Reports » Malaysia

Malaysia stock market and companies daily report (October 05, 2012)

Contributed by Shares Investment

CPO Tax Cut Proposal May Boost Shipments
Palm oil prices climbed for a second day following the proposal from Malaysia’s Plantations Industries and Commodities Minister to reduce export taxes in order to spur shipment exports and lower stockpiles in the country. The December-delivery contract rose as much as 2.3 percent to RM2,404 (US $786) a metric tonne on the Malaysia Derivatives Exchange on Thursday, 4 October. Futures are expected to be on a 7.5 percent drop this week. The plan to cut export duty on crude palm oil to between eight and ten percent from the current 23 percent will be presented to the Malaysian cabinet today, according to Plantations Minister Bernard Dompok. Companies which have yet to fully utilise their duty-free export quota for crude palm oil may have to surrender it to others, added the minister. In a report from Hong Leong Investment Bank, the approval of reduction in the CPO export tax would help cushion palm oil prices from falling lower.
Significance: The likelihood of reduction in export duty would place Malaysia in a more competitive position with Indonesia, which has a 13.5 percent export tax; nonetheless the bounce in prices is expected to be temporary.

Scientex Plans For RM283.2m Take-over Bid in Great Wall Subsidiaries
Scientex through its wholly-owned subsidiary, Scientex Packaging Film plans to acquire the entire stakes in two wholly-owned subsidiaries of rival GW Plastics Holdings for RM283.2 million cash. On the morning of 4 October,Scientex shares rose as much as 10 percent to RM2.70 before easing to RM2.59 at 9.35 am while GW Plastics, gained as much as three sen to RM1.11 before settling at RM1.10 at 9.36 am. Under the deal, Scientex will obtain the entire stake in Great Wall Plastic Industries and GW Packaging from GW Plastics. Upon completion of the proposed disposals, GW Plastic will cease operations and instead become a cash company. GW Plastic plans to distribute the cash proceeds to its shareholders indicatively at RM1.19 per share. According to Scientex, the planned acquisition is a win-win deal as they will be able to access to GW Plastic manufacturing facilities and boost annual production capacity of cast stretch film from 120,000 metric tonnes to 154,000 metric tonnes.
Significance: The proposed acquisitions will provide an opportunity for the enlarged Scientex to pool together the skills, experiences, competencies and knowledge of GW Plastic subsidiaries. Synergy resulting from economies of scale would in turn give rise to improved operational, procurement and administrative efficiencies.

UEM Sets To Dispose Time Engineering By Year-end
UEM Group is planning to divest its interest in Time Engineering by the end of this year. The company is currently working out viable options for disposal of its 45.04 percent stake, according to UEM Group managing director and CEO Datuk Izzaddin Idris. Since the announcement, the IT and communications company has been drawing many suitors especially with its net cash position following the disposal of its interest in Time dotcom last year. The company situated in Cyberjaya primarily provides data storage services and is one of the only few in the region capable of delivering private cloud computing services. At 30 sen per share, UEM Group’s stake in Time Engineering is valued at about RM107 million. Last year, the group sold its 86.84 percent stake in Pharmaniaga to Boustead Holdings for RM534 million and is looking to dispose of its estimated RM173 million stake in Faber Group next.
Significance: UEM Group is currently undergoing a group-wide restructuring which includes the disposal of its non-core and non-competitive businesses to focus on four core areas. The areas are expressways, township and property development, engineering and construction, and asset and facility management.