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Reports Malaysia

Malaysia stock market and companies daily report (March 11, 2014)

March 11, 2014, Tuesday, 06:23 GMT | 02:23 EST | 10:53 IST | 13:23 SGT
Contributed by Shares Investment

Some Bright Sparks In The Steel Industry

- Faced with headwinds, the steel industry seems to be in a gloomy state. However, not all companies in the sector are posting losses with companies such as Malaysia Steel Works bucked industry trends by posting an 18.2 percent increase in net profit to RM28.8 million in FY13 from RM24.3 million previously.

- The integrated steel manufacturer added it was optimistic about the outlook for the steel industry due to demand from domestic construction activity, which in turn was benefitting from infrastructure and residential projects awarded over the last two years.

- Other steel markets that reported full-year net profits are Ann Joo Resources, Hiap Teck Venture and Southern Steel. However, Lion Corp, Perwaja Holdings and Kinsteel reported significant losses.

Significance: A recent deal struck between Perwaja and two key government-owned utility providers, Petronas and Tenaga Nasional, gave the former beleaguered steel producer a lifeline. But, the concern raised is that the deal, which is speculated to comprise an 18-month reprieve followed by a 43-month repayment plan, could set a dangerous precedent as other steel players were facing tough operating conditions.

MAS To Stay On Track For Its Business Strategy

- In the wake of the incident of flight MH370, Malaysian Airline System’s (MAS) official said that the carrier’s business strategy remains intact unless it becomes necessary to adopt a new one.

- The airline’s strategy is aimed at restoring profitability by significantly cutting capacity and focusing on its premium sectors and has been churning out positives, according to the official.

- AmResearch views that MAS’ capacity plan may not be impacted significantly as the outgoing 777 is to be replaced with a new Airbus 330-300. Both AmResearch and Hong Leong Investment Bank have “Sell” on the counter with fair value of RM0.27 and revised target price of RM0.20 respectively.

Significance: The incident weighed down MAS’ share price to hit a historic low at RM0.24 and analysts expect near-term weakness in MAS shares following the disappearance of the flight, based on historical mishaps of other airlines and impact on their share price.

RHB Research: Positive On TAS Offshore

- RHB Research is positive on the prospects of TAS Offshore, driven by its strong order book of RM330 million as at end-February 2014.

- TAS’ build-to-stock (BTS) business model is also bearing fruit. Its potential earnings contribution from its five BTS vessels could be realised as some clients may be willing to pay a higher price for a shorter waiting period and this could also improve profit margins.

- Furthermore, the company’s foray into supply of vessels of Indonesia’s oil and gas industry last year is showing positive results and it is currently negotiating for the supply of more vessels in the next two years.

Significance: The research house maintained “Buy” on the stock with an unchanged target price of RM1.57, citing positive prospects in the oil and gas sector, backed by TAS’ strong fundamentals and earnings growth.