Reports » Malaysia

Malaysia stock market and companies daily report (February 28, 2013)

Contributed by Shares Investment

AirAsia Surge On Strong Q4 Results
AirAsia shares surged to a high of RM2.94 before closed at RM2.86 yesterday following the low cost carrier (LCC) recording a significant improvement in its quarterly and full-year earnings. The airline posted a 168 percent growth in net profit to RM350.6 million for its fourth quarter ended 31 December 2012 from RM130.7 million previously. Its revenue rose 10 percent to RM1.41 billion against RM1.28 billion a year earlier. The LCC attributed the improved results to the higher passenger volume and fares, while the ancillary income increased by five percent to RM42 per passenger. The seat load factor was maintained at 82 percent unchanged from the same period last year. AirAsia said it has adopted a dividend policy of 20 percent of the company’s net operating profit per share beginning FY13. In the meantime, the LCC plans to reward shareholders with tax free dividends of 24 sen for the year.
Significance: Moving forward, one of the AirAsia’s main focuses would be on keeping costs as low as possible, as that is what sets the airline apart from the other players. The LCC expects to continue to be the lowest-cost carrier by constantly introducing various cost initiatives and ultimately, become the lowest fare airline in the region.

FGV Expected To Remain Unattractive
Felda Global Ventures Holdings’ (FGV) outlook will continue to be unexciting, given its on-going replanting programme, said Alliance Research. Last year, FGV has replanted 16,000 hectares of estates, which is higher than its target of 15,000 hectares in 2012, according to HwangDBS Vickers Research. Alliance Research said FGV’s FY12 core net profit was below its own and consensus estimates at 85.9 percent and 88 percent of full year estimates, respectively. Nonetheless, the research house believes the group’s bottom line could see a mild boost from improved downstream operations from North American and also under Felda Holdings, although this growth is not expected to be sustainable. In view of this, Alliance Research expects profits to be back on the decline in FY14, as replanting and aging palms could drag down production. In a note yesterday, the research house maintained its “Sell” rating on the stock at RM4.44 with a target price of RM3.10.
Significance: According to HwangDBS Vickers Research, while continuous productivity improvements in the plantation business remained the group’s priority, FGV should shift its focus towards mergers and acquisitions exercises to grow earnings, given its strong net cash position of RM3.2 billion.

UMW Assigns RM300m To Develop Automotive Division
UMW Holdings has allocated RM300 million from its RM1.3 billion capital expenditure (capex) for 2013 to further develop its automotive division. “RM300 million will be used for our automotive division which we see strong growth, while the rest of the capex will be used for the other divisions,” said group chief executive officer (CEO) Datuk Syed Hisham Syed Wazir in a briefing yesterday. For its financial year ended 31 December, 2012, UMW sold 295,759 units and holds a higher market share of 47.1 percent compared to last year’s 45 percent. The group has also seen a five percent growth in total industry volume as a result of higher sales from the launch of its new models. The group expects combined total sales of about 299,000 units. “The division is expected to continue to perform well with the introductions of new models and we hope to maintain our market share at 47 percent,” the CEO added.
Significance: UOB Kay Hian Research has reinforced a “Sell” rating on the stock, with a target price of RM9.15. UOB Kay Hian reasoned that the group’s operating margin was disappointing due to heavy discounting of Toyota vehicles in the fourth quarter of financial year 2012.