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Reports Malaysia

Malaysia stock market and companies daily report (April 24, 2014)

April 24, 2014, Thursday, 06:14 GMT | 02:14 EST | 09:44 IST | 12:14 SGT
Contributed by Shares Investment

Faber Transforms Into Malaysia’s Largest Asset And Facility Management Firm

- After Faber Group’s announcement on 18 April that it has entered into a conditional share sale agreement with UEM Group, with regards to the proposed acquisition of Opus Group and Projek Penyelenggaraan Lebuhraya for RM1.2 billion. The stage is set for Faber to be turned into the largest asset and facility management company in Malaysia.

- MIDF Research believes that the conditions for the proposed merger were negotiated earlier and can be fulfilled. It also expects the shareholders to give the go ahead for the proposed merger as it is deemed earnings accretive. On this note, it expects the proposed deal could be completed in three months’ time.

- Net cash for the enlarged Faber entity will stand at approximately RM245 million or RM0.30 per share after the merger. The demand for capital expenditure expected to be in the region of RM50 million for the first few years is not high, reflecting the nature of the business.

Significance: MIDF Research maintains “Buy” call on Faber Group with a target price of RM3.61 pegged to a 13.7 times price-to-earnings ratio (PER) based on the group’s post merger FY15 earnings per share of RM0.264.

Alam Maritim Raises RM166.1m In Shares Sale

- In a filing with Bursa Malaysia, Alam Maritim said that it had entered into an agreement with companies owned by Tan Sri Quek Leng Chan and his associate, Paul Poh, to collectively sell them 123 million shares or 15.5 percent of the total share capital, at RM1.35 per share.

- The proposed deal will yield Alam Maritim about RM166.1 million, thus enabling it to raise additional funds without having to incur interest expenses, in addition to strengthening its equity base, which in turn may potentially increase liquidity and marketability of its shares.

- On the utilisation of the net proceeds, Alam Maritim said some RM67 million would be allocated to acquire a new vessel or general working capital, RM95.1 million as repayment of bank borrowings and RM3.8 million for expenses related to the proposed share issuance.

Significance: Notably just a week ago, Quek took up 100 million shares in Singapore-listed Ezion Holdings, another offshore support vessel player.

Kenanga Research Initiates “Outperform” Call On HSL, Target Price RM2.31

- Kenanga Research has listed four reasons it likes Hock Seng Lee (HSL), namely one, it is one of the biggest contractors in Sarawak majoring in marine engineering; two, it has consistently secured more than RM500 million worth of jobs per year since 2012.

- In addition, it has bright earnings visibility driven by an outstanding order book of RM1.1 billion and expects new orders of RM600 million every year; and it has strong financials, that is its margins are among the highest in the construction space and it also has a strong cash pile with no borrowings.

- Being a major contractor in Sarawak, HSL is everywhere in the state. More importantly, it has significant presence in the areas covered by the Sarawak Corridor of Renewable Energy, like Samalaju, Mukah and Tanjung Manis.

Significance: Kenanga Research has an “Outperform” rating for HSL with a target price of RM2.31 based on forward PER of 11 times on FY15 earnings per share of RM0.21, which is one standard deviation above its historical PER mean.