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Malaysia stock market and companies daily report (January 18, 2013)

January 18, 2013, Friday, 04:54 GMT | 23:54 EST | 09:24 IST | 11:54 SGT
Contributed by Shares Investment


Salcon Rises To 2-month High On RM110mil Project
Salcon shares edged up to 48 sen yesterday following its wholly owned unit Salcon Engineering securing a RM110 million sewerage contract from the Sewerage Services Department (SSD) to undertake the construction of a sewage pipes network in Klang. The counter hit a two-month high of 48 sen before closing at 46.5 sen yesterday. Affin Investment Bank Research has a ‘buy call’ on Salcon with a target price of RM0.49 as the contract would contribute positively to Salcon earnings. The project billing is estimated to be about RM27.5 million per annum, and is expected to boost Salcon’s outstanding orderbook at approximately RM300 million. Prior to this, Affin Research has cut Salcon’s FY13-14 earnings forecast by 16 percent and 14 percent, respectively; due to lower orderbook in the construction division as a result of intense competition for new job. “With this new awarded contract, we believe that the downside risk to our forecast is reduced as we have forecasted a construction revenue of approximately RM150 million in FY13,” said the research house. The contract duration is 48 months commencing from 29 January 2013 to 28 January 2017.
Significance: In view of the diminishing construction orderbook, Salcon plans to diversify its revenue sources including property development which has relatively high and stable growth prospects.

Azim Zabidi Seeks White Knights To Rejuvenate Patimas
Businessman Datuk Seri Abdul Azim Mohd Zabidi is in the midst of discussions with foreign partner to revive Patimas Computers, a PN17 company. According to Abdul Azim, the talks are expected to be concluded within the next 10 working days. On 11 and 15 January, he acquired 45 million shares at 12.9 sen and 10 million shares at 18 sen, respectively; through his private arm Syawaras. Upon the acquisition, he will hold a total stake of 6.65 percent and emerge as the new major shareholder of Patimas. The rumours in the market suggest that the prominent politician-businessman will tie up with one of the China’s biggest internet companies to takeover Patimas. Abdul Azim believes Patimas’s data centre and its ability to manage data storage would be the bargaining chip for a foreign company to be interested. “The data centre at the technology park is Patimas’ biggest asset, as I see it,” said Abdul Azim. Patimas had invested about RM80 million into the data centre.
Significance: The shares had experienced volatile trading patterns since the beginning of the month, surging from 3.5 sen to 18 sen, and then falling heavily to 14 sen yesterday based on speculation play. The local bourse had issued an unusual market activity (UMA) query to Patimas recently and investors are warned to be cautious when trading the stock.

DRB-Hicom To Reach New Heights With RM11bil Property Projects
DRB-Hicom’s planned RM11 billion property projects over the next 36 months will uplift the conglomerate’s status to a major player in the property market. The conglomerate had earlier roped in Datuk Mohamed Razeek Md Hussain Maricar, who was formerly Malaysian Resources Corporation’s Chief Executive Officer, last September. This is to help unlock the values of its assets and landbank, which spans from Rebak Island in Kedah right down to Johor and the sites in between. “We still have about 800 acres more to be developed in Tanjung Malim, which is part of the Proton plant, and also 350 acres to be developed in Rebak Island, Kedah,” said Razeek at a media retreat held over the weekend. Gross development value (GDV) of both the projects was however not revealed. Interestingly, it noted that Rebak Island is envisioned to become an exclusive Hamptons-like summer retreat destination for the rich and famous. As for the Tanjung Malim development, it mentioned that national carmaker Proton Holdings and Universiti Pendidikan Sultan Idris would be the catalysts for the development of the area.
Significance: The group has valuable land hidden in its assets all the while. This will be the first time that the group provided an actual sense of value to the land in terms of GDV, as everything was priced at book value previously, according to a CIMB Research analyst.