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Reports Malaysia

Malaysia stock market and companies daily report (February 24, 2014)

February 24, 2014, Monday, 06:36 GMT | 01:36 EST | 11:06 IST | 13:36 SGT
Contributed by Shares Investment

Ekuiti Nasional Plans For Mid-2014 IPO

- Ekuiti Nasional is set to make its first initial public offering (IPO) by mid-year through Icon Offshore.

- The listing is part of Ekuinas’ role to create value for Bumiputera firms and then list them on the stock exchange to become big players. Ekuinas will take a minimum of 20 percent stake in each company over five to seven years and add value to the company before selling it.

- The company, which has a war chest of RM2.4 billion, has been nurturing Icon Offshore to become a larger company with international presence. As at 2013, the firm was Malaysia’s third-largest offshore supply vessel provider with 36 vessels operating in waters off Malaysia, Vietnam and Qatar.

Significance: Ekuinas plans to play a bigger role after a RM600 million injection from the government. It only invests in Bumiputera firms to ensure equitable and sustainable Bumiputera participation in the economic pie and eyes only five sectors — education, oil and gas, fast-moving consumer goods, retail and leisure, and healthcare.

Volatile Forex Market A Drag On Axiata

- Axiata Group reported a 1.4 percent increase in 4Q13 revenue to RM4.5 billion while earnings was up 1 percent to RM575.6 million. For the full year period, revenue rose 4.1 percent to RM18.4 billion and earnings rose by 1.5 percent to RM2.6 billion.

- Nonetheless, the firm’s performance has been dragged by Indonesia’s mix of volatile currency (where the Rupiah declined eight percent against the Ringgit in 2013) and intense competition.

- Notably, FY13 gross revenue from Indonesia decreased 6.9 percent as a result of the above. At constant currency, Indonesia would’ve registered a 1.4 percent year-on-year revenue growth. Bangladesh, Sri Lanka and Cambodia registered significant growth of 24 percent, 13 percent and 206.6 percent respectively for the year.

Significance: Axiata targets to have 1,200 Long Term Evolution sites up and running by the second quarter this year and 20 percent of its capital expenditure of RM4.4 billion will be set aside for tower-related investments.

Pestech To Ride On Asean’s Fast Growing Energy Infrastructure Development

- Pestech International has exposure in Cambodia and Laos and is currently working to make inroads into Myanmar and the Philippines. These four nations in the Asean region has huge potential for fast growing energy infrastructure development with 22 percent to 66 percent of the population there without access to electricity.

- Pestech has secured a total of RM331.5 million worth of contracts and Kenanga Research views the stock as a triple-play for explosive earnings growth, alternative power play besides the integrated utility company and independent power producers and proxy to the fast-growing Asean economy.

- Pestech should also benefit from the ongoing construction of new power plants in Peninsular Malaysia, like the 2,000mw coal-fired Track 3B power plant and other mega infrastructure projects in the country.

Significance: Kenanga has an “Outperform” rating and target price of RM4.25 on the stock and believes it is still not too late to accumulate Pestech as it is set to grow its bottom line tremendously over the next two to three years by a 57 percent three-year compound annual growth rate given a sizeable order book of RM400 million.