Malaysia stock market and companies daily report (January 14, 2014)
January 14, 2014, Tuesday, 05:57 GMT | 00:57 EST | 10:27 IST | 12:57 SGT
CPO Prices Likely To Rise, Says RHB Research Institute
- RHB Research Institute holds an optimistic view on crude palm oil (CPO) prices as Malaysia’s palm oil stockpile only increased marginally to 1.9 million tonnes in December 2013, which is sharply lower versus end-2012 as export growth beats production growth, and local consumption surged during the year. December 2013 is likely to be a seasonal peak and could see inventory sliding in the coming months, thus providing a price lift.
- The research firm said production weakness was more apparent in the second quarter and it believes that palm oil prices will strengthen progressively throughout this year due to weak production in Indonesia, as a result of shortage of rainfall over the past two years.
- It added that the increase in India’s import tax for refined edible oil from 7.5 percent to 10 percent will have a neutral impact and will only cause a switch from refined to crude products. Tax for crude edible oil has remained unchanged.
Significance: RHB Research Institute is giving the sector an “Overweight” recommendation and views the price pullback as temporary and as providing a buying opportunity. But, the main stumbling block for CPO prices to rise is the relatively narrow discount to soya bean oil price at US$65 per tonne. However, on the flipside, this also means there is an upside for CPO prices before it reached parity against soya bean oil price
CIMB Raises RM3.6b With New Shares Offer
- CIMB Group Holdings announced that to strengthen its capital position, it will be issuing 500 million new shares equivalent to 6.1 percent of its enlarged share capital, following an accelerated book-build private placement exercise.
- The new shares will be issued at RM7.10 per share, equivalent to a 2 percent discount to the volume weighted average price traded on 10 January of RM7.26. Total proceeds from the new issue will amount to RM3.6 billion. The offer was well oversubscribed and enabled CIMB to increase the deal size by 25 percent from 400 to 500 million shares.
- “We are delighted to have been able to expeditiously raise such a substantial amount of common equity tier 1 to bolster our capital position,” said Datuk Seri Nazir Razak, group chief executive officer, CIMB Group Holdings. “While we have always sought to operate at optimal capital levels, the sharp depreciation of the rupiah over 2013 has set back our capital accumulation plan. We have acted decisively to reposition our capital for growth.”
Significance: The new shares issue lifts CIMB’s common equity tier 1 as at 30 September 2013 from 8.2 percent to 9.7 percent. With the new capital, the group will strengthen its balance sheet to face any future volatility in the financial markets and looks to grow its business at a desired pace going forward.
Minetech In Discussion On Cambodia Casino, But No Jobs Finalised Yet
- In a statement to Bursa Malaysia, Minetech Resources clarified on an article published in a daily newspaper, stating that it is still in the exploratory stage of discussion with a party on a casino and hotel project in Cambodia, but there is no firm commitment yet.
- The matters in discussion with the party in the exploratory stage revolve around undertaking construction and raw material supply in relation to the project.
- “Matters are still at a very preliminary stage and nothing is confirmed yet at this point of time and Minetech has yet to be awarded any job in relation thereto,” said the firm. Minetech Resources said that any project award will be announced accordingly in due course.
Significance: Though the discussion on a possible casino and hotel project in Cambodia is still at a preliminary stage, investors might want to keep a close eye on Minetech Resources as this appears to be a rewarding investment opportunity if the casino project is executed well.