Reports » Malaysia
Malaysia stock market and companies daily report (December 06, 2013)
Pos Malaysia’s Rating Downgrade to “Hold”: AmResearch
- AmResearch downgraded Pos Malaysia from a “Buy” to “Hold” rating, but raised their fair value for the counter to RM6.16, as it rolled forward its discounted cash flow valuation and tweaked their capital expenditure assumption.
- The rating downgrade was because of limited upside as Pos Malaysia’s share price has soared near to their fair value. Since AmResearch’s re-initiation coverage of Pos Malaysia in September, the stock has appreciated 10.5 percent to 4 November’s closing price of RM5.70. It closed at its all-time high of RM6.00 on 29 November.
- Based on its last traded price of RM5.80, the stock is trading at FY14 forecast price-to-earnings ratio of 17 times, or around one standard deviation above its three-year mean level.
Significance: Pos Malaysia’s five-year strategic plan appears to be well on track. Till date, the firm has increased its Ar-Rahnu presence at over 90 outlets, and expects to achieve its target of 100 outlets by the end of FY14. Key re-rating catalyst for Pos Malaysia will be the securing of merger and acquisition deals which will fast track its earnings growth.
Kelington Secures RM148.6m Deal
- Kelington Group’s (KG) wholly-owned subsidiary, Kelington Engineering, has won a job worth US$46 million or RM148.6 million from Kang Hui Maternity Centre Services (Shanghai) Company, a wholly-owned subsidiary of International Healthway Corporation, to provide ultra-high purity mechanical and electrical services and a medical system for the Holland Village project in Shanghai.
- The non-renewable contract is targeted to commence this month and will be completed by October 2014. The contract is expected to contribute positively to the earnings of KG for FY14.
- For 9M13 ended 30 September, revenue stood at RM66.8 million, of which, Malaysia contributed the most at RM29.1 million, or 43.6 percent, followed by Singapore at 29 percent and China at 18 percent.
Significance: The latest contract award, pending approval, will add onto KG’s backlog. For FY13, the group has an order book of RM111.4 million, of which, RM44.6 million remains outstanding as at 30 September. KG said it would continue to leverage its engineering expertise and regional exposure to enhance its performance. As at 30 September, KG had a cash and bank balance of RM23.7 million.
Maxis Will Focus On Boosting Data Products, Says UOB KayHian
- UOB KayHian retains the view that Maxis’ new chief executive officer Morten Lundal will require time to cut red tapes that have been holding back the company. This includes another round of retrenchment following an earlier one in 3Q13 that involved almost 500 staff.
- Malaysia’s largest telecommunication company, Maxis, has been losing subscriber market share (down 13 percentage points) since June 2008, and it has continued to slip this year to 27 percent. UOB KayHian senses that Maxis is looking to raise average revenue per user through the launch of more products to encourage subscribers to use mobile services more rigorously.
- To support its data strategy, Maxis is expected to invest more in 2014 compared to 2013. Its capital expenditure had fallen to RM803 million in 2013 from RM1.4 billion and RM1 billion in 2011 and 2012, respectively.
Significance: UOB KayHian maintains a “Hold” rating with a lower target price of RM6.80 for Maxis, on the basis of the firm investing RM858 million in 2013 and RM1.1 billion in 2014, representing 9 percent and 11 percent of revenues respectively.
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