Reports » Malaysia

Malaysia stock market and companies daily report (October 30, 2012)

Contributed by Shares Investment

Daibochi Can Step Further With M&A
Daibochi Plastic and Packing Industry can achieve more with the possible merger and acquisitions (M&A) expected in the industry. According to a CIMB analyst, early this month Scientex’s proposed acquisition of GW Plastics Holdings had created interest for other listed flexible plastic packaging (FPP) stocks. For the past few years, Daibochi has been diversifying its business away from the traditional non Food and Beverage (F&B) segment. Its efforts are now bearing fruit, with higher sales coming from the medical gloves and tobacco sector this year. The company has achieved its best ever result in the third quarter of FY12, with a net profit of RM7 million. The remarkable performance is mainly attributed to cheaper prices of cost components, reduced wastage and higher cost efficiency. Daibochi’s final quarter result is expected to remain robust given its long-term earnings growth coming from the F&B segment as well as the Australian export market.
Significance: Since most FPP stocks are run by family operators and are of smaller market capitalisation, these companies need  professional management  in order to progress to the next level of growth. Companies that have constant improvements stand to benefit as potential acquisition targets.

Aeon Jumps On Carrefour Takeover Bid
Aeon Co (M) shares jumped as much as RM1.04 on news of the takeover deal between its parent company, Aeon Japan and France-based Carrefour’s Malaysian business for approximately RM750 million. Aeon shares had surged 8.7 percent and closed at RM12.98. According to OSK Research, the takeover news that first emerged last month proved that the merger and acquisition in the consumer market was still vibrant. The deal is expected to be completed within these few weeks. Upon completion of the proposed takeover, Aeon Japan will be the one of the largest supermarket operators and among the biggest retailers in Malaysia. Carrefour, the number two retailer, has been struggling due to the poor performance of its Euro based hypermarkets. Carrefour will close its two stores in Singapore by the end of this year after it unsuccessfully tried to sell its operations in Singapore and Malaysia two years ago.
Significance: The acquisition will create synergies and help broaden the group’s market as Aeon originally is a department store targeting the middle-income group while Carrefour, a hypermarket operator, cater to the low-to-middle-income consumers.

Bumi Armada Seeks More Jobs In India
Malaysia-based international offshore oil and gas services provider, Bumi Armada is eyeing India for future prospects in the floating production, storage and offloading (FPSO) business after officially marking its presence in the country. On Saturday 27 October, the company’s fourth FPSO vessel, Armada Sterling sailed away from the Keppel Shipyard Singapore to serve the India-based Oil and Natural Gas Corporation Ltd (ONGC). For this project, the company had partnered with Forbes & Company, a subsidiary of Shapoorji Pallonji Group (SPG). Bumi Armada hopes to collaborate with SPG for more projects on the back of potential demand in India, according to its executive director and chief executive officer. Going forward, the CEO had cautioned that 2012 remains a challenging year for FPSO providers due to the on-going uncertainty at the Eurozone and volatility in global oil prices. Nonetheless, the increasing demand for FPSO has helped cushion the impact for Bumi Armada.
Significance: The FPSO business environment is becoming less competitive as more players in the industry have consolidated due to the challenging global situation. As a result of this, Bumi Armada is able to secure more new projects for its future.