Thursday, November 29, 2012

Redtone ... Nov12

When there is a tender that comes on board, it will participate in the bidding. It is eyeing three government contracts. Moving forward to the second and third quarters, it expects a significant growth in profit as a lot of projects have already been billed.
Its strategy is capex light. The capex to build a WIFI infra is lower than other internet connections’ infra structure. Furthermore, the project in Sabah would create a critical mass for the group’s future investments in the state. It is going to boost its profitability.
Government projects secured by Redtone make up about 30% of the company’s data revenue. It plans to increase to 50% by end 31 May FY2013.
Its internet date segment is also the current (Nov 2012) major contributor to group earnings and expect to be around 50% and 60%.
Redtone’s strategic collaboration with MAXIS will commence early 2013. The collaboration will see REDTone debut its 4G LTE mobile broadband services by riding on MAXIS network. It will also provide the opportunity for the group to provide 2G and 3G services.
The group’s other segments are voice and prepaid and reload services for its China market.

Tuesday, November 27, 2012

MRCB ... Nov12

The rising valuations of MRCB is complicating a proposed asset injection exercise that would pave the way for the Gapurna group to emerge as a substantial shareholder in the construction company.
Unless the Gapurna group ends up with a meaningful stake of at least 20% stake, it would not be keen on pursuing the deal.
The vehicle that is being injected into MRCB is Nusa Gapurna Sdn Bhd, a company that has 60 acres of prime land in several locations in and around KL.
The Gapurna group, headed by MD and founder Datuk Mohamed Salim Fateh Din, has a 60% stake in Nusa Gapurna while the EPF holds the rest.
The valuation of the landbank owned by Nusa Gapurna is said to be between rm900 million and rm1 billion. The asset to be injected in exchange for shares.
But based on the current share price (25 Nov 2012), Gapurna will not be able to end up with a stake of at least 20%. That being the case, the group may not want to do the deal.
Based on the price of rm1.66 and assuming Nusa Gapurna is injected into MRCB, Gapurna group would end up with about 18% equity stake. It would not be an attractive proposition for the group.
The other option is to inject more land into Gapurna to increase its valuation. That is not a likely option because at the end of the day, the group would be looking at the true valuation of MRCB.
Even after the proposed injection of Nusa Gapurna, the EPF will still very much be the largest shareholder in MRCB with its 40% stake in the former.
Nusa Gapurna’s crown jewel is a 40 acre site in PJ that is being developed into a prime commercial and transport hub. The Selangor State Development Corp (PKNS) has a 30% stake in the project that will be called PJ Sentral garden City.
Besides the land in PJ, Nusa also has land in SJ and Jln Ampang.
The biggest benefit for MRCB from the deal is the 40 acre site would allow it to continue working on prime urban land after completing the KL Sentral project. The Nusa landbank will keep it going for a few more years.
MRCB is a majority owned by the EPF.
The injection of Nusa Gapurna into MRCB would see the immediate land for development,
Apart from replenishing MRCB’s urban landbank, the proposed transaction would see the Gapurna group taking the lead in the management of the company.

Wednesday, November 21, 2012

MPHB ... Nov12

Expectations of dividend payouts, appreciating landbank value and the listing of its MPHB Capital in 2013.

2800 acres of MPHB’s 4600 acre land bank in Pengerang Johor had been compulsorily acquired for the Petrochemicals Integrated Development (RAPID) at 93 sen per square feet, well below its assumed value of rm1.68 per square feet which could see MPHB seeking arbitration for the land price.

The great majority of land in the vicinity was compulsorily acquired at rm2.80 to rm8.00 per square feet. Therefore, do not rule out the possibility that MPHB may seek arbitration in order to increase the price at which its land is acquired.

The rapid infra development in Southeast Penang has also benefited MPHB, as its 81 acre land in Teluk Tempoyak can now (Nov 2012) command double its value at rm100 per square feet.

Its non gaming arm will be listed on Bursa Malaysia by Jan 2013.

MPHB’s non gaming businesses (under MPHBC) will be de-merged from its gaming business. MPHBC listing is slated for Jan 2013.

Tuesday, November 20, 2012

Jetson ... Nov12

The Shapadu Group is set to emerge as a strategic shareholder in construction concern Jetson, in a bid to beef up its property and infra division.

The privately held Shapadu, which derives most of its earnings from oil and gas activities, will take up the lion’s share of a proposed placement exercise by Jetson.

In Oct 2012, Jetson proposed a share placement plan involving up to 8.19 million new rm1 shares to raise working capital at indicative price of rm1.18 per placement share.

Jetson will then undertake works on Shapadu’s construction projects. The collaboration with Jetson will bode well for Shapadu’s construction arm, which is currently (Nov 2012) bidding for about rm500 million worth of jobs.

The current (Nov 2012) construction team at Shapadu is new and small. So with Jetson in the picture, they have a better chance in construction bids.

Shapadu, which has an oil and gas order book of about rm1.2 billion has been expanding into property development for the past two years prior to Nov 2012. The group is currently (Nov 2012) developing over 100 terraced houses in Terengannu.

Jetson has other assets that do not depend on the cyclical construction sector. In fact it derives the bulk of its revenue from its manufacturing division, which produces natural and synthetic rubber moulds for the auto industry.

It also has a 25 year concession to manage a hostel and accommodation for UPM students under the BOT concept.

Together, almost 90% of Jetson’s revenue comes from manufacturing and the management of hostel while the remainder comes from construction and property.

Monday, November 19, 2012

MRCB ... Nov12

The government is planning to revive a plan to build a railway for freight trains to ease the congestion in KL’s central hub, and a JV led by state controlled MRCB has emerged as the front runner to wrest control of the roughly rm3 billion infra undertaking.

According to the proposal, MRCB and DMIA Sdn Bhd have jointly submitted a plan to build a railway line for freight trains, lining Serendah to Port Klang to hel ease the bottleneck at the KL-Sentral area.

The plan has received the backing of key government ministries, is expected to be submitted to SPAD as early as Dec 2012.

Meanwhile, industry observers say MRCB and DMIA have considerable headway in their plans and could secure the job as early as 2013. However, industry executives say several other companies are also eyeing the project and are expected to submit competing proposals in the coming weeks from 19 Nov 2012.

As at end June 2012, MRCB had cash and bank balances amounting to rm490 million and had long term debt commitments of rm1.08 billion and short term borrowings of rm897 million. It also had rm1.4 billion in shareholders’ funds.

DMIA is 50.4% controlled by Subramaniam. The other shareholders are Datuk Salehudin Abdullah (20%), Jacqueline Earthayanthan (15.2%) and Nazreen Ahmad (14.4%).

DMIA partnered MRCB for the beautification and upgrading of Little India in Jln Tun Sambanthan KL as well as other developments plans in the Brickfields suburb.

Meanwhile Gapurna Sdn Bhd, a company said to bge 40% held by EPF confirmed that it is in talks with MRCB for a merger between its unit Nusa Gapurna Development Sdn Bhd and MRCB via a share swap.

It was rerported that a possible merger between Gapurna which is linked to businessman Datuk Mohamad Salim Fateh Din, with MRCB. Gapurna owns about 60 acres of prime land in Klang Valley, worth between rm11 billion to rm13 billion.

However Gapurna has not decided yet whether to inject its entire land banks into MRCB or to just select a few to be included in the deal.

Friday, November 16, 2012

SKPetro ... Nov12

It has secured two new contracts a RM700mil underwater services contract (inspection, repair and maintenance) from Petronas Carigali for 3 years effective October 2012 and a RM136mil well-head platform fabrication job from Hess for the North Malay Basin project's early production system, to be completed by the first quarter of 2013. SapuraKencana had been the frontrunner for these projects, given its lead in fabrication, drilling, offshore support, underwater and installation services.

SapuraKencana has secured about RM4bil worth of new wins year-to-date (Nov 2012), taking its order book to RM15.3bil, the highest in Malaysia's oil and gas industry. This will provide strong earnings visibility for the next three years from 2012.

More contracts may be awarded over the next few months from Nov 2012 after a lull in the first half of 2012. SapuraKencana remains the clear favourite for Petroliam Nasional Bhd's (Petronas) tenders, given its established integrated services.

Its strong RM25bil tender book also indicates healthy contract replenishment in the pipeline.

There are more re-rating catalysts on the horizon arising from Petronas' capex spending.

Meanwhile it has proposed to acquire the tender rig business, of Seadrill Ltd for US$2.9 billion, a deal that would position it as the world’s largest owner of such oil and gas assets and increase the Norwegian company’s interest in the Malaysian listed entity of almost 13%.

Under the proposed transaction, SKPetro would acquire 10 tender rigs wholly owned by Seadrill, acquire the remaining 49% equity interest in the existing five rigs and in 2013 take delivery of three rigs that are currently (Nov 2012) under the construction. This would bring the number of rigs in its stable to 22 making it the world’s largest owner of tender rigs.

Seadrill will be paid in shares worth US$350 million – in an exercise that will see its interest increase from 6.4% stake to almost 13% stake. This would put the company almost on par with SKPetro second largest shareholder, Datuk Mokhzani Mahathir. SKPetro will fund the balance of the US$1.39 billion through a mix of bank borrowings and a seller’s note of US$187 million.

Seadrill will, to support this position, receive a minimum of US$350mil in new shares of SapuraKencana. This comes in addition to the 6.4% stake that Seadrill presently owns in SapuraKencana.

Seadrill is disposing of the tender rig business in return for a bigger stake in the holding company. It is going into assets that are used in ultra deep water drilling. As for SKPetro, this is an opportunity to increase its asset size within a minimal space of time.

The biggest plus point for SKPetro is that John fredriksen, the chairman of and president of Seadrill will sit on the board of SLPetro. He rarely sit on the boards of companies outside his stable.

After the exercise, Seadrill’s strategic stake will raise from 6% to 13% and lead to two board representations, which may include Seadrill’s founder and major shareholder John Frederickson. This will assuage investor concerns that Seadrill may be planning to dispose of its stake in SKPetro.

This exercise will further fortify the strategic alliance with Seadrill in expanding the group’s global footprint, particularly in Brazil where SKPetro is hoping to jointly bid for three additional pipe laying support vessels in addition to the current (Nov 2012) three under construction.

While news flow for local domestic fabrication contracts is slowing down (Nov 2012), SKPetro’s forward earnings momentum has re ignited with this new asset injection and dissipating concern over a potential stock selldown by Seadrill.

Both companies had entered into a non-binding memorandum of understanding to combine and integrate both companies' tender rig businesses. The enlarged tender rig business under SapuraKencana would comprise, 16 tender rigs in operation, and an additional five units currently under construction.

In addition SapuraKencana would also be offered the right to be the manager for three further tender rigs which are not part of the transaction.

The operating rigs and the newbuilds were currently contracted under long-term fixed price contracts with Chevron, Shell, PTTEP, and Petronas Carigali.

The total order backlog amounts to US$1.55bil as of end of October 2012. The majority of the operating rigs are currently deployed in Southeast Asian waters. Of the 15 operating rigs, nine are barges and six are semi-tenders, which are capable of operating in water depths of up to 6,500 feet.

One of the main objectives of the transaction is to develop a strong leading player in the Far East market.

Wednesday, November 14, 2012

MBSB ... Nov12

Over the years, it has evolved from giving out just home loans to providing retail and corporate loans as well as civil servant personal financing. Now (2012) it has set its sights on a banking license that will crystallize its status as a full fledged financial institution.

However its CEO said that it is no rush to get a banking license but is moving towards becoming a banking entity in the near future. At this juncture, it is tying up the loose ends and improving business operations so that MBSB will behave like a bank when it is ready the banking license.

In 2013 would be good for MBSB, among the gaps (moving towards being a bank) is the group’s capital. Currently (Nov 2012), it is doing to close the gap. The gaps are in business, operations, capital and everything else that requires it behave like a bank.

It has been adhering to BNM’s guidelines although it is not required to do so, as it prepares itself to be declared a bank.

A critical step for MBSB to become a bank is its target to go live with its new core banking system.

A banking license would be good for MBSB as it would formalize its best practices. MBSB is already in compliance close to compliance with most of the requirements, so it would not make much a difference.

A license would lower financing costs for MBSB and allow it to tap the interbank market. At the same time, it would open up new types of securities that MBSB could offer.

It is true that MBSB will have to comply with the stricter guidelines, but that will give shareholders more confidence in the company, knowing that it has regulatory oversight.

However other said that MBSB will not try and become a full blown commercial bank. MBSB is likely to continue to focus on its niche which has been very lucrative.

The company, in which the EPF has a 64% stake could always take the route of a development financial institution and be governed by the DAFIA instead of falling under the BAFIA.

MBSB is an exempt finance company that was given the green light by the MOF in 1972 to undertake a financing business in the absence of a banking license. It is not subject to BAFIA or BNM’s responsible lending guidelines but is answering to the MOF.

Unlike other financial institutions, MBSB may finance loans with a loan to value ratio exceeding 70% for a third mortgage and above, a ruling that was enforced in 2011. However personal financing accounted for the bulk of its current’s loans, amounting to rm16.78 billion of 65% of total loans as at Sept 30, 2012.

Be that as it may, MBSB’s growth has been impressive. MBSB’s NPL is also at a record low at 4.33%. On Dec 31, 2011 the NPL stood at 8.85%.

There were even rumors of a takeover by RHB Cap Bhd, in which the EPF has a 44.84% stake. However nothing has come of that and RHB Cap is in the midst of a merger with OSK Holdings Bhd.

Monday, November 12, 2012

IPO ... HiapHuat

Hiap Huat Holdings Bhd, which is seeking a listing on the ACE Market of Bursa Malaysia, plans to raise RM17mil from the initial public offer (IPO).

The IPO comprised of 85 million new 10 sen shares, of which 80 million would be placed out and the remaining five million units would be offered to the public.

Of the RM17mil, it would used RM8.2mil for working capital, RM4.5mil for capital expenditure, RM2.3mil to fund the listing process and the remaining RM2mil to repay bank borrowings.

The shareholders were also offering for sale 50 million existing shares which would be placed out.

The group is licensed to collect, treat and process waste oil, waste solvents, used drums and containers. As an integrated licensed scheduled waster oil recycler, it is involved in collecting, recycling refining and producing recycled products.

The company is a used oil recycler. Its core activity is collecting, recycling, re-refining and producing recycled products. The group stores, treats and recycles waste oil collected from industrial and commercial companies and then formulates them into end products ready to be used by end consumers.

The group's recycled end products derived mainly from its recycling and recovery process are sold under their own “AF1”, “Top Up”, “NEKKO”, “Cap Rumah” and “Flag” brand names.

Muhibah ... Nov12

It will meet the Official Receiver (OR) appointed by the court on 12 Nov 2012, together with the other contractors and creditors of the project, which may include CIMB Bank Bhd..

According to the group’s MD, Muhibbah wants to restructure the project, and willing to inject more money into it, as the group believes in the viability of Southern Johor as an oil and gas storage terminal alongside Singapore.

If it is required for Muhibbah to become a major shareholder of the project, it is willing to do that.

The meeting with the OR on 12 Nov 2012, the group hope that CIMB will listen to what the other creditors would want to say in regards to how best to save the APH project. The group is looking forward for a solution to be achieved and agreed by all the parties involved in the project.

Besides CIMB (which was owed rm1 billion by the promoter of the project), KIC Oil and Gas Sdn Bhd, Muhibbah was the second largest creditor with about rm407 million owed.

The group has made provisions of about rm160 million for the project in its balance sheets, with the remaining net additional impact of rm245 million.

However Muhibbah is still optimistic about the viability of the project, and wanted to salvage and add value to it. If a solution could be found and the project could be resumed, Muhibbah might not have to provide the additional rm245 million in its book at all.

Friday, November 9, 2012

MAHB ... Nov12

It needs to raise more cash to finance KLIA2, the new LCCAT that is now estimated to cost between rm3.6 billion and rm3.9 billion.
MAHB is expected to issue sukuk amounting to rm1 billion to rm1.5 billion for the purpose. It will be MAHB's second largest sukuk issuance after its restructuring exercise in 2009, when the company raised rm2.5 billion.
Of that amount, rm2 billion was allocated for the development of KLIA2 while the remaining rm500 mikllion was paid to the government as consideration for the restructuring.
However, it has been found that the rm2 billion is not sufficient to complete KLIA2 because it is 70% bigger than planned. With six months from Nov 2012 to go to complete KLIAw, MAHB has to finish the job.
With the new paper, MAHB would have issued sukuk of up to rm3.5 billion for KLIA2.
Although KLIA2 project is loss making on a net income level for the first three years, it will be cash flow positive from its first year of operations. This should ally fears of a cash flow drain on the parent because the KLIA2 project would be self funding.
KLIA2 will definitely be a game changer for MAHB, which operates and manages 39 airports in Malaysia . The company has also four foreign airports in its portfolio.

Thursday, November 8, 2012

Scomi ... Nov12

Its tag team of Shah hakim and Datuk Zamaluddin Abdullah apears headed for a break up, a spilt that could seriously complicate the entry of IJM Corp Bhd as the engineering concern's new strategic shareholder.
Sources say that Kamaluddin has put in motion a bid to split the equity holdings he and his business partner control jointly in Scomi Group.
The two businessmen together own a commanding 14.63% equity interest in Scomi Group through privately held Kaspadu Sdn Bhd and its wholly owned subsidiary Onstream Marine Sdn Bhd.
The process to split the shareholder is not straightforward and could get bigged down in legal issues, bankers and lawyers say. But Kamaluddin's latest corporate gambit is set to have far reaching implications for the group and could scuttle IJM's bid to take a major stake in the company.
The campaign to block IJM from emerging as the single largest shareholder in Scomi could find traction with the looming uncertainty in the relationship between Shah Hakim and Kamaluddin,
As an interested party IJM will not be able to vote on plan to issue the new debt paper. The uncertainty over the 14.63% stake held by Kaspadu and Onstream Marine could take out that block of shres from the voting equation and give Messrs Abu Sahid & Siew a major say in corporate restructuring plan. What's more Kamuluddin enjoy close ties with Abu Sahid.

Wednesday, November 7, 2012

Genting ... Nov12

Anticipation that an 18 year long mega casino project being planned in South Korea will provide it the much needed investment opportunities outside Malaysia .
It was reported that the South Korean port city of Incheon has partnered with a group of investors to develop a US$290 billion leisure and gaming destination to rival Macau and Las Vegas .
The SK government liberalized laws to lift a major hurdle for foreign investment in opening foreigners only casinos.
The partnership could be a win win situation for all parties in turning SK into a gaming destination … Casino players could benefit given the opportunity to penetrate into a new market.
Market observers would not be surprised if Genting is interested as it had earlier shortlisted SK as one of the group’s potential new market, given the country’s well established infra and high GDP per capita.
Genting is looking for ways to expand outside Malaysia and this is one opportunity. With its track record in casino operations in Malaysia and globally, there is merit to believe that Genting may gain a footing in SK.
In fact, Genting share has not brightened up for some time till late Oct 2012 due to the perception of election risk. Since mid Sept 2012, it had hovered at below rm9.00 following news reports that PAS might close down Genting casinos if PAS won the coming state election in Pahang.
Other catalysts for Genting include the higher than expected visitors’ arrival into Malaysia , Genting Malaysia ’s UK development completed earlier than expected and the license to develop full scale casino will be granted by the NY legislators.

Thursday, November 1, 2012

Tenaga ... Nov12

TENAGA NASIONAL BHD [] posted a net profit of RM1.01 billion for the fourth quarter ended August 31, 2012 compared to net loss RM338.6 million a year, due mainly to the alternate fuel cost differential compensation of RM3,154.5 million, which was recognised during the current period.
The utility giant said on Wednesday that its revenue for the quarter increased to RM9.33 billion from RM9.5 billion arising from an increase in sales of electricity in the Peninsula and the tariff increase of 7.1% on 1 June 2011.

Earnings per share rose to 18.44 sen compared to loss per share of 6.21 sen, while net asset per share was RM6.57.

For the financial year ended Aug 31, Tenaga’s net profit jumped to RM4.19 billion from RM965.4 million on the back of revenue RM35.85 billion versus RM32.24 billion.
Tenaga said the strengthening of the ringgit against the Japanese Yen during the quarter resulted in a translation gain of RM93.0 million as compared to a loss of RM334.6 million in the corresponding quarter.