Reports » Malaysia
Malaysia stock market and companies daily report (December 30, 2013)
Perdana Petroleum’s Remarkable Recovery: CIMB Research
- Perdana Petroleum has taken delivery of its 16th vessel, a work barge, which will be deployed to Dayang Enterprise Holdings for a long-term contract. Now that it has taken delivery of the new vessel, the average age of Perdana’s young fleet has reduced to less than four years.
- CIMB Research said that the company is set to add two more work barges to its fleet next year and they are encouraged that its fleet expansion programme is on track. The operating environment in the marine support space has been very conducive, with improvement in both charter and utilisation rates.
- Perdana currently fetches charter rate of around US$2 (RM6.58) per horsepower (HP) for a 5,000 HP anchor handling tug supply vessel, higher than US$1.50 to US$1.80 netted last year. The company’s utilisation rate shot up to a robust 83 percent in 3Q13 from an estimated 74 percent a year ago. Around 65 percent of its working vessels are on long-term charters.
Significance: CIMB Research continues to value the stock at FY15 price-to-earnings ratio (PER) of 15.8 times, applying a 30 percent discount to the average PER of the oil and gas big caps. The stronger earnings uptick expected in FY14 is the potential rerating catalyst that supports its “Add” call with a target price of RM2.00.
Gadang Upbeat On RM2.2b In Iskandar
- Gadang Holdings has teamed up with two developers, Hatten Group and Sunbuild Development, to build an integrated project in Iskandar called Capital City, which has an expected gross development value of RM2.2 billion.
- The key feature of the property development, which spreads over 5.6 hectares, is a retail-concept mall, Capital 21, where it will house brands in 21 capital cities under one roof as well as an amusement park and a museum. The project is estimated to complete by early 2018.
- Gadang is also looking at other parts of Johor for possible acquisition as it is confident that the Johor state will be the next growth centre in the country.
Significance: Gadang is upbeat on the prospects of the property market in Iskandar Malaysia within the next five years given the strong demand from foreign investors and believes the Southern economic development zone of Johor will see more economic activities and investments going forward.
Macau Gaming Sector More Attractive: RHB Research
- Malaysian gaming sector’s earnings growth is seen lagging behind Macau’s (FY14 projected: 5.6 percent versus 22.4 percent), which has prompted anticipation that investors may increase exposure in shares of Macau gaming firms, according to RHB Research Institute.
- The sturdier growth in Macau’s gaming market is primarily underpinned by the continued influx of visitors from China along with the local economy’s expansion. RHB Research predicts Malaysia’s planned goods and services tax (GST) next year may result in earnings downgrade for local gaming firms.
- Although shares of Macau casino operators are traded at 30 percent to 45 percent premium to Malaysian gaming stocks, RHB Research expects the valuation gap to stay in the near-term.
Significance: RHB Research maintains its “Neutral” call for the Malaysian gaming sector in 2014, taking into account impact of the GST and the local industry’s more muted growth prospects versus Macau’s. The Malaysian gaming sector call comes with “Buy” and “Neutral” recommendations for Berjaya Sports Toto and Genting Malaysia shares, with a target price of RM4.46 and RM4.56 respectively.
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