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Reports Malaysia

Malaysia stock market and companies daily report (July 15, 2014)

July 15, 2014, Tuesday, 04:08 GMT | 23:08 EST | 07:38 IST | 10:08 SGT
Contributed by Shares Investment

TNB’s Profit Possibly Below Expectations

- Tenaga Nasional’s (TNB) third quarter earnings ended May 31 could be affected by higher than expected costs due to the burning of more liquefied natural gas and distillates.

- CIMB Research opines that given the higher cost, TNB’s earnings for the third quarter and nine month period is likely to be below expectations.

- CIMB Research however pointed out that the lower third quarter earnings could be offset by either a tariff hike, which it initially expected to be implemented in July, with Independent power producer savings of about RM500 million.

Significance: Should there not be any positive indications of impending fuel cost pass through implementation, CIMB Research opines that the longer term outlook for TNB will remain cloudy, and in such a situation, the research house thinks that TNB’s valuations should carry a higher discount to the market price to earnings ratio due to its higher earnings risk.

Telekom Malaysia Awaits Possibility Of Unlocking Long Term Opportunities

- Long term strategic opportunities could be derived, following Telekom Malaysia’s (TM) acquisition of Packet One Networks.

- TM’s re entry into the wireless segment was noted by Nomura Research, to be similar to that of United Kingdom’s BT Group, which recently secured 4G spectrum and was looking to launch wireless services.

- TM’s retail revenue sees about 60 percent coming from SMEs, Government and enterprise, while the general consumers take up the rest.

Significance: TM’s conclusion of its high speed broadband discussions with the Government is viewed by Nomura Research as a key catalyst in the near-term. It remained positive on its second phase of fibre rollout. Nomura Research believe the stock has further catalysts despite a 15 percent year to date outperformance, and have lifted target price to RM7, maintaining their “Buy” call.

TSH To Buy Icon Field Ventures

- TSH to acquire the entire issued and paid-up share capital in Icon Field Ventures (Icon) for RM24.48 million from Wingate Consolidation.

- TSH also mentioned that Icon will purchase 90 per cent of the entire share capital of PT Prima Usaha Sukses (PT PUS) from PT Tirta Agung Selaras and PT Teguh Aman Sentosa.

- PT PUS has acquired the ‘Ijin Lokasi’ (Location Permit) for 9000 hectares of land in Indonesia and obtained the necessary license to develop the land into an oil palm plantation.

Significance: TSH said that the proposed acquisition would further enable TSH to increase its oil palm plantation areas in Indonesia. The logistics of where the land is located also provides good accessibility, good infrastructure, and near to a river for the transport of its commodities.