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Reports Malaysia

Malaysia stock market and companies daily report (March 13, 2014)

March 13, 2014, Thursday, 05:42 GMT | 01:42 EST | 10:12 IST | 12:42 SGT
Contributed by Shares Investment

MPC To Pay AD RM120m In Settlement

- In a filing with Bursa Malaysia, Malaysia Pacific Corp (MPC) said it had entered into a settlement agreement with Amanahraya Development (AD) over a material litigation arising from a joint venture agreement dated 20 August 2008, by paying the latter RM120 million.

- The litigation arose from a joint venture unit among Oriental Pearl City Properties, Lakehill Resort Development and Taman Baru Masai. All the parties have entered into the settlement agreement that was obtained by AD against Oriental and MPC on 30 January 2012.

- The judgement sum was RM113.2 million then, with an interest rate of 7.2 percent on the sum from 19 September 2012, and costs of RM5,000. The company said it will make a RM5 million cash payment upon execution of the settlement agreement and another cash payment of RM115 million thereafter within six months.

Significance: MPC has been categorised as a Practice Note 1 company, having defaulted on its debt payment. This raises question as to how the property firm will come up with the cash payment to pay AD in the litigation settlement.

TA Enterprise Major Shareholder Has Been Mopping Up Firm’s Shares

- Datuk Tony Tiah Thee Kian, the co-founder and the single largest shareholder of TA Enterprise, has been gradually increasing his equity interest in the firm by accumulating shares in the open market. Tiah has seen his shareholding increase to 30.3 percent by acquiring about 34 million shares between October 2012 and yesterday.

- The veteran stockbroker bought shares every month during the period except September 2013, most of which in August 2013, and between March and June 2013. He is the only director and substantial shareholder to have changed his equity interest since October 2012.

- Other shareholders in the group include Globabase Enterprise, Delroy Investment Holdings, Fleet Investment Management and Glodcape International, according to TA’s latest annual report. In all, these substantial shareholders collectively hold about 15.2 percent of the company.

Significance: It remains to be seen whether Tiah intends to acquire 33 percent of the group and trigger a mandatory general offer to take it private. It has long been speculated in the industry that Tiah intends to sell the stockbroking business.

RHB Research Initiates “Buy” Call On Scientex, Target Price RM6.36

- RHB Research likes Scientex for its fast expanding plastic firm manufacturing segment, reputable brand name in Johor’s property market and committed management team under the founding Lim family, which holds a 60 percent majority stake in the company.

- The research house anticipates it to register earnings of RM143 million to RM192 million for FY14 to FY16, implying a 10.2 percent 3-year compound annual growth rate.

- Scientex’s property development division currently has an undeveloped landbank of 401 hectares with a total remaining gross development value of RM4.4 billion to be developed over the next 10 years. Moving forward, the company’s growth will be driven by the expansion of its manufacturing production lines as well as sustainable growth in its property sales.

Significance: RHB Research initiates “Buy” call on Scientex with a target price of RM6.36 based on a price-to-earnings ratio of 12 times assigned to its manufacturing segment and ascribing a 30 percent discount to the revised net asset value of its property segment.