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Reports Malaysia

Malaysia stock market and companies daily report (March 07, 2014)

March 7, 2014, Friday, 05:20 GMT | 01:20 EST | 10:50 IST | 13:20 SGT
Contributed by Shares Investment

CPO Stocks Hot Favourites Among Investors

- Plantation stocks were heavily traded on Bursa Malaysia yesterday, after world palm oil experts expressed their bullish projection that crude palm oil (CPO) prices are set to top RM3,000 per tonne level by 2H14. Among the top gains were Genting Plantations and PPB Group, which gained RM0.30 each to reached RM11 and RM16.66 respectively.

- Palm oil experts at the close of Bursa Malaysia’s palm oil conference on Wednesday concurred that CPO price will reach the RM2,400 and RM3,200 per tonne mark, underpinned by biodiesel mandates from Indonesia and Malaysia, the looming El Nino dry weather phenomenon, and the logistics bottleneck at oilseed producing countries hampering supply.

- Dorab Mistry of Godrej International, a renowned commodity trader has forecast that CPO prices would hit RM3,000 to RM3,500 per tonne if El Nino arises. Alternatively, if the weather phenomenon does not take place, prices will still trade higher at RM2,600 to RM2,900 per tonne this year, says Dorab.

Significance: In its latest update, UOB Kay Hian has an “Overweight” call on the plantation sector, as it expects CPO prices to gain momentum on the back of slower supply growth and stable demand.

Petronas Wins 2 New LNG Contracts

- In a press statement, Petronas says it has signed two contracts to supply CPC Corporation of Taiwan with up to 2.6 million tonnes of liquefied natural gas (LNG) per year for six years. The delivery to CPC will commence from 2Q14 and 2015 respectively.

- Petronas began its LNG supply to CPC in 1995 through a 20-year contract for an annual supply of 2.25 million tonnes of LNG.

- The volume, which would ship from the Petronas LNG complex in Bintulu, Sarawak and other supply sources, is to meet the demand and requirements of CPC’s customers in Taiwan, primarily the country’s power sector.

Significance: The signing of the new contracts is expected to further strengthen the ties between the two companies, according to Petronas.

Alliance Research Upgrades Deleum To “Buy” Rating

- Alliance Research has increased its earnings forecast for Deleum by about 9 percent, in anticipation that the oil and gas support services firm will continue to grow its record high RM3.3 billion order book as it undertakes idle offshore oil and gas asset revival projects.

- In an investment note, Alliance Research pointed out that Deleum planned to venture into these asset revival projects through the company’s asset integrated solutions.

- The research house maintains its FY14 estimates but push up FY15 and FY16 estimates 8.1 percent and 8.9 percent respectively. This is on the back of new asset integrated jobs contributing roughly RM40 million to RM50 million per annum in revenue, as well as full year contribution from their slickline contracts starting FY15.

Significance: Alliance Research upgrades Deleum shares from “Neutral” to “Buy” rating and raises its target price from RM5.12 to RM5.88, based on a price-to-earnings ratio of 13 times assigned to FY15 earnings per share, which is representative of small-cap and gas service players in Malaysia.