Malaysia stock market and companies daily report (May 22, 2015)

Axiata On The Right Path: HLIB

- Hong Leong Investment Bank (HLIB) believes that Axiata is embarking on the right approaches, absorbing the short-term pain for long-term sustainability, noting that majority of its hurdles are behind now and gradual improvements are expected for the telco.

- Simplified postpaid plans were introduced by the firm and the take-up rate is encouraging, up from 800 per day to 1,800 per day, eventually leading to rival’s reaction. The group also has new prepaid plans on its pipeline.

- The research house noted that Axiata has set a prudent capital expenditure budget of RM1.1 billion to elevate Long-Term Evolution population coverage from 15 percent with 1,700 sites to 30 percent with 2,000 sites by 2015, with emphasis on the quality of service.

Significance: However, HLIB also added that 2H15 would be rather soft due to industry-wide goods and services tax complications that has led to dealers’ refusal to sell reloads, thus the firm needs to be more aggressive in the period. For now, it has a ‘Neutral’ call on the stock with a target price of RM7.52.


Sime Darby 9M15 Earnings Down 36%

- Impacted by tough business conditions and weak markets for commodity prices, Sime Darby recorded a 54.7 percent and 36.2 percent decline in 1Q15 and 9M15 net profit to RM368 million and RM1.3 billion respectively.

- Revenue contribution from its plantation, industrial and motors segment fell in 9M15. In particular, the plantation segment reported a 45.9 percent drop in revenue primarily due to lower contribution from the upstream operations as a result of the lower average crude palm oil price realised.

- Amidst macroeconomic headwinds and weak market sentiments, the group has implemented strict controls on capital expenditure and cost-containment measures while focusing on enhancing operational efficiencies.

Significance: While facing headwinds in its business, the firm noted that its motors division’s expansion into new territories and the property division’s focus on integrated development and affordable properties will enable has helped it face challenging market conditions.


UEM Sunrise Eyes RM2b Sales In 2015

- Property developer UEM Sunrise expects RM2 billion in sales this year with the launch of eight new projects. The target is slightly lower than RM2.4 billion achieved in 2014.

- Group managing director Anwar Syahrin Ajib commented that property transactions are likely to fall in 1H15 due to cooling measures, but he expects the market to regain momentum in the second half, supported by desire of home ownership.

- With respect to the 11th Malaysia Plan that was announced, UEM Sunrise is likely to benefit from the high-speed rail project which will pass through Nusajaya before Tuas.

Significance: Going forward, the group will continue to supply both affordable and premium housing, with unique products that deliver high value. Additionally, the firm also has plans to acquire more land in the next three to five years with allocation of RM500 million annually.

Contributed by Shares Investment