Reports » Malaysia

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

Contributed by Shares Investment

IHH Healthcare Bears US$460.7mil Risk
IHH Healthcare (IHH)’s foreign exchange exposure risk remains a concern to analysts as IHH’s Turkish arm Acibadem Holdings had reported foreign exchange losses on an unhedged loan amounting to US$460.7million. The loan, which is serviced in Turkish lira, has a US$257.1millon payment due in 2015. The remaining RM203.6million is an amortised loan that will be repaid in semi-annual payments until 2018. Few analysts considered the foreign exchange risk a non-major concern. One analyst from CIMB Investment Bank said the management has been capable of containing the foreign exchange risk and believes that the US$500million debt is expected to be refinanced, most likely in the Singaporean or Malaysian market to benefit from interest rate savings. Currently, exchange rates are increasingly trending in favour of the Lira. The currency is less volatile than it was two to three years ago.
Significance: According to IHH, Acibadem’s earnings are largely dependent on the year-end US$ to Turkish Lira exchange rate and its impact on the unhedged borrowings. Although the earnings for the second quarter ended 30 June were slightly below expectations, stronger growth is expected in the second half.

MRCB Hits 3-Week High On EDL Takeover News
Malaysian Resources Corporation (MRCB) shares closed 3.55 percent higher yesterday following last week’s announcement of the government taking over the Eastern Dispersal Link (EDL) in Johor Bahru. The stock closed at RM1.75, after an intra-day high of RM1.77, its highest in three weeks. The government announced last week its decision to take over the EDL to settle the issue on toll charges, stating that the costs and terms of the purchase will be known by the year-end. To recap, MRCB was not able to collect toll charges starting from 12 May as stated in the concession agreement, as the government has yet to approve the toll charges. As of now, an estimated RM40million in start-up losses and finance cost of RM7million per month have eaten into MRCB’s profitability. According to HLIB Research, the share has been maintained at a Buy call with a target price of RM2.29 based on sum-of-part valuation.
Significance: According to HLIB, EDL’s equity valuation should be worth around RM600 million to RM800 million, depending on traffic projection and discount rate applied whereas the project cost the group RM1.4billion and was developed by its wholly-owned subsidiary MRCB Lingkaran Selatan.

Palm Oil Rises To 1-Week High On Tight Soy Supply
Malaysian crude palm oil futures touched a one-week high on Tuesday, as limited soybean supplies from poor production in the west may shift more demand towards the tropical oil. The US soybean futures hit a record high in Asian hours, however palm oil’s rise was subdued by stock builds in Malaysia as top producer Indonesia offers cheaper refined palm oil. Traders also priced in higher production that contributed to the stock build, although strong palm oil exports on the back of higher shipments for crude products could slightly help ease stocks. By the midday break, the benchmark November 2012 contract on the Bursa Malaysia Derivatives Exchange edged up 0.1 percent to RM3,075 ringgit per tonne after hitting RM3,100. However, technical remain bearish as palm oil faces resistance at RM3,093 per tonne, and will retrace to RM3,049, according to Reuters.
Significance: Palm oil exports surged to 1.45 million tonnes in August which was the highest seen this year. This was boosted by higher shipments of crude products and demand recovery from major food buyers China and India