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Reports Malaysia

Malaysia stock market and companies daily report (May 15, 2014)

May 15, 2014, Thursday, 05:41 GMT | 00:41 EST | 09:11 IST | 11:41 SGT
Contributed by Shares Investment


CPO Demand To Rebound After Price Correction

- Palm oil inventories closed slightly above market estimates at 1.76 million tonnes in April from 1.68 million tonnes in March, owing to stronger than expected growth in production while exports were relatively flat (up 1.2 percent month-on-month, down 13.4 percent year-on-year)

- Meanwhile, April 2014’s average crude palm oil (CPO) price fell to RM2,696 per tonne from RM2,850 per tonne in March, but it is still significantly higher than April 2013’s RM2,296 per tonne.

- PublicInvest Research believes the easing off in CPO prices has helped attract buying interest ahead of the potential El Nino phenomenon and the upcoming Hari Raya celebrations. And, it thinks inventories will stay low in the next few months as it anticipates exports would climb after the recent CPO price correction.

Significance: PublicInvest Research retains its “Overweight” call on the Malaysia plantation sector and its top picks are Genting Plantations, Sime Darby, Ta Ann Holdings and TSH Resources based on attractive valuation and robust future earnings growth potential.


7-Eleven Malaysia’s RM1.38 Listing Price Fair, Says HLIB Research

- 7-Eleven Malaysia’s listing on the Main Market of Bursa Malaysia has been set for 30 May. The leading convenience store operator in Malaysia holds an 82 percent market share of the standalone convenience store segment, in terms of numbers, nearly 1,600 stores as at May 2014.

- A total of RM250.3 million is expected to be raised to support store expansion and refurbishment plans, construction of a new distribution centre, and the upgrading of its information technology systems.

- HLIB Research expects 7-Eleven’s revenue and earnings per share to grow at compound annual growth rates of 12.8 percent and 24.6 percent respectively for FY13 to FY16 (excluding one-off initial public offering expenses of RM22.8 million), underscored by aggressive store expansion and refurbishment plans, introduction of new products and services, and improvements to its product mix.

Significance: Based on the indicative listing price of RM1.38 per share, 7-Eleven’s implied forward price-to-earnings ratio (PER) of 20.8 times to FY15 estimated earnings, is in line with the regional peers average PER of 20.3 times. Therefore, HLIB Research deems 7-Eleven’s listing price of RM1.38 per share as fair.


BST’s Vietnam Deal Unlikely To Impact Earnings

- Berjaya Sports Toto’s (BST) associate company, Berjaya Gia Thinh Investment Technology (Berjaya GTI), had been chosen to undertake the investment, procurement, installation of equipment and operation of a computerised lottery system in Vietnam.

- The project will be undertaken by Berjaya GTI, which is 51 percent owned by Berjaya Lottery Vietnam (BLV), which in turn, is 80 percent owned by Berjaya Corporation and 20 percent owned by BST. This translates to an effective 10 percent stake in the venture for BST.

- The project will be carried out in collaboration with Vietnam Lottery, a wholly-owned subsidiary of Vietnam’s Ministry of Finance. Though the news is a positive surprise, BST’s effective stake in the deal is just 10 percent and contribution to earnings is likely to be insignificant.

Significance: PublicInvest Research maintains a “Neutral” rating with an unchanged target price of RM4.12 on BST. It is keeping its earnings estimates unchanged pending the release of further details on the deal, and does not rule out the possibility that BST might increase its stake in BLV at a later stage.