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Reports Malaysia

Malaysia stock market and companies daily report (May 14, 2014)

May 14, 2014, Wednesday, 05:24 GMT | 00:24 EST | 08:54 IST | 11:24 SGT
Contributed by Shares Investment

Auto Sales To Stay Resilient

- According to industry experts, vehicle sales are expected to remain steady in 2H14, boosted by new model launches and aggressive promotional activities. However, the impact on sales could be affected by further credit tightening measures by banks and the implementation of the goods and services tax.

- “We expect the market to grow further in 2H14 and would like to maintain our sales forecast of 675,000 units as of now,” says Frost & Sullivan Asia Pacific automotive practice associate director Dushyant Sinha.

- Honda and Nissan will both be adding new models, as well as Proton and Perodua with their new hatchbacks. Original equipment manufacturers are also rolling out completely knocked down variants at lower price points. This should spur demand along with increased activity in the energy efficient vehicle space.

Significance: Vehicle sales would be strengthened by promotions from car companies, especially towards the later part of the year as most automotive companies will look to clear their inventory, however, further tightening of credit and possible fuel subsidy rationalisation could dampen the impact on the market.

POSH Wins US$80.5m Vessel Charter Contract

- In a statement released, Malaysian Bulk Carriers’ 21.2 percent Singapore-listed associate PACC Offshore Services Holdings (POSH) announced it has won a one-year vessel charter contract from Brazil national oil firm Petrobras, valued at estimated US$80.5 million or RM260 million.

- POSH chief executive officer Gerald Seow said the contract involved the charter of its semi-submersible accommodation vessel (SSAV), POSH Xanadu, to support Petrobras’ oil and gas operations in the Campos Basin.

- This contract confirms the capability of POSH’s SSAV design to meet the operating requirements of deep-water oil field operations around the world and reaffirms the strong demand in the deep-water accommodation sector.

Significance: The one-year contract, expected to begin in December 2014, came with a one-year extension option. If the charter is extended for another year, the total contract value would be in excess of US$144 million or RM465 million.

Genting’s Las Vegas Investment Credit Negative For The Group: Moody’s

- In a note, Moody’s Investors Service said Genting’s US$4 billion or RM13 billion development of Resorts World Las Vegas is a credit negative for the gaming group because it will further increase its capital expenditure over the next two years.

- This, in turn, would increase the net debt leverage to about 1 times from 0.3 times as at December 2013. Moody’s thinks the weakened credit profile arising from the investment in Las Vegas will reduce Genting’s ability to make a bid to develop an integrated casino resort in Japan via its 51 percent owned subsidiary Genting Singapore.

- If the Japan integrated casino resort bid is successful, the project is expected to begin in 2016 with a sizeable capital expenditure outlay that would exceed the US$5.6 billion development of Resort World Sentosa.

Significance: With a number of expansion projects already underway, the Las Vegas development increases Moody’s estimate of Genting’s annual capital expenditure from RM7 billion to RM11 billion for the period 2014 to 2016.