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Reports Malaysia

Malaysia stock market and companies daily report (July 18, 2014)

July 18, 2014, Friday, 05:48 GMT | 00:48 EST | 09:18 IST | 11:48 SGT
Contributed by Shares Investment

Boustead Finalises RM9b Navy Deal

- Pursuant to the letter of award received from Malaysia’s Ministry of Defence (MOD) in December 2011, Boustead Naval Shipyard (BNS), a subsidiary of Boustead Holdings, has inked a RM9 billion contract to supply six ships to the country’s navy.

- BNS will design, build and deliver six second-generation patrol vessels with littoral combat ship capability for the Royal Malaysian Navy.

- The contract is expected to be carried out over the Tenth, Eleventh and Twelfth Malaysia Plans.

Significance: In FY13, Boustead’s heavy industries segment, which is where BNS sits, reported annual sales of RM2.5 billion. The RM9 billion deal with MOD is about three and a half times that figure.

Sumatec To Fund Acquisition Via Rights Issue

- Sumatec Resources plans to undertake a rights issue to partly fund its US$250 million acquisition of Borneo Energy Oil and Gas.

- The company announced that they might seek to raise 50 percent of US$250 million from rights issuance and the other half from special issue shares. Sumatec aims to complete this acquisition this year and will disclose the price of the rights issue soon.

- Additionally, Sumatec will spend US$150 million to set up facilities at Karaturun More and Karaturun Severo Vostochunyi, which will be funded via bonds.

Significance: The acquisition is part of Sumatec’s plan to become a large and independent oil and gas player with 200 million barrels reserves in their portfolio in five years’ time.

Malaysian Airline Plane MH17 Shot Down Over Ukraine

- The MH17 flight was allegedly shot down a Russian-made surface-to-air missile while flying over eastern Ukraine en route to Kuala Lumpur from Amsterdam, killing all 298 people aboard.

- Malaysian Airline System (MAS) is still recovering from the aftermath of the disappearance of the MH370 flight in March which has yet to be located and the latest incident deals another hard blow to the company who is struggling on its financials.

- The company’s shares fell 17.8 percent to RM0.185 at one point on Friday morning before cutting some of it losses to sit 8.9 percent lower.

Significance: MAS shares have lost a third of its value year-to-date and with the latest incident, outlook for the struggling carrier looks bleak. There are strong speculations that the company could be restructured or sold.

Tambun Indah Land To Build Retirement Village Within Pearl City

- Tambun Indah Land will build a retirement village within its flagship integrated mix project ”Pearl City” in Simpang Ampat on Penang’s mainland.

- The proposed development will be built on 1.24 hectares of land and will offer facilities such as clubhouse amenities, meeting room, medical center and shuttle bus services. The group is also looking at offering an Australian-inspired retirement village with custom-designed amenities for retirees.

- A total of 200 high-end condominiums units will be offered for sale for those aged 60 and above and completion is expected by 2020.

Significance: With a gross development value of RM3 billion, Pearl City is also set to see the opening of the mainland’s first international school next year. Therefore, RHB Research gave it a target price of RM3.