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Reports Malaysia

Malaysia stock market and companies daily report (March 04, 2014)

March 4, 2014, Tuesday, 06:15 GMT | 01:15 EST | 11:45 IST | 14:15 SGT
Contributed by Shares Investment

FGVH Looking To Acquire AP As Part Of Its Global Goal

- Plantation giant Felda Global Ventures Holdings (FGVH) has confirmed it is evaluating several brownfield plantations, not limited to Asian Plantations (AP), a Singapore-based plantation company listed on the Alternative Investment Market on the London Stock Exchange.

- However, at this point of time, FGVH had not come to a conclusive decision. The possible acquisition is in line with FGVH’s aim to become one of the top-ten agri-commodity players in the world by 2020. FGVH added that it was continuously exploring potential deals that supported its growth strategy.

- Analysts are generally positive on the possible acquisition of AP, but do not expect any earnings contribution in the near term, as AP had been loss making.

Significance: Although AP is a loss making unit, its appeal is its strategic location, which is close to the deep water refinery hub in Bintulu, according to a research note from PublicInvest Research.

Cash Flow Issue Leads Perwaja To Default On Coupon Payment

- Perwaja Holdings subsidiary, Perwaja Steel, will not be able to fulfil its coupon payment obligation of RM9.8 million for its RM280 million nominal value 7 percent convertible unsecured loan stock which is due on 26 March.

- Perwaja’s inability to generate cash flow due to temporary cessation of business operations as a result of non-payment to utility providers, which in turn was caused by the slowdown of steel industry and decline in steel prices was the reason given for the default.

- In a filing with Bursa Malaysia, Perwaja said it has finalised the settlement agreement with Petroliam Nasional and Tenaga Nasional, the two essential creditors, as such it will be able to resume its business operations with the resumption of gas and electricity supply to its plant in Terangganu.

Significance: Perwaja added that together with its advisor, they are currently working towards finalising the debt restructuring scheme to restructure its financial position and total indebtedness.

Kenanga Initiates “Outperform” On MBC, Target Price At RM2.53

- Kenanga IB Research has initiated coverage on Malaysian Bulk Carriers (MBC). The research house likes MBC for its: 1) healthy net cash balance sheet position, 2) young and efficient fleet management with average fleet age of 5.9 years, and 3) exposure to the recovering dry bulk shipping market.

- Kenanga IB Research believes that MBC at current level is a compelling investment as the dry bulk shipping market has yet to fully recover to even half of pre-crisis level, which means more upside potential.

- Another highlight of MBC is its 21 percent owned associate, POSH, which provides MBC some exposure to the booming offshore marine vessel industry. MBC also has the option to list its associate, POSH, at favourable valuation due to the booming offshore support vessel market driven by higher upstream oil and gas activities.

Significance: Kenanga IB Research initiates coverage on MBC with an “Outperform” rating and a target price of RM2.53, based on the six-year average forward price-to-book value ratio of 1.3 times.