Reports » Malaysia

Malaysia stock market and companies daily report (March 12, 2013)

Contributed by Shares Investment

Tek Seng Eyes 40 percent Revenue From Solar Cell Unit
Tek Seng Holdings expects its solar cell business under subsidiary, TS Solartech, to generate over 40 percent of group revenue for 2013. Group executive chairman Loh Kok Beng said the group was now securing orders from local and overseas solar panel manufacturers. The company produces crystalline solar cells using German solar technology at its plant at the Penang Science Park in Bukit Minyak, which commenced production in January 2013. A four-watt solar cell piece is currently sold at US$2 (RM6.21), down from around US$2.50 to US$3.00 two years ago, as the pricing of key raw materials such as silicon wafers have dropped. Loh said the group was currently producing 26,000 pieces of solar cells per day, using one production line and running on one shift. The group has allocated RM480 million over the next five years to upgrade the plant and expand production lines which are expected to be increased to eight by 2015, with an installed production capacity of 640MW.
Significance: According to Loh, the group will invest around US$1.25 million before mid-2013 to produce higher-end PVC flooring products. Currently, management is expecting more orders to come in over the next few months, where half of the solar cell products are for the export market and the remainder for the domestic market.

Air Asia inks Strategic Alliance With Zest Air Group
Philippines’ AirAsia(PAA) has inked a Strategic Alliance Agreement (SAA) with Zest Air Group majority shareholder Ambassador Alfredo Yao with the intention to invest in its subsidiaries Zest Airways and Asiawide Airways. PAA in a statement said that it will acquire 49 per cent of common stock of Zest Airways and 100 per cent of Asiawide Airways, in exchange of a 15 per cent stake in PAA to Zest Air Group. Shareholders of PAA will also inject funds to augment working capital as to strengthen the partnership between the two companies. Zest Airways operates 11 aircraft on 10 domestic and 10 international routes. It has hubs in Manila, Kalibo and Cebu in the central Philippines, which are major tourist destinations. PAA chief executive officer Marianne Hontiveros said the proposed investment in the Zest Group would complement the strategies for future growth of PAA, which currently operates out of Clark.
Significance: PAA will be able to leverage on Zest Air’s strength through its operation in Ninoy Aquino International Airport which constitutes a majority of the air traffic in the Philippines, and has a strong domestic network that feeds into its current international routes.

Analyst Downgrades Oldtown
Oldtown, the local white coffee franchise is expected to incur higher operating and market expenses going forward, in view of the more competitive and challenging market. Kenanga Research has lowered its current earnings forecast for Oldtown to RM45 million in FY13 and RM50 million in FY14 from RM52 million and RM59 million, respectively. Nonetheless, the brokerage remains positive on the cafe outlets operator, given Oldtown’s growing regional market share and its vision of launching more cafe outlets regionally, which is expected to boost its fast moving consumer goods (FMCG) segment. The research house highlighted that its local sales had improved by 23.8 percent last year, as the firm had hired more FMCG distributors which helped to retain its market share. Kenanga Research has downgraded Oldtown to “market perform” from “outperform”, and lowered its target price to RM2.38 per share from RM2.40. Yesterday the counter closed at RM2.30, up five sen with 1.4 million shares changing hands.
Significance: Kenanga Research believes that Oldtown has overrun the capacity of its manufacturing of instant coffee mix and instant milk tea mix. As a result, its upcoming new capacity in the second quarter of this year should come in just in time to boost its capacity and growth.