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Malaysia stock market and companies daily report (March 11, 2013)

Contributed by Shares Investment

Maxis & Astro To Launch IPTV
The much anticipated launch of the Internet protocol television (IPTV) at the end of March have analysts at Maybank Investment Bank (Maybank IB) believing that the joint-product deal is a win-win situation for both parties, Astro Malaysia Holdings and Maxis. However, estimated earnings of Astro for the financial year ending 31 January, 2015 have been lowered based on expected higher staff costs, and lower IPTV earnings before interest, tax, depreciation, and amortisation (EBITDA) margins. Furthermore, a longer time is needed to convert the old standard definition (SD) set-top boxes (STBs) to high definition (HD) STBs. It is understood that Astro will take 25 percent of the broadband average revenue per user (ARPU) while Maxis will have the remaining majority 75 percent. Astro will also take 100 percent of content ARPU. Meanwhile, Maybank IB analysts expect Astro’s quarterly revenue for the fourth quarter ended 1 January 2013 to be up slightly but earnings to be lower at about RM100 million to RM110 million.
Significance: Analysts believe that the Maxis-Astro IPTV product will serve as a pre-emptive strike against other newcomers to the pay-TV market via IPTV, and help enforce Astro’s near-100 percent market dominance.

KPJ Healthcare Expects To Deliver Better Results For FY13
KPJ Healthcare is projected to post better results for its year ended 31 December 2013, as the scheduled launching of its two new hospitals and the new Sabah Medical Centre are expected to increase the number of beds; said RHB Research. The research house believes that the lucrative medical tourism industry could be the key to sustainable long-term growth in the rising competitive market. Currently the main focus of KPJ is to transform its three existing hospitals into reference centres for oncology, while extracting value from its 23.6 percent stake in Vejthani Hospital, Thailand. “Efforts to replicate Vejthani’s successful medical tourism strategy in Malaysia could pay off over the longer term,” said RHB Research. For KPJ’s FY13 performance, the brokerage is projecting a total revenue and recurring net profit of RM2.43 billion and RM178.3 million, respectively. As for FY14, its revenue and net profit is expected to improve to RM2.8 billion and RM193.4 million, respectively. Meantime, the research house has a “Buy” call on the stock with an unchanged fair value of RM6.45, which is based on a price-earnings ratio of 23.5 times for FY13.
Significance: According to RHB Research, the management reaffirmed that KPJ would continue with its expansion plans of opening at least two new hospitals per annum, which had thus far helped the firm maintain its dominance in the local healthcare sector.

KLCC Property Holding’s Listing Of Stapled REIT Has Been Approved
Securities Commission Malaysia (SC) has approved KLCC Property Holding’s (KLCCP) proposal to form a stapled real estate investment trust (REIT). With an asset size of RM15.4 billion, KLCC REIT will be the biggest REIT in terms of asset size in Malaysia once it is listed, reportedly in April. KLCC REIT will consist of three assets namely, Petronas Twin Towers, Menara 3 Petronas and Menara Exxon Mobil. All these assets are wholly owned by Petronas and have a 100 percent occupancy rate. Menara 3 has a 100 percent occupancy rate for its office portion and a 92 percent rate for its retail portion. “A catalyst for the company would be the potential transfer of its assets such as Suria KLCC and Kompleks Dayabumi into the REIT in the future, which could translate into higher dividends as tax savings can be returned to shareholders,” said a property analyst. “Gearing is low at 15 percent with more than RM5 billion of debt headroom for acquisitions before hitting the 50 percent assumed statutory limit,” said CIMB Research analyst Foong Wai Mun.
Significance: According to Maybank analyst, KLCCP has committed to pay more than 90 percent of KLCC REIT’s consolidated distributable income from 40 percent previously as dividends. Despite not possessing tax incentives of a pure REIT, shareholders will still be able to reap an additional 9 sen to 11 sen dividend per share under the new corporate structure.