Reports » Malaysia
Malaysia stock market and companies daily report (February 18, 2014)
Al-Hadharah Boustead REIT’s Delisting Part Of A Bigger Plan
- Al-Hadharah Boustead REIT, will be delisted on 19 February ahead of a bigger initial public offering (IPO) planned by its main shareholder – Boustead Holdings. Boustead Plantations’ IPO is expected in the second quarter of this year.
- Al-Hadharah, which manages 12 plantation assets worth RM1.2 billion, will delist after its units were thinly traded and the company found it difficult to maintain dividend yields.
- Boustead Holdings, offered to pay RM2.10 per share or US$190 million for the 46.4 percent it did not own in Al-Hadharah. Al-Hadharah was merged with Boustead Plantations and the company now manages 40 oil palm estates and 10 mills across Malaysia.
Significance: The delisting was a “good opportunity” for unit holders to exit at an attractive price, considering the limited growth prospects of the real estate investment trust, said Hong Leong Investment Bank.
West Coast Expressway Potential Catalyst For OKA Corporation, Says RHB Research
- In a research note, RHB Research said it liked OKA Corporation for its prudent management, strong presence in Peninsular Malaysia and solid earnings visibility, given its ability to ride on the infrastructure developments in Malaysia that have long gestation periods.
- “Being one of the dominant sewage pipe makers in Malaysia, we believe that OKA Corporation could potentially benefit from the West Coast Expressway project,” said the research house.
- Earnings growth is expected to remain strong over the next two years, underpinned by more orders and better margins. The research house expects cumulative aggregate growth rate of 25.5 percent from FY13 to FY15F.
Significance: RHB Research initiates coverage on OKA Corporation with a “Buy” rating and a fair value of RM1.70. OKA Corporation is still trading below its net tangible asset per share of RM1.72 as at end-September 2013.
QCT-MRC Deal Could Provide More Inorganic Opportunities
- On 29 January, Quill Capital Trust (QCT) signed a heads of agreement with Malaysian Resources Corporation (MRC) for the acquisition of Platinum Sentral for RM750 million, to be settled through cash and the issuance of new units.
- In its announcement, the REIT’s management stated that it intends to fund the RM486 million cash portion of the Platinum Sentral acquisition through a mix of debt-to-equity funding. Over the short term, management is not too worried if the REIT’s gearing breaches 40 percent as it believes that its asset value will likely to remain stable.
- As the settlement will involve the issuance of at least 200 million new units to MRC, it will likely emerge as the REIT’s major unit holder, with holdings of about 28 percent. This will also see a dilution in the holdings of QCT’s two largest unit holders, CapitaCommercial Trust and Quill Group, whose respective holdings may be reduced to about 16.3 percent (from 30 percent currently)
Significance: RHB Research reiterates its view that the deal with MRC is positive for the REIT, as it could provide steady inorganic growth opportunities through the former’s pipeline assets as inorganic growth opportunities through Quill Group are rather limited. It maintains a “Neutral” rating for the counter with an unchanged target price of RM1.25.
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