The Star Online: Business
The Star Online: Business |
- HLB upgraded to ‘buy’
- Malaysians among detained oil ship crew
- India's Sept palm oil imports up 21% on festive demand
| HLB upgraded to ‘buy’ Posted: HONG LEONG BANK BHD By RHB Research Rating: Buy Price Target: RM16.60 HONG Leong Bank's (HLB) share price performance has lagged behind its peers this year. RHB believes this is due to a combination of factors, such as below industry loan growth in the past two financial years, tepid financial year 2013 (FY13) earnings per share growth, and the overly bullish FY13 return on equity expectations by consensus (15.5%-16% forecasted vs 15% actual). However, following a recent meeting with its management, RHB is turning more positive on the outlook for the group; at current valuations, the market is under appreciating its prospects. The small and medium-scale enterprises (SMEs) financing is a key driver for loan growth and recent data suggests that its branch strategy is starting to bear fruit. RHB estimates HLB's SMEs loan market share has risen to 7.3% at end-second quarter 2013 from 6% at end-third quarter 2012. Secondly, after the disappointment in FY13, consensus now projects FY14F ROE (return on equity) of 14.7%, which is below the 15%-17% guidance for FY14. RHB sees upside to consensus estimates, which should lead to a re-rating of the stock. RHB raised its FY14 forecast - FY15 forecast net profit projections by 3%-7% to reflect a more positive outlook for the group. The research house is also also raising its fair value to RM16.60 (13.5 times 2014 earnings per share) from RM15.20 (13 times 2013 EPS) while upgrading its call to a buy. UZMA BHD By PIVB Research Rating: Neutral Target Price: RM4.06 UZMA announced last Friday that its subsidiary Uzma Engineering Sdn Bhd had received a Letter of Award (LOA) last Thursday from Petronas Carigali Sdn Bhd for the provision of a drilling project management team for Petroleum Management Unit (PMU) wells. Although the contract value is not known, PIVB believes the project value is relatively substantial given the intense efforts being made by Petronas in the upstream oil and gas (O&G) segment. Meanwhile, the increasing support from Petronas indicates further strengthening to its earnings growth potential going forward for a relatively young company of 13 years which has grown based on its merits and capabilities. PIVB has a neutral call with a revised target price of RM4.06, based on 13 times multiple (previously 12 times) to its FY14 earnings per share of 31.2 sen. We believe Uzma deserves a higher price to earnings due to its strong orderbook of approximately RM1.3bil (to last until 2017) and continuous contract wins given the positive outlook for the upstream O&G segment. We also tweak our FY14/15 forecasts upwards by about 8% and 18% respectively to account for potential and multiple small contracts that are not disclosed. AHMAD ZAKI RESOURCES BHD By ALLIANCE RESEARCH Rating: Buy Target Price: RM1.20 AHMAD Zaki Resources Bhd (AZRB) announced that it was awarded a RM163mil contract to build the new Air Police Base in Jalan Lapangan Terbang Subang, Shah Alam. With this recent award, AZRB's year to date (YTD) job wins stand at RM1.89bil vis-à-vis Alliance's full year assumption of RM1.8bil. We estimate AZRB's orderbook balance to now stand at RM3.76bil, implying a very strong orderbook to construction revenue ratio of 6.3 times. Contracts in the pipeline include the Langat 2 water treatment plan where the SalconMMC-AZRB joint venture is understood to have submitted a RM1bil bid. Alliance expects the outcome to be known in the first quarter of 2014. This is when the Selangor water consolidation exercise is expected to be resolved. Year to date job wins of RM1.89bil has marginally surpassed Alliance's full year target by 4.8%. As this research house does not expect any of AZRB's outstanding tenders to materialise for the remainder of the year, we deem our ssumption to be in line. Alliance's earnings forecast are unchanged. "Buy" call is maintained with an unchanged target price of RM1.20 based on the sum of parts valuation which comprises 10 times FY14 earnings (RM0.86/share) and RM20,000 per hectare for its 4,750 ha of planted plantation land (RM0.34). The winning of SK316 EPCIC project has significantly lifted Malaysia Marine And Heavy Engineering Holdings Berhad's (MMHE) earnings visibility. While the SK316 contract alone is not sufficient to re-rate MMHE's share price, Affin has turned less negative on MMHE. |
| Malaysians among detained oil ship crew Posted: CARACAS: Venezuela and Guyana will meet on Thursday to resolve the fate of a ship and crew hired by a U.S. oil exploration firm that Venezuela seized in waters disputed for more than a century by the South American neighbours A senior Guyanese official, who asked not to be named, confirmed the meeting. He said there were about two dozen workers on board from eight countries: the United States, Russia, France, Indonesia,Brazil, Malaysia, Panama and Ukraine. The foreign ministers of both countries have spoken on the phone and will meet in Trinidad and Tobago"in the hope of resolving diplomatically whatever difference exists between both sides," a Venezuelan government statement said. A senior Guyanese official, who asked not to be named, confirmed the meeting. He said there were about two dozen workers on board from eight countries: the United States, Russia, France, Indonesia,Brazil, Malaysia, Panama and Ukraine. Venezuela's navy on Thursday seized the RV Teknik Perdana survey boat, which was being used byTexas-based Anadarko. Venezuela said the ship had violated its waters. Guyana says the boat was well within its territory and Venezuela's action has threatened its national security. The boat has been taken to the Venezuelan island of Margarita. Its Ukrainian captain Igor Bekirov was due to appear in court shortly to face charges of violating Venezuelan waters, local judicial authorities said. Anadarko was not immediately available to comment. Oil exploration has fanned the flames of the old territorial dispute, and the incident did not appear linked to the socialist Venezuelan government's antipathy toward Washington. The United States and Venezuela have just expelled the others' top diplomats. A U.S. embassy official said Washington was aware of reports that five Americans were on the ship, but would not give any further comment or details due to "privacy concerns." Guyana awarded Anadarko Petroleum a deep-water, exploration license in June last year for a block named Roraima, although details of the concession have not been revealed. Oil companies have been increasingly interested in the northeastern shoulder of South America since a discovery off nearby French Guyana in 2011 that industry experts described as a game-changer for the region's energy prospects. Venezuela and Guyana have long argued about the status of the disputed Essequibo region, an area on the border about the size of the U.S. state of Georgia, and over rights to the ocean resources that lie offshore. Venezuela calls it a "reclamation zone," but in practice it functions as Guyanese territory. Critics of President Nicolas Maduro, who replaced the late Hugo Chavez as Venezuela's leader after winning an election earlier this year, say he is exploiting international incidents to try and distract attention from domestic woes. Guyana's former foreign minister, Rashleigh Jackson, urged a quick release of the ship and crew after Thursday's talks, then further negotiations to settle the maritime territorial limits. "What is needed in these talks is a decision on a mechanism to settle the maritime boundary once and for all," he told Reuters.- Reuters |
| India's Sept palm oil imports up 21% on festive demand Posted: MUMBAI: India's palm oil imports surged 20.6 percent in September from a month ago, rising for the first time in four months, as a recovery in the rupee encouraged refiners to buy more for the peak festival season. India, the world's leading buyer of palm oils, imported 644,386 tonnes in September, the Solvent Extractors' Association (SEA) said in a statement on Monday. That included imports 167,601 tonnes of refined palm oil. SEA warned of a crisis brewing in the refining industry due to the increasing trend toward buying refined oils from abroad. Importers were helped by the rupee's rally in September, when it gained 5 percent to snap a four-month losing streak. Palm oil accounts for about 80 percent of India's total cooking oil imports. Most of it comes from Malaysia and Indonesia. India relies on imports for about 60 percent of its annual vegetable oil demand of 17-18 million tonnes. Total vegetable oil imports during the month jumped 14 percent from last month to 863,917 tonnes, the SEA said. India's demand for edible oils usually increases in the December quarter due to Hindu festivals like Dussehra and Diwali, which often with family gatherings for feasts. A Reuters survey had forecast average vegetable oil imports at 881,000 tonnes in September, including 614,000 tonnes of palm oil. India's vegetable oil imports in October are likely to be 800,000 to 900,000 tonnes, lower than 1 million tonnes during the same period a year ago, as soybean supplies started from the new season crop, said B.V. Mehta, executive director of the SEA. "Soybean supplies have already started due to early sowing. Oil mills are crushing new season crop and that will limit imports in October," he said. Soybean is the country's main summer-sown oilseed crop and supplies have started in key growing areas, although recently heavy rains disrupted harvesting. REFINED PALM OIL THREATS India's vegetable oil imports in the first 11 months of the marketing year ending on Oct. 31 stood at 9.66 million tonnes, up 5.5 percent from the year before. Refined palm oil (RBD) imports in April to September more than doubled to 1.45 million tonnes, as the world's biggest palm oil exporter Indonesia structured taxes to favour exports of the refined product over crude to support its domestic refiners. Rising imports of refined palm oil are "leading to crisis in the domestic refining sector", said the SEA. It wants the government to raise duties on refined products to protect the local refining industry. "More than half of refining capacity is idle in India," said an official with a leading refiner based in central Madhya Pradesh state. "Indian refiners can't survive if the duty structure is not altered." In September, the difference between the landed price of refined palm oil and crude palm oil in India was $10 per tonne, compared with $36 during the same period a year ago. The food ministry has suggested the import duty on refined palm oil should go up to at least 10 percent from 7.5 percent, but it needs support from other ministries. The finance ministry favoured an increase earlier in the year when it was desperate to cut imports and rein in the current account deficit. India imports about $10 billion of edible oils a year -- about 2 percent of total import costs. But the rupee's fall to a record low in August helped to stem the tide of imports and encouraged exports.- Reuters |
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