Reports » Malaysia

Malaysia stock market and companies daily report (March 07, 2013)

Contributed by Shares Investment

Analysts Welcome Genting’s Buyout Of Las Vegas Resort
Analysts are upbeat on Genting’s acquisition of the unfinished resort from Boyd Gaming Corporation in Las Vegas, United States for US$350 million or RM1.08 billion. The acquired property will be developed into an integrated resort to be known as “Resorts World Las Vegas”, which will be Genting’s first destination resort in Las Vegas. It is expected to generate US$2 billion of gross development value to the firm, said Alliance Research. The research house highlighted that the acquired property will be facing the Las Vegas Strip and is zoned as H-1, which allows for the development of gaming enterprises, compatible commercial, and mixed commercial or residential projects. “It also lies entirely within the gaming enterprise district, which allows for application for a non-restricted gaming licence and permitted gaming throughout the site,” Alliance Research added. The research house had revised upwards its target price for Genting to trading buy at RM11.80 from RM9.84 previously.
Significance: Alliance Research view the deal as a “positive surprise” as the purchase consideration of US$350 million represents about 50 percent discount to the investment value of US$703 million as appraised by an independent valuer. As such, the research house believes the acquisition provides a good platform for Genting to venture into gaming operations in Las Vegas at an attractive price.

Supermax To Venture Into Uruguay, South America
Supermax Corporation plans to venture into South America by establishing production facilities in Uruguay, which is expected to complement the glove maker’s existing presence in Brazil. According to executive chairman and group managing director Datuk Seri Stanley Thai, Supermax is gearing up to enter the new market in Latin America and Mercosur Free Trade Agreement countries. The factory will serve as a test bed for South America, which is expected to boost Supermax’s annual capacity by another 2.4 billion pieces or 200 million pieces of gloves per month. In the meantime, the company is planning to set up factories in Indonesia and Thailand to cope with its local rubber glove output capacity which has reached some 90 percent. According to Thai, Supermax’s annual capacity stood at 17.76 billion pieces as at December 2012 and the figure is expected to grow to 23.13 billion pieces by end 2013, driven by the demand of nitrile gloves.
Significance: According to Thai, Supermax’s expansion in South America is deemed crucial because the country’s government has imposed a 35 percent duty on imported natural rubber examination gloves in the region, which makes the foreign-made gloves more expensive and less competitive there.

Hopes Of A Higher Takeover Price Sends KHSB Shares Up
Shares of Kumpulan Hartanah Selangor (KHSB) rose as much as 10.6 percent to a high of 67.5 sen yesterday as investors anticipated a higher offer price for KHSB’s shares. The stock closed 8.2 percent higher at 66 sen, with 33.3 million shares done. Kumpulan Darul Ehsan (KDEB), which offered to acquire 56.57 percent stake in KHSB, had agreed to revise their offer price from 76 sen a share. KDEB had also made the takeover offer for Kumpulan Perangsang Selangor’s (KPSB) 56.57 percent stake in KHSB, comprising of 254.56 million. According to the latest development, KDEB had accepted the conditions set out by KPSB which includes setting the purchase consideration for each share at a minimum of 76 sen. Another condition set was the option to increase purchase consideration up by 10 percent from the minimum offer price at KPSB’s request.
Significance: The offer price would help reflect the prevailing market value of the land banks and investment properties of KHSB following the valuations to be carried out by an independent valuer to be appointed jointly by KDEB and KPSB.