Reports » Malaysia

Malaysia stock market and companies daily report (November 29, 2012)

Contributed by Shares Investment

Analysts Optimistic About Astro
Most analysts who initiated their coverage on Astro Malaysia Holdings this week gave positive reviews, indicating a potential upside of 38 percent for its stocks. Analyst in these investment banks had assigned a 12-month target price ranging from RM2.81 to RM3.70. Based on a recent report from Credit Suisse, Astro showed potential in benefiting from Malaysia’s attractive demographics where 60 percent of its subscribers has the highest growth in the country’s population. Credit Suisse gave it an “outperform” recommendation. At the moment, the highest target price for Astro (RM3.70) is set by Maybank Investment Bank. It believes that the growing Malay household subscriber base could boost Astro’s share of advertising expenditure market. Furthermore, Goldman Sachs which has a target price of RM3.20 on Astro, added that Astro’s above global industry average multiples are justified by strong revenue growth, near monopolistic position and the regulatory environment in Malaysia. It sees Astro in the position to capitalise on untapped demand in the country, seeing that Malaysia’s pay-TV penetration is still at a low of just 50 percent.
Significance:  Astro was listed on 19 October this year at an IPO price of RM3. Prior to its debut, many analysts were pessimistic of its expensive valuations. At RM3, it was trading at a price earnings ratio of about 30 times. Since then, the stock had stuck below its IPO price and touched its low of RM2.61 on 11 November. It closed yesterday at RM2.74 with 9.97 million shares traded.

MAS’ Plans For Rights Issue Causes  Shares To Drop 20.8 Percent
Malaysian Airline System (MAS) fell 20.8 percent after the company announced its plans to raise RM3.1 billion (US$1 billion) through a rights issue. According to an analyst at Maybank Investment Bank Research, the rights issue will cause severe dilution on earnings per share, thus resulting in supreme volatility of the stock until there is more clarity on the exercise. MAS said in an announcement to the stock exchange on Tuesday that the proceeds would be allocated to pay off capital and debt expenses. The carrier posted a small operating profit of RM4 million, ending six quarters of losses. The analyst added that the market is over reacting as input has yet to be received from the management on the structure of the rights issue. Furthermore, MAS also stated it will reduce the par value of its shares to 90 sen from RM1.00, in order to build a credit reserve of RM8 billion.
Significance: According to one analyst, investors are doubtful of MAS’ intentions with the rights issue, and are concerned whether MAS is able to turn things around with the proceeds. The company had last raised RM2.7 billion through a rights issue in 2010.

KLCCP Plans Stapled REIT
KLCC Property Holdings (KLCCP) will be restructuring to establish the country’s first ever stapled real estate investment trust (REIT) known as KLCCP Stapled Group that would be listed on the Main Market of Bursa Malaysia by the second quarter of next year. The exercise involves the injection of three assets, Petronas Twin Towers, Menara 3 Petronas and Menara ExxonMobil, from KLCC (Holdings) after acquiring the remaining 49.5 percent stake in Midciti Resources for RM2.86 billion. According to KLCCP, the proposal will allow the group to pay out at least 90 percent of its distributable income to its shareholders, which makes it a new dividend player in the country. “This landmark transaction represents a unique value proposition for KLCCP and its shareholders,” said chief executive officer Hisham Wahir. “The structure will also allow our investors to continue benefitting from the upside from our future developments.”
Significance: While the exclusion of the Suria KLCC retail mall from the proposed stapled REIT structure has upset some analysts, there is the promise of more value to be unlocked in the future, as the mall could still be shifted from the holding company into the stapled REIT.