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Reports Malaysia

Malaysia stock market and companies daily report (April 14, 2014)

April 14, 2014, Monday, 05:40 GMT | 01:40 EST | 10:10 IST | 12:40 SGT
Contributed by Shares Investment

Penang Construction Contracts Value To Increase 5% To 10%

- Penang Master Builders and Building Materials Association president Datuk Lim Kai Seng said Penang should see between 5 percent and 10 percent increase in value and volume of construction projects from the private and government sectors this year from RM6.6 billion achieved last year.

- IJM Land, Mah Sing Group, DNP Land, a subsidiary of Wing Tai Malaysia, Ideal United Bintang, Tambun Indah Land, Sunway, S P Setia and Eastern & Oriental, are among the eight developers with plans to undertake fresh projects this year valued at a total of about RM4.6 billion.

- For the next three years, the value of construction and renovation works to be generated respectively from the projects of the eight developers is about RM1.5 billion and RM200 million per year.

Significance: The state and Federal government’s plan to implement 40,000 affordable houses with a collective gross development value of about RM8 billion to be developed between 2014 and 2020 will generate construction and renovation works with a respective value of RM4.5 billion and RM1 billion.

DRB-Hicom Acquires SSKM For RM5.5m

- In a statement on Bursa Malaysia, DRB-Hicom says its wholly-owned subsidiary Edaran Otomobil Nasional had entered into a conditional share sale agreement with Melewar Leisure (ML) and Avis Investment Services for the proposed acquisition of 3.42 million shares of vehicle rental company Sistem Sewa Kereta Malaysia (SSKM) for RM5.5 million.

- The proposed acquisition provides an opportunity for DRB-Hicom to diversify into the vehicle rental business, which can complement the vehicle leasing business currently undertaken under its subsidiary, DRB-Hicom Leasing.

- In addition, DRB-Hicom can also leverage on SSKM’s existing branch network, infrastructure, customer base and the Avis brand to further create synergies between SSKM and the other relevant business in the group.

Significance: DRB-Hicom said the sum of RM5.5 million was arrived at on a willing buyer-willing seller basis after taking into consideration SSKM’s financial position in FY12, its potential future earnings, and the proposed capitalisation of a debt owing to ML as at 28 February of RM1.4 million, adding that the acquisition was expected to be completed by this quarter.

HLIB Research Maintains “Hold” Rating On Genting Malaysia, Target Price RM4.49

- Genting Malaysia is constructing a new cable car system to replace Awana Skyway in Genting Highlands. The new cable car system is said to have 106 gondolas which covers 2.8 kilometres and has the ability to transport up to 2,000 passengers per hour from Sri Layang/Awana to the highlands.

- The construction of the new cable car system is part of Genting Malaysia’s RM5 billion Genting Integrated Tourism Plan (GITP), where it was announced that it would be constructing a new upper cable car system in an effort to improve its accessibility to the resort. The construction is expected to complete and open in 2016.

- Going forward, HLIB Research expects more news flow on Genting Malaysia’s GITP efforts. Among others that have been announced are the development of a new hotel (three-star hotel with estimated 1,300 rooms), upgrades on its show area (with seating capacity of 10,000 people), construction of a new multi-storey car park as well as additional bus space.

Significance: HLIB Research maintains a “Hold” rating on Genting Malaysia with an unchanged target price of RM4.49 based on sum-of-parts valuations. Potential re-rating catalyst for the counter could come from a spillover effect to its casino as more visitors patronise the new outdoor theme park.