Reports » Malaysia

Malaysia stock market and companies daily report (December 07, 2012)

Contributed by Shares Investment

CIMB Research Keeps “Neutral” On Banking Sector With Maybank As Top-pick
CIMB Research had maintained its Neutral rating on the banking sector as the industry’s loan growth slowed to 11.8 percent year-on-year in October compared to 13 percent year-on-year, recorded in July. “However, asset quality is expected to be intact, alleviating any fears of a spike-up in credit costs for new impaired loans,” stated the research house in its report dated 3 December. Other encouraging indicators for the banking sector include financing opportunities from the Economic Transformation Programme projects, an undemanding CY13 price-to-earnings ratio of 11.6 times and an attractive net dividend yield of 4.5 percent. In the report, Maybank was a top pick as the stock offered one of the best net dividend yields in the sector, exceeding 5 percent. Moreover, Maybank’s diversified portfolio places it among the top three banks in terms of market shares in all business segments. “(This) will enable the group to reap the greatest benefits from the implementation of the broad-based ETP,” said in the report.
Significance: Moving forward, the report suggested that the slower loan growth recorded in October does not signal any near-term rebound.

Johore Tin’s RM5.8m Acquisition Of Land
Johore Tin through its wholly owned unit, Able Dairies has acquired a parcel of land located in Kuala Langat, Selangor for RM5.79 million. The 1.63 hectares freehold land which is close to Able Dairies’ existing milk and dairy products manufacturing facility will serve as the site of its new warehouse and factory. “The acquisition and construction of a new warehouse and factory on the land is part of Johore Tin and its subsidiaries’ expansion plans,” Johore Tin said. Currently Able Dairies’ facility is operating at nearly full working space capacity. As a result of this, the company is renting additional storage from three logistic companies with a combined rental cost of RM0.2 million per annum. The facilities are expected to be completed within 18 months, and will be funded by the recent renounceable rights issue as well as internally generated funds.
Significance: The proposed facility will allow the company to add in extra milk canning lines at its existing facility to boost the production capacity by 25 percent from the current output of 95 million cans per annum, as well as reap savings in rental cost.

S P Setia Plans RM1b Projects In Embassy Row Area
S P Setia is planning to launch an investment-grade commercial and residential property project worth RM1.04 billion at the Embassy Row in Jalan Ampang, Kuala Lumpur following its wholly owned unit Setia Hicon, acquiring the land from British High Commission for RM295 million. According to the property developer, there is a three-storey building, two-storey clubhouse with ancillary buildings and a swimming pool on the freehold land, measuring approximately 12,456 square metres. Besides being located at the very heart of Kuala Lumpur with easy access and excellent transport infrastructure, the property is also within close proximity to the Petronas Twin Towers. The acquisition is expected to be completed during the first half of FY13. According to a report, the decision to sell the prime land could be due to the British Foreign and Commonwealth Office having trouble coping with a tight budget. By relocating elsewhere, it would help the office reduce its costs.
Significance: The future development potential for the property is huge, given its location in the immediate vicinity of KLCC, within the golden triangle. SP Setia would not have trouble to finance the deal as its borrowing capacity remain strong.