Malaysia stock market and companies daily report (January 08, 2014)
January 8, 2014, Wednesday, 07:13 GMT | 03:13 EST | 12:43 IST | 15:13 SGT
Perak In Privatisation Deal
- Perak Corporation announced that it would undertake a selective capital reduction and repayment exercise that will see Perbadanan Kemajuan Negeri Perak (PKNP) and three other associated firms owning the company. The offer for shares not already owned by them is at RM3.90 per unit or RM188.7 million in total.
- The offer price was at an 11.75 percent premium to Perak’s last traded price of RM3.49 before the privatisation was announced.
- Notably, Perak’s illiquidity, which sees its shares trading at a discount to its net asset value over the last few years is one of the driving factors for the privatisation move.
Significance: PKNP is planning to expand the business to include other property-related activities, which could have a long gestation period exceeding five years, noting that its risk-return profile is set to change with this move.
Top Glove Raises Glove Prices
- Top Glove Corporation raised its glove prices a week ago to maintain profit level, following the government’s decision to raise electricity tariff to RM0.3853/kWh from RM0.3354/kWh. With the hike, manufacturers have to contend with the rising costs.
- Top Glove noted that the tariff hike has caused its production costs to go up by three percent and will be passing on these additional costs. It said the prices would see an increase from US$20 (RM65.80) per 1,000 gloves to US$20.20.
- Top Group has allocated RM180 million for factory upgrade and expansion, with an additional capacity of 2.2 billion pieces of the nitrile variant despite being a clear market leader, with its size twice bigger than its closest rival.
Significance: Top Glove’s decision on glove pricing is also keenly matched by its rivals like Supermax Corporation and Kossan Rubber Industries. Affin IB Research maintained “Add” on Top Glove with a lower target price of RM6.48.
UOA To Dispose Building For RM72.5m
- UOA Development proposed to dispose its 12-storey office building in Kuala Lumpur’s Bangsar South for RM72.5 million via a sell-then-lease-back arrangement with Marak Moden.
- The group’s existing tenancies would be terminated upon the completion of the sale and purchase agreement. UOA will also lease the building from Marak Modem upon the legal possession date at a monthly rate of RM362,700 for a three-year period.
- UOA noted that the sale was due to its rapid expansion and the property was no longer sufficient for its requirements.
Significance: While a new premise has yet to be identified, the disposal was predicated by the favourable offer from the purchaser. The proceeds from the disposal will be placed into fixed deposit accounts with financial institutions.