Reports » Malaysia
Malaysia stock market and companies daily report (February 20, 2014)
Softer Global OSV Market Leads Affin To Cut Bumi’s Target Price
- Bumi Armada reported a record FY13 net profit of RM431.2 million, up 11.8 percent year-on-year on higher revenue, up 24.9 percent year-on-year, lower finance cost and a lower effective tax rate.
- Affin IB Research said the FY13 results were however 13 percent below consensus as well as 10 percent below house estimate. This was due to weaker-than-expected offshore support vessel (OSV) fleet utilisation and an unexpected associate loss of RM12.7 million in 4Q13 arising from a non-cash transaction relating to the lease of its India floating production storage and offloading (FPSO) contract.
- Bumi Armada has a firm orderbook of RM13.2 billion with RM8.9 billion of extension options as at end-December 2013. Management is optimistic in securing Indonesia’s Madura and Angola’s East Hub FPSO projects, which could prove to be future catalysts.
Significance: Affin maintains its “Buy” rating on Bumi Armada with a lower target price of RM4.50 (from RM4.70) based on an unchanged 19 times FY14 price-to-earnings ratio, as it cuts FY14 to FY15 earnings per share forecast by 3 to 4 percent, imputing lower OSV fleet utilisation rate in view of the slightly softer global OSV market.
Seek Purchases JobStreet In RM1.7b Cash Deal
- JobStreet Corporation is selling its online job portal business for RM1.7 billion cash to Seek Asia Investments, which is majority owned by its substantial shareholder Seek. In a filing with Bursa Malaysia yesterday, the job e-portal said it had entered into a conditional share sale agreement for the sale of all the company’s online job portal businesses in Malaysia, Singapore, the Philippines, Indonesia and Vietnam.
- The divestment is expected to be completed by the second quarter of this year. Subsequently, the company will declare a special dividend to its shareholders from the hefty sum of the sale proceeds. Shareholders will receive an aggregate of RM1.7 billion as a single-tier interim special dividend.
- The payment obligation of Seek to JobStreet would be partly offset by its dividend entitlement as it is currently a substantial shareholder of JobStreet with a 21.8 percent equity stake. On a back-of-the-envelope calculation reveals Seek should be entitled to a dividend payout of RM363.3 million. Once the acquisition is complete, Seek will merge JobStreet with JobsDB, in which it bought the remaining interest less than a year ago.
Significance: Upon completion of the divestment, JobStreet would become a cash-rich shell company but the board would take the necessary actions to formulate a plan to regularise the affected listed issuer condition of the company subsequent to the proposed disposals.
Kenanga Initiates “Buy” On Pestech, Target Price RM4.25
- Kenanga IB Research has initiated coverage on Pestech International stating the home-grown integrated electric power technology group is an alternative play for the power sector both locally and internationally.
- In a research note, the house said Pestech was competing directly with global giants like ABB and Siemens for energy infrastructure projects, particularly in the fast growing ASEAN countries in Indochina, making it an investment proxy to the growing economy of emerging and developing countries.
- Although Pestech’s share price has tripled in the past one year, Kenanga believes there is still further upside potential supported by Pestech’s sizeable order book of about RM400 million and high chance of clinching projects from its tender book at approximately RM1 billion.
Significance: Kenanga IB Research initiates coverage on Pestech International, the only listed energy infrastructure company on Bursa Malaysia, with an “Outperform” rating and target price of RM4.25.
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