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Reports Malaysia

Malaysia stock market and companies daily report (April 30, 2014)

April 30, 2014, Wednesday, 04:47 GMT | 00:47 EST | 09:17 IST | 11:47 SGT
Contributed by Shares Investment

Censof To Benefit From GST Rollout

- With the implementation of the Goods and Services Tax (GST) regime set to be implemented on 1 April 2015 and registration to commence in 1 June, Censof Holdings is expected to gain sizeable contracts with the establishment of the GST software services across the country.

- MIDF Research noted that companies with an annual sales turnover in excess of RM0.5 million are required to participate in the GST system. The Royal Malaysia Customs estimates that 22 percent of, or 1.2 million out of the 5.4 million, companies and businesses registered with the Companies Commission of Malaysia fall under this segment.

- The research house expects a strong take up rate given the short registration window of 10 months. Additionally, the remaining 4.2 million businesses could apply for voluntary registration to avoid the hassle of application once the business crosses the threshold.

Significance: MIDF value Censof at RM0.58 with a FY15 forecast earnings per share of RM0.036 against a forward price-to-earnings ratio of 15.8 times. The target price offers a 16 percent upside based on the firm’s 29 April closing price of RM0.50.

Eversendai Secures RM172.2m In New Contracts

- Through its subsidiaries in the Middle East and India, Eversendai Corporation bagged several contracts for structural steel projects worth RM172.2 million.

- Out of the total sum, two projects were valued over RM40 million each with the first involving the construction of a complex steel construction on Dana Island in Doha, Qatar, expected to be completed by December.

- The second large contract comprises the construction of a facility for the International Airport in Jeddah, Kingdom of Saudi Arabia, meant for the handling of the carriers’ existing and new aircraft engines, slated for completed by January 2015.

Significance: Eversendai is able to rely on its reputation to bid for upcoming projects in line with the Dubai World Expo 2020 and strengthen its position as a global player in the booming construction market in the Middle Eastern region.

JF Apex Research Maintains Hold On DiGi.Com

- DiGi.Com’s 1Q14 net income rose 47.4 percent year on year to RM485 million, as a result of lower depreciation. However, net profit fell 11.5 percent quarter on quarter driven by higher taxes without last year’s broadband incentives.

- Quarter-on-quarter revenue declined 0.9 percent to RM1,718 million, from RM1,733 million, due to seasonal churn. DiGi’s customer base declined 110,000 to 10.885 million in 1Q14.

- DiGi reported its first interim dividend of RM0.062 per share, representing a 99.4 percent payout ratio. On the balance sheet front, Digi’s 1Q14 cash balance reduced to RM372 million from RM761 million in 2Q13 and around RM1.5 billion in FY12.

Significance: With a capital expenditure budget of RM900 million this year, concerns has been raised of DiGi’s ability to pay constant dividends. JF Apex Research maintains a “hold” recommendation with an unchanged target price of RM4.85.