Reports » Malaysia

Malaysia stock market and companies daily report (January 15, 2013)

Contributed by Shares Investment

SP Setia Rises On Battersea Launch
SP Setia shares surged as much as 2.24 percent following the overwhelming response for the 800 units offered under the first phase of the Battersea Station project known as Circus West. The counter rose 2.24 percent to RM3.19 before it closed at RM3.16, with 1.1 million shares traded yesterday. The Battersea project has received enthusiastic response at unprecedented levels since its first launch on 9 January in London, with some 650 out of 800 units already taken up. In July last year, a SP Setia led-consortium, which included plantation giant Sime Darby and the Employee Provident Fund, won the bid to buy the London’s iconic Battersea power station for 400 million pounds. SP Setia president and chief executive officer Tan Sri Liew Kee Sin expected to sell out all units by April or May this year. Liew also noted that the profits generated from the project could only be recognised after the completion of the project, estimated in 2016 due to the accounting policies in London.
Significance: SP Setia is targeting phase two comprising of 300 luxury residences on the roof top of the power station, food and beverage outlets, as well as retail and leisure units with combined gross development value of RM4 billion, this year; said Public Investment.

Scomi Expects More Monorail Projects
Scomi Engineering, the regional leader in energy and logistics engineering, is targeting one third of the US$45 billion or RM137.2 billion worth of new monorail deals that will be implemented in Asia and South America over the next five years. According to group chief operating officer Kanesan Veluppillai, the Indonesian government plans to tender three new monorail lines in Jakarta next year, worth RM3 billion to RM4 billion. In Bangkok, the government intends to tender the Pink Line (east west line) valued at about RM4 billion. Whereas in Brazil, there will be another monorail line in Sao Paulo, the tender of which, will be next year and worth around RM2 billion. In the past four years, Scomi won three out of the seven monorail projects tendered worldwide. In 2008, the company together with its Indian partner won the monorail project in Mumbai. Last year Scomi won two jobs in Brazil which carry a combined value of RM5.6 billion.
Significance: Scomi is confident of its future prospects. The company is planning to venture into heavier rail which includes long distance railway, bullet train and intercity. It also seeks to participate in the mass rapid transit (MRT) project, as well as high-speed rail (HSR) by way of technology transfer.

TNB Likely Beneficiary Of China’s Tariff Removal
Tenaga National (TNB) is likely to benefit from China’s National Development and Reform Commission’s decision to terminate the tariffs on crude coal exports effective from 1 January 2013. TNB would be able to enjoy the substantial cost savings as the tariff removal could drag down global coal prices, due to oversupply in the market. Coal prices have been on a downtrend since early last year when it dropped 24.3 percent from a peak of US$116.5 per tonne to US$88.2 per tonne. Based on MIDF Research, for every US$10 per tonne fall in the average coal price, there will be seven to eight percent savings in TNB’s fuel costs and vice versa. The growth of coal generated electricity is projected to increase to 45 percent from the current 33 percent. “Coal will become an increasingly more dominant fuel source given the commodity’s relatively stable and abundant supply compared with oil and gas”, MIDF Research added.
Significance: TNB will continue to enjoy cost savings should the downtrend in coal prices persist. However the company still faces the risk of higher energy payment if coal prices recover in the future, although the risk could be removed with the target implementation of the incentive-based regime by 2015.