Reports » Malaysia

Malaysia stock market and companies daily report (January 30, 2012)

Contributed by Shares Investment

By Shares Investment

Analysts: Rubber To Be Gold For Sime Darby
Sime Darby (SD), a traditional palm oil plantation, property, motors, industrial equipment, energy & utilities and healthcare company, have decided to enter into the rubber plantation business – an move cheered on by analysts for its long term prospect. SD’s entry into the rubber plantation business will be through an acquisition. SD had on 25 Jan-12 announced in Bursa Malaysia that its indirect-wholly owned subsidiary PT Minamas Gemilang was acquiring a 95% stake in PT Indon Sukses Lestari Makmur (PTISLM) for US$4.36 million (RM13.2 million) cash. In addition, PTISLM is in the process of obtaining the Timber Forest Production Exploitation Business License from the Ministry of Forestry over approximately 10,000 ha of concession area on the industrial plant area for rubber forest located in East Belitung Regency, Bangka Belitung Province, Indonesia. The proposed acquisition, which will be funded through internal funds, is expected to increase SD’s exposure in rubber plantation, which stands at 8,100 ha currently.

Significance: Affin Investment noted that the implied land price of US$460 (RM1,400) per ha in the Indonesian deal seemed fair and they do not expect the deal to have a significant impact on SD’s FY12 to FY14 results as the land in consideration is small compared to its current land bank of 424,556ha in Malaysia and 285,571ha in Indonesia.

GAS Malaysia Expected To Sign A Gas Sales Agreement With Petronas
GAS Malaysia (GasM), a subsidiary of MMC Corp, is expected to sign a gas sales agreement (GSA) with Petroliam Nasional (Petronas) early next month. According to an analyst, the gas price under the new GSA is expected to remain the same at RM14.05 per million British Thermal Units (mmBTU) as the price has been revised upwards from RM11.05 mmBTU as of June last year. Currently, GasM has four major shareholders. The biggest shareholder in GasM, with an ownership of a 55%-stake, is MMC Corp and Shapadu (Holdings). This is followed by Tokyo Gas-Mitsui & Co (Holdings) and Petronas Gas which holds a 25% stake and 20% stake respectively. In GasM’s initial public offering (IPO), they are offering 333.84 million ordinary shares of 50 sen each, representing 26% of the existing and paid-up share capital of GasM.

Significance: The new contract expected to be signed by GasM will be a boost to its reputation as it prepares to list in Bursa Malaysia potentially in April.

Long Wait For IJM And AZR For The Award For The MRT Project
IJM Corp (IJM) and Ahmad Zaki Resources (AZR) are both waiting for a formal letter of award from MRT Corp for the two elevated packages of the My Rapid Transit (MRT) Sungai Buloh-Kajang line before making an announcement on Bursa Malaysia over the success of their bid. IJM and AZR had most recently been appointed the main contractors for the RM974 million package V5 and the RM764 million package V6 respectively for the MRT construction works. Both companies will be constructing a viaduct guideway and other associated works. The construction of a viaduct guideway – an elevated guideway structure on which the tracks of MRT is located – is one of the many projects introduced by Malaysian Government. One of the largest projects awarded recently is the RM7 billion West Coast Expressway project. The project had been awarded to Kumpulan Europlus’ (KEuro) 64.2%-owned subsidiary West Coast Expressway to build the 316km highway between Banting, Selangor, and Taiping, Perak. KEuro is a 23% subsidiary of IJM.

Significance: Analysts said IJM stood to benefit the most from the slew of national infrastructure projects recently awarded. Investors could potentially ride on the optimism that more projects will be awarded for construction companies which saw IJM’s share price increasing 4.6% (25 sen) to RM5.70 per share.

This article is contributed by Shares Investment. Visit Sharesinv.com for the latest Singapore, Malaysia and China stock market news and reports.