BPuri ... Apr11

WILSON & YORK Research

INITIATION REPORT
Bina Puri Holdings Bhd (“BPHB”) is mainly engaged in civil engineering/construction, quarry/ready mix concrete and property development. The group was founded in 1975 and was listed in 1995. BPHB derives a substantial portion of its order book overseas, and has completed major highway projects in India, housing projects in Thailand, luxury hotels in Nepal, and various types of buildings in China, Indonesia, and several
countries throughout the Middle East.

INVESTMENT RISKS
Risks to our recommendation and target price include: i) increases in construction materials cost, ii) rising interest rates as the company is highly geared, and iii) a sharp slowdown in the general level of economic
activity in Malaysia or among the many economies where BPHB is active. This company has a global order book, which tends to diminish investment risk. However, a rising exchange rate could have adverse
effects on overall profitability.

RECOMMENDATION
We maintain our BUY recommendation on BPHB with a fair value estimate of MYR 1.60. Value investors will be attracted by the combination of very strong earnings growth at earnings multiples well below the company's peers. Looking ahead, average ROE is heading to levels of 11- 12%, well above the 7-8% average seen over the previous eight quarters. Meanwhile, at current prices, the shares trade on 1.4x trailing book value and 1.1x current book value.

Compared to many of its peers in sales and market cap, BPHB offers a higher ROE at lower multiples. Though net margins have historically been quite thin, BPHB has a proven record of building its order book. The other aspect that may put off investors is the very high debt/equity ratio that the company has historically maintained. It should be noted that the operating profits/interest expense ratio is 4.7x trailing operating profits and is heading above 5.0x current year operating profits.

PetOne ... Apr11

Petrol One Resources Bhd, formerly known as Changhuat Corp Bhd, aims to be back in the black by FY12 ending June 30 on the back of more contracts as it expands its floating oil storage business.

The company expected to own five very large crude carriers (VLCCs) by FY12, starting with the acquisition of two vessels by 3Q11.

They are in talks to secure a long-term charter for its second vessel soon. The vessels would be funded partly through borrowings and through a proposed rights issue. The private placement proposed by the company earlier 2011.

Over the last three financial years, Petrol One has seen losses, although it is noteworthy that the figures have been narrowing. For FY10, it posted a net loss of RM2.7 million on revenue of RM31 million.

Based on its most recent financial statements for 2Q ended Dec 31, 2010, the company had a gearing ratio of 3.64 times.

Part of the proceeds from the rights issue will be used to pare down its gearing.

In September 2008, the company’s wholly-owned unit Changhuat Manufacturing Sdn Bhd completed the acquisition of 63% equity interest comprising 12.6 million shares in O&G company Arus Dermaga Sdn Bhd for RM45 million.

In 2009, it secured a RM96 million contract with Coastal Oil Singapore Pte Ltd for the provision of a 240,000-tonne VLCC at the Port of Tanjung Pelepas, Johor, for storage of crude oil, fuel oil or alternatively fuel oil blend stocks over 36 months.

IPO ... Hibiscus Petroleum Bhd

A shell company has no assets, no track record and no business. Essentially, they would be investing the management of the company.

The structure of a special purpose acquisition company (SPAC), which is regulated by SC, requires that the company utilize its IPO proceeds within three years of listing, with a minimum shareholders’ approval of 75% for any proposed acquisitions.

The company is headed by veterans in the O&G industry – Petronas Carigali Sdn Bhd board member and former Shell Malaysia deputy chairman Zainul Rahim as its chairman, fromer SapCrest Bhd COO Pereira and Perisai’s MD Zainol Izzet as a director of the company.

It also has two foreign experts on board, namely India based Raliance Industries Ltd’s Dr Rabi as its non executive director and former Sarawak Sehll Bhd project manager Dr Pascal Hos as its head of petroleum engineering.

Hibiscus plans to raise between rm150 million and rm300 million in the IPO leading up to the acquisition of assets or the rights to develop small O&G fields in South Asia, the Middle East, East Asia and Oceania.

Despite listing in Malaysia, its immediate market is not necessarily in Malaysia.

It intends to become a junior independent O&G exploration and production player in the near to medium term, making it a pure E&P player.

UEMLand ...Apr11

UEM Land is a strong candidate for inclusion as an index component of the FBM KLCI being the largest property stock on Bursa Malaysia by market capitalisation and landbank size now.

Despite the company's rather premium valuation against its peers, the stock's potential inclusion into the barometer and positive news flow from Iskandar region would give the boost for an upward rerating.

The acquisition of Sunrise which was completed in February 2011, boosted UEM Land's market capitalisation to about RM11 billion.

Once included as one of the index components, it will be the only pure property stock in the index.

It will raise the company''s profile and visibility, and subsequently justify its premium valuation given that the FBM KLCI top 30 stocks are typically used as a benchmark portfolio.

UEM Land is the flagship company for the real estate investment and development businesses of UEM Group, which is a wholly-owned by Khazanah Nasional, the government's investment holding company.

UEM Land was a good proxy to the government's strategy to propel the domestic economy towards high income status, particularly under the Economic Transformation Programme.

Due to its size and the growth prospects, the company's liquidity was the highest among the listed property stocks as foreign and local institutional interest on the stock had picked up.

IPO ... Malakoffs

If Malakoff Corp Bhd is relisted, it is unlikely to be the same dividend-yielding animal that the company was prior to its privatisation by MMC Corp Bhd in 2007.

The bulk of its cash flow has been tied up during its privatisation, leaving it without much room to declare healthy dividends.

MMC had to gear up to increase its interest in Malakoff during the privatisation from about 22% to 51%. Also, since privatisation Malakoff has not had an expansion in its generating capacity. This means that there is no new cash flow and all existing cash would have been committed”.

Apart from MMC, the other shareholders of Malakoff are the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (KWAP).

Although Malakoff has submitted a bid for an expansion of another 1,000MW at its Tanjung Bin power plant in Johor, it is still early to tell whether Malakoff would be awarded the capacity expansion.

The other bidder for the spare capacity is Jimah Energy Ventures Sdn Bhd, which has proposed a similar size capacity expansion at its plant in Negeri Sembilan. The Energy Commission would only announce the expansion award in September 2011, and the new capacity would only be commissioned by 2016.

If Malakoff gets the additional 1,000MW, then it would provide some upside. But the competition for additional power is keen as apart from Jimah there are other parties looking at it including Tenaga (Nasional Bhd).

Currently, Malakoff is generating 5,020MW which is about 25% of electric power generation capacity in the peninsular. The company was valued at RM9.3 billion when it was delisted on July 2007.

The relisting of Malakoff would depend on what kind of Malakoff is MMC trying to put up. Malakoff used to be a favoured stock among investors because of its generous dividend payout due to its power generating business which is cash generating.

The relisted Malakoff should have a profound business growth strategy, whether through the proposed capacity expansion or by securing overseas contracts.

It was also not clear yet whether MMC, which owns 51% of Malakoff’s shares, would include the overseas operations of the company, which has a significant footprint in the Middle East and North Africa region, as portrayed through its projects in Saudi Arabia, Algeria, Kuwait and Jordan.

Malakoff operates in power generation and water desalination in these countries, to diversify its geographical exposure and since the market for power generation in Malaysia is quite limited.
MMC should consider relisting the whole operation of Malakoff for a better growth prospect.

Another factor which is deemed unfavorable for an independent power producer (IPP) is that the current power purchase agreement (PPA) between IPPs and the government is due to expire in 2017, so it is poised to be renegotiated soon. The former PPA was viewed as lopsided in favour of the IPPs, hence observers are bearish for IPPs to gain significant benefits from the new PPA.

The government would not want to repeat its mistake when negotiating the former PPA, hence the new agreement would likely not be very much in favour of the IPPs.

However, there is a void on Bursa Malaysia for a well-capitalised and pure independent power producer, after the privatisation of Malakoff and Powertek Bhd by Tanjong plc. The latter has also been privatised by Usaha Tegas Sdn Bhd, the private vehicle of tycoon T Ananda Krishnan.

Investors who want to invest in a pure independent power producer would be able to do that once Malakoff is relisted. This is because since the privatisation of Powertek Bhd by Tanjong plc, and subsequently the company itself was taken private by Ananda Krishnan, there is no major IPP stock listed on Bursa.

However many questioned the main motive of the eventual relisting plan by MMC of the leading power producer company. The investing community generally are in the dark about Malakoff after its privatisation. However, any relisting exercise of the IPP by MMC would not be so soon.

PetGas ... Apr11

PetGas will turn into a multi-utility player with the completion of its Melaka regasification plant in July 2012 and Kimanis power plant in 2013.

Expect the regasification services agreement (RSA) between PetGas and Petroliam Nasional Bhd (Petronas) to be finalised soon.

There will be no fuel cost risk under the RSA as gas supply will be procured by Petronas

PetGas registered strong net cash of RM2.1 billion (RM1.06 per share) for 9M11. Epect capital expenditure to rise to RM1.5 billion per year over FY12/13 with the new investments, but free cash flow will remain strong at more than RM600 million due to improved profitability under the fourth gas processing and transmission agreement (GPTA).

PetGas does not have a dividend policy.

Expect higher revenue for PetGas’ PGU gas volume upon completion of the Melaka regasification plant, as the fourth GPTA allows the use of third-party gas.

Masteel ... Apr11

The Johor government approved a RM1.23 billion intracity commuter train project proposed by Metropolitan Commuter Network (MCN), a joint-venture company between Masteel and KUB Malaysia Bhd.
The commuter rail will utilise existing KTMB tracks so no additional land acquisitions or track infrastructure are necessary, though a spur line linking Senai airport to the rail network may be added at a later stage.

MCN, in which Masteel has a 60% stake, is expected incur some RM370 million in capital expenditure, primarily for rolling stock. It is anticipated that roughly RM70 million of this would be funded through equity by the two partners, while the balance would be raised through a bond issue.

The other portion of the project, estimated to cost RM860 million, including the ticketing, signalling and communications system, electrification and transit stations, would be funded by project financing under the government’s Public-Private Partnership (PPP) scheme. The assets would then be leased to MCN under a long-term concession of up to 33 years.

Having received the state government’s endorsement, the proposal is now expected to go to the federal government for approval. If all goes to plan, the concession agreement could be finalised by mid-2011. Construction is targeted to commence by early 2012 and the rail lines would be operational by early 2014.

MCN will be project manager for the rm1.23 billion project. KUB will handle most of the construction work while Masteel will be responsible for sourcing and coordinating the system works.

KUB’s shareholders include the Minister of Finance (22.55%) and Gaya Edisi Sdn Bhd (29.62%). The latter is believed to be linked to UMNO.

Upon completion of the project in about two years, MCN will lease the rail transit infra from the government for a 33 year concession period. In essence, the government will be the asset owner for the rail transit infra with MCN being the service provider, although it will still own the trains which it procures.

For MCN, the main source of revenue will come from the ridership while the main cost component will be lased payable to the government (for it to recoup and earn returns on the rm860 million capex). The annual lease will be on a step up basis to match the projected increase in traffic and cash flow.

Expect Masteel to capture some one-off construction profit from the rail project in 2012/13. More importantly, the project would provide the company with a recurring income stream over the entire period of the concession.

Expect contributions from the project would only account for up to 10% to 15% of Masteel’s earnings when it is fully operational. Thus, the primary earnings generator will continue to be its steel manufacturing business.

Padini ... Apr11

About 100.15 million shares representing 15% of the paid-up capital of Padini

Holdings Bhd were traded off-market.

The sale is believed to be between Padini’s second largest shareholder Puncak Bestari Sdn Bhd and Permodalan Nasional Bhd. The shares were transacted at RM1.02 for a total of RM26.5 million.

Puncak Bestari, which owned 179.3 million or 27.25% of Padini, was looking to sell its block of shares for RM1.02 per share.

The placement, which would reportedly lead to a RM182.9 million gain for Puncak Bestari, should lead to better liquidity in the trading of Padini shares.

Yong Pang Chaun Holdings Sdn Bhd was the largest shareholder as at Oct 29, 2010, with a 43.97% stake in Padini followed by Puncak Bestari’s 27.25%.

L&G ...Apr

When Hong Kong-based property tycoon Tan Sri David Chiu emerged as a substantial shareholder in Land & General Bhd (L&G) in August 2007, there was speculation of a possible asset injection or takeover exercise. It pushed the stock from 20 sen to over 80 sen in six months, but there was no asset injection.

Instead, the new management spent the last few years quietly cleaning house and strengthening the foundations of the company.

Now, things are looking up for the company with projects worth RM2.41 billion in gross development value (GDV) in its pipeline.

What is going to be the major, lucrative development for L&G going forward — its remaining 43 acres (17.2ha) of freehold development land in Sri Damansara, the jewel in the crown.

L&G’s net book value (NBV) for the land is carried at less than RM20 per sq ft.  comparison, freehold commercial land in Mutiara Damansara is now valued at more than RM400 psf.

The low land cost could translate into fat margins for L&G, much higher than the standard “20-over percent” margin for an ongoing project. ompleted service apartments or condominiums in Mutiara Damansara are now being sold for more than RM600 to RM700 psf, while in Sri Damansara developers such as TA Global Bhd are now trying to price their new units at more than RM400 psf or even RM600 psf.

L&G had no borrowings and had cash of RM141.4 million as at Dec 31, 2010, with shareholders’ funds of RM248.2 million.

L&G’s unbilled sales are currently about RM45 million, arising from the 8trium@Sri Damansara project which only has 10% of construction works to be completed but exclude its 50% share of the RM200 million GDV sold in the phase 1 of The Elements@Ampang.

Meanwhile, L&G, with a cash position of RM141.1 million, is scouting for more landbank.

MMHE ... Apr11

MMHE is believed to be looking at taking over either some or all of the assets of Sime Darby Bhd’s oil and gas unit, which is parked under the latter’s troubled energy and utilities divisions.

It is said that MMHE, the heavy engineering arm of Petronas started looking at the assets several months ago. However, it is believed that the plan is still in the preliminary stage has not gone to the board yet.

MMHE has been asked by its parent, Petronas to increase its asset base, as more O&G jobs are being rolled out.

Among the O&G assets that Sime Darby owns are two fabrication yards – one in Pasir Gudang and the other in Teluk Ramunia, Johor.

MMHE is not the only interested party, as there are at least two other O&G players eyeing Sime Darby’s O&G assets.

However, MMHE declined having entered any discussions with Sime Darby for the purchase of any O&G assets. Nevertheless, as an organization, it needs to constantly evaluate additional revenues for growth. This can be achieved through an organic approach. Identification of potential assets is only one of the many steps involved, but it may or may not eventually result in an actual acquisition.

MMHE could become Malaysia’s largest fabricator should it succeed in acquiring Sime Darby’s O&G assets such as the fabrication yards.

Despite the losses, Sime Darby’s president and group CEO had indicated that it would not hive off the O&G assets, as opportunities still abound for the division. A source says there are differing views among Sime management on whether the group should dispose of its O&G assets.

Meanwhile, both of Sime Darby’s motor and plantation division are doing well.

Industry observers say MMHE, a wholly owned unit of MISC Bhd, should have no problem in obtaining financing for Sime Darby’s O&G assets, as the former is sitting on a big cash pile.

As at Dec 3010, its cash and cash equivalents stood at rm1.79 billion. The company also has virtually no borrowings. Some of the cash is from proceeds raised in its IPO a year earlier.

As at Dec 3010, MMHE had an order book of rm3.6 billion, the bulk of which is for its engineering and construction activities.

Expecting MMHE to clinch between rm4 billion and rm5 billion in new jobs over the next 12 months (April 2011 & Beyond). Furthermore, MMHE will also see new overseas orders.

EPF new rules.

If ONE (1) of your Nominees in the EPF Nominees list dies,
automatically the whole arrangement (EPF Nominees list) is VOID ..
Meaning if, you only put in One (1) name & unfortunately he/she dies
before you - automatically EPF will channel your EPF money to trustee
of AMANAH RAYA upon your death.

Even though if you have few names in the EPF Nominees list, - the
whole arrangement is VOID & none of the individual names left in the
EPF Nominees list will get their portion & automatically EPF will
channel your EPF money to trustee of AMANAH RAYA upon your death.

Piece of advice - if any of the your Nominees in the EPF Nominees list
dies, please do immediately approach the nearest EPF counter & present
the Death Certificate of the individual & register your NEW / LATEST
Nominee in the EPF Nominees list + NEW / LATEST percentage .

If, you & the other party (maybe spouse) involved in the same
misfortune (accident / illness) that caused death to both yourself /
spouse please, please, please alert your siblings / relatives /
parents to immediately approach the nearest EPF counter & share the
information within 3 days to AVOID all EPF money to be surrendered to
trustee of AMANAH RAYA .

Upon surrender to trustee of AMANAH RAYA, your children will have to
battle the money thru 3 channels;

Majlis Agama

Pejabat Tanah

Mahkamah

The normal period via above 3 channels usually takes 2-3 years (except
if you have inside/tip top connection) at Amanah Raya.

How to lock your car and why

I locked my car.  As I walked away I heard my car door unlock.  I went back and
locked my car again three times. Each time, as soon as I started to walk away, I
would hear it unlock again!!  Naturally alarmed, I looked around and there were
two guys sitting in a car in the fire lane next to the store. They were
obviously watching me intently, and there was no doubt they were somehow
involved in this very weird situation .  I quickly chucked the errand I was on,
jumped in my car and sped away..  I went straight t o the police station, told
them what had happened, and found out I was part of a new, and very successful,
scheme being used to gain entry into cars.  Two weeks later, my friend's son had
a similar happening....

While traveling, my friend's son stopped at a roadside rest to use the bathroom.
  When he came out to his car less than 4-5 minutes later, someone had gotten
into his car and stolen his cell phone, laptop computer, GPS navigator,
briefcase..... you name it.  He called the police and since there were no signs
of his car being broken into, the police told him he had been a victim of the
latest robbery tactic -- there is a device that robbers are using now to clone
your security code when you lock your doors on your car using your key-chain
locking device..

They sit a distance away and watch for their next victim. They know you are
going inside of the store, restaurant, or bathroom and that they now have a few
minutes to steal and run. The police officer said to manually lock your car
door-by hitting the lock button inside the car -- that way if there is someone
sitting in a parking lot watching for their next victim, it will not be you.

When you hit the lock button on your car upon exiting, it does not send the
security code, but if you walk away and use the door lock on your key chain, it
sends the code through the airwaves where it can be instantly stolen.
This is very real.

Be wisely aware of what you just read and please pass this note on.  Look how
many times we all lock our doors with our remote just to be sure we remembered
to lock them -- and bingo, someone has our code...and whatever was in our car.

COCOLND ... Apr11

WILSON & YORK

INITIATION REPORT
Cocoaland Holdings Bhd is ranked by sales approximately in the middle of the thirty listed companies in the Malaysian snack food industry. Export sales comprise more than 25% of total sales. Cocoaland Holding’s
predecessor company, MFESB, was formed in 1980. This company and others were consolidated and converted to a public limited company in 2000 under the name Cocoaland Holdings Bhd, prior to listing in 2005.

INVESTMENT RISKS
Risks to our recommendation and target price include: i) rising trends in material costs, ii) an increase in the general level of interest rates, and iii) a sharp slowdown in the general level of economic activity in Malaysia or
in the economies of the company’s many trading partners, which number above forty.

RECOMMENDATION
We maintain our BUY recommendation on Cocoaland Holdings Bhd with a fair value estimate of MYR 2.60. It is possible that the share price will surprise on the upside; sales growth may accelerate more quickly and
material costs reduce further and faster than we expect. Equally, investors may need to prepare themselves for one more round of raw material related cost increases before these costs revert to their long run levels.

Compared to its peers in sales and market cap, Cocoaland is somewhat richly valued. To compensate investors for this rich valuation, Cocoaland has two things going for it: an extremely clean and strong balance sheet and a powerful strategic partner, Fraser & Neave. F&N owns a 23.1% stake in Cocoaland and is surely interested in helping Cocoaland reach new customers in Malaysia and abroad.

Axiata ... Apr11

Axiata Group Bhd is seeking the approval from its shareholders to buy back its own shares of up to 10% of its issued and paid-up share capital at the forthcoming AGM.

It also proposed to exempt Khazanah Nasional Bhd from the obligation to undertake a mandatory takeover offer on the remaining shares it did not already own in Axiata upon the latter’s purchase of its own shares. Khazanah holds 41.3% stake in Axiata. Future purchases by Axiata of its own shares pursuant to the proposed share buy-back could increase Khazanah’s shareholding in Axiata by more than 2% in any six-month period.

As a result, Khazanah would trigger an obligation to undertake a mandatory takeover offer on the remaining voting shares in Axiata. Causing Khazanah to trigger a mandatory takeover obligation is not the objective of the proposed share buy back,

Meanwhile Moody's Investors Service sees no impact for the Baa2 issuer rating and senior unsecured bond rating of Axiata Group Bhd following its proposal to buy back up to 10% of its own shares. The outlook remains positive.

The purchase will be funded out of surplus internal cash sources, after taking into consideration capex and working capital requirements throughout the Group. The cost would be approximately RM4.0 billion based on 12 April 2011, compared to consolidated cash holdings of RM6.3 billion (RM5.9 billion at holding co level plus Celcom) as at Dec 31, 2010.

While the purchase will adversely affect retained cash flow metrics, Moody's believes that this can be accommodated within the Baa2 rating given Axiata's relatively strong financial metrics and moderate leverage, as measured by adjusted consolidated debt/EBITDA of 1.7 times.

Moody's notes that shareholder approval for the buyback does not impose any obligation on Axiata to execute fully on the mandate. However, while Moody's anticipates this to be a one-off event, the agency cautions that further shareholder returns over and above standard dividend payouts may have adverse consequences for the rating or the positive outlook, particularly if retained cash flow is pressured over a sustained period.

The last rating action on Axiata was on 6th December 2010 when Moody's changed the outlook on Axiata's ratings from stable to positive.

Axiata is one of Southeast Asia's largest regional cellular telecommunications providers with approximately 159.7 million subscribers. Key investments include Celcom in Malaysia (wholly owned); XL in Indonesia (66.7% stake); Dialog in Sri Lanka (85% stake); Hello Axiata Ltd in Cambodia (wholly owned); and Robi in Bangladesh (70% stake) as well as a 29.49% stake in M1 in Singapore and 19.1% in Idea in India.

Axiata was demerged from Telekom (rated A3/stable) in April 2008. Axiata is 62.62% directly owned by government of Malaysia related entities including a 41.3% stake held by Khazanah Nasional Bhd.

HuaYang ... Apr11

WILSON & YORK Research.

INITIATION REPORT

Hua Yang Bhd (“HYB”) has carved out a niche for itself in the value segment, providing good quality residential and commercial structures at reasonable prices. The company’s land bank is well diversified within
Malaysia, with three large projects in Klang Valley, Perak and Johor. The company was formed in 1978 and converted to a public limited company in 2001, prior to listing in 2002.


INVESTMENT RISKS
Risks to our recommendation and target price include: i) increases in the general level of interest rates, ii) possible restrictions on mortgage lending or other related disincentives to property development that are currently being seen in other countries around the region, and iii) a sharp slowdown in the general level of economic activity in Malaysia or among its major trading partners: China, Singapore, US and Japan.

RECOMMENDATION

We maintain our BUY recommendation on Hua Yang Bhd with a fair value estimate of MYR 2.08. Value investors will be attracted by the combination of solid earnings growth and profitability at earnings multiples well below the company's peers. Looking ahead, average ROE is heading to levels of 13-15%, nearly double the average seen over the period 2006- 2009, whilst P-BV remains below 0.8x.

Compared to its peers, HYB offers a higher ROE at lower multiples. See page eight of this report for more details. Though heavyweight SP Setia Bhd is not in HYB’s peer group, investors must pay quite a premium for SP Setia Bhd’s growth prospects as it currently trades on 2.9x P-BV. Hua Yang Bhd offers comparable growth rates at current year multiples less than 0.8x P-BV and 6x P-E. More importantly, the affordable housing sector that HYB is focused on is far less saturated than the high end segment that so many other listed companies are chasing.

EKSONS ... Apr11

Its growth catalyst is that the bulk of the RM221 million sales achieved in the property division will be recognised in the financial year ended March 31, 2011 (FY11) and FY12.

Also, the plywood manufacturer could possibly benefit from the anticipated rising demand in Japan for timber products in the aftermath of the earthquake.

Eksons’ joint venture mixed commercial development in Seri Kembangan, Selangor, The Atmosphere,  has secured RM221 million in sales, of which only RM31 million has been recognised to-date. The rest will filter in over the next two years.

Eksons posted a net profit of RM27.9 million or 17.04 sen per share on a revenue of RM279.1 million for FY10 ended.

For the nine months ended Dec 31, the company made a net profit of RM21.5 million, an increase of almost 20% from RM18 million in the previous corresponding period.

The recognition of the RM190 million sales from the property division in FY12 and FY13 will apparently be a big boost to Ekson’s earnings.
On the timber business, which is currently the biggest profit contributor, Eksons was in negotiations to start exports to Japan to take advantage of the current tight supply there in the aftermath of the earthquake.

For FY10, the manufacturing division posted a pre-tax profit of RM14.4 million, which was 59% of group’s pre-tax profit of RM24.5 million.

The bulk of Eksons’ wood products is exported to the Middle East, which contributes 60% to 70% to group revenue.

MEGB Report... Apr11

Alliance Research.

Maiden overseas venture
On 12th Apr 2011, Masterskill Education Group Bhd (Masterskill) signed an MoU with PT Sejahteraraya
Anugrahjaya Tbk (PTSA) and Dato’ Sri Edmund Santhara, Masterskill CEO to set up a JV in Indonesia for
the purpose of establishing the Universitas Masterskill- Mayapada (UMM) in Indonesia. The MOU would be in effect for a period of 3 months.

Under the JV, PTSA would be the largest shareholder, holding 40% stake while the remaining would be held equally by Masterskill and Dato’ Sri Edmund Santhara respectively. The total paid-up capital would be US$10m (RM30m). PTSA would be responsible to obtain all approvals and consents for the establishment and operation of UMM, which would offer programmes in nursing and allied health education. In addition, PTSA via a tie-up with PT Bank Mayapada Internasional and other financial institutions would provide a
student loan scheme to eligible students for their full course studies in UMM. Masterskill in turn would provide the standard operating procedures, curriculum and guidelines relating to the programmes in nursing and allied health education provided by UMM.

Our view: generally positive, but short on details and near-term meaningful contribution unlikely. We laud the overseas venture given the 1) huge potential market in Indonesia, 2) severe shortage of nurses and healthcare professionals in Indonesia and 3) below-par standard of education in healthcare, which presents a good opportunity for Masterskill to develop nursing and allied health science courses in Indonesia. In addition, UMM students would also benefit from the clinical training provided by Mayapada Hospital, which is indirectly owned by PTSA. However, specific details are scant and we expect the Indonesian venture to
contribute meaningfully from FY14 onwards. Thus, Masterskill’s fundamentals are unchanged at this juncture.
Maintain TRADING BUY with TP of RM2.60 intact.

MAHB ... Apr11

MAHB is “seriously” on the lookout to build and manage overseas airports in line with its aspiration to become a global leader in airport investment and management.

Currently, the overseas airports under MAHB’s investment portfolio are Rajiv Gandhi International Airport in Hyderabad, India; Indira Gandhi International Airport in New Delhi; Sabiha Gokcen International Airport in Istanbul, Turkey; and Malé International Airport (MIA) in the Maldives.

MAHB won a bid to build, operate and modernise the MIA in June 2011. The project also includes the expansion and maintenance works of the airport, based on a 25-year concession.

MAHB gained a foothold in China, following the signing of a memorandum of understanding with Nagamas Enterprise (HK) Ltd to set up a joint venture to explore the possibility of providing airport management services to Yongzhou Lingling Airport and other airports in China.

Nevertheless while MAHB positioned itself as the global player in airport investments, this would not compromise the development of its local airports.

XDL ... Apr11

Mercury Securities Sdn Bhd

BACKGROUND
XiDeLang Holdings Limited (XDL) was incorporated in Bermuda under the Bermuda Companies Act in April 2009 as an exempted company limited by shares. In August 2009, the company was registered in Malaysia as a foreign company.
XDL’s history can be traced back to 1993 when HongPeng Footwear started the production and marketing of sports shoes in Jinjiang City, Fujian Province, China. XDL was subsequently listed on in November 2009. The group was the third shoe-sector manufacturer from China (PRC) to list on Bursa Malaysia.

“Sport shoes, apparels and accessories”
The group is principally involved in design, manufacturing and marketing of sport shoes, as well as design and marketing of sports apparel, accessories and equipment. The group’s business and manufacturing premises are located in Jinjiang City, Fujian Province in China.

Currently, XiDeLang management team is led by Mr Ding Peng Peng (MD/CEO) and Ms Ding Li Hong (Executive Chairman). They were the founders of HongPeng Footwear back in 1993, and as such have around 18 years of experience in the shoe industry. Ms Ding is particularly active in various Chamber of Commerce and Footwear Association while Mr Ding is also involved in a local Chamber of Commerce.

The “XiDeLang” brand of sports shoes was launched in 1993. Since then, the brand has established a reputation synonymous with trendy, innovative, and quality sports shoes, apparel, accessories and equipment. Over the years, the group had been awarded numerous titles and recognitions, such as “Fujian Famous Brand”, “Well-known Mark of China” and Number 1 spot for “Jinjiang Top 10 Most Growth for Sports & Leisure Brand”.

“Various awards received”
XiDeLang Sports Group was established in 1995 as the owner of XDL’s proprietary “XiDeLang” brand. The primary focus of this company is in brand management and product development. A broad range of shoes were developed, for activities such as skateboarding, running, basketball and tennis.
In 1996, HongPeng (Fujian) was established to undertake the manufacturing of sports shoes. Meanwhile, HongPeng Footwear continued its production of sports shoes, with a focus on overseas markets.

The group’s in-house team develop about 2000 shoe designs each year, of which around 500 designs are commercialized. Currently, the product range also includes designs meant for hiking, trekking and casual-wear shoes.

“Expansion into Sports Apparels / Accessories”
In 2005/2006, the group established a complementary line of sports apparel and accessories to leverage on its XiDeLang brand name and extensive distribution network. The group had successfully launched its range of sports apparel and accessories in 2007 while production was outsourced to third party manufacturers.
“Engaged Brand Ambassador”

In 2007, XiDeLang engaged a China artiste named Zhang Jie as its brand ambassador. Zhang Jie is a singer and actor with a strong following from the youth segment. This is based on the group’s strategy to market to the “youth market” of consumers between the ages 15-35.

“Extensive Distribution Network”
At the point of listing, XiDeLang had an extensive distribution network of around 2300 retail locations around China, of which around 1320 are concept stores. The group’s products are retailed across 25 provinces and municipalities in China via 32 distributors/retailers.

The group’s annual manufacturing output has grown from 1.6 million pairs of sports shoes in 1995 to 4.4 million pairs in 2008. The group also actively outsource a portion of its production requirements.

PERFORMANCE – FY10
XDL recorded revenue of RM125.6 million and RM465.1 million respectively, for its 4Q/FY10 and FY10 results. This represented a y-o-y increase of 63.0% and 20.8% respectively.
“Strong y-o-y performance”

The group’s net profit after tax (NPAT) for 4Q/FY10 and FY10 was RM20.3 million and RM79.3 million respectively, which was an increase of 103.8% and 16.3% respectively.
The group’s positive performance during its FY10 was largely boosted by the improvement in sales of both its HongPeng (Fujian) and HongPeng Footwear subsidiaries.

This was due to increased brand awareness as a result of the group’s intense A&P (advertising and promotion) efforts. In addition, the group’s continuous research and development (R&D) assist in keeping the group abreast of the rapidly changing fashion trends and consumer taste, with new models being launched periodically. Furthermore, there was strong consumer demand in both the PRC and overseas markets.

XDL recorded roughly the same level of revenue during both its 4Q/FY10 and 3Q/FY10. However, the group’s net profit after tax for 4Q/FY10 had dropped by 7.3% as compared to 3Q/FY10. This decrease was mainly due to the lower gross profit achieved during 4Q/FY10. The lower gross profit was due to the higher usage of raw materials, which is typical for autumn/winter shoes and apparels.

VALUATION / CONCLUSION
“Final dividends proposed”
XDL’s Board of Directors had declared a tax exempt final dividend of 1.0 sen per share for its FY10 ended 31st December 2010. Earlier on, the group had paid out an interim dividend of 1.5 sen tax exempt for its FY10. XDL first declared dividends in its FY10 (the group’s first post-listing dividends), as no dividends were declared for its FY09.

The group’s future dividends would be determined by the performance of the group. During the IPO, the group’s management had stated their desire to endeavour to pay out up to 30% of its annual net earnings as dividends. However, as the group’s dividend payout ratio was not that high in its FY10, we expect that the group’s dividend payout ratio to be within the 10-20% range of its annual net earnings for its FY11.

With an adjusted beta (correlation factor) of 0.70 to the KLCI, XDL (-10.99% YTD) has underperformed the KLCI (+0.13% YTD) this year. Market conditions have also been volatile lately, impacted by the recent political uprisings in the Middle East/North Africa, sovereign debt issues in Europe and a major earthquake in Japan. As XDL is not an especially large market-cap stock, this may put a dampener on its market visibility and trading volume.

“Buy Call”
Based on our forecast of XDL’s FY11 EPS and a prudent estimated P/E of 3 times (within its historical range), we set a FY11-end Target Price (TP) of RM0.66. This TP offers a 64.1% upside from its current market price. Our TP for XDL reflects a P/BV of 0.85 times over its FY11F BV/share. Meanwhile, the Regional Footwear sector’s average P/E and P/BV is 16.2 times and 1.96 times, respectively.

Puncak ... Apr11

It is calling for the respective bondholders meeting following the recent rating actions taken by Malaysian Rating Corp Bhd (MARC) in a move to seek certain waivers from bondholders.

MARC’s actions had resulted in the rating of some of the group's debt to fall below the minimum required under their respective trust deeds.

While the current rating prevails, an event of default existed on some of the group's debt as the revised rating was below the minimum level. If allowed to remain, further action (if any) by the respective bondholders could result in a default on the group's debt obligations.

Puncak Niaga had upon consultation with its legal counsel and certain major bondholders of the group, decided to call for the respective bondholders meeting.

The meeting was also for its unit Puncak Niaga Sdn Bhd (PNSB) to seek for certain waivers from the bondholders to address the current situation.

On April 6 2011, MARC took various rating actions on the Selangor water sector issuers, including the rating actions against Puncak Niaga, PNSB and 70% owned Syarikat Bekalan Air Selangor Sdn Bhd.

PMETAL ... Apr11

Press Metal Bhd and three foreign companies, which together plan to invest some RM9.5bil in energy-intensive industries in Samalaju Industrial Park, Bintulu, have signed separate power purchase agreement (PPA) term sheet with Sarawak Energy Bhd (SEB).

Press Metal and the three companies OM Materials,Asia Minerals Ltd and Tokuyama Corp would require a long-term supply of 1,300MW to power their plants. The electricity will be supplied by the 2,400MW Bakun hydroelectric dam, which is expected to produce its first 300MW in three months.

Press Metal, which owns and operates an aluminium smelter in Mukah, would invest RM5bil in a new smelter project in Samalaju. Press Metal, which also has operations in China, Singapore and Dubai, sold 20% of its stakes in Press Metal Sarawak to Japan's Sumitomo Corp about six months ago.

OM Materials, a Singapore company listed on Australian Stock Exchange, and has operations in China, Australia and Africa, will invest US$300mil (RM903mil) in a manganese and ferro-silicon smelting plant.

Asia Minerals Ltd, a Hong Kong company with current operations in Mongolia, China, South Africa and Brazil, will also set up a manganese smelting plant with an investment of US$200mil (RM602mil).

Tokuyama Corp would invest RM3bil in a polycrystalline silicon factory, which is now under construction.

The proposed plants of the four companies, which are the first batch of investors in Samalaju in Sarawak Corridor of Renewable Energy (Score), are expected to start commerical production next year and in 2013.

SEB would finalise the PPA with the four companies.

SEB was concluding the PPA term sheet with another three Score investors, which planned to invest close to RM3bil.

Meanwhile it has proposed a rights issue to raise between RM316.7 million and RM323.7 million to finance the Samalaju aluminium smelting project in Sarawak.

The rights issue involved the issuance of up to RM323.73 million nominal value of redeemable convertible secured loan stocks (RCSLS) at 100% of its nominal value with up to 147.15 million warrants.

The rights issue was to advance funds to its unit Press Metal Bintulu Sdn Bhd to part finance the 120,000  tonnes capacity aluminium smelting plant and infrastructure building cost to cater for additional 120,000 tonnes capacity in Samalaju.

Fututech/E&O ... Apr11

Loss making company, a former associate of E&O is poised to transform itself into a construction company.

The company, currently a designer of lights and kitchen cabinets has seen a change in shareholders with the exit of E&O and entry of new shareholders who are in the construction business.

In fact, prior to E&O’s exit in March 2011, changes had already started to appear in Fututech, with the company obtaining construction related jobs. The work was from E&O Property Development Sdn Bhd. It has been awarded some rm333 million worth of design, road and construction works by E&O.

But with the exit of E&O as a major shareholder, can Fututecch continue to be the beneficiary of projects from the property developer?

Industry observers say that it is likely to be the case as the new shareholders of Fututech are no strangers to E&O.

E&O’s divestment will allow Fututech to become an entity focused on construction.

Fututech has been loss making since 2005, accumulating losses of rm31.3 million up to FY2010 ended Dec 31, 2010. However in FY2010, Fututech reported that its net losses narrowed.

The company says it managed to narrow its losses due to the positive contribution of the group’s new construction management business and the gains from the disposal of a subsidiary’s land and building in 2010. Its core businesses appeared not to be doing well as the company was in a negative operating cash flow position of rm9.78 million as at Dec 31, 2010.

As at Dec 2010, Fututech had cash and cash balances of rm5.06 million and was in a net cash position of rm4.84 million.

BHIC ... Apr11

It hopes to conclude its contract to construct littoral combatant ships (LCS) for the Ministry of Defence soon to achieve its target of doubling its order book in 2011.It expects the details of the contract to be ironed out by the middle of 2011.The contract would be in the billions of ringgit and would be valued much higher than the first batch of vessels.

BHIC’s order book currently stands at RM1.2 billion.

BHIC had received a letter of intent in October 2010 to undertake the construction of six second-generation patrol vessels with combatant capabilities. The value and duration of the project were still being worked out.

BHIC has a 20.74% stake in Boustead Naval Shipyard Sdn Bhd (BNS), which is the sole holder of the rights to build 27 offshore patrol vehicles (OPVs) for the Royal Malaysian Navy.

The first batch of the OPV programme, which was awarded in 1999, came up to RM5.3 billion. It was reported by The Edge late last year that the contract value for the second batch of vessels could possibly be more than RM7 billion.

BHIC is looking forward to participate in oil and gas projects given Petroliam Nasional Bhd’s (Petronas) substantial capital expenditure programme and plans to develop marginal oilfields.

BHIC is among seven companies that have a fabrication licence by Petronas.

The group is also in advanced negotiations with several parties to make commercial vessels.

While the group is known for its defence-related works, BHIC is looking to also strengthen its commercial side. For the next three to five years, it (revenue) will mainly come from the defence-related works.

BHIC was previously known as PSC Industries Bhd (PSCI).

BHIC posted a net profit of RM79.7 million for FY10 ended Dec 31 from RM76.7 million a year ago. Revenue rose to RM649.8 million from RM543.9 million.

YHS ... Apr11

Yeo Hiap Seng Bhd (YHS), which over the last few years had either been making losses or was only marginally profitable, is striving for more sustainable earnings by rationalising its manufacturing operations.

It had embarked on a plant upgrading exercise to achieve better efficiency and lower operating costs, and had targeted to consolidate its current five factories into three by 2012.

The plant upgrading and ongoing consolidation exercise had resulted in an impairment on plant, property and equipment of RM11 million in FY10.

But while the cost of the exercise had eroded net profit to RM3.82 million for the year, the group’s operating profit had recovered to RM19.57 million, the highest in four years, despite YHS’ revenue falling 13.6% year-on-year to RM471.23 million.

YHS attributed the fall in revenue to the discontinuation of the Red Bull products distribution business, which went to rival beverage manufacturer Fraser & Neave Holdings Bhd.

The next step for YHS to regain its lustre among food and beverage stocks is to recover its market share and replace lost revenue caused by its exit from the Red Bull business.

Its core brands and products would continue to be the key drivers of its business. Yeo’s Asian soft drinks remained the market leader with a 38% market share despite intense competition.

YHS’ largest shareholder is YHS (Singapore) Pte Ltd, which holds a 60.81% stake in the company.

Its net cash and short-term cash investment increased from RM42 million a year ago to RM65 million as at end-December 2010 with no borrowings.

Reliance ... Apr11

Datuk Samsudin Abu Hassan has emerged as director of Reliance Pacific Bhd barely two months after he quit as executive director of Seloga Holdings Bhd. Reliance announced his appointment as its independent and non-executive director.

He said he was invited by Reliance group's major shareholder to join the board of the company.

Reliance is in the midst of selling off its travel business to focus on its hotel and property activities. In January 2011, Reliance announced that it was selling its travel division to Alpha Vantage Sdn Bhd for RM52.23mil because the travel units were losing money as margins in the travel business were thinning due to competitive pressure. Alpha Vantage is a company in which Reliance chairman Datuk Gan Eng Kwong and chief executive officer Datin Irene Tan are shareholders.

The group felt it would be more beneficial to focus and utilise resources on higher profit margin divisions.

Reliance has several plots of vacant land in Port Dickson. It owns the Avillion Hotel Group which has hotels in Port Dickson and Malacca.

Star ... Apr11

Having seen its cash pile diminish significantly, Star Publications (M) Bhd is proposing to raise up to RM750 million from the capital market to boost its war chest. The amount makes the proposed exercise Star Publications’ largest fund-raising effort to date.

The proposed fund-raising exercise could increase Star’s gross gearing ratio to 0.82 times, from 0.23 times currently.

It proposed to raise up to RM750 million in commercial paper (CP) and medium-term notes (MTN) for investments, capital expenditure and working capital requirements. It intends to implement CP and MTN programmes with a limit of up to RM750 million in nominal value for each programme. The proposed programmes will have a combined limit of up to RM750 million.

For illustrative purposes, based on Star’s audited consolidated balance sheet as at Dec 31, 2009, and assuming that the maximum amount of RM750 million nominal value of CP and/or MTNs is issued, the ratio of total debt to shareholders’ funds would increase from 0.23 times to 0.82 times.

The CP programme will have a tenure of seven years from the first issuance of the paper while the MTN programme will have a tenure of 15 years.

While the issuance of the CP and MTNs will not have an effect on Star’s issued and paid-up share capital, the company said the proposed programmes will increase its consolidated gearing, with the level dependent on the amount raised. The effect on its gearing will be offset if the proceeds raised are used to refinance existing borrowings.

The effects of the CP and MTN issuances on consolidated earnings will depend on, among other things, the effective borrowing cost of the debt issuances and the use of the proceeds, details of which have not been disclosed at this stage.

On Dec 31, 2010, Star’s cash and cash equivalents stood at RM216.7 million compared with RM773.2 million a year earlier. During the year, the publishing company saw its cash position decrease by RM545.9 million, mainly due to dividends paid and repayment of MTNs.

After deducting borrowings, its net cash as at end-2010 stood at RM121.6 million, compared with RM474.3 million at the end of 2009.   

During the year, Star also acquired more newsprint and its inventory shot up to RM210.5 million compared with RM85.5 million a year earlier.

While this is not the first time that Star has raised funds via the debt market, it is the largest fund-raising exercise for the company, should it raise the full amount.

The company had issued debt papers twice in the past 10 years. The last time it made plans to raise funds via the debt market was in 2004, when it announced that it would raise up to RM350 million via CP or MTN programmes. At that time, the company was sitting on a healthy cash pile of RM258 million.