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Reports Malaysia

Malaysia stock market and companies daily report (February 17, 2014)

February 17, 2014, Monday, 09:30 GMT | 04:30 EST | 14:00 IST | 16:30 SGT
Contributed by Shares Investment

2014 To See RM26.7b Worth Of IPOs

- Affin Investment Bank expects to see mega initial public offerings (IPOs) to flood Bursa Malaysia this year, which will be worth around US$8.1 billion (RM26.7 billion). The house sees at least 15 listings this year, exceeding 2012 offerings.

- Notably, the largest IPOs this year would be 1Malaysia Development at around US$3 billion and Malakoff Corporation at US$1 billion. Permodalan Nasional would list its own property trust with IPO size that is as big as Malakoff.

- The house also highlighted the ample liquidity given Employees Provident Fund, Armed Forces Fund, Retirement Fund Inc (KWAP) and Pilgrims’ Fund Board (Tabung Haji) were sitting at the highest cashflow ever and were ready to absorb the IPOs.

Significance: Listings this year are highly anticipated to be a record year as 2012 was by far the best year for IPOs worth a total of US$7 billion, involving Felda Global Ventures Holding, IHH Healthcare and Astro Malaysia while 2013’s IPOs amounted to US$4 billion.

AmResearch Maintains “Buy” Rating On MRC With Potential For Re-Rating

- The deal to inject Platinum Sentral into Quill Capita Trust (QCT) should be signed by mid-March. Such a move could be a prelude to Malaysian Resources Corporation (MRC) injecting more prime office properties in KL Sentral into QCT to aid its de-gearing efforts and enable it to recycle capital into more net asset value-accretive deals, according to AmResearch.

- The status of the Eastern Dispersal Link in Johor may be settled by May. Together with the divestment of its 30 percent stake in the Duta-Ulu Kelang Expressway for RM228 million and more asset monetisation initiatives to come, this could reduce MRC’s net debt by about RM1 billion.

- AmResearch foresees MRC to be the front runner for the Kwasa Damansara project in Selangor. Kwasa Land, a unit of MRC’s major shareholder, Employees Provident Fund, is the project’s master developer. It is also positive on Penang Sentral, a joint venture between MRC and Pelabuhan Hartanah, which is in the midst of submitting a development order to kick-start the project.

Significance: AmResearch maintains “Buy” rating on MRC with an unchanged fair value of RM2.20 based on a 20 percent discount to its revised net asset value. It further recommends investors to accumulate the counter before the investment tide turns positive ahead of sustained news flow momentum with two major re-rating catalysts, namely PJ Sentral and Kwasa Damansara.

Sunway REIT’s RM7b Portfolio Target

- Sunway Real Estate Investment Trust (REIT), the second largest Malaysian REIT player with a current portfolio of RM5.2 billion, is upbeat that its asset portfolio will exceed RM7 billion by 2018, led by current asset enhancement initiatives (AEIs) and third party acquisitions.

- The group has RM1 billion to reinvest in AEIs to boost some of the current assets. It is investing RM460 million to transform Sunway Putra Place in Kuala Lumpur into a five-star asset comprising a mall and hotel. To be completed in June 2015, it is expecting to recoup investments within 12 years at a return on investment of between 7.5 percent and 8 percent.

- Sunway REIT is also considering third-party acquisitions, but only on assets that can provide a seven percent yield.

Significance: While its portfolio value is still far behind that of KLCC Property REIT, which has RM15 billion worth of properties in its portfolio, Sunway REIT expects key drivers for growth will be organic through AEI and asset turnaround.