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Reports Malaysia

Malaysia stock market and companies daily report (March 25, 2014)

March 25, 2014, Tuesday, 05:16 GMT | 01:16 EST | 09:46 IST | 12:16 SGT
Contributed by Shares Investment

RAPID Investment May Exceed Initial Target By 150%

- Investments at the Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, Johor, could top US$50 billion by 2020, 150 percent more than the initial target of US$20 billion.

- Pengerang will serve as a catalyst for development in areas such as refinery, petrochemicals, power, naptha cracker and regasification plants, as well as crude oil storage and liquefied natural gas storage tanks, according to Malaysian Investment Development Authority (MIDA).

- Petroliam Nasional (Petronas) is expected to make a final investment decision on the RAPID project at the end of the month.

Significance: MIDA approved 18 projects worth about RM7.1 billion last year, of which seven each were in the machinery and equipment and petroleum and petrochemicals sectors, three in the engineering support services and oil and gas had one.

SapuraKencana’s FY14 Earnings Surge

- For the full financial year ended 31 January, SapuraKencana Petroleum posted a higher than expected net profit of RM1.1 billion on a revenue of RM8.4 billion.

- The oil and gas company said the higher profit was in line with the increase in revenue that rose due to the inclusion of nine months of the tender rig business’ financial results.

- The group’s earnings are expected to grow, as going forward it would reflect the full-year contribution of the tender rig business, additional earnings from the acquired assets of Newfield Malaysia and revenue stream from both currently contracted assets as well as assets which will be deployed in new market.

Significance: SapuraKencana’s order book currently stands at RM25.4 billion as at 31 January, providing it with good earnings visibility. It also expects to have an improved funding position that will support its growing aspirations following the completion of its refinancing exercise.

AmResearch Maintains “Hold” Rating On Malayan Banking, Target Price RM9.90

- Recent loan demand trend is probably slow. While the corporate and non-consumer loan demand trends have been strong in January, these are essentially based on drawdown plans put in place before then end of 2013.

- AmResearch expects corporate loan disbursements to have been more subdued in February. As for consumer loans, there are indications that primary launches have slowed down.

- A possible local incorporation in Singapore would mean an increase in investments in subsidiaries and associates. This creates uncertainty over its CET1 ratio, in the short term, according to the research house.

Significance: AmResearch maintains “Hold” rating on Malayan Banking with a target price of RM9.90 as it remains uncertain over the mark-to-market losses for its securities portfolio, the impact to bank level CET1 ratio from possible incorporation in Singapore, weaker domestic growth environment overall on the banking industry, and high long-term debt ratio.