Reports » Malaysia

Malaysia stock market and companies daily report (February 26, 2013)

Contributed by Shares Investment

UMW Shares Rise On IPO Of O&G Unit
UMW Holdings shares edge up to a high of RM12.28 on morning session yesterday, possibly on the back of the initial public offering (IPO) of its oil and gas (O&G) arm. On midday yesterday, UMW shares rose eight sen to RM12.18, hovered between RM12.10 to RM12.28 with 164,000 shares changing hands. The company has hired four banks, Malayan Banking (Maybank), CIMB Group Holdings, Credit Suisse Group AG, and Goldman Sachs to advice on its associate WSP Holdings’ IPO in the second quarter this year, said Dow Jones newswires. Meantime, Maybank IB Research maintained a ”Hold” recommendation on UMW. The research house also noted that the offer price to take WSP private has been raised to US$3.20 per American Depository Share (ADS), which is a 7 percent premium to the earlier proposal of US$3. “Indications are that UMW will merge its existing 22.3 percent stake in WSP with Long Hua Piao under WSP Oil Country Tubular Goods (OCTG) and ride along the privatisation exercise. The privatisation offer, at a transaction value of US$893.6 million will then be for the remaining 26.8 percent stake in WSP not owned by WSP OCTG,” it added.
Significance: The research house expects UMW will continue to streamline its O&G portfolio. Therefore, they do not rule out a potential divestment of WSP in the future following the completion of the privatisation.

Boustead Q4 Earnings Fell 21.7 Percent To RM150.5m
Boustead Holdings posted RM150.5 million earnings for the fourth quarter ended 31 December, 2012 which is a 21.7 percent decrease from RM192.3 million a year earlier due to the sharp fall in crude palm oil (CPO) prices. Its revenue edged up 4.8 percent to RM2.68 billion from RM2.55 billion previously. For FY12, its earnings dipped 31.7 percent to RM416.7 million from RM610 million in FY11. Nonetheless, its revenue rose by 19.4 percent to RM10.21 billion from RM8.55 billion a year ago. “For the year under review, despite being affected by plunging CPO prices and higher operating costs, the plantation division was once again one of the group’s strongest contributors, delivering a profit of RM206 million,” the company said in a statement to Bursa Malaysia. All its business divisions recorded positive results, with the exception of the heavy industries division. The division was affected by the downcast economic environment for the maritime sector in addition to cost escalations, which contributed to losses in the commercial shipbuilding segment.
Significance: In order to mitigate the future losses, Boustead plans to scale down its reliance on construction of large commercial vessels while developing a portfolio of smaller commercial crafts.

MSM Falls 2.97 Percent On Weaker Earnings
Shares in MSM Malaysia Holdings fell 2.97 percent in afternoon trade yesterday at the back of lower than expected earnings. Last Friday, MSM announced a 47.82 percent plunge in net profit to RM39.87 million for its fourth quarter ended 31 December, 2012, from a year ago. This amounts to a full year net profit of RM202.03 million, which is down 23.42 percent from FY11. In its research note, Maybank IB Research reduced its target price on MSM to RM4.40 from RM4.70 with a retained “Hold” recommendation and slashed FY13 and FY14 forecasts by 19 percent and 15 percent respectively. MSM has proposed a final dividend of 11 sen per share which, if approved, will bring full year dividends to 19 sen. According to Affin Investment Bank Research, this translates into a yield of 3.8 percent and a payout ratio of 68 percent versus FY11’s 50 percent. The stock closed 5 sen lower yesterday with 57.1 thousand shares traded.
Significance: According to Affin Investment Bank Research, the disappointing results were mainly driven by the flattish revenue growth of 0.1 percent year-on-year , which was further exacerbated by a sharp 3.9 percent-points contraction in earnings before interest and tax margin to 12 percent due to the significantly higher raw sugar costs and a higher effective tax rate of 29.2 percent.