Reports » Malaysia

Malaysia stock market and companies daily report (January 25, 2013)

Contributed by Shares Investment

F&N Believes Takeover Impact Yet To Be Determined
Fraser & Neave Holdings (F&N) believes that any impact from the recent proposed takeover between its Singapore-based parent, F&N Singapore and the Thailand billionaire Charoen Sirivadhanabhakdi has yet to be determined as any effect is only to take place upon the acquisition. “The transaction is likely to be completed between end-February and mid-March. When the new shareholder settles down, I am sure the impact will be known,” F&N Malaysia chief executive officer Datuk Ng Jui Sia said. Charoen is likely to gain the control of the 130-year old F&N Singapore following the recent raising of his offer to S$9.55 per share or US$11.2 billion. Meantime, Charaens’ is the only offer for the bid, after Indonesia’s Riady family quit this week. As of Monday, his stake in F&N Singapore stood at 43 percent, where the latter has a controlling 56 percent equity interest in F&N Malaysia.
Significance: F&N Malaysia believes its Indochina region exports would experience a “fair bit of growth” moving forward. Its manufacturing facility in Thailand has bounced back after operations were halted due to the floods there. To date, the operation has received RM92.5 million out of a total RM110 million claims made.

TNB Posted Q1 Net Profits Of RM1.4bil
Tenaga Nasional (TNB) registered a net profit of RM1.4 billion for its first quarter for the year ended 31 August 2013. The national utility company’s revenue edged up five percent to RM9.13 billion. This was against RM8.69 billion a year ago. Its earnings staged a turnaround to RM1.4 billion compared with a loss of RM74.1 million previously. The improved results are mainly attributed to the recognition of fuel cost compensation, lower generation costs and foreign exchange gains, which is in line with analyst expectations. However, the utility giant remains cautiously optimistic about its future prospects. “We will continue to be burdened with fuel costs. Gas volume will still be an issue until the regassification terminal (RGT) in Malacca is ready. The delay in the RGT is a concern for us,” said president and chief executive officer Datuk Wira Azman Mohd. In the meantime, TNB will seek for gas supply from PETRONAS’ supplier to cater to the nation’s electricity demand.
Significance: Although TNB has benefitted from the lower coal prices, the management was urged to be alert on the impact of the continued use of alternative fuels on its operating costs. Moving forward, TNB will tender for more projects overseas, with the focus on the Middle Eastern and North African regions.

Analyst Call “Buy” For Kulim
While the market is experiencing an oversold situation recently, AmResearch has upgraded its recommendation of Kulim (M) from “hold” to “buy” based on the revised fair value of RM4.30; which is derived from a fully-diluted price earnings ratio of 15 times for its FY13. The research house targets a 31 percent increase in Kulim’s earnings of RM325.6 million in FY13, mainly attributed to turnover recovery, stabilisation of production cost per tonne as well as lower minority interest. On the other hand, its Papua New Guinea arm New Britain Palm Oil (NBPOL), which is Kulim’s 49 percent owned unit also expects to perform better in FY13. The other catalyst would be some form of asset acquisition or the disposal of its remaining shipping assets. In the meantime, the research house believes that Kulim would increase its shareholding in NBPOL, with an estimate cost of RM42 million to increase its equity interest in NBPOL by 1 percentage point.
Significance: Speculation has been rife that Kulim’s parent company, JCorp would embark on another round of restructuring which could involve Kulim and NBPOL, following last year’s privatisation of QSR Brands and KFC Holdings. The company needs to consider other factors as well, should the downtrend in crude palm oil prices movement, continue.