Selasa, 8 April 2014

The Star Online: Business

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The Star Online: Business

Boost for Lafarge's M'sian position; 'buy' for TNB and Sime

Posted: 08 Apr 2014 09:00 AM PDT


By RHB Research Institute

Buy (maintained)

Target price: RM9.61

LAFARGE SA and Holcim Ltd agreed to merge to form the world's biggest cement maker with more that US$40bil (RM133bil) in sales. The enlarged entity will also cut overcapacity and energy expenses.

The new company will be called Lafarge-Holcim.

Lafarge Malaysia has not made any announcement pertaining to the merger. However, Holcim Malaysia Sdn Bhd is currently operating a 1.2 million tonne per annum (tpa) grinding plant in Pasir Gudang, Johor, that leads to a potential asset injection of this unit into Lafarge Malaysia is possible.

There is synergy on the possible merger or acquisition of Holcim Malaysia, as Lafarge Malaysia is also operating a separate 700,000 tpa grinding plant in the same area to service clients in Peninsular Malaysia's southern region.

The company's integrated plant in Langkawi, Kedah, has been exporting excess clinker at marginal costing.

Hence, the transaction may see Lafarge Malaysia possibly channelling more clinker to Holcim Malaysia at better margins, as the larger quantity may mean savings in logistics costs.

Apart from that, the merger may also further fortify Lafarge Malaysia's leading position in the local cement market, with market share increasing to almost 40% from one-third presently.


By Maybank Investment Bank Research

Buy (unchanged)

Target price: RM10.20

SIME Darby Energy Sdn Bhd (SDESB), a wholly-owned subsidiary of Sime, has entered into sales and purchase agreements to dispose of its 75% equity interest in Port Dickson Power (PDP) plant to Hypergantic Sdn Bhd (HSB) and its operations and maintenance business to Malakoff Power Bhd (MPB) for a total cash consideration of RM300mil.

HSB is presently the minority shareholder of PDP with a 25% equity stake. Both HSB and MPB are indirect subsidiaries of MMC Corp (not rated) via Malakoff Corp Bhd.

The proposed disposal does not come as a surprise as Sime Darby earlier decided not to make further investments into the capital-intensive power business as it is of the opinion that the new generation power purchase agreements (PPAs) have been giving lower returns to IPPs.

As such it is better to re-allocate capital to its four core businesses which are able to generate higher returns to shareholders.

It is believed the RM300mil price tag is fair considering the IPP expires in January 2016 and priced at 1.8 times price-to-book value (considering the residue value for its power plant sited on a 67-acre in Port Dickson, Negri Sembilan).

The disposal is expected to complete in its six months ending June 3, 2014 and Sime is expected to record a one-off estimated net gain of RM56mil or a marginal 1.8% increment to its six months' core net profits of RM3.10bil. The earnings forecast has been maintained for now.


By TA Securities


Target price: RM14.16

TNB's earnings for its second quarter ended Feb 28, 2014 are tentatively scheduled for release on March 24, 2014. Its core net profit (before foreign exchange) is estimated to be between RM1bil and RM1.05bil.

That implies a 29% to 32% decline quarter-on-quarter. Note that quarter-on-quarter comparison is partially distorted by RM188.7mil due to reduction of corporate income tax by one percentage point announced in Budget 2014, recognised in the preceding quarter.

Electricity demand is assumed to decline by 2% quarter-on-quarter, as the quarter coincides with major festivities, i.e. lower demand from non-residential segments. It has also taken into account savings in capacity payment as a result of unplanned outages at Tanjung Bin and Jimah.

The impact however will be partially offset by time lag – TNB's P&L would reflect cost to procure liquified natural gas (LNG) at RM41.68 per million British thermal units for two months (January and February) but the revenue covers only one month (February) due to billing timing.

It is estimated that this will translate into approximately RM172mil additional fuel cost in the second quarter of 2014 versus the proceeding quarter.

KLCI edges up early Wednesday

Posted: 08 Apr 2014 06:25 PM PDT

KUALA LUMPUR:  Malaysia's key FBM  KLCI eked out marginal gains early Wednesday, propped up by DiGi and BAT but the gains were restrained by mild selling of TM, Maybank and Genting.

At 9.10am, the FBM KLCI was up 0.73 of a  point to 1,853.04. Turnover was 136.53 million shares valued at RM69.81mmil. There were 182 gainers, 72 losers and 165 counters unchanged.

BIMB Securities Research said after Tuesday's decline, where the KLCI lost 10.59 points despite some final minute attempts to prop the market up, the market could remain lacklustre.  It expects 1,850 to be the immediate support level.

Reuters reported that Asian shares rose in early trade on Wednesday after Wall Street snapped a three-day losing streak, but Japanese stocks tumbled after the yen surged on fading hopes of near-term stimulus from the Bank of Japan.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.6%, taking heart from a recovery in US stocks overnight. Australian shares gained 0.2%.

At Bursa Malaysia, BAT was the top gainer, adding 58 sen to RM60.18 while Nestle added 50 sen to RM67.20.

HDBS jumped 43 sen to RM4.48 with 1.07 million shares done after it announced a RM2.50 special dividend.

Takaful regained its footing to add 14  sen to RM12.50after the pullback on Tuesday.

Property based Eco World added 13 sen to RM5.33.

DiGi rose seven sen to RM5.33.

Auto-based Tan Chong added nine sen to RM5.60 but its  bigger rival UMW fell the most, down 12 sen to RM11.80.

Plantation heavyweight IOI Corp fell six sen to RM4.78. TM and Maybank lost four sen each to RM5.82  and RM9.70 while Genting dipped three sen to RM9.70.

HDBS jumps on RM2.50 special dividend

Posted: 08 Apr 2014 06:08 PM PDT

KUALA LUMPUR: Hwang-DBS (M) Bhd's share price surged to a  high of RM4.76 at  the start of Wednesday's trade as it plans to return RM2.50 a share to its shareholders as special dividend.

At 9am, HDBS was up  71 sen to RM4.76.  There were 257,500 shares done.

The FBM KLCI edged up 0.83  of a point to 1,853.14. Turnover was 50.99 million shares valued at RM26.06mil. There were 97 gainers, 45 losers and 137 counters.

Hwang-DBS announced plans to reward  its shareholders after completing the sale of its investment banking business to Affin Holdings Bhd for RM1.36bil.


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