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Reports Malaysia

Malaysia stock market and companies daily report (March 27, 2014)

March 27, 2014, Thursday, 06:04 GMT | 02:04 EST | 10:34 IST | 13:04 SGT
Contributed by Shares Investment

TH Heavy Engineering To Achieve 4-Fold Increase In Capacity

- TH Heavy Engineering, the third largest oil and gas facilities fabricator in Malaysia, is upgrading its fabrication yard to achieve a four-fold increase in load-up capacity to 8,000 tonnes by 3Q14.

- The upgrade is expected to push the yard’s current annual capacity above 20,000 tonnes, depending on the evaluation done by Petroliam Nasional (Petronas) as annual capacity is approved based on the available job contracts.

- TH Heavy Engineering is also in the early stages of diversifying into the floating production storage and offloading (FPSO) system and is currently bidding for a contract by an international oil and gas player.

Significance: The venture into FPSO will allow the company to have a more sustainable and persistent cash flow due to the long-term contract tenure of around 10 years. This, coupled with its capacity expansion, will enable the company to strengthen its position in the industry.

Telekom Malaysia And Green Packet In Potential Partnership

- Shares of Telekom Malaysia (TM) and Green Packet have been suspended, pending a material announcement. This has sparked speculation that both companies have reached a strategic merger and acquisition agreement.

- Green Packet has long been speculated to be in talks with several major telecommunications companies, including TM and DiGi.Com, to sell a substantial stake in its 51 percent owned Packet One Networks (M).

- Packet One Networks, which is also 26 percent owned by South Korea’s SK Telecom, own valuable wireless spectrum for broadband services.

Significance: If speculations turned out to be true, the merged entity of TM and Packet One Networks would become a significant player as a combination of their strengths in the low and high-frequency bands would help build a strong 4G footprint in the country. TM will also be able to utilise Packet One Networks’ 2,000 base stations that cover 50 percent of the Malaysian population.

Gamuda To Sell Stake In Its Water Assets

- Gamuda is willing to sell its water assets in Selangor, where it owns a 40 percent stake in Syarikat Pengeluar Air Sungai Selangor (SPASS), if it can fetch “the right price”.

- Gamuda had in the past agreed to previous offer by the governments, where the latter would takeover Puncak Niaga, Syarikat Bekalan Air Selangor, SPASS and Konsortium ABASS for RM9.65 billion.

- However, the latest 12 percent return-on-equity-based offer would result in a valuation that is way below 10 percent of SPASS’ net asset value (NAV). The offer of RM250.6 million, when compared to its NAV amounting to RM2.5 billion would result in a staggering RM920 million loss for SPASS.

Significance: Notably, the government has elected to forcibly acquire the water assets and the task force will oversee the water production and assets of the company. Hence, it resulted in the price for acquisition lowering by about RM2 billion from its original RM9.65 billion.