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Malaysia stock market and companies daily report (February 22, 2013)

Contributed by Shares Investment

KLK Down 1.3 Percent On Disappointing 1Q Results
Kuala Lumpur Kepong (KLK) shares fell as much as 1.3 percent in the morning session trade yesterday, following news that the plantation giant’s earnings for its first quarter slipped 24 percent. Close to mid-noon, KLK was trading at RM20.56 a share, down 1.26 percent (26 sen) with some 832,400 shares done, after falling as much as 1.3 percent earlier. It was the third largest loser on the KLCI. Recently, KLK registered a net profit of RM260.9 million for its first quarter ended 31 December, 2012, a 23.5 percent decrease from a year ago. This was attributed to the decline in average selling prices of crude palm oil (CPO), palm kernel and rubber, said the company. According to CIMB Research, KLK’s first quarter results fell short of expectation, thus leading the research house to reinforce an “Underperform” rating on the stock, with a target price of RM18.48.
Significance: KLK’s first quarter results were only 23 percent of CIMB Equities Research’s full-year forecast and 21 percent of consensus numbers. Furthermore, Kenanga Research said KLK’s earnings should decline by 5 percent in FY13, adding that it is less optimistic on CPO price outlook.

MAHB May Need To Book RM20m Associate Loss in 2013
Malaysia Airports Holdings (MAHB) may have to recognise another RM20 million of associate loss in 2013 from its Sabiha Gokcen International Airport (ISGIA) venture. On Thursday, CIMB Equities Research indicated that MAHB turned in a solid performance in FY12, boosted by a 16.6 percent growth in aero revenue due to the tariff hikes since late-2011. It said MAHB’s non-aero revenue’s 10 percent growth was mainly on stronger retail spending. Nevertheless, the RM23.5 million associate loss from Sabiha Gokcen was as a negative surprise. “MAHB had stopped recognising ISGIA losses since 2Q12 but had recently pumped in further capital and hence had to recognise its share of losses in the fourth quarter,” it said. CIMB Research said MAHB’s full-year earnings were 3.7 percent below its estimates, due to the Sabiha Gokcen venture, but in line with consensus.
Significance: Excluding the loss in associates, MAHB’s fourth quarter was 5.3 percent above our estimates, suggesting that the core Malaysian operation had performed extremely well. CIMB Research noted that Investors should look ahead as MAHB embarks on a new phase of growth with the completion of KLIA2 and a potential RM4 billion investment tax allowance.

AirAsia India To Fly In Fourth Quarter
AirAsia expects its recent proposed joint venture (JV) airline, AirAsia India to commence its operations in the fourth quarter this year. The low cost carrier via its investment arm, AirAsia Investment has made an application to the Indian Foreign Investment Promotion Board (FIPB) to seek approval for its 49 percent investment into a proposed Indian JV airline. The JV would be between AirAsia Investment and two Indian parties, namely Tata Sons and Arun Bhatia of Telstra Tradeplace. The proposed airline will operate from Chennai, Tamil Nadu, and focus on providing domestic Tier II/Tier III city connectivity to Indian travellers. The cost of investment for the new airline would be somewhere around US$30 million to US$50 million, according to founder and group chief executive officer Tan Sri Tony Fernandes. “I hope we can get the approvals and start operations sometimes this year or maybe in the fourth quarter,” he said. At the meantime, the airline operates AirAsia Malaysia, AirAsia Japan, Thai AirAsia, PT AirAsia Indonesia, and AirAsia Philippines.
Significance: Given the enormous level of connectively AirAsia offered to the southern cities of India from Kuala Lumpur and Thailand, Fernandes believes that this region would be the “playground” for the low cost carrier as they are familiar with this area.