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Reports Malaysia

Malaysia stock market and companies daily report (June 10, 2014)

June 10, 2014, Tuesday, 05:43 GMT | 00:43 EST | 10:13 IST | 12:43 SGT
Contributed by Shares Investment

Malaysia’s Financial Sector To Be Further Liberalised

- Prime Minister Datuk Seri Najib Razak said that the government further liberalised the country’s financial sector by removing barriers faced by foreign-owned fund managers and easing ratings requirements for the corporate bond market.

- Foreign firms will be allowed to fully own unit-trust management companies in Malaysia, which will allow foreign fund managers broader access to the retail investors in the nation.

- From 2017, Malaysian companies will not need to get credit ratings on the corporate bonds they issue. International credit rating agencies with full foreign ownership will also be allowed to operate in the Malaysian market.

Significance: The moves were aimed at boosting investment and encouraging a “stable and inclusive” financial system as the country aims to reach developed-world status by 2020, with a projected income per head of US$15,000 (RM48,000).

Sime Darby Aims To Double Market Cap

- Sime Darby plans to double its market capitalisation to RM100 billion by 2016.

- The group intends to expand and strengthen its position in diversified business activities such as plantation, industrial, motor, property, energy and utilities. For its plantation business, Sime Darby is planning to acquire land bank outside Malaysia. Ivory Coast is one of its potential investments for oil palm in the West Africa region.

- The group is also looking to plant up to 100,000 hectares of oil palm within the next 10 years in Liberia under its 63-year concession with the West African country’s government to develop 220,000 hectares of land.

Significance: The expansion of Sime Darby’s land bank would be crucial as its land in Malaysia and Indonesia nears full utilisation. Furthermore, the plantation business is the group’s largest earnings contributor.

HLIB Maintains “Buy” On Astro Malaysia

- Hong Leong Investment Bank Research (HLIB) expects strong earnings growth ahead for Astro Malaysia Holdings given its stronger free cash flow growth and completion of high capital expenditure (capex) phase for B.yond set top box swap out exercise.

- The MH370 case has resulted in a negative impact on advertising expenditure (adex) of all media companies and the house expects Astro’s year-on-year growth in adex for 1Q15 to be slower.

- The target growth for the average revenue per user (ARPU) in 1Q15 is 4 percent, to RM100 a month based on higher revenue from B.yond subscribers and higher take-up of subscription-free satellite TV service.

Significance: The research house has kept its “Buy” call on Astro with a target price of RM3.72. HLIB do not expect a major surge in capex in the near future, leading to a higher free cash flow position and could translate to a higher dividend yield.