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Reports Malaysia

Malaysia stock market and companies daily report (February 19, 2014)

February 19, 2014, Wednesday, 04:55 GMT | 23:55 EST | 09:25 IST | 11:55 SGT
Contributed by Shares Investment

Property Sector Feels The Heat

- According to RHB Research, Malaysia’s property sector could be staring at some downside if plans to curb bulk buying take shape.

- Bulk buying is usually done via property investors club (PIC) and in recent months, foreign buyers from China, Singapore and South Korea have bought some of the country’s best properties using the PIC concept.

- Notably, high-rise projects as well as those in Iskandar Malaysia could face more pressure with sales already slowing due to the 30 percent real property gains tax.

Significance: The house thinks that some downside in property stocks is possible but will be minimal as sector valuations are already cheap. It is “Neutral” on the property sector as a whole, outlining UEM Sunrise, Mah Sing, UOA Development among developers that will be most affected if PIC concept is contained in Malaysia.

AMMB Cautions Challenging Outlook For 2014

- AMMB Holdings posted a 9 percent rise in earnings to RM1.3 billion year-on-year on the back of a 13.5 percent increase in revenue to RM7.2 billion for the nine months ended 31 December 2014.

- Nonetheless, the group expects a challenging year given the expected slowdown in personal loan and retail segment. The consumer loan to gross domestic product ratio has continued to increase which will be a tricky issue to manage.

- Alliance Research notes that the group is among the stockbrokers which were exposed to the penny stock crash in Singapore last October and has set aside RM40 million for the “gross exposure” its clients have on the penny stocks. AMMB has conservatively provided RM60 million, representing 50 percent of its total RM120 million gross exposure, for its stockbroking arm in the country.

Significance: AMMB is hopeful to sustain its momentum to meet a profit growth of between 10 and 12 percent and a return on investment at 14 percent. Alliance values AMMB at RM7.84 with a “Neutral” outlook on the company’s prospects this year.

Berjaya Food’s Expansion Pipeline Healthy

- Despite slower consumer spending anticipated in Malaysia, AmResearch expects Berjaya Food earnings to remain stable and resilient due to its well-diversified business portfolio given the exposure to various markets; Kenny Rogers Roasters Malaysia’s halal certification which allows it to serve the larger population in the country; and robust double digit same store sales growth for Starbucks Malaysia.

- Despite a more challenging operating environment, Berjaya Food’s expansion pipeline and execution remained healthy. We take note of the group’s successful maiden forays into Malaysia for Jollibean and Brunei for Starbucks Coffee in 2H14.

- Berjaya Food intends to franchise Jollibean Malaysia after opening six company-owned outlets. Meanwhile, Berjaya Food is expected to increase the number of Starbucks outlets in Brunei to 10 within five years.

Significance: AmResearch recommend investors to accumulate Berjaya Food for its solid execution and resilient business. Maintain “Buy” with an unchanged fair value of RM2.30.