Isnin, 4 November 2013

The Star Online: Business

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The Star Online: Business

Positive views on Press Metal's stake sale


PETALING JAYA: Press Metal Bhd's proposed disposal of a 20% stake in its main smelting plant Press Metal Bintulu Sdn Bhd (PMB) for RM444mil is viewed positively by analysts due to the synergistic nature of the transaction and its valuation.

The company will make a gain of RM336.4 mil from the disposal.

It has entered into a conditional sales and purchase agreement last Friday to sell the plant to Japanese conglomerate Sumitomo Corp.

PMB has an optimum capacity of 320,000 tonnes and is located in Samalaju Industrial Park, Bintulu, Sarawak.

Sumitomo is an existing partner of Press Metal as the Japanese giant also owns 20% of Press Metal's other smelting plant in Mukah.

RHB Research analyst Ng Sem Guan said the sales proceeds would help pare down Press Metal's net gearing to 1.2 times from 1.74 times.

The transaction will effectively increase the company's market capitalisation from RM1.26bil to RM2.22bil, which has prompted Ng to raise his fair value of the company's shares by RM1 to RM3.77.

He maintained a "buy" call on Press Metal but added that ongoing repairs at the Mukah plant following a power outage in June and weak aluminium prices might put a cap to its share price.

An analyst with AmResearch concurred that the deal underscored Sumitomo's commitment in the aluminium manufacturer.

Under the terms, Press Metal has certain free cashflow and production cost target conditions which, if met, it will be "rewarded", otherwise it could be subject to a penalty.

On the terms for earn-out adjustment, Ng pointed out the risk of a potential penalty up to US$16mil based on Press Metal's annual free cashflow (FCF) until financial year ending Dec 31, 2018 (FY18) that is largely dependent on aluminium prices, which is something beyond management's control.

The penalty, nonetheless, would be spread over a period of five years and Press Metal would be rewarded with not more than US$43mil should it surpass the FCF target set in the sales and purchase agreement, which was not disclosed.

Ng said of the final adjustment of the deal, "We are hopeful of a reward of not more than US$21mil upon finalisation of PMB's FY18 accounts, which take into account certain production costs that are likely within management's control."

On the flip side, PMB is subject to a US$26.9mil penalty if it does not meet the target upon finalisation of its FY18 balance sheet.

Asian shares mixed as US data in focus


HONG KONG: Asian markets were mixed on Tuesday as traders await the release of growth and jobs data out of the United States, while Tokyo was hit by a stronger yen and a slump by car giant Nissan.

The euro saw further selling pressure as investors bet the European Central Bank will cut interest rates following soft inflation data last week.

Tokyo was flat, Hong Kong dipped 0.83 percent, Sydney was 0.75 percent higher, Shanghai lost 1.00 percent and Seoul fell 0.19 percent.

Jakarta and Kuala Lumpur were closed for public holidays.

With few catalysts to drive buying, traders are looking to the US figures for a handle on when the Federal Reserve will begin reeling in its stimulus programme, which has been credited with a global stocks rally at the start of the year.

While a strong set of results on gross domestic product and non-farm payrolls will be positive economically, they would also suggest the bank will start winding down the programme - which is worth $85 billion a month - sooner than later.

Wall Street saw small gains, with the Dow up 0.16 percent, the S&P 500 rising 0.36 percent and the Nasdaq adding - AFP

Apple to open manufacturing plant to make sapphire materials for devices


NEW YORK: Apple Inc will open a manufacturing facility in Arizona in partnership with mineral crystal specialist GT Advanced Technologies Inc  to make sapphire materials for Apple's popular electronics devices.

The project will provide 700 manufacturing jobs in the first year and 1,300 construction and associated jobs in MesaArizona, according to a statement by Arizona Governor Jan Brewer on Monday.

Apple confirmed the plan, but would not say exactly what components would be made at the new facility or what products they would appear in.

GT specializes in "crystal growth equipment" for consumer electronics and other industries. It said on Monday it signed a multiyear supply agreement with Apple to provide sapphire material, which has in the past been used in watches, optical instruments and integrated circuits. There have been reports that device makers are looking at sapphire crystal for use in screens.

Apple's push to create jobs in the United States comes after scrutiny of its massive overseas cash reserves and conditions for workers at contract manufacturer facilities it uses in China.

The move also signals a tentative revival in U.S. manufacturing. Earlier this year, Apple revealed plans to build computers at a site in AustinTexas, while Google Inc's <GOOG.O> Motorola unit decided to assemble its new Moto X phones in the same state.

Big corporations such as Caterpillar Inc <CAT.N> and General Electric Co <GE.N> have been shifting some production back to home soil over the past few years. Last month Wal-Mart Stores Inc <WMT.N> announced a campaign to buy more U.S.-made goods.

GT said it will own and operate the furnaces to produce the sapphire material, but Apple will own theArizona facility.

Under the terms of its supply deal, Apple will give GT a prepayment of about $578 million, which GT will pay back to Apple over five years, starting in 2015, GT said.- Reuters


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