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Malaysia stock market and companies daily report (January 22, 2013)

Contributed by Shares Investment

Axiata Optimistic On Cambodia Venture
Axiata Group, one of the largest Asian telecommunication providers believes its recent RM472.7 million merger between its two Cambodia arms, Hello Axiata and Latelz would be the catalyst of its earnings this year, which is driven by cost efficiencies. Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim is of the view that the merger would generate synergistic benefits. Operating on its own, the two units were making losses. Through a better cost structure, the merger entity is expected to register a net profit by this year-end. The merger is expected to be completed by the end of the first quarter of this year. Furthermore, the merger could imply the company’s confidence in the Cambodian economic development, which has grown by at least six percent over the past two years. Meanwhile, Axiata believes its capital expenditure would be slightly lower than the last year due to lower spending in its Indonesia operations.
Significance: Despite a high mobile penetration rate of over 80 percent in Cambodia, Axiata believes the growth potential remains strong as the unique mobile penetration rate is below 40 percent. Additionally, the industry is projected to grow at a rate of high single-digits to low teens over the next few years.

TRC Synergy Secures RM170mil SCORE Project
TRC Synergy’s wholly owned unit Trans Resources Corporation secured a RM169.9 million access road package from Jabatan Kerja Raya Sarawak, which is part of the Sarawak Corridor of Renewable Energy (SCORE) infrastructure development project announced by the government earlier. The deal is the first key project TRC has secured for FY13, and is expected to boost its construction division’s orderbook by nine percent to RM2.12 billion from RM1.95 billion; said RHB Research. Additionally, the research house believes the project will deliver earnings before interest and tax (EBIT) of RM13.6 million to RM17 million over the contract period, assuming an EBIT margin of eight to 10 percent. Nonetheless, the research house has maintained its forecasts as the deal falls within its estimation of new contracts secured in FY13 of RM400 million. TRC would remain a top pick as the company faces less competition for certain public jobs which are designed for Bumiputera’s and Sarawak-based contractors.
Significance: In the meantime, the construction sector is likely to trend downwards as the deadline for the general elections is getting closer. Upon the elections, the construction stocks are expected to draw investor’s attention again, underpinned by the construction up cycle as well as its strong fundamentals.

Ranhill Energy Expects Listing In Q2
Ranhill Energy and Resources, a Malaysian energy and water company, is expected to go public by the second quarter of this year in a deal that will possibly raise more than RM1 billion, according to two sources close to the deal. Asked to quote the timeline, the answer was; “Second quarter at the latest, but it depends on the elections,” said one of the sources. Ranhill Energy provides engineering services for the onshore and offshore oil and gas, refinery and petrochemical industries. It also owns and operates two 190-megawatt combined-cycle gas fired turbine power plants in Sabah. It was also awarded an exclusive licence by the government to provide source-to-tap water supply services in Johor, the second most populous state in the country. 70 percent of the IPO proceeds will be used to redeem Islamic notes and bonds with 19.1 percent to pay off company acquisitions. Another 7.1 percent is allocated to expand its water business in China, and the remaining for listing expenses. This was according to a draft prospectus filed on 13 January.
Significance: The company has yet to announce the amount of shares to be offered, the pricing, or a timeframe for the IPO. Ranhill Energy is part of Ranhill, which was bought out by its management in 2011 for 90 sen per share, thus valuing the company’s equity at RM538 million. The initial public offering could be among the first after a general election that must called by the end of April.