Malaysia stock market and companies daily report (February 06, 2014)
February 6, 2014, Thursday, 05:59 GMT | 00:59 EST | 11:29 IST | 13:59 SGT
Higher Palm Oil Prices Positive For Plantation Sector
- RHB Research maintained its positive outlook on the plantation sector due to higher palm oil prices and cheaper fertilisers.
- Demand for biodiesel from Pertamina, the national oil corporation of Indonesia, should jump-start palm oil prices and the plantation sector. Palm oil prices will also likely strengthen in the second quarter as Indonesia’s weak biodiesel production becomes evident.
- RHB notes that the market is awaiting Pertamina’s move on the second biodiesel tender after its failure in the first tender to secure three million tonnes for this year’s consumption. Should Pertamina prove successful, it will likely drive palm oil prices significantly higher.
Significance: The research house believes the current industry weakness is unjustified because unlike the broad commodity sector, it is not hit by a glut. Valuations are inexpensive and represent a buying opportunity for investors.
Public Bank FY13 Earnings Crosses RM4b For The First Time
- Public Bank’s earnings surged past the RM4 billion mark in FY13 to RM4.1 billion from RM3.8 billion last year, boosted by higher net interest income, net fee and commission income. Operating income from the year rose 8.6 percent to RM15.3 billion from RM14.1 billion.
- Despite the intense competition in the banking industry for market share and changes in the regulatory requirements which put pressure on pricing, Public Bank was not only able to record double-digit growth of 11.8 percent and 11.5 percent in loans and deposits respectively, but also sustain its market share in its domestic core lending and deposit-taking business.
- The bank expects to maintain its earnings momentum and record satisfactory performance this year.
Significance: Alliance IB Research maintained “Neutral” on Public Bank with a lower target price of RM17.06 (from RM17.14). The house had trimmed FY14 earnings estimates by 3.3 percent, noting that despite the bank’s proven track record, superior asset quality and high return on equity, the rich price-to-book valuation has priced in such positives.
AirAsia X To Benefit From Bangkok Hub
- AirAsia X has been given the green light to operate international flights from Thailand’s Don Muang International Airport. Its new subsidiary, Thai AirAsia X Company, is expected to have a short gestation period of earnings due to its established brand awareness and focus on matured service routes.
- MIDF Research notes that the airline would possibly incur some initial start-up losses for a short-term and that the major cost component of the airline’s operations is the fuel bill, which makes up 47 percent to 52 percent of its total operating expenditure.
- Public Bank highlighted that there are no long-haul low-cost carrier airline based in Bangkok and the company will have the competitive advantage of having feeder traffic and short-haul connectivity from Thai AirAsia and will offer connecting fly-through services with Thai AirAsia’s short-haul domestic and regional network.
Significance: MIDF Research has maintained a “Buy” call on AirAsia X but revised its target price to RM1.45 while Public Bank maintained “Outperform” on the firm with a target price of RM1.29.