Ahad, 16 Februari 2014

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The Star Online: Business

MRCB maintained at 'buy'

Posted: 16 Feb 2014 08:00 AM PST


By AmResearch

Buy (maintained)

Target price: RM2.20

AMRESEARCH has maintained a "buy" rating on Malaysian Resources Corp Bhd (MRCB) with an unchanged target price of RM2.20 per share.

The deal to inject Platinum Sentral into Quill Capita Trust (QCT) should be signed by mid-March.

This could be a prelude to MRCB injecting more prime office properties in KL Sentral into QCT, said AmResearch.

Such a move would aid MRCB's de-gearing efforts and enable it to reinvest its capital into more net asset value (NAV)-accretive deals, it said.

Furthermore, the status of the EDL Highway could be revealed by May, which would lead to the removal of a key overhang on the stock. AmResearch said these asset monetisation initiatives, which included MRCB's divestment of its 30% stake in Duke for RM228mil, could reduce its net debt by about RM1bil.

Meanwhile, the High Court's judgement on PJ Sentral could be known by the end of the month. A positive resolution will result in a significant lift to MRCB's revised NAV (RNAV), given PJ Sentral's high development potential, AmResearch said.

The research house foresees the company emerging as a front-runner for the Kwasa Damansara project. Kwasa Land, a unit of MRCB's major shareholder EPF, is the master developer.

Tenders could be called in two months' time, it said.

AmResearch is also positive on Penang Sentral, which has been primed as a future transport hub in the north given its high commercial appeal and strategic location.

It expects MRCB's upcoming fourth quarter results for the financial year ended Dec 31, 2013 to improve greatly from the previous quarter, as the risk of further provisions diminishes substantially, which sets the stage for a solid earnings turnaround.

It forecasts 2014 core net profit to come in at RM101mil.

The market seems to under-appreciate MRCB's quiet but disciplined transformation to become a property-centric group with a cleaner balance sheet.

The stock is trading at a deep discount of 47% vis-à-vis its RNAV with a trough price to book value of only 1.4 times.

AmResearch recommends investors to accumulate MRCB before the investment tide turns positive ahead of sustained newsflow momentum.

Its current valuations have not incorporate two major re-rating catalysts – PJ Sentral and Kwasa Damansara


By RHB Research

Neutral (maintained)

Target price: S$3.55

Singapore Telecommunications Ltd (SingTel) gained further market share in mobile and Internet Protocol TV (IPTV) segments, thanks to the aggressive bundling of its services under mio-Home and mio-Plans.

However, its share of IPTV and the broadband market is likely to come under pressure going forward, due to the cross carriage agreement with StarHub and heavy competition in the fixed broadband space.

The company intends to defend its premium position in the fibre market, which RHB Research believes should ease concerns of a potentially unproductive price war.

After executing a massive transformation plan to rebrand its service and the overhaul of its distribution model over the past 12 to 18 months, Optus, Singtel's Australian unit, appears confident of gaining revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) share in the quarters ahead. However, RHB thinks that revenue recovery will take time since the mobile market in Australia is still reeling from lower device subsidies and falling interconnection rates amid a shrinking subscriber base.

The Australian dollar has appreciated 1.3% against the Singaporean dollar on a year-to-date basis, after shedding 10% in 2013. This would have a positive impact on Optus' translated revenue and EBITDA going into the financial year ending March 31, 2015.

RHB lowered its 2014 and 2015 forecasts by 2% to 3% after adjusting its Australian dollar forex assumption. Incorporating the latest mark-to-market valuations of its listed OpCos and the group's latest net debt position, its sum-of-parts-based fair value is revised to S$3.55 from S$3.70 previously.

SingTel remains a "neutral" due to the lack of meaningful rerating catalysts. RHB's top pick for exposure to Singapore telecoms is M1.


By PublicInvest Research

Not rated

Target price: RM4.78

Suiwah Corp Bhd's current market capitalisation of RM120.4mil has only factored in the value of its retail business, manufacturing division, Sunshine Square property and net cash, said PublicInvest Research.

It added that investors have overlooked Suiwah's valuable landbank as well as its newly-opened shopping mall in Bertam, Seberang Prai, which is fully tenanted.

Based on PublicInvest's sum-of-parts (SOP) valuation, Suiwah could be worth at least RM274mil or RM4.78 per share.

Suiwah has its origins as the first neighbourhood general merchant in Air Itam, Penang in 1961. It runs its retail business under the 'Sunshine' brand, a household name in Penang.

Although the Sunshine brand is a household name in Penang, the retail business is a thin-margin business. PublicInvest believes Suiwah's management is diversifying and complementing its retail business by taking pro-active steps to unlock the development potential of its valuable landbank. Going forward, property rental income is expected to diversify and improve the group's earning base.


By Affin Investment Bank

Reduce (maintained)

Target price: RM3.35

Against higher year-end provisions and expenses, the fourth quarter of the year ended Dec 31, 2013 core net profit fell 11.7% year-on-year and 13% quarter-on-quarter to RM40.2mil despite a strong 9.1% year-on-year gas volume growth.

This brought full-year net profit to RM171.4mil, which are in line with Affin Investment Bank's and street estimates. The group declared a second interim net dividend per share (DPS) of 3 sen, and a final 4.36 net DPS for 2013. For 2013, net DPS amounted to 13.36 sen – translating into a 100% dividend payout, in line with management's guidance and its prospectus mandate.

Since Petronas Gas Bhd's commencement of the Melaka Regasification Terminal, Gas Malaysia has been allocated higher gas volumes, leading to it recording strong 9.1% year-on-year gas volume growth.

This helped lift fourth quarter revenue by 9.5% year-on-year to RM604.2mil.

However, earnings before interest and tax (EBIT) fell 14.6% year-on-year as a result of higher operating expenditure and depreciation charges.

Consequently, EBIT margin fell 2.3% percentage points to 8.1%. Sequentially, revenue rose by 3.5% as a result of higher customer bookings in the quarter. That said, year-end provisions and expenses led to a 13% quarter-on-quarter decline in core net profit to RM40.2mil.

With Petronas committing to higher gas volumes to industrial users, Gas Malaysia as the 'toll operator', benefits from higher revenue and positive operating leverage.

Full-year topline rose 9% year-on-year to RM2.317bil, on 8.5% year-on-year growth in gas volumes sold. Coupled with the lower effective tax rate, full-year core net profit jumped 5.3% year-on-year to RM171.4mil.

Affin downgraded 2014 and 2015 earnings per share (EPS) by 7.6% and 6.8% respectively as gas volumes were downgraded marginally while operating expenditure was raised to account for 2% of group sales. Therefore, it lowered the target price to RM3.35 per share and maintained a "reduce" call on the stock.

It projects a three-year 2013 to 2016 EPS compounded annual growth rate of 7.5% driven largely by higher gas volumes.

Its target price factors in a blue-sky scenario of 100% dividend payout over the next two years. Although the stock yielded 4% in 2014, Affin cautioned that the yields come expensive.

Affin recommends switching to Tenaga Nasional Bhd, as it is a key beneficiary to the Government's subsidy rationalisation exercise.

Gold hits 3-month high on US growth fears

Posted: 16 Feb 2014 06:51 PM PST

SINGAPORE: Gold hit fresh three-month highs on Monday, adding to gains after posting its biggest weekly rise in six months, as fears over US economic growth and a weaker dollar sent investors seeking the safe-haven metal.

Spot gold rose 0.3% to US$1,322.24 an ounce by 0026 GMT, after hitting US$1,323.76 earlier in the session – its highest since November. The metal jumped 4% last week, its biggest weekly gain since August.

US gold futures rose for a 9th session – their longest winning streak since July 2011.

US manufacturing output unexpectedly fell in January, recording its biggest drop in more than 4½ years, as cold weather disrupted production in the latest indication the economy got off to a weak start this year.

Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the fourth quarter, even as others exited when bullion prices posted their biggest annual loss in 32 years.

SPDR Gold Trust's holdings fell 5.10 tonnes to 801.25 tonnes on Friday.

Meanwhile hedge funds and money managers raised their bets in gold futures and options to a three-month high on signs that the Federal Reserve will not rush to cut its stimulus, Commodity Futures Trading Commission data showed on Friday.

Elsewhere gold premiums in India, the world's second-biggest consumer of the metal after China, fell 17% on Friday to their lowest in four months as buyers postponed purchases on speculation over a possible cut in import duty soon – Reuters.

Scomi shares up following Quek's entry

Posted: 16 Feb 2014 06:31 PM PST

KUALA LUMPUR: Shares of Scomi Energy Services rose at mid-morning on Monday after Tan Sri Quek Leng Chan made a big entry into the group, which would make him the second largest shareholder with 11.5% stake.

At 10.24am, Scomi Energy jumped 12.5 sen with some 21.96 million shares heavily traded between the prices of RM1.04 and RM1.14.

The FBM KLCI rose 9.82 points to 1,829.19. Turnover was 1.08 billion shares valued at RM519.93mil. There were 382 gainers, 176 decliners and 298 counters unchanged.

Hong Leong Investment Research has maintained its Buy rating on Scomi Energy with a target price of RM1.02, saying that it is positive on the entry of new strategic investor given it will remove the share overhang concern.

"We view Quek's entry into Scomi Energy at a right and exciting timing given the group's potential RSC win and the vastly untapped WMS market," it said.
Kredit: www.thestar.com.my

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