Friday, June 24, 2011

Sridge ... Jun11

Over the years the group has written off rm4 million in its investment in Bernana-TV. The significance of the write off can be seen from Silver Ridge’s total market value, which was just rm8 million (price at rm0.08). That is less than the net cash of rm9.5 million on its balance sheet.

Nevertheless, it posted a good set of operating results for 1Q2011 ended March 31. It posted a net profit of rm1.8 million or earnings per share of 1.8 sen in 1Q2011.

Its executive director Wong Chee Keong said that in addition to an end to taking a share of losses from Bernama-TV financial results were bolstered with earnings from its participation in the national high speed broadband (HSBB) project. The group’s core business is providing telecommunications services and solutions.

Wong spent many years at Telekom Malaysia where his latest post was assistance general manager He left to start Silver Ridge with major shareholder Datuk Mohd Suhaimi who owns 48% of the company. Suhaimi is Silver Ridge’s MD and also head of UMNO’s Gunung Jerai division in Kedah.

HSBB is an rm11 billion project towards which the government has committed to contribute about rm3 billion over a 10 year period. The government’s objective is to promote HSBB penetration in Malaysia.

As the HSBB project is in its first phase, it offers prospects of a long term business for the support industry. Silver Ridge’s contract for the HSBB project is for the three years and there is another 1 ½ years to go. The contract will provide some stability to its revenue for its duration. And it believes that it stands a good chance of an extension of the contract.

The contribution from the HSBB contract kicked in in 1Q2011.

The HSBB contract secured in a JV with Alcatel Lucent, involves services for fibre to home. All new infra for HSBB now uses fibre optic cables, although copper lines are still in use.

There are other components in the HSBB project that Silver Ridge can try to get involved in, as well as new locations where HSBB is available. In addition, there are value added services, including providing premises equipment such as modems for customers of HSBB that Silver Ridge can play a role in.

There are four main components in the roll out of HSBB and Silver Ridge has the expertise in all four components.

Silver Ridge is working on two other contracts for which revenue has not kicked in yet.

Silver Ridge also manages servers for Celcom and Digi as well as technical support for BlackBerry’s customers.

PChem ... Jun11

Petronas Chemicals Group Bhd is going all out to grab a bigger market share of the world's petrochemical products. It also aims to become the third largest revenue contributor to parent Petroliam Nasional Bhd (Petronas) in the long term.

Petronas Chemicals, a 64.4 per cent subsidiary of Petronas, is currently the second smallest revenue contributor to the national oil and gas company accounting for six per cent of the RM210.8 billion revenue Petronas raked in for financial year ended March last year.

Petronas has a total of seven business divisions which include trading of crude oil, retail and distribution of petroleum products, logistics and maritime business and petrochemicals.
One of the strategies to strengthen its global position include ramping up production to boost revenue and make strategic, selective and synergistc acquisitions to consolidate the group's position as one of South-East Asia's largest integrated petrochemical producer.

Petronas Chemicals is the chemical arm of national oil and gas corporation Petronas, one of the country's leading integrated petrochemical producers.

Efforts to beef up production include participating in Petronas' upcoming plan to build a US$20 billion (RM60.3 billion) integrated downstream oil and gas complex in Pengerang Johor together with Germany's chemical company the BASF group. The plan is currently undergoing a feasi-bility study which ends in 2013.

Petronas Chemicals is primarily involved in the manufacturing, marketing and selling of a diversified range of downstream petrochemical products which are broken down from crude oil and natural gas.

These include olefins, polymers, fertilisers, methanol and other basic chemical and derivative products which are made into products such as paints, coatings, cosmetics, solvents, engine lubricants, plastic products, energy drinks and so many others.

Petronas Chemicals is the largest producer of methanol by volume in Southeast Asia and the fourth largest in the world.

It is also the largest producer of ethylene glycols in Southeast Asia and the third largest producer of urea and low-density polyethylene in South-East Asia by volume.

Locally, the group is also the market leader in the Malaysian petrochemicals industry based on the sales of urea, glycols and me-thanol.

The group operates through two integrated petrochemical complexes in the east of Peninsular Malaysia (Kertih and Gebeng) as well as three manufacturing complexes in Gurun, Bintulu and Labuan and a poly vinyl chloride plant in Vietnam.

Thursday, June 23, 2011

IPO ... Prestariang Bhd

Prestariang Bhd, an information and communications technology (ICT) training and certification provider proposed listing on the Main Market of Bursa Malaysia.

The Multimedia Super Corridor (MSC) status company expected to float a total of 22 million shares via a public issue and another 77 million shares through an offer for sale exercise, the company said in a statement yesterday.

It raise funds for our future expansion and growth, which includes research and development (R&D) expenditure and working capital. 

Besides ICT training and certification, Prestariang also provides software licence distribution and management. Among the company’s key projects are Program Pentauliahan Professional (3P Programme) and Managing University Software as an Enterprise (MUSE).

The 3P Programme is one of our key projects where we match graduates’ core competency with industry need for human capital. In essence we help graduates increase their chances of employability.

Prestariang also supplies Microsoft and Autodesk software licences to public higher education institutions in Malaysia through MUSE.

This is a unique yet universal certification programme designed to produce digitally literate and responsible citizens. IC Citizen is Prestariang’s first in-house developed ICT certification programme. IC Citizen was globally marketed in partnership with US-based Certiport Inc to some 10,000 centres in 142 countries.

Prestariang recently received the “Autodesk High Achiever Education Authorisation 2011” and the “Microsoft Partner Network Gold Volume Licensing 2011” awards.

UOADEV ... Jun11

Based on the IPO's institutional price of RM2.60 per share, UOA Development has a market capitalisation of RM3.1bil, which makes it among the five largest property developers listed on Bursa Malaysia, together with UEM Land Bhd, SP Setia Bhd, IJM Land Bhd and IGB Corp Bhd.

The company is a unit of United Overseas Australia Ltd (UOA), which was founded and listed on the Australian Stock Exchange (ASX) in 1987. Its headquarters and business operations has been based in Kuala Lumpur since 1989. UOA is also listed on the Singapore Stock Exchange (SGX) in 2008, while its associate company, UOA Real Estate Investment Trust (UOA REIT), was listed on the Main Market of Bursa Malaysia in 2005.

UOA Development is known as a fully integrated property developer with in-house capabilities in project conceptualisation and design, construction as well as sales and marketing.

UOA Development's property launches in the second half of 2011 include One @ Bukit Ceylon Hotel Suites, which consists of 354 units located on a freehold 1,566 sq m site off Jalan Ceylon, Kuala Lumpur, and Kiara IV, which is a freehold residential project with 80 units on a 39,700 sq m site in Bukit Segambut, Kuala Lumpur. Both projects, due to be completed in 2013, have a combined GDV of RM400mil.

As at Dec 31, 2010, UOA Develop-ment had a total saleable and lettable area of more than 300,000 sq m of properties under development with a gross development value GDV) of RM2bil to be completed over the next three years.

The company has a further total potential saleable and lettable area of more than 1.2 million sq m being held for future development projects with an estimated GDV in excess of RM8bil.

For financial year 2010 (FY10), UOA Development posted a net profit of RM285.8mil on revenue of RM375.2mil. This was a 61% jump in net profit, compared with its reported net profit of RM177.6mil on revenue of RM427.8mil in FY09.
For the first quarter of this year, the company posted a net profit of RM130mil on the back of revenue of RM145.7mil.
The company had solid fundamentals with a strong parent in UOA, prime landbank in strategic locations in the Klang Valley, and reasonably high margins attributable to its in-house construction and procurement unit.

Critics however say that investors preferred property stocks with more diversified township developments and were perhaps unhappy that UOA Development was mainly renowned for its ongoing 60-acre Bangsar South City project in Kampung Kerinchi, Kuala Lumpur.

There was “single” area concentration risks for the company as the bulk of its projects were in Bangsar South City while the property sector's risks included negative real-estate policies, rising interest rates, tightening banking system liquidity and an economic slowdown.

The company was also overly exposed to non-residential properties which accounted for 86% of its remaining GDV.

However, the company had hoped the ratio would change in the next two years, with higher volume contribution from residential projects.

As part of this strategy, its wholly-owned subsidiary, Magna Tiara Development Sdn Bhd, had entered into a conditional sale-and-purchase agreement with Sim Nam Housing Development Co Sdn Bhd to acquire two parcels of freehold land measuring 4.86 acres in Sri Petaling, Kuala Lumpur, for RM50mil cash from internally-generated funds.

The company plans to build a high-rise residential development on the site, located 15km from Kuala Lumpur City Centre, with a launch slated in the fourth quarter of 2011.

Wednesday, June 22, 2011

IPO ... Bumi Armada

Oil and gas outfit Bumi Armada Bhd, which is controlled by T Ananda Krishnan, is set for a grand return with an IPO to raise up to RM9 billion.

While part of the IPO will be used as working capital, the company has serious plans to expand its foothold and perhaps purchase more floating production, storage and offloading (FPSO) vessels in the near future.

The draft prospectus shows that about 879 million new and existing shares will be offered, with the institution and retail portions to constitute 27.27% and 2.73% of the enlarged issued and paid-up capital respectively.

It is looking to invest RM6 billion to RM7 billion in the next two to three years.

According to the draft prospectus, RM775 million from the IPO will be used to repay bank borrowings while the rest is reserved for working capital and capital expenditure.

As at Dec 31, 2010 Bumi Armada had RM2.02 billion in long-term debt, RM1.39 billion in short-term debt and RM3.7 billion worth of assets.

The immediate goal for the company is to be the fourth largest FPSO vessel player globally by the end of 2013, by growing its fleet to six FPSO vessels from the current four.

Armada TGT1, which cost US$350 million, is expected to bring in US$700 million over the next seven years.

The Bumi Armada-Vietsopetro (VSP) alliance was awarded the contract in November 2009 for the leasing and operating of the vessel, under a fixed time charter of seven years with an option to extend it for up to 15 years.

It will be operating in Te Giac Trang, offshore Vietnam, for Hoang Long Joint Operating Company — a partnership including partners like PetroVietnam and Soco International.

Around 84.8% of its revenue for FY10 was derived from outside of Malaysia.
The company had entered into its first contract in Brazil, and is looking to grow its presence in Mexico, Angola, India and Indonesia.

For FY10, Bumi Armada’s net profit rose 26.4% to RM350.7 million from RM277.4 million the year before while revenue rose 70% to RM1.2 billion from RM732 million. Its profit has grown substantially since the firm was taken private in FY02 when it posted a net profit of RM63.4 million on a revenue of RM444 million.

Takaful ... Jun11

Syarikat Takaful Malaysia Bhd has been largely left out of the insurance rally and is trading at low valuations.

Its shares are trading at a steep 35% discount (09 May 2011) to its net asset value and at half the industry’s average price-to-book valuation. As at Dec 31, 2010, Takaful Malaysia’s book value stood at RM2.40 per share.

The only other insurance stock trading below its book value is MNRB Holdings, at 0.58 times book. However, it should be noted that MNRB is a national re-insurance, and not an insurance company.

LPI Capital is trading at 2.72 times book, followed by Kurnia Asia at 1.82 times book and Allianz Malaysia at 1.43 times (09 May 2011).

Takaful Malaysia’s relatively low valuation makes it an attractive target for outsiders looking to penetrate the industry, or for existing competitors seeking to strengthen their foothold. Or even as a long-term investment.

Merging with a bigger player or a bank, such as Bank Islam Malaysia Bhd, could also bode well for Takaful Malaysia.

Takaful Malaysia and Bank Islam share common shareholders. A potential merger could create a larger and more integrated Islamic financial group which would allow for better cross-selling of products.

However Takaful intends to focus on growing its two subsidiaries overseas, PT Asuransi Takaful Keluarga and PT Ansuransi Takaful Umum in Indonesia. It will concentrate on the performance of these companies, and will further strengthen their position with a greater focus within the takaful segment and improve strategic alliances and partnerships vis-à-vis affinity programmes.

Regulatory restrictions prevented Takaful Malaysia from merging with its sister company, Bank Islam Malaysia.

Takaful Malaysia is eyeing a larger share of the local takaful market, which is estimated to grow between 25% and 30% annually.

Takaful Malaysia is looking to grow its present customer base of one million by 25% by the end of 2011, through increased distribution channels and introduction of new products.

In September 2010, BNM issued four new family takaful licences. The new licences were issued to joint ventures between American International Assurance Bhd and Alliance Bank Malaysia Bhd; AMMB Holdings Bhd and Friends Provident Group plc, UK; ING Management Holdings (M) Bhd, Public Bank Bhd and Public Islamic Bank Bhd; and Great Eastern Life Assurance Co Ltd and Koperasi Angkatan Tentera Malaysia Bhd.

In June 2011, there are 11 operators. They are AIA AFG Takaful Bhd, CIMB Aviva Takaful Bhd, Etiqa Takaful Bhd, Great Eastern Takaful Sdn Bhd, Hong Leong MSIG Takaful (Malaysia) Sdn Bhd, ING Public Takaful Ehsan Bhd, MAA Takaful Bhd, Prudential BSN Takaful Bhd, Syarikat Takaful Malaysia Bhd and Takaful Ikhlas Sdn Bhd.

Tuesday, June 21, 2011

Success ... Jun11

It will continue to look at mergers and acquisitions (M&A) to grow its transformer and lighting products manufacturing business. The company is also pursuing organic growth via the expansion of its capacity and geographical reach.

STC would consider viable M&A opportunities and these exercises could be financed via the issuance of new shares in STC and bank borrowings. However, funds earmarked for M&As would mean the company might allocate less money for dividends.

To expand the company’s geographical reach, it has plans to set up sales offices in Singapore, Europe and North America. STC currently has sales offices in Kenya and Australia. Overseas sales made up 13% of STC’s revenue of RM52.82 million in 1Q11 ended March 31 2011.

Since STC’s listing in January 2005, the company has embarked on acquisitions to grow its operations although not all are successful.

In December 2006, STC had acquired a 60% stake in Seremban Engineering Bhd (SEB) for RM14.63 million before securing the balance 40% for RM21.78 million in April 2008. STC now owns 65% of SEB following the listing of the latter in May 2010.

STC’s exposure to the oil and gas process equipment sector is via SEB which also manufactures process equipment for other industries such as palm oil, food and waste management.

In January 2011, STC had announced plans to acquire a 60% stake in Nexus Electronics Sdn Bhd for RM6 million. Nexus is a full-fledged manufacturer of transformers for electronic application and LED light modules. The exercise was terminated the following month as the buyer and seller could not agree on certain terms in the sale and purchase agreement.

In China, the company’s aluminium die casting and lighting products assembly facilities are already fully utilised. But the group had no intention of expanding the capacity of its China factories.

For its 1Q11, STC’s net profit remained flat at RM5.25 million compared with RM5.2 million a year earlier although its revenue expanded 34% to RM52.82 million from RM39.37 million. The process equipment segment in particular helped the company’s topline.

As the company sales are transacted in US dollars, the strong ringgit has eaten into its profits.

On the venture into process equipment for the oil and gas (O&G) sector, STC had begun talks with local O&G support services providers which could subcontract the jobs to the company.

However the firm was still fairly new in its O&G venture. As such, the company may not be able to secure significant projects in the short term. However, should the company perform well in the long run, it should be able to gain good exposure hence, a good track record to clinch more subcontract projects from larger O&G support services players such as Dialog Group Bhd and Kencana Petroleum Bhd.

STC’s new venture into process equipment for O&G, and its potential involvement in lighting products for the consumer market may serve as the growth catalysts.

SEB with an existing order book of RM50 million is tendering for about RM30 million worth of jobs.

SEB’s results for 1Q ended March 31 came in significantly better with a net profit of RM124,000 against a net loss of RM266,000 a year earlier as revenue more than doubled to RM16.49 million from RM6.35 million.

SILVER ... Jun11

Its tie up with KPFM as part of the national food stockpile agenda has stirred interest in the company. The question now is how significant this venture will be for Silver Bird, which currently earns most of its income from confectionery products and prepaid cards.

The national food stockpile, or GMN was mooted to boost the income of FELDA settlers and is expected to constitute between 10% and 18% of national consumption.

KPF Quality Foods Sdn Bhd (KPFQ), in which Silver Bird owns 30% stake via its unit Stanson Marketing Sdn Bhd, was established for this purpose.

KPFM’s wholly owned subsidiary KPF Holdings Sdn Bhd holds a 60% stake in KPFQ, while the remainder 10% is held by little known Consortium Fresh Food Quality Bhd (CFFQ).

Under the deal, KPFQ will purchase, process, package and sell agri food products and other related food products from GNM and other suppliers.

It has been reported that the Federal Land Development Authority (FELDA) has committed rm750 million to the GNM project over the next 10 years. Will Silver Bird et a big slice of this cake?

The venture is a boon to the company it will have to access to KPFM’s more than 30000 retail outlets and FELDA’s community of more than one million settlers and their families, and FELDA staff. Silver Bird currently has 20000 participating retail outlets.

More importantly, the collaboration also gives Silver Bird the opportunity to grow beyond Malaysia and Singapore, as it plans to ride on Felda Golobal Ventures Holdings Sdn Bhd’s network abroad. The group’s international businesses are held under FCVII, which is owned by FELDA.

This tie up with FELDA will definitely give Silver Bird a quantum leap and the distribution of the agri food products will start as early as July 2011.

Furthermore since the venture will leverage on Silver Bird’s fleet of more than 300 trucks, the company can fully utilize its asserts and hence, generate a higher return on assets. While FELDA group has its own distribution channels, Silver Bird’s agenda of distributing agricultural products. Silver Bird’s confectionery products have a shorter life span, similar to that of agri food products.

Silver Bird attributes the collaboration with FEDLA to Daud Yunus, the MD of Perkasa Nomandy. The fund management company is the adviser for CVC Ltd, which in turn owns more than 9% of Silver Bird. While Daud controls CEFQ, which has a 10% stake in Silver Bird, its MD has more than 15% stake in it, which Berjaya Corp Bhd’s Tan Sri Vincent Tan holds a 21.59% stake.

As KPFM has a 13.36% stake in Silver Bird, it makes sense for it to undertake the project with the latter. Additionally, KPFM can leverage on Silver Bird’s brand name and network to market the products.

Silver Bird’s tie up with FELDA could be a catalyst for the company’s shares.

Meanwhile Silver Bird Group Bhd has proposed a private placement exercise of new ordinary shares of up to 10% of its issued and paid-up share capital. The actual proceeds to be raised from this would be dependent on the issue price and actual number of placements shares to be issued.

Proceeds from the proposed private placement should be utilised for repayment of bank borrowings as well as to defray the expenses in respect of the proposed private placement.

The group's total outstanding borrowings stood at RM130mil as of June 6 2011.

Monday, June 20, 2011

IPO ... Eversendai Corp

A structural steel construction and engineering company Eversendai Corp Bhd aims to bid for an additional RM1 billion to RM1.5 billion worth of projects for the rest of the year, after having secured almost RM350 million so far 2011.

As at May 16 2011, the company’s order book has grown to RM1.4 billion.

For FY10 ended Dec 31, Eversendai posted a net profit of RM116.7 million versus RM77.9 million the year before, although its revenue was lower at RM744.9 million compared with RM817 million previously.

Apart from the existing market, it aims to venture in a big way into other emerging markets such as India, Indonesia and Vietnam. This is due to the growing need for infrastructure development in these countries and it posed a big opportunity for Eversendai.

Eversendai is currently working on the construction of four power plants in India. The company has bid for several power plant projects in Indonesia and Vietnam, while it is also bidding for an iconic high-rise building in Vietnam.

To support the company’s steel needs in India, the company had procured 30 acres (12ha) of land, with an option to extend to another 10 acres to build its steel fabrication plants there. The plant would be ready in 18 months, and would cost RM83 million that would be funded via the IPO proceeds.

On the company’s extensive exposure in the Middle East, a region that has been plagued with political turmoil and civil war, the company’s operation there is limited to selected countries that are politically stable and provided tremendous growth opportunities for the company, namely the UAE, Qatar and Saudi Arabia.

The IPO consists of 232,190,000 ordinary shares of 50 sen each or 30% of its paid-up capital, comprising a public issue of 160.7 million new shares to institutional investors at the price to be determined by the book-building exercise, and the offer of 71.5 million existing shares, of which 41.3 million shares are for institutional and selected investors, while 30.1 million for the public and eligible directors plus employees at retail price of RM1.70 each.

The initial offer is expected to raise RM273.2 million, with RM126 million be set aside for capital expenditure including the new fabrication plants in India and to purchase plant and machineries for its Middle East operations, as well as enhance its production capabilities of its existing fabrication facility in Rawang.

Another RM80 million will be reserved for business expansion such as EPC and to advance its leading position in UAE and Qatar. The company also plans to expand into other Middle East countries such as Saudi Arabia and Oman in the near future.

BStead ... Jun11

1MDB has awarded a rm2.8 billion contract to construct a new base for the RMAF to LTAT.

LTAT has a wholly owned corporation PPHM, which is involved in property development, project management, construction, supply of building materials and insurance services.

PPHM is a registered Class A contractor and a listed Graded G contractor. PPHM has successfully completed various development projects for LTAT, the Ministry of Defence and several government agencies and private developers.

PPHM’s projects are mainly in the building of low cost housing, with projects in Bkt Jalil amd Mutiara Damansara in the Klang Valley as well as Mutia Rini in Johor.

LTAT also has a 59.28% stake in BStead Holdings Bhd, where property development is one of the core businesses.

It is uncertain whether LTAT will develop the new air forces base on its own or engage other experienced developers or construction companies. Observers say BStead, being a subsidiary of LTAT, may get a slice of the pie should the armed forces fund opt to involve other companies.

Friday, June 17, 2011

JOBST ... Jun11

The online recruitment market is growing rapidly, with job advertising volumes still registering high double-digit growth rates.

The full growth potential for online recruitment services is yet to be realised. This could be unlocked through the increasing broadband/Internet penetration in the Asia-Pacific region, migration from print to online advertising given its better value proposition and growing demand for convenient and efficient services.

JobStreet is sheltered from volatile prices of raw material like newsprint, whose costs are passed on by the print media via higher ad rates. Jobstreet has kept its ad rates stable with the aim of achieving a target mass before raising prices. Its largest cost item is staff (circa 55% of FY10 total operating expenditure), where a major item is sales commission. Hence, JobStreet’s margins are more resilient than other advertising media.

A US-based online job site,, acquired (third largest player) in Singapore on May 5 2011. This is the second acquisition of an Asia-based online job site after SEEK Ltd bought JobsDB in December 2010.

An industry consolidation is imminent with increasing appetite for the Asian market. And JobStreet could be an active participant in the consolidation process given its strong position in Asia-Pacific.

Thursday, June 16, 2011

Bjcorp ... Jun11

It is expanding its Kenny Rogers Roasters (KRR) chain of restaurants in China to tap the emerging economy’s huge population base. The company intends to set up new outlets in cities with populations of up to five million people each.

BCorp could use part of the proceeds from the sale of its 40% stake in Berjaya Sompo Insurance Bhd (BSompo) to finance its KRR ventures in China, the world’s second largest economy with a population of some 1.3 billion.

In May 2011, BCorp announced that Roasters Asia Pacific (HK) Ltd had obtained a business licence to establish a new wholly owned subsidiary, Kenny Rogers Roasters Catering (Shenzhen) Co Ltd (KRR Shenzhen), in Shenzhen, China. KRR Shenzhen will be wholly owned by Roasters Asia Pacific, which is a 100%-owned subsidiary of BCorp. According to BCorp, KRR Shenzhen plans to develop and operate the KRR chain of restaurants in China.

BCorp owns the global KRR brand through its subsidiary KRR International Corp. In April 2008, KRR International acquired the global brand, including its franchise rights, from US-based Nathan’s Famous Inc.

Berjaya Food Bhd (BFood), meanwhile, holds the exclusive franchise to develop and operate the KRR chain of restaurants in Malaysia. As at March 2011, BFood had 66 KRR outlets across Malaysia. The first restaurant was launched in 1994. BFood was listed on March 8 this year.

BCorp had also indicated that it planned to use proceeds from the sale of its stake in BSompo to finance its proposed development projects such as Berjaya Central Park, Berjaya Hills and Berjaya City, apart from the group’s food and beverage and automobile operations.

The conglomerate, via 51% subsidiary Changan Berjaya Auto Sdn Bhd, has been licensed by Chang’an Automobile Co Ltd — one of the largest manufacturers of passenger and commercial vehicles, buses besides special purpose vehicles in China­­ — to manufacture, assemble and distribute the Chana brand of motor vehicles in Malaysia.

Under a MoU between Changan Berjaya and regional market representatives, Malaysia will be made an export hub for the Chana right-hand drive vehicles for the Asean and African markets besides other right-hand drive vehicle countries.

Berjaya Brilliance Auto Sdn Bhd, a subsidiary of Changan Berjaya, has also been appointed to assemble and distribute Brilliance Jinbei commercial vans in Malaysia, and to export the vehicles across Southeast Asia.

BCorp, via subsidiary Berjaya Joy Long Auto Sdn Bhd (BJoy), has also signed a distributorship agreement with China-based Jiangsu Joylong Auto Co Ltd (JJA).
BJoy has been given the exclusive rights to sell, market and distribute JJA vehicles in Malaysia, Thailand, Indonesia, Vietnam, Cambodia and Laos.

Assembly and manufacturing of these vehicles is likely to be done in Malaysia.

BCorp has undertaken several notable corporate exercises involving its operating units in recent months.

In November 2010, BCorp said its subsidiary Inter-Pacific Securities Sdn Bhd (IPS), had signed an asset purchase agreement for the proposed sale of IPS’ existing business to a special purpose vehicle which would be jointly owned by IPS and Singapore’s Kim Eng Holdings Ltd.

On March 8 2011, BCorp completed the listing of BFood which operates the KRR restaurants in Malaysia.

On March 11 2011, the conglomerate’s founder and major shareholder Tan Sri Vincent Tan Chee Yioun announced his intention to privatise another of the group’s listed entities, Berjaya Retail Bhd (BRetail), which was floated some seven months earlier. Tan, via Premier Merchandise Sdn Bhd, is making an offer to acquire the remaining BRetail shares and irredeemable convertible preference shares he does not own at 65 sen a piece.

Faber ... Jun11

With the emergence of Malaysia’s pilgrim fund board Lembaga Tabung Haji (LTH) as one of major shareholders of Faber Group Bhd, chances of the latter securing renewal of crucial contracts and new projects, especially in the local and the United Arab Emirates (UAE) markets, will seem brighter now.

Over the past few months have been particularly concerned about the uncertainty of Faber’s 15-year concession in providing health support services to government hospitals in Malaysia being renewed. But with LTH backing now, the prospects of the concession being renewed have certainly improved, and this would certainly enhance investor confidence in the integrated facilities management and property solutions company.

The concession, which represented about 60% of Faber group’s revenue, was due to expire by the end of October 2011. It is understood that negotiations for the concession were still ongoing with the Ministry of Health.

LTH had acquired 36 million shares, representing a 9.9% stake, in Faber on June 2 2011 via an off-market transaction. This effectively made LTH the third largest shareholder in Faber after UEM Group Bhd (32%) and Universal Trustee (M) Bhd (12.7%).

Earlier, Faber had lost two UAE contracts worth RM184mil. This involved the contract for the provisions of civil, mechanical and electrical services for low cost houses at Madinat Zayed and Liwa, which expired in April 2011, and the contract for improvement, development, upgrading and maintenance of infrastructure facilities and projects at Madinat Zayed — Zone-1, which expired early June 2011.

The company still had a presence in the UAE market, which contributed 15% of the group revenue for its financial year ended Dec 31, 2010, through other existing projects.

Faber’s chances of securing new contracts in the UAE would likely improve with LTH coming in as one of its major shareholders. And should the company secure new contracts there, its overseas earnings visibility would definitely improve.

Also noteworthy was the fact that LTH had in its bag property projects in the local and overseas markets, and that would open further opportunities for Faber. For LTH, its investment in Faber made sense, given the latter’s recurring income position and consistent cash flow and dividend policy.

Faber made a net profit of RM14.15mil on revenue of RM198.19mil for the quarter ended March 31, 2011, compared with a net profit of RM14.39mil on revenue of RM183.98mil for corresponding period last year.

Its net cash position, on the other hand, improved from RM284.9 at the end of 2010 to RM318.5mil at the end of March 2011.
In April 2011, the company declared a final dividend of 8% less 25% income tax for its financial year ended Dec 31, 2010.

Wednesday, June 15, 2011

Paramount ... Jun11

Paramount’s education arm, comprising KDU University College, KDU College and Sri KDU private school, produced a pre-tax profit of RM23.2 million for FY10 ended December, on revenue of RM97.6 million. That made up about 20% of the group’s FY10 core pre-tax profit of RM116.3 million (excluding a one-off gain of RM60.8 million from the disposal of a 20% stake in Jerneh Insurance Bhd).

Applying a PER of around 15 times, below peers such as HELP International Corp Bhd and SEG International Bhd (SEGi), Paramount’s education arm, if listed, could be worth about RM260 million. Some sees the possibility of a listing a few years down the road to unlock value for Paramount, whose market value stood at about RM683 million on June 6 2011, based on a share price of RM5.66.

Its net assets per share stood at RM5.42 as at March 31, but less than 10 times historical PER for its core earnings.

The valuation of HELP may be a good gauge of how much Paramount’s education division could potentially be worth. HELP has a market capitalisation of RM373.6 million and is trading at a trailing PER of 17.2 times and 15.9 times forward PER. For FY10 ended October, HELP posted a pre-tax profit of RM26.68 million on a revenue of RM105.2 million. This makes HELP about 15% larger than Paramount’s education unit in terms of pre-tax profit and 8% bigger in terms of revenue.

If Paramount’s education unit is priced at a 15% discount to HELP in terms of market capitalisation, the unit, if listed, could be worth around RM317 million. This is equivalent to 46% of Paramount’s current (07 June 2011) market capitalisation, even though the education unit accounts for only 20% of core earnings.

Paramount’s education business has fared well with pre-tax profit coming in steadily at above RM20 million a year between FY07 and FY10. Currently, the division is on a new expansion drive which could potentially see earnings reaching a much higher level from FY14/FY15 onwards.

The expansion is for both the tertiary and private school units, explaining that a new RM400 million campus for KDU University College is under construction while the group is also starting its new international school programme this September.

However, the fruit from these efforts will only come a few years later. Due to the capital cost incurred for the construction of the new campus over the next few years, earnings from the tertiary education unit will drop and offset any increase in contribution from the private school.

Overall, the performance from the education division will not have many surprises until FY14/FY15 after the new KDU University College campus is completed.

The new KDU University College campus will be built in Glenmarie, Selangor,on land acquired from The Titular Superior of the Brothers of Saint Gabriel. Phase one of the campus will be completed in 2014, at a cost of RM250 million, to cater for 5,000 students. Phase two, to be implemented at a later stage at a cost of RM150 million, will further increase student capacity at Glenmarie to 9,000.

It was the planned RM400 million investment in the new campus that spurred speculation about Paramount floating its education division to raise fresh capital.

The group owns a 4ha plot of freehold land in Pulai, Iskandar Malaysia, which it has earmarked for its education division. However, there are no immediate plans for this piece of land.

Paramount’s education division has come a long way from FY05 when it posted an operating loss of RM3.1 million before turning around in FY06 with an operating profit of RM10.3 million.

It is surprising that as a developer, the group has committed to growing its education division over the years, instead of developing for immediate profit its valuable landbank in Penang, Damansara Jaya and Kota Damansara.

The RM400 million investment in the Glenmarie campus further entrenches Paramount’s commitment to education. Together with the expansion of its private school it is set to grow the group’s education division beyond its current annual pre-tax profit of over RM20 million.

HapSeng ... Jun11

Hap Seng Consolidated Bhd has allocated RM460 million for capital expenditure for this year, to grow its six core divisions, namely car distribution, plantation, building materials, financing services, property development and fertiliser.

On top of that, the diversified group has also set aside RM800 million to RM900 million for capital expenditure for the next three years. However, the sizable capital expenditure would not be spent on acquiring any gaming business.

Hap Seng was “not keen for the moment” to buy into Pan Malaysian Pools Sdn Bhd, a numbers forecast operator (NFO). Hap Seng is aware of the sale (of Pan Malaysian Pools)…but gaming is not a business that they are interested in. There could be some interested parties looking for them for funding purposes because Hap Seng is in the financing business…certainly it is not for investment purposes. Earlier market talk that the company is in partnership with Genting group to take over number forecast operator (NFO) Pan Malaysian Pools Sdn Bhd from Tanjong plc.

On the group’s operations, Hap Seng was looking for merger and acquisition opportunities all the time but was in no hurry to conduct any transactions.
Hap Seng has delivered a good set of results for FY10 ended Dec 31. Its net profit surged 174% to RM409.1 million from a year ago. Revenue grew 13% to RM2.8 billion from RM2.5 billion a year earlier. Earnings per share jumped to 57.34 sen from 17.79 sen for FY09.

The earnings growth momentum continued in 1QFY11. Hap Seng, a Mercedes-Benz dealer, recorded an unaudited net profit of RM109.2 million, up 90% from RM57.4 million for the previous corresponding period.

As at end-March, Hap Seng had cash and bank balances amounting to RM254.07 million, and receivables of almost RM928 million. On the other side of the balance sheet, the company had short-term debt of RM1.37 billion, while its long-term borrowings stood at RM790.9 million and shareholders’ funds stood in excess of RM3 billion.

It is also noteworthy that Hap Seng will be undertaking a rights issue to raise more capital after its recent share placement, which raised RM229.9 million.

The company also planned to reduce its dependence on the plantation division as it continued to grow other core businesses. The plantation division was currently contributing 50% to the group’s earnings.

On property development, the group is building Menara Hap Seng 2, which is adjacent to Menara Hap Seng. It is a 30-storey building, with a net lettable area of about 320,000 sq ft, expected to be completed in 2012. Meanwhile, the group also plans to develop an office tower on a parcel of land, also adjacent to Menara Hap Seng, near the junction of Jalan P Ramlee and Jalan Sultan Ismail.

Its property division has about 2,350 acres of undeveloped landbank. In addition to this, there are on-going projects on 191 acres of land, with another 739 acres still at planning stage.

After plantation, the auto division was the second best performer in the group for FY10, registering a 67% growth in revenue to RM592.3 million from a year ago.

For its auto business, the group is focusing on expanding in Vietnam.

Hap Seng is controlled by the family of the late Tan Sri Lau Cho Kun @ Lau Yu Chak. The low profile Lau family owns about 71.73% of the company via its vehicles Gek Poh (Holdings) Sdn Bhd and Pembangunan Melati Sdn Bhd. The Lau family, which comes from Sabah, is among the wealthiest in the country, and its patriarch Tan Sri Lau Gek Poh died a few years ago.

Tuesday, June 14, 2011

BPPLAS ... Jun11

BP Plastics Holdings Bhd expects to get an approval from the Cambodian government soon to start a rubber plantation there.

BP Plastics decided to venture into rubber cultivation in Cambodia due to the availability of arable land and the low cost there.

The company had acquired 100% interest in BPPlas Plantation Sdn Bhd in June 2010 and set up a wholly-owned subsidiary, Baoman Rubber Ltd, in October. It had applied for concession rights to cultivate rubber trees on 10,000ha government-alienated land in Mondulkiri, on the northeast of Cambodia.

For the financial year ended Dec 31, 2010, BP Plastics registered a net profit of RM17.13mil on revenue of RM220.75mil compared with RM15.61mil and RM175.21mil respectively in the previous year.

DRBHcom ... Jun11

It is well-positioned to post strong earnings growth across all three of its business divisions in the coming years.

DRB-Hicom is on track to begin making its maiden deliveries of vehicles to
Volkswagen (VW) by end-2011.

VW’s aggressive strategy to be the global automotive leader by 2018 involves
increasing its global footprint and presence in emerging markets. The defence equipment business is also set to be a major contributor from the RM7.5 billion armoured wheeled vehicles contract. Hardware deliveries are expected to commence in earnest in 2012 contributing to FY13 earnings.

To date, DRB-Hicom’s property development business has been relatively piecemeal and lacking scale, focused on developing legacy landbank. The acquisition of 614ha of development land in the heart of the Iskandar Development Region in Johor will transform DRB-Hicom into a significant property developer. Estimate that the township development could have a gross development value of over RM5 billion over the next 10 years.

The acquisition of a 32.2% stake in Pos Malaysia for RM622.8 million from Khazanah Nasional Bhd. The sovereign wealth fund is expected to complete the transfer by mid-2011. Management’s immediate priority is to contribute to the streamlining of its core postal businesses, including growing the postal operator’s mail, courier, and retail businesses, including strategic alliances with domestic and global players to make further inroads into the logistics sector.

Improved investor understanding of the group’s myriad businesses could reduce the valuation discount to other conglomerate peers as well as the higher than average holding company discount of 25% used to derive our sum-of-parts fair value.

The key risks include: (i) lower car sales; (ii) unfavourable forex movements; (iii) higher interest rates; (iv) prolonged disruption to the global automotive supply chain; and (v) rising fuel costs.

Monday, June 13, 2011

XOX ... Jun11

The company reported a net loss of RM1.67mil for the three-month period ended March 31, mainly due to the selling and distribution expenses necessary in creating brand awareness for XOX's services. Revenue for the period was RM12.69mil on the back of about 391,000 subscribers.

Industry observers say XOX's expenses to boost its brand awareness were necessary or else it will just lose market share to competitors.

As a full-fledged MVNO, XOX was able to ride on Celcom Axiata Bhd's network for infrastructure, meaning that costs on infrastructure would be minimal. Consequently, proceeds from the IPO would be used mainly for branding and customer acquisition activities.

Nevertheless, XOX predominantly targeted the Chinese community, which includes blue-collars, business owners, foreign Chinese nationals and youths. As per agreement with Celcom, XOX's advertising and marketing activities can only be in English and Mandarin. While this does not restrict XOX from acquiring other customer segments, it would limit the company's opportunity to reach out to the Malay populace.

XOX's entrant as a niche player to cater for the ethnic Chinese seems to be a viable idea, with strong backing from its MVNO, Celcom, which looks at it as a win-win situation as Celcom does not concentrate on this segment.

XOX lacked both financial and operations records. The company had been loss-making for the past four years. And marker observers do not hold as much confidence as XOX's management on its spirited forecast for its current financial year (FY11) in terms of subscriber acquisition and higher ARPU (average revenue per user) assumptions.
According to its prospectus, XOX expects a net profit of RM19.7mil for FY11 against a net loss of RM15.9mil posted a year ago. It also anticipates revenue to surge more than 10 times to RM249.5mil from RM20.1mil achieved in FY10.

It posted a net loss of RM1.66 million for its first quarter ended March 31 (1QFY11).

The loss after taxation was mainly due to the selling and distribution expenses that were necessary to create brand awareness of XOX’s services.

XOX is a mobile virtual network operator (MVNO) that rides on Celcom Axiata Bhd’s existing network to provide mobile services. It was granted 1.5 million service numbers by the Malaysian Communications and Multimedia Commission (MCMC) in 2008, and is targeting to grow its services among the local Chinese speaking market.

For 1QFY11, XOX posted revenues of RM12.7 million on the back of about 391,000 subscribers.

During the current quarter XOX has also managed to record an average revenue from sales of recharge of approximately RM30 per user per month.

Despite the losses in 1QFY11, XOX is still positive that it could meet its profit forecast for FY11.

Its FY11 financial performance would be dependent on growth of the subscriber base and average monthly revenue from the sales of recharge voucher.

XOX hopes to achieve this by increasing its distribution channels to allow subscribers wider and easier access to recharge vouchers, and thus increasing customer retention. It also plans to introduce new products and services such as Mobile Wallet, Social Network Portal and other additional convergence subscription plans.

XOX currently has 400,000 subscribers, and plans to grow its subscription base to 1.5 million by year-end 2011.

Correspondingly, the group forecasts to attain higher monthly average revenue per user (Arpu) of RM40.30 from convergent subscribers, and RM76 from postpaid subscribers in FY11.However concerned is that XOX’s growth guidance of 300,000 new subscribers per quarter as “ambitious” given the other mobile operators only saw an average of 248,000 new subscribers per quarter in 2010.

E&O ... Jun11

Sources say it is likely to see some changes in its shareholding, which could even lead to new names appearing at the helm of the company.

It is learnt that some of the major shareholders are prepared to exit the company which has attracted interest from local and foreign property companies. If such a deal materializes, it could see another large property company on Bursa Malaysia.

E&O’s MD Datuk Tham is the largest shareholder with a direct stake of 6.65% and an indirect stake of 9.04%. Other shareholders include Singapore based GKK Investment Holdings Ltd, with a shareholding of 11.73% and Puan Sri Nik Anida, wife of Tan Sri Wan Azmi Wan Hamzah, who holds an indirect 11.8% stake. In May 2011, ECM Libra Financial Group also emerged in E&O with a 5.62% stake.

Is should be noted that AMCorp Group Bhd head Tan Sri Azman Hashim owns ECM Libra through his family company Equity Vision Sdn Bhd.

There is keen interest in the company and there are some shareholders is prepared to divest their stake.

In fact E&O is run by a set of professional managers led by executive director Eric Chan.

E&O has a landbank totaling 16722 acres. Land held for property development was worth rm681 million as at April 2011.

It is the company’s dominance in Penang that may be a bigger attraction. Of its existing landbank, E&O’s biggest plot in the Klang Valley is the 309 acre in the Ampang area.

In Pennag, E&O’s presence is its ongoing development of its Seri Tanjung Pinang project that spans 980 acres of reclaimed land. In addition to property development, E&O’s other core businesses include hospitality and lifestyle. The first phase carries a gross development value of rm3 billion, with the second having a possible DGV of up to rm12 billion.

E&O had been quoted as saying that E&O was looking to expand its reach beyond Malaysia.

Friday, June 10, 2011

MMHE ... Jun11

MMHE is entering into a MoU with Sime Darby Engineering to acquire its 130-acre Pasir Gudang yard for RM399 million cash, as it will radically transform Malaysia’s fabrication landscape.

Including Petroliam Nasional Bhd’s (Petronas) Teluk Ramunia yard, MMHE will have access to the country’s largest domestic fabrication yard of 672 acres, which is 3.5 times Kencana Petroleum Bhd’s current 192 acres.

While the Pasir Gudang yard will be partly utilised for its existing Oil and Natural Gas Corp and Kebabangan jobs, the Pasir Gudang and Petronas’ Ramunia yards offer ample additional fabrication capacity which will underpin MMHE’s re-accelerating earnings momentum and growing deepwater expertise.

MMHE remains one of our top picks for the oil and gas sector due to …

(1) Capacity expansion stemming from Sime Darby Engineering’s Pasir Gudang yard, which will accelerate order book recognition, drive margin efficiencies and enhance MMHE’s deepwater capabilities.

(2) Further upgrades in consensus margin assumptions given the possibility of a quick turnaround from the reaping of “low-hanging fruit” efficiencies under the new managing director/CEO from Technip’s subsea division.

(3) Significant additions to the group’s net order book of RM3 billion from the prolific wave of upcoming projects by 2H11 as half of MMHE’s Pasir Gudang yard will be unutilised when the topside structure of the Gumusut-Kakap floating production storage semi-submersible is lifted onto its hull.

(4) New margin benchmarks for MMHE’s tenders of over RM5 billion comprising more complex structures than the jobs undertaken by other domestic operators.

Thursday, June 9, 2011

Benalec ... Jun11

The group has entered into an agreement with Vista Selesa Development Sdn Bhd for the proposed disposal of land in Klebang, Melaka.

The land measures 2,977,736 sq ft, with a 99-year leasehold period. It is strategically located within seven km west of Bandar Melaka and 15km southwest of Ayer Keroh town. In the future, it will also have direct access from the proposed Coastal Highway which links Duyong, Mahkota Parade, Kota Laksamana and Klebang.

Benalec will receive a total cash consideration of RM46 million for the first portion of the land measuring 1,627,405 sq ft (about 15ha). For the remaining portion, Benalec has entered into a joint venture with Vista Selesa to develop 1,350,331 sq ft (12.5ha) of land into a mixed development project. Under the deal, Benalec would either receive a cash consideration of RM38 million or 25% of the project’s estimated gross development value, whichever is higher, when it is completed in 2013.

Benalec also announced that it has proposed to undertake a private placement and a share buyback exercise of up to 10% each of its share capital.

Taken together with Benalec’s net entitlement to the land sale on the first portion and estimated proceeds from any proposed private placement, estimate that Benalec could potentially raise proceeds of about RM144 million.

The latest move is part of Benalec’s strategic positioning to raise capital ahead of more value-accretive deals in the future. It intends to use part of any new monies raised to fund its upcoming Kota Laksamana project in Melaka.

The 101ha Kota Laksamana land holds immediate development potential as it sits on prime seafront land within the Melaka city centre. Benalec is in the process of obtaining approvals from the authorities and the project could kick off by 4Q2011. The group is also open to forging strategic partnerships with reputable developers to realise the deeply-embedded value of the land.

Based on land sales alone, estimate that Benalec could reap a net gain of RM80 million or about RM27 million per year over a three-year period based on a conservative value of RM28 psf.

Wednesday, June 8, 2011

GenM ... Jun11

Lim’s Genting Malaysia Bhd bagged for US$236 million (RM713 million) a 13.9-acre tract of waterfront land in northern downtown Miami to be used for a mixed development that would include hotels, restaurants, residences, retail shops and a convention centre. But there’s little doubt that he can to also get a gaming licence there.

Genting group, Wynn Resorts and Adelson’s Las Vegas Sands Corp in 2011 hired a stable of lobbyists to push through a bill that would give them the chance to bid for a licence to operate an exclusive casino resort in any of the five cities in Florida — Miami, Jacksonville, Tallahassee, Tampa and Orlando — where Walt Disney World is located — The land Genting Malaysia bought includes the building which houses The Miami Herald Media Company.

The lobbying began since the Seminole Tribe of Florida won exclusive rights to offer slot machines as well as other casino favourites like black jack and baccarat within tribal areas two years ago. Giants of the casino world have reportedly been lobbying for a chance to set up shop in one of the US’ most popular tourist destinations. The existing revenue-sharing model where the tribe pays the state at least US$150 million a year through 2015 will stop if additional gambling were to be authorised by the state.

To win, lobbyists will need to prove the economic good to the state and its people far exceeds the potential social impact from a possible rise in negative activities associated with gaming. In his 30-page letter vetoing a US$400,000 study on the feasibility of bringing casino resorts to Florida, Governor Rick Scott did say he thought it “important to have a full consideration of the positive economic impact, the costs that may result from this policy, and the impact on current gaming in [the] state” — leaving the door open for the casino lobbyists.

Even without a casino licence just yet, Genting Malaysia sees the Miami land acquisition as “an integral step” in its pursuit of expanding internationally in the leisure, hospitality and entertainment industry. The envisioned Resorts World Miami represents Genting Malaysia’s second venture in the US, after Resorts World New York at the historic Aqueduct Racetrack in New York City.

However, not everything that the Genting group has touched has turned to gold, though. Its five casinos in London and 38 others in the UK, for instance, have yet to be a big money spinner, though efforts have been underway over 2010 to revamp the operations there.

As Genting group’s cash pile from the Malaysia and Singapore casinos grows, some investors think it should return more cash to shareholders instead of putting money in unrelated pursuits or lofty projects that may take some time to pay off.

Meanwhile Genting Malaysia Bhd's land acquisition in Miami, Florida for US$236mil is seen as the way to diversify its earnings base and spur growth going forward.
The move was viewed positively given the choice location of the waterfront property as Florida attracted up to 82.3 million visitors in 2010, of which 87% were local visitors.

However the announcement has made no mention of casino operations but the announcement will be in due course as licences would be required from the Miami-Dade County.

It was reported that Genting Malaysia would fund the US$2bil development cost of the project without stating the funding details.

The deal will position Genting Malaysia to capitalise on the potential liberalisation of “resort-style” gaming in Florida. But here was a question mark over whether the Florida state government would liberalise such gaming in the state.

This purchase, however, is sizeable, indicating the group's confidence in the success of the mixed development project.

Assuming bank borrowings of US$200mil (85% of total price), estimate that its net cash will fall by about 33% to RM1.5bil. The total price accounts for less than 1% of the group's shareholders' equity.

While it is still early to assess earnings impact for RWM, do not expect any meaningful contribution over the next two to three years (2011-2013). Genting Malaysia's foray into the United States, if successful, will help diversify earnings base and spur growth.

Tuesday, June 7, 2011

Maxis ... Jun11

Increased gearing has started to take a toll on Maxis Bhd’s earnings as the telco giant moves to gear up its capital structure.

For 1QFY11 ended March 31, Maxis’ total borrowings rose to RM5.6 billion from RM4.9 billion previously, with its debt-to-equity ratio at 0.65 times.

Due mainly to higher net finance costs from additional borrowings, net profit for 1QFY11 declined 2.35% year-on-year (y-o-y) to RM539 million from RM552 million in the previous corresponding quarter.

On its current gearing, the group could still gear up to 1.4 to 1.5 times (debt-to-equity ratio) if needed. It needs to invest more capex (capital expenditure) to get bigger future revenue.
Other than earnings, Maxis’ group revenue also declined marginally by 0.9% y-o-y to RM2.13 billion from RM2.15 billion due to reduction in voice, interconnect and international gateway services revenue.

Maxis was scaling down its low margin international gateway services business. The segment contributed about RM400 million of revenue last year.

Maxis saw strong growth momentum in non-voice revenue. During the quarter, non-voice contribution to the total mobile revenue jumped to 42.1% from 34.8% for 1QFY10. Non-voice revenue grew 22% y-o-y to RM857 million from RM704 million.

While total revenue was sluggish during the quarter, Maxis’ Ebitda margin rose to 51.1% from 50.3% in the previous corresponding quarter.

With the voice market becoming increasingly saturated, strong cost optimisation was essential to offset pressure on margins.

Y-o-y average revenue per user fell to RM49 from RM52 previously.

Maxis crossed the 14.1 million total subscription in the first quarter 2011, of which 3.3 million were postpaid and wireless broadband subscription while prepaid subscription was 10.8 million. Total subscription numbers were 12.7 million and 14 million for 1QFY10 and 4QFY10 respectively.

During the quarter, Maxis also applied stricter subscription definition for reporting purposes. Postpaid, including wireless broadband, subscription base excludes subscriptions that have been barred for more than 50 days prior to the reporting date while prepaid subscription base excludes subscriptions that do not have any revenue contribution for more than 50 days prior to the reporting date.

Based on the new definition, Maxis subscription base for 1QFY11 was 12.7 million, instead of 14.1 million.

The agreement between Maxis and Telekom Malaysia Bhd for the former to have access to the latter’s high-speed broadband network would enable it to reduce capex to about RM1.3 billion in 2011 from the RM1.5 billion planned earlier. Maxis’ capex in 2010 was RM1.4 billion.

Petra ... Jun11

It has moved a step closer to playing a part in Petronas’s development of marginal oilfields.

It signed a MOU with Labuan Shipyard & Engineering Sdn Bhd to utilize Labuan Shipyard’s facilities at Victoria Harbour, Labuan for its fabrication activities. Under the MOU, the two parties may also explore areas for cooperation to collaborate on projects pertaining to leasing of fabrication yards, fabrication works and storage facilities.

Observers sat it was an ordinary business arrangement that allows Petra Energy to lease the required yard space to support its RM400m Petronas Carigali HUC work at a stable, pre-agreed rental rate.
Petra Energy will join a consortium to bid for a marginal oilfield development contract by Petronas in Sabah and Sarawak.

They are targeting a strategic partner for the development of marginal oilfields. They are looking for a foreign partner to do the design, preferably on from Europe or Australia.

Its target is to have everything ready by 3Q2011. It will be well prepared for the planning during the final quarter and ready for marginal oilfield development in Jan 2012.

Petra Energy is 29.55% owned by offshore support services outfit Petra Perdana and 30% owned by Sarawak businessman Datuk Bustari Yusuf.

Even if it loses the bid for the development job, Petra Energy would still benefit from sub contracts handed out by the winning bidder.

Its fundraising exercise could be slated for 2H2011 to beef up Petra Energy’s capital base, enhance its working capital and reduce its borrowing costs.

The company has rm900 million in unbilled sales, which will provide visible contract billings for the next two years.

Its current order book includes the rm400 million hook up and commissioning job awarded by Petronas Carigali Sdn Bhd in Dec 2010.

The company returns to the black in 1QFY2011 ended March 31 after it completed its kitchen sinking exercise in Dec 2010.

Given that all the kitchen sinking activities were completed in 4QFY2010, expect the company to deliver a more stable performance in the coming quarters, especially after securing the rm400 million hook up and commissioning job from Petronas Carigali in Dec 2010.

However, marginal oilfield development is a high risk high return job. Will Petra Energy which specializes in vessel chartering and HUC activities be able to climb the value chain to participate in upstream exploration and production?

Monday, June 6, 2011

BREM ... Jun11

Brem Holdings is backed by a steady stream of income from property development projects in Kuala Lumpur and stable inflow of cash from its water concessionaire arm, PNG Water Ltd.

The total land bank of approximately 258 hectares (639 acres) in the Klang Valley and Sungai Petani, Kedah, as well as a total Gross Development Value (GDV) of at least RM2.94 billion and an outstanding order book of RM540 million, provides the company with steady earnings visibility for the property development units.

Meanwhile, its 51 per cent-owned PNG Water, which has been contributing a stable recurring income at an average of RM12 million annually, will continue to be a boon in bolstering its earning base.

Taking into consideration the water concession which is not due to expire until 2019, its annual growth is steady but gradual, and foresees this trend continuing up till the concession expires.

KNM ... Jun11

Its plans for oil sand production a few year ago failed to materialize when crude oil prices fell to about US$30 a barrel at the end of 2008. Oil sand production was deemed not viable owing to the high production cost involved, of about US70 a barrel.

But now that crude oil prices have climbed to more than US$120 a barrel, it makes commercials sense for KNM to resume oil sand production.

The rising demand for oil sands augurs well for KNM. KNM’s oil sand plant in Canada, which was completed in Aug 2008, should see an improvement in its utilization rate. This will boost the company’s earnings.

It is an alternative way to secure oil resources, given the depleting conventional oil reserves.

Oil sands are a type of petroleum deposit that can be found across the globe. Canada and Venezuela are said to have huge deposits. These deposits are seen as a portion of global oil reserves as the costlier crude oil and new technology allow oil sands to be extracted profitably.

KNM executive chairman and CEO Lee is the largest shareholder in KNM with a combined indirect stake of 22.72% as at Dec 2010.

Owing to the poor demand for oil sands caused by the plunge in crude oil prices during the global financial crisis, the company decided to convert the plant to undertake service related jobs.

In April 2011, Moody’s Investors Service expect sustained interest from oil majors to develop unconventional hydrocarbon reserves, such as oil sands and shale gas, as high oil prices have made them commercially viable. However they also involve higher development risks owing to cost overruns, delays and technological challenges.

The possible revival of KNM’s oil sand project could be the wildcard to give the company’s earnings a boost.

In May 2011, KNM had secured a rm218 million contract from Russian oil and gas major. In Nov 2010, it secured a US$216 million gas condensate project in Uzbekistan. It has an order book of rm5.4 billion.

Sunday, June 5, 2011

Microwave water

A 26-year-old guy decided to have a cup of coffee  He took a cup of water and put it in the microwave to heat it up (something that he had done numerous times before).                  
I am not sure how long he set the timer for, but he told me he wanted to bring the water to a boil.  When the timer shut the microwave oven off, he removed the cup from the oven. As he looked into the cup, he noted that  the water was not boiling, but instantly the water in the cup 'blew-up'  into his face.                                                          
The cup remained intact but the water had flown out into his face due to the build up of energy.  His whole face is blistered and he has 1st and  2nd degree burns to his face, which may leave scarring.  He also may lose partial sight in his left eye..  While at the hospital, the doctor who was attending to him stated that this is a fairly common occurrence and water  (alone) should never be heated in a microwave oven.  If water is heated in this manner, something should be placed in the cup to diffuse the energy such as a wooden stir stick, tea bag, etc.  It is however a much safer choice to boil the water in a teakettle.     

General Electric’s (GE) response:                                    
Thanks for contacting us. I will be happy to assist you. The e-mail that you received is correct.  Microwaved water and other liquids do not always bubble when they reach boiling point.  They can actually get superheated  and not bubble at all.  The superheated liquid will bubble up out of the cup when it is moved or when something like a spoon or teabag is put into it.  To prevent this from happening and causing injury, do not heat any liquid for more than two minutes per cup.  After heating, let the cup stand in the microwave for thirty seconds before moving it or adding anything into it.