Isnin, 11 November 2013

The Star Online: Business

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The Star Online: Business

Moody's: Spinning off of property unit may weaken IOI Corp short term credit profile


KUALA LUMPUR: IOI Corp Bhd's credit profile would weaken in the short term once it spins off its property unit, but the action should prove beneficial in the long run, according to Moody's Investors Service.

"With the demerger, IOI would have lower earnings and a smaller asset base as well as reduced income diversity, but the expected impact has been factored into its Baa2 ratings," Moody's vice-president and senior credit officer Alan Greene said in a statement.

"Furthermore, the demerger would be beneficial in the long term because IOI would be able to focus on growing its plantations and resource-based manufacturing divisions, which are highly cash generative," he added.

Greene was speaking at the release of Moody's report entitled IOI Corp: Frequently Asked Questions on the Demerger of Its Property Business, which he co-authored with Dylan Yeo, an associate analyst at Moody's.

The report further said that with the demerger, Moody's expected the company to be more cash generative, as income from the plantations and resource manufacturing divisions would no longer be used to fund large-scale property developments.

"After the demerger, greater emphasis would be placed on IOI's liquidity position. This is because cash on hand would become more important, as IOI's operating margin would see a greater correlation with crude palm oil prices after the loss of the property segment," Yeo said.

Looking ahead, excessive shareholder returns or overly aggressive growth plans might pressure IOI's ratings.

For example, a further sizeable acquisition in the next 12 months might reduce the company's cash position, and could result in net debt/earnings before interest, tax, depreciation and amortisation or EBITDA, rising above Moody's downward rating parameter of 1.5 times.       

5 players to bid for UDA Holdings RM6.5bil project at Pudu Jail site


PETALING JAYA: UDA Holdings Bhd has received bids from five "big boys" to develop its RM6.5bil project at the former site of Pudu Jail.

Speaking to reporters after signing a memorandum of understanding with Bank Muamalat develop Waqf land in Malaysia, UDA Holdings group managing director Ahmad Abu Bakar said the bidders will submit their proposals on November 22.

"We are still reviewing. The bidders have two months to come out with an alternative proposal," he said.
One of the five players is from Singapore, he added.

Also known as the redevelopment of Bukit Bintang City Centre, measuring 7.85ha, the site will consist of various components.

Datasonic surges to fresh peak on earnings outlook


KUALA LUMPUR: Shares of Datasonic surged to a new high of RM6.86 in mid-morning Tuesday trade, spurred by expectations of strong earnings outlook.

At 10.29am, Datasonic was up 39 sen to RM6.86. Turnover was 266,500 shares done.

Its share price has surged from RM1.46 at end-May

The FBM KLCI fell 5.75 points to 1,798.46. Turnover was 926.48 million shares valued at RM467.92mil. There were 204 gainers, 339 losers and 303 counters unchanged.

RHB Research has initiated coverage of Datasonic with a BUY and fair value of RM10.51, based on 15 times FY14 price-to-earnings, which is at 10% discount to its peers due to relatively lower liquidity.

"We expect the group to register core earnings of RM76.7mil to RM106.6mil from FY13F-15F, which implies a CAGR of 55.9% over FY12's RM28.1mil.

"We like Datasonic's strong earnings growth trajectory, committed management team, and proven track record in implementing security-enhanced identification measures," said the research house.


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