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Reports Malaysia

Malaysia stock market and companies daily report (April 23, 2014)

April 23, 2014, Wednesday, 07:22 GMT | 03:22 EST | 11:52 IST | 14:22 SGT
Contributed by Shares Investment

BAT’s Market Share Holds Steady, Illicit Cigarettes Concern

- British America Tobacco (BAT), Malaysia’s largest tobacco company, sees its premium brand segment (which accounted for three quarter of the market) gaining market share this year, despite challenges from the illicit cigarette trade.

- The group’s market share grew by 1 percent to 62 percent, maintaining its position as the market leader of Malaysia’s legalised tobacco industry. Dunhill’s market share expanded 1.3 percent to 47.6 percent.

- According to the 2013 Illicit Cigarette Study, the legal cigarette industry sales volume declined almost 17 percent in 4Q13, due to exercise-led price increase. At the same time, illicit trade increased by 4.5 percent.

Significance: BAT chairman Datuk Mohamad Salim Fateh Din said any further increase in exercise duties would fuel the illegal cigarette problem. “It was particularly notable in 2013, that despite exercise increases in both 2012 and 2013, the group’s exercise and duty payments to the government declined, versus 2012.”

PublicInvest Research Upgrades Uzma To “Outperform”, Target Price RM7.20

- PublicInvest Research is positive on the recent Tanjong Baram RSC project awarded by Petronas, which is worth US$100 million or RM327 million, of which about half is contract to Uzma. The total development cost for the project is estimated at RM101 million.

- Uzma currently has a secured orderbook of RM1.8 billion which is set to last till 2017 with its bid book estimated to be about RM2.8 billion.

- The research house is waiting for more special projects to be announced, in activities such as chemical enhanced oil recovery, brownfield rejuvenation and risk service contract works. It added that the recent 1-for-1 rights issue to raise RM99 million would aid in the funding of the Tanjong Baram project.

Significance: PublicInvest Research upgrades Uzma to “Outperform” rating with a target price of RM7.20 pegged to a 19 times price-to-earnings multiple based on FY15 earnings per share of RM0.379.

CIMB Research Maintains “Add” Call On UMW-OG, Target Price RM5.00

- UMW Oil & Gas Corporation’s (UMW-OG) Naga 7 jack-up rig could be in for potential early delivery, the construction of which was originally scheduled to be completed in December 2014. This positive development comes just a month after the early delivery of Naga 5, a month earlier than the original schedule.

- Unlike Naga 7, Naga 5 already has a contract signed. In mid-May, the jack-up rig will start servicing a six-week US$7 million or RM22.8 million drilling contract awarded by Nido Petroleum for work in Philippines. This translates into an attractive daily charter rate of about US$165,000 per day.

- Management is scouting for a second contract for Naga 5 and first contracts for Naga 6 and Naga 7. The outcome of negotiations for Naga 5’s second contract could be due this month. CIMB Research expects the daily charter rate to normalise to around US$150,000, which is still appealing.

Significance: CIMB Research has an “Add” rating for UMW-OG with a target price of RM5.00, as the firm embarks on an aggressive fleet expansion to take advantage of the shortage of Malaysian-flagged jack-ups as well as high demand for jack-ups in Southeast Asia.