Reports » Malaysia

Malaysia stock market and companies daily report (January 30, 2013)

Contributed by Shares Investment

Marine Business The Catalyst For QL Resources’ Growth In 2013
QL Resources’ marine segment is likely to be the main catalyst for the company’s growth in 2013, buoyed by its regional expansion. This is according to OSK Research. QL Resources’ core business consists of marine products manufacturing, integrated livestock farming and palm oil activity. The research house noted that QL had the capacity to produce 30,000 tonnes of surimi currently, of which 25,000 tonnes came from Malaysia whilst the remaining 5,000 tonnes came from its Indonesian operations in Surabaya. “Recent expansion at the Surabaya marine products plant will boost its annual capacity in Indonesia from 5,000 tonnes to 10,000 tonnes,” the research house added. However, QL’s integrated livestock farming segment, which is the main component of its revenue is expected to be dampened by the falling egg prices in the peninsula and the rising prices of corn and soybean. Furthermore, the downward movement of crude palm oil prices has eroded the margins of its palm oil division.
Significance: OSK Research believes QL’s marine division would deliver better results given the bountiful fish supply and stable demand for marine products, which in turn could be the catalyst for growth this year. Besides that, the group is also looking for opportunities to acquire some local and regional surimi and surimi-based manufacturers to scale up this lucrative business.

KBB To Acquire 10 Percent of China’s World Granary For RM21m
KBB Resources has proposed to acquire 10 percent of China-based World Granary Holding (Tianxia) for RM21 million through a share swap practice. Under the deal, Tianxia will receive 35 million new KBB shares of RM0.60 per share, which make up 22.5 percent of the latter’s total shares. KBB believes the agreement would provide a good platform for both companies to leverage on each other to strengthen their market existence. Through the deal, KBB would be able to sell its products in China, fully leveraging on Tianxia’s strong market network. At the other end of the spectrum, KBB would collaborate with Tianxia to market and develop a new range of Tianxia’s products which are halal compliant, in Malaysia and the Middle East market. Managing director Datuk Seri Chin Seak Huat believes that the proposal would pave the way for more collaboration between the two companies in the future. The group also plans to acquire another 10 percent share in Tianxia within a year.
Significance: KBB has settled its debts via a restructuring exercise last year and have exited its PN1 status. This also marks a new beginning for the company. Moving forward, KBB will be targeting higher margin products, and will continue to venture into overseas markets.

Concession Award Drives Faber Shares Up 8.6 Percent
Faber Group’s share price surged in early trade yesterday, following a concession awarded for the privatisation of hospital support services for the Northern Peninsular region, Sabah, and Sarawak. Faber Group’s wholly owned subsidiary, Faber Medi-Serve (FMS) was awarded the concession which consists of three letters from the Public Private Partnership of the Prime Minister’s Department for a period of 10 years each. FMS which will have full control for the Northern Peninsular, would only hold a 40 percent equity stake in the Sabah and Sarawak concessionaire. The remaining stake there will be held by ICare Consortium and Metrocare Services along with the joint venture between Simfoni Dua and Perbadanan Pembangunan Ekonomi Sarawak, respectively. Faber Group’s shares closed 8.6 percent higher at RM1.51 with 3.3 million shares traded. According to MIDF Research, the news came as a relief to the group’s uncertainty regarding the concession renewal award which brought about a decline in last year’s share price.
Significance: Currently the IFM concession business contributes approximately 68 percent of the group’s total revenue. However, the revenue and earnings growth of the property division is expected to cover the losses incurred by the concession business.