Oldtown ... Dec12

The management would refocus on growing its business, after completing a private placement exercise which raised RM64 million.

The exercise, floating 33 million new shares which constitute about 10 per cent of the company's total shares at RM1.95 each, would strengthen the cafe outlet chain operator's financial position to undertake earnings accretive expansion going forward.

Estimate that Oldtown's net cash in the third quarter calendar year 2012 (post placement and ex-proposed dividend) amounted to RM107 million.

Alliance said that according to the management, approximately 70 per cent of the fund raised or RM45 million, would be used for capital expenditure (RM35 million) and an additional marketing budget (RM10 million), while the rest is for working capital needs.

MYEG ... Dec12

It is poised to see acceleration of earnings in the medium term, spurred by the introduction of new Road Transport Department and Immigration Department services. In the longer term, the customs tax monitoring service will be the wildcard.

Its existing portfolio of service continues to grow, although growth rates will inevitably slow as they near market share saturation levels.

The company’s services are seeing increasing market share and customer acceptance. The underlying market for its range of services is large, with recurring demand supported by the group popularity of online services.

Despite substantial capex in the customs monitoring and other new planned services, MYEG’s balance sheet remains strong. Its net cash position improved to rm6.1 million as at end Sept 2012. Amounts from its associate company has been rising to rm20.4 million as at end Sept 2012.

It is set to spend up to rm60 million for the financial ended June 30 2013 to roll its two new services, the online tax monitoring system and expansion of its online foreign worker permit renewal services.

Its online tax monitoring system has already been completed and its targeted to launch by first quarter of 2013.

Also in the group’s 2013 pipeline is the expansion of its existing online foreign worker permit renewal services. The existing services currently (Dec 2012) only caters to the work permit renewals for foreign maids by MYEG is also looking to expand its services to other sectors as well.

MyEG is mainly involved in the development and implementation of E Government services to 12 government agencies including the JPJ.

Gamuda ... Dec12

The outlook for Vietnam property remains subdued but its construction order book should ride on the rollout of new mass rapid transit (MRT) lines.

Gamuda has scrapped its plans to venture into a build-operate-transfer (BOT) highway project in Indonesia as negotiations fell through. This is not a big setback as chances for order book top up are better locally, as the group is targeting over RM10bil worth of new jobs in 2013.

Group managing director Datuk Lin Yun Ling's recent (Dec 2012) near-doubling of his stake to 3.25% is a vote of confidence in the group's prospects and should provide some reassurance to investors.

Vietnam property remains subdued, especially in Ho Chi Minh City . Q1'13's RM330mil new property sales came largely from Malaysia . However, the management is hopeful that its build-then-sell approach will revive demand over the longer term.

YTLPower ... Dec12

YTL Corp Bhd may have to wait a bit longer before making an offer to take listed subsidiary YTL Power International Bhd private, as the former's share price has come off quite a bit in recent months prior to 18 Dec 2012.

Most believe YTL Corp would take YTL Power private via a share swap, as had happened with YTL Cement Bhd in February 2012, because this would enable the Yeoh family, which has a 55% stake in YTL Corp, to preserve their cashflow and stake at the group level.

YTL Corp's current (Dec 2012) share price level precluded an offer to take YTL Power private anytime soon. YTL Corp and the family would want to maximise their advantage from the share price vantage.

The case for taking YTL Power private lies in the company's cashpile. YTL Power has a cashpile of RM10bil, which YTL Corp will need for large multi-billion-ringgit infrastructure projects such as the high-speed rail project and also for the group's restructuring plans.

YTL Corp managing director Tan Sri Francis Yeoh has also been reported to be interested in acquiring overseas assets.

It would be more meaningful to take YTL Power private first before the other listed subsidiaries not only due to the company's cashpile but also contributions to earnings at the group level. The other listed subsidiaries under the YTL Corp umbrella include YTL Land and Development Bhd, YTL E-Solutions Bhd and Starhill Reit.

While the share swap would not be ideal for realising value for minority shareholders of YTL Power, shareholders should note the possibility of YTL Power turning into a “value trap” if the offer did not materialise.

In the past 12 months prior to Dec 2012, YTL Power's management has reduced the interim dividend per share (DPS) to just a quarter of the previous run-rate, resulting in a significant de-rating of the stock.

Since there were no catalysts for the share price, a re-rating was not in the cards for the future. This probability of YTL Power raising dividends or embarking on accretive acquisitions in the near term is low. Furthermore, the dividend yields of YTL Corp and YTL Power have converged with the decline in the latter's dividends, coinciding with an increase in the former's dividends.

Assuming a swap ratio of one time, there would not be a significant reduction in dividend yields for YTL Power shareholders swapping into YTL Corp shares. However, buying into YTL Power as a cheaper entry into YTL Corp because of the premium that would be offered in the event of a share swap, implying a discounted entry into YTL Corp.

FACBInd ... Dec12

分享锦集：第一控股丑小鸭变白天鹅

第一控股工业（FACBInd，2984，主板工业产品股）12月12日宣布，以1亿3100万令吉，脱售两项资产，取得将近6800万令吉的盈利，每股净赚约80仙。

这项消息，使投资者对该股刮目相待，股价在短短的数天内，上涨了1倍。

该公司的股价，数年来都在50仙的水平波动。当其他股项节节挺升时，该股却欲振乏力，落后大势甚远。

金融海啸大出血

实际上，从资产产价值的角度看，该公司的股票，数年来都被严重低估。最主要的原因，是该公司的业绩，乏善可陈，提到第一控股工业，大部分投资者都会嗤之以鼻，认为这是一只劣股，因此不屑一顾，这是导致该股股价长期不振的主因。

犹记在2009年，当次贷风暴引发的金融海啸达到最高潮时，第一控股工业大出血，亏蚀5000多万令吉，以一只实收资本只有8500多万令吉的公司，这样的亏蚀是惊人的，难怪该公司股东都怀疑该公司能否生存下去，争相抛售，使该股一度跌到2角的水平。

我有一位持有该股的朋友忧心忡忡地问我：“怎么办？”

我在温习该公司的所有资料，包括细读历年的年报后，发现该公司的每股净有形资产价值，原本高达2令吉50仙，在亏蚀5000多万令吉后，仍高达2令吉，以2角买进该公司的股票，等于以2角买进2令吉的资产，这是一个投资良机。

我劝他加码，据我所知，他以2角多买进更多，持守至今仍未出售，取得丰厚的回酬。

原来当时我发现，次贷金融风暴，导致不锈钢原料及制成品价格暴跌，根据会计准则，该公司在结账时，必须根据市价，勾销原料和存货的亏蚀额，使账目反映公司的实际情况。

此项勾销，使该公司单单在库存原料和存货方面，就亏损4400多万令吉，这项勾销，其性质跟折旧一样，其实未涉及现金的支出，所以对该公司的现金流量，没有影响。该公司财务陷困的可能性不高。

更重要的是这是一次过的亏蚀，以后不会再出现。

再细读该公司2009年的资产负债表，我发现该公司的每股净有形资产价值，由于这项亏损，已由约2令吉50仙降至约2令吉。

从2009年报的“产业表”，我发现该公司在莎亚南的20英亩厂地，是在1992年买进的，账目中的价值，还是以1992年时的价值入账并未重估价值。

我们知道，地产的价值，长期来说，有涨无跌，1992年买进的地皮，到了17年后的2009年，价值肯定已涨了不止2倍。

净有形资产RM2.68

所以，当时我很肯定，第一控股工业的每股净有形资产价值，不止2令吉。当时的股价只有2角，只等于其有形资产价值的十分之一，从资产价值的角度看，这是一个投资良机。

现在，该公司以9700万令吉，售出这段在账目中只有3500万令吉的厂地，使该公司的每股净有形资产价值，由今年9月30日时的1令吉87仙，激增至2令吉68仙。

业绩差掩盖资产价值

这项脱售，证明了该公司的股票，数年来价值一直都被低估。

我重提这段往事，是想说明四点：第一、从资产的角度看，目前有不少上市公司的股价，价值仍被严重低估。

无可否认的，这些拥有宝贵资产的上市公司，其股票不受青睐，大部分是由于业绩表现差劲使然。

第二、是大部分投资者都没有深入阅读上市公司的年报，不知道这些公司拥有宝贵的资产，所以，即使股价跌到只等于资产的一半，甚至4分之一或更低，仍不敢买进其股票，错过了廉价买进资产的良机。

第三、大部分投资者都急功近利，没有耐心作长期投资，没有给予资产价值被低估的公司，以时间，让他们利用资产，为他们赚钱。

第四、大部分投资者，都没有养成反向思维的习惯，股市大跌原本是低价买进的良机，但大部分人不但不买，反而卖出，结果错过了数年，甚至10年8年才出现一次的投资良机，委实可惜。

优先买进资产雄厚公司

我是一名反向投资策略的忠实信徒，所以，当第一控股的股价跌到2角，我的朋友问我“怎么办”时，我在做足功课后，劝他不退反进，大胆买进更多第一控股，而且我劝他买进后就长期持有，博取厚利，如今事实证明这是一项正确的投资决定。

在这里，我必须指出，资产只是评估股票价值的许多准则之一，并非惟一的准则。

我们在评价一只股票的价值时，还要加上别的准则，评估才较准确，其中最重要的一个是盈利表现。

股票的价值是一个综合体，资产只是其中一部分。

然而，如果大家深入研究上市公司的资产价值的话，往往可以从中发掘出投资机会，第一控股工业就是一个例子。

当然，如果第一控股工业没有脱售其资产，投资者亦不能从中受惠。

无论如何，拥有雄厚资产的公司，总胜过没有资产的公司。

如果其他条件相等，则应优先买进资产雄厚公司的股票。

第一控股在今的9月30日时，持有2614万令吉的现金，加上脱售资产所得的1亿3100万令吉，手头现金将高达近1亿6000万令吉，在每股2令吉68仙的净有形资产中，现金占约1令吉90仙。

剩下床垫白钢业务

在脱售资产完成后，第一控股仍有两项业务：第一项也是最重要的一项，是梦乡床垫（DREAMLAND），这方面的业务，在大马和中国都赚钱。

第二项是部分白钢制造业，亦有利可图。

该公司财务总管BONGSHEE CHENG受THE EDGE周刊（12月17日）询问时透露该公司将大力发展上述两项业务。

明年料派息11仙

他预测2013年该公司净利可能高达1800万令吉，或每股净赚超过21仙。

他说，该公司一向保持将30%至50%净利作为股息的派息政策，则第一控股明年有每股派发11仙股息的潜能。

如果BONG先生的预测能实现的话，则以目前约1令吉的股价计算，明年的周息率（DIY）高达11%。

而以每股21仙的净利计算，预期本益比仅4.76倍。

该公司的每股净有形资产在脱售完成后将高达2令吉68仙。

无论从本益比、周息率或净资产价值的角度看，1令吉的股价仍属便宜。

Sunway ... Dec12

Sunway Bhd and Iskandar Investment Bhd have teamed up to undertake a mixed development project in Iskandar Malaysia which will have a gross development value of RM12bil.

Its unit Sunway City Bhd and Iskandar Assets Sdn Bhd had teamed up to undertake the project on several parcels of land in Iskandar Malaysia.

The proposed mixed development on the land is expected to generate gross development value amounting to approximately RM12bil.

Under the corporate exercise, SunCity's unit, Harmony Impulse Sdn Bhd would acquire 412.75 acres of land and 366.32 acres in Tanjung Kupang, Johor Baru for a total of RM412.72mil.

SunCity and Iskandar Assets would hold ordinary shares and redeemable preference shares in Harmony Impulse in the proportion of 60:40.

The purchase consideration of up to RM412.72mil for the 799.07 acres was based on RM12.16 per sq ft.

Market observers viewed the venture as “long-term" positive move. This new land will transform Sunway into one of the biggest developers in Iskandar. It has increased its landbank by 29 per cent to 1449ha and raise gross development value by 40 per cent to RM25 billion.

Perisai ... Dec12

It is proposing to acquire a 51% stake in Emas Victoria (L) Bhd which owns a floating production, storage and offloading (FPSO) facility for RM271mil, and at the same time, dispose of a 50% stake in SJR Marine (L) Ltd, which owns a pipelay barge Enterprise 3, for RM112mil. The vendor for both these proposals are EOC Ltd, a unit of Singapore-based Ezra Holdings Ltd, which has a 16.1% stake in Perisai. The proposed acquisitions are expected to be completed by the first half of 2013, and is expected to contribute positively to the earnings of Perisai for the financial year ended Dec 31, 2013.

However, although the proposed acquisition would be immediately earnings accretive, dilution from Perisai’s enlarged share base due to issuance of new shares to fund the purchase, and a 50% reduction of profits from its proposed sale of a pipelay barge, would result in mild earnings per share (EPS) contraction in the financial year ending Dec 31, 2013 (FY13). Nevertheless, earnings growth trajectory at the EPS level will resume from FY14.

Perisai proposed to acquire a 51% stake in Emas Victoria (L) Bhd, which owns an FPSO facility, for RM271mil, and a 51% equity interest in Victoria Production Services Sdn Bhd for RM51. At the same time, Perisai plans to dispose of a 50% stake in SJR Marine (L) Ltd, which owns pipelay barge Enterprise 3, for RM112mil. The purchase price will be satisfied by the issuance of 145 million new Perisai shares, and US$37mil (RM112mil) proceeds from the sale of the SJR Marine stake.

Both transactions are with EOC Ltd, a unit of Singapore-based Ezra Holdings Ltd, which has a 16.1% stake in Perisai.

The proposed acquisitions are expected to contribute positively to the earnings of Perisai in FY13.

Perisai had on Nov 30 2012 signed three transactions with EOC.

First is for Perisai's acquisition of 51% equity interest in EOC's FPSO unit named Lewek Arunothai for US$89mil (RM271mil) which is housed under Emas Victoria. The purchase price will be satisfied by the issuance of 145 million new Perisai shares, and US$37mil proceeds from the sale of the 50% stake of SJR Marine. The 145 million new Perisai shares will be issued at RM1.10 each.

Perisai is also buying a 51% stake in Victoria Production Services Sdn Bhd for RM51. Like Emas Victoria , this company is also in the ship and boat leasing business. Victoria Production will be carrying out the operation and maintenance services for Hess' development block situated at the North Malay Basin . The project is expected to commence in the third quarter of 2013.

Third is for Perisai's disposal of its 50% equity interest in SJR Marine to EOC for US$37mil (RM112mil). Perisai currently owns 100% of SJR Marine. Currently, Enterprise 3 is chartered on a bareboat basis to an oil and gas service provider. The bareboat charter is for 4 years until June 2013. Perisai will eventually sell the remaining stake in SJR Marine to exit the pipe installation segment and focus on drilling and the FPSO operations. Perisai's sale of the 50% equity interest in SJR Marine is slated for completion in August 2013.

In Nov 2012, Perisai's 40%-owned Larizz Petroleum Services secured a contract from US-based Hess Exploration & Production BV for the provision of Lewek Arunothai for Hess's development block at Terengganu's Kamelia field in the North Malay Basin . Larizz is the local agent for EOC. Lewek Arunothai, which will be used to support early production activities, is targeted to be at the project site in mid-2013. Lewek Arunothai is currently being converted and refurbished at a shipyard in Singapore and is expected to be completed by the third quarter of 2013. The estimated costs of conversion is US$143.1mil (RM435.81mil) The contract is for three years with extension options of up to three years. It has a value of US$272mil for the primary charter, with potential for a further US$271mil if the full extension is exercised.

Meanwhile, Perisai will grant EOC a call option to acquire the remaining 50% equity interest in SJR Marine at the same price as the disposal consideration within the next 2 years from the date of completion of the proposed disposal. In the event the call option is not exercised, SJR Marine will source for third party buyers for the Enterprise 3 on terms to be mutually agreed upon within 12 months upon the expiry of the call option granted to the vendor. If SJR Marine is unable to dispose of Enterprise 3 within the 12-month period, Perisai will have a put option to require the vendor to purchase the remaining 50% equity interest in SJR Marine at the same price as the call option for cash.

KPJ ... Dec12

KPJ is aggressively looking at more mergers and acquisitions (M&As) following its recent buy of a stake in a Thai hospital. KPJ has aspirations to have a regional footprint and they are pursuing that actively.

KPJ recently forked out RM60.5mil to buy a 23.4% stake in Thailand 's Vejthani Public Co Ltd (VPCL), which operates the Vejthani Hospital , a multi-specialty private hospital in Bangkok . This deal was likely to be a prelude to a larger exercise.

Market observers recommended the group's asset light model by injecting its hospital assets into the Aqar Reit and even speculated that a special cash dividend could be in the offing. By injecting its hospital assets into Aqar Reit, KPJ minimises its asset base to fuel its expansion, therefore keeping net gearing at a minimum and maximising returns on equity.

In early 2012, KPJ said it would spend RM2bil over the next five years to build new and expand existing hospitals locally and abroad. Despite its rapid expansion, KPJ did not need to raise any cash, as it has commercial papers and medium-term notes of RM250mil which could be utilised if necessary.

IPO ... IWH

Iskandar Waterfront Holdings Sdn Bhd (IWH), a unit majority-controlled by Tan Sri Lim Kang Hoo, is believed to be working on a plan to list the company on Bursa Malaysia by as early as 2013.

IWH is 60 per cent-controlled by Lim and those alligned with him via Credence Resources Sdn Bhd, while the balance are owned by Kumpulan Prasarana Rakyat Johor (KPRJ), a unit controlled by the Johor government.

The plan to sell IWH shares on the stock market are still in the preliminary stage, as the company will first have to be restructured. The shareholding needs to be realigned to include other government-linked companies interest at the IWH level.

IWH is a holding company with interest in as many as five major players in the Johor property sector. Companies it has interest in are Danga Bay Sdn Bhd (100 per cent), Iskandar Coast Sdn Bhd (20 per cent), Iskandar Waterfront Sdn Bhd (72 per cent), CBDD Sdn Bhd (60 per cent) and Tebrau Teguh Bhd (47 per cent).

IWH is the master developer in charge of the development of Danga Bay , Iskandar Waterfront, Tebrau Coast and the central business district development in Johor.

The entire waterfront project is part of the Iskandar Malaysia development, which is spearheaded by Khazanah Nasional Bhd.

This is done via Iskandar Investment Bhd, which was incorporated in late 2006 to oversee and encourage regional development within a 3,600ha landbank in the heart of the Johor region.

Khazanah Nasional has a 80 per cent stake in Iskandar Investment, while KPRJ and the Employees Provident Fund 20 per cent stake.

Currently (Dec 2012), only KPRJ has a direct stake in IWH, which oversees the development of the valuable landbank stretching 1,210ha in southern Johor Baru.

The current gross development value (GDV) of IWH's total landbank stands at more than RM100 billion, and its IPO is bound to attract a lot interest due to the size of its GDV and IWH's unique status.

PCHEM ... Dec12

PetChem's Q3 FY12 earnings dropped 38% on-year, on the back of a 15% on-year revenue decline. The company’s 9MFY2012 net profit fell 12% year on year to rm2.6 billion.

The drop in revenue was due to lower product selling prices for its Olefins & Derivatives (O&D) division, as global manufacturing activities declined thus weakening demand.

Feedstock for PetChem's O&D division was limited as PetChem's supplier undertook a revamping exercise on one of the gas processing plants.

Other factors were weaker product prices for its fertilisers & methanol division due to weaker urea and methanol prices; and lower plant utilisation for its fertilisers & methanol division, due to maintenance for its plants.

Moving forward, the outlook for both divisions remain challenging on the back of continued uncertainties.

Its earnings outlook in 4QFY2012 and 1HFY2013 remains tough due to weak product prices and margins. Also a feedstock supply shortage still persists for both olefins and fertiliser groups. The positive impact from its cheap gas feedstock is unlikely to offset the weak earnings.

Its CEO and CFO presented a more gloomy earnings outlook for PChem in 4Q12 and 1H13. Negative surprises included the company’s more cautious outlook and the financial impact of the discontinuation of the vinyl business, resulting in a huge 4Q12 charge of RM560m. On the olefins and derivatives group, while utilisation is expected to improve from 3Q12 as gas feedstock will increase, it expects the weak margins to persist on the back of depressed product prices and rising costs. Fertiliser will see higher volume as there will be no major maintenance shutdowns in 4Q12. However product margins are likely to remain weak on low demand and rising supply.

Market observers remain negative on PChem's short-term margin outlook given the current (Dec 2012) weak industry margin visibility and challenging operations from continued feedstock shortages.

Earnings would recover by mid-2013 after industry supply cuts from high-cost producers.

With a challenging outlook and the limited upside near-term, near-term share price downside exists on potential consensus earnings downgrades for 2012-14 on the weaker margins and operation outlook.

Maybank ...Dec12

It will decide over the next six months from Nov 2012 whether it wants to locally incorporate its Singapore retail banking operations, a move that may enable it to double the number of outlets there.

Maybank is one of eight foreign banks that hold a qualified full banking (QFB) licence in Singapore , a status that gives it greater branching privileges than other foreign lenders operating there. A QFB-status bank is allowed to have up to 25 business locations on the island republic, and Maybank, which currently (Nov 2012) has 22 branches, is the only Malaysian bank to hold that status.

In June 2012, the Monetary Authority of Singapore (MAS) would require QFB banks that are important to the domestic market to locally incorporate their retail operations.

Maybank was prepared to locally incorporate its Singapore business but needed more details and clarity on what such a move would entail.

The potential move comes as Maybank, the fourth largest bank in Asean by assets, increasingly looks at deriving income from its overseas markets, particularly Indonesia and Singapore . It aims for 40 per cent of its pre-tax profit to come from its overseas operations by 2015 compared with 21 per cent in 2009. In recent years, it spread its wings in the region via organic growth and a series of acquisitions in a bid to become a leading financial services player in Asean by 2015.

For the nine months so far this year, its international operations saw a 53 per cent rise in pre-tax profit to RM1.72 billion, with Singapore accounting for about S$307 million (RM767.5 million) of that.

Genting ...Dec12

Genting Hong Kong Ltd, an 18.4% unit of Genting Malaysia Bhd, will start physical works soon on phase one of its US$1.1bil (RM3.41bil) Resorts World Bayshore, a project that is set to be three times the size of the existing Resorts World Manila. It is understood that construction is scheduled to begin 2013 with a target to finish the first phase by 2016 involving 16ha and an initial US$550mil (RM1.7bil) investment.

When completed, Resorts World Bayshore will hold two upscale hotels with 800 rooms, a grand opera that seats 3,000, a mall, and residential towers centred around a casino that is two times larger than Resorts World Manila's. Both integrated resorts are 20 minutes apart.

Resorts World Bayshore forms part of an ambitious push by the Philippines government and spearheaded by its Philippines Amusement and Gaming Corp to build a 100ha gambling and leisure haven to rival Macau and Las Vegas , dubbed Entertainment City . The development will take up eight sq km of reclaimed land on Manila Bay .

Genting HK, which the Lim family has a 55.3 per cent stake in it, operates its cruise business via two entities, namely Star Cruises-Asia Pacific (Star Asia) and Norwegian Cruise Lines (NCL). It has a 50 per cent joint ownership alongside Apollo and TPG.

It currently (Nov 2012) has a combined fleet of 18 ships cruising to over 200 destination, offering approximately 35,000 lower berths. The plan is to add on a new ship every year. By 2016, expected to have 22 ships.

In 2011, Star Asia's net income rose 76 per cent to US$57.9 million (RM177.7 million), while NCL posted a net income of US$126.9 million and adjusted earnings before interest, tax, depreciation and amortisation of US$506 million versus US$23 million and US$405 million respectively, a year ago.

The performance is not a "one-hit wonder", as its fleet of ships are registering very good occupancy rate. Some of its ships are even registering over 100 per cent occupancy rate. Besides its cruise business, the company's casino project in Manila is also showing good growth signs.

Genting HK has a 50 per cent stake in Travellers International Hotel Group Inc, which owns and managers Resorts World Manila. The other 50 per cent is owned by the Philippines conglomerate Alliance Global Group Inc.

By the time the third phase expansion is completed in 2016, Resorts World Manila is expected to house five hotel chains, a convention centre, as well as larger retail and gaming spaces.

It currently has three hotel chains, a casino, a retail mall among others.
Genting HK and Alliance Global is also investing another US$1.2 billion to build another casino project in Manila - dubbed Resorts World Bayshore.

Mudajaya ... Dec12

It is now in net cash position and has been a dividend-yielding stock. Despite that concerns are still surrounding its Indian independent power producer (IPP) project.

In 2006, Mudajaya ventured into the Indian power sector by taking a 26% stake in RKM Powergen Pte Ltd via subsidiary Mudajaya Corp Bhd in undertaking a 1,440MW coal-fired IPP project in Chhattisgarh, India. The project comprises four generating units with a nominal capacity of 360MW each.

RKM is one of the IPPs that have yet to ink the fuel-supply agreement (FSA) with Coal India Ltd due to the coal-supply deadlock.

The project is still on track despite fears of delays but once the Indian power plant goes into full swing, it will be the company's earnings driver, going forward, as sales of electricity will trickle in.

The IPP would be a “turning point” for Mudajaya, as it will lift the company from being a pure construction player to an IPP and provide the company with a stable recurring income rather than its current cyclical revenue from construction.

Earnings from the Indian IPP is estimated to contribute some 20% to Mudajaya's bottom line.

Its management stated that the power plant in Chhattisgarh is making significant progress and is expected to be commissioned in July 2013.

The imminent signing of the Indian IPP's FSA remains a key share price catalyst, along with potential new contracts. Mudajaya.

However checks indicate that the progress of construction at the Chhattisgarh project may have faced more delays due to unfavourable weather as well as labour shortages.

It appears that the first unit of its 4x360MW power plant will only be completed by end of first quarter 2013, versus the end of the current financial year ending Dec 31, 2012 (FY12) previously, with the remaining three units expected to come on stream on a staggered basis after three months thereafter.

Mudajaya currently has profits coming from its equipment procurement contract in India.

The Indian IPP is tax-free for the first 10 years and is expected to provide Mudajaya with a good income stream.

With RM419.49mil in cash, Mudajaya intends to make a significant purchase in the region, possibly a power plant, to boost its recurring income by becoming an IPP itself. It is looking at maybe 50% to 60% of its income to come from recurring income including IPPs, tolled highways and property projects in five to six years from 2012.

Mudajaya's revenue, which is now (Dec 2012) derived mainly from construction, will shift significantly once its recurring income increases. Currently, it has negligible recurring income.

Mudajaya's orderbook stood at RM2.8bil as of Sept 30 2012 that will last the company for the next three to four years. It has tendered for RM5bil worth of projects, mainly targeting the power plants, highways and building.

Mudajaya's power plant expansion may increase the company's construction order book and provide it with another source of steady earnings when concession profits kick in.

Mudajaya has no urgent need to raise fresh funding, given its net cash position, and can expect to soon enjoy a larger stream of recurring income. However, Mudajaya will be going to the bond market in 2013 to further boost its coffer.

The company's capital expenditure (capex) for FY13 will not be significant but is expected to rise in FY14 and FY15 to RM400mil to RM500mil as it takes on more projects. Its current capex is around RM200mil.

In its third-quarter announcement, Mudajaya declared a second interim single-tier dividend of 12.5% (or 2.5 sen) per ordinary share of 20 sen each. For the first nine months to Sept 30, Mudajaya posted a higher net profit of RM189.89mil, or 34.86 sen earnings per share, against RM164.5mil, or 30.18 sen per share, in the corresponding period a year ago.

As at Sept 30, shareholders funds stood at RM1.09bil and net assets per share at RM2.

Mudajaya fares better on home turf with civil works for the Janamanjung and Tanjung Bin power plant extension running on track.

Mudajaya is in negotiations with the Government for a building-type job worth more than RM200mil. Under this contract, Mudajaya will be paid via land where it intends to embark on a township development.

Mudajaya has also submitted its pre-qualification tender for the 1,300MW gas-fired plant at the Refinery and Petrochemical Integrated Development in Pengerang, Johor.

CIMB ... Dec12

Japan's biggest bank, Mitsubishi UFJ Financial Group, is among the first round bidders

for General Electric's $1.5 billion stake in Thailand's fifth-largest lender, Bank of Ayudhya.

Suitors of GE's Thai bank stake are seeking a foothold in one of Asia's fastest growing economies. They are expected to seek full control of the bank, which is also Thailand's No. 1 retail bank with a $5.9 billion market value.

In addition to MUFG, GE received multiple bids for its 25.3 percent stake, with second round offers due after Dec. 25 2012.

Source said that CIMB Group Holdings had also lodged a bid. Singapore's Oversea-Chinese Banking Corp, which was earlier seen as a potential bidder, did not submit a first-round bid.

Any suitor seeking to take control of the bank would have to overcome several hurdles, including a 49 percent cap on foreign ownership and Thailand's single presence policy on bank ownership.

Some private equity firms were initially eyeing the stake, but their interest has cooled, sources said, as regulators may not favour short-term investors entering the country's banking sector.

Market observers viewed that it is unlikely to acquire GE’s stake in Thailand BOA as CIMB was in capital conservation mode, and was highly unlikely to utilize a significant portion of its capital to acquire a non controlling stake in BOA.

Its near term risks include ongoing external uncertainties due to its cast regional footholds, potential foreign selldown due to high foreign shareholdings (40% in Oct 2012) and higher risk premium with the 13 GE drawing closer.

Protasco ... Dec12

Infra development provider firm Protasco Bhd reported a 194% jump in its net profit to RM18mil for its recent quarter with its revenue also higher at RM206.6mil against RM175.5mil earlier.

It also declared a special plus interim dividend of 10 sen per share.

The better performance was a result of higher revenue from its construction contracts segment and improved operating margins particularly in its construction contracts segment, the company said.

For the nine months to Sept 30, Protasco made a net profit of RM30.73mil on RM484.03mil in sales. This compares with a net profit of RM19.5mil on sales of RM450.4mil a year earlier.

As at Sept 30, the company had some RM41mil in cash and bank balances.

Protasco announced a slew of board changes in coming week including the emergence of a new substantial shareholder, Kingdom Seekers Ventures Sdn Bhd. One of the directors of Kingdom is Tey Por Yee who is the boss of mobile application service provider Nextnation Communications Bhd which is listed on the ACE market.

Tey Por Yee has emerged as the biggest shareholders with a 27.11% stake. He bought the shares at rm1.20. Kingdom Seekers purchased the block of shares from Datuk Mohd Ibrahim Mohd Nor, better known for his foray into Bernas which he controlled until 2003.

Tey says he funded the acquisition via a combination of borrowings and his own funds. At rm1.20 a share Tey would have paid rm96.51 million for the block of 80.43 million shares. He stresses that he is merely an investor and will not get involved in the day to day management of Protasco.

He has been scouting around for a property development company for sometime.

Datuk Mohd Hanif Sher Mohamed was appointed as independent and non executive director.

Mohd Ibrahim bought a small stake in Protasco in early 2010 when the shares were trading at between 90 sen and rm1.00. In June 2012 Mohd Ibrahim increased his interest after buying shares from one of Protasco’s founding members, Datuk Hasnur Rabiain Ismail.

Other long time shareholders include Datuk Chong Ket Pen, who together with Hasnur, started his career in the Public Works Dept before venturing into Protasco Bhd.

Sources say among other changes, Protasco is expected to see an injection of assets soon.

Protasco Bhd known for its concession to maintain 6200km of federal roads in several states in the peninsula as well as Sarawak.

As at end Sept 2012, Protasco had cash and bank balances of rm41.45 million, deposits with licensed banks of rm55 million and short term investments of rm39.70 million. Its short term borrowings amounted to rm31.75 million while long term borrowings were rm4.40 million.

Protasco had a 100 acre land parcel in Sepang with a net book value of rm110.95 million which was last valued in April 2002. It also owns several shophouses and smaller parcels throughout Malaysia.

The company started developing the 100 acres in 2007. To date (Dec 2012) it has built up two blocks of condo.

Its present bulk of earnings comes from its concession to maintain 6200km of federal roads in Pahang, Selangor, Terengganu and Kelantan.

The concession is held by its 51% unit and expires in 2016. Through the wholly owned subsidiary HCM Engineering Bhd, it also holds the concession to maintain 420km of roads in Sibu, Mukah and Bintulu in Sarawak.

There is no change in the concession despite the change in shareholding.

While Tey’s investments in Protasco has its merits, how his plans for the company play out remains to be seen.

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.

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.

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.

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.

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.

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.