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Reports Malaysia

Malaysia stock market and companies daily report (July 01, 2013)

July 1, 2013, Monday, 05:21 GMT | 00:21 EST | 08:51 IST | 11:21 SGT
Contributed by Shares Investment


TNB Aims For 3,000MW Hydroelectric Output By 2020
Tenaga Nasional (TNB) plans to increase the total output capacity of its hydroelectric power plants to over 3,000 Megawatts (MW) by year 2020. According to TNB’s Stesen Janaelektrik Sultan Mahmud (SJSM) Kenyir’s general manager Mohd Aidee Hamidin, the group currently had identified five locations to build new hydroelectric plants in West Malaysia. “SJSM Kenyir will also undergo refurbishment. We intend to increase its capacity by 15 percent to 460 MW,” said Mohd Aidee, adding that the works will begin with one unit commencing in 2016. Meanwhile, TNB’s operations and management (O&M) unit TNB Remaco is eyeing to penetrate African markets. “We’ve been wanting to enter the continent as we know we could provide our expertise in those markets. But the political unrest in Egypt since last year has put our plans on hold,” said the company’s chief operating officer Haji Anuar Yusoff.
Significance: TNB Remaco is currently bidding for a contract, which is an O&M job for an Iraqi power plant. The company estimates its pre-tax profit will rise to RM78.2 million with revenue of RM722 million, within two financial years.

CIMB Research Remains Neutral On Malaysia Banks
CIMB Equities Research is maintaining its “Neutral” rating on Malaysian banks on concerns over margin compression and an upturn in credit costs.The research house noted that feedback from banks showed Bank Negara Malaysia (BNM) had yet to curb financing under the developer interest-bearing scheme (DIBS). “Our channel checks with banks suggest that BNM has not given any directive to banks to stop DIBS but has requested information from them for study. Banks shared that DIBS financing accounts for up to three percent of their existing property loans and five to 12 percent of new property loans,” it said. Additionally, CIMB Research believes any discontinuation of DIBS would be negative for the banks though the impact should not be significant. It said residential mortgages have been contributing 3.5 percentage points to 3.7 percentage points to industry loan growth of 10 to 13 percent since 12 January 2013.”Assuming that 10 percent of the new loans disbursed are for DIBS, a curb of this scheme would only bring down loan growth by 0.3 percentage point to about 0.4 percentage point,” It added.
Significance: The research house expects a slowdown in the growth of residential mortgages to about 11 to 12 percent on-year due to BNM’s measures to tighten consumer lending. It also pointed out that Maybank remains its top pick in this sector.

Digi Considering Business Trust Listing
DiGi is considering listing some of its assets as a business trust on the domestic stock market, a company official said. However, Malaysia’s third-largest telecom company by subscribers has not decided yet on the size of the possible deal or what assets might be included in the trust, said Chief Strategy Officer Christian Thrane. Meanwhile, Mr. Thrane also said DiGi.com is sticking to its target of keeping its earnings before interest, taxes, depreciation and amortization margin at 46 percent this year, after it dipped to 43.7 percent in the first quarter. The company expects revenue to grow up to seven percent this year as it further expands its third-generation network coverage, he added.
Significance: DiGi’s plans for business trusts comes after Malaysia recently introduced guidelines paving the way for such listings on the domestic market, in an apparent challenge to the regional dominance of Singapore and Hong Kong in trusts. Business trusts typically comprise income-generating assets and distribute most of their profits as dividends.