Kulim's 2Q earnings. "We estimate Kulim's 2QFY13 PBT will rise to RM39mil from RM25mil for 1QFY13," it said. RHB Research also expects Kulim's plantations in Malaysia to show further earnings improvement, with 2QFY13 fresh fruit bunches (FFB) production rising 12.4% on-quarter. Against 1H last year, Kulim's FFB production jumped 29.8% due to contribution from estates acquired from Johor Corp. "Recall that in 1QFY13, Kulim's Malaysia operations posted an 11.7% y-o-y increase in EBIT, making it one of the few companies with strong earnings despite a 20% decline in crude palm oil (CPO) prices. We expect this earnings momentum to continue. Our FY13 forecast earnings of RM156mil looks achievable despite the company having made only RM19mil in 1QFY13," it pointed out. RHB Research said NBPO's board and independent advisers have advised shareholders to reject Kulim's offer to buy 30 million NBPO shares at GBP5.50 each, as the offer price was deemed too low. The research house also said the independent advisers value NBPO at GBP6.50-7.00 per share. The acquisition, if successful, would be earnings accretive and boost the FV for Kulim to RM3.80. "However, all is not lost even if the takeover offer fails, as Kulim is NBPO's single largest shareholder and hence the biggest beneficiary if the latter is worth GBP6.50-7.00/share. Pricing NBPO at GBP7.00 implies that Kulim's Johor estates are valued at RM68,700 per ha, or 64 sen per sq ft, which is cheap considering some of its estates are prime property development land," it said. |
| RHB Research "Neutral" on Genting, lower fair value Posted: KUALA LUMPUR: RHB Research is maintaining its "Neutral" call on Genting Bhd with a lower fair value of RM10.35 from RM10.66 to incorporate its new fair value for Genting Singapore. It said taking the cue from 52%-owned Genting Singapore's weaker-than-expected first half of 2013 results, RHB expects Genting's first half 2013 core earnings to disappoint, as the group's Singapore operation typically contributes 45%-50% of its bottomline. "Thus, we see Genting's first half 2013 core earnings hovering at RM930mil to RM990mil, vis-à-vis our previous financial year 2013 projection of RM2.19bil. This aside, we expect the company to declare an interim dividend per share of three to four sen," it said. RHB said Genting recently secured a permit to demolish the former Miami Herald site in Miami, Florida and expects demolition works to commence in the fourth quarter of 2013. "Given the lack of progress on proposals to legislate gaming in the state, we believe management will, for the time being, focus on developing the proposed mixed development. This will comprise condominiums, a hotel, waterfront restaurants, as well as related amenities on the five-acre site along Biscayne Bay," it said. It noted New York Governor Andrew Cuomo recently signed the Upstate New York Gaming Economic Development Act, which will allow four gaming resorts to be built in the area. "Should voters approve the ballot referendum come November, we expect Genting to capitalise on this opportunity by submitting a formal application via its Malaysia unit," it said. |
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